WHERE HAS ALL THE MONEY GONE?

guillotine

There is more money in the world than ever before. There is more poverty in the world than ever before. How can this be? This is not a paradox created by the world economy crises. We are talking about the status quo. For example, in the world’s most important economy, the USA, incomes for the lower two thirds of the economic pie have not increased since the 1970s.[1] On the other hand the real income of the top fifth, the infamous 1%, has doubled during the same period.[2] This is obviously not accidental. When economists talk of growth they are obviously talking about an increase in wealth that affects the upper point of the pyramid only. But what happens to the money when it gets to the top? Most of it vanishes: there is between 21 and 32 trillion dollars, which itself would constitute the world’s largest economy, languishing in the vaults of offshore tax havens around the world. [3] So, there is more money but it has been removed from circulation and made invisible rather than allow the tax man to get his hands on it.

gu_wealth-offshore-02

Does this explain why citizens today pay more taxes than ever but receive fewer public services? We are told that services are too expensive. But, why are they too expensive now when there is more money, but they weren’t too expensive before when we were much poorer? The Welfare State is an investment, but what is the point of making that investment if the effort we made for so many years to build that welfare is privatised for profit tomorrow. The biggest economic question today should be: why in countries with strong welfare states in the 60s and 70s is it that with the dismantling of those welfare state systems tax rates have increased and incomes in the lower two fifths have not grown? Does this not indicate a complete failure of the liberal-democratic system?

The system emerged through the violent revolution of 1789. We are driven by a system made by the heirs of Robespierre. The kings and nobles are dead, their heads in baskets, but now we have new nobles who have designed an economy that ensures the upward flow of money and the subsequent maintenance of the new nobility. It justifies itself through a morality based on an ambiguous term like freedom and the equally ambiguous justice embedded in its glorious invention of democracy. Freedom for the liberal is two-faced though, for there is good freedom and bad freedom and liberalism gives precedence to latter. Bad freedom is the freedom to be able to protect or have protected what one has obtained – even if that obtaining has come about through inheritance (preservation of new aristocracies and nobilities), accident or luck (the lack of those who play the casinos in Las Vegas and Wall Street or the lucky who purchase the bargains handed to them on a platter when political friends sell off public services established by tax-payers’ capital) or even the ruthless acquisition of the big fish devouring the teeming minnows that swim before its gaping jaws. It also implies the freedom for those who have most of the money not to have to pay any tax on that money.

But could history be on the verge of a new cycle? Just like 1789 the new system of aristocracies and their open flaunting and arrogance is creating a general feeling of indignation that is rapidly turning into disdain and anger. How long will it be before the mob decide to resurrect an old industry? – The manufacture of new guillotines.

guillotine2

http://www.democracynow.org/shows/2013/1/18


[1] Yes, wages have increased but if we adjust earnings according to inflation and calculate 1970s incomes in 2011 dollars we see that there has been no progress. This data and adjustments can be found here: http://www.census.gov/hhes/www/income/data/historical/household/
http://www.bls.gov/data/inflation_calculator.htm

[2] Ibid.

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