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It's either a foolhardy move, or a brave one

Kitty Miv, Editor
04 August, 2016

Kitty's Country Rankings are below, with a description of how they are compiled. This week, as every week, I give out Encomiums to countries which have done Good Things, and award Execrations for countries which according to my highly personal and partial views have done Bad Things.

Britannia may no longer rule the waves, but it is still the world's fifth-largest economy, home to arguably the most important financial center in the world (I'm never quite sure how such things are measured, but it's right up there with New York), and remains something of a force on the world diplomatic stage. It is therefore unsurprising to see so many countries express an interest in doing trade deals with the UK. And, after a worrying period during which the country appeared to have politically decapitated itself, it is also encouraging to at last see the embryo of a Brexit plan emerge, with the Government now keen to sell Britain to key developed and emerging economies.

A word of warning for the UK though: don't get your hopes up too soon. Despite the encouraging feedback the UK has had from the likes of the US, Mexico, Australia, and New Zealand, this isn't going to be plain sailing. Even relatively simple bilateral free trade agreements can take ages to conclude. Then, after months, maybe years of ironing out the wrinkles, negotiators face the prospect of watching all their hard work disappearing down the drain as legislators reject the texts they put together so painstakingly.

Few people thought Brexit was going to be easy, but combined with the likely tortuous process of securing an EU withdrawal settlement, securing a network of suitable free trade deals will probably take years of blood, sweat, toil, and tears. Still, the British will hope that at the end of this arduous journey, they will have something positive to show for it.

As we turn our gaze across the Channel, the French could be entitled to say that they have little to show for their own sweat and toil. This is because France now has the dubious honor of taxing its workers the most out of any country in the EU. Yet the study which came to this conclusion suggests that all this tax hasn't necessarily been spent wisely by the Government (really?).

Perhaps it is too simplistic an extrapolation to make, but you'd think a country at the top of the tax league table would reward its citizens with first class public services. But it doesn't necessarily follow. In a 2007 study by Canada's Fraser Institute, France came 17th out of 23 industrialized nations for public sector efficiency. It is difficult to imagine that things have changed much almost a decade on, with public spending the equivalent of 56 percent of gross domestic product in 2014, according to the Heritage Foundation and the Wall Street Journal.

It is probably fair to say that the world hasn't quite got to grips with Bitcoin. And you could say that's because there's nothing to physically get to grips with, apart from, of course, your smartphone or computer mouse when you decide to open your "virtual" wallet and send a string of code to an invisible purse located somewhere else in the websphere.

I'll be honest, the concept of "virtual" money still baffles me, despite attempts to "unbaffle" myself. Virtual currencies still feel nothingy, and illusory. As a Florida judge put it recently when dismissing a case against a man for allegedly laundering money using Bitcoin, virtual money cannot be stashed under the mattress like good old-fashioned cash. Having said this, virtual money is, apparently, the future.

Several tax authorities have issued guidance on digital currency, under the general Bitcoin umbrella, and financial centers are now in something of a race to capture as much Bitcoin business as possible. So, if we're giving points for innovation, Gibraltar should be at the head of the line after its stock exchange become the first in Europe to list an instrument invested entirely in Bitcoin.

It's either a foolhardy move, or a brave one. But they've said that about a lot of successful inventions.


Kitty's Encomiums and Execrations

Methodology: each week (this is the 147th) one or more countries are given encomiums and one or more are given execrations. Those are the entries below with descriptive links. In the following week, each encomium counts as + 1 for that country, and each execration counts as – 1, being added to that country's existing score. Over time, therefore, a ranking will build up for each country, and further countries will join the listing. Germany is at minus 2, since in the second week it had an execration and in the first week it had an encomium, leaving it at neutral; then it had an execration in week four, thus dropping to – 1, and another one in week six, dropping to – 2; finally in week 13 it got something right, so it went back up to – 1; then in week 16 it gained a further star, so then it was in neutral territory until week 23 when it dropped back to minus one, but reverting to neutral territory in the following week, then dropping to minus one in week 50, and back up to plus one in week 51, then to plus two in week 52. Some weeks ago it dropped a place, but then quickly recovered one step. Etc etc.

The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but as time goes by they are becoming useful for decision-making. For any country in negative territory, you should think carefully before starting a business there.

Kitty's Encomiums

United Kingdom toils

Gibraltar brave

Kitty's Execrations

France burdened




About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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