Thatcher and Thatcherism didn't save Britain – They've caused the problems it has today ; the Falklands War was as avoidable as Iraq ; and Thatcher didn’t promote freedom but backed and armed dictatorships

I won’t celebrate anyone’s death, but Prime Minister David Cameron’s claim that Thatcher “saved our country” and the £10 million state funeral (of which taxpayers will pay at least half the costs) are party political propaganda and a slap in the face to all the unemployed and disabled people facing benefit cuts today (1) – (2). The message is “She mattered, you don’t”.

Thatcherites, like Thatcher, are not revolutionaries but reactionaries who want to go back to the 19^th century when there was no welfare state or government regulation

Thatcherites see themselves as radical reformers going up against “the establishment” and “vested interests”. For Thatcher this meant trade unions and public sector professionals like teachers, nurses, doctors and lecturers. For brave Chancellor George Osborne, a public school and Oxford University educated millionaire Chancellor of the Exchequer, it means the vast oppressive charities and churches who help the poorest (4).

Thatcherites aim to roll back all the progress made by Atlee’s post-war Labour government and take us back to the 19^th century with no trade unions, no employee rights, no welfare state and no NHS (these “only encourage dependency”) – back to the poorhouse, the workhouse and the poor dying of hunger, cold or illness and being blamed for their own suffering.

It’s new only in rejecting the One Nation conservatism of politicians like Ian Gilmour MP (who condemned Thatcher’s policies and record in his book ‘Dancing With Dogma) and Prime Minister Harold MacMillan.

From On Yer Bike in the 80s to Workers and Shirkers today –
Different Decade, Same Thatcherite attempt to impose ideology over reality

The current Conservative government even continues to claim that it hopes its welfare “reforms” will “encourage people to work” even when it’s own (fiddled) figures show over 5 times more people unemployed (2.52 million) than job vacancies (494,000) (5) – (6). (The actual ratio is higher as the unemployment figures are fiddled downwards by using methods including counting people on unpaid temporary “workfare” placements as “employed”  (7).)

So basic arithmetic shows there are no jobs available for over 80% of unemployed people in the UK ; but Thatcherites have never let facts or logic get in the way of an ideology which pretends that the most powerful and wealthiest have no responsibility for the massive effects of their actions, while the poorest and most vulnerable, who have no power or influence, are supposedly entirely to blame for every problem.

Osborne claims people on benefits are all “shirkers” who don’t work (when many do) and don’t work by choice (8) – (9).

So for the first time since 1945 benefits are being cut to punish all the supposed “shirkers” (inflation is 2.2%, but the rise in benefits this year is limited to 1% -a real terms cut) (10)

This is exactly the same crap that was shovelled by Thatcher and her ministers in the 80s, when, after being elected on a campaign that promised to get unemployment down, they increased it from 2 million to over 3 million – and then people like Norman Tebbit told the unemployed to “get on yer bike” and get a job.

Thatcher didn’t save Britain – she began the policies that led to our current problems

Far from saving Britain, Thatcher caused many of our current problems.

Setting  us on the road to the banking crisis

As the late Conservative MP Ian Gilmour pointed out, by raising interest rates to double figures to cool a financial sector boom in the South-East of England, Thatcher destroyed much of Britain’s manufacturing industry, which was pushed into recession by the resulting over-valuation of the pound (hurting exports) and unaffordable credit, leaving us over-reliant on the financial sector, which she began the deregulation of with the 1986 ‘Big Bang’ (this being the main cause of the boom, which was as much a bubble as the one that burst recently) (11) - (12).

Destroying key industries due to blinkered ideology

She closed down our steel industry, while other countries, like Germany, continued subsidising steel and other key industries, even under conservative Chancellors like Helmut Kohl. As a result Germany’s economy remains stronger and its unemployment lower than ours.

(And in fact as Nobel prize winning South Korean economist Ha Joon Chang has shown with copious historical examples, every single developed country got that way by subsidising and protecting industries until they were strong enough to compete internationally (13))

Selling off assets that provided revenue to government

She sold off valuable assets like British Gas and British Telecom, losing the government revenue which could have funded the NHS, public education and the welfare state.  While it’s likely ideology was the main driving force for these privatisations, they also funded short term income tax cuts which helped her win elections. No wonder former Conservative Prime Minister Harold MacMillan accused her of “selling the family silver”. In fact it was worse than that. She sold the geese that laid the golden eggs.

Deregulation and privatisation leading to consumers being fleeced

Her privatisation and deregulation of every economic sector led not to greater competition but to oligopoly – sectors dominated by a few large companies which took over smaller firms or pushed them out of business, before charging customers whatever they like due to informal price fixing or simple profiteering. For instance today a handful of energy companies dominate Britain’s market for electricity and gas for the domestic and business markets.

While benefits for the poorest are cut and capped, these companies are allowed to charge whatever they like. They have doubled their profit margin by percentage on their average customer between 2011 and the first quarter of 2013 – under two years. The gap between their own costs and the prices they charge to customers rises constantly. The heads of these companies are rewarded with knighthoods (14) – (16).

This is Thatcherism again. Those who have wealth are assumed always to deserve it, while those who are poor are assumed to be poor because they are lazy or spendthrifts. In reality some of the wealthiest people in Britain started off with wealth or a family with connections to get them jobs on the boards of big firms – and then used their own wealth, or the company’s, or the bank’s, to buy political influence with donations to party funds, effectively exempting their company or their entire sector from any significant regulation. (And no, I’m not saying this is true of anyone who has more money than average, some did work hard for it and take risks and pay their employees fair wages).

Selling off council houses without replacing them –
meaning we have to pay housing benefit for rent for private landlords

She began the sale of council houses, without buying or building replacements. Today, due to the shortage of council houses, councils spend a fortune renting social housing from private landlords or paying housing benefits that go to those landlords in rent.

This is the main reason for high benefits payments to some families – because most of it goes on housing benefit that goes straight into the pocket of private landlords – but David Cameron’s Thatcherite government is capping the benefits payments to people stuck in this situation as if this was their fault, rather than buying and building enough council houses (17).

Every Daily Mail or Sun headline about asylum seekers or people on benefits living in mansions is a result of this policy, begun by Thatcher, but rather than blame her and her successors in government, they blame weak, powerless, easy targets instead.

Thatcher and the Falklands War –
Not a war hero but either incompetent
or else deliberately engineering
a war that wouldn’t have happened otherwise

The attempt to present her as a great war leader in relation to the Falklands, with 800 members of the military to be present at her funeral, is especially hard to reconcile with the historical facts.

When the Argentinians began talking of taking the Falklands in 1977, Labour Prime Minister Jim Callaghan and Foreign Secretary David Owen were persuaded by military chiefs to send a Royal Navy fleet to the South Atlantic to signal Britain would fight any invasion. The Argentinians backed down. In a similar situation in 1982 Thatcher’s government withdrew the last Royal Navy ship from the area during spending cuts, leading the Argentine military junta to believe Britain would not fight for the islands (18) – (19). They invaded – and then Thatcher declared war. Hundreds died as a result.

Some suggest that Thatcher, then the most unpopular Prime Minister in British history, after increasing unemployment to over 3 million, wanted a war to restore her popularity (20).

It’s impossible to know whether this was the result of blind ideology in imposing spending cuts and incompetence in not caring where they were made, or whether Thatcher wanted the Argentinians to believe Britain wouldn’t fight in order to get a war to restore her political fortunes. Either way she was responsible for an easily avoidable war and all the deaths in it. By any rational standard she should be condemned for not preventing war as simply and easily as Callaghan did rather than lauded for winning a war against an inferior military.

In the case of the 1990-1991 Gulf War against Iraq, which Thatcher committed British troops to shortly before her party got her to resign over the poll tax, there is no such doubt. The Bush (senior) administration and the Kuwaiti monarchy duped Saddam into war with the US over Kuwait. Bush and his advisers sought to repeat Thatcher’s feat of going from unpopularity on domestic unemployment and recession to election victory on a tide of war fuelled nationalism ; they failed.

The Poll Tax

The poll tax, which resulted in Thatcher’s resignation, was a local council tax under which everyone paid exactly the same amount irrespective of their income. It caused riots the last time it had been tried by an English ruler, in 1381, resulting in the peasants’ revolt. The Conservatives, who supposedly want everyone to know the history of Britain, seemed to be massively ignorant of it – they thought the poll tax was going to be hugely popular. Instead, as in 1381, it brought mass non-payment and riots. Thatcher, whose supporters claim she was acting on behalf of the “ordinary person in the street” showed she had no more clue what many of them wanted than medieval English kings knew of peasants’ needs.

A lover of freedom? Thatcher’s foreign policy

We’re told Thatcher was a “lover of freedom”. This is only true if you interpret freedom in the narrow neo-liberal sense of freedom for companies, banks and those with lots of money to do what they like – pay less tax due to tax cuts, avoid tax through tax havens, avoid regulation, charge customers whatever they want to, etc.

She certainly opposed Communism, but her role in it’s downfall, like Reagan’s, was negligible. Dissidents and protesters in the Soviet bloc did far more, as did Gorbachev – and before him Brezhnev by spending so much on the Soviet military that he drove the USSR’s economy into the ground. Her support for “freedom” elsewhere wasn’t just non-existent – she was supporting , training and arming the forces of many dictatorships.

General Pinochet aided the British war effort by allowing them to use Chilean ports. Thatcher treated him as an honoured friend after that, despite Pinochet having overthrown the elected government of President Salvador Allende in a military coup and having thousands of people tortured and killed.

She condemned Nelson Mandela’s ANC as terrorists and refused to place economic sanctions on Apartheid South Africa, though we are assured that in private she was putting verbal pressure on South African Presidents to free Mandela. Sanctions would have made considerably more difference and much sooner.

Thatcher’s government also provided training, tens of millions of pounds of money and dozens of jet fighter bombers to Mugabe’s military as he was massacring members of the tribes of his political opponents by the thousand. Perence Shiri, one of the officers who headed the genocide was subsequently allowed to come to Britain to train at the Royal Defence College. The massacres were played down by the Foreign Office as “exaggerated” (21) – (22).

She even armed Saddam Hussein during the Iran-Iraq war in the 1980s and right up until the Iraqi invasion of Kuwait in the middle of 1990; including selling him chemicals used as ingredients for chemical weapons, spare parts for tanks and attempting (but failing) to sell him hawk jets which could be used to bomb ground targets (as they later were in Indonesia) while Saddam was using chemical weapons on Iranians and Iraqi Kurds and carrying out his Anfal campaign of genocide against the latter. (23) - (24)

On top of this, British taxpayers ended up having to pay the £1 billion bill for Saddam’s purchases from British arms companies, as after the 1991 Gulf War there was no chance of his government paying – and Thatcher had approved the exports under Export Credit Guarantees  (25).

She signed the Al Yamamah oil for arms deal with the Saudi monarchy, which continues to be an absolute dictatorship imposing a medieval version of Islamic law – and torturing confessions out of suspects before executing them by beheading. Her son Mark Thatcher had a £1 million house purchased for him by a company based on a tax haven and owned by Wafic Said, a dodgy Middle Eastern arms deal broker. Said also gave Mark a £14,000 Rolex watch. Said’s wife donated large amounts to the Conservative party before the 2010 election . Mark Thatcher has denied rumours that he received millions more as part of the deal (26) – (27).

Margaret Thatcher also sent the SAS to train the mass murdering Khmer Rouge’s monarchist allies in laying land mines in the 1980s (28).

Supporting mass murdering dictators, monarchist allies of ultra-nationalist regimes guilty of genocide and governments which gave black people no rights whatsoever seem like strange ways to promote freedom, but then Thatcher never really supported freedom or democracy in the sense that most people use the words.

A Prime Minister who divided Britain – just like Major and Blair and Cameron

Thatcher was the first post-war Prime Minister to divide Britain, largely through strident English nationalism thinly disguised as British nationalism, combined with constant attempts to divide the majority in order to make conquering them easier.

Those who had jobs were encouraged to hate those who were unemployed as supposedly all lazy scroungers, while Thatcher continued to drive unemployment higher and higher. Those who worked in the private sector were told they should disdain public sector employees and trade unions as supposedly selfish “vested interests” – and the working class were encouraged to hate the middle class as effete namby pamby liberals who were meant to be out of touch with reality and had more education than was good for them. Hatred of foreigners, minority nationalities, religions and ethnic groups, as well as refugees and asylum seekers was also encouraged.

This was all continued under Blair to some extent, with opposition to his policies also blamed on the “middle class” as if a bunch of former lawyers who were now on over £100,000 a year ministerial and Prime ministerial salaries weren’t middle class.

Under Cameron we are back to all the divide and conquer tactics used under Thatcher.

Thatcher’s period as Prime Minister did more than anything to boost support for Scottish and Welsh devolution and for independence for Scotland - and this has been cemented by the continuation of many of her policies by her successors.

If Thatcher’s supporters don’t want her death and funeral politicised they should stop trying to use it to re-write history as party political propaganda

The Conservative party claim no-one should denigrate Thatcher’s record at this time. If they didn’t want her death and funeral politicised perhaps they shouldn’t have tried to use it for party political ends and to try to justify their current shameful policy of taking from the disabled, the poor and the unemployed to fund tax cuts for millionaires.

Given the Thatcherite establishment’s shameless rewriting of history, politicisation of her death and funeral and attempt to use it to gain votes, the political opponents of the government have no option but to respond in kind. Margaret Thatcher has thousands of admirers who are senior politicians, journalists and editors telling her version of history and the present. They won’t be allowed to stop the millions of people who oppose Thatcherism, and those who suffered under Thatcher and her legacy under her successors, telling the other side of the story.

(1) = BBC News 08 Apr 2013 ‘David Cameron: Baroness Thatcher 'saved our country'’, http://www.bbc.co.uk/news/uk-politics-22068771

(2) = Telegraph.co.uk 15 Apr 2013 ‘Margaret Thatcher's funeral: it would be extraordinary not to spend so much, says No 10’,
http://www.telegraph.co.uk/news/politics/margaret-thatcher/9994872/Margaret-Thatchers-funeral-it-would-be-extraordinary-not-to-spend-so-much-says-No-10.html

(3) = ITV news 16 Apr 2013 ‘Poll: 60% oppose taxpayer funding of Thatcher funeral’,
http://www.itv.com/news/update/2013-04-13/poll-60-oppose-taxpayer-funding-of-thatcher-funeral/

(4) = BBC News 02 Apr 2013 ‘George Osborne: Benefit critics talk 'ill-informed rubbish'’, http://www.bbc.co.uk/news/uk-politics-21998784

(5) = Office for National Statistics 20 Mar 2013 ‘Labour Market Statistics, March 2013’,  http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/march-2013/statistical-bulletin.html

(6) = Office for National Statistics 20 Mar 2013 ‘Labour Market Statistics, March 2013 - Vacancies’, http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/march-2013/statistical-bulletin.html#tab-Vacancies

(7) = Guardian 15 Jan 2013 ‘Statistics cast doubt on coalition's '500,000 new jobs' claim’, http://www.guardian.co.uk/uk/2013/jan/15/statistics-doubt-coalition-500000-jobs

(8) = BBC News 03 Apr 2013 ‘George Osborne: Benefit critics talk 'ill-informed rubbish'’,
http://www.bbc.co.uk/news/uk-politics-21998784

(9) = Guardian 22 Oct 2012 ‘Extra 10,000 working people a month reliant on housing benefit, says report’, http://www.guardian.co.uk/society/2012/oct/22/working-people-housing-benefit-report

(10) = Guardian 01 Apr 2013 ‘The day Britain changes: welfare reforms and coalition cuts take effect’,  http://www.guardian.co.uk/politics/2013/mar/31/liberal-conservative-coalition-conservatives

 (11) = Ian Gilmour (1992) ‘Dancing with Dogma – Britain under Thatcherism’, Simon and Schuster, London, 1992, Chapter 4, pages 60 - 65

(12) = Observer 09 Oct 2011 ‘Big Bang's shockwaves left us with today's big bust’,
http://www.guardian.co.uk/business/2011/oct/09/big-bang-1986-city-deregulation-boom-bust

(13) = Ha Joon Chang (2007) ‘Bad Samaritans’, Random House, London, 2008

(14) = Guardian 02 Dec 2011 ‘Big six energy firms face fresh accusations of profiteering’,
http://www.guardian.co.uk/business/2011/dec/02/energy-firms-accusations-profiteering-electricity

(15) = Guardian 12 Apr 2013 ‘Big six energy firms accused of 'cold-blooded profiteering'’, http://www.guardian.co.uk/business/2013/apr/12/big-six-energy-firms-accused-profiteering

(16) = BBC News 31 Dec 2010 ‘New Year Honours: Broughton and Carr business knights’, http://www.bbc.co.uk/news/business-12093737

(17) = BBC News 15 Apr 2013 ‘Benefit cap 'will encourage people to work'’, http://www.bbc.co.uk/news/uk-politics-22148764

(18) = BBC News 01 Jun 2005 ‘Secret Falklands fleet revealed’,
http://news.bbc.co.uk/1/hi/uk/4597581.stm

(19) = Freedman, Lawrence (2005) ‘Official History of the Falklands Campaign Volume 1’,
Routledge, 2005, chapters 8 – 9

(20) = Lenman, B. P. (1992) The Eclipse of Parliament: Appearance and Reality in British Politics since 1914 (London: Edward Arnold)

(21) = Campaign Against The Arms Trade ‘UK Arms Exports to Zimbabwe’ by Emily Mitchell, Section 3, Mugabe’s Zimbabwe , http://www.caat.org.uk/resources/countries/zimbabwe/ and
http://www.caat.org.uk/resources/countries/zimbabwe/#3

(22) = Programme Transcript – Panorama, "The Price of Silence" , RECORDED FROM TRANSMISSION: BBC 1-10 Mar 2002, http://news.bbc.co.uk/hi/english/static/audio_video/programmes/panorama/transcripts/transcript_10_03_02.txt

(23) = Financial Times 29 Jul 1991 ‘Britain Exported Poisonous Gas Ingredients to Iraq’

(24) = Financial Times 30 Dec 2011 ‘UK secretly supplied Saddam’,
http://www.ft.com/cms/s/0/52add2c4-30b4-11e1-9436-00144feabdc0.html#axzz2QfcSoZKo

 (25) = Guardian 28 Feb 2003 ‘How £1bn was lost when Thatcher propped up Saddam’, http://www.guardian.co.uk/world/2003/feb/28/iraq.politics1

(26) = Guardian 13 Apr 2013 ‘Mark Thatcher's return to the spotlight’,
http://www.guardian.co.uk/uk/2013/apr/11/mark-thatcher

(27) = Guardian 28 May 2010 ‘Questions raised over Conservative party donations by businessmen's wives’, http://www.guardian.co.uk/uk/2010/may/28/donations-tory-wives-businessmen

(28) = Pilger , John (1998) Hidden Agendas Vintage , London , 1998, pages 33-34 , 260-261 of paperback edition

We need tax havens closed down to avoid another financial crisis and increase revenues , the 50p tax rate is a side issue, the mansion tax a gimmick

Chancellor George Osborne's cut in the 50p top rate of tax is supposed to bring in extra revenue by making the wealthiest pay tax in the UK, while business Minister Vince Cable is calling for a “mansion tax” supposedly to target the “super rich”. Another Lib Dem – Lord Oakeshott – says it’s because otherwise taxing the super rich is like pinning down jelly. In fact the real problem – the thing allowing the super-rich and big firms to avoid taxes; and the thing that caused the financial crisis and will cause another if they’re not closed down –is tax havens. Some will tell you closing them down is impossible – they’re wrong. It’s been done before and it can be done again.

Deputy PM Nick Clegg suggest a minimum tax rate, which is a better idea, but both avoids the main problem – tax havens, including the City of London ‘Square Mile’, which is governed only by the Corporation of the City of London – mostly bank and hedge fund executives.

To listen to most politicians you’d believe that they’ve now re-regulated banks and financial firms as much as is possible and that taxing and regulating big firms, banks and billionaires further is impossible as they’d just go elsewhere .  Nicholas Shaxson’s book ‘ Treasure Islands ’ shows this is a long way from the truth. It should be required reading for every voter in every country in the world (1).

The ‘Mansion Tax’ might get a little extra tax out of some of the super rich (while also e.g punishing widows and people who’ve retired for having a bigger than average house or a house in an area with high property values, the same way the Rates used to). It will barely make the super-rich of big firms blink though. If you want to get significant taxes out of them, you have to close down the tax havens

Bretton Woods

Shaxson shows that after World War Two the Bretton Woods agreement between the western European countries and the US imposed capital controls – i.e limits on how much money could be transferred from one country to another by private individuals and companies, with any large amount requiring an explanation of the reason and approval by government, which would not be granted unless benefits to the country the money was coming from could be shown.

There were also fixed exchange rates between the dollar and other currencies, avoiding currency speculation of the kind that led to Black Wednesday and the Asian Financial Crisis in the 1990s.

(Other aspects of Bretton Woods, such as the Gold Standard, were more questionable)

However from the day Bretton Woods came into force, bankers, the financial industry and politicians they lobbied were looking for ways to get around it and weaken it to the point it would collapse entirely. By 1971 they managed to achieve that.

How tax havens cause financial and economic crises – and will cause more if they aren’t closed down

Their main method has been tax havens, not only because of low (or no) taxes, but also because tax havens provide secrecy, allowing banks and companies to avoid regulation. They do this in several ways. For instance by allowing banks and companies and people to registering their company or shell companies or accounts in tax havens. Tax havens also allow professional front-man directors, managing executives, treasurers etc who are listed as the executives of thousands of different firms registered in that haven. So if anyone tries to find out about who owns and manages that company, they’ll only find the front people. Secrecy is the most important aspect, because if no-one knows who really runs an account or firm or what company or individual is putting money into it or taking it out (e.g to donate to political parties’ or politicians’ campaign funds), no-one can regulate them.

Enron, World.com, Parmalat and Long Term Capital Management for instance were all registered or had shell companies in the Cayman Islands, a British dependency.

While many tax havens are small islands and so ‘offshore’ some of the onshore tax havens like the US State of Delaware Luxembourg, Switzerland and the City of London (Square Mile) mentioned earlier are even bigger centres of corruption. Delaware has more companies registered in it than any other tax haven due to it’s lack of regulation, almost zero taxes and high level of secrecy.

The ‘financial derivatives’ like ‘Collateral Debt Obligations’ which led to the financial crisis were mostly invented and issued by firms registered in tax havens.

The onshore and offshore tax havens are similar in being small, largely being governed by the heads of companies in the tax haven (Jersey, City of London) or by governments so small that they are captured easily by big banks’ and companies’ lobbying and donations (Delaware).

The City of London is governed by the City of London Corporation headed by the Lord Mayor (no relation to the democratically elected mayor of the rest of London). City of London Corporation elections work like those of a medieval city dominated by merchant guilds rather than a modern democracy. There are 9,000 ordinary electors, but 39,000 votes held by companies. The votes held by companies are held by their Chief Executives, who get a number of votes based on their number of employees. (Tony Blair, who dropped the Labour party’s previous policy of abolishing the Corporation in 1996, passed legislation in government increasing the number of votes in it going to company executives from 26,000 to 39,000).

When Labour party member Maurice Glasman stood against one of the candidates in a Corporation election, it was unprecedented. The heads of the companies in the Square Mile are almost always elected unopposed by any other candidate.

This means that, in practice, as many of the UK’s banks and other financial companies are in the Square Mile governed by the Corporation, the UK’s financial industry remains entirely unregulated. Neither the British government nor the Mayor of London, nor the London Assembly, nor the EU, can regulate what goes on inside the Square Mile under their ‘Ancient Charter’ dating to before the Norman conquest of England.

What’s more the City of London Corporation and the firms that make it up are in denial about CDOs and other financial derivatives having caused the crisis and continue to lobby the government to avoid ‘unnecessary’ regulation of the financial sector and to allow it to continue to create now and ‘innovative financial products’ of the kind that caused the crisis.

If the tax havens aren’t closed down another crisis is not just a possibility – it will almost inevitably happen again, because the banks and firms involved are so big they can always extort a bail-out to avoid taking down the entire economy with them – and then re-invest some of the money they get from that in lobbying and donations to party funds.

How Tax Havens push up taxes for the majority

Shaxson found that an estimated $12 trillion – a quarter of the world’s wealth – is untaxed in tax havens, put there by individual people or their financial advisors. The amount put in them by banks and big companies is not known, but we do know that every major company and bank in the UK, from RBS to Tesco has dozens of subsidiaries, ‘joint ventures’ or ‘associates in tax havens like Jersey – and that the purpose of these subsidiaries and other agreements is to avoid tax. So at a guess at least half the world’s wealth is going untaxed in tax havens.

We also know that the Inland Revenue, which would jail ordinary people or heads of small businesses for evading or avoiding tax, instead negotiates ‘sweetheart deals’ with big banks and firms, allowing them each to avoid tens to hundreds of millions each a year – and that’s only from the accounts the Inland Revenue knows about.

That pushes taxes up for everyone else – all the ordinary people and small businesses who can’t afford the lawyers and accountants they’d need to avoid tax.

If that money was taxed, so those who can afford to pay paid what they can afford, taxes for everyone else would fall, extreme cuts in public spending would be unnecessary as tax receipts would rise and the kind of fraud that allowed the financial crisis to happen could be prevented.

How Tax Havens allow developed and developing world corruption

It also helps corrupt governments and dictatorships around the world – including in the poorest countries – to divert taxes and aid money into secret accounts in tax havens. So the next time you hear someone complain about how corruption makes aid pointless, point out that it couldn’t happen on the scale it’s happening without the tax havens and lack of controls on capital transfers, which are the result of the actions of developed world governments like the US, Britain, France and Switzerland. The centres of corruption are tax havens in the developed world.

Tax Havens launder drug , criminal and terrorist money

The secrecy which tax havens provide which is designed to allow people and companies to avoid or evade tax also allows drug traffickers, organised crime and terrorist groups to launder money. Shaxson provides several concrete examples including the BCCI affair and the Florida mafia

The Fiction that most Tax Havens are independent

The British government maintains a fiction that it has no control of what goes on in it’s tax haven dependencies – especially the Cayman Islands, Jersey and the Isle of Man. Shaxson’s book provides plenty of examples of them being able to get their way when they want something in these places – and plenty of quotes showing the British government giving their dependencies a nod and a wink on how it would be better if matters were ‘resolved’ without the UK government having to act itself and end the convenient fiction.

The biggest threat from tax havens – and how they can be closed down, as they were under Bretton Woods

The most frightening thing about tax havens though is that they are all still operating, providing secret accounts and shell companies for banks and firms worldwide – and as long as that’s the case another global financial crisis could happen tomorrow.

The ‘nothing can be done’ excuse – and why it’s false

Most of the politicians and bankers and billionaires will tell you that there is nothing that can be done about this – that modern technology and business practices have gone beyond the ability of governments to regulate them. That’s nonsense. It was possible to transfer money between countries fairly rapidly in 1945-1970, but Bretton Woods prevented it being done constantly without good reasons – and growth rates in that period were far higher (at an average of 4% a year) in the developed world than they have been since 1970. Before 1945 there was the same chaos in international finance, leading to the same problems – the 1929 Great Crash and the global Great Depression. So this is not a matter of new developments making new capital and exchange rate controls impossible – they are just as possible as they were in 1945 to 1970.

The ‘lack of political will’ excuse – and how to create the political will

Many will tell you that the problem is a lack of political will – again, nonsense. If enough people demand that their governments close down tax havens and impose regulation on them, it can be done, just as it was done after World War Two. Tax havens rely on money being able to get in and out. Simply ban all money transfers in and out of them until new regulations are in force and enforce full sharing of all information on accounts and companies registered in them.

The problem is that the billionaires and big firms and the newspapers and TV stations they own and the politicians they lobby and donate to have persuaded everyone that the people costing them money are fraudulent welfare claimants, when in fact, for instance, only 0.6% of benefit claims in the UK are estimated to be fraudulent. As long as the majority allow themselves to be conned in this way there certainly won’t be the political will to do anything about the tax havens that are really pushing taxes up for the majority and causing economic crises. If they are informed and persuaded of the real problems – and that allowing the tax havens to remain will result in another financial crisis and recession if they’re not closed down, that will rapidly change though.

Politicians lack the ‘political will’ to do anything about tax havens as long as the majority don’t realise how they’re suffering due to them because the same big firms and super rich people benefiting most from tax havens are also the ones donating most to the funds of the big parties and spending most on lobbying government.

The ‘requires an international agreement we can’t get’ excuse – and the alternative of leading by example

Then there’s the excuse that it would require an international agreement and that that’s not possible. In fact it’s been done before (Bretton Woods) and progress can be made even without one – because if one country starts closing down it’s tax havens then the voters in others won’t accept that closing down tax havens is impossible any more -  and the dominoes will start to fall.

Sources

(1) = Michael Shaxson (2011) ‘Treasure Islands: Tax Havens and the Men who Stole the World’ Bodley Heads, London, 2011

(2) = Guardian DataBlog October 2011 ‘Tax havens and the FTSE 100: the full list’- The top 100 British multinationals have declared full or joint ownership of 34,216 companies - 25% of which are located in jurisdictions classed as tax havens. http://www.guardian.co.uk/news/datablog/2011/oct/11/ftse100-subsidiaries-tax-data

(3) = Guardian 20 Dec 2011 ‘HMRC hid 'sweetheart' tax deals for big business, MPs say’, http://www.guardian.co.uk/politics/2011/dec/20/inland-revenue-sweetheart-tax-deals

A sense of entitlement doesn’t mean wanting a job and a pension , Sir Roger Carr, it means unlimited greed at the expense of others

Many of the same people who are paying themselves  salaries from several hundred thousands to millions every year, plus the same again in bonuses, are condemning public sector employees for their ‘sense of entitlement’ in wanting jobs and pensions; and the unemployed for wanting to have enough money to eat. One of them is Sir Roger Carr, the head of the CBI (Confederation of British Industry).

Last month the Independent reported Sir Roger telling a conference sponsored by Barclays bank’s corporate division that

 “Most of us... have grown up in the West with a sense of entitlement – to jobs, opportunity, wealth,” he said. “What's happening all around us is a cultural cold shower, a move from entitlement, a recognition that things have changed, nothing is by right: we have to earn our place in a vigorously competitive world as individuals and as nations.”

adding that  “We need to encourage all those in positions of authority – government, opposition, regulators and commentators – to stop the demonisation of industry: banking, energy or defence.” (1)

Because of course it’s “demonisation” to place the blame for the crisis on the people who actually caused it, who demanded deregulation, got it and used it to commit fraud on a massive scale – often by buying and selling worthless ‘assets’ like collateral debt obligations and demanding a commission on each sale.

In Carr’s world, if regulators so much as criticise these industries now, never mind actually regulate them (little sign of that) that’s ‘demonisation’.

Demonising energy industry executives’ sense of entitlement

Since 2004 Sir Roger has been chairman of Centrica, which owns British Gas, of which Scottish Gas is a subsidiary.

According to Centrica’s website, Carr’s salary in 2010 was £470,000, up from £450,000 in 2009,  while in 2011 there was an average fall of 4.5% for everyone employed in the UK(far more for those made unemployed). Carr earned an absolute amount 18 times higher than median earnings in the UK of around £26,000 for most people in 2010 and 2011(2) – (4).

That’s only the pay for one of his four paid jobs, which, according to the CBI website, also include ‘deputy chairman & senior independent director of the Court of the Bank of England... senior advisor to KKR - the world's largest private equity company’ and ‘visiting fellow of Said Business School, University of Oxford’.

The Bank of England jobs seem to pay at least £150,000 a year based on the bank’s annual report, bringing Carr’s annual income to a minimum of £620,000 in 2010, or 23 times median earnings, without including his pay from KKR or the University of Oxford (5) .

Sam Laidlaw, the Chief Executive of Centrica, had a basic salary of £2 million in 2010. He also had shares and pension payments worth between £2 millionand £8million. That makes Laidlaw’s pay somewhere between 76 and 380 times median earnings in the UK (6) – (7).

I’d be surprised at his lack of self-consciousness in accusing the majority of people of ‘a sense of entitlement’ in these circumstances, but as the late American economist J.K Galbraith often pointed out, people making huge amounts of money often convince themselves this must be due to their own genius rather than to any unfairness or fault in the system they work in – and that anyone who has far less must have less due to their moral failings.

British Gas is one of the ‘big six’ British energy companies found to have continually increased it’s prices above rises in it’s costs, to have maintained price increases permanently after short term increases in the price of buying gas wholesale and to have failed to pass on anything like the full reduction in wholesale costs when prices fell.

A study by Manchester University found that‘In the first six months of 2004, retail electricity prices were on average £1.93 per 100 kilowatt hour higher than the wholesale measure. By 2010 this gap had more than doubled, to over £4. It narrowed in 2011 as a result of well-publicised cost increases in the wholesale market, but averaged £2.73 in summer – even before the price rises passed on to householders by the big six this autumn….. around 80% of the winter price spike was passed to the consumer price, but when wholesale markets fell in summer, retail prices moved far less – only around 50% of the amount… The data also shows that when wholesale prices suddenly spike – as they did in 2009 – consumer prices rapidly follow suit. However, prices fall back more slowly and to a lesser degree after the wholesale price spike abates.’ (8)

In short, profiteering on gas prices when the majority are suffering pay cuts in real terms and the poorest and pensioners are having to choose whether to heat their homes or eat.

Not only that, but an estimated 2,700 people in Britain will die this winter due to cold – due to being unable to afford to heat their homes(9).

That makes Sir Roger’s condemnation of the ‘sense of entitlement’ of others ring very hollow. In fact it makes it sound like the massive arrogance and smugness of someone who feels entitled to profit at everyone else’s expense – much like the hedge fund managers and the bank chief executives and government ministers.

It also makes his claim that the regulators are demonising the energy industry sound pretty far fetched ; and difficult to understand why a government which claims “we’re all in it together” thought he deserved to be given a knighthood in January this year.

Demonising the Defence Industry

Now I find myself itching at the fingertips to demonise the defence industry some, partly because it’s just so easy.

It has been arming murdering dictatorships like Saddam Hussein’s (in the 1970s and 1980s) and the Saudis (today).  If the dictators fail to pay then the Arms Export Credit Guaranteesystem means the taxpayer in the UK pays the bill, as they did after the 1991 war with Saddam.

Until well into the Arab Spring  British arms companies were also arming the dictatorships shooting protesters across the Arab world, with the approval of the Cameron government (10).

The defence industry gets government subsidies on a scale which most civilian manufacturing companies can only dream of – including the continuation of the construction of two of the largest aircraft carriers ever built by BAEsystems.

The excuse given by David Cameron is that the last government supposedly drafted the contracts in a way that would make cancellation more expensive than paying for both to be completed. Yet when the National Audit Office questioned this and requested documents on the cost and the terms of the contract, Cameron refused to let  them see any of them. When the NAO got hold of some documents, they found the cost has increased from £3.65 billion in 2007 to £6 billion today and probably £10 billion in the end. One will be ‘left in a state of “extended readiness”(i.e left to rust) when it’s finished in 2016, while the other won’t have any planes till 2020, when it’ll have just 6, then 12 in 2023(11) – (14).

That’s just one example of how the MoD subsidises arms companies for billions at taxpayers’ expense every year, using money that could provide services, fund research and development of new technologies and medicines, or provide loans to civilian industries that provide far more jobs.

Here are a couple of others.

The senior management of the banking, financial, energy and defence industries seem to think it’s clever to try to turn accusations of a ‘sense of entitlement’ back onto the majority. It lacks any credibility.

(1) = Independent 22 Nov 2011 ‘CBI president attacks 'sense of entitlement' ’, http://www.independent.co.uk/news/business/news/cbi-president-attacks-sense-of-entitlement-6265921.html

(2) = Centrica Annual Report and Accounts 2010 – Financials – Summary Reports -Directors' emoluments, pension benefits and interests in shares’ , http://www.centrica.com/files/reports/2010ar/index.asp?pageid=49

(3) = Guardian.co.uk 23 Nov 2011 ‘UK incomes fall 3.5% in real terms, ONS reveals’, http://www.guardian.co.uk/money/2011/nov/23/uk-household-earnings-fall?commentpage=last#end-of-comments(including people in part-time jobs, fall is 4.5% including inflation – a 0.5% rise minus 4.5% inflation)

(4) = Office for National Statistics ‘2011 Annual Survey of Hours and Earning -Median full-time gross annual earnings’, http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/ashe-results-2011/ashe-statistical-bulletin-2011.html#tab-Annual-earnings

(5) = Bank of England Annual Report 2010 - Remuneration of Governors, Directors and MPC members, http://www.bankofengland.co.uk/publications/annualreport/2010/renumeration2010.pdf (page 40 under sub-heading ‘Other senior executives’)

(6) = See (2) above

(7) = Centrica – Governance - Aligning rewards with results  - Remuneration mix', http://www.centrica.com/files/reports/2010ar/index.asp?pageid=54 (shows salary makes up only about 20% of executives total annual payments)

(8) = guardian.co.uk 02 Dec 2011 ‘Big six energy firms face fresh accusations of profiteering’, http://www.guardian.co.uk/business/2011/dec/02/energy-firms-accusations-profiteering-electricity

(9) = guardian.co.uk 19 Oct 2011 ‘Fuel poverty 'will claim 2,700 victims this winter'’, http://www.guardian.co.uk/money/2011/oct/19/fuel-poverty-2700-victims-winter

(10) = guardian.co.uk 21 Jul 2011 ‘MP attacks Hague over review of arms sales to Arab regimes’, http://www.guardian.co.uk/politics/2011/jul/21/uk-arms-sales-middle-east , ‘Senior MPs have delivered a severe rebuke to the government over its approval of the sale of a wide range of arms, including sniper rifles, machine guns and "crowd control goods" to countries in the Middle East and north Africa……….Britain supplied the weapons despite official guidelines stating that exports of equipment that could be used for internal repression must be blocked. In a damning report earlier this year, the Commons arms export controls committees demanded an urgent review of exports to "authoritarian regimes worldwide"………..They referred specifically to the Mubarak and Gaddafi regimes in Egypt and Libya, to Bahrain, Syria, Yemen and Saudi Arabia. Observers said military trucks sent by the Saudis to help suppress demonstrations in Bahrain were British.’

(11) = Guardian 07 Jul 2011 ‘National Audit Office challenges £6bn project to build aircraft carriers’,http://www.guardian.co.uk/uk/2011/jul/07/nao-report-aircraft-carriers-navy

(12) = guardian.co.uk  11 Jul 2011 ‘David Cameron 'prevented independent watchdog seeing aircraft carrier papers'’,http://www.guardian.co.uk/uk/2011/jul/11/david-cameron-aircraft-carriers

(13) = Channel 4 News 07 Jul 2011 ‘Guardian 07 Jul 2011 ‘Full fact check : the real cost of cancelling aircraft carriers’http://blogs.channel4.com/factcheck/factcheck-the-real-cost-of-cancelling-aircraft-carriers/7210; ‘In 2007, the Labour government decided to build two 65,000-ton Queen Elizabeth-class aircraft carriers at an estimated cost of £3.65bn….But since then, costs have spiralled dramatically, with the projected outlay now thought to be £6.24bn for just one fully operational carrier, the Queen Elizabeth…..The second ship – the Prince of Wales – will be built, but left in a state of “extended readiness”, meaning that fighter planes won’t be able to launch from or land on its deck…..It gets worse: the NAOnow thinks the eventual bill for the programme “will significantly exceed £10 billion”.’

(14) = Guardian 29 Nov 2011 ‘MPs warn Royal Navy's carriers will be costly, late, and of limited use’, http://www.guardian.co.uk/uk/2011/nov/29/royal-navy-carriers-impaired-use-public-accounts-committee ; government admits one carrier to be mothballed on construction in 2016, one to have no planes on it till 2020, when it will have only 6, raised to 12 in 2023