Thursday
(0)Over on the Adam Smith Institute blog, Madsen Pirie makes an excellent point about the joys of borders and the competition they bring:
In the US I like to cross state lines to go for the lower sales taxes and duties. It is reckoned that 'leakage' (cross border shopping) will be a significant factor if there is a 3 percentage point tax differential. And it's not only competition in sales and purchase taxes which works. I love French food and wine, and the priority they are given, but I don't feel the same way about their income tax and social insurance. The Danes do pickled fish on rye bread superbly, but there's no way I want to pay Danish taxes. I enjoy the Swedish forests and lakes, but not their government.
Which is of course why so much of the USA's political class have supported the steady march towards ever more federal power and why the EU's political classes love 'harmonization' to prevent 'unfair' tax competition. The Adam Smith Institute is often seen as just being about the life of homo-economicus but as Madsen's remarks show, they are in fact concerned about the impact of liberty on culture and society and not just the Dow Jones Index.
One of the reasons so many French families can be found living in Kensington ('Frog Valley') is that there is a two way exchange going on between Britain and France: a 'brain drain' in which French entrepreneurs, executives and high tax bracket individuals are moving to relatively less regulated more dynamic Britain to escape the deadening (and grasping) hand of the French state, whilst at the same time retired British people who do not actually have to work for a living, and are thus unlikely to have to deal with the nightmarish French state, are buying up property in the Dordogne to experience the cheese, fois gras and claret idylls of bucolic France.
Yes, there is something to be said for borders.
Well there is something to be said for there being different jurisdictions on opposite sides of borders. The borders themselves (as obstacles that have to be crossed) often suck.
You're back, Perry?
Posted by Michael Jennings at October 23, 2003 02:56 PM
Don't forget the glorious contribution that the OECD makes as it "produces internationally agreed instruments, decisions and recommendations to promote rules of the game in areas where multilateral agreement is necessary for individual countries to make progress in a globalised economy"... or, in short, runs a cartel for governments.
Posted by Guy Herbert at October 23, 2003 03:30 PM
There is nothing to be said for (state imposed) borders, there is plenty to be said for low (better still _no_) taxes however.
Lets also be clear about tax 'competition', not in itself a good thing. Sure it has a limiting effect on how much tax an individual state can get away with levying but what we actually want is no tax anywhere, not tax competition.
Posted by Paul Coulam at October 23, 2003 04:39 PM
That's me! Live in Tuscany (not much cheaper now than England for good property, but bureauchaosy means you get away with almost anything), do business in London at London rates, and enjoy the spending power!
Posted by Tony Millard at October 23, 2003 07:42 PM
I'm fairly sure I don't want no tax anywhere. I think some properly conducted government is a good idea, and hence some tax (if small by OECD standards) is necessary to support it. And I'm certainly prepared to contemplate lots of coexisting forms of polity, giving me some chance of living in one that suits me.
The no-tax alternative is really another route to the worst case "failed state": tax rates varying arbitrarily between some (effectively) and infinite with the chance of death, serious injury or enslavement thrown in, depending on how much one has to spend on defending oneself against marauding gangs and how effectively it works out.
Posted by Guy Herbert at October 23, 2003 08:05 PM
Oh I agree Paul, that is the desired end point... but in the mean time I think the best way to lower the exorbitant level of state spending is to induce brain and capital drains to more liberal (in the true sense of the word) jurisdictions.
Posted by Perry de Havilland at October 23, 2003 11:05 PM
induce brain and capital drains
Perry,
Hence I want to create Talent-Redistribution.com website to provide information and help to those fleeing from state slavery.
Trouble is where to flee to?
Posted by Rob Read at October 24, 2003 12:15 PM
