Expert team warns of ‘race to the bottom’ threatening living standards around the world
The University of Warwick is at the centre of what experts are describing as a new global movement against so-called ‘race to the bottom’ competitiveness between nations.
Researchers and activists with expertise in jurisdictional competition in the fields of tax, financial regulation, working conditions and welfare entitlements gathered at Warwick’s campus in Coventry on Monday (16 February) for an inaugural meeting to map out their ambitious plans.
The team – which is jointly co-ordinated by Matthew Watson, a Professor of Political Economy from the Department for Politics and International Studies and an Economic and Social Research Council Professorial Fellow – is calling for a total reform of one of the fundamental underpinnings of current political economic thought.
They claim that international competition over national regulations and practices, which results in countries continuously trying to undercut one another, is having a devastating impact on living standards around the world.
Speaking at the conference, Prof Watson said: “At the moment the big story is, of course, HSBC and how its competition practices have highlighted the issue of tax avoidance – which makes the launch of this incredibly exciting project particularly timely.
“But we’re talking about far more than tax here – we want to consider the broader regulatory structures that have allowed this sort of regulatory undercutting to become a normal part of what takes place on an international scale.
“There’s been a politics of closing your eyes to the ability of the powerful to write regulations for their own good and we want to challenge that with a politics of shouting loudly on behalf of the 99 per cent.
Bringing together experts from around the world, the new initiative is a spin-off of the Tax Justice Network, directed by John Christensen, which over the last 12 years has helped to bring the issue of off-shore tax havens into the media spotlight.
John said: “What we now have is a large group of committed academic researchers and campaigners who are going to work together to debunk the myths about political economics, highlighting harmful regulation, tax competition and so on...it’s just the start of what we hope is a new global movement.”
He referred to the recent revelations about HSBC’s Swiss banking arm as an example of why regulatory policies need a modern re-think: “It’s a classic case of a company operating in a sector which is weakly regulated precisely because of the enormous pressures brought to bear on countries to cut back on regulation.
"Switzerland is one of the worst examples. It’s so secretive and lax that it creates what I call a criminogenic environment - essentially encouraging banks to knowingly engage in criminal activity. It’s harmful for the rest of the world and for the banks themselves because no doubt powerful countries such as the United States have to intervene.
“The US Department of Justice, for instance, currently has HSBC on probation following a previous scandal and there’s a real prospect that in New York they could revoke its licence to operate in the US this week, destabilising the whole banking sector. That’s what happens when you operate in a criminogenic field; that’s what happens when you race to the bottom – it’s globalisation gone wrong and things need to change.”
Prof Watson concluded: “A lot of the commentary on HSBC over the last week or two has been reshaped into the fairly predictable narrative of ‘who’s doing this more badly than anyone else, let’s name the biggest tax avoiders’ – but, for us, that misses the point.
"The real issue is how these systems, where this activity is considered normal, have been designed: the rhetorical structures, such as political language, which shape that activity and which create a situation where the only consideration is how to cut regulation.”
"Every fresh movement needs a start and I think we are very lucky at the University of Warwick to be able to host this new group. The people who are involved are the best in their fields and are rightly questioning the underlying principles of economic competition. All we need now is for those in power
Researchers and activists with expertise in jurisdictional competition in the fields of tax, financial regulation, working conditions and welfare entitlements gathered at Warwick’s campus in Coventry on Monday (16 February) for an inaugural meeting to map out their ambitious plans.
The team – which is jointly co-ordinated by Matthew Watson, a Professor of Political Economy from the Department for Politics and International Studies and an Economic and Social Research Council Professorial Fellow – is calling for a total reform of one of the fundamental underpinnings of current political economic thought.
They claim that international competition over national regulations and practices, which results in countries continuously trying to undercut one another, is having a devastating impact on living standards around the world.
Speaking at the conference, Prof Watson said: “At the moment the big story is, of course, HSBC and how its competition practices have highlighted the issue of tax avoidance – which makes the launch of this incredibly exciting project particularly timely.
“But we’re talking about far more than tax here – we want to consider the broader regulatory structures that have allowed this sort of regulatory undercutting to become a normal part of what takes place on an international scale.
“There’s been a politics of closing your eyes to the ability of the powerful to write regulations for their own good and we want to challenge that with a politics of shouting loudly on behalf of the 99 per cent.
Bringing together experts from around the world, the new initiative is a spin-off of the Tax Justice Network, directed by John Christensen, which over the last 12 years has helped to bring the issue of off-shore tax havens into the media spotlight.
John said: “What we now have is a large group of committed academic researchers and campaigners who are going to work together to debunk the myths about political economics, highlighting harmful regulation, tax competition and so on...it’s just the start of what we hope is a new global movement.”
He referred to the recent revelations about HSBC’s Swiss banking arm as an example of why regulatory policies need a modern re-think: “It’s a classic case of a company operating in a sector which is weakly regulated precisely because of the enormous pressures brought to bear on countries to cut back on regulation.
"Switzerland is one of the worst examples. It’s so secretive and lax that it creates what I call a criminogenic environment - essentially encouraging banks to knowingly engage in criminal activity. It’s harmful for the rest of the world and for the banks themselves because no doubt powerful countries such as the United States have to intervene.
“The US Department of Justice, for instance, currently has HSBC on probation following a previous scandal and there’s a real prospect that in New York they could revoke its licence to operate in the US this week, destabilising the whole banking sector. That’s what happens when you operate in a criminogenic field; that’s what happens when you race to the bottom – it’s globalisation gone wrong and things need to change.”
Prof Watson concluded: “A lot of the commentary on HSBC over the last week or two has been reshaped into the fairly predictable narrative of ‘who’s doing this more badly than anyone else, let’s name the biggest tax avoiders’ – but, for us, that misses the point.
"The real issue is how these systems, where this activity is considered normal, have been designed: the rhetorical structures, such as political language, which shape that activity and which create a situation where the only consideration is how to cut regulation.”
"Every fresh movement needs a start and I think we are very lucky at the University of Warwick to be able to host this new group. The people who are involved are the best in their fields and are rightly questioning the underlying principles of economic competition. All we need now is for those in power
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