*edit, May 8, 2014 – I see from reviewing this older post that I left out information that would have kept the post from being mostly mysterious. I will correct that. This post simply presents a snippet of a debate between two individuals on the subjects of austerity and tax justice. I will add in the comment from Dan Mobley which John Christensen responded to. The blurb about Dan states: **Dan Mobley was a senior advisor to the UK Treasury before moving to Standard Chartered Bank in London. He speaks in a personal capacity.** The blurb about John states: **John Christensen is a development economist and former government adviser who now directs the international secretariat of the Tax Justice Network.** WordPress has it’s limitations. I tried enclosing the respective authors’ blurbs in quotation marks. The final, closing, marks on John’s blurb wouldn’t show properly. When I moved it one space over, it became a starting enclosing mark. WordPress could stand to use a few more features, such as a ‘force’ character option or something. Also, The url provided for John’s organization worked okay but the underlining/highlighting of it wouldn’t stay under it, so I dropped it and simply turned the reference to it into a link.
Dan Mobley stated:
If we want to prevent future crises, we need to draw the right lessons from this one. The many incompetent and arrogant bank CEOs and boards deserve the full weight of public fury, but this justified rage should not blind us to the fact that bankers were feeding the addiction of individuals, governments and companies to cheap borrowing, using the glut of savings flowing uphill from Asia to the West.
Macroeconomic policy failed: governments ran massive structural deficits long before the crisis, bribing their electorates with unaffordable promises (with much of the cost hidden off balance sheet). The ‘Great Moderation’ of the 1990s was actually a borrowing and spending spree.
I would love to plug some of the gap by closing tax havens and clamping down on tax evasion. But history teaches us how slow progress is internationally – the G20’s failure here is scandalous but predictable – and how quickly new loopholes are found by rich individuals and companies.
We could fill a magazine debating the Tobin Tax. Even if one believes it works – and if so-called speculative activity was curbed, this would mean little revenue raised – there is no chance of it being agreed by all governments globally.
Campaigning activity would be much better focussed on corporate tax transparency and (internal corporate) transfer pricing (see Glossary).
We should delay spending cuts (and tax rises) until we have stronger signs of economic recovery, to avoid tipping us back into recession. But the day of reckoning cannot be delayed forever.
– See more at: http://newint.org/argument/2010/11/01/are-public-service-cuts-justified-debate/#sthash.WcVTECBG.dpuf
John Christensen responded to Dan’s above comment with:
We have common ground on tackling corporate tax transparency, transfer mispricing and the scandalous failure of the G20 countries to tackle tax havens, almost all of which are (rich) OECD countries or politically connected to OECD countries. Your point about savings from the South flowing uphill is fundamental: a large proportion of those flows are illicit (embezzled funds, trade mispricing, tax evasion etc). Global macroeconomic imbalances will not be remedied without action to improve cross-border co-operation and information exchange, which bankers are lobbying flat-out to prevent.
Action must be taken to reduce personal and corporate debt. Since housing costs are responsible for a majority of household debt in most countries, priority must be given to providing affordable, energy-efficient housing. This would form part of a Green New Deal investment programme, providing the stimulus to boost economies and reduce energy consumption. Public investment of this type can be partly funded from new taxes (a land value tax is especially suitable for this purpose) which will raise significant sums without stalling economic recovery or worsening inequality.
Excessive corporate debt needs urgent action. One of the reasons why private equity investors have loaded companies (and football teams) with so much debt is because tax relief is given to loan capital, but not equity capital, creating a bias in favour of the former. The solution is to withdraw the tax relief on interest payments.
None of which precludes immediate public spending cuts, which should focus on the obscene sums spent on weapons programmes.
My online response to the above linked-to article follows:
I’m not an expert on the subject of tax havens but I know it’s an important subject, for which reason I try to keep up. (And John helped me out in that regard when he sent me the title of a book he contributed to, edited by Steven Hiatt, which no one in bookstores here in Toronto knew about.)
It’s fairly simple, Isn’t it? We all agree (in one sense) to have a system in which there are rules for how an individual or company contributes, financially, to the cost of running the city, province or country all within a global money system (which I have no use for, but which is another subject). The details are always worth discussing as long as everyone has good intentions. But there are more important issues, clearly.
After the rules and laws are set, the law and order crowd sees that it can gain advantages and dominance in society (with which it’s members can guarantee outcomes for themselves) by breaking the rules, as seen in the number of tax havens dotting the global landscape. Because they operate within a corporatocracy (representing a whole other world of rules made, agreed to, followed by most and then broken by a minority), they simply get what should be called ‘criminal’ to be declared ‘legal’.
I have to say, I don’t get a lot. But it’s easy enough for an uneducated guy like me to see that that legalized criminality is unjust and unsupportable. If we are to get to the kind of society I want to live in, in which there isn’t entrenched inequality (which involves ‘real’ suffering by ‘real’ people), then that legalized criminality is unsupportable. Which means, I support those who care about the kind of society I care about.
John Christensen: 1
Dan Mobley: 0