How Runaway Inequality Creates Runaway Global Warming

Eric Zuesse, originally posted at strategic-culture.org

The bottom half of humans own next to nothing, but they own as much as the world’s richest 80 individuals do, because though the bottom half are poor, there are 3.79 billion of them.

The average person among the richest 80 owns 45,750,000 times as much as does the average person among the lower half. In other words: in terms of wealth, the typical one of those hyper-rich equals nearly 46 million of those poor people.

The richest  person among the poor half of humanity owns approximately $5,000, but billions of people in the lower half own less than nothing — they’re negative net worth: owing more than they own. However, whatever they own is visible, and easily seizable, either by creditors, or by thieves.

By contrast, the wealth of all billionaires, including of the top 80, is largely secret, lots of it being in shell companies, many offshore, untraceable. Consequently, estimates of the wealth of the richest 80 individuals are probably unrealistically low. This secretiveness is a major reason why the public tolerates being ruled by an aristocracy: they don’t even recognize that they are — they think they live in a democracy, even if they don’t.

The roughly two thousand known billionaires do lots of business with others in the billionaire class, and with politicians whose careers they fund. And they tend to get what they want in the resulting governmental policies. As for the bottom half of the economic pyramid, even the ‘news’ that the poor read is often produced by the two thousand; and, even when it’s not, whomever does produce it needs to sell ads to these billionaires, which means that it’s necessary to please them in the ‘news’ reports, which the poor, like everyone else, will be reading, and which will be shaping the public’s views, and so will help to determine the politicians whom they vote for (if they vote), which votes will reflect what has come to be ‘known,’ from those ‘news’ reports, and from those ads, which will, in effect, thus be buying ‘their’ government.

Understanding the way the super-rich function (such as via this secrecy, and via these media) is essential in order to understand history, and even in order to understand the present — and, so, to have realistic insight regarding also the future. Lots of myths are knocked down, along the way (as will here be documented). It’s mind-cleansing, though this might be mere tedium for readers who aren’t interested in cleaning the junk out of their mental attic. But, for those who want to get rid of any mental junk, here’s that clean-out:

SECRECY & TAX-EVASION:

Just how prevalent the secretiveness of aristocrats is can be estimated from the only study that has been done of how easy it is to hide vast sums of money via shell companies (a popular device amongst the super-rich). This research was originally made available in a basic report published online by the authors, who are three professors of political science — Findley, Nielson and Sharman — and it was finally published in 2014 by Cambridge University Press in a more comprehensive book (containing not just what was in that original paper), titled Global Shell Games: Experiments in Transnational Relations, Crime, and Terrorism. The book was reviewed and highly praised at several places. 

The book says, on page 72, that, “the findings of this study on the relative compliance of rich nations, poor countries, and tax havens directly contradicts [they meant to say ‘contradict’] the prevailing expectations,” because the rich countries were found to be more corrupt than were the “tax havens” such as Cayman Islands, and than poor countries. They continued: “Tax havens evince superior compliance rates, and developing countries are at least as compliant as developed ones — and in multiple analyses poorer countries demonstrate significantly greater compliance than rich nations.” 

Their bottom-line finding was (p. 73 in the book) “By the broadest measure, the Dodgy Shopping Count, tax havens achieved a score of 25, developing countries 11.9, and rich countries 7.8 (remembering that the higher the score the harder it is to obtain an untraceable shell company and the more effectively the international standards are apparently applied).” Or (as stated in their paper): “it is more than three times harder to obtain an untraceable shell company in tax havens than in developed countries.” 

The U.S. was not only below average in honesty but was probably even worse than the nominal figure, because, as the paper itself noted, “the U.S. number is elevated by the much higher non-response rate from firms in U.S. sample.” In any case, the U.S., and rich nations in general, have governments that are much more accommodating to tax-cheats than poor countries and especially than tax havens are. Basically, there is non-enforcement against the super-rich and their institutional servants (such as incorporation-firms) in the rich countries. As the paper put this: “One of the biggest surprises of the project was the relative performance of rich, developed states compared with poorer, developing countries and tax havens. … The overwhelming policy consensus, strongly articulated in G20 communiqués and by many NGOs, is that tax havens provide strict secrecy and lax regulation, especially when it comes to shell companies. This consensus is wrong.” The exact opposite was found to be the case: tax-haven countries are especially likely to adhere to all legal requirements, including international requirements.

This study tested business-law firms that serve the very rich, and that especially create corporations in foreign countries — law firms that do substantial business in setting up foreign incorporations. The basic finding was that such firms in wealthy countries are more cooperative with tax-evaders than is the case regarding incorporation-firms in poor countries.

Incorporation firms are not equally “dodgy” in all parts of the United States. Specifically, the “Figure 4: Dodgy Shopping Count by State in the U.S. for all states” showed that, whereas WV, VT, UT, TN, SC, RI, ND, MS, ME, DC, and AK were very strict; NV, DE, MT, SD, WY, NY, TX, PA, CA, and AR, were very lax and were amongst the worst in the world for enforcement against tax-evasion operations. As was explained in the paper, “the principle of a ‘risk-based approach,’ according to which riskier customers should attract greater scrutiny, is relatively ineffective in screening corrupt customers and only partly effective at thwarting potential terrorists.” (A major concern in the U.S. is to block funding to terrorist organizations such as to Al Qaeda. Most of that funding comes from aristocrats. On 11 February 2015, I headlined “Al Qaeda’s Bookkeeper Spills the Beans,” and reported that the man who had kept Osama bin Laden’s books and who personally collected each of the many multimillion-dollar donations to Al Qaeda, had revealed in sworn court testimony in October 2014, that Arab royals and especially the Saudi royal family had financed Al Qaeda all along, and that the organization was entirely dependent upon their funding, not just for its growth, but for its very existence.) Consequently America’s half-hearted focus on blocking the funding of terrorist organizations has had virtually no impact against the money-laundering by oligarchs or aristocrats in general — the U.S. Government is very accommodating to super-rich tax-cheats; and, so, the enforcement of the law against funding terrorist organizations is being carried out in ways that don’t much inconvenience America’s (or other countries’) billionaires. However, in America, small donors to terrorist organizations are affected.

The predominant types of corruption are very different in rich countries than they are in poor ones. Whereas in poor ones, bribing is the normal mode of corruption, the normal forms in rich countries are campaign finance and tax-evasion — and these happen to be the preferred forms of corruption amongst the very rich, especially in the richer countries. The U.S. Supreme Court, in its 2010 Citizens United  decision, said, essentially, that the typical forms of corruption by America’s super-rich are beyond the reach of the law, and that only corruption by the rest of the population can be subjected to effective enforcement in the U.S. They cited the U.S. Constitution as the reason for this, by claiming that political money is “free speech” that’s beyond the reach of the law in the U.S. Thus, only “quid-pro-quo” deals, or outright bribes (the type of thing that’s routine in poor countries), can be prosecuted in the United States. 

The U.S. was found, in the tax-evasion study, to be slightly more corrupt (in terms of government enforcement against tax-evasion) than Mexico, Thailand, and Argentina, but slightly less corrupt than Bahrain, Ukraine, UK, and Chile. (Of course, bribery is probably far more common in nations like Ukraine than in the U.S.; so, the U.S. isn’t necessarily more corrupt than such countries across-the-board.) At the very bottom were Kenya, Canada, Czech Republic, and “US Inc. Services,” meaning U.S.-based business-incorporators that don’t provide other law-services than incorporations. Multi-service law firms have more at stake than just creating new corporations; and, occasionally, the laws concerning corporations and the rich are enforced in the U.S. Whereas incorporation-only firms can risk it, the general-purpose corporate-law firms are less likely to violate the money-laundering and tax-evasion laws.

So: perhaps the richest 80 individuals actually own more than do the bottom 60%, or even than the bottom 70% of people do. Maybe the hidden money amounts to a significant proportion of the real  wealth of the top 80; in which case, perhaps the richest 70 persons might own more than the poor half of humanity do.

INHERITED WEALTH:

But, even if hidden wealth isn’t such a big factor, there’s another important reason why almost everything is owned by the very few super-rich — or, as I headlined in 2013, “World’s Richest 0.7% Own 13.67 Times as Much as World’s Poorest 68.7%.” (Or, more-simply put: the richest 1% own 14 times more than do the poorest 70%.) Inherited wealth is also a major cause of such wealth-inequality. “Economic mobility into and out of the billionaire class, during the latest ten-year period (2000-2010), is low: only 24% entered or left the class during this decade … . The U.S. was average in that regard, at 23% entering or leaving. Japan was high, at 42% mobility. Canada was extremely low, at only 12% mobility.”

Here is an example of how that works: A new extremely wealthy person in America is Nick Woodman, who is #5 on CNN Money’s “15 Top-Paid CEOs.” His pay this year is $77.4 million, at the company he founded, in 2002 at the age of 26. Wikipedia has said of him, that in 2002 “he decided to travel around the world surfing.” His surfing was a key part of the event that started him on the road to super-wealth. He wanted his friends to take high-quality videos of him surfing, and he decided that there need to be far smaller cameras for making such videos. He thus discovered a market-niche that most non-rich would have been far less likely to discover — even though it’s becoming less and less of a high-end market, and more and more of a mass market for compact HD video cameras. “Woodman and his future wife Jill financed the business by selling shell necklaces they bought in Bali (for $1.90) from their car along the California coast (for $60)[13] combined with $35,000 borrowed from his mother[12][13] and $200,000 borrowed from his father.[4]”

The folksy “shell necklaces” and “from their car” aside, people who are in the bottom 99% really can’t afford to do any of that. But Woodman wasn’t actually in the bottom 99%. “Woodman is the son of Concepcion (née Socarras) and Dean Woodman.[4][5][6][7] His father was a Quaker Christian who co-founded the investment bank Robertson Stephens;[4][8.” That “was a San Francisco-based boutique investment bank that focused primarily on technology companies.” Nick went to private schools, where other rich kids went; so, he met other monied people, from the start, who had friends who also were looking for things to invest in. Such elite “crowd funding” has been common among aristocrats since long before there was any such thing as the Internet. And what, then, was the background of his father, Dean Woodman? Dean went to “one of the oldest preparatory schools in the US.” Furthermore: “he worked in the investment banking division of Merrill Lynch including 16 years as director of West Coast corporate financing.” So, Dean was well-connected. Nothing was said about Dean’s father (Nick’s grandfather), but most fathers can’t afford to send their children to a prep-school, such as Dean’s father did.

In order to be or become among the richest 80 people, one normally is several generations descended from the first rich ancestor. I once did an analysis of the ten wealthiest individuals on Forbes’s list and found that 7 of them were born to extremely wealthy families; and, in most cases, the original fortune was two or more generations back; the generations since then continued to grow it.

Some of the people in the top 80 are first-generation wealth, but, that’s actually rather rare. The higher one reaches into the billionaire class, the less likely one is to be the founder of a dynasty, and the more likely one is to be an heir — and to have built the family fortune even higher.

PSYCHOPATHY:

On 10 January 2014, I headlined “Studies Find That Successful People Tend To Be Bad,” and summarized a number of social-science investigations regarding the question of whether the rich tend to have different values than do the non-rich; and, what they all discovered was that:

“To the extent that a person wants his child to succeed (in the ordinary sense of that term), to rise or stay at the top in social standing, the parent will teach his child not to care about the welfare of others but only of himself, and to do anything or crush anyone in order to win what he wants. The child will be taught that he is entitled to do this because of his inborn superiority, his lineage — not because of anything he does or has done. On the other side, to the extent that a parent encourages a child to care about the welfare of others, or not feel entitled by birth, that parent will reduce the likelihood his child will attain or retain high social standing.” 

The richer one is, the more one turns out to be a supremacy-seeker and the less one even really cares any longer about how much money he has — it becomes instead all about rising in the ranking. It becomes all about winning. And so one ignores anybody who isn’t a competitor. If you’re not a competitor, the person sees you only as a potential tool to beat down somebody who is, and therefore everyone is seen either as a friend or as a foe; either you’re this person’s customer, or you’re a competitor’s customer, but your happiness has no intrinsic value to him, only his own winning does. It’s the very meaning of “ruthless.” And that’s the type of people who are found at the very top: they are obsessed with winning, not with doing, and least of all with doing good. They are virtually winning-machines. They are essentially like weapons of war.

CONCLUSION, & THE CONNECTION OF ALL THIS TO GLOBAL WARMING:

The world is controlled by a very private and very secretive, largely psychopathic, aristocracy. This is ‘the free market,’ in the real world, as opposed to the mythology about it that’s nurtured by the aristocrats (who own almost everything and don’t want the public to know it). Democracy is actually almost non-existent (and it’s already non-existent at the national level in the United States), and it’s become even less existent, as wealth becomes ever-more concentrated. Increasingly, democracy is becoming mythological, instead of any longer being real (if it ever was, anywhere).

So: in broad summary terms, and with that documentation which has just been linked-to here, this is how the aristocracy sustains itself and is increasingly taking up a larger and larger share of the Earth’s wealth (and this “Earth’s wealth” matter is what will get us to the issue of global warming). It’s all being facilitated by secrecy, tax-evasion, inherited wealth, and psychopathy. And all of that is entirely natural. There’s nothing whatsoever unnatural about it. It’s the way things are, as opposed to the mythology that’s peddled — and long has been peddled — about wealth, and about government.

It’s just more of the same, more of what’s been going on already for thousands of years.

The only difference is that, now, in the developed world, things are getting worse instead of better for average people; and, in the developing world, things won’t be able to continue getting better unless fossil-fuel use gets cut back globally and fast and drastically, so that stranded fossil-fuel assets become written-off — which the developed world’s aristocracies oppose and propagandandize against (for example, see this about two American brothers, each one of whom is high among the world’s 80 wealthiest individuals, and together they run a U.S. political operation that receives contributions from many of the others).

U.S. President Barack Obama’s only major achievement during his two terms in office was his cooperating with Chinese President Xi Jinping to produce, on 12 December 2015, the Paris Agreement to constrain global warming. The final barrier to be overcome had been the insistence by poorer countries that use coal to continue it during a transition period, and the insistence by richer countries to prohibit that different treatment and to demand that China, India, etc., be treated no differently than rich countries (which had already largely transitioned away from coal). The lower-income nations were expecting the higher-income ones to help them to transition, and Obama had first given ground regarding that on 15 November 2014, at the start of the Brisbane G20 Summit. So, his only major achievement was actually a two-step process. The big question now is the extent to which U.S. President Donald Trump will cooperate with all the rest of the world on that. Thus far, he is acting like such a psychopath that he is the lone hold-out now publicly opposing the Paris Agreement. That’s as extreme as can be.

The fate of the world could thus end up depending upon whether America’s aristocrats, who have until now been strongly against writing-off fossil fuels, suddenly switch away from that “Drill, baby, drill!” position. But turning away from it could destroy the Republican Party. How likely is it that Republicans would switch on this? It would require the Republican Party to abandon its laissez faire, anti-regulatory, ideology. That has always been the basic ideology of the aristocracy, throughout the world (because regulation reduces especially the freedom of aristocrats). What, then, would remain of the Republican Party? Even if this happened, could it happen in time to prevent runaway global-warming (if that hasn’t already been set into motion)?

The aristocracy have always controlled most of the world’s resources. But now they are faced with concerns about future generations in a way that they never were before. If they don’t fundamentally change their mode of thinking, then very hot times are ahead, and even their own heirs won’t be entirely spared the negative consequences. Not even the gated compounds and island retreats will be immune to this revolution, because it will be a revolution of nature — not, like in 1848 Europe — a mere revolt by the masses of people.

There are no historical precedents for this. The future won’t necessarily be a brave new world, but it will be a new world, one fundamentally different from past history. All bets are off. There is no basis on which to project intelligently, concerning this. Only ignorant gambles are possible. However, if past history is any guide at all, then the winners of those ignorant gambles will likely declare themselves to have been sages, for having predicted ‘wisely’ how these coin-tosses would turn out. Perhaps whatever people might happen to survive will then say that those aristocrats had been chosen by God, or the gods. And, so, the basic myth will be continuing, until everything burns out.

Or, as Shakespeare, through his Macbeth, more realistically, said of everything: 

“It is a tale told by an idiot, full of sound and fury, signifying nothing.”

And, then, it’s suddenly gone.

And all that many billions of poor people will have to show for it is the misery they had suffered in obscurity while kings such as Macbeth had “strutted and fretted their hour upon the stage.” Because, their  “hour” never even came.

———-

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010,  and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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  • kimyo

    James Hansen, father of climate change awareness, calls Paris talks ‘a fraud’

    It’s a fraud really, a fake,” he says, rubbing his head. “It’s just bullshit for them to say: ‘We’ll have a 2C warming target and then try to do a little better every five years.’ It’s just worthless words. There is no action, just promises.

    Climate Scientist James Hansen Warns World is on Wrong Track to Prevent Runaway Global Warming

    AMY GOODMAN: What did you make of President Obama’s speech on Monday here at the U.N. climate summit?

    JAMES HANSEN: Well, we have to decide: Are these people stupid, or are they just uninformed? Are they badly advised? I think that he really believes he’s doing something. You know, he wants to have a legacy, a legacy having done something in the climate problem. But what he’s proposing is totally ineffectual.

    war on terror: totally ineffectual (aside from putting money in the one-percenter’s pockets).
    war on drugs: totally ineffectual (aside from putting money in the one-percenter’s pockets).
    war on poverty: totally ineffectual (aside from putting money in the one-percenter’s pockets).
    war on carbon: totally ineffectual (aside from putting money in the one-percenter’s pockets).

    Paradise Papers: Prince Charles lobbied on climate policy after shares purchase

    Prince Charles campaigned to alter climate-change agreements without disclosing his private estate had an offshore financial interest in what he was promoting, BBC Panorama has found.

    Sir Alistair Graham, former chairman of the Committee on Standards in Public Life, said Prince Charles’s actions amounted to a serious conflict of interest.

    He said: “There’s a conflict of interest between his own investments of the Duchy of Cornwall and what he’s trying to achieve publicly.

    “And I think it’s unfortunate that somebody of his importance, of his influence, becomes involved in such a serious conflict.”

    • LostInTheStars

      The example of the Paris talks is the only flaw in this otherwise excellent article, and you are correct to point it out.

      I do disagree with you about the war on poverty (under Lyndon Johnson.) For as long as it lasted it was getting results. We no longer have a war on poverty; we have a war on poor people.

      • kimyo

        i totally agree that we have a war on poor people. the usg clearly seeks to sow misery among the most vulnerable.

        it’s still worth observing though, that ‘anti-poverty’ programs such as lifeline or ebt/wic are wildly profitable for companies like verizon and jp morgan.

        Universal Service Fund

        In 2013, the lifeline program paid out $1.8 billion in subsidies to telephone companies; reduced to 1.5 billion by 2015.

        JP Morgan’s Food Stamp Empire

        How the welfare state became a profit center. By Peter Schweizer.

        The bill was also, however, a potentially good development for mega bank JP Morgan Chase. Why, you may be wondering, would one of the nation’s biggest banks benefit from a bill meant to feed poor children? A closer look at the legislation reveals the answer. The bill mandates that “all state agencies implement Electronic Benefit Transfer (EBT) systems by October 1, 2020” for those receiving money through the Women, Infants, and Children (WIC) program. And which company administers nearly half of all states’ EBT programs? You guessed it: JP Morgan Chase.

        We seldom think of poverty programs as profit centers, preferring to discuss them as matters of ideology. Liberals view programs like WIC—which provides food to both pregnant mothers and mothers of young children—as the mark of a compassionate nation. Conservatives see them as a gateway to government dependency.

        Arguably, they may fit either of those descriptions. But as with so many other government programs in Washington, both WIC and its close cousin, the federal food stamp program, have morphed into something else: cash cows for powerful corporate interests.

        • LostInTheStars

          I agree that current programs supposedly benefiting the poor are actually moneymakers for corporations. I’m old enough to remember Lyndon Johnson’s War on Poverty (a good thing), and when I see the phrase “war on poverty” that is what comes to mind. So we are both right. I’m saying how it once was, and you are reminding us that those days are gone now that almost everything has to be privatized. And it’s not just because of the Republicans: Bill Clinton morphed the Democratic Party into a second Republican Party, Following his lead, Obama worked towards privatizing public schools, which are – though poorly funded – anti-poverty programs.

          • kimyo

            the greatest failure of government by dubya (ie: clinton/bush/obama/trump) is in education. technological advances should have caused the price of a college degree to drop to (essentially) zero.

            given proper deployment of technology, every student would advance at his/her own pace. gifted students would serve as mentors, skills verified via teleconference and open audit trails. predatory pricing on texts would disappear. students would emerge from the system with demonstrable comprehension of any subject which attracted their interest.

            what we got instead: a bunch of kids carrying ipads used mostly to play candy crush.

            bill gates and steve jobs should hang their heads in permanent shame. they could have made such a profound difference and instead chose to give us 92 versions of microsoft office (now with 10,000 new features YOU WILL NEVER USE) and wildly over-priced status symbols built by modern day slaves.

      • Kimberly


        Google is paying 97$ per hour,with weekly payouts.You can also avail this.
        On tuesday I got a great new Land Rover Range Rover from having earned $11752 this last four weeks..with-out any doubt it’s the most-comfortable job I have ever done .. It sounds unbelievable but you wont forgive yourself if you don’t check it
        !da160d:
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  • I’ve long thought and argued that the Raygun revolution and the temporally corresponding growing awareness of the perils of fossil fuel use were not coincidental, and that they realized even then (the aristocracy) that inevitably only socialistic solutions would remedy or mitigate the human misery, etc, that would accompany AGW. And in this country unless and until the “money is speech” doctrine is abolished, they will still have the biggest piles of cash and consequent power even after those socialistic solutions whittle the inequality down to a more reasonable size. Republicans continue to push the stupid like “trickle down” in the furtherance of that goal, and as long as the tentacles of the aristocracy are buried in both parties they’ll likely succeed. This is why Bernie’s plan of divorcing the corporate interest is on the right track imo. It’s little more than a http://www.sonypictures.com/movies/2012/ of their own creation.

  • LostInTheStars

    Runaway unregulated capitalism causes both inequality and global warming. All human values are sacrificed at the altar of short-term greed. This began in the mid-70s and I have no idea how to stop it.

  • Black Swan

    ” The International Central Banking System seeks to unite the World under a suffocating blanket of Usury that diverts all the Worlds Cash Flow into the hands of the Monetary Controllers. This is what Globalism and the New World Order are all about-Worldwide Slavery To Materialism And Money. It’s a system of Totalitarian Control based on Violence and Greed, but it also uses mind tools like Entertainment, Drugs and Pornography to corrupt, exhaust, and control the population. The Financial System is even more insidious than outright military aggression, but its just as deadly. Full spectrum superiority of International Finance is leading to massive species extinction, drastic climate change and a threat to the survival of Humanity itself.” Richard C. Cook

  • Sparticus

    if the people would stop supporting this economy and its corruption they would get the equality they desire and even more. The whole problem with mankind is that they are easily divided and lack discipline. All it takes is 1-million people on wall street, close the NYSE, until the 1-percent either jumps out of their Ivory Tower windows or begs for forgiveness.

    It is all this easy, people.

    Oh, and there are over 6-million people living in abject poverty in NYC alone.