A recent report by the consultancy firm, McKinsey, reveals that treasure troves of cash are being held in off-shore, tax-free havens. This does not come as news for many; what is notable of the report is the sheer magnitude of wealth that the ultra-rich of the world have accumulated in off-shore accounts for decades.
James Henry, the former chief economist at McKinsey, is an expert in off-shore investing and international tax havens, and was responsible for preparing this report. He estimates that anywhere from $21-trillion to $32-trillion is hidden away in secret accounts around the world. These numbers are truly mind boggling! In particular, the amount siphoned away by the capitalist class in the so-called developing countries could easily be used to end poverty in any of these countries. Since the 1970s, Henry concluded that once returns on investment was factored in, $316-billion had escaped Nigeria, and $318-billion had left Saudi Arabia; as much as $807-billion had been siphoned out of Russia and into secret accounts and tax-free shelters since just the 1990s!
The vastness of such funds can be difficult to comprehend, but it is roughly equal to the total annual GDP of the USA and Japan combined. This money could finance the total debt held by the world’s developing countries. According to the Guardian, to whom the report was exclusively released, if the total amount gained “an average 3% [interest rate] a year for its owners, and [if] governments were able to tax that income at 30%, it would generate a bumper £121-billion [$195-billion] in revenues — more than rich countries spend on aid to the developing world each year.”
The situation in Canada is not much better. Canadian companies have stockpiled $525-billion in cash reserves, amounting to about one-third of the entire Canadian economy. This is three and a half times more than the $150-billion held a decade ago. Recent research by the Gandalf group shows that 45 percent of Canadian companies have been saving instead of spending.
The numbers are similar in the United States, where $5.1-trillion is being held onto by the ruling class instead of being invested. (This number is equivalent to Germany’s total economy, the largest in Europe.) In Britain, the capitalists are sitting on $1.2-trillion in bank accounts.
In fact, investment only rose by 1.2 percent last year, which was thought to be a year of recovery. This goes along with Henry’s research that the top ten private banks, including Switzerland’s UBS and Credit Suisse, and US investment firm Goldman Sachs, managed $6.5-trillion compared to $2.4-trillion from years prior.
The report points to the unwillingness by the ruling class to re-invest their wealth. This is the irony of the world’s current economy; the captains of industry don’t want to captain the industries of their own nations. They have no faith in their own system and they would rather keep the money hidden in their pockets. Despite trillion of dollars in government bailouts and subsidies, and despite record-low interest rates, very little investment is occurring in the current climate. In a “normal” economic climate, the capitalist class would be eager to take advantage of this type of situation, investing their cash to secure future profits. But, as we have explained on numerous occasions, the current capitalist crisis is one of overproduction — the capitalists are not confident there is enough of a market out there to make much profit. Instead, they prefer to stuff their money away in a bank vault than risk losing it in a non-existent market. In turn, this only deepens the crisis — a perfectly vicious cycle.
Henry’s report calculates that approximately $10.2-trillion is being held by only 92,000 people, or 0.001% of the world’s population. With such extreme concentration of wealth it is of little surprise that the majority of consumers around the world have little money to spend. This inequality is especially felt by people living in developing nations on a daily basis. However, as governments of developed countries grant bailouts to banks and pursue policies of immense austerity onto their own people, class struggle is being awakened on a grand scale in Europe.
The unity of the world’s capitalists may not be stated out rightly, but the flow of wealth speaks for itself. As the world’s wealthy unite in action to rob us blind, we must act to combat this secrecy and reinvest this wealth to the benefit of those who earned it with their labour and sacrifices. The rulers of our society will not spare a moment to sacrifice our pensions, wages, benefits, education, futures, and even our lives. But they refuse to even make a dent in the profits of the rich.
We shall not stand for this. In a socialist society we would place the entire economy under the democratic control of the people. We would produce for the good of society —investing into education, healthcare, childcare, the elderly, and individuals with disabilities. We would invest in ecologically friendly technologies, actually developing “developing” countries, putting an end to illiteracy, poverty, disease, and ecological disasters. We would invest in stable infrastructure so that when tsunamis and hurricanes strike, damage is minor. This is all possible in a socialist society where wealth is democratically controlled instead of being concentrated in the hands of 0.001%, and where wealth is actually used to better society rather than accumulate in some dusty bank vault.
We call for:
- An end to robbery of public wealth for private gain
- Placing the super-assets of the elites under national democratic control
- No more secret bank accounts or treaties for tax evasion
- Forgiveness of all the debts to developing nations
- A stop to bail-outs of the rich and re-investment to stimulate the economy
- Reinvest the hoards of money back into socially beneficial production
