The Conversation

Capital flight made easy

I've always thought the surest sign of an impending systemic collapse would be the rapid departure of the Evil Rich.  Wealth brings options for re-arranging your life that are simply inconceivable for the rest of us.  The middle class can't rearrange its affairs to shelter income and assets from taxation, or relocate away from high-tax sinkholes, the way wealthy people can.  When an average Joe's tax burden grows, he grits his teeth and cuts down on discretionary spending; he can't carefully and precisely restructure his financial activities to reduce tax exposure, and he can't just get up and move to a different state (or country) on short notice.

If you want a lesson in how quick and easy capital flight can be, for those who have lots of capital, look at France and California.  French socialists are quite literally stunned at how fast M'sieu and Madame Moneybags packed up their liquid assets and headed for the border.  California has been hard at work reducing its tax base for years, and it keeps finding new ways to accelerate the process.  When a true systemic crash is imminent - when the cash-strapped government is on the verge of turning feral - smart people with deep pockets will vanish in droves.  That, of course, only makes the fiscal crisis worse, because the Left suddenly finds itself with fewer pockets to pick.  The former members of the "upper middle class" will be astounded at how quickly they become the hated Evil Rich.


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