Teaching The French To Take On Business Risk

George W. Bush was mocked several years ago when he reportedly lamented that the French had no word for "entrepreneur." Whether he actually said it is in question, but in one sense, at least, he would have been right: polls show that the French have a deeply ambivalent, if not negative, view toward free markets, and the fact is that one of the world's largest economies has struggled to produce a culture of risk-taking, let alone any sort of iconic figure in the mold of a Steve Jobs or Richard Branson.

But there's now a bright spot: a new government measure aimed at simplifying and promoting business startups. On Jan. 1, a law took effect that allows just about anyone to become their own boss, without endless bureaucracy and fees. Retirees, students, workers, the unemployed and even bureaucrats can sign up online in 15 minutes and start building their own businesses, without losing their existing publicly funded pensions and unemployment and other benefits. And—truly an innovation here—instead of starting up with thousands of euros in lump-sum payouts for social-security contributions, the state doesn't collect until the business starts bringing in revenue. Even when it does, the "auto-entrepreneur," as the businessperson is called, reaps tax breaks.

The response to the measure has been breathtaking. The government expected that 200,000 people would sign up by the end of 2009. But by mid-February, there were already 62,000 auto-entrepreneurs on the books, suggesting that the number of startups could surpass half a million by the end of the year. Finance Minister Christine Lagarde says the figures "will explode the initial objective." Philippe Hayat, founder of 100,000 Entrepreneurs, a network of businesspeople that has been trying to change French attitudes toward entrepreneurship, calls the legislation "a revolution."

The effort is only the latest aimed at making going into business more attractive. Beginning six years ago, the French government reduced the capital requirement for starting a limited-liability company to €1, and offered new funding for specific groups, like job seekers, to start their own business, all while facilitating financing and trimming taxes. The number of new firms began to grow immediately. Last year the number of new businesses hit a record 327,000—a 60 percent increase since 1998.

That record is likely to be shattered in 2009. But there is much work to be done. Pessimism remains a hallmark of French economic culture. One recent study showed that French people underestimate the number of startups created each year, as well as their prospects for survival, suggesting they still hold an inflated perception of the dangers involved. The National Foundation for the Teaching of Business Management, which commissioned the study, also concluded that the French "have a deformed vision of companies."

One reason for France's attitude toward business is that most career politicians have little experience with the business world and tend to legislate accordingly, often by holding on to old laws that protect jobs at the expense of greater productivity. Another reason is that French economics classes, which are optional, are often taught with an ideological slant. Last year, a government commission studying how high-school economics was taught found an overemphasis on social problems linked to the economy and lamented "an excess of despair." In textbooks, when private firms are discussed, there is a tendency to "emphasize conflicts, poor working conditions and low salaries"—all of which makes pining for a risk-free life away from the private sector easy to understand. "This idea that capitalism is dreadful and horrible is something that is circulated, precisely among teachers, and notably economics teachers," says Marc Lazar, author of "Communism: A French Passion." "And that maintains an old French core of suspicion, of hostility to money, where Catholic culture mixes with a radical leftist culture marked by Marxism."

The new law is helping to change things, mixing old-style French protection with greater U.S.-style efficiency, affording budding entrepreneurs a low-risk taste of President Nicolas Sarkozy's mantra "Work more to earn more." Last fall, Florian Hascoat, 28, lost his job at a middle school and became one of the first to sign up to be an auto-entrepreneur. Now he is a children's entertainer, making balloon animals at birthday parties in southern Brittany. The fact that he is still collecting unemployment checks means he has a cushion as he makes his first business decisions. "I wouldn't have started my business if it weren't for this status," he says, "because I wouldn't have been sure I could cover my expenses." The words of a business megastar in the making? At least it's a start.