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Part 2: Oxfam Says Privatization, Tax Havens Drive Global Inequality to Staggering Levels

Web ExclusiveJanuary 21, 2016
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Extended web-only interview with Raymond Offenheiser, president of Oxfam America. The group just issued the report, “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.”

Watch Part 1 || The 1% Economy: The World’s Richest 62 People Now Have as Much as Poorest 3.6 Billion

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StoryJan 21, 2016The 1% Economy: The World’s Richest 62 People Now Have as Much as Poorest 3.6 Billion
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Nermeen Shaikh.

NERMEEN SHAIKH: A shocking new Oxfam report finds the world’s richest 62 billionaires now own as much wealth as half the world. The Oxfam report is titled “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.” The report is timed to coincide with the meeting of global elites at the World Economic Forum in Davos, Switzerland.

AMY GOODMAN: Addressing the forum on Wednesday, Vice President Joe Biden cited Oxfam’s findings.

VICE PRESIDENT JOE BIDEN: As we were flying into Davos this week, the Oxfam report made a lot of headlines. It pointed out that 62 of the wealthiest people in the world—I’m sure they’re all good people—have as much wealth as the poorest 3.6 billion people in the world combined. If you read past the headline, the report explains that inequity is driven in large part due to tax avoidance in tax shelters. It’s not just about tax equity. It’s about economic growth. I don’t have to tell Christine this. I don’t want to—she is no part of my speech; I don’t want to implicate her in that regard. It’s not just Joe Biden saying this. It’s the IMF saying this, it’s Standard & Poor’s—not liberal think tanks in the United States of America. Both say growing inequity is a threat to economic growth. She may not like hearing it, but keeping billions of dollars in offshore tax havens might be good for your shareholders, but it robs your home country. So bring it back. Invest it in the communities in which you live, the enterprises—the communities that allow your enterprise to thrive.

AMY GOODMAN: For more, we’re joined by Ray Oppenheiser, who’s president of Oxfam America. Again, the report they’ve just put out that Joe Biden was citing—the vice president gave the opening plenary at the World Economic Forum, the gathering of the world elite in Davos, Switzerland—the Oxfam report is called “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.” We’re going to Part 2 of our conversation.

Raymond Offenheiser, what is most important for people to understand? We ended Part 1 where you said more than two-thirds of that 62 people who have more wealth than half the world’s population are from here in the United States. How was that gotten?

RAYMOND OFFENHEISER: How have they—how have they achieved this value? Well, I mean, many of these individuals are people who have been in the tech sector. Many of them, we know their first name—almost on a first name basis. And many others—actually, one out of five of them are actually from the financial sector, which is a sector that has benefited dramatically from the kind of tax loopholes and other sort of regulatory and—or deregulation processes that have actually enabled this accumulation of wealth and concentration of wealth to happen.

AMY GOODMAN: And, of course, they pour fortunes into lobbying for those loopholes.

RAYMOND OFFENHEISER: Right. Actually, this is what we’ve seen over the last 20 or 30 years. We’ve seen sort of a dismantling of the economic system in a way that has produced the kind of volatility that produced the financial crisis of 2008 and 2009, which bankrupted many poor families across the United States. But ironically, in the period subsequent, we saved the banking sector. It’s been making record profits. There’s been an enormous amount of accumulation and concentration of wealth at the top end post the financial crisis, meanwhile while Main Street has not necessarily benefited.

NERMEEN SHAIKH: Well, what are—how do you respond to the arguments made by some that these ultra-wealthy people, like Bill Gates and Mark Zuckerberg, in fact do a great deal for the poor, not just here in the United States, but globally?

RAYMOND OFFENHEISER: Well, I think all good credit to them for the work they do through philanthropy. But actually, you know, Martin Luther King has a wonderful quote about philanthropy, which basically, in sort of—if I can paraphrase, basically says, you know, we should encourage philanthropy, but we cannot—but even while encouraging it, we should remember what the reasons are that it exists in the first place and what the problems are that it’s seeking to solve.

And I think the—that’s the essence of sort of, I think, the question that we’re raising here, is, fundamentally, what we’re talking about here is a rigged system that lacks transparency and in which there’s all kinds of opportunities for abuse, tax evasion and tax avoidance, that actually is undermining, I think, a number of things—democracy in the United States and around the world, the social cohesion and social contract that hold countries together, and even, I think, most importantly, I think, for your listeners here in the United States, social mobility. I mean, the basis of the American dream is social mobility. And it’s interesting to note that the United—most Americans would presume—and if we polled them, I think they would agree to this—that we’re number one in the world in social mobility. That’s why people come here. By all statistical research by, you know, reputable institutions, we fall into 19th in terms of social mobility globally. And there’s many countries—

NERMEEN SHAIKH: And that wasn’t always the case.

RAYMOND OFFENHEISER: That was not the case. And this is a consequence of what we’re seeing now, where the rules are rigged, and it’s much harder for people that are working two and three jobs in this country to make even a poverty wage, let alone sort of, you know, enable their children to get out of the sort of cycle of poverty that they live within.

AMY GOODMAN: Talk about the tax havens, how they enable this, but also specifically where they are.

RAYMOND OFFENHEISER: Well, you’ll find tax havens, you know, in islands across the Caribbean. You tend to find them in these very small states that really don’t have much other basis for an economy of any serious stature. So, I mean, one rather profound example is the British Virgin Islands. There are 24,000 people who live in the British Virgin Islands, and there are 800,000 shell companies there that actually are servicing corporations from throughout the world, enabling them to put—offshore their profits and put them into the British Virgin Islands. And then you have a whole massive number of international banks. There are some 50 banks that are the—kind of the transaction agents for all this money moving around the world to tax havens. And if you sort of look at the profits that they’re achieving through this—in managing all that money, they’re astronomical over the last number of years. And so, you sort of have a system now where policies of major countries allow these loopholes to exist and allow the tax havens to exist, and then you have a banking system that’s found it very profitable to engage in this kind of enterprise.

NERMEEN SHAIKH: Well, I want to turn to a clip from a recent documentary called The Price We Pay. The film tackles the issue of tax havens and their cost to the societies losing out on the trillions of dollars in revenue. This clip is from a parliamentary hearing in England in 2012, where Labour MP Chuka Harrison Umunna questions Barclays CEO Bob Diamond about his company’s tax practices.

CHUKA HARRISON UMUNNA: Would you say that one of the ways companies meet their obligations to society is through the payment of tax? Yes or no?

BOB DIAMOND: I think payment of tax is an important responsibility of businesses, yes.

CHUKA HARRISON UMUNNA: Could you tell me how many subsidiary companies your group uses and that are incorporated in the Isle of Man?

BOB DIAMOND: I don’t have that number with me. I’d be happy to look into it and get back to you.

CHUKA HARRISON UMUNNA: Well, according to the return that your group company put in last year, you have 30 subsidiaries operating in that jurisdiction. Can you tell me how many subsidiary companies you have operating in Jersey?

BOB DIAMOND: I don’t have that number with me, either.

CHUKA HARRISON UMUNNA: The number is 38. Can you tell me how many subsidiary companies of your group are incorporated and operating in the Cayman Islands?

BOB DIAMOND: Same answer.

CHUKA HARRISON UMUNNA: You have 181. Now, of course, all of these are well-known tax havens, which are used by companies. And a cursory reading of your group return shows that you have over 300 such companies operating in tax haven jurisdictions around the world. You will understand, Mr. Diamond, that there’s obviously—I mean, if you look at the facts that I’ve just presented, that would suggest that your bank is engaged in tax avoidance on a grand scale, would it not?

BOB DIAMOND: Well, I don’t know what you—what—I think “tax evasion” is a very clear phrase. And it’s a space we would never go to.

CHUKA HARRISON UMUNNA: I know. And I didn’t use the word.

BOB DIAMOND: And I—I chose the word “tax efficiency,” which is our obligation, and it’s something that is in line with government policy.

CHUKA HARRISON UMUNNA: Your “efficiency” may be our “avoidance.”

NERMEEN SHAIKH: That’s a clip from a parliamentary hearing in England in 2012 where Labour MP Chuka Harrison Umunna questioned Barclays CEO Bob Diamond about his company’s tax practices. I want to turn to another clip from the film The Price We Pay, this again in Britain. Labour MPs are questioning Amazon’s director of public policy, Andrew Cecil. The clip begins with Austin Mitchell questioning Cecil. Then Labour MP Margaret Hodge speaks.

AUSTIN MITCHELL: I’m interested in why you pay so little tax, corporation tax particularly, in this country, so that we can pay some kind of benefit to all the booksellers you’ve put out of business, because undoubtedly you put a large number of booksellers, some of them local, in my case, out of business. And I don’t get, frankly, from all this interview, why Luxembourg is so lucky. I mean, the books are here, the warehouses are here, the billing is here, the business is here, the customers are here.

ANDREW CECIL: We have paid in excess of 100 million in payroll taxes in the last five years. We’ve paid tens of millions in business rates in the past five years. And—

MARGARET HODGE: I’ve heard this argument before. Let me just kill this argument, because it really makes me cross. On the one hand, so does every other business. So the community-based bookshop that you’re putting out of business also pays business rates, also pays its PAYE, also pays VA—actually, probably pays VAT in a way that you don’t, and you—in the same way. And you’re making it uncompetitive.

And the other thing is, you depend on the services that come out of the tax you pay. So, you know, you depend on the ability of your—of getting your goods around, so you’ve got to get in the truck, the roads in place. You depend on all those things.

And probably, worst of all, both you and Mr. Alstead employ people on probably minimum wage, if we’re lucky. And then we, the taxpayer, pick up tax credit bill for that, too. So we’re putting a lot of money back into the people you put, and you’re not putting enough tax into our economy. That’s what’s riling us all.

NERMEEN SHAIKH: That was Labour MP Margaret Hodge questioning Amazon’s Andrew Cecil. Raymond Offenheiser, could you respond to how Amazon and Barclays representatives defended their companies’ practices?

RAYMOND OFFENHEISER: Well, I think what we are seeing, I think, in that particular conversation is basically a logic in which, you know, the company executives feel under pressure to shareholders to deliver more value, in terms of shareholder return, and that pressure is relentless, and it’s measured quarterly. And I think this sort of crazy logic of, you know, more shareholder, more shareholder value, you know, everything for the shareholder, loses sight of the whole question of what’s the public good obligation of any company in its home jurisdiction. And I think that, the globalization process that I think we’re living today, actually has disconnected companies’ sense of responsibility to their—to the public that they actually should be serving. And so, we basically expatriate all this value, and then we tax some minimal amount in our home countries. And meanwhile, these same companies actually require public services, roads, infrastructure, all sorts of things that if they didn’t exist, their companies would actually suffer, but they want the tax burden of that to be shifted to the individual taxpayer and away from the corporation itself, in the name of, as the speaker said, tax efficiency.

AMY GOODMAN: We just interviewed Jane Mayer, who wrote the book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, and it’s about the Koch empire, David and Charles Koch. Can you explain how the ultra-wealthy have captured the political process? I mean, this is very significant, given that you found that—what was it?—42 of the 62 of the wealthiest individuals in the world are right here in the United States.

RAYMOND OFFENHEISER: Right. Well, I think it’s not just the individuals. It’s actually the particular industries themselves, through all sorts of trade associations in Washington that fund a massive lobbying machinery that is actually very, very focused on tax legislation. And I don’t think it’s any accident that both parties here in the United States have been talking about the need for tax reform for literally the last 20 years, and we haven’t seen anything done. And I think part of what we’re trying to do with this report is actually underline the fact that we’ve got an inequality crisis. We’ve got lots of people talking about this issue. It’s now legitimate. Everything from politicians on both sides on the aisle running for the presidency, the pope, Obama, and even individuals among these wealthy people—Bill Gates, Warren Buffett, Zuckerberg and others—I think, acknowledge this. But we don’t see an action agenda going forward, and we see a lot of sort of avoidance behavior. And I think what we’ve really got to do now is build the public will here in the United States, raise public awareness about things like tax havens and all the loopholes in these—in the tax legislation that’s there, that has been a victim of what we would refer to as political and economic capture of our system, and unpack these rigged rules and force a reform under whatever administration assumes power after the next election.

NERMEEN SHAIKH: Well, I want to turn—on the question of money in politics, I want to turn to one of the most striking moments from the Democratic debate Sunday night. Bernie Sanders pointed out that Hillary Clinton, also a Democratic presidential contender, had accepted speaking fees from investment bank Goldman Sachs. This is a clip.

SEN. BERNIE SANDERS: Let me give you an example of how corrupt—

HILLARY CLINTON: —authority, with his regulators, to make those decisions.

SEN. BERNIE SANDERS: —how corrupt this system is. Goldman Sachs recently fined $5 billion. Goldman Sachs has given this country two secretaries of treasury—one on the Republicans, one on the Democrats. The leader of Goldman Sachs is a billionaire who comes to Congress and tells us we should cut Social Security, Medicare and Medicaid. Secretary Clinton—and you’re not the only one, so I don’t mean to just point the finger at you—you’ve received over $600,000 in speaking fees from Goldman Sachs in one year. I find it very strange that a major financial institution that pays $5 billion in fines for breaking the law, not one of their executives is prosecuted, while kids who smoke marijuana get a jail sentence.

NERMEEN SHAIKH: That’s Democratic presidential contender Bernie Sanders speaking Sunday night. Raymond Offenheiser, your response, as we are in election season?

RAYMOND OFFENHEISER: Well, I’m delighted actually to see that this whole issue of inequality is at the center of the debate. And in other words, it’s—you know, this has been an issue that we’ve been avoiding. We sort of talk about, you know, the middle—you know, the need for supporting the middle class. We don’t talk about poverty. We don’t talk about the poor. But I think—this election cycle, I don’t think we can avoid this issue. I think the whole point being made here about Wall Street’s influence on Washington is a very profound one, and it’s a very clear one.

And when you look at who—whose interests were served and who got saved in the aftermath of the financial crisis in 2008 and 2009, we see much—an enormous amount of damage to, you know, families that are trying to kind of—that are living by the rules and trying to educate their children and put food on the table. We do not—and many of them are still suffering the consequences of that collapse, in terms of lost pensions. But we see Wall Street thriving and booming and, at the same time, assuming, to some degree, in some cases, even a victim narrative, in which they need more deregulation, fighting the Dodd-Frank Wall Street Reform Act and the elements within it to this day and trying to block the writing and implementation of the rule-making process under the SEC, which still is not complete yet. And they’re, you know, fighting tooth and nail to kind of resist the kind of change that we really need to make for a more fair and equitable tax system in this country.

NERMEEN SHAIKH: Well, could you talk about the Even It Up campaign, what Oxfam is calling for that world leaders and leaders here in the U.S. ought to do?

RAYMOND OFFENHEISER: Well, the Even It Up campaign is Oxfam’s effort to really take on the question of inequality. And we’ve chosen to do that, in part because we began to realize, as an organization that’s been working on poverty issues around the world and social justice issues, that if we didn’t—if we didn’t address the inequality question and we allow the sort of processes and rigged system to endure, all the work we might be doing with communities and all the work we might be doing to kind of build social infrastructure would be compromised, because there wouldn’t be the money to actually fund the social services or fund the environmental services or build the infrastructure, because it was all going to be moving to the top.

And so, we basically are trying to bring this—put this issue very centrally into the domain of leadership in countries around the world. So, in addition to this particular study that we’ve released, which is really our effort to kind of drive the global narrative and, to some degree, push it through the Davos event, we’ve also released studies on inequality in Mexico, in Peru, in Malawi. And so we’re actively driving the discussion on inequality down to the country level. At this point in time, for example, there are 19 billionaires in Africa, something that people aren’t aware of. And yet—and so, this same phenomenon is happening on the African continent in the way it’s happening here in the U.S.

AMY GOODMAN: You say as much as 30 percent of all African financial wealth was thought to be held offshore?

RAYMOND OFFENHEISER: Exactly. In other words, that’s the sort of evidence of sort of the same kind of phenomenon we see here in the U.S. of using tax havens, that probably a lot of that money is, you know, in Isle of Man and Guernsey and so forth. And—

AMY GOODMAN: And what about vulture funds, the role they play, when you have these—the financial elite, for example, in the United States buying up the debt of countries, say, in Africa?

RAYMOND OFFENHEISER: Yeah, well, I think we’re seeing a lot of kind of interesting things happening with, you know, money in the financial system kind of pursuing sort of odd kinds of outcomes. For example, one of the things we found was, in the aftermath of the financial crisis, when the value of equities went down, we actually found moneys from pension funds in the United States actually becoming a part of a land grab process in Africa, where actually money was going into the African continent to kind of participate in efforts to secure long-term leases on valuable agricultural land as a hedge against a potential future food crisis. So, in other words, that money had to find some place to go, and the equities market wasn’t a good place, so it starts to move in perverse ways in other parts of the world.

AMY GOODMAN: How would you grade President Obama when it comes to rising inequality?

RAYMOND OFFENHEISER: Well, I think President Obama has tried, through his eight years, basically—you know, seven-and-a-half, I suppose, at this point—to actually make the point about, you know, the stagnation of wages in the middle class. In other words, the interesting thing here in the United States is—and I think even President Clinton had commented on this at the end of his administration—

AMY GOODMAN: But not commenting, what actually has happened.

RAYMOND OFFENHEISER: I think we—I think he could have done more. In other words, I think he’s now becoming very strong on this message in the last two to three years of his administration, but, you know, he was saddled with the financial crisis in the first part of the administration, and the leadership that was in place at that particular time tended to privilege the banks and less Wall—and less Main Street. And I think there needed to be a little bit more balance, I think, in the way that those issues were addressed at that particular time.

AMY GOODMAN: Finally, Raymond Offenheiser, Oxfam is also calling for action on climate change. In relation to Davos, the World Economic Forum, and beyond, what are you demanding?

RAYMOND OFFENHEISER: Well, basically, we are—because we’re focused on poverty issues in the developing world, one of the things that for us is very, very important is that climate change is actually occurring. It’s not something that’s down the road. It’s—people are living the experience of climate change in many countries of the world. And the poorest populations across the world, particularly in Africa and South Asia, are experiencing the consequences of that. They’re experiencing increased rainfall or unpredictable rainfall. They’re experiencing, you know, reduced drought cycles that are having a variety of impacts on their agriculture. And what we’re arguing for is adequate, if you will, finance for those countries that are suffering the consequence of climate change, in the form of, I suppose you might say, a part of the package deal of support—what’s referred to as adaptation. So, while we’re focused, as with the environmental community, very heavily on mitigation of carbon increase and trying to get our—get the carbon levels down, we also think there’s an equity issue there in terms of the responsible countries—our own, which produces 25 percent of the carbon annually—to actually finance the consequences in the developing world.

AMY GOODMAN: I want to thank you for being with us, Raymond Offenheiser, president of the international relief and development organization Oxfam. We’ll link to the group’s report, “An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped.” You can also watch Part 1 of the conversation at democracynow.org. I’m Amy Goodman, with Nermeen Shaikh. Thanks for joining us.

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