After playing the Obama inauguration a couple of months back, the pop star Bono flew back home to a rare barrage of hostile headlines. As you know, the global do-gooder wants us to send more of our money to Africa. So why is he sending his money to the Netherlands? From the Irish Times:
“Bono ‘Hurt’ By Criticism Of U2 Move To Netherlands To Cut Tax.”
U2 hasn’t, in fact, moved to the Netherlands. You won’t find them busking outside downtown Rotterdam mosques of a Friday night. But they did move some of their business interests from the Emerald Isle to the Low Countries. From the Times of London: “Bono Hits Back Over Tax Dodging Claims.”
Actually, he didn’t really “hit back” except in the mildest way, protesting that there was nothing “hypocritical” about being an “activist” and taking advantage of favourable “financial services” arrangements in the Netherlands, and that in any case U2 “pay millions and millions of dollars in tax.” Hey, so what? Any old Halliburton robber-baron pal of Dick Cheney can make the same claim: paying “millions and millions” counts for nothing when you’re supposed to be paying millions and millions and millions and millions. From the Belfast Telegraph:
“U2 Frontman Bono’s Tax Avoidance ‘Depriving Poor.’ ”
According to Nessa Ni Chasaide of the Debt and Development Coalition Ireland, U2 has consciously deprived the Irish exchequer of revenue needed for overseas aid. “While Bono has championed the cause of fighting poverty and injustice in the impoverished world,” said Miss Ni Chasaide, “the fact is that his band has moved parts of its business to a tax shelter in the Netherlands. Tax avoidance and tax evasion costs the impoverished world at least 160 million U.S. dollars every year.”
Oh, come on. It doesn’t cost “the impoverished world” anything. It’s Bono’s money, not theirs. And who’s to say, even if he did give it to the government, that they’d stick it in the mail to some Afro-Marxist kleptocrat as opposed to squandering it closer to home? I’m with the U2 lads on this: I think the caterwauling rockers know better how to spend their dough than the state does. I’m entirely sympathetic to the wish of Timothy Geithner and the other A-list tax delinquents of President Obama’s administration not to toss one more penny than the absolute minimum into the great sucking maw of the government treasury.
Unfortunately, that’s not an argument a celebrity “activist” like Bono can easily make. So his “hitting back” consisted mostly of sitting back while the Bono impersonator Paul O’Toole stood outside the Department of Finance in Dublin singing his own version of U2’s I Still Haven’t Found What I’m Looking For—i.e., a jurisdiction with zero per cent tax rates for billionaire rock stars. U2 Ltd. actually moved to the Netherlands a couple of years back, about 17 nanoseconds after the Irish finance minister removed the tax exemption on “artistic” income above 250,000 euros. This was round about the time of Bono’s Live 8 all-star African-awareness-raising rock gala, but the world was too busy Rocking Against Bush to pay any attention. It’s only in the last few weeks that charities and NGOs and “justice groups” have decided to make an example of the unfortunate warbler.
But here’s my question: instead of arguing whether U2 Ltd. should be based in Dublin or Amsterdam, why not move it to Africa? After all, it’s essentially a licensing operation, so it doesn’t have any physical product to warehouse or ship other than the occasional PDF or MP3. All you need’s a phone line and a computer. Or, at the very least, why doesn’t Bono outsource U2 Ltd.’s tax preparation to Africa? With the invention of the Internet, India’s accountants started mugging up on 1099s and Schedule C and the other salient features of the U.S. tax code and have managed to snaffle a percentage of the American tax-filing bonanza away from H&R Block. Why couldn’t Bono open up a small accountancy firm in Bangui or Bujumbura? If he’s so eager to help Africa, wouldn’t that be a great vote of confidence?
Well, yes. But it’s not going to happen. Each year, the World Bank ranks nations by the ease with which one can start a business. The global top 10 includes countries you’d expect to find there—New Zealand, America, Britain, and even Canada—but also a couple of territories that a generation or two back you wouldn’t have: Singapore, Hong Kong. Of the bottom 10 on the list, nine are African. To start a business in Singapore involves getting over four bureaucratic hurdles, takes four days and costs 0.7 per cent of income per capita. To start a business in Canada takes one hurdle, five days and 0.5 per cent of income per capita. To start a business in the Democratic Republic of Congo takes 13 hurdles, 155 days and 435.4 per cent of income per capita. That’s why U2 Ltd. isn’t going to be relocating to Kinshasa any time soon.
There is nothing preordained about any of this: in 1950, what was then the Belgian Congo had a higher GDP per capita than either China or India. But today it’s literally the last place in the world you’d want to start a business. Well, okay, a big chunk of the Congo’s been a war-torn hellhole for the last decade. So what about, say, Guinea-Bissau? Starting a business there requires overcoming 17 government hurdles, takes 233 days and costs 257.7 per cent of income per capita. Which is why Bono can’t put his money where his mouth is.
A quarter-century ago at Live Aid, Bob Geldof stood on the stage of Wembley Stadium and bellowed at the developed world: “Give us yer fokkin’ money!” By the time of Live 8 in 2005, the message had evolved: the rockers were no longer demanding our money, only that we in turn beseech our governments to give more “aid” to Africa. In her new book, the Zambian economist (actually, more of an econo-babe) Dambisa Moyo takes aim at Sir Bob and Sir Bono beginning with the very title: Dead Aid. Government-to-government aid, says Miss Moyo, all but guarantees corruption and barbarism: a country that seeks private business investment will be accountable to the global markets; a country that raises public funds from taxes will be accountable to its own voters. But a government that gets “aid” from other governments is accountable to no one and nothing, and decades of easy money that make self-absorbed Western do-gooders feel swell about themselves have debauched the political culture of a continent. Which is why so much of the trillion dollars lavished on Africa since the earliest days of decolonization has wound up in this week’s president-for-life’s Swiss bank account while the conditions for domestic wealth generation improve not a whit.
But lowering the obstacles to business formation in the Congo doesn’t have the cachet that celeb-led moral posturing does. On the face of it, listening to a bunch of leathery old rockers ululating their ancient hits would seem an unlikely way to end poverty in the world, but it does absolve one of having to think about Africa—or even about which bits of “Africa” work (Mauritius) and which don’t (Somalia), and why. The historian Niall Ferguson, who wrote the introduction to Dead Aid, says that he was left “wanting a lot more Moyo, and a lot less Bono.” And, as much as any policy she proposes, this lèse-majesté to the beshaded knight of compassionate cool seems to have driven his humanitarian non-profit group to launch multiple if somewhat obsessive assaults on Miss Moyo.
I love elderly rock stars—not for their “music,” which is mostly ghastly, but for their business acumen, which totally rocks. Sir Paul McCartney owns the publishing rights to Guys & Dolls. David Bowie was the first pop singer to hold a bond offering in his back catalogue and had $55 million worth of Bowie “Class A royalty-backed notes” snapped up in nothing flat after Moody’s gave them their much coveted triple-A rating. Madonna cleans up with a book of nude photographs featuring such unsettling sights as her naked bottom propped up like a novelty bike rest, and then decides to relaunch her literary career with some improving children’s stories, but, either way, is savvy enough to headquarter her business interests in the United States and United Kingdom.
Yet ask her to help Africa and she climbs up on stage, as she did at Live 8, and urges people to “start a revolution.” Like Africa hasn’t had enough of those this last half-century? You can run a farm or factory in relatively primitive societies. But the protection of intellectual property—of products as flimsy as sung words and crotchets and quavers—requires the most evolved form of capitalist society. The aristorockracy are the last people who want a revolution. Africa should do as Bono does, not as he says.