The Guardian has a series of articles on the flight of wealth from countries that are producing it to a tiny number of bank accounts in countries that are tax havens. It’s not news that a small number of people are extraordinarily rich. But it might be news that 0.001% of the world’s population — that’s right, one one-thousandth of one percent — or about 92,000 people have $10 trillion in assets stashed in these tax havens. In total, 10 million people worldwide hold offshore assests; considering them all, claims a study commissioned by the group Tax Justice Network, you find upwards of $21 trillion, possibly $32 trillion. For comparison, estimated US GDP in 2011 was a bit over $15 trillion, while Japan’s was slightly below $6 trillion.
Where did this money come from? Well, that depends on what you think about capital. Does profit come work or financial manipulation? Americans used to favor the former answer, but that got your hands dirty rather than getting you rich quick. So, like empires before us, we farmed out the actual work to our colonies and kept the hugely enriching stuff at home, namely finance and the military might needed to enforce its extraction. Concentration of wealth is the goal of empire once it becomes established, and ours is no different. We concentrate wealth gathered, from the locals’ viewpoint often stolen, from around the world into our hands. And we concentrate wealth from all Americans into the hands of a tiny proportion of the population.
The study was performed by James Henry, formerly chief economist at McKinsey and an expert on tax havens.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.
This is particularly true of states with oil riches. A person with a sense of history might be tempted to bring up how the people who control those vast sums of money in the oil-rich states came to be in charge and to be capable of defending their wealth and privilege. Certainly one must look beyond those states, and toward North America and Europe, for some of the most powerful sources of influence.
Tax Justice Network calculates that if the $21 trillion in tax havens earned 3% interest per year and governments could tax that income at 30% it would generate $189 billion each year, which is more than the rich countries spend on aid to the developing world annually.
Billions of people around the world are suffering from malnutrition, disease, endemic warfare, and environmental degradation. These problems cannot be separated from the concentration of enormous amounts of wealth in small numbers of hands. Indeed these two issues are two sides of the same coin: with one comes the other. There is nothing positive for society or the individual in the accumulation of such private fortunes, and we are all paying a price for letting it happen.