Thanks for the info, very interesting and not something I was aware of. Although I'd disagree with the idea that generic "deregulation" is the problem here, at least in this case. In my mind it's just a good example of all the inevitable "race to the bottom" dynamic that happen where the laws of the sales location can be skirted by instead only applying the laws of the production location.
Basically, locales realize they can get a huge economic boon to themselves that is only possible because they are essentially exporting their shitty policy outside their borders.
Tax havens are perhaps the best example. No country could survive as a tax shelter if businesses could only do business within their borders. But instead, you have small countries that offer no/low taxes because they can pull in tons of business from gigantic markets outside their borders.
It happens all over the place:
1. In the Marquette example, states try to pull in lots of banking business by having easy usury laws, but the vast majority of those banks's customers are from other states.
2. A couple states have gotten rid of "the rule against perpetuities" to attract perpetual trusts, even though most of the trust business occurs elsewhere.
3. Businesses can extract huge tax concessions from states by offering to set up headquarters in a state, even if most of the business is done outside that state.
I agree that the generic idea of "deregulation" is sometimes not to blame but I do want to point out that the Marquette decision is basically the lynchpin in this particular case AFAIK -- usury laws AKA consumer protection regulation (which is the regulation that was bypassed/minimized in this sense) already differed from state to state, but that wasn't enough incentive for banks to move their headquarters.
Intranational competition/racing to the bottom is fine within the bounds of regulation -- capitalism is a powerful force but in my opinion the job of the government is to set the guard rails.
The EU problem is an international problem which is why it's so much harder to solve. You can't force another nation to charge certain % for taxes but there are other things you can do. Unfortunately most of the actions you can take to disincentivize that behavior aren't quite so friendly, so the politics intensifies and countries go for what they can get away with. The control dynamic is different compared to intranational regulation.
There's certainly competition between states and companies but it's always when the guard rails bend/break that we see explosions in a certain kind of activity and then the repercussions 5-10 years later. It happens over and over again in history -- regulations that reduce corporate tax rates, roll back environmental protections, etc -- it happens across party lines, and there's usually a happy/boom period for a while for some market participants... Then the chickens come home to roost.
The addition of regulation can do it too, of course, and some of the time the ambitions are noble, but to me the removal of regulation that was well established (for a good reason) and the subsequent ill effects always feels the most avoidable.
Basically, locales realize they can get a huge economic boon to themselves that is only possible because they are essentially exporting their shitty policy outside their borders.
Tax havens are perhaps the best example. No country could survive as a tax shelter if businesses could only do business within their borders. But instead, you have small countries that offer no/low taxes because they can pull in tons of business from gigantic markets outside their borders.
It happens all over the place:
1. In the Marquette example, states try to pull in lots of banking business by having easy usury laws, but the vast majority of those banks's customers are from other states.
2. A couple states have gotten rid of "the rule against perpetuities" to attract perpetual trusts, even though most of the trust business occurs elsewhere.
3. Businesses can extract huge tax concessions from states by offering to set up headquarters in a state, even if most of the business is done outside that state.