LOOKING BEHIND THE NUMBERS – RICHARD MURPHY

By Olivia Hanks

Richard Murphy is in some ways an unlikely figure. A tax expert and former accountant, his views are resolutely anti-establishment: asked on air in 2012 to name the greatest threats to democracy, he responded “Deloitte, KPMG, PwC and Ernst & Young”. Yet despite having some vociferous critics (as you would expect for someone whose raison d’être is forcing the wealthy to pay their share of tax), his influence is now being felt: as the architect of country-by-country reporting, which requires corporations to publish figures for every country in which they operate so that it is clear when profit has been moved into low-tax jurisdictions, he has helped to create a framework for taxation transparency worldwide. Country-by-country reporting has now been adopted by the OECD and the EU.

When you see him in the flesh, this outspoken activist, thorn in the side of multinationals, courted by multiple political parties, he’s…well, he’s a chartered accountant. A chartered accountant who, as he likes to marvel, draws large crowds to lectures about tax.

At a recent talk by  Richard Murphy, organised by Norwich Green Party, the lively debate included – unsurprisingly – discussion of Brexit. Murphy has repeatedly made it clear on his blog that he believes Brexit is a disaster, but at Wednesday’s meeting, he was keen to talk about how it might be turned into an opportunity.

His opening gambit was that the left must become more interested in power: we have tended to consider it a dirty word, with the result that the field is left open to the Tories and the vested interests they protect. This concentration of power in the hands of a few – and the failure to use it for the public good – is, he argues, what the Brexit vote was really about. The government, however, has used the referendum as a pretext to implement another, more authoritarian version of the same power; but this outcome is not the only Brexit possible.

Murphy offered three ways in which no longer being bound by EU laws on finance could be a good thing. Firstly, we could use capital controls (difficult to use under EU law) to tax the flow of money into tax havens, thus rendering them essentially redundant. Secondly, we could insist that pension funds, as a condition of the tax relief they receive, invest part of their money in things that create jobs in the UK, which in practice would mean investing in housing. Finally, we could print money for investment in renewable energy or other desirable infrastructure which would create jobs – essentially the ‘People’s Quantitative Easing’ that had a brief moment in the limelight when advocated by Jeremy Corbyn.

As with many economic theories, it is astonishing that no one really seems to know whether ‘printing’ money for investment definitely causes runaway inflation.

This third point has always been controversial. As with many economic theories, it is astonishing that no one really seems to know whether ‘printing’ money for investment definitely causes runaway inflation. Until recently, the idea was generally derided as ‘silly’ and dangerous; but with an increasing number of economists endorsing it, that position becomes harder to maintain.

qe4people.jpg

One argument against PQE is that by allowing the government to decide what money is created for, it removes the Bank of England’s independence (‘conventional’ QE is initiated by the BoE, not the government). However, this independence is hardly a central tenet of our constitution: it only came about in 1997. And there is no reason to assume that independence is always beneficial. One of the main arguments for it is that it takes monetary policy out of the hands of irresponsible politicians – by putting it in the hands of unelected officials (in a sector whose capacity to behave responsibly has been… well… brought into question).

Behind the argument that the BoE must remain independent is the belief, perpetuated by mainstream economists and the world of finance, that financial questions are morally and politically neutral – that money just does what it does, independent of any human input. A quick look at the use of ‘conventional’ QE and who has benefited from it swiftly shows this neutrality is an illusion.

This brings us back to Murphy and his words on the importance of power. Accountants, he says, must learn to “look behind the numbers, not just add them up”. Most accountants, according to him, do not realise that accounting methods represent a particular political philosophy – one that favours the interests of capital over the public good. There is no absolute reason why an increase in capital, as opposed to social or environmental benefit, has to be the measure of success.

Some of Murphy’s aspirations for a post-EU UK might sound far-fetched, especially with Theresa May dragging us towards a Brexit that works for no one except a few extremely wealthy individuals. However, just a few years ago we might have said the same – and many did – about country-by-country reporting. Murphy and just a handful of others led the assault on tax avoidance in the aftermath of the 2008 financial crash. Just recently, he has written a chapter for the World Bank on the need for a wealth tax – “that’s an astonishing change”.

We can do it, he says, but we have to put our vision forward now. The impossible becomes possible “if you have good ideas, and enough people willing to go out and shout about it.” If anyone can turn disaster into opportunity, it may well be Richard Murphy.

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