Thursday, October 04, 2007

Conservatism and the Offshore Aristocracy

In a welcome article in The First Post, Phillip Blond argues that capitalism in its current form is failing to deliver affluence for all. Conservatives in the UK should now be supporting wealth redistribution from the asset rich to the asset poor. (It is a theme that has been taken up on the other side of the Atlantic too -- with commentators from both the left and the right calling for change.) Referring to the situation in Britain, the world’s largest tax haven, Blond says:

Conservatives should, however, go further and lighten the heavy taxes imposed on wage-earners by ending the disgrace of British sponsored offshore tax havens and the huge losses they create for the public purse.

Citing former Federal Reserve Chairman Alan Greenspan’s recently expressed concerns that capitalism will lose its public acceptability if it fails to deliver more equitable outcomes, Blond suggests that true conservatism is incompatible with contemporary capitalism with its tendency towards winner-takes-all monopolies.

Conservative thinking, in Europe and elsewhere, remains blinkered about how tax havens and harmful tax policies, especially tax concessions aimed at the super-rich and business donors to political parties, distort markets and exacerbate wealth inequality. The same applies to Gordon Brown’s government, which Blond rightly condemns for being captive to “a tax haven culture for the offshore aristocracy.”

Conservatives also need to think more rigorously about how deeply corrupted contemporary capitalism has become in response to the growth of offshore tax havens. Offshore special purpose vehicles are not just used for tax dodging. Insider trading, market rigging, disguising risk, false accounting, trade mispricing, illicit political donations, and a host of other corrupt practices are routinely transacted through opaque structures in shady places like Jersey, Guernsey and the Isle of Man. Richard Brooks, another commentator, touches on this in another fine piece in the same edition.

Conservative politicians are not alone in turning a blind eye to the damage caused by tax havens, but true conservatism is based upon values of upholding the integrity of public institutions and democracy. It is heartening to see such values being asserted publicly.

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