Income and Wealth inequality: The Good, The Bad, and The Ugly, Part Three: The Ugly

Income and Wealth Inequality: The Good, The Bad, and The Ugly,  Part Three: The Ugly by Peter Burrows 5/14/16

It’s ironic that Bernie Sanders, who calls himself a socialist, rails incessantly against income inequality.  Ironic because income inequality in socialist countries is gargantuan, far, far more than in free enterprise countries.

Bernie has been bitching about the wealthiest family in America, the Waltons, who are the children of Sam Walton, founder of Walmart. Hey, Bernie: Sam Walton built the world’s largest retail chain by offering the best prices, by helping all his shoppers live better, especially the poorest, whom you claim to care about.  Not a nickel of the Walton’s money was stolen from anybody.

Contrast that with the wealthiest family in Cuba, the Castros.  Some years ago, Fortune Magazine estimated Fidel’s worth at $900 million, but I personally don’t give their estimate much credence. It was mostly guess-work.  What isn’t guess-work are documents leaked from London-based HSBC’s Swiss branch in February 2015 that revealed 29 Cubans with 70 accounts worth $83.8 million, with the largest account being $48.5 million.(1)

None of the clients were Castros, but it strains credulity to think Fidel and Raoul and all their children don’t also have many millions stashed away.  And  remember, this is from only ONE bank.  In fact, it has been alleged that the Castros have their own bank for their accounts. (2)

Of course, Bernie will say that’s a bad example as Cuba is a socialist dictatorship and Bernie is a democratic socialist, an elected socialist, like Hugo Chavez in Venezuela. Ooops! Bad example.

The Castros are poor cousins compared to socialists who have better stuff to steal than sugar, such as the afore mentioned Hugo Chavez, the late socialist leader of oil-endowed Venezuela. (I first wrote “oil-rich” Venezuela, but having oil doesn’t make a nation rich if socialists are in charge.)  Chavez died in 2013, but not before running the nation into the ground in his 14 years in charge.

Things are no better under his successor, fellow-socialist Nickolas Maduro. Today, Venezuela rations toilet paper, food, electricity, and just about everything.  People are hunting stray dogs and cats, not to adopt, but TO EAT.(3)

However, there are a few Venezuelans who don’t have to stand in line for anything or worry about eating their pets. One of them is Hugo Chavez’s daughter, Maria, who reportedly has $4.2 billion in American and Andorran banks. (4) Gosh, I wonder how she got all that money. Probably wrote some books like J.K. Rowling’s Harry Potter series, which were made into movies and made Ms. Rowling a billionaire.  Of course. Maria must have done something like that.

Chavez had two other daughters, and the three of them were estimated to have cost Venezuela $3.6 million a day. (5) That‘s $3.6 million A DAY. Over 14 years, that’s a lot of money.

The source of all this stolen money is the Venezuelan oil company, PDVSA, owned and operated by the Venezuelan government.  (American-based Citgo is a wholly owned subsidiary.) PDVSA had peak profits of $15.9 billion in 2013 when oil prices averaged about $95 per barrel.  How much was skimmed from PDVSA’s profits over the years is something we may never know, but the leaked HSBC documents revealed 1,138 Venezuelan accounts with $14.8 billion in deposits. (6) This in ONE bank.

Alejandro Andrade, Chavez’s former body guard who became Venezuela’s treasury minister from 2007 to 2010, had three HSBC accounts with $698 million in deposits.   Andrade is now living in Florida, and is reputedly a horse aficionado. (7) Probably works in some stable somewhere, shoveling stuff out.  Right.

The HSBC documents also showed some $270 million in the accounts of citizens of Zimbabwe, where at last count, 98% of the economy was run by the government.  Remember, this is just one bank. Estimates of the total amount deposited in Swiss banks by Zimbabweans is $4.5 billion. (8)

Sure is easy to get rich in socialist countries, as long as you’re not one of the socialist masses.  You have to be one of those Hugo Chavez/Bernie Sanders types who come to power wailing and moaning about how the little guy is being screwed by an evil private enterprise system that has bought the government, hates poor people, exploits workers and eats babies.  Out with those guys and in with the  “good” guys, the Hugos, the Bernies, the Maos, the Kim Jong Uns who will then proceed to enrich themselves in the economic justice con game.

Mao, too?  Yes, indeed. While his people starved, Mao had gourmet food flown in from around the country; while families of three generations communed in one room, Mao had over 50 estates, some of which included entire mountains and lakes for his exclusive use.  (9)

Mao’s example is carried on today by China’s satellite, North Korea, where Supreme Leader Kim Jong-Un spends a fortune on luxury goods while his people suffer widespread hunger and malnutrition, according to a UN report released in 2014. (10)

Sadly, once in power, all these “economic justice” types quickly become the new fat cats.  Read George Orwell  classic “Animal Farm.”  In fact, if all this blather about “inequality” puts people who want to “fix” inequality in power, it guarantees the sort of inequality we see in places like Venezuela. The power to “correct”  subjective inequalities is too much power, which will be abused. Always.

Gosh, you say, that sort of thing can‘t happen here.  Oh?  Have you ever heard of Franklin Raines?   He was President of Federal National Mortgage Corporation, a.k.a. Fannie Mae, from 1998 to 2004.  Fannie Mae was/is a government sponsored enterprise, a GSE, under the control of The Department of Housing and Urban Development.  It was also a publicly owned company with stock trading on the New York Stock Exchange.

Raines resigned in the wake of an accounting scandal that involved overstating the earnings of Fannie Mae for years.  Those overstated earnings, to the tune of $6.3 billion, made Fannie Mae’s stock a Wall Street darling which resulted in BIG profits for Raines’s stock options:   “– of the more than $90 million in executive compensation received by Raines from 1998 through 2003, over $52 million  was directly tied to achieving earnings-per-share targets  through phony accounting.” (11)


A few years after Raines left, Fannie Mae spiraled into bankruptcy and helped take the entire nation down with it.  I think the government should have gone after Raines’s huge compensation in a “clawback” like they did with those innocents who profited from Bernie Madoff’s Ponzi scheme, but they didn’t.  Makes one wonder if there is a double standard in the Justice Department like there is in the mainstream media. If Raines had been a big-shot Republican, you‘d have heard of him!

Which brings to mind a thought experiment:  Assume that instead of the Clinton Foundation, there was a Bush Foundation that had received hundreds of millions in contributions from around the world, had hired Bush cronies at BIG salaries, had a Bush kid running it and that Jeb Bush was the Republican presidential nominee who had made $21 million giving speeches in a recent 18 month period. Now assume the New York Times had endorsed Bush —WHOA! That’s an assumption too far when it‘s a Republican being ugly. (12)

(5) ibid (4)

(11) Gretchen Morgenson And Joshua Rosner, Reckless Endangerment (Times Books, 2011)  p. 254.
(12) New York Times, 1/30/16: Hillary Clinton for the Democratic nomination – Voters have the chance to choose one of the most broadly and deeply qualified candidates in modern history –

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