The Monster in Paradise

Commentary – The necessary war against offshore businesses.

By Luigino Bruni

Published in Avvenire on June 23, 2013

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The latest protests in Brazil, triggered by the World Cup, and the G8's war against tax havens share the same origins. The World Cup “industry” doesn't represent the true beauty of football. There is little in common between multinational sport organizations and recreational soccer games. Likewise, the international market for grains has barely any ethical contact with the bread sold in shops. The difference isn't only in scale – as it used to be some decades ago – but also with nature. Financial capitalism fostered this deep-rooted transformation. Football fell prey to global economic interests.

Many Brazilians have protested the World Cup organization (not only) due to the exploitation of the sport. Their important message to the Brazilian government includes the need for investment in education, health and security to fight inequality, Brazil's true blight. The World Cup (2014) and the Olympic Games (2016) will not heal such a blight.

Games (circenses) have not produced bread (panem) for the people; they have often been used as instruments of control in the hands of rulers. Similarly, today's world sporting events produce bread that does not feed the poor, but it is used to hold banquets for the sponsors and the “Dives” (rich men) who are building the stadiums. In Brazil and other countries, soccer has been the opiate of the poor and the young. This must change! In many regions of Brazil, there are no decent schools, universities and hospitals. The country does not need new stadiums. Who will these sport centers benefit? Who did they benefit in South Africa (a crisis-hit country, which enjoyed a short economic boost that only lasted until 2010)? Was it beneficial for Italy in '90? It produced corrupt contracts and drew people's attention away from historical sociopolitical events. Not to mention Athens in 2004! The stadiums don't even benefit the soccer industry that much. Capitalists build them with public revenue and sell the sport to the international media, urging spectators to stay home and watch the matches. This capitalistic system transforms sport, a relational good, into a product.

Many of these multinational sport organizations use the tax havens that the G8 has promised (again) to destroy. The powerful rulers of the world often vocally declare war against these havens. For example, on April 2, 2009 in London the G20 officially announced the imminent end of offshore operations. As the name implies, offshore operations are held in faraway places, hidden in the world's seas. It is the home of the sea monsters “that scurry and swarm in the water” (Genesis), the kingdom of the Leviathan and Moby Dick.

Alas! This fiscal paradise has moved onshore, and the “tax delinquent sea” has inundated the continent. Many European states, principalities, republics and islands offer similar fiscal incentives to the ones in the Cayman Islands, the ill-famed tax haven. Most multinationals, financial organizations and banks establish their domicile in these havens. They produce misleading social balance sheets and often create philanthropic foundations with 1% of their sordid profit to protect their virtuous image. Last year, after taking part in an event in Montecarlo, I quit eating a delightful Italian product when I found out that it had registered there minimizing tax liabilities. Rather we agree with it or not, financial capitalism depends on tax havens since citizens, businesses, hedge funds and banks continuously demand lower taxes. Today, approximately fifty percent of international trade takes advantage of tax havens. The tax departments of large corporations, in particular banks and trusts, often pay millions of euros to tax advisors, who offer multi-state tax optimization (a euphemistic phrase).

World politics has declared its commitment to promoting fair global finance, but it doesn't have the power to tame the Leviathan. As long as the capitalistic culture of short term profit maximization endures, tax havens will remain an essential part of the global financial system. The potential for eliminating these havens depends on radical changes. Schools must educate non-consumeristic, social-minded citizens; governments must regulate banks' activities. However, currently things seem to be moving in the opposite direction (eg. Basilea 3). Finally, the globalization process must slow down, and local governments must enjoy more autonomy. World leaders declare their willingness to fight tax evaders but don't implement the necessary, unpopular policies. Likewise, after eating fatty foods and creamy deserts, my friend drinks sugarless coffee, claiming to “be on a diet”. One must tackle the root causes of problems to promote serious changes.

The inconvenient truth is that tax havens sustain the market for smartphones, wellness centers, exotic tourism and other appealing capitalistic goods. Similar to these current offshore solutions, many ancient civilizations developed areas outside of legal civilian control. Slaves, servants, colonies and wars were human and ethical costs that allowed these unjust societies to go on. However, civilizations have always fought the great monsters, those that “scurry in the seas”, hoping to create a better world: “On that day the Lord with his cruel and great and strong sword will punish Leviathan the fleeing serpent, Leviathan the twisting serpent, and he will kill the dragon that is in the sea” (Isaiah).

Although tax havens are called fiscal “paradises”, they are occupied by uncivilized men as barbaric as the ancient sea monsters. Unfortunately, small and medium-sized enterprises fall victim to tax delinquent multinationals. A few SMEs establish themselves in these havens, but they do not have the money nor the culture (thank God!) to set up these offshore operations. As a result, they lose consumers and close down, and the unemployment rate rises. Let us unite behind Brazil's unrest and declare our opposition to offshore-based capitalism, uniting every part of society to change it!

Further commentaries by Luigino Bruni in Avvenire are available through the Avvenire Editorial

Translated by Cristian Sebok

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