Coups d’état?

By David Brooks

The super-rich in the United States and their counterparts in other parts of the world have committed what could only be described as an attempted coup d’état. They are not only controlling the economy, especially the financial sector, but are also seeking to take control of political processes.

As in other countries which implemented versions of the neoliberal recipe, the United States is characterized today by an economic inequality and/or concentration of wealth without precedent since the period before the Great Depression. It is the country with the greatest economic inequality in the developed world.

US Congress

Here are some figures: 400 individuals in the U.S. own more wealth than the poorest half of the American population, 150 million people. The Walton family, of Wal-Mart fame, is worth almost $90 billion, more than the bottom 40% of the U.S. population. The richest 1% percent controls 40% of the nation’s wealth.

Meanwhile, analysts expect the level of poverty in the U.S. to reach its highest point in almost 50 years, the Associated Press reports. One of every six (and almost one of every four) American children lived in poverty last year and the forecast is for greater numbers in the next three years.

According to research by University of California economists, while the income of the wealthiest 1% in the U.S. doubled between 1980 and 2010 (the income of the wealthiest 0.1% tripled), the income of the lowest 90% fell almost 5%.

As in the developing countries, the wealthy here insist that they are the engine of the economy, that their interests are "the national interests" and that they generate jobs, investment and "opportunity," as well as resources for development through the taxes they pay.

But just like the rich in the Third World countries we know, the interests of the rich have little to do with national interests. And a new, exhaustive report confirms this.

The rich do not invest their fortunes in their own countries or pay the taxes that they owe their nation, but do everything they can to hide their wealth and evade their fiscal responsibilities. Between $21 trillion and $32 trillion in financial wealth are hidden in fiscal havens or foreign banks (about 80 foreign jurisdictions), including both legal assets and those obtained through illegal deals, according to a new report The Price of Offshore Revisited, by the research network Tax Justice Network. That amount exceeds the combined GDP of the United States and Japan.

That treasure is not part of calculations on inequality (in itself extravagant: the poorest 50% of the world’s population own % of the world’s wealth, while the richest 10% own 84% of the world’s wealth) nor on debt accounting; when it is included, everything looks worse. The report was written by James Henry, former chief economist of McKinsey & Co., international consultants, and an expert on fiscal matters.

If one includes the treasure transferred to fiscal havens or countries with discreet banking systems (such as the Cayman Islands or Switzerland), the inequality is far greater than heretofore calculated. According to the report, more than 30% of the world’s financial wealth is controlled by 91,000 persons, or 0.001% of the world’s population.

This club, with its aides in the world’s principal banks, has the power to sink economies, to announce that countries like Greece, Spain, Mexico – and, yes, the United States – do not have the resources for social expenditure and must lay off millions of workers and practice policies of austerity, while its members hide the fortunes they have extracted from their people away from the reach of their own countries, funds sufficient to create jobs and national development in large parts of the world.

In 139 "low-middle income countries" studied in this investigation, between 1970 and 2010, these elites had transferred sums ranging from $7.3 trillion to $9.3 trillion in unrecorded offshore wealth, while the foreign debt of those countries reached $4.08 trillion in 2010.
"The problem is that these countries’ assets are held by a few wealthy individuals, while their debts are shouldered by ordinary people through their governments," the report says.
The fiscal impact is enormous. If this hidden wealth, consisting of at least $21 trillion, earned just 3% in interest, and that amount were taxed by governments at 30%, it would generate tax revenues of $189 billion per year, more than twice what the OECD [Organization for Economic Cooperation and Development] countries currently spend on all overseas development aid.

And, of course, this club of super-rich institutions has huge political power in members’ countries. The Americans in this exclusive world club have always had massive influence in this country’s political-electoral games, but now, thanks to the Supreme Court ruling in the Citizens United case, some years ago, the super-rich have full "freedom of expression" to spend unlimited funds on election campaigns.

Independent Senator Bernie Sanders explained it this way at a Senate hearing: "What the Supreme Court did in Citizens United is to say to these same billionaires and the corporations they control: ‘You own and control the economy, you own Wall Street, you own the coal companies, you own the oil companies. Now, for a very small percentage of your wealth, we're going to give you the opportunity to own the United States government.’"
Apparently, this kind of coup d’état by a class of super-rich – all in the name of "democracy" – is being attempted in various corners of the world.