Because at one point you did. And the existence of those places worked on removing barriers of trade. And now those places are being dismantled while the barriers of trade are already removed.
So you get the luxury to look at it through the lens of the present, ignoring how it came to be completely.
At this point financial centers offer different collections of favorable regulations that you can choose at your own whim.
Separate jurisdictions shift nuances of law around and compete on this still.
For example, many people access the US markets through Delaware "because they heard" and have no idea what the other 49 states, 1 district, and 5 territories offer despite having complete autonomy to compete over the last 30 years.
Some of those 55 jurisdictions are faster, cheaper, have Chancery courts, have favorable court rulings completely opposite of Delaware, can lean on Delaware case law if desired, have newer and more interesting business types you can create, may be more private and anonymous, may be better for your business.
Thats how centers develop and their utility. Its mostly the ease of getting the local government to listen to the desires of ephemeral entrepreneurs.
Unless another state has a very compelling benefit, why make things riskier and difficult?
Usually you want to find a solution that you can see works, that has a good network effects for professional services, and that has the largest number of similar businesses for stability (so that the state is not interested in causing problems directly or by side-effect, and the state has aligned incentives to help foreign businesses).
The same thing occurs with offshore havens. Network effects matter.
Network effects is given as a major reason for why YC recommends Delaware C-Corps: https://www.lawtrades.com/answers/y-combinator-startups-go-c...
Because some of those 49 states, 1 district, and 5 territories have very compelling benefits and are not riskier and are not more difficult. Which professional service is most useful to you? Incorporation and legal services are extremely prevalent.
Example:
Wyoming has API based incorporation which takes less than 24 hours and is cheaper. Faster, cheaper and better: pick all three, its a valid option!
The same top incorporation services for Delaware cater to Wyoming as well.
Lets look at common users on this site or industry:
- No Stripe Atlas target customer needs or benefits from Delaware over the above example of Wyoming. IIRC Stripe Atlas itself funnels people to Delaware
- All VC backed companies with employees have higher compliance requirements by flocking to Delaware which passed stricter securities transparency laws giving employees more rights about information
- No software engineering contractor that's lazily avoided all legalese but now heard they might want an LLC needs Delaware. They will also gain zero benefit from its fairly unique court of chancery.
- No app developer gains more benefits from Delaware than similar states like Wyoming and never has any need for its fairly unique court of Chancery. (Wyoming also has a court of chancery)
- pretty much only multinational conglomerates with complex M&A disagreements that even can be heard at a state-level court needs Delaware
This isn't to present a false dichotomy of Delaware vs Wyoming. Wyoming has the same level of benefits as Delaware for these above use cases, except Wyoming happens to be faster and cheaper to use. If every entrepreneur was flocking to Wyoming irrationally, I would point out the exact same things. Or perhaps I would have spent time with the UCC and state legislators to make even more competitive incorporation statutes somewhere else.
Great, definitely compare and contrast.
> It still doesn't seem worth it to examine the laws of all 56 jurisdictions in the US ...
Not sure and you're right that it isn't worth it to do that, but the simple reality is that legislatures didn't just ignore their incorporation statutes for 30 straight years while Delaware was winning the marketing game. Their fairly unique Court of Chancery isn't really useful in today's world for most organizations. There is a simple benefit in reading comprehension.
There are common attributes that jurisdictions offer for legal persons. Namely related to the privacy and protection of the natural persons that created the legal person. You make a list of the things that are important for you, and then there may be charts that show how well a jurisdiction offers a certain perk.
The next aspect comes down to competency, and this isn't easy to gauge from a chart. Most jurisdictions aren't attracting lots of foreign business and simply don't have a group of public servants that know how to do what the state legislature said was legal. So popular streamlined states like Wyoming and Delaware cut through that process of deduction really quickly. But if you do have patience then you can really leverage obscure jurisdictions.
The third aspect comes down to state priorities and psychology. Again, incorporation laws are usually made to be competitive, but states and outside jurisdictions usually aren't focused on the "incorporation industry" like Delaware and some United and micro states are. Most jurisdictions exist because someone was EXTREMELY PASSIONATE about succession/partitioning for an ideology and then maintaining stability. And then some foreigners see the power vacuum and are like "hey nice new state you have, while you're at it how about passing this LLC statute, yes its the same as Colorado's but all the directors and beneficial owners are unknown and the state doesn't levy any taxes or really ask any information at all, you'll make money from the annual incorporation fees alone." and the governor and legislature is like "uhm what yeah okay back to our extremist ideology and sugar plantation regulations", but you'll potentially be able to leverage a sovereign brand and sovereign protection for centuries before anyone really revisits the incorporation laws.
When you're ready to really get to the next level, there is a lot you can do with creating legal persons in one jurisdiction under one set of laws that own legal persons in other jurisdictions under different sets of laws. Mix and match. Lots of structures, infinite permutations possible. Many perks.
In terms of labor, specialists like having multiple employment options in case they ever need to jump ship, and for specialized enough services centers are the only places capable of offering such networks. New York is still the largest financial center in the US despite many attempts to dethrone it because it has built up so much of a center. And people don't really abandon centers unless something catastrophic happens.
It depends on what you want? The point is that you can shop for features, and Delaware isn't the end all be all.
Sometimes it is as simple as making a list of the things you want and googling for it or asking around.
Other times it requires actually reading the incorporation statutes, trudging through case law, simple because a state sucks at marketing.
And other times it requires introducing and passing a new law in that state.
London acts as a financial centre for many businesses seeking to do business with EU nations. Hong Kong was historically the financial centre for traders seeking to do business with China. Being a former British colony, they had advantages such as being literate in English and understanding both eastern and western cultures.
If indeed globalization has not yet run its course, we may see less and less of a need for these financial centres in the future.
Once the trade war nonsense ends, you'll see these stories and comments disappear. Just like all the "I hate facebook" stories and comments. Just like the "Russia controls everything in the US" stories and comments.
Until it's time for "We've always been at war with eurasia". If only these people cared about freedom here at home as much as they "care" about freedom in china. You'll notice that most of the people ( journalists and commenters ) crying about censorship, privacy, freedom etc in china are the same ones demanding more censorship, less privacy and less freedom here and on social media.