En Passant

The true extent of the wealth hoarded by the richest 1 percent has been severely underestimated writes Emma Norton in Socialist Alternative. New research completed by the Tax Justice Network in Britain shows that between $21 and $32 trillion – as much as Japan and America’s GDPs combined – has been stashed in offshore tax havens by the world’s richest 10 million individuals. Just 92,000 of them claim a $9.8 trillion dollar share.

If your jaw hasn’t dropped yet, it is worth remembering that these figures only measure financial assets. The super-rich from around the world stash their wealth in countries with loose tax laws, often paying large sums to law firms and accountants to help shield them from tax authorities. But they also claim countless yachts, pieces of fine art, and mansions. These types of savings are not included in the figures.

Global wealth and income surveys rarely take notice of the 0.001 percent’s overseas bank accounts. This study shows just how much we’ve been missing. James S. Henry, the main researcher for “The Price of Offshore Revisited” report, noted:

Since most of missing financial wealth belongs to a tiny elite, the impact is staggering. For most countries, global financial inequality is not only much greater than we suspected, but it has been growing much faster…

[I]t turns out that this offshore sector – which specializes in tax dodging – is basically designed and operated, not by shady no name banks located in sultry islands, but by the world’s largest private banks, law firms, and accounting firms, headquartered in First World capitals like London, New York, and Geneva. Our detailed analysis of these banks shows that the leaders are the very same ones that have figured so prominently in government bailouts…

So the institutions that went begging for bailout money after they destroyed the North Atlantic financial system are helping to hide money from the very governments that bailed them out.

In the midst of a global economic crisis that is seeing thousands of people thrown out of their homes, pensioners losing their life savings and public services slashed, these new figures are particularly astonishing. In Greece, where the crisis has reached boiling point, members and supporters of the capitalist class have been waving the finger at workers, blaming them for the recession.

One of the most hypocritical and nonsensical aspects of this is the notion that tax evasion amongst the Greek working class is responsible for the country’s sovereign debt crisis. The most outrageous of these accusations came from Christine Lagarde, head of the International Monetary Fund, who is one of the chief figures responsible for imposing harsh austerity on the European working class. Lagarde – who pays no tax whatsoever on her $551,700 income – still had the audacity to comment about “all these people in Greece who are trying to escape tax”.

This new study confirms that the real tax dodgers are, along with Lagarde, the super-rich who ferret away their wealth in offshore tax havens.

Wasted possibilities

The enormous wealth stashed away by the super-rich could fulfil a more useful purpose than sitting in vaults in the Cayman Islands. Taxing just the interest on this stupendous wealth by a meagre 30 percent would generate $189 billion per year.

$21 trillion, all of which is profit skimmed from the wealth created by workers, could be used to eradicate poverty, eliminate the European “debt crisis”, or change much of the world’s energy production to renewables. In a rational system, where human need trumped profit, we wouldn’t even need to track down these corporate criminals and tax them some measly amount. Instead, if the workers that produced this incredible wealth had democratic control over production, humanity could do all of this and more.

The first thing would be providing education, food, water, sanitation and healthcare for everyone. According to most reports on world poverty, we could very easily provide these basic rights to those who lack them, and it would only cost $6 billion dollars for education, $9 billion for water and sanitation and $13 billion for basic healthcare and nutrition per year. That is, if we used only 0.13 percent of the money the rich have hidden away in offshore accounts, we could deal with these problems immediately.

With the basics covered, how could we use the $20.972 trillion remaining to make the planet a better place to live? The group Beyond Zero Emissions estimates that the process of transforming Australia into a zero carbon emissions economy would cost around $370 billion over 10 years – so after accounting for that we would be left with $20.602 trillion. Remember this figure next time anyone says there is no money for renewables.

Many of the world’s disease and illness could be easily treated or cured with the resources hoarded by the super-rich. For example, only $6 billion dollars per year is required to treat every person with HIV/AIDS. If you’re not bored with the maths already, that’s 0.03 percent of that stashed-away wealth…

Capitalism is about more than greed

The world under capitalism is a picture of inequality. And the gap between rich and poor has widened in most countries since the 1980s.

In Australia there has been a tripling of the income share of the top 0.1 percent and a doubling of the income of the top 1 percent over the period. The super-rich of Australia today has an income share greater than any time since the 1920s. Meanwhile, the bottom 20 percent in Australia claims a measly 1 percent of the national income.

And, no, these figures don’t take into account wealth that Australia’s rich hide in overseas ventures.

Why, when we produce enough food every year to feed the world at least twice over, do a billion people go hungry while others have more money than they can possibly spend? Why does inequality exist at all?

The answer lies in how production is organised. The capitalist system is unfair and unequal at its core because it consists of a small number of people controlling production. How can there be income equality in a system where a tiny minority jealously guard their control and ownership of the things that make the world tick: the factories, farms, mines and office buildings?

Poverty is to be expected in such a system. Everything, even basic necessities like food, is a commodity to be sold on the market for a profit. So even though technically everyone has a demand for a certain amount of food each day, under capitalism this only translates into “effective” demand if you can afford to pay for it.

This was brutally illustrated during the onset of the Global Financial Crisis in 2008, when hundreds of thousands of people around the world were literally “priced out” of the food market, forcing them to go hungry. The system is set up so that decisions about production are made by the capitalists based on what is profitable, not on human need.

Under capitalism we can’t have equality or an end to poverty. It is only by organising against this class of parasites and its supporters, that the means of creating wealth can be put in the hands of the people who have an interest in sharing it: the workers of the world.