World without borders
Blitzing Mannheim last Tuesday in advance of a meeting the following morning, I soon tired of the centre of town with its Water Tower, Paradeplatz and street names like P3 and Q5. Settling into my hotel room, I turned on the TV. Confronted by Mary Poppins dubbed into German – at least in British war movies they made the Germans speak English with a middle-European accent - I decided to chance my luck with the radio embedded in the dashboard next to the bed.
The radio was an experience in itself, bringing back memories of the car radios of my childhood. By rotating a knob a red plastic marker glided along the horizontal dial – there were no pre-tuned stations. Trying FM first and fully expecting to be blasted by Beethoven or Bach at every stroke of the knob, the only music I hit upon was a Turkish pop channel. My opinion of Turkish music was formed in the era before public voting in the Eurovision Song Contest when Turkish singers were considered national heroes if they scored any points at all; evolution definitely rid Turks of the music gene. But it was medium wave where the fun really started. As I moved between wavelengths in the hope of colliding with the BBC World Service, I listened to the whistles and wooshes as stations slowly appeared out of the audio fog and then receded again into obscurity. It occurred to me that seventy years ago across that embattled continent many would have searched for Alvar Lidell broadcasting from London with the only reliable news of the day, as Goebbels’s propaganda machine churned out its incessant lies.
In fact, as competitors from CNN to Sky to Fox entered the market, the BBC always managed to retain its name as the world’s number one reliable news source in the broadcast media. A quarter of a century after leaving the borders of that green and pleasant land, the BBC is still for me, in the words of WH Auden, “My north, my south, my east and west”.
However, a foul wind may be blowing through the Beeb’s corridors. There was the mildest hint at the spectacular opening ceremony of the London Olympics last weekend. In a move that would have done justice to the Beijing Olympics four years ago, the allegedly Marxist director Danny Boyle managed to ignore the Empire (too insulting to some) and World War II (too insulting to one) even though, thanks to the former, London is today the most truly cosmopolitan city in the world and, thanks to the latter, it was not difficult to find a site for the Olympics in East London since the Luftwaffe had done a pretty good demolition job seven decades earlier. Meanwhile, Boyle took neatly choreographed digs at some British sacred cows – the Queen and the BBC among them.
Few non-Brits or those under 40 would have paid any attention to a flash of legendary BBC weather forecaster Michael Fish from 1987 publicly informing a woman who had called that day that she need not worry about a rumoured Hurricane on its way to Britain - you see, there had not been a Hurricane in Britain for some 300 years. Well, when I woke up the following morning and ventured outside, I discovered that a tree had taken root in my neighbour’s roof and the street was littered with debris. Miraculously, the Hurricane – hitting around 3am in the morning - had killed nobody.
The BBC’s continuing fall from papal infallibility came home to me a few weeks ago when they ran an item on the news declaring that, according to a new study, at least $21 trillion of assets are being managed in tax havens. The item went on to explain that this was bigger than the US and Japanese economies combined and this tax black hole could solve lots of the world’s economic problems. We were told that the study was written by James Henry, former Chief Economist of McKinsey and Co for the influential Tax Justice Network. And to make sure that the BBC would be viewed as thorough, they even interviewed a British tax expert who said that, while he could not disprove the figures, they seemed very big (rocket science collides with taxation once again).
As an international tax geek this item was clearly of real interest to me so, hard-wired with my 20th century education that insists I independently check all facts, I went searching for the influential Tax Justice Network and this important study. Well, the website can best be described as the on-line equivalent of “Behind the wash basins at Waterloo Station”. Getting a real feel for who and what this organization purports to be was not easy (although I think I got there in the end). Most worrying of all, the study “The Price of Offshore Revisited” was not yet available. What was there (after a virtual treasure hunt) was a brief press release which the BBC seemed to have quoted faithfully and mindlessly. Taking a look at the BBC website version of the item, I realised that the tax expert consulted as possible counterweight to the report, had clearly seen even less than the BBC. All he seemed to be saying was – “Blimey, that number is too big to make sense”.
I kept revisiting the site in search of “The Price of Offshore Revisited” until, last week – Eureka! – I found it , albeit off site. Mr Henry’s study was, indeed, interesting reading and he is clearly a serious dude. While he arrives at some interesting conclusions, including that – in the absence of an offshore industry – emerging nations that are currently debtor nations would turn into creditor nations (which, Mr Henry, I don’t think would have a causal effect on credit unless, horror of horrors, exchange restrictions were imposed or, as you seem to discount, material sums found their way back as investment in the source country), his central thesis is something known to everyone – that the amount of tax being avoided or evaded in emerging countries would potentially have a major positive impact on their economies.
I took something else away from this study, however. It is a regular chant of the Libertarians that use of offshores in tax avoidance (as opposed to tax evasion) schemes is highly moral since any diversion of funds from Big Bad Government to private hands will increase the efficiency of the economy. Even leaving aside the specific woes of emerging countries stripped of basic tax revenues it appears, according to the report, that money parked in offshores is generally invested in low-risk investments – if a wealthy investor wants to take risks he is happy to do that in the full view of his government (of which, he might be a member). So, while these trillions of dollars may serve to lower interest rates in the world economy they are essentially crowding out private investment by pension funds, insurance companies etcetera that need low risk investments while depriving the world of much needed risk capital – potential “creative destruction” that Joseph Schumpeter declared so critical to the future of a free market economy.
Overall, the BBC, along with some American news companies that picked up the story at the same time, did a pathetic job here and would have been well served to wait for the report. It is perhaps not a coincidence that the BBC has adopted an American term in recent years: “BREAKING NEWS”. As an expatriate who relies on the BBC, would it be too much to ask that it keep the News WHOLE?