The great curse of democracies is that eventually a majority of the people become addicted to and demand ever more government benefits that cannot be funded by the diminishing numbers of taxpayers or through borrowing.
Warren Buffett famously explained to his shareholders in 2004 that investors “should try to be fearful when others are greedy and greedy when others are fearful".
Just as natural science developed out of a natural philosophy we are hopefully moving toward a science of regulation, both in the sense of being well-established knowledge and drawing on political science and quantitative economics.
The quality and cost of payment services from M-Pesa in Kenya to Apple Pay in the U.S. are steadily improving. However, the channeling of saving to investors is lagging behind.
Cayman has taken just such a permissive approach to certain forms of financial regulation and has reaped the benefits. Extending that approach into other areas might well enable the island to become a hub for other entrepreneurial activities, to the benefit of islanders and to the world.
At age 19 there was no doubt in my mind that I did not want a career in criminal law. I chose the much more objective (and enjoyable) commercial law. So much for that!
In the early 1970s, there was no euro, Greece could print as many drachmas as it wanted, and the notion of a common European fiscal policy would have been dismissed as sheer fantasy by all but the most ardent proponents of a “United States of Europe”.
The global debt crisis is leading to increased money chaos. Europe is in the worst shape, but the debt and money problems are to be found almost everywhere on the globe. As an economist who has often written about money, I feel a bit of embarrassment about how little progress we have made with “money”.
If the Cayman financial industry were faced with extinction or only the potential of a diminished role, we would not bother providing you with the third edition of the Cayman Financial Review, which you are now reading. Cayman can continue to grow as a financial centre, provided both the new government and the financial industry do more to protect it from the financial imperialism of foreign governments, and provided the private sector – with the support of government – develops new products and continues to improve existing financial services.
Consider the following recent comments by key regulators in the United Kingdom and the United States and a likely one from France:
An explosion of prosperity around the world has followed the increasing liberalisation (globalisation) of trade and investment.
The apocryphal Chinese proverb, “May you live in an interesting age”, describes the current international financial environment – from the US FATCA to the various “me too” versions being hastily put forward by European governments, the world’s financial plumbing is being reworked.
We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene degree of wealth inequality in America.