France is a frustrating place. She ought to be the richest country in the world. She boasts a beautiful climate, a perfect location at the heart of Europe but looking out to the Atlantic, a wide range of natural resources, more signature products than any other nation, a global image that is associated with sophistication and prestige, a population prepared to seek their fortunes beyond her boarders, good international contacts leftover from her days as a colonial power, and a cultural tradition with tangible cash value.

The latest evidence of that last asset is the proposal to build a theme park near Paris celebrating the life and times of the Emperor Napoleon I. If that sounds eccentric, consider two facts. First, France already makes huge amounts of money from its history and art, from the Louis XIV at Versailles through the Impressionist painters to Asterix the Gaul, who already has his own theme park, the success of which has encouraged the Napoleonic investors.

Second, the Napoleon name is already one of France’s – many – successful brands. The Emperor has, amongst other things, a pastry and numerous cognacs named after him – which is ironic because he was noted for his moderation in eating and drinking, at least by French standards. A chicken dish named after one of his battles, Marengo, has a slightly better claim to a genuine connection, and there are a number of sites and events associated with the great man which attract the many people, often high-achievers and therefore high-spenders, from around the world who like to think of him as a role model.

Yet, although Napoleon is a business success story, he may also be a fitting symbol of the reason why France is not as wealthy as the sum of her assets suggests she ought to be. The French have always admired strong rulers – Richelieu, Louis XIV, and Napoleon, among others – and the ostentatious centralised government they impose. It is no coincidence that the word dirigisme – meaning state direction – comes from France. While this has had some positive advantages in terms of keeping a diverse nation together, the negative side is that it has prevented the natural entrepreneurial abilities and inclinations of the French people from developing to their full potential.

Intelligent people in France have long seen the dangers of this. The last two Presidents, Chirac and Sarkozy, were both elected on a ticket of reform, but both became bogged down in a war of attrition with the vested interests of the ruling bureaucracy, and both lost their nerve when they were put to serious tests. However, for all Mr Sarkozy’s failings, and there are many, there can be no hope for France in the probability that he is about to be defeated by a man who believes his country’s problems can be solved by a 75% tax rate.

Perhaps it takes a Napoleon to run France – but France needs a Napoleon who understands basic economics.

The return two weeks ago of Vladimir Putin to the Russian presidency raises more questions than answers.

First, but least important, was the election rigged? Probably, but it is also probable that Putin really is far more popular than any of the other candidates.

So is Putin the best option for Russia? He may have been the best on offer. There may be others who are morally superior, but the lesson of history is that a huge country like Russia needs a strong ruler, and no one at the moment is as strong as Putin. He may be no saint but he is tough enough to fight the many devils that plague his country.

How will his return to Russia’s top foreign policy post impact on the rest of the world? A more assertive Russia is bound to undermine the American hegemony, which has in any case been in decline in recent years. It may represent the beginning of a return to multi-power politics. It is hard to say if that is necessarily a bad thing.

What about the economy? Putin’s early years in office show an understanding of the need for pro-market reforms, and the political will and the energy necessary to carry them through. If he can rediscover those qualities in himself, that might be the best thing about his re-election.

Will he tackle corruption? Sometimes. There is no doubt that Putin dealt ruthlessly with some of the corrupt practices that built up during the Yeltsin years. At the same time he can be very protective of some personal friends and associates who do not deserve that protection. The kindest thing that can be said about his attitude towards the rule of law is that it is flexible.

What about human rights? The good news is that Putin is powerful enough to advance individual liberties without weakening his political position. The bad news is that his record indicates he is unlikely to do so. Some cases still leave a very bad taste in the mouth – not least because the government’s over-reaction seems so unnecessary. He appears to be a man who holds grudges.

What will change as a result of this election? Not much.

What does all this mean for business? Who knows? However, the recent history of Russia does call to mind a Biblical text: “To him who hath shall more be given; to him who hath not even what he hath shall be taken away.”

Your contributor, along with many others, came up with the concepts of Amazon Marketplace, Wikipedia, and the iPhone, years before they became reality. His problem was that the technology was not in place when he did.

Business is less about having original ideas than it is about getting the timing right. There is nothing brilliant in itself about buying a share but buying it at precisely the right moment can make a fortune – and buying the same share for the same price an hour earlier or later can lose one.

Rupert Murdoch’s launch of The Sun on Sunday is a masterclass in timing. There was informed speculation that he would do such a thing within hours of his dramatic closure of his previous London Sunday tabloid, the News of the World, in response to the phone hacking scandal last July. Yet he did nothing. He knew that public outrage was genuine. A launch then would have been seen as cynical and arrogant. It would have flopped.

Since then, however, there has been a slight softening of the public mood. The sight of the 80-year old Mr Murdoch being attacked by a protestor in the British Parliament actually won him some sympathy – and positive admiration for his wife Wendi for the way she rushed to his defence.

The government’s decision to set up an inquiry into regulation of the press has prompted journalists, many of whom are virulently anti-Murdoch, to close ranks against the prospect of state control of a free press. Many were also offended at the heavy-handed way the police arrested some of Mr Murdoch’s employees. Irrespective of whether the arrests were merited, it seems that the Metropolitan Police cannot do anything these days without imitating the overkill they see on American cop shows. Journalists of all opinions could imagine men in helmets and flak-jackets stamping into the bedrooms of their own children.

Meanwhile, the police have admitted that the allegation that, more than any other, prompted the inquiry seems to be a fabrication. It was the now discredited claim that Mr Murdoch’s people had deleted the voicemails of a young murder victim that really stirred up popular anger. No one really cares about self-publicising “celebrities” whining about having their telephones tapped.

So the launch of the Sun on Sunday has been well-timed in the tactical sense – but is the whole concept well-timed at the strategic level? Many in Mr Murdoch’s own organisation, looking at the profits of Fox television franchises such as The Simpsons, see the old man’s obsession with print journalism as a thing of the past. It has certainly been a major distraction over the last year. The digital revolution has not yet killed newspapers outright, but, although there is still profit to be had from paper, the whole stressful experience may convince the next generation that there are better ways of spending their time.

Since our last post was about Greece, balance demands that we ought to say something about her neighbour, and long-time competitor, Turkey.

This huge country has one foot in Europe and one in the Middle East. Despite the fact that 97% of her land is in Asia, the eyes of Turkey’s political and business classes have been looking more and more to the West in recent years. The West has paid her little attention in response. This is a big mistake.

Turkey is a gigantic business opportunity. Her economy has been modernising at a furious rate. The in-flight magazine on Turkish Airlines – which is itself now a very impressive modern operation – is as full of IT gadgets, fashionable leisure items, and new media as its American equivalents. One is met at Istanbul by that ubiquitous symbol of Western “progress”, the Starbucks. Turkish television shows Hollywood films. Young urban Turks are indistinguishable from their counterparts in Western Europe.

Yet Turkey remains a land of dramatic contrasts. Within a few miles of up-market coastal resorts that resemble the South of France there are villages that look unchanged since the zenith of the Ottoman Empire in the 16^th Century. The tourist can feel that he has entered a time warp. SUVs whizz past old ladies who are literally bent double under huge bundles of sticks. Turkey is changing fast, but still has a long way to go – hence the opportunity.

The country’s cosmopolitan leaders have long sought to add membership of the EU to membership of NATO and the G-20 as a symbol of Turkey’s commitment to the modern world. The appetite for this has been diminished a little, but by no means completely, by the eurozone crisis and also by a recent falling out with France. The French passed a law making denial of Turkish massacres of Armenian Christians a criminal offence. That these massacres took place, about a hundred years ago, is a matter of undoubted historical fact, and the Turks really do need to come to terms with this aspect of their history, among others. However, the French law is unlikely to help this process: how can one encourage people to debate a difficult subject by making it illegal to discuss it freely?

The strident reaction of Turks of all shades of opinion to the French law is a useful reminder that, for all its modernising, Turkey retains a political culture very different from that of the Western countries it seeks to emulate. However, this may be to Turkey’s advantage in the medium term. A country semi-detached from the EU – with all the benefits of physical proximity and economic integration, but without the burden associated with eurozone membership – might be the best place to do business for the next few years.

While the Olympians of high politics clash with the Titans of international finance over the mega-million deals necessary to keep Greece in the euro, is anyone actually interested in what happens to Greece?

The top priority for Greece is to build a modern economy. Bailouts and austerity packages of themselves build nothing. While it is true that Greece, like America, Britain, and practically every other Western economy, needs to sort out its public sector debt, that in itself is not enough. Teaching a government to stand on its own two feet is a necessary precondition, but no more than that – a first step.

The important part, and the really hard part, is generating private sector business that adds value to the GDP. Those protesting about cuts in public services ignore the fact that, without viable businesses making money to pay taxes, there can be no public sector services. Fresh injections of German money are not the answer – it is reliance on easy money from eurozone partners that led the Greeks to ignore private sector competitiveness in the first place: there was no need to encourage enterprise when the government could borrow more without negative consequences.

That was never going to last forever. Some day the bills must be paid. Now that day has come, but the Greeks’ neglect of the private sector means they have nothing on which they can fall back.

Greek business is unprepared for reality. It is reported that Greek VAT revenue has fallen by almost 20% since January last year in spite of a 10% increase in rates. Of course, tax revenues in general tend to decline not “in spite of” rate increases but because of them. Faced with a choice between passing the rate increase on to their customers or taking it from their own profit margins – which may have been less than the percentage rate increase even before the recession – many small businesses become unviable. No wonder 60,000 Greek businesses have closed since the summer.

At the same time the Greek government learns to live within its means, it must learn to love Greek business. Certainly it must pay more attention to its needs. Higher taxes are not helpful in this context.

If the government can become more business-friendly, there may actually be hope for Greece, whether inside the euro or out. There is no need for the country to remain on international welfare forever. It has a lot going for it – landscapes and history that attract visitors, an outward-looking view of the world that dates back to Homer and Herodotus, and an outstanding tradition of entrepreneurship. In sectors from catering to shipping, Greek entrepreneurs have flourished all over the world. What will it take to let them flourish in their native land?   

When British employers discuss what is undermining their country’s competiveness in global markets, the UK’s education system is usually at or near the top of the list. Many state schools are failing both business and young people by turning out potential employees – and entrepreneurs – with inadequate skills and unhelpful attitudes.

So a headline that a girl’s school was holding a “failure week” was enough to make the blood boil. Of all the bad attitudes instilled by poor education, the worst is low expectations – especially among girls.

Yet, on reading the full article, the headline proved to be very misleading. Given the negative culture of too many schools, especially in deprived areas, you might have a right to suppose that a “failure week” meant a week of preparing young people for the life of failure to which their useless education condemns them. In fact, the opposite is true. The “failure week” is not about failure at all. It is about success – and the role of failure in achieving that success.

There is a paradox of success and failure. You cannot get something for nothing. Success demands risk – and extraordinary success demands extraordinary risk. The possibility of failure is the price of risk – which leads to the almost mathematical conclusion that the possibility of success has a positive correlation with the possibility of failure.

In other words, successful people succeed more because they risk more, and because they risk more they also fail more. The biographies of most highly successful people include long lists of failures. Indeed, the average high achiever will fail far more often than someone who plays it safe all his life. The mediocrity avoids failure, but he also avoids success.

If you never fail, it means you are not testing your limits and therefore you are living below your potential – which is perhaps the greatest failure of all.

The key to success lies in how you respond to failure. If you just lie there after being knocked down, moaning and complaining and blaming everyone and everything but yourself, you will remain a failure. The success is not the person who never gets knocked down, but the one who gets knocked down and then has the courage to pick himself up again and the intelligence to learn from his mistakes as he rejoins the fray.

People like that succeed because they keep coming back until they do. They will be beaten but they are hard to beat.

Middle-income entrepreneurs in the UK can end up handing over more than half their hard-won earnings in taxes of one sort or another. So it is indeed shocking, but not really surprising, that US Presidential Candidate Mitt Romney, who is worth an estimated $250 million, paid taxes of “only 13.9%” on the $43 million he made over the last two years.

As usual, however, the media headlines do not tell the whole truth. A more accurate figure may be 14.5% rather than the 13.9% which was widely reported because it made a better story. Most reports also ignore the fact that this figure refers only to federal taxes: Americans pay state and local taxes on top of this. Finally it should be stressed more than it has been that this effective tax rate is an average over the whole income and should not be confused with the headline marginal rates that are payable on only part of the income of higher earners – the notorious 50% in the UK.

All that said, it does still shock how the effective rate paid by Mr Romney is much lower than that paid by many who are a lot poorer. There is no serious suggestion that Mr Romney has done anything illegal or dishonest. On the contrary, it is surely to his credit that he gave about $7 million to charity, which is tax deductible in the US and therefore a major factor in the relatively low marginal rate. He should not be condemned for generosity.

Nor should he be criticised, as a man in his 60s, for being retired from active business and living off his investments. Income from investments is taxed at a lower rate, as capital gains. At first glance, it does seem absurd that the tax rate on “unearned income” is lower than that on “earned income”. Yet most “unearned income” actually comes from the investment of income previously earned, so it seems unfair to tax it twice at the full rate.

In any case, Mr Romney has only done what we all do: arrange our finances to minimise our tax liability under the existing system. It is the system that is wrong.

Governments with high marginal tax rates know that they are economic nonsense but keep them for purely political reasons: they give the impression that they are “soaking the rich”, which usually goes down well with the vast majority of the voters who do not consider themselves rich. In order to prevent the rich disappearing, and most of their countries’ economies with them, these governments have almost invariably undermined the high headline rates of tax by a complex, but discreet, system of write-offs and loopholes. These tend to be more accessible for the super-rich than for middle-earners. This is why a flat rate tax would be both fairer and more efficient.

The most significant thing about Mr Romney’s tax returns is that they run to more than 500 pages.

Britain’s system of public honours looks increasingly absurd. The recent decision to strip disgraced banker Fred Goodwin of his knighthood only brings it further into disrepute

All nations, even the most egalitarian of republics, have some form of state recognition of outstanding service. The principle is based on sound management practice: it encourages workers if their work is appreciated and it encourages others when such people are held up as role models, and it costs very little. The French Revolution abolished all titles of nobility, and old revolutionaries objected when Napoleon replaced them with the Legion of Honour. The master of psychology replied, “With such baubles are men led.”

Baubles they are. It seems ridiculous that some people get worked up about them. Even more ridiculous is the way that most seem to go not, as they should, to people who make some great sacrifice or who go above and beyond the call of duty, but to people who simply do the jobs they are paid to do – and sometimes paid very well.

In the UK, the volunteer lifeboatman or the tireless charity worker might be thrown a bone in the form of an MBE (Membership of the Order of the British Empire, the lowest ranking honour), but there is no sense of proportion when higher ranking knighthoods are given to super-rich pop-stars or soccer-players simply because they are celebrities, or to bureaucrats who are already very well rewarded from the public purse.

Honours for businessmen as businessmen are equally superfluous. The proper reward for business is the money one earns, no more, no less. If a successful businessman gives a large proportion of his personal earnings to charity, or a lot of his free time to a good cause, he might deserve a separate honour for that, but no one should expect to be honoured for doing no more than enrich himself.

So it was wrong to give to give Sir Fred/Mr Goodwin a knighthood in the first place “for services to banking” – especially since it turned out that his services to banking consisted of leading the Royal Bank of Scotland into bankruptcy.

Yet two wrongs do not make a right. Once granted, an honour should not be revoked except in the most extreme circumstances. Mr Goodwin has been convicted of no criminal offence. He was stripped of his knighthood by a secret committee of bureaucrats, without a hearing, in response to a media campaign that had more than a whiff of a lynch mob about it. Goodwin may not deserve our sympathy but that does not justify the way the decision was made. Friends in high places should not be enough to honour a man nor subsequent unpopularity enough to dishonour him.   

This blog tries very hard to be apolitical, but it does have one underlying political principle: a belief that enterprise and free markets are the most efficient generators of material prosperity.

So we do not share either the motivation or the conclusions of most “anti-capitalist” protestors. However, that does not mean they are necessarily wrong about everything. Some of their criticisms are valid. The fact that we are in favour of free markets does not oblige us to defend the cosy relationships that undermine those free markets. On the contrary, it is precisely because we believe in free markets that we add criticisms of our own.

Although the two expressions are often used interchangeably, it should be noted that there is a difference between free markets and capitalism – certainly the sort of capitalism that prevails at the moment, state-sponsored capitalism, or “crony capitalism”.

Free markets are, or should be, level playing fields, open to all and on which all can compete fairly, so long as they are willing to abide by the same rules.

Fairness and openness go out of the window when the state grants little favours to its special friends. When big business buys expensive lunches for tax collectors in return for an unusually sympathetic attitude, it is small business that ends up paying the bill. Small business is also the loser in the close relationship between government and the banks: in a reverse of the Biblical parable, government forgives the debts of the bankers but allows them to treat their small business debtors ambiguously.

There is also a need for greater transparency and accountability within the private sector itself. Free markets work on the principle of reward in proportion to success – with extraordinary reward for extraordinary success – but not extraordinary reward for little success. So it is not the anti-capitalists but we minor capitalists with small shareholdings in big corporations who should be the first to object when directors and senior executives are given excessive pay increases which are not matched by increases in profitability.

What is required is not the overthrow of the whole capitalist system but a reform of corporate governance within that system to increase the independence of non-executive directors and the rights of shareholders.

Politicians as varied as American conservative Newt Gingrich and British socialist Ed Miliband are talking of the need for a “new kind of capitalism”: we have every right to suspect their motives – but they may be right.

With public confidence in politics, the media, the banks, the legal system, the police, and big business all in rapid, and for the most part deserved, decline, perhaps the time has come to do more to celebrate the heroes on whom all that is best in modern life depends: the entrepreneurs.

The management theorist Peter Drucker defined entrepreneurship as transferring resources, including time, capital, labour, money, and knowledge from a lower to a higher state of productivity.

In other words, human and natural resources would achieve nothing unless someone had the enterprise to put them to good use. They would lie idle. Mankind would not have progressed beyond the caves without the initiative of the relatively few individuals willing to take risks and try new things. So entrepreneurs are behind every real advance in human civilisation. They were not necessarily the people who had original ideas. They were the people who put those ideas into practice, which may be more important.

Should any complain that some entrepreneurs are very well rewarded for that, they should note that we have committed ourselves to be rewarded only in direct proportion to our providing for the needs and desires of others, no more, no less. If we fail to serve those needs and desires, we fail to sell our products and services, and we get nothing.

If we succeed, it means other people consider what we provide is useful to them. The principle that control of resources should go to those who have done most to meet the needs and desires of others seems morally right, as well as the most efficient way to organise an economy. It is a democratic principle: people vote with their wallets. Certainly it is a more democratic, efficient, and moral system than any of the alternatives that have been offered.

Finally, in a world divided by ideology, ignorance, egotism, greed, and the misuse of religion, doing business is one of the few things that can bring members of different branches of our diverse species together for their common good.

King Edward VI once provided a Company of Merchant Adventurers who were exploring unknown lands with a letter of introduction. In it, he wrote, “Of all men, the merchant is most deserving; for God, in providing for mankind, ordained that all his needs should not be found in any single region, in order that each region should have need of others, and friendship thus be established among all men.”