Economic myths: Closing tax havens could end world hunger

The headlines all seem to screaming "We can end world hunger if we can just shut down tax havens".

Superficially, you might think this is just the old wishful thinking that if Western countries could collect more tax they'd have more money to send to the Third World as aid, which is of course nonsense and the myth I set out to debunk. The point is that

a) Third World aid payments are ultimately futile, "trade not aid" is my motto, and

b) It's not Western countries who allow "money" (which at this level of debate is an abstract concept anyway) to be shifted out of Third World countries into tax havens, it is the totally corrupt or incompetent governments of those Third World countries themselves who allow it.

Most of these countries - unless they are Islamic hell holes for whom there is no hope anyway, and good riddance - could sort themselves out in no time by simply reneging on debts owed to Western banks; stopping importing expensive Western weapons; and starting to collect taxes from land and resource rents instead of trying to copy the supposedly sophisticated Western system of taxing accounting incomes and profits (which is itself a smokescreen).

Problem is, aside from a short article in today's Metro which I can't track down anyway, people appear to be moving on from The Myth to the actual solutions. I hoped that at least I'd catch out The Guardian, but even they are more nuanced about it:

The If campaign, a coalition of 200 charities campaigning against world poverty, welcomed the Caymans statement. "This is the first hole in the wall of secrecy surrounding Britain's overseas territories.

"David Cameron now has a real opportunity to show that all the UK's tax havens – both overseas territories and crown dependencies – can reform and help end the scandal of tax-dodging. We need quick action to deliver a deal at next week's G8 to ensure poor countries can collect the billions in missing tax that would help them end hunger."

Ah well, let's try leftie Labour MP Lucy Powell

We also need to address the structural causes of poverty and hunger if we are to achieve radical change.

The OECD estimates that developing countries lose three times more to tax havens than they receive in aid each year. That is why we need to end tax secrecy so that companies can be held to account and corruption can be rooted out. Developing countries will never be able to lift themselves out of poverty if they cannot collect taxes to fund their own services.

So even she is sort of stumbling towards the underlying problem.

The FT is of course even more even-handed than that:

It has been billed by the British government as “a turning point” in the battle against tax evasion and avoidance. When world leaders gather in Northern Ireland next week, they will set out to end tax havens and stem the illicit flow of funds out of some of the world’s poorest countries...

A long-running drive to inject transparency into the extractive industries is set to receive fresh impetus at the G8. There has been growing unease about corruption and secret deals between companies and governments of developing countries robbing their public of the benefits of their natural resources.

Rules requiring companies to disclose what they pay and governments what they receive are based on the premise that if the money is openly tracked, it is harder to steal.

But they start with the assumption that the "flow of funds etc" is illicit in the first place - it probably is - but surely it's up to the governments of the countries out of which wealth is flowing to a) stop f-ing pocketing half of it for themselves, b) decide what is illict and what isn't, and c) police and prevent/collect tax from those flows?

As long as Western governments - themselves massively corrupt - just do a fig leaf operation whereby they confiscate some of those flows after the event and then send a tiny part back to the self-same corrupt Third World governments, that achieves precisely nothing.