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Uncontrolled Warrior Princes Dressed Up As Ministers

Kitty Miv, Editor
23 August, 2012

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

Canada rounded off a week of pro-trade activity by announcing a mission to the Dominican Republic and Haiti. Presumably the trip forms part of the grandly-titled Global Commerce Strategy, which will see Trade Minister Ed Fast carrying out country-wide consultation on setting targets for the next batch of international trade deals. Also this week Angela Merkel and Stephen Harper pushed towards the goal of an expanded EU/Canada trade deal. If only people like Francois Hollande and Vladimir Putin set as much store by trade. 'Trade follows the flag' goes the mistaken saying; it's the other way around.

Unlike Canada, India wouldn't know a free-trader if it came face to face with one at a Commonwealth tea-party. Despite that, Chile is bravely setting out to negotiate an FTA with the sub-continent. Best of British luck is all I can say. Actually Chile is South America's Canada in this respect. Free enterprise and free trade seem to be in its DNA. Why is it that some countries have all the right instincts while others get everything wrong? Not going to try to answer that question right here and now; more than 500 words on any one subject and the editor starts to twitch. When I retire I'll write a book about it.

Hobby-horse time, so skip to the next paragraph if you don't like it when I moralize. This is an encomium for Angela Merkel, who is trying very hard to stick to the deal Germany did with Switzerland over bank deposits in the teeth of opposition from her socialist opponents. In the USA their attitude would be called class-envy, but of course we don't have classes in Europe any more, do we? Anyway, the duty of an opposition is to oppose, but what gets up my nose is that they think it is OK for the State to steal. Specifically the state of North Rhine Westphalia, which is specifically and blatantly stealing computer data from the Swiss. OK, we all know it's normal for the State to kill people, whether or not they admit to it, and to lie (they all do it all the time and they don't make the smallest pretence about it). The only one of the 10 Commandments they don't break is the one about neighbours' wives, and if for State you substitute Head of State, I'm not even sure about that one. It beggars belief that a state (I don't like the capital letter) might expect its citizens to obey laws which are comprehensively broken by their rulers. In history, this has led to the collapse of empires, and beyond question it is one of the main factors behind the moral bankruptcy of modern society. Want to know who to blame? Go and talk to North Rhine Westphalia. For instance.

Belgium is a puzzle. As a country, it defies rule number one, which is that language = country. You can have multiple countries with one language, but you can't have one country with multiple languages. Dialects, OK, but not languages. So, French and Dutch (they call it Flemish) doesn't go. Arguably, it is only EU glue which has kept the improbable animal in one piece over the last fifty years, and a good part of that glue is Brussels, the EU's capital, which is also economically crucial to Belgium. Whether the country's cultural complication has got anything to do with its awful tax system is hard to say, but it certainly is a fact that tax levels are very high. According to a Molinari Institute report, it costs an employer EUR2.45 to put one euro in a worker's pocket. The real reason is probably that the eurotrash (EU officials and their hangers-on) don't pay tax, so someone else has to pay it for them, being the downtrodden Belgian worker. Not to forget Belgian dentists, however, who were the prototypical investors in Eurobonds before they became another kind of eurotrash. I didn't need to go to a Belgian dentist while I was in Brussels, so I can't tell you whether they ask for cash or not, but I can guess.

So the UK's HMRC continues its role as nanny of the universe by destroying the Cyprus QROPS industry, fresh from its blitzkrieg of Guernsey's 300 QROPS operators. For decades, the UK tax authority has forced UK savers to keep their pensions money in approved institutions and will not allow them to convert more than 25% of the money into cash when they retire, so that they have to take the miserable annuity rates offered by the few remaining UK pensions companies, which have been comprehensively ruined by Gordon Brown's tax grab and the government's desperate attempt to keep interest rates low on its debt pile by printing money ('quantitative easing'). Not surprisingly, the increasing numbers of UK expats don't like this thieves' compact, and have used loopholes to extract their hard-earned assets from the Treasury's grasp. QROPS (don't ask) allowed this, but HMRC realized it had made a mistake, and is now back-tracking for all it is worth. Another example of how governments will steal your money by the back door if they can't take it 'legitimately' through the front door.

This seems to be 'knock India' day in Kittysville; but they deserve it. No doubt there are plenty of well-educated, internationalist, fair-minded business-people in India; but none of them seems to end up in government. The normal scenario is playing itself out with the new finance minister, who indeed may have been a well-educated, internationalist, fair-minded person until he took the poisoned chalice a month ago, and came face to face with his devious, merchantilist, self-serving colleagues, and is now rapidly being undermined. The problem with the Indian administration is that it is incoherent. On Monday, white is black, on Tuesday it's purple, and by Thursday it's back to being white again, thanks to the internecine wargames carried on by a series of uncontrolled warrior princes dressed up as ministers. This is about Vodafone, in case you hadn't guessed. I bet they wish they'd put the money into Russia instead, or China, or Brazil. As for me, I did some business in India once: my number one manager said afterwards that she hoped never to have to do business with another Indian in the whole of her life. I lost a little bit of money, but more importantly, I lost belief in a whole country, and nothing has happened since to change my mind.

Kitty's Encomiums and Execrations

Methodology: each week (this is the 16th) three countries are given encomiums and 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 has a ranking of – 1, 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.

The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but hopefully one day they will become useful for decision-making, even if for the moment it is all just an amusing game. For any country in negative territory, you should think carefully before starting a business there.

Kitty's Encomiums:

Canada waving flags for trade

Chile wants an FTA with whom??

Germany tries to honour a commitment

And Kitty's Execrations:

Belgium still has dentists, but is it a country?

India loves foreigners (to steal from)

United Kingdom hates expats

Ciao

Kitty

 


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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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