No remittances without representation!

Sir, you write “Poor government plagues Central America”, “Central America needs a bold gesture from the US”, FT April 22.Those migrants who often see no choice in life than to depart, with their family remittances produced their efforts far away from home, too often only help to keep in power those who caused them to depart.

An ambitious process such as that one referred to by FT, requires time to acquire political feasibility, and moments of sharp internal divisions might not be the best moment to find it.

In this respect I argue that to help the migrants acquire much more political representation in their homelands, would be a better place to start.

And the migrants sure have economic ammunition they could use. For some of these countries the GDP they help generate in e.g., USA, is larger than the whole GDP registered in their respective homeland.

The Honduran migrants chase a more reachable American dream, so as to be able to chase a more unreachable Honduran dream

Sir, Jude Webber writes: The scope of Wilson Flores’ American dream — to send money home to his mother and younger siblings, and eventually to go back to Honduras and open a shop — is modest.” “Honduran migrants chase the American dream” October 31.

It is a sad dream. Even if Flores manages to get into America and get a job, the money he will send home to his mother and younger siblings, will also be helping to finance the permanence in power of the system that made him migrate in the first place, and so he might never be able to go back and realize his Honduran dream.

I was an Executive Director at the World Bank, 2002-04, representing, among other, Honduras. There I did what I could to remind everyone that when compared to the remittances sent home by the Central-American migrants, all other support by donors and multilateral institutions were peanuts. In fact I repeated whenever I could that for instance what the Honduran migrants earned gross in the US, was more than the GDP of Honduras, which should make you wonder sometimes where the real Honduras is.

And I protested loudly when by means of diaspora bonds many tried to capture even more of the migrants’ savings, to finance their governments even more. 

On top of it all, those Honduras migrants had/have much less influence in their homeland than foreigners…and so I frequently argued “No remittances Without Representation.” 

If host nations, like the United States wanted to reduce the flow of migrants, one way positive way would be to help the migrants gain political power in their homelands, so as to help them create the conditions that could allow them to return… and live their Honduran dream. As an absolute minimum the migrants should have a sizable representation in their respective congresses or parliaments.

Down the line, if a majority of the citizens of a nation have migrated, like 51%, and if they suddenly wanted to take back their country by democratic powers, or even with force, would that be classified as foreign intervention, as an intromission into a sovereign’s domains?

Sir, more than a decade later, these sincere concerns I had, are sadly not longer just about my friends from Honduras or El Salvador, they are much closer home; they are about my landsmen the Venezuelans. For a starter what would now be happening in Venezuela, without family remittances?

@PerKurowski

Remittances that help family and friends to survive, sadly, usually, help keep in power those who forced migrants to leave their homelands.

Sir, Gideon Long (and Vanessa Silva) report “Migration has also helped Mr Maduro to stay in power. The UN estimates that 2.3m people — 7 per cent of the population — have left Venezuela since 2015. Many are prominent opponents of the regime and while their voices are still heard from exile, they are no longer in Caracas orchestrating protests.” “Venezuelans display resilience in face of hyperinflation” August 25.

But how many millions Venezuelans are kept alive by the remittances from their emigrant family members or friends? Several millions? So that clearly helps the Maduro government to hold on to power much more than the absence of some prominent (but also until now quite ineffective) opponents.

Fifteen years ago I served as an Executive Director in the World Bank. My Chair also represented nations from Central America like El Salvador and Honduras, which had millions of migrants working abroad, primarily in the United States, and from where with great sacrifices, they constantly sent their families vital monetary assistance.

As much as I admired these emigrants, I abhorred knowing that their remittances were also helping to keep in power those who were basically responsible for them having to emigrate.

For instance if we assume that migrant workers remit 20% of what they earn, then according to remittance data supplied by the World Bank, in 2008 and with respect to Honduras, we could calculate Honduran migrants gross earnings abroad, representing 122% of Honduras GDP. And so, in economic terms, where is really Honduras?

Time and time again I push for the idea that, as a minimum minimorum thank you for providing their homelands with these lifelines, the migrants should at least have an important representation in their respective general assemblies. That way they could at least try to change the realities so as to be able to go back to their homelands, before they forgot these. “No remittances without representation”.

We often hear about the dangers that brain-drain could represent for these countries. I always thought heart-drain to be much worse menace.

@PerKurowski

Even after the crisis there has been no change in who are represented when deciding on bank regulations.

Sir, Sarah O’Connor writes: “If we want groups to make fair decisions, our best shot is to make the groups representative of the people who are subject to those decisions.” Hear hear!, “Diversity coaching from the Olympic dressage event” August 22.

In the matter of bank regulations, where were all those who perceived as risky by the banks, like entrepreneurs, suffered the Mark Twain realities of bankers lending you the umbrella when the sun shines and wanting it back if it looks like it could rain?

Had they been present perhaps regulators would have understood the concept of conditional probabilities, and therefore had realized that assets perceived by bankers as risky become safer, not riskier; while assets perceived by bankers as safe become riskier, not safer.

Can you imagine how much tears, sufferings and lost opportunities that would have saved the world, primarily our young?

The saddest part of the story is that even after the crisis should have evidenced to all the regulators had no idea of what they were doing, there has been no changes at all in who are being represented when analysis and decisions are taken, so they still keep seeing and considering the risks in the same or quite similar way, the bankers are perceiving the risks. 

How good it would have in the Basel Committee some representation of the young who know that risk taking is the oxygen for the development they need, and that the older do not have the right to “safely” extract all equity from the current economies.

@PerKurowski

G8, scrap all corporate tax, it only dilutes the citizen’s tax representation.

Sir, in all discussions about corporate taxes, like your editorial “The world needs global tax reform”, June 17, it amazes me how it is ignored that, sooner or later, at the end of the day, one way or another, all corporate taxes end up being paid by citizens, but in this case without the representation that tax payment should have awarded them with.

Corporate taxes stimulate politicians and corporations to negotiate in all coziness, leaving the citizens out of it.

The easiest, most efficient and best way to reform taxes on a global basis, is a zero corporate tax.

And of course there are hundreds of ways to tax citizens so as to make up for that fiscal income shortfall.

Limit how much of annual payments to a banker are tax-deductible expenses

Sir, at the end of the day, somewhere somehow, one bank customer is going to pay for what the banks pay in tax. And so, if you want real transparency, eliminate the taxes on banks, because whoever really ends up paying these should have his full tax representation.

The way you go at it in “Let the sun in on banks’ tax affairs”, February 21, and like so many others go at it, unnecessarily make the banks stand out as villains; and, the publication of “how profits and corporate profits are allocated across countries”, would also unnecessarily breed animosity between the citizens of the world.

But that said, if you cannot do anything about it, because politicians like taxing banks so that they can be lobbied by banks, then at least help to eliminate some distortions. For instance any payments in salaries plus bonuses to any individual banker that exceeds more than £300.000 per year should not be allowed as a tax deductable expense. That would help to cap those banker bonuses in a way that creates much less distortions than other proposals we have read.

PS. Tax-havens are best fought with tax-heavens

Down with all corporate taxes, these only dilute the citizen’s tax representation.

Sir, I refer to Mr. George Osborne’s, Mr. Pierre Moscovici’s and Wolfgang Schäuble’s “We are determined that multinationals will not avoidtaxes” February 16, and which unfortunately does not seem to imply that the “smaller businesses paying up to 30 per cent” will now be able to pay the 5 per cent the authors indicate multinational pay. 

Yet all corporate taxes will, no doubt, at the end of the day, one way or another, be paid by a citizen somewhere. And therefore that citizen’s payment will occur without the governments being held accountable to that citizen, allowing instead that citizen’s tax-paying-representation powers to be exercised by the corporations. 

Also, since the final real bill for a corporation’s tax might hit someone earning or having absolutely nothing, these corporate taxes can de facto also be extremely regressive. 

I therefore hope the ensuing discussions and determination of this powerful trio, gets to be oriented toward lowering or better yet eliminating all corporate taxes. Of course, a zero corporate tax would imply that all investment income had to be taxed at the same level as all other income. 

Down with corporate taxes! The only ones who should have the right to cover for a government expenses are the citizens, and that right should not be diluted in any way. 

PS. This is not the moment, but if you have time, I would like to refer you to My Tax Paradise, because nothing is more powerful against sinful tax-havens than a virtuous tax heaven.

Corporate taxes only dilute citizens' tax representation

Sir, I come from an oil-cursed nation where when there is an oil boom, our government becomes almost independently wealthy, and we the citizens become almost a nuisance to it, except for during Election Day, and this even though that oil income rightfully belongs to us. And in many ways something similar happens with corporate taxes. 

All corporate taxes will, no doubt, at the end of the day, one way or another, be paid by a citizen somewhere, most probably in a very regressive way. And that citizen payment will occur without the governments being held accountable to the citizen, allowing instead the citizen’s tax-paying-representation powers to be exercised by the corporations. 

Therefore, when I read well argued articles like John Gapper’s “Politicians should stop posturing on corporate tax” January 31, I can only sadly conclude thinking “what brilliant distractions the politicians sponsor in order to keep us citizens away” so as to be allowed to be lobbied, in petit committee, by corporate interests. 

Also, when corporations pay taxes on behalf of the not so blissfully ignorant citizens, this can quite often be an extremely regressive taxation, since the final tax bill might hit, one way or another, someone earning absolutely nothing. 

Of course, a zero corporate tax would imply that all investment income had to be taxed at the same level as all other income. 

And so… down with corporate taxes! The only ones who have the right to cover for a government expenses are the citizens and that right should not be diluted in any way. 

PS. This is not the moment, but if you have time, I would refer you to My Tax Paradise.

How to save ourselves from an ättestupa

Sir, if countries were open-ended investment trusts, then if the average lifespan was eighty years, a newborn baby should have eighty shares, a fifty-six-year-old consultant (like me) should have only twenty-four shares, and anyone over eighty should count his blessings and be happy with the one he’s got left. From this perspective, the representation of the young in our current democracy is null.

Lorenzo Bini Smaghi, in “How to save the young from the burden of pensions” October 18, describes precisely the conflicts that are getting more serious by the day as the graying of the democracies in Europe (and the US too) is reducing even more the low representation of the younger generations. This though is not a problem restricted to the developed countries. The World Development Report 2007 from the World Bank titled Development and the Next Generation is a truly hair raising reading that evidences our failings as a society and that most of those coming after us are giving up on participation and hope, with damned good reasons.

It is said that in Scandinavia, a long time ago, when the older people felt that they stood in the way of the young, they threw themselves off steep cliffs known as an ättestupa. In this respect Bini Smaghi, instead of talking about saving the young would be more correct phrasing it as saving ourselves, before they throw us down an ättestupa—for damned good reasons!