28 July 2015   1 comment

There is a part of the global economy about which we know very little: the offshore economy that disguises wealth in order to avoid national taxes.  There are a large number of sovereign states that have banking laws that defend almost complete secrecy.  Because of those laws it is very difficult to estimate the size of this offshore economy.   But a new report suggests that this untaxed wealth ranges between $21 and $32 trillion (for comparison purposes, the US economy is about $18 trillion).  The loss of the tax revenues associated with the offshore economy is simply staggering.

The existence of the offshore economy has an interesting dynamic on politics.  Recent studies have attempted to assess the impact of donor contributions to public policy.  The evidence suggests that wealthy donors assess national problems in pretty much the same manner as non-wealthy donors.  But wealthy donors favor remedies to those problems which differ a great deal from the policies supported by the non-wealthy.  Not surprisingly, the policies favored by the wealthy are usually the ones that are implemented.  The chart below shows the fascinating disparity:

Note that the wealthy and the general public are in broad agreement that income inequality is not a prerequisite for America’s prosperity and that current income inequality is too great (the columns on the right).  But the wealthy and the general public do not agree that the government should take action to reduce that inequality.  A fascinating conclusion.

US President Obama became the first American President to address the meeting of the African Union.  The meeting was in Ethiopia and Obama gave a speech that both praised African leaders for the substantial progress their countries have made in recent years but was also highly critical of the corruption that seems to pervade many African politics and economies.   He received the most applause when he criticized leaders who stayed too long in office–a pointed reference to the President of Burundi.


Posted July 28, 2015 by vferraro1971 in World Politics

One response to “28 July 2015

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  1. Thanks for note about Obama in Ethiopia, addressing African Union. I had just finished reading note from Peace Corps volunteers in Ethiopia who tried desperately to get a meeting with Obama. Didn’t succeed but commented that PC Ethiopia got three shout-outs! You can find info on PeaceCorps Ethiopia Facebook page. One was at the State Dinner. Obama said, “Ethiopia kindled a commitment to service for generations of young Americans who volunteered for the Peace Corps and who have for decades worked alongside the people of this proud land.” I’ll post a note about it in my blog catherineonyemelukwe.com on Friday and use your comment too!


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