Populists, corruption and disaster capitalism

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If I was to tell you about a newly installed government, whose minsters and party donors were making millions betting against their own country via offshore firms, who openly earn large sums in kickbacks for a few hours of supposed work (e.g. after dinner speaking fees, “consultancy fees”, etc.), a government that was now using a crisis to give out sweatheart deals to its cronies, you’d probably assume I’m talking about some tin pot dictatorship in the developing world. But no, I’m talking about the UK under Boris, which has got to count as the most corrupt in the country’s history. But its actually the new normal (you think this is bad, wait till they are in coalition with Farage!).

Recently Channel 4’s dispatches did a piece on “brexit millionaires and how many in the Tory party, or their donors, were cashing in on brexit and making millions. Front and centre was Jacob Rees-Mogg, aka the right honourable member for the 18th century, the new minister for silly walks leader of the house of commons. In between being a grammar nazi (he’s set a whole bunch of grammar rules for civil servants, rules he has himself broken 700 times), he has been profiting from brexit. His offshore investment firms have racked in millions since brexit started. With him personally profiting to the tune of at least +£7 million. So much so he can afford to buy a a multi-million town house in London (to go with his country estate) and pay for it in cash. This is corruption, pure and simple.

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Rees Mogg’s little country cottage

And he is by no means alone. Boris is going for a no deal brexit, not because its what people voted for (he and his ministers have been challenged to provide an example of when in the referendum they suggested the UK might have to leave without a deal, we’ve yet to get an answer). In fact polls show the public would rather just cancel brexit all together than except no deal. Even Teresa May is warning no deal threatens the union (pity she didn’t say that while in office!). But the cabinet backs it because they know its the best way for them and their mates to make a quick buck. Food and medicine shortages! millions loosing their jobs! civil war in NI! Scottish independence! how is any of that their problem?

In fact here’s a good one, from a young Tory whose whinging that Boris can’t ignore him and implement no deal against the wishes of parliament and the country. LOL, the naivety of youth. He can, he is and he will. If you have a problem with that you shouldn’t have voted Tory.

And in other countries we are seeing similar trends. Trump hasn’t drained the swamp, he’s made it deeper and released alligators. In Italy, the horseshoe government of populists are now literally surrounded by steaming piles of garbage as the cities public services have collapsed. And corruption is as bad as ever (if not worse), so much so some are thinking of voting for Berlusconi. And if that sounds unlikely, well consider that in Greece, the populists there made such a pigs breakfast of things that the very party who got the country into a massive mess in the first place have just been voted back in.

Rome is now in such a mess, tourists are been giving advice about the risks to their health while visiting

Many people voted for populists because they were appalled at self serving politicians divorced from reality. But, perhaps unsurprisingly, voting for even more corrupt and incompetent populists has just made the situation worse. The very same elites these voters hate, just took to bribing and manipulating the populists. And guess what, they are even dumber than the regular politicians and cheaper too! In fact they’ll do things the regular politicians won’t dream of doing (because the latter are prone to rare moments of clarity where they actually giving a shit).

Angry desperate voters, voted for the most extreme option on the ballot paper thought they were sending a message. But the message that arrived in elites HQ was that these voters are even more naive and stupid than we thought, so let’s take full advantage of them (I mean they could have voted for some established third party candidates, or others who can’t be bought, then we’d be really screwed, but instead they vote for some complete idiot whose in our pocket). The elites can basically do whatever they want now, just so long as their boy remembers to make the odd racist dog whistle and some vague promises that they’ll never have to keep.

The fact is that populists leaders know that they aren’t held to the same standards as other politicians. It used to be a politician made the slightest gaffe, that was it, game over. Remember how Ed Miliband lost because of one photo of him looking awkward for a second eating a bacon roll, or the whole plebgate business. It used to be a politician said something to the media that was inaccurate, or broke the ministerial code and they’d be gone within a week (a good example, Brian Lenihan and the 1990’s Irish presidential election, he went from odds on favourite to being sacked and losing by a landslide over one phone call he made back in 1982).

Now they can get caught in a lie live on air and nobody bats an eyelid, because its one in a string of so many lies nobody can keep up (well unless you are a member of the labour party of course….or black….or worse both). Its understood that voters will ignore this, they are voting based on anger and tribal loyalties, not facts and policy. So long as said leader stays on message and keeps them angry (i.e. they have absolutely no good incentive to help these voters in any way, because then they might calm down and start acting sensibly) he can get away with anything.

Consider for example how both the Tories and the GOP have abandoned their long term commitment to balanced budgets. Both came to power talking about the dangers of deficit spending and how they would be pro-business. Now the policy is bollix to that and fuck business. Like Trump, Johnson seems to be planning to spend like a sailor on shore leave. But not on hospitals, schools or helping the poor (Tory policy here has been branded by the UN as ‘mean-spirited and callous), but instead on no deal preparation, tax cuts for the rich and big infrastructure projects than can be farmed out to Tory donors.

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The Tories new motto

I mean seriously, why do you think Boris gets paid over a £150,000 to show up and give an after dinner speech? You think they like the sound of his voice that much? No its a bribe and now they’re going to cash in. And its hardly as if any of this should be a surprise, given his past performance as London mayor and foreign secretary.

Of course the fact these policies, combined with the economic impact of a no deal brexit (or Trump’s tariffs), will make a mess of the economy and wreck the public finances doesn’t matter to them. They’ll get rich, who cares. In fact they’d even see a silver lining to that. They can use such a crisis to sell off state assets (such as the NHS) to themselves and their allies and dismantle the welfare state.

Its a strategy the rich have been applying in developing world countries for decades. They’d take advantage of the country’s naive or incompetent populists/autocratic government, to swoop in and wreck the economy on purpose, knowing they and their allies (juiced in local elites) would be able to take advantage of the chaos. Now they’re just doing the same in western countries (what goes around comes around I suppose).

And furthermore, even if some leftie such as Corbyn or Bernie ever gets into power, so what! They’ll not be able to afford to implement any of their policies or even reverse the mess the current government is making. In fact, the conservatives can just blame them for everything (as they did with Obama). What’s that? the lefties might putting up taxes? So what! let em! all their money is offshore….course if the UK was only part of some big pan-European club which was determined to do something about such tax avoidance …just a thought!

The Panama files

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The revelations from the Panama files of the law firm Mossack Fonseca have been on the one hand shocking, yet on the other oh so predictable. It is a well known fact that a large chunk of the world’s capital exists in a sort of “dark matter” like state. We know its there, we can see its effects when the rich flaunt their wealth, but nobody can pin down where it is, so its widely assumed to be tied up in tax havens.

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Note the data above based on a 2008 estimate, actual numbers may be much higher now.

Details are sketchy, but the estimate is that between $11.5 trillion and $20 trillion dollars is squirrelled away in tax havens, about 15% to 25% of the entire net worth of the global economy. That equals (or exceeds) the annual economic output of China. Its estimated that global governments lose out to the tune of between $100 billion to $255 billion in unpaid tax. And quite a lot of this money represents the proceeds of crime, or funds looted by corrupt regimes from the state coffers. At least $6.2 trillion of that money comes from developing nations (i.e. nearly half of the total, even though developing nations represent only about a quarter of the global economy).

What Mossack Fonseca were in the business of doing was acting as the intermediaries for transactions that allowed money to be spirited away, cached offshore in shell companies and then laundered back, often through the purchase of assets such as property in London for example. And as the BBC’s panorama reveals 95% of this company’s business was devoted to this kind of activity.

When most of us think of money laundering or offshore banking, we envisage some guy in a small office in the Cayman Islands wearing a Panama hat and Bermuda shorts with a safe in the back of the office. But no, Mossack Fonseca employs thousands of people and have many times this number in offices worldwide whom they will hire out to act as stool pigeons for dodgy deals. This is tax evasion and money laundering on literally an industrial scale. And the banks are clearly aware of this and compliant in such transactions.

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The top ten banks linked to the Panama papers

One of the methods that David Cameron’s dad employed, which was also used by the Brinks Matt robbers was “bearer bonds”. You’ve probably heard of these in a Hollywood film, where thieves break into a bank or an armoured car to steal a small suitcase which is somehow worth tens of millions because it contains “bearer bonds”. Well in truth bearer bonds have been largely banned in most of the world, given the obvious means by which they can be abused by criminals (or terrorists) to circumvent tax or money laundering legislation. However, it would seem that they are still in use, which is both shocking and on the other hand, not a surprise.

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In the wake of the Panama papers Putin searches for places he can hide away his millions in ill-gotten gains

And as noted many of the rich and powerful have been left with awkward questions to answer. A lot of the time its not what they have been saying, but what they’ve not been saying that counts. Osborne refused to answer any questions (then terminated the interview) on the issue of his offshore dealings. Parallels could be drawn with the same reaction from the Icelandic PM who has now resigned.

Cameron released a series of increasingly carefully worded statements which all but admitted that he had benefited from these offshore tax haven funds set up by his father. Indeed at the time of writing he’s actually now admitted that he had a stake. Now you’d expect Boris Johnson to use this as an opportunity to knife Cameron nice and quietly. Instead he’s been defending the PM, all but confirming that he too has had his hand in offshore deals like this. Oh, and search the Fox News site for “Panama files” brings up no hits (guess where Murdoch keeps his millions….).

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Cameron’s attempt to draw a line under all of this tonight, still leaves a lot of questions. Why would you set up a firm in the Bahamas, whose main beneficiaries (those that weren’t clearly front men….one was a local bishop) were all based in the UK, other than to avoid tax? He claims it was so they could trade in shares in dollars….then why not set up in New York or Delaware? And, given how many of these offshore shell companies often use property deals to re-shore funds, that raises questions as to how Cameron afforded a multi-million pound house in London. And it has also been revealed that while publicly talking tough about cracking down on offshore finance, Cameron has in private opposed efforts by the EU to crack down on tax havens.

And this brings us back to the EU referendum. The EU has been pushing quite heavily to end the “phantom zone” of offshore tax havens….which probably explains why so many of Farage’s hedge fund buddies favour Brexit  (Farage has been previously forced to admit he used tax havens). You can draw a direct correlation between EU efforts to crack down on tax havens and funds flowing the way of UKIP. The UK is a key hub around which many of these tax havens orbit. If the UK ceased to support them (Corbyn proposed direct rule be imposed on them) the system would start to break down.

And again, to be clear this is not a victimless crime. When Ian Cameron (or Farage) avoided paying tax, you paid the tax for them. Yes, Farage and Cameron as good as went around to every taxpayer in the UK and picked their pockets. And one of the facts that the Panama papers revealed is the degree to which the London property market is dominated by offshore dealings (Private Eye have a handy map tool available here). After all, the next best thing to a bearer bond, is the title deeds to a London flat. Of course the end result is British being priced out of the housing market by wealthy foreign billionaires using UK property (which they often leave empty) as gambling chips in a casino. Meanwhile Farage gets to blame foreigners for London being overcrowded.

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UK citizens now make up a minority of London property buyers…oh and the EU are just 4.7%

The company at the heart of this whole debacle have responded by pointing out that the only crime committed was by the person who leaked all this information. They also made some flippant statement about their e-mail being hacked. But its doubtful that anyone could access Terabits worth of data via e-mail (if they can what kind of an outfit are these jokers running!). No, I suspect an internal mole is involved. But unfortunately, they are almost certainly right, the only crime here was whoever leaked all this data, which perhaps highlights everything that is wrong with offshore banking.

Suffice to say action needs to be taken. Withdrawal from the EU will play right into the hands of those who want to turn the UK into essentially a giant tax haven (keep in mind that tax havens still need to be financed, typically through higher VAT rather than income tax, so those living in the country still end up paying quite a lot of tax). While I suspect Corbyn is going a bit far when he talks of imposing direct rule, some economic sanctions launched by Britain and the EU (block all trade, forbid anyone UK/EU citizen from owning shares in offshore funds, freeze all assets of said companies, travel bans, etc.) would have the desired effect.

However, perhaps the most obvious measure is to apply the blinding light of transparency. Make all companies that do any form of business in the EU, regardless of where they are based, declare all of their shareholders as well as the pay and earnings of senior company officials. Like vampires, these blood suckers prefer dark places, force them into the light and they’ll explode.

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Cameron’s Panamanian lawyer makes the mistake of opening the curtains

Unfortunately, neither the current PM, nor anyone else in the cabinet, are credible candidates to lead such an effort.

Blogging Catch up

Pandering to the UKIP mob

Teresa May’s speech on immigration was something that got the news commentator’s talking. In it she claimed that the benefits of immigration are zero….which is somewhat at odds with the data from within her own department. As the Guardian points out  on every one of her claims not only does the data not support her claim, it strongly suggests the opposite conclusion.

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All such claims are of course just myths put out by closet racists. The UK is not “full or overcrowded by any stretch of the imagination. Migrants are not a threat to British culture, they do not push up crime (actually crime rates often fall when migrants move into an area…because they generally work for a living!) and they are not putting undue pressure on the NHS. Indeed without the taxes paid by migrants its questionable how the UK can afford to continue to fund the NHS or the generous pension provisions.

More worryingly is that this speech confirms that the Tories have completely lost the plot on this issue. They plan to ignore any and all data that happens to contradict the mantra of the tabloids and push ahead with a radical policy. Of course the whole point of responsible government is to prevent rule by the mob.

But if the Tories want to pander to UKIP why not just go the whole hog and have a racist themed costume party next time. Cameron can go as a pig-screwing upper class twit (he won’t even have to put on a costume), Theresa May can go as Eva Braun, Eric Pickles as can go as Goering, Osborne as Himmler, etc.

Syrian Refugee’s

Indeed speaking of tabloid miss-information, the Daily Mail has recently claimed that only 20% of those arriving in Europe from across the Mediterranean are Syrians. However, a more reasoned analysis of the data, suggests a very different picture. The data set they focus on precedes the recent influx. While it might have been only 20% before June, the UNHCR figures suggest 51% of documented arrivals are now Syrian refugees.

And of course, this only accounts for “documented” refugee’s but most of the Syrians aren’t being documented. And we’re assuming that Syria is the only country where people have a legitimate right to flee from. However, it is a known fact that many of the refugee’s are coming from other war zones such as Eritrea and Afghanistan.

This highlights the dangers of letting right-wing tabloids set policy. They have a nasty habit of being wrong and manipulating data to suit their own ends.

Tax does have to be Taxing

I recall pointing out in the lead up to the last election that the Tories spending plans were unaffordable without major welfare cuts. And the fact is that the bulk of welfare spending is not spent on unemployment benefits or welfare to the disabled (3% of the welfare budget). Instead its working tax credits and pensions (about 50% of welfare budget).

Thus the only way the Tories could pull off their plans is by significant cuts to working tax credits…or pensions. The latter of course is unlikely given how many pensioners vote Tory. So anyone voting Tory was more or less guaranteeing that tax credits would go.

The Tories naturally, denied this. However, blink and a few months later and now working tax credit cuts are on the agenda. Needless to say, this is the reward for all those who were silly enough to vote Tory!

The Billion dollar flat

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The impoverished East European state of Moldova has been hit by a number of dodgy corruption scandals, including what was basically a massive pyramid scheme. As much as 1/8th of the country’s GDP has essentially been stolen. However, more surprising is the connection between this theft and a modest two bedroom flat in a Scottish council estate.

This flat is the headquarters to 530 companies, many of them involved in the recent theft. Yet, despite this nothing has been done by the British authorities. The attitude of the Tory government seems to be its okay to rob people, so long as they are abroad. And no doubt when hordes of Moldovans start migrating to the UK they will complain about how the plight of these people is hardly their problem.

Security Theater

An interesting wee video from comedian Adam Conover, in which he points out the ridiculous nature of airport security. The reality is that the TSA (the American security drones who waste your time at airports, boss people around and make you go through the “smut machines”) are a massive waste of time and money. Not only have they never caught an actual terrorists (including the shoe or underpants bombers, nor the 9/11 hijackers) but when they’ve been tested by the FBI, they failed to find dummy weapons on 95% of the occasions.

In essence its what’s called “security theatre. Whereby the TSA engage in a ritual meant to reassure people about security for the benefit of the closet racists who are scared of any dark skinned people on the same plane. Frankly, they may as well start sacrificing chickens to the gods of the air for all the good it actually does.

Failing the AI test

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An American Professor has a thought experiment to highlight what he claims is a flaw in so-called artificial intelligence. Basically machines think differently to us, so they perceive things in a very different way.

Imagine the scenario where you are on a road in a wood and you see a underground bunker door leading into a dark room. Standing in the doorway is a clown smiling next to a sign saying “free hugs. Now to a human, no way we’d go down to a creepy bunker to go near an even creepier looking clown. But an AI would think, well clowns are good, hugs are good, and free hugs are better.

In essence, what our Professor is trying to do is create a form of intelligence test, or perhaps more precisely a common sense test for AI’s. Often when the topic of artificial intelligence comes up, many point to the Turing test. This has never sat well with me, as I’d argue its flawed. It relies on the fact that a human can’t be fooled by a machine, if the machine is less smart the human. I’ve known situations where dogs and cats have outsmarted their owners, so that’s not really an appropriate benchmark.

So a more effective test of future artificial intelligence would be to apply tests to it that test the machines ability to reason, its common sense, its ability to learn new things independently, its morality and its capacity for independent thought. Several similar tests like this “clown test” could produce a more objective AI test with which to gauge artificial intelligence.

Of course, one flaw in this is that we have to ask the question, would all humans pass our test? Let us take this idea of perceiving risks. Recently a school kid in the US was arrested because his teacher thought a clock he’d build himself was a bomb. And this is one of a whole host of similar incidents. I myself have seem airport security take holy water off some old fella. And the US TSA have a reputation for taking all sorts of stuff off people.

Now I suspect computers won’t have to advance much further to realise that an Irish grandad with holy water is no threat to anyone…..other than vampire’s and Tories 😉 . So by this logic we have to conclude that many in the security services lack sufficient common sense and fail the test and hence do not count as intelligent concious beings.

And similar we have the issue of bible literalism or the likes of ISIS and other religious puritans. Again, most of us will understand that works such as the Bible or the Koran are not to be interpreted as literally true word for word (not least because there is ample scientific and historical evidence to counter a literal interpretation). They are instead works of allegorical literature, which was a common writing style at the time of their creation. So again, by this yardstick, as Baptists (or ISIS) can’t exert basic common sense, we would have to judge that they fail any AI test.

And lets not even get onto climate change deniers, anti-vaccine quacks, Gun nuts  who follow a literal interpretation of the 2nd amendment or those tinfoil hat wearers who still think MH17 wasn’t shot down by the Russians Separatists…..

The point I’m trying to get across here is that any test by which we judge a future AI has to be fair. If a large proportion of the human race would fail it also, or demonstrate that they too lack basic common sense, then perhaps we judge machines a little too harshly….or maybe we let our fellow humans off a little too easily!

To desert and abandon

I’m not usually the sort to get worked up over law and order issues. As I see it the powers that be have a nasty habit of exaggerating certain “threats”, such as knife crime, or the war on drugs (which we’re losing, unsurprisingly), terrorism, etc. purely as a means of control. This keeps the populace scared and easy to herd, just look at the queues at an airport for the pointless exercise of “security theater” (does anyone honestly expect a terrorist or drug dealer to walk through security forgetting he’s got an AK-47 in his bag or a kilo of coke in his briefcase? Won’t he be better off attacking the large queue of people rather than waiting till he’s on the plane?).

However that said, there are some ne’er-do-well types who commit crime and need to be locked up. Unfortunately, thanks to the Tory cuts, the police are now so overstretched that they can’t commit to basic law enforcement tasks, such as dealing with burglaries anymore. Instead they are way too busy dealing with other things such as terrorism (when was the last time there was an attack in the UK? Do we need tens of thousands of coppers to deal with something that happens every decade or so? And what exactly are MI-5 & 6 doing? Are they so crap at their job’s the cop’s now have to do it?) or cybercrime (I don’t think your average bobby is the best choice of person to be chasing down hackers….in another country!), sexual offences (like all those MP’s….who they never prosecuted!).

Or to put in another way the police are not in the grip of a massive “real work avoidance” strategy, devoting all of their efforts to the things the tabloids fret over and ignoring the very job they should be doing. This of course comes on the back of previous reports which have pointed to the fact that certain crimes have been more or less decriminalised, notably car crime, pick pockets and shoplifting. This has got to the point where some criminals have literally been dismantling people’s vehicles on the street without so much as a police siren to be heard. And here in Scotland we had that awful story of a couple left to die by the side of the M9 for several days because the police didn’t bother to follow up on a 999 call. Clearly the police force is creaking at the seams. And with further cuts on the way something needs to be done.

This is all very worrying. Some coppers point out that it could lead to a more “confrontational” style of policing, where on the rare occasions they do intervene, they act more like a posse of marshals in the old west, shooting first and asking questions later. And no doubt they’ll be wanting guns pretty soon also.

And its only a matter of time before some enterprising individual starts offering their “skills” and providing a vigilante service for locals, happily cracking the skulls of any petty criminals in the area for a fee. Of course history tells us that such types soon become worse than the criminals they set out to defend against. Just look at the Italian mafia. The Mafia got its start, because in 19th century New York the police were so badly resourced and corrupt, that protection from crime was a privilege for the well to do. Poor, recently arrive emigrants from Italy or Ireland had no such protection….until some criminals realised they could make more money selling protection and shaking down shop keepers than robbing places. So they set up a police department for wiseguy’s.

So Cameron and Osborne better do something about this quickly….or they might wake up some morning soon to find a horse’s head in their bed! :))

21 Trillion dollars

A shocking revelation yesterday was an estimation of the amount of cash the wealthy have hidden away in offshore tax havens. Potentially some $21 trillion dollars (or up to £13 trillion) has been taken off the grid. That’s the equivalent of the entire US and Japanese economy combined!

This merely serves to highlight a point I’ve long been making, a good deal of our deficit problems could be solved, by getting the super rich to pay more tax….or perhaps more to the point, actually paying they’re taxes! It beggars belief that some of the super rich can pay less to the Inland Revenue that the maid who vacuum’s their living room.

And if there’s one thing that infuriates me, it is these right wing faux patriots (see my article on “the patriot tax” from last year), who seem to be quite happy to wrap themselves up in the US or UK flag, be made “lords” or knights of the realm or appointed government adviser’s, yet they seem unwilling to put they’re money where they’re mouth is and pay their taxes. Now in a different era such behaviour would be considered tantamount to treason. Indeed Edward Longshanks, in the built up to his crusade, threatened to emasculate any noble who failed to pay his dues. So perhaps by me just asking the nouveau-nobles too pay they’re fair share I’m being too kind.

There is also a capitalist element to all this also. Much of this hoard of cash is essentially “dead” money. It’s money that isn’t being invested in businesses here in the UK (or US) and helping to pull the world out its current recession. This serves to yet further undermine the argument of the conservatives. They argue that we shouldn’t go after tax cheats because they’d punish us by not investing the money in the country….that’s exactly what their doing right now! Clearly there is an urgent need of governments to crack down hard on this form of aggressive tax avoidance.

Now as I’ve also pointed out before, yes it is not possible to just “tax the rich” and that alone will magically solve all the world’s financial problems. But it will certainly help a lot more than the current policy of aggressive austerity, which all the indicators are is actually stifling growth and pushing up borrowing costs.