Friday, May 16, 2014

The Idea of America is Still Alive and Well. It's Just Relocated Offshore

By Simon Black

I've been invited to make a presentation this afternoon to a group of entrepreneurs that have been accepted into the Startup Chile program.

Startup Chile is a very attractive program for entrepreneurs; they essentially receive a cash grant, a residency visa in Chile, and a number of other perks including mentorship and networking opportunities.

The really great part about it is how international the program is; they accept people from all over the world.

Whereas some places that have traditionally been viewed as Startup havens (like the United States) are chasing talented foreigners out of the country as quickly as they can, Chile welcomes them.

And it's one of the reasons I think this country has such a bright future.

At the end of the day, a business is only as good as its people. Great companies hire bright, energetic workers... otherwise they turn into the Department of Obamacare.

This is the prime reason why so many great companies continue to operate in places like northern California and New York despite the high costs.

Sure, they could set up shop in the Marshall Islands where the tax rates are zero and the cost of doing business is trivial.

But they wouldn't be able to find a qualified work force, or any credible business infrastructure.

Companies are ultimately going to go where they can prosper. If they need brilliant employees, they'll go where the brilliant employees are.

This is why Chile is so unique, though.

With its easy immigration code and labor laws which allow companies to hire a multitude of foreign workers, Chile is a place where talented foreigners can easily relocate and continue their careers.

This is even more favorable for young startups, which can literally import their entire team to Chile, quickly and legally.

Yet even though the talent is here (and growing), or companies can easily bring in their own people, they don't have to pay out the nose for it.

Cumulative corporate tax rates in Chile are half of what they are in California or New York. And overall tax collection as a percentage of GDP in Chile is among the lowest in the OECD.

Not to mention, the cost of doing business is much lower.

This is going to be a major long-term economic driver for Chile (as long as they don't screw it up).

Other places have adopted this strategy as well-- Puerto Rico is one notable example, where US citizens are already authorized to move. And corporate tax rates can be as low as 4%.

In the coming years, talent, capital, and productive businesses will flock to these places because they'll be able to find all the things they need to prosper.

This is what America used to represent-- the freedom to work hard, prosper, and generally be left alone.

Those principles have been choked off by out of touch politicians and bureaucrats in the United States.

But the idea of America is still alive and well. It's just relocated offshore.

Have a great weekend.

Simon Black is Senior Editor  at Follow Sovereign Man on Facebook, Twitter, Google+

1 comment:

  1. I see. I crony (private-public) program run by a bunch of elite Business school types (MIT, Stanford - home to US Defense and Intelligence research) with venture-capitalists and the Chilean government (repeat GOVERNMENT) is now being touted as the American idea of freedom.

    Simon Black must think the American libertarian crowd is a bunch of suckers.