A fairer society means breaking the big business stranglehold on politics


Labour’s challenge to fight inequalities and rebuild democracy rests on addressing Britain’s ‘finance curse’

If the next Labour leader wants a fairer society, they must break the big business stranglehold on politics.

by Nick Dearden Re-posted from openDemocracy 10.09.15

In just a few weeks, the Labour leadership contest has substantially shifted the political debate in Britain, challenging the policy of austerity, raising inequality as the defining issue of our times, highlighting the erosion of democracy.

Fighting inequality and rebuilding democracy depend on breaking the stranglehold of big business and finance on politics in this country.  And this means reassessing Britain’s role in the world, because the prestige of this country is based upon London as a financial hub and a corporate HQ.

We live in an offshore centre for corporate interests, and this has not only fuelled poverty and inequality around the world, it has done so at home too.  Britain’s prestige has not translated into benefits for ordinary citizens here.  Despite this, political leaders have for decades failed to tackle the vested interests that have captured this country.

If they want to really change Britain, top of the list for the next Labour leader is the dependence of our economy on finance.  We have a ‘finance curse’, in the same way oil-rich nations can develop a ‘resource curse’.  Far from harnessing resources to build a fairer society, finance’s dominance has undercut other sectors of our economy.  Today, governments of every shade jump to the tune of finance, as we experiment in ever greater forms of deregulation, allowing the banks to transform everything we value into a derivative to be gambled on.

Britain has been captured by financial interests, which use this island to avoid taxes globally, to unsustainably inflate debt bubbles, and to speculate on the air we breathe.  There is no path to rebuilding democracy which doesn’t involve an almighty battle to ‘tame the City’ – with robust mechanisms to make companies pay their taxes internationally, levy taxes on speculation, restrict stock market listings, cancel unjust debts and reform the Corporation of London.

But finance is only the most obvious case of corporate capture in Britain.  In fact big business has a stranglehold on our politics.  On the one hand our government is aggressively pushing forward a ‘new generation’ of trade agreements like the EU-US investment deal known as TTIP.  TTIP threatens to water down social and environmental standards across the board, seeing such regulations as little more than ‘trade obstacles’.  TTIP will even give multinational corporations a special ‘right’ to sue our government for passing laws which threaten their profits.

On the other hand the British government is obstructing attempts by Latin American countries to hold multinational companies accountable for abusing real human rights, meaning that people have no access to effective legal redress for harm done to them by British-based corporations.  So far is the British state in the pocket of corporate interests that even our aid budget is used to privatise and deregulate economies in Africa, Asia and Latin America.  Aid money is thrown at free market think tanks to privatise energy supplies; agribusiness conglomerates get a helping hand to control seed markets; education multinationals find new markets in some of the poorest countries on the planet.

The rule of multinational corporations, which places a higher value on profit than human rights, is a key factor driving inequality. Combatting inequality means the next Labour leader needs to be prepared to use the British veto in Europe to halt TTIP and its sister deals, limit the influence of multinational corporations over the UK political process, establish a commission to tackle corporate abuse of workers’ rights and environmental sustainability, and overhaul the aid budget as a form of redistributive taxation which can help countries across the world develop decent public services.

These proposals form part of a manifesto of policies which we launch today, the first step in beginning to rebuild our democracy and properly fight inequality.  It also includes reducing carbon emissions and giving substantial reparations to help developing countries build democratically-controlled energy systems in low carbon economies.  And supporting small scale, organic agriculture, rather than industrial farming.

If we really want a fairer society, there is no alternative to taking on vested interests.  We can’t just decide to exercise a ‘nicer’ form of global power, because our power is built on a base that necessarily erodes democracy.  A powerful financial sector, unfair trade practices, ideologically-driven privatisation, and many other policies, which we inflict on the world, also serve to make our own country more unequal.  So these policies must be changed not just for the millions of people around the world affected, but for the British people too.

True, it may make our country less ‘important’ at the top table, but that is a price well worth paying for a fairer world, and a happier society

This article is cross posted from Global Justice Now and appears here.

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The Observer’s bankrupt when it comes to Labour


The Observer is Bankrupt when it comes to Labour

Richard J Murphy from Tax Research UK

If you read the Observer today (19/7/15) you would think that the Tories will rule in the UK until at least 2030.

You would also believe that Labour has taken leave of its collected senses to even have Jeremy Corbyn as a member.

And that a triumvirate based around Liz Kendall, Chuka Umunna and Tristram Hunt is the only group in touch with reality.

It goes on, and on, and on, all based around Andrew Rawnsley’s jaded perspectives, an appeal to people to believe the findings of a small set of focus groups (Really? After all Labour’s experience of them?) that say some people might never return to the Labour fold after 2015 and a poverty of analysis that belittles the paper.

What do I mean? Take this example (and there are so many more in today’s paper it could provide enough material for a PhD thesis) from the editorial, where it is said that Labour must learn that:

Parties can help shape … questions, but they can’t tell voters what they should be and certainly can’t ignore the ones that they don’t like.

And yet only paragraphs later the same editorial notes:

Even as the Conservatives are masterfully shaping the territory on which the 2020 election battle will be fought, Labour is focused on an introspective conversation with its members, not a dialogue with the country.

When the paper cannot even be internally consistent on what is politically possible from the left and right – one of which can apparently define the whole agenda for discussion, and so opinion, and yet the other can’t – within the same editorial its inability to construct an argument becomes painfully clear.

The whole paper is riddled with that inability today. Take this wonder from Alistair Darling from today’s edition where he says:

We want people to get on, each generation building on the achievements of the last.

Quite right Alistair. And then he adds:

That needs a strong stable economy, but also needs investment. Borrowing to provide housing or a decent transport system is a good thing and we should say so.

I agree. And then he offers this next observation:

And yes, we need to get debt and borrowing down, as I have always said. I’m glad Osborne was able to meet my target.

Any you wonder why people aren’t voting Labour? Let me explain it as a non-party member who looks at politics but does not partake in it at a party level.

The problem is threefold. First what Alistair Darling says is incoherent economically unless you say a) that you are going to screw the electorate for large sums of money to pay for the investment or b) you’re going to do more of the much hated PFI that is shifting vast amounts of public funds to the private sector or c) you’re going to do what I call Green Infrastructure Quantitative Easing but which Jeremy Corbyn calls People’s QE (as far as I can tell they’re the same). But Alistair did none of those things. I don’t suppose he has a clue what that form of QE is so he looked stupid, and deservedly so. And people, even people who know little of economics, have rumbled that. Until Labour talks economically literately it has no hope, and it is not.

The second problem is also implicit in Darling’s comment: he ended up playing on Osborne’s territory. That’s because Labour has no story of its own. This myth of the middle ground is nonsense. It’s a fabrication. It’s a lie that there is such a thing. The middle ground is simply where people are in the prevailing narrative. It’s where that  narrative has taken them, but let’s not pretend that parties cannot move where that is or should not want to do so: the Observer editorial recognises implicitly – but without the candour or wit to admit it – that this is what the skill of the Tories in the last decade has been: they have been able to move the middle ground their way. But what they then argue is that Labour should not seek to change that fact, or where the middle ground is. What the Observer is saying is that Labour must play by Tory rules on the middle ground the Conservatives have created.

But why would they do that?  If sending people into poverty, deliberately; slashing funding for the NHS; cutting investment in education; sending undergraduates deeper into debt; holding wages at near poverty levels; offering tax cuts for the richest and no one else; threatening to end the BBC and going to war without bothering to tell anyone is the middle ground then the Observer has clearly lost the plot. And anyone saying that this is where Labour needs to be, or thereabouts, has also lost any scintilla of reasoning they might have once possessed. It is this loss of reason so that they are even unable to identify the true nature of the problem that they face that is the third problem the likes of those in the Observer who think that they are on the left face.

It is this lack of intellectual capacity to reason that impoverishes Darling, and it is the same problem that cripples the Observer: somewhere within it (I can’t be bothered to re-find the link) it is said that all parties die in the end and so, it is claimed Labour must die if the left is to go forward. But implicit in that statement is the glaringly obvious fact that so too will the Conservative Party and its current narrative die, and yet there is not in any one the many articles the Observer publishes today (with the single unifying theme of attacking Jeremy Corbyn) any hint of this possibility. What is astonishing is that when the Tory narrative on Europe is close to shredding itself and that people may reject the whole Tory edifice when they lose parts of the NHS, education, the BBC, or just the nation as Cameron shatters the Union which was supposed to be the basis of his party, the Observer seems quite unable to notice any such possibility, at all.

So let me offer explanation for what is happening. What the Observer is really saying today is that it thinks there is one hegemonic narrative in UK politics and that it thinks it is neoliberalism.

It is saying that any threat to that narrative, from wherever it comes, should be challenged. So Corbyn is unacceptable.

And it is saying that Labour must oppose the Conservatives from within that constraint of subscribing to neoliberalism when the whole basis of neoliberalism is the shrinking of the state, the increasing division of reward, the privatisation of gain and the outsourcing of risk, all of which should be antithetical to Labour as I understand it.

So let me tell the Observer a simple fact: opposition on that basis is not possible. If the middle ground is neoliberalism a policy called neoliberalism lite is not going to work: from the outset that is by definition both a failure and bound to fail.

Opposition now is to take control of the narrative. Opposition then, when neoliberalism has become so universal in apparent appeal (except, that is, in Scotland, Wales, Northern Ireland and significant parts of the North), is about offering a different narrative. It has to be: neoliberalism is a totalitarian logic of exclusion. The Observer’s logic is not just appeasing that totalitarianism in that case, it is in the process supporting it. This is not a situation where ambiguity is possible. You’re either for or against neoliberalism: there is no possibility of sitting on the fence and the Observer has made clear today on which side it fits.

So what is the alternative narrative? Is it some bizarre logic, as all Jeremy Corbyn’s opponents would wish to suggest? Without wishing to be involved in party political debate – because, I stress, that is not my bag – I suggest not.

Instead it is  a narrative that says people are the foundation of wealth, whoever they work for.

That means this is a narrative that values people equally whether they work for the state or private sectors.

And it is a narrative that says let each do what it is best able to deliver.

But which also says that if markets are best able to deliver then they have to be based on certain rules, like transparency, accountability, paying taxes, the prevention of monopoly power and the promotion of enterprise and not rent seeking speculation, because in case the Observer has forgotten it, these are the qualities that make markets work when the concentrated power of neoliberalism is simply about reward extraction by a few from the effort and assets of the many, and is as far removed from real market theory as Soviet tractor factories were.

None of which then says that this alternative narrative is opposed to business: far from it, this is a more pro smaller business agenda than anything that the right has put forward for decades because of the right’s bias towards wealth, big business and globalisation, all of which are the antithesis of small business success.

And that narrative has to recognise that effort is and will be rewarded but that the right to enjoy that reward is dependent upon complying with the democratic wishes of the society of which a person is a member, including its expectation that redistribution to deliver greater equality is not just the right thing to do, but a basis for enhanced prosperity for all in the long run.

That narrative also says that the state must and will use the powers available to it to deliver these goals if it is to be responsible. So it will invest when it thinks fit, and create the money to do so (back to QE) when the market will not deliver the scale of economic activity that the country can sustain. Wouldn’t anything else be wholly irresponsible?

And it will regulate to correct market failure, whether by banks or in the environment.

And it will foster employment by reducing the taxes on labour and increasing them on unearned income.

And it will not waste resources paying housing benefits when it would be better off building houses.

And nor will it penalise the young and lay a lifetime burden of debt upon them when they are the basis of our future prosperity.

There is much more to the vision, of course.

But for heaven’s sake, if the Observer cannot see that it is only by talking about alternatives that Labour (or any other left of centre party) can put together the necessary coalition of interests to create change in this country then no wonder they back Labour leaders who might, like the last shadow chancellor, feel comfortable discussing VAT on replacement windows but ducked big issues like the tax gap.

Or to put it another way, if a debate is to take place, shall we make it about something more than the positioning of deckchairs whilst neoliberalism steams on?

– See more at: http://www.taxresearch.org.uk/Blog/2015/07/19/the-observers-bankrupt-when-it-comes-to-labour/#sthash.UH3VtZ9Q.dpuf

Bankers + Tax Havens = Lower wages, benefits and pensions


This video clip of the ‘looting of America’ exposes the same type of looting that is occurring in the UK.  In fact, it is generally accepted that the City of London is an even more criminogenic environment than Wall Street.  Banks that are too big to fail and bankers that are too big to jail.

In spite of being only 12 minutes long, it romps through the major ruses with an impressive list of commentators which include New Economic Perspective‘s Professor Bill Black and Professor Stephanie Kelton; Naked Capitalism‘s Yves Smith, James Henry, author of ‘The price of OffShore Revisited’ and Citicorps’ 2005 plutonomy document on the inconvenience of the franchise.

There is even a clip of Goldmans Sach’s Lloyd Blankfein explaining that the 99% of Americans have to lower their expectations of wages, benefits, pensions and sell off the remaining public assets.  We don’t need the chief vampire squid.  We have George Osborne turning the UK into a third world country.

The Truthseeker: Looting Of America (E12)

Published on Apr 5, 2013

The man who jailed a thousand bankers tells us how to do it; Twice the size of the US economy exposed offshore; and Wall Street circles the nation’s last assets. Seek truth from facts with former senior financial regulator Bill Black, The Price of Offshore Revisited author James Henry, former Wall Street executive Richard Eskow, Econned author Yves Smith, economists Stephanie Kelton and Dean Baker, and chief vampire squid Lloyd Blankfein.

Major Banks Help Clients like Romney Hide Trillions in Offshore Tax Havens


Forget the 47 percent. Foreign tax havens—and investment vehicles like those the GOP candidate established at Bain Capital—are robbing world treasuries of billions.

Major Banks Help Clients Hide Trillions in Offshore Tax Havens

Published on Aug 3, 2012 by 

James Henry of Tax Justice Network:  US media and politicians mostly ignore massive untaxed wealth that big banks help rich move to tax havens.

Well, when you look at the distribution of wealth here that’s offshore, we think there’s no more than about 10 million people that really account for about 83 percent of the $21 trillion that is at a minimum offshore. And that’s pretty concentrated. The top 100 are multibillionaires. They account for about 8.1 percent of the total. The next 2,900, billionaires with an average wealth of $1.4 billion, account for another 7 percent of it. So that’s about 3,000 people that already are owning nearly 15 percent of the world’s financial wealth.

And then we have—the next step in the ladder is the sort of ultra high net worth crowd, which are—their average wealth is on the order of $58 million, and there’s about 117,000 of them in the world. And then, finally, there’s another fortunate few, who are about 9.9 million, whose average wealth is on the order of $6.3 million, and they account for about 60 percent of this. So 82 percent of the world’s wealth, then, when you add all this up, is—of the offshore wealth is owned by about 0.14 percent of the world’s population.

So if you look at it from the standpoint of who’s actually benefiting from this industry, you know, it’s a tiny share of the global population. And that group has—in terms of global wealth, which is about $231 trillion, they own about a third of all that global wealth. And so that’s a—you know, 0.14 percent is a tiny fraction owning that much wealth.


James Henry, a former chief economist at McKinsey & Co., describes offshore tax havens like the “bar scene in Star Wars.” He explains, “Dictators and kleptocrats used them to conceal stolen loot. Arms dealers and drug dealers use them to launder their deals. Google and Apple and Pfizer use them to park their intellectual property and pay themselves tax-free royalties. Banks use them to park lousy loans and stash the offshore accounts and assets under management of their wealthy individual clients, many of which are paying zero taxes back home…And so on.” 

Romney has investments in a number of well known tax havens, including Ireland, Luxembourg, the Cayman Islands, and Bermuda. Until 2010, he held a few million in the Swiss bank UBS, which in 2009 was forced to pay the US $780 million in fines and penalties for helping more than 17,000 Americans commit tax fraud by hiding as much as $20 billion overseas. The total value of Romney’s offshore investments is unknown, but his tax returns have revealed that he has at least $30 million invested in the Cayman Islands, in at least 12 different Bain Capital funds. When pressed about the relationship between his offshore investments and his low tax rate (he paid 14.1 percent on $13 million in income, according to his 2011 tax return), Romney has largely declined to answer questions about his overseas holdings other than to say, “I pay all the taxes that are legally required, not a dollar more.” Romney has also denied getting tax benefits from his offshore accounts. He told Fox News, “[T]here was no reduction, not one dollar reduction in taxes by virtue of having an account in Switzerland or a Cayman Islands investment. The dollars of taxes remained exactly the same. There was no tax savings at all.”

Similarly, a Romney campaign spokeswoman told Mother Jones that Romney’s foreign investments “are taxed in the very same way they would be if the shares were held in the US rather than through a Cayman fund. No taxes are avoided or reduced. These funds are registered with the IRS and report all income to investors and the IRS, just like domestic funds.”

Romney’s assertion that his offshore investments have not reduced his tax bill has been met with skepticism by tax experts.