Other recent
entries in this blog:
19 April 2009
A Penny For Your Thoughts
The Pirate Bay judgement in Sweden last week, in which the four leaders of
the download facilitation site were sentenced to one year in prison and ordered
to pay SEK30mn (USD3.56mn) in damages (they have appealed), is a victory for
the established music distribution industry, but it is just one skirmish in
a long-term war which the old-style providers cannot win. A much more significant
event during the week was the French National Assembly's rejection, against
the wishes of the government, of the 'three strikes and you're out' law which
would have required ISPs to switch off persistent download offenders. Just as
French parliamentarians refused to bow to the authoritarian agenda of the old
guard, so in New Zealand recently a popular outcry stopped the government from
bringing in a similar law.
It was time that the received wisdom of the sanctity of 'the rights of copyright
holders' received a jolt. In recent years, legislators around the world have
been gaily extending copyright periods, introducing 'droits d'auteur', slapping
fees (taxes) on the re-sale of art works and so on. These rules are anti-democratic
and anti-cultural, on a level with book-burning, and are testament to nothing
other than the lobbying power of the established publishing and distribution
industries.
Copyright and royalty laws and structures are mostly of very modern provenance,
and are a direct result and reflection of the particular distribution systems
that have grown up. Although the Romans issued copyright-style privileges to
booksellers, copyright in the written word didn't really have much of an impact
until well after the invention of printing, and composers didn't start getting
royalties until the mid-19th century. Recent as they are, however, it is absurd
to try to translate these out-dated concepts into the new world of Internet
distribution.
That is not to deny the rights of originators, and even to some extent distributors,
to be rewarded for their labours; it is just to say that the current model is
dead, and needs to be thrown out, lock, stock and barrel.
As in so many other spheres of economic activity, the Internet is disintermediating
the middle-men, giving the end-consumer direct ways of accessing and enjoying
the words and music she wants. That much is obvious: what is missing, or at
least unclear, is the mechanism by which a market discovery mechanism can be
set up through which consumers can reward originators. And originators themselves
will find that the destruction of the old models of content marketing will be
creative for them. There are substantial barriers to entry in many branches
of publishing, as anyone knows who has tried to find a publisher for a book,
or a recording company for a new group.
In the last analysis, words (literature), the graphic arts and music are types
of entertainment, and the Internet will enable direct delivery of a far greater
range of types of entertainment to users. Already in the first decade of the
21st century entertainment and sport are perceptibly merging into one another,
and this process will continue at a rapid pace during the decades to come, as
the world gets richer, and elective activities gradually come to replace more
and more of what had been known (for only 400 years after all) as 'work'.
Another notable feature of the ossification of the delivery of cultural entertainment
that has accompanied the growth of the copyright phenomenon in the last two
hundred years is the distinction between 'professional' and 'amateur'. Amateurs
might indeed sing at karaoke bars, but only professionals get paid for singing.
This distinction will break down during the next 20 years as content becomes
universally available through the Internet. Early examples of universal providers
such as YouTube have run into copyright problems, not surprisingly, but by 2020
technology will routinely enable commercial relationships to be set up between
any willing performer/consumer pair.
We can label such technology KISS (Kontent Identification and Subscription
System), which will come into universal use, even in China, with the value of
any given piece of content, regardless of its origin, calculated in real time
based on its audience, and charged to the (compulsory) account of the user.
Content providers (call them musicians, writers, artists, or whatever) will
still able to put their own price on a work, and to withhold it unless the price
was paid, but hardly anyone will do so, due to the difficulty of marketing what
cannot be seen or experienced in advance. Under the KISS system, the cost of
experiencing a piece of content is incurred incrementally during the experience,
so that if after two seconds you know you hate what you are experiencing, you
just switch it off, and it has cost you very little or even nothing.
KISS technology can be applied to all forms of entertainment, including music,
books, magazines, blogs, news, football, painting, and a range of new art-sport-forms
which will develop under the stimulus of the new media, such as virtual beach
volley-ball, which can be either watched (you pay), or participated in (you
get paid).
One useful by-product of KISS will be the creation of an objective measure
of an individual's 'contribution' to the common weal; and if couch potatoes
come under attack in due course in the way that first smokers and now drinkers
and fatties are being ostracized, it will be those individuals with high KISS
ratings who get the best treatment in society and privileged access to the scarce
resources of our threatened planet. Scary? Not really: it's just a way of redefining
money for the coming post-capitalist world.
05 April 2009
Thank You, Gordon, Now Here's The Money For Your Bus Home
Just in the last week, the outlines of the 'new world order' which will shape
the international fiscal landscape for the next few decades have become perceptibly
clearer, with low-tax jurisdictions rushing to sign information exchange agreements
with their high-tax tormentors in order to avoid inclusion on the OECD's new
blacklist, which most of them have indeed escaped.
Before giving up on offshore as a bad job, however, it is worth remembering
what has actually changed, and what happened last time that the OECD bullied
low-tax countries, in 2000. On that occasion the OECD wanted two things: transparency
and higher taxes. It got transparency, as dozens of offshore jurisdictions enacted
'know your customer' rules and banned bearer shares. But it didn't get higher
taxes - the offshore jurisdictions banded together and shamed the OECD into
agreeing a 'level playing field' which maintained tax competition as a respectable
concept.
This time the OECD is attacking secrecy, making sure that high-tax country
citizens cannot hide their wealth or income away from the eyes of their home
tax authorities. But the OECD is flogging a dead horse: fishing expeditions
by tax authorities in the UK, the USA, Ireland, Germany and France have made
offshore concealment a dangerous and expensive game to play. No sensible, seriously
wealthy person would any longer take the chance of evading taxes on a major
scale. And they don't have to, anyway, there are plenty of legitimate ways of
protecting your wealth without hiding it under a rock on a Caribbean island.
One of the best ways of protecting yourself from taxes is by not living in
a high-tax country, and the counterpart of the OECD's efforts to prise open
the offshore shutters will be an ever-increasing stream of tax-emigres. Something
that the tax authorities don't 'get' is that taxation is a bargain with two
parties - the taxman and the taxpayer. Taxpayers pay because the bargain is
worth it to them, and for the last fifty years wealthy people have accepted
the bargain because they were able to protect most of their wealth from taxation,
using legitimate or illegitimate means.
The behaviour of the cloth-eared British Treasury over 'non-doms' is a perfect
example of how to kill the goose that was laying such a rich harvest of golden eggs.
New rules apply an annual GBP30,000 charge to any long-term non-domiciled UK
resident (not born there, roughly speaking) in addition to local-source taxation.
One in four resident but non-domiciled taxpayers in the UK who responded to
a recent poll regarding the changes to the non-dom tax regime have already made the decision
to leave the country, and another 25% have said they will wait and see before
doing so. Now, do you suppose these are the poorer 50% of non-doms, or the richer?
No prizes for guessing that the richer people will leave, while the poorer ones
will stay.
Something else that the tax authorities don't 'get' is the Internet. There
is no longer any need for a business person, an investor or a company to have
a physical presence in a country in order to operate there. The foreign hedge
fund managers in New York who have been able to treat 'carried interest', ie
their fund management profits, as low-taxed capital gains rather than high-taxed
income will all be on the way to Dublin, Zurich or Cyprus as soon as Congress
passes the inevitable law to change the current regime. All the rich Russians
have already left Moscow as fast as their Lear Jets could carry them.
And this uncomprehending behaviour at a moment when the trillions of taxpayers' money being thrown
at the world's banking sector by short-sighted politicians hang like a toxic
cloud over the rich countries' fiscal landscape. Taxes are going up, make no mistake
about it, and big time. They will have to - but not offshore, where the banks
are mostly as solid as the rocks they stand on. In between the year 2000, when
the OECD launched its anti-offshore rockets, the banking and investment fund
assets held offshore have increased by approximately 500%, and it has become
almost impossible to find anywhere to live at a reasonable price in any offshore
territory with a halfway-decent climate and good Internet connectivity. Now
that the world's leaders are kindly insisting on the removal of the last shreds
of ill-repute from offshore, just watch it grow in the next 10 years!
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Latest
25 entries from all other blogs:
03 May 2009
Time To Get Out Of Money?
04 April 2009
A New Economic Order
22 March 2009
Asset protection, bearer shares and anonymity
08 March 2009
There's No Fool Like A Gold Fool
19 February 2009
Time To Tax The Vegetarians!
17 January 2009
How Do You Achieve The Lifestyle Of Complete Freedom Without Having The First Million In The Bank?
23 November 2008
Please Securitize Me
19 November 2008
You Don’t Know Until You Go!
28 October 2008
Why the Financial Crisis Doesn't Really Matter
26 October 2008
Is Oil Cheap?
14 October 2008
The British Government’s ‘Ill Considered’ Use of Anti-Terrorist Financing Legislation against Iceland and the Wider Implications
07 October 2008
How and Why You Should Buy Physical Gold Offshore
04 October 2008
Thank You, Mr Paulson
22 September 2008
Scam Busters: Second Citizenship and Passport
05 September 2008
Offshore Banking: Failure to Open a Bank Account
29 August 2008
How to Avoid Envy by Keeping a Low Profile
21 August 2008
High Yield Offshore Investment Programs: Do They Exist?
20 August 2008
Blacklisted Offshore: Private Consultant's Opinion
18 August 2008
Why taking a vacation can improve your health – and wealth!
17 August 2008
Alphabet Soup
11 August 2008
Your Ships Come in Over a Calm Sea
07 August 2008
While Offshore Banking Giants are in Trouble
05 August 2008
Microchips with Everything
27 July 2008
Don't Play Poker With Uncle Sam
25 July 2008
Is Dominica Good for Your Offshore Business?
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