TRADE
A crack in the door of monopoly capitalism For decades, intellectual property rules have been at the heart of a hidden private tax system that transfers wealth away from ordinary people. But now the global mood is changing, writes NICK SHAXSON. A few years ago, economists who followed these things noticed a weird thing happening in Ireland: a staggering 26% jump in the size of its economy in 2015, and a bunch of other indicators going haywire. Nothing stranger than usual was happening on the streets of Dublin – so what the hell was going on? After a bit of digging, the answer became clear. Ireland, a corporate tax haven, had changed its tax rules, encouraging Apple and a bunch of other multinationals to shift their corporate structures and bring a trove of ‘intellectual property’ such as patents, brands and trade secrets into their affiliates in Ireland. An estimated €250 billion worth of these ‘intangible assets’ had suddenly whooshed in, though it hardly touched the sides – except for perhaps helping a handful of Irish tax advisors to upgrade their Porsches. It made the Irish national statistics a laughing stock: the economist Paul Krugman dubbed this tax haven activity “Leprechaun Economics”. We now live in a global economy which transfers resources on a vast scale from ordinary people to billionaires, from the productive economy to the financial sector, from the public to the private sectors, in ways that both redistribute wealth upwards and reduce prosperity. They can do this, in particular, by monopolising markets and dodging taxes. In reality, this is what the socalled ‘free’ market increasingly looks like – a system of offshore monopoly capitalism. Intellectual property (IP) – essentially, the business of government-enforced
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monopolies over ideas and inventions – sits at the core of this system. IP has become a lifeblood of our modern global economy, sewn into its fabric via a nest of legal rules and heavyweight political protection. These monopolies over patents, copyrights and trademarks constitute a hidden private tax system levied by private interests over wider populations. There is a role to play for patents in a modern economy, but the system has been rigged by vested interests. In an earlier age, when government policies in many countries struck a better balance between private property rights and the interests of citizens, there was a surge of new wonder drugs under development. The rise of private power to exert choke holds over markets has dramatically tightened the innovation tap.
AT THE HEART OF TAX INJUSTICE We’re often told that tax is bad: that the less tax we pay, the freer we are. This ideology has helped vested interests push official levels of corporate and personal income taxes down to very low levels. As the heiress Leona Helmsley once said, tax is for the little people. She was right. Worse, many of us pay large private taxes on top of our normal taxes, through the power that intellectual property gives to big business. We pay four layers of these hidden private taxes for these knowledge monopolies, in fact. First, nearly all the high-technology goods and services we consume were funded,
Right: The campaign to suspend patents on Covid-19 vaccines and treatments is putting new pressure on the global intellectual property regime.
