Interlude II - Look to the Old West

How would you describe "offshore" tax havens as one part of the global economic system that exists today?

One major problem with a capitalistic economic model is that is doesn't incentivize goodwill. Proponents would say that the corporations and systems it fosters are by definition the most effective, and therefore the most beneficial to humanity, but the more time goes on, and the more globalization brings capitalism to the far corners of the Earth, the more we can see that that isn't necessarily the case. Only so much voluntary goodwill exists in human society, and the history of capitalism has shown that mandatory taxation is the only way for a civilization to even begin to address issues of social justice.

Take that process as it's existed so far in the United States, for example, and apply it to the much bigger pool that is the entire world, and tax collection naturally becomes much more complicated, the same as it was in America in the 19th century when the nation was a patchwork of states, territories, and lawless wilderness. Eventually, everyone wanted a say in the united government that was emerging, and this desire to participate forced the western populations to come in from the cold, so to speak, and accept more orderly economic strictures.

"Offshore" tax havens, as such, are a natural symptom of market globalization that, while bad, certainly are part of an overall leveling-out process that I think will eventually be a net benefit to social justice by enhancing job opportunities and wages in the less-developed world. Havens are popular now because they're easy for anyone who can afford the requisite staff of lawyers, and because they, like milking a newfound gold claim in 19th-century California, are still essentially legal even in the most egregious circumstances.

Despite this, what we've seen this year could be the first real stirrings of opposition to the current system of tax avoidance. If so, however, what will ultimately be necessary is a totally new global economic system wherein the rules for taxation are consistent from country to country, and in which tax payments can be extracted from foreign banks similar to the process by which criminal persons are extradited from foreign nations today.

This, again, will follow a similar model to the one that united the states. It will not happen quickly, and not everyone will come along willingly, but eventually global governance will have evolved to the point that it will be to the benefit of nations both large and small, both prosperous and developing, to come to the table, and the more they desire representation, the easier it will be for the world community to remove tax shelters from the equation--and people will be better off for it.

Interlude I - The Age of the Nation-State

One of the reasons I've been more off-and-on with this blog than usual over the last couple months is that I've been taking a class online, at a website called edX. While the courses are free, they're set up and run by actual college professors, and sometimes even count for college credit if you're so inclined. For no other reason than self-improvement, I enrolled in a class called The Age of Globalization, by University of Texas at Austin professor John Hoberman.

It's been very rewarding so far, but in addition to lots of reading and video lectures, each week ends with an essay question--which nicely (or unfortunately) overlaps with the time that I'd normally be writing about a reason I enjoy paying taxes. While the subject matter is definitely more off-topic than I usually get here, some of what I've been writing about does have a bit of thematic overlap with this blog--the principles of modern society, the benefits of working together, and so on. So in an effort to keep from totally ignoring this thing until the class is done, I thought I'd share a few of my globalization essays here in place of my normal entries. You can expect things to get back to normal when the class ends this December, though something may jump out at me in the meantime that demands a normal entry; only time will tell.

Describe three (3) reasons why you believe that the nation-state IS or IS NOT losing its power, influence, and independence in today's globalized world.

Without a doubt, globalization is absolutely drawing the age of the nation-state to a close--in terms of power, influence, and independence.

In terms of power: a nation-state's strength lies in its ability to govern the behavior of its members. But the rise of capitalism, and then multinational capitalism, has seen commercial power exceed the reach of governmental power in many ways. Not only do world governments no longer have the ability to regulate commercial behavior where enormous multinationals are concerned, in the case of many nations, it's actually against the interests or their societies to do so--hence the concept of "too big to fail". Even if one nation decided to buckle down and get serious about regulating, say, shipbreaking (even a nation with the reach of the United States), the shipping companies affected by this change in policy would be out of the nation's reach, as all their shipbreaking operations are elsewhere in the world. And because of the size and scope of these companies, the US can either do business with them or suffer serious commercial consequences of its own.

In terms of influence: ironically, the failure of the European Union to earn even a hint of the kind of loyalty European citizens already feel for their respective nations is a sign of those nations' fading influence. In World War II, the Allied Powers were every bit the unilateral, anti-democratic entity the EU parliament embodies today, but because it was a time of war, the citizens of allied nations believed in what the Allies were doing and truly saw citizens from other Allied nations as brothers in world society. Now, without so existential a threat to rally people behind, the EU represents nothing to the European people but another layer of bureaucracy that at best is unnecessary and at worst is something to ignore. While this disregard does not seem to carry over to European citizens' sense of national pride, I believe that this pride is now largely vestigial; if they truly listened to their national leaders, and their leaders wished for that devotion to be transferred to the EU, it would be done, as simple as that.

In terms of independence: as previous sections of this course have demonstrated, national independence is the first thing to go in the age of globalization. The only true independence now lies in the global free market, which allowed for the rise of multinational corporations like McDonald's and Walmart. Ultimately, the power companies like these represent is demonstrated by the rise, now, of state-owned enterprise. It's not enough now for a historically unimportant, second-world nation like Brazil to do well within its own borders; to really make it in a globalized world they much use the sway of their governments to foster multinationals of their own--and only then use the money and prestige that comes from a successful multinational to boost their own standard of living. Of course, as even SOEs become too large to survive as state-owned entities, even they must eventually break away from their host nations--as we're now seeing. What happens next is unclear, but it can't be good for those nations.

Reason #305: Shutdown

So look: the shutdown is bad. I'm against it happening. But this blog is about finding the positives, and--as tough as that can be sometimes--damn it, that's what I'm gonna do!

• First, anything written into "permanent law", like Social Security, is separate from the normal, year-by-year (or month-by-month, these days) budgetary process, and thus is still funded, as not to do so would be against the law.
• Still at work: EMTs, air traffic controllers, VA hospitals (generally), food inspectors, federal prison guards, FEMA, and as we learned yesterday, law enforcement. While none of them will receive a paycheck until the shutdown is over, they are still earning their normal pay and will get it all in a big lump once the shutdown is over (which raises the question of how much money a two- or three-week shutdown is really saving).
• Note to people demanding that Congress stop receiving paychecks as well: one, for most of them their federal paycheck pales in comparison to their other sources of income. Two, congressional pay is one of those aforementioned separately-funded things, so their not getting paid wouldn't impact the budget process. Third, the only reason the whole "retroactive pay" thing happens for people like the capitol police is because they're deemed essential workers; if Congress were deemed nonessential then it would be illegal for them to keep working, and they'd never be able to pass a budget. Lastly, even if all this were amended, it wouldn't go into effect until the next congressional session and wouldn't help right now anyway.
• Hilariously, one service deemed nonessential is the processing of gun licenses--meaning that we've finally found the one thing more sacred to conservatives that getting guns in the hands of as many people as possible. The border patrol also has to hold off on hiring new agents, so there goes the illegal-immigration argument.
• Obamacare, the thing this is all about, is now in effect and has not been hindered at all--because it's mostly a reorganization of private insurance plans, which have nothing to do with federal spending. Even the Medicaid expansion and tax incentives come out of permanent funding.

Last but not least--for all it's cost us in other ways, government spending is actually down right now; for the first time since the Korean War. Politicians spend so much time bickering about reduced spending versus higher taxes that we can all lose sight of the shared goal of lowering the deficit--and even if nothing else can be said about it, this does lower the deficit.


Further Reading

There’s much less time to avoid a government shutdown than you think

How Congress Will Still Get Paid in a Government Shutdown