Think of this as Volume 18, Number 26 of the newsletter I have written weekly since March, 1997. Enjoy.
Since the World Cup is still going on, let’s start this off by talking about FIFA.
John Oliver gave you the basics.
FIFA is a private organization, and governments are forbidden from running national affiliates. It’s also a global organization, and uses that status to get out of paying all sorts of taxes, pitting one country against another to do so. It’s supposed to be about promoting kids’ soccer, but it’s mostly run for the benefit of the people who run FIFA.
You can argue over whether Qatar paid off FIFA officials for the 2022 World Cup. You can argue about whether Qatar is a “21st century slave state.” You can’t argue about the corruption inherent in FIFA. The group canned the man who headed CONCACAF, the regional group the U.S. belongs to, over corruption. A man named Chuck Blazer, who was put in charge of U.S. operations 20 years ago, got rich as “Mr. 10%", taking rake-offs on events for doing nothing more than approving them.
But this is not a football story. The FIFA story is not unusual.
I’ve written before about how private companies can become laws unto themselves by simply crossing a line between jurisdictions.
This isn’t just true between counties, or states. It’s also true between nations.
We have a global economy. Most scaled companies are global. The billionaires who control these companies are global citizens. They can get out of any law they don’t like by simply crossing a line. So can the companies they control. It’s a race to the bottom, and the bottom is in sight.
Sometimes this actually works to America’s advantage. Alibaba, the Chinese version of Amazon, is going to sell its stock in New York rather than Shanghai or Hong Kong because American law is actually less friendly to corporate democracy than Chinese law. We will let you create separate classes of stock, one with voting rights controlled by management, one without. Google has that structure. You won’t be able to get Larry Page, or his heirs, out of that office with a blowtorch.
Most of the lines are crossed to avoid paying taxes. The ultra-rich of China, Europe, the Middle East and America can engage in all sorts of shenanigans to make sure that only their lessers pay for the societal peace and infrastructure that makes their wealth possible.
Anyone who becomes more powerful than the government becomes the government. The 2014 election is a test of whether two men can turn this thesis into fact, buying the Congress along with a small number of their like-minded, and like-pocketed buddies. And this turns out to be the crisis the 2008 election was leading to, just as World War II was the crisis the 1932 election was leading to.
When the Web was first spun, in 1994, folks like me liked to say that national laws here were just local ordinances. That’s no longer strictly true. The Internet today is more like China. The more technical knowledge you have or can buy, the more freedom of speech and action you have on it. The less you care about the technical details in which you operate, the less freedom of action you have. I have what I call “freedom” only because I live my life as though I were always on TV. But if I had some terrible secrets to hide, and if I were deemed a threat to anyone, they would quickly see the light of day, and there would be nothing I could do about it.
This 1994 “freedom,” however, does exist in the real world of 2014, for the ultra-wealthy. Most can ignore any laws they dislike. Want to own slaves? You can do that. Want to own slaves in New York? You can do this by simply claiming to be a “diplomat.” If caught, cross a line.
Most of the ultra-wealthy can avoid all the taxes they wish to avoid. They can buy governments on any level, and do. Large corporations and rich individuals are the global government today because there is no force on Earth to oppose them.
What’s wrong with this isn’t what is happening today. It’s what could happen tomorrow, which is at the heart of Thomas Piketty’s “Capitalism in the 21st Century.”
What could easily happen tomorrow is feudalism, on a global scale. As the children and grandchildren of the ultra-rich inherit all the money and power of the people who created that wealth, they are going to treat it as a birthright. They will act like Dukes and Earls and Counts and Barons in medieval Europe. We know that because the Walton kids are already doing it!
Not everyone, of course. There are deserving rich. But it’s important that the rich be deserving. An undeserving upper class breeds revolution and bloodshed, just as an undeserving lower class breeds crime. Does this have to end in a French-style revolution, with the heads of the Walton’s grandchildren paraded around on pikes? It could.
What we face is a struggle for global law and order. We face a struggle to create laws, and institutions, that work everywhere, from which the ultra-wealthy and rich corporations cannot hide. Winning this fight will take a degree of cooperation and trust the world has never seen before.
The Foreign Account Tax Compliance Act, or FATCA is just one step being taken by one government. Such laws are easy to evade. Rich people can take their money out of the U.S., and rich corporations can choose to domicile elsewhere. Why else would Mallinckrodt, descended from a chemical firm launched by two German-American brothers in St. Louis during the 19th century, now be based in Ireland?
Once you have enough money, the lines between cities, counties, states and nations become just that, lines. Lines you can ignore, lines you can erase. You can live like a God, live anywhere you like. The “Millionaire Migrant” phenomenon now making Vancouver real estate unaffordable to the people living there is being replicated in New York, London, and in many other places.
I spent some of my recent vacation in one such place, Silverthorne, Colorado. The mountainside is filled with huge, empty mansions, the homes of ultra-wealthy families. I was shown one that can sleep 22 people. (Not this one.) It is occupied just two weeks each year, I was told.
The men and women who live in such luxury need have no sense of responsibility, and no sense of shame. They are laws unto themselves. They have become our rulers, our betters, our new feudal lords.
Unless and until, that is, we’re willing to work on a global scale to stop them.
