This is a lovely little piece of logic from one of the loons to the left of us.
The assertions he makes in the section cited just above here are, as far as they go, significantly (but not wholly) true. As we’ve noted many times in the past, British tax havens, for example, provide, among many other things, the bedrock of a respected legal system — which is, among other things, why Russian oligarchs like to spar it out in London courtrooms, not in Moscow.
Excellent, one of the reasons the Russians use Cyprus is indeed as I have asserted. Not for tax reasons, not to get out of a tax jurisdiction, but for legal reasons, to get into a legal jurisdiction.
To get the cash out of Putin\’s reach. Score one for Worstall.
But where I\’m wrong is that even if this is true it should not be:
Both these above points get us into a major, existential question about what the offshore system is and does. It provides escape routes for the wealthiest sections of society, from the laws and rules that bind everyone else.
If a country has unjust laws or is poorly governed, should we consider it a good solution to provide the small, wealthiest and therefore most influential section of the population with offshore escape routes from those unjust laws, leaving everyone else in the lurch?
Is this really a wise route to better governance?
Of course it isn’t. And it’s nonsense to suggest otherwise. It may be perfectly rational for investors to take advantage of the offshore escape route, but that isn’t the same as saying it’s a good thing. Not at all.
Consider a thought experiment, where capital is bottled up in the country where it is earned, and Russia’s élites also have to make do with the Russian legal system. Suddenly the most influential section of the population – including many of those in government — would have powerful incentives to make an unjust and capricious legal system less unjust and less capricious.
Allow me to transalte that in the most objectionable manner possible. The Jews who escaped Germany should not have done so. They should have stayed and the incentives to avoid the Holocaust would have been such that they would have made the unjust and capricious Nazi system less unjust and less capricious. Gassed themselves in public perhaps in order to shame Eichmann into better behaviour.
Agreed, that is objectionable. But it is exactly the same logic as Shaxson is using there.
Note that Shaxson is also denying anyone the right of exit. If your country is fucked up then you\’ve got to just hunker down and deal with it. The idea of buggering off to somewhere else with a better governance must not be allowed. I\’m sure the hundreds of millions of migrants would be overjoyed to hear about this theory.