The richest person in the world, as of December 2022, is the French billionaire Bernard Arnault, whose fortune now amounts to some $220 billion. People outside of his home country may be less familiar with him than tech billionaires such as Elon Musk and Jeff Bezos, but they’re likely to recognize the products that made him so wealthy: luxury brands ranging from Christian Dior and Louis Vuitton fashion to Hennessy liquor. In any case, Arnault has long been a fixture in French high society and politics.

What is the luxury industry exactly? What are Arnault’s political views? And what does his wealth tell us about France? Those are a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity.

For the full conversation, look for Ones and Tooze wherever you get your podcasts.

LISTEN HERE: For the entire conversation, and episodes in the weeks ahead on this subject and others, follow Ones and Tooze wherever you get your podcasts.  

Cameron Abadi: How exactly did Bernard Arnault acquire his massive wealth?

Adam Tooze: I think, like most other extremely wealthy people, he didn’t start off poor. He comes from a business family, born in 1949 in the now quite hardscrabble textile town of Roubaix. His father owned a civil engineering company, and Arnault pushed his father, when he came into his own in the 1970s, to take the company out of civil engineering and move them into real estate. He successfully repackages the company as a real estate firm, sells a slice of its interests. And then in the ’80s, through his excellent contacts in government circles, he gets wind of the fact that the French government is looking for somebody to take over a textile and retail conglomerate, the center of which was the Christian Dior business, which at the time was in serious financial trouble. And again, exploiting this network of excellent contacts that he has, he partners up with the investment bank Lazard Frères. He forms a financial holding company. And with that, then sets about taking charge of Christian Dior. He acquires controlling interest in that group, proceeds to strip it of all but its most essential workforce, acquiring a fearsome reputation. The guy goes by the moniker of Terminator. He’s sacked thousands and thousands of people, which was a promise he had made not to do as part of the takeover. He then, with Moët Hennessy, the Champagne brand, and Louis Vuitton, founds LVMH, which is now his vehicle for spectacular wealth.

CA: Is luxury a coherent industry of its own? Luxury is usually a reference to high-quality products relative to other kinds of products of their own kind. So how does a company specialize in something so inherently variable and relational?

AT: Yeah, I think you point to an important tension. In common parlance, luxury is just a general indicator of quality, a certain generosity. You know, “money, no object,” kind of excess privilege, quality, and so on. But in business speak, nowadays, it refers quite distinctly to the cluster of high-end, high-valued, high-brand-value goods, which are in the fashion space, leather goods—handbags, quintessentially—fine jewelry, of which the most exclusive is essentially made to measure for individual clients. The same is true, of course, of the very high-end fashion. Writing instruments—so pens—watches, cars, perfumes, yachts, interior design, the most high-end real estate, the most high-end hotels, the most luxurious food brands—either caviar or something like that—wine and spirits, and particularly Champagne. Cars up to a point—we’re kind of really talking Ferrari more than Porsche when we’re in the real luxury end. Various types of spa products, massage, wellness products, and then antiques and ultimately art. And it’s a fluid category, essentially shaped, inherently, as you’re saying, by taste. And taste is obviously debatable—except it is sociologically real. You know, how people pay, even what they choose to value is something that we may not be able to fully explain, but we can certainly map it. And by being able to map it, we can then make money out of it, or the brands which cater to this market can. And it’s a huge market—billions, hundreds of billions of dollars’ worth of quality spending, luxury spending that falls under this moniker.

CA: During the presidency of François Hollande, Arnault became the object of controversy, because Hollande wanted to raise wealth taxes, and yet Arnault’s response was to say he was going to give up his French passport and move to Belgium and become a Belgian. He ultimately didn’t do it, but is this kind of threat common? And is there a pull factor—do European countries compete over the ultrarich like Arnault?

AT: They do, but not as much as American states compete with each other in American counties. But, yes, absolutely, there is competition. It’s also worth saying that if you come from Roubaix—I mean, Roubaix is essentially on the border with Belgium. So it’s not entirely unreasonable for Arnault to say, you know, “I wish I had just been born a couple of hundred yards away, and then I wouldn’t be dealing with this pesky wealth tax that you want to impose.” It’s also worth saying that he has subsequently insisted that it had nothing to do with tax evasion. It was about the stability of the enterprise and, you know, the inheritance, and he has renounced any idea that this was ever serious.

But across Europe, yes, there is absolutely locational politics. If you think about the Formula 1 race drivers or the tennis stars who tend to be residents of Monaco, and indeed citizens of Monaco, to take advantage of the very low tax rates there. Countries like Ireland or the Netherlands both offer extremely advantageous tax conditions. So there is clearly this tax competition. But the very fact that it was a scandal in Arnault’s case, and that he was ultimately forced to retract, I think points to actually how difficult it is for somebody of his ilk. I think a couple of billion here or there and people will probably not notice. But if you’re a whale of his size, overwhelmingly the richest person in France and the richest man in the world right now, for him to change his nationality remains something of a scandal in Europe.

CA: Is Arnault also a political figure? Do we know what his views are—are they basically the same as wealthy people everywhere?

AT: I think it’s fair to say that he’s a low-tax guy. I mean, his beef with Hollande was over the wealth tax, and he backed [President Emmanuel] Macron, continues to back Macron very actively. And one of the things that Macron did in his first term as president was abolish the wealth tax—so gifting the likes of Arnault a considerable benefit. Arnault also hobnobbed with Donald Trump. They’re very rich people who know each other. They’re both in the hotel, luxury business—or at least Trump fancies himself to be in that line.

The most significant intervention of late has been his white-knight role in connection with the leading French radio station, which was up for sale, sensitively, at the time of the recent presidential election in 2022. And the fear of the Macron camp was that a rival oligarch, Vincent Bolloré, who is a huge name in infrastructure, was going to swoop in and convert a chain of radio stations to a right-wing, Fox News, pro-[Marie] Le Pen kind of stance. And at that moment, it’s quite clear, I think, that the Macron camp was in touch with Arnault’s team, and Arnault rapidly established a strong minority position in the ownership of the radio station, which is pretty hard to justify on other terms. It doesn’t correspond to other interests of his business but was extremely reassuring, I think, for the Macron camp to know that in the battles for control of the private media in France, they have an ally on their side who has both deep pockets and utter ruthlessness in his business dealings. So he is a figure, I think above all, identified with Macron.