three curable symptoms of an ailing global economy and their treatment

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The transfer of money through channels other than strictly regulated and monitored companies cannot be ruled out but that money’s unchecked investment in bonds, shares, properties and business companies clearly and convincingly points out that the countries and their governments at both ends are intentional accomplices of white collar crimes for a number of understandable but inexcusable reasons.Is it possible that those who are responsible to monitor the inter-state flow of money don’t know from which countries money is transferred to their countries? Who in regulatory, banking and financial circles doesn’t know whose money is parked in which tax haven for how long? Who doesn’t know who manages the illegally transferred funds on whose behalf? Why do the tax havens hide the information?

Why these questions have not been answered so far?

Who is responsible?

What can be done about it?

The Answers follow…

Three Curable Symptoms of an Ailing Global Economy and their Treatment

By Zahid Hussain Khalid

Introduction

Nothing remains incurable in today’s world when the scientists are looking beyond Mars and DNA / Stem Cells to conquer the universe and immortalize humans. Seeing the strange mysteries of universe and the life unfolding faster than the speed of light the unpleasantly slow pace of response to a wide range of malfunctions in the overall system of governance are endangering the very survival of human civilization on planet earth demanding an immediate identification of symptoms and a serious effort to cure them.

The world was divided into two systems of governance and economic zones immediately after the Second World War: American led Capitalist Zone built on the principles of democracy and social and economic justice; and Soviet Communist Zone constructed on the principle of absolute state control on country’s natural resources and economic outcome of the human input resulting in a Cold War and a bipolar world.

The first priority of the people of a world devastated economically by war and exploitation of colonial powers before their decolonization needed funds for infrastructure development and economic rehabilitation in Europe, Asia-Pacific, Middle East and Africa. United States of America and USSR used carrots and sticks to bring countries in their respective zones of influence by offering them different sets of social and economic incentives and issuing threats of serious consequences for remaining out of any one of the two zones of influence. In spite of those incentives and threats there was a covertly Aligned at country level but overtly Non-Aligned Group of Countries too. The response and its outcome were mixed. Western Europe was admirably helped by United States to become a rapidly growing industrial manufacturing and trading zone. Eastern Europe was assisted by Soviet Union to share the benefits of manufacturing and trading activities within Russian zone of influence. Non-Aligned Group had restricted access to both zones of influence for social, economic and military assistance.


The turning point in cold War, Gorbachev's conceptual racing car's crash and end of the first phase of an era of a War for Influence

Soviet invasion of Afghanistan was a turning point in the history of Cold War in which Soviet Union’s wrongly presented social and economic theory of Communism as an ideology was defeated by militant Jihadis recruited, trained and equipped by United States of America for helping to fraudulently defend Islam wrongly propagated to be under threat by a social and economic theory which was theocratically never a challenge or threat to any religion including Islam. The retreat of Soviet Union in Afghanistan was a clear indication of insurmountable pressures of multiple weaknesses in the system of governance to keep the Union economically viable, socially intact and politically united. Michael Gorbachev had a reform plan.

Gorbachev’s policies of Perestroika (restructuring) and Glasnost (openness), according to General Mirza Aslam Beg, Pakistan’s former Chief of Army Staff, “were like abruptly taking a u-turn while driving a racing car running at a speed of more than 200 Kilometers an hour which was expected to result in crash” and did result in breakup of the Soviet Union. Gorbachev’s move was premature. Former Soviet Union was not ready for such a shock which caused the ultimate breakup of the Union.


How United States of America missed an opportunity to become a genuinely acceptable world leader?

That was presumably an end of the Cold War, a bi-polar world and assumingly beginning of the trial of victorious Capitalism free of any challenge so far from any side. It was the victory of an American dream called Capitalist World in it first phase and to expand the land of opportunity from within the borders of the United States to the four corners of the world in its second phase by sharing the experiences of reconstructing a world which was turned into ruins after Second World War, successfully turning a large number of countries into prosperous manufacturing and trading hubs in the third phase. Keeping in view the resulting good will and a feeling of gratitude for America’s admirable role in putting the ruined economies and also the means of earning a livelihood of a large number of countries it was not a questionable expectation that United States of America could be whole heartedly accepted as a genuinely generous peace loving world leader.

Did it mean that there were no dark sides at all? War in Vietnam and CIA’s widely known tactics to change regimes and dictate American Cold War Agenda in different continents of the world also has a long disappointing and annoying chapter in the history of international relations and power politics. The end of Cold War was the beginning of an invisible economic world war through military means and military operations other than war.

The original plan was prepared during and after the Yaum Kapoor War but partially implemented due to the fear of Soviet Union’s possible intervention to counter American move for global economic domination through regime changes, military operations and occupation of militarily weak and economically resource rich countries of the world with the help of proxy militant groups. After the disintegration of Soviet Union there was no visible constraint to worry about any interference from any side. The hawks in Washington’s Strategic Policy Designing Teams were ready to avail the opportunity.

Please read the details here America, the great game and the greater middle east an undiscussed perspective unveiling the birth of conspiracy theories


Hurriedly launched flawed economic reform package for finanancialization of globalization with an overt back up plan of Grand Military Operation other than War

They prepared an aggressive economic plan to erase every sign of communism by introducing policies of privatization, public-private partnership, deregulation, out-sourcing, and globalization of banking and financial services with the help of a globally interlinked network of banks, stock exchanges and equity brokers.

They had a very strong case for economic reforms and military intervention also because the Soviet Occupation of Afghanistan had created a dangerous group of highly trained, well equipped and fearless armed non-state terrorists belonging to resource rich countries of the Middle East and Africa. The potential terrorism threat to the countries of the regions, resulting fear of their economic instability and political insecurity of the rulers were the soft grounds for the justification of military intervention wrapped in military assistance to combat terrorism. Smartly using these grounds for military intervention the running-for-their-lives non-state terrorist groups convincingly appeared fighting for their own survival and political change in more than half a dozen countries.

An Unknown Short History of Two Post-Colonial Invisible Global Empires – UK, USA and Extremism

This was a smooth transition of Cold War into Proxy War for Economic Dictation and Domination through Military Operation Other Than War!

A Technically Flawed and Unintentionally Criminalized Financialization of Globalization

It was assumed that money leads to power and power on its turn leads to authority. The process of globalization has created national, regional and global banking, business and stock market cartels. Banks are the places where the white and / or black money is parked and its flow and flight are facilitated with and without the connivance of regulatory authorities under an invisible indirect influence of ministry of finance. It is wrong to even think that the regulatory authorities work independently in developing and developed countries.

Stock brokers are the portfolio managers and proxy investors of both black and white money. They, again I am not ruling out the exceptions, serve the genuine entrepreneurial role models, crooks and criminals with the same dedication with which they serve the governments and their countries. As an unwritten globally practiced principle, depending on the status and the stature of the customer, it is


none of their business to know how the money is earned, from where it comes and to which overseas destination it has to go. They smartly package tailor-made investment plans to match every customer’s need. Can they do that without the knowledge and support of the regulators? Strangely no one addresses this question to those who are supposed to answer. And even when someone dares to ask, the people at the other end are not legally bound to answer because the regulatory procedures are intentionally made so complicated that no one dares to initiate the probe.

The main players

There are nearly two dozen following major suspects at cabinet, legislative, regulatory and business ends who need to be thoroughly investigated for tracking the sources of inward and outward flow of black money and those who facilitate them:

Ministers / Secretaries of Finance, Trade, Industries, Petroleum, Natural Resources, Ports and Shipping and Housing

Auditor Generals

Governors of Central Banks

Chairmen and Director Generals of Investment Boards, Privatization Commissions, Trading Corporations, Boards of Revenue, Directorates of Customs: sea, dry and airports

Chairman Public Accounts Committees on Finance

Chairmen of Stock Exchange Regulatory Commissions

Chairmen, Presidents, Director Generals and Administrators of the District Civil and Defense Housing Development and Highways Authorities

Leading Stock Brokers

Leading Real Estate Developers

Foreign Currency Dealers and Money Changers

The above ministries, regulatory bodies, commissions, boards, authorities, corporations, directorates, developers, brokers and dealers work independently but in so many ways they cannot function without extensive interaction with each other for necessary approvals, licenses, registrations, duties, taxes, refunds, investments, banking transactions and on-and-off-book facilitations and most of the time without favors, bribes and speed money. This is what results in collaboration between the white collar criminals in government and business circles to protect each other covertly and overtly with the help of intentionally and technically engineered temporary and / or permanent untraceable legislative, legal and regulatory flaws. These flaws make the job of investigators extremely difficult in developing countries which have been enslaved and recolonized through their rulers. These countries have been turned into hell evidently in connivance with the leaders of the developed countries (I will shortly explain how) for unchecked fearless plunder by almost all leaders of the ruling and opposition parties (hard to find exception cannot be ruled out) with the active role of business cartels, armed party extortionists and target killers as front men in almost all major economic sectors.


The Smart Tactics to Knit a Web of Safety Measures

The following tactics are used to fearlessly plunder the developing countries:

Charter of Democracy

National Reconciliation Ordinance

Amendments in Constitution

Issuance of SROs

Relaxation of and amendments in Tax Laws

Deliberate Regulatory Negligence and

Appointments of allegedly men of questionable integrity in investigation, regulatory and law enforcement agencies

The above measures stop the process of accountability and trigger violence through indirect state sponsored economic terrorism encouraging the extortionists, target killers and crime mafias to hollow the very foundation of the states from within. The following three deadly symptoms are discussed in informed circles which are in the knowledge of the rulers and the governments also:

Overtly regulated and covertly unregulated activities in Stock Markets, banks and financial institutions are as deadly as incurable poison extracting value, causing economic exclusion, resulting in growth without prosperity and possible result in Ultimate Demise of Capitalism…

Read the details here ABC of Life 3Cb: Value Creation-Extraction=Profits without Prosperity

Flawed legal differentiation between tax evasion and tax avoidance promoting technically engineered capital flight have turned tax havens into graveyards of social and economic justice creating secret oases of affluence and expanding deserts of deprivation… Please read the details here

ABC of Life 3-Ca: How Rich the Rich & Poor the Poor Countries Are?


State Authority plus Market Forces minus Good Governance has resulted in demands for legislative and legal immunity for irresponsible business and irresponsive political behavior of global business cartels and political leaders of NOT only the about-to-fail-fragile and failed States of the developing and under-developing but developed and the most developed countries of the world also!

Please read the details here ABC of Life 4: Nation-State Authority+Global Market Power-Governance=?

What to do?

“The way out”, which I had discussed earlier also in my article The Dark Sides of Deregulation and Sanctions, “is to revisit the existing regulatory regimes and reinvent the rules of doing business in and outside a country by securing its real and potential industrial, manufacturing and agricultural performance base without imposing any unnecessary restrictions on overseas investment and entrepreneurial initiatives. Such a step will keep the domestic economic performance intact and make room for its positive and constructive role in contributing to global economic performance also. Any overseas investment initiative after sufficiently securing the future economic growth timeline of a country ought to be encouraged but not at the cost of the viability of its own economic system. In order to make it sure an international code of doing business has to be introduced with the tripartite consent of international entrepreneurs, their respective governments and a proposed International Overseas Doing Business Code of Conduct Regulatory Regime. These proposed measures will effectively put an end to job exports, capital flight, political extortion and election campaign contributions narrowing the gap between rich and poor and ultimately putting an end to it.”


https://www.linkedin.com/pulse/dark-sides-deregulation-sanctions-zahid-khalid

https://www.linkedin.com/pulse/dark-sides-deregulation-sanctions-zahid-khalid

Points for Action of those who matter in G20 and G30

It goes without saying that poverty and inequality beyond rationally acceptable limit are caused by wrong economic, monetary and fiscal policies; legislative, legal and regulatory flaws and imbalance between pro-business and pro-people and pro-employer and pro-employee policies.

The transfer of money through channels other than strictly regulated and monitored companies cannot be ruled out but that money’s unchecked investment in bonds, shares, properties and business companies clearly and convincingly points out that the countries and their governments at both ends are intentional accomplices of white collar crimes for a number of understandable but inexcusable reasons.

Is it possible that those who are responsible to monitor the inter-state flow of money don’t know from which countries money is transferred to their countries? Who in regulatory, banking and financial circles doesn’t know whose money is parked in which tax haven for how long? Who doesn’t know who manages the illegally transferred funds on whose behalf? Why do the tax havens hide the information? The only understandable answer is that any amount of money that flows in from any other country plays an important role in the economic growth of the recipient countries. How can we expect such countries to ask those who bring in hundreds of millions, billions and trillions of dollars to stop doing that? It will be economically suicidal. But what do the rulers and policy makers of these tax havens forget that any law which results in the death of a person only because someone else in any other country is beneficiary of that law is not law but a criminal act to globalize such acts of murder.

How is that so?

“…by shaping and enforcing the social conditions that foreseeably and avoidably cause the monumental suffering of global poverty,” according to Thomas Pogge, “we are harming the global poor – or, to put it more descriptively, we are active participants in the largest, though not the gravest, crime against humanity ever committed.”

There is, as Thomas Pogge insists, a very serious dimension of this alarming situation of human rights violation which clearly establishes beyond any doubt that all the deaths caused by very severe deprivations, chronic undernourishment, lack of access to safe drinking water, adequate shelter, sanitation, electricity, quality basic education forced under age work labor in slavery like hazardous work conditions are “serious punishable crimes against humanity.

How is it so?

I have discussed it in detail here ABC of Life 3-B: Why Tax Havens Are Deadlier Than The Death?


A few highlights of some important facts to prove that debtor nations are actually the creditors

James Henry’s 2012 report for the Tax Justice Network, “The Price of Offshore Revisited,” has established that “for a focused group of 139 mostly low – middle income countries, these private offshore holdings of US$7.3-9.3 trillion are roughly twice their aggregate gross external debts of $4.08 trillion. These countries traditionally regarded as debtor nations, are in fact creditors to the world, once these secret private offshore holdings are taken into account.”

Financial Secrecy Index (FSI) of Tax Justice Network shows that “some of the biggest tax havens are in fact some of the world’s largest and wealthiest countries such as, Switzerland, Luxembourg, and the United States.” The other countries are: Hong Kong, Cayman Islands, Singapore, Lebanon, Germany, Jersey, Japan, Panama, Malaysia, Bahrain, Bermuda, Guernsey, United Arab Emirates, Canada, Austria, Mauritius, and British Virgin Islands.

“By supporting investments routed through secrecy jurisdictions (Tax Havens) DFIs,” as alleged by Mathieu Vervynckt, “allow the possibility of a significant loss of tax revenues. More importantly, they are helping to legitimize the offshore industry.” These multilateral DFIs in addition to bilateral DFIs are the World Bank’s International Finance Corporation (IFC); the European Bank for Reconstruction and Development (EBRD); the EU’s European Investment Bank (EIB).

Why this has not been emphasized so far?

At the first High Level Meeting of the Global Partnership for Effective Development Cooperation in Mexico in 2014, the affirmation of donors of their past commitments “to publish information to a common, open standard, incorporating the International Aid Transparency Initiative (IATI) by the end of 2015” is not reflected in The 2014 Aid Transparency Initiative Index in which “average score for all organizations still sits disappointingly low at 39%, and there is an increasing gap emerging between the organizations at the top and those at the bottom of the ranking” for the following three reasons:

1. There is a race to the top, but the majority of organizations are lagging behind in meeting their international commitments.

2. The lack of comparable, comprehensive and timely publication of information means that information on development cooperation is still difficult to access and use.

3. Progress is achievable, if the political will exists.

Mathieu Vervynckt estimates that as far back as in 2009, two million international business companies and hundreds of thousands of trusts, mutual funds, hedge funds and captive insurance companies are located in tax havens. In addition, about half of all international bank lending is routed through tax havens and 30-40% of the world’s stock of Foreign Direct Investments is accounted as assets of firms registered in these jurisdictions. What are the consequences?

In Europe alone, tax evasion and avoidance cause an estimated €1 trillion loss of income each year. In 2008, Christian Aid estimated that developing countries lost around $160 billion per year in corporate tax revenues. They estimated that this would be enough to substantially address infant mortality and save the lives of 350,000 children aged five or under every year. Furthermore, Tax Justice Network


reports that “an estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world.”

Read the details here ABC of Life Concluded: Can the words really change the world?

Across the board regulatory inaction of states is “a result of four normative transformations,” according to State of Power 2015 which is clearly reflected in the ongoing proceedings of the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United State. This partnership is feared to “have devastating effects on the rights of the people as a consequence of: downwards harmonization, regulatory convergence, arbitration tribunals and the normative principles” which are “part of a legal-political framework of domination,” marking, “a profound rupture in the hierarchy and the normative pyramid of the human rights protection system. What is more, there is clearly a democratic deficit in global economic institutions, including the arbitration tribunals that remain beyond national judicial powers’ reach.”

Social justice in any civilized society is nothing but the creation of a balance between greed and fear. When greed and fear cross their respective limits they result in social and economic injustice and imbalances. An economically privileged individual’s uncontrolled and unchecked greed at the giving end results in fear of a socially unprotected and under-privileged deprived person at the receiving end. The question is who is there to create that balance? In deregulated capitalism I see the answer to that question missing and hold the system of political governance responsible for that missing but essential for saving millions of lives answer demanding strict regulations. Why?

Humans are civilized social animals. These civilized social animals if not controlled by a set of strict laws and inescapable binding regulations have bio-genetic potential to turn into social monsters. This is what social and economic scientists and rulers have failed to understand. What are the consequences? Everybody is demanding rights and not willing to accept responsibilities in return creating and feeding an irresponsible and irresponsive system of governance which is evidently incapable of controlling the crisis after an unending series of ongoing and potentially dangerous crises both at national and global levels.

What can be done?

A lot can be easily done by honestly and sincerely curing the following three symptoms in the system of global governance:

Meaningful regulations and fully independent regulatory institutions headed by men of uncompromising character and integrity.

Removal of flaws like tax avoidance from tax laws which encourage and facilitate tax evasion.

The governments are voted in power to address those concerns of the voters which they are incapable of addressing themselves without the proper planning of those they entrust with the responsibility to look after them. This is what people expect the governments to do – serve the people! Rationalization of the corporate sense of optimism in country’s economy and its alignment with the expectations and well-being of the people needs to be the first priority of any government anywhere in the world. Let the corporate sector do what they are good at – doing business remaining within and strictly adhering to


national and global rules of doing business. They have nothing to with social service sectors like education, health, housing, justice, inland and border security.
