Vinoth Ramachandra

Archive for January 2016

The UK-based international charity Oxfam reported this week that the world’s richest 62 people now own as much wealth as half the world’s population. Super-rich individuals saw an increase of 44 percent since 2010, taking their cumulative wealth to $1.76 trillion – equivalent to the total owned by 3.5 billion of the world’s poorest people. The report also stated that tax havens were helping corporations and individuals to stash away about $7.6 trillion, depriving governments of $190bn in tax revenue every year.

Any regular reader of my Blog will not be surprised by these findings. While conventional economics has long ignored inequality and been obsessed with economic growth as an end in itself, there has been a growing counter-stream of eminent voices (e.g. Anthony Atkinson, Thomas Picketty, Joseph Stiglitz, Paul Krugman) who have argued that not only is economic inequality on such a scale morally obscene, but also bad economics.

I have also (following Susan George) called for more studies by economists and anthropologists on the rich than on the poor. How do the super-rich make their fortunes? Who bears the costs? How do they change politics? Why do they need so much money- money that they could never spend in several lifetimes? What does it do to their characters and relationships? Etc.

The most common way that the super-rich in low and middle-income countries have made their fortunes is fairly straightforward: viz. the open plunder of public resources. Think of the Russian oligarchs who bought state enterprises in the 1990s for a song; Chinese business tycoons hand-in-glove with the communist party leaders; ruling political families in Nigeria, Philippines or Sri Lanka who have siphoned off public funds into their undisclosed private accounts in Switzerland, Dubai, Singapore or the Cayman Islands (funds that are almost impossible to recover because of the secrecy enveloping the global banking system).

But is it any different in the U.S and other rich nations?

As I wrote on 18 December 2010 (“Crony Capitalism”), the Clinton and Bush administrations were well-stocked with former senior bankers from Goldman Sachs. Hank Paulson, the Treasury Secretary who engineered the 2008 bank bailout was himself a former chairman of the bank; so, unsurprisingly, Goldman Sachs was one of the first banks to benefit from the scaremongering that the US Treasury initiated to get the deal passed by both houses of Congress, while its rival Lehman Brothers was allowed to sink.

The world’s single largest funder of research into emerging technologies is the Pentagon- through its Defence Advanced Research Projects Agency). DARPA does not engage in research and development directly, but gives large grants to the top American private universities and private technology companies to do so. Without DARPA funding, the computer revolution would not have happened. DARPA (then called ARPA) funded the research that invented the Internet (initially called ARPANET), as well as the researchers who developed the Graphical User Interface, a version of which you probably see every time you use a computer or smart phone. Siri (the virtual assistant incorporated into Apple’s iPhones) was also a product of DARPA-funded research.

So, U.S. taxpayers fund the research that leads to the high-tech products that are patented and sold around the world by private corporations. The technology billionaires that are spawned write their own pay-checks and salt away their fortunes in offshore tax havens out of reach of the IRS. Sweat-shops on the Mexican side of the U.S-Mexico border, or in Southeast Asia, make the components for the computers and smart phones for some of the world’s most powerful corporations.

Isaac Newton, notes Joseph Stiglitz, was at least modest enough to admit that he stood on the shoulders of giants. But these titans of industry, from Microsoft to Amazon, have no compunction about being free riders. “To say that Apple or Google simply took advantage of the current system is to let them off the hook too easily: the system didn’t just come into being on its own. It was shaped from the start by lobbyists from large multinationals. Companies like General Electric lobbied for, and got, provisions that enabled them to avoid even more taxes. If Apple and Google stand for the opportunities afforded by globalization, their attitudes towards tax avoidance have made them emblematic of what can, and is, going wrong with that system.”

The only candidate in the current U.S. presidential race who has the courage to address these moral issues is Bernie Sanders, the veteran Democrat senator. Unsurprisingly, Sanders’ reported net wealth is $700,000, compared with Hilary Clinton’s net wealth- reportedly between $30-45 million- which positions her closer to Donald Trump. (In the Senate, Sanders voted against the Iraq war, bailing out Wall Street, and the 2001 Patriot Act; Clinton voted for all of them).

Last September Sanders visited Liberty University, a private college founded by the fundamentalist preacher Jerry Falwell. Surprisingly a large number of students received his message positively. “Calling on us to help the neediest, that resonates with me as a Christian,” said Quincy Thompson, the student body president, who had a chance to briefly meet Mr. Sanders after the event. “But as a Christian, I think the responsibility to help them falls to the church, not the government.” []

This, in a nutshell, is the obstacle to support for Sanders from the so-called “Bible-believing” wing of the American church. Ironically, it is ignorance of the Bible. The Church helps the poor, while governments help the rich. I can only hope that a Jew like Bernie Sanders will help these Christians go back and read the Hebrew Bible.



January 2016