By Roberto Savio
ROME, Jan 22 2015 (IPS)

Every day we receive striking data on major issues which should create tumult and action, but life goes on as if those data had nothing to do with people’s lives.

A good example concerns climate change. We know well that we are running out of time. It is nothing less than our planet that is at stake … but a few large energy companies are able to get away with their practices surrounded by the deafening silence of humankind.

Roberto Savio

Another example comes from the world of finance. Since the beginning of the financial crisis in 2009, banks have paid the staggering amount of 178 billion dollars in fines – U.S. banks have paid 115 billion, while European banks 63 billion. But, as analyst Sital Patel of Market Watch writes, these fines are now seen as a cost of doing business. In fact, no banker has yet been incriminated in a personal capacity.

Now we have other astonishing data from Oxfam – if nothing is done, in two years’ time the richest one percent of the world´s population will have a greater share of its wealth than the remaining 99 percent.

The richest are becoming richer at an unprecedented rate, and the poorest poorer. In just one year, the one percent went from possessing 44 percent of the world´s wealth to 48 percent last year. In 2016, therefore, it is estimated that this one percent will possess more than all the other 99 percent combined.

The top 89 billionaires have seen their wealth increase by 600 billion dollars in the last four years – a rise of five percent and equal to the combined budgets of 11 countries of the world with a population of 2.3 billion people.

In 2010, that figure was owned by 388 billionaires, and this striking and rapid concentration of wealth has, of course, a global impact. The so-called middle class is shrinking fast and in a number of countries youth unemployment stands at 40 percent, meaning that the destiny of today’s young people is clearly much worse than that of their parents.“In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production”

It will probably take some time before those figures become part of general awareness but it is a safe bet that they will not lead to any action, as with climate change. U.S. President Barack Obama is the only leader who has announced a tax increase on the rich, although he stands little chance of succeeding with his Republican-dominated Congress.

In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production. But up to a point: 34 percent of today’s billionaires inherited all or part of their wealth, and – interestingly – “inheritance tax is the most avoidable of levies”, as James Moore noted Jan. 20 in The Independent.

The “father of modern times”, late U.S. President Ronald Reagan, saw it clearly when he said that the rich produce richness, the poor produce poverty. So let the rich pay less taxes.

Well, in a just-released report, the U.S. Institute on Taxation and Economic Policy notes that in 2015 the poorest one-fifth of Americans will pay on average 10.9 percent of their income in taxes, the middle one-fifth 9.4 percent, and the top one percent just 5.4 percent.

Now, 20 percent of the richest billionaires are linked to the financial sector and it is worth recalling that this sector has grown more than the real economy, and has regulations only at national level. At global level, finance is the only activity which has international body of some kind of governance, as do labour, trade and communications, to name just a few.

Finance is no longer at the service of the economy and citizens. It has its own life. Financial transactions are now worth 40 trillion dollars a day, compared with the world’s economic output of one trillion.

At national level, there are now attempts half-hearted attempts to regulate finance. But let us look what is happening in United States. The new bland regulation is the Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly known as the Dodd-Frank, and it does not go as far as restoring the division between deposit banks, which was where citizens put their money and which could not be used for speculation, and investments banks, which speculate … and how!

This separation was abolished during the U.S. presidency of Bill Clinton, and is considered the end of banks at the service of the real economy. In any case, the lobbyists on Wall Street are intent on having the Dodd-Frank chipped away at, little by little.

There is some schizophrenia when we look at the relations between capital and politics. The U.S. Supreme Court has eliminated any limit to contributions from companies to political elections, declaring that the companies have the same rights as individuals. Of course, there are not many individuals who can shell out the same figures as a company, unless you’re one of the 89 billionaires!

Meanwhile, banks are not only responsible for the corruption of the political system, and for the illegal activities which have earned them billions of dollars, they are also responsible for funding only big investors, and leaving everybody else out from easy credit. The efforts of the Chairman of the European Central Bank,  Mario Draghi, to have banks give credit to small companies and individuals has gone largely nowhere.

But a new and imaginative initiative comes from the very stern Dutch bankers. All 90,000 bankers in the Netherlands are now required to take an oath: “I swear that I will endeavour to maintain and promote confidence in the financial sector. So help me God”.

This is not so much oriented towards the customer, and it is very self-serving; and it brings God in as the regulator of the Dutch banking system. Perhaps the Dutch bankers have been paying heed to the words of Goldman Sach’s CEO Lloyd Blankfein who said at the time of the financial crisis in 2009 that bankers were “doing God’s work”.

Well God will have to be actively involved. All the three biggest Dutch banks – Rabobank, ABN Amro and ING Groep – have been involved in scandals that have hurt consumers, or were nationalised during the financial crisis, costing taxpayers more than 140 billion dollars. In one case, Rabobank was fined one billion dollars.

New York’s Wall Street and London’s City are said to be open to the idea of introducing a similar oath.

It is probably only that kind of Higher Power which could turn the tide in this world of growing inequality and lack of ethics. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

The author can be contacted at utopie@ips.org

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By Roberto Savio
ROME, Mar 11 2014 (IPS)

F. Scott Fitzgerald famously said “The rich are different from you or me”, yet in his days, in the early years of the 20^th century, the rich were not subject to public scrutiny, and were generally an object of envy, not resentment.

Fast forward to the 21^st century and the Occupy Wall Street movement, which first took to the streets in September 2011  in New York’s Wall Street financial district, on behalf of the 99 percent of Americans (who possess 60 percent of the national wealth) against the one percent that possess 40 percent, to denounce growing social inequality. The success of the movement’s popular action resonated throughout the world and so now the rich are striking back.

Tom Perkins is their leader, an 82-year-old with a net worth of 8 billion dollars. He owns a 1,600 square metre penthouse in San Francisco and has just bought a yacht worth 110 million dollars. In a letter to the Wall Street Journal in January this year, Perkins compared the “progressive war on the American one percent” of wealthiest Americans to the Holocaust, comparing the Occupy Wall Street movement’s “demonisation of the rich” to Nazi Germany’s anti-Semitism.So, the rich really are different from you and me, and they are growing so much that it would be a pity not to join them.

A month later, Perkins publicly stated that in elections the number of votes a person can cast should be proportional to the amount of taxes that that person pays. And he is stirring his peers to “come out”.

Bud Konheim, CEO of luxury fashion company Nicole Miller, has done just that with his message to the 99 percent – stop complaining. “Our 99 percent  are the one percent in the rest of the world … The guy that’s making, oh my God, he’s making 35,000 dollars a year … Why don’t we try that out in India or some countries we can’t even name. China, any place the guy is wealthy.”

John Mark, the former CEO of Morgan Stanley, which was rescued with public funds, is defending the extravagant salaries of corporation executives. He has just made a statement in favour of James Dimon, the CEO of JP Morgan Chase who received 20 million dollars at a time when his bank had lost several million in wrong investments in sovereign funds and paid a penalty close to 12 billion dollars for fraudulent practices.

According to financial sources, Wall Street has spent 600 million dollars in lobbies, to try to deter the action of the regulator in implementing the rules approved by the U.S. Congress for a somewhat stricter control, hoping to avoid a repetition of the financial meltdown of 2008 which, combined with the European crisis of sovereign funds, has brought unemployment to young generations everywhere.

For those who think that in reality the vote of a billionaire is equal to the vote of an unemployed person, this counterattack by the one percent is legitimate. The only problem is that, apart from their different weight in politics, I wonder it the same naïve persons would also believe that rich and poor pay taxes in the same proportion. According to Tax Justice Network (TJN), an organisation that campaigns to curb tax avoidance, fiscal paradises now hold close to eight percent of the gross world product (the U.S. has a gross domestic product close to half of that), and TJN underlines how big capital spurs corruption.

What is corruption? According to the Oxford English Dictionary, corruption is “dishonesty or fraudulent conduct by those in power”. And financial institutions and the one percent are certainly in power. According to TJN, the amount embezzled over the last 15 years is a staggering 30 trillion dollars, or half of the world’s annual gross product. In China, four trillion is thought to have disappeared between 2000 and 2011, much of it funnelled to fiscal paradises. In Russia, the figure is around one trillion and in the European Union 1.2 trillion.

All over the world, banks have been fined at unprecedented levels for fraud and corruption. Reading the U.S. Senate report (2009) on the level of corruption in UBS, Switzerland’s largest bank, is like entering the world of crime novels. The 176-page report details the extent UBS went to in helping U.S. clients hide billions in assets.

UBS paid a fine of 780 million dollars, and more has to come. In an appeal for a world corruption police force published in the New York Times last month, Alexander Lebedev reported the theft of five billion dollars from Bank of Moscow, four billion from BTA Bank and AMT Bank, four billion from Rosukrenergo, three billion from Globex and Sviaz Bank, two billion from Russian Agricultural Bank, one billion from Rosagroleasing, and one billion from VEFK Bank. According to Lebedev, a former senior KGB official and now businessman, and owner of the London Evening Standard and the Independent, “if someone steals one billion dollars, and heads for an offshore haven, it is practically impossible to take legal action.” Like all Russian oligarchs, he certainly has considerable inside knowledge!

Anyhow, there is no need for the one percent to be concerned. In spite of their complaints, they are doing better than ever. Just read this year’s Wealth Report, the annual compendium of all things rich from Knight Frank, the property management firm. Over the past decade, the

super-rich have swelled by 59 percent, and billionaires by 80 percent: they now stand at 1,682. Those with assets of more than 30 million dollars number around 167,000, equivalent to the population of a sizable town. In a recent poll, 75 percent of the famous 0.1 percent said that they increased their wealth in the last year.

By 2030, China is expected to have 322 billionaires, more than Britain, Russia, France and Switzerland combined: finally proof that socialism, albeit in its Chinese version, is superior to capitalism. Sovereign countries take note. Malta is proposing to offer its passport to those who give 650,000 euros, with no residency requirement. Malta is part of the European Union, so with its passport you can go everywhere. Spain and Portugal are offering residency, even with limited time, in their country if you make substantial investments, and Latvia and Estonia are now following. The U.S. gave 7,641 investors an immigrant visa in 2012, and 80 percent of these went to Chinese investors.

So, the rich really are different from you and me, and they are growing so much that it would be a pity not to join them. The market is now the basis for democracy – anybody can make it, it’s just a lack of will if we’re still part of the 99 percent!

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