I once attended a forum for black students held at York University, where there were a number of seminars and sessions to try to broaden the discussion and (I guess) impart some life skills. One of these forums was about developing and harnessing economic power, moderated by two women who had a successful business consulting firm. Some of the stuff was useful (invest in real estate, work closely with other black businesses to keep money ‘in the community’), while some of the stuff was a bit… different (sell your real estate and buy platinum bouillon!). In a fit of mysticism that I have found to be distressingly common among black intellectuals, they encouraged us to think of ‘money’ as part of an acronym:
Mobilize Our Natural Energy Yield
Which is, y’know… not where the word comes from, but whatever. Small quibble.
The point of the acronym was, I think, to divorce our minds from the concept that paper money is actually worth something in and of itself. Money is, and always has been, a proxy for the time and skill that goes in to the production of goods or services. Since its very early days, it has grown and expanded to represent a lot of other things as well, but at its fundamental level money is what you exchange for goods and services according to the level to which you value them.
The recent economic collapse revealed that our concept of ‘money’ had moved dangerously far away from anything resembling goods and services, and has instead mutated into a seemingly-arbitrary score that different groups use to decide who is better than the other. And when we started realizing “hey, wait a second, this whole thing is built on fairy dust and leprechaun tears”, it collapsed. But at some point, there was MONEY flowing between places, right? So where the hell did it all go? Did it just disappear into the ghost of the machine? Maybe. Then again, maybe not:
The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.
James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.
“These estimates reveal a staggering failure,” says John Christensen of the Tax Justice Network. “Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people. ”This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich.”
In total, 10 million individuals around the world hold assets offshore, according to Henry’s analysis; but almost half of the minimum estimate of $21tn – $9.8tn – is owned by just 92,000 people. And that does not include the non-financial assets – art, yachts, mansions in Kensington – that many of the world’s movers and shakers like to use as homes for their immense riches.
The whole philosophy of ‘trickle down’ is seemingly absurd on its face. The idea is that the wealthy purchase goods and services, and the money leaks out into the economy at large as payment to those who provide those goods. The problem is that above some threshold, per-capita consumption tapers off. After all, there’s only so many yachts and private jets one can purchase before ze has to start buying extra homes just to contain them. If all the wealth is concentrated in the hands of people who literally cannot spend it fast enough, it’s just going to get sequestered and never make it into the economy.
Combine that with the psychopathic culture of the very rich whereby wealth is a status symbol (and once all of your material needs are met, what else is there besides status?), and you get a strong incentive to collect money and simply keep it. It serves no function, it cannot be exchanged for things of value because it is the only value. Any and all tricks that can be used to keep it accumulating are fair game. Removed from the context of actual production, it simply becomes a line-item to jealously watch like a giant economic Smeagol.
The counterbalance to that is taxation – taking money that is serving no purpose and putting it to use somewhere. There is zero material harm done to those who are taxed. There is a philosophical harm if you accept the axioms that money you earn is yours and yours alone, and that it is wrong to deprive someone of their property; however, that becomes a pretty abstract argument in the face of the harm being done to those whose economy and livelihood are devastated in order to satisfy a pathological desire to see an account balance grow.
It would be wrong to characterize the rich as maliciously greedy. While I am sure that avaricious, conscious, intentional greed exists in greater measure among the very wealthy, the problem is a culture that glorifies wealth as something other than a measure of hard work. There are no 92,000 people in the world who are worth trillions cumulatively. Nobody has ever worked that hard – there aren’t enough hours in the day. We can and must counterbalance this glorification of getting the ‘high score’, and the answer is to reject the ‘trickle-down bootstraps no-handouts’ nonsense that is passed off as legitimate economic policy and discourse.
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