Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Aditya Chakrabortty comments on how massive amounts of wealth are both being siphoned out of our social systems, and used to buy the politicians who facilitate those transfers:

(A)t root, the Panama Papers are not about tax. They’re not even about money. What the Panama Papers really depict is the corruption of our democracy.

Following on from LuxLeaks, the Panama Papers confirm that the super-rich have effectively exited the economic system the rest of us have to live in. Thirty years of runaway incomes for those at the top, and the full armoury of expensive financial sophistication, mean they no longer play by the same rules the rest of us have to follow. Tax havens are simply one reflection of that reality. Discussion of offshore centres can get bogged down in technicalities, but the best definition I’ve found comes from expert Nicholas Shaxson who sums them up as: “You take your money elsewhere, to another country, in order to escape the rules and laws of the society in which you operate.” In so doing, you rob your own society of cash for hospitals, schools, roads…

But those who exited our societies are now also exercising their voice to set the rules by which the rest of us live. The 1% are buying political influence as never before.
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Hirschman argued that citizens could protest against a system in one of two ways: voice or exit. Fed up with your local school? Then you can exercise your voice and take it up with the headteacher. Alternatively, you can exit and take your child to a private school.

In Britain and in America, the super-rich have broken Hirschman’s law – they are at one and the same time exercising economic exit and political voice. They can have their tax-free cake and eat it.

- Meanwhile, Jared Bernstein offers new evidence that tax cuts for the rich bear no relationship to economic development. And David Lawder reports on what looks to be a start in developing international standards to rein in tax evasion, while Rajesh Makwana points out that a global tax body may be needed to overcome corporate resistance at the national level in developed countries.

- Richard V. Reeves, Edward Rodrigue and Elizabeth Kneebone write about the multiple dimensions of poverty and inequality which put people at a fundamental disadvantage in seeking social inclusion. And Dave Lieber laments the use of the criminal justice system to lock offenders into perpetual debt servitude.

- Finally, Thomas Walkom writes that a time of low oil prices and reduced public revenues is exactly the point when it makes sense to implement consumer-level carbon pricing.