CAPITALISM'S ACHILLES HEEL Dirty Money and How to

202 CAPITALISM’S ACHILLES HEEL
We have been guided for many years by an implicit cost–benefit analysis
suggesting that the receipt of such money is good for the United States,
good for Europe. It shows the strength of our economies. People in foreign
countries want to bring their money into our systems where they know it
will be safe and can grow. Succeeding administrations in the United States
and Europe have encouraged this view.
Supporters of dirty money have never subjected this issue to a real
cost–benefit analysis. I outline some of what must be included in such an
appraisal and then at the end of this chapter lay down a challenge to others
who should delve into these same questions.
The Benefits
Dirty money brings hundreds of billions of dollars out of nonwestern countries
into western countries. My figure is a half-trillion dollars a year, accumulating
to trillions lodged permanently in deposits, properties, and market
investments in Europe and the United States. The other half-trillion out of
the trillion-dollar annual flow circulates between western countries themselves
and cooperating tax havens. Some may feel that this is a benefit to the
West, contributing to maximizing private profit and reducing the role of
government. This is a dubious argument at best, and I record it only to
round out the case that others make for dirty money.
The Costs
If a half-trillion is supposedly a net gain to the West and another half-trillion
may serve to discipline overreaching western governments, what is the
downside attached to these flows? The costs can be seen in the impact on
both domestic and foreign interests of western countries. Domestically it
shields and thereby facilitates drug, criminal, and terrorist money passing
into the West. This voids anti–money laundering as an effective instrument
in the fight against such perils, thereby weakening the ability of western
states to counter some of their most serious threats. And internationally it
undermines key foreign policy objectives of the United States and Europe in
poorer countries in Asia, Latin America, and Africa and in the former Soviet
Union and Eastern Europe. Together the damage done to the fabric of western
societies resulting from an appetite for dirty money is staggering.