To have and to have not
By Vittorio Jucker
n a recent trip to Vancouver I saw the mythical outer space-motif Lamborghini Aventador mentioned in an April New York Times story about the sons and daughters of China's wealthiest people finding financial havens overseas. The beautiful Lamborghini, one of many luxury vehicles owned by China's youthful and cash-rich Chinese elite, was parked in front of an elegant Japanese restaurant and had the whole street buzzing.
The owner is a 20-year-old art student who moved to from Beijing with his mother six years ago. When the Times asked him what his father did, he replied: "I can't say."
The $600,000 Aventador is the perfect physical image of capital flight, legal and otherwise, which the so-called Panama Papers recently brought to light. Revelations about capital flight to reputedly safe havens (and tax havens) has already had severe ripple effects in Iceland and Great Britain. But it's only one of many ailments affecting both developing and industrial countries.
Political systems buffeted by long waves of recession and its political aftershocks are moving toward paralysis. A fairly typical example is Spain, where five months after December national elections there is still no government. New elections may be necessary. Recent French voting boosted the populist, right wing National Front, which has been kept out of power by an unnatural alliance between Socialist and centrist parties.
Vague but widespread fears about immigration and terrorism have fueled a boom in radical-progressive populist movements, some of them reactionary. Austria's recent decision to build a "wall" along the Brenner border with Italy was a response to increasing pressure from the extreme right. Yet such actions remain paradoxical, since most everyone knows that European states, their populations in decline, are badly in need of new citizens.
Though the West is officially recession-free, its less than two percent annual growth rate is unimpressive. So far, national governments, the EU or the IMF have been unable to provide persuasive solutions to the problems posed by unemployment, immigration, low wages, and falling standards of living. Income discrepancies continue to rise, and with it a general sense of insecurity.
Privatization and the limiting of state involvement in the economy — seen by both conservatives and progressives as a one-size-fits-all solution — have created crises in the industrial world. In Belgium, France, Italy and Spain, the steel and petrochemical industry is faltering. Indian-owned Mittal Steel recently decided to close Britain's last remaining steel plant, in Wales.
The European Central Banks's policy of quantitative easing and the Federal Reserve's own measures have failed to generate enough liquidity to spur growth. In fact, their measures may be a case of too little, too late.
The affluent West faces a lacerating confluence of immigration, terrorism, and economic stagnation.
Market turmoil reflects deeper problems than the debate over tumbling oil prices suggests.
Russia's increasing disenchantment with the West has roots that grew from the broken 1990s.
What Adam Smith once called the "animal spirits" of capitalism have sadly run amok.
Memories of long gone days traveling in tough Africa spill forward into an uncertain present.
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