The New Gilded Age: Tax and Economic Reform is the Only Way forward!

Higher wages, crackdown on tax dodging and higher investment in public services can stop the widening divide.

Oxfam is calling for urgent action and is challenging executives of multi-national corporations to pay their fair share to society. It said nine out of 10 World Economic Forum corporate partners had a presence in at least one tax haven and it was estimated that tax dodging by multinational corporations costs developing countries at least $100 billion every year. Corporate investment in tax havens almost quadrupled between 2000 and 2019.

As a priority it is recommending a three-pronged approach: 1) a crackdown on tax dodging; 2) higher investment in public services; and 3) higher wages for the low paid. It said a priority should be to close down tax havens, increasingly used by rich individuals and corporations to avoid paying tax which have deprived governments of the resources needed to tackle poverty and inequality.

Oxfam Report: Recommendation #1 – Crackdown on Tax Dodging and (Embezzlement?)

The report does not include going after money “stolen” from the world’s poorest countries by corrupt politicians and government officials who siphon cash through embezzlement. Billions of dollars are illicitly amassed from state-owned companies and stashed away, hidden from the arm of justice every year. As an example, on Friday January 29, investigators in Switzerland found out that $4 Billion earmarked for economic and social development projects are missing from a Malaysian state fund. The Swiss attorney general’s office released a statement saying that; “A small portion of the cash was transferred into Swiss accounts held by former Malaysian officials as well as current and former officials from the United Arab Emirates,” adding that, “four other cases involving allegations of criminal conduct and covering the period from 2009 to 2013 have come to light, each involving a systematic course of action carried out by means of complex financial structures.” The prosecutors have asked Malaysian authorities for help investigate the disappearance of the funds, but to date, the Malaysian companies at the centre of a corruption scandal have made no comment on the losses they are believed to have incurred.

The Gilded Age

Inequality in 2019 has reached and surpassed the 19th-century levels of the “Gilded Age”. The gilded age in United States history lasted from 1870 to about 1900. The term was coined by Mark Twain satirizing an era of serious social problems masked by thin gold gilding. The gilded age coincided with the Victorian era in Britain and the Belle Époque in France. Even though the gilded age boom was a highly stratified one, it was a period of immense ferment and optimism in America. That era had a dynamism and optimism that ours can only hope for.

the-gilded-ageIn a piece entitled; “The New Gilded Age: A bigger con job than the first one,” Andrew O’Hehir writes that the gilded age period witnessed the birth and burgeoning of the labor movement and the women’s movement. Real wages rose by 60 percent, even with a steady incoming tide of immigration, and by the turn of the 20th century, per-capita income in the U.S. was much higher than in any European country. Public education became widespread for the first time, cities opened the first public hospitals and states founded the great land-grant universities, most of which were meant to be tuition-free forever. Carnegie, who had risen from poverty in Scotland, gave away nearly his entire fortune, endowing libraries, schools and other public institutions all over the country.

The New Gilded Age

Today’s inaptly named “New Gilded Age” in comparison is a gigantic Ponzi scheme, in which the super-rich try to convince us all that lives of wealth and luxury await us, just beyond the horizon. The serious hoarders of capital in the new gilded age, the 1 percent, are a tiny and insulated group whose enormous, exquisitely renovated digs in East Hampton or the Provençal countryside are grotesque in a different way and on a grander scale than those of the gilded age.

condo-parkFrench economist Thomas Piketty has shed a revealing light on the ultra-rich in his much-discussed bestseller “Capital in the Twenty-first Century,” a work that pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.

In his book Thomas argues in intense, data-rich detail that over the past half-century wealth has stagnated and income gone flat for the vast majority of people in the Western world. Furthermore, Piketty draws an explicit comparison with the gilded age when he observes that those at the top of the wealth pyramid today generally did not get there on merit, because they worked harder and got better educations and developed brilliant ideas, but because they were born atop big piles of money that got bigger, and because current economic conditions exaggerate the inherent tendency of capital to breed and multiply.

Global Corporatism vs. Sustainable Development

In published piece in Global Research; “The Davos Blind Eye: How the Rich Eat the Poor and the World,” Prof. John McMurtry states that throughout the unseen redistribution of wealth from the poor to the rich, ever more free-market reforms are promoted as “enhanced competition”, “liberalized deregulation”, and “austerity programs” to correct the excessive entitlements of the weak and underprivileged.

The current economic paradigm that relies on “more growth” as an imagined solution is only benefiting the rich while veering our globe towards cumulative organic, social and ecological collapse as the environment is looted and polluted on ever larger scales of depredation. And if that is not enough, closer to home, more austerity programs means stripping the funding of all public sectors and institutions which have evolved to serve the common good. Public services and infrastructures too are perpetually driven towards bankruptcy by never-ending defunding, cutbacks, privatizations, and corporate lobby control of public policies and subsidies.

The United Nations SDG Resolution of 25 September 2015 known as “Sustainable Development Goals” is a set of aspiration goals covering a broad range of sustainable development issues. These include ending poverty and hunger, improving health and education, making cities more sustainable, combating climate change, and protecting oceans and forests.

SDG is not merely an economic or technical challenge; it is a political one, as it also deals with closing the gap between the haves and the have-nots, tackling the vast differences in interests and power relations, and putting into place new and fundamentally different paradigms of well-being that prioritise sustainability and equity. For this reason, it is imperative that civil society, and in particular environmental and human rights organisations, become increasingly involved and pro-active in the SDG process, if they are to articulate and defend the interests of the most vulnerable segments of society, and of nature. The question is, will political leaders accept the need for distributional remedies, or will they continue to side with the wealthy against the struggling middle class?

Rise-Up, not Trickle-Down Economics

When it comes to world economies, there exists mounting evidence that refutes the doctrine of “Trickle-down” economics; the idea that by giving the wealthy tax breaks will encourage them to spend more and that this wealth will “trickle down” to the less wealthy has been disproven time and time again. In fact the poor have undeniably lost almost half their share of global wealth while the richest have multiplied theirs at the same time.

Wall_Street_SignIt is now believed that what dismally performing economies really need is a policy that benefits the poor directly through re-investment in infrastructure. Programs that will boost the productivity of society as a whole and whose benefits will, in effect, “rise up” to benefit the poor, the middle class but also the wealthy.

Oxfam Report: Recommendation #2 – Higher Investment in Public Services – Bucking the Austerity Trend.

In an article published in The Globe and Mail, entitled; “Justin Trudeau understands that timing is crucial to austerity,” Eric Reguly reports that Justin Trudeau, the newly elected Premier of Canada is vowing to run deficit budgets for three years to stimulate Canada’s ailing economy. The focus of Trudeau’s economic plan is fairly modest and amounts to spending up to $5-billion a year on infrastructure from roads and bridges to flood-control systems and seniors’ homes. Mr. Trudeau argued that the timing was perfect to pry open the spending spigots. With interest rates at historic lows, borrowing couldn’t get any cheaper. Even if it were not money for nothing, overhauling infrastructure is never a bad idea, and Canada certainly needs it. The return on investment is generally positive; such spending makes any economy more productive.

Austerity programs are typically a blend of spending cuts and tax hikes designed to drag budgets into balance, they yank stimulus out of the economy. As a few smart Canadian economists, among them Marshall Auerback, a director of Economists for Peace and Security, and Louis-Philippe Rochon of Laurentian University, have argued, austerity doesn’t work when an economy is in retreat. Waning government spending on top of waning private spending only sucks the oxygen out of an already weak economy. When an economy is in recession, austerity deepens it. This is Keynesian Economics 101.

Oxfam Report: Recommendation #3 – Higher Wages for the Low Paid

The third recommendation in the Oxfam report was for higher wages for the low paid. But higher wages are also considered an anti-austerity measure.

In defense of higher wages, Bernie Sanders insists that huge corporations like Walmart pay their people a decent living wage with medical benefits? (In 2013, Walmart’s owners the Waltons, had a net worth of $145 billion, that’s equivalent to the net worth of all average American families living in the State of Louisiana.)

The economist Robert Reich, a fighter for economic justice for the poor supports Sanders’ idea and adds; “I do not think that taxpayers in this country ought to be subsidizing the wealthiest family in this country or any company and any corporation that is paying its workers so little that those workers, in order to have a decent living, have got to rely on food stamps, Medicaid, subsidized housing, and so on. That is corporate welfare of the worst kind. But more broadly, let me simply say that Walmart is the largest employer in the United States. It is paying its workers, if you include its part-time workers, on average $8.80 an hour. Now, compare that to 1955, when the largest employer in the United States was General Motors and it was paying its workers in today’s dollars $37 an hour.”

Canada did not invent austerity economics, but Canada could be once again showing the world that there is a right time to launch austerity, and a wrong time. The Europeans got it dead wrong and, seven years after the financial crisis, they are still paying for their epic miscalculation. Especially the Greeks who are reeling under Franco-German Hegemoney. The Canadians would have continued to make the same mistake had they voted for the incumbent Conservative Stephen Harper. Who would have thought that a young Justin Trudeau has spared Canada from a dose of austerity that would have backfired?

America is in the throes of the most controversial election in decades, pitting democrats against democrats, and democrats against republicans. The U.S. is at a critical juncture, Sanders best articulates the Canadian option, while the Republicans want to “Greek” the American people. The 2016 election is a referendum on Class and Demographics! It’s a fight between the middle-class and corporate aristocracy, and a battle between Millennials and Baby Boomers.

We have been Warned Time and Again

World leaders’ concerns about the escalating inequality have not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where millions of children go to bed hungry every night, we cannot afford to carry on giving the richest an ever bigger slice of the cake.

The Equality Trust, which campaigns against inequality in the U.K., said Britain’s 100 richest families had increased their wealth by at least £57 billion since 2010. Duncan Exley, the trust’s director, said: “Inequality, both globally but also in the U.K., is now at staggering levels. We know that such a vast gap between the richest and the rest of us is bad for our economy and society. We now need our politicians to wake up and address this dangerous concentration of wealth and power in the hands of so few.”

ghandi-lennon-kennedyA recent testimonial from an American; a “one-tenth of the one percent” Nick Hanauer, whose family owns a bank, planes and homes around the world thinks that income inequality is an enormously pressing issue that must be taken seriously by those on top. And yet, contrary to what we might expect from someone like him to say, he cautions we must address the income gap before the other ninety-nine percent rise up with pitchforks. Personally, I think pitchforks should remain in farms – for violence will not solve any problem. Change must come peacefully. People only resort to violence when everything breaks down. When hope is lost, chaos will reign.

Dissent is the Mother of Ascent

Consumer Advocate and past Presidential candidate Ralph Nader sees today’s struggle, as a fight against corporate power and a collapsing democracy. “Everything,” he says, “flows from that. All the issues we talk about – taxes, corporate welfare, bloated military budgets, foreign policy, poverty, health – flow from the weakening of our civic institutions.” Far from being intimidated by the corporations he adds, “We need to talk about issues, abuse of corporate power, citizen empowerment, and civic responsibility.” He strongly believes that the new generation of Millennials can change the world, but he warns them; “If you’re not turned on to politics, politics will turn on you.”

99-percentRalph warns us to be wary of corporate culture; “Corporations know how to tap into our minds, our bodies, and our sense of loneliness.” He tells us that ‘growing up corporate’ means that we grew up looking at things the way corporations wanted us to look at them. “Corporations define everything for us. The fact that most people don’t care about the corporate abuses that go on daily means that by growing up corporate they are not alerted to civic alternatives. Civic responsibility is more than charitable activities. Working at a soup kitchen is a worthwhile act, but you should be asking: ‘Why are there so many hungry people?’ More justice means less charity,” he concludes.

We all hope that some of the young people that Ralph Nader addresses will go on to become citizen activists. There’s no doubt that most of them will be swallowed by the corporate society, but for those who may already have the inclination to want to help out, Please Get Involved!

In closing, I can’t stop thinking of the haunting words of the late Robert F. Kennedy; “A revolution is coming – a revolution which will be peaceful if we are wise enough; compassionate if we care enough; successful if we are fortunate enough – but a revolution which is coming whether we will it or not. We can affect its character; we cannot alter its inevitability.”

These prophetic words reverberate today more than at any other time in our history. The Iowa primaries are upon us. Let’s hope that our society will wake up from its slumber and yank back democracy from the grubby hands of the greedy rich.


The New Gilded Age: A bigger con job than the first one – Andrew O’Hehir

The Davos Blind Eye: How the Rich Eat the Poor and the World – Prof. John McMurtry

Justin Trudeau understands that timing is crucial to austerity – Eric Reguly

Cover Artwork featured: Two Worlds “Sharing the Wealth” by Mark Henson

Woman at Window Courtesy of

Wall Street Sign: Wikipedia Commons

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