Until now, the left-wing hyperventilating over corporate “inversions” has been out of proportion to the number and size of corporations actually doing it. This is partly because Democrats are looking forward to using the issue in a populist anti-corporate crusade. They’re practically salivating over the chance to scream about “unpatriotic” companies re-incorporating in Canada or Europe to get out of paying American taxes.
The other reason inversions became a big deal over the past year or so is that a lot of companies were thinking about it. The political class has a lousy track record of predicting the future, but their antennae tend to be quite sensitive when it comes to the impending loss of tax revenue. And they’re right to be worried. Every time I discuss the impending systemic crash of American government, which I think is now a decade away at most, I make the point that the Great Crash will begin some months before insolvency causes Big Government systems to fall apart, because the smart people – who also tend to be the rich people with lots of assets – will see it coming and get out of Dodge, hastening the onset of the very crisis they seek to avoid. Sharp investors and business tycoons have both options for escape, and the prescience to exploit them.
So now we’ve got Burger King, a company everyone recognizes, working on an inversion deal… with the assistance of Warren Buffett, previously presented as Barack Obama’s favorite tycoon, the very model of a “patriotic millionaire.” (Never mind that Obama consistently misrepresented Buffett’s actual proposals for millionaire taxes; Buffett let him do it, which makes him complicit.) Sometimes these deals fall apart, but if it goes through, you’ll hear a lot of howling from Democrats about the evil and unpatriotic court of His Majesty the King of Burger.
It’s incredibly wrong-headed – damn near suicidal – to fret about building higher tax and regulatory walls to keep multinational corporations captive in the United States. We should be looking at these inversions as a clear warning sign that our government has gone off the rails, and our tax system is choking our economy to death. The problem is not Burger King, or Canada, where they are planning to reincorporate. The problem is America, Washington, Obama, the tax code, and our whole attitude toward anti-competition.
Because this is really all about competition. In a global economy, governments are competitive too. That means they can lose “customers” if their policies are absurd. The United States should be the most vibrant and competitive government entity on the planet. We should be a mighty Galt’s Gulch that stretches from sea to shining sea. Instead, our Ruling Class has this crazy idea it can hold multinational corporations captive – luring them in with access to American markets, then pinning them down and sucking them dry. It won’t work. It never works.
Our Founding Fathers understood the importance of encouraging competition and learning from it. That’s one reason federalism and decentralized power are such wise ideas. Nothing promotes both efficiency and the rights of all citizens better than competition, which means people and business entities can flee from abusive, corrupt, foolish ruling elites. Nothing makes politicians stop seeing themselves as elites better than giving their “subjects” the option of withdrawing consent. The “consent of the governed” is supposed to be a big deal for Americans, is it not? Well, it is meaningless to discuss consent if the governed have no way to withdraw it. Make the populace captive to inescapable central authority, and you should not be surprised to find yourself ruled by arrogant elites who care only about pleasing the constituencies that finance and empower their campaigns.
Nothing defends against the tyranny of the majority better than the ability of the governed to withdraw their consent. If you had not already remarked upon it, the ObamaCare disaster should have made it clear that when the populace is captive to centralized inescapable power, unhappy citizens can be ignored. They can be defeated. There are people who are pleased with the insurance ObamaCare has given them. They care not a whit about the people who have been made to suffer by losing their insurance, or who are taxed to provide lavish subsidies for the lucky “winners” in the system. Why should they? What are those unhappy victims going to do, leave the country?
The whole mindset of the political class changes when they know they have to win all of their citizens over, serve all of them, and protect all of their lawful rights. As soon as a political system is sealed off, the business of rewarding “winners” and defeating “losers” begins. Corporate inversions are the best thing that has happened to American government in a long time: a shot across the bow that should warn the political class that they’re steering us toward rocky shores. It’s a clear signal that the United States has lost its competitive edge on the global stage. We should be responding to that alarm, not slapping the snooze bar with quick-fix legislation that will punish the productive for seeking to escape.