June 30, 2009
Interesting Post: Flippin’ Osborne?
Up on Liberal Conspiracy today, there’s an interesting post about George Osborne’s second home “flip”and the apparent inconsistency in how David Cameron has disciplined his MPs.
Purely by coincidence, I was trawling the Lib Dem website this morning (it’s work; don’t ask) and noticed that Lib Dem peer Lord Oakeshott was addressing this only a couple of weeks ago. Lord Oakeshott said:
“This is a real test of David Cameron’s leadership. He blackballed his country gentlemen with their moats and duck houses before their feet could touch the ground. But will he make his Shadow Chancellor pay back the tax he’s dodged?”
That seems a pretty pertinent question. The time line provided by Liberal Conspiracy makes it seem even more so:
Liberal Conspiracy also asks:
Two Questions for Tory Backbenchers and grass-roots activists:
1) Has Mr Cameron been consistent in his claim that: “I don’t think it is right to get money from the taxpayer for what you nominate as a second home and then to sell it and not pay capital gains tax”?
2) Has Mr Cameron honoured his declaration that: “Where appropriate, others will be removed from the front bench if they do not behave appropriately. I want to very tough [sic] but I also want to be consistent and fair.”?
To those I would add a third: why has the media been so comparatively silent about this? Is it simply expenses-fatigue – or something more worrying?
When David Cameron couldn’t remember how many houses he owns in a Times interview, it went pretty much un-noticed. Now Osborne appears to have flipped his second home to turn and profit and avoid tax – and apparently gotten away with it.
I’m not a Tory, as should be fairly obvious from this blog. But if I was, I think I’d still be worried. It seems to be one rule for Cameron’s mates, and another for the rest of his party. And the media seem to be in on it. This kind of cronyism and blind-eye-turning lay at the heart of New Labour – and look what a disaster that little experiment proved.
Do we really want to repeat history?
Going Offshore to help the Poor?
There’s a piece up on the Tax Justice Network blog this afternoon about CDC, the UK Government’s “investment vehicle” for initiating development in the world’s poorest countries.
It explains CDC’s origins, how it now operates a private equity model, its use of secrecy jurisdictions – and whether this is really the best way to help the world’s poorest.
I’d say it’s essential reading for anybody who would like to see how the Blair administration decided to privatise international aid – and the consequences of such a decision.
By the way, one thing the article doesn’t mention is how lucrative this “development” model has proved – for some. In 2008, Richard Laing the CEO of CDC, received a total remuneration package of £970,000.
Not bad for a development organisation 100% owned by the UK Government, eh?
June 29, 2009
Gone Straight?
The dominant media and political mantra of the weeks surrounding the European Elections was that the BNP has “gone straight”. Instead of jackboots and skinheads, the BNP is now all about suits, ties and hair you can comb. It reflects – we are told – a tactical shift: rather than ranting about race, the BNP now targets “local issues” – housing, most especially – and presents itself as an alternative to the political mainstream.
Many have claimed that the BNP’s change is only skin deep. They definitely have a point.
If you go to the BNP’s website and scroll down, you can click a link for the “Excalibur” BNP on-line store. If you click on “books” and then “Race and Science”, you can find some interesting titles. They include:
The Importance of Race in Civilization which is billed as showing “how any society’s racial homogeneity is intrinsic to its stability and progress.”
A Nation of Immigrantswhich the BNP advertises as: “Using genetic, archeological [sic] and historical evidence, this book shows that the British people are NOT a “nation of immigrants” as the far left lies, but actually a highly homogenous [sic] group of people with roots going back millennia. Perfect to refute those who try and justify today’s mass Third World immigration.”
Race, Evolution and Behaviour: A Life History Perspective. This delightful sounding tome provides some vintage Victorian anthropology, namely that:
“There are recognizable profiles for the three major racial groups on:
- brain size
- intelligence
- personality and temperament
- sexual behavior, and
- rates of fertility, maturation, and longevity.”
These books are providing arguments and justifications for deep-seated racism, of the sort endorsed by Victorian colonists and later by Nazi eugenicists. It’s that simple. And they’re on sale, from the BNP, and just a few clicks from their main home page.
They may have grown their hair, but clearly the BNP are still very proud of their racist commitments. These are commitments which go far, far deeper than simply “representing the indigenous white male”, as Nick Griffin has repeatedly claimed.
Thanks to Ste for pointing this out to me
June 27, 2009
Joining the Herd
As a substitute for blogging – I’ve been too busy to have time to say much recently – I’ve decided to join the herd and subscribe to Twitter.
You can “follow” me on paul_sagar.
No good will come of this, i’m sure.
The Future’s Blue
At this website you can watch a video of Conservative Future, the re-branded Young Conservatives.
I, personally, don’t think it’s as embarrassing as some on the left have been making out. As Alix said on Liberal Conspiracy, ”Some normals, some tossers, quite a lot of received prejudice, same as in any youth politics movement”.
What I find altogether more significant and worrying is the the Tory PPC for Tooting – Mark Clarke – thinks that the UK should pursue banking secrecy and low/no tax policies as a development path out of the recession.
You know, like the Turks and Caicos Islands. Which are currently having their Government taken over by the United Kingdom because of the political, social and economic collapse that has resulted from 3 decades of tax havenry.
Many Tories still don’t get it about tax havens. They’re on the wrong side of history. Just ask Barack Obama.
June 24, 2009
Rich, Famous and Homeless
Tonight on BBC 1 I watched a programme called Rich, Famous and Homeless.
The premise is simple. 5 rich and (allegedly) famous people give up everything and sleep rough in London. They give up credit cards, money, phones, contact with the outside world – the works. Periodically they are filmed on camera, but for the most part they are left to get on with it.
Normally I hate this sort of programme. I detest, for example, the obnoxious Channel 4 show The Secret Millionaire in which self-righteous smug rich people go “undercover” to assess poor people and pick out one lucky pauper to shower with cash. It’s the vindictive Victorian attitude of the “deserving and undeserving poor” all over, and it pushes the message that some are qualified to pass judgement on the lives of others by simple virtue of their wealth.
Rich, Famous and Homeless is not like that. It is excellent television.
Tonight’s episode was dramatic. One celebrity went – in just three days – from a hardcore right-winger (“they’re just bone idle, the homeless, i’d never live like that”) to looking haggard, buying beer instead of food, and confessing how sorry he feels for anyone “who has to live like this”.
In turn, all those celebrities who forced themselves to beg for money described how pathetic and low they felt. One of the participants broke down in tears because “nobody will even look at me. It’s like i’m not even there”.
Another was shocked and distressed after a homeless woman had threatened her, encouraged others to join in, and a knife was pulled in the ensuing confrontation.
But the most powerful scenes came at the end when the celebrities were “buddied-up” with genuine homeless people: a woman abused as a child who has worked as a prostitute and broke down when talking about her mother’s refusal to help her; a man who’d lived on the streets since he was 13 and made ends meet by being a rent boy; another man struggling with heroin addiction, trying to forge a new life so he can see his daughter.
Putting people from the very top end of society with those at the very bottom was powerful stuff. Perhaps the most moving scene was the former hard-line rightist almost breaking down in tears in an abandoned house, saying “I can’t believe anyone lives like this”.
For a brief time last year I worked in a homeless hostel in Oxford. The plight of the people using the hostel hit me hard. I came away with two important realisations:
1. The vast majority of homeless people lack basic social skills: they just don’t understand why it’s important to turn up on time, why it’s important to dress smartly, why it’s important not to shout or be aggressive as soon as things don’t go your way. They simply haven’t learned – or else they’ve forgotten – these things. The result? Normal society is an alien world to them. Job interviews especially become a basic impossibility to navigate. Prioritising rent payments are likewise not comprehended as a basic necessity for getting on with life.
That’s not supposed to be insulting or patronising to homeless people: it’s simply an observation I made of the vast majority of homeless people I came into contact with – and it explains in part why so many of them are and remain homeless.
2. Most homeless people are alcoholics, heroin addicts, crack addicts or all three. This is just a fact. Do most of them become drug addicts and then lose their homes, or do they lose their homes and then become addicts? I don’t know and I don’t care. Why? Because homelessness is horrible. As Rich, Famous and Homeless has effectively portrayed, being homeless is dangerous, exhausting, mentally and emotionally devastating, debilitating and demeaning. Just because somebody takes illegal drugs, that does not justify or make irrelevant the horrific circumstances they live in. It does not provide us with a license to ignore.
What makes Rich, Famous and Homeless such a powerful and important piece of television is that it helps to make these realisations accessible to many people who may be very dismissive of the plight of the homeless. From my experience, many people rationalise homelessness by telling themselves that homeless people “deserve it” or are “choosing” to be homeless or that they are “on the take and doing really well out of it”.
Indeed, this is hardly surprising. The Fabian Society has recently been publicising its findings that people prefer to live in a world which they think is fair – even if all empirical evidence is to the contrary: people rationalise and justify gross inequality in society by reasoning that it must be fair or deserved inequality – and that way they don’t need to worry about it.
The same thing happens with homelessness. People don’t want to believe that the homeless are such because they have been unlucky, or abused, or neglected, or have simply fallen through the cracks of society – and have then been forgotten and abandoned by the rest of us.
What Rich, Famous and Homeless does is show that such easy rationalisations of homelessness cannot be sustained. Most homeless people do not “deserve” to be homeless – and even if they do “deserve” to be homeless, so what? They’re still human, and still suffering – and that’s not something we can justifiably ignore.
TRANSPARENCY EDIT EXPLANATION: Removed references to “ordinary people” as it sounded smug and didn’t convey what I was trying to say properly.
June 22, 2009
Upgrade
If you shift your gaze to the top of this web page, you will see that this blog is now based at www.thebadconscience.com
I couldn’t get the domain for just “badconscience”, sadly.
Furthermore, I now have a specialist email for this website. Anyone wishing to contact me can do so via paul ‘at’ thebadconscience . com
June 21, 2009
Benn, Thatcher and The State We’re In
What with the financial crisis and ensuing recession, the collapse of the New Labour project, the advent of an apparently directionless but power-bound Tory party, and the success of fascists for the first time in a British election, lots of soul-searching and finger-pointing has gone on.
A favourite target for the left has been that old, reliable and easy-to-hate bête noir of the left: Margaret Thatcher.
Of course, blaming Thatcher alone is silly. A major global recession – which owes an awful lot to massive trade imbalances between China and the West, leading to high growth with continuously low commodity inflation, coupled with high asset inflation which facilitated a huge speculative bubble in the property markets – cannot and should not be blamed solely on Thatcher.
The collapse of ideology-lite New Labour is no surprise. Such a project – based on vague gestures about middle class aspiration and things only getting better – could only work when the good times boomed. A Tory Party whose leader is a deliberate Blair clone – Cameron was originally selected because he performed so well in the focus group-approach New Labour placed at the heart of its purpose and being – and which is correspondingly vague and unclear about what it wants power for, is again no surprise. That people vote for extremists in times of economic turbulence is, post-20th Century, almost a boring cliché.
Yet there is something in the claim that it’s Thatcher’s fault. After all, her de-regulation of the money markets in the 1980s certainly exacerbated the financial crisis which has become a real economy recession. Her proclamations that there is no such thing as society and her emphasis on individual material acquisition fuelled a consumer-driven economy with individuals hell-bent on purchasing goods and – especially – houses at all costs, including using fantasy money loaned by the same institutions Thatcher deregulated. China may have supplied the cheap clothes and credit for a mass consumer boom, yet Thatcher helped ensure the consumers were there en mass, albeit with help from her good friend Ronald Reagan.
Tony Blair and the New Labour project were a direct reaction to the power-monopoly of Thatcher and the years of opposition wilderness inflicted upon Labour. Whilst John Major kept Labour waiting after his 1992 victory, it was the powerful and dominant Thatcher – not the weak and flailing Major – whom New Labour defined itself around. The collapse of New Labour and its succession by Cameron’s Conservatives is therefore traceable through Brown, beyond Blair and Major and back to Thatcher. Given that the BNP returned two MEP’s because the Labour vote in the North West and Yorkshire and Humber regions collapsed, the charge that “Thatcher did it” holds at least a kernel of truth.
Yet if we are going to go down the road of blaming Thatcher, then it’s no good pointing the finger at her and stopping there. If no man is an Island, then no woman acts in a vacuum. For Thatcher to happen – and happen so successfully – other people must have helped, and we should ask questions of those people too. For the left, that means checking who’s in the back yard.
So step forward, Mr Tony Benn.
The former 2nd Viscount Stansgate enjoys something of a celebrity status nowadays. Being wheeled out on television and radio every time the media needs somebody from “the left” to provide a tasty sound-bite, he is perhaps most famous for his (possibly apocryphal) quip that he left Westminster to pursue politics. My personal experience is that many on the left view him as a tragic martyr; a compassionate leftist lamb slaughtered on the altar of free market capitalism, a true prophet whose proclamations we failed to heed and for which we are now paying the price.
Yet if we are to blame Thatcher for some of our present woes, then Benn must go on trial too. Although I can’t speak for his political and economic views now, there is evidence that the Benn of the 1970s was even loonier than the right probably dreamed. Take, for example, Benn’s suggestion of how to cope with the economic crisis of 1975, in a Cabinet Memorandum (PRO reference: CAB 129/185/13):
TO REBUILD OUR INDUSTRIES BEHIND A WALL OF PROTECTION
3, In preference to this [currency devaluation and wage controls] we should now adopt a comprehensive system of protection to secure a rapid boost to output and jobs, and the industrial policy set out by the Trades Union Congress and the Labour Party statement, embracing Jack Jones’ new investment fund proposals. It would involve a clear breach with European Economic Community free trade rules but would make possible a rapid industrial recovery and a long-term programme to regenerate industry which could win wide national support at home and would be understood abroad,. It would be seen as a necessary period of British re-industrialisation, using our own resources, including our energy reserves, to rebuild our manufacturing base.
Thankfully, calmer voices in Wilson’s government prevailed, and Denis Healey did not withdraw the UK from the EEC to pursue a policy of economic protectionist isolationism. Yet post-1979, Benn’s presence on the Labour front bench, along with Michael Foot, helped drag the party to a position probably the most extreme outside of the Soviet Union. The 1983 “suicide note” manifesto returned a not-especially-popular Thatcher government to power, which then proceeded to wage its successful war on “the enemy within”: the organised Labour of the Unions for whom Benn claimed to be a champion. If we’re looking for more reasons why Thatcher can be held responsible for present messes, then the huge disparity between the powers of capital and organised labour she facilitated can certainly be pointed to. But again, the finger doesn’t just point to Thatcher, it points to who made Thatcher possible.
The next months and years will mark a time of transition for the British left, a period in which new goals and ideas are required in an ideological post-New Labour wasteland. Part of that process – if it is to be done successfully – means looking backwards as well as forwards. The left needs to decide what went wrong, as well as how to put things right.
It’s no good just blaming everything on Thatcher. Benn and others on the old left enabled Thatcher’s victories. Blair and New Labour were willing accomplices to her settlement. Both paths should now be consciously discredited as the British left searches for a new direction.
June 19, 2009
Why Tax Havens Are Bad
Quite often people stumble across this blog after putting “Why are tax havens bad?” or “Why should I care about tax havens?”, or variations thereof, into search engines.
Accordingly, I thought it would be good to have a handy – though by no means complete – summary of why one might care about tax havens.
So here are you are:
10 Reasons Why You Already Care About Tax Havens
1. If you care about the current global financial crisis, then you care about tax havens. Although the global recession has a great deal to do with trade imbalances – particularly between China and the West – it is at least in part due to the debt securitization processes which created systemic instability in financial markets, and the “shadow financial system” which operated outside the remits of the (admittedly fairly useless) financial regulators. Tax havens did not cause the present global crisis – but they certainly helped it happen. And their continued presence is a block to reform and an invitation to repeat the mistakes of history.
Professor Sol Picotto has more (or here if you don’t want to pay the FT). Indeed, just yesterday the Norwegian Commission on Capital Flight from Developing Countries concluded that:
Tax havens increase the risk premium in international financial markets . . . (they) enhance counterparty risk and information symmetry between different players, which undermines the working of the international financial markets and contributes to higher costs and risk premiums for all countries.
2. If you care about undermining the domestic tax revenue authorities of your country – which means undermining hospitals and schools and all the other good things that tax makes possible – then you care about tax havens. In Britain, an estimated £18.5 billion is lost each year to tax havens. That’s money which should have gone into the social pot to help everybody, but was instead stuffed into the pockets of already wealthy individuals and corporations.
3. If you care about a fair tax distribution, then you care about tax havens; if you think it’s wrong for the burden of tax to be shifted towards the poor and away from the rich, then you care about tax havens. This is because tax havens are only open to the wealthy, who can afford to employ financial advisers and lawyers to help them move their money out of the reach of domestic revenue authorities. To make up the shortfall, revenue authorities must increase the tax burden on the poor, who can’t move their money offshore. As the Tax Justice Network points out, if that £18.5billion hadn’t been lost by the UK to tax havens, it could have been translated into a 4.5p cut in the basic rate of UK income tax.
4. If you care about Government hypocrisy and inconsistency, then you care about tax havens. In the UK, the Department for Work and Pensions in 2009 ran an advertising campaign entitled “We’re Closing In”, which publicly targeted benefit fraud (people claiming for state assistance – e.g. disability benefit – that wasn’t properly due to them). Benefit fraud is predominantly perpetrated by the poorest in society. It costs the UK economy about £1billion a year (definition changes in accounting reports make an exact figure hard to obtain). Tax avoidance and evasion is perpetrated by the richest individuals and corporations. In February 2008 Britain’s Trades Union Congress published a report estimating that £25 billion annually is lost to the UK from tax avoidance. This is made up of £13 billion p.a. from tax avoidance by individuals and £12 billion p.a. from the 700 largest corporations. It doesn’t all go into tax havens – but tax havens are at the heart of the avoidance industry. Yet where is the Government campaign to close in on rich tax avoiders, who cost us 25 times more than benefit fraudsters?
5. If you care about the plight of developing nations, then you care about tax havens. Christian Aid estimates that 1000 children die every day in the developing world because of tax dodging, much of it facilitated through tax havens. Oxfam estimates that developing countries miss out on up to $124 billion in lost income from offshore assets held in tax havens each year. Some $11.5trillion dollars is held in offshore accounts across the world. Because developing nation tax authorities are unable to touch this money, the Tax Justice Network estimates that developing nations effectively lose $250billion dollars per year. This is the equivalent of five times the 2002 United Nations estimate of what is needed to finance the Millennium Development Goals of halving world poverty by 2015 – goals which nobody now expects to be met.
6. If you care about international terrorism, then you care about tax havens. After 9/11, the USA orchestrated a concerted effort to close down the bank accounts and seize the assets of the Al Qaeda cells which attacked New York and Washington. This was done successfully – showing how quickly international financial impropriety can be curtailed when the will is in place. Yet the underlying infrastructure which allowed Al Qaeda to finance its attacks – which took years of international planning and preparation – has been left untouched. Tax havens are at the heart of international terrorism. The secrecy they provide allows terrorist organisation to move huge sums of money illicitly. The 9/11 attacks, the insurgency in Iraq and the Taliban resurgence in Afghanistan are all funded by dirty money which is held in and passed through tax havens. Tackling terrorism means, in part, tackling tax havens.
7. If you care about international drug running – and the vast amounts of power and wealth it puts in the hands of international criminal gangs – then you care about tax havens. In Mexico, 5,612 people were killed because of the drug trade in 2008. This pales into insignificance when compared to Columbia, which has one of the highest murder rates in the world, much of it a result of organised criminal drug violence and political unrest fuelled by the cocaine trade. As a United Nations Office on Drugs and Crime report put it:
The biggest problem is that in parts of Colombia, the State does not have a monopoly on the use of force. Highly organized criminal structures such as drug trafficking mafias and paramilitary groups are well armed and dangerous. There are many private security companies, some of which use illegal weapons. Most Colombians who die from bullets do not die through indiscriminate violence. Rather, firearms are being used in the “professional” exercise of violence.
In Afghanistan, opium production in 2007 soared 34% from alrady record levels in 2006 – much of that production putting money into the hands of the Taliban and Al Qaeda.
Tax havens and the drug trade are intimately entwined, because criminal gangs controlling the drug trade use tax havens to clean their dirty money. The drug trade is profitable, in part, because the money made from selling drugs can be transformed from dirty into clean by laundering it in tax havens. The banking secrecy and ‘no-questions-asked’ approaches which underlie tax havenry ensures that no customer is turned away – no matter where their money came from, or how much blood needs washing off.
8. If you care about human trafficking, then you care about tax havens. Each year, an estimated 600,000-800,000 people are illegally trafficked across international borders. 70% of this number are female, and 50% are children. The vast majority of trafficked workers are forced into the sex industry. Most of the others are trapped by gangmasters, working as illegal aliens for exploitative slave-wages. The profitability of people trafficking is in part – like the drug trade – because the kingpins controlling trafficking operations can launder their dirty money and transfer it into respectable bank accounts, allowing them to get very rich. Tax havens are what make this possible.
9. If you care about fighting corruption, than you care about tax havens. Corruption blights the ability of developing nations to prosper, distorts trade, hampers efficiency, redistributes wealth from poor to rich and subverts the democratic process. Tax havens are at the heart of national and international corruption in the modern world. They allow corrupt politicians and business leaders to ferret-away their ill-gotten gains, and they facilitate the very processes of corruption in the first place. In his excellent book Capitalism’s Achilles Heel, Raymond Baker explains how the current president of Pakistan – Asif Ali Zardari – and his assassinated former Pakistani president wife – Benazir Bhutto -used tax havens to facilitate contract kick-backs that made them very rich indeed:
“Letters in 1994 promised “consultancy fees”, meaning kickbacks, of 6 percent and 3 percent to two British Virgin Island companies…controlled by Bhutto and Zardari. Payments of $12 million were made to Swiss bank accounts of the BVI companies.”
“Then there was the deal to import $83million worth of tractors from Poland. Ursus Tractors allegedly paid a 7 percent commission to another of Zardari’s Caribbean companies. Bhutto waived import duties on the tractors, costing the Pakistani government some 1.7 billion rupees in lost revenues.”
“Without missing a beat [French aviation companies] agreed to pay a “remuneration” of 5 percent to…yet another of Zardari’s British Virgin Island companies. This would have generated a tidy $200million for the Bhutto-Zardari couple, but unfortunately for them she was driven from office before they could collect.”
Pakistan is merely one example – and it’s not even the most extreme. Nigeria and Indonesia are – according to Baker – certainly worse. Corrupt regimes and individuals around the world systematically use tax havens to enrich themselves and rob the people they are supposed to serve.
10. If you care about democracy, then you care about tax havens. This is because tax havens undermine democracy, a fact which has already been perfectly well laid-out by Richard Murphy, here. But to quote Mr Murphy directly, and to bring our list to a fitting conculsion:
“[the] tax rates, levels of spending and the allocation of reward within a society should be determined by the people of each state in free and democratic elections. If the people of a state wish to have a high rate of tax, and resulting high levels of public service, or even of income redistribution, then that is their choice. No one, especially a small group of financiers who have taken effective possession and control of the legislature of a small jurisdiction should be allowed to try to undermine that democratic process being undertaken elsewhere. Those who demand that these financiers have such power through such locations are in effect saying that the democratic process is one to which they do not subscribe.
The message is simple: tax havens are being used to undermine democracy. They are a threat to fundamental part of our way of life.”
The above is not intended as a complete or comprehensive list. But it should serve as introduction to a basic fact about the modern world: tax havens are at the nexus of all that is going wrong with global financial capitalism. And because global financial capitalism affects everyone, everyone should care about tax havens.
