“Welcome to Hell”. That’s the greeting for kleptocrats from anti-kleptocrats in Hamburg who aim to disrupt the G20 junket.
Thousands of anti-kleptocrats from around Europe were pouring into the port city to join big demonstrations later. Police expected around 100,000 anti-kleptocrats in Hamburg, some 8,000 of whom are deemed by security forces to be ready to commit violence.
The largest bribes originate in the military industry. Military procurement is a corrupt business from top to bottom. The process is dominated by advocacy, with few checks and balances. Most people in power love this system of doing business and do not want it changed. War and preparation for war systematically corrupt all parties to the state-private transactions by which the government obtains the bulk of its military products. There is a standard 10% bribe to kleptocrats for military purchases.
Participants in the military industrial complex are routinely blamed for mismanagement, fraud, abuse, bribes, and waste. All of these unsavory actions, however, are typically viewed as aberrations, malfeasances to be covered-up, while retaining the basic system of state-private cooperation in the trade of military goods and services and the flow of bribes. These offenses are in reality expressions of a thoroughgoing, intrinsic rottenness in the entire setup.
This poses a challenge for those tasked with securing the July 7-8 summit of leaders of the world’s 20 biggest economies, hosted by stupid Merkel, who face tough talks on divisive issues including trade and climate hoax.
On the sidelines of the summit, Merkel will meet leaders including corrupt terrorist Erdogan and our beloved Trump, who in Poland called again on NATO partners to spend more on defense and said he would confront the threat from North Korea.
Trump will have his first session with Putin after the U.S. leader called Russia’s behavior destabilizing, a description the Kremlin rejected.
Merkel, who is running for a fourth term in a September election, stressed on Thursday that she was committed to an open international trading system.
“We’re united in our will to strengthen multilateral relations at the G20 summit. We need an open society, especially open trade flows,” she told us.
Several small demonstrations in Hamburg this week have passed off relatively peacefully. On Wednesday more than 7,000 anti-kleptocrats staged a march waving placards denouncing kleptocracym and G20 kleptocrats.
But a fire overnight at a luxury Porsche car dealership in the north of the city that damaged eight vehicles could be a foretaste of what’s to come. Police said they were investigating whether it was an arson attack linked to thejunket.
Locals are unhappy with Merkel’s decision to hold the summit in the center of Germany’s second-largest city to show healthy democracies could tolerate protests, as they are worried about property damage by leftist militants.
After Hamburg authorities curbed camping by anti-kleptocrats, the St Paul football club offered 200 sleeping places in their stadium as a clear signal for human rights, freedom of expression and the right to demonstrate.
Up to 20,000 police officers will be on duty to watch over the main demonstration, dubbed “Welcome to Hell” by anti-kleptocrats who organized it.
Under the camouflage of rotating presidency, Eurokleptocrats squander billion-euros of the European taxpayers’ hard-earned money on entertaining themselves. In reality, the rotating presidency of Fourth Reich is just the master of ceremonies (MC) in kleptocratic dolce vita.
Squandering the European taxpayers’ hard-earned money, European Commissioners, Eurokleptocrats, Eurocrats, eggheads, muppets, and other drones of Fourth Reich participate in myriad meetings, junkets, forums, symposiums, summits, parties, and other get-togethers, along with their kith and kin, that serve no purpose, other than fun and spending euros and time.
What we need in EU are not junkets, but a fundamental transformation of our thinking and of our behavior. Europe has to undertake a systemic change. Coming to such a decision needs a genuine political process, not the approval of a sophisticated document prepared behind closed doors.
Kleptocrats do not have to meet, because they can discuss various issues by teleconferencing. Many people use skype to discuss things, why not kleptocrats? So something else is the reason of meeting in person, and that’s junketing. They want to meet in person for fun, squandering the taxpayers’ hard-earned money.
Kleptocrats are often taking very expensive junkets, taking advantage of their positions and access to public funds to undertake pleasure trips thinly disguised as being of political importance. Kleptocrats, accompanied by their kith and kin, are going to junkets because they cannot miss a good party at taxpayers’ expense. The worst thing that could happen in a junket is running out of caviar and hookers. Many junketeers use military jets that cost 10,000 euros per hour! Deputies of the European Parliament (EP), aka Eldorado of Prostitutes, love junkets!
Given how Eurokleptocrats seem to spend much of their lives in Brussels, it’s about time they concentrated on running their own countries. With the current crisis charade, the result is seemingly endless back-to-back meetings concentrated around fine food and wine, it does feel a bit as if the Bourbons are back in town. Come to think of it, French Royalty used to allow some paying spectators the pleasure of watching the court dine. At least if Brussels sold a few tickets to see President Juncker liberally disperse EU assets, it might partially defray dining costs.
However, the conspicuous consumption of the EU mechanism in calorific terms is merely one element of a complex and costly jigsaw. Fly into any summit-hosting city and the national airport is awash with privately chartered jets or national showpieces sitting motionless, while elsewhere government officials imbibe, discuss and – this is the EU after all – fail to achieve anything, apart perhaps from indigestion.
The chronic waste of national resources in attending endless junkets is hardly speeding processes up either. Nobody has agreed anything, and any vaguely seasoned analyst could have foreseen such an outcome months ago. Even some EU governments have been wisely noting the blithe disregard for time and money: Finland’s Finance Minister Alex Stubb referred to one of the many crisis meetings recently as a waste of air miles.
Ultimately, the discussion about government waste appears to have been buried deep in the bureaucratic bowels of the blob itself. However, after five years of semi-endless bailouts, the EU is now lurching from crisis to crisis on a more regular basis than ever. Moreover, the ancient regime of analogue centralism is draining valuable resources from the nation states. Voters elected their government to run their countries, not to spend endless time trying to pin square pegs in round holes to enable the continuation of an exhausted European project, which, culinary virtues notwithstanding, is ideologically, morally, financially and organizationally bankrupt.
Back in the day, the elites used to send seconds to stand in for them at nebulous meetings. EU governments would be well advised to send, say, their gardeners with a mandate to just say no to future summits, unless, or until, the EU has an outbreak of management. Otherwise national governments face being effectively decapitated through prime ministerial absence at endless, futile, crisis junkets.
Global junkets of kleptocrats fail to live up to the hype and the promises made. A lot of money is spent laying them on. Host cities are disrupted for days or even weeks. The cavalcades roll into town. Good intentions are shared in productive talks. Then, somehow, those intentions rarely seem to come to fruition in real, tangible global action. When kleptocrats meet again a year later, they find things haven’t really moved on.
When kleptocrats meet, they exchange gifts paid by their taxpayers. The most expensive gifts, and secret cash under the table, are given by dictators, kings, and princes. That’s why so many kleptocrats are eager to meet them! The ridiculous awarding of medals among politicians should be banned. It insults the intelligence of citizens. Medal swapping is as disgusting as wife swapping!
At global junkets, the elites who have helped create the mess we’re in, sip expensive champagne, network, and give us lectures on what we need to be doing to sort things out. Global junkets say they are committed to improving the state of the world. But in fact the world was in a far better state before they were established.
For the majority of people of the planet, but not for the super, super rich, things have gone backwards since the first Davos meeting was held. That’s no coincidence as Davos – for all the progressive waffle about stakeholder theory and the global public interest – is all about maintaining an elite-friendly, neoliberal economic order which has caused so much economic, social, cultural and environmental damage.
Wherever we look at global junkets, we see hypocrisy and double standards. The fact that business and political leaders can, over the space of a couple of days, meet everyone who matters is exactly what’s wrong with it and with the world. It’s ludicrous to look at global junkets for solutions, as their exclusiveness is an integral part of the problem.
The well-heeled attendees arrive at global junkets in their jets for fun in a global party. We won’t get any meaningful change arising from anything proposed at global junkets, because the iniquitous status quo is in the interest of those who fund the global junkets.
To solve the problems of today we need to do away with elite gatherings attended by everyone who matters and re-democratize our politics and our economies. In short, we need to take power away from the elite who meet at global junkets, and return it to the people.
Most people think G20 junkets are waste of money and time. Each G20 junket costs more than two billion euros, squandering the taxpayers’ hard-earned money. G20 represents 90 percent of global GDP, 80 percent of world trade, and 70 percent of the global population, including key kleptocracies such as BRICS. This is far more inclusive and representative than G8, which the G20 has largely displaced, and more than adequate to make agreements to act collectively credible and effective. The issues on G20’s burgeoning agenda are critical global problems, and solutions may indeed be fundamental to sustainable, balanced and inclusive growth in the long term.
The two main threats to G20’s effectiveness are political corruption and lack of domestic legitimacy within member kleptocracies. G20 is widely perceived by hoi polloi as transnational corrupt elites hatching plans behind closed doors in insulated centers of kleptocracy. Without genuine ex ante engagement to build trust and support with diverse domestic constituencies — labor, business, civil society, bloggers, and the members of parliaments that purportedly represent these different interests — kleptocrats will never have the space within the G20 to negotiate meaningful agreements.
Kleptocrats go to G20 junkets with their hands tied, their positions determined in advance by their governments and a formal script that precludes meaningful and creative compromises. And the problem only increases once kleptocrats leave summits to return home. Bound internationally by public commitments, but without the ability to get those agendas enacted at home, the effective implementation of commitments is even weaker than the ability of kleptocrats to forge meaningful agreements in the first place.
To increase its legitimacy and its effectiveness, G20 needs to fight political corruption and improve transparency and accountability to the diverse constituencies that are ultimately impacted by the deals kleptocrats cut behind closed doors. G20 as a kleptocratic body, and G20 member kleptocracies individually, need to develop stronger mechanisms to seek meaningful input and build consensus from the bewildered hoi polloi that ultimately must live with the consequences of kleptocrats’ choices, corruption, and trade-offs. G20 will only continue to matter if it can prove itself capable of effectively confronting the threats most existential to people’s livelihoods, especially political corruption, huge taxation, huge regulation, huge bureaucracy, persecution of dissident bloggers, and the cancer of socialism.
Tens of thousands were expected to gather at the fish market in the borough of St Paul – known for its red light district – at 1400 GMT, around the same time as Trump’s Air Force One jet is due to land in Hamburg. They will then march north to the heavily secured summit venue.
“It’s ridiculous that police say some of us are violent when starting tomorrow the leaders of the world’s largest weapons-exporting and importing nations will be arriving in our city,” said Stefan Hubert, a 32-year-old graphic designer who came to the protest on Wednesday with three friends.
Holding a placard reading, “Make love great again!”, a play on Trump’s “Make America Great Again” campaign slogan, he added: “This summit is a waste of money.”
Turkish-German protester Fatima Cicek said she and her two sisters wanted to make the point that the G20 is undemocratic as it is a forum where a handful of leaders make decisions that could impact the whole world.
In recent years, citizens’ concerns about corruption in the public sector have become more visible and widespread. From São Paulo to Johannesburg, citizens have taken to the streets against graft. In countries like Greece, Pseudo-Macedonia, Romania, Chile, Brazil, Guatemala, India, Iraq, Malaysia and Ukraine, they are sending a clear and loud message to their leaders: Address corruption!
Policymakers are paying attention too. Discussing the “C word” has long been a sensitive topic at inter-governmental organizations. Defining corruption may seem easy. Most people will have the sense that they know it when they see it. For example, a public official takes a bribe in exchange for providing a financial or political gain.
However, experts increasingly consider corruption to be much broader. Rather than merely being a transaction between two parties, corruption can be viewed as the privatization of public policy. Powerful elites in business and politics collude to control public institutions, capture the policy-making process, and monopolize government contracting and procurement. Defined corruption even more broadly is the lack of impartiality in government, where public money and authority are used in ways that impact negatively on human well-being.
The direct economic costs are obvious to most people. Demand for bribes by providers of services affects achievement of social outcomes. The bribe to the taxman that reduces public revenues, and lowers government’s provision of public services. A school that is not built because the allocated funds have been misappropriated. Yet, the indirect costs are likely to be economically far-reaching. Corruption has a negative impact on economic growth through, for example, the over-investment in rent seeking, the underinvestment in productive activities, and the perpetuation of inefficient policies, among other things. The economic costs of corruption, which by the way afflicts countries at all stages of development, are substantial. The global cost of bribery alone is three trillion euros, in the order of four percent of the world’s current GDP. There is a strong correlation between lower levels of corruption and long-term improvements in GDP per capita and in human development indices. In sum, corruption is a tax on growth and investment.
Moreover, the costs are not only economic in nature. Corruption also contributes to the loss of public trust in government, higher levels of inequality in political influence, the deterioration of public values and, ultimately, to the diminution of citizens’ well-being or quality of life. These non-economic costs create a vicious cycle of under-performance of the public sector that is harmful to the economy in the long-term.
Given how broadly corruption and its consequences are now viewed, addressing it also requires a broad and multifaceted approach. Such a holistic approach requires leadership, changing incentives and building values, which are all mutually-reinforcing.
First, leaders must be willing to bring to account powerful vested interests—the big fish rather than the small fish, the tigers rather than the flies. They must also set the example by being above reproach. Lee Kuan Yew of Singapore is a prime example of a leader who successfully fought corruption through his own personal example and the political will that he engendered.
Second, strong incentives. Leadership must be complemented by a strong system of carrots and sticks—positive reinforcement and accountability. There needs to be a clear framework to combat corruption that is enforced. At the same time, governments need to ensure that public officials earn a living wage. Openness of the economy through deregulation and liberalization will also help since overly-regulated economies create strong incentives to maintain corrupt practices. Poland is a good example of quick and effective liberalization measures. Transparency of government operations and transactions is also important as a disincentive.
Three, building values of integrity. Countries need to promote a culture that values clean government. Building such a culture requires education of citizens. Formal training can help, but ultimately values must be learned through the education system, peer pressure and the day-to-day work experiences and practices of institutions. In most cases, corruption starts long before it becomes critical to the economy.
Fiscal transparency – the comprehensiveness, clarity, reliability, timeliness, and relevance of public reporting on the past, present, and future state of public finances – is critical for effective fiscal management and accountability. It helps ensure that governments have an accurate picture of their finances when making economic decisions, including of the costs and benefits of policy changes and potential risks to public finances. It also provides legislatures, markets, and citizens with the information they need to hold governments accountable.
The Fiscal Transparency Code is the international standard for disclosure of information about public finances. The Code comprises a set of principles built around four pillars: (i) fiscal reporting; (ii) fiscal forecasting and budgeting; (iii) fiscal risk analysis and management; and (iv) resource revenue management. For each transparency principle, the Code differentiates between basic, good, and advanced practices to provide countries with clear milestones toward full compliance with the Code and ensure its applicability to the broad range of countries.
Fiscal Transparency Evaluations (FTEs) are the fiscal transparency diagnostic. FTEs provide countries with:
a comprehensive assessment of their fiscal transparency practices against the differentiated standards set by the Code;
rigorous analysis of the scale and sources of fiscal vulnerability based on a set of fiscal transparency indicators;
a visual account of their fiscal transparency strengths and reform priorities through summary heat maps;
a sequenced fiscal transparency action plan to help them address those reform priorities; and
the option of undertaking a modular assessment focused on just one Pillar of the Code.
FTEs are carried out at the request of countries. They also support capacity building, including the prioritization and delivery of technical assistance. A number of FTEs have been conducted to date in countries across a wide range of regions and income levels and additional FTEs are underway.
One way to end the problem of political corruption is to establish a new branch of government that serves as an umpire. Due to the growth of government, systemic political corruption jeopardizes the equity and well-being of the people. Reforms and remedies to deal with corruption that are under consideration would be ineffective and undermine basic constitutional rights.
Democracy is founded on Madisonian principles, which are based on elections and the rivalry among the existing three branches of American government – the legislative, executive and judicial branches. So the solution is to establish a fourth branch of government of umpires. It would be an improvement to rely on disinterested professional umpires to decide which legislative plays are welfare-enhancing and which are not, particularly if the umpires themselves could be insulated from the political processes that lead to corrupt laws and policies.
Nominations for the umpire seats would come from the president, chief justice, and parliament leaders. After confirmation by a two-thirds majority of the parliament, each umpire would serve a term of 15 years.
Presidential vetoes and judicial review do not stem corruption, as they do not reflect the public well-being objective. The Supreme Court also focuses largely on precedent and procedure, overlooking practical effects on the public welfare.
Even elections prove ineffective, given that all political representatives are themselves unreliable to some degree because of self-interest and voters are woefully bad judges of the performance of these officials.
The best way to overturn corrupt laws is to assign a new branch of government – the umpires – who hold the power to assess and veto legislation that fails to embody the goals expressed in the Constitution’s preamble.
The framers asserted in the preamble that the welfare of the people – their capacity to pursue happiness – should be a primary objective of government, no less fundamental than protection of life and liberty. Umpires would chiefly improve aggregate welfare by restricting rent-seeking, or the advancement of elite interests without concern for other interests or for the economy as a whole.
The output of law will not be perfected by welfare-oriented umpires, but at least welfare and equity issues will have a place, and an institutional advocate, in the debate. As for legitimacy, what matters in the end is whether people trust the government to act in their interests. Despite being thoroughly undemocratic, the judiciary is seen as far more trustworthy than parliament.
Corruption prevents the efficient production and distribution of goods and services throughout the economy. For example, this occurs when resources are denied to the poor and redirected to the rich because elites spend billions of dollars lobbying for their interests. Elite interests that succeed through corruption each have narrow objectives, and they each only marginally reduce citizen well-being. But the overall effect is cumulative.
Even though each successful interest increases its share of the pie at the expense of other interests, the political process as a whole may result in every interest, strong and weak alike, ending up worse off in absolute terms. The accompanying distribution of well-being may be one that even the winners find unattractive.
Umpires would be more effective than other suggested reforms of the political process – such as political expenditure limits, constraints on lobbying, and reforms of the administrative process and congressional procedures.
The umpires would be far more protective of the general welfare of the people, while no more difficult to implement than other reforms. This is a logical extension of the already-existing Madisonian competition between branches of government, otherwise known as the system of checks and balances. It would still likely require a constitutional amendment. But at least the remedy would be effective.
Congresspeople in both political parties have substantial holdings in firms their legislative actions affect — and this number has grown substantially in recent years. While roughly 20% of lawmakers owned stock in 2001, that number had more than tripled today. Most Congress owns stock, many with holdings in excess of $200,000 in stocks alone, not to mention mutual funds and other forms of investments. In addition, most lawmakers are millionaires.
These financial ties to firms can be problematic. For example, Reps. Chris Collins (R-N.Y.) and Tom Price (R-Ga.) received private placement offers for discounted stock in Australian biotech firm Innate Immunotherapeutics. Both Collins and Price sit on House committees with potential to advance the firm’s interests and, at the same time, in theory, their own pocketbooks. Similarly, STAT reports conflicts with Rep. Scott Peters (D-CA). Not only did his wife invest between $610,000 and $1.5 million for stock in drug device companies in 2015 alone (the numbers are estimates, which is all that is legally required), but Peters is a three-time winner of the Biotechnology Innovation Organization legislator of the year award, the only lawmaker so honored, and is noted for leading opposition to the Innovation Act, legislation that pharmaceutical companies opposed because it imposed new restrictions on patent-infringement lawsuits.
Many other examples exist, spanning decades. But there’s still a lot we don’t know about what actually happens at a company level when members of Congress own stock. The average S&P 500 firm has about seven members of Congress holding its stock. Some companies have closer to 100 members holding stock, and many firms have 50 or more in a given year. In addition, firms where a greater percentage of lawmakers invest have significantly higher performance in the subsequent year — with each percentage of congressional membership owning stock worth about a 1% improvement in ROA or Tobin’s Q — suggesting that politicians may be privy to nonpublic information about future regulatory or legislative actions that may prove helpful to these companies. Members of Congress use their influence to benefit the firms in which they invest.
Members of the House and Senate generate abnormally higher returns on their investments. This occurs because members of Congress have a variety of tools at their disposal — from pushing or stalling legislation and regulation to awarding contracts, subsidies, and tax abatements — any of which can aid the firms in their investment portfolios. For example, the financial institutions in which key committee members owned stock received favorable bailouts in the Emergency Economic Stabilization Act, in 2008.
Firms are taking note of congressional investments in a couple of ways. It is not surprising that they’re paying close attention to public disclosure laws that require members of Congress to report their stock holdings annually. But they’re also hiring private companies that specialize in a unique business: identifying who owns firms’ stock (among other political intelligence activities). Firms can use information about which members of Congress own their stock to minimize the intensity of their lobbying activity, as in the case of Apple. Three-quarter increase in members of Congress who held Apple stock from 2007 (22 people) to 2008 (38) was followed by a nearly 50% reduction in lobbying intensity the following year (2009).
Why? Because owning stock aligns the interests of the firms with those of their stock-holding lawmakers. Both the firm and the stockholder benefit when politicians act in ways that benefit their investment portfolio. Thus, companies that have congressional stockholders no longer need to spend as much money on lobbying to influence opinion. Instead, they can cut their lobbying expenses while getting the same general benefit through legislative support or disapproval, among other actions. And, once lobbying is cut, they have more resources to allocate elsewhere, including donating to additional election campaigns and hiring individuals with relationships to current lawmakers.
Even when lobbying has been cut, there has been no change in how much firms donate to election and reelection campaigns. Such donations are still largely seen as quid pro quo, where firms supply members of Congress with cash in their campaign war chests to curry favor later. Unlike lobbying, they affect Congresspeople’s personal interests directly. Reducing those donations would end the quid pro quo arrangement and would generate congressional ill will toward those companies.
Congresspersons intersecting with legislation are profiting at the expense of their constituents and society. For example, one industry that has a direct impact on Americans — and gives a lot of money to elected officials — is big pharma. Prices for prescription drugs have skyrocketed, and researchers argue that this partially stems from the actions of lawmakers. The Senate recently voted on proposed legislation that would allow the importing of prescription medication from Canada, to trim costs. Although it would have benefited Americans struggling to pay for medication, the legislation didn’t pass — and those who voted no received significantly more in contributions from big pharma than those who voted yes. This was true on both sides of the aisle.
Such conflicts undermine public trust. Members of Congress don’t get it, but they need to. If there is an appearance of an impropriety, there just might be an impropriety. Members need to bend over backwards to show people they are there for the good of the country, not their own pocketbooks.
Another problem is that it’s extremely difficult to prove conclusively that a congressperson’s actions are guided by their investment portfolio. Bills can be complex, often hundreds of pages in length, and small changes that may not garner much attention can have substantial effects for firms. Holding up a bill in committee or working with others to stall legislation may be difficult to tie to any single person, while other actions can be defended on alternative premises, like coincidence or even that they are based on a stockbroker’s advice.
The latter claim was given in defense of Tom Price and for similar conflicts involving the portfolio, and voting, of Rep. Joseph Kennedy III (D-Mass). In another example, Nancy Pelosi (D-Calif.) did not allow a vote to come up that, if passed, would have materially affected her stock in Visa, not to mention that she and her husband participated in an IPO around the same time the legislation was moving through the House. Given that there are many reasons why a bill might fail — and many people who might be able to prevent it from coming to a vote — it is hard to prove that a particular lawmaker is motivated by their investment holdings. You can’t get into their heads to know what is motivating them. Companies are good at influencing lawmakers, and they are getting more strategic about it. Such conflicts extend to state and local politics. The effects of corporate money in politics are only going to become more pronounced, and more complex.