Global Movement Needed to Change 'The Rules' of Inequality

Tax havens are allowing a "tiny global elite" to "extract trillions of dollars" from rich and poor countries alike
by Alnoor Ladha and Thomas Pogge and Firoze Manji

he ancient Mayan civilisation's Long Count calendar ends in December 2012. This fact has sparked debate in recent years about whether our generation was the one that would experience humanity's final days. Whatever your reading of that debate, you certainly don't need to look far today for evidence that the human race is in serious trouble. But amidst all the grim realities, there are also significant signs of hope: signs pointing to new opportunities for positive, lasting change.

In recent years, we saw dictatorships toppled across North Africa and the Middle East. There was hope that nations could chart a common course to tackle climate change. We seemed on the verge of reining in the unchecked greed of the banking system. Back in 2008, America surprised the world by electing a black president to the White House.

Yet cynicism can so quickly fill the space where hope had bloomed. In nations where dictators were toppled, old elites reassert their power. Today, while the warming oceans rise, even the prospect of a global climate plan is beyond the horizon. While there are fewer banks now, they are richer and more powerful than ever before. A black president has been re-elected, but financial elites have never had more of a stranglehold on American priorities.

The greatest hope for progress on such vast challenges is in the democratic impulse now taking shape in many nations. Coordinated movements of ordinary citizens have emerged as a major force from Tahrir Square to Wall Street. Across the world we are seeing millions of ordinary people joining citizen-powered movements, determined to overwhelm the power of entrenched elites. They are harnessing new technologies and social networks and seeing themselves as the agents of change. These movements are still half-formed and often flawed, but they are getting stronger.

Changing the rules

The challenge now is for these new movements to grow, to work together and to focus their energies. Lasting change requires more than overthrowing a dictator or firing a few CEOs. It requires changing the rules themselves - the national and international laws, policies and practices that allow injustices to endure while regimes rise and fall.

The rules as they stand today have created a world in which inequality is vast and growing. The world's 1,226 billionaires have more combined wealth than 3.5 billion people - half the entire planet's population. The richest 10 per cent of the world's population takes 90 per cent of the world's income.

The scale of inequality and poverty can appear overwhelming and unchangeable. Yet it is not inevitable. It is the outcome of active choices by people who make and enforce the rules we all live by: rules about global trade, banking, loans, investment, taxes, working conditions, land, food, health and education. These rules are made by people and people can change them.

Frederick Douglass, a leader of the 19th century abolitionist movement which brought an end to slavery, once said, "Power concedes nothing without a demand". If we want to change rules that have been written by the few and for the few, we must look outside existing power structures to the power of the many. We know from history that when people demand their rights, they can move mountains and change whole systems.

Right now, there is a special moment of opportunity. Throughout the world, citizens have access to information in ways once unimaginable. Affordable technologies are revolutionising our ability to communicate with one another and act collectively. The opportunities for new citizen-powered movements to become catalysts for change have never been greater than today. Powerful elites are losing the structural advantages they once enjoyed of being able to maintain secrecy, restrict information and suppress popular movements.

Offshore tax havens

This month, we are launching a new platform called /The Rules (http://www.therules.org/), to help mobilise action by ordinary citizens around the world to challenge and change the rules - the most basic drivers of inequality and poverty. We have a special focus on organising with people and grassroots movements in countries such as Brazil, India, Kenya and South Africa. We are creating new ways for people to speak up using simple, cheap technologies like basic mobile phones.

The first campaign for /The Rules will target the system of offshore tax havens, starting with one of the biggest and most connected of all, the City of London. Tax havens are the product of rules that have been rigged by powerful corporations, lobbyists, lawyers, bankers, accountants and government officials. They are allowing a tiny global elite to extract trillions of dollars from rich and poor countries alike, starving our nations' treasuries and choking off funds essential for schools, medicines, social programmes and infrastructure.

New research has blown the lid on this secretive shadow economy, with at least $21 trillion estimated to have been stowed away in these tax havens - 10 per cent of all the world's privately held wealth. This is also more than 10 times the total value of development aid given to the world's poorer nations in the past 20 years. The few who benefit from these rigged rules will fight long and hard to preserve them, but they can be defeated.

Rules express and entrench much of the injustice in our world today. But rules can be changed and the opportunity to make those changes has never been greater. Instruments of power once only in the hands of elites are now available to ordinary citizens - and we are beginning to use them. That gives us reason for hope.

This article was written by the founding members of /The Rules and the original version appeared on Al-Jazeera.
http://www.aljazeera.com/indepth/opinion/2012/11/20121126134721926547.html

http://www.therules.org/

Alnoor Ladha is an activist and social entrepreneur. He is a co-founder of The Rules, a citizen powered movement to address the root causes of poverty and inequality. In addition, he is also a Partner and the Head of Strategy at Purpose, an incubator for new types of social movements. In addition, He is also currently a Board Member of Greenpeace International USA.

Having received his PhD in philosophy from Harvard, Thomas Pogge is Leitner Professor of Philosophy and International Affairs at Yale. He is President of Academics Stand Against Poverty (ASAP), an international network aiming to enhance the impact of scholars, teachers and students on global poverty. Pogge is also involved in a team effort toward developing a complement to the pharmaceutical patent regime that would improve access to advanced medicines for poor patients worldwide.

Firoze Manji is the founder and former editor-in-chief of Pambazuka News and founder and former executive director of Fahamu - Networks for Social Justice. He is a visiting fellow at Kellogg College, University of Oxford, and an associate fellow of the Institute for Policy Studies, Washington.

Cabal of Willing Gov'ts Maintain Global Tax Havens

It Takes a Cabal of Willing Governments to Maintain Global Tax Havens
When corporations say what they do to shield profit from taxation is "legal" they're often right. And this is wrong.
by Martin Kirk

Everyone loves to hate a thief. And quite right, too. Google, Amazon and Starbucks – and many more like them – are certainly stealing from the UK and other countries by playing tax systems so aggressively.

But there’s a more important story here that the British MPs and world media are largely missing. In fact, the only ones who haven’t missed it are Google themselves. Matt Brittin, Google’s UK Chief, hit a very important nail on the head when he said, to Channel 4 News this week, “ [Google] plays by the rules set by politicians.”

Leaving aside his motivation to shift the blame, the man is not wrong. The rules of the international tax system do not just let this happen, they actively encourage it.

Tax theft is endemic all over the world. It is organised through an intricate system of tax havens; the PR around it is astonishingly good, as evidenced by the fact that most people have no idea of its scale and can get distracted by the misdeeds of a few bad apples rather than seeing the barrel they came in; and one of the most vibrant and important hubs – the City of London - is sitting right under the noses of the British politicians who are today decrying the corporations who use it.

Tax havens exist solely to help the rich avoid national taxes. They give them a way to opt out of the social contract. Multinationals happily extract profits from countries and then team up with tax havens to avoid paying their share of taxes that make the countries profitable for them in the first place. Without things like the rule of law, and economic and political stability, the market for most products would flounder. All these things cost, and when people steal taxes they are essentially saying, everyone but us should pay.

The scale of the theft is staggering. Somewhere between $21 and $32 trillion is hidden behind the vast walls of tax haven secrecy. That’s the equivalent of one third of all global annual income. Somewhere between 60 and 70% of all international trade flows through them so that profits can be siphoned off untaxed.

The scale alone means tax havens have a material impact on levels of global inequality and poverty. But more insidious is what they actively facilitate. Tax havens are in the background of practically every instance of large-scale corruption and economic crime of the last thirty years. Every corrupt leader, every major arms dealer and drug cartel, as well as most multinational corporations rely on their ‘discretion’ to do business. It’s a morality-blind service industry for the ultra-rich. Forget the 1% - this industry exists largely for the pleasure and benefit of the 0.02%; the 10 million people who ‘own’ the bulk of the $21trillion hidden.

This theft cuts deepest in the poorest countries in the world, that struggle to pay for basic services like education, healthcare, strong justice systems - all the things that make societies more equal and fair.

So as we revel in the shaming of a few bad guys, we should remember that this episode has done nothing more than highlight the symptoms of an endemic global disease. We should be very suspicious of the British Finance Minister, George Osbourne’s seemingly helpful decision to put £150m into the British tax collection authority to help catch corporate theft of this kind. This is the man who, just this year, actively undercut EU efforts to tackle tax havens by signing a bilateral deal with Switzerland that protects the secrecy of tax thieves for a one-off cost of the payment of some back taxes. So before we congratulate him for adding a few sticking plasters with one hand, we should demand answers to why he’s feeding the disease with the other.

If decision makers are serious about tax havens, they should look to the system behind the headlines. For British MPs, that means looking down the road at the City of London and asking questions like, why does the City of London have special exemptions from the Freedom of Information Act? For others, especially the leaders of poorer countries, that means standing together and demanding change at the international level.

Perhaps most importantly, people can start demanding change themselves. Can we really rely on business leaders and politicians to bite the hand that so often feeds them? And as long as one tax haven exists, there will be a place for the corrupt and the greedy to hide the money they steal, so picking them off one by one is never going to work. The only thing to do is change the rules that let all of them exist. The first step is to see the bigger picture.

This post is also appearing on New Left Project today.
http://www.newleftproject.org/

Martin Kirk is director of Global Campaigns Director for /The Rules (http://therules.org/), a new global campaign fighting against inequality and poverty, with a specific aim of highlighting the systemic damage caused by tax havens around the world. To take part, go to www.therules.org. Twitter: @therulesorg

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