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Written by: Kamran Mofid

Published: 08 August 2012

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Austerity in Europe and elsewhere:

The consequences of the stupidity of the “Creative destruction”, the so-called Austerity Measures are all there to be seen: Massive cuts in public expenditures, huge rise in unemployment, including youth unemployment and under-employment, cuts in wages, pensions, increases in costs of education, healthcare, housing, transportation, public utilities, recession and depression, and much more. If this is not the triumph of Profit over People, then, what is it?

The pertinent questions must now be: Why austerity? Why inhumane policies, causing so much pain on the vulnerable masses? Why are these elected and not elected governments not collecting the taxes that should lawfully be collected? Why are they not doing the right things about tax avoidance and evasion? Why are they allowing the 1% to get away with “murder”, whilst blaming and punishing the 99%? What has happened to morality? Where has justice gone?

In short, “the world economy is edging nearer to the abyss, and policymakers, none more than in Britain, are paralysed by the stupidities of their home-spun economics. Yanis Varoufakis, ex-speechwriter for former Greek Prime Minister George Papandreou and now an economics professor in the US, said last week: "There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down."

See more below:

At least $21tn (£13.5tn) of untaxed private wealth was invested in global tax havens in 2010, according to a report from the Tax Justice Network, a group of tax professionals which campaigns on the issue.

To put that into context - it is more than a quarter of the total GDP (gross domestic product) for the whole world - about the size of the US and Japanese economies combined.

How big is the problem, and what is its nature?

A Background reading

“Assets held offshore, beyond the reach of effective taxation, are equal to about a third of total global assets. Over half of all world trade passes through tax havens. Developing countries lose revenues far greater than annual aid flows. We estimate that the amount of funds held offshore by individuals is about $11.5 trillion – with a resulting annual loss of tax revenue on the income from these assets of about 250 billion dollars. This is five times what the World Bank estimated in 2002 was needed to address the UN Millenium Development Goal of halving world poverty by 2015. This much money could also pay to transform the world’s energy infrastructure to tackle climate change. In 2007 the World Bank has endorsed estimates by Global Financial Integrity (GFI) that the cross-border flow of the global proceeds from criminal activities, corruption, and tax evasion at US$1-1.6 trillion per year, half from developing and transitional economies. In 2009 GFI's updated research estimated that the annual cross-border flows from developing countries alone amounts to approximately US$850 billion - US$1.1 trillion per year.

Offshore finance is not only based in islands and small states: `offshore’ has become an insidious growth within the entire global system of finance. The largest financial centres such as London and New York, and countries like Switzerland and Singapore, offer secrecy and other special advantages to attract foreign capital flows. As corrupt dictators and other élites strip their countries’ financial assets and relocate them to these financial centres, developing countries’ economies are deprived of local investment capital and their governments are denied desperately needed tax revenues. This helps capital flow not from capital-rich countries to poor ones, as traditional economic theories might predict, but, perversely, in the other direction.”…

Read more:

TAX HAVENS CAUSE POVERTY

The Broken Capitalism and Cruel Austerity