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IEET > Security > Eco-gov > Rights > Economic > Life > Enablement > Innovation > Implants > Vision > Futurism > Technoprogressivism > Fellows > David Brin

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Will the World’s Middle Class Rise Up to Reclaim $21 Trillion Hoard Hidden Offshore by Global Elite?


David Brin
David Brin
Contrary Brin

Posted: Sep 4, 2012

Consider this headline. $21 Trillion hoard hidden offshore by global elite. Consider that number and consider my prediction that the world’s middle classes will become radicalized, perhaps in the 2020s, or even sooner.

My 1989 novel Earth is credited with a fairly high predictive score.  In fact, fans maintain a wiki to track its successful “hits” - including little things like the World Wide Web and wearable augmented reality “google goggles.”

(They also track some embarrassing “misses”... ah well.)

Set in the year 2038, Earth portrays citizens in that near-future era looking back upon a brutal struggle that took place in the 2020s.  The Helvetian War was unlike anything we’ve seen since the French or Russian Revolutions. A radical rising by a fed-up world middle class, pushed against the wall by cynics and the corrupt connivers.

What they seek - and attain - is not socialism, a discredited foolishness that arose out of silly abstractions that bore no relationship at all to real human nature. Market economies have out-performed socialist or communist or oligarchic ones so overwhelmingly that only delusional fools - or would-be oligarchs - should prefer top-down, bureaucratic control instead of the fluid productivity that we get out of creative competition. (Does that make me sound like a right-winger? Silly.  Broaden your memes.)

No, the new radicalism that may be demanded in the 2020s—especially by emerging middle classes in the developing world—is to give all people a chance to compete fairly, free from parasitism by their homegrown kleptocrats and from the rising global variety. Free from the secret, conspiring control of a caste that Adam Smith himself called the oppressors of freedom and market economics across 6000 years.

“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”—Adam Smith, in The Wealth of Nations

Now, in that context, consider this headline. $21 Trillion hoard hidden offshore by global elite.

Yes that is a “T” and not a “B.” Just sit there and consider that number.  Then think about my prediction that the world’s middle classes will become radicalized, perhaps in the 2020s, or even sooner.

The study in question estimates the staggering size of the offshore economy and how private banks help the wealthiest to move cash into overseas havens. Russian, Saudi and Nigerian oil barons top the list, followed by US and British bankers and then drug lords and other criminal enterprises.  The totals amount to as much as the American and Japanese GDPs put together.

With US tax rates at their lowest levels in 60 years, and taxes on the rich at their lowest levels since 1920, it would seem that they still aren’t low enough for today’s super wealthy.  Consider the GOP’s potemkin rally in Tampa, in this context.

See also this angle: This hidden wealth costs western democracy governments $280 billion a year in lost tax revenue. That’s annual.  An amount so huge that infrastructure repair and boosted science could coincide with cuts in the actual tax rates for law-abiders who aren’t part of the secret Lords Economy.

Want to see where this might lead?  Try reading Earth.

Is a World Middle Class Even Possible?

In fact, it is more than possible. If by “middle class” you mean having a clean home with electricity and sanitation, a washing machine and access to transporation, plus kids who are in school with adequate food, clothing and books, then that already includes two thirds of the Earth’s human population, a fact that is seldom mentioned by either left or right.

Why is this good news ignored? Because of the Paradox of Progress.  It’s all a matter of deep personality. The reflex of folks on the right is to avert the gaze from problems to be solved and to resent nagging to solve them. The reflex of the far-left is hypersensitivity to perceived problems. To rail for solutions - but to deny that any past attempts at improvement ever worked! The right is suspicious toward the whole notion of “improvability” of either humans or society. The left wants improvability, passionately, but insists it has never happened yet.

Both extremes are - in effect, completely crazy.

Amid ongoing debates over progress, there is a third group. Those who seek to improve the human condition and who admit that steady improvements have already taken place.  These are called “liberals” - a very different breed than leftists - and to them the question of whether development has taken place inevitably gives way to practical discussions.  How to foster a speedup of already ongoing progress.   Pragmatic progressivism eschews dogma in favor of asking: what has worked and what hasn’t?

What’s becoming clear is that some parts of the world are doing better than others.  In 1970, South Korea had a lower per capita GDP than Ghana.  Today, all the nations of East Asia have left all African nations in a cloud of dust, and that includes China, which had a thirty year hiatus under Maoism.  Today, Latin America has large areas that are burgeoning—e.g. Brazil—and sub-Saharan Africa is experiencing its most rapid rate of growth (outside of certain hell-holes) since colonial kleptocrats gave way to local kleptocracies in the 1960s.

Still, the African acceleration is only impressive compared to previous stagnation. And some regions that have tried—under pressure or tutelage from international development agencies—to reform their laws and civil society, have failed to make them sufficiently competition-friendly to invite much new investment, or to give vibrant locals a level playing field against conniving local elites.

What do the professionals say?

Two interesting perspectives offer a glimpse at just how difficult the problem can be.

In a fascinating and vivid audio-visual presentation, Owen Barder explores the implications of complexity theory for development policy. He explains how traditional economic models have tried and failed to understand why some countries have managed to improve living standards while other countries have not. Using complexity theory, he shows that development is a property of a system, not the sum of what happens to the people within it.

While Barder is both interesting and informative and is on-target in his range of criticisms - (do watch the video!) - in the end he winds up sounding like a lot of “complexity” fans.  Okay, so the problem is complex.  Thanks for telling us that.

For balance, have a glimpse at an interesting, if a bit depressing, appraisal of the likelihood that creative-competitive capitalism can ever take root in MENA—the Middle East and North Africa—despite formal legal reforms.  The problem is an ancient one… oligarchies of a few at the top, engaging in what Adam Smith called “rent-seeking,” using informal connections and conniving to bypass the new “civil society reforms” and still maintain their advantages, thus repelling or driving out investment in new competitive enterprises.

It is a standard pattern that this World Bank report deems fairly hopeless to overcome in this region, though others are doing better… while the United States slips ever deeper into the classic oligarchic pattern that Adam Smith loathed.

So, shall we commit seppuku and give up?  Of course not.  There is enough light erupting all over the Earth to encourage belief in progress, not only that it can happen, but that it has.  And that tech-driven transparency will help, when citizens can record and expose local corruption with the touch of a cell phone.  And that—far better than chiding—is good enough reason to persevere.

So, will the world’s new middle classes rise up?

As I portrayed in Earth… and explore a bit in Existence... there are two types of uber-rich.  Those who are loyal to the Enlightenment Experiment that empowered their rise and (in effect) gave them everything they have… a diamond shaped social structure in which even with their billions, they - and their children - will keep facing fresh competition from a lively, vibrant population of educated and confident citizens…

...versus a portion of the new-aristocracy that simply does not get it.  Who think - as oligarchs did in 99% of past human cultures - that they are superior NOT because of this year’s latest goods and services, but because wealth inherently means lordly merit.  Such folks aren’t at fault for having this reflex.  We are all descended from the harems of guys who pursued power tenaciously and darwinistically.  The reflex is in our genes.

But it’s a poison. Our Enlightenment Experiment achieved more human progress in just four generations than all the preceding feudal societies combined.  Its founders, like Adam Smith, recognized the oligarchic tendency and denounced it.  They knew that the foolish “uber” types would keep trying to pound our diamond shaped society back into a pyramid, promoting “rent-seeking” income (like dividends and capital gains) ahead of the wages earned by creative and hardworking people with their hands.

Inevitably (and history bears me out) all this conniving will have just three possible outcomes.

1- They succeed.  The Enlightenment Experiment comes to an end. (In Existence I explore the rationalizations they might give, to excuse such a backward shift, some of them very clever!)

2- The middle classes - uniting in common cause with knowledge professions like science - could enact yet another mild, moderate, incremental, American-style revolution, of which 1776 was only one example. So was the first U.S. Civil War and Teddy Roosevelt’s progressive era, and FDR’s New Deal, in which oligarchy gets stymied just enough to keep freedom and creative competition and entrepreneurial markets and  transparency and divided power and opportunity and social mobility going, while maintaining the allure of competitively-earned wealth as a reward for delivering cool things into the world.

3- Paris… 1789.

Here is the chief difference between the good/smart/tech billionaires and the fools who now use Fox News to push an idolatry of property that has always, always, always been the enemy of competition.  The smart guys—the billionaires in Silicon Valley for example, or Warren Buffett and Bill Gates—want option number two. If need be, they will join the world’s middle classes and help keep our looming “helvetian wars” mild.

In sharp contrast, the ones who are pushing the United States into Culture War… indeed, the lastest phase of the American civil war ... actually think they are very smart.  But their efforts, if successful, will only lead to outcome#3.

They aren’t as smart as they think they are.


David Brin Ph.D. is a scientist and best-selling author whose future-oriented novels include Earth, The Postman, and Hugo Award winners Startide Rising and The Uplift War. David's newest novel - Existence - is now available, published by Tor Books."
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COMMENTS


Great article David. I like your point that the left refuses to admit that we’ve made progress. That is an essential concept. I wonder if part of the problem is that people want to measure themselves against the wealthy rather than the poor. So we look at our homes with electricity and running water and wish we had gold plated hot tubs and theater systems.

I think part of IEET’s role is to evaluate and name the improvements and look at what should come next.





“Our Enlightenment Experiment achieved more human progress in just four generations than all the preceding feudal societies combined.”


Material progress, not human progress; since we live in no genuine civilisation, no genuine human progress is made- only gross material progress—the oligarchy David describes above is evidence of such.





“What they seek - and attain - is not socialism, a discredited foolishness that arose out of silly abstractions that bore no relationship at all to real human nature.”

This sentence only really makes sense in a US context, where even progressives dare not say publicly that any good ever came from socialism. In the rest of the world it is clearly recognised as having provided an essential third alternative to paternalistic conservatism and bourgeois libertarianism. Many forms of social organsiation (such as labour laws or health and safety) that are taken for granted in the US are essentially socialistic in nature. Only in its extreme (communist) form does socialism fail to take enough account of human nature to be workable. The American left desperately needs to find the courage to stop dismissing such an important (and generally positive) development in human affairs as irrelevant or archaic.





The $21 trillion sitting is offshore accounts is, in theory, inaccessible to the US through the existing tax code (although there are lots of ways to possess it if you are willing to expend enough energy and violence). The real problem is the absurd idea that this money isn’t accomplishing anything in the world.

Money does not exist as a number on your bank statement. It exists because it is mobile and freely fungible. That $21 trillion is loaned out (or, in some cases, paid out) to acquire goods and services and to fund the development of business & technology somewhere. It’s obviously NOT in the Cayman Islands, and could well be anywhere in the world, including the US. The argument is that it goes untaxed. You can certainly bet that it is moving around and getting used, sometimes in untaxed ways.

Seizure of these funds will redistribute the beneficiaries of the wealth they represent, but, at the moment, we have no way to determine “whose ox is getting gored” in the process. Although I do not know where these funds are “invested”, it could be in any endeavor at all, from supporting slave labor to financing private space efforts, to give two extremes.

In the absence of total transparency to follow the money wherever it goes, and total accountability to enforce repayment, no one has any idea of whether the effects of recapturing the US IRS theoretical share of this wealth would have a beneficial effect on anything in the world, other than the US balance sheet. Thinking repossesion will address any problem other than US debt is as silly as thinking those banks in Cayman are just sitting on all the world’s wealth.





When Mr. Brin makes his blanket dismissal of socialism he is either;
1) Clueless regarding how much socialism is ingrained into the systems of every “advanced” nation on this planet
  -  or -
2)  Merely guilty of publishing an unsupportable, cranky opinion in an open forum that solicits feedback. He makes absolutely no effort to apportion the value of any particular system into its socialist and non-socialist components. Without that detail, his assertion is just an amateurish rant.

I suspect that he is one of those who have become enamored of a “free enterprise” system that has never existed.

Also, his condensed synopsis of Left vs. Right politics is superficial, clearly incorrect, and comical, but it probably wasn’t intended to be so funny.

At the risk of offending Mr. Brin, who has decided to interject his views into the public space on many occasions and must develop a thick skin when someone challenges his weakest opinions, I also notice that his views regarding the forces behind evolution are quite behind the times.

“Symbiogenesis”, Mr. Brin. Look it up. Competition does not account for as much as you, and many others, have claimed it does. Then read some of the latest research on symbiosis and lateral genetic transfer.

. . . And the thought that most of the human population can trace their heritage back to being the offspring of harems is so effing laughable that I hope it was indeed a joke.

Brin’s standard for a “middle class” level of life is appallingly low. He also wildly overestimates the amount of the planet’s population that are living at his assumed level. Where did he get those figures anyway? He appears to be more out of touch with the common man than even Mitt Romney. Even the world bank is much more pessimistic about the squalid existence that most of the world’s people endure.

Otherwise, some of the rest of the article was very interesting.





I can see relevant responses in the (other) target audience of this article, namely the hyper-rich. These people will occasionally hear chatter of ‘lesser people’ about revolutions, and they will poinder this from the splendid isolation of some villa complex, in some remote New Hampshire estate the size of a small country, and they may

1 - scoff and humphrah at this talk. “What are these mice contemplating? One stop of our boots and we squish them”. Many hyperrich (especially the ones that use their affluence to quickly become completely detached, alienated and weird) will be outraged and will regard this as just idle chatter of pretentious losers. “They should go get a job”.

2 - They get afraid.

Now think about it. What can “we” do to increase outcome 2. What kind of art, statements, political statements, vandalism (or acts of violence) could engender widespread fear in the ranks of the hyper-rich. I am merely speculating here, full disclaimers apply. And once these maggots start feeling sincere fear (not just of their money being taxes - no actually, fear of being dragged from the first airport they cross and getting dragged away by a hysterical lynch mob…?

My suggestion is - start LISTING the hyper rich. Very simple, create a very resilient web site listing names, family members and all plausible properties of the hyper-rich. Imagine the shock when some bloated Saudi sees his name, and the names of his wives and many children on that list? With pics. With details where they live. I can envision a legal wikileaks/anon initiative to crowd-source (and make mostly unstoppable) the investigation of anyone who might be member of the global 1%.

Being made part of a listing would for these people be a first step towards an imminent lynching. As in, sooner or later we are coming after you. Legally hopefully, but eventually legality would stop applying.





Wealthwatch.net





Once we’ve made them afraid, what would we like these people to actually do (other than invest more in personal security)?





Less buying politicians. Less purposefully rescinding democratic entitlements. Less engineered austerity. Less feeding us Koch.





“When Mr. Brin makes his blanket dismissal of socialism he is either;
1) Clueless regarding how much socialism is ingrained into the systems of every ‘advanced’ nation on this planet”


We can agree advanced nations aren’t advanced, as they are not actually civilised: without civilisation, advancement is limited. So the socialism ingrained into the ‘systems’ (which are a bit too chaotic to be termed systems) isn’t really socialism but instead is state capitalism. Only social democracy has existed thus far, not socialism. Naturally it’s semantics here, but the collateral point remains: without civilisation, whither the socialism?





So the answer to “will the world’s middle class rise up to reclaim $21 trillion hoard hidden offshore by global elite?” is no.

@Ambassador Zot: again: First we create a civilisation; then we think about socialism or libertarianism, and all the rest of that which will have as little to do with the future as Catholic v Protestant does with today.





Interesting article, despite some of the glossed over aspects which the ambassador indicated.

I agree that there is an enlightenment principle at work in political thought which is fairly unique to modern times in scale; similar concerns for liberalism and egalitarianism may have occurred in previous cultures, but at a greatly reduced scale. It is testament to the human intellect that principles of fairness constructed by great thinkers like Adam Smith can be implemented at high political and legal levels. And so they should be, so I disagree that in the converse case where oligarchs inhibit social mobility that, “Such folks aren’t at fault for having this reflex. ” Of course they are at fault, and ethics classes at schools and universities are essential so that those that succeed as a result of training at such institutions are aware of their responsibilities and punished when breaking (or attempting to change) the laws which ensure fairness.

It seems to me that there is still a strong conservative argument that low taxes or tax avoidance for the super rich aggregates wealth into the hands of those that know how apply it for economies of scale.This argument is perhaps only compelling, but significantly compelling, when we realise that less oligarchical countries are in competition with more oligarchical countries. That China presents a growing economic challenge to the US is a result of Chinese oligarchs leveraging massive manufacturing and infrastructure projects. They are even building your bridges now. http://www.nytimes.com/2011/06/26/business/global/26bridge.html?pagewanted=all

So the question is; how does one create fairer societies not just internally, where such principles can place a country at a disadvantage to others, but globally? How do we make the world a fairer place? The answer, at least in part if not in totality, must be through greater transparency, as Khannea indicated. The masses must know, and have a right to know, where wealth and power flows and how it is used. However,  I disagree with Khannea’s implication that Wikileaks is not part of a legal solution. Wikileaks is entirely legal in the countries from which is operates, and Julian Assange, who is Australian, has committed no crime according to the Australian Federal Police. Regardless that Bradley Manning may well spend the rest of his life behind bars or be executed for treason, it is through the agency and capabilities of entities like Wikileaks that the world can become more transparent and fairer.





“That China presents a growing economic challenge to the US is a result of Chinese oligarchs leveraging massive manufacturing and infrastructure projects. They are even building your bridges now.”


And Chinese rivers are filled with toxic waste- environmentalism isn’t merely a bourgeois fad anymore, it is an economic factor.
But when/if WMDs are decommissioned and crime is radically diminished, then I will pay attention to genuine social progress; until that time, I’ll continue to think social progress is a mirage and only material progress in general—and economic activity specifically—are real.





“And Chinese rivers are filled with toxic waste” and thats the great tragedy of the world isn’t it? No matter how much we predict future disaster our innate selfishness and instinct to compete at the personal, social and national levels prevents us from making the right decisions. Some famous environmentalist, I can’t remember who, said that China has the potential to turn everything around and lead the world in environmental progress because only they have the political will and might to enact to social and technological change at a massive scale. I don’t share that optimism unfortunately.

Meanwhile, the super-rich, who have some power to progress environmental technologies, don’t, because they make money from established technologies and because they probably think they can buy themselves out of environmental calamity. If they believe in climate change in the first place - I have personally witnessed some monumentally gymnastic denialism from businessmen who make their money from unsustainable industries.

Perhaps the most pertinent question is: will the revolution be sparked by wealth inequality or environmental disaster? Perhaps it will be the same thing.

Intomorrow, just wondering, why do you see the problem of WMD and crime as being equivalent? I see the problem of WMDs as immediately and significantly problematic in that they could end life on earth in an instant - so must be eradictaed completely. Isn’t crime just a more local problem, an inescapable product of natural human behaviour, impossible to eradicate?





“Isn’t crime just a more local problem, an inescapable product of natural human behaviour, impossible to eradicate?”


In 1912 ‘local’ had a parochial inference—in 2012 local is different.
Today crime is more transnational, and if some future criminal activity involves transnational WMD-materials (such as plutonium) then crime and WMDs are in fact linked.





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