Panama, France and "laissez-faire"

Recent political news in Panama features conflicts between President Martinelli of Panama and France`s leader President Sarkozy. It seems that just after Martinelli`s visit to France to review among other things the terms and conditions for the release of former dictator Noriega for return to Panama custody...Sarkozy chose the following week to claim that Panama is not cooperating with them on collecting taxes from their countrymen or corporations in Panama. I guess the meetings in France did not create good karma for whatever reasons. Now Panama authorities are retaliating by cancelling business and finance deals with French sources on some of the major projects going on in Panama.

Regardless of France`claims, I as a foreigner living in Panama can attest to the fact that Panama and its banks have made it much more difficult to open accounts and do business as foreign entities in this small Latin country. It strikes me as somewhat disingenuous of France to make this claim based on what I have seen first hand of the changes and increased taxation taking place in Panama.

What might be more interesting on this front has been the many comments and reactions I have read internationally to this charge. It is quite obvious that France, the USA, Great Britain, and many other Western countries have found themselves in more desperate hard times than they are willing to admit. There is no doubt that there is significant cash flow LEAVING these high tax countries. Of course, the real issue is that it is not foreign money leaving these former economic powerhouses...but significant domestic funds are leaving for better opportunities and lower taxation as well. While it is no shock that these countries are trying to stop that exodus of capital...it is still arguably immoral and illegal for these governments to do so. What they are in fact admitting is that they have allowed their systems to become upside down in debt and social entitlement to the point where their governance is unsustainable. It is much easier to blame a country of less than 4 Million inhabitants for your troubles than to accept blame and take REAL measures to give your constituents real incentives to stay the course behind your leadership economically and otherwise.

While few of us really understand the powers that function behind these superpower trading blocks, there is no doubt that Centralized global funds are running scared. There are huge discrepancies between the economies of many of these main political and governmental partners. They have truly grown "too big to manage" versus "too big to fail". The "Superpowers" of current western persuasion are trying to unite in their efforts to stop the bleeding of funds leaving their losing propositions for more upside elsewhere in the developing world. If people`s votes in these supposed democracies vote against investment and for highly taxing retained profits...the money will find a way to go elsewhere. And yes, you can see a lot of it in the Panama construction boom and rise in domestic and international financing here.

Outside of losing military protections in the canal zone, I find it hard to identify motivators for Panama to work WITH the USA and other superpowers in sustaining their high tax systems. Cant any of these players just admit that "globalization" is here to stay and that tomorrows winners will be those countries who offer the best incentives and lifestyles for living, working and investing within those few countries? Must the world continue to bear the saber rattling and cries of "fowl play" from governments that have been upside down economically for decades now? Must countries like Germany, Switzerland and even Asian countries like China, Taiwan and Singapore continue to bail out the former empirical powers of the West?

Western Civilization has overall lost its edge on managing productivity and profits. They continue to fail in legislating moralities and redistribution of wealth. Technology and globalization has now irrevocably taken away any monopolistic opportunities for superpowers to hog resources or control global money flows. Even the recent unconstitutional taxes that the USA has passed will ultimately fail to rescue their sinking ideology. Only continued market competition between regions and states will keep a real score on who wins the global competition on profits and upward mobility. I would argue that Latin America is getting set to realize significant, sustainable growth primarily because they are now more independent of the superpowers to do so. The USA has lost its insider relationship with these countries...primarily because it has been so preoccupied with fighting terrorism. Unfortunately, they have gotten so caught up in the fighting that they have forgotten it takes money and productivity to create and sustain the machinations of warfare. It is a losing proposition I am afraid. Just look at the lack of fanfare over the USA`s complete pull out of Iraq. Where are all the bands and flag-wavers on this one?

So, this brings us back to little Panama. While all of this global hoopla has been going on over terrorism and EURO meltdowns...Panama and other countries in this region have been growing fast and furious. Banks are full of cash, and unemployment rates are next to nothing....and now the likes of Sarkozy and USA voices come out of the woodwork crying about their loss of revenues and investment to these little Banana Republics.

While all is not perfect in Panama...and I fear they are living and investing in the same track as the USA did historically with big debt against irrational income expectations and entitlements...it is little wonder Panama and other democracies in this region are garnering such huge upticks in economic growth and production. France and other Western powers should simply focus more on encouraging their citizens and domestic companies to become more productive and competitive. Quit making it so easy for the Panamas of the world to pick your pockets of prosperity. After all, "laissez-faire" is a French word and concept...meaning an environment "in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies...and literally means "let do", but it broadly implies "let it be", or "leave it alone."