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Wednesday, July 11, 2012

Inequality 12: Billionaires and the UN Politics of Envy

The United Nations (UN) is one huge global bureaucracy. Its original mandate was to promote world peace and resolution of conflict between and among nations, that is why it was formed at the end of World War 2 in 1945.

Since then, the UN has grown into a web or dozens of tentacles of different bureaucracies with concerns on almost all sectors. This somehow confirms one important role of the bureaucracy – once it is created, it only wants and aspires to perpetuate itself forever.

More than a year ago, I compiled a list of the different offices and agencies under the UN, I counted at least 131 of them, ranging from the Security Council and ILO, down to the UN World Tourism Organization. See the list here, UN bureaucracies – too many.
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From the long list of UN bureaucracies, and I think that list is not complete yet,  many UN officials are getting uneasy: who will feed them and sustain their high, tax-free salaries and perks, now that the rich governments, previously the main contributors to the UN and its dozens and dozens of bureaucracies, are having huge fiscal problems. If those rich governments can cut certain subsidies to their own people and taxpayers, then the international and multilateral bureaucracies could be next in the chopping block.

Late this week, there were several reports with headlines like UN calls for ‘billionaires’ tax’ to help world’s poor. Many rich country governments reeling from cut back their contribution to foreign aid. In 2011 for instance, foreign aid flows have declined by $167 billion.

So fearing the scary scenario that the budget and spending power of the UN and its many attached offices and going to decline, they have produced this fantastic plan of creating new taxes purportedly to “save the planet”, “save the dolphins and polar bears”, “save the poor”, etc. Me thinks that deep inside, many will not admit what they really wish to whisper, "save our pockets and lifestyle"..

Here is a list of the potential taxes proposed by the UN:WESS and the potential revenues they can give to the UN”

1.  A tax of $25 per tonne on carbon dioxide emissions. It could be collected by national governments, but allocated to international cooperation -- about $250 billion.

2. A tax of 0.005 percent on all currency transactions in the dollar, yen, euro and pound sterling.   a tiny currency transaction), which could yield an estimated 40 billion U.S. dollars per year for international cooperation - could raise about $40 billion a year.

3. Earmarking a portion of a proposed European Union tax on financial transactions for international cooperation – projected tto raise more than $70 billion a year.

4.  Regular allocations of he special drawing rights (SDRs) of the International Monetary Fund (IMF) and use of "idle" SDRs could yield about 100 billion U.S. dollars per year for the purchase of long-term assets which would then be used as development finance.

Overall, the various  billionaires’ tax will help raise more than $400 billion a year.

What's wrong with being billionaires? Take these two examples.

First, a bunch of science geeks and nerds made a grand conspiracy -- to create or invent a rice or potato variety that is packed with certain nutrients and vitamins that will improve or boost its consumers' immune system against certain infectious diseases. It's like an indirect vaccine against certain diseases minus the injections. Various laboratory and clinical trials prove that their invention was successful -- safe, effective, no negative side effects, etc. It became a hit worldwide, the geek inventors are selling their rice at P80 per kilo equivalent, millions and millions of people in Asia and elsewhere are buying their rice, the geeks became super-super rich, they became multi-billionaires.

Second, another bunch of information and communications technology (ICT) geeks and their investors also made their own big conspiracy – to produce cool smart phones and allied gadgets that can carry most if not all functions of separate gadgets, like internet and email access, a video-camera, a radio, tv, organizer and so on – at a much cheaper, really affordable prices. Even rural farmers can afford to purchase them and their kids help them to see some  graphs of price and quantity movements of their crops as sold and traded in various public markets and groceries. Tens of millions of people worldwide are buying these new products from a new company, the geeks and their investors have become very rich, some have become multi-billionaires

The UN officials now think that those geeks and risk-taking investors and entrepreneurs owe the UN and the world some debt, or they committed a crime of being highly efficient and  hard-working, highly successful, that these billionaires should pay lots of taxes to their national governments, and lots of additional taxes earmarked for the UN, so that the UN guys will save the planet, save the poor against certain infectious diseases, save them from illiteracy and the “digital divide”.

This is a highly rent-seeking if not idiotic argument. These days, people can become very rich mainly by producing certain goods and services that really benefit humanity. Exception are  certain politicians becoming very rich.via dictatorship and/or heavy economic protectionism of their family-owned or crony-owned local companies.

So the proposed new taxes by the UN are mainly rent-seeking, distortionary measures driven mainly by the politics of envy while mouthing some bleeding heart developmental concerns.  
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See also:

Inequality 8: On Sustainable Inclusive Growth, June 23, 2011
Inequality 9: CMFR Forum on Inclusive Growth, September 22, 2011
Inequality 10: On Urban Congestion, January 05, 2011

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