The New York Times recently published an article that highlights a special issue in wealth inequality: how the very rich protect their money. (Permalink = http://nyti.ms/2gIYlf9 ). A wealthy couple who were both born in other countries but have lived and worked mostly in Florida, are getting divorced. Their work involved several businesses that offered services over the internet while delivering little and have been the subject of suits by several state attorneys general. In response to these suits, the husband took steps to move his wealth "offshore" and put it into accounts in locations impervious to legal attack in the United States. His wife claims not to have known about this, and to be surprised, when they filed for divorce, that she too has no access to this money in the divorce proceedings. She hired attorneys specially skilled in tracking "hidden" funds.
At one level, this is about the breakup of an unhappy marriage and how it leads to a fight over money to deal with the emotional distress. But it also tells something about the super-rich. The couple had several different homes in different countries and spent time living away in order to qualify for favorable tax rates based on where they were in residence. The husband spent little time in the US to avoid being vulnerable to legal proceedings. The suits against the various companies allege consumer fraud and even if this is not proven, it seems that the companies generated enrichment mostly for the owner(s?) and for the legal and accounting staff hired to sequester the wealth.
In the tension between the legal structure of local jurisdictions, and the protective desires of the super rich, individuals will make every effort to escape the regulation of the local system. And this is equally true for large multinational corporations. Apple, a tech darling, is known for sequestering much of its profits in a derivative company in Ireland where it pays much lower taxes. For some time, Switzerland was famous for a banking system which would allow wealthy from other countries to hold money in "secret" accounts, not readily accessible to foreign legal proceedings, though reportedly this has recently improved, and the Swiss have been replaced by several other banking havens. If we understand the "rule of law" as rules administered by a specific jurisdiction, then this story is about the super rich and major corporations do not believe they are subject to the jurisdiction or rule of law of the places where they earn their wealth!
And it would be a mistake to see this only as an offshore issue for the US. A "60 minutes" story repeated twice in the last year, shows how someone, pretending to represent a wealthy foreigner, is offered help in sequestering money by New York attorneys (not all of those approached agreed!) to protect their wealth from the local countries from whence they are escaping. There are super rich everywhere who, for one reason or another, wish to protect their money from local jurisdictions and legal suits and there are cadres of experts for hire to find ways to do so. Though the story in the New York Times features the wife's outrage at discovering that she is "locked out", in reality the entire country is "locked out". Such people believe their wealth can protect them from having to deal with their local society including litigation and tax laws. They believe that their wealth places them above the law.
This gives a different meaning to being super rich. It is not about how much you can buy or own, or how much you can enjoy your life. It is about how much you can "control" your life circumstances to avoid the consequences of your actions. Though you may have to live in special havens, avoid previous partners who have claims on your money, and subject yourself to other constraints to control your fortune. This is not a problem that can be solved by one country alone. Such transfers can only be managed by a system of international coordination of banking. And the rules protecting the rights of legal jurisdictions must be part of this process. The world is far from having that sort of cooperation. And it is not clear that the current US government sees this as a problem.
Thursday, June 15, 2017
Economic development that destroys natural beauty
The September 19th, 2016 New Yorker magazine has a profile on Yvon Chouinard, the rock climber, adventurer, developer of new climbing hardware, and founder of the clothing company Patagonia. The profile captures the conflict between the adventurer and the businessman, and reveals a fundamental split in the agenda of the outdoor community. In keeping with Chouinard's personal values, the company has championed high risk outdoor wilderness adventures, primarily through the photographs in its catalog, while maintaining a strong support for environmental protection. The company has several initiatives to make its products more environmentally friendly and produces them with less environmental impact. (Less than other outdoor clothing manufacturers?) He is personally famous for his climbing exploits and other adventures. And the profile reveals his desire to be an environmentalist in the strongest terms. Along with a few other colleagues of his generation (now 77) his career embodies the dream of people who pursue their favorite activities and are financially rewarded at the same time --- like Hobie Alter developing his beach boats, and the Meistrell brothers who founded Body Glove wet suits.
Chouinard is not happy though. The natural world that he loved to explore and challenge is becoming crowded and overdeveloped. Ski areas to him are "golf courses" of social and real estate development. And climbing has become so popular that major climbs require scheduling by serious climbers. Surfing along the California coast is so crowded that on good days there is competition for waves that sometimes gets ugly. What happened? Success. The adventures of Chouinard and others were so appealing that more and more people were attracted to them, and bought outdoor clothing, and ropes, chock and expansion bolts, surf boards, etc. Outdoor adventure has become a major business. REI of Seattle, once a clubby supplier to hard core outdoorsy people is now a large marketer of the "outdoor lifestyle" with clothing, lessons, trips, and everything you might need to enjoy your adventure. Going outdoors is no longer for an odd group of folks who want to escape the more developed part of the world. Major climbs like Mt. Whitney and Mt. Everest must be scheduled to deal with the high demand. To be sure these are still daunting climbs requiring training and conditioning. But more and more reports indicate that some of the climbers are marginally prepared and in mortal danger if the situation turns against them. Deaths have occurred. There are still wilderness areas in several parts of the Americas, and the Himalayas. But the most desirable of these areas get very busy at the peak times of the year and it is hard to say that you are "alone in the wilderness" at those times.
Chouinard the businessman has succeeded in defining a lifestyle and a premium clothing brand that draws others to fantasize and sometimes populate the outdoors, so he is chipping away at the wilderness he is fond of, and wishes to protect. It makes no sense to focus on him personally: there is now an extensive industry of equipment, clothing, travel planning, and training all designed to make money off people wanting to be outdoors, in relatively wild and unspoiled places. A similar challenge faces the National Park Service every year when it must deal with the seasonal demand for access and utilization of its most popular parks, effectively degrading their "natural" and "wild" qualities into crowded tourist experiences. Even the Sierra Club sponsors guided wilderness trips on the justification that getting people to experience the wilderness will make them stronger advocates for it. There is a long history everywhere in the world of people discovering beautiful natural places and wanting to live around them. Housing developments are built by people wealthy enough to afford multiple homes, and the sites become real estate projects. Yvon's life story is just one poignant example of the incompatibility between the desire for natural experiences and the desire to have some economic benefit from the access.
The solution is elusive. It is possible to restrict the access to wilderness locations and require controlled reservations to enter them. This already occurs in some popular National Parks. And this effectively nullifies that sense of spontaneous wandering into wild places! There are still beautiful unrestricted natural areas in the US and other parts of the world, but the threats of development, including high end tourist development are current challenges along with natural resource development of logging, mining, and drilling. How many ski mountains, once wild places with a few lifts and some rambling shacks, have been transformed into condo cities which flood to overflowing in good snow seasons and otherwise languish. Avid skiers seem to rarely notice that the part of the mountain that is "wild and natural" has poles going up it to carry lift lines, and the base is covered with lodges and resorts that are anything but "wild and natural". Everyone is entitled to enjoy the gifts of nature in their own way, but some ways effectively nullify the benefit for others.
The only solution is changing the public's attitude toward using the natural world. Give up using it to prove what a great climber you are. Give up using it as a party space away from home with all the pleasures of home. Give up making it easy and accessible to large numbers of folks. Encourage visitors to concentrate only on seeing and understanding the natural features and beauty and not any way of exploiting or "using" it. And this includes emphasizing natural means of navigation around the sites and limited access by motorized vehicles. In short, give up trying to make money off of the natural beauty in any aggressive way, and fund access to preserve and protect the natural beauty that people initial claim to care about. One can compare the North and South rim of the Grand Canyon to see how two different ways of developing the same site result in dramatically different experiences. None of this is new. Edward Abbey had the same rants in Desert Solitaire half a century ago. And he did not slow the changes, and neither will this.
Chouinard is not happy though. The natural world that he loved to explore and challenge is becoming crowded and overdeveloped. Ski areas to him are "golf courses" of social and real estate development. And climbing has become so popular that major climbs require scheduling by serious climbers. Surfing along the California coast is so crowded that on good days there is competition for waves that sometimes gets ugly. What happened? Success. The adventures of Chouinard and others were so appealing that more and more people were attracted to them, and bought outdoor clothing, and ropes, chock and expansion bolts, surf boards, etc. Outdoor adventure has become a major business. REI of Seattle, once a clubby supplier to hard core outdoorsy people is now a large marketer of the "outdoor lifestyle" with clothing, lessons, trips, and everything you might need to enjoy your adventure. Going outdoors is no longer for an odd group of folks who want to escape the more developed part of the world. Major climbs like Mt. Whitney and Mt. Everest must be scheduled to deal with the high demand. To be sure these are still daunting climbs requiring training and conditioning. But more and more reports indicate that some of the climbers are marginally prepared and in mortal danger if the situation turns against them. Deaths have occurred. There are still wilderness areas in several parts of the Americas, and the Himalayas. But the most desirable of these areas get very busy at the peak times of the year and it is hard to say that you are "alone in the wilderness" at those times.
Chouinard the businessman has succeeded in defining a lifestyle and a premium clothing brand that draws others to fantasize and sometimes populate the outdoors, so he is chipping away at the wilderness he is fond of, and wishes to protect. It makes no sense to focus on him personally: there is now an extensive industry of equipment, clothing, travel planning, and training all designed to make money off people wanting to be outdoors, in relatively wild and unspoiled places. A similar challenge faces the National Park Service every year when it must deal with the seasonal demand for access and utilization of its most popular parks, effectively degrading their "natural" and "wild" qualities into crowded tourist experiences. Even the Sierra Club sponsors guided wilderness trips on the justification that getting people to experience the wilderness will make them stronger advocates for it. There is a long history everywhere in the world of people discovering beautiful natural places and wanting to live around them. Housing developments are built by people wealthy enough to afford multiple homes, and the sites become real estate projects. Yvon's life story is just one poignant example of the incompatibility between the desire for natural experiences and the desire to have some economic benefit from the access.
The solution is elusive. It is possible to restrict the access to wilderness locations and require controlled reservations to enter them. This already occurs in some popular National Parks. And this effectively nullifies that sense of spontaneous wandering into wild places! There are still beautiful unrestricted natural areas in the US and other parts of the world, but the threats of development, including high end tourist development are current challenges along with natural resource development of logging, mining, and drilling. How many ski mountains, once wild places with a few lifts and some rambling shacks, have been transformed into condo cities which flood to overflowing in good snow seasons and otherwise languish. Avid skiers seem to rarely notice that the part of the mountain that is "wild and natural" has poles going up it to carry lift lines, and the base is covered with lodges and resorts that are anything but "wild and natural". Everyone is entitled to enjoy the gifts of nature in their own way, but some ways effectively nullify the benefit for others.
The only solution is changing the public's attitude toward using the natural world. Give up using it to prove what a great climber you are. Give up using it as a party space away from home with all the pleasures of home. Give up making it easy and accessible to large numbers of folks. Encourage visitors to concentrate only on seeing and understanding the natural features and beauty and not any way of exploiting or "using" it. And this includes emphasizing natural means of navigation around the sites and limited access by motorized vehicles. In short, give up trying to make money off of the natural beauty in any aggressive way, and fund access to preserve and protect the natural beauty that people initial claim to care about. One can compare the North and South rim of the Grand Canyon to see how two different ways of developing the same site result in dramatically different experiences. None of this is new. Edward Abbey had the same rants in Desert Solitaire half a century ago. And he did not slow the changes, and neither will this.
Subscribe to:
Posts (Atom)