Friday, October 25, 2013

Interlude II - Look to the Old West

How would you describe "offshore" tax havens as one part of the global economic system that exists today?

One major problem with a capitalistic economic model is that is doesn't incentivize goodwill. Proponents would say that the corporations and systems it fosters are by definition the most effective, and therefore the most beneficial to humanity, but the more time goes on, and the more globalization brings capitalism to the far corners of the Earth, the more we can see that that isn't necessarily the case. Only so much voluntary goodwill exists in human society, and the history of capitalism has shown that mandatory taxation is the only way for a civilization to even begin to address issues of social justice.

Take that process as it's existed so far in the United States, for example, and apply it to the much bigger pool that is the entire world, and tax collection naturally becomes much more complicated, the same as it was in America in the 19th century when the nation was a patchwork of states, territories, and lawless wilderness. Eventually, everyone wanted a say in the united government that was emerging, and this desire to participate forced the western populations to come in from the cold, so to speak, and accept more orderly economic strictures.

"Offshore" tax havens, as such, are a natural symptom of market globalization that, while bad, certainly are part of an overall leveling-out process that I think will eventually be a net benefit to social justice by enhancing job opportunities and wages in the less-developed world. Havens are popular now because they're easy for anyone who can afford the requisite staff of lawyers, and because they, like milking a newfound gold claim in 19th-century California, are still essentially legal even in the most egregious circumstances.

Despite this, what we've seen this year could be the first real stirrings of opposition to the current system of tax avoidance. If so, however, what will ultimately be necessary is a totally new global economic system wherein the rules for taxation are consistent from country to country, and in which tax payments can be extracted from foreign banks similar to the process by which criminal persons are extradited from foreign nations today.

This, again, will follow a similar model to the one that united the states. It will not happen quickly, and not everyone will come along willingly, but eventually global governance will have evolved to the point that it will be to the benefit of nations both large and small, both prosperous and developing, to come to the table, and the more they desire representation, the easier it will be for the world community to remove tax shelters from the equation--and people will be better off for it.

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