By Brian Davey
Treasure Islands: Tax Havens and the Men who Stole the World by Nicholas Shaxson, Bodley Head
Shaxson’s book “Treasure Islands” is the most important book I have read for several years. I was vaguely aware of tax havens and secrecy jurisdictions but this book is genuinely revelatory. This book is endorsed not only by John Pilger, but also by Nicholas Stern no less . . . Pilger and Nicholas Stern . . . together. That should make you think . . .
The international competition that drives every country to the bottom in regard to taxing the wealthy less and less, but also in regard to the dismantling of banking and financial regulation, which gave us the 2007 global financial crisis, is all traceable back to these tax havens and secrecy jurisdictions.
They were developed with the knowing connivance of the Foreign and Commonwealth Office as well as the active encouragement of the Bank of England. They enabled the British banks to hang onto a global role after the collapse of the empire by providing – arms length unregulated and untaxed playgrounds for banks, dictators looting their countries, multinationals and organised crime the world over. The evidence in the book is unequivocal. The Bank of England and British banks connived to offer a no-regulation market for Eurodollars in London that would allow US banks to escape US banking regulations and not be regulated by anyone. They then extended this unregulated zone outwards to the remaining colonial outposts for more and more dubious activities in competition with Switzerland, Lichtenstein, Luxembourg.
As this process proceeded they were well aware that, for example, in the Cayman Islands, they were being used for money laundering by the Mafia and South American international crime syndicates in drug smuggling.
I’ve not read Susan George’s ‘Whose crisis, whose future’ – but I have skimmed it and I get the impression that she sees a huge role for the ideological triumph of neo-liberalism. This smashed up Keynesianism where states and politicians had control over international financial flows and therefore an ability to control their own economies and banks. But it was not just an ideological victory – the ideological victory was made possible by the practical undermining of control over finance and international financial flows. That’s where these “Treasure Islands” have a structural and strategic position in the global economy and the development of neo-liberalism and the dominance of the banks.
At the same time as neo-liberal economics was being propagated in the universities and by Thatcher, the Bank of England and British state was creating a system that cut the ground under any ability to regulate or police international financial flows and thus gave practical expression to neo-liberal ideology. With the havens and secrecy jurisdictions it became impossible to control financial capital and the banks.
The result is the creation of banks too big to fail or be controlled and a financial sector take over on global politics. Read the book, its all there. What it shows is that we are now in thrall to a criminal and unaccountable financial elite. Some of the details are positively Kafkaesque – I mean in the Cayman Islands there is actually a law, passed with UK government connivance whereby you can go to jail, not only for revealing banking secrets but just for asking for them!
A core principle of ecological economics is distributive equity and the need for public expenditure. Of course the current deficits are partly the result of the recession but they are also the result of the state losing the ability to tax. That is above all the inability of the state to tax the rich - that is now the result of this promotion and sanctioning of international crime by the Bank of England and the Foreign and Commonwealth Office – and of course the Swiss government, Luxembourg, China in Hong Kong and Macau…..
The money commons idea is important since we must abolish the Bank of England and completely recast the money system DIY.
As my next door neighbour puts it – what’s going on now is that we are being robbed. There is a bank robbery going on . . .
We are governed by criminals. That’s the bottom line.
What’s needed is fundamental political change including site value tax, banking reform and reform of the energy sector. A different bottom line would include . . .
(i) Bringing in Land value tax – since this is something the obscenely wealthy can’t avoid, behind all their financial instruments there ultimately are assets – mainly the value of land . . . so we need a land value tax.
(ii) Getting rid of offshore tax havens. Offshore tax havens could not function without their ambiguous relationship as quasi colonies. We need to cut them loose and make them fully independent whether they like it or not – sling these crooks out of the so called commonwealth and bring the shabby imperial legacy to an end for good.
(iii) Also we must dismantle the Bank of England and institutions like the “City of London Corporation” (which is not to be confused with the Greater London Authority). Even though the Bank of England was nationalised and even when it was supposedly under direct government control it was subverting financial controls and the ability of political institutions to control finance. Now it is not even under political control, except of the most minimum kind. As far as the City of London Corporation is concerned, most people are barely aware of its existence, let alone its enormous power and shadowy influence in the political system. It is not under democratic control but controlled by corporations and have immense power behind the scenes, including in mainstream London, national and international politics. As Shaxson shows it has a role harvesting profits around the world from a vast property empire and yet no one knows what it owns – and freedom of information act requests simply do not apply – it is set up as a secrecy jurisdiction in its own right. This is an outrageous abuse of power and the City of London Corporation should be disbanded – no matter how old it is, no matter what historical traditions it has, it is time for this archaic club for plutocrats to be sent packing.
(iv) Bringing in Cap and Share in the energy sector. Charging companies for the right to import fossil fuels into the economy – and capping how much they are allowed ot bring in – and sharing out the fee they pay equally amongst the whole population. The rich would not be able to evade having to buy permits to sell fossil fuels. (www.capandshare.org or www.holyrood350.org)
Not that there is any chance whatsoever of the present government or a Labour government implementing such things. First we need something like what the Egyptians are working on . . .
Building up a movement around these core political demands in a package or programme will take several years. The conventional left are clueless when it comes to the actual structural issues that underpin the crisis and pose things in simplistic rich versus the poor terms – however the way I see it we are entering a period of turmoil, intense political unrest and breakdown in financial and governance systems. The cuts show every evidence of creating chaos among public services in which vulnerable groups will be badly hit and there will be extreme hatred against the government and the financial and economic elite, not the least from redundant public sector workers. We can stand aside from that and be irrelevant or make sure our ways of tackling climate change and peak oil are tied in very closely with proposals for unevadable land value taxation and fundamental banking reform and, in so doing, try to get a political movement off the ground that speaks for justice and speaks to everyone’s needs.
Hitherto I’ve not felt that it was worthwhile getting involved in politics except indirectly through developing practical projects and companies in the local economy. I still feel that there is a need to help people cope in self help action – however one risks being trapped in the paradoxical situation of helping the government by promoting the cheaper self help options – all in the interests of programmes that are there to prop up unsustainable arrangements for the super rich. We need to establish a broader movement that brings together those who focused on the impending environmental crisis, those who have focused on building local resilience and those seeing fundamental structural change in an unfair society . . .
How can we make our own Jasmine Revolution and be part of that process?