Monday, November 22, 2010

India and China: a warning from the City of London

Mark Field, member of parliament for the City of London, had some frightening things to say, in a recent BBC radio programme about Offshore Financial Centres (which also quotes various others with whom we have worked with in the past, including Jim Stewart (about 2:15 minutes) and Richard Murphy (about 13:45 minutes) and Here are the frightening words, a bit less than 12 minutes into the programme:
There are going to be financial centres in states of India and China that don’t exist today, that in 10 or 15 years’ time will be significant players, and they will be small enough and nimble enough to have that sense of innovation going forward. . . . we mustn't forget the importance of innovation and nimbleness.
Tax havens use code words to describe what they are - and "innovative" and "nimble" are two favourites. Nimble means that they will do whatever it is that the bankers want them to do - and typically, that means finding ways around the democratic rules and restraints of other jurisdictions. "Innovative" can mean positive things, but it is too often used as a over for abusive structures, as this latest global crisis has taught us. This is tax havenry that Field is talking about. Whether (or to what extent) this is what the Indians and Chinese want is open to question, but the dangers are real - not least for the ordinary citizens of those two countries.

The Lord Mayor of London, who represents the City of London - meaning the UK's financial services industry - has been in India and China recently. The City of London already has offices in Beijing and Shanghai which, as the Lord Mayor notes:
"work to promote “the City” as a brand"
The Lord Mayor (not to be confused with the Mayor of London) also works to promote international financial liberalisation. We will bring you a lot more detail about this in January.

Not content with helping set up tax havens in Ghana, the Seychelles, Mauritius and Botswana, to suck illicit and other money out of Africa, the City of London is keen to help the elites in China and India set up their own improperly regulated free-for-all zones -- and to get a piece of the action in the process.

Field is effusive about tax havens:
"Referring to the Channel Islands and the Isle of Man: they are offshore dependencies, or rather Crown Dependencies of the UK, and their obvious connection, both geographically, in language, and legal terms, has been of great benefit to the UK - and long may it continue."
Richard Murphy makes short shrift of Field's arguments, from one angle.

"The money flows into the tax haven. It comes out of the tax haven. It was not generated in the tax haven. So to simply look at the flow of money into the city of London and to ignore how the money got to the tax haven in the first place is to be, frankly, blind to the whole issue. You have to look at this money in total. Did this money come out of Africa or Latin America?

It matters quite a lot where that money came from. If that money is capital flight money, it is money that left that country in an illegal way . . . those countries are losing out on their legitimate taxation income."

We have also pointed out that all that offshore money flooding into Britain has not done it any good at all: it has inflicted the so-called Jersey Disease. Not only that, the tax haven racket has made the City of London so powerful that it has the entire political class in Britain by the throat - few people in UK politics even dare oppose it, out of terror for the damage it may cause to their careers. Bankers have, quite literally, captured the British state - and it is the City's network of tax havens that ultimately give them their main source of power.

Finance is necessary, but tax havenry is a scourge. Let's hope that Field does not get his wish.

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