One of the most important political and economic facts of this young century is that capital has been slipping the traces of the nation-state. Business is global; government is national. That mismatch is one of the big sources of tension in the world today: Whether it comes to taxes, bank regulation or immigration, the fact that money and politics no longer live in the same neighborhood makes consensus harder to achieve.
For Exhibit A, you could point to the flood of Russian rubles into Cypriot banks- and the dramatic consequences.
Global businesses have profited handsomely. Multinationals have legally lowered their tax bills by shifting their profits to low-tax countries: As a scandalized British public recently learned, for example, Starbucks paid 8.6 million pounds, or $13 million, in corporate taxes in Britain over the past 14 years.
For individual plutocrats, taking advantage of globalization is even easier: Move your legal residence – and your money – as the actor Gerard Depardieu or the Facebook co-founder Eduardo Saverin did.
But these lower tax bills come at a cost. As I was told by Kemal Dervis, former minister of economic affairs in Turkey and now vice president of the Brookings Institution, “Capital is seeking to avoid the burden-sharing which makes modern society possible.”