Nov 09 2016

Treasure Islands, relaunched for Truxit

Posted by: Nicholas Shaxson in: Thoughts

There is now a new version of Treasure Islands available. Essentially, it’s got a new introduction, and a new chapter.  Here is an excerpt.

“The Brexit vote was, in the end, about globalisation. The hottest issue was immigration, which is, as Professor John van Reenen of the London School of Economics points out, ‘globalisation made flesh’. But behind the vote we can also discern a powerful role played by tax havens, the dark twisted souls of financial globalisation.”

I’m posting this on the day of Donald Trump’s victory: this stuff is all the rage.

Truxit, one might call it. (The word ‘truculence’ is in there somewhere too.)

I spoke to Trump twice for my Vanity Fair article. Both times, he said he would “fix” tax havens and that it would be “easy” to do so. And both times, he cut short the call when I asked him to explain how exactly he would do so. Enough said.

The best explainer for Truxit? Well, everyone has their favourite. I like this, from Arlie Russell Hochschild at Mother Jones, who spent five years with people who’d turn out to be Trump supporters:

“What the people I interviewed were drawn to was not necessarily the particulars of these theories. It was the deep story underlying them—an account of life as it feels to them. Some such account underlies all beliefs, right or left, I think. The deep story of the right goes like this:

You are patiently standing in the middle of a long line stretching toward the horizon, where the American Dream awaits. But as you wait, you see people cutting in line ahead of you. Many of these line-cutters are black—beneficiaries of affirmative action or welfare. Some are career-driven women pushing into jobs they never had before. Then you see immigrants, Mexicans, Somalis, the Syrian refugees yet to come. As you wait in this unmoving line, you’re being asked to feel sorry for them all. You have a good heart. But who is deciding who you should feel compassion for? Then you see President Barack Hussein Obama waving the line-cutters forward. He’s on their side. In fact, isn’t he a line-cutter too? How did this fatherless black guy pay for Harvard? As you wait your turn, Obama is using the money in your pocket to help the line-cutters. He and his liberal backers have removed the shame from taking. The government has become an instrument for redistributing your money to the undeserving. It’s not your government anymore; it’s theirs.

I checked this distillation with those I interviewed to see if this version of the deep story rang true. Some altered it a bit (“the line-waiters form a new line”) or emphasized a particular point (those in back are paying for the line-cutters). But all of them agreed it was their story. One man said, “I live your analogy.” Another said, “You read my mind.”

This graph, from Martin Wolf in the FT, illustrates the Truxit. Click to enlarge.

But this resonates with me at a deeper level because of something I’ve long believed in, which I first understood while writing about Africa’s oil states, and which I recently wrote about in an article about corruption in the Washington Post:

“Nigerian writer Chinua Achebe points toward a better, more systemic definition of corruption in his 1983 classic, “The Trouble with Nigeria”: “A normal sensible person will wait for his turn if he is sure that the shares will go round,” he wrote. “If not, he might start a scramble.”

Picture society as a queue. Disrupt a queue with, say, a fire hose, and after the spluttering has ceased, order should re-emerge – just as stable countries recover from earthquakes or economic shocks. Yet when the strongest push in at the front, that is more dangerous: People begin to lose faith in the queue, and in each other. They start to wonder: “Why should I pay my taxes if the rich go offshore and evade theirs?” Or “If I don’t snaffle that stream of oil revenue to feed my family, then that jerk in the next ministry will get it.”

The world economy is being corrupted. By tax havens, by unaccountable bankers, trust lawyers, lobbyists — and yes, tax-free real estate magnates. Trump, with all his shocking personality flaws, is not an obvious candidate to reverse this deep corruption.

But it must be reversed.

Endnote: I am also mourning the death of the legendary Chris Simpson. For two years in Angola in the mid-1990s, I was the Reuters correspondent and he was the BBC correspondent, and my best friend. Farewell Chris.

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