Celebrate the Facts!
Al Capone and the like, the source of legends, are long gone, it seems, but fear not. The ultra-rich have now replaced them as a new class of outlaws, effectively bribing politicians, hiding their money from the taxman, concealing crimes with nondisclosure agreements, and living a life of splendor amongst riches they can never spend. The new mafia is the uber-wealthy.
The United States Justice Department defines International Organized Crime as ‘self-perpetuating associations of individuals who operate internationally to obtain power, influence, monetary and commercial gains, wholly or in part by illegal means, while protecting their activities through a pattern of corruption or violence. ‘
The old school organized crime was the stuff of legends, glamorized in the Godfather and dozens of mob movies. Formal organizations, linked by ethnic identity and congruent goals, harvested revenues from selling alcohol and drugs, gambling, extortion, prostitution, and other illegal means. Organizations controlled product sales and geographic areas and cooperated informally to further goals. They bribed politicians and public officials, manipulated legislation, colluded to maintain monopolies, and used violence to sustain their regimes. They also hid their money from the taxman, avoiding any responsibility to contribute to a societies that provided their wealth.
Over time, governments found a way to suppress their power, mainly by coopting their revenue sources. The repeal of prohibition in 1933 eliminated rum-running, previously controlled by the mob. The legalization of gambling, often under the auspices of governments and always taxed, also destroyed a source of revenue. Now cannabis sales are legal in many states, with hallucinogenic substances not far behind. Once a source of income for organized crime, labor unions have dried up along with the money. Narcotic drugs appear to be the last lifeline for these once prominent criminal groups.
Nature abhors a vacuum, and the captains of industry have seized the mantle of the most significant criminal syndicate in history. Most of the problems revolve around taxes, but the problem goes beyond rich people dodging taxes but the erosion of tax rates. Wealthy interests fund politicians, buy access to stall progressive legislation, further erode tax rates, and advance their corporate interests. Mostly this is about money.
The ultra-wealthy have an annual collusion meeting at an extravagant ski resort in Davos, Switzerland. The meeting, formally known as the World Economic Forum, whitewashes their incredible wealth with noble-sounding themes, and they attend presentations about climate change and sustainability, with breakout sessions populated by sycophantic ‘thought leaders’ parroting congratulatory themes. However, the real action occurs behind the scenes, where the global fat cats renew ties to other self-styled Übermensch and the politicians who also attend.
Politicians gain and keep an office and enrich themselves after leaving it by toadying to the wishes of their wealthy masters. Former United States presidents Bill Clinton, with a current net worth of $120 million, and Barack Obama, now worth about $70 million, had modest means when elected. Those are extreme examples but illustrate the riches accrued by befriending the wealthy gentry.
One discussion worth touching on is the concept that incredible wealth incentivizes innovation. However, it’s worth noting that many oligarch classes didn’t invent anything. Elon Musk didn’t discover electric motors or lithium-ion batteries but merely adopted these in a new application. Similarly, neither Musk nor Jeff Bezos designed the rocket engine and orbital flight but adopted existing technologies. Overnight delivery and sales of cheap retail goods have existed for decades: Bezos merely unified the two. Computer technology was already well into deployment; Bill Gates provided an operating system code in DOS to IBM for free and leveraged his way into a developing market. These guys aren’t innovators; they are old-school robber barons more akin to Andrew Carnegie and John Rockefeller.
Others from the unctuous super-affluent class did nothing more than being born and inheriting their wealth. If they had been born in Mumbai, their story could have been tragic.
Fast tax facts about international corporate tax abuse and private tax evasion:
One problem about discussions about tax code is the word ‘fair.’ Fair has very little to do with taxes. The purpose of graduated tax codes is to fund the government and meet the overall social objectives of a democratic society. The erosion of marginal tax rates, reduction of corporate income tax rates, and legislation to mitigate environmental compliance costs were inimical to the interests of the great majority of constituents of the politicians who helped pass those laws. In an electoral system now dominated by dark money, one might argue that passing those new laws was flawed, anti-democratic, and immoral.
A larger question is whether massive dark money contributions to evade taxes, an immoral act, are equivalent to a crime. Egalitarian societies, with rational elections and actual limits on campaign contributions, use tax policy as a policy mechanism to avoid top-heavy wealth accumulation. However, gaming that system results in a different end. Avoiding the outcome becomes a criminal and immoral act, as it destabilizes society.
In 2019 about 5.2 million children under five years mainly died from preventable and treatable causes. So Jeff Bezos buying a $500 million yacht is a profoundly immoral act in that, or any other, context.
A great example of a legal tool the wealthy use to conceal criminal behavior is a nondisclosure agreement, where the rich pay people they have wronged, often criminally, to remain silent and refrain from criminal charges. Wealthy sexual criminals such as Harvey Weinstein and Jeffrey Epstein and dozens of other rich people used legal machinations to conceal their crimes for years. Aside from immoral, these agreements are illegal when used to cover crimes and avoid charges. They also insulate the uber-wealthy from responsibility for the consequences of their behavior, thereby establishing them as outlaws.
Big money plutocrats don’t mind political divisions in the United States. Conversely, the resultant media revenue and legislative gridlock cause their celebration. Such problems divert attention from their predatorial investment and business practices, immoral hoarding of wealth, and gluttonous exhibition of their money. Swings in governance allow them to jam through favorable legislation, such as the ill-advised corporate tax rate reductions of 2017.
Fixing the problem could be both swift and straightforward:
Unfortunately, too many people make too much money from the status quo, adding inertia. The ultra-rich make and keep excess wealth by gaming and abusing the system. Some marginal countries harvest revenue from sheltered money. Lackeys of the organizations make incomes by supporting their objectives.
The only people who seem to suffer are the overwhelming remaining population of the world.
Michael Donnelly investigates societal concerns with an untribal approach - to limit the discussion to the facts derived from primary sources so the reader can make more informed decisions.