This is a lovely little piece of logic from one of the loons to the left of us.
The assertions he makes in the section cited just above here are, as far as they go, significantly (but not wholly) true. As we’ve noted many times in the past, British tax havens, for example, provide, among many other things, the bedrock of a respected legal system — which is, among other things, why Russian oligarchs like to spar it out in London courtrooms, not in Moscow.
Excellent, one of the reasons the Russians use Cyprus is indeed as I have asserted. Not for tax reasons, not to get out of a tax jurisdiction, but for legal reasons, to get into a legal jurisdiction.
To get the cash out of Putin\’s reach. Score one for Worstall.
But where I\’m wrong is that even if this is true it should not be:
Both these above points get us into a major, existential question about what the offshore system is and does. It provides escape routes for the wealthiest sections of society, from the laws and rules that bind everyone else.
If a country has unjust laws or is poorly governed, should we consider it a good solution to provide the small, wealthiest and therefore most influential section of the population with offshore escape routes from those unjust laws, leaving everyone else in the lurch?
Is this really a wise route to better governance?
Of course it isn’t. And it’s nonsense to suggest otherwise. It may be perfectly rational for investors to take advantage of the offshore escape route, but that isn’t the same as saying it’s a good thing. Not at all.
Consider a thought experiment, where capital is bottled up in the country where it is earned, and Russia’s élites also have to make do with the Russian legal system. Suddenly the most influential section of the population – including many of those in government — would have powerful incentives to make an unjust and capricious legal system less unjust and less capricious.
Allow me to transalte that in the most objectionable manner possible. The Jews who escaped Germany should not have done so. They should have stayed and the incentives to avoid the Holocaust would have been such that they would have made the unjust and capricious Nazi system less unjust and less capricious. Gassed themselves in public perhaps in order to shame Eichmann into better behaviour.
Agreed, that is objectionable. But it is exactly the same logic as Shaxson is using there.
Note that Shaxson is also denying anyone the right of exit. If your country is fucked up then you\’ve got to just hunker down and deal with it. The idea of buggering off to somewhere else with a better governance must not be allowed. I\’m sure the hundreds of millions of migrants would be overjoyed to hear about this theory.
Dont think Shaxtonboys thought this one through, has he?
Thats all those dissident groups exiled from right-wing oppressive regimes provide fodder for half CiF articles.
Is hanging Nelson Mandela going to be back in fashion, now?
I agree Tim, that is grossly offensive.
Shaxson’s point is that the very rich opting out of Russia’s legal system might otherwise be using their influence – some of them are close to Putin – to improve the legal system. Whereas the Jews in Germany plainly had no influence with Hitler.
Whether or not Shaxson is right, your analogy is wrong.
@PaulB – you don’t seem to understand how authoritarianism works.
However “close to Putin” these people are, he can always destroy them. This is the power he holds and he’s not going to give it up just because people close to him ask nicely. In fact doing so is most likely to get you a Polonium lunch so the analogy, while a bit of a stretch, does work.
Paul B > but Jews made up a majority of ‘the rich’ and ‘the very rich’ in pre-Nazi Germany.
But to qualify Tim’s example (principally for comical effect); those Jewish people who foresaw the repression of the Nazi government and got out with a majority of their capital would be wrong in doing so according to Shaxson ideas* but those who got smuggled out later with nothing were fine because their capital had already been confiscated.
*when using Reductio ad Hitlerum
Whether or not Shaxson is right, your analogy is wrong.
No, what is wrong is your understanding of Russia.
he and Murphy seem to share the same view, that somehow there is a State of which you are a “natural part” and that said State has the right to do with you or your assets as it sees fit, and you have no moral right to seek to avoid that. Grubby little statist idiots, the pair of them.
If you think the situation of, say, Mikhail Fridman under Putin is similar to the situation of, say, Aron Hirsch under Hitler, then what is wrong is your understanding of Nazi Germany.
Tim adds: And the situation of Sergei Magnitsky differs in what major respect?
Surely some speed record for the argumentum ad hitlerum broken there?
But look at it the other way. If you could escape a nasty regime only so long as you could prove you’d failed the 11+ or whatever, would this be an incentive for the regime to improve?
Shaxson’s argument is a more extreme version of the
Public schools should be banned….
So that the movers and shakers that would normally send their kids to private school, then devote their energies to fixing the state schools…
Except the state schools are fucked by the lefty teachers, the shitty LEA, and the underclass..
I.e. the movers and shakers have to fix the entire country to get their kids a decent education – whilst Shaxson and every Owen Jones loving Guardianista fight them all the way – precisely the same crowd that wanted private schools banned in the first place…
Lefties don’t do cognitive dissonance, but if they did it would be the greatest cognitive dissonance in world…
If you think the situation of, say, Mikhail Fridman under Putin is similar to the situation of, say, Aron Hirsch under Hitler, then what is wrong is your understanding of Nazi Germany.
I don’t see anyone defending oligarchs here. It’s the ordinary Russians who are getting their money out as much as anyone, some of whom I know personally.
I suppose it would reduce immigration and so please the Daily Mail. Not sure if that’s quite what Shaxson wants though.
The Indians under Idi Amin would be another example.
Business owners, professionals, influential people in the community.
Would they have been wrong if they’d tried to get some of their money out? Should they have stayed there and tried to sort it out? After all, what’s the loss of a few children to the greater good?
And those fucking Huguenots. That St Bartholomew’s Day Massacre would never have happened if, er, they’d all stayed put.
Sorry, but I think a lot of you are missing the point. Shaxtons rebuilding the Berlin Wall here. He is using exactly the same justification the left, on this side of it, employed to defend its existence. That the capital, be it financial or human, belongs to the State & should serve the State & escaping it betrays those who do not.
Shaxson lives in Switzerland does he not?
Indeed. Why doesn’t Shaxson live in the UK and campaign to reform its tax system rather than live in Switzerland and benefit from its lower taxes?
Yes, but Shaxton sends a check for the difference to the UK Treasury every month.
(Bloody pigs. That’s another one shit on the roof of the car. Wish they’d find a different tree to roost in.)
Bob – “but Jews made up a majority of ‘the rich’ and ‘the very rich’ in pre-Nazi Germany.”
I bet they did not.
That the capital, be it financial or human, belongs to the State & should serve the State & escaping it betrays those who do not.
I’ve seen this argument on Lefty forums before: it’s the next logical step to Obama’s “you didn’t build that”, the idea that because the state has provided you with an education, health care, etc. (whether you wanted their version or not), then you have a duty to stick around to pay for it. It’s a modern version of the colonists deriding the uppity, ungrateful brown folk who have the temerity to want freedom despite all the great things whitey has bestowed on them.
It’s interesting, Tim, that here you conveniently confuse the flow of capital with the flow of people. It’s also interesting, Tim, that you fail to provide a link to the original story. Afraid of something? It’s also interesting that you say I’m a lefty. How so? Large numbers of thinking people on the right agree wholeheartedly with me. (OK, you may consider David Cameron an outrageous lefty, but that’s your problem.) We are all unhappy about the corruption of markets by the offshore system of tax havens. We are all upset by the free, relatively untrammeled pursuit of criminality that the offshore system facilitates. And so on. Why is it ‘left wing’ to object to criminalisation and the corruption of markets? If it were true, what would that say about people on the right, as you see them? (And yes, that comparison was indeed objectionable, though not entirely unexpected from you.)
If we forget about left or right or the Nazis and just focus on Mr Shaxson’s logic, I would have thought he’s got the incentives entirely the wrong way round.
Imagine you’re Putin himself. In which situation would you be able to expropriate more capital via an unjust legal system:
a) Capital cannot leave the country
b) Capital can go offshore in search of a fairer legal system
Clearly a). So in the case where capital cannot flee offshore, you would gain more from setting up an unjust legal system. So you have an incentive to make the legal system more unjust.
Indeed, hasn’t the left been arguing for decades that international capital mobility is a constraint on the policies governments can pursue, because they have to persuade capital not to leave the country?
What about all these “influential elites” Mr Shaxson mentions? Well, anyone close enough to Putin to have political influence on him is likely to benefit from said unjust and capricious legal system, as, after all, it is presumably set up to benefit Putin and his friends. So they certainly don’t have incentives to reform the system.
What about all these “influential elites” Mr Shaxson mentions? Well, anyone close enough to Putin to have political influence on him is likely to benefit from said unjust and capricious legal system, as, after all, it is presumably set up to benefit Putin and his friends. So they certainly don’t have incentives to reform the system.
Exactly. This is why I said that certain people do not understand Russia. The elites – who can influence policy – will get their money offshore regardless of any law; the ones who will suffer from capital controls will be the moderately rich Russians who want to get their (often) hard earned gains out of the reach of corrupt officials.
See here for example, where Putin is telling Russian officials to close their foreign bank accounts or be fired. You can bet your last penny that this will not apply to him and his inner circle, or anyone else remotely able to influence policy.
Good, so we agree that the oligarchs in Russia are nothing like wealthy Jews in Nazi Germany, and that Tim’s analogy is wrong.
Good, so we agree that the oligarchs in Russia are nothing like wealthy Jews in Nazi Germany, and that Tim
Good, so we agree that the oligarchs in Russia are nothing like wealthy Jews in Nazi Germany, and that Tim’s analogy is wrong.
No. We are *not* in agreement. As I have already pointed out, nobody is comparing wealthy Russian oligarchs with Jews in Nazi Germany. Tim simply compared Russians with Jews, it was *you* who introduced the qualifier *very rich* when discussing the Russians in your very first comment. And I pointed out that you do not understand Russia, because if you did you would not leap to the conclusion that somebody expressing concern about the ability of *Russians* to get their money offshore was talking about oligarchs.
Tim N: Shaxson, as quoted by Tim W, wrote about
Tim W wrote underneath the quote:
introducing his objectionable analogy with Nazi Germany.
So no, it was not me who introduced “very rich”, it was Shaxson, and therefore Tim W in commenting on Shaxson, who was talking about “the wealthiest”. Not for the first time, you have had a failure of reading comprehension.
So no, it was not me who introduced “very rich”, it was Shaxson, and therefore Tim W in commenting on Shaxson, who was talking about “the wealthiest”. Not for the first time, you have had a failure of reading comprehension.
Yes, Shaxson was talking about introducing capital controls in order to prevent the wealthiest from leaving. Tim understood that such laws would keep ordinary Russians from escaping the tyranny of the state, and pointed out that they would have kept the Jews from leaving Nazi Germany. It was *you* who assumed that Tim was equating Jews in Nazi Germany with Russian oligarchs.
Not for the first time, you have had a failure of reading comprehension.
Erm, no. However, not for the first time, you cannot admit that you are wrong even when it has been pointed out to you several times. One wonders if there are any topics on which you do not consider yourself an expert.
Well, I’m scratching my head about this. You accused me of leaping to the conclusion that Nick Shaxson was talking about oligarchs when, in fact, Nick Shaxson was talking about oligarchs. And, faced with that, you berate me for being unable to admit that I am wrong.
I suggest that you admit that you were wrong about that. And I will admit that I was wrong to assume that Tim W was talking about the same thing as Shaxson, because, on re-reading what he wrote, I see that he’s gone off at a tangent.
However, we’re not really disagreeing about much here, we’re just looking at different issues. You’re concerned with the right of your friends among ordinary Russians to get their money out of the country, and incidentally with asserting your superior understanding of Russian affairs. OK. And I am concerned to reject the wrong and offensive analogy with Jews gassing themselves, which I’m sure you don’t need to defend.