In the case of Russia, we had our Robber Barons era back in the 1990s. The country’s inflection point was a transition from Communism to capitalism. You bet that the process couldn’t escape its downsides and drawbacks along the way.
Back in the day, there were seven business tycoons, like Mikhail Khodorkovsky (now living in the West after serving a ten-year term in prison because of Putin), Boris Berezovsky (now dead), Alexander Smolensky (now dead), Mikhail Freedman (safe and sound, Alfa Group), Vladimir Potanin (safe and sound, Oneksim Group), Vladimir Gusinsky (now lives in Israel), and a couple of others whose names I don’t remember. These people owned banks, oil, and media companies, etc. They were our Robber Barons, in a way, or ‘oligarchs.’ Overall, these seven people were known as sevenbankership, as I am trying to translate the term into English. I mean, the rule of the seven bankers.
In the 1990s, it was assumed that they had not just business but also considerable political influence. In many ways, it was true. For example, Boris Berezovsky was trying hard to influence Boris Yeltsin’s family, and Vladimir Gusinsky was an owner of a media holding that fiercely opposed the Russian government. Both of them were known as kingmakers.
Until Vladimir Putin came to power in 2000.
He rather quickly changed the situation as, in the beginning, he openly declared war on oligarchs. He was rightly counting on public support as nobody liked some shady people trying to rule the country from backstage.
Putin ended their rule, kicking out Berezovsky and Gusinsky of power and taking out their assets. However, he introduced his cronies. The difference was that, unlike during Boris Yeltsin’s era, these new oligarchs were 100% loyal to Putin as they depended on him. The previous oligarchs had independently created their fortunes.
Now, the big business is under Putin’s control. The good thing is that non-eligible people don’t try interfering with the state’s business. The back side of the coin is that Putin himself is not legitimate to rule anymore because he’s winning one fake election after another…
Have we gone back to the 1890s?
Ah yes, the 1890s – I remember it well! It was a time when our Royal Navy, easily the biggest navy on the planet, enabled our merchant fleet, again by far the largest on earth, to take the merchandise manufactured by the world’s very first industrialised nation to all the major populated parts of the greatest Empire ever seen, then or since. And all paid for by the banks situated in the most important city back then, London, and using by far the most highly rated currency ever known – the pound.
It was so, so different back then. Like the rest of Europe, and indeed the USA, it was a time of “La Belle Epoque”, the beautiful era during which women literally competed to be the most stylish in every society in every city. The wealthy, completely unapologetically it seemed, flaunted their wealth before the riff-raff that was the general population. Today’s oligarchs hide behind lies and misinformation to conceal the fact that they are rich and using their wealth in various corrupt ways.
Oh, that we could go back to the 1890s. Well, apart from the mind-numbing poverty that was still prevalent, and life-threatening industrial employment everywhere. Not forgetting the diseases which were still rampant in the cities.
It was a time for fabulous wealth for the minority, combined with stunning poverty for the rest. You might feel a connection to present day Britain, but I think you would be well wide of the mark.
Have we gone back to the 1890s?
An economist recently described the United States as a third world country with flat screen TVs. Wealth inequality is rampant in the US today and if the billionaires running the US Government get their way it will become worse.
Please forgive me if I get a little off topic here but I thought it may be worthwhile to explore why the richest pay little or no tax in America. First, you know that Yank’s primary tax is an income tax. It’s a progressive tax, meaning that the more you make, the more you pay. Sounds fair, right? Here’s how the One Percent beat the system: You only pay income taxes on income, duh. To a person, these people all get one dollar a year in pay. Their actual income is one, single dollar and that is what they pay taxes on.
Their compensation is that they get stock options, not stock but stock options. You only pay income tax when you convert the option into stock and sell it. Needless to say, you’ll sit on the stock option and let it go up in value before cashing it in. So, your twenty-five million in options is actually worth fifty when you sell it, years later.
So how can you live off that? Well, you tell the limo to take… no wait, you tell your personal rep. at the Bank to come to you, now. Then you tell him you need a bigger mansion and you’ll put up these stock options as collateral. “Sure, we will loan you money against your stock options.” You still haven’t been paid yet so you still don’t owe any income taxes.
It gets better. See, the bank representative just gave you fifty-million for a new house so you run out and purchase a shiny new crib. The interest on that loan is a tax deduction. In other words, you have yet to receive any money from your “job” but you have a new mansion and a huge tax write-off. I could continue but you get the idea. Just know that when you see some millionaire on the TV taking credit for a new wing at the Children’s Hospital, he’s not actually donating money to help children, it’s to help himself.
The system is designed to fleece the poor so the rich can get welfare. Sorry for getting so far away from the topic at hand, but hopefully this will give you some background on why the rich seem to get richer while you struggle. And yes, many industrialized countries have similar set-ups.
So, what about the poor (the 90%)? The parallels are striking; the 1890s were a time of great innovation. Like today, immigration was a huge issue and laws were passed to restrict voting rights. The biggest companies were de-facto monopolies. The one percent, called Robber Barons, made huge donations to political campaigns and efforts were made to bend government to the needs of the few. Sound familiar?