Gordon Brown is being given a lot of attention because he is promoting a new autobiography. I revisited a piece I wrote about him when he had been Chancellor for a decade, in 2007, as a result.
The main thrust of my argument in June of that year - just before the global financial crisis began to emerge - was that he had been two-faced with regard to tax, which was the lens through which I viewed his achievements. He had been tough at home and had raised the revenues he had needed; it is hard to recall such times. But internationally he had not just been lax, but had actually continued promotion of the UK as a tax haven, with light touch or non-existent regulation.
My conclusion was:
The conclusions are clear. Brown has achieved his objectives. He has raised the tax he has needed, but in doing so he has had to be tough. He would not have needed to be so tough on tax avoidance if he was not simultaneously promoting tax avoidance: the obvious folly of which is the current ‘tax amnesty' for those UK tax residents who have not declared income on their offshore bank accounts; accounts on which they may well have had no tax liability if they had been living in the UK as a non-domiciled person.
The problem he leaves for his successor is that this strategy is time worn. The EU is running tired of the UK's excuses. The political capacity for taxing a majority in the UK whilst a minority are given favour appears to be running out. Like Blair, Brown may be quitting his job at a good moment. Unlike Blair, Brown will retain responsibility for his legacy and will have to account for it as his premiership progresses.
I could not have been aware of how true that was. He is still trying to justify his actions. And he is still failing to recognise that it was his lax attitude to global capital that did for him. He still tries to persuade himself otherwise. He is not alone. But that is no defence. It is time he admitted the truth.
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If he had any shame at all he would live in quiet obscurity.
Many (?), some (?) politicians have big egos – I believe that Brown suffered in that respect. Hence the current bout of attention seeking.
He was also quoted in the Guardian talking about “rogue bankers” with respect to the financial crash. That he does so, shows that either he is still in denial with respect to what happened or possibly suffers from cognitive dissonance. The book “After the Great Complacense” demonstrates that what happened was due to a pervasive banking “culture”/outlook – the section on financial “bricolage” is particulalry interesting, ditto the “working the angles” comment. So much for Brown’s “rogue bankers” – that would be all of them then Gordon?
Like all of us Gordon Brown had a right to rely upon the word and integrity of internal auditors, audit committees, rating agencies (and their auditors and audit committees), external auditors, non executive directors and directors.
We now know that these primary bulwarks against financial meltdown were non existent.
As far as I can see nothing has changed.
It would now appear that tax evasion, money laundering and secrecy surround the top advisers to the American president. I would suggest that this is the main story and not the possibility of Russian collusion and yet our journalists give this little attention.
May I offer another angle on Brown?
The greatest amount of deregulation of the financial sector that led to the 2008 crash seemed to happen in the USA.
There is no doubt that politicians there were ‘captured’ by Wall Street whose alumni peppered the Fed and other US Govt., institutions (people like Robert Rubin for example who was in charge when Clinton was in power, Hank Paulson etc.).
Many more politicians around the world fell for it with a mixture of having to tow the US line on financial policy/practice (in order to be seen as ‘friendly’ and avoid sanctions) or because of a lack of intellectual curiosity (and why not – deregulation seemed to work for some time up to The Great Crash?).
But there were indications that all was not well. Apparently the FBI knew about the corrupt miss-selling of mortgages in the US housing industry (mortgages that were then packaged up with other mortgages as securities to be sold as secure long term investments but were more sub-prime than prime) but the story goes that after the attack of September 11th they had other things to do. And so the corruption went on and we know what happened next. These securities were sold on throughout the world’s financial system.
In this country both the Tories and New Labour had given up on traditional economic means of creating wealth (making things) for some time but it was disappointing to see a Labour party effectively abandon it too and, (as the Americans say) ‘drink the cool aid’ that was letting the financial sector/markets make more money from money that had already been made (x100 by the way).
To be honest Richard I take a bit more of a benign view towards Brown and his ilk on this issue – he was frankly misled as were many other politicians by stuff like the so-called ‘efficient markets hypothesis’ (which is nothing more than sheep following sheep or should that be lemmings?) and the notion of ‘rational self interest’ curbing excessive risk taking (which it does not because as we know now the get rich quick bonus culture fuels greed that shoves such rationalism aside).
Brown’s ploy in my view was about turning his eye away from tax in the hope that the tax he took was sufficient over a longer period of time in power to address Britain’s ills – this is why he chose not to tax more highly because he too wanted to use the continuing gravy train by taxing with more moderate taxation. In other words he had not even considered the possibility of a crash (even though there were warnings out there that nearly every one ignored – yourself and a few others excepted). Remember he thought he’d ‘conquered boom and bust’. But he ran out of time as there WAS another bust because no-one really bothered to look closely at what was happening – especially on the mortgage backed securities industry which was the epicentre of the last financial earth quake.
Having said all of that, I have been left rather hacked off with Labour too – in fact most of our politicians but for different reasons. And this is because they fail to deal with America’s economic and legal hegemony in the trade and financial worlds. And I see this as the source of the UK’s woes.
You may remember that I wrote on your blog about the experience of my father who was a toolmaker in the 1970’s whose family owned firm he worked for was bought out by an American firm and effectively asset stripped. The Americans did a lot of this because of the power of the dollar which they work so hard to maintain. He lost his job as a result of that just after buying a new house around 1972. He’d already bought and paid for our first house. But things were never the same after that – we were always struggling and he ended up (a skilled man) working nights at a bus depot cleaning and filling up buses with fuel for the rest of his life. Before he got that job, he bought himself a ladder to clean the windows of the other new houses to pay the mortgage and put food on the table. He never went on the dole.
Anyhow, I digress but I say this in memory of his plight which was not fair on him or anyone of his post war generation. Asset stripping is not fair competition over the quality or price of goods – it is just a means of seizing productive assets for less productive purposes such as getting rich quick.
My point is this. What did the British government do about things like this because the Tiny Rowlands, the Jim Slaters and the James Goldsmiths – (look them up) all well into asset stripping – were never taken to task by a British Government (that is stopped from doing this). Why? Any politician wanting my future vote has to address the following all of which (unless I am mistaken) are legal principles exported by America (and note I said ‘exported’ – that is to say a deliberate act which enables them to grow the US economy by debasing other economies):
(1) Why are corporations interpreted as being a person or persons and having the rights thereof ?
(2) Why are stockholder rights put above any other rights including those of the customer?
My view is that until I see these legal principles challenged and then discarded in this country by our politicians I fear that really no progressive government can actually makes things any better. The problem for the UK is America and the American way of doing international business which will always favour America.
Challenging these American legal principles will not happen without consequences. But it has to be done in my view at least.
Corbyn’s Labour – if they got in – would still have to try to turn things around here even though these foreign, faulty and self interested legal principles still existed. They have to go.
Brown and Blair (New Labour) did not challenge the American Way and paid the price – or rather we did and still continue to do so.
Just in case anyone thinks that this is a unique point of view I invite you to seek out Adam Curtis’ documentary film ‘The Mayfair Set’ which goes into a lot of detail about what went on. Growing up, all I heard was that the UK was rubbish at industry and that the Unions contributed to industrial decline. But this film tells us that it was deeper than that – the oil crisis (where the Muslim oil producing countries put up oil prices for the Israeli supporting West some 400%?) seems to have created an opportunity for some really dodgy thinking (such as neo-liberalism and shareholder value driven asset stripping) to get its foot in the door. Oh and all of a sudden the welfare state seems to be too expensive.
Also I can recommend Prof Michael Hudson’s book ‘Super Imperialism: The Origin and Fundamentals of US World Dominance’. The UK is mentioned a lot and Hudson pours scorn on how his own country treating one of its most staunch allies – the UK – so badly. In fact I have to say that the French government comes out of this book really well – they have certainly had more arguments with the US and its policies and seem to stick up for their people far better than any supine UK Government ever did.
Apologies for the rather long contribution.
Points noted though
Brown was bright enough to see through the EMH if he had wanted to
Agree re asset strippers
Pilgrim I don’t think I you nor he can blame the Americans.
Gordon Brown was elected to office as an adult. He didn’t collapse the global economy on his own and that is not my charge against him.
He stood as a socialist, continued to pretend to be a socialist and he isn’t. He proved to be a centralising neoliberal to the core. Waste of space in my opinion. What was going on America doesn’t enter into it.
Andy
So you are saying that I’ve wasted my time mentioning the American legal influence on British domestic policies? Well thanks for that Andy. As I said, get some reading done or check out the Adam Curtis documentary. In fact do both. You are talking about the most powerful, aggressive and self -seeking country on Earth right? And it’s not Russia. The USA casts a shadow over every democracy on earth as well as on those countries trying to be a democracy.
I choose to blame the Americans because it is factually correct to do so. You do what you want Andy.
To be clear we need to deal with the Americans OK? A lot of the tosh about markets has come from the US and spoon fed to us here. We need to spit it out and rub it into the dirt where it belongs. Look at what the Greenspan and Rubin did to Democrat President Clinton? Clinton was turned as was Blair , as was Brown. If you want to read the intellectual horse shit about the middle way, look at Anthony Giddens. The great lie was that you could be socially progressive but also encourage selfishness. What a load of crap.
And that is why I can sort of understand Brown. Yes Glenn – he was timid – no doubt about it but the PM (Bliar) was a closet Tory who could have sacked him at any time. Yes – he was bright Richard no doubt about it but I still think he was playing for time and unfortunately he ran out of it.
PSR,
Re the Cousins, I agree they are and have been a malign influence on the post war world, and continue to be so. The are the only rogue superpower on the planet. Dismissive of any and all international agreement that they have not written themselves and which thus entirely suits their purposes.
When I was in trouble for something as a child and claimed in my defence that ‘he (my elder brother) told me to do it’ My Mother would scornfully enquire whether I would jump in the lake if he told me to.
I suggest that our political class needs to ask itself the same question with regard to what the Cousins ‘tell’ us to do.
Since when did ‘NO’ disappear from the political lexicon?
Perhaps it fell into disrepute because it seems the only word De Gaulle will be remembered for.
PSR, as we both know, most of those behind Brexit are the those who slavishly worship the hard right ideology practised in the US, and will be only too happy to see trade deals set up in which US corporations will be free to asset strip what’s left of the UK, and any food safety, environmental and worker rights slashed to help them make easy profits out a supine UK.
Pity the useful idiots of the left who backed Brexit couldn’t work this out.
And it’s also why so many English right wingers dislike the French so much, precisely because although these right wingers like to wrap themselves in the Union flag, they’d rather sell the UK off to their ideological heroes in the US than stand up for real British national interests.
Pilgrim,
You noted this ” Remember he (Gordon Brown) thought he’d ‘conquered boom and bust’.”
Yes I do remember and I thought that it was unforgivable. On that account alone and I support Andy’s suggestion that: “He stood as a socialist, continued to pretend to be a socialist and he isn’t. He proved to be a centralising neoliberal to the core.”
For those that may not know, Brown’s absurd suggestion that he’d conquered boom and bust was a conscious extension of ‘The Great Moderation’ concept promoted by the former Fed Reserve chief, Ben Bernanke among others. Brown joined in this chorus and repeated it in his last budget as Chancellor, at a time when Roubini, Dean Baker, Steve Keen and others were sounding the alarm bells about financial and housing collapse. I knew about these alarm bells at the time. There was no reason why Brown wouldn’t — except that he chose not to.
https://en.wikipedia.org/wiki/Great_Moderation , http://bilbo.economicoutlook.net/blog/?p=7554
Agreed
Gordon brown was one of the most under rated politicians of our time
Whatever did or did not happen in the USA that does not explain the extent of the failure on the UK. Regulation in the UK was flawed, that is undeniable; but that weak regulation has been an endemic problem in Britain for the whole of our history. The mote is in our own eye.
It seems to me that Brown also missed a salient point (apart from having an apparent epiphany regarding the Banks and bankers in the City when it is frankly too late for his opinion to be interesting, or frankly matter). Ironically the Fraud Act was passed by Parliament in 2006, just as the financial crisis was reaching the tipping point. Nobody noticed, because nobody was looking, but here is the interesting question; how many people who have been charged with offences arising from the Financial Crash, were charged under the Fraud Act, 2006? How many people were found guitly under the Fraud Act, 2006?
That is a genuine question; but until proven otherwise I am inclined to doubt that the new Fraud Act of 2006 achieved anything at all; and that raises another question; what was its point, beyond the trivial tidying up of previous decrepit, unusable legislation? Did we replace it with more unusable legislation? Why?
Brown was timid when it came to regulating the markets, he could have insisted on more transparency, look at what worked and what didn’t.
Brown thought he was the natural successor to John Smith his mentor and always thought Blair was a chancer , but his puritanism got in the way of realpolitik and he lost and never got over it.
The Boots ‘brass plate’ happened on his watch.
But I look through a different lens: the Hinchinbrooke hospital privatisation, and paying ATOS incentives to kick disabled people off their benefits happened on Brown’s watch.
The (then) junior ministers who signed off on those two items were Labour Party leadership contenders in 2015, and front benchers now.
And the subsequent careers of Brown’s most senior ministers are the envy of any Conservative MP.
Not to mention, Nile, his insistence on the notion that work was the road out of poverty whilst the security of labour continued to be undermined to the point where we invented the working poor, in the name of ‘flexibility’.
Not to mention in a few short years completely undermining the the entire principle of statutory benefits and the reintroduction of the concept of means testing which the Labour movement spent the entire (bloody) 20th century dismantling.
Back to the Victorian (and older) idea of a deserving and an undeserving poor.
I’m afraid my contempt knows no bounds. And when I think about it he probably only kept the UK out of the Euro to foil TB’s plan to be emperor of Europe.
He’s a man who completely lost his moral and political compass. When he finally made it into No10 he had completely forgotten why he ever wanted to be there.
The tragedy of Labour is the Faustian pact they made with neoliberalism: you can have power for the next x years but you must ditch socialism, adopt neoliberalism, privatise the profits and socialise the losses. And when the bankers came asking for the money they handed it over, no questions asked and no strings attached.
Just remember that the Conservatives abolished the 30% rate for capital gains in 1988 and applied income tax rates. So for about a decade capital gains tax was charged at the same rates as income tax – 40% for higher rate taxpayer – with allowance for indexation. I don’t remember many complaints then that the rate was too high.
But that was swept away when Brown introduced taper relief in 1998. The long 10 year taper soon became a 10% rate for business assets (including shares in a trading company) after 2 years, and now we have a 45% top income tax rate but a 20% rate of CGT for most gains (or 10% after 1 year, with entrepreneur’s relief).
Brown broke the consensus that gains should be taxed at the same rates as income. So inevitably there is now a huge incentive to try to turn income into capital to cut the tax rate from 45% (or more, with national insurance) to 10%.
And who oversaw the huge expansion of PFI?
I agree with rate equalisation
But indexation? I would need to be repersuaded