There's no better way to understanding the destructive distortions governments around the world cause in their economies than through Austrian economics.
In case you don't know, Austrian economics is based on the analysis of the purposeful actions of individuals and advocates, property rights, the free market, and sound money while opposing taxes, price controls, capital controls, and other destructive government interventions in the economy.
Ludwig von Mises – the leader of the Austrian School of economics – claimed that the first job of an economist is to tell governments what they cannot do.
Austrian economics contrasts sharply with mainstream Keynesian economics, the type of economics taught in public schools.
Being essentially a state-sponsored school of thought, it is no wonder that Keynesian economics seeks to justify destructive government meddling in the economy.
It is also no surprise that Ron Paul chose Austrian economics.
Austrian economics is very relevant to international diversification because it gives us the intellectual tools to better understand the distortions that actions of a desperate government can cause… and how to better position our investments and ourselves as a result.
This is why I am very glad to bring to you this conversation between Jeff Deist and Dan Mitchell.
Jeff is the president of the Mises Institute and Dan Mitchell is a renowned defender of tax havens.
I think you'll enjoy their conversation below.
Jeff: Dan Mitchell is a PhD economist and the Cato Institute's resident tax expert. He's also a great defender on moral grounds of so called tax havens, which are nothing more that sovereign foreign countries that dare to have lower tax rates than Uncle Sam prefers.
Taxes sound like a boring subject, but Dan brings great energy and passion. I must say from my own perspective, he really demystifies some of these tax issues in a way that is very readable for a layperson.
Dan will tell us why the US worldwide tax regime violates the basic human right not to be hounded by a country in which you neither live nor have income, why Burger King was right to move its corporate headquarters out of the US, why greedy politicians hate tax competition, and why invasive laws like FATCA should scare anyone who cares about privacy.
Welcome, Dan. How are you?
Dan: I'm doing just fine considering I'm living in the epicenter of Washington DC, which is always uncomfortable.
Jeff: I have to say, you must be one of the most important antitax intellectuals in the world. I well remember working in Ron Paul's office in the mid 2000s. We very frequently cited your material. So you've really spent an entire career in demystifying and exposing the whole rotten tax schemes. Kudos to you for that.
Dan: Thanks… maybe it's just a sign that there are far too few people in Washington trying to limit government than expand it.
Jeff: Tax havens seem to be a particular point of contention for our progressive friends. But we've heard the left's view on tax havens ad nauseam. I would love to get your thoughts on how we, as liberty minded folks, should defend lower tax jurisdictions.
Dan: Well, I like tax havens because they restrain the greed of politicians. Politicians always want to finance bigger government. If they have to worry that the geese that lay the golden eggs might fly away or at least that their money may fly away, that's going to restrain their appetite for higher taxes.
Globalization dramatically increased the ability of taxpayers to seek out low tax jurisdictions that have strong human rights laws regarding financial privacy. I think that's one of the reasons why so many countries lowered income tax rates beginning in the 1980's. The average top personal tax rate in Organization for Economic Co-operation and Development (OECD) countries – basically developed countries of the world – the average top tax rate fell from nearly 68% down to the low 40s%. The average corporate tax rate has fallen from 48% down to 24%. There have been big decreases in the double taxation of dividends, interest, and capital gains.
