The news about the fashion for the ultra-rich to hide their assets in offshore tax-free havens, all exposed in The Paradise Papers (13.4 million documents about secret offshore investments leaked to the German newspaper Suddeutsche Zeitung), has given rise to numerous accounts of how this works, and what it implies. The most revealing one I’ve seen is a recent interview in Reader Supported News, on November 25, that Doug Henwood conducted with Brooke Harrington, the author of Capital Without Borders: Wealth Managers and the One Percent. What the interview revealed is both infuriating and alarming for modern ‘advanced’ societies, particularly ones that claim to be democracies. The idea is simply that the current accumulation of vast wealth in fewer and fewer individual hands and families seems to indicate a coming apocalypse that the very wealthy are already preparing for. Harrington cites a recent New Yorker article describing the “boom in business for luxury underground bunkers,” and the numbers of the super-rich obtaining passports for places like New Zealand to which they can flee in their private jets when the expected civil unrest starts.
Harrington uses a phrase that I think best describes where we’re headed: neo-feudalism. Here is how she introduces it:
…what this concentration of capital in an increasingly small group of people’s hands means is that the economic system is ossifying. It’s going backwards towards feudalism, where wealth was tied up generation after generation among a very small group of families. That’s exactly what we see happening now.
In other words, as government control is placed increasingly in the hands of politicians willing to do the bidding of their wealthy donors (witness the current Republican “tax reform” that claims to be giving huge tax breaks to corporations and the wealthy so they can invest it in production that will raise the wages of middle-class workers; yeah, right) and, in fact, directly in the hands of the wealthy themselves (the cabinet appointees of Donald Trump, himself a billionaire, are the richest in U.S. history), the flight of money out of government programs and into private hands is accelerating at a breathless pace. And with the help of the cancellation of the estate tax in the current Republican bill, the concentration of wealth in these same families can only increase.
The question that all this hiding of increasingly concentrated wealth raises is: why? Why are the wealthy, including Queen Elizabeth of England, spending so much time and effort to get their wealth into tax-free offshore havens? And the answer is simple, according to Harrington. The ultra-wealthy refuse to see their ‘hard-earned’ (i.e. mostly inherited) money being used to help the less fortunate. Harrington places this in historical context (though in the U.S., the hatred for the high taxes to support things like Social Security began with Roosevelt’s New Deal):
The other thing was that in the seventies, a lot of countries began to develop extensive welfare states, so taxes rose. And a lot of wealthy people didn’t want to pay those taxes.
They were especially keen not to pay them as they saw that corporations had figured out how to use offshore financial centers to insulate their capital from taxes, and said “Ah ha. If corporations can use them, I can use them, too.” So, like the corporations, they began to hire professional wealth managers to figure out the best ways to hide their growing wealth in offshore havens like the Cayman Islands. They proved what Thomas Piketty in Capitalism has recently shown beyond any doubt: wealth multiplies itself and therefore concentrates itself beyond what anyone had previously thought. The wealthy spend a good deal of their time, that is, insulating their wealth, their capital, from what they see as the depradations of the ‘welfare state’ and the vast masses it is designed to help. No no, say the wealthy. Let them eat cake. Let them earn their own wealth, the way I did (by having a wealthy father). Let them take care of their own health care, their own aging parents, their own food problems, their own homes in areas prone to flooding and sea-level rise from global warming. Not my problem.
And so, the money that is generated in the global economy is increasingly concentrated in the hands of the ultra-wealthy few. Harrington cites an Oxfam study comparing the wealth gap as recently as 2010 with the wealth gap today, and it is astonishing. In 2010, those whose combined wealth “exceeded that of the poorest 50% of humanity,” amounted to about three-hundred people—bad enough. But in January 2017, the wealth of half the people on the planet was exceeded by the combined wealth of a mere eight (8) people! That is an indication of how fast ultra wealth is increasing in our time. And the ultra-wealthy know it and are worried about it, fearing that something catastrophic is coming, must be coming, some uprising of those vast masses who must sooner rather than later wake up and realize that they have been callously abandoned by those best equipped to contribute to the general welfare. By those who simply refuse to contribute; feel it is an ‘unfair imposition.’ That is why they are hiding more and more of their wealth. That is why they are building luxury bunkers. That is why a family like the Pritzker family, major funders of the Democratic Party (Penny Pritzker was rewarded by President Obama with a cabinet post, Secretary of Commerce) has more than 2,500 offshore trusts. That is why many are making plans to flee to safe havens like New Zealand. They know, as Harrington puts it, that “we’ve essentially re-feudalized ourselves.” And that a global reckoning is coming.
As for me, that reckoning, whatever form it takes, can’t come soon enough. For me, the wealth that greedy bastards like the Koch Brothers and Trump and his family and Wilbur Ross and all the rest have accumulated is nothing short of obscene, just on its own. When it is used to avoid the rest of humanity, to give the finger to the plight and suffering of the rest of humanity so they can pass its obscenity on to their heirs in perpetuity, it is beyond obscene. It is a crime against humanity, against the realization that all humanity is one humanity, that all humans are equally deserving of the basics, and that any society worthy of the name must recognize that no one, no matter how clever or lucky, rises or falls alone; that all of us rise or fall together. And that the masses in a society have the right, once they perceive that that is not the case, to take whatever steps are necessary to make it be so. And it can’t come soon enough for me.