This is the text of my recent book review on tax havens for

One of the biggest potential rifts in modern societies is that between great wealth and democracy. The ideals of formal equality, such as equal rights and one vote for every adult, are widely accepted. On the other hand, there is an influential school of thought that argues gross economic inequalities can undermine democratic societies.

The contemporary critics are not generally akin to the socialists of yesteryear. They are not arguing for the abolition of capitalism or the creation of a classless society. Their call is essentially for new forms of regulation of existing societies. Prominent supporters of this approach include many members of what called by called the technocratic elite. These are technical experts with close ties to government and top universities.

Gabriel Zucman’s The Hidden Wealth of Nations (Chicago Press, 2015) fits into this tradition. The assistant professor of economics at the University of California, Berkeley, makes a case for much tighter regulation of tax havens. In his view, offshore centres such as Switzerland, Luxembourg and the Cayman Islands enable the super-rich to evade paying their rightful share of tax. Given his background it is not surprising that his case is firmly grounded in data.

If that was all it was it would be an interesting and relatively accessible technical study of tax havens. The problem lies in some of the grand claims made for it. In a foreword to the book, Thomas Piketty, one of the world’s best-known experts on inequality and Zucman’s PhD supervisor, suggests his protégé’s work is an important contribution to understanding one of the main threats to democracy. Piketty goes on to argue that what makes it particularly significant is its grounding in data and solutions rather than just abstract principles.

To be fair to Zucman, his book should first be examined in its own terms. It is to his credit that he has written a new book in clear English (translated from the original French) rather than simply tweak his doctorate. For anyone who follows finance it should prove relatively accessible.

The author also provides a useful thumbnail sketch of the history of tax havens. The backdrop to this story is the transformation in the nature of wealth. By the mid-19th century, financial wealth (such as shares and bonds) had taken over from land ownership as the main form of assets held by the rich in the industrialised nations. But it was not until the 1920s, when the main countries started levying taxes on large fortunes, that Switzerland emerged as an important offshore financial centre. But it was not until the 1980s that new centres of wealth management emerged including London, Hong Kong, Singapore, Jersey, Luxembourg and the Bahamas.

Zucman also makes a valiant attempt to estimate the amount of assets held in tax havens. He comes up with a conservative estimate for the cost of global tax evasion of 8 per cent of the financial wealth of households. That is equivalent to about 1 per cent of the total revenues raised by governments worldwide. He uses various means to come up with this total including the discrepancy between assets and liabilities in the international investments positions of countries. On a global level, these should theoretically be equal but in practice there always seem to be more liabilities than assets. This “hole” is the point of departure for Zucman’s estimate of the illicit wealth held in offshore centres.

In the final part of the book he proposes measures to deal with this problem. These include the creation of a global financial register so there is a centralised record of the ownership of assets. Zucman also favours sanctions against uncooperative territories. Such measures are explicitly meant to complement Piketty’s proposal for a global wealth tax.

The problem with the book is precisely what Zucman and Piketty see as its greatest strength: its emphasis on data. Estimating the extent of offshore wealth is fine but it cannot resolve or even identify the fundamental problems the world is facing. Even a perfect estimate of this figure would not answer the question of what should be done about it. That is a political and moral question.

This narrow approach also sidesteps what are arguably far more important questions, for example, the social power that arguably accompanies the ownership of substantial productive capacity – or the role that an intrusive state can play in undermining individual freedom.

Such questions belong in the realm of abstract principles, and in politics, rather than technical economics.

Yesterday the Financial Times published two book reviews by me: a piece on Dark Money by Susan Mayer and another on The Hidden Wealth of Nations by Gabriel Zucman.The text of the former, a study of the Koch brothers and their influence on American politics, appears below. I will upload the text of the other book at a later date.

To many of their critics they are almost evil incarnate. The fabulously wealthy industrialists, Charles and David Koch, are accused of corrupting US politics for the benefit of the super-rich and the detriment of ordinary Americans. They have, in this view, promoted a dense web of pro-free market organisations in an attempt to distort political debate to further their own narrow commercial ends.

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (Random House) is essentially a dossier written for those who share that perspective. Jane Mayer, who has worked as an investigative journalist for The New Yorker for more than two decades, has written an exhaustive study of the brothers’ attempt to influence public opinion. There is little if any attempt to persuade the non-partisan.

No doubt most if not all of what Mayer says is true. Indeed, in outline at least, much of it is uncontentious: the Koch brothers are fabulously wealthy (about $43bn each, according to the Forbes list of the world’s billionaires); they have long used part of their wealth to support think-tanks; and they have close connections with like-minded billionaires. Mayer dubs this network the “Kochtopus” to describe its many-tentacled approach.

In recent years, the brothers have come to play a more central role in influencing US electoral politics. In practice, this has meant supporting candidates who are on what could be defined as the radical right of the Republican party.

Dark Money is for those who want more detail. It outlines the family’s history including a guilt-by-association revelation that the brothers’ father Fred, the founder of the dynasty, had business links with Nazi Germany and Stalin’s Soviet Union. It explores how the brothers moved from a position of keeping a distance from mainstream politics — in 1980, David stood as the Libertarian party candidate to be vice-president of the US — to close involvement. It also outlines the numerous organisations and individuals through which the Koch brothers promote their world view.

For the non-partisan reader, the obvious question is likely to be one of double standards. Although there is no doubt that the Kochs support conservative causes (at least if that term is misleadingly defined to include libertarianism) what about the wealthy backers of liberal movements (in the American sense)?

Dark Money addresses this objection several times but only in passing. Mayer mentions that Barack Obama and the Clintons have received substantial financial backing from Wall Street titans. She also points to George Soros as an example of a billionaire who has supported many liberal causes. Her riposte is that the conservatives spend much more in the aggregate to influence the political process and they are more secretive.

The more interesting question is the exact nature of Mayer’s objection to the Kochs. A careful reading of the book makes this clear. Fundamentally, she seems to be suggesting that it is that the brothers influence politics in order to pursue their own commercial interests. Their promotion of free market ideas is, in her view, designed to benefit their business. But this begs the question of what she expects them to do. It would certainly be perverse to argue they should campaign against their own interests.

There is a long history of political realism, going back to ancient Greece, that sees politics as fundamentally a question of interests. The organised political sphere in a democracy provides a forum in which competing interests can be peacefully resolved.

Mayer does not explicitly spell out an alternative in Dark Money but her preferences are clear. She makes numerous references to the disinterested views of highly educated experts on subjects ranging from economics to climate change. Yet the public often dislikes such experts for good reason. These functionaries are frequently wrong, a possibility Mayer naively discounts, and they all too often take a disdainful view of the mass of the population.

If conservative billionaires such as the Kochs or Donald Trump are enjoying political success it is because their opponents fail to offer an inspiring vision. Rather than obsessing over the influence of the super-rich, the critics should reflect on their own failure to project an alternative.

This is the text of my article published on spiked on 2 March.

There are two main ways in which the relationship between man and nature can be understood. Some contend that humans should reshape the natural world for their own benefit, while others argue that humanity should respect natural limits.

The first view can be traced to Francis Bacon (1561-1626). The brilliant English philosopher, statesman and scientist ushered in the Enlightenment view that humans should seek to dominate nature. By this he did not mean that nature should be destroyed, as is sometimes alleged by greens, but rather harnessed to meet human needs.

Many key Enlightenment figures, including the French encyclopédistes Jean le Rond d’Alembert and Denis Diderot, recognised the key contribution Bacon made to modernity. Immanuel Kant, the great German Enlightenment philosopher, hailed Bacon in the preface to his Critique of Pure Reason (1781).

There is a strong argument that Bacon created the preconditions for the idea of progress. Writing in his classic study, The Idea of Progress (1920), John Bagnell Bury said that, for Bacon, ‘the true object… of the investigation of nature is not, as the Greek philosophers held, speculative satisfaction, but to establish the reign of man over nature; and this Bacon judged to be attainable, provided new methods of attacking the problems were introduced’.

In retrospect, Bacon’s supporters were right to recognise the importance of his insights. By reshaping and harnessing nature for our own benefit, we have created a far more prosperous society. It is hard to imagine the whole panoply of aircraft, cars, computers, electricity grids, hospitals, schools, railways, roads, telephones, universities and the like without it. Yet Bacon is virtually forgotten, except by the green and feminist authors who deride him for allegedly advocating the rape of nature.

In fact, mass prosperity and economic progress have brought enormous benefits to humanity. There are many ways in which this improvement can be measured, but perhaps the most striking is average life expectancy. It has increased from about 30 in 1800 to over 70 today. That increase alone – which it should be remembered is a global average – gives the lie to the claim that only the wealthy have benefited from mass affluence. An average of over 40 extra years of life is a considerable feat, worthy of huge celebration.

Yet this view that humans should strive to dominate nature has fallen out of favour. Since the 1970s, an alternative conception of man’s relationship to nature has become dominant. This perspective holds that humans should be constrained by natural limits. If they do not accept such limitations, so the argument goes, we will suffer all sorts of nasty consequences.

Historically, this view was most commonly associated with Thomas Malthus (1766-1834). For Malthus, these limits were expressed in the form of overpopulation. His Essay on the Principle of Population, first published in 1798, argued that if the human population was not kept in check, then there would be famine and war. Malthus’s essay has influenced conservatives, miserablists and misanthropes ever since.

As it happens, Malthus’s argument was not original. Many had argued before him that humans were constrained by natural limits. He gained prominence because his views were a direct riposte to the optimism of Enlightenment thinkers such as Nicolas de Condorcet, William Godwin and Adam Smith. He restated the case for pessimism when it was on the defensive, and sought to undermine faith in the power of human reason.

Over the past two centuries, Malthus’s predictions of doom have fared terribly. The global population is over seven times the size it was in his day, and yet people are far better off. Although the world is far from perfect, the average person lives a longer, better and healthier life than ever before. Under such circumstances it should not be a surprise that Malthusians have been on the defensive for over a century and a half.

Sadly, similar ideas have come to the fore again, albeit in a modified form, since the 1960s. The emphasis this time around is not so much on population – although that preoccupation has not disappeared – but the idea of overconsumption. Contemporary green thinking has reinvented the idea of a natural limit in a slightly different guise.

This notion is not confined to campaigning groups or self-proclaimed green political parties. Since the 1970s, it has become mainstream among Western governments and international organisations. Often the discussion is posed in terms of the need for sustainability – essentially a codeword for permanent austerity. From this starting point, the green-minded deride popular consumption and argue that the economic development of poor countries needs to be constrained for the sake of the environment.

One of the main goals of Andrea Wulf’s widely acclaimed The Invention of Nature is to rewrite the history of green thinking with the dashing Alexander von Humboldt (1769-1859) as its founder. Although he is little-known in the English-speaking world – or at least he was until Wulf’s book became a bestseller – the German scientist and explorer was a much more attractive figure than Malthus.

He was perhaps the best-known scientist of his age – comparable in fame to Napoleon – and a renowned explorer. He met and influenced a tremendous range of historical figures, including German literary giants such as Johann Wolfgang von Goethe and Friedrich Schiller, US president Thomas Jefferson, and the South American revolutionary Simón Bolívar. Charles Darwin, writing in his autobiography, credited Humboldt with giving him the ‘burning zeal’ to study the natural sciences. Humboldt’s best-known expedition was a six-year trip to Latin America, where, despite facing many hardships, he did a systematic botanical study of tens of thousands of plants in the region. Humboldt was also staunchly anti-slavery and opposed to colonialism.

If Wulf’s book was a straightforward biography of an unfairly neglected historical figure, it would deserve all of the plaudits. But its many admirers seem either to ignore or fail to recognise the significance of the ill-advised second goal the author set herself. In the prologue, she states that she aims to ‘understand why we think as we do about the natural world’. But, in that respect, the book is a failure. For one thing, to achieve that objective it would be necessary to write an entirely different book. Rather than focus on Humboldt, she would need to examine critically the changing perspectives of the natural world. On an even more basic level, the discussion of Humboldt’s life leads to a neglect of green ideas that existed before him.

The main focus of Wulf’s study is what Humboldt called his Naturgemälde (which can be roughly translated as his ‘painting of nature’). This was a sketch drawn by Humboldt that showed that nature was a complex web in which everything is connected. In that respect, it anticipated the idea that contemporary greens sometimes refer to as Gaia.

Yet Wulf, rather than drawing out its significance, more or less asserts that this is a foundational idea for green thinking. She fails to point out that the claim that humans are merely part of nature, rather than playing a special role, is a key element of anti-humanism. From a green perspective, it is reasonable to see humans as fundamentally on a par with any other animal. Indeed, from this vantage point, humans can be seen as worse than any other animal as they are viewed as destroying the world’s natural balance. In this way, the idea that humans are simply a part of nature is just another way of arguing that humans should respect natural limits.

As it happens, Humboldt himself was an empiricist rather than someone with a broader interest in philosophical issues. His Naturgemälde was simply an attempt to describe nature as he saw it. Unlike Malthus, he did not draw out any overt political views from his conception of nature. Wulf is essentially reading history backwards when she classifies Humboldt as a green thinker.

This unfortunate tendency of projecting the present on to the past is also apparent in the several references she makes to climate change. She may be right in arguing that Humboldt was the first scientist to recognise that humans can alter the climate. However, this claim shows that she fails to recognise what is distinctive about the contemporary debate. Even most of those derided today as ‘climate deniers’ would accept that human action can modify the climate. The distinctive feature of the current green orthodoxy is that it contends that a rapacious humanity is laying the ground for catastrophic climate change. It overestimates the extent to which humans cause problems and underestimates our capacity to devise solutions.

The Invention of Nature therefore works as a fascinating biography, but it is a total failure in its second stated goal of exploring how humans understand the natural world. It is a misguided attempt to rewrite the history of green thinking with the adventurer and scientist Humboldt as its founder. It fails to understand what is distinctive about green thinking or appreciate that its intellectual antecedents predate Humboldt.

The multi-authored Ecomodernist Manifesto represents an alternative attempt to put a positive spin on environmentalism. Its writers concede that economic progress has brought enormous benefits, but contend that it is right to hold on to an environmentalist ideal.

To maintain this position, they essentially split the idea of natural limits in two. They argue that humans should reduce their impact on nature, but they do not need to live in harmony with it: ‘We affirm one long-standing environmental ideal, that humanity must shrink its impacts on the environment to make more room for nature, while we reject another, that human societies must harmonise with nature to avoid economic and ecological collapse.’

It is hard to see how such a position is tenable. Economic and social progress depend precisely on humanity increasing its impact on nature. We need to enhance our control over the natural world, rather than step back from it. Hunger, disease and even straightforward scarcity still present formidable challenges. Even tackling climate change, to the extent it is a problem, will demand enhancing the technological powers of humanity, not scaling back.

The Ecomodernist Manifesto’s writers attempt to square this circle by advocating what they call a ‘decoupling’ of human development from environmental impacts. That means allowing humans to flourish, while protecting nature at the same time. But couching the arguments in this way blurs a key distinction. It may be that humans decide, for example, that they want to leave some of the planet as wilderness. But that should be on the basis of what is in the interests of humanity, rather than a belief in the need to respect natural limits.

By couching the manifesto in such pragmatic terms the authors manage to avoid the overt miserablism of much green thinking. However, there are clear signs that anxiety about economic progress is lurking not far beneath the surface. For example, the manifesto talks of the need to bolster resource productivity – the efficiency with which raw materials are harnessed – but it avoids any mention of labour productivity. Yet it is labour productivity – the amount that can be produced for each hour or day of human labour – that is key to economic progress. To abolish scarcity on a global scale – in other words, to make everyone affluent – would require a huge boost to average levels of labour productivity.

A related problem is indicated by the references to alleviating poverty. At first sight, this seems unobjectionable. Who could be against such a goal? But the manifesto focuses on reducing the most extreme forms of material deprivation and, by implication, eschews the goal of prosperity for all.

Ecomodernism cannot work as a coherent vision because green thinking is fundamentally opposed to modernity. A truly modern vision has to be based around the needs of humanity. It makes no sense to talk about the planet – which, when it comes down to it, is basically just a lump of rock – as if it has its own independent interests. The planet is not, and cannot, be a conscious being.

The ecomodernists are simply trying to give green thinking a makeover. They are playing down its anti-human premises and blurring its negative consequences. They are repackaging a miserablist and misanthropic outlook in a bid to make it seem palatable.

Now, more than ever, it is important to insist on a humanist conception of the relationship between man and nature This means insisting that humans should not constrain their ambition and creativity for the sake of the natural world. On the contrary, we owe the enormous gains we have made to our success in bolstering our control over nature. If anything, we need to take this process even further, rather than scaling back.

Perhaps it is also time to rehabilitate the reputation of Francis Bacon and his immense contribution to modernity. Without his insight, that humans should strive to dominate nature, we would all be far worse off.

Spiked has published an article by me critiquing “progressive” environmentalism. I will upload the full text at a later date but in the meantime it is available here.

I’ll be debating the Divide, a new film on inequality and fairness, at the University of Birmingham on the afternoon of Wednesday 24 February. I hope some of you can come along. Details can be found here.


I do not normally upload work-related articles on to this blog as they are often too technical. However, this comment may be of more general interest. It is from the February issue of IPE.

Pension funds and asset managers should focus more on their role of providing retirement income and less on political questions. Indeed, it would be best if the pensions industry ditched entirely what has become known as ESG (environmental, social and governance).

The focus on ESG within the pensions industry is astounding. There are inevitably big debates about climate change, sustainability, child welfare, human rights, divesting from Israeli firms and much more. No doubt, such discussions make participants feel good but they should consider their negative consequences.

For a start, they seem to have forgotten that most people still receive a meagre retirement income. For example, a recent study of the British market by Aviva estimated that the current typical saving and investment is only £53,793 (€71,900, excluding the value of their home). That would deliver income of between £3,117 a year if an annuity is bought, or £3,635 each year if invested in a drawdown plan over 25 years. On top of a basic state pension of up to £115.95 a week that amounts to a total weekly income of perhaps £185 per person.

Naturally such figures should be put into perspective. The basic state pension in Britain is lower than in many countries. The estimate is also an average. Relatively affluent individuals do much better but many people subsist on a bare minimum. The aspiration should be that everyone has a reasonable retirement income.

Not that the pensions industry is primarily responsible for the low level of payouts. Pension levels depend fundamentally on the general level of prosperity. Any payout is ultimately derived from an economy’s current output. When people invest for retirement they do not build up a stock of goods and services for future consumption. In essence, they get a claim on economic production once they have retired.

This points to one reason why ESG is problematic. Its environmental preoccupations lead to a curbing of economic growth. For example, the discussion of climate change often leads to the conclusion that consumption should be curtailed. Yet it is rising prosperity that provides the possibility of better pension payouts for all. Similarly greens forget that coal power can be enormously beneficial to poorer countries in particular.

ESG is also fundamentally undemocratic. Political topics should be debated in the public realm in a free society and not be restricted to the relatively narrow world of financial institutions, public officials and campaigning groups.

The plaudits given to Mark Carney, the governor of the Bank of England, for his comments on climate change typify this undemocratic tendency. An unelected technocrat should not be using his position to make public statements on such matters.

Political discussions belong in the sphere of politics rather than inside the pensions industry.

I will be debating “are greens the friends or the enemies of progress?” at the Zurich Salon on the evening of Tuesday 19 January. The other speakers are Thomas Vellacott (CEO of WWF Switzerland), Silvio Borner (professor of economics) and Stephen Tindale (director of the Alvin Weinberg Foundation). It will be chaired by Sabine Beppler-Spahl of the Freiblickinstitut think tank. More details of the event can be found here.

This is my book review from yesterday’s FT.

What would you do if you were walking past a shallow pond in which a small child was drowning? There can be little doubt that the vast majority of people would wade in to save the child even if it came at the relatively trivial cost of getting their clothes muddy.

This is the starting point of a famous essay by Peter Singer, an Australian moral philosopher, first published in 1972. It has just been republished, along with two additional essays by Singer and a foreword by Bill and Melinda Gates.

Of course, Singer does not stop with the example of the drowning child. His next step is to argue there is no moral difference between letting the child drown and letting one die in a faraway country as a result of extreme poverty.

The two cases are different in psychological terms, though. The small child in the hypothetical example is in front of you whereas those living in severe poverty are generally a long way away. But in moral terms, Singer argues, the challenge posed is the same.

In both cases it is possible to eliminate the suffering at no risk to our physical well-being. We might get our clothes muddy or be able to afford fewer luxuries, but that is miniscule when set against the value of a human life.

Over the years Singer’s argument has inspired countless philanthropic initiatives around the world. With the endorsement of Bill and Melinda Gates in this new edition it has gained public recognition from perhaps the world’s greatest philanthropists.

Perhaps its influence is not surprising since, at first sight, its argument seems unimpeachable. Who, after all, would want to be seen arguing the case for letting a small child drown? However, a closer examination shows there are reasons to question Singer’s moral reasoning. In particular, the use of a small child as a starting point risks infantilising the people it is ostensibly designed to help: the poor themselves. It casts western philanthropists as heroic saviours of the helpless and those living in dire conditions as passive victims of dire circumstances.

An alternative starting point would be to see human beings as capable of shaping and reshaping their own circumstances. People have the ability to transform the world around them for the better, rather then simply lying back helplessly and accepting their fate.

This sense of agency is the main force for eliminating poverty. Perhaps the most striking recent example is China’s widely acknowledged success in lifting hundreds of millions of people out of poverty from the 1980s onwards. This was achieved by a drive to transform its economy, rather than allowing itself to become the object of western pity.

That is not to say contemporary China is perfect or that its model should be followed slavishly. Only that, through their own efforts, people have often succeeded in lifting themselves out of poverty through economic growth.

Indeed, long before China’s rapid surge in development began in the late 1970s, that is precisely how the west’s own prosperity was created. Western affluence is primarily the result of concerted action by earlier generations, rather than the gift of external charity.

This alternative view does not, of course, preclude saving drowning children or even giving aid to those suffering in an emergency. A key problem with Singer’s argument is precisely that it blurs these exceptional circumstances with the everyday business of conquering poverty.

In fact, Singer is, at least in passing, critical of the forces that do most to eliminate poverty. In his original 1972 essay on famine he favourably cited two of the most prominent critics of economic growth of the time.

There are additional reasons to resist Singer’s arguments. His explicit condemnation of those who fail to accept a duty to eschew new clothes or cars for the sake of the poor risks generating resentment. He is essentially trying to guilt-trip westerners into giving up luxuries.

Yet there is not a fixed amount of wealth in the world. It is quite possible — indeed, it has been the norm in recent times — for the world’s poor to have become richer at the same time as the affluent countries have also become wealthier. Those who want to contribute to famine relief or poverty alleviation should be free to do so. But viewing the world’s poor as mere passive recipients of western charity is a temptation that should be resisted.

Famine, Affluence, and Morality, by Peter Singer, Oxford University Press

I will be debating Inequality: should we really be worried? at a Battle of Ideas satellite event at the Kulturhuset Stadsteatern in Stockholm on at 2.15pm next Saturday. There are two other sessions the same afternoon on Migrants, Refugees and Borders  and Europe’s Changing Drugs Laws. Please come along if you are in the area.

I will be speaking at an extra Battle of Ideas session on whether we need the new Sustainable Sevelopment Goals from the United Nations at 4pm this coming Saturday.