A gentleman-farmer (actually he’s more like a gentleman-builder) by the name of Charles Hugh Smith recently put into clear words a concept which has been bothering me for a few years now. There is never ending talk of shortfall of revenue to fund Western social systems and medicine. At the same time, our largest companies are not paying taxes – or at least very few. With a corporate tax rate at 35% (United States, Europe is similar) but real payments hovering around 10% with technology companies aiming at less than half that, it’s not a wonder our social systems are falling apart.
Control fraud is a profoundly insightful concept presented by author William K. Black (Wikipedia), the essence of which is that those with control/ power in centralized institutions can defraud the institutions and their users/citizenry by modifying the rules of what’s legal/allowable, and do so legally, i.e. within the letter of the law if not the intent of the law….
Control fraud ranges from juicing the financials of companies to “legally” stripmining entire nations. In my view, borrowing billions of dollars to buy back shares in a company and thereby boosting the value of the stock options held by top management is an excellent example of fully legal control fraud: the top managers essentially transfer enormous wealth from the enterprise to their private pockets, under the guise of “building shareholder value.”
…control fraud ranges from masking fraud to bringing fraud (however shakily) into the circle of quasi-compliance to fully legal fraud (i.e. much of what enriched the few at the expense of the many in 2002-2008 housing/mortgage bubble.)
There are no rules or ethics or guidelines at this point. Might equals right again just as in the Middle or Dark Ages. Security violations which would send you or I to jail for ten years allows Hillary Clinton to run for president, as “gross negligence” becomes “carelessness”.
When the powerful can change the laws to suit their financial interests whenever they like makes the whole system a rigged poker game. Apple just decides to keep all its profits, then do illegal deals behind closed doors with Irish politicians, then waits it out for the US to change its laws so it can bring its profits home nearly tax free. All illegal and unethical and done almost openly, brazenly by one of the most visible and profitable companies in the world. The world’s wealthiest company run by a sterile narcissist perpetuating the greatest tax fraud in history. Yet Tim Cook has the audacity to openly scold Europeans for expecting him to pay taxes on Apple’s local profits and to admonish his own politicians for expecting Apple to pay any tax at all.
Income Growth for the Last Seventeen Years Only for Super Wealthy
A Rising Tide Does Not Lift All Boats
The corruption at the top hollows out the bottom of the economy. Younger people don’t have much interest in an honest day’s work as they see that those gaming the system and not working are doing so much better. There will be no one to do the work, little to eat. If the super wealthy think they will be safe in their guarded havens, they haven’t been reading history. The aristocrats of Ancien Régime France were the most coddled and protected and privileged class since the heyday of Ancient Egypt.
Most of them lost their heads. King Charles I of England was reputedly a very jolly fellow until Oliver Cromwell and the Roundheads had enough of subsidising his shallow lascivity.
I’m not sure what we — the intelligentsia or upper middle class — can do to stop these shenanigans. If they don’t stop it will end badly for all of us. The upper middle class will be the first to suffer – as we’re easier to get to — eventually the really rich will pay an even higher price. Not to put too blunt a point on it, the redistribution of wealth does not start again soon, the fate of Ghadaffi awaits their heirs.
I originally wrote elite instead of rich. But these people are not elite. They are scum, lacking either ethics or humanity, only interested in pecuniary gain and willing to break any rules to obtain these riches.
For heck’s sake, you can’t take wealth to the grave. Wealth should be a tool to improve the world, not a method to hold it senselessly ransom.