
Tax haven in the heart of Britain (2011) - ljf
http://www.newstatesman.com/economy/2011/02/london-corporation-city
======
adwf
Seems to be a lot of complaining about the City of London's semi-autonomous
status, without actually explaining why this is a bad thing. I've always
thought it was just an odd historical quirk. They're still subject to the
general laws of the country, still subject to the same taxes and regulations.

The articles main complaint seems to be about banks and other financial bodies
using offshore tax havens, but that has nothing to do with the City's odd
status. That could happen - and does happen - anywhere in the world...

~~~
Lazare
Yep. The City is in every way entirely subject to parliament, and the laws of
the country apply within the square mile in every particular the way they do
outside it.

The biggest oddity is that since so many people commute into the City, they
don't just let residents vote in council elections, but also businesses in
proportion to the number of workers they have; an odd but not altogether crazy
way of making sure that all stakeholders are represented.

...what any of this has to do with offshore tax havens is a mystery to me.
There's only one FSA in Britain, and they don't care where you're
headquartered.

Edit: From the article: "the corporation is an offshore island inside Britain,
a tax haven in its own right. The term "tax haven" is a bit of a misnomer,
because such places aren't just about tax."

Actually, it's not that it's not _just_ about tax; it's that it's not about
tax at all. Tax rates are the same in and outside the City. A "tax haven"
that's not a haven and doesn't have different tax rates? This is Orwellian
stuff.

~~~
UweSchmidt
Sorry but businesses getting to vote based on the number of workers they have
sounds insane and totally undemocratic.

There is a tendency on the internet to downplay the significance of democratic
principles and to consider them as quaint, liberal or at odds with
libertarianism. Worrying imo.

~~~
colechristensen
It is literally a single square mile. Nobody's sense of democratic principals
should extend so far as to say a single square mile cannot choose to govern
itself a little differently.

There are 7,000 actual residents in the City of London and more than 300,000
people work there. To give the huge imbalance of people who work but don't
live there a voice in government a mere 16000 non-resident votes are also
allowed and divied up to businesses with respect to their size. For the boring
local government services provided, this is more than fair.

Also, in general the people who live (especially) and the people who work in
the City of London are fabulously wealthy. My heart doesn't bleed for their
lost electoral rights (not that I actually believe that the system is unfair)
and they all seem pretty okay with it anyway.

~~~
UweSchmidt
If the people who work there "got a voice in government" that would be quite a
bit better. According to the article that's not the case: Corporate management
of "Goldman Sachs and the People's Bank of China" would be calling the shots.

Not sure if I understand where you are coming from. How can you not see a
_fundamental_ problem with the situation (even if "people are rich" and "just
a square mile" would make this _particular_ situation less severe)?

Would you be ok with an expansion of this system to other areas? How do you
feel about democratic ideas in general?

~~~
bokonist
Do you think that the board of trustees for a university should be elected by
those students and others living on university owned property? Many
universities own far more than 1 square mile, they are essentially mini-cities
with their own police, courts, etc. Is it a fundamental problem that
universities are not run as democracies?

~~~
UweSchmidt
I'll leave this question unanswered as I don't have knowledge about the type
of university you are talking about (mine had no own police). If you are truly
curious about this topic, your question has probably been thorougly dealt with
in literature in the last 100 or 200 years.

If you just put that there to weaken my argument, I'd say let's stay with the
topic at hand. We were discussing a local government that's nominally run as a
democracy but where corporations have the votes, potentially part of a trend
to less democracy if we are not careful (see protesting in the USA, blogging
in Russia etc.).

~~~
bokonist
I am actually interested in your psychology.

I have a sort of a long term career dream of starting a community/small city
as a startup. Such a community would necessarily not be run as a democracy. I
have found that there exist "true believers" in democracy, who view it is
morally problematic for any community to not be a democracy. Yet such true
believers tend to be quite inconsistent in their beliefs - they very rarely
complain about college campuses, remote company towns, military bases,
research facilities, etc, not being run as democracies. I am thus very
interested in how people draw distinctions - what makes it ok for one
community or mini-city to be a democracy but not another, where is line? And
in designing my city some day - how can I avoid setting off people's triggers
whereby they denounce a certain government structure for not being democratic?

~~~
toyg
_> what makes it ok for one community or mini-city to be a democracy but not
another, where is line?_

There isn't one, really. Which is why the Soviet system instituted formally-
democratic assemblies in any entity. In principle, it was a great idea; in
practice, these bodies were soon hijacked by professional political operatives
from The Party, who would steer them in the "right" direction and use them as
another tool of control (speak up against the Party line in your factory
soviet, and you'd soon be on a train to Novosibirsk). For other insights into
that particular form of organization, I'd recommend Bulgakov's "Heart of a
Dog".

Whether the limits of the Soviet system where environmental or historical in
nature (they didn't have the internet, say), it's an open debate for another
day, but I mention it to define one extreme of the theoretical scale: anyone
can vote on anything. At the other extreme, you have absolute monarchy: nobody
can vote on anything.

Anything in between these extremes is not "absolutely democratic" or
"absolutely undemocratic", which is why debate is so fragmented and dependent
on specific circumstances. You can have profoundly-undemocratic organizations
being run in a substantially democratic way by this or that specific leader,
or formally-democratic institutions being run with an iron fist by a single
individual.

I think that, pragmatically speaking, the most basic element of democracy is
just the acceptance of the existence of feedback. If one is ostracised,
isolated or punished for the simple act of expressing a differing opinion,
people will feel that democracy is non-existent, that the game is rigged. On
the other hand, if differing opinions are given substantial space and even co-
opted by rulers, especially in times of crisis, the absence of formal
democratic structures will be considered a purely theoretical problem and
likely ignored in practice.

Others famously define the basic unit of democracy the answer to the question
"can we replace our rulers without violence?". However, this sort of argument
can be subverted by putting in place mechanisms for such a replacement and
then, by other means, ensuring that they will never be invoked.

------
bcRIPster
For more background, these two videos are amazingly informative.

The City of London Explained (pt 1 and 2)

[https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-...](https://www.youtube.com/playlist?list=PLqs5ohhass_QScZFYoQX-7376-Zp654mH)

~~~
coppolaemilio
Thanks for the video, it was great :O

~~~
Dobbs
I highly recommend all of CGP's videos. They are all fun and very informative.
I just started listening to his podcast "Hello Internet" which is also
enjoyable.

------
valarauca1
TL;DR "The City of London" is an ancient city founded by the Romans who's been
continuously governed by an embarrassingly complicated government that nearly
puts the Catholic Church to shame, and is nearly as old. It to this day
involves guilds.

The short version is that companies get the right to vote in this system. And
do the high price properties are nearly the entire government.

This leads to an incredibly business friendly government.

~~~
jbuzbee
Oh yeah. See their recent abuses of perceived power to shut down web sites
they (or their supporters) don't like:

[https://www.techdirt.com/blog/?tag=city+of+london+police](https://www.techdirt.com/blog/?tag=city+of+london+police)

------
walshemj
As a UK citizen I think sorting out the channel islands, IOM and the other tax
havens in the EU is probably more useful.

but of course that would upset powerful media owners according to one UK MP.

~~~
justincormack
The Channel Islands and Isle of Man are not in the EU... thats one of the
strangenesses. They should be forced to join.

~~~
gaius
It is the EU that is directly responsible for the "Dutch double sandwich" and
various other tax dodging schemes. Lots of loopholes, we simply can't close,
until we leave.

~~~
greenpinguin
The EU is the only hope we have to balance the power of the city. What can a
government of only 60 million, where one house is not even democratically
elected, do against the might of world's finance system?

~~~
Dobbs
I'm not sure what the fact that one house is not democratically elected has to
do with anything?

The point of an upper house is that it is supposed to be impartial to the
whims of the voters. In the USA we originally had an appointed Senate and
still to this day have an appointed Judicial system. Should supreme court
judges be elected?

I have to say as a quasi-outsider (English raised in the USA) that more often
than not I'm extremely impressed by what comes out of the House of Lords. For
example their recent statement on the EU's right to be forgotten.

~~~
maaku
As an American ("no taxation without representation!") I've always... admired
the House of Lords. They are able to say and do things which no elected
politician can, and provide a sort of stabalizing feedback to the UK's
parlimentarian system. Not unlike the relationship of the American congress
with the appointed-judege court system.

I was sad when I found out that the House of Lords is in the process of being
reformed, with membership moving from peerage to either elected or elected-
appointed positions. I fear that this won't end well for Britain :(

~~~
toyg
The role of a second parliamentary chamber is hotly debated across the West at
the moment.

Countries where both houses are elected and enjoy equivalent powers (like
Italy or the US) complain that this arrangement slows down lawmaking, in an
age where everything else is actually speeding up.

Countries where the second chamber is not elected, like Britain, experience a
certain unease: they wage war oversea "to bring democracy", and then half of
their lawmaking is in the hands of a completely undemocratic body with dubious
legitimacy.

Countries where the second chamber actually represents different bodies from
the electorate (like Germany) seem to have found a pragmatic third way, but
then this chamber ends up over-representing certain interests (in Germany,
local ruling classes and their nests of semi-private special businesses),
which again is not really democratic in nature.

I think we'll have to learn again why balance is required in matters of such
importance, and we'll probably have to learn it the hard way. The major
supporters of "streamlined" government have always been tyrants and oligarchs,
after all.

~~~
dragonwriter
> Countries where the second chamber is not elected, like Britain, experience
> a certain unease: they wage war oversea "to bring democracy", and then half
> of their lawmaking is in the hands of a completely undemocratic body with
> dubious legitimacy.

Its been quite a long time (more than a century) since the Lords could be said
to hold anything like half the legislative power in the UK.

~~~
toyg
Until 2005, they had ultimate responsibility for the judiciary (although
mostly on paper). Also, the review process _is_ half the lawmaking, although
the most obscure half. All sorts of shenanigans can be slipped in through
reviews, and compromises on sticky points can be "encouraged" by playing the
timing card. The fact that the Commons can eventually steamroll the Lords
doesn't mean that they always do, especially if majorities are weak.

~~~
dragonwriter
The fact that the Commons can steamroll the Lords means the two aren't co-
equal in power -- if they always did so, it would mean that the Lords had _no_
legislative power, not merely the significantly-less-than-half of the
legislative power that they actually have had since the early 20th century.

~~~
toyg
I think we're saying the same thing here, really; whether "half the lawmaking"
is 45% or 50% is a technical point that is basically irrelevant in practice.

My original comment related to very pragmatic situation of acting as
"champions of democracy" while still maintaining a very significant role in
the lawmaking process for a wholly-undemocratic body. It's a real problem that
has not been solved and significantly weakens British arguments in, say,
foreign policy and cultural debate.

~~~
maaku
Who says that democracy has to be 100%? If you want to get technical, we all
live in republics anyway, not direct democracies.

I know I am an outlier, but it seems a totally strange and foreign concept to
me that one could criticize the UK for being hypocritical in promoting
democracy abroad because of the House of Lords.

~~~
toyg
_> If you want to get technical, we all live in republics anyway_

No "we" don't (dunno about you but I live in a constitutional monarchy, which
is a fairly popular form of government in Europe, and it just ain't a republic
in any technical sense).

 _> it seems a totally strange and foreign concept to me that one could
criticize the UK for being hypocritical in promoting democracy abroad because
of the House of Lords._

You should visit the Middle-East sometimes, but even just France would be an
eye-opener I think.

------
stuaxo
They are the last of the rotten boroughs.

They should be merged with tower hamlets next door, which has a very high
poverty rate.

They are not voted in by the people, but the various guilds within their
boundries.

------
phaemon
The City of London Corporation is the number one reason to vote Yes for
Scottish independence. The concept of the Remembrancer should be utterly
repugnant to anyone who believes in democracy over facism.

Edit: And I'll note that this was voted down before I even had a chance to fix
my spelling! Guess the money spent on "social media consultants" was
worthwhile guys, huh?

~~~
phaemon
Oh, and I'm going to be mentioning the Corporation a lot over the next month,
in letters to the local press and messages online. The downvotes have
motivated me :)

