The Offshore World

In amongst a typically judicious review of Treasure Islands and Winner-Take-All Politics, David Runciman draws a suggestive comparison between the contemporary politics of financial ‘mobility’ and the legacy of colonialism.

Shaxson’s book explains how and why London became the centre of what he calls a ‘spider’s web’ of offshore activities (and in the process such a comfortable home for the likes of Saif Gaddafi). It is because offshore is the offshoot of an empire in decline. It perfectly suited a country with the appearance of grandeur and traditionally high standards, but underneath it all a reek of desperation and the pressing need for more cash.

As Shaxson shows, many of the world’s most successful tax havens are former or current British imperial outposts…What such places offer are limited or non-existent tax regimes, extremely lax regulation, weak local politics, but plenty of the trappings of respectability and democratic accountability. Depositors are happiest putting their money in locations that have the feel of a major jurisdiction like Britain without actually being subject to British rules and regulations (or British tax rates)…

…The other thing most of these places have in common is that they are islands. Islands make good tax havens, and not simply because they can cut themselves off from the demands of mainland politics. It is also because they are often tight-knit communities, in which everyone knows what’s going on but no one wants to speak out for fear of ostracism. These ‘goldfish bowls’, as Shaxson calls them, suit the offshore mindset, because they are seemingly transparent: you can see all the way through – it’s just that when you look there’s nothing there.

In some senses this confirms an established story. Imperialism 101. For others, it will unsettle the idea of globalisation and inter-dependence as essentially the negation of great power politics.

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