The Problem with the ‘Uncut’ Campaigns…
…or, why Bono shouldn’t pay up.
This week, U2 will be headlining at the Glastonbury festival. As expected, rock music purists are debating whether U2 is just too pop; whether this might be another symptom in the festival’s dumbing-down (Snoop Dogg, Beyonce and Jay-Z being among recent headlining artists).
But the musical discussion has been overshadowed by a political one. Art Uncut, a spin-off from the UK Uncut protest movement which we heard so much about during the tuition fees arguments of late last year, is staging a demonstration against U2. Not because Bono isn’t rock’n'roll enough, but because he – in their view – is dodging his taxes.
I encourage you to read the 3rd June piece about this on the Art Uncut website. Titled “It’s crucial we send a message to Bono that what he is doing is wrong”, the piece forwards what is now becoming a very familiar argument: that there is a moral obligation to maximise individual tax contributions.
The ‘Bono Pay Up’ Facebook event page now has around 200 registered participants, all of them (presumably) ticket-holders for the expensive Glastonbury event. Perhaps this seems a little meagre, given that around 177,000 people are set to attend the festival. But the overall power of a moral argument against tax-avoidance has gathered massive support elsewhere, mixed well into a generally politics-flavoured cocktail of state spending cuts opposition and distaste for specific coalition reforms. Protests and sit-ins at Fortnum & Mason, Topshop and the like have attracted news headlines and big-name support from the likes of the Guardian‘s Polly Toynbee.
Let’s run through the ‘uncut’ argument.
- State spending cuts are bad, and will undermine valued services which are best provided by the state.
- Budget deficits, like the UK’s annual £170 billion debt rate, are also bad. It is right to try and reduce national debt and the spending deficit.
- Raising taxes is not always good, though preferable to reductions in public spending.
- How then do we plug the deficit, without reducing spending or raising taxes too much? Simple: we force rich companies and individuals to stop avoiding their taxes.
On the face of it, this is a powerful, practical ‘everyone wins’ argument. Congratulations should be offered to UK Uncut and its spin-off campaigns for bringing their agenda into the public eye through the targeting of a few case-studies. Bono and U2 are just the latest example of this.
So what’s the problem? Let’s dig down into the case against Bono and U2.
1. We are not morally or legally obliged to maximise our tax contributions.
I would even view this as a human right. We have the human right to act rationally wherever such action is legal. Minimising our tax contribution is always rational – particularly, in fact, for the very rich, as they are far less likely to need state support at some later point.
Being a multinational company or rich individual and earning a lot of money shouldn’t change this. Human rights aren’t human rights if they stop applying to you over a certain income threshold. Put it another way: at what point does a state gain the remit to delimit human rationality?
This is not to say that civil society shouldn’t be concerned with encouraging selfless, generous, charitable and social behaviours. But Bono surely ticks a lot of these boxes independently, as we shall see below.
2. Ireland is not a ‘developing country’…
…not in the sense that this term is usually understood, anyway. Art Uncut argues:
… [T]ax issues are crucial to development. Christian Aid estimates that developing countries lose $160bn annually, more than the global aid budget, thanks to unscrupulous multinational companies dodging tax. If we want poor countries to become richer, we need to adopt an ethical approach to taxation. It’s clear that U2 take anything but an ethical approach to taxation.
Even allowing this assertion – that developing countries are often screwed by tax-dodging multinationals – cannot help in the case of U2 and Ireland. Ireland is a highly developed and economically modern country.
3. Why should Bono trust Ireland with his money?
There is a reason, after all, why Ireland is now having to embark on a significant austerity programme. As a state, Ireland has hardly demonstrated fiscal prudence.
Irish spending policies contributed to a landmark unemployment rate and the country’s first recession since the 1980s. When the financial crisis occurred, the cost of bank-bailouts contributed to an already-vast deficit. Eventually, the EU and IMF stepped in, and other countries lent fiscal support to Ireland.
Perhaps Bono wouldn’t agree with the spending priorities of the Irish state. Perhaps he didn’t agree with the largely ineffective 40 billion Euro stimulus package, or the policy of buying out failing banks with their toxic credit. By the time of the 2008 crisis, U2 was already tax-resident in a different country; this was both legal and rational and, as an internationally successful band, not particularly strange either.
4. What if Bono spends his money more wisely and charitably anyway?
As the Art Uncut article states,
Bono presents himself as someone who cares deeply about development.
This is putting it mildly. U2′s philanthropy is near-legendary. The band has spent more than a decade (perhaps ironically) campaigning on third-world debt. Bono co-organised the Live 8 charity concert project. He is a founder of the Product Red charity brand campaign. He has his own charity – the One Foundation. This and other work represents millions of pounds of charitable contributions, on top of robust political activism.
I’m not a particular U2 fan, and there may be many good reasons to arch an eyebrow at some of Bono’s posturing, or question the effectiveness or sensibility of his approach. But to suggest that Bono is money-grubbing seems decidedly churlish.
Indeed, if Bono is choosing to reduce his contribution to one or another state infrastructure, and then pumps what surely amounts to more than the difference into charitable projects, and he chooses to do so legally, who has a moral basis for questioning his actions or attacking his civic sensibilities?
To conclude…
I suppose the broader point is that it would seem peculiarly trusting, even naive, if people imagined that in all cases the state they happen to live in is better placed to dispose of their money with wisdom. Yet to volunteer taxes – to offer, as it were, additional taxes, above those that are legally required – would be exactly the same as minimising personal disposable wealth. It would be an admission of incompetence, perhaps, or a wholesale acceptance of the idea that the state knows best.
Surely, and especially in the aftermath of the last few years, nobody actually still thinks this way?
Great piece. Thank you for getting into the detail so well.
Not everyone is so philanthropic as Bono.
And isn’t it quite dangerous to allow people to choose what they support and what they don’t? If ordinary people got to decide that would be the end of the welfare state.
By no means does the state know best, but we have to place some trust in it otherwise we would be left with anarchy.
A very well written piece.
I would like to add one additional point which is that many within UK Uncut would probably argue against spending cuts not only on the basis that they might damage services (this is a deeply questionable argument when one considers how disproportionately massive spending increases have been compared to the subsequent improvement (if any) in the quality of the services in question) but also on the basis that they would damage the economy as demand would be taken out of the economy.
It is demonstrable fact that money spent by the state is less effective at stimulating demand than money spent by private citizens and businesses. As such, increasing taxation on the wealthy would have a greater negative impact on economic growth than decreasing public spending. That is to say that a tax increase of £100 million would be more damaging to economic growth than a spending reduction of a similar size. They would, on the face if it, both remove £100 million from the real economy but the reduction in the spending power of citizens and businesses would be more damaging to economic growth than the reduction in state spending since people are better at spending money than governments.
It could therefore be argued that it is not only a moral and human right to pay as little tax as one can legally get away with but it is also an economic obligation – since the individual is wiser than the state when it comes to spending his or her own money. Similarly it could be said that it is the obligation, morally and economically, of the state to spend as little as it can while providing the services needed – essentially the state should be no larger an economic player than it absolutely needs to be.
“This week, U2 will be headlining at the Glastonbury festival. As expected, rock music purists are debating whether U2 is just too pop; whether this might be another symptom in the festival’s dumbing-down (Snoop Dogg, Beyonce and Jay-Z being among recent headlining artists).”
That’s pretty fucking racist, right there. And worse than that, pretty fucking rockist.
Your comments about Bono’s donations to charitable trusts and how they are supposedly a better alternative to the public sector would make alot more sense if you used a different celebrity that gave to charity. This is because The One Foundation (I am using this one in particular as Bono did not co-found Product Red or Live8) actively campaigns for MORE government financial intervention and campaigned to increased taxation others. I believe the main reason Bono is chosen as a target by uncut is his hypocrisy, rather than specific accuastions of greed.
Also putting the cause of Ireland’s spending policy as the cause of the economic crisis is a gross over-simplification and ignoresother factors like it’s over-investment in the real estate bubble (which artificially propped up the economy), it’s extremely low taxation for corporations yielding only short term economic gains and it’s refusal to regulate it’s bank industry properly (Ireland has been plagued by banking scandals for the majority of the last decade). It was this kind of short-sightedness in it’s taxation as well as spending that caused these problems.
Comments! Lovely.
@joe – rock music purists tend to be, erm, rockist. Not sure if it amounts to racism to mention three non-rock glasto acts who all happen to be black.
@aran – yep, we don’t even need to go to philanthropy to render an argument in favour of minimal taxation.
@mini – thanks!
@pickle – fair point, but I suppose I’d rather trust individual people rather than centralised decisions in most cases. on philanthropy, how about Bill Gates? I’m happier with him putting his wealth into his charitable endeavours than with the idea of it going into government programmes. And as aran says, you needn’t go to charity for individual spending to be better for the economy.
@thomas – I’m using bono because so is Art Uncut. But yes, there’s plenty of room to critique bono’s approach in general, as I indicated in the post. in general though, the point is that his money isn’t going on a scrooge mcduck vault of swimmable gold… the man is charitable and philanthropic, which you wouldn’t get from the Art Uncut campaign. On Ireland- I think I was trying to convey that Irish spending largesse and state debt contributes signally to the financial crisis in Ireland… bad regulation was a big deal, but regulation is absolutely not the same thing as taxation.
I believe I mentioned how their taxation (particularly their low corporate tax) was also a strong issue there.
Also just because Bono isn’t some scrooge mcduck charicature does not really excuse such hypocrisy in his actions, especially when he is seen as the face of encouraging foreign aid and charity. Neither of these two benefit from their de facto spokesperson behaving like a hypocrite, which is what he is being held to task for her. Nothing in the Art Uncut article attacks him for doing charity work, it attacks him for engaging in behaviour that encourages developing countries to ignore their own development to court companies, thus relying even more on handouts. This isn’t a good basis for companies will eventually just leave your country for a competing one that undercuts it (like what happened with Ireland after Bono took his company away)
On bank taxation – I’m disagreeing with you there – don’t see how a low corporate tax could contribute to a banking crisis that was the product of failed regulation? Unless you’re arguing that the banking sector was too big because it was too prosperous because taxes were too low. But this wouldn’t be a problem in itself if it weren’t for crappy business and trading practices which should’ve been regulated up the wazoo.
My complaint just above was that Art Uncut doesn’t mention the fact that Bono is a hard-working philanthropist. I don’t really think he’s being a hypocrite by rationally minimising his own tax burden at the same time as encouraging various state economic interventions.
I also don’t have a fundamental problem with different states competing with each other to attract businesses or rich folk on the basis of low tax.
Firstly the continued lowering of tax across the board while not keeping it inline with spending was a problem, the banking crisis is not the sole cause of the financial crisis in Ireland. I think you keep trying to attribute one factor. It is similar to what happened in Greece. Increased spending while having no real
Secondly, I feel the lack of regulation was a by-product of the culture to entice corporations to ireland which started with low corporate tax and was build on by with ignoring regulations (being a soft touch on regulation goes hand in hand with being a soft touch on corporate tax). Ireland was transformed into this kind of attitude which was not compatible. Once again I don’t think you can treat these as seperate issues, but rather signs of bigger things going on.
“I also don’t have a fundamental problem with different states competing with each other to attract businesses or rich folk on the basis of low tax.”
It is extremely short sighted. Especially for nations that have large nations of debt as the rewards are only short term, and any GDP increase goes straight into short term debt (look at the Asian Tiger for another example of this). It also opens the door for other short-sighted enticements I mentioned such a soft touch regulation and other enticements that drain the public purse. This reduces the nations sovereignty to deal with its own issues by neglecting health and education and so on, which increases the cycle.
“My complaint just above was that Art Uncut doesn’t mention the fact that Bono is a hard-working philanthropist. I don’t really think he’s being a hypocrite by rationally minimising his own tax burden at the same time as encouraging various state economic interventions. ”
Just because you use the word rational doesn’t make it so. Perhaps a more appropriate word is “legally”. I just don’t see what right he has to tell a country what to do with its tax revenue if he doesn’t pay tax in the country in question. He specifically is asking for these natiosn to increase their spending burden while decreasing his tax burden. I don’t really see what isn’t hypocritical about that.
Thanks Thomas, I’ll address your points in reverse order, more or less:
“Just because you use the word rational doesn’t make it so. Perhaps a more appropriate word is “legally”. I just don’t see what right he has to tell a country what to do with its tax revenue if he doesn’t pay tax in the country in question. He specifically is asking for these natiosn to increase their spending burden while decreasing his tax burden. I don’t really see what isn’t hypocritical about that.”
I’m using a super-simple political science definition of rationality – that is, rationality = wanting to maximise, rather than minimise, personal access to a given resource or good. As it happens, I have similar concerns about Bono’s messianic undertakings, and the general tone and intellectual basis for an awful lot of international development. But as an individual with means, he can go ahead and preach whatever he likes. The Art Uncut campaign doesn’t seem worried about his hypocrisy (not overtly, at least), but about his moral standing in terms of their framework – and my central point – over whether or not there is a meaningful moral obligation to maximise personal tax contribution.
“It is extremely short sighted. Especially for nations that have large nations of debt as the rewards are only short term, and any GDP increase goes straight into short term debt (look at the Asian Tiger for another example of this). It also opens the door for other short-sighted enticements I mentioned such a soft touch regulation and other enticements that drain the public purse. This reduces the nations sovereignty to deal with its own issues by neglecting health and education and so on, which increases the cycle.”
Ahhhh but you see, I think my strategy for increasing a state’s tax take (so as to eg. balance a budget) is better than yours. Mine involves reducing taxes so that I take a fair amount from a large number of rich people and companies. With less tax burden their profits increase, which also cycles around to increase the tax they pay. Your strategy involves (I suppose) some kind of international legal arrangement to prevent states from undercutting each other in tax so companies might as well stay put. High tax burden reduces marginal spending power, reducing innovation, limiting competition and cutting back profits (and thus, in the end, possible tax contributions).
“The banking crisis is not the sole cause of the financial crisis in Ireland.”
I agree! In fact, this was my original point in the post. I was trying to tackle the question of whether low corp tax can have contributed to what I view as a regulatory failure in banking.
“the lack of regulation was a by-product of the culture to entice corporations to ireland which started with low corporate tax and was build on by with ignoring regulations (being a soft touch on regulation goes hand in hand with being a soft touch on corporate tax).”
You make an interesting argument here – that the failing is attributable to a certain culture, of which both low corp tax and lax regulation were symptoms. This may well be true, but I don’t see a problem with low corp tax in and of itself, particularly as regards the origins of the financial crisis (in Ireland or anywhere else).
That’s not my strategy….the fact it is not even remotely plausible to implement meant I didn’t even remotely consider it. My ACTUAL strategy of just hoping the companies would just cut it out because they realise it makes me feel bad has a better chance of resolving it then that.
Anyway what you are suggesting isn’t really anything new, it’s just the Laffer Curve, yet another way of over-simplifying a complex issue. Attempting to apply it in real life has shaky results at best excet in extreme cirumstances as seen in both the situation in Ireland (where it was not a suitable long term strategy) and the Bush tax cuts (which contributed to his massive deficit and look like they will never end up paying for themselves). The most common real life application this is often a permant loss in revenue.