Colours: A Poem

British newspapers have themselves been in the news spotlight of late, much to their discomfort, as allegations of phone hacking, bribery and possibly even perverting the course of justice, have forced the closure of the News of the World and look likely to bring down the whole News Corporation empire. This update isn’t about that case. Instead I want to make some related points, which are true about the mainstream media in general – and war in particular – that will remain true long after the Murdoch empire has crumbled to dust.

The media has a primary role to play in maintaining public support for overseas wars, as well as internal repression at home, all justified in the name of the War on Terror. They appeal to patriotism and the cult of blind sacrifice. Every now and then, this backfires, as the reality of war comes home, wrapped in a flag, wrapped in the colours: wrapped in a newspaper. One of those newspapers was caught hacking into the mobile phones of the relatives of dead soldiers, which should be enough to show that the corporate media cares for nothing except money. 

Photo: AP

Despite that, I found this Daily Mail report of a young widow’s grief particularly sad and moving.
I cannot read it or look at the picture of Mrs Kirkpatrick, dressed unusually in pink, placing a rose upon the hearse bearing the body of her husband, without crying. These images have haunted me for over a year. The pink dress seems like a defiant expression of love in a world governed – literally – by hate. I had to write a poem about it, in Sapphic stanzas; the form associated with Sappho, one of the very first love poets. Why? How else does one defeat war, but with love? How to stand out against black, but with pink? It’s all about the colours …


Colours

Wearing pink, she places a rose upon the
coffin of her former defender; so the
lines would claim. He died not for nothing, words cry,
draped in the colours.

Red and white and blue are the colours; shrouding
dead and dying soldiers of Empire, shrouding
too the things of love, which were broken, long lost
covenants buried:

Sacrificed and sold for a well of black gold.
Keep the wheels in motion and don’t ask why, or
who or where your enemies really are – just
follow the colours.

---

By coincidence, the Daily Mail story is dated on the anniversary of the 7/7 bombings in London, which claimed 56 lives and which was used by the Blair government to shore up support for the wars in Iraq and Afghanistan which have in their turn destroyed many thousands of lives and continue to claim victims today: mostly innocent civilians including many children. US troops are finally due to begin withdrawal from Afghanistan this month. I would like someone to explain to me exactly why it was all worthwhile and why all those people had to die. Mrs Kirkpatrick is also owed an explanation.

Note on form: Sapphic stanzas were originally written in patterns of long and short syllables in ancient Greek. The English Sapphic form translates this pattern into a regular metre based on stress. The predominant foot is the trochee, although each line incorporates a dactyl. The effect in English is to induce a sombre and solemn mood, reminiscent of a funeral cortège, but injected with a note of urgency thanks to those dactyls.

My Big Fat Greek Default

BREAKING NEWS: Greece has defaulted on its debts! Oh, wait. Apparently it hasn't happened yet. Most media commentators are still talking about a second bailout of over 100 billion euros (it may be a gazillion, I can't quite remember). This will arrive if the Greek prime minister, George Papandreou, who survived a vote of confidence, can push through yet more austerity measures, of the sort only previously imposed by the IMF on banana republics whose rulers dispense financial advice to their people down the barrel of a gun.

Many wise words have been spilled explaining the dangers of 'contagion' to the rest of the eurozone and the whole banking system. We are supposed to believe that a Greek default would be a catastrophe for mankind: something like a massive asteroid that could wipe out all of Europe's bankers, politicians and media pundits at a stroke. Only the thing is this: it has already happened. For the Greek people, it has been happening for the past year already and the pain will continue indefinitely.

What would Socrates do?

Now for a lesson in semantics. Q: What is the difference between a 'bailout' and a 'default'? A: Nothing, except:

1) It is the ordinary citizens of Greece and Europe generally who are paying the whole price, instead of the bond holders - i.e. the banks who hold Greek debt and whose irresponsible lending created the crisis. The wealthy bond holders don't lose a cent. Isn't that nice? They get all their money back, with increased interest, and their risk is nil. Nada. Zilch.

2) A 'bailout' does nothing to wipe the slate clean. It's like going on a savage cocaine bender just to get over the terrible depression that followed the last one, knowing full well that the black dog will return again tomorrow, with a whole pack of its mates.

To take the drug analogy further, who do we blame? The seedy dealer, peddling empty promises of endless sunny illusions? Or the poor sap who believed those promises? The analogy isn't quite precise, in this case, because politicians act as a kind of middle man between the bankers and the people. It's the politicians who sell those promises and take a cut on the deal, which is why they are always on the side of the bankers, of course. Both parties to the deal are somewhat to blame, but most people can see that it is the drug pushers who bear the greater share of responsibility and deserve to be punished (whilst the addict goes into rehab).

In this case, the drug pushers, far from being punished, are put in charge of solving the problem. Funnily enough, they prescribe another dose of drugs, only the price has gone up - way up - and the addict has to sell all his possessions just so he can afford to keep taking the drugs. Meanwhile, the addict's friends and family (who are also on the same drugs), have to chip in to help him pay.

What is the real solution to this problem? It is called the Red Pill, my friends. The Red Pill dispels illusions. What is that great big fat mountain of debt, really? It is nothing: an illusion, a simulacrum, a scam, a confidence trick. Where did it come from? It was created by banks (97% of it) out of thin air. That which is created from nothing can go back to nothing. So what if a lot of imaginary money disappears from whence it came? Give the problem back to the banks. They created it. They can sort it out. A lot of rich people will get slightly miffed. Default.

Footnote: In the case of Greece, the drug also goes by the steet name of 'the euro'. This drug releases a steady stream of cheap credit into the user's blood system, causing a feeling of intense euphoria and a craving for German imports, which can last for years.

Update 28/6/11: I hope I made it very clear above that the EU/IMF/ECB bailouts are not designed to assist the Greek economy at all, but simply to allow private bondholders to cut and run before Greece inevitably defaults. This is easy to see if you understand that 70% of Greek debt was in private hands last year, but this is now down to about 50% and falling. Here is another article explaining how Greece is being hung out to dry, by former Citibank economist, Michael Burke. The people of Greece, thankfully, are not easily fooled any more. They have had enough of venal, worm-tongued politicians in league with fraudulent bankers. The corporate media is mostly arrogant and complacent about the extent of popular anger, as well as the causes of the crisis and I suspect they will be in for a shock. It would not surprise me at all if the Greek government were toppled by force within the next two weeks.

Epitaph to Brian Haw 1949-2011. RIP

My personal tribute to Brian Haw, campaigner for peace, truth, liberty and justice, who died yesterday, aged 62 after a battle against cancer. His greatest battle, however, was against the politicians who lied in order to take our nations to unjust and unnecessary wars around the world. These wars are still in progress even as new ones begin, justified by fresh lies:

Epitaph to Brian Haw

If one lone fool in Parliament Square 
could speak the truth, then cast
an army of such fools - and dare
that peace be yours at last.

---

Unlike the politicians and war-mongers against whom he protested, Brian Haw will be missed by millions around the world. There is a Guardian obituary here and Haw's own website is here. There is also a tribute from film maker and activist, Chris Atkins, on Youtube here. Deepest sympathy to Brian's family.

Brian Haw 1949-2011. Photo from Socialist Unity 2009.

Thought for Food

Looking for a sound investment? Maybe I could interest you in a cheese sandwich? Perhaps Sir or Madam would prefer a foie gras, washed down with champagne? The latter might be more to the taste of the directors of Glencore, the world’s biggest commodities company, which has just listed on the London Stock Exchange with an estimated value of $60 billion. Glencore’s valuation reflects the fact that the prices of commodities, including basic foods, have shot up dramatically in the last couple of years and now stand at 30-year highs in real terms. The consequences are hunger and social unrest in much of the world, but an opportunity for profit in others. What is causing the problem, and is it really a problem?

The Economist magazine suggests that rising prices are driven mainly by supply-side factors such as drought and wildfires. The increasing use of land for bio-fuels may also be a factor, together with demand side causes like population growth and the growing purchasing power of the Chinese. However, the Economist is deluded if it thinks that speculation is not the main factor in the current commodities bubble. Their argument is exactly like saying that speculation had nothing to do with the recent property bubbles around the world. They forget that every asset price bubble is driven by debt creation in banks and the flight of 'hot money' around the world. Right now, commodities are where it's at; they are literally the next big thing. There's nowhere else for the hot money to go: property prices are falling, shares are volatile, bond rates are rock bottom. Hot money always wants the hottest returns.

The bubble may have started with supply-side factors but it is now being driven by speculation, financed by banks (especially Goldman Sachs). This is driving up inflation and could plunge the global economy back into recession, all for the sake of further enriching a handful of 'top' bankers, who are still receiving state hand-outs after committing massive fraud over the past 10 years (see the Oscar-winning documentary film, Inside Job).

The Economist suggests that the solution is to increase food yields. Again, they miss the point entirely. There is more than enough fertile land and food in the world to feed everyone in abundance, without any need for increased yields. The real problem is its distribution and the distribution of the wealth required to buy it. If food were equitably distributed, there is enough to provide 2,720 calories every day to every single person on this planet (far more than most people need), which is 17% more than 30 years ago, despite population growth. Whilst Westerners stuff their faces on junk and succumb to diseases of obesity, hooked on sugar, meat, celebrity culture and advertising, the majority of the poor world starves, purely to sustain a bankrupt global capitalist system of institutionalised slavery and theft.

If you read textbooks on economics (sadly, I do - you should do yourself a favour and not bother), you will find that they say that commodities futures markets exist to provide price stability over the longer term and that the role of speculators is to smooth out the short term shocks and fluctuations. This is indeed exactly how it works in the fantasy world of free-market economic theorists, where the market is largely made by the primary producers and consumers, whilst speculators play only a minor role.

The real world situation is the opposite of this: Glencore controls around 10% of the entire world's wheat market and even larger chunks of several other vital markets. Together with other huge speculative players like Goldman Sachs, they are now the tail wagging the dog. When the speculative money absolutely dwarfs the money belonging to the actual producers and consumers, derivatives markets become weapons of mass destruction, whose purpose is simply to create a massive casino where real lives are nothing but chips to be gambled. The winners will get even more fabulously wealthy whilst the losers (if they're too big to fail) will get bankrolled again by the taxpayer (you). The biggest losers, as always, will be the poor, especially in the developing world.

Bin Laden 'Buried at Sea'. Skepticism Killed in Crossfire.

I was going to blog about the death of free speech in Britain, following the pre-emptive arrests of dozens of anti-government activists in advance of the Royal Wedding, but that will have to wait, because there has been another reported death since then which has totally captured the news agenda. Osama Bin Laden is reported to have been killed by US special forces in Afghanistan, on 30th April, 2011; a date which happens to be the supposed anniversary of Adolf Hitler's suicide, although I'm sure this is nothing but a curious coincidence.

Osama Bin Laden has been presented as the great bogeyman of the West, the prime suspect for the 9/11 terror attacks, the official main reason for the invasion of Afghanistan and the prosecution of that war for nearly 10 years, at the cost of countless, mostly innocent, lives. Bin Laden's media persona is a character strongly reminiscent of George Orwell's Goldstein, from 1984. Yet there has long been speculation that he may have died some time ago, given that he has been more elusive than Elvis for a number of years; his appearances confined to videos of increasingly dubious authenticity, or a few unreliable witness reports. Even the Daily Mail has taken seriously the possibility that Bin Laden may have died on 13th December, 2001, just 3 moths after 9/11. This belief comes originally from an item in the Egyptian newspaper, al-Wafd, on 26th December, 2001, which is sourced to a senior Taliban official and is, until now, the only credible report of Bin Laden's death. It was repeated by several Western media outlets, but quickly forgotten. The report is given credence by the fact that Bin Laden was a kidney dialysis patient who needed special medical equipment to keep him alive; equipment and expertise which is unlikely to have been available in the mountain caves of Tora Bora.

Osama Bin Laden (1957 - 20??). Photo: AP

Whilst searching for further information about these reports, I chanced upon a website which claims to document the evidence concerning Bin Laden's death. When I last checked at 22:43 on Sunday, this website was claiming that it was under a continuing massive distributed denial of service (DDOS) attack which began just moments before the official announcement of Osama Bin Laden's death by President Obama. Of course, this may be some kind of joke or deception, but I find it somewhat strange, if it is true. For now, I would treat that claim with the same skepticism with which I would like us all to treat official reports of Osama Bin Laden's death. The fact that the website is still up suggests that the DDOS attack was not very successful. Another reason to doubt the website's claims is that it also seems to advocate a number of causes such as climate change denial, for which there is very good contrary evidence. However, the evidence it presents concerning Bin Laden's death must be judged entirely on its own merits, which is something I invite readers to do for themselves: it does present numerous links to reputable independent news reports supporting the contention that Bin Laden may have been dead for many years. Those who prefer a more authoritative investigation of these claims might want to read Professor David Ray Griffin's book on the subject, 'Osama Bin Laden: Dead or Alive?'

The most curious feature of the official US report of Bin Laden's death is that his body was apparently buried at sea, within hours. US officials say this was in accordance with Islamic custom and to prevent his grave becoming a focus for anti-US sentiment. This excuse does not impress many Muslim scholars, nor does it impress me. Indeed, it is standard custom throughout the world, since time immemorial, to exhibit the bodies of your defeated enemies, or at least to exhibit incontrovertible evidence of their death. This is exactly what the US did with the body of Che Guevara in 1967 and those of Saddam Hussein's sons; there was no standing on custom out of respect for the traditions of the deceased, or concerns about martyrdom. The most crucial thing is to prove that your enemy is dead. If America were really concerned about not offending Muslims, perhaps they should not have invaded two Muslim countries and killed tens of thousands of innocent Muslims over the last 10 years.

Still, it seems very likely that US special forces did mount a raid on a 'compound' in Abbottabad, Pakistan on Saturday night. We have already been treated to some video footage of the supposed aftermath of that raid and I expect more will follow in due course. We may get a photograph of the deceased, but we know that such things are all too easily faked. It is possible that a man or several people were killed in that raid. It is even possible that the men who died were Taliban or even Al-Qaeda fighters (if the term 'Al-Qaeda' still has any useful meaning). What we cannot say with any confidence at all is that one of these men was Osama Bin Laden.

Hence I find it alarming that there has been so little skepticism in the mainstream media and even among self-proclaimed rational skeptics in the blogosphere, concerning the official statements from US military, government and intelligence sources. Instead, accusations of 'conspiracy theory' are routinely hurled across Twitter in the direction of anyone who dares raise so much as an eyebrow. Perhaps it is time we began to deconstruct the phrases 'conspiracy theory' and 'conspiracy theorist', exposing them for the cheap insults and avowedly unskeptical thought-bypass devices that they are. We may find that the idea that Osama Bin Laden was the criminal mastermind and head of a global terror network called Al-Qaeda, which was responsible for the 9/11 attacks and many others, is equally worthy of the label 'conspiracy theory'. Personally, I find that line somewhat self-defeating. I prefer to reject all accusations of 'conspiracy theory'; then we are left looking for actual palpable evidence of things. This is a concept which often proves far too hard for the mainstream media to grasp, sadly. We are therefore left with little more than fables, constructed from prejudice, suggestion and misdirection.

Sometimes these fables are exposed, just as the ridiculous claims of Donald Trump and the so-called 'birther movement' were exposed. Those claims had no credibility to begin with because they were based on no real evidence. Ironically, President Obama's victory over the 'birthers' will help to deflect skepticism over his own equally unsupported claims that the US has now killed its greatest enemy. It was really a victory over nothing, since it was always going to be easy for Obama to produce his birth certificate. I suspect it will be very much more difficult for him to produce truly believable evidence that Osama Bin Laden was killed by US forces this weekend, but I am willing to be convinced.

Nonetheless, there is real significance in the demise of the legend of Osama Bin Laden, and there is a real sense in which a bogeyman has been laid to rest. Bin Laden's assumed death paves the way for a US withdrawal from Afghanistan, which was already set to begin in July this year. It gives President Obama an immediate popularity boost (in spite of bad economic news) and will allow him to claim some kind of victory, both in Afghanistan and the closely related phony 'War on Terror'. The truth is that the Afghan War has been a defeat for the US (and its allies) and it never had anything to do with homeland security or global terror. It was always a war about access to Caspian oil fields, as was ably demonstrated in The New Great Game: Blood and Oil in Central Asia, a book by the Berlin-based journalist, Lutz C. Kleveman.

RIP Osama Bin Laden (1957 - 20??). RIP The War on Terror? Until the CIA invent a new bogeyman to support the next foreign adventure, perhaps.

AV or not AV? That's not the question.

I'm a democratic, freedom-loving lefty and I know many others who share my values. It is therefore very perplexing that some of my dearest friends are currently likely to vote 'No' in the forthcoming referendum to change the voting system in British general elections. This Easter weekend I had a long conversation with one of these friends, during which I came to understand his objections to the change on offer, and I recognise some real problems with AV; however these are not sufficient to justify a 'No' vote, especially if you are a democratic, freedom-loving left-winger. If you are one of those, please let me explain why you should reconsider your decision to oppose this change:

It seems that the over-riding reason for opposing AV among lefties is that it is thought that it might lead to a more bland, centrist style of politics in which the Liberal Democrats will hold the balance of power, most of the time, if not forever. Owen Jones makes this case in his blog. A similar case is put forward in another Labour blog, here. Both offer well articulated arguments. However, I believe this is a grave misconception, which the 'No' campaign would dearly love us to accept. The first big clue that this is a misconception comes from the very composition of the 'No' campaign itself: a reactionary cocktail mixed from the Taxpayers' Alliance, the Tory right, the BNP and the hyper-authoritarian Blairite wing of the Labour party (John Reid, Margaret Beckett, et al). Still, this issue is too important to indulge in ad hominem arguments. Many on the left see the referendum as a chance to give Nick Clegg a well-deserved kicking. This is probably the best reason to vote 'No'; a reason with which I can thoroughly identify, but it's just not good enough when it comes to a fundamental matter of the mechanics of democracy. On the other hand, Labour supporters might also want to consider the fact that a 'Yes' vote would severely weaken David Cameron.

So, why is it a mistake to think that AV would lead to more bland, centrist politics? First, it could hardly have escaped anyone's notice that the current climate of political debate is already about as bland and centrist as it is possible to be. Why is that? Well, who decides elections, in practice? Left-wing voters in inner city ghettos? No. Elections under first-past-the-post (FPTP) are decided by a tiny number of floating voters in a small number of marginal constituencies; about 1.6% of the electorate. These people tend to read tabloid newspapers and watch the X-Factor. At present, if you want to win an election, you need to pander to them. No one else counts. Labour takes the inner-city vote for granted and the Tories can always rely on the country squires. This is why you can barely squeeze a blue Rizla between the two main parties on policy. They both accept the neo-liberal economic consensus, the need for cuts and the inviolable rights of banks to rip us all off, ad infinitum. None of this can ever possibly change under our current voting system. We are completely at the mercy of media pundits and the voters they manipulate.

The status quo is completely unacceptable, if you support progressive politics. There is no case for FPTP over AV when it comes to a consideration of fairness and democracy. Why should it take 10 times as many votes to elect a Liberal Democrat MP as a Conservative MP? This is indefensible, no matter how much you may hate Liberal Democrats. The reason is partly because the Lib Dem vote is more uniformly spread across the country. Why should the geographical concentration of support have such a huge effect on the way our democracy functions? Would you accept that fact if it were the Labour vote (or even Conservative vote) that were spread out, and the Lib Dem vote were more concentrated? In their hearts, even opponents of change understand that AV is marginally more democratic than FPTP. It is totally obvious that AV gives voters more power to influence elections, because it means fewer votes will be wasted. The argument is best summarised by a cartoon:

Cartoon by R. Douglas Johnson

It is also untrue that AV would disadvantage smaller parties, as has been claimed by the Socialist Party, among others. It has been pointed out that in Australia, the Greens got 11.8% of the vote but only 1 MP out of 150, under AV, whilst we have 1 Green MP in the UK with only 1% of the vote. The point to understand here is that AV leads to an increased vote for smaller parties, although it doesn't generally give them more MPs. That's because people are free to express their true opinions under AV, without wasting their vote. AV is not PR, but that 1 Australian Green MP would equate to 4 MPs in the 650 seat House of Commons, so AV does have the potential to benefit smaller parties, by increasing their vote, although minor parties are unlikely to win many more seats. The increased vote for minor parties also gives them a chance to influence the policies of other similar parties who might want to court transfer votes. On the other hand, AV makes it impossible to elect a candidate who is strongly opposed by a local majority: this will often be a BNP candidate, or perhaps even a Tory, which may explain their opposition to AV. It is most unlikely to affect the prospects of the Greens, who are not  widely reviled. They will still find it hard to win seats, but no more so than under FPTP.

But what of the alternative? The 'Yes' campaign has been guilty of grossly exaggerating the benefits of AV over FPTP. Whilst this has been as nothing compared to the outright lies peddled by the 'No' campaign, the truth is that AV is only a very small improvement over FPTP, in terms of democracy. The evidence is that it is only a very marginally more proportional system, most of the time, although it may increase the effect of a landslide. FPTP is almost as likely to lead to hung parliaments, and the Australian experience with AV suggests that coalitions are not going to be the norm. In any case, the evidence is very sketchy and based on a host of assumptions backed by very little firm data; it is 90% guesswork. It is important to understand that the outcome of elections depends crucially on the political landscape and context: this is true under any electoral system. Here is where AV offers real improvement: it promotes plurality because it gives voters the power to express their true preference, as Sunny Hundal argues on LibCon.

FPTP is designed for a two-party system. It simply doesn't make any sense in a multi-party democracy where voters feel increasingly disinclined to support the two main parties. I grew up during a time when the left-wing vote was split, most obviously in the 1983 election. This delivered a landslide victory for Margaret Thatcher's Tory party on 42% of the vote, despite the fact that most voters were clearly opposed to their policies. The splitting of the left-wing vote produced 17 years of extreme neo-liberal Tory government, until the Labour party finally learned to pander to those tabloid-reading floating voters in marginal seats. The result was a further 10 years of neo-liberal Thatcherism, but with the smiley face of Tony Blair on the poster - admittedly we did get more money for health and education but at the huge cost of foreign wars for oil, PFI scams, tuition fees, lower social mobility, deregulation, welfare for bankers and a vicious attack on our civil liberties.

A recent YouGov poll suggests that Labour would now be the main losers if AV were adopted in preference to FPTP. This is very much in contrast to what would have been the case for most of the past 30 years, including the 2010 election. A closer look at that poll reveals that Labour, with 42% of the vote, would still have an outright majority under both FPTP and AV. The only effect of AV would be to reduce the Labour majority by a mere 13 seats, which I consider to be a good thing, as it would reduce the power of the executive over the legislature. The Tories would have the same number of seats under either system, so the Lib Dems - as ever - would be the beneficiaries, although they would still have less than half as many seats as they have now, due to the collapse in their support - and yet they would still be under-represented! In short, the political landscape has changed, and that is why Labour is no longer necessarily the biggest loser from FPTP. It looks like it may now be the right-wing vote that is fragmented, for the very first time in history. The Tories are fighting for reactionary votes with UKIP, the BNP and the right-of-centre rump of the Lib Dems. This may well be a temporary state of affairs, though, bearing in mind the rising support for the Green party and the possibility that the Lib Dems may rediscover their principles and position themselves to the left of Labour, as they have done for the past 3 or 4 elections, to great effect.

None of this really matters. It would be foolish in the extreme to make a decision on electoral reform on the basis of narrow party political advantage as revealed by a snapshot of voting intentions from a single poll at a single moment in history. This momentary advantage of FPTP to the Labour party is not even that great (13 seats in an overall majority either way). Still, it seems that many Labour supporters, especially left-wing activists, have a gut feeling that anything which benefits the Lib Dems must be opposed. There is considerable tribalism in this feeling (often based on local antipathies), and its intellectual justification is a half-thought-out assumption that AV will lead to more centrist politics. I hope I've already shown that this assumption has no basis and that centrist politics is rather a consequence of FPTP.

In fact, there is a condsiderable body of voters and potential voters to the left of Labour, whose views are largely ignored and whose votes are taken for granted or considered surplus to requirements by the party. Many of them voted Lib Dem in 2010 and have since been attracted either to Ed Milliband's more leftish style of Labour politics, or to the revitalised Green party, which is well to the left of Labour on most issues, and far less authoritarian. Electoral reform at last holds out the possibility of galvanising a broad left majority capable of steering the Labour party away from the neo-liberal consensus of the past 30 years. We must not let this opportunity slip away. The centre is the ground already occupied by the two main parties; it makes no sense to 'reach out' to that ground, where there is no room for manoeuvre. AV would give Labour an incentive to reach out to the left instead - to the Greens, socialists and remaining left-wing Lib Dems - in pursuit of the transfer votes it will need to defeat the Tories who, at the same time, are likely to pursue transfers from parties to the right of them, like UKIP. This could well shake up the political consensus in a way that is desperately needed.

AV will not solve all the problems of our broken electoral system. It may well not solve any of them to a great extent. But a 'Yes' vote will send out a clear message that we cannot put up with this bland rubbish that passes for democracy any longer. We need to shift the electoral battleground away from a handful of floating voters in marginal constituencies. AV is only a small step in the right direction, but it is the start of a process of wider electoral reform, including reform of the House of Lords, which must not be sacrificed for the sake of nit-picking objections, tribal prejudices, short-term advantage or a misplaced nostalgia for the two-party politics of the 1950s. If there is a 'No' vote on 5th May, we can be sure that supporters of the status quo will use it to block all attempts at electoral reform for decades to come. This is exactly why the Taxpayer's Alliance and the Tory right want us to vote 'No', which is exactly why we should vote 'Yes' to AV.

I will end on a completely shameless ad hominem argument, which you should probably ignore. Here are the two chaps who most desperately need a 'No' vote on May 5th, and this is how they will look if you give it to them, because the current system serves their interests perfectly, even when they are not in power:

Addendum 26/4/11: Neal Lawson wrote a similar piece to mine on 15th April in Open Democracy, which is well worth reading and makes it perfectly clear that it is the forces of reaction, wealth and privilege which have the most to lose from a 'Yes' vote. In case you doubt this, note that the 'No' campaign is largely funded by big business and wealthy bankers such as Peter Cruddas (founder of derivatives dealers CMC Markets), Lord Sainsbury, Peter Hargreaves (head of Hargreaves Lansdown) and Lord Fink (head of Man Group), as confirmed by the bankers' propaganda sheet, CityAM in today's issue (page 10).

Ask yourself why these people, the Tories, the TPA and the BNP all desperately want a 'No' vote. Ask yourself that question and think hard about it over and over again from now until May 5th.

The Elephant in Ireland's Room

The Irish banking crisis shows no sign of being over yet, as further bank bail-outs were announced recently. There has been much talk about the causes of Ireland's crisis and its severity, but almost no politician or economist has pointed an accusing finger at Ireland's attractive corporation tax (CT) regime. This is considered inviolable and essential to secure Ireland's recovery. Other countries are even scrambling to follow Ireland's example, as the UK announces corporation tax cuts and Northern Ireland's First Minister talks of reducing CT to 10%. So, apparently a low corporation tax rate is far from being harmful to the Irish economy. Or is it? I will argue that Ireland's CT rate (at 12.5%) and more importantly its weak tax regulations were in fact among the three main causal factors in its banking crisis. Let's look at them. Only the first is obvious:

1) Poorly regulated global growth of debt and related structures. This refers to the ability of banks to pump ever more debt into the global economy and for that debt to cross borders almost at will.

2) Ireland's low CT rate and very lax rules on what multinational corporations (MNCs) are allowed to get away with. Note: it isn't just the low rate that is important, but the rules which go with this; they work in tandem.

3) Tax avoidance by MNCs, aided and abetted by banks and accounting firms.This is the elephant in the room.

To put it simply, without 2), Ireland would not have been a target for 3), which greatly inflated the size of its banking sector and left it massively over-exposed when 1) led to a global debt tsunami. Incidentally, the debt tsunami also destroyed the economy of Iceland, which had followed a very similar path to Ireland. It too has a low CT rate (15%), lax regulation and a bloated banking sector which is now killing its economy. How come? In order to understand this, one needs to know a bit about the tricks MNCs use to avoid tax, by shifting profits into lower-tax jurisdictions from higher-tax ones.

If you are a MNC, one of the most popular tricks is to heap a big pile of debt onto your operations in high tax countries, financed by loans from your own subsidiaries in low tax countries. Debt interest payments can be set against tax in many cases, which means you can transfer your profits to a low tax (or no tax) jurisdiction. There's no real trade going on here; it's just an accounting trick, a form of what is called 'transfer pricing'. High-tax countries know about this and have put rules in place to discourage the use of tax havens for this purpose. However, Ireland is not officially regarded as a tax haven, and so escapes these rules. Instead, it is a trusted member of the eurozone club, which puts it in a highly privileged inside position. Nonetheless, Ireland's tax rules are so weak that it should be considered a tax haven, just like the Cayman Islands or Bermuda.

Photo: Peter Morrison / AP

To illustrate this point, consider the case of Google, which moved its HQ to Dublin in order to escape tax. They do it by exploiting two well-known tax avoidance scams called the 'double irish' and the 'dutch sandwich'. These are essentially transfer pricing scams involving the use of debt to shift profits through other poorly regulated jurisdictions like Luxembourg and the Netherlands. Ultimately, Google decants its profits in Bermuda, where it pays no tax at all. The result is that globally, Google gets away with paying just 2.4% tax on all its profits, saving it over $3 billion and leaving the taxpayers of many countries to pick up the shortfall. The irony is that Ireland scarcely benefits at all from all this, since Google largely escapes even Ireland's low CT rate. Many other companies are operating the same scam, all quite legally. Over the past decade, hundreds of companies have moved their IP licensing or Treasury operations to Ireland or set up subsidiaries there to take advantage of the tax avoidance gold rush. In their wake, they leave a trail of debt:

An inevitable consequence of this tax avoidance activity is to create a huge demand for loans from low-tax, weakly regulated countries like Ireland. Irish banks sucked in a huge amount of money, most of which left the country almost immediately in the form of loans between subsidiaries within MNCs. The flow of this money increased from 400 billion to 2.5 trillion euros between 1998 and 2009, which is about 15 times the entire GDP of the Irish economy (see page 3 of this report). This demand for debt led to a rapid increase in the balance sheets of the banks, pumped up like body-builders on steroids. The Irish government even facilitated this growth by setting up the International Financial Services Centre (IFSC) as an offshore centre; a tax haven in all but name.

Cartoon: Kipper Williams

When the global financial crisis struck in 2008, Ireland's bloated banks were left completely exposed, at the mercy of the insane, virtually unregulated credit markets. The debts quickly unravelled, leaving taxpayers all over the world holding the IOUs. Ireland was particularly badly hit because its banks had taken on a disproportionate amount of the bad debt. They got into that position by being the centre of a huge tax avoidance network. 

Most observers like to point to Ireland's property bubble and subsequent bust, but this was really a sideshow. It's true that Ireland suffered a particularly severe property bubble, as did many other countries, but this was a consequence of the inflated balance sheets of its banks, not a primary cause. Banks don't like to leave spare money lying around. If there's the possibility of using it to speculate on an asset price bubble, that's what they will do, and so they did, mainly through commercial property lending. After all, it's so much easier than sound long-term lending to small businesses for genuine investment.

The most remarkable thing is that no one appears to have learned anything from the crisis, least of all Irish politicians and economists, none of whom saw it coming in the first place. They are carrying on as if it were a one-off and a bail-out is going to fix everything. I can confidently predict that articles like this one will be ignored. Banks' balance sheets will gradually recover - all paid for by higher taxes and public spending cuts. The whole insane cycle of tax avoidance and debt-driven growth will start again. The Spectator will run articles on the new economic paradigm, Celtic tigers and how it will all be different this time. A few lefty economists will raise doubts and be dismissed as peddlers of sour grapes. Then one day the financial markets will implode. Again. Only next time it will be much worse, and again, Ireland will be first in the firing line, because it remains a plump target for companies wanting to avoid tax.

The lesson for Ireland and for all of us, is that if you advertise yourself as a cheap whore, don't be surprised when multinational corporations treat you like one. They really don't love us. We have to stop letting them use us.