Socialists complain about jurisdictional competition as a “race to the bottom,” as more successful societies put pressure on the less-successful ones to lower taxes, relax irrational regulation, and terminate failed state boondoggles. This is seeing things from the perspective of the state. Viewed from the perspective of the individual, jurisdictional competition is a race to the top: a competition between jurisdictions to provide the better environment for starting or expanding a business, pursuing a meaningful personal goal, or merely living free from the ability of other people to force their views of how you should conduct your life. America benefited greatly from general jurisdictional competition in previous eras, and has suffered from the lack of it more recently. Gaining an attractive partner and a friendly competitor for the talent of citizens and other productive newcomers would significantly expand national and personal options in coming decades.
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Samizdata quote of the dayJune 22nd, 2016 |
 9 comments to Samizdata quote of the day |
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I love the slight irony here, that one of the EU’s more useful innovations (free movement of people) which helps create proper competition between jurisdictions (don'[t like the tax rate – then up and leave) is in fact one of the big sticks that the leave campaign is using to convince people to leave – although this does also worry me, as it suggests many of those who will vote as I will have a very different idea about the future of the UK.
“as more successful societies put pressure on the less successful ones to lower taxes, relax irrational regulation and terminate failed state boondoggles.”
I was born in 1947 and have NEVER seen this once – EVER
1945 – Germany – US Democrats, who were in charge, wanted to send Germany back to the Stone Age – Ludwig Erhard would have none of it and chose free markets, rule of law and so forth
1945 – World Bank and IMF created and both run out of Washington DC. They have told countries in trouble to RAISE taxes, regulate like hell and so forth.
1945 -1991 – CIA, the Democarts and US University system marveled at the economic powerhouse, AKA the USSR, and overestimated their economy by a factor of 3.
1958 – Lee Kuan Yew chucks Communism and the UN bullshit and created the most successful post WWII economy by doing the direct opposite of Socialism/Communism which had taken over virtually all of Asia, save Hong Kong, Taiwan and Japan. World disapproves vehemtly.
1973 – Chile – Communist Allende elected and tries to turn Chile into Cuba. World applauds enthusiastically. Pinochet and military throw the asshole out, listen to the Chicago School Economists and Chile is the success story of South America. World turns on Chile.
1977 – Israel – Menachim Begin elected and ends Laboor party rule of Israel’s Socialist economy. World disapproves. George Bush One pressures USSR into releasing 1 million Soviet Jews. Jews arrive in Israel, are greeted by left and told “vote for us.” Russian Jews, after living under Communism for 70 years, tell the Labor Party, Ha’artez and Histadrut and so forth to Fu&* Off – that they had lived under Communism and didn’t want to ever live under it again. Their votes for free market/economic liberty parties allowed for “Start Up Nation”, the most entrepreneurial post WWII economy on the world. The Price? Israel now reviled by the UN and Left and that has nothing to do with their decoloniziung their own land.
1978-1980 – Japan – When I was at Harvard Business School in these years getting my MBA, and learning by the Socratic Method, we were deluged by dozens of cases about Japan’s success all featuring MITI, the top down economic bureaucracy purportedly the reason for Japan’s success. The cases totally ignored the three Americans who made it possible: McArthur, Deming and Dodge who were the real heroes. Those guys didn’t sit well with the dirigiste Harvard faculty who had heads up their collective asses, but the Japanese knew what happened and said so.
and on and on and on
JG III, well said. It is a nice theory that jurisdictional competition will trigger such desirable outcomes but it doesn’t seem to happen in practice. Inside the EU all the member states seem to be heading the wrong way, merely some slower than others. Freedom of movement certainly has led to citizens of less successful member states moving to more successful member states but this doesn’t seem to be having a corrective effect on the policies of the unsuccessful member states. If I’m wrong about that, I would like to know it.
That is not how socialists (or welfare-statists, who are not the same thing) see it. They see “pressure … to lower taxes on business at the expense of the middle and working classes, relax useful regulation that imposes any costs on business, and use state boondoggles to subsidize business.”
Whether their view has any merit is debatable at best, but it ought to be stated fairly, not caricatured.
That’s really never how you hear it in the UK or Europe or really anywhere outside North America. Like… never. The left does not give a damn about the “middle class”and sure as fuck never conflates the middle and working class, which is a uniquely American thing to do.
Rich Rostrom, you are getting this wrong, not Mr Bennett. In my line of business, where I read lots of leftist critiques (such as from the Tax Justice Network, a body that goes on about “tax havens”) for instance, the standard argument is that tax competition hurts the poor (yes, really). Go and read the propaganda of Christian Aid, Action Aid, and other bodies.
It may well be that some critics of a “race to the bottom” on tax may also suggest that the “middle class” lose out from this, although they would be regarded as chumps, for the simple reason that more and more of the mass affluent of the world experience what it is like to work and live abroad, to travel on cheap airlines, to see how other nations do things.
The great mass of the UK public now travels abroad on holiday, thanks in part to the freedoms since 1979 to take money abroad without hindrance. There is also no doubt that countries’ reductions in corporation tax have been driven by a competitive race to cut such taxes to maintain an edge.
There are of course groups that are harmed by deregulation and changes in capital flows. Think of those taxi drivers who are objecting to Uber, for instance, and other disruptive business models. Whether they are “working class” or other is a matter of terminology. Mr Bennett’s point stands. I also recommend the whole of his article.
In my experience the libertarian right and the left in general have some similar concerns but use different terminology and misunderstand one another. More usually the left misunderstand the libertarian (or classical liberal) right to a much more serious degree (and ascribes evil motives to classical liberals et al) while “our side” has a more complete understanding of the left but I still think there is some misunderstanding.
For instance those on the left will be concerned about crony capitalism, which they see as being the true face of capitalism. We could take the view, as I think many classical liberals do, that this misunderstanding is wilful but I prefer to think that it is a genuine misconception. There was a thread here some time ago about how classical liberal economics is counter-intuitive, I myself do not think it is counter-intuitive, quite the opposite. I could ascribe malice to the author(s) of that thread but I do not do so, preferring to learn from how others perceive the same ideas, issues and debates.
I recognise what Johnathan Pearce is talking about when he refers to the work of the Tax Justice Network and fellow travellers. I think such organizations think along the lines of “we want to do good works” and perceive anyone who opposes them as being evil, as it is “obvious” to them that anyone who opposes “fair” taxation is wilfully choosing their personal wealth over healthcare for the poor and sick, food for starving children, etc. It doesn’t matter that we have different ideas about how to resolve the issues they are concerned about, they unthinkingly ascribe evil motives to anyone who opposes their strategies in even the slightest way.
I also recognise what Rich Rostrom is talking about. There are many species of socialist. We fall into dire error if we lump all those on the left together and fail to distinguish them by their many differences in opinion. Like it or not the majority of people under 30 are utterly convinced of socialist notions and we need to understand their assumptions – assumptions moreso than arguments I think, as no rational debate will be effective if it doesn’t shake false assumptions about the way things are – in order to have any hope of prevailing in the long run.
@Johnathan Pearce – June 23, 2016 at 7:36 am:
Isn’t that exactly what I wrote? That (in the leftist view) the “race to the bottom” includes “cutting taxes on businesses at the expense of the middle and working classes”. To elaborate on this phrase, it means exempting businesses (especially big international businesses, which are the most mobile) from taxation, and in consequence either cutting government services (health, education, pensions), or making up the revenue from internal taxes, usually on consumption, which bear heavily on the poor.
Good post – it is true.
We do not want the “unity” of the Roman Empire.
We want different taxes and different regulations in different places.
As was the case before the Romans “unified” the cities of Classical civilisation – and sent Classical civilisation into stagnation and decline.
Such things as Renaissance Italy (which depended on political DISUNITY) and the industrial revolution in Britain cold not have occurred with “European Unity”.
And YES this does apply to the United States.
Up to modern times the Federal government was basically about the military – it was a military “Common Defence” pact, not really about the “General Welfare” in the modern sense.
As a conservative (as well as a libertarian) I think this transformation in the role of the Federal government is a terrible thing.