A mega-project is quietly being developed that will have far-reaching consequences and represent a significant intrusion into the financial privacy of each individual. Economists Joseph Stiglitz, Thomas Piketty and Gabriel Zucman are driving forward this project, called the Global Asset Registry. Their vision is to uncover the hidden wealth of nations. But what will the consequences be?
Greater equality and justice
Imagine that everything you own and acquire is entered in a register of assets, stating your name, place of residence and tax number. Anyone in the world can inspect and access the information about your possessions. What do you think about it?
Under the leadership of the Independent Commission for the Reform of International Corporate Taxation (ICRICT), to which also Mssrs. Piketty, Stiglitz and Zucman belong, work is underway on a global, centrally managed asset register. A first Global Asset Registry Workshop, held in Paris in July 2019, generated a wealth of ideas. Land, houses, apartments, other real estate, cars, bank accounts, life insurance policies, safe deposit boxes – all types of assets, without exception, could be included in this register, and it should be as accessible as possible to the public.
In the Roadmap for a Global Asset Registry (GAR), ICRICT argues that the prevailing inequality of wealth poses a serious threat to the economy, society and democracy. It does not explain exactly what this danger is. But it does see the solution in the complete disclosure of property owner- ship. The ICRICT admits that the effective extent of wealth inequality is unknown. But it hopes that the GAR will bring hidden wealth to the surface and then reveal the extent of wealth inequality.
To this end, ICRICT wants to link the wealth data that the GAR collects with those already collected by existing instru- ments – such as the Common Reporting Standard, the Beneficiary Register or Country-by-Country Reporting – or those contained in other national registers. Any additional data could then be collected at a later stage. Those behind the project eventually want to be able to trace asset ownership back to its origin, if possible.
For the common good
The ICRICT justifies its striving for comprehensive asset transparency by stating that it wants to revive a «broken social contract», according to which private property only receives protection from the law if, in return, ownership
relationships are disclosed and applicable taxes are paid. The argumentation suggests that it is striving for an ideal «Contrat Social» in which the common will and the common good prevail over everything. Individual rights and goods are to be subordinated to this common will and common good. The conviction seems to be that inequality of property becomes inequality among people. Conversely, however, this means that there would no longer exist any room for individual freedom of action and decision-making, or for property rights.
Political decision makers are an important target group.
As outlined in the GAR Roadmap, ICRICT would like to give them a basis for discussing an «appropriate» level of inequality and supporting appropriate taxation. Further- more, ICRICT sees the GAR as an instrument to prevent crime and abuse of power; tax authorities or citizens of corrupt states should be able to take action against their governments. They argue that the advantage for ordinary citizens or businesspeople is the complete transparency and the resulting convenience of only having to sign tax returns, for example. The data on belongings would already be stored centrally.
What role does Covid-19 play?
The project’s argumentation is largely based on estimates and assumptions. It follows the widespread notion that the
«rich» are getting richer and the «poor» are getting poorer because a certain percentage of the world’s wealth is accounted for by a certain percentage of the population, and this percentage is decisive for all social problems and injustices. This is the basis for the idea that justice is achieved when everyone has the same amount of wealth. But is it not much more important that people have the ability to exit poverty and the chance to increase their living standards, instead of everyone having equally much or, conversely, equally little? Discussions about rich and poor often fail to take into account that worldwide poverty has fallen significantly in recent decades (as confirmed in surveys by the World Bank and other organisations), and that living standards are generally much higher today.
The measures initiated because of Covid-19, however, could interrupt the decline in poverty, leaving a lasting mark on the economy and society. Across the globe, social and economic prosperity will weaken and poverty will increase again. Here and there, the virus will also tempt to maintain restrictions on fundamental rights and increase control over citizens. A comparison of these developments with the objectives of the GAR reveals a complex picture of the future: The opportunities to shape life according to one’s own ideas will dwindle. The right to own, use, dispose of and be- queath legitimately acquired property will gradually be restricted. Authorities and centralised organisations, on the other hand, will be given greater scope for action.
What does this mean for the future?
The world is moving into a challenging age. The claim to equality and justice ignores the fact that in a world where everyone is equal, no progress can be made. To paraphrase Friedrich A. von Hayek: «A social market economy is not a market economy, a social constitutional state is not a constitutional state, a social conscience is not a conscience and social justice is not justice.» Why? Because with the word «social» individual liberty rights are being gradually eroded.
Whether and how the GAR project will be able to really establish itself depends ultimately on the extent to which politicians, especially in Western democracies, will adhere to the principles of the rule of law – because the project attacks the principle of the rule of law and personal rights. It will also depend on how aware each individual becomes of the dangers that emanate from such comprehensive transparency.
A global register of assets would neither bring crime to a standstill, nor would it close the gap between rich and poor, nor eliminate inequality. On the contrary, it would make a mockery of fundamental human rights and expose every citizen. Social progress and social prosperity would be destroyed because private property would be destroyed.
Realism instead of clichés
The GAR Roadmap also argues that offshore structures through foundations or trusts hide the existence of proper- ty and provide fertile ground for tax evasion, tax avoidance or financial crime. Here, the authors seem to be deliberate- ly negating all developments of recent years in the field of tax compliance and the fight against money laundering and terrorist financing in favour of their project.
The purpose of foundations, trusts or other legal asset structures is to organize assets in such a way that business, family or charitable goals and projects can be realized. However, this presupposes that assets are preserved and protected, for example against the dangers arising from current political and economic developments. Foundations and trusts are instruments with which assets can be preserved over the long term and aligned with a specific purpose – so that also future generations have good prospects.