Ambush of the week

Dave Hartnett was until a few days ago the head of HRMC, the government's tax collectors. Creatively - thinking outside the box, one might say - he saw it as his job not to collect tax, but to allow major corporations such as Vodafone and Goldman Sachs to avoid paying tax. Illegally, as Private Eye's long-running investigation shows.

Dave's corporate mates wanted to thank him for his long years of service, with a slap-up feed at an Oxford college (they're for hire): bow ties, candles, champers. Cue UK Uncut with a lovely ambush and some delightful replies from the assorted tycoons ('we'll set the dogs on you', 'scum').

Enjoy.

First horse, then cart

Today's Twitter sensation is this article in the New York Times, in which a Goldman Sachs equity trader explains to his company why he is leaving.

The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for. It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.

I can sympathise with him, of course. No doubt his colleagues are scum-sucking con-men bent on enriching themselves at the expense of clients (Smith seems to have no conception of a society beyond Goldman Sachs and their customers).

But amidst the general electronic rejoicing at the Prodigal Son's redemption, the liberals have missed the major point. Greg Smith's major assertion is that a culture of greed has damaged Goldman Sachs as a company. Bad people have wrecked a good system.

He's utterly wrong. A bad system has produced damaged, greedy, amoral people. Speculative capitalism isn't an honourable and sustainable enterprise occasionally besmirched by greedy individuals. Speculative capitalism assumes that individuals are driven by greed and self-interest and turns those characteristics into the engines of economic growth. By legitimising selfishness (such as destroying a company's value overnight to enrich Goldman Sachs through short-selling - deliberately engineering panic-selling of its shares), Goldman Sachs and similar companies deliberately turn human failings into structural features of the economy.

What's missing from Greg Smith's mea culpa is any understanding of economies and human society as a structure. To him, individual motivations and behaviours significantly affect structures. To us marxists, structures dictate human behaviour: culture is part of what Marx called the 'superstructure', while economics is part of the underlying structure. His disgusting colleagues aren't bad apples: they're behaving rationally and logically within the paradigm of speculative capitalism. It might offend Smith's personal code of conduct, but for 12 years he has enthusiastically participated in an economic activity which has impoverished massive swathes of the planet's population.

For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

He neither comprehends nor regrets this. Instead, he's shifted attention to the attitudes and sharp practices of a few individuals within an inevitably corrupting system. Smith's a cog in a machine, and he has no critique at all of the mechanism - he's merely personally offended by local difficulties.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

A careful reading reveals not a radical, but a conservative. He wants the system to survive. He wants Goldman Sachs, one of the most destructive and predatory corporations on the planet, to survive. He has no concept of speculative capitalism's destructive impact on the human condition.

Greg: yes, many of the trees are falling down, but you need to realise that the wood itself is rotten.

PS: there's a much funnier take on the piece here. 
PS2: so what's my solution? Here's my naive and confused first steps.

Towards the Promised Land

A parliamentary report confirms what Private Eye, the Guardian and UK Uncut supporters have long known to be true: that voluntary taxpaying isn't confined to Greece and Italy. Over here, the more you owe, the less you pay.

What's really shocking about the latest report is the simplicity of this particular scam. In Shaxson's Treasure Islands, the vast panoply of tax-evasion scams is laid bare: companies acquiring 'debts' to other companies in the same group but based offshore so that all the profits magically become losses, or every banana in the world being virtually shipped to one tiny tax-free island, and myriad other schemes.

But that's too complicated. Vodafone and Goldman Sachs found a much better system.
1. Refuse to pay your tax.
2. Make it very clear that you have more and better lawyers than the government.
3. Wine and dine officers of the Revenue and Customs service ('Don't cheat: eat'). They will soon be your friends. And eventually your employees.
4. Accept the head of HMRC's illegal offer of a tiny settlement with a handshake. (Vodafone owed £6bn and paid £1.25 bn). Don't worry about oversight: Dave Hartnett both shakes hands and is the authorising officer, very conveniently. And when that pesky parliament pokes its nose in, HMRC will insist on 'commercial confidentiality'.

Why break the law when you can own the government, whichever party's nominally in charge?

How bonus culture works

Goldman Sachs profits down 53%
Goldman Sachs bonuses down 5%

I really, really, wish I worked in the banking sector.

Mmm, fried squid rings

Actually, it was Matt Taibi of Rolling Stone who described Goldman Sachs as a giant vampire squid. Read the piece here.