© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice.
December 17, 2010 10:43 pm
In Monaco, I briefly felt like a billionaire. Though it was December, every afternoon I swam in a heated pool on the roof of my hotel. On one side was the Mediterranean, on the other the mountains, and everywhere were apartment blocks crammed with tax-dodgers. It was perfectly quiet: noise is the enemy of the principality, even worse than socialism.
I had arrived expecting to write that Monaco was the past: tax havens, I’d read, were under threat. Instead, I returned to middle-class life feeling that the tiny state for rich people is the global future. As western countries emerge from recession, the contours of post-crash society are becoming visible: increasingly, the rich inhabit a low-tax universe segregated from everyone else.
It’s true that tax havens have taken some stick lately. In April 2009, the depths of recession, global leaders threatened them. Gordon Brown, the then British prime minister, announced at the G20 summit that banking secrecy “must come to an end”.
Yet walking Monaco’s streets, you are soon reassured. “The rock”, as locals call it, or “a sunny place for shady people”, as the writer Somerset Maugham put it, has survived both the recession and demands for transparency just fine. The men are still wrinkly, and the women blonde and armed with tiny dogs.
Walking around town, you can hear your own footsteps. Stopping at an estate agent’s window, you goggle at prices. Mere millionaires need not apply. A large flat overlooking the port costs €17.8m – although that’s nothing compared with the penthouse sold here recently by the British Candy brothers for €240m, the world’s record price for a private home. (Full disclosure: my bid for this property was trumped.) Monaco’s house prices are the world’s highest. No wonder, with so many multimillionaires packed into a country smaller than New York’s Central Park. I stopped at what looked like another estate agent to goggle more, but it wasn’t an estate agent. It was selling private planes.
Monaco masquerades as a small town from the olden days. You pass dinky little shops, children playing unaccompanied on the beach, and fur-clad Madame Billionaires feeding birds in parks. It’s so comfortable that female life expectancy here is 94.
Yet Monaco is a facsimile of a “community”, because only the rich belong. The principality resembles the global future because it has two classes: jet-owners and bus passengers. The 35,000 residents are rich. About 39,000 people commute daily from France and Italy to serve them.
Anyone who belongs to neither class is suspect here, and liable to get stopped by the police. Monaco supposedly has one cop per 62 inhabitants, plus copious CCTV cameras. I met a millionaire’s son who had been hauled off for questioning after he was spotted hanging around outside unshaven in jeans. Visible involvement in violence is a faux pas here: Mark Thatcher, Maggie’s son, was denied residency after helping finance a coup in Equatorial Guinea.
Overseeing the show is Prince Albert. Most monarchs nowadays rarely bother their subjects. But in Monaco you feel every day that you are living in a monarchy, as if you were an 18th-century peasant. At the conference I attended, everyone stood up whenever Albert walked in. His portraits festoon town.
Albert oversaw Monaco’s response to the G20. Being a tax haven seems to embarrass him, but he likes rich residents. Monaco therefore signed “tax information exchange agreements” with 24 states, and became a slightly more transparent tax haven.
And so, as the Great Recession lifts, the trend of recent decades in western countries continues. As Randy Newman sings: “ … the rich just get richer/and the poor you don’t ever have to see”.
The rich have escaped the recession almost unscathed. Even where states raise taxes, the rich are usually nimble enough to escape. Often they own political parties: the Republicans kept alive President Bush’s tax cuts for the richest Americans. And tax havens abound. Even in bankrupt Ireland, Google pays virtually no tax on the billions it channels through the country.
But states need money from someone, and so the poor pay instead. Ireland’s new whizzo scheme is to levy income tax on people earning just €15,300. The poor everywhere also pay a sort of “noise tax”: they rarely live in perfect silence. And now they’re losing their public services, notably in the UK, where the billionaire retailer Philip Green recently headed a review of public spending. Coincidentally, Sir Philip’s wife lives in Monaco. “My wife’s not a tax exile,” he explains, and I’m sure tax is a tedious irrelevance to the Greens. Still, as parables go, you couldn’t make it up.
Swimming on the roof in Monaco, some past December swims came back to me: in my grandparents’ pool in white Johannesburg in the 1980s. I’d never then seen anything like the wealth gap of South Africa under apartheid. We ate chocolate cake on the lawn; the maids lived behind the kitchen. It turned out that this was the future.
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.