31 December 2009

Inaugural “Untrusted, too” Annual Reading Recommendation Round-up

I made a request on Untrusted yesterday for books etc people would recommend as inspiring works on social and political issues they've read recently. I was asking for contemporary George Orwells and Rosa Luxemburgs, because if we spend too much time reading The Guardian, we might think that there's very little worthwhile writing going on.

As it's the end of the year, let's expand the idea for people to suggest writing, contemporary or not, which has inspired them recently. I might even come up with some suggestions of my own if I can think of any.

OK, that's it...

09 December 2009

Chomsky on Postmodernism and the theorists

NOTE: Moving this over here from the UT for Jay...

"I've returned from travel-speaking, where I spend most of my life, and found a collection of messages extending the discussion about "theory" and "philosophy," a debate that I find rather curious. A few reactions --- though I concede, from the start, that I may simply not understand what is going on.

As far as I do think I understand it, the debate was initiated by the charge that I, Mike, and maybe others don't have "theories" and therefore fail to give any explanation of why things are proceeding as they do. We must turn to "theory" and "philosophy" and "theoretical constructs" and the like to remedy this deficiency in our efforts to understand and address what is happening in the world. I won't speak for Mike. My response so far has pretty much been to reiterate something I wrote 35 years ago, long before "postmodernism" had erupted in the literary intellectual culture: "if there is a body of theory, well tested and verified, that applies to the conduct of foreign affairs or the resolution of domestic or international conflict, its existence has been kept a well-guarded secret," despite much "pseudo-scientific posturing."

To my knowledge, the statement was accurate 35 years ago, and remains so; furthermore, it extends to the study of human affairs generally, and applies in spades to what has been produced since that time. What has changed in the interim, to my knowledge, is a huge explosion of self- and mutual-admiration among those who propound what they call "theory" and "philosophy," but little that I can detect beyond "pseudo-scientific posturing." That little is, as I wrote, sometimes quite interesting, but lacks consequences for the real world problems that occupy my time and energies (Rawls's important work is the case I mentioned, in response to specific inquiry).

The latter fact has been noticed. One fine philosopher and social theorist (also activist), Alan Graubard, wrote an interesting review years ago of Robert Nozick's "libertarian" response to Rawls, and of the reactions to it. He pointed out that reactions were very enthusiastic. Reviewer after reviewer extolled the power of the arguments, etc., but no one accepted any of the real-world conclusions (unless they had previously reached them). That's correct, as were his observations on what it means.

The proponents of "theory" and "philosophy" have a very easy task if they want to make their case. Simply make known to me what was and remains a "secret" to me: I'll be happy to look. I've asked many times before, and still await an answer, which should be easy to provide: simply give some examples of "a body of theory, well tested and verified, that applies to" the kinds of problems and issues that Mike, I, and many others (in fact, most of the world's population, I think, outside of narrow and remarkably self-contained intellectual circles) are or should be concerned with: the problems and issues we speak and write about, for example, and others like them. To put it differently, show that the principles of the "theory" or "philosophy" that we are told to study and apply lead by valid argument to conclusions that we and others had not already reached on other (and better) grounds; these "others" include people lacking formal education, who typically seem to have no problem reaching these conclusions through mutual interactions that avoid the "theoretical" obscurities entirely, or often on their own.

Again, those are simple requests. I've made them before, and remain in my state of ignorance. I also draw certain conclusions from the fact.

As for the "deconstruction" that is carried out (also mentioned in the debate), I can't comment, because most of it seems to me gibberish. But if this is just another sign of my incapacity to recognize profundities, the course to follow is clear: just restate the results to me in plain words that I can understand, and show why they are different from, or better than, what others had been doing long before and and have continued to do since without three-syllable words, incoherent sentences, inflated rhetoric that (to me, at least) is largely meaningless, etc. That will cure my deficiencies --- of course, if they are curable; maybe they aren't, a possibility to which I'll return.

These are very easy requests to fulfill, if there is any basis to the claims put forth with such fervor and indignation. But instead of trying to provide an answer to this simple requests, the response is cries of anger: to raise these questions shows "elitism," "anti-intellectualism," and other crimes --- though apparently it is not "elitist" to stay within the self- and mutual-admiration societies of intellectuals who talk only to one another and (to my knowledge) don't enter into the kind of world in which I'd prefer to live. As for that world, I can reel off my speaking and writing schedule to illustrate what I mean, though I presume that most people in this discussion know, or can easily find out; and somehow I never find the "theoreticians" there, nor do I go to their conferences and parties. In short, we seem to inhabit quite different worlds, and I find it hard to see why mine is "elitist," not theirs. The opposite seems to be transparently the case, though I won't amplify.

To add another facet, I am absolutely deluged with requests to speak and can't possibly accept a fraction of the invitations I'd like to, so I suggest other people. But oddly, I never suggest those who propound "theories" and "philosophy," nor do I come across them, or for that matter rarely even their names, in my own (fairly extensive) experience with popular and activist groups and organizations, general community, college, church, union, etc., audiences here and abroad, third world women, refugees, etc.; I can easily give examples. Why, I wonder.

The whole debate, then, is an odd one. On one side, angry charges and denunciations, on the other, the request for some evidence and argument to support them, to which the response is more angry charges --- but, strikingly, no evidence or argument. Again, one is led to ask why.

It's entirely possible that I'm simply missing something, or that I just lack the intellectual capacity to understand the profundities that have been unearthed in the past 20 years or so by Paris intellectuals and their followers. I'm perfectly open-minded about it, and have been for years, when similar charges have been made -- but without any answer to my questions. Again, they are simple and should be easy to answer, if there is an answer: if I'm missing something, then show me what it is, in terms I can understand. Of course, if it's all beyond my comprehension, which is possible, then I'm just a lost cause, and will be compelled to keep to things I do seem to be able to understand, and keep to association with the kinds of people who also seem to be interested in them and seem to understand them (which I'm perfectly happy to do, having no interest, now or ever, in the sectors of the intellectual culture that engage in these things, but apparently little else).

Since no one has succeeded in showing me what I'm missing, we're left with the second option: I'm just incapable of understanding. I'm certainly willing to grant that it may be true, though I'm afraid I'll have to remain suspicious, for what seem good reasons. There are lots of things I don't understand -- say, the latest debates over whether neutrinos have mass or the way that Fermat's last theorem was (apparently) proven recently. But from 50 years in this game, I have learned two things: (1) I can ask friends who work in these areas to explain it to me at a level that I can understand, and they can do so, without particular difficulty; (2) if I'm interested, I can proceed to learn more so that I will come to understand it. Now Derrida, Lacan, Lyotard, Kristeva, etc. --- even Foucault, whom I knew and liked, and who was somewhat different from the rest --- write things that I also don't understand, but (1) and (2) don't hold: no one who says they do understand can explain it to me and I haven't a clue as to how to proceed to overcome my failures. That leaves one of two possibilities: (a) some new advance in intellectual life has been made, perhaps some sudden genetic mutation, which has created a form of "theory" that is beyond quantum theory, topology, etc., in depth and profundity; or (b) ... I won't spell it out.

Again, I've lived for 50 years in these worlds, have done a fair amount of work of my own in fields called "philosophy" and "science," as well as intellectual history, and have a fair amount of personal acquaintance with the intellectual culture in the sciences, humanities, social sciences, and the arts. That has left me with my own conclusions about intellectual life, which I won't spell out. But for others, I would simply suggest that you ask those who tell you about the wonders of "theory" and "philosophy" to justify their claims --- to do what people in physics, math, biology, linguistics, and other fields are happy to do when someone asks them, seriously, what are the principles of their theories, on what evidence are they based, what do they explain that wasn't already obvious, etc. These are fair requests for anyone to make. If they can't be met, then I'd suggest recourse to Hume's advice in similar circumstances: to the flames.

Specific comment. Phetland asked who I'm referring to when I speak of "Paris school" and "postmodernist cults": the above is a sample.

He then asks, reasonably, why I am "dismissive" of it. Take, say, Derrida. Let me begin by saying that I dislike making the kind of comments that follow without providing evidence, but I doubt that participants want a close analysis of de Saussure, say, in this forum, and I know that I'm not going to undertake it. I wouldn't say this if I hadn't been explicitly asked for my opinion --- and if asked to back it up, I'm going to respond that I don't think it merits the time to do so.

So take Derrida, one of the grand old men. I thought I ought to at least be able to understand his Grammatology, so tried to read it. I could make out some of it, for example, the critical analysis of classical texts that I knew very well and had written about years before. I found the scholarship appalling, based on pathetic misreading; and the argument, such as it was, failed to come close to the kinds of standards I've been familiar with since virtually childhood. Well, maybe I missed something: could be, but suspicions remain, as noted. Again, sorry to make unsupported comments, but I was asked, and therefore am answering.

Some of the people in these cults (which is what they look like to me) I've met: Foucault (we even have a several-hour discussion, which is in print, and spent quite a few hours in very pleasant conversation, on real issues, and using language that was perfectly comprehensible --- he speaking French, me English); Lacan (who I met several times and considered an amusing and perfectly self-conscious charlatan, though his earlier work, pre-cult, was sensible and I've discussed it in print); Kristeva (who I met only briefly during the period when she was a fervent Maoist); and others. Many of them I haven't met, because I am very remote from from these circles, by choice, preferring quite different and far broader ones --- the kinds where I give talks, have interviews, take part in activities, write dozens of long letters every week, etc. I've dipped into what they write out of curiosity, but not very far, for reasons already mentioned: what I find is extremely pretentious, but on examination, a lot of it is simply illiterate, based on extraordinary misreading of texts that I know well (sometimes, that I have written), argument that is appalling in its casual lack of elementary self-criticism, lots of statements that are trivial (though dressed up in complicated verbiage) or false; and a good deal of plain gibberish. When I proceed as I do in other areas where I do not understand, I run into the problems mentioned in connection with (1) and (2) above. So that's who I'm referring to, and why I don't proceed very far. I can list a lot more names if it's not obvious.

For those interested in a literary depiction that reflects pretty much the same perceptions (but from the inside), I'd suggest David Lodge. Pretty much on target, as far as I can judge.

Phetland also found it "particularly puzzling" that I am so "curtly dismissive" of these intellectual circles while I spend a lot of time "exposing the posturing and obfuscation of the New York Times." So "why not give these guys the same treatment." Fair question. There are also simple answers. What appears in the work I do address (NYT, journals of opinion, much of scholarship, etc.) is simply written in intelligible prose and has a great impact on the world, establishing the doctrinal framework within which thought and expression are supposed to be contained, and largely are, in successful doctrinal systems such as ours. That has a huge impact on what happens to suffering people throughout the world, the ones who concern me, as distinct from those who live in the world that Lodge depicts (accurately, I think). So this work should be dealt with seriously, at least if one cares about ordinary people and their problems. The work to which Phetland refers has none of these characteristics, as far as I'm aware. It certainly has none of the impact, since it is addressed only to other intellectuals in the same circles. Furthermore, there is no effort that I am aware of to make it intelligible to the great mass of the population (say, to the people I'm constantly speaking to, meeting with, and writing letters to, and have in mind when I write, and who seem to understand what I say without any particular difficulty, though they generally seem to have the same cognitive disability I do when facing the postmodern cults). And I'm also aware of no effort to show how it applies to anything in the world in the sense I mentioned earlier: grounding conclusions that weren't already obvious. Since I don't happen to be much interested in the ways that intellectuals inflate their reputations, gain privilege and prestige, and disengage themselves from actual participation in popular struggle, I don't spend any time on it.

Phetland suggests starting with Foucault --- who, as I've written repeatedly, is somewhat apart from the others, for two reasons: I find at least some of what he writes intelligible, though generally not very interesting; second, he was not personally disengaged and did not restrict himself to interactions with others within the same highly privileged elite circles. Phetland then does exactly what I requested: he gives some illustrations of why he thinks Foucault's work is important. That's exactly the right way to proceed, and I think it helps understand why I take such a "dismissive" attitude towards all of this --- in fact, pay no attention to it.

What Phetland describes, accurately I'm sure, seems to me unimportant, because everyone always knew it --- apart from details of social and intellectual history, and about these, I'd suggest caution: some of these are areas I happen to have worked on fairly extensively myself, and I know that Foucault's scholarship is just not trustworthy here, so I don't trust it, without independent investigation, in areas that I don't know --- this comes up a bit in the discussion from 1972 that is in print. I think there is much better scholarship on the 17th and 18th century, and I keep to that, and my own research. But let's put aside the other historical work, and turn to the "theoretical constructs" and the explanations: that there has been "a great change from harsh mechanisms of repression to more subtle mechanisms by which people come to do" what the powerful want, even enthusiastically. That's true enough, in fact, utter truism. If that's a "theory," then all the criticisms of me are wrong: I have a "theory" too, since I've been saying exactly that for years, and also giving the reasons and historical background, but without describing it as a theory (because it merits no such term), and without obfuscatory rhetoric (because it's so simple-minded), and without claiming that it is new (because it's a truism). It's been fully recognized for a long time that as the power to control and coerce has declined, it's more necessary to resort to what practitioners in the PR industry early in this century -- who understood all of this well -- called "controlling the public mind." The reasons, as observed by Hume in the 18th century, are that "the implicit submission with which men resign their own sentiments and passions to those of their rulers" relies ultimately on control of opinion and attitudes. Why these truisms should suddenly become "a theory" or "philosophy," others will have to explain; Hume would have laughed.

Some of Foucault's particular examples (say, about 18th century techniques of punishment) look interesting, and worth investigating as to their accuracy. But the "theory" is merely an extremely complex and inflated restatement of what many others have put very simply, and without any pretense that anything deep is involved. There's nothing in what Phetland describes that I haven't been writing about myself for 35 years, also giving plenty of documentation to show that it was always obvious, and indeed hardly departs from truism. What's interesting about these trivialities is not the principle, which is transparent, but the demonstration of how it works itself out in specific detail to cases that are important to people: like intervention and aggression, exploitation and terror, "free market" scams, and so on. That I don't find in Foucault, though I find plenty of it by people who seem to be able to write sentences I can understand and who aren't placed in the intellectual firmament as "theoreticians."

To make myself clear, Phetland is doing exactly the right thing: presenting what he sees as "important insights and theoretical constructs" that he finds in Foucault. My problem is that the "insights" seem to me familiar and there are no "theoretical constructs," except in that simple and familiar ideas have been dressed up in complicated and pretentious rhetoric. Phetland asks whether I think this is "wrong, useless, or posturing." No. The historical parts look interesting sometimes, though they have to be treated with caution and independent verification is even more worth undertaking than it usually is. The parts that restate what has long been obvious and put in much simpler terms are not "useless," but indeed useful, which is why I and others have always made the very same points. As to "posturing," a lot of it is that, in my opinion, though I don't particularly blame Foucault for it: it's such a deeply rooted part of the corrupt intellectual culture of Paris that he fell into it pretty naturally, though to his credit, he distanced himself from it. As for the "corruption" of this culture particularly since World War II, that's another topic, which I've discussed elsewhere and won't go into here. Frankly, I don't see why people in this forum should be much interested, just as I am not. There are more important things to do, in my opinion, than to inquire into the traits of elite intellectuals engaged in various careerist and other pursuits in their narrow and (to me, at least) pretty unininteresting circles. That's a broad brush, and I stress again that it is unfair to make such comments without proving them: but I've been asked, and have answered the only specific point that I find raised. When asked about my general opinion, I can only give it, or if something more specific is posed, address that. I'm not going to undertake an essay on topics that don't interest me.

Unless someone can answer the simple questions that immediately arise in the mind of any reasonable person when claims about "theory" and "philosophy" are raised, I'll keep to work that seems to me sensible and enlightening, and to people who are interested in understanding and changing the world.

Johnb made the point that "plain language is not enough when the frame of reference is not available to the listener"; correct and important. But the right reaction is not to resort to obscure and needlessly complex verbiage and posturing about non-existent "theories." Rather, it is to ask the listener to question the frame of reference that he/she is accepting, and to suggest alternatives that might be considered, all in plain language. I've never found that a problem when I speak to people lacking much or sometimes any formal education, though it's true that it tends to become harder as you move up the educational ladder, so that indoctrination is much deeper, and the self-selection for obedience that is a good part of elite education has taken its toll. Johnb says that outside of circles like this forum, "to the rest of the country, he's incomprehensible" ("he" being me). That's absolutely counter to my rather ample experience, with all sorts of audiences. Rather, my experience is what I just described. The incomprehensibility roughly corresponds to the educational level. Take, say, talk radio. I'm on a fair amount, and it's usually pretty easy to guess from accents, etc., what kind of audience it is. I've repeatedly found that when the audience is mostly poor and less educated, I can skip lots of the background and "frame of reference" issues because it's already obvious and taken for granted by everyone, and can proceed to matters that occupy all of us. With more educated audiences, that's much harder; it's necessary to disentangle lots of ideological constructions.

It's certainly true that lots of people can't read the books I write. That's not because the ideas or language are complicated --- we have no problems in informal discussion on exactly the same points, and even in the same words. The reasons are different, maybe partly the fault of my writing style, partly the result of the need (which I feel, at least) to present pretty heavy documentation, which makes it tough reading. For these reasons, a number of people have taken pretty much the same material, often the very same words, and put them in pamphlet form and the like. No one seems to have much problem --- though again, reviewers in the Times Literary Supplement or professional academic journals don't have a clue as to what it's about, quite commonly; sometimes it's pretty comical.

A final point, something I've written about elsewhere (e.g., in a discussion in Z papers, and the last chapter of Year 501). There has been a striking change in the behavior of the intellectual class in recent years. The left intellectuals who 60 years ago would have been teaching in working class schools, writing books like "mathematics for the millions" (which made mathematics intelligible to millions of people), participating in and speaking for popular organizations, etc., are now largely disengaged from such activities, and although quick to tell us that they are far more radical than thou, are not to be found, it seems, when there is such an obvious and growing need and even explicit request for the work they could do out there in the world of people with live problems and concerns. That's not a small problem. This country, right now, is in a very strange and ominous state. People are frightened, angry, disillusioned, skeptical, confused. That's an organizer's dream, as I once heard Mike say. It's also fertile ground for demagogues and fanatics, who can (and in fact already do) rally substantial popular support with messages that are not unfamiliar from their predecessors in somewhat similar circumstances. We know where it has led in the past; it could again. There's a huge gap that once was at least partially filled by left intellectuals willing to engage with the general public and their problems. It has ominous implications, in my opinion.

End of Reply, and (to be frank) of my personal interest in the matter, unless the obvious questions are answered."

09 November 2009

Unemployment and Welfare in the USA

I was asked if I could say a bit about welfare and unemployment benefits in the United States.  It's tempting to say that there are none, but that's not actually true.  The details vary a bit from state to state, so the following is specific to Iowa, with other states being roughly similar.

First, unemployment:  In all states, one may only receive unemployment benefits for a maximum of 26 weeks.  It takes 2-3 weeks to process the initial claim.  Afterwards, one must file a weekly claim.  In Iowa, this is done by calling an automated phone system.  Unemployment benefit recipients are required to apply for a minimum of two jobs each week that they receive unemployment and are not allowed to reject any job offer.  The amount paid is based on the recipient's earnings for the 52 weeks prior to filing an initial claim.  When you apply for unemployment, any employer you've had during the previous 52 weeks has the right to contest your claim.  If they can prove that you were let go because of work performance issues, your claim will be rejected.

If you haven't found work by the end of your 26 weeks and you have dependent children, you can apply for welfare.  Most states have moved to "Workfare".  The goal is to get recipients off of welfare as soon as possible.  Again, you have to apply for a minimum of two jobs every week or be in some sort of training programme. As with unemployment benefit, recipients are not allowed to refuse any offer of employment.  Any job, any hours, at any pay.  In Iowa, the average monthly cash benefit is $318/month.  There is also food assistance, called food stamps.  Cash benefit and food stamps are now paid via a card, like a bank card, that is used in stores and at ATMs.  The cash benefit is meant to cover all non-food expenses.  It comes nowhere near doing so.  There is a lifetime limit of 60 months of being on welfare.

There are some subsidised housing programmes.  Local housing authorities usually have some rental units of their own and there is a federal rental assistance programme called Section 8, that pays a portion of a recipient's rent on privately rented accommodation (paid directly to the landlord).  In a rural area, the wait for Section 8 assistance is usually no more than a few months.  In urban areas, the wait for housing assistance can be years.  I know of no federal assistance with mortgage payments for home owners who find themselves in long-term difficulties.

Medicaid is the federal medical assistance programme for the poor.  Generally, if you qualify for Workfare in your state, you will receive Medicaid.  In rural areas, this isn't much of a problem, but in urban areas, finding a doctor can be difficult.  Doctors are only required to accept a small number of Medicaid patients.  Dentists are not required to accept any, so dental care is often impossible to find.

The key thing about all of the above (except unemployment benefits) is that they are only for families with dependent children.  Childless adults who aren't disabled are pretty much screwed.  And disability benefit is an extremely difficult thing to acquire in the United States.

11 October 2009

Tax havens: A modest proposal

Posted for the tech-illiterate Hank Scorpio:

1. History

Tax havens date back to medieval Europe and were originally set up as a safe place to bank your cash at a time of civil and international turmoil. If Dan Brown is to be believed, the Knights Templar owed much of their power and prestige to providing financial services to those going on Crusades or pilgrimages to locations where law enforcement agencies were unregulated to say the least.

In modern times, the first recognisable tax haven was Switzerland, which offered a secure home for rich refugees from Bolshevik Russia and Nazi Germany. Its neutrality in the Great War afforded it a unique status in Central Europe inasmuch as it did not have to finance massive rebuilding of its infrastructure, which meant that it was able to keep its taxes much lower than its neighbours. Adopting neutrality again in the Second World War cemented its economic stability and its "no questions asked" policy about the source of the money, or Nazi gold, it sheltered, made Switzerland immensely attractive to investors with more cash than scruples.

2. Tax havens defined

The key features of a tax haven are:

(i) nil or nominal taxes;
(ii) lack of effective exchange of information with foreign tax authorities;
(iii) lack of transparency in legal or administrative processes;
(iv) no pernickety insistence that its "customers" should actually be based in the country;
(v) self-promotion as an offshore financial centre

The OECD has formally identified 72 countries as tax havens, of which 30 are Commonwealth countries or Crown dependencies. These include the Isle of Man, which has no capital gains tax, stamp duty or inheritance tax. The top rate of income tax is 18%, and payments are capped at £100k p.a. Although nominally independent and self-governing, the Isle of Man has no need to worry about including anything in the tax bill for defence spending, as the UK guarantees the island's security. And health and dental care are conveniently provided by the NHS. So, UK taxpayers are effectively subsidising the island, allowing it to attract business away from the mainland by offering cut rate income tax and virtually no corporation tax.

It's not all good news for the Manxpersons though. Jeremy Clarkson lives there.

The UK itself is arguably a tax haven, though it might not feel like it for us poor wage-slaves. The IMF, not exactly a refuge for bleeding heart liberals, has had the temerity to apply the tag to us, thanks to the City's burgeoning role in providing tax avoidance schemes and resisting international calls for greater financial transparency.

3. Globalisation and the growth of tax havens

Deregulation of financial services in the last 25 years has opened the door to a huge expansion of global trade. Capital has become ever more mobile as financial transactions have been made easier by the fax, the internet etc. It is no longer necessary to be physically present in a country to take advantage of its services. As Barack Obama said in 2007

"There's a building in the Cayman Islands that supposedly houses 12,000 US corporations, which means it is either the largest building in the world or the biggest tax rip-off in the world, and I think we know which one it is."

The vast increase in the wealth of a tiny elite is testimony to the "success" of globalisation as it has exploited the mobility of capital with the connivance of tax havens, which shamelessly prize secrecy over decency.

In his 2007 book, 'Capitalism's Achilles Heel", Raymond Baker said

"For the first time in the 200-year run of the free market system, we have built and expanded an entire integrated global financial structure the basic purpose of which is to shift money from poor to rich...In my reading of history and in my judgment, this reality is the ugliest chapter in global economic affairs since slavery."

4. Tax avoidance/ tax evasion

The difference between the two was famously described by Denis Healey as "the thickness of a prison wall", and the truth is that the lines have become increasingly blurred. What is clear though is that the existence of tax havens as a vehicle through which income can be channelled and therefore taxed, disproportionately favours those who are wealthy enough to access the expertise of dodgy accountants.

In 2007, Grant Thornton, an accountancy firm, calculated that the UK's 54 billionaires paid income tax totalling just £14.7M on combined wealth of £126Bn.

According to a report by Christian Aid in 2008, "a full 50% of world trade is reported to take place through tax havens."

Clearly, the good folk in these tax havens aren't doing much in the way of creating the goods and services on which this trade is based. However, the useful service they provide to global corporations is a PO box and a local lawyer to whom contracts can be faxed, and thus the tax (stamp duty, corporation tax etc) is charged at local rates as opposed to those that apply where the corporation is truly based or where the work is actually carried out.

A typical example of avoidance in this area is transfer pricing, by which a corporation will sell goods or services to a subsidiary company in a tax haven. In doing so, the corporation can set the price so that it incurs a loss on the deal in its home jurisdiction while inflating its profit in the tax haven. As the tax haven is likely to have nominal corporation tax at best, the actual level of global profits can be manipulated to ensure that balance sheet losses occur where the tax liability would be heavier.

Given that 60% of all global trade is now reckoned to take place between corporations and their subsidiaries, the amount of tax lost here is immense. The OECD has estimated that anything between $1 trillion and $1.6 trillion is illegally exported by companies and individuals every year, and transfer pricing is one of the predominant means by which it's done.

5. Money laundering

Money laundering involves transferring money between accounts to disguise its true origin, typically that it's the proceeds of crime. Because tax havens have bank secrecy laws, protecting the confidentiality of their clients, they are the most popular route for organised criminals and terrorist groups to launder their money.

It's pactically impossible to calculate how much money is laundered through tax havens each year, although estimates range from $500Bn to $1 Tn.

The social impact is huge: it helps to ensure that crime does indeed pay for drug traffickers and mafia groups, helping them to expand their operations, leading to more drugs on the streets, in turn leading to more violence and crime. The tax lost means that the rest of us have to pay higher taxes to cover the shortfall and to finance the policing of more criminal activity. And of course it means that terrorist activity is better financed and thus more sophisticated and difficult to combat.

When it emerged that nine of the 9/11 hijackers had been financed through money laundered through Dubai, one might have expected the Emirates to have been in for a rough time.

To put it bluntly, Dubya was characteristically wrong when he named the countries forming an Axis of Evil. The War on Terror would have been more effectively waged if he'd trained his guns on Switzerland, the Caymans and elsewhere and told them that they either give up the criminals or face the consequences.

6. The future

The recent G20 conference focussed heavily on tax havens and their complicity in the financial crisis. The OECD has started publishing black, grey and white lists of all countries based on their cooperation with international measures to open up the corporate books. A number of jurisdictions, such as Liechtenstein, Jersey, the British Virgin Islands and the Bahamas have recently signed agreements with the UK Treasury on sharing information.

There are encouragng signs that the days of the tax havens could be numbered as the financial crisis deepens and the wisdom of international cooperation becomes evident. But until every tax haven is required to give up its secrets, the rich and powerful will continue to exploit that secrecy and the rest of us will pay to varying degrees.

30 September 2009

to save or not to save...

I'm re-posting this at Montana's request. It relates to Dotterel's environmental questions and is a brief discussion on the pros and cons of preserving iconic species. The title should link you to the piece which appeared in the G2 a week or so ago.

Also, couldn't resist this picture of five fat Pandas, who do they remind you of?

24 September 2009

Which Side Are You On?

What’s ‘your’ team and how did you adopt it?

I first encountered football hooliganism at the age of 5. As I skipped along Green Street ahead of my mother and her sister, two eight year olds stood in my path. “Which football team?” asked the one with his hands in the football boots tied around his neck. It was as if Miss Fisher at school had asked me which animal. Which animal goes baa? Which animal lives in trees and eats bananas? How about a clue? I named one of the few teams I had heard of; the one at which cousin Jimmy was a ball boy. As the boots were clapped against either side of my head, I realised that Clapton Orient had been the wrong answer. I also had my first lesson in betrayal: my mother was laughing too much to do anything to avenge me. Auntie Connie, on the other hand, kicked off her stilettos to run after the boys, and their chants of “Arsenal!” were punctuated by my outraged sobs and the slaps she managed to land on their ears.

I learnt a lot that year. The next time I was asked the football team question, I confidently replied “Arsenal”. The result was the same as before - minus the boots, fortunately, though painful enough. However, also absent were the tears as I was too busy asking myself: “Just how many of these football teams are there?” Since Dad was somewhere near Aden with the Merchant Navy, it was left to Cousin Jimmy to educate me in such matters. After a basic introduction to the First Division, we moved on to the more important lessons: Geography and Maths, and I learned that my local team was West Ham and that the laws of probability meant that this was statistically true for most of my peers. I became, in short, West Ham ‘til I died.

My ears remained virtually untouched over the next few months, apart from the attentions of one or two teachers. At the same time, my theoretical West Hamness became real as I learned the names and facts behind my team on Dad’s and Cousin Jimmy’s shoulders at Upton Park and was able to pass more complicated tests like “all right then: who’s the centre half?”

Then, just as I was beginning to feel safe, I was faced with a new challenge: “Oxford or Cambridge?” We hadn’t done the lower divisions, so I chose the first-named. Ears ringing, I continued on my journey across the playground and felt more than ready when I was asked the same question. Not only did Cambridge earn me another ear slap, I was also introduced to the Chinese burn.

After several such incidents, I lost all faith in the laws of probability and resorted to Jimmy’s self-defence system. The next time I was asked, I punched the boy on the nose and ran away, shouting “Ox-fo-ord!” I had unknowingly become a boat race hooligan. In both senses. It was years before I worked out that neither answer had been correct and by then it was too late: I was West Ham and Oxford.

These days of course, nobody twists or slaps my ears. They do bend them however, and I still accumulate teams in the same haphazard way. Sometimes it’s through love, for example ten years ago when I added Wolverhampton Wanderers to my list. My wife follows them because she and her brother had been given football strip pyjamas one Christmas. He’d bullied her into giving up Manchester United for Wolves.

Or it could be through sheer bloody-mindedness, as when I was on a bus in Barcelona. A Barça supporter saw me reading ‘Marca’ (a sports paper associated with Real Madrid) and muttered ‘facha!’ (more or less ‘fascist’), making Madrid the first successful team in my collection.

Which makes me wonder: if I could go back and start again, would I only pick teams likely to offer me more than three FA cups and one UEFA? After all, but for the gods of chance, I could have spent years basking in the reflected glory of Arsenal, Cambridge and Man. United. It would be nice to celebrate a little more silverware, but then I’d have to give up Billy Bonds. No thanks.

22 September 2009

Welcome to Untrusted, too

Unsure yet what is going to end up here.  Mostly trying to figure out the logistics at the moment.