Mar 04 2011

Tax havens and the French thinkers

Posted by: Nick Shaxson in: Thoughts

The work of Quesnay and Mirabeau, French economic thinkers who preceded Adam Smith, is an essential part of the ancestry of economics. Here is a quote (hat tip: Jamie Stern-Weiner) from them, which is pertinent.

“The wealthy merchant, trader, banker, etc., will always be a member of a republic. In whatever place he may live, he will always enjoy the immunity which is inherent in the scattered and unknown character of his property, all one can see of which is the place where business in it is transacted. It would be useless for the authorities to try to force him to fulfil the duties of a subject: they are obliged, in order to induce him to fit in with their plans, to treat him as a master, and to make it worth his while to contribute voluntarily to the public revenue.”
Quesnay and Mirabeau, ‘Philosophie rurale’ (1764); cited in Hirschman, ‘The Passions and the Interests’, p. 95

This is an argument about power. Because it’s hard for public authorities to see what the merchants and traders are up to, that puts public servants, representing the public interest, in a subservient position towards market players. Now the rise of disclosure in corporate reporting and much more — which means we have been able to find out much more about what modern merchants are up to and thus to regulate and restrain them as appropriate —  made this observation less relevant. At least it did so, for a while.

But the rise of tax havenry, which has encouraged once again the scattering of parts of a business around the world, and the envelopment of this business in secrecy, has brought us back to this age-old problem. If you can’t see what the merchants are up to, they will acquire enormous power. Courtesy of offshore.

And we’re seeing just this tendency in Britain at the moment, as Britain’s politicians “treat [the corporations] as a master, and to make it worth his while to contribute voluntarily to the public revenue.”

Tax as a voluntary contribution. Just as George Monbiot explained recently.

one comment

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