The fall of Jersey: how a tax haven goes bust(theguardian.com)
theguardian.com
The fall of Jersey: how a tax haven goes bust
http://www.theguardian.com/uk-news/2015/dec/08/fall-of-jersey-how-tax-haven-goes-bust
89 comments
This is why Cameron wants to have some "red lines" with the EU. He's terrified they are going to strangle The City.
For those of us that are unfamiliar with the special situation with The City, can you perhaps elaborate a bit? I'm curious to learn more about what you're alluding to.
CGP Grey does a really good job giving an overview of the history of The City of London.
https://www.youtube.com/watch?v=LrObZ_HZZUc
Along with another video about the governing structure of The City of London.
https://www.youtube.com/watch?v=z1ROpIKZe-c
https://www.youtube.com/watch?v=LrObZ_HZZUc
Along with another video about the governing structure of The City of London.
https://www.youtube.com/watch?v=z1ROpIKZe-c
Thanks!
the City of London Corporation, the local-government authority for the 1.2-square-mile slab of prime real estate in central London that is the City of London. The corporation is an ancient, semi-alien entity lodged inside the British nation state [snip] the corporation is an offshore island inside Britain, a tax haven in its own right.
http://www.newstatesman.com/economy/2011/02/london-corporati...
http://www.newstatesman.com/economy/2011/02/london-corporati...
What makes it "a tax haven in its own right"? Is it subject to different taxation than the rest of London or the UK?
No, it isn't. It's a strangely-constituted local authority. Combined with the "Guilds", which are effectively trade associations that hold dinners and occasionally public events in historical dress. It's a very cliquey environment, but that doesn't make all the conspiracy theories true. When people say "the city", they often mean "the UK financial industry", in the way that Americans say "Detroit" meaning "the US car industry".
What the "city" may well get is favourable interpretation of complex ambiguous tax arrangements. That's the argument against e.g. Vodafone. What the "city" is afraid of is changes in EU law that seem highly technical but have the effect of damaging its business. The Tobin tax is one example.
(London in general benefits from the stupid way property tax is done in the UK with finite "bands", so a family house and a multistorey mansion pay the same annual tax, but that's a separate issue.)
What the "city" may well get is favourable interpretation of complex ambiguous tax arrangements. That's the argument against e.g. Vodafone. What the "city" is afraid of is changes in EU law that seem highly technical but have the effect of damaging its business. The Tobin tax is one example.
(London in general benefits from the stupid way property tax is done in the UK with finite "bands", so a family house and a multistorey mansion pay the same annual tax, but that's a separate issue.)
The City of London is a special area inside London, which is filled with financial companies.
https://en.wikipedia.org/wiki/City_of_London#Criticism
https://en.wikipedia.org/wiki/City_of_London#Criticism
As best i understand, since Thatcher dismantled UK industry it has been the one thing keeping the nation "afloat".
That's not really what I'm referring to. I understand that you are referencing the status of London as one of the main financial capitals of the world but I'm looking for more about the allusions towards some sort of special tax situation perhaps. Or maybe I'm misreading the allusions.
I think it is not so much about tax as it is about regulations. Something akin to a EU-wide Glass-Steagall.
It's a race to the bottom. There are plenty of jurisdictions (i.e. BVI) with 0% companies. Most of these are used as SPVs to own property, shares, etc somewhere.
If you can pay 1% or 0%, and it doesn't really matter where the company is based, which one do you pick?
If you can pay 1% or 0%, and it doesn't really matter where the company is based, which one do you pick?
The one with the best combination of real estate rates, corporation friendly body of law, best bargain labor pool on training and pay, best distribution access (for physical goods) or network infrastructure (for digital goods), etc etc.
Taxes are a cost of doing business, and yes, businesses will optimize that cost wherever they can, but paying 1% less in taxes isn't a bargain if it increases your costs or lessens competitive ability elsewhere.
Taxes are a cost of doing business, and yes, businesses will optimize that cost wherever they can, but paying 1% less in taxes isn't a bargain if it increases your costs or lessens competitive ability elsewhere.
Bunch of separate items:
- What about Guernsey? Are they screwed as well? How can you write an article about one half of a pair of twins without mentioning the other half? A fund I used to work for had a guy sitting there pretending to make trading decisions, precisely for the tax advantage.
- Lived on Jersey for a bit. It was like a little piece of Surrey, on an island. Lots of expensive cars. Nice country pubs, good views in places. Roads are too narrow. A bit like an early version of GTA though: although there are variations, you quickly discover how small it is.
- As a finance guy I never realised how bad the Dutch disease got on the island. I did realise there were an unusual number of lawyers and accountants. But I never thought it was as bad as it turns out.
- What about Guernsey? Are they screwed as well? How can you write an article about one half of a pair of twins without mentioning the other half? A fund I used to work for had a guy sitting there pretending to make trading decisions, precisely for the tax advantage.
- Lived on Jersey for a bit. It was like a little piece of Surrey, on an island. Lots of expensive cars. Nice country pubs, good views in places. Roads are too narrow. A bit like an early version of GTA though: although there are variations, you quickly discover how small it is.
- As a finance guy I never realised how bad the Dutch disease got on the island. I did realise there were an unusual number of lawyers and accountants. But I never thought it was as bad as it turns out.
Most EU venture capital funds structure holdings through Jersey or Guernsey SPVs as well.
It's always frustrated me that Jersey/Guernsey/Isle of Man get away with reaping the benefits of being part of the UK (EU and EEC membership) whilst not actually being part of the UK, undermining our tax system, generally gaining from tax avoidance and evasion on the mainland.
These territories need to be given an ultimatum become part of the UK and implement UK tax laws or remain independent and be 100% responsible for their own affairs.
Edit: Amazon and Play.com used to operate out of Jersey to avoid VAT being charged on orders [1].
[1] - https://en.wikipedia.org/wiki/VAT-free_imports_from_the_Chan...
These territories need to be given an ultimatum become part of the UK and implement UK tax laws or remain independent and be 100% responsible for their own affairs.
Edit: Amazon and Play.com used to operate out of Jersey to avoid VAT being charged on orders [1].
[1] - https://en.wikipedia.org/wiki/VAT-free_imports_from_the_Chan...
The IoM isn't part of the EU or the UK. As a Manxman living in Europe, I'm fortunate that my mother's side of the family is English or I'd have more trouble with work permits and whatnot. I haven't been able to exchange my Manx driving licence for a Spanish one, for example, since it isn't recognised.
As for taxes, people on Mann get screwed over on prices - everything from groceries to petrol is more expensive than the north of England since it has to be shipped in. The tax breaks for residents are less than for corporations too, without the corporate breaks I think there would be less work there in general. Might get rid of the southern English bankers that all moved there in the 2000s if they removed so many incentives so it wouldn't be a complete loss ;-)
As for taxes, people on Mann get screwed over on prices - everything from groceries to petrol is more expensive than the north of England since it has to be shipped in. The tax breaks for residents are less than for corporations too, without the corporate breaks I think there would be less work there in general. Might get rid of the southern English bankers that all moved there in the 2000s if they removed so many incentives so it wouldn't be a complete loss ;-)
>As a Manxman living in Europe, I'm fortunate that my mother's side of the family is English or I'd have more trouble with work permits and whatnot.
Only for the EU. As a Manxman you have a nice one-way street of benefits working in the UK...
>Manx people, as British Citizens, may travel and work freely in the United Kingdom.
However myself as a British citizen cannot take a ferry from Liverpool to the IoM and start work. But the reverse is entirely possible for yourself.
Only for the EU. As a Manxman you have a nice one-way street of benefits working in the UK...
>Manx people, as British Citizens, may travel and work freely in the United Kingdom.
However myself as a British citizen cannot take a ferry from Liverpool to the IoM and start work. But the reverse is entirely possible for yourself.
I'm English and I've worked in the Isle of Man - and getting a work permit was just a formality. You are also ignoring the money the IoM hands over to the Treasury to support the defence of the British Isles. The "neutral" Republic of Ireland genuinely free-rides on UK defence (and historically actively worked to undermine Northern Ireland security) and so would be a far better target for your complaints.
GP post's complaints don't apply in Ireland: A British citizen from Liverpool can arrive on the boat in Dublin and start working that afternoon with no permits. Looks like you're throwing in a red herring.
> everything from groceries to petrol is more expensive than the north of England since it has to be shipped in
I can assure you that the North is one of the cheapest places to live in the UK. I could rent a huge, 4 bedroom house in some places for less than I'm renting a single room in London. Out of interest how much is petrol/groceries? What popular UK brands do you have over there that could be compared?
I can assure you that the North is one of the cheapest places to live in the UK. I could rent a huge, 4 bedroom house in some places for less than I'm renting a single room in London. Out of interest how much is petrol/groceries? What popular UK brands do you have over there that could be compared?
> is more expensive than the north of England
[emphasis mine] The Isle of Man is off the north west coast of England, so he's comparing the prices there with the nearest mainland.
[emphasis mine] The Isle of Man is off the north west coast of England, so he's comparing the prices there with the nearest mainland.
[deleted]
Oh right, I think it should be 'than England, to the north' in that case though? 'The north of England' is a commonly used phrase to group counties like Yorkshire, Cumbria etc so even with the emphasis I still parse it wrong.
So what is the IoM status? Is it a separate country?
Wikipedia says its a Crown dependency - how is that different than being part of the UK?
I would love to hear more -- because how can IoM avoid Jersey's fate?
Wikipedia says its a Crown dependency - how is that different than being part of the UK?
I would love to hear more -- because how can IoM avoid Jersey's fate?
> So what is the IoM status? Is it a separate country?
No. The IoM isn't a sovereign state, although it has it's own legislative branch.
>Wikipedia says its a Crown dependency - how is that different than being part of the UK?
They don't have representation in the UK, other than the Lieutenant Governor. They have their own passports, currency and taxes. The UK can pass laws that affect the Crown Deps but they generally don't do so without consent.
>I would love to hear more -- because how can IoM avoid Jersey's fate?
IoM has diversified it's sketchy revenue creating beyond tax evasion and avoidance of UK banks by also issuing becoming a haven for the UK/Ireland gambling industry.
No. The IoM isn't a sovereign state, although it has it's own legislative branch.
>Wikipedia says its a Crown dependency - how is that different than being part of the UK?
They don't have representation in the UK, other than the Lieutenant Governor. They have their own passports, currency and taxes. The UK can pass laws that affect the Crown Deps but they generally don't do so without consent.
>I would love to hear more -- because how can IoM avoid Jersey's fate?
IoM has diversified it's sketchy revenue creating beyond tax evasion and avoidance of UK banks by also issuing becoming a haven for the UK/Ireland gambling industry.
This video (5m long) might explain a few things
https://www.youtube.com/watch?v=rNu8XDBSn10
https://www.youtube.com/watch?v=rNu8XDBSn10
Thanks. OMG. What a mess.
It looks like a system of whatever works and not upsetting an apple cart.
It looks like a system of whatever works and not upsetting an apple cart.
> So what is the IoM status? Is it a separate country?
This mostly explains things:
https://www.youtube.com/watch?v=rNu8XDBSn10
This mostly explains things:
https://www.youtube.com/watch?v=rNu8XDBSn10
It's similar to somewhere like American Samoa wrt to the USA.
Crown dependancies are self governing, though the UK has ultimate responsibility and control. The UK usually leads in defence and diplomacy. The extent of UK involvement and precise details vary from dependency to dependency.
Crown dependancies are self governing, though the UK has ultimate responsibility and control. The UK usually leads in defence and diplomacy. The extent of UK involvement and precise details vary from dependency to dependency.
Guernsey and Jersey are independent countries that have an agreement with the crown of England that has been in place for hundreds of years. They are under no obligation to placate your current government or adhere to their wishes. They have their own elected governments that suits them better.
Yes they get some benefits from that agreement such as military protection which didn't help them much during WWII where they became occupied by Germans.
Yes they get some benefits from that agreement such as military protection which didn't help them much during WWII where they became occupied by Germans.
Well, the British Overseas Territories have a similar relationship with the UK
(Also the Channel Islands are not fully within the EU https://en.wikipedia.org/wiki/Jersey#Relationship_with_the_E... )
I can only imagine their current relationship with the UK is with their (UK) accord.
(Also the Channel Islands are not fully within the EU https://en.wikipedia.org/wiki/Jersey#Relationship_with_the_E... )
I can only imagine their current relationship with the UK is with their (UK) accord.
Sorry to clarify - they benefit from the UKs EEC and EU membership, not that Jersey is a member of either the EEC, EEA or EU [1].
[1] - https://www.gov.je/Government/JerseyWorld/InternationalAffai...
[1] - https://www.gov.je/Government/JerseyWorld/InternationalAffai...
I suspect the City gains a lot of benefits from having a few tax havens a short flight away.
Of course the City is a tax haven itself as well, but yes, there probably is a lot of pressure/lobbying power to leave things as is.
Yes indeed.
And so does the EU.
And so does the EU.
So they can run their illegal tax schemes directly through The City? Or arrange their ledgers so they pay no tax?
We need a full reform. This is a small part of it.
We need a full reform. This is a small part of it.
Start by lowering UK taxes. That's the reform that's needed.
Yeah, capitulating to their demands... I'm sure that won't encourage more tax arbitrage.
UK corporation taxes are pretty low in global terms and the UK is already an offshore tax haven.
Northern Ireland will soon get its own corporate tax rate of 12.5-13%.
I grew up in Jersey, and for sure there's a lot that I don't like about the place.
Still I found this article very poorly-written, poorly-researched, sensational, weighed down by anecdotes, cliches and an exhausting "Poor UK, evil Jersey" pattern. It gets worse as the piece goes on, increasingly opinionated and accusatory.
I am not an expert, but I sense that very many factors went into creating the situation there, many of them outside forces, and it's not possible or helpful to caricature an entire island in this way to look for a simple cause and effect relationship.
Still I found this article very poorly-written, poorly-researched, sensational, weighed down by anecdotes, cliches and an exhausting "Poor UK, evil Jersey" pattern. It gets worse as the piece goes on, increasingly opinionated and accusatory.
I am not an expert, but I sense that very many factors went into creating the situation there, many of them outside forces, and it's not possible or helpful to caricature an entire island in this way to look for a simple cause and effect relationship.
You were probably already better informed on Jersey than most of us were before reading the article. There may have been significant details left out, but as a broad brush I felt the article probably did a good job of presenting a general picture of the island's economy.
Perhaps there are some important specifics that you would like to contribute, rather than just criticising the article's tone.
Perhaps there are some important specifics that you would like to contribute, rather than just criticising the article's tone.
I never understood why countries do not impose huge taxes on money moving in and out of tax havens. I guess there is always another route you can take to disguise the origin.
>why countries do not impose huge taxes on money moving in and out of tax havens
It doesn't really make the counties any more prosperous. Firstly you can't really just ban tax havens because then people would move money to countries that are not havens but just happen to have lower taxes in some area (eg. Ireland for corporate tax, Belgium for cgt). Then if you restrict money going in, outside investors are wary of bringing any money in. So you kind of end up like the UK in the 70s when they had exchange controls, high unemployment, strikes etc.
There are smarter ways to stop offshore avoidance. Usually enforcing the existing laws more thoroughly which is partly what's happening to Jersey - I have a Jersey bank account and get occasional letters about how they are being forced to declare it to the EU/UK tax authorities.
It doesn't really make the counties any more prosperous. Firstly you can't really just ban tax havens because then people would move money to countries that are not havens but just happen to have lower taxes in some area (eg. Ireland for corporate tax, Belgium for cgt). Then if you restrict money going in, outside investors are wary of bringing any money in. So you kind of end up like the UK in the 70s when they had exchange controls, high unemployment, strikes etc.
There are smarter ways to stop offshore avoidance. Usually enforcing the existing laws more thoroughly which is partly what's happening to Jersey - I have a Jersey bank account and get occasional letters about how they are being forced to declare it to the EU/UK tax authorities.
Some countries do that. For example in Portugal the yearly tax on real estate is around 0.3% of the price of the house/apartment but if the owner is a country based in a tax haven (and that include countries in the Grey area like Hong Kong), then the tax rate is 7.5%.
Freedom of capital, mostly. Also, there are valid reasons to bank outside your native country. The wealthier you are, the less location matters, and the more reasons you might have to bank "offshore" (or at least outside your native country).
An example: a friend who often travels to the UK asked his local bank if he could get a GBP denominated credit card (+ settle it in GBP). Wasn't possible. He opened an account in Jersey (or Guernsey, can't remember), where this wasn't a problem.
An example: a friend who often travels to the UK asked his local bank if he could get a GBP denominated credit card (+ settle it in GBP). Wasn't possible. He opened an account in Jersey (or Guernsey, can't remember), where this wasn't a problem.
They want the money. Why would the UK impose huge taxes on money from, say, the US? They would just lose it to Zurich or Monaco.
Why? The money doesn't belong to the government. The problem is that taxes are too high. Lower taxes and there's no need for havens.
You park your capital somewhere because you like the commercial, legal and financial infrastructure. Insofar as your financial mass distorts economic spacetime for everyone int eh vicinity, it's not unreasonable that you will be asked to pay some of the costs of said distortion. If you stay in a hotel that's only half-full and make your bed before you check out, would you expect your stay to be free? Probably not.
I'm being a bit tongue-in-cheek here, but your repeated claims that taxes are too high presupposes some objectively correct level of taxation. In the real world, what happens is that tiny poor jurisdictions set tax rates that would be economically unsustainable but for the prospect of attracting some huge international firm whose revenues are so big that even a tiny percentage of them is a lot of money for the poor jurisdiction, and the extra administrative costs of domiciling the corporation there are less than the difference between the unusually low tax rate and that of a more economically logical place for the headquarters, based on actual factors of production.
Why should taxes come down to the level of whatever the poorest country is willing to charge in order to attract itinerant capital? Why not (as we are sort-of in the process of doing) just deny market access to firms that don't want to pay prevailing rates?
It's not that I hate capital as such, but as an individual I have to pay some sort of taxes and my international economic movements are somewhat restricted, because of the basic fact that people can impose costs on an economy as well as contribute to it. I'm not enthused about paying taxes on the income I receive in return for my work product, but I recognize that there's a quid pro quo here as I prefer to live in a civilized society and transact business using money rather than live in a cave and subsist on fish or something. I don't care for the idea that having a large sum of capital should exempt one from these rules, in addition to the obvious economic advantages that said capital provides (and which I slightly envy but do not resent).
I'm being a bit tongue-in-cheek here, but your repeated claims that taxes are too high presupposes some objectively correct level of taxation. In the real world, what happens is that tiny poor jurisdictions set tax rates that would be economically unsustainable but for the prospect of attracting some huge international firm whose revenues are so big that even a tiny percentage of them is a lot of money for the poor jurisdiction, and the extra administrative costs of domiciling the corporation there are less than the difference between the unusually low tax rate and that of a more economically logical place for the headquarters, based on actual factors of production.
Why should taxes come down to the level of whatever the poorest country is willing to charge in order to attract itinerant capital? Why not (as we are sort-of in the process of doing) just deny market access to firms that don't want to pay prevailing rates?
It's not that I hate capital as such, but as an individual I have to pay some sort of taxes and my international economic movements are somewhat restricted, because of the basic fact that people can impose costs on an economy as well as contribute to it. I'm not enthused about paying taxes on the income I receive in return for my work product, but I recognize that there's a quid pro quo here as I prefer to live in a civilized society and transact business using money rather than live in a cave and subsist on fish or something. I don't care for the idea that having a large sum of capital should exempt one from these rules, in addition to the obvious economic advantages that said capital provides (and which I slightly envy but do not resent).
In the tax avoidance game, any amount of taxes is too high. Your advice will take the rates right down to zero.
You could cut the taxes in half, and they'd still seek out tax havens. Don't capitulate to their demands. Cut off the ability send money to the tax havens.
Is Jersey really powerful enough to create a tax haven? Or is it that powerful people in foreign governments purposefully let Jersey exist so that they can benefit from its existence?
Basically, what I'm questioning is whether the tax haven is Jersey's doing at all. Of course they are complicit but I don't think that it's up to them to decide to be a tax haven.
Basically, what I'm questioning is whether the tax haven is Jersey's doing at all. Of course they are complicit but I don't think that it's up to them to decide to be a tax haven.
Jersey is effectively owned by the Queen, albeit rather indirectly through her role as Duke (sic) of Normandy.
In practice the day to day running of the Channel Islands is left to what's called the Privy Council, but the Queen gets final say.
Parliament isn't involved.
If the Queen objected strenuously to Jersey's role as a tax haven, it would never have become one.
Jersey is one of those edge cases where the feudal nature of the British establishment becomes obvious. Parliament isn't quite only for show, but a lot of wheeling, dealing, and money hiding goes on behind the scenes. Neither the British parliament, nor City regulators, nor the EU have much oversight.
In practice the day to day running of the Channel Islands is left to what's called the Privy Council, but the Queen gets final say.
Parliament isn't involved.
If the Queen objected strenuously to Jersey's role as a tax haven, it would never have become one.
Jersey is one of those edge cases where the feudal nature of the British establishment becomes obvious. Parliament isn't quite only for show, but a lot of wheeling, dealing, and money hiding goes on behind the scenes. Neither the British parliament, nor City regulators, nor the EU have much oversight.
So does this mean the Queen is still the absolute ruler of some random bits of real estate?
I always thought that the Queen was reduced to a figurehead status.
I always thought that the Queen was reduced to a figurehead status.
UK constitutional affairs are crazy; believe me, I've looked at them at several times. It's a rabbit hole of ad-hoc agreements for little bits of land here and there, acquired or controlled at various points in time by feudal or commercial means, and just maintained as they were or with minimal harmonization. It's the same at all levels, from the smallest of towns to the humongous London (the City or the Metropolitan Authority? it's all a mess...) to Crown Dependencies, Overseas Territories, etc etc.
You then couple this legal patchwork with Common Law and a formalized-but-not-quite-fully-consistent parliamentary process, evolved day-by-day over several hundred years, and you can understand how very few people at any given time actually know who really should be in charge of this or that. What matters is that the right someone should be considered in charge at the right time on the right matter, correctness be damned. It's an extremely pragmatic stance on Power: it decouples highfalutin declarations of what Power is and where it comes from, in favour of simply making sure that Power exists and can be exercised for everyday purposes by trusted insiders without facing a riot.
The current system has been running continuously for more than 300 years (and it's not incredibly different from the one it replaced, which was almost 600 years old at the time). Imagine maintaining a custom backend for 300 years, piling hack over hack because you're never allowed to rewrite it all from scratch. That's what the British system basically is.
But going back to your question: of course the Queen is a figurehead, but it's because she decides to be so, as British monarchs have done since the Glorious Revolution. In theory, she (or her heirs) could, at any time, try to force the constitutional compromise, reasserting everyday powers that today are in Parliament hands (the list grows longer every year, as it often happens with elderly rulers)... but there is really no reason for her to do so: she is well looked after, paid handsomely to basically be a 365/24/7 global PR representative for her country, and allowed to own a large amount of wealth and property, some of which she (or rather her heirs) can directly manage and profit from (Duchy of Cornwall etc). Why would you give up all that and precipitate a disastrous conflict and potentially a civil war? For some misplaced pride of power, at 89, after having seen through (and won) the Cold War?
So the powers stay there, she just doesn't use them (and would likely be rebuffed if she tried too hard to); she exercises influence were strictly necessary and that's enough to keep everyone happy. It's a bit like owning nuclear weapons without ever using them.
This whole setup is also the reason some people still worry about the return of "activist" monarchs. HRH the Prince of Wales at various points tried to wield his unwritten power a bit... ungraciously, stoking these fears, but he seems to have recently accepted that his reign will be too short to really worry about, so we should be ok.
You then couple this legal patchwork with Common Law and a formalized-but-not-quite-fully-consistent parliamentary process, evolved day-by-day over several hundred years, and you can understand how very few people at any given time actually know who really should be in charge of this or that. What matters is that the right someone should be considered in charge at the right time on the right matter, correctness be damned. It's an extremely pragmatic stance on Power: it decouples highfalutin declarations of what Power is and where it comes from, in favour of simply making sure that Power exists and can be exercised for everyday purposes by trusted insiders without facing a riot.
The current system has been running continuously for more than 300 years (and it's not incredibly different from the one it replaced, which was almost 600 years old at the time). Imagine maintaining a custom backend for 300 years, piling hack over hack because you're never allowed to rewrite it all from scratch. That's what the British system basically is.
But going back to your question: of course the Queen is a figurehead, but it's because she decides to be so, as British monarchs have done since the Glorious Revolution. In theory, she (or her heirs) could, at any time, try to force the constitutional compromise, reasserting everyday powers that today are in Parliament hands (the list grows longer every year, as it often happens with elderly rulers)... but there is really no reason for her to do so: she is well looked after, paid handsomely to basically be a 365/24/7 global PR representative for her country, and allowed to own a large amount of wealth and property, some of which she (or rather her heirs) can directly manage and profit from (Duchy of Cornwall etc). Why would you give up all that and precipitate a disastrous conflict and potentially a civil war? For some misplaced pride of power, at 89, after having seen through (and won) the Cold War?
So the powers stay there, she just doesn't use them (and would likely be rebuffed if she tried too hard to); she exercises influence were strictly necessary and that's enough to keep everyone happy. It's a bit like owning nuclear weapons without ever using them.
This whole setup is also the reason some people still worry about the return of "activist" monarchs. HRH the Prince of Wales at various points tried to wield his unwritten power a bit... ungraciously, stoking these fears, but he seems to have recently accepted that his reign will be too short to really worry about, so we should be ok.
>> London and Paris tussled over the islands for almost 300 years. Eventually, however, Pope Sixtus IV intervened and, in 1481, issued a papal bull of neutrality. England and France could wage war, but the Channel Islands, by religious injunction, could not. The result was that Jersey traded unimpeded with both sides, and thus its enchanted inbetween life began.
It should be no surprise today's largely secular laws don't know how to deal with 15th-century papal bulls.
It should be no surprise today's largely secular laws don't know how to deal with 15th-century papal bulls.
It's still perhaps a little surprising that this status quo has never been challenged on the British side, bearing in mind the UK has been radically anti-Catholic for most of the period since then, and unusually assertive about establishing overseas territories and colonies.
(I suppose the practical answer is that that British rejection of the papal bull would invite the French to interfere militarily or even annexe islands much closer to their own shores than mainland Britain, and frankly any negative side effects of the in-between status historically weren't worth the cost of the warships to guard them)
(I suppose the practical answer is that that British rejection of the papal bull would invite the French to interfere militarily or even annexe islands much closer to their own shores than mainland Britain, and frankly any negative side effects of the in-between status historically weren't worth the cost of the warships to guard them)
I'd go further with the practicality and say that the British legislature was administering a thousand other colonies at the time (Canada) and just never bothered to address an issue over a crag smaller than many cities.
The UK controls what Jersey does and lets it do it. They have loads of other tax havens too. Let's hope the rich get what's coming to them and the people of the UK can eventually be free of the cancer that is The City.
People all over the world would be better off if The City is crushed.
People all over the world would be better off if The City is crushed.
And what is coming to the wealth creators? I guess you mean the 1% who contribute 30% of income tax in the UK for instance. Just wondering how you're going to make up the deficit (or what cuts you'll make) when they 'get what's coming to them' as you so crudely put it.
And here I thought that people actually building widgets in factories are wealth creators... As opposed to having your name on the deed to the factory.
[deleted]
Not really, no. Without someone willing to risk money creating the factory those people would be poking the ground with sharp sticks.
Without labour working in those factories, producing goods, those deeds are about as valuable as toilet paper.
You're confusing creating value with economic velocity. Mere ownership cannot create value. Mere ownership can change the rate at which money circulates in the economy.
You're confusing creating value with economic velocity. Mere ownership cannot create value. Mere ownership can change the rate at which money circulates in the economy.
You are completely ignoring the value of risk. Labor is just one input among many to widget making. Without somebody willing to take the risk, to sink money he has into the widget building business, it just doesn't happen.
This is why capitalism works far better than the alternatives.
This is why capitalism works far better than the alternatives.
So, before capitalism, people didn't build widgets?
My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
Crediting the super-rich (A very few exceptions aside) for creating wealth is nonsense. In the best case, the people they employ created their wealth - said people just ended up keeping less/spending more of it. In the worst case, collecting rents created their wealth.
My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
Crediting the super-rich (A very few exceptions aside) for creating wealth is nonsense. In the best case, the people they employ created their wealth - said people just ended up keeping less/spending more of it. In the worst case, collecting rents created their wealth.
> So, before capitalism, people didn't build widgets?
Sure they did, at sustenance level. Or do you think that the noncapitalist economy of preindustrial Europe could produce enough widgets to sustain the modern standard of living?
>My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
This is looking more and more false by the day, to be honest. At this point, companies that employ hundreds of thousands of assembly line workers that produce "actual value" are less profitable than companies that automate that same assembly line using capital. On the flip side, the return to human capital in the form of educated workers has certainly increased.But I challenge you to build Google or Facebook without the venture CAPITALists who provided the money to purchase the infrastructure and hire the labour. The knowledge economy is great, but at some point the software still has to run on hardware purchased with, you guessed it, capital.
The point being that capital and labour are both necessary for a functioning economy, and concluding that labour is the only thing that matters and that anyone rich must be a rent-seeker leads you to becoming Venezuela or Argentina.
Sure they did, at sustenance level. Or do you think that the noncapitalist economy of preindustrial Europe could produce enough widgets to sustain the modern standard of living?
>My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
This is looking more and more false by the day, to be honest. At this point, companies that employ hundreds of thousands of assembly line workers that produce "actual value" are less profitable than companies that automate that same assembly line using capital. On the flip side, the return to human capital in the form of educated workers has certainly increased.But I challenge you to build Google or Facebook without the venture CAPITALists who provided the money to purchase the infrastructure and hire the labour. The knowledge economy is great, but at some point the software still has to run on hardware purchased with, you guessed it, capital.
The point being that capital and labour are both necessary for a functioning economy, and concluding that labour is the only thing that matters and that anyone rich must be a rent-seeker leads you to becoming Venezuela or Argentina.
>So, before capitalism, people didn't build widgets?
There was no "before capitalism".
>My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
Labor without capital is the same duck. Creating a business is risky, and someone has to be on the hook for that risk.
>Crediting the super-rich (A very few exceptions aside) for creating wealth is nonsense.
The super-rich are a sideshow. Most "capitalists" out there are people like you and me putting money into their 401(k) every paycheck.
There was no "before capitalism".
>My point is that labour does not need capital to produce value (Although access to capital can increase the amount of value labour can produce.) Capital without labour is, quite obviously a lame duck.
Labor without capital is the same duck. Creating a business is risky, and someone has to be on the hook for that risk.
>Crediting the super-rich (A very few exceptions aside) for creating wealth is nonsense.
The super-rich are a sideshow. Most "capitalists" out there are people like you and me putting money into their 401(k) every paycheck.
How do you define capitalism? There are places that have money but lack sufficient property rights to support a system of capitalism.
i.e. "it's my land because I live here and work on it" vs "it's my land because I own a title deed as recognised by some authority".
i.e. "it's my land because I live here and work on it" vs "it's my land because I own a title deed as recognised by some authority".
We are kind of screwed when capital can create value without labor, which might happen with automation.
Speaking of havens, does Jersey have enough independence to become a data haven?
They do. A friend of mine was doing tech stuff (an encryption related startup) there a few years ago. A lot of people in the government, who tend to be quite approachable, do honestly seem to care about this stuff.
Tech is one of the industries they're trying to get involved in.
Tech is one of the industries they're trying to get involved in.
Yes, but it's still ultimately under direct control of UK forces. If GCHQ wanted to tap your cables, they would do so in the same way as in Britain.
Of course they can - if you're talking about tapping submarine cables or other attacks from the "outside".
I was asking more about the legal situation, whether they have enough independence to enact laws to prevent the authorities making "inside" attacks such as:
* Forcing operators to identify customers
* Forbid the operator from telling their customers about anything
* Take hardware without allowing it to be destroyed beforehand
These things could still happen illegally of course.
I was asking more about the legal situation, whether they have enough independence to enact laws to prevent the authorities making "inside" attacks such as:
* Forcing operators to identify customers
* Forbid the operator from telling their customers about anything
* Take hardware without allowing it to be destroyed beforehand
These things could still happen illegally of course.
Are you sure about that? I was under the impression that wasn't possible.
Jersey is under UK military control, it even has a formal Territorial Army regiment, so it's certainly possible in factual terms.
In legal terms I honestly don't know, but after Snowden I thought we agreed that the law is no obstacle for these people.
In legal terms I honestly don't know, but after Snowden I thought we agreed that the law is no obstacle for these people.
There's a Jersey in England?
fuhgeddaboudit!
fuhgeddaboudit!
This may shock you, but we also have a York and a Hampshire.
You should have named them "Old York" and "Old Hampshire". This way is confusing.
"Olde" would be acceptable, too.
"Olde" would be acceptable, too.
I would like to renew my periodic proposal to replace all names with UUIDs. For example, the York in England could be renamed to E4D24E55-D779-402A-90D4-9EBE41FB2AA4. England itself could become 62F2B833-2462-4F64-A071-2887FF46105A. The "New" York in the colonies could be renamed to D6EE5383-2D68-4CC2-BCED-CDBB2B7661E0. This would eliminate all confusion.
We'll have to think up a new tune for Kandler and Ebb's classic D6EE5383-2D68-4CC2-BCED-CDBB2B7661E0, D6EE5383-2D68-4CC2-BCED-CDBB2B7661E0
...and an England, apparently.
https://en.m.wikipedia.org/wiki/List_of_places_in_the_United...
That's just England, not including the rest of the UK.
That's just England, not including the rest of the UK.
No. There’s not even a Jersey in the UK. There is, however, a Jersey in the Crown Dependencies of the United Kingdom of Great Britain and Northern Island.
So not collecting taxes didn't generate enough revenue to keep things in the black?
This was the turning point for Jersey, in case you missed it in a fairly long piece.
I wonder why Jersey didn't simply raise the corporate tax rate to 1%, and lower its citizens taxes to 1%. They still would have come in far below most of the rest of the world in corporate tax rates[1], but would have wildly increased their revenues.
As it happens, they ended up losing their financial industry anyhow.
[1]https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates