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<font size=3><a href="http://www.counterpunch.org/" eudora="autourl">
http://www.counterpunch.org/<br><br>
</a></font><font face="Times New Roman, Times" size=4><b>March 21,
2007<br><br>
</font><h1><font face="Times New Roman, Times" size=5><b>The Billionaires
and How They Made It<br><br>
<br>
</i></font><font face="Times New Roman, Times" size=5 color="#990000">
Meet the Global Ruling
Class</b></font></h1><font face="Times New Roman, Times" size=5>By JAMES
PETRAS<br><br>
</font><font face="Verdana" size=6 color="#990000">E</font>
<font face="Verdana" size=2>ven as the world's billionaires grew in
number from 793 in 2006 to 946 this year, major mass uprisings became
commonplace in China and India. In India, which has the highest number of
billionaires (36) in Asia with total wealth of $191 billion, Prime
Minister Singh declared that the greatest single threat to 'India's
security' were the Maoist-led guerrilla armies and mass movements in the
poorest parts of the country. In China, with 20 billionaires with $29.4
billion net worth, the new rulers, confronting nearly a hundred thousand
reported riots and protests, have increased the number of armed special
anti-riot militia a hundred fold, and increased spending for the rural
poor by $10 billion in the hopes of lessening the monstrous class
inequalities and heading off a mass upheaval.<br><br>
The total wealth of this global ruling class grew 35 per cent year to
year topping $3.5 trillion, while income levels for the lower 55 per cent
of the world's 6-billion-strong population declined or stagnated. Put
another way, one hundred millionth of the world's population
(1/100,000,000) owns more than over 3 billion people. Over half of the
current billionaires (523) came from just 3 countries: the US (415),
Germany (55) and Russia (53). The 35 per cent increase in wealth mostly
came from speculation on equity markets, real estate and commodity
trading, rather than from technical innovations, investments in
job-creating industries or social services.<br><br>
Among the newest, youngest and fastest-growing group of billionaires, the
Russian oligarchy stands out for its most rapacious beginnings. Over
two-thirds (67 per cent) of the current Russian billionaire oligarchs
began their concentration of wealth in their mid to early twenties.
During the infamous decade of the 1990's under the quasi-dictatorial rule
of Boris Yeltsin and his US-directed economic advisers, Anatoly Chubais
and Yegor Gaidar the entire Russian economy was put up for sale for a
'political price', which was far below its real value. Without exception,
the transfers of property were achieved through gangster tactics
assassinations, massive theft, and seizure of state resources, illicit
stock manipulation and buyouts. The future billionaires stripped the
Russian state of over a trillion dollars worth of factories, transport,
oil, gas, iron, coal and other formerly state-owned resources.<br><br>
Contrary to European and US publicists on the right and left, very few of
the top former Communist leaders are found among the current Russian
billionaire oligarchy. Secondly, contrary to the spin-masters' claims of
'communist inefficiencies', the former Soviet Union developed mines,
factories, energy enterprises were profitable and competitive, before
they were taken over by the new oligarchs. This is evident in the massive
private wealth that was accumulated in less than a decade by these
gangster-businessmen.<br><br>
Virtually all the billionaires' initial sources of wealth had nothing to
do with building, innovating or developing new efficient enterprises.
Wealth was not transferred to high Communist Party Commissars (lateral
transfers) but was seized by armed private mafias run by recent
university graduates who quickly capitalized on corrupting, intimidating
or assassinating senior officials in the state and benefiting from Boris
Yeltsin's mindless contracting of 'free market' Western consultants.
<br><br>
<i>Forbes </i>magazine puts out a yearly list of the richest individuals
and families in the world. What is most amusing about the famous
<i>Forbes</i> magazine's background biographical notes on the Russian
oligarchs is the constant reference to their source of wealth as
'self-made' as if stealing state property created by and defended for
over 70 years by the sweat and blood of the Russian people was the result
of the entrepreneurial skills of thugs in their twenties. Of the top
eight Russian billionaire oligarchs, all got their start from
strong-arming their rivals, setting up 'paper banks' and taking over
aluminum, oil, gas, nickel and steel production and the export of
bauxite, iron and other minerals. Every sector of the former Communist
economy was pillaged by the new billionaires: Construction,
telecommunications, chemicals, real estate, agriculture, vodka, foods,
land, media, automobiles, airlines etc..<br><br>
With rare exceptions, following the Yeltsin privatizations all of the
oligarchs quickly rose to the top or near the top, literally murdering or
intimidating any opponents within the former Soviet apparatus and
competitors from rival predator gangs.<br><br>
The key 'policy' measures, which facilitated the initial pillage and
takeovers by the future billionaires, were the vast and immediate
privatizations of almost all public enterprises by the Gaidar/Chubais
team. This 'Shock Treatment' was encouraged by a Harvard team of economic
advisers and especially by US President Clinton in order to make the
capitalist transformation irreversible. Privatization led to the
capitalist gang wars and the disarticulation of the Russian economy. As a
result there was an 80 per cent decline in living standards, a
devaluation of the Ruble and the sell-off of invaluable oil, gas and
other strategic resources at bargain prices to the rising class of
predator billionaires and US-European oil and gas multinational
corporations. Over a hundred billion dollars a year was laundered by the
mafia oligarchs in the principle banks of New York, London, Switzerland,
Israel and elsewhere funds which would later be recycled in the
purchase of expensive real estate in the US, England, Spain, France as
well as investments in British football teams, Israeli banks and joint
ventures in minerals.<br><br>
The winners of the gang wars during the Yeltsin reign followed up by
expanding operations to a variety of new economic sectors, investments in
the expansion of existing facilities (especially in real estate,
extractive and consumer industries) and overseas. Under President Putin,
the gangster-oligarchs consolidated and expanded from
multi-millionaires to billionaires, to multi-billionaires and growing.
From young swaggering thugs and local swindlers, they became the
'respectable' partners of American and European multinational
corporations, according to their Western PR agents. The new Russian
oligarchs had 'arrived' on the world financial scene, according to the
financial press.<br><br>
Yet as President Putin recently pointed out, the new billionaires have
failed to invest, innovate and create competitive enterprises, despite
optimal conditions. Outside of raw material exports, benefiting from high
international prices, few of the oligarch-owned manufacturers are earning
foreign exchange, because few can compete in international markets. The
reason is that the oligarchs have 'diversified' into stock speculation
(Suleiman Kerimov $14.4 billion ), (Mikhail Prokhorov $13.5 billion ),
banking (Fridman $12.6 billion ) and buyouts of mines and mineral
processing plants.<br><br>
The Western media have focused on the falling out between a handful of
Yeltsin-era oligarchs and President Vladimir Putin and the increase in
wealth of a number of Putin-era billionaires. However, the biographical
evidence demonstrates that there is no rupture between the rise of the
billionaires under Yeltsin and their consolidation and expansion under
Putin. The decline in mutual murder and the shift to state-regulated
competition is as much a product of the consolidation of the great
fortunes as it is the 'new rules of the game' imposed by President Putin.
In the mid 19th century, Honoré Balzac, surveying the rise of the
respectable bourgeois in France, pointed out their dubious origins:
"Behind every great fortune is a great crime." The swindles
begetting the decades-long ascent of the 19th century French bourgeoisie
pale in comparison to the massive pillage and bloodletting that created
Russia's 21st century billionaires.<br><br>
</font><font face="Verdana" size=2 color="#990000"><b>Latin
America<br><br>
</b></font><font face="Verdana" size=2>If blood and guns were the
instruments for the rise of the Russian billionaire oligarchs, in other
regions the Market, or better still, the US-IMF-World Bank orchestrated
Washington Consensus was the driving force behind the rise of the Latin
American billionaires. The two countries with the greatest concentration
of wealth and the greatest number of billionaires in Latin America are
Mexico and Brazil (77 per cent), which are the two countries, which
privatized the most lucrative, efficient and largest public monopolies.
Of the total $157.2 billion owned by the 38 Latin American billionaires,
30 are Brazilians or Mexicans with $120.3 billion . The wealth of 38
families and individuals exceeds that of 250 million Latin Americans;
0.000001 per cent of the population exceeds that of the lowest 50 per
cent. In Mexico, the income of 0.000001 per cent of the population
exceeds the combined income of 40 million Mexicans. The rise of Latin
American billionaires coincides with the real fall in minimum wages,
public expenditures in social services, labor legislation and a rise in
state repression, weakening labor and peasant organization and collective
bargaining. The implementation of regressive taxes burdening the workers
and peasants and tax exemptions and subsidies for the agro-mineral
exporters contributed to the making of the billionaires. The result has
been downward mobility for public employees and workers, the displacement
of urban labor into the informal sector, the massive bankruptcy of small
farmers, peasants and rural labor and the out-migration from the
countryside to the urban slums and emigration abroad.<br><br>
The principal cause of poverty in Latin American is the very conditions
that facilitate the growth of billionaires. In the case of Mexico, the
privatization of the telecommunication sector at rock bottom prices,
resulted in the quadrupling of wealth for Carlos Slim Helu, the third
richest man in the world (just behind Bill Gates and Warren Buffet) with
a net worth of $49 billion . Two fellow Mexican billionaires, Alfredo
Harp Helu and Roberto Hernandez Ramirez benefited from the privatization
of banks and their subsequent de-nationalization, selling Banamex to
Citicorp.<br><br>
Privatization, financial de-regulation and de-nationalization were the
key operating principles of US foreign economic policies implemented in
Latin America by the IMF and the World Bank. These principles dictated
the fundamental conditions shaping any loans or debt re-negotiations in
Latin America. <br><br>
The billionaires-in-the-making, came from old and new money. Some began
to raise their fortunes by securing government contracts during the
earlier state-led development model (1930's to 1970's) and others through
inherited wealth. Half of Mexican billionaires inherited their original
multi-million dollar fortunes on their way up to the top. The other half
benefited from political ties and the subsequent big payola from buying
public enterprises cheap and then selling them off to US multi-nationals
at great profit. The great bulk of the 12 million Mexican immigrants who
crossed the border into the US have fled from the onerous conditions,
which allowed Mexico's traditional and nouveaux riche millionaires to
join the global billionaires' club.<br><br>
Brazil has the largest number of billionaires (20) of any country in
Latin America with a net worth of $46.2 billion , which is greater than
the new worth of 80 million urban and rural impoverished Brazilians.
Approximately 40 per cent of Brazilian billionaires started with great
fortunes and simply added on through acquisitions and mergers. The
so-called 'self-made' billionaires benefited from the privatization of
the lucrative financial sector (the Safra family with $8.9 billion ) and
the iron and steel complexes.<br><br>
</font><font face="Verdana" size=2 color="#990000"><b>How to Become a
Billionaire<br><br>
</b></font><font face="Verdana" size=2>While some knowledge, technical
and 'entrepreneurial skills' and market savvy played a small role in the
making of the billionaires in Russia and Latin America, far more
important was the interface of politics and economics at every stage of
wealth accumulation.<br><br>
In most cases there were three stages:<br><br>
</font>
<dl>
<dd>1. During the early 'statist' model of development, the current
billionaires successfully 'lobbied' and bribed officials for government
contracts, tax exemptions, subsidies and protection from foreign
competitors. State handouts were the beachhead or take-off point to
billionaire status during the subsequent neo-liberal phase.<br><br>
<dd>2. The neo-liberal period provided the greatest opportunity for
seizing lucrative public assets far below their market value and earning
capacity. The privatization, although described as 'market transactions',
were in reality political sales in four senses: in price, in selection of
buyers, in kickbacks to the sellers and in furthering an ideological
agenda. Wealth accumulation resulted from the sell-off of banks,
minerals, energy resources, telecommunications, power plants and
transport and the assumption by the state of private debt. This was the
take-off phase from millionaire toward billionaire status. This was
consummated in Latin America via corruption and in Russia via
assassination and gang warfare.<br><br>
<dd>3. During the third phase (the present) the billionaires have
consolidated and expanded their empires through mergers, acquisitions,
further privatizations and overseas expansion. Private monopolies of
mobile phones, telecoms and other 'public' utilities, plus high commodity
prices have added billions to the initial concentrations. Some
millionaires became billionaires by selling their recently acquired,
lucrative privatized enterprises to foreign capital.<br><br>
</dl>In both Latin America and Russia, the billionaires grabbed lucrative
state assets under the aegis of orthodox neo-liberal regimes
(Salinas-Zedillo regimes in Mexico, Collor-Cardoso in Brazil, Yeltsin in
Russia) and consolidated and expanded under the rule of supposedly
'reformist' regimes (Putin in Russia, Lula in Brazil and Fox in Mexico).
In the rest of Latin America (Chile, Colombia and Argentina) the making
of the billionaires resulted from the bloody military coups and regimes,
which destroyed the socio-political movements and started the
privatization process. This process was then even more energetically
promoted by the subsequent electoral regimes of the right and
'center-left'.<br><br>
What is repeatedly demonstrated in both Russia and Latin America is that
the key factor leading to the quantum leap in wealth from millionaires
to billionaires was the vast privatization and subsequent
de-nationalization of lucrative public enterprises.<br><br>
If we add to the concentration of $157 billion in the hands of an
infinitesimal fraction of the elite, the $990 billion taken out by the
foreign banks in debt payments and the $1 trillion (one thousand billion)
taken out by way of profits, royalties, rents and laundered money over
the past decade and a half, we have an adequate framework for
understanding why Latin America continues to have over two-thirds of its
population with inadequate living standards and stagnant
economies.<br><br>
The responsibility of the US for the growth of Latin American
billionaires and mass poverty is several-fold and involves a wide gamut
of political institutions, business elites, and academic and media
moguls. First and foremost the US backed the military dictators and
neo-liberal politicians who set up the billionaire-oriented economic
models. It was ex-President Clinton, the CIA and his economic advisers,
in alliance with the Russian oligarchs, who provided the political
intelligence and material support to put Yeltsin in power and back his
destruction of the Russian Parliament (Duma) in 1993 and the rigged
elections of 1996. And it was Washington, which allowed hundreds of
billions of dollars to be laundered in US banks throughout the 1990's as
the US Congressional Sub-Committee on Banking (1998) revealed.<br><br>
It was Nixon, Kissinger and later Carter and Brzezinski, Reagan and Bush,
Clinton and Albright who backed the privatizations pushed by Latin
American military dictators and civilian reactionaries in the 1970's,
1980's and 1990's . Their instructions to the US representatives in the
IMF and the World Bank were writ large: Privatize, de-regulate and
de-nationalize (PDD) before any loans should be negotiated. <br><br>
It was US academics and ideologues working hand in glove with the
so-called multi-lateral agencies, as contracted economic consultants, who
trained, designed and pushed the PDD agenda among their former Ivy League
students-turned-economic and finance ministers and Central Bankers in
Latin America and Russia.<br><br>
It was US and EU multi-national corporations and banks which bought out
or went into joint ventures with the emerging Latin American billionaires
and who reaped the trillion dollar payouts on the debts incurred by the
corrupt military and civilian regimes. The billionaires are as much a
product and/or by-product of US anti-nationalist, anti-communist policies
as they are a product of their own grandiose theft of public
enterprises.<br><br>
<font face="Verdana" size=2 color="#990000">Conclusion<br><br>
</b></font>Given the enormous class and income disparities in Russia,
Latin America and China (20 Chinese billionaires have a net worth of
$29.4 billion in less than ten years), it is more accurate to describe
these countries as 'surging billionaires' rather than 'emerging markets'
because it is not the 'free market' but the political power of the
billionaires that dictates policy.<br><br>
Countries of 'surging billionaires' produce burgeoning poverty,
submerging living standards. The making of billionaires means the
unmaking of civil society the weakening of social solidarity,
protective social legislation, pensions, vacations, public health
programs and education. While politics is central, past political labels
mean nothing. Ex-Marxist Brazilian ex-President Cardoso and ex-trade
union leader President Lula Da Silva privatized public enterprises and
promoted policies that spawn billionaires. Ex-Communist Putin cultivates
certain billionaire oligarchs and offers incentives to others to shape up
and invest.<br><br>
The period of greatest decline in living standards in Latin America and
Russia coincide with the dismantling of the nationalist populist and
communist economies. Between 1980-2004, Latin America more precisely
Brazil, Argentina and Mexico stagnated at 0 per cent to 1 per cent per
capita growth. Russia saw a 50 per cent decline in GNP between 1990-1996
and living standards dropped 80 per cent for everyone except the
predators and their gangster entourages.<br><br>
Recent growth (2003-2007), where it occurs, has more to do with the
extraordinary rise in international prices (of energy resources, metals
and agro-exports) than any positive developments from the
billionaire-dominated economies. The growth of billionaires is hardly a
sign of 'general prosperity' resulting from the 'free market' as the
editors of Forbes Magazine claim. In fact it is the product of the
illicit seizure of lucrative public resources, built up by the work and
struggle of millions of workers, in Russia and China under Communism and
in Latin America during populist-nationalist and democratic-socialist
governments. Many billionaires have inherited wealth and used their
political ties to expand and extend their empires it has little to do
with entrepreneurial skills.<br><br>
The billionaires' and the White House's anger and hostility toward
President Hugo Chavez of Venezuela is precisely because he is reversing
the policies which create billionaires and mass poverty: He is
re-nationalizing energy resources, public utilities and expropriating
some large landed estates. Chavez is not only challenging US hegemony in
Latin America but also the entire PDD edifice that built the economic
empires of the billionaires in Latin America, Russia, China and
elsewhere.<br><br>
The primary data for this essay is drawn from Forbes Magazine 's
"List of the World's Billionaires" published March 8,
2007.<br><br>
</i>James Petras</b> most recent book is
<a href="http://www.amazon.com/exec/obidos/ASIN/0932863515/counterpunchmaga">
The Power of Israel in the United States</a>.(clarity 2006 third
printing) His essays in English can be found at petras.lahaine.org And in
Spanish at rebellion.org <br><br>
<x-sigsep><p></x-sigsep>
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