2011: so much news, so little hope

2011 has been an incredible year for NEWS – so much has happened it is bewildering to think about the significance (though pundits are full of words in trying to do just that) How can we be wise men and women as we ponder “how to interpret this present time” (Luke 12:56)

A rare bright news spot was the marriage of William and Kate. But look at the summary of gloomy news:

Christchurch in NZ had a huge earthquake that destroyed much of the city then a month later, Japan suffered a huge earthquake leading to the Fukushima nuclear emergency.

Two of the most reviled names on the world stage – Osama Bib Laden and Col Gadaffi – were removed from power and both were killed. Yet stability seems no closer.

The Arab Spring has reached 9 nations, 4 leaders have fallen from power and in some places a frosty Arab winter has descended. The USA has been embroiled in two budget crises. Europe faces bailouts for weaker economies that could total a trillion (!) Euros and mean a huge shake-up of the Eurozone.

The financial troubles around the world have worrying implications for the next generation of workers and leaders: youth unemployment has soared in Spain (44%), Portugal (28%), South Africa (45%), the USA (25%) and Egypt (25%) and it is the mix of nations here that causes disquiet.

Meanwhile, concern grows in the news about increasing inequality between rich and poor. In the UK according to The Church Investors’ Group Guide for Christian Investors, the pay of chief executives of the largest 100 companies “is on average over 100 times that of average salaries in these companies”. In Tesco’s (the UK’s largest supermarket) the pay differential is 526:1. A generation ago, pay gaps in big companies were much more modest at 10:1.

In the USA, the situation is very similar. In 2009, The Institute for Policy Studies says major corporate CEOs took home 263 times the pay of America's average workers. Last year, this gap leaped to 325:1.

Not only is income distribution becoming more unequal, even greater inequality exists in asset ownership. The top 1% of Americans now own 37% of the nation’s wealth; the bottom 80% own just 15% - and the gap has widened more rapidly in the last three years than it has for decades (see ‘Transforming Capitalism from Within’ by Jonathan Rushworth and Michael Schluter).

But though individual inequalities may rankle, corporate behaviour over tax may be a bigger issue. 98 out of the 100 top companies listed on the stock exchange in London (the FTSE 100) have subsidiaries in tax havens. Of course the obvious reason for such behaviour is to reduce tax liability: Boots (the UK’s largest chemist chain) moved its official headquarters to Switzerland to save over £100 million a year. That is money that could have gone to schools and hospitals and police and dwarfs the £2.5 million it so proudly gave to cancer research in 2010.

But such behaviour erodes trust. Andrew Witty, Chief Executive of GlaxoSmithKline, said earlier this year: “One of the reasons why we’ve seen an erosion of trust broadly in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is. I think that’s completely wrong.”

In the USA, 25 of the top 100 countries paid their CEO more than they paid in federal corporate income tax. The New York Times reported on tax avoidance among the Fortune 500 in March this year and identified 12 corporations that have paid an effective rate of -1.5% on $171 billion in profits.

Tax havens are the most common way for US companies to avoid tax, costing the federal treasury around $100 billion a year. But it is not just the lost taxes that are of concern here - tax havens are secretive and can facilitate criminal activity, from drug money laundering to the financing of terrorist networks.

It is also clear that tax dodging affects resource rich nations in the developing world which are being denied large amounts of tax because companies transfer their profits out of the countries where they are actually earned and into countries with lower tax rates.

Occupy sites in many cities around the world have pleaded for change. Everywhere there is unrest. The poor cry out for justice.

Economic systems should be for the good of all – not just delivering profit and power to the few. There is plenty of Biblical advice to protect the vulnerable and poor, work hard, apply “honest weights” and shun greed. Whatever system is in place, we need to review it against these standards and modify it when things aren’t working.

‘Transforming Capitalism from Within’ by Jonathan Rushworth and Michael Schluter sets out an alternative approach to the purpose, performance and assessment of companies. Their report proposes reforms as to how companies could operate in a sustainable and profitable way, using good relationships as a guide rather than merely competing for short-term financial gain.

We are entitled to ask questions of the richest and most powerful and to suggest more just ways of operating.

The first question is about pay inequality. We have to persuade those at the top that they have a duty of responsibility to the rest of society not to gouge wealth. The Church Investors’ Group Guide for Christian Investors says, it would be difficult to justify a pay ratio of CEO to average worker in excess of 75:1.

If you own shares or have a pension, ask some difficult questions about the pay rates of top executives of companies in which you own shares. If the answers are not satisfactory, ask your accountant or investment advisor to move your money to cleaner companies.

Secondly, we need to question companies about their tax bills – do top companies that pay huge bonuses pay their fair share of tax?

If their profits and the tax paid were set alongside each other in an honest way, everyone could see much more easily what was going on.

Take time to check out campaigns that are calling for more transparency in financial transactions – in some places this is called Publish What You Pay but there are other campaigns too that focus on mining companies - fill out an online form for Unearth the Truth in the UK.

Write to your local MP urging them to support regular and open reporting on payments made by companies to governments at home and abroad.

As we read the signs of the times, it is easy to be filled with gloom. The good news is that we do not have to accept injustice. We can be bringers of hope and peace, especially at Christmas.