Nick Shaxson ■ Scientific revolutions and the tax justice consensus


From a book review in The Economist:

“(the author) cites Thomas Kuhn’s theory of scientific revolutions. First, the existing models are proved wrong by the facts. Second, the experts try to adjust the theory to account for the anomalies, leading to ever-greater complexity. Third, a new theory is put forward that throws away the existing framework. Fourth, the theory is attacked by the experts as being incompatible with the existing model. Finally, younger, more open-minded scientists accept the new theory and it becomes the consensus.”

As far as the tax justice consensus is concerned (see our entire website to get a flavour of its wide-ranging application), we are firmly into phases three and four, and entering phase five. The old guard certainly isn’t letting go yet, but we’ll get there. As we noted, just a couple of posts ago:

“New political eras begin when the ideas that define them are embraced by those most reluctant to accept their logic.”

It’s happening. The Economist itself has undergone a true sea change in pretty short order: from its rabidly pro-secrecy jurisdiction stance as late as 2007, to a far more reasonable stance recently (though still with a fair number of articles by the old guard: some generic rebuttals to that particular piece’s arguments here.)

The book that The Economist is currently reviewing (Money, Blood and Revolution, by George Cooper, a fund manager) notes that:

“The logic of competition helps to explain, in his view, why there was so little economic growth before the Industrial Revolution. This lack of growth is a problem for those who believe that the West’s modern difficulties are caused by excessive government regulation and high taxes; the world before 1700 had minimal government and low taxes.”

And, more specifically:

“In a pre-industrial economy, wealth flows up from the bottom of society to the top in the form of taxes and stays there. But in a democratic society, social mobility is more fluid, creating the incentive for capitalists to create wealth. At the same time, progressive taxation means that wealth flows back to the bottom and keeps the circulation flowing. This has been vital to capitalism’s success.

Today’s problems, according to Mr Cooper, are caused by the high debts built up by those lower down the social scale; debt transfers money from poor to rich. What is needed is thus an injection of money at the bottom of the pyramid, via fiscal stimulus, rather than “quantitative easing”, which pushes up asset prices and benefits the rich.”


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