August 2012        

A tale of three reports

“It was the best of times [for the 1 per cent], it was the worst of times [for the 99 per cent], it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us . . .”—Charles Dickens (A Tale of Two Cities)
Three reports were published in the last couple of months that in many ways tell the truth about the crisis today and confirm what the Communist Party has been saying since the outset—namely that the establishment’s response has been to transfer wealth from labour to capital, from working people to the rich, and that the rich are getting richer while working people are getting poorer.
     The first of these was the Boston Consulting Group’s report Global Wealth, 2012, sadistically subtitled The Battle to Regain Strength. This report found that private wealth grew by 1.9 per cent in 2011, to $122.8 trillion. While growth was slightly down on previous years, it grew nonetheless, and they expect it to grow further, to $150 trillion by the end of 2016.
     Not surprisingly, however, the report also found that the highest growth rate was among the “ultra-high-net-worth” individuals—those with more than $100 million. And even leaving the super-rich aside, the “ordinary” rich are also doing pretty well, with the number of millionaire households in the world increasing by 175,000 to 12.6 million, 0.18 per cent of the world’s population.
     While Ireland sits at fourteenth place in the proportion of millionaire households, at 2.2 per cent, geographically the report states that the traditional centres of capital—North America, western Europe, and Japan—lost private wealth, while the “BRIC” countries—Brazil, Russia, India, and China—grew most. China is third in absolute number of millionaire households, with 1,432, behind the United States and Japan, and fifth in number of $100 million households, with 648, behind the United States, Britain, Germany, and Russia.
     The second recent report is The Price of Offshore Revisited by James Henry, former chief economist of the management consultancy McKinsey and Company, on behalf of the Tax Justice Network. It found that these high and ultra-high-net-worth individuals exploit various loopholes and gaps in cross-border tax rules to hide at least $21 trillion and possibly more.
     These people, of course, are not clever enough to exploit this on their own but are aided and abetted by the private banking and wealth management divisions of various banks. Henry names these institutions, and a brief glance shows a who’s who of infamous banks—UBS, Credit Suisse, HSBC, Goldman Sachs, Barclays, BNP Paribas, Deutsche Bank—many of which have been the beneficiaries of various state guarantee and recapitalisation schemes.
     The third report tells the other story: that of the 99.8 per cent. Decent Work?: The Impact of the Recession on Low Paid Workers was commissioned by Mandate and compiled by Camille Loftus. It finds that working people have been hardest hit by the crisis, and hardest hit by austerity measures.
     The report shows that the average take-home pay of Mandate’s members had fallen by €109. This is as a result of austerity measures by the Government, reduced working hours, and increased basic prices and utility bills.
     A third of Mandate’s members are finding it difficult to feed and clothe their family, 40 per cent are finding it hard to pay their mortgage, rent and utility bills, 70 per cent have had to cut back on spending and avoid social activities, and 75 per cent said they were finding it hard to cope.
     The report also shows how the poorest 10 per cent saw their disposable income reduced by 26 per cent in 2010; indeed every decile (group of ten percentage points) up to the best-off 10 per cent saw their disposable income reduce in 2010, while the richest saw theirs increase by 8 per cent.
     These reports confirm that, yes, it is the best of times for a tiny few and is also the worst of times for the vast majority. The reports are consistent: they show that there is an abundance of wealth in the system, but it is monopolised and concentrated in the hands of a tiny fraction of the world’s population.
     The state is still as powerful and important a class tool as it was in Dickens’s time, as it supports the financial institutions that hide capital from taxation and forcibly transfers wealth from poor and working people to the already rich.
     This process of accumulation of wealth is not new. It is not neo-liberalism: it is the capitalist system itself. But this process also creates contradictions, fundamentally those between the social process of wealth creation and the private process of wealth accumulation, which provides belief, light and hope that we can create a better world by challenging this system and its state power.

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