Philippa Kaur

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    Should Billionaires Be Taxed Differently?

    As a columnist for The Washington Post, Megan McArdle works for the Post’s owner, a man named Jeff Bezos. Over the past two decades, McArdle has had numerous other prestigious bosses. She boasts a solid career in high-level journalism, having worked for The Atlantic, Newsweek, The Economist and Bloomberg, among others. Bloomberg View’s executive editor, David Shipley, once called her “an extraordinary writer and thinker.”

    Early on, in 2001, McArdle broke onto the scene as the author of a blog, “Live from the WTC,” at a time when most people were not yet addicted to the internet and few even knew what the word blog meant. Making her mark as a blogger required one of two talents: the ability to come up regularly with remarkable scoops and cutting insights, or developing a shrill, brutally opiniated voice capable of irritating the right class of adversaries and resonating with a crowd of equally opinionated followers. McArdle long ago branded herself a libertarian. That quite naturally helped to define her as the second type of celebrated blogger. She has consistently lived up to that billing, even as an opinion writer for the revered Washington Post.

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    McArdle has now weighed in on ProPublica’s blockbuster scoop last week concerning the tax returns of the 25 richest Americans. New York Times editor Spencer Bokat-Lindell prudently commented: “Depending on your point of view, it was either one of the most important stories of the year or an invented scandal.” The Times author exposes the significant complications when wishing to address the issue of taxing the super-rich. He coyly conceals his own point of view. 

    In her column in The Washington Post bearing the title, “Think Twice Before Changing the Tax Rules to Soak Billionaires,” McArdle doesn’t hesitate to trumpet her point of view urbi et orbi. “Think twice” of course means: Read my article and stop complaining. She suggests that taxing the rich more would be undemocratic because it would mean treating them differently from other citizens. That would be an injustice. Her jibe, “soak billionaires,” suggests that taxing them would be torture similar to waterboarding.

    Then McArdle offers this: “We talk a lot about rich people ‘paying their fair share,’ but we’re rarely clear on what exactly we mean by that.”

    Today’s Daily Devil’s Dictionary definition:

    Fair share:

    An amount corresponding to the implicit rules of equitability that apply in any society that values solidarity, meaning that no such amount can be determined in a society with an ideological bias against solidarity

    Contextual Note

    McArdle may have been inspired by former UK Prime Minister Margaret Thatcher who, to the rhetorical question, “Who is society?” gave this response: “There is no such thing! There are individual men and women.” That means fairness is in the eye of the beholder. It also means all’s fair in love and war… and tax avoidance. In any case, the two ladies appear to share a similar train of thought. In the idea of “fair share,” it isn’t the concept of “fair” that upsets either of the ladies. It’s the idea of “share.” In McArdle’s mind, the noun “share” simply designates a unit of ownership in a corporation’s stock. Society, in this sense, is hardly different from a community of shareholders, some owning many more shares than others.

    The columnist speculates about what it would mean if the wealthy were taxed on the added value of the stocks they own. She imagines a melodramatic scenario in which “they might be forced to sell off stock of a business they spent decades building.” Shares cannot be shared, so they must be sold. That would be downright tragic because the builders might just stop building and then where would society be? But having made her melodramatic point, she doesn’t even try to imagine how such things would play out in the real world. Like Kurtz in Conrad’s “Heart of Darkness,” she simply invokes “The horror! The horror!”

    McArdle’s shock at the idea of entrepreneurs losing their life’s work makes no sense for two fairly obvious reasons. The first is theoretical, the second pragmatic. In theory, a wealthy person could be forced to sell stock to pay a percentage of capital gains. That person’s share of the company would be correspondingly diminished, but in almost all cases only slightly, since the tax would only represent a percentage of the gain in value. Owning 10% of a company valued at $1.5 billion is better than owning 12% of a company valued at $1 billion. In the long term, having to sell those more shares could end up reducing the person’s future wealth. It would not reduce their current wealth.

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    But because real billionaires tend to be well advised and own portfolios that allow them a wide range of options, they never make such sacrifices. Whether it is to buy a yacht or pay taxes, they rarely if ever liquefy any assets. They borrow against those assets, which has the added value of reducing their declared income on which they would normally pay taxes.

    For most people, income represents the money they must earn to survive or maintain a lifestyle. Because wealthy owners of businesses decide on their own remuneration, they avoid having a substantial taxable income by living lavishly off money they borrow from a bank and pay back with interest. The interest is the only “penalty” they pay for their prodigality. It is nowhere near what they would pay in taxes. It’s an ideal solution. Banks love lending money to the rich because there is zero risk. The wealthy avoid taxes. Their tax lawyers and accounts earn a decent fee. The society of ordinary taxpayers reaps no benefit other than whatever trickles down from the high profit margins of those who sell yachts and luxury goods.

    McArdle doesn’t want to know about such systemic truth. Instead, she returns to her imaginary vision of a system obsessed by its envy of the rich and intent on invoking the idea of fairness to constrain their freedom. She confesses that, “given a choice between letting billionaires spend fortunes reaching for the stars, or destroying those fortunes so that the rest of us don’t have to look at them, then personally, I’ll take the rockets.”

    Historical Note

    The rockets that Megan McArdle refers to are those that her boss, Jeff Bezos, is building thanks to his astronomic fortune, some of which he has invested in his space venture, Blue Origin. Is it a coincidence that she works for Bezos’ newspaper and that she uncritically assesses his personal indulgences?

    Her previous column, with the title “Why Aren’t We Talking More About UFOs?” clearly advances the interests of Blue Origin. The more concerned Americans are about alien invasions — whether from outer space, China or Russia — the more public money (provided by ordinary taxpayers) will be available to support Blue Origin, a company that is about to receive a gift offered by Congress of $10 billion to colonize the moon, even after losing out in a public bid to fellow billionaire Elon Musk’s venture, SpaceX. 

    McArdle probably thinks of Blue Origin as yet another example “of a business [Jeff Bezos] spent decades building.” His lobbyists have convinced the government to spend billions on it, while Bezos himself skirts his tax obligation. She complains that the argument demanding “‘taxes on untaxed capital gains’ is what you come up with if you just don’t think anyone should have enough money to be able to shoot themselves into space.” The “you” she refers to is ProPublica, which dared to make that case, and anyone else equally feeble-minded enough to begrudge billionaires their private pleasures. 

    Bezos’ ownership of the Post is paying off. When making the decision to buy the paper in 2013, he reasoned: “The Washington Post has an incredibly important role to play in this democracy. There’s no doubt in my mind about that.” Had he waited a year to consider the findings of a Princeton study published in 2014 with the title, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” he might have more accurately explained: The Washington Post has an incredibly important role to play in this plutocracy.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Modi’s BJP Lost to Mamata’s TMC Because of Bengali DNA

    In early May, the eastern Indian state of West Bengal went to the polls. The state elections attracted global attention. The BBC’s analysis of the election was headlined, “West Bengal Election: Modi Loses a Battle in the ‘War for Indian Democracy.’”

    Such attention to a state election is surprising. West Bengal is not the richest, the largest or the most populous state in India. Yet it has always been an important part of the country. The British started the colonization of the Indian subcontinent by winning the Battle of Plassey in 1757. Calcutta, or Kolkata as it is now called, was the capital of British India for more than a century. Of course, West Bengal did not exist then. Bengal was the name of the British province and included modern-day Bangladesh, Bihar and Orissa then.

    History Matters

    It was Bengali intellectuals such as Raja Rammohan Roy, Ishwar Chandra Vidyasagar, Bankim Chandra Chattopadhyay, Swami Vivekananda and Rabindranath Tagore who led the first Indian cultural renaissance. The founder of the Bharatiya Jan Sangh, the forerunner of the ruling Bharatiya Janata Party (BJP), was Syama Prasad Mukherjee, a Bengali. Manabendra Nath Roy, the founding father of Indian communism and the founder of the Mexican Communist Party, was Bengali too. So was Subhas Chandra Bose, India’s iconic freedom fighter who defeated Mahatma Gandhi’s candidate, in the party elections of the Indian National Congress.

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    Suffice to say, Bengal has played a larger than life role in the political and cultural life in modern India. Yet it is important to remember that this region has always sung to its own tune. Whenever a Delhi-based empire weakened, Bengal was the first province to sound the bugle of independence. Since independence, West Bengal has continued this timeworn tradition. Iconic chief ministers of West Bengal, such as Bidhan Chandra Roy and Siddhartha Shankar Ray, dealt with powerful Indian prime ministers such as Jawaharlal Nehru and his daughter Indira Gandhi as equals.

    The first sustained challenge to the Congress party came from West Bengal. It was here that the communists won a historic electoral victory in 1977 and remained in power until 2011. Bengal has thrived on an us-versus-them mindset vis-à-vis the national capital, New Delhi. Bengalis believe they have been wronged by New Delhi and have to retain their independence from India’s overbearing capital. In this narrative, West Bengal is the last bastion standing against the invaders from the north, and this is the essence of Bengali pride.

    Mamata Banerjee overthrew the longstanding communist government in 2011 and has been in power since. She is a feisty leader whom her admirers call “Didi,” a Bangla word for elder sister. This spinster in Kolkata has taken on the bachelor in New Delhi and won. Fittingly, a meme doing the rounds on social media adapts Asterix to Indian political lore: “One small state of Ben-Gaul still holds out against the invaders. And life is not easy for the Gow-Man believers who make the camps of Fascism, Hindutvam and Religious Extrememum…” Other variants spoke about Ben-Gaul holding out against the all-conquering North Indian invaders and their emperor, “Modius.”

    How Ben-Gaul Knocked out the BJP?

    Before the election, many deemed Banerjee’s victory in West Bengal unlikely. Two BJP members of parliament confidently told one of these authors that their party was headed to a victory. Banerjee’s All India Trinamool Congress, abbreviated as TMC, was facing local anger. Many accused the TMC of “misgovernance — including corruption, nepotism and high-handedness— seemed” to have put the party in peril. The BJP was promising Bengalis rapid industrialization and high growth after years of economic stagnation.

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    Banerjee’s right-hand man, Suvendu Adhikari, decamped to the BJP, as did many other key party members. In fact, Adhikari went on to defeat Banerjee in Nandigram, her own constituency. When the dust settles, it is clear that the BJP had reasons to be confident. Yet India’s ruling party led by Prime Minister Narendra Modi was stung by Didi’s ferocious counterpunching and was eventually knocked out. What happened?

    First, the BJP did not announce a local chief ministerial candidate. It did not promote any “son-of-the-soil Bengali leader” and even mighty Adhikari was left to play a supporting role to Modi. In India’s largest state of Uttar Pradesh (UP), this strategy had worked. In West Bengal, the strategy backfired. The mother of one of the authors grew up in Kolkata and presciently remarked that Modi’s speeches in Hindi would not go down well among a people with immense linguistic pride. Modi did not even use an interpreter to translate his speeches into Bangla. Banerjee portrayed herself as the local Didi and slammed the BJP as outsiders insulting Bengali pride and even identity. It turns out that her narrative resonated with the voters.

    Second, the local BJP leaders acted sycophantically. This was not in keeping with the Bengali traditions of local leaders acting as equals of leaders in New Delhi. Bengalis feared that the BJP would reduce West Bengal into vassal status. The historic suspicion of Gujaratis and Marwaris, the trading castes who once collaborated with the British, also kicked in. Modi and his chief aide, Amit Shah, are both Gujaratis. When local leaders invoked the two national leaders repeatedly as Modiji and Amitji, they offended Bengali sensibilities and triggered old suspicions.

    Third, the BJP failed to take into account the legacy of India’s first cultural renaissance. This intellectual, social and cultural movement that began in the late 18th century and continued till the early 20th century continues to shape the Bengali ethos. It challenged pernicious customs such as caste, dowry and sati, the burning of wives on their husband’s pyres. Inspired by secularist, modernist and humanist ideals, Bengali intellectuals set out to modernize not only Bengali but also Indian society. Middle-class Bengalis have long seen themselves as “bhadralok,” well-mannered persons. Modi himself constantly pays homage to Swami Vivekananda, a charismatic Bengali spiritual figure. Yet he was unable to appeal to the bhadralok legacy of West Bengal. Too many Bengalis saw Modi as peddling a revanchist version of Hinduism that they had fought hard to reform.

    A case in point is the BJP’s crusade against the consumption of beef. Unlike much of India, meat eating has never been taboo in the Bengali tradition. Even saints have not ordained against eating meat or fish. West Bengal remains one of the few states where beef is freely sold. The BJP used strategies that worked elsewhere in states like UP and Bihar. The party failed to keep its finger on the unique Bengali pulse that beats to a more self-proclaimed liberal rhythm. The caste-based politics by the BJP had limited success, as did the specter of moral policing as under UP’s hardline Hindu chief minister, Yogi Adityanath.

    Fourth, the BJP’s narrative of local Hindus getting subsumed by Bangladeshi Muslim immigrants failed against the TMC’s narrative of New Delhi reducing Kolkata to feudatory status. Under Banerjee, Bangladeshi immigration has increased and caused unease among many voters. Yet there is a strong linguistic and regional identity in West Bengal. The partition of 1947 has not cast such a bitter memory as in Punjab. Bangladesh itself broke away from Pakistan in 1971 on linguistic grounds. Bengali pride trumped Hindu identity at least this time around.

    Fifth, Banerjee deserves much credit for campaigning with great energy and a clear message. West Bengal has done well in reducing poverty and achieving higher agricultural growth than in the rest of the country even if overall economic growth has been low. Also, Banerjee’s schemes for the rural poor and women have won her much support. Modi has won a majority of the women’s vote because of his last-mile welfare programs. Here, Banerjee won most of the women’s votes in a fundamentally matriarchal society that worships the goddesses Durga and Kali. 

    Finally, there is a politically incorrect point that analysts often overlook. One of the authors is Bengali and can attest that bhadralok culture has prized learning over wealth. In part, this might have been a defense mechanism to cope with the poverty the British inflicted on this part of the world. In part, this might be a reaction to the Marwari pursuit of wealth by collaborating with the British. To this day, many Bengalis distrust Gujaratis and Marwaris, whom they see as money-grubbing soulless creatures. The older generation still professes wistful love for the old multinational firms that dominated Kolkata till the 1970s such as Burn Standard, Andrew Yule and Balmer Lawrie. 

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    Arguably, the Bengali distrust of money has led to low growth in the state. The Bengali diaspora around the world wax lyrical about the preservation of their distinctive “Bangaliyana” and how they are culturally different from the rest of India. Yet, unlike Gujaratis, very few Bengalis invest in their home state. They invest in West Bengal only when they return to retirement in Kolkata. Like many cities in Italy, Kolkata is becoming a city of geriatrics with the young leaving in droves for jobs elsewhere.

    Even in 2021, Bengalis tend to be employees, not entrepreneurs. They flock to all parts of India and indeed much of the world to work as doctors, lawyers, accountants, academics, administrators and more. In the last few years, startups have taken off in India, including economic backwaters like Kerala and Odisha. Yet West Bengal still lacks any meaningful startup culture.

    The BJP’s constant championing of development, industrialization and growth might have rubbed off this deep-seated suspicion of entrepreneurship, business and wealth in the Bengali psyche. It did not help that Modiji and Amitji were Gujaratis spouting Hindi in a state that is proud of its distinctness from India. As mentioned earlier, the province of Ben-Gaul has historically been the first to secede from pan-North Indian empires. No wonder Didi beat Modi.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Saudi Seeks to Replace UAE and Qatar

    Saudi Arabia has stepped up efforts to outflank the United Arab Emirates and Qatar as the commercial, cultural and/or geostrategic hub in the Gulf. The Saudis recently expanded their challenge to the smaller Gulf states by seeking to position Saudi Arabia as the region’s foremost sports destination, once Qatar has had its moment in the sun with the 2022 FIFA World Cup. The kingdom seeks to secure a stake in the management of regional ports and terminals, which have so far been dominated by the UAE and, to a lesser extent, Qatar.

    The kingdom kicked off its effort to cement its position as the Middle East’s behemoth earlier this year. In February, Saudi Arabia announced it would cease doing business by 2024 with international companies whose regional headquarters were not based in the country. 

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    The UAE ranks 16th on the World Bank’s 2020 Ease of Doing Business Index as opposed to Saudi Arabia at number 62. As a result, freewheeling Dubai has long been the preferred regional headquarters of international firms. The Saudi move “clearly targets the” United Arab Emirates and “challenges the status of Dubai,” said a UAE-based banker.

    Saudi Arabia is a latecomer to the port control game, which is dominated by Dubai’s DP World. That company operates 82 marine and inland terminals in more than 40 countries, including Djibouti, Somaliland, Saudi Arabia, Egypt, Turkey and Cyprus. The kingdom’s expansion into port and terminal management appears to be less driven by geostrategic considerations. Instead, Saudi Arabia’s Red Sea Gateway Terminal (RSGT), backed by the Public Investment Fund (PIF), the Saudi sovereign wealth fund, said it was targeting ports that would service vital Saudi imports, such as those related to food security.

    In January, PIF and China’s Cosco Shipping Ports each bought a 20% stake in RSGT. The Chinese investment fits into Beijing’s larger Belt and Road Initiative (BRI), which involves the acquisition of stakes in ports and terminals in Saudi Arabia, Sudan, Oman and Djibouti, where China has a military base.

    Jens Floe, the chief executive officer of RSGT, said the company planned to invest in at least three international ports in the next five years. He said each investment would be up to $500 million. “We have a focus on ports in Sudan and Egypt. They weren’t picked for that reason, but they happen to be significant countries for Saudi Arabia’s food security strategy,” Floe said.

    Saudi Sports

    Saudi Arabia’s increased focus on sports, including a possible bid to host the 2030 World Cup, serves multiple goals. First, it offers Saudi youth, who account for more than half of the kingdom’s population, a leisure and entertainment opportunity. Second, it boosts Crown Prince Mohammed bin Salman’s burgeoning development of a leisure and entertainment industry. The Saudis believe this could allow the kingdom to polish its image tarnished by human rights abuse, including the killing of Saudi journalist Jamal Khashoggi in 2018, and challenge Qatar’s position as the face of Middle Eastern sports.

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    A recent report by Grant Liberty, a London-based human rights group that focuses on Saudi Arabia and China, estimated that Riyadh has invested $1.5 billion in the hosting of multiple sporting events. These include the final games of Italy and Spain’s top football leagues, Formula 1 races, boxing, wrestling and snooker matches, and golf tournaments. So far, Qatar is the Middle East’s leader in the hosting of sporting events, followed by the UAE.

    According to Grant Liberty, further bids for events worth $800 million have failed. This did not include an unsuccessful $600-million offer to replace Qatar’s beIN Sports as the Middle Eastern broadcaster of the UEFA Champions League. Saudi Arabia reportedly continues to ban beIN from airing in the kingdom, despite the lifting of the Saudi-Emirati-led diplomatic and economic boycott of Qatar in January.

    Oil Exports

    Mohammed bin Salman’s Vision 2030 plan to diversify and streamline the Saudi economy and ween it off dependency on oil exports “has set the creation of professional sports and a sports industry as one of its goals,” said Fahad Nazer, spokesperson for the Saudi Arabian Embassy in Washington. “The kingdom is proud to host and support various athletic and sporting events which not only introduce Saudis to new sports and renowned international athletes but also showcase the kingdom’s landmarks and the welcoming nature of its people to the world.”

    The increased focus on sports comes as Saudi Arabia appears to be backing away from its intention to reduce the centrality of energy exports for its economy. Energy Minister Prince Abdulaziz bin Salman, the crown prince’s brother, recently ridiculed an International Energy Agency (IEA) report, saying “there is no need for investment in new fossil fuel supply” as “the sequel of the La La Land movie.” He went on to ask, “Why should I take [the report] seriously?”

    Putting its money where its mouth is, Saudi Arabia intends to increase its oil production capacity from 12 million to more than 13 million barrels a day. This is based on the assumption that global efforts to replace fossil fuel with cleaner energy sources will spark sharp reductions in American and Russian production. The Saudis believe that demand in Asia for fossil fuels will continue to rise even if it drops in the West. Other Gulf producers, including the UAE and Qatar, are following a similar strategy.

    “Saudi Arabia is no longer an oil country, it’s an energy-producing country … a very competitive energy country. We are low cost in producing oil, low cost in producing gas, and low cost in producing renewables and will definitely be the least-cost producer of hydrogen,” Prince Abdulaziz said. He appeared to be suggesting that the kingdom’s doubling down on oil was part of a strategy that aims to ensure that Saudi Arabia is a player in all conventional and non-conventional aspects of energy. By implication, he was saying that diversification was likely to broaden Saudi Arabia’s energy offering, rather than significantly reduce its dependence on energy exports.

    “Sports, entertainment, tourism and mining alongside other industries envisioned in Vision 2030 are valuable expansions of the Saudi economy that serve multiple economic and non-economic purposes,” said a Saudi analyst. “It’s becoming evident, however, that energy is likely to remain the real name of the game.”

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    How the Tech Giants Work for the Security State

    The United States proudly believes in its uniqueness as the one nation in this corrupt world that remains dedicated to the freedom of its citizens. That belief is part of the nation’s founding myth. Americans see their nation as representing an ideal, a model for all other nations to emulate. They continue to believe that their government is committed to their own unassailable freedom, even after the increasingly visible stranglehold over all of its institutions by the military-industrial complex, a process already well underway when President Dwight Eisenhower denounced it 60 years ago. 

    The takeover has been confirmed by numerous events, including a series of costly and futile wars in Southeast Asia and the Middle East. Despite the obvious lessons of recent history, Washington’s political class consistently demonstrates its inability to oppose policies that lead to more failed wars or to rein in an ever-expanding military budget. It would be more accurate to call the USA the UCA, the United Complex of America. Militarism in body and spirit defines its unity.

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    As a corollary of their conviction that their system of government represents an ideal the rest of the world should emulate, Americans believe that all other nations, even their Western allies, have less freedom. The populations of these nations willingly accept being ruled over by invasive governments that exercise unjustified control over their citizens’ lives, limiting their right to the pursuit of happiness.

    After all, every one of them boasts one form or another of the tyrannical practice known as “socialized medicine.” Most of them even have national identity cards, symbols of all-seeing, all-controlling administrations. Those two horrors — socialized medicine and identity cards — define cowardly peoples who have renounced their basic rights (including the right to arm oneself for rebellion), something Americans will always refuse to do.

    In an article detailing the complex relations between tech giants and law enforcement, three New York Times reporters reveal how, in the home of the brave and the land of the free, the citizens deemed to be brave have ended up accepting a truly invasive system they naively believe makes them free. Without having to invent a visibly centralized system of control, their government has perfected its strategies for spying on, managing and when necessary, directly controlling the lives of its citizens.

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    Thanks to the culture of the consumer society, the methods devised turned out to be simple to put in place. It begins with an immediately acceptable ideological principle that already applies to practically everything in the American way of life. The most powerful government in the world delegates an important part of the task of control to private enterprises. Just as American foreign wars, once prosecuted by a national, conscripted army, have veered toward the logic of mercenary armies, the US government’s surveillance — though clearly present in its vast, centralized intelligence community and security state — relies on private tech companies to provide the direct interface with its citizens. Distracted by the glitz, glamor and freebies offered by successful tech enterprises, the American people fail to recognize how they are being monitored and manipulated. 

    The hyperreal illusion is facilitated by Americans’ belief that because private companies are focused on profit, they, as the customers who enable the firms’ profitability, are in good hands. Profit, they have been taught, is the secret weapon that preserves apolitical virtue. Americans feel they can entrust every aspect of their life to companies like Google, Facebook, Apple, Microsoft and Amazon, who have no political agenda other than expanding the boundaries of citizens’ freedom by offering them access to platforms that, in turn, offer them more and more free or discounted goods and services.

    Focusing on the example of Apple, the Times article highlights the kind of ambiguity that exists when politically motivated persons of authority use that authority to subpoena not people, but the data collected by the admittedly greedy but supposedly politically neutral tech companies. Users have nothing to fear because the companies all have policies designed to protect the confidentiality of their customers’ data. It is written into their contracts.

    But in a world where the population has been told terrorism is always lurking in the shadows, law enforcement and national security sometimes need to access that data. They use the law to accomplish their goal. The companies, to respect their contract with users, have the right to refuse. “But more frequently than not,” the article tells us, “the companies comply with law enforcement demands. And that underlines an awkward truth: As their products become more central to people’s lives, the world’s largest tech companies have become surveillance intermediaries and crucial partners to authorities, with the power to arbitrate which requests to honor and which to reject.”

    Today’s Daily Devil’s Dictionary definition:

    Surveillance intermediaries:

    Supposedly uninvolved, neutral bystanders who have been given the task of hoarding the data that can be used, when needed, to restore order or achieve any other ends deemed essential to the security of those in power.

    Contextual Note

    These practices are now being exposed in the courts. According to the understanding Americans have of a democratic system based on the subtle play of “checks and balances,” freedom and justice, even when challenged, will always prevail. Or will they? It is one thing to know how the system was designed. Another is to understand how it works.

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    The Times reporters reveal that “more frequently than not, the companies comply with law enforcement demands.” The number of those requests “has soared in recent years to thousands a week.” Analyzing the statistics, they note that over a six-month period in 2020, for example, Apple challenged 238 demands. That corresponds to 4% of the total. Blind compliance with the government thus occurs 96% of the time. That translates as the same figure for non-compliance with the terms of their own contract with their customers.

    President Joe Biden’s attorney general, Merrick B. Garland, justifies this arrangement, not because it is founded in law but because it is the result of “a set of policies that have existed for decades.” Blame it on tradition. Or rather don’t blame it at all. That is the ransom people pay to their need for security. The article describes the use of “gag orders that authorities placed on the subpoenas.” Apple and Microsoft agreed, under constraint, not to inform those whose information was targeted. “In Apple’s case, a yearlong gag order was renewed three separate times.”

    Historical Note

    In 2013, Edward Snowden revealed to the world that the US spies on its own citizens. The shock of 9/11 put in place a state of permanent paranoia that allowed Americans to accept any measure proposed to protect them from terrorists. All the data that exists about the citizens themselves, most of it now generated and stored by private companies, may play a role in controlling their behavior. It helps the government detect sedition and terrorism. For the companies, it is merely the key to generating profits by understanding and influencing the behavior of consumers.

    In recent years, the media have reported extensively on the social credit system China is currently putting in place. It appears to use invasive technology to produce the equivalent of George Orwell’s Big Brother in “1984.” For that reason, it is anathema to freedom-loving Americans. What the Times article reveals is that, contrary to China, whose government exclusively defines and operates the system, Americans get two surveillance operators for the price of one.

    If an intrusive government is the enemy of the people’s freedom, the Chinese at least have the advantage of knowing who the enemy is. In the US, where the government has set up a central system of what we might call “control of acceptable values” (i.e., values that do not lead toward terrorism), there is a second set of operators: the platforms that organize all the data that may prove useful to the needs of the central surveillance system. The people trust the companies, who are only interested in the cash advantages produced by citizens’ data. But the government is interested in everything else, from basic security to partisan political exploitation.

    Americans traditionally fear “big government,” a Godzilla-like monster that may be surveilling them. That fear is so deeply instilled, they will never notice, let alone fear surveillance intermediaries.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    A Modi-fied India Has Weakened on the World Stage

    Narendra Modi, the prime minister of India, has completed seven years in office. At the same time, his autocratic leadership has brought the simmering discontent in the foreign policy establishment out in the open. Some members of the Forum of Foreign Ambassadors of India signed an open letter slamming critics of Modi’s foreign policy. On May 31, the government notified the Central Civil Services (Pension) Amendment Rules, 2020, to further muzzle dissent by retired bureaucrats.

    Although rare, such vocal disagreements are not new in India. However, with its economy in shambles and a spate of downgrades by reputed international agencies on democratic values, human development, press freedom and hunger index, the foreign affairs discord will further diminish its global stature.

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    Over the decades, India has seen several significant changes in the way it looks at the world. It went from the idealistic Non-Aligned Movement in the 1950s to a close relationship with the Soviet Union during the Cold War. Now, India has cozied up to the United States to form the Quad, a strategic partnership to counter China that also includes Japan and Australia. India also flirted with BRICS nations for a brief while to form a coalition of developing countries — Brazil, Russia, China and South Africa — which seems to be dying a quiet death.

    All along, India has prided itself in maintaining strategic autonomy. Modi’s megalomania made him believe that he would suddenly catapult India to global power status. Unfortunately, his terms in office have left a muddled mess in its wake.

    Strong Start

    In today’s world of modern warfare and geopolitics, which includes nuclear-armed neighbors in Pakistan and China, Modi’s early years saw inane chatter about “Akhanda Bharat,” the ruling Bharatiya Janata Party’s (BJP) term for undivided India. This idea seeks to regain ancient India’s lost glory by spreading Hinduism’s influence across South Asia. Barring such misplaced euphoria, Modi rode the wave of international goodwill to regularize the border with Bangladesh.

    In western Asia, the Middle East was warming up to Indian influence. Progress was made on a deal to develop Iran’s strategic Chabahar port, which would facilitate overland access to Afghanistan. In 2017, Modi became the first Indian prime minister to visit Israel. India has also improved its relationships with Saudi Arabia and the United Arab Emirates. Yet since the 2017 Doklam standoff on the India-China border that Modi’s team handled well, Beijing has succeeded in building more infrastructure in the region than New Delhi. Though it could also be considered a strategic tie. Despite US objections, the decades-old India-Russia defense partnership evolved from New Delhi being a technology buyer to the recipient of technology transfer and, finally, a defense research and development partner — an evolution that has continued under Modi.

    Embed from Getty Images

    India’s perpetual see-saw with Pakistan has continued throughout Modi’s tenure. His initial outreach by inviting then-Prime Minister Nawaz Sharif to his inauguration in 2014 and a surprise stopover in Lahore a year later quickly fizzled out. In 2016, Pakistan-based militants carried out terrorist attacks near the town of Uri in the Indian state of Jammu and Kashmir. In response, India conducted “surgical strikes” across the Line of Control (LoC), which separates the disputed Kashmir region. In 2019, Pakistani militants attacked Indian soldiers in Kashmir. For the first time since 1971, India entered Pakistani airspace to bomb locations that New Delhi claimed to be terrorist training camps.

    The situation between India and Pakistan did not change much. Tensions between the two countries persist. But Modi was reelected in 2019 on the promise of this altered equation of India swiftly and boldly following up on terrorist attacks by Pakistan-based militants.

    The reality was much more nuanced. Despite Indian claims and Pakistani counterclaims, international observers concluded that the two cross-border raids by India were not particularly effective. By blocking access to bombed sites, Pakistan’s side of the story seemed flimsy. However, Islamabad’s downing of an Indian fighter jet in February 2019 and capturing an Indian pilot, who was returned a few days later, appeared to expose holes in India’s defense preparedness. Nonetheless, Modi managed to isolate Pakistan globally and, in 2018, have it included in the gray list of the Financial Action Task Force, the global agency tracking terror financing.

    India’s relations with the West did not improve much. In Europe, other than the Rafale warplanes agreement in 2016, the Modi government was unable to make progress on the stalled trade deal with the EU. To be fair, Brussels was busy rebuilding after the Great Recession and the chaos caused by Brexit. Across the Atlantic, there was optimism in the air. During his final term, US President Barack Obama reluctantly embraced Modi. Later, the bonhomie between Donald Trump and Modi could not prevent a trade war.

    However, India-US defense and strategic cooperation strengthened as Modi built on the hard work of his predecessors, Atal Bihari Vajpayee and Manmohan Singh. The rising threat of China also played its part in developing this relationship. The 2015 agreement between Obama and Modi on nuclear liability issues was followed by a bilateral Logistics Exchange Memorandum of Agreement in 2016 and a Communications Compatibility and Security Agreement in 2018. The Quad seems to be a natural extension of this closer US-India partnership, India’s Act East policy and the Asian pivot of the United States.

    What Changed?

    After a reasonably strong start, Modi’s India has found itself in a muddle. India’s foreign policy failures closely follow the country’s economic decline since 2017-18 and steadily rising majoritarianism. Trump’s erratic, isolationist policies and India’s widening geopolitical deficit vis-à-vis China played a role, but most of Modi’s wounds are self-inflicted.

    For his narrow domestic agenda and to pass the Citizenship Amendment Act (CAA), Modi selectively gave a pathway to citizenship to non-Muslims from the neighboring countries of Afghanistan, Bangladesh and Pakistan. Because it excluded Muslims, even persecuted ones, from these countries, the CAA was criticized and deemed discriminatory.

    In doing so, Modi alienated Bangladesh, which is rapidly modernizing and leaving India behind on most human development and economic indicators. Bangladesh swiftly showed India its place through a diplomatic snub and demonstrated its desire to walk into China’s open arms. Sustained diplomacy over the past year, combined with Modi’s recent trip to Bangladesh and India’s donation of COVID-19 vaccines, repaired some of the damage. While cooling down the CAA rhetoric might help, India’s weakened economy could still push Bangladesh closer to China.

    Embed from Getty Images

    Under the Trump administration, the US held a tough stance against Pakistan over what it called “Islamabad’s failure to take action against militant groups.” Aid from Saudi Arabia also dried up due to strained relations between Riyadh and Islamabad. As a result, Pakistan is beholden to China. The China-Pakistan Economic Corridor (CPEC), which passes through Gilgit and Baltistan, a disputed region that both India and Pakistan claim sovereignty over, has cemented China’s grip on Pakistan. New Delhi has not approached the recent ceasefire agreement with Islamabad and the resumption of peace talks from a position of strength. Rather, it is a tacit admission by both weakened parties that peace is mutually beneficial.

    Relationships with the Arab world and Israel remain strong, but Modi has lost the plot with Iran and is losing some ground with Russia. Beijing recently signed a 25-year strategic deal with Tehran and, with its economic clout, is pulling the Kremlin into its sphere of influence. In the pre-Modi era, as a rising economic power, India managed to carve out exceptions for itself to bypass US sanctions against Iran and Russia. Throughout Modi terms in office, China has steadily widened the economic and geopolitical gap with India. New Delhi’s growing weakness vis-a-vis Beijing has resulted in India kowtowing to the US and losing its strategic autonomy.

    Britain’s need for trade partners following its departure from the European Union might lead to a favorable India-UK deal. But a free trade agreement between India and the EU has not seen any significant movement under Modi. US President Joe Biden does not seem to be in any rush to end the trade war his predecessor began with India.

    For all the buzz surrounding The Quad, India is the junior partner that has little to offer to others in terms of economic benefits. New Delhi will enhance its strategic and military cooperation with other like-minded democracies, but it is unlikely to intervene if there is a full-scale confrontation between India and China. Unless the Indian economy becomes efficient and tightly integrates itself with Quad countries, its usefulness to other partners will be limited to its size and strategic location.

    In the Cold War, the US aligned with autocrats and religious fundamentalists, most notably in China and Pakistan, to defeat the Soviet Union. In the new brewing cold war between Washington and Beijing, Quad countries will pay lip service to building democratic institutional capacity in India. However, if push comes to shove, they will partner with an authoritarian India to counter China, which will serve their narrow self-interests.

    India-China Relations

    Modi’s biggest foreign policy failure is India’s frayed relationship with China. His misplaced overconfidence forced him to reject conventional wisdom and embark on a charm offensive with Chinese President Xi Jinping. Modi ignored the Doklam warning and kept expecting Xi to treat India as an equal, despite the crumbling Indian economy. Meanwhile, China had already started reducing New Delhi’s sphere of influence through its outreach to India’s neighbors and offers of economic and strategic partnerships. In 2019, Modi scrapped Article 370 of the Indian Constitution to downgrade the state of Jammu and Kashmir to a union territory status. His deputy, Amit Shah, made unrealistic claims about taking back the China-controlled Aksai Chin. In response, Xi directly occupied Indian territory in Ladakh for almost a year.

    China’s strength and India’s decline are best captured through the different ways the countries approach bonds. China is selling its government bonds internationally at a negative interest rate despite a raging pandemic, ongoing border clashes with India and a 300% debt-to-GDP ratio. Indian bond investors are demanding higher yields even though India’s debt-to-DGP ratio is below 100%.

    With a sizable military and tactical superiority, India was unlikely to lose territory to China. However, through emergency weapons purchases during the Doklam standoff, India paid dearly for Modi and Shah’s hubris and prioritizing domestic politics over national interest.

    Weakened on the World Stage

    Through his speeches, photo-ops with world leaders and tweets, Modi keeps peddling lies and projecting strength to voters. While India’s financial health has deteriorated significantly, the BJP has raised — through anonymous electoral bonds — millions in political donations that fuel Modi’s formidable propaganda machine.

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    The world knows that India is run by a narcissist who has built a false domestic narrative of the country’s global standing to keep winning elections. The West will keep hoping that India gets its act together economically and stops destroying independent institutions so that it becomes a democratic counterweight to China. But that is a battle only Indian voters can lead.

    As India warms up to the Quad, where does it go from here? As a new cold war brews, lessons from the past are informative. While the US used China and Pakistan to dismantle the Soviet Union, China cleverly used its leverage to strengthen its economy and authoritarian communist rule. Meanwhile, Pakistan indulged its military and majoritarian religious leadership to destroy itself from within.

    With his dismantling of democratic institutions and promotion of religious bigotry, Modi has left Indian foreign policy in doldrums. If voters want it to become a vibrant, democratic counterweight to China and a global player that does justice to its potential, India will have to find a leader who understands that issues like a strong economy, independent judiciary and social stability cannot be divorced from its foreign policy but are integral to it.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Does the World Need to Contain China?

    The rise of China has revived the rhetoric of Cold War-era containment to depict competition between dominant powers, although the state of international relations is fundamentally different. Containment strategy toward China featured prominently in former US President Donald Trump’s policy, and many believe that strategic competition will continue to define the relationship under the Biden administration but in a different form. However, the necessity to contain China is a contested idea both on economic and ethical levels.

    In the first place, it should be understood that the world “includes many different groups with varying degrees of dependence from China,” says Domingo Sugranyes, director of a seminar on ethics and technology at Pablo VI Foundation. Therefore, he adds, “the need for containment will be seen differently if you are looking at textile supply chains, workers’ rights in [Xinjiang], data privacy rules, markets for European cars.”

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    Oscar Ugarteche, a Peruvian professor of economics, believes the emergence of a new superpower competing with other Western countries may be “positive, particularly for the Global South.” That said, we are undeniably witnessing “the emergence of a new distribution of power in which relative weights are shifting away from the United States and its allies, although the absolute political and economic power of these nations is and will remain considerable,” he mentions.

    Some, such as researcher Valerio Bruno, see the rise of China not only in the economic and military domains, but also as an ideological confrontation — “between two Weltanschauungen” — that determines whether the future world order will be defined by liberal or authoritarian ideas. Proponents of a containment policy believe that China does not offer a realistic alternative to the liberal order and that it should be obliged to comply with those rules. How? According to economist Etienne Perrot, it could be through “multilateral agreements and targeted alliances” designed to bring European powers more firmly into the containment effort in the economic and technological domains.

    Embed from Getty Images

    In contrast, some observers question the necessity of containment. Kara Tan Bhala, president and founder of Seven Pillars Institute for Global Finance and Ethics, argues that “a deliberate policy of containing another country, and thereby not allowing many to achieve their human potential” may not be morally justified. States should “respect the diversity of systems … while encouraging each other to become ‘better socialists’ and ‘better capitalists’ serving humanity,” says Christoph Stuckelberger, a professor of ethics. On the economic front, Ugarteche says, “the technological competition between the USA and China is positive for all of us as it speeds up innovation and reduces costs and consumer prices.”

    At first glance, the Cold War rhetoric of containment refers to a bipolar world, which is not (yet) the case. Multipolarity seems to be the best guarantee to avoid the world sliding into bipolarity, with a risk of falling once again into a Thucydides’ Trap. In this perspective, the swift assertion of the European Union as a global, active player is urgently needed to leverage a new negotiated equilibrium anchored in a minimal level of mutual commitment on most urgent global challenges. In that sense, the notion of containment may be reformulated in terms of the world’s self-containment, especially, as Edward Dommen says, when we look “at the way the world economy abuses the planet.”

    By Virgile Perret and Paul Dembinski

    Author’s note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: Does the world need to contain China and, if so, how?

    “… multilateral agreements and targeted alliances…”

    “Yes. China, by virtue of its human capacities, its natural resources and its organization, is today the dominant power (in terms of purchasing power parity). Opposite, the United States retains a monetary and military advantage, which China seeks to steal from them. Knowing that “power corrupts” (Lord Acton) and that “only power stops power” (Montesquieu), how to contain China without submitting to the USA? Through multilateral agreements and targeted alliances against MNCs [multinational companies] who, in the global market, behave like privateers in the service of their country of origin, sometimes even like pirates without faith or law.”

    Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

    “… China does not export its politics.”

    “Is it the world or is it the West? Did the world need to contain Great Britain or Spain or the US in its time? What we are facing is a new superpower emerging that will compete with other Western countries and the result should be positive, particularly for the Global South. “The more, the merrier.” The technological competition between the USA and China is positive for all of us as it speeds up innovation and reduces costs and consumer prices. All else is irrelevant. China does not export its politics.”

    Oscar Ugarteche — visiting professor of economics at various universities

    “…negotiate with a clear understanding of issues at stake…”

    “The ‘world’ is no geopolitical actor; it includes many different groups with varying degrees of dependence from China. The need for containment will be seen differently if you are looking at textile supply chains, workers’ rights in [Xinjiang], data privacy rules, markets for European cars and machinery, monetary balances, Taiwan security and microprocessor supplies, loans to Africa and Latin America, or rare earth resources. … If the question refers to containment from the ‘West’ or, more precisely, the European Union, then the answer is no. We should negotiate with a clear understanding of issues at stake, as in the case of the proposed comprehensive agreement on investment. Above all, we should learn more facts about the incoming largest economic power.”

    Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, past executive vice-chairman of MAPFRE international insurance group

    “One world — diverse systems”

    “How should the role of China be in the world? Three options: 1) China is disconnected from the world, sealed off, as it was to some extent 1949-1979, based on self-reliance and autonomous development; 2) China is fully integrated in the globalized world and follows the Western model of so-called capitalism and democracy as many powers in the West hoped that China, with its Open Door Policy since 1979, would develop; and 3) China is integrated in the world, but with its ‘Chinese characteristics’ of ‘third way’ combining planned and market economy, socialist one-party system with elements of consultative participatory processes and controlled civil society. The ethics of international relations needs to respect the diversity of systems as in option 3, while encouraging each other to become ‘better socialists’ and ‘better capitalists’ serving humanity.

    Christoph Stuckelberger — professor of ethics, founder and president of Globethics.net foundation in Geneva, visiting professor in Nigeria, China, Russia and the UK

    “…we are witnessing the emergence of a new distribution of power…”

    “The danger of conflict arises when there is no longer a consensus regarding the real power situation of the major parties — in this case, Russia as well as China and the United States. Conflict can become real when the parties, acting on significantly different subjective visions of the objective situation, come into collision. The purpose of conflict will be to demonstrate what the real power relationships have become and to establish some new consensus. Avoidance of conflict requires peaceful development of such a consensus, for which prerequisites will be acceptance by previously dominant countries that we are witnessing the emergence of a new distribution of power in which relative weights are shifting away from the United States and its allies, although the absolute political and economic power of these nations is and will remain considerable.”

    Andrew Cornford — counselor at Observatoire de la Finance, past staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

    “…foster friendly and mutually fruitful relations…”

    “Does the world need to contain China? The USA? Itself? To contain oneself is always good advice, and if we look at the way the world economy abuses the planet, the world ought indeed to contain itself. However, to struggle to contain another party normally provokes a hostile reaction, and things go from bad to worse. Better to converse with it and thus to foster friendly and mutually fruitful relations. Trade is a form of that kind of conversation. As Adam Smith said, “It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society … universal opulence.”

    Edward Dommen — specialist in economic ethics, former university professor and researcher at UNCTAD and president of Geneva’s Ecumenical Workshop in Theology.

    “…climate change will do more to change China…”

    “Containing China may be too big a task, and not all the world necessarily agrees on this goal. Indeed, it’s questionable if a deliberate policy of containing another country, and thereby not allowing many to achieve their human potential, is morally justified. Certainly, we should robustly oppose her monstrous conduct in Xinjiang, Tibet and Hong Kong and counter the Chinese Communist Party’s unacceptable behavior, for example, in trade and IP [intellectual property] in a targeted manner. But the demographics of an aging and gender skewed population, and the devastating effects of climate change will do more to change China than any containment strategy. One final thought: Should the world have contained the US when it destroyed indigenous peoples or practiced slavery?

    Kara Tan Bhala — president and founder of Seven Pillars Institute for Global Finance and Ethics

    “…two comprehensively different conceptions of the world…”

    “As Xi Jinping continues to steer the Middle Kingdom out of its historical isolation, avoiding challenging the United States for the position of world leader will be difficult, given China’s demographics and economic status. These two Weltanschauungen, two comprehensively different conceptions of the world, sooner or later will present the international community with a choice. Xi is well aware that the Biden administration can finally change course for the US and its allies, forging a united and progressive front after years of populist, nativist and authoritarian politics. Perhaps this element can help understand Xi’s assertiveness at the last World Economic Forum better than the recent economic successes. After all, political and civil rights are China’s Achilles’ heel.”

    Valerio Bruno — researcher in politics and senior research fellow at the Centre for Analysis of the Radical Right (CARR).

    “…obliging China to follow the rules…”

    “Present international relations cannot be correctly interpreted in the Cold War terms. The current confrontation between the United States and China is not Cold War 2.0 — it has a different nature. A historicist attempts to adapt the strategy of containment to post-Cold War realities are doomed to failure. The heterogeneous world is not able to be either an opponent or a proponent of the People’s Republic of China; only the consolidated West can be such an actor. China is a revisionist power. [It] criticizes the liberal world order but does not offer a realistic alternative. The most effective way to minimize Beijing’s destructive influence is to improve a rule-based order, and therefore a liberal order, by obliging China to follow those rules.

    Yuriy Temirov — associate professor, dean of the Faculty of History and International Relations at Vasyl Stus Donetsk National University in Ukraine

    *[A version of this article was originally published by From Virus to Vitamin and Agefi.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    in World Politics

    ProPublica Reveals the US Is a Tax Haven

    This week, ProPublica published a long, detailed article that blew the roof off two burning and intimately related questions currently in the news: wealth inequality and taxation. In the wake of the 2008 financial crisis, Thomas Piketty, Branko Milanovic and numerous pundits in the media have written reams on the topic. Politicians like Bernie Sanders and Elizabeth Warren have highlighted the issue and made proposals to address the problem. When Sanders suggested during the Democratic presidential primary that “billionaires shouldn’t exist,” the Democratic Party turned to one of the richest billionaires, Michael Bloomberg, counting on his financial clout to prevent the Vermont senator from winning the party’s nomination.

    In the US, people are more easily impressed by wealth itself than by the serious problem that wealth inequality has created. ProPublica’s article may help to change the public’s focus.

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    ProPublica exposes the brutal fact that, contrary to the tenets of conservative Republican orthodoxy, the wealthy are the “takers” and people who work for a living, the “makers.” Worse, the taking they do no longer requires much effort. The tax system delivers everything they take away from others directly to their doorstep. Between 2014 and 2018, the 25 richest Americans “paid a total of $13.6 billion in federal income taxes.” The article calls it “a staggering sum, but it amounts to a true tax rate of only 3.4%.”

    Among the many details, ProPublica highlights the case of Warren Buffett, signaling “his public stance as an advocate of higher taxes for the rich.” Between 2014 and 2018, “Buffett reported paying $23.7 million in taxes.” But given the increase in his wealth over that period, that impressive sum “works out to a true tax rate of 0.1%, or less than 10 cents for every $100 he added to his wealth.” Who wouldn’t be happy paying taxes at that rate? And for Buffett, it isn’t even on earnings, which for most people permit survival, but on the absolute growth of his net worth.

    The article also cites the case of George Soros, the man who single-handedly broke the Bank of England. “Between 2016 and 2018,” according to a spokesman for the billionaire, “George Soros lost money on his investments, therefore he did not owe federal income taxes in those years.” The same spokesman, ProPublica reports, is quoted as affirming that “Mr. Soros has long supported higher taxes for wealthy Americans.”

    Today’s Daily Devil’s Dictionary definition:

    Support:

    To sit on the sidelines and verbally encourage other people to do things one is disinclined to do or incapable of doing on one’s own

    Contextual Note

    ProPublica has provided the world with a truly enlightening trove of information that sends a clear message. And this is only the beginning. The publication promises in the coming months to “explore how the nation’s wealthiest people — roughly the .001% — exploit the structure of our tax code to avoid the tax burdens borne by ordinary citizens.” Its reporting will certainly serve to clarify a debate that, for many, may have seemed too abstract and too polemical to try to take on board.

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    The numbers demonstrate the extreme, hyperreal nature of wealth distribution today. When the public learns that, in 2011, Jeff Bezos — who is, on and off, the richest man in the world — “claimed and received a $4,000 tax credit for his children” and that his true tax rate over time is less than 1%, they may begin to take the measure of how the tax system works and to whose benefit.

    The figures, nevertheless, show that between 2006 and 2018, Bezos paid out $1.4 billion, a staggering amount for any ordinary wage-earner to even try to comprehend. But his personal fortune over that time ballooned to reach close to $200 billion today. Has he earned it through his hard work? No, it earns itself. That’s what money does. And thanks to his ability to hire tax advisers and clever accountants, all but crumbs of his wealth stay in his hands, never to pollute (or contribute to improving) the public sphere.

    Historical Note

    ProPublica went to great lengths to gather, verify and publish these carefully guarded tax secrets. Its editors were not surprised when, as Forbes reports, IRS Commissioner Charles Rettig “told lawmakers that internal and external investigators are working to determine whether the data ProPublica used was illegally obtained.” In the land that enshrined free speech as a right (First Amendment) apparently even more fundamental than the right to own an AR-15 (Second Amendment), all speech is legitimate except when it is blown through a whistle.

    This simply means that the act of reporting certain types of scandalous abuse in the public interest is now deemed to violate the republic’s interest. We can expect the US government to spare no expense in its pursuit of the anonymous whistleblower who provided ProPublica with the tax returns it has put on display, whose secrecy is protected by the law.

    This is not a great time for whistleblowers. The cases of Edward Snowden, Julian Assange and Chelsea Manning have made headlines over the past decade. They all did something that could be interpreted as technically illegal, especially when laws such as the Espionage Act happen to be on the books. But they clearly exposed essential information about how a democracy functions that purports to be “of the people, by the people and for the people.” Thomas Drake, John Kiriakou and Jeffrey Sterling and Reality Winner are among others who were prosecuted by the Obama and Trump administrations for making significant contributions to our understanding of how government manages and sometimes mismanages people’s lives, fortunes and deaths.

    Last week, Natalie Mayflower Sours Edwards, who worked as a senior adviser at the US Treasury Department’s Financial Crimes Enforcement Network, was sentenced to six months in prison for revealing to BuzzFeed News what the International Consortium of Investigative Journalists qualifies as “financial corruption on a global scale.” She was arrested in 2018. Her crime consisted of sharing confidential bank documents with a journalist, an act that sparked “a global investigation into illicit money flows,” which, had she not acted, the public would never have known about.

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    BuzzFeed’s spokesman, Matt Mittenthal, helpfully explained that the resulting “investigation has helped to inspire major reform and legal action in the United States, the E.U., and countries around the world.” In other words, sometimes it is necessary to break the law to make it stronger and more equitable.

    Ben Smith, a New York Times columnist, summed up Edwards’ plight in a tweet: “This woman is going to prison for six months for her role in revealing systemic global financial corruption, and inspiring legal changes all over the world.” The law did not go after BuzzFeed in this case. Nor did it end up going after ProPublica in a 2012 case concerning tax filings for Karl Rove’s nonprofit, Crossroads GPS, in which the IRS initially told BuzzFeed “that it would consider [the] publication of them to be criminal.”

    In the eyes of the IRS, ProPublica has once again committed the crime of letting the truth out of the bag. It may well escape any punishment. The pattern is always to prosecute the whistleblower, but that requires identifying that person. If, as in the case of Edwards, the government does succeed in prosecuting and sentencing the whistleblower, that will not serve to put the truth back in the bag. That is why the government will be relentless in seeking the whistleblower and why the public should be grateful both to that person and to ProPublica.

    The government’s aim is not to repair the damage already done, but to instill fear in any other courageous individual in the position to reveal the inner workings of a system designed for the financial elite and managed by the political elite. In Edwards’ case, US District Judge Gregory H. Woods made this point clear when he “said that it was necessary to impose a ’substantial meaningful sentence’ in order to discourage others from committing similar crimes.”

    Publishing substantial meaningful truth will always provoke the call for a substantial meaningful sentence.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    in World Politics

    How the Radical Right Bullied Professors in 1920s Austria

    As universities across the United Kingdom scramble to use the COVID-19 pandemic as an excuse to sack unwanted lecturers and professors, it becomes increasingly urgent to remember the history of labor organizing in higher education. What has and hasn’t worked in the past?

    The University and College Union is currently fighting job cuts and the closure of courses, departments and even entire campuses at 16 universities across the country, including the universities of Chester, Leeds, Leicester, Liverpool, Portsmouth and Sheffield. Teaching has finished for the year in most places, so the strikes, boycotts and protests are relying primarily on the assumption that it is possible to shame university managers into upholding long-cherished norms about the intrinsic value of education. In several cases, the cuts are a response to the UK government’s decision to reduce funding to the Performing and Creative Arts, Media Studies and Archaeology by half. The wave of redundancies is seen as evidence that many university leaders value profit and political expediency more than research and education.

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    Whether a strategy of petitions and public shaming will work remains to be seen, but the way that universities responded to political and economic pressure during the crisis of postwar reconstruction does not bode well for the unions. In 1920s Austria, university leaders proved willing to sacrifice academic standards and the jobs and physical safety of their staff in order to placate violent bullies on the radical right.

    Austria in the 1920s

    Austrian universities struggled to stay open during World War I, welcoming women and refugees as students and offering “war degrees” for soldiers who could take crash courses and simplified exams while on leave from the front. Once the war was over, students flooded back to campuses, many of them veterans who had been forced to postpone their studies during the war. Whereas before the war students had come from across the Habsburg Empire, now that the empire had collapsed, university admissions officers privileged students who were citizens of the new Austrian Republic.

    A reforming, left-wing government in Vienna tried to reorganize the education system and bring institutions of higher education under the control of the Ministry of Education. Outside of Vienna, in particular, many university leaders resisted centralizing efforts in the hope that the republic would collapse and be absorbed into a greater German nation-state. As old power structures crumbled and new, ethnically-based democracies were established across the region, right-wing students attempted to take advantage of the upheaval to impose their agendas on universities.

    Antisemitic riots and violence against Jewish students plagued universities in at least 11 European countries during the early 1920s, as students demanded that Jews be banned from attending universities and that Jewish or left-wing professors be expelled. Students targeted individual professors, including celebrated scientists such as Albert Einstein and Julius Tandler, disturbing their lectures and vandalizing laboratories. Despite condemning the violence, in the vast majority of cases, university leaders made concessions to the students by preventing Jews from sitting their exams and, in some cases, even introducing strict quotas on the number of Jews allowed to enroll.

    Alfons Leon

    The case of Professor Alfons Leon at the Technical University in Graz is particularly instructive. An acclaimed researcher in technical mechanics with a host of accolades to his name, Leon was dean of the School of Civil Engineering for three years. His state-of-the-art laboratory was the envy of his colleagues.

    But, in 1922, he insisted that students who were war veterans sit rigorous exams when some of the other professors had been willing to let them pass without having studied the material. Leon was a known socialist and the disgruntled students began sending him threats and complaining about him to the university. The students were members of the same right-wing fraternities that were responsible for the antisemitic riots. That November, they challenged one of Leon’s teaching assistants to a duel. As the duel was clearly directed at Leon himself, he refused to allow his assistant to fight, which the students took as an insult to the honor system that fraternity life was based on.

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    Rather than support their professor, the university leadership launched an inquiry into Leon’s alleged misconduct and forced him to take a leave of absence. The investigation lasted 10 years, with Leon making skillful use of the university’s established rules and procedures to keep his job and insist that he had done nothing wrong.

    In the process, it became apparent that several of his senior colleagues supported the students because they were alumni of the same fraternities that were persecuting Leon. Professor Fritz Postuvanschitz, in particular, led the attack on Leon because he had refused to fabricate evidence that would have helped Postuvanschitz’s son escape being convicted of fraud. Other senior figures in the university sided with the students because they sympathized with their right-wing politics and disliked Leon as a graduate of Viennese universities they saw as their rivals. Eventually, Leon was forced into early retirement, but only after the collapse of democracy in Austria and the rise of an Austrofascist government.

    Lessons for Today

    Leon’s story teaches several lessons that are still relevant today. First, it reminds us that universities are eminently political places, where personal ambitions, petty jealousies and party politics frequently matter more than credentials or upholding academic standards. Second, it reveals how easily university managers are manipulated by student violence, especially when those students are supported by influential voices in the community. Third, it shows that it is indeed possible to resist managerial bullying by appealing to labor laws and following established procedures, even though doing so might be exhausting, detrimental to one’s health and, ultimately, futile. But fourth, and most importantly, it shows that even when one occupies the high moral ground, it is often impossible to shame university administrators when they cherish political power and entrenched interests over what they claim to be the values of their institutions.

    For those lecturers fighting for their jobs today, Leon offers hope that resistance is possible, but also a warning that exposing management’s cupidity and disrespect for academic values might not be enough.

    *[Fair Observer is a media partner of the Centre for Analysis of the Radical Right.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More