Poverty, violence and globalized indifference

S P SETH

The recent European Commission finding that the US corporate giant, Apple, had paid almost no taxes on the sale of their products in Europe over the last decade highlights how the rich and the powerful can get away with murder, metaphorically speaking. On surface, of course, it all appeared legal because they were paying tax at the rate of 0.005 per cent in 2014 in Ireland under a deal negotiated with that country, thus avoiding paying 13 billion euros in tax over the past decade. The ‘sweetheart deal’ between Apple and Ireland, a member of the EU, “enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU single market.” And: “This is due to Apple’s decision to record all sales in Ireland rather than in countries where the products were sold.”

The Apple, and other large corporations like Amazon and McDonald that might be next in line for similar adverse findings, are unlikely to comply, with Apple warning that the decision would “have a profound and harmful effect on investment and job creation in Europe.” The Apple says that the decision would “upend the international tax system” and the company is confident that it would be overturned on appeal.

These kinds of tax arrangements, tax havens and other similar deals are part of the international financial system, under which corporations, rich people and prominent ruling elites can conduct their affairs without prying eyes. For instance, Panama Papers that recently disclosed the murky world of shady deals, which, I believe, even features Pakistan’s Prime Minister, Nawaz Sharif, was another, though unrelated, side of it.

Among other things, these corporate giants and their murky financial world have led to global inequality and fostered poverty on a scale, perhaps never seen before. By ‘legitimizing’ greed as economic ideology operating independently of ethical and social norms, it has somehow made poverty acceptable by blaming the poor for their own misery. But it has now reached a point where some well-meaning organizations are drawing attention to the gravity of the situation. For instance, an Oxfam report made this extraordinary finding that just 85 of the world’s richest control as much wealth as half the world’s population-- that is 3.5 billion people. It warned that, “This massive concentration of economic resources in the hands of fewer and fewer people presents a significant threat to inclusive political and economic systems.”

In a world that is gone mad with civil wars, insurgencies, terrorism, sectarian conflict, proxy wars, it is often not realized that at the base of such conflicts, though not always visible, has been the economic deprivation of vast numbers of people thus making them prone to exploitation by extremism of all sorts. And it is capitalism that sanctifies greed, which leads to concentration of wealth among fewer and fewer people. With the collapse of the Soviet Union, which tended to advertise itself as a classless society, the US-led capitalist system became a model of sorts to follow. And it was not until the global recession of 2008 that serious questions started to be asked about what and where things had gone wrong? Even then the criticism has been largely in terms of rectifying its problems but not questioning the model itself.

However, the French economist, Professor Thomas Picketty, recently raised some serious questions about its working in his book, Capital in the Twenty-First century. His argument goes like this: as the rate of return on capital (in the form of corporate profits, dividends etc.) outstrips the rate of growth, this will lead to greater accumulation of inherited wealth among fewer people, thus creating a highly unequal society, which is already happening. And this might see a return to Dickensian levels of poverty of the 19^th century in rich countries.

One can already see this with corporate executives awarding themselves obscene wages and benefits in millions, if not billions of dollars in some cases, while the wages of ordinary workers remain stagnant and even fall further. At the same time, there is a greater trend to part time jobs, with full time jobs becoming harder to come by. Picketty’s book has raised some fundamental questions about the workability of the capitalist system in the twenty-first century. Reviewing it in the New York Review of Books,  Paul Krugman, said that, “The big idea [of the book] is that we haven’t just gone back to the nineteenth century levels of income inequality, we’re also on a path back to ‘patrimonial capitalism’, in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.”

AT another level, the system came under attack from US Senator Elizabeth Warren, considered presidential hopeful at some point. She took issue with the notion that the rich in the US or, for that matter, anywhere else in the world, have acquired their riches because of their own creativity, entrepreneurship and merit. Warren sought to puncture this myth during her 2011 congressional campaign pointing out that, “There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved the goods to market on roads rest of us [taxpayers] paid for you. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire services the rest of us paid for.”

And she sought to put all this in a social context, pointing out that, “Now look, you built the factory and it turned into something terrific, or great idea… Keep a big hunk of it. But part of the underlying social contract is you take a big hunk of that and pay forward for the next kid that comes along.”  In other words, “For capitalism to work we all need each other.” But as we see in the case of massive tax evasion by corporations like Apple, Google and many rich and powerful people all over the world, there is a deliberate and calculated attempt to manipulate the system to make the rich richer, which often also ends up making poor poorer. Or else, they will have to wait for the trickle down theory to work, if it does.

The most trenchant critic of the capitalist system is Pope Francis. He has talked about the “tyranny” of capitalism. He has called it the “dictatorship of an economy, which is faceless and lacking any true human goal.” According to Pope Francis: “In this [capitalist] system, which tends to devour everything that stands in the way of increased profits, whatever is fragile, like the environment, is defenceless before the interests of a deified market, which becomes the only rule.” It fosters, promotes and entrenches a system that is free of ethical values and equity. And: “Inequality [it fosters] eventually engenders a violence, which recourse to arms cannot and never will be able to resolve.”

He has made the point that, “In this globalized world, we have fallen into globalized indifference. We have become used to the suffering of others.” And this is the reason why there is no real global action to eradicate human sufferings of all sorts that we are witnessing everyday on our television screens, and many are living it everyday in strife torn societies while others are trying desperately to escape in boats that are carrying human cargo in search of a destination to nowhere.

Note: This article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au