it's time to get above ourselves

Magic Money Trees

 

Theresa’s now infamous quote to a working nurse that there’s “No Magic Money Tree” to pay NHS staff a decent wage falls into stark relief as we hear stories of heroism from our front-line services treating victims of terrible attacks in Manchester and London.

But how do you cut throughout the rhetoric and counter-rhetoric to find some clarity on a contested area?

A story by Tim Fernholz on Quartz highlights the work of Economists Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman (1) which does just that:

“A spate of massive leaks showing the inner-workings of global tax evasion has given the public a window into how the super-wealthy—including celebrities, politicians, and criminals—leverage the globalization of finance to hide their wealth from the authorities. But the leaks, which encompass just one Panamanian law firm, Mossak Fonseca, and one Swiss bank, HSBC Switzerland, offer only a small peek at these illicit flows. Can we use this data to make a general observation about the prevalence of tax avoidance?”

Alstadsæter, Johannesen, and Zucman have taken the data from the two leaks and combined them with “unusually detailed income and wealth records in Norway, Sweden, and Denmark to estimate the size and scope of tax evasion. Adding these additional sources to the mix has allowed the researchers to make up for the consistent problems of random national audits.”

Fernholz writes:

“The economists’ surprising finding: The top .01% of the wealthy in these countries (those with more than $40 million in net wealth) evades about 30% of their respective personal income and taxes, compared to the average evasion rate of 3%. These findings complicate two arguments commonly made by defenders of the status quo: One, that tax evasion is a relatively uncommon practice among the very wealthy highlighted by extreme cases, and two, that tax evasion among lower-income earners—working under the table or failing to declare tips, for example—is more pernicious than the use of offshore banks. This also has implications for attempts to measure inequality, which often rely on tax data that under-measure inequality because hidden funds are not taken into account. Zucman has argued in previous work that as much as 10% of the world’s wealth is held in tax havens and reinvested elsewhere.”

10% of the world’s wealth hidden.

 

 

But this is very specific to this campaign and to this group of Conservatives, whose senior figures are personally implicated and profit from this.

Our Home Secretary, Amber Rudd, as Paul Mason pointed out has her own offshore arrangements:

Of course this hidden wealth is essentially theft, and it’s worth repeating that the entire narrative generated and maintained by the media is almost exclusively focused on a very different threat, that of the scroungers and the feckless poor.

 

This is all laid out very clearly.

We’ve known since 20111 that at least 50% of Tory funds come from City and we know to that the Conservative plans for the NHS centre around Jeremy Hunt’s Naylor Report which sees our health welfare as a “source of untapped value”.

So there’s a neat symmetry in which the nurse is patronised but her own hard work is exploited for more wealth to the already super-rich.

As health campaigner Deborah Harrington puts it: “We own this, it’s ours. It’s been handed down through the generations since 1948. We all contribute to this society that provides these things, and we’re being told now they’re unaffordable unless we cannibalise them, constantly reducing our property and ownership.”

But this isn’t enough.

As @doughadams outlines in ‘Workers vs. Shirkers – A Critical Review of Public Literature Concerning Unemployment, Austerity and Welfare’ (2):

“The government’s ‘austerity measures’ have led to a rise in the use of punitive and conditional measures against welfare claimants and have correlated with a change in public attitudes. The number of people supporting the statement ‘The government should spend more on welfare benefits for the poor, even if it means higher taxes,’ has halved since 1987 (IPSOS Mori cited in Tinsley, 2013 p. 46) and the sanctions on benefits claimants by the Department of Work and Pensions now outweigh the number of fines given by courts (Webster, 2015). A Foucauldian critique attempts ‘to make harder those acts which are now too easy’ (Foucault, 2003 p 172 in Fryer and Stambe, 2014a).”

This whole story about ‘Skivers vs. Strivers’ is key to the massive misdirection we’re being sold:

“Daguerre and Etherington (2014) highlight the ways in which the Conservative government in the 1980s led a change in public discourse, reframing the unemployed as either ‘lacking energy’ or ‘plainly dishonest’, with ‘renewed emphasis on welfare dependency and benefit fraud’ (p. 18). They strengthened the division between the ‘hard working majority’ and ‘work-shy’, and stigmatised benefit claimants, gaining support for punitive measures and welfare cuts (p. 17). More recently, the government presented benefits claimants as ‘… people who are either not trying, or who are gaming the system…’ and suggested a ‘battle to stop claimants slipping back into the benefits system by the back door’  (Chris Grayling, 2012).”

 

“Benefits cheats admit they get ‘TOO MUCH’ dole: New documentary lifts lid on scroungers.”

The Daily Star, 22nd October 2015

 

That we live in a wealthy country disfigured by poverty and inequality and where the media plays a vital role in exerting a propaganda to support that elite rule is becoming more abundantly clear every day. This week we can do something about it.

 

 

(1) ‘Economists say the ultra-wealthy are dodging taxes far more than we think’. 

(2)  ‘Workers vs. Shirkers – A Critical Review of Public Literature Concerning Unemployment, Austerity and Welfare’

 

 

 

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8 Comments

  • bringiton 7 months ago

    The individuals who avoid taxation through “sheltering” their money in offshore tax havens justify their actions by claiming that they earned it through their own efforts (ha ha) and don’t see why they should share or contribute anything to the society in which they operate.
    They should be deported to a desert island/tax haven of their choice and left to their own resources.
    In many of those places,their favourite mantra,”there is no such thing as society”,is a reality.
    Cake and eat it too comes to mind.

    Reply
  • Alf Baird 7 months ago

    The ‘leakage’ from the UK economy is actually much worse than even this suggests. Annual surpluses from privatised ex public utilities, mostly taken offshore by owners given operating monopolies by successive Westminster governments (energy, ports, airports, water etc), are vast. As these ‘businesses’ tend to be leveraged transactions, their inflated debt levels also help reduce tax liabilities. Inflated land/asset values and interception of rents (e.g. via high prices) within the UK are also extracted from ordinary consumers and taken offshore taxfree. The global rich and famous ‘own’ all of this via secretive offshore ‘funds’. The money tree example does however indicate that a savvy government would find it relatively easy to raise billions in extra taxes. A refusal to do so indicates whose pockets the politicians are really in. As Mrs May is a big fan of the Naylor report, this suggests that NHS England&Wales’ assets are also heading towards offshore ‘funds’ if the Tories get back in. Scotland will be next, although SNP seem to have already been ‘dabbling’ with equity funds (housing?), which are probably an even worse long term option for ordinary Joe Public than PFI.

    Reply
  • Ian 7 months ago

    Coincidentally I’m reading a book (No Expenses Spared) about the MP expenses scandal of about ten years ago. I remember reading about it at the time but to have it summarised, along with highlighting the efforts that MP’s made to try to block access via the Freedom of Information Act to their expenses claims, truly is jaw dropping. Claiming 8 pence far a carrier bag will give a good idea of how greedy they were. At the other end, the Sky’s the limit. Hint – ask Gordon Brown about it next time you see him. He does love watching football.

    I doubt much will have changed other than the MP’s finding new ways to hide their plunder of tax payers money.

    Reply
  • Jim Perston 7 months ago

    You forgot to mention the magic money tree in which banks make money out of thin air and then lend it under the name of quantitative easing.

    Reply
  • SleepingDog 7 months ago

    What is quantitative easing (government printing money) but a magic money tree?

    What are the inflated salaries and bonuses of the financial sector and corporate executives but skimming from a money stream and filling their buckets from a money tap?

    What desert in inherited riches?

    What of conflicts of interest in self-enriching legislators, or selling of honours, traditions of British politics for centuries? Or the self-serving holders of public office who use their privilege to charge fees for access or to mouth paid-for questions, or as a springboard to lucrative future careers, or simply charge fortunes for speaking engagements?

    What of the recipients of bribes and those who bribe them, money changing hands to defraud taxpayers and obtain worse value for money public purchases?

    Some of these practices are discussed in more detail in editor David Whyte’s book How Corrupt is Britain?

    Yes, there are money trees, and money streams and secret money islands, but only the rich and powerful are allowed to own and recognise the existence of these parasitic treasure sources.

    Reply
    • Bella Caledonia Editor 7 months ago

      All true Sleeping Dog. We published an extract from How Corrupt is Britain? when it came out. See also Treasure Islands by Nicholas Shaxson http://treasureislands.org

      Reply
      • SleepingDog 7 months ago

        Cheers, @Editor, I will have a look at Treasure Islands if I can get hold of the new edition.

        From silver spoons to the civil list, it seems that some people can conjure up money in a way denied to others. I am currently reading Edward Bellamy’s Looking Backward: 2000–1887. A character explaining the future socialist utopia makes the point that we are all inheritors of all those who have contributed to civilization for millennia before us (trees of ancestors and trees of knowledge if you will) and to cut some out of that inheritance is an injustice of capitalist-industrialist society.

        Reply
        • Bella Caledonia Editor 7 months ago

          Thanks – nice reference with Bellamy – had forgotten that one

          Reply

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