This paper analyzes the interaction between corporate taxes and corporate governance. We show that the characteristics of a taxation system affect the extraction of private benefits by company insiders. A higher tax rate increases the amount of income insiders divert and thus worsens governance outcomes. In contrast, stronger tax enforcement reduces diversion and, in so doing, can raise the stock market value of a company in spite of the increase in the tax burden. We also show that the corporate governance system affects the level of tax revenues and the sensitivity of tax revenues to tax changes. When the corporate governance system is ineffective (i.e., when it is easy to divert income), an increase in the tax rate can reduce tax revenues. We test this prediction in a panel of countries. Consistent with the model, we find that corporate tax rate increases have smaller (in fact, negative) effects on revenues when corporate governance is weaker. Finally, this approach provides a novel justification for the existence of a separate corporate tax based on profits.
Research has begun to show how powerfully social capital, or its absence, affects the well being of individuals, organizations, and nations. Economics studies demonstrate that social capital makes workers more productive, firms more competitive, and nations more prosperous. Psychological research indicates that abundant social capital makes individuals less prone to depression and more inclined to help others. Epidemiological reports show that social capital decreases the rate of suicide, colds, heart attacks, strokes, and cancer, and improves individuals? ability to fight or recover from illnesses once they have struck. Sociology experiments suggest that social capital reduces crime, juvenile delinquency, teenage pregnancy, child abuse, welfare dependency, and drug abuse, and increases student test scores and graduation rates. From political science, we know that extensive social capital makes government agencies more responsive, efficient, and innovative. And from our own personal experience we know that social capital makes navigating life a whole lot easier: our friends and family members cheer us up when we?re down, bring us chicken soup when we?re sick, offer job leads when we?re unemployed, baby–sit our kids when we?re away away, join us at the movies when we?re bored, give us loans when we?re broke, and remember our birthdays when even we forget them.
It is becoming increasingly clear that social capital has an enormous array of practical benefits to individuals and to communities. What is more, social capital has what economists call "positive externalities." That is, networks of trust and reciprocity not only benefit those within them, but also those outside them. Consequently, when social capital is depleted, people suffer in clear and measurable ways, and there is a ripple effect beyond a scattering of lonely individuals. Shoring up our stocks of social capital, therefore, represents one of the most promising approaches for remedying all sorts of social ills.
Yet the national stockpile of social capital has been seriously depleted over the past 30 years. By virtually every measure, today?s Americans are more disconnected from one another and from the institutions of civic life than at any time since statistics have been kept. Whether as family members, neighbors, friends, or citizens, we are tuning out rather than turning out.
Published as: Putnam, Robert D., and Lewis M. Feldstein. Better Together: Restoring the American Community. New York: Simon & Schuster, 2003.
Prime Minister Ariel Sharon of Israel is seeking US support for his government's planned unilateral steps to address the current Israeli-Palestinian crisis, including the construction of a barrier around and within the West Bank and the removal of Israeli settlements and troops from the Gaza Strip. Such unilateral steps would have disastrous consequences.
They would divide the West Bank into disconnected, fenced-off enclaves and further erode the Palestinian economy and quality of life. They would make Gaza ungovernable and probably put it under the control of Islamic extremists. They would make it impossible to form a viable Palestinian state and to resolve the deadly conflict between the two peoples.
The US administration should strongly discourage these unilateral steps and promote a return to serious negotiation of a comprehensive, final agreement between the parties. Negotiations are the only way to develop a formula for ending the conflict that meets the basic needs of both parties, that engenders their commitment, and that is conducive to stable peace, mutually enhancing cooperation, and ultimate reconciliation between the two societies.
Sharon's argument in favor of unilateral steps is that there is no partner for peace on the other side. This view has been widely shared within the Israeli public since the breakdown of the Camp David talks in 2000 and the onset of the second intifada. Indeed, this view is mirrored on the Palestinian side, where there is an equally strong belief that there is no Israeli partner for a solution that would establish an independent, viable Palestinian state.
These mirror images are dangerous because they justify acts of violence and unilateral steps that create self-fulfilling prophecies: The belief or claim that there is no negotiating partner on the other side—that the only language “they” understand is force—leads to actions that destroy the possibility of negotiations. There is ample evidence that these images are not only dangerous, but unwarranted.
Public opinion data on both sides continue to show majorities in favor of negotiations and of a compromise based on a two-state solution (while believing that the other side is not ready for such a compromise). Furthermore, in recent months, politically influential Israelis and Palestinians have issued joint proposals for resolving the conflict on the basis of a mutually acceptable two-state formula.
The most elaborate of these proposals is the Geneva accord, developed under the leadership of Yossi Beilin and Yasser Abed Rabbo, Cabinet members and leading negotiators of the Israeli and Palestinian governments, respectively. The Geneva initiative represents a particularly significant contribution to the peace process.
Given the character, background, and experience of the prime movers of this initiative and of the people who joined them in the effort, it suggests very strongly that there is a credible negotiating partner on each side. Given the specific and detailed agreements it achieved on many of the most contentious issues in the conflict, it suggests very strongly that there is a mutually acceptable formula for a two-state solution that can be successfully negotiated.
The Geneva accord itself is not a negotiated agreement in any formal sense of the term, but it is a first-class simulation of such an agreement. As such, it offers a powerful demonstration that a mutually acceptable agreement can be negotiated. It does not substitute for official negotiations, but it provides an impetus for renewed negotiations, by highlighting the principles on which an agreement must and can be based.
Moreover, it should help speed up the negotiation process because it offers concrete ideas for dealing with many of the difficult practical and political issues that a final agreement would have to encompass. Above all, it breaks through the pervasive pessimism, mistrust, and despair that have hampered return to the negotiating table.
The Geneva initiative has already gained considerable support around the world, including the United States. The possibilities for successful negotiations that it demonstrates can serve as an effective counterweight to Sharon's argument that he has no partner for peace and hence no alternative to the unilateral use of force.
But gaining American and international support is only part of the problem faced by the architects and promoters of the Geneva initiative. The critical challenge they confront is to garner public support for the principles and terms of the accord within their own societies. The compromises envisaged by the Geneva accord entail high costs for the two peoples.
In particular, there is strong resistance to provisions requiring them to relinquish claims heavily laden with emotion and symbolic meaning and central to their national identities and associated narratives—such as those touching on the right of return of Palestinian refugees or sovereignty over the holy sites in Jerusalem. Even among the majorities in each public who support compromise to achieve a two-state solution, there is great reluctance to bear these costs in the face of profound distrust in the other side's willingness or ability to reciprocate and to conclude a genuine, acceptable agreement.
These concerns are exacerbated by a structural problem in the way proponents of the Geneva accord present it to their respective publics. For understandable reasons, they may emphasize to their own constituencies how favorable the accord is to their own interests and how much the other side has conceded.
What may encourage their own public, however, may well discourage the public on the other side—who inevitably also hear these messages—and may reinforce the prevailing distrust. For example, when Palestinians hear Israelis stress that Palestinians have in effect given up the right of return, and Israelis hear Palestinians deny that this is the case, both may come to feel that the accord is a bad deal or that it is sufficiently ambiguous to allow the other side to exploit it to their own side's disadvantage.
There is a need, therefore, for common messages, jointly constructed by thoughtful and credible representatives of both sides, and brought to both populations. Joint construction is essential to ensure that proponents of the Geneva initiative avoid working at cross-purposes as they seek to mobilize their own constituencies—to ensure that their messages are responsive to the concerns and sensitivities of each side without unduly threatening the other side.
Furthermore, to build on the enormous achievement represented by the Geneva accord, its provisions must be communicated in a way that captures the publics' imagination and generates trust and hope. The two publics must be persuaded that a solution along the lines envisioned in the Geneva accord is not only necessary, but that it is possible, that it is safe, that it is fair, and that it promises a better future.
To this end, the Geneva initiative—as inserted into the public debate—should be framed in terms of a principled peace that represents, not just the best available deal, but a historic compromise, which meets the basic needs of both societies, validates the national identity of each people, and conforms to the requirements of attainable justice.
I envisage three central elements to a jointly constructed framework for a principled peace:
Acknowledgment of the other's nationhood and humanity, through explicit recognition of each people's right to national self-determination in a state of its own, acceptance of each other's authentic links to the land, and rejection of language that denies the other people's political legitimacy and historical authenticity; and through words and actions demonstrating that the other side's lives, welfare, and dignity are considered to be as valuable as one's own.
Affirmation of the meaning and logic of a historic compromise, by framing the agreement as a commitment to end the conflict and share the land both sides claim through the establishment and peaceful coexistence of two states, in which the two peoples can fulfill their respective rights to national self-determination, give political expression to their national identities, and pursue independent, secure, and prosperous national lives; and by clearly spelling out the implications of such a commitment in terms of both the costs that the logic of the historic compromise imposes on each side, and the benefits provided by a principled peace.
Creating a positive vision of a common future, by framing the agreement as an opportunity for the two peoples to build a common life in the land they share and to which they both have emotional attachments, rather than as an arrangement being forced on them by outside pressure and the unending cycle of violence.
Consistent with the high degree of interdependence between the two societies, the agreement should be presented to both publics as the foundation of a future relationship based on mutually beneficial cooperation in many spheres, conducive to stable peace, sustainable development, and ultimate reconciliation.
The expansion of the European Union this week, as well as elections to the European Parliament in June, make 2004 a crucial year for the EU. In many ways it was also supposed to be Tony Blair's year.
For many Europeans, the British prime minister was the top contender for the political leadership of Europe. The position of president of the European Union, whose creation he advocated, was meant to be his. However, the past 12 months have had a devastating impact on Britain's position in Europe. Blair's support of the Bush administration's invasion of Iraq has compromised his European ideals and ignored the views of European public opinion.
Just like Italy's Silvio Berlusconi or Australia's John Howard, Blair now faces the risk of an electoral fiasco. Many of his Labor voters still have not fully digested the implications of going along with the US "preemptive strike" against Saddam Hussein's regime. The elections to the European Parliament in June will most probably give a warning to the British leader.
As for his U-turn announcement on a possible referendum on the EU's new constitution, British and European commentators have unanimously condemned it as an opportunistic move by the prime minister in order to outplay his Conservative opponents during the upcoming electoral campaign. Fellow European politicians such as the former Irish premier John Bruton accused Blair of showing "no leadership on European issues."
From his 1997 landslide victory to the fall of 2002, Blair was the dream politician of many Europeans who saw in him the hope of their generation. In Germany, Spain, Italy, and even France, known for their conservative if not old-fashioned politicians, people were fascinated with this cosmopolitan British prime minister. He had promised to put his country at the "center of Europe" in order to end 50 years of misunderstandings between Britain and its continental neighbors.
French members of Parliament remember Blair's March 1998 pro-European speech and are still struck by the fact that he was praised by both right and center-left parties. In Germany, the ruling SPD party had had strong links with the Labor government until last year. Meanwhile, the Blair administration was filled with ambitious foreign affairs specialists open to the world, especially to Europe.
Blairites then started to play a larger role in European institutions; not only the UK Representative Office in Brussels but also European Commission directorates, and even the European Parliament's main political groups became powerful instruments of Blair's dynamic policies. In less than five years, the number of British bureaucrats increased in senior EU positions in Brussels. That was before last year's Iraqi diplomatic crisis, the most serious rift within the EU since Britain joined in 1973.
Meanwhile, Britons have become more pro-European. They have traveled more extensively across the continent and bought property. Moreover, they are encountering more and more Europeans in their own country. Whether in lifestyle, business, or the way public services are run, they realize they have a lot more in common with their continental cousins. In addition, the spread of the English language is now making them particularly comfortable with communications across Europe. It is likely that the arrival of 10 new EU members will help to unify the continent even more under a common banner.
Sadly, by splitting Europe and not calling for a British referendum on the European currency in the spring of 2003 (as originally planned), Blair has failed to recognize his countrymen's ideological and emotional proximity with continental Europe. Despite attempts to reconcile with President Jacques Chirac of France and Chancellor Gerhard Schroeder of Germany on issues such as European defense and economic reforms, Blair may well have missed his chance to play a major leadership role in the new Europe.
Many pro-European British diplomats, politicians, and businessmen—not to mention pro-British Europeans—are disillusioned. In the eyes of many Europeans, Blair is now no more than an interesting politician unwilling to chose between the two sides of the Atlantic.
With the end of the Cold War, and until 9/11/01, many academic and journalistic pundits averred that military power was no longer of great importance, that the future lay with economic power. The claim was made that the United States was an "economic superpower," and therefore would continue to be the world's dominant power in any case. Does this term mean anything other than "biggest national economy?" If so, what exactly does it mean? This paper will discuss the concept of economic power, and then apply the concept to the proposal of John Mearsheimer, the R. Wendell Harrison Distinguished Service Professor of Political Science pat the University of Chicago, that on strategic (balance of power) grounds the United States should take steps to slow down the economic growth of China.
In 1982, Eric Wolf published Europe and the People Without History to identify and begin rectifying large gaps in anthropological knowledge. That project remains unfinished. In the past year, since September 11, 2001, the necessity of filling in some of these gaps has become urgent. The history of relations between Western powers and transnational Muslim societies in the Indian Ocean is one of them. An anthropologically nuanced understanding of such societies as diasporas, thought in tandem with their continued relations with Western empires over five hundred years, lends a useful perspective on a set of conflicts which is massively unfolding. Threatening to become a self-fulfilling prophecy of a clash of civilizations (Huntington 1993) in popular discourse and political decision-making, a phenomenon on this horrendous scale remains within the purview of anthropologists if one sees it as an instance of culture contact under conditions of global imperialism, unmitigated by colonial administration.
The distinction between imperialism and colonialism is critical. Talal Asad's Anthropology and the Colonial Encounter (1973) launched anthropology on an auto-critique by noting that its quiet field sites were fields of colonial power, and its practitioners members of colonizing societies. Colonialism refers to foreign presence in, possession of, and domination over bounded, local places. Today, the multi-sited ethnographies we increasingly pursue need to be analytically framed within a field of power which is transnational. The term imperialism refers to foreign domination, without the necessity of presence or possession, over expansive, transnational spaces—and many places. Within the purview of U.S. power, then, the appropriate term for this frame is not postcolonialism, but ongoing imperialism. The time may soon be upon us for a sequel to Asad's volume, now trained on American anthropology and the imperial encounter. While the terms globalization, neo-liberalism, and late-liberalism may have been productive in probing the complexities of consent to contemporary transnational hegemony, they have been less attentive to its classical twin, coercion. While colonialism may be the past of British and French anthropology, imperialism is the long present of the American one. Thus the sense of urgency, again (Hymes 1999).
In what follows, I look at a series of contacts between Western empires and Muslim societies through the eyes of a Muslim diaspora, as it were, a mobile people with a written history. The review suggests that what is new to this history is the unique nature of American power worldwide. In its global reach it is imperial, but in its disavowal of administration on the ground, it is anti-colonial. Decoupling the concept of colonialism from that of imperialism is a necessary step in thinking about this new mode of domination, and it is a task this essay sets for itself.
Citation: Ho, Engseng. “Empire through Diasporic Eyes: A View from the Other Boat” Society for Comparative Study of Society and History.(April 2004): 210-246.
In the rubble following the collapse of the World Trade Center towers in the violent assault of September 11 lies the tawdry remnants of religion?s innocence. In those brief horrifying moments our images of religion came of age. Religion was found in bed with terrorism. Whatever bucolic and tranquil notions we may have had were rudely replaced by those that were tough, political, and sometimes violent. Is this the fault of religion? Has its mask been ripped off and its murky side exposed–or has its innocence been abused? Is religion the problem or the victim?