Nocturnal Pasture

OFFSHORING

Much research has documented the vast sums of “missing wealth” stored in tax havens, and detailed its implications for inequality, fiscal policy, and economic growth. Less present in the discussion is the institutional and political history of these offshore financial centers.

In a 2017 paper, VANESSA OGLE recounts the making of what she terms the offshore “archipelago”—the various institutions that, outside of the core of powerful nation-states, became central to the international financial system. From the paper:

“Contemporary definitions of tax havens are often too static to capture the more fluid and multifaceted legal constellation among such sites as they appear to the historian. In the age of empire, the natural state of affairs entailed legal unevenness. This world was made up of centralized nation-states, multiethnic land empires, overseas empires with their colonies, protectorates, settlements, and dominions, as well as ‘informal empire’ with its regimes of extraterritoriality and legal pluralism. Local administrations in overseas territories had considerable leeway in drafting company and bank laws or tax codes and accounting standards for these respective entities and sub-entities. Legal and political unevenness greatly benefited tax avoidance on a global scale.

As empires came undone, an archipelago-like landscape of distinct legal spaces re-created some of the unevenness that had characterized the nineteenth century. Yet in the twentieth century, this offshore world and the unevenness it offered existed in and for a world order in which bounded, homogeneous national state spaces and generally sizable nation states had eventually become the norm. The New Deal, the European welfare state, decolonization, and the Bretton Woods system were state-based and government-driven projects. The offshore world emerged on a more significant scale precisely at the moment when these state-based projects began to assume their greatest importance. It consisted of tax havens, flags of convenience registries, offshore financial markets and banking institutions, and special economic zones. This landscape allowed free-market capitalism to flourish on the sidelines of a world increasingly dominated by larger and more interventionist nation-states.”

Link to the piece.

• Antonio Coppola, Matteo Maggiori, Brent Neiman, and Jesse Schreger recalculate global capital flows, accounting for cross-border financing and tax havens: “We find that portfolio investment from developed countries to firms in large emerging markets is dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese firms by nearly $600 bn, while China’s official net creditor position to the rest of the world is overstated by about 50 percent.” Link.
• Drawing on interviews with key informants from banks, shell companies, foreign real estate, and investor citizenship programs, Alexander Cooley and J. C. Sharman argue that “professionals in major financial centers serve to lower the transaction costs of transnational corruption by senior foreign officials.” Link.
• Daniela Gabor and Cornel Ban’s 2017 paper on the political economy of shadow banking. Link. And Jan Fichtner’s 2016 “anatomy” of the Cayman Islands offshore financial center. Link.
• The 2011 book The New Fiscal Sociology, edited by Isaac Martin, Ajay Mehrotra, and Monica Prasad, marks and collects interdisciplinary research in the comparative history and politics of taxation. Link.

NEW RESEARCHERS

Land Reforms in Monarchical Iraq

Omar A. M. El-Joumayle is a PhD student in Economics at the University of Pavia. In a 2019 article co-authored with Bassam Yousif, he examines the challenges to agrarian reform between 1944 and 1958 in monarchical Iraq. Drawing on continuities in the country’s institutional history, the article outlines the influence of big landholders in preventing structural land redistribution despite popular demand.

From the paper:

“In 1869, the Ottoman state implemented the Land Code of 1858 in Iraq, extending central government control to facilitate tax collection. Ottoman rulers reasoned that peasant cultivators would agree to pay tax directly to the central government in exchange for security of tenure on land. In Iraq, the law conflicted with tribal customs, where land was controlled by the tribe as a whole. Fearing military conscription, individual cultivators were reluctant to register lands in their names, so tribal sheikhs and urban entrepreneurs registered lands under theirs instead. Under the League of Nations mandate, in 1916-1932, the British elevated the position of tribal sheikhs and placed low taxes on agricultural output.

We present data about the representation of large landholders in the Chamber of Deputies. The proportion of deputies who were tribal sheikhs averaged between 32 and 38% of the total in the 1940s and 1950s, higher than their representation in the 1920s and 1930s. Tribal representatives were more influential and effective in the Chamber than emergent, urban-based parties that were electorally weak relative to the powerful landholders of tribal chiefs, who still dominated rural politics.”

Link to the paper.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way: editorial@jainfamilyinstitute.org.

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• “Both the market and national security regulatory systems leave in place the business model of telecoms, and consequently, they cannot ensure the civic provision of essential communications tools.” On the blog, Sebastian Benthall and Jake Goldenfein analyze the limits of existing telecommunications regulatory frameworks in light of the social consequences of COVID-19. Link.
• We are hiring: and for a fellowship in ethics of governance of AI, to work on a project with a United Nations organization; and for an editorial associate, to work on Phenomenal World and across our projects. Link to our opportunities page for more information.
• In the NYT, Somini Sengupta and Julfikar Ali Manik cover the floods in Bangladesh. Link. And a new study by Ebru Kirezci, Ian R. Young, Roshanka Ranasinghe, Sanne Muis, and Robert J. Nicholls et. al finds that “With no coastal protection or adaptation, there will be an increase of 48% of the world’s land area, 52% of the global population and 46% of global assets at risk of flooding by 2100.” Link to the piece, link to coverage in the FT.
• Maria Eugenia Giraudo on the distributional politics of commodity booms: “Analying the design and implementation of fiscal policy during the soy boom in Argentina and Brazil, I argue that domestic institutions mediated the capacity of the state to design and implement tax structures related to natural resources.” Link.
• Jacob Orrje on how technology, logistics, and trade facilitated the Republic of Letters. Link.
• “Our evidence suggests that employers did not experience greater difficulty finding applicants for their vacancies after the CARES Act.” Ioana Marinescu, Daphné Skandalis, and Daniel Zhao estimate the job market impacts of increased unemployment insurance. Link. On the problems with wage replacement versus expanded UI: coverage in the Times.
• Bradon Ellem, Johan Sandström, and Curt Persson “compare the iron ore sectors and mining regions of Malmfälten in Sweden and the Pilbara in Australia” to study the impact of liberalization in each country. Link.
• Using a novel measure of multiple jobholding, Paul Glavin finds that “almost 20% of Canadian workers reported multiple jobholding in 2019—a rate three times higher than Statistics Canada estimates.” Link.
• Jean-Philippe Dedieu examines the “influence of Malian exile networks in Africa and Europe on the formation of domestic pro-democracy organizations and the overthrow of the Traoré regime in 1991.” Link.
• “We estimate the effect of a reduction in communication time on imports of three product categories in 19th century cotton textile trade: yarn, plain cloth, and finished cloth. In order to identify causal effects, we use exogenous variation in the ruggedness of the submarine seafloor to predict in which year countries get connected to the global telegraph network. The telegraph dramatically reduced the time it took to exchange information expressed in words, but did not affect the exchange of physical objects such as product samples. Using evidence from cotton traders’ communication, we show that the examined three products differed in their codifiability, that is, in the extent to which merchants specified product attributes in words. Empirically, we find that communication time reductions had the largest effect on imports of the most codifiable product; yarn, and the smallest effect on the non-codifiable product, finished cotton cloth.” By Réka Juhász and Claudia Steinwender. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org