The primary policy measure, especially for any longer-term correction of this
structural discrimination, was outlined as follows: “Relying on taxing more and
spending more as a response to inequality can only be a temporary measure. The
only sustainable way to reduce inequality is to stop the underlying widening of
wages and income from capital” (OECD 2008: 3). In this context it is interesting
that the OECD report did not include the income of the super-rich because it would
have been hard to measure by standard income indicators. What Thomas Picketty
called the rentier class (2014) earns and manages its wealth differently.
The Tax Justice Network (TJN), a coalition of researchers and activists, estimated in 2012 that some 30 % of global financial wealth was owned by the top
0.001 % of the world’s population or about 91,000 people. The next 19 % was
owned by the next 0.01 %, or 800,000 people and 32 % belonged to the next
0.1 %, or 8 million people. This left 19 % of the world’s financial wealth for the
remaining 99.9 % of the world’s population (TJN 2012: 5).
These numbers are probably utterly out of date by now. Oxfam International
brought new calculations to the 2014 WEF showing that the richest 85 people
owned assets which amounted to the same value as those owned by the poorest 3.5
billion people. Since the report used numbers gleaned from the ‘Forbes Billionaires
List,’ the magazine published an update three months later: the top tier had shrunk
to 67 individuals.
The wealth of the wealthiest is growing so fast that the lists need monthly
updates. Within one year, from 2013 to 2014, the threshold for qualification into the
top 20 billionaires list jumped from $23 to $31 billion (Moreno 2014).
TJN went further and also examined levels of tax avoidance and the harmful
impacts of tax competition and tax havens in offshore centers. In 2012 they published a report by James Henry, a former chief economist at McKinsey. According to
him, at least $21 trillion and possibly up to $32 trillion of “unreported privately held
financial wealth” is squirreled away in tax havens. This is a sum, “equivalent to the
size of the United States and Japanese economies combined” (Henry 2012: 1). And
this is only financial wealth. It excludes real estate, yachts and other non-financial
assets owned via offshore structures.
Because this is unreported wealth, inevitably none of these sums have so far
made it into the official statistics, so global wealth inequality is much higher than
the data we usually draw upon suggests. In order to put the potential of redistributing existing wealth into perspective, TJN calculated how much a tax of 30 %
on a conservative estimate of 3 % capital gains on those $21–32 trillion would
generate. The resulting $190–280 billion is double the amount that the OECD
countries combined spend on all overseas development assistance around the world
(Henry 2012: 2). Additional taxes, for example, on inheritance, a wealth tax or a
collection of tax avoided in years past would increase the numbers accordingly.
TJN estimates that the $21 trillion belongs to no more than 10 million people
who can afford a team of advisers specializing in the most effective ways of
avoiding tax. This casts a very different light on scarcity, just distribution practices
or proper formula for redistribution policies. The ahistorical ethics of no-net-loss is
unmasked as just as half-baked as closed system physics.
3.3 How Mainstream Economics Anticipate the Future
105
structural discrimination, was outlined as follows: “Relying on taxing more and
spending more as a response to inequality can only be a temporary measure. The
only sustainable way to reduce inequality is to stop the underlying widening of
wages and income from capital” (OECD 2008: 3). In this context it is interesting
that the OECD report did not include the income of the super-rich because it would
have been hard to measure by standard income indicators. What Thomas Picketty
called the rentier class (2014) earns and manages its wealth differently.
The Tax Justice Network (TJN), a coalition of researchers and activists, estimated in 2012 that some 30 % of global financial wealth was owned by the top
0.001 % of the world’s population or about 91,000 people. The next 19 % was
owned by the next 0.01 %, or 800,000 people and 32 % belonged to the next
0.1 %, or 8 million people. This left 19 % of the world’s financial wealth for the
remaining 99.9 % of the world’s population (TJN 2012: 5).
These numbers are probably utterly out of date by now. Oxfam International
brought new calculations to the 2014 WEF showing that the richest 85 people
owned assets which amounted to the same value as those owned by the poorest 3.5
billion people. Since the report used numbers gleaned from the ‘Forbes Billionaires
List,’ the magazine published an update three months later: the top tier had shrunk
to 67 individuals.
The wealth of the wealthiest is growing so fast that the lists need monthly
updates. Within one year, from 2013 to 2014, the threshold for qualification into the
top 20 billionaires list jumped from $23 to $31 billion (Moreno 2014).
TJN went further and also examined levels of tax avoidance and the harmful
impacts of tax competition and tax havens in offshore centers. In 2012 they published a report by James Henry, a former chief economist at McKinsey. According to
him, at least $21 trillion and possibly up to $32 trillion of “unreported privately held
financial wealth” is squirreled away in tax havens. This is a sum, “equivalent to the
size of the United States and Japanese economies combined” (Henry 2012: 1). And
this is only financial wealth. It excludes real estate, yachts and other non-financial
assets owned via offshore structures.
Because this is unreported wealth, inevitably none of these sums have so far
made it into the official statistics, so global wealth inequality is much higher than
the data we usually draw upon suggests. In order to put the potential of redistributing existing wealth into perspective, TJN calculated how much a tax of 30 %
on a conservative estimate of 3 % capital gains on those $21–32 trillion would
generate. The resulting $190–280 billion is double the amount that the OECD
countries combined spend on all overseas development assistance around the world
(Henry 2012: 2). Additional taxes, for example, on inheritance, a wealth tax or a
collection of tax avoided in years past would increase the numbers accordingly.
TJN estimates that the $21 trillion belongs to no more than 10 million people
who can afford a team of advisers specializing in the most effective ways of
avoiding tax. This casts a very different light on scarcity, just distribution practices
or proper formula for redistribution policies. The ahistorical ethics of no-net-loss is
unmasked as just as half-baked as closed system physics.
3.3 How Mainstream Economics Anticipate the Future
105