How countries treat their ultra-rich

Source: The post is based on the article “How countries treat their ultra-rich” published in the Business Standard on 9th January 2023.

Syllabus: GS 1 – Effects of globalization on Indian society.

Relevance: About capitalism and its present impact on globalization.

News: In the recent period, some rich and powerful people have faced trouble in countries such as the US, Russia, China, and Saudi Arabia.

About Freedom in the World index and the reality of ultra rich persons

US: The US has a score of 83 and is classified as “Free” in the index. There rich people in the US can oppose the government without fear of death, jail, exile, expropriation or commercial harm.

Saudi Arabia (score of 7, regarded as “Not Free”): About 500 people were locked up in a Hotel by the “anti-corruption agency”. Many victims were forced to buy their freedom by giving up their wealth.

China (score of 9): Ever since the present Chinese President took charge, he deployed state power against the private sector.

Russia (score of 19): Ever since the Ukraine war, the Russian rouble has lost its hard-currency status. Rich people have been dying under mysterious circumstances, at an average rate of three per month.

How capitalism is slowly damaging the present globalization?

After the Berlin Wall was brought down, the world made inevitable progress towards capitalism and freedom. The world nations are approaching the third  globalization in a way it damages the globalization.

Note: The third globalization is marked by the emergence and eventual dominance, within the most advanced industrial countries, of the information sector.

Such as, 1) The State’s use their power in ways that are unfavourable to globalisation. For instance, the US government blocking Chinese de facto public sector undertakings like Huawei from operating in its country, 2) The financial investors in the first world countries demand higher risk compensations when investing in unsafe places, 3) There is a narrowing of global value chains to emphasise production in safe places, and 4) Several wealthy families in places like China and Russia are systematically moving assets, businesses, homes, and loved ones into rule-of-law havens like London.

Whether the rich are the target of taxation or the engine of growth, their exit is harmful for globalization.