In this article we return to the theme of the “healthy society” that I first wrote about in April this year. At the same time it’s also a review of a book and a website.
For the past year, I’ve been following the blog posts of Richard Murphy on Tax Research UK and just recently I finished reading his book The Courageous State. For me this book and his posts have been (and continue to be) a real eye-opener. I’ve left the info on Richard to the very end as I want to focus on his website and book. First, let me talk about his website: Tax Research UK

Tax Research UK
This website has now been ranked as the No 1 economics blog in the U.K.. Please don’t be put off by the words “economics” and “tax research”. There’s a very good reason this site was ranked No 1. Richard’s posts are less about economic theory and more about action.
The key theme in his posts are that governments have more than enough money to look after the needs of their people; that the key problem is that the wealthiest corporations and individuals on the planet are using the world’s financial and taxation systems to their own advantage and paying little or no tax. This is having a deleterious  effect on the finances of many nations and ultimately the livelihoods of millions of people. For example, in the European Union the tax gap (the gap between what is owed in taxes and what is actually paid) is estimated to be about €1 trillion.[1] When you consider that governments in Europe are forcing their populations to go through austerity measures, this is crazy stuff folks. In the U.K. the tax gap is estimated to be £120 billion.[2] And there likewise the Cameron government has imposed austerity measures and cut-back extensively on the public sector.

It’s issues such as this that Richard Murphy tackles in his daily posts. Many of his posts are like ‘cruise missiles’ aimed straight at the politicians, authorities and key figures in the financial sector. And he is clearly making himself heard in Britain and around the world, with a recent member’s bill (Michael Meacher) being introduced into Parliament – written by Richard Murphy – and aimed at curbing massive tax avoidance. The accounting concept of country-by-country reporting, aimed at creating more transparency in the financial affairs of multi-national corporations, was created by Richard Murphy. This concept is presently being considered by the E.U., the OECD and International Accounting Standards board among others.

Here is a taste of some of his writing:

As you can see, it’s not all about tax and it’s not all about Britain; but pretty much all of it is topical and raising very important issues.

The Courageous State
Now for the book. Richard Murphy starts by explaining how we got into the economic mess we are, or the “Cowardly state” as he calls it.  The following passage, for me, sums it up brilliantly:

My argument is a simple one, which is that we did not end up in this situation by chance: this development of the cowardly state represents a seemingly coordinated and certainly consistent pattern of policy that has, despite the changes of political parties in power, continued unabated for an extraordinary period of time. With its genesis in Thatcher, this policy of transferring the processes of the state to the private sector with the intent that they should never be reclaimed can be argued to have been undertaken over a thirty-year period which appears to have been almost uninterrupted by such niceties as the democratic process.” [3]

Bear in mind, that while he talks about the U.K., much of what he writes about is relevant to the U.S., Australia, Canada and New Zealand and most western countries. So for example, when you read Thatcher, think about what was going on in the U.S. at that same time, i.e. Reagan.

He then goes on to provide us with an alternative economic model to the way things are currently operating in the world. In this model he outlines what he sees as the real goal for any economic entity  and that is the achievement of potential.

The achievement of potential is, I suggest, the goal of economic entities: the reasons why we fail to achieve our potential is the issue that requires explanation…the reason for government involvement in the economy, which underpins the whole logic of this book, is that nothing guarantees that the widespread achievement of potential will happen but government intervention definitely helps it do so.” [4]

He also highlights the role played by ‘feral’ finance in creating the distortions and problems in the global economy:
Too much banking can crowd out real money making in real business that makes goods and services people want and need. This the widely recognized economic concept of “squeezing out” in operation. The same can also be true of too much speculation within an economy as opposed to real wealth creation. It would appear glaringly obvious that having  large numbers of people spending their lives gambling cannot be good for the generation of real well-being and yet this is encouraged in our current economy.” [5]

Finally in the third section of the book, Richard outlines a number of solutions; ways in which the courageous state can be made a reality. These include: ways of restraining ‘feral’ finance, closing the tax gap, creating a green investment bank and closing down tax havens.

So who should read this book (and check out this website)? People who want to know what alternatives we have to the socio-political quagmire we are in. People who want a better understanding of what is really afoot in the financial world. But above all, people who are looking for hope in creating in a better society.

Buy the book

Till next time
Cheers
Anthony

About Richard Murphy:

Richard Murphy (54) is a chartered accountant and economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”.

Kevin Maguire, associate editor of the Daily Mirror has saidWe’ve got to take sides on tax. Rich individuals, corporations, well-funded special interest groups and much of Fleet Street is on one (the wrong) side and then there is Richard Murphy plus a few others, including yours truly. But it is Murphy who is the heroic figure. Tireless and forensic, driven by an admirable moral fervour, I take my hat off to a campaigner with Duracell batteries.

A graduate in Economics and Accountancy from Southampton University he was articled to Peat Marwick Mitchell & Co in London. He later founded a firm of accountants in London which he and his partners sold in 2000. Richard was also chairman, chief executive or finance director of more than ten SMEs.

He was a founder of the Tax Justice Network and is director of Tax Research LLP which undertakes work on taxation policy, advocacy and research for aid agencies, unions, NGOs and others in the UK and abroad. Richard Murphy has been responsible for introducing many new issues into debates on tax policy. In particular he created the entirely new accounting concept of Country-by-Country reporting that is now being considered for adoption by the European Union, OECD, International Accounting Standards Board and others.

Richard has been a visiting fellow at Portsmouth University Business School, the Centre for Global Political Economy at the University of Sussex and at the Tax Research Institute, University of Nottingham.

Richard was voted the seventh most influential left wing thinker in 2010/11 in a Left Foot Forward poll, making him the highest ranked UK based economist on the list.

In October 2012 the Association of International Accountants gave him their award for an Outstanding Contribution to the Accountancy Profession.

In addition to The Courageous State, he is a co-author of ‘Tax Havens: How Globalization Really Works‘, Cornell University Press, 2009. You can view from here some of his other publications and reports.

 

[1] Murphy, Richard. Closing the European Tax Gap

[2] Murphy, Richard. The alternative economic policy we need, Tax Research UK, 26th July 2011

[3] Murphy, Richard. The Courageous State, Chapter 2, page 30

[4] Ibid, Chapter 8, page 114

[5] Ibid, Chapter 12, page 234

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