Tuesday, December 14, 2010

Flying a Questionable Flag Liberia’s Lucrative shipping industry

Khadija Sharife has yet another fine article, this time in MIT Press Journals.

The article is an important piece of much overlooked history into an unpleasant pieces of offshore maritime history: a tale of warlordism, arms dealing, corruption, villainous bearer share systems, malpractice, secrecy, and powerful U.S. corporate and shipping lobbyists. The U.S.-based International Registries Inc. in Reston, Virginia, states its business model bluntly:
"Generally the goal is to maximize profitability, while minimizing the risk of exposing beneficial owners to personal liability.”
A contract with Liberia will provide “cloaking” services that are “almost impenetrable.”

In light of this we should point out, yet again, that the money that flows in from these activities are what economists call rents: the unearned income of what Adam Smith called "the man who loves to reap where he did not sow." It is, in this respect, just like oil, and it fosters corruption for the same reasons that oil fosters it (see here for an in-depth explanation of how this all works.)
Advanced economies that aspire to be, or are, secrecy jurisdictions, face similar corrupting pressures from rents derived from secrecy, because these earnings are economic rents, just as they are in Liberia.

There is much else to read in here. One of these is the overt reference to extreme corporate freedoms, unbound by democratic constraints:
"the [Liberian shipping registry] company’s brochure touts, “the great seal of Liberia proclaims, ‘the pur- suit of freedom brought us here.’ and it is the pursuit of corporate freedom, which maintains the continued dominance of the Liberian offshore business entity.”
This article is an important one, so we will be adding it to our nascent Offshore History page.

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