Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this “evil phenomenon” is “most destructive” in the global South, where it is a “key element in economic underperformance and a major obstacle to poverty alleviation and development”. There’s only one problem with this theory: It’s just not true.
According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20 billion and $40 billion each year. That’s a lot of money. But it’s an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. On the other hand, multinational companies steal more than $900 billion from developing countries each year through tax evasion and other illicit practices.
This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world’s total private wealth.
Even if we do decide to focus on localised corruption in developing countries, we have to accept that it does not exist in a geopolitical vacuum. Many of history’s most famous dictators - like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak - were supported by a steady flow of Western aid. Today, not a few of the world’s most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia - three of the darkest states on the Corruption Perceptions Index (CPI) map. This raises an interesting question: Which is more corrupt, the petty dictatorship or the superpower that installs it?
“Gervasi: “Choices are not made randomly. They are socially controlled, and reflect the cultural model from which they are produced. We neither produce nor consume just any product: the product must have some meaning in relation to a system of values.” This leads to a perspective on consumption in terms of integration: “The goal of the economy is not the maximization of production for the purposes of the individual, but the maximization of production in relation to society’s value system” (Parsons). Similarly, Duesenbury will claim that the only choice is, in fact, varying one’s possessions according to one’s position in the social hierarchy. In effect, the differences in choice from one society to another, and the similarity of choices within a society, compels us to view consumer behavior as a social phenomenon. The economist’s notion of “rational” choice has been changed into the model of choice as conformity… Needs are not so much directed at objects, but at values. And the satisfaction of needs primarily expresses an adherence to these values. The fundamental, unconscious, and automatic choice of the consumer is to accept the life-style of a particular society (no longer therefore a real choice: the theory of autonomy and sovereignty of the consumer is thus refuted).”
Myths are dangerous precisely because they rely more on cultural memory and prejudice than facts, and behind the current crisis between Greece and
the European Union (EU) lays a fable that bears little relationship to
why Athens and a number of other countries in the 28-member organization
find themselves in deep distress.
The tale is a variation of Aesop’s allegory of the industrious ant
and the lazy, fun-loving grasshopper, with the “northern
countries”—Germany, the Netherlands, Britain, Finland—playing the role
of the ant, and Greece, Spain, Portugal, and Ireland the part of the
The ants are sober and virtuous—lead by the frugal Swanban house
frau, German Chancellor Angela Merkel—the grasshoppers are spendthrift,
corrupt lay-abouts who have spent themselves into trouble and now must
pay the piper.
The problem is that this myth bears almost no relationship to the
actual roots of the crisis or what the solutions might be. And it
perpetuates a fable that the debt is the fault of individual countries
rather than a serious crisis at the very heart of the EU.
First, a little myth busting.
The European debt crisis goes back to the end of the roaring ‘90s
when the banks were flush with money and looking for ways to raise their
bottom lines. One major strategy was to pour money into real estate,
which had the effect of creating bubbles, particularly in Spain and
Ireland. In the latter, from 1999 to 2007, bank loans for Irish real estate
jumped 1,730 percent, from 5 million Euros to 96.2 million Euros, or
more than half the GDP of the Republic. Housing prices increased 500
percent. “It was not the public sector but the private sector that went
haywire in Ireland,” concludes Financial Times analyst Martin Wolf.
Spain, which had a budget surplus and a low debt ratio, went through much the same process, and saw an identical jump in housing prices: 500 percent.
In both countries there was corruption, but it wasn’t the penny ante
variety of tax evasion or profit skimming. Politicians—eager for a piece
of the action and generous “donations”—waved zoning rules,
environmental regulations, and cut sweetheart tax deals. Hundreds of
thousands of housing projects went up, many of them never to be
Then the American banking crisis hit in 2008, and the bottom fell
out. Suddenly, the ants were in trouble. But not really, because the
ants have a trick: they gamble and the grasshoppers pay.
The “trick,” as Joseph Stiglitz,
Nobel Laureate in economics, points out, is that Europe (and the U.S.)
have moved those debts “from the private sector to the public sector—a
well-established pattern over the past half-century.”
Fintan O’Toole, author of “Ship of Fools: How Stupidity and
Corruption sank the Celtic Tiger,” estimates that to save the
Irish-Anglo Bank Irish taxpayers shelled out $30 billion Euros, a sum
that was the equivalent of the Island’s entire tax revenues for 2009.
The European Central Bank—which, along with the International Monetary
Fund (IMF) and the European Commission, make up the “Troika”—strong-armed
Ireland into adopting austerity measures that tanked the country’s
economy, doubled the unemployment rate, increased consumer taxes, and
forced many of the country’s young people to emigrate. Almost half of
Ireland’s income tax now goes just to service the interest on its debts.
Poor Portugal. It had a solid economy and a low debt ratio, but
currency speculators drove up interest rates on borrowing beyond what
the government could afford, and the European Central Bank refused to
intervene. The result was that Lisbon was forced to swallow a “bailout”
that was laden with austerity measures that, in turn, torpedoed its
In Greece’s case corruption was at the heart of the crisis, but not
the popular version about armies of public workers and tax dodging
oligarchs. There are rich tax dodgers aplenty in Greece, but Germany,
Sweden, and many other European countries spend more of their GDP on services
than does Athens. Greece spends 44.6 percent of its GDP on its
citizens, less than the EU average and below Germany’s 46 percent and
Sweden’s 55 percent.
And as for lazy: Greeks work 600 hours more a year than Germans.
According to economist Mark Blyth,
author of “Austerity: The History of a Dangerous Idea,” Greek public
spending through the 2000s is “really on track and quite average in
comparison to everyone else’s,” and the so-called flood of “public
sector jobs” consisted of “ 14,000 over two years.” All the talk of the
profligate Greek government is “a lot of nonsense” and just “political
cover for the fact that what we’ve done is bail out some of the richest
people in European society and put the cost on some of the poorest.”
There was a “score” in Greece. However, it had nothing to do with free spending, but was a scheme dreamed up by Greek politicians, bankers, and the American finance corporation, Goldman Sachs.
Greece’s application for EU membership in 1999 was rejected because
its budget deficit in relation to its GDP was over 3 percent, the cutoff
line for joining. That’s where Goldman Sachs came in. For a fee
rumored to be $200 million (some say three times that), the
multinational giant essentially cooked the books to make Greece look
like it cleared the bar. Then Greece’s political and economic
establishment hid the scheme until the 2008 crash shattered the
It was the busy little ants, not the fiddling grasshoppers that brought on the European debt crisis.
American, German, French, and Dutch banks had to know that they were
creating an unstable real estate bubble—a 500 percent jump in housing
prices is the very definition of the beast—but kept right on lending
because they were making out like bandits.
When the bubble popped and Europe went into recession, Greece was
forced to apply for a “bailout” from the Troika. In exchange for 172
billon Euros, the Greek government instituted an austerity program that
saw economic activity decline 25 percent, unemployment rise to 27
Percent (and over 50 percent for young Greeks). The cutbacks slashed
pensions, wages, and social services, and drove 44 percent of the
population into poverty.
Virtually all of the “bailout”—89 percent—went to the banks that
gambled in the 1999 to 2007 real estate casino. What the Greek—as well
as Spaniards, Portuguese, and Irish—got was misery.
There are other EU countries, including Italy and France that, while not in quite the same boat as the “distressed four,” are under pressure to bring down their debt ratios.
But what are those debts?
This past summer, the Committee for a Citizen’s Audit
on the Public Debt issued a report on France, a country that is
currently instituting austerity measures to bring its debt in line with
the magic “3 percent” ratio. What the Committee concluded was that 60
percent of the French public debt was “illegitimate.”
More than 18 other countries, including Brazil, Portugal, Ecuador,
Greece and Spain, have done the same “audit,”, and, in each case, found
that increased public spending was not the cause of deficits. From 1978
to 2012, French public spending actually declined by two GDP points.
The main culprit in the debt crisis was a fall in tax revenues
resulting from massive tax cuts for corporations and the wealthy.
According to Razmig Keucheyan,
sociologist and author of “The Left Hemisphere,” this “neoliberal
mantra” that was supposed to increase investment and employment did the
According to the study, the second major reason was the increase in
interest rates that benefits creditors and speculators. Had interests
rates remained stable during the 1990s, debt would be significantly
Keucheyan argues that tax reductions and interest rates are
“political decisions” and that “public deficits do not grow naturally
out of the normal course of social life. They are deliberately inflicted
on society by the dominant classes to legitimize austerity policies
that will allow the transfer of value from the working classes to the
The audit movement calls for repudiating debt that results from “the
service of private interests” as opposed to the “wellbeing of the
people.” In 2008, Ecuador canceled 70 percent of its debt as
How this plays out in the current Greek-EU crisis is not clear. The
Syriza government is not asking to cancel the debt—though it would
certainly like a write down—but only that it be given time to let the economy grow. The recent four-month deal may give Athens some breathing room, but the ants are still demanding austerity and tensions are high.
What seems clear is that Germany and its allies are trying to force
Syriza into accepting conditions that will undermine its support in
Greece and demoralize anti-austerity movements in other countries.
The U.S. can play a role in this—President Obama has already called for easing the austerity policies—through its domination of the IMF.
By itself Washington can outvote Germany, the Netherlands, and Finland,
and could exert pressure on the two other Troika members to compromise.
Will it? Hard to say, but the Americans are certainly a lot more
nervous about Greece exiting the Eurozone than Germany.
But the key to a solution is exploding the myth.
That has already begun. Over the past few weeks, demonstrators
in Greece, Spain, Italy, Germany, Portugal, Great Britain, Belgium and
Austria have poured into the streets to support Syriza’s stand against
the Troika. “The Left has to work together having as its common goal the
elimination of predatory capitalism” says Maite Mola, vice-president of
the European Left organization and member of the Portuguese parliament.
“And the solution should be European.”
In the end, the grasshoppers might just turn Aesop’s fable upside down.
Joseph “Joe” Ades (18 December 1934–February 1, 2009), also known as the “Gentleman Peeler,” was a well-known street potato peeler seller in New York City,USA.
Joseph Ades, the youngest of seven children, was born in Manchester, England, where his father worked in the textile industry. Leaving school at 15, he became an office boy before becoming intrigued by the local markets that would spring-up in the World War II–devastated landscapes of Northern England. He started out hawking comic books before selling linens, textiles, jewelry, and toys directly on the streets.
Ades sold enough peelers to enjoy café society at the Pierre Hotel, on the Upper East Side, and lived with his fourth wife, Estelle Pascoe–November 17, 2007) in her three-bedroom apartment on Park Avenue.
“Never underestimate a small amount of money gathered by hand for 60 years”
Ades died on February 1, 2009, only a day after being informed that he had been granted American citizenship.
whenever people talk about capitalism in comparison to any other alternative, they always make it seem as if capitalism is the final answer, the pot of gold, that it’s the best and it hasn’t failed. truth is, it did fail. there’s no such thing as so-called “free enterprise” and “innovation” when the fact of the matter is those things as of right now are completely under the power of the 1%. and it’s no mistake that people talk about capitalism this way. this is how capitalist nations raise us, to believe that a free market is the best way to go, it’s absolutely equal, those who are in poverty are just lazy, there’s no way it could be our economy. just keep selling your labor for a deflated profit.
“The main quality of capitalism is that the working class doesn’t enjoy in the fruits of their labor. The working class supplies the rich, allowing them to enjoy in luxuries which the average person will never be able to afford. Democracy does not offer equality in capitalism. It creates a hostile atmosphere, forcing people to compete with one another. Such a system cannot be healthy for neither the economy nor the mental well-being of individuals. When a person is struggling to pay his bills, no equality can be seen there. Capitalism secures the wealth of the rich, starving the working class. No equality can be seen there. As soon as capitalism collapses, socialism will most likely be taken as a solution, for the people of a socialistic country all enjoy in the fruits of their labor, in which they are well taken care of by their government.”
I wish I saw more posts about how awful the food industry is in regards to capitalism, poverty/obesity, dangerous work environments, abuse of immigrant workers, big corporations abusing farmers, destruction of the environment, sanitary conditions in factory farms, and abuse of animals for the sake profit rather than the constant pissing contest between vegans and non-vegans :)
This is a presentation I gave in my literature class about Zora Neale Hurston’s Their Eyes Were Watching God from a proletarian/Marxist feminist perspective. Basically, I analyze the black woman’s place within imperialism, recognizing gender and national oppression as a part of capitalist exploitation.
Here’s the powerpoint I used where you can see all the quotes.
(This is like probably the thing that I’ve given the most care and effort to and it actually turned out well. I got a 92)
A lot of capitalists seem obsessed with the idea of oppressed peoples “catching up” to privilege. Women catching up with men, people of color catching up with whites, the post-colonial world catching up with the imperialist western powers. This is the language you hear repeated over and over in pro-capitalist circles.
In reality, capitalism is a marathon. We run as hard as we can- twenty miles. Thirty miles. A hundred miles. Suffering, thirsty, our feed ulcerated and bleeding. Sometimes we puke by the side of the road. Sometimes we die.
The man with the stopwatch by the side of the road. “You’re catching up!” He says, knowing full well that privilege, in the mean time, is miles ahead, in an air-conditioned Porsche. “Privilege is just five minutes ahead, you’re making good time.”
And yes, we do move forward. But for every mile we pay for with our blood, sweat and tears, privilege opens up the throttle and takes twenty.
We must do away with the notion, entirely, that “catching up” is good enough. We must do away away with the notion that the suffering of the working class, in the mean time, is somehow justified. We must abolish privilege, in it’s entirety- from white supremacy and patriarchy, all the way through to the material exploitation we call “capitalism”.
Sometimes I think running is the only thing I’m remotely good at. Sometimes I get tired of it.
“The fact is that the average man’s love of liberty is nine-tenths imaginary, exactly like his love of sense, justice and truth. He is not actually happy when free; he is uncomfortable, a bit alarmed, and intolerably lonely. Liberty is not a thing for the great masses of men. It is the exclusive possession of a small and disreputable minority, like knowledge, courage and honor. It takes a special sort of man to understand and enjoy liberty — and he is usually an outlaw in democratic societies.”
H.L. Mencken, Baltimore Evening Sun (12 February 1923)