It has been said time and again how Globalization has led to increasing prosperity around the globe with free movement of capital and trade. But what has been not been emphasized enough is that how the easy movement of capital has exacerbated loot and plunder on a global scale. Tinpot dictators and cronies have stashed billions of dollars from their impoverished countries in offshore tax havens using the services of unethical financial giants like HSBC. Money laundering and Tax Evasion has become the mainstream business model of the “wealth management” and private banking arms of the global financial MNCs like Citi, UBS, Credit Suisse, HSBC and others. These banks have been actively involved in helping the super rich in hiding and stashing their ill gotten wealth. A study done by an economist of McKinsey estimates that around 21-32 trillion dollars has been hidden most of it illegally to avoid tax. Global income inequality has been highlighted as the biggest risk by WEF which can lead to a potential breakdown of the society.
The rising income inequality throughout the world is sowing seeds of dystopia according to a report released by World Economic Forum. The biggest risk amongst the 50 risks listed is the increasing wealth gap between individuals in all countries. Gini’s coefficient has risen in most countries, developing as well as developed and this has a strong correlation to globalization. The global arbitrage of labor has tilted the scales towards capital and increasingly made wages become stagnant. Developing countries with weak institutions are showing income inequality in horrific forms with $2 billion homes existing in the middle of millions, surviving on less than $2 a day. US has already seen the OWS movement as a result of this increasing income gap between the have and have nots. Middle Eastern countries have also seen revolutions brought upon by the massive riches of the elite compared to the rising poverty of the poor and even the middle classes.
It is apparent and blatant especially in the poorest countries in India where 50 billionaires coexist with 800 million people finding it hard to fill their stomachs. Governments which consist of many of this super rich, will never crack down effectively on the massive ill gotten wealth which can easily solve the current economic crisis.
Income Inequality in India has been rising at an unprecedented rate in the last couple of decades. The opening of the Indian economy has led to even starker levels of income disparity amongst the very rich and majority of the Indian citizens. The Crushing Income Disparity is seen in the world’s most expensive $2 Billion House set amongst 42% of the world’s hungry children. The latest Forbes report lists 50 Indian Dollar Billionaires with 2 in the Top 10. A 2007 report by the state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately US$0.50 nominal; US$2 PPP) per day. The living conditions of the majority have already fallen further with food price inflation between 10-20%. While revolutions have already broken out in much higher per capita countries like Egypt, Libya etc. India remains relatively dormant with the only large Naxalite movement reflecting the massive income disparity. Makes you question whether capitalism in India has made much sense especially as there has been no spreading of wealth from the top to the bottom.
James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.
In total, 10 million individuals around the world hold assets offshore, according to Henry’s analysis; but almost half of the minimum estimate of $21tn – $9.8tn – is owned by just 92,000 people. And that does not include the non-financial assets – art, yachts, mansions in Kensington – that many of the world’s movers and shakers like to use as homes for their immense riches.Google+