Nick Cohen in The Guardian
Donald Trump’s tax affairs are as nothing compared to those of the great global corporations
Keeping it offshore: Jost Van Dyke in the British Virgin Islands, a tax haven for the world’s rich. Photograph: Alamy
Donald Trump is offering himself as president of a country whose federal income taxes he gives every appearance of dodging. He says he is fit to be commander in chief, after avoiding giving a cent more than he could towards the wages of the troops who must fight for him. He laments an America where “our roads and bridges are falling apart, our airports are in third world condition and 43 million Americans are on food stamps”, while striving tirelessly to avoid paying for one pothole to be mended or mouth to be filled.
Men’s lies reveal more about them than their truths. For years, Trump promoted the bald, racist lie that Barack Obama was born in Kenya and, as an unAmerican, was disqualified from holding the presidency. We should have guessed then. We should have known that Trump’s subconscious was trying to hide the fact that he was barely an American citizen at all.
He would not contribute to his country or play his part in its collective endeavours. Like a guest in a hotel who runs off leaving the bill, Trump wanted to enjoy the room service without paying for the room. You should never lose your capacity to be shocked, especially in 2016 when the shocking has become commonplace. The New York Times published a joint piece last week by former White House ethics advisers – one to George W Bush and one to Barack Obama, so no one could accuse the paper of bias. They were stunned.
No president would have nominated Trump for public office, they said. If one had, “explaining to the senate and to the American people how a billionaire could have a $916m ‘loss carry-forward’ that potentially allowed him to not pay taxes for perhaps as long as 18 years would have been far too difficult for the White House when many hard-working Americans turn a third or more of their earnings over to the government”.
Trump’s bragging about the humiliations he inflicts on women is shocking. Trump’s oxymoronic excuses about his “fiduciary duty” to his businesses to pay as little personal tax as he could are shocking. (No businessman has a corporate “fiduciary duty” to enrich himself rather than his company.) Never let familiarity dilute your contempt.
And yet looked at from another angle, Trump is not so shocking. You may be reading this piece online after clicking on a Facebook link. If you are in Britain, the profits from the adverts Facebook hits you with will be logged in Ireland, which required Facebook to pay a mere €3.4m in corporate taxes last year on revenues of €4.83bn . If you are reading on an Apple device, Apple has booked $214.9bn offshore to avoid $65.4bn in US taxes. They are hardly alone. One recent American study found that 367 of the Fortune 500 operate one or more subsidiaries in tax havens.
Trump may seem a grotesque and alien figure, but his values are all around you. The Pepsi in your hand, the iPhone in your pocket, the Google search engine you load and the Nike trainers you put on your feet come from a tax-exempt economy, which expects you to pick up the bills.
The short answer to Conservatives who say “their behaviour is legal” is that it is a scandal that it is legal. The long answer is to invite them to look at the state of societies where Trumpian economics have taken hold. If they live in Britain or America, they should not have to look far.
The story liberal capitalism tells itself is heroic. Bloated incumbent businesses are overthrown by daring entrepreneurs. They outwit the complacent and blundering old firms and throw them from their pinnacles. They let creative destruction rip through the economy and bring new products and jobs with it.
If that justification for free-market capitalism was ever true, it is not true now. The free market in tax, it turns out, allows firms to move offshore and leave stagnant economies behind. Giant companies are no longer threatened by buccaneering entrepreneurs and innovative small businesses. Indeed, they don’t appear to be threatened by anyone.
The share of nominal GDP generated by the Fortune 100 biggest American companies rose from 33% of GDP in 1994 to 46% in 2013, the Economist reported. Despite all the fuss about tech entrepreneurship, the number of startups is lower than at any time since the late 1970s. More US companies now die than are born.
For how can small firms, which have to pay tax, challenge established giants that move their money offshore? They don’t have lobbyists. They can’t use a small part of their untaxed profits to make the campaign donations Google and the other monopolistic firms give to keep the politicians onside.
John Lewis has asked our government repeatedly how it can be fair to charge the partnership tax while allowing its rival Amazon to run its business through Luxembourg. A more pertinent question is why any government desperate for revenue would want a system that gave tax dodgers a competitive advantage.
What applies to businesses applies to individuals. The tax take depends as much on national culture as the threat of punishment, on what economists call “tax morale”.
No one likes paying taxes, but in northern European and North American countries most thought that they should pay them. Maybe I have lived a sheltered life, but I have no more heard friends discuss how they cheat the taxman than I have heard them discuss how they masturbate. If they cheat, they keep their dirty secrets to themselves. Let tax morale collapse, let belief in the integrity of the system waver, however, and states become like Greece, where everyone who can evade tax does.
The surest way to destroy morale is to make the people who pay taxes believe that the government is taking them for fools by penalising them while sparing the wealthy.
Theresa May promised at the Conservative party conference that “however rich or powerful – you have a duty to pay your tax”.
I would have been more inclined to believe her if she had promised, at this moment of asserting sovereignty, to close the British sovereign tax havens of the Channel Islands, Isle of Man, Bermuda and the British Virgin and Cayman Islands.
But let us give the new PM time to prove herself. If she falters, she should consider this. Revenue & Customs can only check 4% of self-assessment tax returns. If the remaining 96% decide that if Trump and his kind can cheat, they can cheat too, she would not be able to stop them.
Whenever an elite is unjust, anywhere in the world, from South Africa to Chile to Saudi Arabia, it’s been the Conservative Party that has bravely fought them by selling them weapons and inviting their leaders to dinner.
Mark Steel in The Independent
What a welcome message from Theresa May, that she’s sick of the elite. The Cabinet all applauded, as you’d expect; although 27 of them are millionaires, that doesn’t make them elite – they all got their money by winning it on scratch cards.
The Prime Minister was only abiding by a change to international law that states everyone who makes a public speech now has to insist they can’t stand the “elite”. Donald Trump – a man whose background is so modest that, in one of his castles, he has to go outside to use the moat – hates the elite. Iain Duncan Smith with his modest 15-up 15-down Tudor mansion is fed up with the elite, too. Boris Johnson stands up against the elite, because his background was so humble that one of the kids at his primary school had an imaginary friend who didn’t have his own valet.
This year, the Queen will probably start her Christmas speech by saying, “My husband and I are sick to death of the elite. When one has been required to reign as a working-class monarch, one rather views these elite types with sufficient disdain to get the right hump.”
But May was more specific. She singled out the “Liberal Metropolitan Elite,” for ruining our lives.
You can understand why, because these are the very people who have spoilt everything with their liberal ways. There’s Topshop’s Philip Green, who wasted millions so he could complete a course as a human rights lawyer and get his hipster beard trimmed. Mike Ashley, condemned for his treatment of staff at Sports Direct, has “homeopath” written all over him.
There’s Alan “cycle lane” Sugar, who, if I remember right, turned down his knighthood as a protest against the number of toads that get run over. And the most powerful man in the media is Rupert Murdoch, who publishes newspapers full of feminism and media studies.
One way we must stop these liberals, she insisted, is prevent human rights lawyers from haranguing the army. She’s right there: if there’s one area in which human rights lawyers have absolutelyno need to investigate, it’s war. Whoever heard of an army that isn’t careful to look after human rights? They should concern themselves with real human rights culprits, such as florists.
These abuses have come about because, for 35 years, British life has been relentlessly liberal. It started with Margaret Thatcher, who shut down the mines so they could be replaced by documentaries on BBC4 about Tibetan dance. And she brought in the Poll Tax, but only because she was convinced this would lead to wider ownership of African wood carvings bought from antique shops in Notting Hill.
Then we had liberal Tony Blair with his liberal invasion of Iraq, in which he insisted the air force only used Fairtrade depleted uranium. Now, at last, we’re all sick of being ruled by these elite liberals.
Conservative figures such as Amber Rudd have this week been forced to ask “can we at last talk about immigration?” Thanks to the elite, who can think of a single occasion in the last six months when anyone in public eye has mentioned immigration?
There are some programmes on radio or television that simply refuse to discuss the issue. For example, during a first-round clash in the Swedish open snooker championship on Eurosport, a whole four minutes went by on the commentary without mention of how you can’t move in Lincolnshire for Bulgarians. And two minutes passed by without any talk of immigration during the two-minute silence on Remembrance Day at the Cenotaph. And if we can’t talk about protecting our borders at that time when can we discuss it?
The idea that we should welcome immigration is a perfect example of how the Liberal Metropolitan Elite operates, because foreigners are alright for some with their cheap nannies but down-to-earth types, bless them, can’t stand people who have the nerve to move over here and fix radiators or bed-bath the elderly.
This week is the 80th anniversary of the Battle of Cable Street, when thousands of people assembled in East London to prevent the British Union of Fascists from marching through a Jewish area. I wonder who was in the crowds that day, linking arms to defy the supporters of Hitler? It can’t have been the working class, since they must all have said “it’s alright for the elite, but these Jews come over here and lower our wages.” So it must have been the Liberal Metropolitan Elite who took on the fascists, by hurling antique carriage clocks at them after distracting them with an avant-garde contemporary dance evening.
Theresa May seems ambitious, because she said she’s going to battle an “international elite”. So they’re global, these elites, and they can only be fought by determined earthy salt-of-the-earth types such as Anna Soubry. Jeremy Hunt, for example, looks exactly like someone who’s just come off an eight-hour shift driving a forklift truck carrying tomatoes round a warehouse for Lidl, shouting “there you go sweetheart, stack them up while I sort out these elite doctors giving it all that about weekends”.
If there’s one thing we know about the Conservative Party, it’s the natural home for common folk who want to take on the international elite.
Whenever an elite is unjust, anywhere in the world, from apartheid South Africa to military Chile or patriarchal Saudi Arabia, it’s been the Conservative Party that has bravely fought them by selling them weapons and inviting their leaders to dinner. Just like the poor-but-happy folk down any council estate always keep a door open for a military dictator, the little darlings.
George Monbiot in The Guardian
What if democracy doesn’t work? What if it never has and never will? What if government of the people, by the people, for the people is a fairytale? What if it functions as a justifying myth for liars and charlatans?
There are plenty of reasons to raise these questions. The lies, exaggerations and fearmongering on both sides of the Brexit non-debate; the xenophobic fables that informed the Hungarian referendum; Donald Trump’s ability to shake off almost any scandal and exposure; the election of Rodrigo Duterte in the Philippines, who gleefully compares himself to Hitler: are these isolated instances or do they reveal a systemic problem?
Democracy for Realists, published earlier this year by the social science professors Christopher Achen and Larry Bartels, argues that the “folk theory of democracy” – the idea that citizens make coherent and intelligible policy decisions, on which governments then act – bears no relationship to how it really works. Or could ever work.
Voters, they contend, can’t possibly live up to these expectations. Most are too busy with jobs and families and troubles of their own. When we do have time off, not many of us choose to spend it sifting competing claims about the fiscal implications of quantitative easing. Even when we do, we don’t behave as the theory suggests.
2.8 million voters punished Al Gore for the floods and droughts of 2000 – ironic, given his position on climate change
Our folk theory of democracy is grounded in an Enlightenment notion of rational choice. This proposes that we make political decisions by seeking information, weighing the evidence and using it to choose good policies, then attempting to elect a government that will champion those policies. In doing so, we compete with other rational voters, and seek to reach the unpersuaded through reasoned debate.
In reality, the research summarised by Achen and Bartels suggests, most people possess almost no useful information about policies and their implications, have little desire to improve their state of knowledge, and have a deep aversion to political disagreement. We base our political decisions on who we are rather than what we think. In other words, we act politically – not as individual, rational beings but as members of social groups, expressing a social identity. We seek out the political parties that seem to correspond best to our culture, with little regard to whether their policies support our interests. We remain loyal to political parties long after they have ceased to serve us.
Of course, shifts do happen, sometimes as a result of extreme circumstances, sometimes because another party positions itself as a better guardian of a particular cultural identity. But they seldom involve a rational assessment of policy.
The idea that parties are guided by policy decisions made by voters also seems to be a myth; in reality, the parties make the policies and we fall into line. To minimise cognitive dissonance – the gulf between what we perceive and what we believe – we either adjust our views to those of our favoured party or avoid discovering what the party really stands for. This is how people end up voting against their interests.
We are suckers for language. When surveys asked Americans whether the federal government was spending too little on “assistance to the poor”, 65% agreed. But only 25% agreed that it was spending too little on “welfare”. In the approach to the 1991 Gulf war, nearly two-thirds of Americans said they were willing to “use military force”; less than 30% were willing to “go to war”.
Even the less ambitious notion of democracy – that it’s a means by which people punish or reward governments – turns out to be divorced from reality. We remember only the past few months of a government’s performance (a bias known as “duration neglect”) and are hopeless at correctly attributing blame. A great white shark that killed five people in July 1916 caused a 10% swing against Woodrow Wilson in the beach communities of New Jersey. In 2000, according to analysis by the authors 2.8 million voters punished the Democrats for the floods and droughts that struck that year. Al Gore, they say, lost Arizona, Louisiana, Nevada, Florida, New Hampshire, Tennessee and Missouri as a result – which is ironic given his position on climate change.
The obvious answer is better information and civic education. But this doesn’t work either. Moderately informed Republicans were more inclined than Republicans with the least information to believe that Bill Clinton oversaw an increase in the budget deficit (it declined massively). Why? Because, unlike the worst informed, they knew he was a Democrat. The tiny number of people with a very high level of political information tend to use it not to challenge their own opinions but to rationalise them. Political knowledge, Achen and Bartels argue, “enhances bias”.
Neoliberalism – the ideology at the root of all our problems
Direct democracy – referendums and citizens’ initiatives – seems to produce even worse results. In the US initiatives are repeatedly used by multimillion-dollar lobby groups to achieve results that state legislatures won’t grant them. They tend to replace taxes with user fees, stymie the redistribution of wealth and degrade public services. Whether representative or direct, democracy comes to be owned by the elites.
This is not to suggest that it has no virtues; just that those it does have are not those we principally ascribe to it. It allows governments to be changed without bloodshed, limits terms in office, and ensures that the results of elections are widely accepted. Sometimes public attribution of blame will coincide with reality, which is why you don’t get famines in democracies.
In these respects it beats dictatorship. But is this all it has to offer? A weakness of Democracy for Realists is that most of its examples are drawn from the US, and most of those are old. Had the authors examined popular education groups in Latin America, participatory budgets in Brazil and New York, the fragmentation of traditional parties in Europe and the movement that culminated in Bernie Sanders’ near miss, they might have discerned more room for hope. This is not to suggest that the folk theory of democracy comes close to reality anywhere, but that the situation is not as hopeless as they propose.
Persistent, determined, well-organised groups can bring neglected issues to the fore and change political outcomes. But in doing so they cannot rely on what democracy ought to be. We must see it for what it is. And that means understanding what we are.