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New jobs for old

"New jobs for old." "New jobs for old." Like Abanazar in Aladdin, pantomime politicians rub the magic lamp of e-commerce, frantic to conjure up the genie of new jobs to replace the millions disappearing from manufacturing. At the Lisbon summit they promised to create 20 million e-jobs across the European Union. Bunkum! Businesses create jobs; governments create non-jobs at the cost of taxing viable companies out of existence.

These self-styled viziers don't understand that technology is the problem, not the solution! Productivity is delivered by machines needing only a few machine-minders. Wealth is created from the rare talent of knowledge workers, not from the labour of retrained low-grade service and production workers. Growth has been decoupled from employment. The painful reality is that much of the business case for e-commerce lies in laying off labour.

A successful e-commerce environment must promote and finance entrepreneurial activity. This requires socio-economic institutions delivering the incentives that mobilize talent: witness the phenomenon of Silicon Valley, the 'Intelligent Island' of Singapore, and the economic miracle of Dubai. Unfortunately, talent is in very short supply. Thus every state must scour the globe for alphas, no matter what their age, sex, race or religion. Drag them off the planes if necessary.

Enlightened countries are changing their tax/regulation schemes to attract in both individual workers and hi-tech companies. The USA has a shortfall of 900,000 high-tech workers, so it hands out 115,000 (soon to be 195,000) six-year H1-B visas annually to attract skilled workers. They don't even put a quota on their Intra-Company Transferee L-1 Visa program.

The Americans know that sentimental words about national loyalty have no effect on a New Barbarian^[i] elite that is emerging around the world. Self-interested citizens are losing their faith in the nation-state, the collectivist doctrine that we are all equal in that we are all property of the state, and that the leaders of the state can dispose of (tax) its property as they see fit. All taxation is theft - it is the state obtaining money with menaces. Government is merely legitimate organized crime: even the mafia doesn't charge 60%.

Countries that haemorrhage talent will become economically unviable, composed solely of the unproductive masses, sliding inevitably into a vicious circle of decline. Loyalty to 'self' is replacing loyalty to the nation-state. New Barbarians choose to give their loyalty freely and voluntarily; loyalty is no longer an accident of birth. It is individual not tribal; contractual not judicial; it is made consciously on the basis of unashamed rational self-interest.

Disillusioned and over-taxed at home, talented individuals are emigrating. Some are heading for cyberspace: to "the greatest tax haven of them all, Bermuda in the sky with diamonds" (William Rees-Mogg). Laetitia Casta, the model who posed for the statue of 'Marianne', the symbol of French womanhood found in town halls all across France, is now a tax-exile in London.

"The internationalization of markets ... will have large effects on some [tax bases] (financial capital), marginal or no effect on others (land, already installed capital, unskilled labour), and intermediate effects on others (skilled labour)"^[ii]. Vito Tanzi could have gone much further and made more dire predictions about information capital, of which financial capital is a mere subset.

Because of the need to employ the local masses, wealth generating job creators must be showered with tax credits, tax holidays and other financial incentives, and reduced regulation. Tribal leaders can no longer intimidate the entrepreneurial elite in their society, who will move on to more lucrative and agreeable climes. In 1999, fifty French millionaires moved to London to avoid French taxes. Ireland levels a low rate of corporation tax, and despite being a small country of around three and a half million people, it is now the biggest exporter (or should that be re-exporter?) of software in the world. With an eye on 'content' and not just 'infrastructure, Eire also gives writers and artists preferential tax deals on foreign earnings.

With only the most rudimentary telecommunications infrastructure, a state can still act as a tax-haven and data-haven for footloose individuals and organizations. There are no barriers to entry; this is hi-tech business by proxy. National governments cynically sell 'nationality' for fund raising and inward investment. Eire gave Sheikh Khalid bin Mahfouz (a good Irish name) certificates of Irish naturalization in return for an investment of 20 million pounds^[iii]. Tonga prices its passports at around US$20,000 each^[iv]. Belize charges US$50,000 per family^[v]; the Dominican Republic $17,900, Panama $19,900^[vi]. A 'business migration scheme' attracted Hong Kong businessmen and women into Australia at A$500,000 each^[vii]. They're all at it, and they have been for years.

The big-boys of the developed world in their G-7 cartel can no longer use their technological superiority to keep the rich pickings for themselves. The OECD is  crying foul over the "unfair lowering" of tax rates and a "race to the bottom" that could lead to "fiscal degradation". Strapped for cash, governments will steal (tax) anything in a solid form. Taxes on fuel, food, clothes and particularly property will inevitably rise. Or a "bit-tax"? The state will swindle its share of electronic-trade by taxing data flow, as if it was whisky. However, the value of information does not correlate with volume. A Hollywood film accounts for a gigabyte of data; whereas commercially valuable data would be a tiny fraction of that size.

As the tax-bases of the industrial age unravel, politicians need the money to support the profligate who vote them into office, and so are finding new ways of penalizing the thrifty and hard-working. Such taxes must be levied either at 'source' or on residence. If tax is at source, that source will find its lowest level: somewhere else if levels are high. Based on 'residence', tax can be collected only if the authorities have global access to data on the international flow of information capital. Finding it increasingly difficult to intercept this data by electronic means, states are reverting to the invasion of personal privacy. In Europe the UK is leading the way with its RIP (Regulation of Investigative Powers) Bill.

Apparently such tried and tested methods of taxation with intimidation are morally justified. This is how the European Union will create a 'fair' Information Society across the continent. Meanwhile the United States is creating an Information Economy with the help of the world's economic mercenaries. Who will win: Information Society or Information Economy? The smart money says that new barbarian Ali Babas will help the USA win the battle for dominance of the Information Age, leaving the pantomime Forty Thieves to transform the EU into an e-U(or rather an e-USSR).

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