Property, Globalisation and Why St Paul’s Protestors are Right

Synopsis: In a one off and unashamedly political blog this week, I argue that the protestors at St Paul’s are right to highlight how the good things in capitalism have been undermined and eroded and why their protest should be supported by all right minded people.

This week I’m not going to comment on issues affecting landlords and the private rented sector. Instead, I am going to use this space to publish a blog commenting on the momentous issues facing the world’s economy. (Please forgive the intrusion. I promise that normal service will be resumed next week!)

In an interesting side-comment in last week’s Telegraph in the middle of a piece looking at the Greek problems, it was reported that whilst only 15,000 people in Greece declared earnings of more than €100,000 in 2010, one in 20 purchasers of £20 million houses in London lived in Greece.

So, we can all see where at least some of the money has gone then.

Similarly, when there were problems in Egypt, estate agents operating in the prime end of London property, reported lots of interest from buyers from that country. The same thing went for when the Libyan crisis raged.

I have written before (at this blog) about all this “funny money” and ill gotten gains, and how much of it ends up in the UK property market where it drives up house prices for all of us as it trickles down to suburban terraces from Bexley to Barnstaple.

Tax and Funny Money

I don’t suppose much of this foreign money had ever seen the light of day of a tax demand from those country’s tax authorities.

For me this sort of thing just goes to highlight what’s ultimately wrong with globalisation and how it links to the problems the world is now experiencing.

Because the fact is there is actually plenty of money around. Lots of it.

But it’s not in the hands of the bulk of the ordinary people, who are the ones governments have said must pay off the debts incurred by the world’s hapless banks.

Tax and the Big Global Companies

Most of it is in the big global corporates who are awash with cash – and why wouldn’t they be? After all, many of them don’t pay much tax on the profits they earn, as they are well versed at using techniques such as “transfer pricing” to dump their profits in tax havens like the Cayman Islands and Jersey – which are of course at arms length but nevertheless pretty closely connected with the City of London via what Nick Shaxson (author of Treasure Islands – Tax Haven and the Men Who Stole the World) calls a “spiders web of tax avoidance centred on the City.”

Much of this avoidance is alright as far as the tax man is concerned too. For a good example of how HMRC treated the UK’s second biggest company, Vodafone and allowed them to avoid tax, see this piece:

And so, the money is there.

Benefit Scroungers

But to get at it, the powers that be would rather press down hard on the ordinary citizens of Greece and other countries to get out of the mess created by the banks. Meanwhile, some in the media do their best to divert the public’s attention to benefit scroungers whose take from the public purse is but a tiny fraction of the larceny going on at the big global firms.

I’m fully in favour of capitalism (no better system has ever been invented yet) but not the appalling version of laissez faire global capitalism and global-corporate tax avoidance that was invented under Reagan and Thatcher and has continued even under supposedly social democratic administrations such as New Labour in the UK and the Democrats in the US.

That version of capitalism is destroying opportunities for all of us and in the long run will destroy profits for the big corporates too, because low incomes means people cannot buy up the products and services the big global firms produce.

Support for St Paul’s

In my view, that is why the protestors in St Paul’s are right and should be supported by all right minded people.

It’s time to take capitalism back and ensure that in future it operates for all the people, not just the global banks and multinational corporates. A good start to this could be made by the world setting out a global agreement to shut down the tax havens.

This would go a long way to help retake capitalism for the people – in other words, a rebirth of democratic capitalism.

Normal service for private landlords and for those who sell to them will be resumed next week!

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