Parasites, vultures and other economic agents

The decision by Facebook cofounder, Eduardo Saverin, to relinquish his US citizenship led to a huge outcry, and to new bi-partiscan (a very rare event indeed) to tax him in advance and prohibit him from re-entering the country (the Ex-Patriot Act).  This is not a new phenomenon by the way. Kenneth Dart, inheritor to a styrofoam cup company and a few millions (billions?), renounced his US citizenship and became a citizen of Belize, a flight capital haven, in the 1990s for the same reason.

William McNeill differentiates between the micro-parasites and the macro-parasites, and Saverin and Dart are clearly in latter category. Macro-parasites also benefit from the host, and harm it in the process. And they evolve too. Dart is the owner of a Vulture Fund that made millions (700 or so) out of the Argentinean default back in the early 2000s.

Now, even though it has not received much attention, his Vulture fund has cashed US$ 400 millions out of the Greek payments after the last debt restructuring deal. Yep, there is where the money of Greek tax payers squeezed by the austerity programs of the EU and the IMF goes. Parasites and vultures exist, and will continue to thrive in capitalism, but there is no reason that governments should allow that to happen.

The impunite of parasites, vultures and other types of economic agents results from the lack of regulation with which corporations can act, and that has been the backbone of the neoliberal agenda. But I'll let the discussion of corporations for another post.

PS: Somebody reminded me that what Bain Capital and other private equity firms do is not very different from the parasitical behavior described above.

Historians and the surplus approach

An interesting feature of the literature in history, particularly when related to ancient history, is that ideas that are clearly in the tradition of classical political economy, that is the developments from William Petty to Marx including mainly, but not uniquely Quesnay, Smith and Ricardo, are often used in contrast with the dominant supply and demand approach of the literature in economics. The typical discussion of development presumes that it was the surplus obtained with the domestication of plants and animals, and the transition from hunter/gatherer to agricultural societies, that allowed specialization (the division of labor) and the development of social classes.

The figure below comes from William McNeill's classic The Rise of the West, and the essential concept of surplus is at the center of the stage.

In that sense, historians, contrary to economists (even economic historians) do not tend to fall into the trap of describing markets as autonomous institutions that are disconnected from society. Also, historians tend to think in terms of classes, and restrict individual behavior to the kinds of actions that are related to the underlying social class. That is true in several popular books like Jared Diamond's Guns, Germs and Steel.