Although it was teasing a bit, The Economist magazine last fall described the Netherlands as a “small, affluent, densely populated northern European country, economically timid.”
That characterization stayed with me; it sounded so, well, you know, Connecticut-like. We are small; we are affluent (except for newspaper columnists); we are densely populated; we are Northern; and, based on our economic, employment and population growth rates, we are unquestionably timid.
Perhaps we should succumb to our instincts and become what our personality suggests. Connecticut could reposition itself as a quiet little corner of the world, hospitable to the wealthy, friendly to white-collar paper-shufflers, low-key on matters of little interest to us, with low taxes and government inclined to stay out of the way and provide a few competent services — provided for the most part by outside vendors.
We don’t want to be Dutch, though. We can do better. Welcome to Connecticut: The Liechtenstein of the Northeast.
Liechtenstein has the highest per capita income in the world. Sound familiar? Connecticut has the highest per capita income in the United States. Liechtenstein has a great-big-ol’ financial services sector, full of banks and insurance companies and other shadowy investment outfits — somewhat along the lines of Fairfield County and the Hartford insurance towers.
Based on health, income and education, Connecticut is number-one in the nation for the well-being of its citizenry, according to the American Human Development project. Liechtenstein? The “poverty rate” would be almost zero — if anybody bothered to gather the figures. The inflation rate is below one percent; the unemployment rate is less than 2 percent. Literacy rate? You must be kidding.
Of course, Liechtenstein has been “Liechtenstein” for a good long time; the nation is governed by a prince and values its consistency. No conspiring with the public employee unions to mess things up. Taxes are very low; the little country has a remarkable collection of businesses — as well as almost 17,000 employees a day commuting from Switzerland and Austria and Germany.
Connecticut would have some work to do on that front. The love affair with big government, high taxes, and myriad ways to make businesses miserable, doesn’t lend itself to a Liechtenstein-style environment.
But, the similarities are often spooky. While other Europeans mumble that the Liechtenstein tax and banking systems may lack a certain “transparency” — inviting tax avoiders and evaders in for a good time — Connecticut ranks second in the nation for the average amount of dough its citizens have stashed away in savings accounts. And of course, Fairfield County is well populated with folks who have escaped from the tax nightmares of New York and New Jersey.
The sort-of-Liechtenstein of the United States is Delaware, where many American companies incorporate, but don’t actually headquarter — or do much business there. Hartford’s own United Technologies Corp. is a Delaware corporation, as are many ‘Connecticut’ corporations. The difference between Connecticut and Liechtenstein in this regard is that not only do companies eagerly yearn to incorporate in Liechtenstein, but also, because of the low taxes and friendly regulatory environment, actually manufacture things there. As UTC has made clear, anything it manufactures in Connecticut is assumed to be some sort of awful accident that is slowly being repaired, via moving vans and layoff notices.
Connecticut can do this. A low, flat-rate income tax, a regulatory and political environment not hostile to guys in suits who don’t belong to labor unions; an “economic development” plan that simply says: we’re going to be cheaper and easier than New York and New Jersey on everything. And no more chanting about “taxing the millionaires.”
Laurence D. Cohen is a freelance writer.
