Founder's CornerDear All, This week, I’m shifting our focus to halfway across the globe to the political drama unfolding in the United Kingdom (UK). Britain has just appointed its third prime minister (PM) in less than two years representing the fastest turnover in the country’s history. Liz Truss survived a mere 44 days and the current officeholder, Rishi Sunak, former Chancellor of the Exchequer, is the first PM of Indian descent. Unsurprisingly, India Twitter celebrated Sunak as one of their own now at the helm, but despite supporting measures like Brexit, he comes with a lot of globalist/neoliberal baggage. An ivy league MBA, a stint at Goldman Sachs and even more intriguing, his wife Akshata Murthy is the daughter of N. R. Narayana Murthy, the founder of global outsourcing goliath, Infosys. Yes, that Infosys – the IT outsourcing firm of choice for companies like Southern California Edison and Disney for displacing their American IT workers. And yes, it’s the very same Infosys that settled a $34 million civil suit with U.S. authorities over visa fraud and using B-1 (visitor) visas for work requiring H-1B visas. As it turns out, the IT outsourcing business and subsequent displacement of American workers has been a profitable venture. N. R. Narayana Murthy is a multibillionaire and his daughter, who owns about a 1% stake in Infosys, has a net worth of close to a billion dollars. Interestingly, Akshata Murthy has maintained her Indian citizenship taking advantage of “non-domiciled status”, a British tax loophole that has shielded her from paying taxes on her foreign earnings. Up until a public outcry in April, she avoided paying roughly $23 million in taxes. Since then, she’s relinquished her non-domiciled status. Looking at the chain of events from a class warfare perspective, it’s amazing to see a former Goldman Sachs guy with a billionaire heiress wife become chief of the cabinet and ministers in the executive branch of the British government. This represents a further fleshing out of a global corporatocracy being fueled by the displacement of the developed world’s middle class. What’s important to note here is that Sunak was not elected. He was appointed by the neoliberal faction of the Tories Party who in 2019, in the run-up to the general election targeted working-class voters who prior had largely supported the Labour Party but become dismayed with their stance on globalization. UK workers appear to be no different than U.S. workers. They know globalization with its outsourcing and offshoring to low rent countries has lowered their personal standard of living. The Tories won the election by a landslide winning 43.6% of the popular vote and the majority of seats in parliament – the highest percentage for any party since 1979. Their victory was predicated on the promise to exit from the European Union — Brexit — and curb immigration. Fast forward to 2022, and while former PM Boris Johnson may have run as a populist he governed like an Obama-style neoliberal. Under his watch, immigration levels soared to record levels and foreign workers and students from non-European countries like India and Nigeria entered the UK. In 2021, the UK issued around 1.3 million visas! Those arriving on student visas were allowed to seek off-campus employment for up to 20 hours per week. If they had a dependent spouse, the spouse was entitled to work full time — 40 hours per week. As expected, abuse of the student visa program followed and foreigners began enrolling in easy-to-get in universities for the sake of procuring work permits vs. education. After Johnson resigned, his successor Liz Truss went straight to work further liberalizing immigration policy. As part of her “Growth” strategy she attempted to negotiate a trade deal with India for visa-free travel for Indian citizens aged 35 and under and hoped to ink the deal by October 24th, to coincide with India’s celebration of Diwali. Fortunately for UK workers, Truss resigned before as many in her party grew dissatisfied with her leadership. At this early stage, it’s hard to ascertain Sunak’s immigration policies and priorities. Considering his family ties there’s valid concern he’ll use his influence to increase employment-based immigration. The Infosys business model relies on outsourcing back office and service support operations to foreigners, namely from India, who are willing to work for less and then eventually offshoring those jobs to a low rent country. This is wage arbitrage, and it’s highly profitable. When discussing this with a colleague, she pointed out that at the June 2021 G7 summit hosted by Sunak, a tax reform agreement was signed which in principle sought to establish a global minimum tax on multinationals and online technology companies. And in October that same year, the Organization for Economic Cooperation and Development (OECD) signed an accord to join the tax reform plan. On the face of it, these would have negative implications for Infosys and other India-based IT consulting companies. But after some research, I concluded the tax agreement won’t materially impact Infosys. In truth, it’s just a lot of fluff. According to the Guardian, the G7 tax reform amount is a “global minimum tax of at least 15%.” Contrast that to Infosys’ median average effective tax rate in the U.S. for the past three years which was 26.5%. That’s a far higher amount than the G7 agreement. Moreover, the effective tax rate for the tech consulting industry is roughly 20%. So, fluff, fluff, fluff. While there was a provision in the G7 agreement for awarding taxing rights of at least 20% on profit exceeding a 10% margin, in the end, given the profits Infosys makes from wage arbitrage, this is small potatoes. Like many world leaders, Sunak is a cog in an ever more expansive global corporatocracy and it’s become clear over the past few decades there’s an Indian immigration agenda being pushed by the elites in Western countries. I highlighted previously the UK has and continues to liberalize its immigration policy, is favoring Indian nationals, and almost signed a trade deal with India that would allow visa-free travel to the UK. Similar to the UK’s Indian immigration agenda is the notorious EAGLE Act being pushed in the U.S. House of Representatives. It’s strictly an immigration bill that helps only Indian nationals on H-1B visas by demolishing the 7% country cap quotas for employment-based Green Cards. In closing, it will be as important to watch Congress’ actions during the lame duck session following the November 8th elections, as the voting itself. A lot of mischief can occur in the last few months of the year. In Solidarity, |
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