A number of these so-called havens, including Bermuda, Malta, San Marino, and the Cayman Islands, have already signed a preliminary letter of commitment based on the strength of such threats. In fact, financial protectionism seems to directly contravene the goal of expanding trade. Also, it seems quite straightforward, given recent experience, that the goals of economic growth, reduced unemployment, and increasing living standards are best achieved through competitive tax levels, prioritized government spending, and appropriate regulation. What competition achieves What is inherently contained in the logic of the recent OECD reports is that competition is destructive. This is antithetical to the OECDs own philosophy.
Competition ensures that resources are used efficiently, whether by business or government.
This efficiency translates into lower prices, greater choice, and better quality for consumers and taxpayers. Similarly, producers that survive the rigours of competition are stronger and more viable entities. Competition between countries forces governments to focus first on those areas where they have a legitimate and primary rolesuch as protection of property and persons, infrastructure, and national defense. In other words, competition forces government to focus its efforts in areas where society actually benefits from active government participation and where society receives the biggest gain from government spending. Governments that focus on those key areas and charge taxes related to those services will be rewarded in the form of increased human and financial capital.