Seems to be a lot of complaining about the City of London's semi-autonomous status, without actually explaining why this is a bad thing. I've always thought it was just an odd historical quirk. They're still subject to the general laws of the country, still subject to the same taxes and regulations.
The articles main complaint seems to be about banks and other financial bodies using offshore tax havens, but that has nothing to do with the City's odd status. That could happen - and does happen - anywhere in the world...
Yep. The City is in every way entirely subject to parliament, and the laws of the country apply within the square mile in every particular the way they do outside it.
The biggest oddity is that since so many people commute into the City, they don't just let residents vote in council elections, but also businesses in proportion to the number of workers they have; an odd but not altogether crazy way of making sure that all stakeholders are represented.
...what any of this has to do with offshore tax havens is a mystery to me. There's only one FSA in Britain, and they don't care where you're headquartered.
Edit: From the article: "the corporation is an offshore island inside Britain, a tax haven in its own right. The term "tax haven" is a bit of a misnomer, because such places aren't just about tax."
Actually, it's not that it's not just about tax; it's that it's not about tax at all. Tax rates are the same in and outside the City. A "tax haven" that's not a haven and doesn't have different tax rates? This is Orwellian stuff.
Sorry but businesses getting to vote based on the number of workers they have sounds insane and totally undemocratic.
There is a tendency on the internet to downplay the significance of democratic principles and to consider them as quaint, liberal or at odds with libertarianism. Worrying imo.
It is literally a single square mile. Nobody's sense of democratic principals should extend so far as to say a single square mile cannot choose to govern itself a little differently.
There are 7,000 actual residents in the City of London and more than 300,000 people work there. To give the huge imbalance of people who work but don't live there a voice in government a mere 16000 non-resident votes are also allowed and divied up to businesses with respect to their size. For the boring local government services provided, this is more than fair.
Also, in general the people who live (especially) and the people who work in the City of London are fabulously wealthy. My heart doesn't bleed for their lost electoral rights (not that I actually believe that the system is unfair) and they all seem pretty okay with it anyway.
If the people who work there "got a voice in government" that would be quite a bit better. According to the article that's not the case: Corporate management of "Goldman Sachs and the People's Bank of China" would be calling the shots.
Not sure if I understand where you are coming from. How can you not see a fundamental problem with the situation (even if "people are rich" and "just a square mile" would make this particular situation less severe)?
Would you be ok with an expansion of this system to other areas? How do you feel about democratic ideas in general?
Do you think that the board of trustees for a university should be elected by those students and others living on university owned property? Many universities own far more than 1 square mile, they are essentially mini-cities with their own police, courts, etc. Is it a fundamental problem that universities are not run as democracies?
I'll leave this question unanswered as I don't have knowledge about the type of university you are talking about (mine had no own police). If you are truly curious about this topic, your question has probably been thorougly dealt with in literature in the last 100 or 200 years.
If you just put that there to weaken my argument, I'd say let's stay with the topic at hand. We were discussing a local government that's nominally run as a democracy but where corporations have the votes, potentially part of a trend to less democracy if we are not careful (see protesting in the USA, blogging in Russia etc.).
I have a sort of a long term career dream of starting a community/small city as a startup. Such a community would necessarily not be run as a democracy. I have found that there exist "true believers" in democracy, who view it is morally problematic for any community to not be a democracy. Yet such true believers tend to be quite inconsistent in their beliefs - they very rarely complain about college campuses, remote company towns, military bases, research facilities, etc, not being run as democracies. I am thus very interested in how people draw distinctions - what makes it ok for one community or mini-city to be a democracy but not another, where is line? And in designing my city some day - how can I avoid setting off people's triggers whereby they denounce a certain government structure for not being democratic?
> what makes it ok for one community or mini-city to be a democracy but not another, where is line?
There isn't one, really. Which is why the Soviet system instituted formally-democratic assemblies in any entity. In principle, it was a great idea; in practice, these bodies were soon hijacked by professional political operatives from The Party, who would steer them in the "right" direction and use them as another tool of control (speak up against the Party line in your factory soviet, and you'd soon be on a train to Novosibirsk). For other insights into that particular form of organization, I'd recommend Bulgakov's "Heart of a Dog".
Whether the limits of the Soviet system where environmental or historical in nature (they didn't have the internet, say), it's an open debate for another day, but I mention it to define one extreme of the theoretical scale: anyone can vote on anything. At the other extreme, you have absolute monarchy: nobody can vote on anything.
Anything in between these extremes is not "absolutely democratic" or "absolutely undemocratic", which is why debate is so fragmented and dependent on specific circumstances. You can have profoundly-undemocratic organizations being run in a substantially democratic way by this or that specific leader, or formally-democratic institutions being run with an iron fist by a single individual.
I think that, pragmatically speaking, the most basic element of democracy is just the acceptance of the existence of feedback. If one is ostracised, isolated or punished for the simple act of expressing a differing opinion, people will feel that democracy is non-existent, that the game is rigged. On the other hand, if differing opinions are given substantial space and even co-opted by rulers, especially in times of crisis, the absence of formal democratic structures will be considered a purely theoretical problem and likely ignored in practice.
Others famously define the basic unit of democracy the answer to the question "can we replace our rulers without violence?". However, this sort of argument can be subverted by putting in place mechanisms for such a replacement and then, by other means, ensuring that they will never be invoked.
FYI, a recent "shake-up" of financial regulation saw the FSA (Financial Services Authority) change its name to the FCA (Financial Conduct Authority), and certain parts/responsibilities of the old FSA were (nominally) hived off to a new Prudential Regulatory Authority (PRA), which falls under the remit of the Bank of England.
> They're still subject to the general laws of the country, still subject to the same taxes and regulations.
The point of the article is that this is actually not true; the City is not subject to Parliament and Monarch, but rather a peer with substantial autonomy on various matters, enjoying special representation at Westminster and in other bodies. The author mentions a private development where the City was at the same time investor and institutional overseer, in a clear conflict of interest that would be illegal elsewhere in the UK.
Because the City body politic is composed by businesses rather than individuals, most matters where special status is invoked or leveraged are financial privileges and lobbying powers of one sort or another; this enabled City companies to build the network of tax havens we all know and love, where money flows to semi-autonomous City of London, which redirects it to progressively-more-autonomous dominions oversea, disappearing like a ship on the horizon.
Removing all privileges the City enjoys would be a necessary first step to crack down on global tax avoidance in the financial sector, but this is extremely unlikely: Blair's (New) Labour held an overwhelming parliamentary majority for a decade and still conceded to the City's wishes, while Tories are wholly dependent on City money to even exist in the first place. The author believes international pressure will eventually force the government's hand at some point; personally, I am quite skeptical -- but then again, I work with/for a lot of City companies, so I might not be entirely unbiased.
The only taxes I can see them being exempt from are local council taxes, not income/VAT/corporation tax. And whilst they are nominally not subject to the Monarchy, nor is the rest of the country really.
Much like the Monarchy, the City's regulatory power is largely paper thin and only exists within the square mile. The moment they tried to exercise any kind of open egregious use of power (like evading, rather than avoiding corporation tax), they'd find their priviledges revoked near-instantly.
However that doesn't prevent them from using the usual methods of bribery and corruption from influencing the government. But then how is that any different from any country in the world?
> how is that any different from any country in the world?
Well, other countries at least try to maintain the idea that democratic power comes from the electorate, rather than special interests. So corruption, where it is, has to pass through the electorate (which it often does, but that's another matter). Whereas in Britain, the City is an institutional body openly and directly representing business and "free trade" in Parliament and elsewhere.
This arrangement is closer to what Mussolini implemented in Italy, based on the idea that Parliament should be a zone of mediation between competing private interests, rather than a body dedicated to represent and discover the Will of the People as a whole (which is the traditional French model).
From an ideological standpoint, Labour policy has been very far from unionism for almost 20 years now, and there is an ongoing attempt to cut all remaining ties.
Actually, there are 2 financial center in London. Canary Wharf and the City.
Canary Wharf does not enjoy the same weirdo status as the City and that does not seem to prevent bank like HSBC to be headquartered there. Also quite a lot of financial institutions bleed outside of the City, like in SouthBank.
The whole financial sector in the UK has a murky reputation, and there have been regular show on TV about how "the City" is a big money laundering machine. The City in this cased was used as a synonym for the whole sector in the UK rather than the physical ___location.
True, but if Barclays has 500 subsidiaries, how many will hsbc have? It was probably just cheaper to have the big office in canary wharf and keep the city office with less staff.
I work close to bank station and I have never in my life seen so many banks, in the smallest spaces you get the most exotic bank branch from a bank operating in some other part of the world. And that's just on the street level - if it's not a pret it's a bank- and who knows what's in those generic skyscrapers housing 20 different companies...
I was on the edge of my seat waiting for them to get to the point and I still am. Sounds like a handful of socialists belly aching about something they don't understand but feel is unfair.
I highly recommend all of CGP's videos. They are all fun and very informative. I just started listening to his podcast "Hello Internet" which is also enjoyable.
TL;DR "The City of London" is an ancient city founded by the Romans who's been continuously governed by an embarrassingly complicated government that nearly puts the Catholic Church to shame, and is nearly as old. It to this day involves guilds.
The short version is that companies get the right to vote in this system. And do the high price properties are nearly the entire government.
This leads to an incredibly business friendly government.
It is the EU that is directly responsible for the "Dutch double sandwich" and various other tax dodging schemes. Lots of loopholes, we simply can't close, until we leave.
The EU is the only hope we have to balance the power of the city. What can a government of only 60 million, where one house is not even democratically elected, do against the might of world's finance system?
I'm not sure what the fact that one house is not democratically elected has to do with anything?
The point of an upper house is that it is supposed to be impartial to the whims of the voters. In the USA we originally had an appointed Senate and still to this day have an appointed Judicial system. Should supreme court judges be elected?
I have to say as a quasi-outsider (English raised in the USA) that more often than not I'm extremely impressed by what comes out of the House of Lords. For example their recent statement on the EU's right to be forgotten.
As an American ("no taxation without representation!") I've always... admired the House of Lords. They are able to say and do things which no elected politician can, and provide a sort of stabalizing feedback to the UK's parlimentarian system. Not unlike the relationship of the American congress with the appointed-judege court system.
I was sad when I found out that the House of Lords is in the process of being reformed, with membership moving from peerage to either elected or elected-appointed positions. I fear that this won't end well for Britain :(
The role of a second parliamentary chamber is hotly debated across the West at the moment.
Countries where both houses are elected and enjoy equivalent powers (like Italy or the US) complain that this arrangement slows down lawmaking, in an age where everything else is actually speeding up.
Countries where the second chamber is not elected, like Britain, experience a certain unease: they wage war oversea "to bring democracy", and then half of their lawmaking is in the hands of a completely undemocratic body with dubious legitimacy.
Countries where the second chamber actually represents different bodies from the electorate (like Germany) seem to have found a pragmatic third way, but then this chamber ends up over-representing certain interests (in Germany, local ruling classes and their nests of semi-private special businesses), which again is not really democratic in nature.
I think we'll have to learn again why balance is required in matters of such importance, and we'll probably have to learn it the hard way. The major supporters of "streamlined" government have always been tyrants and oligarchs, after all.
> Countries where the second chamber is not elected, like Britain, experience a certain unease: they wage war oversea "to bring democracy", and then half of their lawmaking is in the hands of a completely undemocratic body with dubious legitimacy.
Its been quite a long time (more than a century) since the Lords could be said to hold anything like half the legislative power in the UK.
Until 2005, they had ultimate responsibility for the judiciary (although mostly on paper). Also, the review process is half the lawmaking, although the most obscure half. All sorts of shenanigans can be slipped in through reviews, and compromises on sticky points can be "encouraged" by playing the timing card. The fact that the Commons can eventually steamroll the Lords doesn't mean that they always do, especially if majorities are weak.
The fact that the Commons can steamroll the Lords means the two aren't co-equal in power -- if they always did so, it would mean that the Lords had no legislative power, not merely the significantly-less-than-half of the legislative power that they actually have had since the early 20th century.
I think we're saying the same thing here, really; whether "half the lawmaking" is 45% or 50% is a technical point that is basically irrelevant in practice.
My original comment related to very pragmatic situation of acting as "champions of democracy" while still maintaining a very significant role in the lawmaking process for a wholly-undemocratic body. It's a real problem that has not been solved and significantly weakens British arguments in, say, foreign policy and cultural debate.
Who says that democracy has to be 100%? If you want to get technical, we all live in republics anyway, not direct democracies.
I know I am an outlier, but it seems a totally strange and foreign concept to me that one could criticize the UK for being hypocritical in promoting democracy abroad because of the House of Lords.
> If you want to get technical, we all live in republics anyway
No "we" don't (dunno about you but I live in a constitutional monarchy, which is a fairly popular form of government in Europe, and it just ain't a republic in any technical sense).
> it seems a totally strange and foreign concept to me that one could criticize the UK for being hypocritical in promoting democracy abroad because of the House of Lords.
You should visit the Middle-East sometimes, but even just France would be an eye-opener I think.
> My original comment related to very pragmatic situation of acting as "champions of democracy" while still maintaining a very significant role in the lawmaking process for a wholly-undemocratic body.
That seems to demonstrate a problem of ludicrously binary thinking. The UK is far more democratic than a great many countries -- and has been making democratic progress longer than many countries have existed. The existence of the shrinking vestigial powers of the House of Lords isn't even a little bit of a pragmatic problem for the UK as an advocate of democratic progress abroad.
> The UK is far more democratic than a great many countries
... and far less democratic than many others.
> and has been making democratic progress longer than many countries have existed
... or, in other terms, has been slower to produce a soundly-democratic system than many younger countries.
In fact, one of the main puzzles constitutional scholars struggle with, is exactly this: how (and why) did a nation that reached substantial parliamentary rule so early, deliberately refuse to evolve towards more democratic forms of governments for so long? Why did England fight the French Revolution so bitterly, when on paper the French were just completing the job started in Westminster so many decades before? How can aristocratic privilege survive, in this day and age, in the same nation that first theorized it as fundamentally unjust?
I know this can be difficult to understand for people grown under the ultimate myth of Westminster "mother of all democracies", but there are other models out there; and some of these models are ultimately much more coherent, in theory and in practice, than the constitutional hodgepodge we experience in modern Britain.
> Countries where the second chamber is not elected, like Britain, experience a certain unease: they wage war oversea "to bring democracy", and then half of their lawmaking is in the hands of a completely undemocratic body with dubious legitimacy.
What is sad about that unease is that it has everything to do with the objecter's mind and nothing to do with the state of the world. "Does it work? Is there any alternative that is better?" <-- That is all we should be asking.
But I'm too cynical a person to ever hope for consequentialism in politics.
> Does it work? [...] <-- That is all we should be asking.
The problem is, how do you define "working"? Who defines it? The Victorian Empire "worked" perfectly well for the ruling classes; less so for Indians and lower classes. That's where the absolutist coherence of "one head, one vote, in all matters" comes in; but in practice we know the idealistic approach doesn't always result in smooth sailing, so we introduce elements of moderation here and there, and then we bang our head against the wall of doubt -- is this counterbalance too anti-democratic? Should we really stop people from shooting themselves in the foot, or is there a deeper horizon where such an outcome could be desirable? Etc etc.
That's the open-ended question of constitutional studies.
Complainers about the Senate are usually sour grapes.
Familiarize yourself with the drivel that passes the House. The Senate has allowed horrible things like lynching to persist for decades, but it stops truly dumb knee jerk measures from being placed into law.
The Lords do something which no elected politician can do: look further ahead than the next election. Regardless of the exact mechanism, a functioning country NEEDS this capability.
Unfortunately it's not clear they will be around for all that much longer. The Lib Dems had a 'reform' bill that would have made the House of Lords largely elected. It failed only because the relationship with the Conservatives fell to pieces at key time. A lot of people think that an unelected House is anathema still.
It's a shame that everyone's so insistent on democracy without having any creativity about it. Athens had the right idea -- create a set of objective standards for people qualified to serve in the upper house, then draw lots and whoever loses gets the job.
Not democratically elected = easier to corrupt.
The previous leader of the Lords OWNES his own lobbying company!
Cameron suggests him as Britain's EU commissioner, and it was only then that the EU parliament had to force him to sell the stakes in it for him to be an acceptable candidate.
This guy was running the house of Lords for years!!! In which democracy is that acceptable??? How is being in political power and a lobbyist for industry at the same time NOT a conflict of interest??
Of course Germans question the power of the car lobby! The problem in the UK is that you destroyed the diversity of your economy in the eighties! The car industry is powerful in Germany but so are many other industries! The UK has sold it's soul to finance, even reforming schools and universities for that one purpose. George Osborne himself says for the UK to prosper in the longterm the economy needs to be rediversified!
That is because individual states implement eu directives in their own way - some with more attention to the letter of the directive and less to the spirit
Arguably the spirit of EU corporation tax law is intended to drive it to zero. That's why a corporation can designate its headquarters as being absolutely anywhere regardless of where its actual workforce or assets are. It's the only sane way to do things, otherwise you end up trying to arbitrarily slice a company up between jurisdictions even when it doesn't make any sense.
BTW the notion that "taxation without representation" is bad is pretty fundamental to modern societies. So if we tax corporations it makes sense that they'd be able to vote, as in the City of London, otherwise perhaps we should not be taxing them.
Which is why it probably doesn't make sense to give corporations a vote, therefore it seems unjust to tax them. However corporations are easy to tax despite all the hullaballoo about tax avoidance so I doubt governments are going to give up on it any time soon. Taxing entities that can't vote is basically free money.
I remember reading a study that 60% of global black trading goes through the city. Why waste time at the periphery when the core is open for all to see?
Also sorting out Crown dependencies is something only the UK can do not the EU.
It's not easier. They are independent nations, sort of at least. The problem is how does the money/wealth get into a tax haven in the first place? That's where the city comes in! You cannot just fly with millions in cash (still happens too) you need a way to move money there smartly to bypass the FCA & Co. Once the money has left EU jurisdiction it's too late!
All those tax havens have effectively sponsoring major eu nations to be able to function. Just get France Spain Germany and UK to present them with an offer they can't refuse.
France did that with Monaco in 1963: Charles DeGaulle blockaded the city until they signed a tax treaty. It didn't eliminate Monaco's tax-haven status, but did limit it in various ways, especially as regards French citizens and companies.
The City of London Corporation is the number one reason to vote Yes for Scottish independence. The concept of the Remembrancer should be utterly repugnant to anyone who believes in democracy over facism.
Edit: And I'll note that this was voted down before I even had a chance to fix my spelling! Guess the money spent on "social media consultants" was worthwhile guys, huh?
Oh, and I'm going to be mentioning the Corporation a lot over the next month, in letters to the local press and messages online. The downvotes have motivated me :)
The articles main complaint seems to be about banks and other financial bodies using offshore tax havens, but that has nothing to do with the City's odd status. That could happen - and does happen - anywhere in the world...