06 April 2013
THE OTHER (SECRET) WORLD ECONOMY
From last night's PBS Newshour interview with investigative journalist Gerald Ryle ~
"Around the world, government officials and individuals use offshore accounts to hide their wealth and evade heavy taxes .... A team of 86 investigative journalists from 46 countries has collectively examined more than 120,000 offshore accounts belonging to individuals and companies from more than 170 countries. The records show how government officials and individuals use covert accounts and companies to shield their wealth, and how some of the top global banks work within these offshore tax havens as well.
" .... the people that you expect to use tax havens are the super-wealthy. But when you look into this world, you find that it's not just the super-wealthy that are using it. It is the moderately wealthy. And it pervades right down through society to doctors, dentists, small-time developers. They have all discovered this world. And they're all using it.
" .... the Tax Justice Network, which is an advocacy group, has got the best figures on what they think is the size of this offshore world. And they say that half of all world trade and a third of all world wealth now resides in the offshore world [emphasis mine].
" .... this is the first time that anyone has been able to really see into that world. And I'm not saying that we have got it all comprehensively covered here. We're only looking at a very small slice [approximately 20 percent] of a very large world. But it's a deep slice of that world.
" .... there is a whole service industry out there of providers who are used by big banks and everyday institutions. And they provide the means to set up offshore accounts,the means to set up offshore companies, the means to basically conduct your business through secrecy."
You can see the interview and read the complete transcript here.
Even to someone as cynical as me, the sheer scale of fraudulent tax evasion and international secret commerce is staggering. An entire parallel global economy exists in the shadows of secrecy and tax evasion.
Ironically, after World War II the U.S. and its allies persuaded and coerced conquered nations to incorporate 20th century capitalism into their economies. With the fall of the Soviet Union, even more nations bought into our economic model. The trouble is that capitalism itself has morphed into an unrecognizable monster, a system in which a tiny number of individuals control most wealth, and the vast majority of individuals control very little wealth. The gap between the two has been widening since 1980, as corporations and the wealthy have devised ways to contribute less and less of their share of taxes (both through revised tax laws written by those whose elections the wealthy supported, and by the insidious use of offshore tax havens), while continuing to enjoy the lucrative benefits of the society which supports them.
The result is an ever-widening chasm between rich and poor. On average, a company CEO makes 400 to 600 times what his/her employees earn, and pays little if any taxes on that wealth. Meanwhile the conservative far right holds government hostage, blindly insisting on spending less on services (which benefit all of society), and refusing to consider raising taxes on the wealthy (which includes themselves). Whatever happened to the wealthy philanthropists of yesteryear, who understood that those who benefit the most must also contribute the most?
The system is sick. How long before it collapses under its own weight?