When did people, once again in the democratic world, start losing control over their nations? When did the stock brokers, hedge fund managers, CEOs, movie stars and sporting heroes start making insanely high amounts of money, far beyond their worth?
By Arvind Saxena
“One of the saddest lessons of history is this: If we have been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.” — Carl Sagan, American astrophysicist
The ‘Occupy Wall Street’ protests, which began in New York City’s Wall Street financial district, in September 2011, were a mobilisation of middle-class young adults against the predatory practices of high finance, mounting economic inequality and the influence of money in politics. Similar movements, like the ‘take back control’, were seen in other parts of the world also. These movements reflected the disillusionment of the working middle class, which has been the cornerstone of social and economic development, at least in the democratic world.
At most places governments responded with force and repression against people who were simply demanding a more just, equal and sustainable world. In a resurgent era of far-right populism, with leaders preaching hate, fear, greed and ultra- nationalism, voices against injustices stemming from elite capture of wealth, power, and corruption are viewed as a threat to the ‘established’ order.
When did things start going wrong?Between 1940 and 1980 as nations adopted democracy, citizens gained control over political power and the rich to poor gap was narrowed. To take an example, in 1937, the top 1% of UK’s population enjoyed 16.9% of the national income. This figure dropped to 9.3% in 1955 and further to 5.7% in 1978. In 2007 it had gone back to 15.0%, springing back further to 16.9% in 2021, i.e., back to the level of the 1930s. The 40 to 50 years when income disparity had been brought down is also the period which saw unprecedented economic growth and prosperity.
In 1980, came the neo-liberal, right-wing push for globalisation and liberalisation, which moved manufacturing, production, money and goods to different countries – and channelling of profits to tax havens. In the USA, the neo-conservative policies saw the income of its bottom 90% population grow by a mere 1% while the top 0.01% people’s income grew by over 400%. The top 300,000 Americans now enjoy as much income as the bottom 150 Million.
According to the UK-based Tax Justice Network, the global rich have hidden over $13 Trillion in tax havens, which is equal to the combined GDP of USA and Japan. Does that show you why large sections of the people have been pushed into poverty?Yes, their due has been denied.
When did people, once again in the democratic world, start losing control over their nations?When did the stock brokers, hedge fund managers, CEOs, movie stars and sporting heroes start making insanely high amounts of money, far beyond their worth vis-à-vis the qualified doctors, engineers, scientists, professors andagriculturists?
There was a time, not too long back, when in 1971, British football skipper Bobby Moore earned around £10,400; Wayne Rooney till recently made £10 Million per year. In 1950, General Motors paid its CEO Charlie Wilson $586,000 (the highest salary at that time), and in 2007 its CEO made $15. 7 Million. Interestingly, in 1950 GM was making a profit but in 2007 it was making a loss. The net worth of some of our top star actors and sportsmen runs into tens of billions of dollars. Does something stink here?
Elon Musk, the richest man today is valued at $ 223 billion. It would take highly qualified professionals millions of working lives to get anywhere near to those figures. Ask the simple question: Who contributes more to society?The film star, cricketer or a corporate finance officer on the one hand, or a doctor who saves the life of your dear ones, a civil servant who organises critical infrastructure, a police officer working amongst the masses or an engineer who keeps your electricity, water, transport, scavenging and other essential services running. Does something strike you as wrong?
To start understanding this con game, we must first reject the false narrative that some people have inherent qualities of hard work and have exceptional intelligence because of which they make so much wealth. Everyone elevated to star status rakes in money at the cost of the common man. We are as yet not talking about how many others make how much on the gravy train, or even how much of the peoples’ wealth is taken out of the country through their ‘new world’ enterprises. Is there even one reason why these earnings should not be checked?Even if some of them claim to spend money on charities and anoint themselves as philanthropists, it is still wrong to justify such concentration of wealth.
Now let us look at a related and frightening phenomenon. Among the top earning 0.1% of Britons, a full 30% now work in finance – where “they produce nothing”. In 2009 Meryl Lynch CEO, John Thain was paid $4 billion in executive bonds – to ‘retain the best people’. This was right after the ‘over achiever’ had led the company to a net loss of $27 billion. In 2009 again, the top 25 hedge fund managers in the world made $25.3 billion i.e., $1 billion each. With this kind of money, they influence policies and government decisions to further benefit themselves, dismantle financial regulation and evade oversight. They lobby for rules to allow private players using public funds such that they can keep the profits, but let financial bodies bear the losses.
Why do loss making companies pay shamefully high salaries to their CEOs, and even pay them a bonus, for leading the company to financial ruin?Obviously, something is not being talked about. Is it kickbacks, siphoning out money, corporate secrets, creative accounting, influence peddling, expertise at gaming the system?Will you call this extraordinary intelligence and capacity for hard work?Why not call it what it is – theft.
The overarching reality is that, the prime movers of our modern economy, the corporate world, have today become the fountain head of all corruption. With a few exceptions, they have subverted not just classic capitalism but also the political systems and bureaucracies of the world. They have taken over education institutions, think-tanks, NGOs, research bodies and the media, which together set out false narratives of right and wrong.It is their endowments and advertising clout which control all opinion making institutions.
Amassing material wealth at any cost, being blinded by consumerism and being happy in a make-believe world, firewalled by round the clock entertainment, is the essence of success for our aspirational classes. Try and say something different and you will be dubbed a ‘loser’ – someone who is complaining because you didn’t make it.
Let us get out of our comfortable cocoons for a while and find answers to why we have not seen any meaningful discoveries and inventions since the 1970s. Internet applications and Apps are not inventions; they are merely tools for scaling up of capacity and speed of processing.
Why are children not attracted to study the sciences?Who is going to buy services if there are no goods produced and manufacturing activity is dis-incentivised?Why should a young boy or girl study engineering, medicine or other sciences if the system is going to pay many times more to a stock broker, financial manager, a lawyer or a computer code writer?
Society is losing out something big. Do you know which companies draw the best talent and offer the best salaries? It is the oil companies, pharma, fast foods, armaments, MNCs and finance. These are the same sectors which are responsible for ecological damage, destruction of bio-diversity, fatal addictions, malnutrition, organ damage, violent conflicts, and inhuman working conditions, suppression of wages, profiteering and destruction of industry.
They also engage in the worst kind of economic subterfuge. For example, we are expected to repose trust in the UN Framework Convention on Climate Change and the “1988 Global Compact”, when all such fora include fossil fuel companies. These companies own oil, gas and coal reserves valued at $27 Trillion, 80% of which will have to remain underground if climate laws are enforced. Do you really believe they care about global warming and rising levels of the oceans?
We keep trusting, and trusting more, because no one tells us the facts.
* Published ePaper on 18 March 2022
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