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Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network

"Multinational corporations use highly complex structures of parents and subsidiaries to organize their operations and ownership. Offshore Financial Centers (OFCs) facilitate these structures through low taxation and lenient regulation, but are increasingly under scrutiny, for instance for enabling tax avoidance. Therefore, the identification of OFC jurisdictions has become a politicized and contested issue. We introduce a novel data-driven approach for identifying OFCs based on the global corporate ownership network, in which over 98 million firms (nodes) are connected through 71 million ownership relations. This granular firm-level network data uniquely allows identifying both sink-OFCs and conduit-OFCs. Sink-OFCs attract and retain foreign capital while conduit-OFCs are attractive intermediate destinations in the routing of international investments and enable the transfer of capital without taxation. We identify 24 sink-OFCs. In addition, a small set of five countries – the Netherlands, the United Kingdom, Ireland, Singapore and Switzerland – canalize the majority of corporate offshore investment as conduit-OFCs. Each conduit jurisdiction is specialized in a geographical area and there is significant specialization based on industrial sectors. Against the idea of OFCs as exotic small islands that cannot be regulated, we show that many sink and conduit-OFCs are highly developed countries."

Fed Economist Cheers Middle Class Squeeze

"This isn’t one rogue economist. This is a highly trained government official in a position of authority who says he just doesn’t care whether cities are places where the middle class can live. His remark is entirely in keeping with a decades-long series of policy decisions that makes life for the middle class last priority. A new Brookings Report shows that the middle is disappearing from New York, San Francisco, and dozens of other cities. And that’s just peachy, says the only government official quoted in the story. If no one really cares, then how much easier will it be to cut loose the middle class entirely? Why worry about predatory lending and home mortgage foreclosures, why regulate tricks and traps in credit cards or payday lenders, why fix public schools or think about how to provide universal health insurance? The rich are doing fine, and, according to the Federal Reserve economist, so long as service labor can be imported from elsewhere, life without the middle class goes on very nicely."

The Great Divide: Rich People Just Care Less

Why do wealthy people often act dismissively to, or ignore those they perceive as below them in class? A growing body of recent research shows that people with the most social power pay scant attention to those with little such power. This tuning out has been observed, for instance, with strangers in a mere five-minute get-acquainted session, where the more powerful person shows fewer signals of paying attention, like nodding or laughing. The more powerful were less compassionate toward the hardships described by the less powerful. Dacher Keltner, a professor of psychology at Berkeley, and Michael W. Kraus, an assistant professor of psychology at the University of Illinois, Urbana-Champaign, have done much of the research on social power and the attention deficit...

The neoliberal (counter-) revolution

G Duménil, D Lévy There is a dramatic contrast between the last twenty years of the 20th century and the previous decades since World War II. It is common to describe the (previous) twenty years of capitalism as “neoliberalism”. Indeed, during the transition between the 1970s and 1980s, the functioning of capitalism was deeply transformed, both within countries of the center and in the periphery. The earlier capitalist configuration is often referred to as the “Keynesian compromise.” Without simplifying too much, those years could be characterized, in the center countries—United States (and Canada), Europe, and Japan—by large growth rates, sustained technological change, an increase in purchasing power and the development of a welfare system (concerning, in particular, health and retirement) and low unemployment rates. The situation deteriorated during the 1970s, as the world economy, in the wake of the decline of the profit rate, entered a “structural crisis.” Its main aspects were diminished growth rates, a wave of unemployment, and cumulative inflation. This is when the new social order, neoliberalism, emerged, first within the countries of the center—beginning with the United Kingdom and the United States—and then gradually exported to the periphery. We explore below the nature of neoliberalism and its balance sheet after nearly a quarter of a century. Neoliberalism is often described as the ideology of the market and private interests as opposed to state intervention. Although it is true that neoliberalism conveys an ideology and a propaganda of its own, it is fundamentally a new social order in which the power and income of the upper fractions of ruling classes—the wealthiest persons—was reestablished in the wake of a set back. Although the conditions which accounted for the structural crisis were gradually superseded, most of the world economy remained plagued by slow growth and unemployment, and inequality increased tremendously. This was the cost of a successful restoration of the income and wealth of the wealthiest

Higher social class predicts increased unethical behavior (PNAS)

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.