In Defense of Tax Havens- The Panama Papers

What do the leaders of the UK, Iceland, China, and footballing body FIFA have in common? They all had a moment this week in which their palms became clammy, heart beating, and they asked their advisor “What did you say about Mossack Fonseca?”

Because what a week it has been. With the leak of the Panama Papers rich pants have been pulled down in all corners of the globe, revealing sets of embarrassing boxers from Reykjavik to Beijing. The papers, leaked by an unknown source to a German newspaper, list over 200,000 offshore companies, incriminating a staggering 143 politicians worldwide. Headlines are quick to proclaim the latest name to be dragged through the mud, and opposition politicians eager to cry corruption and call those involved “absolutely disgusting” (to quote Labour MP Jess Phillips).

But hey wait a minute- doesn’t this all sound a bit familiar? Except last time it was a Panamanian leak but a Luxembourgish one. In 2014, those pesky folk at the International Consortium of Investigative Journalists leaked the twisted tax secrets of 300 multinationals based in Luxembourg. Among those outed in the LuxLeaks scandal were Apple, Amazon, Starbucks, Walt Disney, Facebook, Microsoft, HSBC, Citigroup, Pepsi…the list goes on…and on.

So what’s different this time around? Well, the focus is more on the world leaders associated with offshore banking than any well known brands. This time it’s people, not just companies, being dragged through the mud. You can almost sense the tabloid journalists salivating. And yes, it does seem highly hypocritical (not to mention ironic) that David Cameron has ‘benefited’ from his father’s involvement in offshore wealth- all whilst battling to reduce a deficit exacerbated by missing corporate taxes. But I don’t blame him, nor any of the others. Why not? The left cry- this is greed, pure, dirty greed.

Well, I disagree. I would like to quote Eric Schmidt here, ex Google CEO, who said he was “very proud of the structure that we set up… it’s called capitalism”.  And what is Capitalism? It’s a system that doesn’t discriminate between moral and immoral, race or gender. It only cares about money. A company’s only aim is to make money and grow. So what happens if the competition are using Tax Havens?

Take Apple for example. Between 2009 and 2012, a staggering $74 Billion was shuffled through an Irish tax scheme, allowing the company to pay just 2% tax on that sum. Now imagine you are a competitor of iTunes that doesn’t have an Offshore tax scheme. Suddenly your company is leaking money at the borders of every country you operate in while Apple is happily using a smokescreen to only pay tax in the Haven on all of it’s non-domestic trade. So do you adapt, or do you honorably cough up big chunks of your income while your competitor grows unhindered by such things?

It is testament to to this logic that so many high profile companies have been involved in these scandals. In a Capitalist world, it is adapt and grow, or be crushed. There is no time for ‘doing the right thing’ and customers (as 2014’s weak ‘Boycott Starbucks’ campaign shows) really do not care enough to be a factor. Last time I checked, Starbucks revenue was still over quadruple that of it’s nearest competitor (Tim Horton’s) worldwide.Don’t get me wrong- if I were a Politician, or in any role where I needed people to like me I would go nowhere near, and Cameron, Gunnlaugson, Infantino, Poroshenko and the rest of them were fools to do so. But money doesn’t care if you like it- it only cares about making more money.

So should Tax Havens be stopped? Definitely- but good luck. To do so would require laws to be passed in an international effort- one which banking lobbies in the US and UK will fight to avoid. The reason? A lot of that money that would’ve been paid in taxes the world over lands neatly in the pockets of the First World elite, including our own Prime Minister. It seems that fiddling taxes is the music piracy of the rich and powerful. Everyone does it, and nobody is quite sure whether it’s illegal or not. Whether it is moral, sensible or logical is a question our Prime Minister and other world leaders that caught called out this week will have to deeply consider. But money is like a river, it will flow through the easiest path. And neither moralists nor taxmen will stop it.

 

 

 

Collateral Damage

‘Click to read more’ has been a much more frequent sight on the Facebook posts of my friends, mostly students and artists. The past few weeks have seen ideologies rise in sectors long dormant. Pacifism is back, but only, it seems, on social media. I am talking, of course, about the Syria debate, which feels uncomfortably raw. I certainly don’t remember many other occasions in which the question ‘To bomb or not to bomb’ has been so bluntly laid out to the public. It is a question our generation is not comfortable with. A surprising amount of people have swung towards vehement pacifism, at least on my News Feed. Others (most commonly those with limited intellect) think that we should obliterate the entire country, just to be on the safe side. (Sadly that is not an exaggeration, but an actual quote…ignorance is violence, it seems.)

But before we go on, I’d like to clarify that this is a post on the UK’s response to Syria, particularly with regards to the younger, pacifist-ish generation. I am not arguing particularly one way or the other re. the bombings, and it would be to miss the point to read the article in that way.

The Fear Method

A lot of people just feel like we can’t  ignore Daesh anymore, surely it is time for action. The Paris Massacre is largely responsible for this. Before Paris, ISIS (or whatever they are called this week) was a concerning bubble, but easily written off as just another middle eastern turmoil. It’s funny what happens to people’s sense of empathy when the fight is in their back garden. The Government and Media have jumped on this recent attack in ways that they have not done previously, the Scare-Mongering Machine in overdrive. Now don’t get me wrong- ISIS are scary. Mass murders in town centres are scary. But it is concerning to me the way the government has manipulated this fear into a war thirsty state, with David Cameron giving speeches not unlike the ‘2 minutes hate’ in Orwell’s 1984. Basically, population control, performed by reducing logical, civilised humans to blood thirsty animals.The tool to complete this operation? Fear. A good article on this was written by a Robert Higgs for http://www.independent.org, entitled ‘Fear: The Foundation of Government’s Power’. In his article, Higgs makes the point that without fear, no government would last 24 hours, let alone 4 years.Think about it, and really a lot of human motivation is down to fear. Don’t abolish Trident, we will all die. Don’t even vote Left in fact, or our money will do the disappear-y thing again that obviously was everything to do with Labour and nothing to do with American Sub Prime Mortgage bonds entirely out of the control of the British Voter (If the topic happens to interest you, check out this post). No, Freedom is a luxury for those who don’t live in fear, and as Politicians and the Press love to remind us, these are dangerous times.

The Pacifists and The Country At War

So now the Fear weapon has been deployed on the public. Only, for some reason, only half of them are convinced that bombing is the answer. Surely that’s the whole point of the hate frenzy, just like in Orwell’s book. It stops people stopping and asking “But will this actually help?”. But this is exactly what many people are asking. And to me, it feels like the potential beginnings of something. Something like, a new way of solving problems. Whatever it is, somewhere, in our lives of Western comfort, of imagined morals, we have lost our appetite for war. ‘Give £3 for Syrian refugees this Christmas’ reads a sign on the tube. Meanwhile the newspaper reports of bombs heading straight for Syria. People are confused and in the blur something very important is happening. People are asking whether bombing a country solves problems or creates them. And that is a brilliant question to ask (and one to be expected for a generation that grew up under Bush/Blair).

So Who’s The Baddie?

People are very simple. It seems that most people are happy with the idea of killing ISIS militants, the villains and terrorists that they remember killed people at a gig in Paris. From there it gets more complicated. Some people (again, remember what I said about limited intelligence here) are happy to kill foreigners or muslims or whoever looks a bit different and doesn’t support West Ham, and therefore have no problem with the possibility of civilian casualties in Syria. But a lot of people do have a problem with that. A big one. A lot of people are struggling to stand behind a government authorising bombings when there is that uncertainty.And this group is what interests me.

The Uncomfortable Question

With the question ‘To bomb or not to bomb?’ came a responsibility, even if it was our government, not us, who voted. As soon as this debate became public, responsibility became public. I am curious to what extent the pacifists will stand by their peace time ideals. Whether they will push back against the war bringers even further.ISIS are brutes, we know that. The public are comfortable with that knowledge. But the new generation, the ones that have been denouncing the Iraq War for years, don’t see themselves as the type to start bombing somewhere. Even if it’s the right thing to do, not that I’m saying it is.

The National Loss

Ultimately, whether the bombing campaign is successful in depleting Daesh, whether there are civilian casualties, whether the bombs radicalise more moderates, it is our generation, the ones who don’t quite agree, that will have to live with that. To sit and watch it. And in that, we have our great collateral damage. The loss of a generation’s belief that it could do no harm.

“Since love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.”
—Niccolò Machiavelli, The Prince, 1513

Why Corbyn’s Greatest Strength Could Lose Him The Election.

Who could have predicted our current Political situation? As Westminster whirred to life following the pretty unremarkable summer months, a predictable path was set. For Labour leader, surely Andy Burnham would triumph as the dark haired, white skinned suit capable of giving a convincing speech in roughly the centre ground. Journalists yawned over morning coffees as they prepared the story- ‘Burnham Leads Labour Party’, and we all attempted to be a little bit excited by a vision for the future that just seemed a bit…predictable. In the light of Cameron’s declaration he will stand down at the end of this government, a 2020 Labour win seemed at least plausible, and at most pretty likely.

But then, something happened. A movement which captured the imaginations of citizens previously uninspired by the Labour party coughed up their three quid and swept Corbyn to victory with an astonishing 60% of the vote. Suddenly, people were talking politics. Here, at last, was a figure interesting enough, distinguished from the slippery Centre ground in a way which people appreciate, a knack that only Farage has really nailed in recent years. Corbyn’s values are clear, Left Wing with a pacifist colouring, liberal and somehow (and to use Corbyn’s own term) decent. Agree or disagree, his beliefs are his beliefs, and, if his categorical No on the Trident question is anything to go by, he is sticking to them openly.

Now, voter apathy is rarely caused by divisive figures. Just over a third of the population didn’t vote in the last election- a figure I believe is caused in part by the ever increasing sameness of  the candidates. I mean come on, lets look at Cameron, Miliband, and Clegg – all clean shaven, dark haired mid 40s white men to start with (is this some sort of formula for leadership?). And when they opened their mouths, it was often hard to really distinguish the viewpoints and pick a candidate that felt truly representative, or even truly passionate, about a viewpoint. Promises felt there to be broken, petty squabbles marred the leader debates. Where was the honest politics? The opinions formed over a lifetime and then firmly, and passionately shared? The politics that say, I’m a human being, not a well trained automaton.  

Therein lies Corbyn’s appeal. Sure he’s a little fluffier than the politicians we are used to, with his talk of ‘kinder politics’, and I suppose, the beard. But there is something that Corbyn has that sets him ahead of his rivals- voters trust what he says. And they trust him purely because he is human, untrained, untheatrical- just a person with a point of view. And isn’t that what politics is all about?

Apparently not, according to some of Labours own MPs. “Leadership,” Said Corbyn at the Party Conference, “Is about listening.” And it was this sentiment that MPs were openly conveying when Corbyn let the Nuclear cat out of the bag- before the Labour party had even discussed the subject. Corbyn, many complain, is simply too singular, too independent, too set in his ways, to be a good leader. One Labour MP appeared on Question Time and said that in fact, Leadership is about compromise. And this is something Corbyn needs to learn if he wants to unite the party.

Perhaps this is true. Perhaps Corbyn cannot become Prime Minister without broadening his appeal. Perhaps he should be trained, his message diluted, his rhetoric vaguer. That would probably be the safe option. But maybe, just maybe, the British people are sick of compromise. Maybe they are jaded by politicians who say one thing and do another (after all, it isn’t truly a democracy if you are voted in on lies, surely). Corbyn can be read like a book, and many people don’t like what the book says. But I’ll bet there are a fair few voters who are relieved to be holding a book of Fact, and not Fiction. Corbyn’s leadership represents a change of tone in British politics, and I for one will be glued to the page.

Who To Vote For: Part 1

With the new year comes a lot of responsibility for us Britons. For on the 7^th May, our General Election will be held, the first since the country came out of recession in 2012. A recent online poll at voteforpolicies.org.uk has been anonymously pitting parties against each other policy for policy, with surprising results. Turns out 26% of people who took the poll should be voting Green, followed by Labour at 20% and the Lib Dems at 16%. It’s a starkly different picture to the one seen in election forecasts or newspapers. This mini series of posts will run amid my usual postulations, and seeks to clarify the positions of 5 Major Parties on some key areas. These will be Conservatives, Labour, Lib Dem, UKIP and Greens. Knowledge is power, in this case the power to avoid being a political worm, blindly tunnelling towards whoever stamps their feet the hardest.

So with politicians lacing up their boots for the Campaign Trail as 2015 goes on, it’s time to wise up on policies. Let’s start with a big one- what exactly are the 5 Major parties’ Economic Policies? (Based on what they have said so far).

Conservatives

‘Cutting the deficit’ is the key slogan. Osborne’s got his pruning shears out for this one, with plans to eliminate the deficit by 2018, and to run a surplus of £23 billion by 2020. This means that even once we are out of the red, the Tories wish to continue cutting spending. All of this will be achieved by lowering government outgoings as opposed to increasing taxes (Hello Conservatism!) The party will be shouting about a personal tax allowance of £12,500 and a Fuel Duty Freeze, but have been keeping quiet about where Austerity measures will hit hardest. Cameron wishes to increase the 40% tax bracket up to a £50 grand salary.There is also, naturally, a focus on businesses, with promised cuts to corporation tax and jobs tax, as well as scrapping the job tax for under 21s. Currently revealed figures suggest Cameron’s plans save high earners £649 a year, and low earners just £17.

Labour

The Labour approach is a different matter, they plan to balance the books by getting more people into work, and by making that work pay. Labour have made promises to raise minimum wage to £8, cut income tax, and award tax breaks to companies that sign up to pay employees a living wage, in a mission to end the ‘cost of living crisis’. They also have interesting plans to form a British investment bank to support small businesses. They will maintain austerity measures already in place, and introduce mansion tax on homes over £2 million. They also have plans to cap social security including winter fuel allowances and child benefits- trying to get that ‘over-spending’ reputation in check, perhaps?

Liberal Democrats

The Lib Dems promise to ‘anchor in the centre ground’ if they win the election. This means raising the personal tax allowance to £12,500. They also plan to promote apprenticeships, cut business tax and maintain the current science budget. Their plan appears moderate at the current time, but they haven’t revealed much as yet, and higher earners still win out- saving £203 a year compared to £18 for the poorest families.

UKIP

UKIP wish to cut taxes, introducing a personal allowance equal to minimum wage and abolishing inheritance tax. They wish to lower the income tax rate from 40 to 35p for salaries between 42k and 55k, to the benefit of high earners, who would save £1143 a year. For business, there is little mention of start-ups, the focus is on instigating a minimum floor rate tax for big businesses, whereby they pay tax as a percentage of the UK turnover.

Green

The Greens have a drastically different view. Instead of a personal allowance, they would introduce a Citizen’s Income equal to annual living costs as an unearned right. This also falls under the Welfare bracket, which I will discuss later in this series. They plan to tweak inheritance tax to become accessions tax, meaning being taxed for gifts given whilst the donor is alive, but the threshold would be as such that ordinary people wouldn’t notice the change. Corporation Tax will remain based on net profits, but with higher rates for big businesses. They also wish to phase out VAT, and cut any Capital Gains Tax exemptions beyond a persons own home. And then there’s the Eco-Taxes on certain products and production methods, and Land Value Tax instead of Council Tax. Full of ideas this lot.

So, What Does It All Mean?

With all of the exaggerations we are subjected to from politicians, it has been shamefully difficult to find trust worthy figures. This series will aim to cut through the spin and get to the point. Whatever your vote, it should be an informed one. As for my take on all of this, it appears to me that Labour and the Conservatives are both still pushing a rather dejecting message of Austerity, in the Tories case, it seems this is a larger ruse, designed to shrink the role of Government. Meanwhile the Lib Dems are plugging a now stale rhetoric of being the ‘alternative’, a concept that just doesn’t stand any more with the rise of UKIP and the Greens. UKIP and the Green Party will be very interesting in the coming decade, one harking back to a pre-EU, Big Business right wing and the other looking forward, with a completely unique manifesto that cannot adequately be summed up as simply ‘more Left than Labour’.

It would be great to hear some opinions on these policies, so comment below, and keep your eyes peeled for the rest of this fortnightly series amid my usual posts. Next time we will look at the different approaches to the EU and Immigration, and I have a feeling this could get quite heated.

How Farming Became A Battery Operated Economy

Our Economy started with Factory Farming. It all began when a chicken farmer called Anthony Fisher went to New York and met right wing economist ‘Baldy’ Harper. Harper introduced Fisher to the idea of Factory farming his chickens, already an established method in the US. (So the story goes, a farmers wife was delivered an excess of around 200 chickens sometime in the 1920s. The chickens spent the winter in her house and all survived. It was the first evidence that chickens could be farmed indoors on a mass scale.) Fisher went on to create Britain’s first Battery Farm, and his company Buxted Chickens was a success. Fisher used the profits to found the Institute of Economic Affairs, a Free Market think tank which Margaret Thatcher said “created a climate of opinion which made our victory possible.” So there you have it, an economy founded on chicken farming. Who’d have thought it?

Research Factory Farms and you will drown in a barrel of pathos, force feeding, and pollution. So finding straight economic figures for this article has been tricky. Nevertheless, I will try to keep this free from a welfare angle and just focus on one question. What does the economy of Factory Farming really look like?

Origins

Factory Farming, we often forget, has only existed in the UK for around 60 years. After the Second World War a lot of impetus was put into the UK being self sufficient. Incentives lead to farmers creating bigger, consolidated farms, and higher output expectation lead to factory farming being adopted across the board to meet demand.

Effects On Local Farming Communities

Factory Farms tend to be owned by big companies and usually buy machinery and other supplies from conglomerates their own size. A University of Minnesota study compared the local expenditures of small and large farms. It found that farms with gross incomes of over $900,000 spent under 20 percent of total expenditure in their local community. In contrast, smaller farms with gross incomes of less than $100,000 made 95% of expenditures locally. It is worth considering this wider economic effect when calculating the cost of Factory Farms.

The True Price of Higher Living Standards

The go to rhetoric of the Intensive Farming Industry is that they are feeding the people, and at a low cost. How heroic. However, there are a lot of hidden costs equated with bigger farms that use more mechanised farming methods, despite their apparent efficiency. Monoculture Farms produce more food per worker, which shows efficiency in some respects. However sustainable farms produce more food per acre. This means that sustainable farms create more jobs and more food. But what’s the cost?

The answer is interesting. A major study by Jonasson & Andersson, (1997) showed that giving pigs more space led to more use-able food being created, and less cost on veterinary bills. More recent studies are suggesting the same thing, such as an Exeter University sustainable agriculture study of 9 million farms showed it increased productivity by an average of 93%. In fact, when assessing the most productive way to introduce farming to Africa, a UN report found that small, sustainable farms were best. So why do we still cling to factory farms in the UK?

The cost difference isn’t even as large as it portrayed by the shelf prices. To get down to numbers, a 2002 study found that a Free Range egg cost just 1.54p more than a battery egg. This equates to £2.51 per person per year. So long as the consumer, and not the farmer, is willing to pay the difference, perhaps a time has come when we no longer need Intensive Farms? It may be time to embrace other alternatives, improving the quality of the meat, the productivity of the land, and the deal for smaller farmers.