According to the Paris-based OECD (Organization for Economic Cooperation and Development), a tougher crackdown on tax evasion by wealthy individuals who stash their money abroad could bring in up to $100 billion in fresh revenues to countries now struggling to eliminate their budget deficits.
A survey of 20 countries by the OCED, says Jeffrey Owens, head of the institution’s center for tax policy, has found that these have already netted themselves an additional $14 billion in taxes previously avoided on assets of some $120 billion to $150 billion held abroad by their citizens.
This, says Owens, need be only the start. He reckons that, “There is probably $1 trillion in assets held offshore.”
Score one, therefore, for the Occupy Wall Street movement.
As a protest movement, it has probably passed its peak. It has no specific ideas of how to close the gap between the 1 per cent of the hyper-wealthy and the other 99 per cent. Its demonstrations in major cities are beginning to be closed by the authorities.
Yet on the core issue raised by the Occupy movement of a deeply rooted unfairness in the existing system, the evidence keeps accumulating that it’s onto something fundamental.
Last Sunday’s New York Times contains one more telling example of the kind of thing that’s become routine under the existing system. The Times reveals that the U.S. defence department is paying its contractors the costs of their pension programs even though these companies are already highly profitable.
Cleaning out all the scams of this kind isn’t going to solve the core problem of excess spending, or of under-taxing.
Just about every country — Canada no less than wretched Greece — is going to have to go through a cleaning of their Augean Stables. A long, hard slog awaits us all.
But for us to get through the coming Age of Austerity, one quality will be critical. This will have to be of a general sense of fairness.
Yet fairness is still being set aside.
Consider what’s just happened in Greece and in Italy. Both countries are being put through a brutal exercise in austerity to save them from bankruptcy.
This had to be done. But it’s being done in the wrong way. In both countries, elected leaders — Silvio Berlusconi and George Papandreou — have been pushed aside to be replaced by unelected technocrats. The newcomers — Lucas Papademos and Mario Monti — are highly competent and well-regarded individuals (as Berlusconi most certainly was not).
But neither the Greeks nor the Italians had any say in these changes. They were dictated to them by outsiders.
This was the point made, with great delicacy, by Bank of Canada Governor Mark Carney when he said he saw justification for Papandreou’s call for a referendum to give Greeks a chance to say whether they accepted the austerity package imposed on them in exchange for being bailed out.
Return to the fact that the Occupy movement, no matter how incoherent, really is onto something.
Another recent story shows how the public’s mood is changing. In the U.S., credit unions are suddenly popular — as an alternative to banks. In just the last month, 650,00 people have joined credit unions, more than did so in all of last year.
And there’s a counterpoint story to that one. Recently, the Swiss bank UBS had to admit that it lost $2.3 billion on investments by a rogue dealer. More recently, it’s had to admit it’s still going to pay its staff bonuses that amount to 90 per cent of all its investment dealing profits.
We’re into a new age. We have to act in new ways or there’s going to be a real blow-up.