Tag: EU

Why the travails of Apple are symptomatic of a much wider problem

By Daniel Margrain

In the wake of the democratic decision of the British people to exit from the EU, it would paradoxically appear to be highly probable that the UK government will give away the kind of sovereignty the ‘Brexiteers’ claim to covet by signing an unadulterated TTIP deal with the United States government. At a point in time in which the UK government appears set to extricate itself from the ‘bureaucratic and unaccountable’ EU, the multinational conglomerate Apple is availing itself of Ireland’s tax system, the most favourable national tax regime in Europe.

However, the European Commission ordered Apple to pay the Irish government £11bn of back-dated tax that it has avoided. The Irish Cabinet agreed to appeal the European Commission diktat. Irish PM, Enda Kenny, ordered his ministers back from their summer holidays after the European Commission accused Ireland of breaching state aid rules.

But Independent minister John Halligan initially said that the Irish government should take the cash owed by Apple in order to fund hospital services in his constituency before eventually agreeing to the decision to appeal the ruling. The European Commission alleges that Apple’s effective tax rate in 2014 was a mere 0.005 per cent which means that someone earning £30,000 a year at an equivalent rate would pay just £1 a year in tax.

Meanwhile, the reaction of the British government to the impasse, was not to support the EU in its noble endeavor, but rather to remain on the sidelines in the hope that the situation would play out to their advantage, thus providing them with a potential opportunity to entice Apple with a ‘sweetheart’ ‘investment’ deal. Meanwhile, as Alex Callinicos  pointed out “Apple is playing the EU and the US off against each other over which gets the taxes it hasn’t been paying.”

It’s precisely the logic that overrides these kinds of shenanigans that explains one of the reasons why wealth inequality continues to rise to stratospheric levels, and why governments are witnessing a backlash against globalization. Over the past 40 years, the productive capacity that capitalism has engendered, allied to the ability of successive governments to transfer assets and capital from the public to the private sphere, has created an enormous concentration of wealth at the very top of society.

Britain is a country where armies of lawyers and accountants sift through mountains of legal paper work in order to justify on a legal basis those at the very top paying as little tax as possible. This has happened as a result of the restructuring of rules and regulations which provide corporations with legal loopholes with which to jump through.

In the case of Apple, profits are funneled into a ‘stateless company’ with a head office which, according to EU Commissioner, Margrethe Vestager, “has no employees, premises or real activities.” In other words, Apple’s resident European office for tax purposes doesn’t exist. It has no staff and no location so it doesn’t pay any tax on most of the money it earns outside the United States.

Ireland has been told that it must claw back the £11 bn of back taxes from Apple even though Ireland’s ruling politicians say they don’t want it. This is money which could be spent for the benefit of an electorate who these politicians supposedly represent. Irish finance minister Michael Noonan intimated that individual states, not the EU, are responsible for individual taxation policies. “It’s an approach through the back door to try to influence tax policy through competition law.”, he said.

But what use is a tax policy if it is not intended to benefit human kind? If tax havens like Ireland behave in a way that negatively affects the well being of humans by reducing the resources available to fund services and infrastructure of which the functioning of civil society depends, then such a tax policy is not worth the paper it is written on. Does Ireland look like a country that doesn’t need £11 bn?

Apple’s billions worth of profits generated in Europe and the Middle East are transferred to Ireland where the company pays tax on just 50m euros worth. The rest is sent to their non-existent ‘virtual’ head office. As of 2015, the company’s lightly-taxed foreign cash off-shore mountain of $187bn is the biggest of any U.S multinational.

 

How can Apple defend this state of affairs whilst simultaneously maintaining the moral high ground by claiming that any attempt to prevent such an immoral situation will be bad for the societies in which they operate?

The activities of a virtually non-existent tax-paying company like Apple is already bad for these societies. The reason the masses, as opposed to companies like Apple, are subject to tax at a fixed rate, is because the former, unlike the latter, are not in the financial position to be able to avoid it. Those who are least able to pay taxes are the ones who have it deducted from their wages in full at source.

It’s not the overreaching arm of the EU ‘interfering’ with the tax laws of individual member states that’s the problem, but the fact that multinationals pit one country against another to avoid paying as much tax as possible while availing themselves of everything the rest of us pay for. The ‘race to the bottom’ is one in which corporations are constantly on the look-out to ‘up-sticks’ in the search for ever cheaper tax havens.

The end goal is a scenario in which the corporations pay no tax at all, while the masses pay for civil society because corporations like Apple, Google and Starbucks don’t have to. The upward spiral of money from the many to the few is increasing at a rate of knots due to a form of state-managed capitalism that perpetuates it. Moreover, it is happening to the detriment of the whole of the human race.

Widespread public anger towards this kind of systemic corruption is stymied daily as a result of the distractions associated with TV light entertainment and sports programmes. All this is aided by a largely uncritical corporate-based journalism. The ability of the rich and powerful to lobby governments in support of their own economic narrow interests, often to the detriment of the environment and society at large, exacerbates the problem.

Shortly before becoming the UKs unelected PM, Theresa May, intimated that the Tory government she would go on to lead would instigate greater transparency between government and big business and that she would no longer tolerate the undue influence of corporate power on domestic UK politics and the corruption through the power of lobbying that this implies. However, less than two months later, the Guardian revealed that a £3,150 payment to the government will buy business executives strategic marketplace influence.

The privileging of a tiny minority of the wealthy and corporations in this way, can be regarded as nothing less than the usurping of democracy. The mass of the working poor whose exploited labour creates the wealth from which the rich benefit and who often vote for corporate-funded politicians diametrically opposed to their own interests, is indicative of the propaganda power of a corporate and media-dominated political and economic system.

With a corporate tax rate levied at just 12.5 per cent, Ireland is effectively prostituting itself to Apple who can legally say that legally they are doing nothing legally wrong. The conventional argument goes that if Ireland failed to attract corporations like Apple, then it would be places like Belize, Bahamas or any of the British tax avoidance dependencies who would. But this zero-sum game means that while this situation is great for the CEOs of the corporations and their shareholders, it’s terrible for everybody else.

Because of the unfair competitive advantage the multinationals are able to lever, shops close, factories shut down and local businesses go under. Companies like Apple not only have governments on their side and can buy and manufacture on a vast scale, but they are not subject to the relatively higher rates of tax small businesses are forced to pay.

This situation is compounded by the fact that the typical consumer will tend to look for the cheapest goods and services available which, as a result of economies of scale, the big corporations will be most likely to provide. In such an eventuality, the role that corporations play in society becomes more prevalent at the expense of the small business.

The logical corollary to this is that eventually everything will be sold by a few giant multinational corporations who will come to dominate the marketplace resulting in less choice for the consumer, as well as its monopolization by private capital. This process was predicted by Marx who understood that capitalism was an inherently contradictory system.

In order to gain a competitive advantage over their rivals, capitalists either need to introduce mechanization to speed up the production process, reduce wages or replace their existing workforce with a cheaper one. Here’s where the contradiction comes in: If all capitalists are engaged in this process, their workers will have less and less money so they won’t be able to buy what the capitalists are producing to sell.

The capitalists, therefore, are effectively ‘creating their own gravediggers’ as a consequence of there being less demand in the economy. How has the system managed to have kept going when people don’t have money to buy things? The answer is the emergence and widespread availability of credit. However, the problems of capitalism are now so severe, so systemic, so global, that many people are wondering whether the system is coming to an end.

The hidden hands that feed racism

By Daniel Margrain

Those who have been following the flamboyant political showman, Donald Trump, whose heavy-handed approach to demonstrators at his rallies and outrageously racist remarks many are familiar with, might be surprised to learn that similar comments, albeit hidden ostensibly under the cover of liberal respectability, have gone largely unnoticed within media circles. Nine years before the widespread condemnation of Trump’s remarks, Douglas Murray, Associate Director of the Henry Jackson Society, echoed Trump when, in an admittedly less demagogic fashion, he argued for the banning of Muslim immigration into Europe.

Murray, who heads the avowedly neoconservative and CIA-funded organization that has links to the US and European far right, has also defended the use of torture by Western intelligence agencies. One might think that leading figures within the political and corporate media establishments – particularly on the liberal-left of the spectrum – would be keen to distance themselves from such a right-wing organization. On the contrary, both the hierarchy within the Parliamentary Labour Party (PLP) and political commentators not only cite the Henry Jackson Society when commenting on Islamic affairs, but actually embrace it as well.

The role call of pro-Syria bombing Blairites within the PLP who sit on the Political Council of the Henry Jackson Society include Margaret Beckett, Hazel Blears, Ben Bradshaw, Chris Bryant and Gisela Stuart, while the BBC regularly give air time to Murray on mainstream political discussion and debating programmes like Question Time, This Week, Today and Daily Politics. The organization also acts as a front for the security services via the Quilliam Foundation think tank whose role, in return for tax payers money, is to publicly denounce Muslim organisations and, with the collaboration of the neo-fascist, Stephen Yaxley-Lennon (AKA Tommy Robinson who heads Pegida UK and was formerly the head of the racist and fascist English Defence League), talk up the Jihadi threat. It’s extremely revealing that establishment figures within the hierarchy of the Labour Party who have in the recent past complained about the alleged infiltration of left wing elements within the party, are willing to align themselves with racists and fascists.

The racist outlook of Murray et al and the means to promote it within media circles are far from unique and rarely, if ever, challenged. Former UK diplomat, Craig Murray quoted the “darling of the Mail and the BBC”, Melanie Phillips’ incitement to religious hatred:

“Romney lost because, like Britain’s Conservative Party, the Republicans just don’t understand that America and the west are being consumed by a culture war. In their cowardice and moral confusion, they all attempt to appease the enemies within. And from without, the Islamic enemies of civilisation stand poised to occupy the void…With the re-election of Obama, America now threatens to lead the west into a terrifying darkness.”

To my knowledge, apart from Murray, not a single prominent commentator alluded to Phillips’ Islamophobia and racism.

Another example was the sympathetic treatment the BBC afforded to the ‘doyen of British fascism’, the BNPs Nick Griffin. In 2009, Griffin appeared on the BBC’s flagship political discussion programme, Question Time despite the fact that the Standards Board for England’s 2005 description of the BNP as Nazi was “within the normal and acceptable limits of political debate”. The European Parliament’s Committee on racism and xenophobia described the BNP as an “openly Nazi party”. When asked in 1993 if the party was racist, its then deputy leader Richard Edmonds, who has been convicted for racist violence, said“We are 100 percent racist, yes.”

Prior to his appearance on the programme, Griffin expressed delight with the decision of the BBC to have granted him a major political platform with which to air his party’s views. These views went unchallenged by the other guests on the show that included Labour’s Jack Straw, who had subsequently insisted that female Muslim constituents visiting his constituency office in Blackburn remove their veils and claimed that Pakistani men saw white girls as “easy meat”. At the time of Griffin’s appearance on Question Time, the BBC attracted an audience of almost 8 million viewers, three times its average. Following the publicity generated by Griffin’s appearance, the Daily Telegraph newspaper revealed the results of a UK Gov opinion poll which indicated that 22 percent of British people would “seriously consider” voting for the BNP and that 9,000 people applied to join them after the programme aired.

Many of the individuals who were directly responsible for overseeing Oxbridge-educated Griffin’s appearance – including BBC director-general, Mark Thompson – had themselves been educated at one of two of Britain’s elite educational establishments – Oxford and Cambridge. Griffin, who graduated in law, told the Guardian newspaper that he admired Thompson’s “personal courage” by inviting him. Nicholas Kroll, then director of the BBC Trust – an organization that supposedly represents the interests of the viewing public – was also educated at Oxford. At the time of writing, at least three of the 12 members of the government-appointed trustees, were educated at either Oxford or Cambridge, while the remainder have a background in either law, business or economics. Two years before the Question Time appearance, Griffin had generated a significant amount of publicity following the controversy surrounding Oxford universities decision to allow him a public platform to address students at the universities campus.

Despite the links the establishment has to fascism, the notion that fascist sympathies are rooted within the high echelons of the former has not been widely recognized within public discourse, even though last July, the British royal family were shown giving Nazi salutes as part of a home movie. The problem for the elites is not that these links exist, rather the concern is the possibility that the media will shine a light on these relationships.

As Craig Murray put it:

“It says a huge amount about the confidence of the royal family, that they feel able to respond to their Nazi home movie with nothing other than outrage that anybody should see it…. The royal family is of course only the tip of the iceberg of whitewashed fascist support.”

Fascist ideology is the bedrock on which our political and media culture is deeply embedded. The reality is right-wing establishment think-tanks like the Henry Jackson Society and MigrationWatch UK use racist based arguments around the issue of immigration as as their justification for arguing either for, on the one hand, British withdrawal from the EU or, on the other, for the implementation of greater neoliberal reforms as a precondition for maintaining the countries continued membership within it. This, in turn, provides the intellectual echo chamber for the racist UKIP and BNP as well as the ultra right-wing factions within both of the main political parties.

What this illustrates is the contradictory nature immigration plays as part of the function of the liberal democratic state within capitalism which transcends party political lines. Both the official ‘left’ and ‘right’ are prepared to use false and contradictory arguments around the issue of immigration in order to whip up divisions within society for naked opportunistic short-term electoral gain. Under the New Labour government of Tony Blair, for example, Gordon Brown opened up the UK labour market to potentially millions of workers from the Accession 8 (A8) countries that comprised the former Soviet Bloc as the basis for restoring Britain’s economic status against a backdrop of sustained industrial decline.

Brown did this as the means of addressing Britain’s demographic problems in terms of its ageing population as well as to fill existing skills gaps. However, by the time he had taken over the reigns of power from Blair, he began using the racist language of division by emphasizing the need to secure “British jobs for British workers”. This was after oil refinery workers in 2009 protested against their replacement by foreign workers that he – Brown – encouraged. Short-term electoral interests encourage politician’s to play the race card which does not necessarily correspond with those of their paymasters in the boardrooms of the corporations whose primary concern is to secure the most plentiful, skilled and cheap workers possible.

In pure economic terms, immigrants make a positive contribution, not least because the state has been spared the considerable expense of educating and training them. Political leaders know this and that is precisely why the shrill talk deployed at elections is invariably at odds with the policies they actually implement when in office. That, in turn, is why it is so easy for the bigots within racist parties like UKIP and the BNP to expose the hypocrisy of the mainstream parties while also providing organisations like the Henry Jackson Society and MigrationWatch UK the ammunition they need as their cover for pursuing a racist agenda of their own.

Too readily, those at the top are quick to exploit voters’ concerns about the supposed threat that immigration poses in terms of undermining ‘social cohesion’. But they do this so as to engender a sense of division to make it easier for them to rule over everybody. When tensions arise from time to time, it’s those at the bottom who are routinely condemned for their prejudice and bigotry in the media, whereas the more significant racism which emanates from the policies of those at the top who foment it, goes virtually unnoticed.

It’s not my intention to absolve working class racists of their actions, but rather to point out that the more significant forms of racism is formed in the corporate and media boardrooms, think-tanks and elite political sphere indicative of ruling class power. Although this racism is given political expression in the form of scare stories almost daily in the gutter press of the Sun, Daily Mail and Daily Express that perpetuate them, it’s not restricted to these tabloids. The Chair of MigrationWatch UK, Sir Andrew Green, for example, is regularly granted a media platform in order to push an anti-immigrant agenda, albeit a subtle one.

Similarly the likes of Douglas Murray and Toby Young who newspaper proprietors and TV executives consistently employ to espouse their right-wing views, do a great deal to distill the more overt expressions of racist scare stories so as to appeal to the realms of their middle and upper middle class viewers and readers. It’s deemed irrelevant by corporate executives that the ‘journalists’ they employ proffer spurious and deliberately misleading information, simply that they give their demographic what they think that want to hear and read to increase their customer base and so boost their profits in order to satisfy the demands placed on them by their advertisers.

And that, I submit, is hardly the foundation on which to build a civilized, multi-cultural and inclusive society. Donald Trump may be an oaf and a racist, but is he really much different to the elite that rule us?