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2017
Asia Needs more Dialogue
Solutions to urban pollution may prove complex
Spread of ESGs could herald new global movement
Investing in quality education is imperative if India wants to reap demographic dividends
China needs to lead in new multi-stakeholder world
China’s B&R initiative leading a resurgence of Asia
Education is key - but long-term: Can we survive?
New wave of robots will be beneficial to all
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
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China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
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Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
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Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
Put the hidden trillions to work
By Frank-Jürgen Richter
Business Times, August 16, 2012
 

Unreported income avoiding regular taxation is creating social distortion

The Tax Justice Network commissioned James Henry to investigate offshore investment processes. He found that at least US$21 trillion has been hidden from regular taxation, an amount which is equivalent to the combined economies of America and Japan.

Of course this has become a very sensitive issue for finance ministers of nations in the developed world as they all suffer from the same global recession. They look for local growth but are forced to enact austerity measures, and as their countries’ unemployment rates rise, the taxes taken from salaries and purchases fall further, lowering the minister’s ability to create a favourable investment climate.

The governments do not have the cash to plough into public-sector work schemes (like building new houses), nor can they give long-term guarantees to private investors who thus sit on their cash to wait for better opportunities.

Banks are also stuck in this mess as they are reluctant to offer interbank loans due to the Libor uncertainties (or because of other nations’ interbank rates round the world). The knock-on effect is that banks do not lend to small businesses or to households no matter how devoid of risk – they may be looking only for a small loan to bridge a brief cashflow shortfall but even that request is refused by many banks. And we must not forget that banks from the biggest to the smallest are now subject to increasing regulation, not least relating to their own cash cover in case there is a run on their assets.

Money and trade go together, as Niall Ferguson and James Bernstein explain well in separate tomes. They note how increasingly complex financial instruments were developed by trading nations from late medieval times through to the present day. These days, bright doctorate holders in science and mathematics develop very complex algorithms often only well expressed as computer codes.

Standard clients of banks – and sometimes even bank general managers – do not understand these systems which have now been scrutinised, and often condemned as oversold by “uneducated” lower-level staff in banks. However, clients who have a lot of cash to invest are granted personal advisers who will support every whim – not only relating to investing, but also to renting apartments and cars when the client visits. Client retention is the foremost aim of banks such as UBS, Credit Suisse and HSBC. The latter is alleged to have handled cash from money laundering, drug trafficking and terrorist financing involving transactions with several blacklisted money havens. Nevertheless, the global elite do not wish to be public figures.

The top financial guys have also been fooled – the International Monetary Fund noted an increasing imbalance between the global net trade and its income over the past three decades: essentially these ought to sum to zero, but there is now a “trade gap” of about 15 per cent, or well over US$3 trillion.

Much of this gap is “unreported income” often put away in offshore investments – not of course by ordinary people but by the elites from developing countries who hold offshore bank accounts and other assets. They never reported their unearned incomes or offshore re-investments.

And they avoided Third World and Developed World taxation, which in turn has contributed to widening fiscal and social imbalance everywhere.

So serious are the social distortions created by this edifice that Raymond Baker, the director of Global Financial Integrity at the Centre for Strategic and International Studies in Washington, said in June 2007: “... for the first time in the 200-year run of the free-market system, we have built and expanded an entire integrated global financial structure the basic purpose of which is to shift money from poor to rich.”

So I ask – what ought we to do? Henry estimates that about 100,000 people control US$10 trillion of these hidden assets, and in many cases, a person’s assets far exceed the value of the overseas debts of the countries they come from. I suggest the high personal wealth holders be evaluated for honesty, trust and transparency since some people are simply hardworking and have good investment skills or support, while others are unfit and have got rich mainly by milking their nations.

Of course this would require banks to become even more accountable and transparent – which is slowly happening. In addition, a few honest rich guys and their advisers could put their money to work, with positive benefits for their countries, or even the global economy.

By turning these hidden trillions to work more productively, theworld’s recession could be defeated or at least made less painful. And perhaps by having economies managed to a greater degree by savvy investors and their bright advisers, we may find the world’s money and trade begin to work more in harmony.

 

The writer is founder and chairman of Horasis, a global business community.


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