Inequality — the Engine of Prosperity

By Alexander G. Markovsky, AM THINKER

Throughout the history of civilization, people have been dreaming of a perfect world — full employment, full satisfaction of material and intellectual needs, and equal distribution of wealth — only to discover, to their disappointment, that this utopian system does not exist on this side of the grave.

Nevertheless, the illusory ideas of economic equality transcend time and appeal to people of all colors and races. If the supporters of economic equality, including Marxist graduates of American universities, absorb human history, they may realize that the only historical datum that points to economic equality goes back to the era of primitive communism. Ten thousand years ago, before farming, people were forced to obtain food collectively. Everything that was produced was immediately consumed. This primitive society produced no surplus and created no wealth. Under such arrangement, the private property was limited to personal articles of clothing, hunting tools, etc. resulting in total economic equality — in absolute poverty. Ironically, this is the only way economic equality can be achieved — economic equality and wealth are mutually exclusive.

As people invented agriculture and property ownership, put fences around their properties, produced surplus, engaged in commerce and subsequently built up wealth — inequality was born. The predominant pursuit of wealth creation is the purpose of any society, whether it is slavery, feudalism or capitalism.

Inspired by human’s inherent desire for well-being and passion to extricate himself from misery, wealth creation became the locomotive of economic growth. Capitalism stands out as the greatest wealth generator and distributor that has created more wealth during the last 250 years than all preceding civilizations combined in 7,000 years.

The source of this enormous wealth is the man’s God-given ability to think and innovate. This intellectual ability is a property of the individual and has not been dispersed equally. Hence, it wouldn’t be reasonable to expect equal results from unequal abilities.

Aristotle observed this phenomenon 2,400 years ago when he concluded that, “The worst form of inequality is to make unequal things equal.”

For millennia, inequality was the way of life. It is only with the arrival of the Industrial Revolution that wealth creation accelerated at an unimaginable rate and a political doctrine of classless societies – egalitarianism (from French égal ‘equal’) emerged. With the advent of Marxism, the doctrine further evolved into socialist movement that advocated economic system based on economic equality.

During the 20th century, almost as if in accordance to some natural law, socialism marched triumphantly around the globe with intellectual and moral impetus to shape the world in compliance with its values. However, by the end of the century in most socialist countries, redistribution of wealth had reached the end of its potential, egalitarian values gradually eroded and socialist economies spectacularly collapsed.

The proponents of economic equality failed to recognize the immutable fact — freedom enables people to use their ingenuity to generate wealth, whereas coerced economic equality suppresses the very freedom required to innovate and begets poverty. The greatest moral injustice is an attempt to regulate (control) wealth by the people of limited abilities who are seeking to satisfy their unlimited needs under the banner of self-serving definitions of justice and fairness.

As so eloquently expressed by a Democrat and great American, Daniel Patrick Moynihan:

The great corporations of this country were not founded by ordinary people. They were founded by people with extraordinary intelligence, ambition, and aggressiveness.

If society imposes shackles of equality on the extraordinary contributions of great innovators such as Bill Gates, Steve Jobs, and Elon Musk to those of millions of individuals not so gifted and talented, the enormous upward mobility of the last 250 years will immediately cease.

But no lessons of history will dampen the magic of equality’s divine providence. To sell the ideology, the American socialists insist they have no intention of creating an egalitarian society; they just want to reduce the gap between rich and poor which they failed to define in commensurable terms. As long as there is a gap, the socialists will carry their convictions toward the ultimate objective — making all of us, who are unequally rich, equally poor.

The embracement of the malignant ideology, which signifies the total inversion of American historical traditions and values, demonstrates the magnitude of America’s psychological and political demoralization. The country is no longer having the self-confidence to define its choices. In retrospect, Marxism would never take root in America if great statesmen of earlier times that aspired to equality in liberty had not completely died out and replaced by leaders of lesser wisdom who pursue equality in perpetual human misery.

Alexander G. Markovsky is a senior fellow at the London Center for Policy Research, a conservative think hosted at King’s College, New York City, which examines national security, energy, risk-analysis and other public policy issues, He is the author of Liberal Bolshevism: America Did Not Defeat Communism, She Adopted It. Mr. Markovsky is the owner and CEO of Litwin Management Services, LLC. He can be contacted at alex.g.markovsky@gmail.com

October 3, 2021 | 13 Comments »

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13 Comments / 13 Comments

  1. A very interesting comment under the Wolfstreet article that Adam cited which refers to the actual studies of the political influence of the very rich:

    Winston
    Oct 3, 2021 at 7:26 am
    You really have a simplistic view. What we have is crony capitalism, not free market capitalism. We also have a fully bought and paid for government owned by multinational corporations with no allegiance to any country or people, so the decisions made by that bought government will not reflect what is in the best interests of those who elected them.

    The top 0.1% also have many times the political influence of everyone else by virtue of their having what a bought government wants: money. Need science-based proof? (besides infamous recent snapshots like Pelosi holding a large outdoor dinner party for wealthy donors in CA where the only people wearing the required masks were the servants) Here:

    Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens [Princeton University, 2014]

    Excerpts:
    A great deal of empirical research speaks to the policy influence of one or another set of actors, but until recently it has not been possible to test these contrasting theoretical predictions against each other within a single statistical model. We report on an effort to do so, using a unique data set that includes measures of the key variables for 1,779 policy issues.

    Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic-Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.

    In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes.

    When a majority of citizens disagrees with economic elites or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.

    To be sure, this does not mean that ordinary citizens always lose out; they fairly often get the policies they favor, but only because those policies happen also to be preferred by the economically-elite citizens who wield the actual influence.
    https://wolfstreet.com/2021/10/02/my-wealth-effect-monitor-for-our-money-printer-economy-is-out-in-the-pandemic-the-fed-totally-blew-out-the-already-gigantic-wealth-disparity/

  2. There is “inequality” and “INEQUALITY”! It’s a matter of degree.

    “The great corporations of this country were not founded by ordinary people. They were founded by people with extraordinary intelligence, ambition, and aggressiveness.”. This would be a great thesis to argue about in high school or college!

  3. As for Dr. Markovsky’s heroes Bill Gates and Elon Musk, they are among the worst scoundels of our time. Gates amassed his wealth by stealing the intellectual property of another inventor, conning IBM into surrendering to them an operating system that rightfully belonged to IBM, and relentlessly exploiting his workers and even his business partner, Richard Alpert, making them work 18 hour days and shouting at them constantly. More recently he has sterilized many women under the false pretense of vaccinating them from diseases, and circumstantial evidence suggests that he deliberately unleashed the COVID19 epidemic on the world with the assistance of Chinese collaborators. He has openly said that the world population must be reduced to below 500 million, or roughly 7 per cent of the present world population,to save the world from an environmental apocalypse. This goal can only be achieved by genocide.

    As for Elon Musk, he has made a huge fortune by conning investors into buying shares of Tesla, even though the company produces few cars and sells even fewer. He barely makes a profit from car sales every year. Yet he is vastly richer than the CEOS and shareholders of such profitable car manufacturers as Ford, GM, Fiat-Chrysler, Toyota, Mitsubishi, etc. The execs and shareholders of these companies, which produce large numbers of cars that people actually buy and drive, are relative paupers compared to Musk. Only a year ago he was in deep doodoo with the Securities and Exhange Commission for fraudulent acccounting practices. But poof! the charges suddenly went away, probably because of Musk’s political connections. He has charmed the media by sending some of his fellow billionaires into “space,” for a few minutes. These hijinks cost a fortune, but do non-billionaires no good at all. Even his fellow billinaires get only a brief thrill for the hundreds of millions they pay Musk for this dubious privilege. Then there his “relationship” with Bitcoin, which is probably a Ponzi scheme or pyramid scheme used by crooked Chinese businessmen to launder money an move it out of China. Musk has extensive interests in China, and manufacures most of his cars there.

  4. Additional evidence is to be found on the site Wsolfstreet.com, a blog written by Wolf Richter,that “inequzlity may be the “engine of prosperity” for the ‘Top 1%, and especially the top .01 per cent in income, but bad for the lower 90%, and extremely bad for the bottom 50%. Wolf demonstrates pretty conclusively , in my opinion, that “inequality” results in poverty for a large part of the American population.

    he bottom 50% need not apply. They just get to eat the soaring costs of housing. How the Fed totally blew out the already gigantic wealth disparity during the pandemic.

    By Wolf Richter for WOLF STREET.

    On Friday, the Fed released the detailed data about the wealth of households by wealth category for the 1%, the 2% to 9%, the “next 40%” (the top 10% to 50%) and the “bottom 50%” for the second quarter, after having released less detailed figures on September 23. You read the stories at the time about how the Fed’s money-printing and interest-rate-repression has enriched American households.

    But the detailed data, just now released, show whose wealth jumped the most, and who got left endlessly further behind. It wasn’t households in general that benefited, but only the richest households with the most assets. The more assets they had, the more they benefited.

    My Wealth Effect Monitor divides the wealth (assets minus liabilities) for each wealth category by the number of households in that category, which produces average per-household wealth within each category. The wealth of the bottom 50% is reflected by the jagged green line on the bottom, essentially on top of the horizontal axis:

    Not shown separately are the truly rich – the 0.01% – and the Billionaire Class. The Fed wisely doesn’t provide any information on them separately, but includes them in the Top 1%.

    But according to the Bloomberg Billionaires Index, the top 30 US billionaires are worth on average $69 billion per household currently, having gained on average $2.2 billion in wealth each over the quarter.

    The bottom 50% of US households (green line above) – 63.2 million households – are worth on average $47,900 per household. But this includes $25,970 in “durable goods” (cars, phones, furniture, etc.), which for consumers are normally considered consumables, not assets, because their values are declining, and they don’t produce incomes.

    The bottom 50% gained $7,900 per household over the quarter, and those gains included $2,085 from purchases of durable goods!

    You can kill someone with reckless usage of percentages.

    If I give a homeless person $5, and he already has $5 in his pocket, I increased his wealth by 100%. But he still is homeless and still doesn’t have any wealth. Percentage increases are touted as a way to show that the wealth at the bottom increased sharply, when in fact, it increased by only peanuts because the bottom 50% have so little.

    But even a tiny percentage increase on $65 billion in wealth is a huge amount of money, and the wealth disparity continues to balloon.

    The wealth disparity between the top 30 billionaires on average and the bottom 50% grew by yet another $2.2 billion per household, to $69.2 billion.

    There were 126.34 million households in the US, according to the Census Bureau. The 1% by definition make up 1.26 million households. That’s a lot of households, from Musk on down to the regular multi-millionaire.

    And the wealth disparity within the 1%, from the average top 30 billionaires to the least wealthy among the 1% also grew by around $2.2 billion to $69.2 billion. Because the bottom end of the 1% still own only peanuts compared to the Billionaire Class.

    Since Q1 2020, when the Fed started its crazed money-printing and interest-rate repression scheme, according to the Fed’s data:

    The wealth of the 1% jumped on average by $9.95 million per household to $34.3 million.
    The wealth of the bottom 50% rose by less than a rounding error in terms of the 1%, by $18,600 per household since Q1 2020, to $47,900. Over half of their wealth is in durable goods (cars, phones, furniture, etc.).
    The wealth disparity per household between the 1% and the 50% ballooned by $9.93 million, to a record wealth disparity of $34.2 million.
    The reason is that the 1% hold most of the assets, and the 50% own practically no stocks, no bonds, and very little real estate.

    For the Bottom 50%, real estate is their largest asset at $68,504 per household. This means that relatively few households own real estate. And they have on average $40,122 in mortgage debt, which leaves them with $23,382 in home equity.

    They own practically no stocks and mutual funds ($4,122 on average). And inflating the stock market, as the Fed tries to do, just leaves them purposefully further behind.

    But they own $25,970 in “durable goods,” which the Fed counts as assets, rather than consumables. If you don’t count these consumer goods as assets, the wealth of the bottom 50% shrinks to $21,948.

    So when asset prices rise, they leave the bottom 50% behind.

    This is all part of the Fed’s official doctrine of the “Wealth Effect,” which has been described in numerous Fed papers, including by then San Francisco Fed president Janet Yellen in 2005. “As part of its analysis of demand in the economy, central bank models have long incorporated the wealth effect of house prices and other assets on spending,” she wrote. In November 2010, Fed Chair Ben Bernanke explained the concept of the Wealth Effect to the American people via a Washington Post editorial.

    The Fed, which has now embarked on creating a kinder-gentler facade, no longer calls it the “wealth effect.” But the policies haven’t changed: asset price inflation. And the costs are borne by the bottom 50% for whom life just gets more expensive – including housing costs.

    The bottom 50% range from getting by OK to the down-trodden.

    Among the bottom 50%, there are also large differences. At the top end are households perhaps with a modest house weighed down by a big mortgage, a small 401k, plus cars and other durable goods, minus auto loans, student loans, and credit card debt. But that category also includes the poorest of the poor.

    The bottom 50% face the soaring housing costs and other costs that are a result of the wealth effect. Many live from paycheck-to-paycheck and use their credit cards to tide them over. They have on average very little money left over to put aside and buy stocks with.

    Fed blows out the Wealth Disparity during the Pandemic.

    The Fed’s doctrine of the “Wealth Effect” is designed to enrich the top 10%, particularly the top 1%, particularly the top 0.01%, and particularly the Billionaire Class. The more they have, the more they benefit. This is official Federal Reserve policy.

    But during the pandemic, the Fed went all-out: It printed $4.5 trillion in 18 months and repressed short-term interest rates to near-zero, in order to inflate asset prices to the extreme. And it succeeded.

    This was the greatest economic injustice committed in recent US history. Congress could shut it down but doesn’t want to even debate it. Members of Congress mostly belong to the top 10%, or hope to soon belong to it (on their Congressional salaries, of course, hahahaha), and that’s why this continues.

    The bottom 50% don’t understand what the Fed is doing to them, don’t even know what the Fed is and does, and they are too busy trying to survive in this economy that the Fed has so powerfully rigged against them.

    My Wealth Effect Monitor tracks that economic injustice. Below, it shows the difference in wealth between the 1% and the bottom 50%. Asset price inflation is the cause. The more they have, the more they get. The bottom 50% don’t have anything and need not apply. But during the pandemic, the Fed went hog-wild and completely blew out this wealth disparity:

  5. @Reader

    Forgive my so badly mistaking your point, so let me redirect my response. The reason these elites are elites has less to do with wealth than power. Fauci is the highest paid civil servant in the US govt, but his wealth pales when compared to the likes of men who bow to his direction. Pfiser made a statement regarding the vaccines failing and after Fauci publicly rebuked them, they publicly apologized and immediately retracted their statement, which never needed stating to begin with, as the vaccine failures were quite evident and the correction left everyone clear as to the related authority in this relationship. The details aside, the point here is that power holds a much greater and extensive control than does wealth. Much more so. There is a line of corruption that is strung through the entire of the US govt, all three branches and many of those of the states as well, and it is much more about power than it is about money. Do you truly believe you could bribe someone to commit treason? How about dozens of people? What about thousands? This is a bigger game than money can buy, I believe. And it all is tied back to the devious little snake charmer, Fauci.

    I do agree with Markovsky that these elites have every right to the fruits of their lives or the fruits of their forefathers, for that matter. The reason they are among the “elites” and not related to their wealth but due to the fruits of their involvement in racketeering and corruption, not unlike Al Capone’s capture of Chicago or the 5 families control of NYC or the Nazi conquest of France. They acted without authority and their actions were absolved by the inactions of very people who should have opposed them. The people I refer to who should have stopped them were not only the likes of the FBI and the Justice Dept, but the American people. Many things were known to need reform or repair, and were left idly unattended as the clock went tick tock. People allowed themselves to be twisted into accepting political games where certain massive problems like Medicare and the national debt were left to linger, vegetate and grow….and grow and grow some more. This quite resembled the ruse of these same elites to cajole half the public into supporting them while they pass off a known toxic treatment and withheld readily available safe drugs. These people are charmed by the photogenic smooth talking charlatans who tell them it is sunny as the rain fills their pool. Some do so out of fear, others out of ignorance, and others out of hope. These people and the public officials each support these criminals as their crimes are legitimized by the general support of the masses. This has nothing to do or to critique the subject that Markovsky so well described. It is good that we should overturn these criminals, but it is for their crimes and not their past successes nor their fairly won wealth that I would seek retribution from them.

    Additionally, I think Gates should have been tried for crimes against humanity some years back when he was found to be responsible for the paralysis of half a million children in India over the course of some 20yrs. Like the WHO’s attempts in India to prevent the use of IVM, I would have charged them as well. These are crimes and such crimes have untold numbers of victims, even if we were to exclude the shattered lives left in the wake of such indirect butchery. Should we not enforce a penalty for such obvious attempts to coerce the murder of the general masses, such devious actions will continue to be left unabated and unstopped. But again, this also has nothing to do with Markovsky’s subject.

  6. You really need to read Markovsky’s article again.

    I don’t need to read the nonsense product of his brainwashed brain.

    I never said that everyone should be the same, my point is that fairly soon most of the Earth’s population will not be needed to produce goods or services which in the minds of the criminally insane “elite” who are so smart and good because they are so rich generates all sorts of interesting plans for getting rid of the useless eaters, one of which plans we are witnessing right now.

  7. It seems to me that we were speaking of the free market causing

    world population is unable to make a living because of the nearly complete robotization and automation of the industry and services.

    when nothing such as this has actually been seen to occur, quite the opposite with the use of govt mandates doing the job so adequately instead. I also note that you failed to correct me here.

    The “low unemployment” that you are referring to is the same fiction as “low inflation” based on biased government-created formulas.

    The fiction was well accepted by the Democrats who shook themselves silly with fear of losing the election due to this “fiction” as you lable it. Just for kicks, since you don’t accept the final tally on govt unemployment, what source do you use, a wigi board?

    Also, I speak on matters that interest me or I feel I can offer a point of relevance such as noting that the robots were the result of such poor political planning that it cost the jobs of many of the people it was intended to reward. This is the result of govt trying to manage anything. It never ends well. In govt, if all you have is a hammer then everything gets paid for by the taxpayer, so it doesn’t even matter if you miss the nail or don’t even swing the hammer. Business is about controlling costs and maintaining revenue, neither of which govt knows or cares a thing about. So, pay everyone $15/hr and crush the small businesses and unemploy the workers while the major corporations such as Dicks, Home Depot and Walmart will manage with order some robots, limit hours and raise prices as they reward the politicians for eliminating their biggest competitors, small business. No govt official will lose a wink of sleep or a dollar of income. And everyone who is not in the unemployment line will rejoice, even as their cost of living skyrockets as a result. You really need to read Markovsky’s article again.

  9. @peloni

    The “low unemployment” that you are referring to is the same fiction as “low inflation” based on biased government-created formulas.

    Please, stick to commenting on the medical issues.

  10. @Reader

    All these lovely “free-market” theories of the author will be a utopian dream when most of the world population is unable to make a living because of the nearly complete robotization and automation of the industry and services.

    It may surprise you to know that as recently as 2019, the US was faced with a situation of all time low unemployment. You likely heard of this as it was a great topic of concern for those on the Left while it was held as a great achievement for those on the Right. This took place in the face of massive automation being unfurled. Furthermore, the use of automation was employed as a consequence to the uneasy realization that the nation as the Dems were pursuing their idiotic utopian push for $15/hr salaries for basic labor across the nation. Any business owner will pursue their bottom line, it is only in their interests to do so, and it is only when they are successfully achieving this criteria that they are able to actually continue to pay their employees. So, in anticipation of this financial tsunami, the big box companies pursued robots and automation to replace the anticipated overpriced basic labor costs. Such unmarketable dictates might have been an example of the Law of Unintended Consequences.

    The low-wage earners who faced the unemployment lines while their nation was experiencing its greatest economic boom likely held their skinflint employers responsible for their termination, when in fact, they owed their thanks to the likes of Sanders who was calling for more than doubling the minimum wage. The push towards national-automation was an obvious response to such non-free market attacks upon the free market and it would have taken an enormous financial pressure to bring it to fruition, which is actually exactly what happened.

    This is the unfortunate story of robots being introduced into the marketplace.

    Such unsavvy business practices hurts businesses, but it leaves the poor unemployed. Still, in spite of these facts, the market will adjust, only with the use of androids to offset those who value their labor beyond a competitive price. Businesses, all businesses, hate excessive labor costs. An assett is tangible beyond its cost, as opposed to labor costs. An assett gives a business financial leverage as it can be used to offset loans, opens tax advantages, looks good on the balance sheet and it can always be sold off. But it takes a strong motivation to justify a significant outlay of capital. $15/hr was just the sort of motivation required.

    The greatest problem with free market “theories” as you reference them is that the market place has not had a “free market” in some time, while the US economy was managed and restrained by unbalanced tax incentives and incredibly inefficient regulations(read as expensive) which each were too often designed to only benefit foreign interests, foreign interests with a strong lobby. Being able to directly and continuously, over 4yrs, is how Trump so quickly reinflated the tires of the US economy and brought about such a strong economy, one which, in no small part, was felt by the minimum wage earners, many of whom found themselves unemployed after a robot was found to be better investment due to threats of a govt mandated, over-priced, minimum wage earner.

  11. All these lovely “free-market” theories of the author will be a utopian dream when most of the world population is unable to make a living because of the nearly complete robotization and automation of the industry and services.

    What will his “survival of the fittest” ideas be worth then?

    What if he himself will not be deemed one of the fittest but will end up designated as a useless eater?

  12. Pandora papers: biggest ever leak of offshore data exposes financial secrets of rich and powerful

    The secret deals and hidden assets of some of the world’s richest and most powerful people have been revealed in the biggest trove of leaked offshore data in history.

    Branded the Pandora papers, the cache includes 11.9m files from companies hired by wealthy clients to create offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland and the Cayman Islands.

    They expose the secret offshore affairs of 35 world leaders, including current and former presidents, prime ministers and heads of state. They also shine a light on the secret finances of more than 300 other public officials such as government ministers, judges, mayors and military generals in more than 90 countries.

    The files include disclosures about major donors to the Conservative party, raising difficult questions for Boris Johnson as his party meets for its annual conference.

    More than 100 billionaires feature in the leaked data, as well as celebrities, rock stars and business leaders. Many use shell companies to hold luxury items such as property and yachts, as well as incognito bank accounts. There is even art ranging from looted Cambodian antiquities to paintings by Picasso and murals by Banksy.

    The Pandora papers reveal the inner workings of what is a shadow financial world, providing a rare window into the hidden operations of a global offshore economy that enables some of the world’s richest people to hide their wealth and in some cases pay little or no tax.

    Quick Guide
    What are the Pandora papers?

    Show
    There are emails, memos, incorporation records, share certificates, compliance reports and complex diagrams showing labyrinthine corporate structures. Often, they allow the true owners of opaque shell companies to be identified for the first time.

    The files were leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington. It shared access to the leaked data with select media partners including the Guardian, BBC Panorama, Le Monde and the Washington Post. More than 600 journalists have sifted through the files as part of a massive global investigation.

    The Pandora papers represent the latest – and largest in terms of data volume – in a series of major leaks of financial data that have convulsed the offshore world since 2013.

    Setting up or benefiting from offshore entities is not itself illegal, and in some cases people may have legitimate reasons, such as security, for doing so. But the secrecy offered by tax havens has at times proven attractive to tax evaders, fraudsters and money launderers, some of whom are exposed in the files.

    Other wealthy individuals and companies stash their assets offshore to avoid paying tax elsewhere, a legal activity estimated to cost governments billions in lost revenues.

    After more than 18 months analysing the data in the public interest, the Guardian and other media outlets will publish their findings over the coming days, beginning with revelations about the offshore financial affairs of some of the most powerful political leaders in the world

    They include the ruler of Jordan, King Abdullah II, who, leaked documents reveal, has amassed a secret $100m property empire spanning Malibu, Washington and London. The king of Jordan declined to answer specific questions but said there would be nothing improper about him owning properties via offshore companies. Jordan appeared to have blocked the ICIJ website on Sunday, hours before the Pandora papers launched.

    The Azerbaijan president, Ilham Aliyev, and his wife Mehriban Aliyeva.
    The Azerbaijan president, Ilham Aliyev, and his wife, Mehriban Aliyeva. The Aliyev family has traded close to £400m of UK property in recent years. Photograph: Anadolu Agency/Getty Images
    The files also show that Azerbaijan’s ruling Aliyev family has traded close to £400m of UK property in recent years. One of their properties was sold to the Queen’s crown estate, which is now looking into how it came to pay £67m to a company that operated as a front for the family that runs a country routinely accused of corruption. The Aliyevs declined to comment.

    The Pandora papers also threaten to cause political upsets for two European Union leaders. The prime minister of the Czech republic, Andrej Babiš, who is up for election this week, is facing questions over why he used an offshore investment company to acquire a $22m chateau in the south of France. He too declined to comment.

    The Czech prime minister, Andrej Babiš
    The Czech prime minister, Andrej Babiš, is facing questions over why he used an offshore investment company to acquire a $22m chateau in the south of France. Photograph: Milan Kammermayer/EPA
    And in Cyprus, itself a controversial offshore centre, the president, Nicos Anastasiades, may be asked to explain why a law firm he founded was accused of hiding the assets of a controversial Russian billionaire behind fake company owners. The firm denies any wrongdoing, while the Cypriot president says he ceased having an active role in its affairs after becoming leader of the opposition in 1997.

    Not everyone named in the Pandora papers is accused of wrongdoing. The leaked files reveals that Tony and Cherie Blair saved £312,000 in property taxes when they purchased a London building partially owned by the family of a prominent Bahraini minister.

    The former prime minister and his wife bought the £6.5m office in Marylebone by acquiring a British Virgin Islands (BVI) offshore company. While the move was not illegal, and there is no evidence the Blairs proactively sought to avoid property taxes, the deal highlights a loophole that has enabled wealthy property owners not to pay a tax that is commonplace for ordinary Britons.

    Former Prime Minister Tony Blair and his wife, Cherie Blair
    Tony and Cherie Blair bought a £6.5m office in Marylebone by acquiring a British Virgin Islands offshore company. Photograph: WPA Pool/Getty Images
    The leaked records vividly illustrate the central coordinating role London plays in the murky offshore world. The UK capital is home to wealth managers, law firms, company formation agents and accountants. All exist to serve their ultra-rich clients. Many are foreign-born tycoons who enjoy “non-domicile” status, which means they pay no tax on their overseas assets.

    The Ukrainian president, Volodymyr Zelenskiy
    The Ukrainian president, Volodymyr Zelenskiy, is also named in the leak. Photograph: Anadolu Agency/Getty Images
    Ukraine’s president, Volodymyr Zelenskiy, who was elected in 2019 on a pledge to clean up his country’s notoriously corrupt and oligarch-influenced economy, is also named in the leak. During the campaign, Zelenskiy transferred his 25% stake in an offshore company to a close friend who now works as the president’s top adviser, the files suggest. Zelenskiy declined to comment and it is unclear if he remains a beneficiary.

    The Russian president, Vladimir Putin, whom the US suspects of having a secret fortune, does not appear in the files by name. But numerous close associates do, including his best friend from childhood – the late Petr Kolbin – whom critics have called a “wallet” for Putin’s own wealth, and a woman the Russian leader was allegedly once romantically involved with. None responded to invitations to comment.

    The Pandora papers also place a revealing spotlight on the offshore system itself. In a development likely to prove embarrassing for the US president, Joe Biden, who has pledged to lead efforts internationally to bring transparency to the global financial system, the US emerges from the leak as a leading tax haven. The files suggest the state of South Dakota, in particular, is sheltering billions of dollars in wealth linked to individuals previously accused of serious financial crimes.

    The offshore trail also stretches from Africa to Latin America to Asia, and is likely to pose difficult questions for politicians across the world. In Pakistan, Moonis Elahi, a prominent minister in prime minister Imran Khan’s government, contacted an offshore provider in Singapore about investing $33.7m.

    Kenya’s president, Uhuru Kenyatta
    Kenya’s president, Uhuru Kenyatta, will come under pressure to explain why he and his close relatives amassed more than $30m of offshore wealth. Photograph: Yasuyoshi Chiba/AFP/Getty Images
    In Kenya, the president, Uhuru Kenyatta, has portrayed himself as an enemy of corruption. In 2018, Kenyatta, he told the BBC: “Every public servant’s assets must be declared publicly so that people can question and ask: what is legitimate?”

    He will come under pressure to explain why he and his close relatives amassed more than $30m of offshore wealth, including property in London. Kenyatta did not respond to enquiries about whether his family wealth was declared to relevant authorities in Kenya.

    The Pandora papers also reveal some of the unseen repercussions of previous offshore leaks, which spurred modest reforms in some parts of the world, such as the BVI, which now keeps a record of the real owners of companies registered there. However, the newly leaked data shows money shifting around offshore destinations, as wealthy clients and their advisers adjust to new realities.

    Some clients of Mossack Fonseca, the now defunct law firm at the heart of the 2016 Panama papers disclosures, simply transferred their companies to rival providers such as another global trust and corporate administrator with a major office in London, whose data is in the new trove of leaked files.

    Asked why he was migrating the new company, one customer wrote bluntly: “Business decision to exit following the Panama papers.” Another agent said the industry had always “adapted” to external pressure.

    Some leaked files appear to show some in the industry seeking to circumvent new privacy regulations. One Swiss lawyer refused to email the names of his high-value customers to a service provider in the BVI, following new legislation. Instead, he sent them by airmail, with strict instructions they should not be processed in any “electronic way”. The identity of another beneficial owner was shared via WhatsApp.

    “The purpose of this way to proceed is to enable you to comply with BVI rules,” the lawyer wrote. Referring to Mossack Fonseca, the lawyer added: “You are obliged to keep secrecy for our clients and to not make feasible at all a second ‘Panama papers’ story that happened to one of your competitors.”

    Gerard Ryle, the director of the ICIJ, said leading politicians who organised their finances in tax havens had a stake in the status quo, and were likely to be an obstacle to reform of the offshore economy. “When you have world leaders, when you have politicians, when you have public officials, all using the secrecy and all using this world, then I don’t think we’re going to see an end to it.”

    He expected the Pandora papers to have a greater impact than previous leaks, not least because they were arriving in the middle of a pandemic that had exacerbated inequalities and forced governments to borrow unprecedented amounts to be shouldered by ordinary taxpayers. “This is the Panama papers on steroids,” Ryle said. “It’s broader, richer and has more detail.”

    At least $11.3tn in wealth is held offshore, according to a 2020 study by the Paris-based Organisation for Economic Co-operation and Development (OECD). “This is money that is being lost to treasuries around the world and money that could be used to recover from Covid,” Ryle said. “We’re losing out because some people are gaining. It’s as simple as that. It’s a very simple transaction that’s going on here.”

    Pandora papers reporting team: Simon Goodley, Harry Davies, Luke Harding, Juliette Garside, David Conn, David Pegg, Paul Lewis, Caelainn Barr, Rowena Mason and Pamela Duncan in London; Ben Butler and Anne Davies in Sydney; Dominic Rushe in New York; Andrew Roth in Moscow; Helena Smith in Athens; Michael Safi in Lebanon; Robert Tait in Prague.

  13. Then again, maybe not. This from this from today’s Guardian (UK):

    Pandora papers
    Sunday 3 October 2021
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    Pandora papers Biggest ever leak of offshore data exposes financial secrets of rich and powerful

    Andrej Babiš Czech PM used offshore companies to buy £13m French mansion
    Revealed ‘Anti-oligarch’ Ukrainian president’s offshore connections
    UK Crown estate bought £67m London property from family of Azerbaijan ruler
    Biggest ever leak of offshore data exposes financial secrets of rich and powerful

    Russia Pandora papers reveal hidden riches of Putin’s inner circle
    Let the light in Why the Guardian is publishing the Pandora papers
    Pandora papers reveal hidden riches of Putin’s inner circle
    King of Jordan Hidden property empire worth more than $100m, Pandora papers reveal
    Hidden property empire worth more than $100m, Pandora papers reveal
    Tony and Cherie Blair Former PM and wife bought property via offshore firm and saved £300,000 in tax
    Former PM and wife bought property via offshore firm and saved £300,000 in tax