While at a beach on the lake occasionally looking at the small boats go by,  the book Smuggling – a history 1700-1970 by David Phillipson published David & Charles, London UK, 1973 was read. Smuggling has gone on for centuries and anyone who reads about drugs – they come from somewhere knows smuggling is not likely to stop anytime soon. The book focused on the UK, but one can go to any country in the world and have similar conditions. In the early days of the UK, if a ship was beached or ran aground during a storm, the contents were taken by those who wanted it. There was no agency or company to pick up the belongings for hopefully the vessel was insured properly. If prices or taxes were too high on a given item (the government needing money increases taxes on liquor) then there was an incentive of a alehouse or pub to pay taxes on the government side but to buy non government rum to pay no taxes and keep the profits. If you think about the US and Boston Tea Party – that started as people thought the taxes on tea were too high. Back in England – the coastlines were patrolled by the excise and revenue department. For many years they were chronically understated and few ships, but people joined the department for the other choice was the British Naval Service. Similar to the myth of civil servants – they captured a few ships or loads but the smugglers had the upper hand. For in many parts of the countryside, everyone knew the smugglers and the government was afar. As technology and attitudes change, the smugglers learn to be creative and so the story goes.

Linking to dividend paying stocks, we expect the companies to pay their fair share of taxes as well as to take advantage of loopholes in the system which legislators have passed. Smuggling is a problem for all companies and likely most people have bought something which they did not fully declare to the government. The question is to what degree it happens in the business and do the margins which are obtained offset the smuggling. There exists wide scale networks to move goods to places where there is demand which are beyond the government’s ability to stop and the key is demand. If taxes are too high, the average person hears or finds alternatives. If prices are considered too high, goods are copied and sold as orginals; the smuggling industry is worth billions and it is worthwhile to see how creative they are.

There are more questions than answers, till the next time – to raising questions.