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Wednesday, 2 May 2012

Desperate Times see Desperate Measures


What was the Government's decision making process?
The nature of economic growth is such that it is small and medium sized businesses which are the economic powerhouse of a nation. Large companies continue to grow, but through acquisition rather than innovation.

Large companies in recession are typically those which will survive by cutting employees and it is this sort of behaviour which we have seen in the recent downsizing by HSBC, RBS, Lloyds TSB, RBC, etc.

There has been a sudden raft of investigations by the States of Jersey of local businesses and people.

Jersey Financial Services Commission continues to 'investigate' small finance firms and put them to the wall with the cost of these investigations. The restaurants of the island have come under attack from the Treasury Department and at least one, Five Seasons, recently was forced out of business by the costs involved. Jewellers have also suffered a rash of these investigations recently.

This has a negative effect on the economy for the following reasons;

Firstly the cost of these investigations is prohibitive to small business, it diverts capital which could otherwise be put to work, into dealing with profitless questions from the civil servants. Civil Servants of course are not required to be economically productive but rather are parasitic, living off the hard work of normal people.

The cost of this harassment ultimately has a negative effect on the amount of taxation which is raised as obviously any costs are taken out of profits and therefore the amount raised in taxation declines.

It seems apparent that Government is solely concerned with short term goals of increasing immediate income and has not put due consideration into the longer term effects of this short term thinking.

Businesses have closed or are prevented from working efficiently, people are out of work, tax raised will decrease and their benefit liabilities will increase. Government could be making greater strides by dismissing the staff which are wasting people's time in this manner.

Of course if the Government thinks it could do a better job then perhaps it should nationalise all these businesses. Tomorrow I will look at the likely outcome of such any decision to form the Union of Soviet States of Jersey.