Money and Currency

Money is a store of wealth that may be possible to use as a means of exchange and currency is a means of exchange that may be possible to use as a store of wealth.  Definitions are important.

Offshore Tax Avoidance & Cameron's Panama Hat

Another stage-managed 'leak' of documents enamours the world as this time the mainstream media tell tails against the ready made usual suspects of most wicked who have been off-shoring their wealth in tax-havens.  Naughty naughty.

Strange it is that amongst this cast of pantomime villains David Cameron, Britain's own beloved leader, is probably 'at it' too as it is evident his deceased father was an expert in the tax avoidance industry and operated companies to manage his wealth outside of the reach of the UK tax-man's grasp.

Strange it also is that David Cameron makes oblique statements about if he and his family derive benefit, or will someday derive benefit, from something that in all probability, near certainty, beyond reasonable doubt, exists: a substantial pot of gold buried on a treasure island with a pirate's map only they have possession of.  Why else would his father have formed off-shore companies with board meetings in Switzerland and all if there was no more than the £2.5 million declared in the UK at his death.  That is not enough ever for a decent London house these days.  We can see; David's wearing a Panama, we can see.

The retching hypocrisy is only illustrative of the quality of the material that survives the political system to rise to the top.

But in the wider scale of things, outside of the blatant perfidy, I am happy the wealthy work so hard to conceal and protect their lucre from taxation and death duties.  It is a war of attrition.  The higher taxes are the harder more wealthy folk will work to find the loopholes.  But the harder it is to find the loopholes the higher taxes will become.  If taxes were very low avoiding them would only need to be a little bit complicated.  As taxes rise most taxpayers would take prudent steps to avoid incurring them if it is simple and economical to do so.  High wealth tax payer's desire to invest in tax avoidance mechanisms helps keeps tax levels low.

If it is to be believed; JK Rowling famously admits to paying UK taxes without taking advantage of avoidance strategies and yet she is still one of the richest people in Britain.  How can this be?  She is a world wide best selling author and clearly has won substantial royalties all round but it is not like she owns and controls a giant global petro-chemical industry or media and aviation empire.  Her publisher's should be earning a few bob too and on other writer's works also.  Could it be she is showing that almost all the truly well-off do not have their money as visible as she does.

Apparently most multi-millionaires are self-made.  Is that because they fritter their spoils away in later life or is that because their eventual beneficiaries have trust-funds and off-shore investments made ready for when the time comes to pass it on.

The various means of tax planning for the wealthy are not the exception they are the norm.  You do not get to earn a fortune to let half of it vaporise in death duties, you do not have that mentality.  You do not pay more in tax than you can legal avoid either.  And the more that is at stake the more time and fees you will invest to hold-on to it. That is just good business.

None of this simple commercial reality for the taxation of the prime yielding human-herd tax-livestock is not known to the policy setters.  They understand.  And more; they understand that the ultimate tax-avoidance includes exiting the nation with all your wealth.  People would rather be rich overseas than taxed into poverty.  People would rather live on their wealth than slave away to earn nothing after the tax-man has took it all.

There is a competitive market in the provision of a national tax-efficient environment and top of that game has been for years the United Kingdom - not for the residents, the domiciles, but for the non-domiciles it is treasure island incarnate, with shops and shows and glamour.  The UK is the biggest off-shore provider, especially in combination with its extra little tax havens dotted here and there about the world.  For the international money/power super-rich there has been nothing else like it.  Until now!

It is becoming apparent that for the globe-trotting ultra money clique the USA is sharpening its offer of hush-hush trust facilitation and with good reason.  Having their money in your banks keeps your 'printed' money in demand and, in the event of a global central banking funny 'money' over-issue crises there is nothing better than to have the rich of the world all keeping their eggs in your basket to focus their attention on keeping the USD then durable for a while longer still no doubt.

The Suffocation of Economic Central Control

Centralised control, whether 'the state' acting as if the market or, ostensibly, the 'market' acting as if 'the state', fails (as does tickling yourself fail to raise a chuckle).  What central 'control' is supposed to do is 'sense and react' and therein lays the two fundamental problems:

1/. the input is always going to be faulty (how can such a system be sensitive enough, accurate enough, smart enough to take account of every permutation)?
2/. the output is always going to be faulty (how can such a system be reactive enough, delicate enough, effective enough to take account of every permutation)?

And that does not take account of the two secondary problems, (problems that would remain even if the system of centralised control, be it faux market or state, did not suffer from the two fundamental problems):

a/. the centralised control is always going to attempt to manipulate the market by way of attempting to provide favourable conditions bias to suit its own agenda
b/. the faulty outputs and bias manipulation of the centralised control will distort the market away from the form it would otherwise naturally be drawn to.

Centralised control treats the economy as though it is one big thing and that then all the micro commercial activities will feed from that initiative, as if little piranhas swarming onto whatever gigantic carcass has been fed to them.  That may be fine for feeding identical fish but the economy is rightly comprised of totally disparate elements - it is an ultimately diverse ecosystem.

The great thing about diverse ecosystems is that, left alone, they manage themselves.  There is still a form of centralised control of economies but that is because: each and every element of the whole is a self regulating economy in itself.  The effect of each element, free to act in its own best self interest, is that a system of each element's independent economy acts upon a plethora of spontaneous and autonomous sub-economies to effectively create a whole.

It is not only imposable to replicate or replace the effectiveness of this type of system, it is unnecessary to try (unless the intention of influencing is for one sub-economy to do so in order to attempt to change the whole for reasons of self-interest).  It is unnecessary to try to replicate a system of sub-economies because: since the sub-economy system is so refined and reactive it cannot be bettered for servicing the interests of the sub-economy system as a whole.

There is no such thing as 'the economy', it is just a conceptual idea to explain the 'system of sub-economies' as a whole, just as there is not such thing as a forest, that is just a word for the conceptual idea of many trees, plants, animals living together in one place, symbiotically acting as a if a whole too.

Separation of the Economy from the State

Whilst we have 'the state' I do not see how it can release the control it effects over economy if only because politicians, businesses and other special interest groups will always have control or influence over the government and therefore the institutions of the market. It is not possible to have those acting as 'the state' submit that status because, by the very existence of 'the state', there will always exists a means for 'special interest groups' to have influence and control, especially influence and control over the economy.

It is not possible to have these institutions of the market and of government constructed and enforced in such a way that there is a separation of the economy from the State. The cause is not the 'way' the institutions of the market and of government are 'constructed and enforced' but rather, simply, that 'the state' and its institutions exist and therefore have influence and control. Clearly: if we did not have 'the state' we would not have that means for special interest groups to influence and control the economy or need to attempt to construct and enforce a government in such a way that there is then a separation of the economy from idea of 'the state'.

Capitalism, Corporatism and the State

There does not have to be a 'state' for Capitalism to work, indeed the free market is the very life-blood of a healthy economy and of a harmonious human society when unencumbered by 'the state'. The less 'the state' the more competition arises, the more competition arises the broader the economic and social benefit.

 

Corporatism is another matter and the two, Capitalism and Corporatism, should in no way be confused. Corporatism is utterly dependent on government to grant it faux personage, indemnity, patent, monopoly and privilege. True that Capitalism will seek-out whatever benefit it can derive from whatever medium in which it is set; and that includes taking whatever advantage it can derive and coerce from 'the state'. When Capitalism so feeds from 'the state' it morphs into Corporatism. That is not the fault of Capitalism that is one of the many faults of 'the state'.

End 'the state'. End Corporatism! Long live Freedom. Long live Capitalism. Long live the Free Market.