Defeatism as policy

Last week's Economist had a special feature on "offshore financial centers" (OFCs), the new trendy term for tax havens. Its main points are as follows:

1. OFCs are indeed used to avoid taxation.
2. They offer a good deal more, though: the successful OFCs have efficient regulations, low corruption, and real expertise in providing services to global capital - reinsurers in Bermuda, for example.
3. Tough international rules and local regulations have also been put in place to keep out money-launderers, international criminals, and so forth. This is unambiguously good and should be kept up.
   
4. Allowing businesses in one country to evade taxes by using an OFC elsewhere increases their global competitiveness, and so is actually good policy.
   
5. Business is now global but tax authorities are not, so in the big picture, it is parochial and out of touch to try to pin down global, integrated operations to one country or another.
6. "...[C]lose one regulatory loophole and lawyers will open another; convince one OFC to co-operate in the fight against tax evasion or financial crime and another will take its place."
   

Items (3) and (6) invite comparison. One problem deserves serious attention, pooled efforts, perseverance. The other is, well, so darned difficult it's not worth the effort.*

Guess which of those two problems involves big business doing well for itself! This is a key element in professional pro-wealth defeatism, and indeed conservatism through the ages: if you try, you will fail, so don't try.

The people who use this rhetorical tactic will also, if you ask them, have grand visions that call for moral fortitude, steadfastness against all odds. For the Economist, it's free trade, which they are the first to admit politicians always have strong, if not good, reasons to oppose. For Bush and the war pundits, it's Iraq: they plead that we be solemnly responsible and see it through, even as they crumple at the thought of doing anything substantial to stop global warming, because it could cost businesses money!

It is a clever obstruction tactic, because, by casting doubt on the success of the enterprise, it implies that its user wants the same things as the progressive, without conceding anything in practice.

The key phrase in item (2) is "efficient regulations" (my paraphrase). The Economist seeks to inculcate by stealth the notion that laws should have business as the only constituency and the only beneficiary. Better regulators will "habitually consult local businesspeople to see how they can improve co-operation," and "'are willing to listen and change... not rigid.'" These people deliberately cloud the idea of any greater good beyond business interest. If a business avoids paying taxes, that helps the business, ergo it must be good for everyone.

The entire feature, though informative, is essentially designed a smokescreen to obscure item (1), which is not refuted at any point. Legal or not, loopholes or not, helpful to business or not, to avoid paying taxes on profits to the community where those profits were made is to reject and deny that community.

I'll take responsibility and endeavor over their brand of defeatism any day.

(For more on the transformation of public trust into private wealth-taking, WATCH THIS SPACE for a drawing-together of the strands of intellectual property, the Smithsonian, public medical research, the IRS, and weather reports! To be posted within the week.)

*I should note that the crassness of item (6) is chiefly in the introductory, summary piece: some of the detailed pieces are more thoughtful and interesting. They actually try to explain why governments tend to rattle sabers but not actually crack down on OFC use as much as they could, with particular reference to item (4).