Taking Economic Advice from Monaco

From Mad for Monaco

Once upon a time money problems were the rule rather than the exception in the Principality of Monaco. The Grimaldis seemed to be constantly cash-strapped and one of the things that had to be considered when marriage discussions were going on was usually how big a dowry the lady in question could provide. However, all of that began to change during the reign of HSH Prince Charles III, though it was not the events of his time which would bring really lasting success. Financial problems mostly became a thing of the past under Charles III because of the gaming industry, done in grand style in Monte Carlo at a time when gambling was illegal almost everywhere else. That, obviously, gave Monaco a considerable advantage when it came to attracting big-spending tourists. The gaming industry put Monaco on solid financial ground but it could not depend on such an industry forever. During the reign of HSH Prince Albert I more countries legalized gambling which cut into Monegasque profits and there was World War One which caused tourism to dry up and also cut down on the traditional customer base of Monte Carlo (royals and aristocrats). However, from that time on, particularly under Albert’s successors Louis II and Rainier III, Monaco adopted the policies that would lead to lasting economic success. Could other countries learn from her example?

The first thing to do: get yourself a monarchy if you have the misfortune to be without one. Honestly, most people in the world would not even know Monaco exists were it not for the Princely Family. How many people have heard of San Marino? Even Andorra, although a monarchy, has no resident Princely Family of their own and is often overlooked. The Grimaldis are the greatest ambassadors Monaco could have, attracting tourists and highlighting the best aspects of the country. They also provide ‘charitable leadership’ which we will get more into in a minute. The most significant thing about the economy of Monaco is that the Monegasque have purposely pursued a very low-tax and pro-growth strategy. They have fostered a very pro-business and pro-investment environment by imposing no income taxes and respecting the privacy and private property rights of people in Monaco. The Principality has made no secret of the fact that they try to encourage wealthy people to come to Monaco. What happens when lots of very wealthy people come to a country? They spend a great deal of money, they buy things, they employ people and bring businesses to the country that employ more people, giving those people money to spend that goes back into the economy.

Some may be wondering, ‘what about the poor?’ because, of course, not everyone can be rich. Well, first of all, (and funny thing this for all those who think that the rich make people poor) there are no poor people in Monaco. No one lives below the poverty line, no one is starving and no one is begging in the street. Why? Because the business and investment-friendly environment means that there are always new jobs opening up and there is no unemployment in Monaco (and that’s no joke, the unemployment rate is 0%). However, this is also where we get back to the monarchy and “charitable leadership”. The Princely Family makes charity and charitable causes fashionable and when so many people have so much, they can afford to give much more to those who need assistance. The high-society life that goes with the wealthy is channeled by the monarchy to good causes, in the country itself and all around the world. Since there is little need in Monaco itself, the Principality is home to a multitude of non-profit organizations that help people in almost every corner of the globe and, particularly since the accession of HSH Prince Albert II, also to causes which benefit wildlife and the environment. Of course, the economic crisis in which the world currently finds itself has been felt in Monaco, but compared to others, the Principality has remained mostly untouched and prosperous, a place with no income tax yet where the government takes in more revenue than it spends. The Princes of Monaco have developed a formula for success that other countries would do well to take a second look at.

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