The financial elite is a lawless international syndicate
by David Atkins
David Dayen riffs on an alarming report by the Tax Justice Network:
The Tax Justice Network, an organization I frankly had never heard of until this weekend, came out with a study over the weekend alleging that between $21 and $32 trillion in global wealth is being hidden away in tax havens. This represents the total sum of the US and Japanese economies combined. Former McKinsey and Co. chief economist James Henry oversaw the TJN study.
These are assets and not earnings, but the study estimates that if the assets generated even a modest 3% rate of return, the tax revenue off of it would equal between $190-$280 billion worldwide. Instead of going toward productive purposes, that annual take remains in the hands of high net-worth individuals using tax shelters.
A good deal of this wealth, between $7.3 and $9.3 trillion, comes from rich individuals in the developing world. They have sheltered their wealth and denied their largely impoverished countries the ability to raise themselves out of debt and provide for their citizens, through simple tax evasion. Well over $1 trillion of that sheltered wealth comes from China…
If you’re wondering how global inequality can continue to rise despite advances in productivity and the promotion of democracy worldwide, it’s due to the ability for the richest people in the world to stash away their money with relative ease. And the global financial system, the executives of which have the net wealth and lifestyle of the richest of the rich, enable this behavior.
This sort of behavior doesn’t just damage the economies of the affected countries: it damages the labor market as a whole. When the rich is developing countries keep their wealth in offshore havens, economic justice and equitable growth in those nations is impacted. When that happens wages stay lower, which in turn make it more profitable for companies to cheaply outsource their labor costs to less industrialized countries. The middle class suffers worldwide.
The question is what to do about it. It’s highly unlikely each nation is going to pass national laws to address the issue. The solution would have to entail some sort of international ban on this type of financial activity, focused on the financial institutions receiving the deposits.