Tax Evasion And White Collar Criminals

“Banking secrecy will no longer have a place.” With these words, the German Finance Minister, Wolfgang Schäuble, declared on October 27, 2014, in front of four European newspapers (“Les Echos”, “El País”, “The Times” and “Corriere della Sera”) the international will to cope with tax evasion l.

His words fit within the framework of a global agreement on exchange of tax information that took place this past Wednesday, October 29 in Berlin. This will aim, by 2017, to solve tax evasion towards tax havens such as the Cayman Islands, Switzerland or Liechtenstein. Although it is considered an important step to stop corruption, and we do not doubt it, it is nothing more than a facade that covers other structures to carry out tax evasion.

In this article We will try to outline what represents a common practice in times of crisis : a regulation that serves as a social pretext towards a growing deregulation of these illicit activities.

financial capitalism

Financial capitalism becomes globalization. “Globalization is, in effect, driven by the profit of banks, speculators and traffickers of multinational (American) firms and under the multiform domination of the hyperpower of the United States.“(1). The type of capitalism that is being imposed, especially that which appears after the Cold War, is a globalized, deregulated and “financialized” model ” excessively. Of these three characteristics, the last one is the most notable. “Financialization” represents a “process by which financial services, solidly implemented, take over the dominant role in economics, culture and politics within a national (2) and global economyl.” For finance to be established as such, certain borders need to be opened (globalization ) and the deregulation (or in other words liberalization) of the economy of the states. Likewise, all this is accompanied by the development of new communication technologies (such as the Internet) and large multinational companies.

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He financial capitalism It works at multiple levels but it is on the supranational – or global – scale where it has the greatest guarantees of progress, since financial capital escapes state control, and therefore roams freely. Since the State should be the regulator of the economy (the ideological foundations of the nation state ), capitals would have to be framed within them, assuming their laws and regulations. The search for extreme profitability on a global scale, at levels far removed from social reality, can cause imbalances given the “de-territorialization” of the economy, and causing periods of economic crises.

The economic crisis of 2008: Context for reforming the criminal bases of financial capitalism

It is commonly understood that the current economic crisis began in 2008 with the collapse of the American bank Lehman Brothers. But such blaming of the aforementioned banking entity masks a deeper, more structural reality, whose responsibility has gone unnoticed in many homes. We refer to a criminal reality of the banks’ speculative practices, especially excess credit (taking large risks) and the covert sale of toxic financial products This reality appeals to the white-collar criminals at the core of high finance movements.

These financial “scams” ​​occur in times of economic euphoria, when control of the economy is overshadowed by the optimism of the markets. When the “speculative bubble” bursts – due to the inability to repay the debt by certain economic sectors or society – the bad practices of the banks are exposed, as we could see with the case of Bankia in Spain. In reality, what happens is a collapse in the productive structure. The large number of competitors within the financial sector leads to a progressive decrease in the profit rate of financial monopolies, and forces them to change their strategy in order to perpetuate their dominance. monopolistic/oligopolistic Therefore, financial monopolies/oligopolies are aimed at restructuring the productive system legitimized by social urgency.

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It is there where an attempt is made to regulate those “defects” of the capitalism, with the aim of avoiding further relapses of the system and political and social uproar. Capital evasion in tax havens would be one of the major problems. In Spain, just entering the economic crisis (2009), large companies evaded €42,710 million (3) (remember the €22 billion injected into Bankia by the State). However, parallel to the regulation of these structural defects, another monopolistic model of global fraud is being generated.

“High Frequency Trading”, a New Criminal Structure?

The agreement on the exchange of tax information, instigated by the Organization for Economic Cooperation and Development (OECD) (4) and signed by 49 countries in Berlin on October 29, 2014, it aims to provide confidence in society and in the markets. It seems that, at least initially, it is good news.

But this new regulation is nothing more than a new mask for the criminal character of capitalism. In other words, the construction of new structural bases of the productive system that will serve to perpetuate the power of the monopolies/oligopolies in the production of new capital evasion mechanisms.

High frequency trading or High frequency trading (in English) is a transaction technique that uses sophisticated computers capable of executing orders at high speed in order to take advantage and make a profit by operating automatically when they find differences between prices on securities(5). It is a form of trading algorithmic that acts on a time scale much larger than the human one. Thus, the human brain is replaced by algorithmic calculations and supercomputers, making the human increasingly dispensable.

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We find ourselves facing a new technological paradigm, based on artificial intelligence, which is nothing more than a new financial engineering structure that favors a few people who own large capitals. The regulation of tax havens As we have been saying, it will be nothing more than a makeup service fiscal fraud world if these new speculative practices are not regulated. The autonomous capacity of these large computers, the possibility of obtaining ultra-fast profits and even evading capital (since it is impossible to keep up with the speed of these mechanisms) contrasts with the global political shift against fraud.

The tax evasion the economical crisis, the corruption …they represent a hidden side of the reality of crime. The media focuses on highlighting the most visible acts but not those with the most social repercussions. Rodrigo Rato is an example of the impunity of white-collar criminals whose actions have a greater impact on society.