I watched Johnson's tawdry little video about the UK leaving the EU this morning: I had not the slightest inclination to do so last night. What surprised me most about the video was not how hollow it was (although it certainly achieved that objective) but just how much it said about his true objectives for Brexit.
He said, and I'll share the video just so you can check this, that the first two priorities for post-Brexit Britain (and that is the right word, because it's not clear by how much Northern Ireland will ever be post-Brexit) are to control migration and to create freeports.
Nothing I have yet seen so starkly states what Brexit is all about.
For Johnson the first objective of Brexit is to place greater controls on labour. The intention is to ensure that by controlling free movement labour itself can be controlled, and so too can its price be kept at rates the government would desire. And that is low, of course.
And his second objective is to create freeports. He will claim that these are all about creating regulation free hubs for enterprise. This is completely untrue. There is no evidence that regulation free ports have ever generated work, wealth, much employment, or free market enterprise, come to that. This is unsurprising. That is not what freeports are about, at all. Freeports are instead about permitting the free movement of capital beyond the control of the state and without the imposition of any taxes.
Quite bizarrely, given that freeports are effectively declared to be outside the country that creates them, one of the major objectives Johnson has for Brexit is to carve whole chunks of the UK out of the control he claims to have just taken back, and to pass it over to the free loaders who frequent freeports.
To understand how freeports really work I suggest watching this video. I know it's not in English, but it's good, and explains how the Geneva freeport works to handle diamonds, gold, armaments, fine art and rare wines, all beyond the control of authorities and all beyond the reach of tax:
The aim of freeports is to undermine the state.
It achieves this by suspending the law.
Freeports permit illicit activity.
They permit wealth to be accumulated in secret.
That wealth is beyond the reach of tax.
Research suggests that much of that wealth is also shielded by anonymous offshore shell companies that disguise the ownership of an asset even if it can be located.
The object is to ensure wealth can accumulate without constraint.
This is the paradox that Johnson revealed in his video. He wants to control and constrain people. He will use that power to oppress, not just those who want to come to the UK but also, of course, those who wish to leave the UK as well. The market in labour will be constrained. People will suffer as a result.
At the same time the market in illicit wealth will be liberated to traffic at will. The cost will be to us all, in lost tax revenue, increased inequality and the undermining of the rule of law. Additional jobs will be few and far between.
And let's not for a moment pretend that any freeport activity supports markets: creating ring fences always creates unlevel playing fields that will always, by definition and in practice, undermine effective markets. So there is nothing in this policy that is about wealth creation: it is all about wealth expropriation and extraction.
This is what Brexit was for. And Johnson admitted it last night. One day people will realise.
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Welcome to Brexit means Brexit.
Freeports, as a concept cover a wide territory (special economic zones, free trade zone and a multitude of nomenclatures that no doubt cover different regimes). They exist within the EU, and in the UK there were seven freeports, 1984-2012 (including Liverpool, Tilbury, Sheerness and Prestwick Airport). In effect companies operating in the freeport could manufacture, import, re-export goods free of all tariffs. Conventional taxes would however be paid on goods sold within the UK (as I understand the rules).
The EU has been highly critical of freeports, as opening the door to potential money-laundering, and produced a report, ‘Money laundering and evasion risks in freeports’, October 2018; see link: (http://www.europarl.europa.eu/cmsdata/155721/EPRS_STUD_627114_Money%20laundering-FINAL.pdf). The Report’s summary conclusions begin as follows: “Free ports are conducive to secrecy. In their preferential treatment, they resemble offshore financial centres, offering both high security and discretion and allowing transactions to be made without attracting the attention of regulators and direct tax authorities” (page38). The report goes on to comment that: “Currently, apart from Luxembourg, there is not one country in the world that has made free port operators subject to AML(Anti-Money Laundering) legislation. As UBO (Ultimate Beneficial Owner) data are not required it is relatively simple to hide the UBO’s identity behind another layer of secrecy, which can be an offshore firm, a trust or foundation, a lawyer or a gallery, or a combination of these” (page 38).
Britain, it appears, is now intent on joining a squalid race to be the ‘Big Noise’ at the bottom of the trading and economic gutter.
You are right
The EU is right
Thanks John for the informative comments and the reference. The exec summary was a useful and disturbing intro for someone like me who has not, hitherto, given Freeports much thought.
The people saying the E.U. needs cleaned up! ,This corrupt government in Westminster wanted other means of lining their own pockets.A vote that was meant to be advisory forced into being taken over by a money making dictatorship.Who then spent over 3 years of chaotic and shambolic nonsense trying to push this greedy nonsense through.Quite handy having Scotland,s ports closed should be open to honest trade and regulated,especially for Scotland,s and taxation.Boris,s criminal scheme should be trashed.!!
I am not familiar with the operation of Freeport’s and found the Swiss video very informative. I see that Freeport’s already exist in most EU countries. The U.K. scrapped ours in 2012 and the EU parliament called for their scrapping throughout EU in 2019 because of money laundering concerns. Just want to clarify this statement from your piece.
“Freeports are instead about permitting the free movement of capital beyond the control of the state and without the imposition of any taxes.”
Any taxes? No CT, IT and PAYE for the people and businesses working in Freeport’s? Or do you mean no import duties for goods warehoused in them? It’s quite a big difference.
My apologies if it was not clear that those apply for those working in the Freeport
You would have still suffered the stranglehold of the EU empire.
Johnson is a politician ,enough said.
One regret that the EU did not stick to it’s original trade intentions and became so overbearing and ineffective.
Give it 10 years on it’s present course
The EU did “stick to” its original intentions. Read the Treaty of Rome (1957). The proposition that Britain did not understand the EU’s original intentions is simply, provably and categorically wrong. It is written openly in the first phrases of the Treaty: “ever closer union”. It was written in the blood of Europeans in two world wars. Never again; whatever it takes. It was written on the tin.
Well said, sir.
This is incorrect. The original intention of the EU was to prevent war in Europe. Starting by pooling the coal and steel industries of the original 6 countries, including France and Germany. Expanding later into meshing of economies, then nuclear power. The trade/economic integration was a tool, a means to an end, and not the ultimate purpose of the EU. Judged on its on own intentions, the EU has been 100% successful. There has never been a war on EU territory, by the definition of a recognised country fighting another recognised country. The UK leaving makes war in Europe one step more possible, so sad.
It is not without some irony he releases this tawdry video last night and as this pathetic dismemberment progresses and he feels more secure we can expect more of the same carefully scripted information deposits.
Why so careful in there release of information, why so disjointed in its selective nature, for the very same reason, that three-word slogans won them Brexit in the first place and a General Election in the second, Three words are about all the attention span of the average UK voter will allow them to absorb as the slobber and drool there way through a week’s worth of page three nipples.
It is not that the UK voter is intrinsically thick, though viewing some of the carefully staged BBC extracts from last night one might wonder, it is because they have been carefully schooled over decades to be politically brain dead as to never present a problem to there political masters, in short, most of them will suck up any old rubbish vomited forth by the likes of Johnson and believe they have just been fed a great meal.
That this video frames tax havens and their users in such oblique terms is just more of that vomit and holds both the original trigger and final goal of the Torie’s and their financial masters, total avoidance of the EU tax regulations that came fully into force at midnight last night and to achieve that aim they are quite prepared to trash their own nation in the process, Freeports are the perfect political gateway to tax havens, tax dodging, and money laundering and the UK voters handed it to them on a plate.
JS Edwards, you need to rethink your offensive rhetoric about the average U.K. voter. Mention of page 3 implies you believe The Sun is important source material for the average voter. In the 2019 election 47.5million voted and the average circulation of the Sun was 1.4 million. Do the math and then improve your metaphors.
The “reach” of the Sun, Mail is many millions more than just the print edition. Unfortunately. https://www.newsworks.org.uk/resources/readership
The text of what Boris Johnson has to say about this day was sent to me. It included:
“We can control immigration, create free ports, liberate our fishing industry, strike free trade deals and simply make laws which benefit the people of this great country.”
What it failed to mention was that if you ( boris ) bring in bad controls or make laws we think do not benefit us, then we can still vote you out as before, but we can change those laws without having to lobby Brussels to simultaneously change their laws at the same time.
It means anyone making laws in the UK from now on is a little closer to the electorate, can still be voted out by them, and cannot use the EU as an excuse for why the laws can’t be changed or devolved.
It was not at the behest of the EU that the ‘bedroom tax’ and the widely derided Universal Credit was introduced. Neither was the increase in VAT and the cuts to Corporation Tax. They respected the vote in the ‘referendum. We never applied the rules regarding the ‘free movement’ of EU labour especially when the majority of immigration came from outside the EU. We were never forced to join the EURO. No one forced us to sell our fishing quotas.
Plenty other examples exist which demonstrate our autonomy and the respect for our sovereignty whilst we were in the EU. The EU was just used as a scapegoat.
Making bad law has been made an artform since 2010 so I won’t be holding my breath in expectation that they will be voted out.
A reduction in the number of MPs and boundary changes are on the horizon. Analysis of the impacts has shown this will result in an increase in the number of Tory MPs to the detriment of other parties without any change in their share of the vote.
The idea of a ‘United States of Europe’ came from Winston Churchill. Not just to prevent further war in Europe but because he could see in 1945 Europe divided up between the US and the Soviet Union, and the only way to prevent the continent being an endless battleground, with subject peoples on both sides, was fir it to become a power in its own right. He could also see that Britain was on its needs and had to go to the US for a bail out. Which the US provided – in condition Britain got rid of its colonies. The US has pulled a lot of strings since then.
De Gaulle rightly understood that the UK would never be content to be a partner in a shared Europe. It would always demand to control it or sulk. And so it proved.
More recently the US, spurred in by its wealthiest, its fascist right wing and its organised criminals, decided that capitalism is above the law, the EU was tiresome in demanding standards in terms of product quality, employment and human rights, environmental protection and so on. And the EU -outrageous! – was actually not subserviently following US foreign policy in every respect. The EU would have to be broken. It do happened that this suited Russia too, now ruled by oligarchs and more organised criminals.
TTIP was one attempt, setting EU countries against each other and trying to smear EU democracy was another. Then Brexit. How very convenient for them a trade deal would be for them. Securing Scottish oil, breaking open the single market, destroying the EU economically and politically, all posdible if pursued with the usual US ‘soft coup’ techniques as practiced in South America and elsewhere. And with a ready stock of corrupt, self-serbing politicians too. Billions of dollars have poured into the Brexit campaign from the US. Propaganda and manipulation techniques straight from Hitler and Goebbels have been very successful – many Brexiteers have no real idea why they support it.
Brexit is, in short, a US backed fascist coup. And if you doubt my use of the word fascist, consider the actual policies ‘Britain Trump’ favours – all public services are simply means to pour taxpayers’ money into private pockets, while espousing extreme nationalism, and abuse of ethnic minorities, the poor, the disabled. Neo-fascism differs from the 1930s in that it works by manipulation and puts up a ridiculous, apparently friendly front man to glove the iron fist behind the scenes.
We must on no account whatsoever sign a trade deal with Trump. It will destroy any remaining sovereignty, democracy, human rights, our public services and economy will be bought up cheap, asset stripped and trashed, in short we’ll become effectively a US colony like Puerto Rico. We will be ruled via the ISDS entirely for private profit and any attempt to improve our lot will be met with crushing compensation claims against the government for loss of profits which taxpayers will pay. We won’t even get a vote in US elections.
Johnson is taking back control he never really lost to hand it to the US (and other) interests who have funded him and too many other UK politicians for too long.
Capitalism cannot be above the law. Corporations have to be held to the same standards of behaviour as individuals.
The Big Lie has gone far enough. It’s time to call it out
As the US Senate is proving, Trump is above any law
John Wood wrote: “De Gaulle rightly understood that the UK would never be content to be a partner in a shared Europe. It would always demand to control it or sulk. And so it proved.”
I have a recurring, albeit occasional, dream of a cartoon depicting de Gaulle looking down from on high on Europe and saying “I told you not to let the bas***ds in!”
The problem is that they are fixing it up so that they are never out of power – removal of alternative points of view from the BBC for a start. Johnson doesnt need to worry about the points you made. The conservatives will be in power for at least the next 10 years and by then we will have forgotten as the new reality has been established. That we accept the dubious activities of the super rich and the financial services industry in our society is a testament to how easy it is done. The Sun, the Express, the Mail and the Telegraph control enough of the narrative to ensure that the tories are always going to be the favourites in an election.
Yes Ed. They will also reap additional seats from boundary changes and if Scotland leaves, a big chunk of anti-Conservative seats goes with it too. So with their other trusted ally, our archaic and dysfunctional FPTP voting system to hand, it does rather seem that they have a good chance of a long-term stitchup.
Europe is too big to fail. One after another tax havens bow before big blocks like US or EU. Little England will bow too.
Try reading Treasure Islands by Nicholas Shaxson. Tax havens have been around for 60 years or more. The US and EU have never shut them down. The world’s elites use them to squirrel away their money. Jeaun Claud Junker was instrumental in turning Luxembourg into a tax haven.
https://www.consilium.europa.eu/en/policies/anti-tax-avoidance-package/
Thanks Richard for that very illuminating video – well worth watching; freeports for freeloaders.
“For Johnson the first objective of Brexit is to place greater controls on labour.”
Well, according to you Richard, the Government has the right to do this. It’s called compliance.
Having the right todo something does it make it wise
I agree. Just because a government can do something, isn’t a defence of it being done. It doesn’t make it just or wise. Like a salary cap.
When the thatcherites say “freeport” they don’t mean customs warehouses like that in the video, they mean “free enterprise zones” like that in the Mariana Islands, or pretty much what Hong-Kong was under the rule of the English Empire, or Dubai is today.
Those “Free Enterprise Zones” are meant to be extra-territorial enclaves with a suspension of most regulation, that is without existing labour laws, immigration laws, tax laws, and they are meant to contain not warehouses, but factories and offices, staffed by indentured east asian, latin american, african workers on short term work permits, employed by chinese and indian exporters on £2-3/h wages, with the only english people involved being enforcers.
They are meant to be pockets of Pinochet style economics. At first a few small here and there, and then more and more of them until the whole country becomes a “Free Enterprise Zone”.
They are also meant to be the means to attack the EU economies even from outside their customs area: with wages and regulatory costs so low that even with EU tariffs their products will be considerably cheaper than those made in the EU itself. This is the aim:
https://www.ibtimes.co.uk/buyout-boss-says-brexit-will-be-good-his-business-will-mean-30-cut-uk-wages-1602631
“One of the biggest names in European private equity said that Brexit will be good for his business, but will mean a 30% wage reduction for UK workers. … He added that EU immigration will be replaced with workers from the Indian subcontinent and Africa, willing to accept “substantially” lower pay.”
Mode 4 immigration comes to mind here, importing workers from India rather than exporting jobs there.
“The intention is to ensure that by controlling free movement labour itself can be controlled, and so too can its price be kept at rates the government would desire. And that is low, of course.”
How will “controlling free movement labour” lead to lower labour rates? If there’s less labour available, the price of labour will rise.
“creating ring fences always creates unlevel playing fields that will always, by definition and in practice, undermine effective markets”
True. But then EU protectionism creates an unlevel playing field in wider Europe and globally. For example, the CAP ruined melon farmers in Albania, and it impoverished third world farmers to this day.
Artificial markets where union representation is removed o not necessarily lead to increased wages
They lead to monopsonist power – and remember it will be harder to leave just as much a inward migration will be removed
And if melon farmers in Albania are the limit of the EU failing…wow
Albeit I accept the CAP is in need of reform – became Remainers have always been open-minded
“creating ring fences always creates unlevel playing fields that will always, by definition and in practice, undermine effective markets. ”
The EU has tariffs and barriers to goods from outside the EU. Isn’t that just a bigger ring fence?
Yes
And we are outside the fence now
No
We are inside the fence until 31 Dec 2020.
The precise nature of the fence in terms of height and holes after that date is still subject to negotiation.
Imagine if the government were to abolish the minimum income threshold for migrant workers (already announced).
Imagine if they then created zones where the minimum wage doesn’t exist, perhaps they will kid us that it does by talking about the optional living wage.
You are aware that you would be most welcome in Scotland – at any time….!
Thanks!!
I had to smile when at 2.45mins into his presentation Johnson spoke of the ‘incredible assets of our country; our scientists, our engineers, our world-leading universities’. Hardly the sort of assets that are deployed and multiplied by promoting Freeports methinks? In fact these particular assets all operate at the opposite end of the wealth-generation spectrum, far removed from the ‘Spiv economy’ world of Freeports, surely? So how exactly are Hard-Brexit fantasists like Johnson and his ilk going to unleash the power of these ‘incredible assets’ that he claims to espouse?
And slipped into the speech was “a transformed NHS”. Just how the NHS is being transformed has not been made clear to the electorate, or the House of Commons, because the Health & Social Care Bill 2012 allows the govt to carry on regardless. Heroic efforts have been made to make films and documentaries about this, and they may get one showing on MSM, but nothing happens as a result. I would recommend everyone watches this, and the one that John Pilger made.
(https://vimeo.com/ondemand/thegreatnhsheist)
Have we been asked whether we want our NHS to be transformed?
[…] admit that it is not often that a blog posted here gets this much attention on […]
Don’t forget the driving force behind Brexshit…..â€â™‚ï¸
https://ec.europa.eu/taxation_customs/business/company-tax/anti-tax-avoidance-package/anti-tax-avoidance-directive_en
Johnson’s true Brexit objectives were always apparent and it was endlessly frustrating that it wasn’t called out. The issue of the rich getting richer, would have swayed at least some of the Leave vote. I wrote to several MPs including Keir Starmer urging them to highlight that this was one of the sole purposes of Brexit. Alas the likes of Jeremy Corbyn and his close associates were wrapped up in some socialist utopia , rather than being more pragmatic about moving things towards the Left, that they refused to believe in anything else for the country. I still have great praise for the MPs who stood up and faced the cost of deselection etc, it was and is a shame that so few had been prepared to publicly make the argument about where the EU is now compared to decades ago and what it means for jobs, public services, environment and tax havens.
Whatever is said, surmised, or imagined, about the UK leaving the EU one aspect is , to me, glaringly obvious, as well as horrendous.
Doris has complained that the salary for a PM is insufficient to live on, but continues to espouse that he is going to bring the country back together, and stay in charge.
It is blindingly obvious that brexit was/is a project driven by greed, by the extremely wealthy, who desire to avoid paying due company taxation. With the added bonus of reducing costly workers rights.
That project is being facilitated by a greedy sycophantic, and obsequious, individual, and the motive must be very generous financial inducement.
In short, our most senior politicians are creating policies that they are being paid to produce, to the detriment of the majority of the residents of the uk.
Having recently read a “Wealth of Flows” by Ken Webster I have been thinking more about the way in which circular economies operate. I believe it is instructive to consider the concept of Freeport in juxtaposition with Webster’s thoughts.
In a circular economy the aim is to create two flows of material – biological and technological – that make optimal use of recycling and re-using material, rather than mining the fresh stuff.
The aim is to eliminate the need to have flows of material from the ground to landfill -the linear economy. In such a linear economy people serve as consumers that create the demand which gives value to flows of material. They also provide labour at the lowest possible price. The Freeport exist to manage this flow of material to maximise profits for whoever owns the flow. But also, I feel, to coral people into convenient consumer/slave repositories.
In circular economics such flows of material are trapped locally where they are used. Ideally there is no transport of minerals. Every location, like biology, is self sufficient everywhere.
The reason to introduce a circular economy is to prevent the destruction of our world. The circular economy regenerates natural capital and manufactured capital. People are considered to be users not consumers.
There is no “end product”.
Thus the driving force of a circular economy is to place human quality of life, which includes access to natural capital, at the centre of the picture.
It is still capitalist. But we expand our notion of capital away from just financial capital. We aim to build biologically and technologically regenerative infrastructure whose capital value is never converted into cash. We just build our world once and then live in it.
As opposed to infrastructure targeted at efficient linear economies which exist solely to convert the flows of material from mines into landfill into cash.
Efficient linear economies rely on there being a driving force for endless consumption. Thus humans are packaged up as consumer slaves with those making laws considering only the £ from the destructive flow of material.
Our planet and our families would all be better off under a circular model with greater local ownership of assets and reusable resources so we don’t have to keep buying stuff over and again. I don’t see how freeports fit into the end picture of circular economics gainfully? Are they mutually exclusive?
Maybe a subject worthy of deeper analysis.
I think we have to expand the idea of capital way beyond finance…
Thought provoking stuff Chris.
Its often struck me that if perhaps we just made ‘stuff’ last longer we could, on aggregate, work a bit less but still have all that we needed (as contrasted to what marketers convince us we want). That seems to kind of fit in with your narrative as we would use less physical resources too. But since the Capitalist system requires people (i.e. human capital) working hard, so that the product of their efforts can be top-sliced by financial capital, such a proposal would get a tough ride as we all know who in the politico-economy calls the shots and where power resides.
Alas Alan. That is why I think that we will never tackle climate change. To reduce the consumption and have a sustainable economy with no growth will deny the wealthy their source of wealth. Banks make money by creating money then lending it out at interest. If the economy first grow, then there is no interest created to pay back to the banks. To tackle climate change, the whole economic model must change.
This was my argument in The Courageous State
[…] were 29,822 reads yesterday. Most were on freeports and Boris Johnson. But the future of Scotland also got a good look in. That was the site’s ninth […]
One quick question. I live where the payroll tax rate is 40%, so that when one adds in VAT (15%) and all the other little imposts and stealth taxes, then local government rates and taxes, at least two-thirds of your earnings ends up with some tier of Government. That is far too high, and our new national sport is not paying tax wherever possible.
So I ask, does the need for tax havens imply that tax levels are too high and that if taxation was at a reasonable level, would there be no need for them? Are we tilting at the wrong windmill?
With respect, your closing is false
You ignore marginal tax rates and allowances
Excepting some on very low pay no one in the UK payed much above 355 of their overall income in tax
There has been a history of interest in the concept of a Freeport on Teesside for a number of years, and it is now well up on a Boris shortlist for a new Freeport creation.
This interest originally arose by a 1990s examination of the operation of mainland Freeports at Antwerp and Rotterdam Europort, both of which had a big bulk chemical processing presence (as on the Tees). Because of the different tax status between bulk commodity hydrocarbons and higher value added “intermediate” and “fine” chemicals, the argument was for a Freeport bulk to fine chemicals processing centre in one defined tax status area.
This led to a later suggestion from the Teesside Boroughs (as a “Combined Authority”) and the local LEP (with a strong chemical component) to the government for a Tees Freeport as one of the economic precursors to Metro status.
At the time (2015) this was examined by the government but rejected due to MRC objections. I gather at the later BEIS / Treasury debrief the point was made that earlier experience with Enterprise Zones had shown that whilst popular with high net wealth individuals as investors, there was little push or marketing of industrial units for actual occupation. It seemed the tax gains for investors would be, in the view of their agents, “diluted” by assuming intensive property management functions. This led to a situation where Teesside ended up with a large number of business units and buildings in EZ zones that simply stayed idle and empty. From the point of view of MRC / Treasury they got the worst of both worlds – a lowering of potential tax revenues NOT offset by increased economic activity in an area of massive unemployment. A Tees Freeport would be seen as merely replicating both negative features.
Thanks
I am sure you are right, as were those who wrote the reports suggesting this outcome