**NYT: A RESPONSE TO “A COUNTRYWIDE TALENT EXODUS?”** April 28th, 2009 There is

**NYT: A RESPONSE TO “A COUNTRYWIDE TALENT EXODUS?”**

April 28th, 2009

There is a quite a bit of activity these days around the idea of talent flight due to increased taxes. Not necessarily by choice, but no less than Andrew Lloyd Weber is among the critics. He’s hardly a right wing sympathizer, but he’s given the issue some momentum. Participating in the debate, the NY Times site posted an article, “A Countrywide Talent Exodus?” and it’s attracted a few postings both inside and outside the US, some from the UK. My response, reproduced below, was to a series of UK entries, one suggesting that tax sheltering is a question of political will rather than pragmatic incentives. Another suggested the UK was in better shape in the past. I felt compelled to respond with my usual theme. Again, I’m finding it far more interesting to read the comments than the postings these days. Bloggers are like any public set of intellectuals. They get their position by taking risks, then once they have some notoriety they stop taking them.

When the vast majority of taxes are paid by a small number of people, the people no longer are citizens, they are dependents. New York City is supported by perhaps as few as 50,000 or 55,000 families. If just 1/10th of those people flee, the city will be permanently and irrevocably bankrupt.

As a person with significant knowledge of sheltering methods, their multitude, and ease of implementation, my opinion is that the concept that sheltering is a “political” issue is a mistake. It is profoundly easy to shelter money in this world once you have even a little of it, no matter what country you’re in. It is harder in the more developed countries only because there is more money to be made by keeping it in legitimate circulation. The issue is simply whether it’s worth one’s time and effort to shelter it or not. Al increasing taxes beyond the point of willing payment does is make it worth the time and effort for those with wealth to shelter it. Sheltering is nothing more than a black market. Black markets always develop due to over-regulation and over-taxation. And there is no evidence in history that they can be stopped, except by understanding that such over-regulation and over-taxation is simply the cause of the problem.

As for the results of government in the UK, I don’t understand some of the statements above. You can use government to bend the laws of nature for a short time, but they will always be restored to norms. World competition guarantees that fact. The UK was rapidly becoming one of the poorer countries in Europe, and that trend was reversed in the Eighties. I remember the change. I remember when travel to the midlands and the north felt like a trip back in time to the Second World. That has all changed in my lifetime.

Do not mistake the problem of a state fooling itself because of some math by overconfident economists, justification by incompetent philosophers, the greed of political opportunists, and the consequential use of centralized banking, cheap credit money, and impossible financial instruments as a reason to regulate human commerce. Instead, simply require that bankers hold 20% of any originated loan, and stop offering general credit (credit for unspecified uses) and instead offer targeted credit (for home buying or capital investment) in order to keep people from using it for consumption. Consumption helps laborers in China. It does not help UK citizens. This one “regulation,” which is simply an obvious bit of logic, will stop most financial misuse. It will also have the side effect of disallowing the state from pushing money into an economy, because the bankers will simply not lend if they cannot dispose of the loan without risk.

And, by the way, kill your immigration laws. There is no reason for sanctuary any longer. And, consequentially, there is no need to subsidize London’s business community with cheap labor at the expense of the rest of the country. The problem is just as bad in the US, it’s just less localized, and we have a bigger economy.