New Country. New Business. New Life. AEOI & FATCA Part II

Where not to do business:

By Sbw01f [GFDL ( or CC BY-SA 3.0 (], via Wikimedia Commons
Percentage of People living on $1.00/day or less

We ended the first part of this discussion of inequality. While extreme equality isn’t needed to make a country a good place to do business, extreme inequality is a significant barrier to doing business in a country. That doesn’t mean that it isn’t a good place to settle down, but it does mean that must either concentrate on making your money elsewhere or concentrate on a business serving those who control the wealth.

This is the same table we presented in Part I of this essay:

Country Tax Percent
of GDP
HDI Ease Of
Doing Business
Inequality* 2025 Population Growth** Economic Freedom*** 2015 Real GDP Growth
New Zealand 27.8 0.913 1 0.362 5.6 3 3.00%
Singapore 13.5 0.912 2 0.464 0.7 2 2.00%
Denmark 34.8 0.923 3 0.248 0.7 18 1.00%
Hong Kong 12.5 0.910 4 0.537 -1.2 1 2.40%
Korea 13.9 0.898 5 .0302 -0.2 23 0.50%
Norway 22.4 0.944 6 .0268 3.4 25 1.60%
U.K. 25.0 0.907 7 0.324 2.2 12 2.20%
U.S.A. 11.4 0.915 8 0.450 3.0 17 2.50%
Sweden 43.3 0.907 9 .0249 2.2 19 4.20%
Macedonia 16.4 0.747 10 .0436 -1.6 31 3.20%

* The data isn’t available from a single source so Wikipedia has used a combination of CIA, World Bank and UN data. You can use the links on the Wikipedia site to get to the original data.

** Based on UN constant fertility forecast for the period 2025-2030. I selected this period because almost all population rates of growth are declining and if you are going to have a business, it is important to have an idea of whether you are enterenting a market that growing, static or shrinking. For comparison, the least developed countries have a forecasted birth rate of 27.3 births per thousand and that rate is increasing.

*** This data is from the Heritage Foundation which is a conservative political group in the U.S. that views the U.S. as a socialist state. (!) That should be borne in mind when interpreting the results…at least for the U.S. In any case, most of these countries rank fairly well on the scale of economic freedom.

Population Growth

Throughout the developed and developing world, the rate of population growth is dropping. In much of Eastern and Northern Europe as well as some other countries, the population is declining. We have not yet developed an economic system able to cope well with declining population. If you plan on doing business, you are far better off doing business in a country that is both prosperous and experiencing a reasonable rate of population growth. I’ve selected a date a bit into the future as it is important to know what is coming in this case, not what has passed.

It would probably be optimal to live in a society of zero population growth where there was full employment for everyone who wanted it as they were engaged in improving the quality of life rather than simply producing more and more stuff. Of the countries in this table, those showing positive growth are all reasonable choices based on this one criterion. Barring a change in economic systems in the next ten years the ones showing negative population growth should be avoided.

Economic Freedom

The following components go into the makeup of the Heritage Foundation calculation.  Heritage is not an honest broker so its judgement as to what exactly comprises economic freedom is skewed towards the Burkean ideal rather than that of Voltaire. Furthermore, they have an incentive to make the U.S. look bad when Democrats or moderate Republicans are in office.  That is something to keep in mind.

Property Rights Government Integrity Judicial Effectiveness Trade Freedom
Government Spending Tax Burden Fiscal Health Investment Freedom
Business Freedom Labor Freedom Monetary Freedom Financial Freedom

Real GDP Growth

This is a number that is fairly difficult to tinker with over the short term, but, of course, countries such as China have regarded it as just another piece of propaganda for so long that it is difficult to know what the actual facts are in their GDP reports. Having said that, the countries in our top ten are fairly consistent in their reporting methodologies year-over-year so we can be fairly certain that these growth numbers are real, even if their absolute GDP numbers may not be.

For lack of space we did not list Human Freedom or Polical Risk on the list at the top.  They appear below.

Political Risk

This is not a measure of political freedom. One can make a case that increased democracy brings with it increased political risk. Of course, one can say the same for totalitarianism. For business purposes, one doesn’t care particularly whether a country is democratic or autocratic, the one thing it must be is stable. So lower political risk is a measure of stability, not a measure of freedom.

Human Freedom

This may be the most important of all freedoms but, as business is defined today, it isn’t considered a necessary component although it is hard to point to any countries that have had long term business success without a great deal of human freedom. For that reason, we are presenting the scores here. First is a list of all the many indicators that are used and then the scores. You can download the report here:

Healthcare System Efficiency

WHO measures the health systems of the world to determine the quality and equity of the system in three areas, health outcomes, responsiveness and fairness in financing. From these they calculate a composite index which is what we display here. Because a poorly performing healthcare system adversely affects a country in numerous ways. It is an important measure to look at on its own, as we do here.

Best Countries to Live In

U.S. News & World Report uses sixty-three criteria to determine which the best countries are to live and work in. Among the criteria used for Entrepreneurship, for example, are: Provides easy access to capital, Well-developed infrastructure, Transparent business practices, Educated population, Skilled labor force, Entrepreneurial, and Connected to the rest of the world. These are just a few of the many scorings used. This is clearly an important adjunct to making your final decision as to where to live and to have a business.

Human Freedom Index
2016 Political Risk
WHO Health System Ranking
U.S. News Best Country Index
1. Hong Kong 92 n/a n/a
3. New Zealand 87 14 41
5. Denmark 82 34 12
6. U.K. 81 18 3
13. Norway 81 11 10
15. Sweden 88 23 6
23. United States 85 37 7
35. Korea 81 58 23
40. Singapore 91 6 15
55. Macedonia n/a 89 n/a


New Country. New Business. New Life. AEOI & FATCA Part I

Majestic Center Wellington, NZ. moderate taxes and good growth.
Majestic Center Wellington, NZ, Photo by Dabbelju
The best countries in the world have a compelling mix of taxes, lifestyle opportunities, and business support. Let’s take a look at the best of the best.

Generally speaking, all of us have the same core wants and needs. The Human Development Index (HDI) attempts to boil these needs & wants down to a single number to allow country-to-country comparisons. In our estimation, your quality of life should be paramount in your planning and the HDI helps you do that. However, if you are reading this, more than likely you are also interested in the best place to start a business. We’ve tried to provide you with the essential data for that, too. In this essay, then, I’ve attempted to provide you with the basic data you need to decide on where to work and to live.

The table below is gathered from a number of reliable sources (OECD, World Bank, etc.) and each statistic uses a consistent methodology for all the countries listed. I will discuss the first four columns in this post and the remaining four columns in the next one.

Presenting: The Data

Country Tax Percent
of GDP
HDI Ease Of
Doing Business
Inequality* Population Growth Economic Freedom** 2015 Real GDP Growth 2016 Political Risk
New Zealand 27.8 0.913 1 0.362 0.72 4 3.00% 87
Singapore 13.5 0.912 2 0.464 1.97 2 2.00% 91
Denmark 34.8 0.923 3 0.248 0.42 9 1.00% 82
Hong Kong 12.5 0.910 4 0.537 0.83 1 2.40% 92
Korea 13.9 0.898 5 .0302 0.48 34 0.50% 81
Norway 22.4 0.944 6 .0268 1.27 31 1.60% 88
U.K. 25.0 0.907 7 0.324 0.63 14 2.20% 81
U.S.A. 11.4 0.915 8 0.450 0.75 10 2.50% 85
Sweden 43.3 0.907 9 .0249 0.73 18 4.20% 88
Macedonia 16.4 0.747 10 .0436 0.16 43 3.20% n/a

* The data isn’t available from a single source so Wikipedia has used a combination of CIA, World Bank and UN data. You can use the links on the Wikipedia site to get to the original data.
** This data is from the Heritage Foundation which is a conservative political group in the U.S. that views the U.S. as a socialist state. (!) That should be borne in mind when interpreting the results…at least for the U.S. In any case, most of these countries rank fairly well on the scale of ecoomic freedom.


Taxes are a complex issue that actually makes it impossible to perfectly compare tax burdens across countries, but it isn’t for lack of trying. We can safely say is that these data can affect the way you think about your life and your business. Tax data is presented in what is probably the only reliable way. There are so many variables that you must consult a professional before finalising any decision. Still, these numbers are fairly representative of the actual state of taxes in a country vs. what the laws say. The lower the number, the better your personal tax situation is likely to be.

You will find some cases, such as the U.S, where the nominal taxes are far higher than the actual taxes collected. For example, claimed billionaire, Donald Trump, may not have paid income taxes on fifty million dollars of personal income a year quite legally. It is important that before making any significant financial decision you think about the tax implications. With a good tax accountant or attorney it may be possible to use the deal to avoid taxes not only on the deal, but on other income you make as well.

Human Development Index

This score is incredibly important if you are going to raise a family or to hire competent workers in the country. The HDI covers three important aspects of your life:

  • Can you expect a long and healthy life?
  • Education: How educated is the populace?
  • How likely are the folks around you to have a decent standard of living?

For education, of the countries on this list, New Zealand is second, Norway is third and the U.S. is fifth in the world for education. But it is the total package you should be concerned about and the HDI gives you that number.


Our core belief is in a universal taxation system in which everyone would pay taxes on their wealth and businesses would pay no taxes. Perhaps one day we’ll explain why this is so, but because that is unlikely to happen while our species is dominant. We’ll set that discussion aside for another time. In the real world, FATCA and AEOI are going to make tax avoidance for those wishing to live in a nice country, almost impossible. Almost. But if you are willing to live a peripatetic lifestyle, then you have the possibility of never living 183 or more days in a single location.

For non-Americans, that can make it possible to avoid personal income taxes completely. If you prefer to live a stable life in a decent country such as one of the ten listed here you will pay some income taxes. Your task is to find the country that best matches your criteria for a good place to live and do business while minimising your tax burden.

Ease of Doing business

How easy is it do deal with governments and banks? These are the criteria included in the index:

  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Getting credit
  • Protecting minority investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Resolving insolvency

Economic Inequality

More than a few people would yawn at the idea of economic inequality being a problem because they hope that they will be at the top of the heap looking down. We often think that way because our minds are utterly unable to comprehend the level of inequality in the world. I shall try to give you an idea, though:

Let’s say that you have one million dollars in the bank. We will assign your one million dollars the height of one pixel on a chart. Twenty-eight million dollars would make a line 28 pixels high. That’s just a bit more than a centimeter. So your line is 1/28th cm tall.  About 1/3 mm.
Bill Gates has been busily giving away his money for sixteen years now and has engaged in it exclusively for the past eight years, and yet his net worth is now 85.9 billion dollars. His line next to your pixel is going to be 89500 pixels tall. your wealth is 1/28th of a centimeter. In order to see his line fully, you will need a screen 32 meters tall. And most of the people in the world don’t have even the wealth that an atom would represent in that scheme. That is inequality.

Final Thoughts for Part I

By and large, it is consumption that drives the production pump. However, when there is gross inequality, money is unavailable for consumption and so producers don’t produce. For that reason you want your business to be in a country with a relatively low inequality (GINI) coefficient.

Start a business in a country that scores well on taxes, human development, the ease of doing business and economic equality and you are well on your way to living a long, prosperous and satisfying life.
There is no perfect country for starting a business, but these are some of the best by any objective measure. We can help you get up and running in several of these countries. Save time, money and aggravation. Connect with us.

Wealth, Capitalism & Survival in a Hyper-critical World

Mob attacks plutocrat’s house
Former McKinsey Senior Partner Eric Beinhocker and multi-billionaire Nick Hanauer appeared at the Aspen Institute to participate in a discussion of redefining capitalism. The definition of wealth is fundamental to their system. It is apt that two folks with their particular sets of credentials be the public face for this relatively new approach. Certainly, neither can be accused of being big-government socialists. And they are wealthy enough that they don’t have to be envious of anyone.

Automatic “Wealth” Generation

As Hanauer notes, he’s reasonably bright and works reasonably hard. He’s probably no brighter or harder working than you are, but he’s a billionaire and you aren’t. Why? Automatic, self-reinforcing feedback loops. Without them, Hanauer would have been a moderately successful heir and entrepreneur. But selecting the right parents and the right genes put him in the spot to be the first non-family investor in Amazon.

Hanauer didn’t do nothing, he made some astute decisions and worked reasonably hard, but he didn’t make decisions or do work that would be worth billions in a rational world.
You see, once the money was in Amazon, for the investors, it was just a self-reinforcing feedback loop. Each time you did nothing but let the money ride, it grew. And grew. And grew. The same for two of his other investments. Each was, for him, a self-reinforcing feedback loop.

Wealth is Accumulated Solutions

Wealth/Prosperity, Hanauer & Beinhocker say, is the accumulation of solutions for human problems. Whatever form of stuff you choose, none of it is wealth unless it solves your problems.
If you are in the middle of a desert with no water and a kilo of gold, gold won’t quench your thirst. Someone may show up with a canteen of water and be quite unwilling to part with it. Water will quench your thirst, but your gold won’t. Solutions are wealth, not stuff. Stuff can be a means for accumulating wealth, but it is not wealth.

Capitalism is Failing

Capitalism is the greatest tool for accumulating wealth that man has developed. However, it no longer works. Near-stagnant GDPs in advanced economies all over the world attest to that fact. Obviously, something is awry. Wealth is concentrating at the top. Productivity rewards go to the wealthy. Middle class real wages decline or remain stagnant. Much of the reason for that lies in the failure to understand why Capitalism is better than every other economic system we have tried.

Capitalism is an evolutionary, solution-finding system. The more we remove it from being an evolutionary, solution-finding system, the more poorly it will function. An ethos has developed over the years, that explicitly tries to quench its essential trait. Capitalism, we are told, is a system for generating stuff; the more, the better. As we all know, GDP measures the creation of stuff, not the accumulation of solutions. But measuring GDP leads to perverse outcomes.

Short Termism

By the 1980’s the static economic models used for theoretical illustrations had become cant and affected both government regulation and corporate thinking. Prior to that time the goal of the CEO was a satisfied customer and a satisfied shareholder was a hoped-for byproduct. Starting in the 1980’s the phrase “shareholder value” became inescapable. By 1987 when T. Boone Pickens wrote his Eponymous Memoir, “Boone”, shareholder value, was the siren call for corporate raiders.

Regulations were written the ensured executive compensation would be calculated on share prices, not profits or sales. Accordingly, average CEO compensation rose from 30 times that of the average employee to 500 times…. a relative growth of over 1,500 percent. Executive wages became a large piece of the concentrated “wealth”. This over-concentration of pseudo-wealth has pushed the world into a hyper-critical state. It is the nature of hyper-critical states that very small events can cause a dramatic change in state. The pitchforks and torches may be outside your door tonight.

Growing Real Wealth

If you accept that real wealth is solutions to problems, then you see the world as a very different place:

  • Economic growth is the rate at which problems are solved/
  • Maximising the number of people solving problems will maximise growth and wealth.
  • Therefore, maximising the opportunities to be a problem solver will maximise wealth.

The reader might comment “Governments just get in the way.” But that would be wrong. Although Democratic Capitalism is the greatest tool we’ve ever developed for wealth generation, it has a number of problems:

  • It doesn’t define long-term problems well.
  • Capitalism is biased toward the first, not the optimal solution.
  • It may hamper or destroy good solutions while in the process of providing a bad solution.

The Role of Government

These failures are best resolved by a democratic government that provides the necessary regulation to correct each of these problems. It should not, however abet rent-seeking through predatory licensing (e.g. licensing of hairdressers, cabinetmakers, etc.). Neither should it use any other of the many tools that government has at its disposal to put its thumb on the scale. Regulations are not intrinsically bad or good; their manner of application and results are determinative. Their goal is to help people solve more problems than they create.

The second major role of government is to maximise the number of problem solvers in society. Among other things, this means ensuring that everyone starts their economic life with the best possible equipment to solve problems. Genetics and luck will always determine that outcomes will be different, but in a well functioning society, we can expect wealth distribution to fall on a normal curve.

The very best way you can protect your assets is to live and work in a society that practices this sort of capitalism. As a matter of self-protection and self-satisfaction, you should encourage your government to organise itself to maximise the number of people solving problems.

In the short term, you may want to seriously consider diversifying where you keep your assets. We can help you do that. Contact us now.

Tax Havens and Oxfam – A Case of Apples & Oranges

Singapore's Esplanade theatres. No tax havens here.
Well-meaning people can sometimes get things very wrong. Oxfam has done so in its now-famous report on tax havens.
The following is from Oxfam’s December 2016 report “TAX BATTLES – The dangerous global race to the bottom on corporate tax“:

  • Bermuda
  • Cayman Islands
  • Netherlands
  • Switzerland
  • Singapore
  • Ireland
  • Luxembourg
  • Curaçao
  • Hong Kong
  • Cyprus
  • Bahamas
  • Jersey
  • Barbados
  • Mauritius
  • British Virgin Islands

We applaud the work of Oxfam. Certainly, they have saved untold numbers of lives and prevented a staggering amount of suffering. Still, they should not lump “real” countries with island nations dependent on a bit of tourism and being tax havens. They have a valid point to make; wealth is being concentrated at the top at an increasing rate. That’s a simple fact and there are reasons for it. It needs to be understood that those reasons have almost nothing to do with tax havens. In any case, it is wrong to characterise the Netherlands, Switzerland, Singapore, Ireland, Luxembourg, Hong Kong and Delaware as tax havens. Simply disliking the tax regime of another country or state isn’t sufficient reason to brand them with a pejorative label.

Why Has Wealth Concentrated so Quickly?

One doesn’t need to look beyond the central banks of the world on the one hand and corporate compensation policies on the other. The combination is destructive of innovation, morale and social cohesion. Country-by-country the policies vary a bit, but not enough to break the fundamental pattern.

High Share Prices Counterfeit Success

First, in many if not most corporations, the primary barometer of success is the share price. If the share price goes up, senior executives are rewarded. If the share price down, senior executives receive a lesser or no reward. Of course, the value of their stock options declines as well. Since share price and actual company performance are fairly loosely related, the focus is often on share price. Actual company performance is secondary.

Low Interest Rates Abet Irrational Behaviour

Second, central banks have pursued an utterly useless monetary policy for years which has abetted corporate malfeasance. Cheap money has become the quick and easy way to push up share prices. Two mechanisms are used; share repurchases and mergers. In spite of the obvious insanity, corporations buy back their shares when they are most expensive. They also pursue acquisitions and mergers when share prices are dear. They can only do this because interest rates are low.

Until all nations get their financial houses in order, they are in no position to point fingers. “While many people think of the statutory tax rate when they consider the effect of federal income taxes, the reality is that the statutory tax rate does not represent the best measure of the effect of taxes on a business. Instead, a better measure examines the effective tax rates that businesses face. There are two general measures of effective tax rates – average effective tax rates and marginal effective tax rates.”SBA Study

U.S. Taxes Surprisingly Low

The study linked to above showed that small business C Corporations had an effective tax rate of just 17.5%. Sole Proprietorships had an effective rate of only 13.3 percent. This is in a country that had what was claimed to be an exceedingly high 35% corporate income tax. The idea that Singapore, Hong Kong, the Netherlands et al are tax havens is ludicrous when you look at what is really going on. These “low tax” countries are not responsible for the global concentration of wealth, although they do their fair share.

Follow the Money

If you want to find the tax havens, follow the money. Start with the country whose President claims to be a billionaire and seems not to have paid a penny of income tax in the past twenty years. Sometimes there’s more to saving on taxes than meets the eye.

If you’d like to set yourself up in a “pretend” high-tax jurisdiction so you, too can save on taxes, contact us.

Polish Banks Hacked Via their Financial Supervision Authority

PKO Bank Polski Regionalne Centrum by Henryk Borawski
If you can’t trust the police, who can you trust? Some country set its sights on Polish banks using their top regulator to compromise their systems. Given Russia’s interest in destabilising Eastern Europe, we’re betting it is the hacker. Russian hackers will target banks full-time after the European election season is over. Why do they hack banks? They hack for money, of course, but they hack for patriotic reasons, too.

Battlefield Preparation

NATO worries Russia and Russia wants to fight back. Their military can’t match NATO but Russia’s brainpower is formidable. They are preparing for battle all around the world.

The battlefield is cyberspace and the soldiers are hackers. Every country worth the name is busily breaking into critical systems of likely opponents and are planting cyber IEDs (cIED) to be exploded when the time is right. Sometimes they explode them to to test the effects and sometimes, rarely, they are detected.

KNF, the financial authority became the unwitting vector for a cIED when someone loaded an encrypted javascript virus onto a KNF server that was then unknowingly downloaded by Polish banks accessing the server. The viruses then went to work pumping information out to the hackers that created it.

At least twenty banks in Poland were infected with this virus. It is likely that far more were because up until recently it was undetectable. If it is in Poland, we have to wonder about Latvia, which seems like such a tempting morale for the Russian bear.

Who Better Than the Financial Supervisor

The banking system is very careful. Banks develop systems and test, test, test them to guarantee that hackers can’t get in. It generally takes a security breach to get a hacker in.

However, supervisory agencies tend to be less careful. They have important data, but they don’t handle money, so they are often less careful than they should be. That makes them a perfect vector for attacking the system.

It’s a Hacked World

We regard as laughable the idea that privacy exists today in anywhere but the most backward places. As they say, there are two kinds of businesses today: those that have been hacked and those that don’t know they’ve been hacked.

Take basic security precautions.  You must still make your passwords long and unlikely, but the biggest dangers to your data lie elsewhere. Just living in todays world means your privacy is compromised. Your challenge is to minimise the consequences.

Banking Privacy is Dead in Much of the World

For decades those who wanted financial privacy chose offshore tax havens or East European countries to form companies and open bank accounts. And for decades that made good sense. But two unstoppable forces have put paid to this idea.

First it was the rise of the hackers. Countries in the middle of cyberwar like the Eastern European ones are directly in the bullseye for Russian hackers. On the other hand, island tax haven banks simply don’t have the technical skills needed to deal with todays hackers.

The second was the desperation of countries to maximise their tax revenue. That has led to the coercion of economically weak countries to fork over formerly confidential tax data to just about any big country that asks for it.

Smart Banking

Fortunately, all is not lost. Relative security and relative privacy are still available in the financial world, but you aren’t going to find it in exotic locations. It is time to start looking at countries that are sound. The downside of this is that you’ll have fewer illusions and you’ll probably have to meet your banker face-to-face. If you are running guns or dope, you are still short of options. In fact, you can almost be certain that the only reason you are still in business is because MI6, CIA and FSB want you to be in business.

Singapore is one of the safest places in the world in which to bank. And it is one of the world’s lowest tax jurisdictions. To top that off, several of its banks are among the world’s strongest and their information technology protections among the world’s most sophisticated. Contact us to learn how we can greatly improve your chances of opening an account in Singapore.

FATCA, AEOI and Economic Reformation

Economic reformation to retreat from planetary boundaries
Bumping Against Planetary Boundaries. Derived from globe.svg by Ninjatacoshell

AEOI and FATCA are symptoms of the failed version of capitalism that underlies global political turmoil and the crisis stage our planetary home has already met. Politicians worldwide are desperate to provide enough for their voters to keep themselves in office, but they are failing. Their failure causes disappointment, anger, war, devastation and flight. Populists with worse ideas are attempting to cash in on the chaos. They will be even less successful.

The Failure of Conventional Capitalism

We think we know that capitalism is all about growth. If we could make enough stuff, everyone would be better off. Shallow thinking. Although we all know that the Earth is finite and that we’re not leaving, we act as though Earth’s resources are infinite. The capitalism that we embrace as our secular religion takes that as a given. But the collapse of Venezuela, Somalia, Syria, Western Sahara, the encroaching of sands onto Chinese agricultural lands and the disappearing summer sea ice of the Arctic tell another story.

AEOI and FATCA Measure Desperation

If things were proceeding normally, the OECD governments would not be desperate for revenue. After all, they suck in monumental amounts of revenue every year, that should be enough. Sad to say they then disgorge it wastefully. To top that off, they pilfer it from the pockets of those who need it most and pass it to those who need it least. So they get remarkably little bang for the buck and so do we. This topsy-turvy allocation may align with a fairy-tale version of capitalism but it dispenses with capitalism’s promise.

That’s not news to you, I’m sure. If governments spend revenue unwisely, their first response is to seek more revenue, not to spend wisely. Having emptied the pocketbooks of 95% of their citizens and not wanting to bother the rest, they look farther afield. AEOI and FATCA are the tools they use to suss out additional revenue sources. You look like a likely candidate.

Unforced Change Not in the Cards

Liberals, Socialists, Conservatives and NeoLiberals all suffer from the same illusion that the problem of current debt is solved through future growth. They have to believe it. If they don’t, their whole system collapses. The trouble is that even children can now see that the emperor has no clothes. Politicians cannot see the fallacy because they must not see the it. If they do, they will have no choice but to do what’s necessary to make things better. What could be more unwise than that?

Wealth Concentrates as the World Deteriorates

The structure of today’s capitalism all but guarantees that not only rent-seeking (seeking unearned income) is rife but also ensures through self-reinforcing rental mechanisms greater and greater wealth will accumulate faster and faster. It is accumulating so fast now that this may be the year that one person owns as much wealth as 99% of humanity. At the same time, human population continues to climb and global warming continues to increase with no halt in sight.

Unstopped, global warming will kill us all. Unstopped, population growth will kill us all. And unstopped, wealth concentration will kill us all.
One thing we know with absolute certainty, in a finite system, exponential growth will not continue indefinitely. That’s where we are today. Believe what you want, reality doesn’t care.

Measuring Inequality

I need to make a slight aside here so that you can understand where you are in the grand scale of things. If you have more than US$10,000 in wealth then you have more than 71% of the people on Earth. If you have US$100,000, you have more than 92% of the people on Earth and if you have US$1,000,000 you have more than 99.4% of the people on Earth. And if you are the richest person, you have as much as everyone else put together. Ahhhh the schadenfreude and envy that you must feeling and feeling guilty about, right now, for you are so far above the bottom but the top is out of reach.

There is no way to graph your wealth in relationship to Bill Gates or Warren Buffet. If you have only a few million in wealth, your dot on the computer screen will vanish into nothingness. You’ll cease to exist. Every time he swings his golf club a multi-billionaire accumulates more wealth by the mere fact of his existence than you will in a lifetime of work. Perhaps you think that’s okay. I don’t.

Traditional Capitalism Encourages Shoddyness

Somewhere along the way progressing out of my lower middle-class life I learned that a little extra money spent on clothing bought clothing that was an order of magnitude better in terms of durability and wearability. One could easily spend twice as much on a piece of clothing and get ten times the wear out of it. As it turned out that was true of many things. (Not cars, unfortunately. or smartphones.) Those who patronise Walmart ensure that they’ll need to keep patronising Walmart because the quality is so poor that they have to keep shopping there for replacements. Savings in the world of shoddy are hard to come by.  A few more dollars spent at Land’s End, Duluth or L.L. Bean can mean a decade’s difference in the life of a skirt or shirt. Longer-lived clothes are one more way to add to your bank account.

This isn’t meant as an anti-Walmart tirade, it is to point out that mere numbers do not tell the story of economic progress. Take Las Vegas as an example.

Las Vegas – Home of the Ephemeral

Las Vegas Boulevard is a strip of disposable multi-billion dollar dream castles and fantasies.  The Neon Museum in Las Vegas is the final resting place for the signs of once world-famous casinos that are no more. It houses the last echo of casinos that were wondrous, shoddy creations in their day; creations that deteriorated and outlived their use-by dates and were imploded to make way for equally shoddy successors.

How much more money would have had to have been built into the design and construction of each of these buildings to extend their lives for one or two hundred years?  Ten to fifteen percent. That’s all. But of course the pay back would have started a little later and taken a little longer, and that was all that mattered. It should be obvious that this sort of thinking is a direct contradiction to universal principles and patterns of systemic health and development.

What Can be Done

Regenerative Capitalism offers a way out. But it calls for a radical shift in perspective. Growth is out. Improvement is in.

Here I adapt page 8 and 9 of Regenerative Capitalism

These are the eight characteristics of a healthy human system:

  1. A Healthy System is Innovative, Adaptive, Responsive.  The most innovative, adaptive and responsive systems are the ones most likely to prosper in a world of change.  In Darwinian terms, they are the most “fit”.
  2. It Empowers Participation.  In an interdependent system, fitness comes all parts contributing and taking from the system so that the whole benefits as well as the parts.
  3. A Healthy Human System Honors Community and Place.  Each human occupies a unique place in the system and came to that place through a unique history. A healthy system will honour each person’s place and history.
  4. It Fosters Edge Effect Abundance.  We are a collection of small systems and maximum creativity occurs where different systems touch, not at the center where things are uniform. Working collaboratively across the edges enhances each system.
  5. It has Robust Circulatory Flow.  Economic health is dependent on the robust circulation of money, information and resources.  Sequestering these in the hands of a few leads to economic death.
  6. A Healthy System Seeks Balance.  The Regenerative Economy seeks to balance efficiency and resilience; collaboration and competition; diversity and coherence; and small, medium, and large organizations and needs.
  7. It is In a Proper Relationship.  Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.” The scale of the human economy matters in relation to the biosphere in which it is embedded.
  8. It Views Wealth Holistically.  True wealth is not merely money in the bank. It must be defined and managed in terms of the well-being of the whole, achieved through the harmonization of multiple kinds of wealth or capital. These  include social, cultural, living, and experiential capital. The human system must also be defined by a broadly shared prosperity across all of these varied forms of capital.

Where to Start?

AEOI and FATCA are, as I mentioned, tools that demonstrate the desperation of governments to increase their revenue streams. Resistance is futile. They will have their way sooner or later and you must become comfortable with that fact. There are two things you can do, and both are important:
First, you can avail of legal options that will reduce or eliminate the taxes that you now pay through careful tax planning. I personally detest the idea that we have a system that enables this form of legal cheating, but that’s the system we live in.Contact us for some ideas.
Second, Read Regenerative Capitalism.
Third, Get locally involved, no matter where you are. If you are reading this, you are the kind of person that can make things happen in your community or communities adhering to the principles above. Do it.