Jan 23 2011

Peter Preston’s counsel after reading Treasure Islands: abandon hope

Posted by: Nick Shaxson in: Abandon Hope!, Thoughts

Peter Preston, a former editor of the Guardian, has reviewed my book, describing it as

“A dismaying Big Bang of a book: a chronicle of capitalism’s frailty and foulness that digs far beyond its tax haven title and indicts the system that renders such crookedness not merely possible, but entirely predictable.”

I wouldn’t argue with that. To render something predictable, in this case, really means ‘to explain.’ Which I think is what Treasure Islands does.

There’s plenty for me to like about the review: “a seasoned financial journalist with a talent for asking awkward questions,” or “If you want to understand how Jersey or the Bahamas work, this is the textbook you need.”

His review, though, then takes off in a rather odd direction. He doesn’t argue with anything I say; rather he seems to disagree with my diagnosis that this problem is much bigger than almost anyone realises – and then concludes that because it’s so big, it’s impossible to do anything about it. It is:

“a way of doing business that no one – from WikiLeaks to the Oval Office – can reform or replace because no one has the resolve or the means, because there is (literally) no alternative.”

And then as to presciptions for change:

Dream on . . .

The overall message seems to be this: the problem is so big that  we shouldn’t even bother trying to do anything about it, or investigate it. Give up. Abandon hope. It is a counsel of despair. I mean, is he advising that we should stick to the old stereotypes – that tax havens amount to just a few Caribbean islands and Alpine secrecy zones? I’m sorry if my new analysis is inconvenient to people like Mr. Preston but you will find, if you investigate the offshore phenomenon, that this is where the research will lead you. There is, in fact, no alternative, really. And there are few people offshore who’d actually disagree with this part of my analysis.

Preston is not alone in his discomfort, in fact. I just got an email this morning from someone who argues something similar:

“The simple economic law of supply and demand will keep this process going forever. Dictators and their allies will continue to transfer funds from their home countries to safer currency countries however much their own country could use the funds more sensibly. You can wish that this did not happen but it does and it will. Nicholas’s argument . . . is impractical and therefore weak.”

This is a kind of ‘gotcha!” argument commonly wielded by tax havens: “we’re rich and you can’t catch us – ha ha!”

Preston, in making his argument, is effectively aligning himself with the defenders of offshore. He resists efforts to change the culture that tolerates offshore practices. Why? It absolutely isn’t pointless. The financial crisis has revealed the economic certainties of the last 30-40 years as false ones, and the world is looking for something new. Protests are breaking out, around the world, in the face of austerity and suffering. Everything is up in the air. And now, I think partly thanks to Treasure Islands, we understand how big the problem is:

“thanks to Shaxson, the dimensions of the problem are clearer than they were.”

Nobody even thought to question the offshore culture until very recently. Now that Treasure Islands questions and points to the size of the problem, and challenges it – he is against this? Why make an argument like this? I just don’t get it.

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