Tuesday, 30 April 2013

UK Uncut, Goldman Sachs and the missing £20 million

On this Thursday, 2 May, the High Court will hear a case being brought by the campaign group UK Uncut against HMRC. UK Uncut will argue that HMRC entered into an unlawful “sweetheart deal” with one of the wealthiest global banks, Goldman Sachs and allowed them to pay £20 million less than they should legally have paid.

The £20 million is alleged to represent interest which had built up as a result of Goldmans engaging in aggressive tax avoidance relating to bankers’ bonuses by setting up an elaborate scheme to channel money through the Virgin Islands.

Goldmans is notorious for its aggressive approach to business, which has earned it the name, the Vampire Squid – because it is said to “wrap (itself) around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.  

UK Uncut will argue that the sweetheart deal was made by the then top tax man Dave Hartnett and he acted unlawfully as his actions were in direct contradiction with HMRC’s statutory duty to collect taxes and to do so properly, fairly and equally.

The members of UK Uncut are not after any of the £20 million for themselves, of course. They have a superior moral code to Goldmans - and most others in public life. They are simply being public spirited. They want the £20 million to be paid by Goldmans to HMRC and, most importantly, they want to stop similar sweetheart deals with wealthy corporations and individuals taking place in the future. 

With economic growth negligible, taxing and spending is these days essentially zero sum. £20 million less collected is £20 million less for schools, hospitals, soldiers, deficit reduction or whatever the priority may be.

With the honourable exceptions of Private Eye, which broke the original Goldman Sachs story, the Guardian and the Independent, the press usually ignore UK Uncut or paints them as left wing extremists. This is hardly surprising as most of the press is owned by billionaires who are themselves suspected of tax dodging on a large scale. 

Sadly, even the Radio 4 flagship Today program – which might be expected to be more concerned with the objective truth than the press - insisted on smearing UK Uncut as “anti-capitalist” until there were persistent complaints.  A moment’s thought reveals that there is nothing remotely “anti-capitalist” in tackling tax dodging.

UK Uncut have already been directly responsible for Starbucks paying £20 million “voluntarily” to HMRC and indirectly they are probably responsible for a great deal more money being paid by rich tax dodgers to the benefit of the rest of society.  If the British public – including Middle England and the readers of the Murdoch, Rothermere, Barclays and Desmond press – were told the truth about UK Uncut they would heartily approve. 

In time, I think, UK Uncut will be seen as pioneers in the cause of social justice, successors to the likes of the Chartists and the Suffragettes. The wealthy tax cheats, their helpers and their apologists will, I expect, come to be generally recognised as the selfish, anti-social reactionaries some already see them as today.
                                                                                               No. 306

Sunday, 28 April 2013

Obama, Kim Jong-un and the Gaddafi problem

The NATO campaign in Libya in 2011 is widely regarded as a success for the West but one of the unintended – if predictable – consequences is that it makes dealing with a nuclear armed North Korea much more difficult in 2013.

In recent weeks Kim Jong-un, the 29 year old who has inherited the dictatorship of North Korea from his father, has been sabre-rattling on a global scale. He has worried many millions by threatening to use his country’s nuclear weapons. 

Barack Obama has been trying to deal with any immediate threat to US allies in the region – notably South Korea – and to the US itself. The ultimate end of his policy is that North Korea should give up its nuclear weapons capability altogether. This is not new. Bill Clinton and George W Bush reached agreements with North Korea, in 1994 and 2005 respectively, under which the US would provide money, food and political recognition and in return North Korea would suspend its nuclear programme and ultimately give it up altogether.

A major problem with any attempt to persuade Kim Jong-un that he should disarm his nuclear capability is what the West did in Libya after Colonel Gaddafi, in the words of Tony Blair, gave up his country's nuclear weapons program and stopped sponsoring international terrorism.”

There have only ever been five voluntary nuclear disarmaments - Gaddafi’s was the fifth and the most surprising. The others were three ex-Soviet states which found themselves with nuclear weapons after the collapse of the Soviet Union and apartheid South Africa which disarmed before black majority rule.

Kim Jong-un and his advisers will surely be aware of the essentials of the following chronology relating to Gaddafi.
  • Gaddafi led a coup in 1969. For the next thirty years or so, he was an enemy of the West and was held responsible for a number of terrorist outrages
  • Libya surprised the world by announcing that it would disarm its nuclear weapons on 19 December 2003.
  • The key part of the 2003 deal was George W Bush, fresh from regime change in Iraq, explicitly guaranteeing there would be no such policy in Libya. An expert, Professor Jentleson, wrote in the academic journal International Security in 2005, that: - “The repeated assurances the US and Britain gave Libya about not pressing for regime change were absolutely crucial.”
  • When IAEA and US inspectors visited Libya in January 2004 they found that Gaddafi’s nuclear weaponry was significant and larger than they had presumed
  • On 27 January 2004, a plane left Libya with the first consignment from its nuclear arsenal. The White House hailed Libya for its co-operation and said its good faith in dismantling weapons would be reciprocated
  • Libya became an ally in Bush’s “war on terror” and sanctions were lifted 
  • In 2006 and following, Nicolas Sarkozy allegedly accepted more than £43 million pounds in funding from Gaddafi. A formal investigation started in France this month.
  • In 2007, George W Bush sent the first US ambassador to Tripoli for 35 years and in 2008, Secretary of State Condoleeza Rice visited Tripoli
  • On 9 July 2009, Gaddafi met Obama. The White House said that Obama '' wants to see cooperation with Libya continue in sectors such as Tripoli's decision a few years ago to give up its nuclear program, an absolutely voluntary decision that we consider positive."
  • On 21 December 2009, a plane removed the last nuclear material from Libya
  • In March 2011, only 15 months later, NATO attacked Libya and effected regime change. Gaddafi was targeted personally. In one attack one of his sons and three of his grandchildren were reported to have been killed.
  • On 20 October 2011 Gaddafi himself met a gruesome end.
To the regime in North Korea the lesson must surely be that they cannot trust any security guarantees they are given in exchange for nuclear disarmament. They will conclude that if Gaddafi had retained his nuclear weapons, in all likelihood he would still be alive and in power today.
The North Korean Foreign Ministry has said, that what happened in Libya “fully exposed before the world that “Libya’s nuclear dismantlement”, much touted by the US in the past, turned out to be a mode of aggression whereby the latter coaxed the former with such sweet words as “guarantee of security” and “improvement of relations” to disarm itself and then swallowed it up by force.”
Obama came to office talking about his plans to work towards a world free of nuclear weapons. This noble aspiration requires the world’s bad guys to trust any security guarantees they get in exchange for disarmament. It is difficult to see how Kim Jong-un or other regimes like Iran can be expected to trust Obama or the West generally after what happened to the bad guy who trusted them in Libya.
                                                                                                      No. 305

Friday, 26 April 2013

Donald Rumsfeld and the problem with too many Etonians

This week, David Cameron has appointed yet another Etonian to his inner circle. He has made Jo Johnson, brother of Boris, the head of the Downing Street policy unit. 

Jo Johnson may well be a very able man but his appointment highlights the fact that Cameron relies for advice on people (mostly men) from a strikingly narrow demographic. Almost all Cameron’s inner circle comes from the 7% of the population that is privately educated and many of the key people come from one single school, Eton.  

Etonians at the heart of government include Cameron; Jo Johnson; Oliver Letwin, Cabinet Minister with policy oversight; Sir George Young, Chief Whip; Ed Llewellyn, Cameron’s chief of staff; Rupert Harrison, George Osborne’s chief adviser and Jesse Norman, an influential MP just appointed to a new policy board.

In November last year, Dame Helen Ghosh, former top civil servant at the Home Office publicly attacked Cameron’s “Old Etonian clique” of advisers. She highlighted the negative impact on women’s ability to influence policy at the highest level. The same negative impact would apply to other groups, including much of the middle class - and the poor, ethnic minorities and many others.

The problem with too many Etonians is that identified in the third category of Donald Rumsfeld’s well known statement in 2002: -
“There are known knowns; there are things we know that we know
There are known unknowns; that is to say, there are things that we know we don’t know
But there are also unknown unknowns – there are things we do not know we don’t know.”

However clever or well-intentioned they may or may not be, a group of advisers as narrow as the one around Cameron will always lack knowledge of the reality of the lives of most people in the country. They do not know what questions to ask. They do not know what they do not know. 

It appears that Cameron thinks that he does not need to bring into his inner circle people with different life experiences. The idea may seem as outlandish to him as inviting a native to advise them would have seemed to the members of the Raj.

A rich and privileged background, combined with some wisdom, is potentially a great advantage for someone who wants to fight for social justice. Franklin Delano Roosevelt came from a far wealthier and more privileged background than Cameron and he was one of the greatest progressive politicians of the last century. Unlike Cameron, he knew that his life experiences meant there were a great many things he did not know and so he gathered around him advisers who either knew these things or knew what questions to ask.

George Orwell was an old Etonian. He immersed himself in life experiences far removed from his upbringing. His writing and campaigning for democracy and socialism will be remembered long after Cameron is forgotten.

If Cameron was wise he would surround himself with advisers that more closely represented the country he is governing. Sadly, all his expensive education has failed to furnish him with much wisdom.
                                                                                                                                  No 304

Thursday, 25 April 2013

Four things Osborne does not say about the deficit

George Osborne constantly repeats his two key messages on the deficit. (The deficit, which is the annual excess of spending over income, is often confused with the national debt which is the total of three centuries of accumulated deficits.) 

Osborne says that he has reduced the deficit by a third and that it is coming down year on year. His words sound impressive but they are highly misleading – as they are designed to be.

Here are four things Osborne does not say about the deficit
  1. Almost all the reduction in the deficit took place between May 2010 and April 2011. Since then deficit reduction has effectively stalled.
  2. The deficit reduction which took place between May 2010 and April 2011 was mostly achieved by cutting capital investment e.g. cancelling projects to build roads, hospitals, schools etc. The problem with this approach was that, as even Osborne seems to have eventually realised, these cuts were self-defeating. They led to a reduction in economic activity, which led to lower growth and thus to lower revenue in taxes and higher payments in benefits and, therefore, ultimately to upward pressure on the deficit – and, of course, no new roads etc.
  3. Osborne had to engage in desperate measures to make sure that last year’s deficit came out lower than the one for the year before.  These even included instructing certain Whitehall departments to delay payments until the next financial year – the old “cheques in the post” stratagem, familiar to dodgy businesses everywhere. In the end, the deficit in 2012/13 was calculated at £120.6 billion which was lower than the deficit in 2011/12, of £120.9 billion, but only by a tiny amount, 0.24%, well within the margin of error.
  4. In 2010, Osborne said he would eliminate the deficit by 2015. Since then he has had to move his target date to 2018. At the rate of progress of the last 12 months, it will take centuries to eliminate the deficit.  
Osborne’s deficit reduction plan is failing badly. He was the one who made this his top priority. He gave it precedence over and above growth, employment, inflation, living standards or any other measure. He cannot complain if he is judged on its success or failure.

Osborne’s fundamental mistake was not to understand that it is almost impossible to reduce a deficit without economic growth. His own policies killed off the economic recovery that he inherited in May 2010.  And later today we will learn if the economy has entered into a triple dip recession. 

I do not suppose that Osborne has ever aspired to be liked as a caring politician. I imagine that he has wanted to be respected as a competent one. He is likely to end up being despised as neither caring nor competent.
                                                                                                                                No. 303