The dirty seven
The OECD has named and shamed seven tax havens. It’s not often that Monaco and Liechtenstein get to share an unattractive spotlight with Vanuatu and Liberia. This is an incredibly effective initiative of the OECD: the original list in 2000 contained 35 countries, but public humiliation has brought reform in most.
Closer to home for me, yesterday’s budget from chancellor Gordon Brown contained a promise to review the rules on domicile. Britain allows a bizarre status of non-domiciled resident, in which case tax can be avoided on wealth held outside the country (like in those seven tax havens).
One supposed expert is quoted in the Financial Times saying, “Without the tax breaks, our relative high cost of living and unappealing climate may put people off coming to London. One of my clients said they would be unlikely to choose London over other centres such as Milan, Paris or Frankfurt.” If that’s true, which I deeply doubt, good riddance to them. But I think it’s balderdash. Investment bankers and the like work in London because it’s the centre of international finance. Those alternatives are comparative backwaters.
Incidentally, it is curious to see The New York Times headline the budget: In Calculated Risk, Blair Proposes Tax Rise. Two things are odd about that headline. It’s very much Gordon Brown’s budget (even if it is from Blair’s government). Second, it’s pedantry to call it a proposal. When you have a 160-seat majority in the House of Commons, the budget is fact; the vote on it a formality.
“The international community is anonymous and cannot take responsibility. I can and I do.” Wim Kok’s long and distinguished political career has ended in resignation, after he and his colleagues accepted responsibility for the 1995 Srebrenica massacre.
The resignation does little to salve the memory of Europe’s worst atrocity since World War II, but the Dutch government has acted honourably in extremely difficult circumstances. At a time when the French president is both running for re-election and running away from a host of corruption charges, and when the Italian prime minister has made a priority of self-exonerating legislation, the Dutch exception looks very attractive.
Beware clever words
“From the World Bank to the West Bank: a lot of people are beginning to make the connection.” Or so says an anti-capitalist demonstrator who will be on the streets of Washington this weekend. But what is the connection? The one the protestor either doesn’t want to know or won’t acknowledge is that the World Bank (together with the European Union) is a principal funder of the Palestinian Authority.
All in the family
“As with the Gambino family, the partnership enjoyed by the most senior managers at some of the world’s biggest companies is not a true one. They do not share fully in the downside, as the comparison between miserable earnings reported to shareholders and healthy rewards accruing to managers make clear. They are ersatz partners, like those in gangster movies — suppliers of a routine service who have arrogated the privileges of partnership without suffering the drawbacks.”
Where was this incendiary comparison of modern CEOs and the Mafia made? In some anti-capitalist tract? No, it’s the Financial Times’s Peter Martin holding forth in fine style.
Paul Krugman presses the point on the US’s cavalier attitude towards democracy in Venezuela. “Surely the worst thing about this episode is the betrayal of our democratic principles; ‘of the people, by the people, for the people’ isn’t supposed to be followed by the words ‘as long as it suits US interests’.”
No couch potatoes here
John Naughton often writes good sense. “Content is indeed important, but not the kind of content that outfits like AOL Time Warner own and produce. Internet users are not passive couch potatoes either, but consumers who relish the sovereignty bestowed on them by the mouse button. And increasingly they are people who like to generate their own content (email, web-pages, home movies) rather than consuming other people’s. AOL Time Warner has little to offer such people, which is why it is doomed in the longer term.”
Rush to judgement
Political obituaries are a dangerous job. No sooner had everyone written the final chapter of Hugo Chavez’s extraordinary career than another amazing reversal occurs. Although it was clear the Bush administration welcomed the end of Chavez, Venezuela’s neighbours seem to have a greater respect for democracy.
There seems to be a surge in the use of the supine figure eight that represents infinity. Two ads in this week’s Economist make play of it. One, for Tractebel, promotes mathematical illiteracy. 1 + 1 = infinity, it tells us. Yeh, right. A few pages on, Daimler Chrysler would have us believe that they represent infinite possibilities. I don’t think so.
So long Chavez
Venezuela’s president resigns. The Venezuelan army says president Hugo Chavez has resigned after violent anti-government protests in which 11 people died. Chavez’s presidency was a fascinating attempt to construct a modern, populist alternative to Washington consensus policies. It was doomed in the end by economic naivety and the distorting egotism that may be inevitable in a leader elected by such a resounding majority after years in the wilderness.
I hope that someone brings both honesty and competence to Venezuelan government. The two virtues haven’t been present in tandem for decades.
In support of trade
I’ve commented before on what I see as the maturing of the so-called anti-globalisation movement. The best recent example was this week’s Oxfam report on trade liberalisation. The problem isn’t, as the more naive demonstrators have argued, trade itself. It’s the skewed nature of the trading system.
“World trade could be a powerful motor to reduce poverty, and support economic growth, but that potential is being lost,” the Oxfam report says. “The problem is not that international trade is inherently opposed to the needs and interests of the poor, but that the rules that govern it are rigged in favour of the rich.”
Agricultural subsidies amounting to $1 billion a day are the worst offenders. For the world’s poorest countries in particular, agriculture is one of the few comparative advantages they possess. But distorted politics in Europe especially shut out these poor producers from rich markets. Let’s hope Oxfam makes some headway on its campaign.