Haaretz.
The G8 summit in 2001 year was marked by extremists and anarchists, but they were right: The money trickles only in one direction.
Nitzan Horowitz
The makeshift operations room was crowded with demonstrators, some of them masked. It was one of the first protests against globalization. The pockmarked wall was covered with a poster of a giant champagne glass, with a slender stem and a wide bowl.
Five lines were drawn on the stem. Have you gone bourgeois, I asked them? No, they laughed; this is how the world’s wealth looks – the lower four-fifths are the stem that supports the upper fifth, which gets almost everything.
That was in 2001, at the G-8 summit of the wealthy nations in Genoa, Italy. Ever since, a lot of champagne has flowed at glittering meetings of world leaders, heads of financial institutions and high priests of capital.
But the champagne glass has long ceased to describe the balance of economic power. In a few years the concentration of wealth has grown unimaginably. Not the upper 10 percent, not even the upper tenth of a percent, but 100 people today hold wealth equal to that held by half the planet’s population.
Each of them equals 35 million other people. Sometimes such a person is worth more than a country. Such a concentration of wealth is a major threat politically and economically and creates huge gaps and tensions. Mass migration is one manifestation.
So how does such a huge amount of wealth make it into just a few pockets, such as those of Carlos Slim, the second richest man in the world? Can it be the communications firms and stores he owns bring him more money than a country’s entire gross domestic product?
Slim’s enormous capital, like that of any mega-tycoon, is based on the value of the stock in his endless companies. His businesses account for half the activity on the Mexico City stock market. They have swollen to their current value thanks to the inaction of the authorities and the streaming of investors.
The richer he gets, the greater his superhuman reputation; then the authorities lift even more restrictions and privatize even more assets for him, which lets him create monopolies and keep on ballooning. That’s what happened when Mexico’s telephony industry was privatized; telephone rates there are now among the highest in the world.
This is a vicious circle: the rich get richer. Slim’s activities long ago breached his country’s borders because “there’s nothing left to buy here,” as the joke goes. He has even reached Israel.
There's no difference between small investors buying his companies’ stock with their meager savings and institutional investors and banks investing billions: Both the admiration and the investment are blind. If he collapses, he will bring down a whole country, perhaps a whole continent. So no one will let him collapse and he'll keep growing.
Until when? Until he swallows up everything, because the Mexican authorities, as in many countries, have lost their ability to control the mega-tycoons. With money comes power, which leads to control over politics and communications, and with that more money and more power.
Private enterprise is an excellent invention; it’s essential for society to make progress. Money, the result of industriousness in private businesses, is legitimate, and Slim is a talented man. But in such wealth nothing is private anymore, and certainly such wealth doesn’t stem from a “free market.” The public and the state are the ones that create this wealth, but they’re not the ones who enjoy it.
The fears that troubled the activists in Genoa have become a reality. They were called extremists and anarchists, but even they didn’t predict the extent of the deterioration. The wave became a tsunami. It makes the state meaningless and prevents it from working for the good of all the people.
Over here, the trickle-down theory of Prime Minister Benjamin Netanyahu – the most prominent ideologist of tycoonization – has been proved completely hollow. The money trickles in one direction: from the public to the mega-tycoon. Sovereignty? Democracy? These will soon be empty words.