Capitalism's Achilles Heel

PRAISE FOR CAPITALISM'S ACHILLES HEEL

"The corrosive effects of bribery, money laundering, tax evasion, and fraudulent transfer pricing need to be analyzed and explained. Raymond Baker, a pioneer in this research, shows how illicit funds move through world financial systems and lead to increased corruption, poor distribution of resources, and damage to the rule of law. I hope his passion for the subject will inspire others to delve into the legal, economic, and social consequences of dirty money and what must be done to stop it."
-Senator Carl Levin, (D-Michigan), Ranking Member, Permanent Subcommittee on Investigations

"In today's world, expanded trade relationships and rapid advances in communication technology foster opportunities for greater political freedom, economic growth, and higher living standards around the world. These developments also create new vulnerabilities for the international financial system. This book takes a look at these challenges head on and makes an important contribution to the public debate."
-Senator Charles Grassley, (R-Iowa), Chairman, Senate Finance Committee

"This groundbreaking book will open your eyes to two things: how illegal money is shifted out of poor countries into rich countries and how these illegal flows add to poverty, misery, and inequality in poor countries themselves. Can this be stopped when those in power think they are benefiting? Public pressure, as was focused on slavery two centuries ago, is the first step toward change."
-Branko Milanovic, Economist, World Bank and author of Worlds Apart

"Raymond Baker's comprehensive book on illicit money is required reading for anyone involved in the global economy. His painstaking, fact-based analysis depicts an insidious phenomenon that threatens general welfare and requires urgent corrective action."
-George Vojta, Chairman, Caux Round Table, former vice chairman, Bankers Trust

"A superlative and enlightening overview of the world of corrupt money in its many forms, what it is doing to human civilization, why it must be stopped, and how this can be accomplished. Raymond Baker critiques global capitalism as it is functioning today from neither a liberal nor conservative perspective but from the standpoint of a believer in and supporter of free markets and free trade. A brilliant tour de force!"
-Brent Blackwelder, President, Friends of the Earth

Prologue 1
CHAPTER 1 Global Capitalism: Savior or Predator? 11
PART I Illegality: We Like the Money 21
CHAPTER 2 Playing the Game 23
The Dirty-Money User Manual 24
You're in Business 47
CHAPTER 3 Dirty Money at Work 48
The Corruption Industry 49
The Criminal Component: Drugs, Thugs, 88
and Terrorists
Global Commerce and Tax Evasion: Coin of the Realm 133
CHAPTER 4 Magnitudes and Misunderstandings 162
How Much Money? 162
A Failure Rate of 99. 9 Percent 173
Well-Intentioned Efforts 174
The Patriot Act 177
Dirty Money Is on the Rise 182
Chasing Terrorists' Money 183
Ill-Intentioned Loopholes 186
Haven and Secrecy Structure 191
Falsified Pricing Structure 194
We Like the Money 201
Challenge 205
PART II Inequality: The Gap Matters 207
CHAPTER 5 The Global Divide 210
The Quintile Canyon 210
Measure for Measure 217
It's an Uncertain World 224
The Monkey Wrench 234
CHAPTER 6 "I Don't Understand" and "Don't Tell Anyone" 240
Myths 241
"Don't Tell Anyone" 246
Corruption-At Long Last! 249
Filling Western Coffers: Mum's the Word 252
Debtor's Prison 254
What If? 257
Intellectual Gap or Character Gap? 258
CHAPTER 7 It's the 70 to 90 Percent that Matters 262
It Can't Last 262
Convergence? 267
The Gap Matters 272
Challenge 275
PART III Disutility: Bentham KOs Smith 279
CHAPTER 8 The Anguish of Adam Smith 282
Theory of Moral Sentiments 283
Wealth of Nations 286
Invisible Hand 290
Das Adam Smith Problem 293
The Tears of Adam Smith 297
CHAPTER 9 The Joys of Jeremy Bentham 300
Jurisprudence 301
Utilitarianism 302
Related Interests 305
John Stuart Mill 307
Problems 309
CHAPTER 10 Philosophy Becomes Culture 312
The Great Infusion 313
Twentieth-Century Utility 319
Twentieth-Century Utilitarianism 321
Inoperable Doctrine, Deadly Practice 323
Disutility 327
Challenge 330
PART IV Run It Right: Trust the System 333
CHAPTER 11 Capitalism's Achilles Heel 337
CHAPTER 12 Spreading Prosperity 342
Delegitimizing Dirty Money 342
Tougher on Corruption 346
Reining in the Support Structure 346
Mispricing and Transfer Pricing 348
Capitalism's Contribution to Slashing Inequality 351
". . . When You Pay Me What You Owe Me" 353
Reconstitute the World Bank 360
Justice First 361
CHAPTER 13 Renewing Capitalism 368
Acknowledgments 377
Notes 383
Index 425