From: Gary Howland <gary@systemics.com>
Date: Thu, 4 Jul 1996 22:30:15 +0800
To: hallam@Etna.ai.mit.edu
Subject: Re: Noise: Re: Those Evil Republicans
In-Reply-To: <9606262325.AA25647@Etna.ai.mit.edu>
Message-ID: <31DBA835.6EEA4806@systemics.com>
MIME-Version: 1.0
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hallam@Etna.ai.mit.edu wrote:
> 
> Jersey and the Isle of Man are not independent soverign nations. The
> Manx parliament is subordinate to the English Privy Council and Jersey
> is similarly an anachronism. Andora is ruled jointly by the French President
> and a Spanish Bishop (or is it the other way round?).

Andorra is a self governing sovereign nation - the French president and
Spanish bishop play only titular roles.

Regarding Jersey and the Isle of Man, I misunderstood the requirement for
the countries to be independant - we were after all discussing countries
which have no control over their currencies.  Still, there are many
non-independant countries that do not use the currency of the country
they are dependent on - for example Bermuda and BVI (both UK dependent)
use the US dollar.  Many of the Caribbean islands which are UK dependent
(eg. Anguilla) use East Caribbean dollars.

There are also several independent sovereign nations that have no control
over their own currency (eg. Liechtenstein (the one you mentioned), Andorra,
Monaco, Nauru, Marshall Islands, Micronesia and Pueto Rico).  One could
even argue that countries such as Cuba have relinquished control over
their own currency by tying their Peso to the US dollar (which is also
widely used in Cuba).  The same could perhaps be said of Luxembourg.

> Fogive my skepticism but I don't think that any ecconomist would seriously
> suggest these as usefull models for modern industrial societies. The chief
> industries being parasitic on those of larger nations.

First of all, "parasitic" is a very derogatory term to apply to these
nations.  They are no more parasitic than out of town supermarkets.

Second, you suggest Liechenstein as a useful model for a modern
industrial society that has no control over its currency, but then go
on to criticise Andorra as a useful model.  Why?

Third, you have missed the point I was making, that of Goodhearts law,
which loosely states that "attempts by the government to regulate or
tax one channel of banking business quickly lead to the same business
being conducted through a different channel which is untaxed or
unregulated".  Surely the fact that every large nation has its
banking tax havens (eg. UK has the Channel Islands, the US has the
Caribbean islands) is proof of this?


Gary
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pub  1024/C001D00D 1996/01/22  Gary Howland <gary@systemics.com>
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