Economics is really simple unless you believe in macroeconomic quackery as practiced by government. It is about individuals and how they react to incentives and disincentives. We all strive to improve our position by moving from a less comfortable state to a more comfortable one. What different people consider more or less comfortable is personal.
Humans are always moving away from discomfort toward comfort, as they define it. Ultimate comfort is never achievable and that is why we continue to make decisions and take actions. All actions reflect our understanding of how to improve our condition. All attempt to improve our condition. The end goal is not achievable but always pursued.
The New York Post reports:America’s rich are renouncing their citizenship at record levels — just to get richer.
Startling new data from Uncle Sam show that defections by Americans are expected to double this year, largely to avoid any stiff tax bills resulting from the proposed 55 percent hike on the rich — as well as the likely expiration on Dec. 31 of the Bush era tax cuts.
As many as 8,000 US citizens are projected by immigration officials to renounce in 2012, or about 154 a week, versus 3,805 in 2011, or about 73 per week.
“High-net-worth individuals are making decisions that having a US passport just isn’t worth the cost anymore,” said Jim Duggan, a lawyer at Duggan Bertsch, which specializes in protecting assets of the wealthy.
A careful reading of the article suggests the reporter from the Post does not understand economics. His use of the modifier “startling” to describe the data provides that evidence. Why should the predictably obvious be termed “startling?”
Nothing was more predictable from the onerous policies imposed by the Obama Administration than capital flight — both human and physical. Governments do not seem to understand that policies have consequences and that individual actors do not just roll over for some State planner’s utopia. When legislation is harmful, people alter their behavior in an attempt to mitigate the harm.
The Obama economic policies were guaranteed to create a negative response. If the harmful policies are not abandoned, then capital flight will accelerate. For the moment, many are hesitant to make this decision until they see whether a new Administration may roll back some of the damaging legislation.
No government can afford to lose its talent and capital. Yet few governments are willing to recognize that it is their policies which are driving capital away. So, do not be surprised to see capital controls imposed in the US. These will make it illegal or prohibitively expensive for capital, both human and physical, to leave the country. Central planners are not to be denied just because their plans make no sense to citizens. “Loopholes” must be closed to achieve the “greater good.” It is this thinking and process which leads to totalitarianism.
Every government intervention is an attempt to achieve outcomes viewed by the planners as desirable but undesirable by the citizens. If the outcomes were desired by the citizens there would be no need for intervention. By definition, every intervention is an attempt to thwart the will of markets and people. Each reflects coercion to achieve unpopular ends.
The irony of our current situation is that immigration control will be the result. Unfortunately it will not be control of immigration into the US. Instead it will be laws to prevent citizens from emigrating to other countries. Emigration control represents a legal version of the Berlin Wall. Just as unpopular communist policies made it necessary to wall in its populace, so too will unpopular policies in the US. Government cannot allow the productive host to escape because they would have nothing left to feed off.
All Berlin Walls, whether physical or legal, are signs of serious government overreach. All eventually fail, as do the governments which erected them.