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To say that the current system works (its current form is a few decades old at best) is to ignore the massive impact that secrecy jurisdictions have on virtuall

by pudo 7y ago

To say that the current system works (its current form is a few decades old at best) is to ignore the massive impact that secrecy jurisdictions have on virtually all developing countries. Offshores are used there to facilitate the extraction of trillions in wealth that often is directly stolen from public resource (such as direct tax revenue, procurement contracts, and, natural resource concessions). Of course you can argue that any financial problem the public sector has is always a spending problem and never one with the tax base, but that strikes me as a fringe political opinion, and particularly as not a decision that the people of Ghana, Russia, or Ukraine got to make for themselves. Perhaps they're not small government ideologues and would actually prefer to have health care and schools. Justifying all this by saying that very wealthy and powerful people and corporations need privacy to protect them is pretty cynical. (Disclaimer: I'm an enthusiastic contributor to "lazy propaganda" like this)

motohagiography 7y ago
The problem these and other less democratic countries have is that the government can stay in power using resource extraction wealth to pay their police and armies and they do not rely on direct taxation for their revenues. The reason the people do not have a say in how money gets spent is because there is no political reason to ask them. See De Mesquita and Smith on that dynamic. The problem for developing countries is not foreign bank "secrecy," (a presumptuous term itself) it's their domestic resource curse and other governments propping these leaders up. For these third party countries to decline to sign surveillance agreements and tax treaties that disadvantage them is not "secrecy," its sovereignty. Attacking the sovereignty of financial centres is a sordid attempt to bar the exits and prevent capital flight when large state governments impose ever more wealth destroying policies to buy votes. If by "fringe," you mean that solving the spending problem before the revenue problem is beneath discourse - the policy makers of every Tory, Republican, and Conservative party in the western world would probably like to have a word. As would a number of Liberal parties as well. Contributing to lazy propaganda that advocates for soaking "the rich," seems rather more a fringe activity, and further, if it does not include an understanding of the mechanisms of finance, one that is intellectually dishonest at that.
- pudo 7y ago
  You're mixing a few things up here. The set of countries that are affected by the resource curse, and those dealing in financial secrecy (what else would you call it?), are disjoint. The phenomena are linked through money laundering: wealth generated from state capture in one country does not want to stay in the politically and economically unstable environment it has helped create. It therefore needs to be channeled into the western financial system, the UK or Europe. That's done using shell companies in the BVI, CY, SY, LUX, MT, CH, KN etc. This way financial secrecy creates impunity, where the wealth taken from developing countries evades domestic accountability. Examples: the Aliyevs, Dos Santos, Karimova, Yanukovych, Roldugin, the cabinet of Goodluck Jonathan, and even the Guptas. It's also a bit weird to describe this as in issue of BVI sovereignty. The BVI government is run by a governor appointed by the British queen on advice from the British government. It basically duck types as a colony. The same is even more true for IOM, GG, JE. If only there were some explanation for why it benefits the UK to have half a dozen financial secrecy jurisdictions in its sphere of influence. The system is clearly all about sovereignty. Finally, I did not say that discussing spending was beneath discourse -- merely arguing that governments doing taxation was pretty much what makes them governments. Otherwise it's a golf club. I'll remain eternally grateful for any further explanations of the mechanisms of finance and their benevolence you may have to offer.
  - NeedMoreTea 7y ago
    Isle of Man government has a very independent government with just about all branches of government except defence independent of Westminster. The Lieutenant Governor is purely ceremonial, his only remaining role is granting assent of bills.
  - motohagiography 7y ago
    There _is_ no domestic accountability in those kleptocratic countries precisely because their governments do not make the majority of their revenues from a personal income tax base. I have doubts about the sincerity of western people who seem so terribly concerned about victimized peoples in distant countries when the net effect of the policies they advocate are really about domestic wealth redistribution. The kind of sanctimonious moral arbitrage that exploits "the people," of these countries as a pretext for influencing domestic policy with sob stories is utterly disingenuous. Kleptocrats gonna klepto, and the reason they can is they can afford to pay the military to keep them in power, with funds that come from resources or puppeteer empires. Offering gratitude without demonstrating understanding or any meaningful benefit just tells people their shared experience was wasted on you.

by pudo 7y ago

motohagiography 7y ago

The problem these and other less democratic countries have is that the government can stay in power using resource extraction wealth to pay their police and armies and they do not rely on direct taxation for their revenues. The reason the people do not have a say in how money gets spent is because there is no political reason to ask them. See De Mesquita and Smith on that dynamic. The problem for developing countries is not foreign bank "secrecy," (a presumptuous term itself) it's their domestic resource curse and other governments propping these leaders up. For these third party countries to decline to sign surveillance agreements and tax treaties that disadvantage them is not "secrecy," its sovereignty. Attacking the sovereignty of financial centres is a sordid attempt to bar the exits and prevent capital flight when large state governments impose ever more wealth destroying policies to buy votes. If by "fringe," you mean that solving the spending problem before the revenue problem is beneath discourse - the policy makers of every Tory, Republican, and Conservative party in the western world would probably like to have a word. As would a number of Liberal parties as well. Contributing to lazy propaganda that advocates for soaking "the rich," seems rather more a fringe activity, and further, if it does not include an understanding of the mechanisms of finance, one that is intellectually dishonest at that.

pudo 7y ago
You're mixing a few things up here. The set of countries that are affected by the resource curse, and those dealing in financial secrecy (what else would you call it?), are disjoint. The phenomena are linked through money laundering: wealth generated from state capture in one country does not want to stay in the politically and economically unstable environment it has helped create. It therefore needs to be channeled into the western financial system, the UK or Europe. That's done using shell companies in the BVI, CY, SY, LUX, MT, CH, KN etc. This way financial secrecy creates impunity, where the wealth taken from developing countries evades domestic accountability. Examples: the Aliyevs, Dos Santos, Karimova, Yanukovych, Roldugin, the cabinet of Goodluck Jonathan, and even the Guptas. It's also a bit weird to describe this as in issue of BVI sovereignty. The BVI government is run by a governor appointed by the British queen on advice from the British government. It basically duck types as a colony. The same is even more true for IOM, GG, JE. If only there were some explanation for why it benefits the UK to have half a dozen financial secrecy jurisdictions in its sphere of influence. The system is clearly all about sovereignty. Finally, I did not say that discussing spending was beneath discourse -- merely arguing that governments doing taxation was pretty much what makes them governments. Otherwise it's a golf club. I'll remain eternally grateful for any further explanations of the mechanisms of finance and their benevolence you may have to offer.
- NeedMoreTea 7y ago
  Isle of Man government has a very independent government with just about all branches of government except defence independent of Westminster. The Lieutenant Governor is purely ceremonial, his only remaining role is granting assent of bills.
- motohagiography 7y ago
  There _is_ no domestic accountability in those kleptocratic countries precisely because their governments do not make the majority of their revenues from a personal income tax base. I have doubts about the sincerity of western people who seem so terribly concerned about victimized peoples in distant countries when the net effect of the policies they advocate are really about domestic wealth redistribution. The kind of sanctimonious moral arbitrage that exploits "the people," of these countries as a pretext for influencing domestic policy with sob stories is utterly disingenuous. Kleptocrats gonna klepto, and the reason they can is they can afford to pay the military to keep them in power, with funds that come from resources or puppeteer empires. Offering gratitude without demonstrating understanding or any meaningful benefit just tells people their shared experience was wasted on you.