A Democracy in Name Only: 62 People Control Half the World’s Wealth!

Paul Cienfuegos’ February 2, 2016 Commentary on KBOO Evening News

(His weekly commentaries are broadcast every Tuesday evening. You can view or listen to them all at PaulCienfuegos.com, CommunityRightsPDX.org/podcast, or subscribe via ITunes. Listen to this one HERE.)

Greetings! You are listening to the weekly commentary by yours truly, Paul Cienfuegos.

A few weeks ago, Oxfam released a report about global inequality that was so shocking, it even shocked me. And that’s not easy to do! Amy Goodman – the host of Democracy Now - interviewed the President of Oxfam America, Raymond Offenheiser, to find out more about what was in their report, which was titled “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.” Amy’s interview aired on January 21. I’m going to summarize portions of the interview for you today.

Here’s the statistic I want you all to listen to and try to remember so you can share it with your friends and co-workers. The 62 richest people in the world now own as much wealth as half the world. Yes, you heard that right. The 62 richest people in the world now own as much wealth as half of the world’s population, or 1.6 billion people.

And who are these 62 people? And how have they achieved this exceptional wealth? Three-fourths of them are Americans. Many of them are from the technology sector of the economy. You would recognize many of their names. And many others – about one in five - are from the financial sector, which has benefited dramatically from the kinds of tax loopholes and other sorts of deregulatory processes that have actually enabled this accumulation and concentration of wealth to happen. And these people are accumulating even more wealth at a staggering pace, while a rapidly increasing number of working and unemployed people are barely treading water, in an economic and political system where the rules are rigged. Many Americans are working two and three jobs and still living in poverty.

Oxfam faults a global financial system that has “supercharged the age-old ability of the rich and powerful to use their position to further concentrate their wealth.” The report singles out deregulation, privatization and offshore tax havens that have let trillions of dollars go untaxed. Oxfam says denying governments of this massive source of revenue has hampered efforts to provide basic social services and tackle inequality. A review of some 200 major corporations shows 90% of them use an overseas tax haven to avoid paying their fare share of taxes.

What we have going on today is an accelerating global inequality crisis, not only here in the US, but around the world – in China and India and even in Africa. It raises a lot of very serious questions, such as: How do we fund public services for the poor? How do we finance development into the future? How do we alleviate poverty, given that we’re already seeing significant underfinancing of infrastructure and schools and health systems? So we’ve got to directly address this accelerating concentration of wealth and the mechanisms and systems that enable it.

Tax havens play a huge role in this quite staggering inequality described in the report. Tax havens are a mechanism that’s been created by the financial industry and corporations to allow them to produce value in one location and then transfer that value to another location with a much lower tax rate, so that the corporation only has to pay taxes in the second location. US laws provide loopholes that enable companies to do this. In fact, US companies can actually deduct the cost of moving jobs overseas. It’s scandalous. The banking industry has been a major beneficiary of all this, because the money they’re holding is then put in bank accounts in these tax haven countries, like the Cayman Islands and the British Virgin Islands.

For example, there are only 24,000 people who live in the British Virgin Islands, but there are 800,000 shell corporations operating there, simply to offshore their profits so they don’t have to pay their fair share of taxes in their home countries.

And this is not just a US problem. In Africa, as much as 30% of their financial wealth is also held in offshore tax havens. The crisis is truly global.

There’s a proposal in Congress called the “Stop Tax Haven Abuse Act” that forty-one congresspeople have co-sponsored, that tries to close these and other legal loopholes. Its goal is to require greater levels of transparency, to try to get rid of this disconnect between where a corporation generates value and where it reports it. It’s that diminished corporate taxation that’s creating the situations we see in places like Flint, Michigan, with the lead-contaminated water that has been poisoning the entire community for more than a year now. If the “Stop Tax Haven Abuse Act” can be passed, there would be 200 to 300 billion additional dollars that could be invested in real community needs, here in the US over the next ten years.

Presidential candidate Bernie Sanders has been the most vocal about this crisis, among the many candidates running from the two mainstream political parties. At a recent debate, he said to Hillary Clinton, “Goldman Sachs was recently fined $5 billion. … The leader of Goldman Sachs is a billionaire who comes to Congress and tells us we should cut Social Security, Medicare and Medicaid. Secretary Clinton … you’ve received over $600,000 in speaking fees from Goldman Sachs in one year. I find it very strange that a major financial institution … pays $5 billion in fines for breaking the law, [yet] not one of their executives is prosecuted, while kids who smoke marijuana get a jail sentence.”

Last night, Bernie Sanders defied the odds, and tied with Hillary Clinton in the Iowa caucus – the nation’s first presidential voting. It’s a truly wild year in American politics. The voters are restless and angry. Perhaps the democratic uprisings that we so desperately need in this country are closer than we think. Hooray for that!

You’ve been listening to the weekly commentary by yours truly, Paul Cienfuegos. You can hear future commentaries every Tuesday on the KBOO Evening News in Portland, Oregon, and on a growing number of other radio stations. I welcome your feedback.

You can subscribe to my weekly podcast via I-Tunes or at CommunityRightsPDX.org. You can sign up for my ‘Community Rights Updates’ at PaulCienfuegos.com. You can follow me on twitter at CienfuegosPaul. THANKS FOR LISTENING! And remember: WE are the people we’ve been WAITING for.