Financial regulation: internationally competitive = domestically dangerous
"Here’s a quick and dirty way of judging the quality of your country’s financial regulation: to what extent do you create and impose tougher-than-international standards?Quite so. This is the consequence of a race to the bottom. (A second consequence, of course is that the lowest common denominator typically gets lower.)
By their nature, international standards are the lowest-common-denominator."
He gives a few examples, and then a pretty bleak conclusion:
"The fact is that regulation is one of those things that doesn’t have a natural political constituency: rich banks are good at lobbying against it, while there are no effective or well-resourced lobbyists on the other side. So while it’s worth celebrating the occasional piece of capital-related good news, the long-term outlook remains exactly the same as it did in 1998: at the margin, the administration — no matter whether it’s Republican or Democrat — is going to help the financial industry be “internationally competitive”. Which is another way of saying domestically dangerous."Quite so. And, we should add, internationally dangerous.
Internationally competitive = domestically dangerous. This could be a maxim for our times.
And it also applies to tax.
PS: We recently wrote about all of this with respect to derivatives. This comes to a head today. And although we currently only have a superficial understanding of the fast-changing action, it looks like the bad guys are winning.