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The UK has Benefited Enormously from Successive Waves of Immigration

Kitty Miv, Editor
23 January, 2014

Kitty's Kountry Rankings are below, with a description of how they are kompiled. 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.

David Cameron and George Osborne have been EU-bashing again this week, and they mean what they say as regards the financial transactions tax and financial services regulation. It's not clear that they mean what they say as regards immigration: they have to pretend to be against it in order to placate would be supporters of UKIP and other lunatic fringes. In fact, as they know very well, the UK has benefited enormously from successive waves of immigration resulting from illiberal and repressive policies pursued by successive Continental tyrants, from Huguenot weavers in the seventeenth century to Jewish scientists in the 20th. Countless surveys have shown that immigrants add value to the UK, work harder and are less of a drain on the social services than native Brits; but if they want to get re-elected Tory leaders have to pretend otherwise. Cameron's rather vapid demands for change from the EU are somewhere in the middle of these two scenarios: he can see that the EU would benefit from major changes to its economic policies, and can get electoral benefit from making threatening noises; yet in his heart he probably doesn't believe that changing the EU is feasible.

That's sad, because the UK's economically liberal, internationalist stance, shared to some extent by Denmark and the Netherlands, along with some of the newer Eastern European member states, is badly needed as a counterweight to the statist, Colbertian attitudes of the core Continental EU members led by France and Germany. Sensible EU leaders, and there are some, know this, welcomed the arrival of the UK, and would regret its departure. From the 1970s to the 1990s, the general stance of the UK towards Europe was positive, and the British establishment tried hard to be involved, usually with good results. That has changed. It's trite to say that the Tories under John Major or Labour under Tony Blair were anti-European, rather than just being euro-skeptic, yet that was the period during which the Westminster establishment disengaged from Europe; and the subsequent Tory administration has had a surly, combative attitude towards Brussels which has done nothing to burnish British credentials. Now it's too late: win or lose (and most likely the latter) Europe has hitched its wagon to the "social partners" model and has ditched economic liberalism as a guiding principle. There probably still are economic liberals in Brussels, and on the margin, in such areas as trade relations, they are still effective, but to this day, the only country in Europe that has had a Thatcherite revolution is the UK, and we are long past the point at which the British could have affected the Continental drift towards nanny statism.

This column thinks that the British should leave, by all means preserving the single market (itself increasingly indistinguishable from the WTO's regime and other multilateral agreements), but dumping the regulatory carapace that the EU is imposing on financial services and the labor market, and becoming an independent trading nation once again. If Britain's rulers really meant to do that, and if Brussels really believed they meant it, then there would be a faint last chance for Europe to halt its decline. Otherwise, and much most probably, Osborne and Cameron will continue to whinge, Europe will continue to ignore them, and the whole caboodle will decline gracefully into irrelevance.

So the Turks & Caicos Islands mean to "broaden the tax base" and reduce taxation. This is the countrylet that had to be saved from a financial mess of its own creation by ex-parent the UK, largely due to uncontrolled governmental extravagance, which then refused to implement a VAT for assorted specious reasons, against the advice of just about everyone that has an opinion on such matters, and finally told a credulous nation last November that higher taxes did not imply any increase in the cost of living. Now, I ask you, how are they going to achieve their latest miracle without a GST or a VAT? Perhaps they will invent a new name for it. How about a purchase tax? There used to be one in the UK prior to VAT. Of course, it's even more regressive than VAT, and fairly deadly to commerce. But that won't stop the bumbling incompetents that pass for ministers in the T&C. The Governor (a Whitehall appointee) must have nearly choked as he had to announce their plans in his "throne" speech.

There is much to admire in Canada's economic management in recent years: taxes have fallen, the country's finances are on a sound footing, and Trade Minister Ed Fast has made himself a beacon of free trade to the whole world. But I cannot support the Government in its Cromwellian efforts to bump up tax collection by paying sneaks to inform on their fellow citizens. It goes on all the time, I suppose, without any encouragement from the authorities, fuelled by jealousy on the part of the informants. To add cupidity to that jealousy is to pander to two of the nastiest aspects of human nature. At the minimum, the Government should publish the names of the informants and details of how much they are paid. That way, right-thinking people can ostracize the bounders! But it won't; and you can be sure that no amount of enquiry under Freedom of Information legislation will extract the data. Very distasteful.

One of my editorial colleagues has put the boot into Argentina's hapless Government in an article in this edition of Global Tax Weekly, but I cannot forbear to mark it down for taxing exports. The fact that the Government is forced to take such action is the measure of its inability to run a sound economy: there are innumerable reasons why "triangular" trading operations take place, and only some of them are deliberately deceptive in transfer pricing terms. The Argentines would like to flatten out international corporate structures so that supply chains are reduced to linear simplicity; but it is like trying to shrink a balloon by squeezing it. Clever trading multinationals will find a way around the rules, of course, but worse, the result will be to reduce Argentina's volume of trade as it becomes a less and less attractive place in which to do business. Every one of the Argentine Government's recent attempts to prevent its citizens from moderating the impact of its crazy policies simply has the effect of making their lives less worth living.

Kitty's Encomiums and Execrations

Methodology: each week (this is the 88th) two or three countries are given encomiums and two or three 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 neutral, 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 and now it's on neutral again.

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 against the EU

And Kitty's Execrations:

Argentina squirming

Canada out of order

Turks & Caicos clueless




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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