Vinoth Ramachandra

Collateral Casualties

Posted on: August 26, 2011

Both the British and German treasuries have struck deals this month with the Swiss government to tax their citizens’ hidden accounts in Switzerland’s globally harmful banking system. However, the identities of these account holders will not be disclosed, allowing Swiss bankers to maintain their bizarre boasts of “privacy” and “confidentiality”. The agreement with Germany sees the latter accepting a paltry $2.8 billion from the Swiss banks said to be holding an estimated $276 billion of Germans’ undeclared wealth. The Swiss authorities will in future tax Germans at the rate of 26 per cent on their interest from their accounts and hand that money over to the German government. Similarly with UK citizens.

The vast majority of nations whose public wealth is siphoned off to tax havens by their political masters, drug barons and business elites have no such bargaining powers. The Tax Justice Network and Christian Aid have been advocating for years an end to banking secrecy in offshore tax havens such as Switzerland, Lichtenstein, Cayman Islands and Bahamas. The unilateral German and British actions have undermined that painstaking work. The Tax Justice Network estimates assets held offshore total $11.5 trillion- which if taxed could yield revenues in excess of $225 billion. But leave aside taxation; these havens are vast pools of illicit funds and make the fight against corruption, money-laundering and international crime so much harder.

We are treated to the spectacle of European and American governments thrown into a panic over their budget deficits and taking out their fears on their citizens who are least responsible for the problem: the urban poor and the lower middle-classes who are being subjected to crippling cuts in health care,  education and the provision of public services. The super-rich are allowed to get away with tax evasion on a gigantic scale; and immediately cry “foul” if the rulers whose palms they grease even suggest a rise in taxes. (Warren Buffet is a rare exception to this rule!).

I am often reminded of the late John Kenneth Galbraith’s memorable words, written back in 1977: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich. So it was in the Ancien Regime when reform from the top became impossible, revolution from the bottom became inevitable.”

How refreshing to turn to Professor Zgymunt Bauman’s recent book, suggestively titled Collateral Damage: Social Inequalities in a Global Age.  Bauman is one of the most original and insightful social thinkers of our time. Even at the age of eighty five his output is prolific and his prose still clear, trenchant and thought-provoking. He lives in his retirement near Bradford, a city in the north of England that has repeatedly witnessed bouts of rioting and inter-ethnic violence. Writing well before the most recent spate of riots in London and other English cities, Bauman notes that in Bradford 40 per cent of youngsters live in families without a single person who has a regular job, and one in ten young people already have police records. Such a statistical correlation, he points out, “does not in itself justify the reclassification of poverty as a criminal problem; if anything, it underlines the need to treat juvenile delinquency as a social problem.” (NB: David Cameron and others of the ruling class in Britain were quick to label the recent acts of arson and looting as a “law and order problem”, as if this settled the matter). For Bauman, there are social roots which lie “in a combination of the consumerist life philosophy propagated and instilled under the pressure of a consumer-oriented economy and politics, the fast shrinking of life-chances available to the poor, and the absence for a steadily widening segment of the population of realistic prospects of escaping poverty in a way that is socially approved and assured.”

The term “collateral damage” has recently been added to the vocabulary of military forces to refer to the unplanned, unintended (but not necessarily, unanticipated) effects of armed interventions, effects that are damaging, harmful, and costly in human terms. Many military commanders retrospectively exonerate themselves by saying that while such risks were noted they were worth taking, because one “cannot make an omelette without breaking eggs”. What is glossed over in such accounts is someone’s usurped power to decide which are the eggs to be broken and who gets to savour the omelette (certainly not the broken eggs). Thinking in terms of collateral damage tacitly assumes an already existing inequality in people’s rights and life chances. The situation of youth in Bradford, Bauman suggests, “is a collateral casualty of profit-driven, uncoordinated and uncontrolled globalization.”

The richest 10 per cent of adults worldwide own 85 per cent of global household wealth, with the richest 2 per cent among them capturing more than half that wealth. London is the most unequal city in the world. The financial brokers, hedge fund managers and corporate Fat Cats routinely pilfer and pillage on a scale that dwarfs whatever happened recently in English cities. But they are never hauled before magistrates’ courts for summary sentencing. Nor are they even publicly rebuked. Until, of course, like a certain media tycoon, they fall out of favour with their political cronies.

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18 Responses to "Collateral Casualties"

The recent ‘maximum punishment’ system given to some ‘rioter’ on London cities had 18 months jail for a case of fresh water and 9 months for a man of 49 for ‘removing’ some donuts form an already broken shop [ he was not loosing but took things when passing by]

how much do we then have to demand justice against those who have robbed billions of $ s form the public under this neo-liberal finical system?

[i think this harsh over reaction is partly due to the fact PM, Mayor and judges had to cancel their tropical holidays and return to work

I asked an afro uk young boy at Victoria station what he thought

‘During every summer when all the rich people of the world come and display their luxuries in Lon , we are bitterly reminded how pathetic our lives as we cant even own a cheap cell phone that is advertised to our mind 24/7′

i thought sociologically he was on target

evangelical leaders in countries like UK, Germany, Swiss and US need to do much more than this if the gospel to become an attractive option for humanity

I am bit surprised (and a bit disappointed) that in Vinoth’s previous post ‘On Integrity’ on John Stott’s life there have been so far 33 comments, and on this blog post on a topic that is more current and concrete, only one other comment posted. Maybe there is a ‘stunned silence’ in cyber-space after reading this post. And, indeed, everybody is free to comment on whatever blog post and its relevance.

I just want to add my comment to this blog post.

I want to recommend the work that Christian Aid (CA) on Tax Justice. In particular I would recommend the writings of David McNair from CA-UK and also please check out http://www.endtaxhavensecrecy.org. The big FTSE companies in the UK do not publish their profits on a country-by-country basis. They only publish overall annual profits. The work of Christians and civil society in general is to get the UK government (and other Western governments) to pass legislation that will force big cooperations to publish what profits they are making in each of their country operations, and then can also be held accountable for what taxes they are paying (and not paying in each country).

I believe getting involved in the struggle to bring about more transparency and accountability in international business dealings is a far more important missional issue than say the distribution of bibles divorced from political and social context.

I visited Switzerland for the first time in 2004, to attend a training workshop on cross-cultural issues in Christian mission. At the meeting, I publicly raised the issue of Switzerland’s banking secrecy policy (thinking this was a relevant cross-cultural issue), and I was politely asked to drop the discussion as the focus of the workshop was only on inter-personal cross-cultural issues. Strange…

I live with continued puzzlement, why, large global missionary organizations make boisterous proclamations of their unstoppable agency in being able to fulfill the Great Commission of evangelizing the world by some arbitrary date (the year 2000, or now, by 2020) but go into numb denial when they are asked to exercise that same agency in bringing about the right ordering of the economic and political life our world. Strange…

What a load of crap. I would love to hear an explanation of how exactly investmend bankers pilfer and pillage.

Well, Chris, if you really want to know, I suggest you read the history of the big merchant banks. A good place to begin is Jeff Madrick’s recent book, Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present (Knopf, 2011)

I have also written about Susan George, Whose Crisis, Whose Future?: Towards a Greener, Fairer, Richer World (Polity, 2010) in an earlier post.

[...] between wonderful hipster music and a quiet discussion over coffee (or preferably whiskey) about tax policy or the competing faith influences at work in the two major British political parties, I’ll [...]

A large majority of the rich are so because of what society gives them in terms of opportunity, inheritance and sheer luck. However the overall narrative is still of how the rich ‘deserve’ their wealth and how we are all in some sense ‘self made.’ This is pure hyper individualism and a very clever and tempting lie. Why do worship these rich cheats? The idolatry involved in this is a horror that needs to be named and shamed.

The tragedy in the US, and much of the world, is that the message is controlled by the global corporations who benefit from the current situation. They keep it simple, and repeat often: Regulations hurt jobs. Taxes on the rich stifle growth. Government is not the solution, Government is the problem.

Even intelligent, well-intention people repeat the idea that “wealth distribution through taxation is a form of socialism,” or “cutting defense spending would risk our national security.”

Whatever you think of the tea party, the money behind is has done an amazing job of serving up bite-sized slogans anyone can understand and repeat. Is there anyone who has done a similar job of messaging on behalf of tax justice and surrounding economic issues?

I also find myself wondering how the church in America has been taken captive by economic policies that are so clearly contrary to God’s heart for the poor, and wondering where the strong voices are that would explain, object, and advocate for a different way forward. There are voices in the church speaking on behalf of the poor, but none that I can find speaking in a public way about the corporate hijacking of our economic and political systems.

Carol, I cannot agree with you more.

Figures published yesterday show that one in six Americans live in poverty, an all-time high. The mantra regularly trumpeted is, as you point out, that the rich create jobs and so must not be taxed. But the rich are not creating jobs. Mergers and acquisitions force people out of work. Global capital goes looking for the cheapest labour. And why do business leaders follow Obama on his visits to India and elsewhere? Why is David Cameron in Russia right now? Capitalism today is not about free enterprise. It is about wanting a “nanny state” to open up foreign markets, subsidize the research of private corporations, and to pass on the risks of one’s business to the general public.

But, as you say, where are the Christians in the US who point out these facts of life in the media, the schools, and on the streets?

India which boasts of 69 resident Billionaires have much more debilitating poverty in the Indian state of Madhya Pradeh than the war ravaged African country Congo. In fact 9 North/Central Indian states have the same level of poverty comparable with the entire 26 sub Saharan African countries put together….

After reading your article, I remember reading an article elsewhere, made me wonder, What would be your view of this article

http://swaminomics.org/?p=2005

Tia,

This may not be a place to out in a reply to the Swaminomics link but…

Over the years I’ve become somewhat wary and sometimes weary of SS Aiyer. What really ticked me was his defense of the Caste system as India’s Social Capital which will bring many out of poverty in one of his weekly ruminations, pretty much like the one you’d sent.

This guy also happens to be an establishment mouthpiece way too often….

Here too the thrust of his claims (black money returning as white etc) are nothing new or unknown. But I do am taken aback as to his brazen claim of Swiss banks and other banking heavens not attracting black money anymore. Does he mean to say the banks pay <1% interests to Indian depositors only? If no why should the German and British government feel the itch to have a separate agreement as Vinoth points out? I am also really surprised as to how someone with his stature/learning can hope to hoodwink a million readers into believing that the 1% interest (assuming his claim is true) is all the Swiss banks gives its depositors- the sole return!!! This is surely the most inept apology for Swiss Banks and other tax heavens.

As far as I know the Indian govt had taken no interest in the offer by German Intelligence to divulge the names of Indian depositors which it had obtained from a bank employee. What then is this drama of India signing an agreement* inducing a flight of money? Clearly this guy is up to no good.

I know of no Indian Economists who takes hims seriously. My knowledge is of course very limited.
________
*not kept myself up to date about current news these days but I doubt if Indian govt will sign such a pact and even if it does, I am sure it will never bother to even pursue.

what does it profit a man if he gains the whole world but loses his soul?

I just want to agree with the comment made by Carol Kuniholm. I am deeply troubled by how so many of American Christian friends throw at me well-rehearsed catch-phrases that have no intellectual depth, but deflect the conversations away from the core issue of God’s justice for the poor. I can give examples but I’ll refrain.

Jim Wallis of Sojourners stepped up to this today in a blog post “God and Class Warfare.” http://blog.sojo.net/2011/09/22/god-and-class-warfare/ He says “Well, let’s be clear: There really is a class war going on, and the upper class is winning.”

He quotes the recent IMF study that found “the widening income gap is bad for economic recovery. Growing income inequality actually hinders economic growth, and reducing economic inequality actually helps spur the economy, the report found. The IMF study concluded that a 10 percent decrease in inequality actually increased the expected economic growth by 50 percent. “Sustainable economic reform,” the authors write, “is possible only when its benefits are widely shared.”

I’m reminded of Walter Brueggemann’s Journey to the Common Good: we can live in the pharoah’s nightmare kingdom of exploitation and paranoid protection of unjust wealth, or we can move toward the common good, God’s kingdom of generosity, justice, and peace that comes when all are welcome and cared for.

By the way, Vinoth, I just posted a comment about your post on the Sojo site. I’d love to see your global perspective added to the often circular, unproductive discussion that is taking place between conservative and progressive Christians.

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