Transcripts For ALJAZ Counting The Cost 2019 Ep 45 20240713

A Corporate Tax dodge taking hold out there and its depriving the developing world of much needed money and well take you to thailand one of the Worlds Largest Sugar Producers and export has but much of this sweet stuff shouldnt be here right now and thats not good news for the farmers. It all began as these things do with one very specific grievance in this case chillin students protesting about a hike in train fares now its mushroomed into weeks of protests about an economy that song the slide after years of doing comparatively well against its neighbors. But chile is story goes back further than that under the dictatorship of right Wing Military dictator Augusto Pinochet it was a test bed for unfettered free Market Economics or what we would call neo liberalism the experiment in the 1970 s. It was continued by democratic governments from 1990 to the present day and while under pinochet it was a failure post dictatorship the economy has performed better than its neighbors. So lets do what we always try to do here and hand in the cost and tell the story through numbers and are going to see some days here in the video wall from 5 different latin american economies including chile of course starting with how rich people are in terms of g. D. P. Or g. D. P. Per capita now 990. 00 is where we start chile is the orange line and its a its a middling nation at the end of pinochets regime venezuela with the purple line clearly the richest latin American Economy but as time rolls on look at chile it moves well up the graph there while venice pretty much drops off the charts there and choose a different metric now we call this the gini index which measures economic inequality and this one were picking up from 987 again watch the orange line for chile like its neighbors it is what we would call and unequal economy its got a genie reading a 56 inches so you know the closer you are to 100 on this index the worse you are but by 2014 well weve dropped down a little bit its at about 50 theyre just below 50 so regionally still in the a good position though we should point out as a member of the industrialized nations club the o. E. C. D. Chile is actually the lowest ranked nation and finally we will use unemployment which is a little bit chaotic here at the start of our graph in the early ninetys just over 5 percent it is for chile but as we head back and look at 1st of all the blue line argentina up to 19 percent venezuela is in bad shape as well by 27. 00 tane were looking at actually an increase in unemployment in chile up to 7 percent but its still below the levels of venezuela brazil and argentina so what youre seeing there was a country that was doing well but seems to have lost its way in a moment we will make sense of all of this with our guest from the economist magazine but 1st our latin america editor alysia newman in santiago with more on the protests the cause and the effect. Chile is accustomed to frequent and strong earthquakes. An unprecedented social outburst that exploded clean weeks ago sending much deeper shock waves throughout what was seen as latin americas most stable and prosperous democracy. It was sparked off by a relatively small increase in the metro fare but millions of chileans sought as the last straw and took to the streets to show that theyve had enough of an Economic System that they say hasnt delivered its promise of prosperity except for an increasingly wealthy few 57 year old droste has worked as a maid all her life her eldest son and husband will can construct ssion and became unemployed this week like millions of middle and lower middle class chileans their deep in debt and struggling just to feed themselves i mean but the most worst is yet to come yesterday i was on the bus with a 75 year old pensioner who still works as a maid because her pension is 136. 00 which is more than ill get no one can survive on that well all have to work till we drop dead. Overhauling chillies private Pension System which was installed during the former military dictatorship is one of the most pressing demands along with decent wages Public Health Care Education and affordable transportation the list of grievances is drawn across as children have all taken part in the ongoing demonstrations. But i. Think i agree its taken chile 35 years to wake up all those promises about how the return of democracy would bring us happiness all these years of injustice it shouldnt have to come to this but hopefully well get something out of it this time. Chile isnt latin americas poorest country on the contrary on the books it has the highest per capita income in the region and a stable. Based on an extreme free market model and some see that as the problem and. The economic model established by the constitution hands Education Health care Social Security and Labor Relations over to the private sector the state plays a minimum role model has been very successful in generating wealth but it has also generated enormous levels of inequality. Actually is the member of the o. E. C. D. With the highest income disparity. But conservative senator one dismisses the notion that the economic model needs to be overhauled. And lets put things into context chile has made incredible strides in the last 30 years its reduced poverty from 47. 9 percent to 3 percent its a country that has changed dramatically economically and socially. But not fast enough to chileans who say that theyve been abused by a system that guarantees enormous profits for the private sector while millions are struggling to stay afloat on increasingly meager salaries that a person who makes 6 150. 00 has to pay 300. 00 just for rent its inconceivable to do with a very expensive country i mean. A number of things as expensive as there in europe but the wages are a fraction. Struggling with unrelenting social unrest and a steep drop in his popularity president says hes got the message this week he sent a bill to congress to increase the minimum wage by 16. 6 percent economically this i think we all responded with concrete actions not just good interventions to what our people are demanding. But their leaders the countrys largest trade Union Confederation says its not nearly enough and is demanding basic wages be doubled to allow fan. To cover their basic needs here if that is not addressed we will have more disruption more violence and more outbursts and thats something that neither the government nor the opposition seems to understand. The Economic Cost of 3. 00 weeks of unrelenting nationwide protests is estimated at least 3000000000. 00 and rising the vast majority of the protests are peaceful but every day small but violent groups of vandals and hooded protesters destroyed public and private property until now the mass protests had been confined to the mid and downtown areas of santiago as well as working class neighborhoods oh good job but now theyre really taking to the very heart of whats nicknamed sen patrick a spinoff of manhattan because of its posh straight that includes south americas tallest building this is the gateway to santa outmost most affluent neighborhoods and what this protest as are trying to do is demonstrate the 1st social uprising will also impact those who have the most to gain. The prices has driven down this years economic forecasts as well as chiles currency but what started as an economic and social crisis has rapidly spiraled into a political one with calls for the president resignation and a new constitution resolving this crisis within chiles Democratic Institutions is turning out to be the biggest challenge to see in human propounding the cost. With us now on skype from madrid is Michael Reed Michael is the Senior Editor for latin america and spain of the economist also the author of the book forgotten continent a history of the new latin america nice to have you with us michael i think what were seeing around the world right now not just in chile is this example of protest movements beginning from one thing a spark almost in this case it was metro going up. Almost a case of chile that thats what was needed that discontent with the economy discontent with the ruling class was there for a long time and it needed a spock. Its not i mean this is a worldwide phenomenon at the moment. Protesters have smartphones they see whats happening elsewhere. But in the case of sheila as you say theres been a pervasive sense of discontent that has manifested itself from time to time in demonstrations and protests over the last dozen years or so and on this occasion it exploded into something much bigger we had you know there is serious damage to the metro system. And very big peaceful protests about many issues facing so where did it go wrong if were looking more broadly at the economy deeper into the economy ways that gone wrong because as weve looked at in this program already chile has by and large been a Success Story in latin america. Thats right i mean Economic Growth has been faster than average for the last. 3 decades. And poverty has for a lot its. A much less poor country that it was i think at the center of this is the issue of rising expectations or traditions of being told by that business said hed said by part of the political elite that they should compare themselves rather than with the rest of latin america they should compare themselves with the o. E. C. D. Club of maybe the rich countries which are they joined a few years ago. If you do compared to they were very seedy then this is id say its much more on equal much less fat and theres much less generous Public Service will provision is this an example for us in 2019 that the idea of neo liberalism hasnt really worked that trickle down economics for all its theory doesnt play out properly or well for the people at the boston. When im time to replied to find me a liberal well its the time which just used a lot as a kind of swear i mean i would say 2 things i mean i think in general there is a sense of on these in the will of the direction that capitalism has taken since the financial crisis and that has a lot to do with. Technological change that just a revolution on the rise of china and the concentration within business within markets and a sense that capitalism is less inclusive and less democratic while the 2nd thing is that i think what she they need to look more carefully is that it did it all. A model under which Market Mechanisms were going to be the main source of social provision of Education Health care pensions and people would have to pay im out of the cost of those themselves i think that hasnt worked so well it has been gradually incrementally changed over the last 20 to 25 years i think it needs more time and with more public provision and that means a tax system what does taxed about to roll more than they have being taxed in today so far so in other words that the people who are protesting they do have a fair grievance they might not care what the definition of neoliberalism is for example but as long as theyre not saying benefits and as long as they get a hit the taxes that we think whats whats in this for me i think is right out there and that this is an important but its also potentially dangerous moment because if the government gets it right then typically. A Fairer Society can continue to be a successful economic model gets it wrong and this applies to the whole political class. Then there is a risk that that descends into populism either of the left or right becomes more like. Michael rejoining us on count. In the course talking chile have really enjoyed talking to you thank you for your time thank you very much and. Now were going to talk taxes the one certainty in life so they say along with death but when the lender of last resort asks some pretty tough questions about the way money is being channeled around the world you know you need to sit up and take notice this is the International Monetary fund which says socalled phantom investments made through corporate Shell Companies in tax havens are undermining tax collection from the most advanced to the poorest nations consider this it says luxemburg a country of just 600000. 00 people but which hosts as much f. B. I. Foreign direct investment as the United States and much more than china its got 4 trillion dollars in f. T. I and that works out at about 6600000. 00 a person but hed be pretty hard pressed to find that reflected in its actual economy now all up its estimated 40 trillion in f. B. I. Is channeled around the world but the phantom investments they amount to an astonishing 15 trillion of that or to put it another way the combined g. D. P. Of china and germany why is also important well because that moneys being shifted around to minimize tax and it means that money isnt being used in developing countries to for example alleviate poverty in fact in 2015 the un calculated developing countries lose at least 100000000000. 00 every year because multinationals shift their profits to countries where they pay little or no tax for some context 100000000000 that could provide Safe Drinking Water and sanitary facilities for 2200000000 people every year more on this with our guest in a moment 1st need barkha takes a look at some of these tax havens and the cost to the worlds nations. Taxes have been described as the price we pay for civilization we may not like them but theyre responsible for keeping our economies and our societies afloat paying for roads Health Care Education defense Social Security the list goes on all Companies Pay Corporation Tax on their annual profits its estimated 500000000000. 00 in taxes may be being deliberately avoided by some of the Worlds Largest Multinational Corporations thats roughly the same as the economic output of sweden or 20 times the un humanitarian aid budget an index of worst offenders is dominated by a british controlled network of jurisdictions the British Virgin islands but muta the Cayman Islands and the island of jersey also in the top 10 is the netherlands switzerland luxemburg singapore the bahamas and hong kong according to the index these 10 places are alone responsible for half of the worlds Corporate Tax avoidance Big Companies are free riding on the Global Economy and in many cases causing enormous damage so we have free riding facilities to harming market polity they might well also be harming the countries where theyre operating by not enabling those countries to invest properly in educating their workers training their workers fighting Health Services for their workers so this is harmful activity. Tax haven such as the Cayman Islands a british overseas territory in the caribbean provide offshore Banking Services to wealthy Foreign Companies and individuals allowing them to avoid paying tax in the countries of residence and its all largely legal 100000 companies are registered here including British Petroleum and even much just to united for the past few years the Corporation Tax rate here has been 0 but its not for everyone it requires wealth money to invest and to pay for expensive advises the authors of the Corporate Tax haven index say this isnt. Question of legality but it is a question of fairness over a system where only the rich can afford to get even richer joining us on skype from prague now is peter ganci is an associate professor of economics at Charles University in prague us to have you with us peter i think maybe lets start with for anyone who is not familiar with f. B. I. Foreign direct investment maybe just give us a broad view of why its so important to the way money moves around the world so far lurking best known or if he is an investment that comes across borders well then one Company Involved emotional corp so you can think of any Multinational Corporation and how it makes investments it was what us and thats at the time he said there it is big and its been increasing over time and it now accounts for if you compare it its as large as heart of the worlds total of g. D. P. There is increasing and we know its large but we also know that much of it is not driven by Real Investment but by tax avoidance by these Multinational Corporations ok so that is our issue here and that is i think the issue that a lot of people have around the world this idea of basically dodging taxes we have to point out that companies are not actually doing anything illegal here they are working within government frameworks is it really the governments who have allowed this to happen and who are to be blamed if theres to be blame. Im probably not there in a position to blame and it probably is but im also careful to use the word thanks avoidance by Multinational Corporations takes importance implies that its not necessarily if you got the exhibition is the editor which would imply that its illegal what what what what is clear that is has harmful effects on other experts and other countries so some pics players just months initial corporations engaging in the acts of will and are benefitting from it countries neighboring districts where theres such just examines are also part of the benefitting from it but then there are the other tax payers other countries at all of us of incomes that are losing due to the stakes of wins in terms of tax revenue but also in other ways ok so its then not just the developing nations who are losing out thats the very easy headline i think but advanced nations as well are actually losing their tax revenue as well yes the thats right so. In the recent Research Published in international dickson public plan and with my colleague we find it actually countries at all income levels are losing you to this tax have organs of Multinational Corporations think its their countries of various sizes and or various stage of development have different are different are in different position to tackle extensive ones by my mother nationals its probably easier for people to think of the United States having a lot of power to actually take on this problem whether its especially small low Income Countries have less. To have less powerful tools available to lower these types of weapons and this is where International Cooperation up comes to play and this is supported by many scholars and the International Organizations such as world bank or you see the or International Monetary fund this is what i was going to ask you what it is there some sort of proposal from the likes of the i. M. F. Some some guidance some guidelines which which they put out to say this is how we can actually deal with the issue so in the recent paper they quantified how much of the f. B. I. Is real and how much of this not how much of this driven by of the exit widens you know wink how much is a 1st step to reforming the system and they indeed. Are economists saying that they hold this better data will improve the policies but there are many specific proposals to fix that International Takes corporate system and one way or another there are some proposals on the unitary fixation by especially n. G. O. S which would see Multinational Corporations being treated as one component part and then set of separate companies as it is now but there also are other proposals by European Commission for example which has so far not been successful in implementing its a so course he says he hopes of. Consolidated Corporate Tax base which would see basically a uniter taxation apply if you are any. We really do appreciate your time thank you for joining us today thank you for having me have a good day. Finally this week something bittersweet sugarcane farmers in parts of asia are struggling to make ends meet because of an oversupply but sent prices to their lowest levels in 6 years some of the Worlds Largest producers of huge stockpiles now including thailand one hey as a report from there. This factory in northeast thailand isnt supposed to be operating at the moment its usually a time to prepare for the new harvest of should be cane to arrive from farms around the province of on tiny instead its still processing and bagging last seasons product which for now isnt going any further than the storage sheds which are becoming increasingly full right now is that yeah because everything is so ill just wait and see last season thailand produced more sugar than ever contributing to a global surplus and helping the price to plummet it has a stockpile of around 7000000. 00 tonnes over a 1000000 more than it had at the same time last year another reason there is so much excess at the moment is because historically a lot of time and indian sugar has been smuggled into china but this year chinese authorities have cracked down on their illegal process to try to protect their own sugar industry. Exports from thailand are also being affected by the strength of the thai baht which has been asias best performing currency this year its farmers who are hurting the most costs are going up while their income falls through the law. Yes im worried about the Small Farmers if the price keeps dropping that im afraid that people will give up if we dont see any signs of improvement in a few years it will be bad. The oversupply and low prices are expected to remain for a few years which may affect thailands long term plans to increase sugar production by 70 percent some are concerned that if the expansion happens it will only benefit big businesses that can operate with smaller margins and further squeeze small farms. Growing sugarcane costs a lot of money and the deals with the farmers in sugar mills are not that fear for example the sugar mill wont take any responsibility if the farmer cant deliver the product but i dont care whether theres a drought or flood the farmers take all the risk the government also wants to build 29. 00 new sugar mills in the northeast each with a Biomass Power plant attached they use the material left over after the should be cane is crushed as fuel but with thailand sugar industry expected to lose more than 329000000. 00 this season those plans may have to be reconsidered and that is where well leave you for this week but wed love to hear from you as well you can tweet or messages me directly at the hash tag is a j c t c or you can drop us an email cant because aljazeera dot net and theres more online to it down to 0 dot com slash c. T. C. That takes you straight to our page individual reports links and entire episodes are there for you to watch whenever you want but that is it for this edition of counting the cost on Canal Santamaria and the whole team thanks for joining us the news on aljazeera is next. Well you. Know some overload. For the last 2 years the students have been collecting rubbish every day its helped clean up the campus and helped build some of its facilities for every 2 kilos of Plastic Waste they collect the School Receives a brick made of plastic and cement. For some activists this may not be the most ecological way to eliminate the problems of plastic but this is seen as an immediate solution to the growing problems of landfills across the Country Waste can now be used to manufacture building materials. 0. And this is the news hour live from doha coming up in the next 60 minutes indias supremes called clears the way for a hindu temple to be built at a site disputed by muslims. 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