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Kleptocracy, alternatively cleptocracy or kleptarchy, from Greek: κλέπτης (thieve) and κράτος (rule), is a term applied to a government that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling oligarchy (collectively, kleptocrats), via the embezzlement of state funds at the expense of the wider population, sometimes without even the pretense of honest service.
Neoliberalism has a proven tendency to install kleptocratic regimes in third world countries and xUSSR. Yeltsin, Kuchma and Yanukovich are pretty telling examples of this tendency.
The term means "rule by thieves". Not an "official" form of government (such as democracy, republic, monarchy, theocracy) the term is a pejorative for governments perceived to have a particularly severe and systemic problem with the selfish misappropriation of public funds by those in power.
Kleptocracies are generally associated with corrupt forms of authoritarian governments, particularly dictatorships, oligarchies, military juntas, or some other form of autocratic and nepotist government in which no outside oversight is possible, due to the ability of the kleptocrat(s) to personally control both the supply of public funds and the means of determining their disbursal.
The effects of a kleptocratic regime or government on a nation are typically adverse in regards to the faring of the state's economy, political affairs and civil rights. Kleptocracy in government often vitiates prospects of foreign investment and drastically weakens the domestic market and cross-border trade. As the kleptocracy normally embezzles money from its citizens by misusing funds derived from tax payments, or money laundering schemes, a kleptocratically structured political system tends to degrade nearly everyone's quality of life.
In addition, the money that kleptocrats steal is often taken from funds that were earmarked for public amenities, such as the building of hospitals, schools, roads, parks and the like - which has further adverse effects on the quality of life of the citizens living under a kleptocracy. The quasi-oligarchy that results from a kleptocratic elite also subverts democracy (or any other political format the state is ostensibly under).
International ranking In early 2004, the anti-corruption Germany-based NGO Transparency International released a list of what it believes to be the ten most self-enriching leaders in recent years.
In order of amount allegedly stolen (in USD), they are:
Apr 05, 2015 | Bloomberg View
Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the history of lying, cheating and stealing -- and of the effort down the years to fight commercial crime.
In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of "Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance" by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism.
And what a cast of characters. Thomas Cochrane is my own favorite. (This is partly because he was the model for Jack Aubrey in Patrick O'Brian's "Master and Commander" novels, which I've been reading and rereading for decades. Presumably Klaus isn't a fan: He doesn't note the connection.)
Cochrane was an aristocrat and naval hero. At the height of his fame in 1814 he was put on trial for fraud. An associate had spread false rumors of Napoleon's death, driving up the price of British government debt, and allowing Cochrane to avoid heavy losses on his investments. Cochrane complained (with good reason, in fact) that the trial was rigged, but he was found guilty and sent to prison.
The story is fascinating in its own right, and the book points to its larger meaning. Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing.
As the turbulent century went on, capitalism moved its frontier outward in every sense: It found new opportunities overseas; financial innovation accelerated; and buyers and sellers were ever more likely to be strangers, operating at a distance through intermediaries. These new kinds of transaction required new ways of securing trust. Social status diminished as a guarantee of good faith. In its place came, first, reputation (based on an established record of honest dealing) then verification (based on public and private records that vouched for the parties' honesty).
Successive scams and scandals pushed this evolution of trust along. Gregor MacGregor and the mythical South American colony of Poyais ("the quintessential fraud of Britain's first modern investment bubble," Klaus calls it); Beaumont Smith and an exchequer bill forging operation of remarkable scope and duration; Walter Watts, insurance clerk, theatrical entrepreneur and fraudster; Harry Marks, journalist, newspaper proprietor and puffer of worthless stocks. On and on, these notorious figures altered the way the public thought about commercial trust, and spurred the changes that enabled the public to keep on trusting nonetheless.
The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing.
Trust, to be simple with our definition, is an expectation of behavior built upon norms and cultural habits. It is often dependent upon a shared set of ethics or values. It is also a process orchestrated through communities and institutions. In this sense, it is a cultural event and thus a historical phenomenon.
No doubt, but after a first paragraph like that you aren't expecting a page-turner. Trust me, it gets better. When he applies himself, Klaus can write. Describing the messenger who brought the false news of Napoleon's death, he says:
Removed from the dark of the street, the man could be seen by the light of two candles. He looked, a witness would later testify, "like a stranger of some importance." A German sealskin cap, festooned with gold fringes, covered his head. A gray coat covered his red uniform, upon which hung a star Neighbors and residents of the inn stirred and peered in as the visitor penned a note.
Tell me more.
My other objection is to the book's repeated suggestion that Adam Smith and other classical proponents of market economics naively underestimated the human propensity to deceive and over-credited the market's ability to promote good behavior. Klaus doesn't examine their claims at length or directly, but often says things such as:
The sociability in which Adam Smith had placed his hopes for harnessing self-interest was not a sufficient safeguard in the sometimes criminal capitalism of the ruthless free market.
Of course it wasn't. Smith didn't believe that the market's civilizing tendencies, together with humans' instinct for cooperation, were a sufficient safeguard against fraud or breach of contract or other commercial wrongs. He was nothing if not realistic about human nature. And by the way, many of the subtle adaptations to the shifting risk of fraud that Klaus describes were private undertakings, not government measures. Far from being surprised by them, Smith would have expected their development.
Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff.
To contact the author on this story: Clive Crook at firstname.lastname@example.org
Apr 10, 2015 | Zero Hedge
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
One of the primary purposes of Liberty Blitzkrieg is to dispel the myth that America is politically a democracy and economically a free market, and prove that it is in fact a centrally planned oligarchy. If the people were well aware of this and fine with it, that's one thing, but my contention is that the vast majority of the public is merely buying into the myth. This is why the population is so passive and easily controlled. They simply don't understand what is happening to them. The proverbial frog slowing boiling to death.
Whenever I note that real median incomes in America haven't increased for decades, many people have a hard time believing it. Nevertheless, as John Adams famously proclaimed: "facts are stubborn things." Indeed they are, and an article published today by Bloomberg View provides some disturbingly stubborn facts that must be admitted to and faced. We learn that:
If you worry about the declining fortunes of the U.S. middle class, take heed: It might be worse than you realized.
Tracking the middle class can be difficult, because the group is hard to define. Typically, researchers look at households with incomes or net worth in the middle of the entire population. This approach, though, might provide a falsely rosy picture.
Two economists at the Federal Reserve Bank of St. Louis - William Emmons and Bryan Noeth - sought to address this shortcoming by focusing on households' demographic characteristics, rather than income or wealth. Specifically, they looked at families whose breadwinner was at least 40 years old and had achieved a level of education that would typically allow a middle-class standard of living. Whites and Asians needed exactly a high-school diploma to qualify. For blacks and Hispanics, it took a two-year or four-year college degree - a stark recognition of persistent racial inequality.
The results are not pretty. As of 2013, this group's median annual income stood at about $45,000, down 16 percent in inflation-adjusted terms from 1989, with a big part of the drop occurring since 2001. Over the same period, a more commonly used measure of the middle class's fortunes - the median income for all families - declined just 1 percent.
Yep, since 2001. This is not a coincidence. This is when America reacted like a bunch of scared imbeciles to a terrifying terrorist attack, and squandered what was left of freedom, civil liberties and common sense (see: How I Remember September 11, 2001). But moving along…
The picture for wealth is no better. The group's median net worth (assets minus debt) was about $127,000 in 2013, down an inflation-adjusted 27 percent from 1989 and 38 percent from 2007, just before the financial crisis hit. By comparison, the median net worth for all families declined just 4 percent over the whole period (it's also lower overall because it includes younger families that haven't yet saved much).
While the numbers revealed by this alternative methodology are downright devastating, I'd note that even by the conventional measurement income and wealth are still DOWN since 1989. Don't worry though, oligarchs are more wealthy and more powerful than ever. This is no accident, it's baked into the system.
* * *
For related articles, see:
- The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics
- Just Another Tale from the Oligarch Recovery – $100 Million Homes Being Built on Spec
- The Face of the Oligarch Recovery – Luxury Skyscrapers Stay Empty as NYC Homeless Population Hits Record High
- Another Oligarch Preaches to the Peasants – Charlie Munger Says "Prepare for Harder World"
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