Panama Papers, Saudis diversify. 2 to 8 April: What just happened?
Do the wealthy play by a different set of rules?
Not content with being famous for hats and canals, Panama has staked a claim this week for being home of the world’s most talked-about papers too. Yes, on Monday we learnt of the largest leak of data in history: over 11.5 million confidential files from Panamanian law firm Mossack Fonseca revealing how thousands of rich people are setting up companies in countries with little to no tax on business or investment income, and storing their funds there. Famous people mentioned in the papers include Simon Cowell, Jackie Chan and Lionel Messi. On the political side, the president of Argentina and Prime Minister of Iceland (who subsequently resigned) were also named. Why should you care? The crucial thing is, there’s not necessarily anything illegal about this, and some say it’s the fault of that take too much from the wealthy. Whether or not that’s true, the part that’s indisputably illegal, and most definitely something we should all know about, is when public funds are stored in so-called offshore firms, or funds that by law need to be taxed in the country they’re earned in: that’s tax evasion, and it’s a massive problem. Here’s our round-up of the coverage on what’s going on, and why it matters. And below it's all explained with piggy banks.
Should we be allowed to buy or sell sex?
It’s fine to sell, but not to buy: France has repealed a 2003 statute banning prostitutes from ‘soliciting’ on the streets, and passed a new law which fines customers instead. Anyone shown to have paid for sex will be fined $1700 (€1500) the first time, and $4265 (€3750) after that. The law also includes €4.8 million in support for workers who give up prostitution, including help securing residency permits for the 80% of sex workers in France who are victims of human trafficking from around the world. Some are calling this a revolutionary move, tackling the profitability of the market for sex by discouraging demand. But the French union of sex workers has condemned it as ‘repressive’, forcing prostitutes underground without giving them enough support to move out of the industry. It’s a powerful example of how much our values determine our economies: what can and can’t be sold, what should and shouldn’t count as work, and who gets to decide?
Does Saudi Arabia's plan to diversify show it's thinking about a world beyond oil?
Saudi Arabia’s worried about oil, so it’s making the biggest changes to its budget since the country was founded in 1932. Only 80 years ago, it was modest land of farmers and nomads; now, it’s the world’s largest oil exporter, with a huge welfare state, no income tax whatsoever, and an extremely powerful royal family calling the shots. It’s relied almost exclusively on oil exports since the 1940s, but with last year’s drop in oil prices, Deputy Crown Prince Mohammid bin Salman has decided it’s time to make a change. He’s planning on tripling income from other sources, by, among other things, taxing a slightly random selection of consumer goods: luxury items, sugary drinks, and energy – as well as implementing a Green Card system similar to the one in the US, allowing employers to hire more foreigners for a fee. The plan is to use all this to make a wealth fund worth $2 trillion (that’s enough money to buy Apple, Alphabet, Microsoft, and Berkshire Hathaway – the world’s four largest publicly-traded companies.) It’s a sign that the drop in oil prices is being taken seriously, and that we really might be on our way to a world less reliant on the stuff: if we did, that would have huge implications for the political relationship between Saudi Arabia and the rest of the world, not to mention the government and its citizens.
No equality, no business
Two weeks ago we reported on several US companies who’d threatened to stop doing business in the state of Georgia if a controversial anti-LGBT bill was passed there - now the same thing's happening in North Carolina. Internet payment giant PayPal has scrapped its plans to open a office there after a new anti-gay law, which bans transgender students in public schools from using their preferred bathroom, was passed recently. PayPal CEO Dan Schulman said: “the principles of fairness, inclusion and equality are at the heart of everything we seek to achieve and stand for as a company. And they compel us to take action to oppose discrimination.” With the Governor of Georgia vetoing that state’s bill following pressure from Coca-Cola, AMC, Disney and many others, the message to politicians from big business seems to be: if you enact discriminatory legislation, you’ll suffer the economic consequences.
How much is all the 'housework' we do worth? In the UK, it’s $1.4 trillion a year apparently!
In the UK, all the work people do to keep their domestic lives ticking over is worth somewhere in the region of $1.4 trillion (£1tr) a year, according to new figures released by the Office for National Statistics. That’s cooking, cleaning, DIY, washing and childcare and gardening, among other things. For instance, if all the Brits doing their own laundry had paid someone else to do it, it would have cost $116bn (£82.7bn). Childcare would have cost $452bn (£321bn). Even just knitting and sewing would have cost around $7.9bn (£5.6bn). That’s a lot of woolly jumpers! The total amount ‘spent’ on home production in 2014 was equal to 56% of the entire UK economy in that year. The mad part is, not a single economy around the world has figured out a way to include the value of all the unpaid work done in a country into the way it calculates the economic output of the country as a whole – it’s basically invisible. This calculation is a step in the right direction.
Why buy just one house when you could own a whole village?
An entire village in the north of England called West Heslerton - including a 21-bedroom mansion, 43 houses and a pub - is up for sale for $28m (£20m). The previous owner kept rents low, so residents are now worried that new owners might increase them. The village is being presented as something of a money-making opportunity, with $546k (£388k) up for grabs in rental income and farming subsidies. With housing costs and availability being of particular concern in the UK, the sale raises an interesting question over whether our houses are homes, or investments, or both? Perhaps a more fundamental question is: how does any one person come to own a whole village anyway?
Forget the shares, where are the sausages?
German police were called to stop a fight over sausages at a meeting of Mercedes shareholders in Berlin this week. It seems trouble started when one person noticed another taking too many sausages from the free buffet, some of which he was wrapping up to take home with him. According to the report, it was all because the company served Saitenwürschtle sausages, a speciality from Mercedes’ home in southern Germany, which are not generally available in the capital. Apparently, there were some 12,500 sausages to be shared among 5,500 shareholders. Not bad when you consider the company was also paying out $3.95bn (€3.47bn) in share dividends as well. That’s a fair chunk of cash and 2.27 sausages each. Surely enough for anyone!