Capitalism reinvented

Capitalism is being re-invented and there are new strategies on protectionism and tax friendliness. Malta is perfectly positioned as a tax-friendly haven that obeys both the word and spirit of international law.

HSBC's call centre or De La Rue's banknote printing plant in Malta would be far more expensive to run in the country hosting their parent organisation's head office.

Offshore activity is a legitimate exercise of sovereignty. It is a custom which prospers because of the human instinct for the secretive creation of wealth. It is bound to expand exponentially with the movement of the world towards a paper currency, under-primed to a considerable extent, by gold or copper, or a combination of both.

Man's natural instinct to hoard and his deep-seated hypocritical attitude to plead poverty will ensure a puritanical reinvention of capitalism. It is notorious how banks have often been founded by deeply religious people.

Catholics, Jews and Quakers have all founded banks which made massive use of the principle of 'offshore banking'. Capitalism would have been impossible without it. The Vatican used the Medicis of Florence to bank their money, and demanded no interest. They later used the Rothschilds of Naples and bankers in Malta who obtained in return titles of nobility.

The Financial Times's series on the future of capitalism concluded that the world needed more globalisation, not less. "Capitalism's worse crisis in 70 years has not prompted a serious alternative vision of society", the FT pointed out.

That is despite the obvious massive manifestation of uncertainty causing sudden financial swings. Society will continue to develop according to old behaviour parameters. The psychology and economics behind tax havens is unchanged.

This seems to be the conviction of both Obama and Brown, who are both seeking to retain tax havens in their country while seeking to dismantle them all over the world. We notice protectionism run mad.

This hypocritical policy, which is damaging to Malta's interests, has been labelled as such in both the FT and The Economist. The latter published an article on April 3 entitled 'Haven hypocrisy'. It was reproduced immediately in Il Corriere della Sera, Italy's top quality newspaper.

The article maintained that anonymous companies can open bank accounts and move assets both in the US and the UK. All this costs in the UK is $753. This is nothing but an insidious and most dangerous form of protectionism against which every investor must be guarded by researching possible strategies for a reorganistaion of portfolios.

The world is fast becoming a very different place, and we all must know what is happening, or we will have to answer with our life-blood - our money.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S & P.

johnazzopardivella@hotmail.com