The financial scandal no one’s talking about
Steve at Pub Philosopher is right, where is left-wing outrage when you need it? He points out that:
So, while Merrill Lynch is being sued by the US government for mis-selling toxic sub-prime debt, the same bank is taking advantage of the UK’s tax regime to offset all its losses against its tax liability. Yes, that’s all its losses, worldwide.
Merrill Lynch has transferred $29 billion worth of losses, mostly from its US operations, to its UK subsidiary in London. This means that, despite any profits it might make in the future, the UK arm of the firm will be able to show a loss for many years to come. The Financial Times estimates that even if Merill Lynch’s UK operation were to continue to generate profits at 2006 levels, a record year, it would pay no UK corporation tax for the next sixty years.
This government’s pandering to financial companies, to make up for their decades of anti-business stances, means that as financial companies go into recession, they’ll be doing their best to take advantage of favourable tax laws to ensure they don’t have to pay tax. So much for corporate responsibility eh? And will New Labour ministers exhort them to pay their fare share, like it does to poor people? Let’s see shall we?
PS, Steve, Dave Osler did mention it actually.
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Filed in: Economics
Judging by the lack of comments here and on the few other blogs that have mentioned this, no-one is particularly bothered by this story.
Is it because we all assume that financial institutions are so powerful they can do what they like and the whole thing is just too big and too complicated to worry about?
It’s far easier to get worked up about the ‘cultural’ issues like Jade Goody on Indian Big Brother.
This isn’t just a criticism of the left, though, the right is just as bad at getting worked up about relatively minor issues, while ignoring major abuses of power.
Probably because there is not much to say. Bankers and of rich businessmen give money to Labour, Labour lets them do what they want.
Sounds as though the rules should be changed.
On the other hand, Merrill Lynch employs a large number of people in London, most of whom are paid very well and will thus pay a large amount of income tax and NI.
Would you rather they weren’t here?
Would you rather they weren’t here?
This seems to be the excuse used by anyone these days to let corps do what they want.
Isn’t a mature democracy supposed to have some rules to adhere to? And where else will it go?
Well given that they’re paying sod all tax and employing ever fewer people, many of whom also pay very little tax, does it matter whether they are here or not?
Rumbold @ 2, surely you mean:
“Probably because there is not much to say. Bankers and of rich businessmen give money to government, government lets them do what they want.”
Can’t see this situation being different with anyone else in power, really. Business and government are always scratching each other’s backs, which is just another reason why I maintain that there is no point in voting. It just legitimises an utterly corrupt system, in which we lose as soon as we participate.
Trans-national capitalists and their money are inherently mobile, so they’ll always be able to take advantage of the rest of us in this kind of way.
So of course I’m outraged at this type of tax dodging from big business, but it’s nothing new – I’ve been bitching about it for years!
These kind of figures and examples are what we should be pointing to every time some odious tabloid is blaming the welfare state for all our troubles. Corporations rip the public off and dodge infinitely more taxes than benefit fiddlers, and the figures prove it.
I mean, the welfare state is ripping us all off – the corporate welfare state (aka. “socialism for the rich”), that is.
Dave S:
Fair enough. If the Conservatives get in they will do the same thing.
Socialism for the corporates, capitalism for the rest of us…no change there…
A further thought on “where is left-wing outrage when you need it?”
In my opinion the “left” (and those of us who get bunched in with them slightly against our will) have been continuously outraged about this kind of corporate skullduggery for sooooooo long that people have grown bored and/or apathetic about it and stopped listening to us! The noise we make is so loud and so continuous, that it’s started to sound like silence.
This particular example seems quite heinous, but it’s absolutely nothing new – it’s happening all the time, and people like me are trying to raise awareness and stop it all the time!
Big business can afford the best lawyers, the best strategic planners, the best economists, the best lobbyists, and they can afford it on a constant basis.
When they can’t get what they want, they keep trying FOREVER until they do. Or they find a new loophole. Or they lobby to get the law changed. Or they do it somewhere else.
Pick fucking anything – nuclear power, GM crops, software, movies, music, oil, airlines, banks – ANYTHING! They’re all at it.
When they occasionally get caught with their hands in the till (or giving brown envelopes to politicians), a small bit of wrist slapping occurs. Maybe some exec becomes the fall guy if they’re really unlucky. Almost nobody ever gets criminal charges pressed against them or ends up in jail (“oh it’s only white collar crime – no danger to society” etc.), and the company just carries on, claiming “things are different now” or even (often) just refusing to acknowledge their crimes (see Union Carbide / Dow and the Bhopal catastrophe, for example).
Personally, I’m all in favour of corporate capital punishment. As in, harm people, society or the environment, and your company ceases to exist, or is at least hauled over the coals and punished BIGTIME.
Where we have corporate personhood, we should have punishments that fit the types of crimes that corporations are capable of and are carrying out with impunity every single day.
Can we expect to see corporate death sentences any time soon in the modern neoliberal capitalist world? Don’t make me laugh!!! Limited Liability… you ain’t kidding!!
Big business friendly government would never dream of seriously bitch-slapping the likes of Monsanto or Microsoft or Exxon-Mobil or McDonalds! They probably couldn’t even if they wanted to – and they don’t want to!
The outrage over this kind of thing never went away – far from it. It’s been played to death and gets mistaken for a silent, broken record, because there are far easier targets to pick on – like people on the dole or immigrants.
Not to mention that the mainstream press (even the relatively liberal / left press) is part of the same bastard capitalist machine anyway. I won’t be holding my breath waiting for them to dig their own graves by printing anything remotely radical about what we should do about it any time soon!
So let me tell you… my personal level of outrage at this kind of stuff is verging on the cataclysmic! I detest these bastards and their despicable system with every fibre of my being, and I spend countless hours and many sleepless nights plotting how to finally and utterly destroy it.
Just because someone’s not spewing it on some blog, it doesn’t mean that they haven’t heard.
Dave S sums it up for me. But I don’t think it’s so much an apathetic state as much as it is about being preoccupied with means to earn the daily meal.
Informed yapping is one thing. but do we have it in us to topple something the size of Lynch & Co., or Monsanto?
One other thing I forgot to say:
These days (indeed, probably for decades), corporations really are far more powerful than governments.
A government is (in theory) confined within national borders, can usually be voted out, and (in theory) held to account. For all it’s flaws, democracy is at least supposed to give us a bit of control. Even military dictatorships can be toppled by a determined people.
A corporation is not confined to a nation. It is not dependent on one person, or even a particular group of people. It isn’t accountable to the public. It’s basically an immortal entity, who’s entire objective is to make money for shareholders.
Somewhat like the Terminator, “It can’t be bargained with! It can’t be reasoned with! It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever…”
That is the modern corporation – it is an immortal, almost omnipotent psychopath.
As corporations are more powerful and more mobile than governments, there’s really not much that governments can do about them. Sure, I loathe governments, but they aren’t the ones pulling the strings. (Hence why nobody should ever vote, because it just further ingrains and legitimises the status quo: corporate rule of everything.)
Even (especially!!) international bodies are in cahoots with corporations. The UN, EU, WTO, World Bank etc. – they will not do anything which damages corporate interests.
Even when they slap a corporation with an “unprecedented” fine (such as the EU versus Microsoft, who were fined €497 million in 2004) it’s still peanuts in the grand scheme of things.
I’m sure businesses have teams of analysts who’s job it is to predict the chance of being caught, sued and what the cost is likely to be. Then that’ll just get factored back into the decision making and pricing process. We have seen countless times that lawsuits are just another consideration the cost of doing business.
So that brings us to banks – the most untouchable type of corporation.
As Nathan Mayer Rothschild said at the gathering of world bankers in 1912:
“Give me the control of the credit of a nation, and I care not who makes the laws.”
Sometimes I’m amazed at the frank insight business leaders give us into their world and their thinking – but then I remember that they are in the habit of doing whatever the hell they like, and they know that nobody can stop them. So why not boast about your power, when you’re in an untouchable position!?
‘Nuff said really!
Still, further viewing:
The Corporation – explores the nature and spectacular rise of the dominant institution of our time. Asks and answers the question: If a corporation is a person, what kind of person is it?
Money As Debt – explains the workings of the world’s financial systems. A real eye-opener.
The World According To Monsanto (Greenpeace review) – this is something everybody should see. In the context of our discussion here, it’s just one example of the type of power corporations wield, as well as their revolving-door relationships with government. It’s also highly relevant at the moment with the “debate” on GM crops.
All of these can be downloaded from the usual sort of places.
Dave S – Thanks for the links. The Corporation is, indeed, an excellent book. I liked Bakan’s metaphor of the corporation as a psychopath.
The trouble is, though, like a lot of lefties, you go over the edge when something like this happens and blame the whole capitalist system.
Most people quite like capitalism. They know businesses need to make money, they like the idea of accumulating what wealth they can and they know that innovation by business is what provides them with most of their creature comforts. People have been making money since the dawn of time. It’s normal.
If you go on about tearing down the whole system, most people will stop listening.
However, while they might be broadly pro-business, most people don’t like anyone who takes the piss. In the same way, most people agree that people should be entitled to benefits if they are ill or out of work, but they still get angry if they see lazy people working the system.
Which is whey the Merrill Lynch tax dodge should be an ideal populist story for the left. It’s an extreme example of what’s wrong with the system. It could get people angry about tax dodging businesses in the same way that a major benefit fraud gets people angry about dole scroungers.
BTW – I like your idea of corporate capital punishment. Withdrawing the licences to operate from companies that really take the piss would be a god deterrant. To be effective, though, it would need to be done on a Europe-wide basis and the chances of getting agreement on that would be zero.
Hi Steve,
You’re right that this is indeed a useful extreme example of what’s wrong with the current system, and that’s certainly what I plan to use it as.
I think it’s also useful to take down fascists like the BNP with, and show them in their true colours. Eg. if the fash really cared about “the British people” and didn’t just want to bash “foreigners” and those on benefits, then they’d be as outraged about this corporate ripping off of as you and I are. This example should certainly prove useful for shutting them up when they’re blaming all our problems on immigrants (not that I expect them to pay any attention, mind).
But I’m afraid I don’t share your optimism about the benefits of capitalism, or that “most” people are happy with it.
Sure, “most” people are happy with it if you’re looking at a country like the UK or the USA. But by it’s very nature (the pursuit of profit, a concept which necessarily requires a small group of “rich” and a much larger group of “poor”), capitalism depends on externalising it’s costs wherever possible.
There are a hell of a lot of people who are on the butt-end of capitalism. In fact, I’d go as far as to say that “most” people worldwide fall into that category.
That’s why “The Majority World” is the terminology of the day, when a decade ago we’d have been calling it “The Third World” – because the majority of the world’s population are on the “wrong” side of the capitalist divide.
Sure, they might hope that one day they’ll make the transition into being on the right side of consumerism, but I don’t think that hope is formed out of a love of capitalism – more out of a longing not to be trodden under it forever.
I think it’s also a pipedream to suppose that one day “most” people will truly be able to benefit from capitalism, because in order for it to function and create profit, it necessitates exploitation – of people, of the environment, of the availability of cheap oil and cheap energy etc.
The things that prop capitalism up and keep from the edge of implosion are somewhat running out.
That is going to necessitate the creation of radically different ways of living, if we are to maintain (and facilitate the further creation of) anything approaching a decent quality of life for most people.
So while I detest capitalism, I’m quietly confident that it’s not really going to be decades before it gets replaced by something a fair bit better. This has been the fate of every system which has come before, and I think it’s naive to believe that capitalism will be any different.
What I’m not confident about is how rocky the transitional period is going to be, because I really am not expecting it to be pretty. Unfortunately, this transitional period is not something we’re going to be able to avoid – it is coming, and we’re going to have to ride it out one way or another.
Still, I’m relatively confident that a rejuvenated, happier humanity should emerge from the other side, and hopefully have learned a few big lessons on the way.
Incidentally, as I mentioned before, I find myself somewhat reluctantly lumped in with “the left”, when I don’t believe this is actually quite where I belong.
I’m not really into “traditional” left struggles, and I think we anti-capitalists / anarchists need to move beyond those to stand any chance of creating the type of world we want.
So I’m sure “left” is a convenient box to put me in, but I think my political philosophy encompasses a whole lot more than just the politics of the left.
It’s anti-authoritarian, anti-state, anti-capitalist, pro-humanity, pro-liberty, pro-sustainability and more. It’s also not a doctrine defined by any person, book, or political party, or relevant to any particular point in time – it is a praxis, rather than a theory or a manifesto.
It is adaptable and very open to improvement, negotiation, compromise and consensus, and it doesn’t expect everybody to think the same as me or do what I want them to do. It’s more about trying to achieve what’s best for any given group of people at any particular point in time.
I’m hopeful that “most” people will start listening when it becomes apparent to them that the current system which they have made their cosy lives in is not going to continue forever, and they are no longer able to deny the massive changes which are afoot.
I know that considerable numbers of people are working right now to create a viable future way before that point comes about.
But we’re not going to get anywhere by telling people how to live their lives. We’re just going to get on and create our future ourselves, and help everybody else catch up when they are ready to make the jump.
With a bit of luck…
Cheers!