Sunday, April 17, 2016

Panama Papers and the Paralyzed Public

Close to 800,000 French citizens lost much if not all of their monetary wealth including a reported 15,000 single women in the Panama scandal.  510 politicians had pocketed bribes to keep the matter out of the public eye.  Many were indicted.  Of the few who went to trial for admitted corruption, all were acquitted save one minister for city development who committed suicide.  After the press broke the scandal, there were allegations that the leak of information to the public was part of some deeper anti-Semitic agenda as some of the middle-men were dodgy Jewish financiers.  When all was said and done, corrupt politicians involved in covering up the deception pocketed over half the total 1.8 billion Francs that were stolen from the public.  And nothing changed.  This was 123 years ago and the event was the bankruptcy of the Panama Canal Company.  The public outcry led to lasting reform and the people all got the justice that for so long had been denied them.   Oops!  No.  In fact, this evisceration of public investment led to the distressed acquisition of the Panama Canal by the United States for about $40 million dollars and the permanent loss of economic assets by the French public. 

When the report of the leaked 80 gigabits of records of Mossack Fonseca was published in February 2015 (a year before the public learned of the “Panama Papers” scandal) in Süddeutsche Zeitung the scope of corruption of public officials and corporations was not fully understood.  The next 2.6 terabytes of data – ultimately uploaded to the International Consortium of Investigative Journalists (ICIJ) in Washington D.C. – were reviewed revealing the records of nearly 10% of all offshore companies with land holdings in Britain.  Edward Snowden referred to the Panama Papers as the “biggest leak in the history of journalism,” knowing full well he’s holding onto the even bigger leak about other corporate activities that will make tax evasion and asset hiding child’s play.  And by this, I’m not referring to the SZ comment that, “what’s coming next,” may include a lot more information about Americans and American corporations.  What I’m referring to is the massive number of U.S. corporations that have used their commercial access around the world for corrupt and clandestine purposes referenced in Hank Crumpton’s The Art of Intelligence: Lessons from a Life in the CIA’s Clandestine Service

What do the Panama Paper’s tell us about ourselves?  What is the significance of the Panama Papers in the larger context of the economic system in which we operate?  What does it say about our political leadership to realize those who are setting public policy see their own policies as so odious that they need to evade their own rules? 

The Panama Papers evidence, above all else, that the illusion of the dominant economic framework of our time is a rigged game.  While I’ve been a long-standing critic of the immoral worldview that was promulgated by the Judeo-Christian contrivance of human “dominion” over everything – these papers genuinely indict those who perceive beneficence in the “unseen hand” in the market place.  The unseen hand is connected to the public’s pocket and has been picking it for longer than anyone wants to admit.  The hypnosis under which most of the general public operate – that finance and politics are beyond the remit of the pedestrian brain – is as much to indict as the actors that prey on this apathetic social meme.  And it’s rather important to note that the ICIJ did not release all of the records.  In other words, editorial decisions about who to vilify and who to shield were part and parcel of the “greatest leak” to date.  In short, even those who are allegedly at the vanguard of disclosure are still holding onto the illusion that someone somewhere needs to be the “bad guy” and someone else is “not”.  Like so many disclosures before, the paternalistic determination of what the “public needs to know” supports the very information arbitrage that keeps those in power in power and those without power impotent against the certainty that corruption marches on unabated. 

The Panama Papers conveniently demonstrate the genius of the British Empire.  In the First Article of the Treaty of Ghent ending the War of 1812, the groundwork for revenue shifting and base erosion (the OECD’s term for tax evasion) was laid in subtle most favored nations concessions ratified by the United States, His Britannic Majesty and the Dey of the Regency of Algiers.  In the agreement to an inviolable, universal peace – a lofty sounding concession – the ability for the Empire to preserve its banking and asset shielding status was solidified.  And while the United States – having recently gained independence from Great Britain – was going to turn into an industrial juggernaut compared to its former colonial master, Great Britain, its laws, its concessions to aristocracy, and its financial institutions was going to have the last laugh repatriating the wealth from the very lands it had “lost”.  In short, the brash American experiment failed before it even had a generation under its belt and the Panama Papers are just the tip of the iceberg when we see how much the British Empire controls or holds in terms of global assets.

I have encountered, over the past month, a stream of humanity who have all lamented their incapacity to “do something” about the certainty that they have that the economic house of cards is about to collapse in a manner far worse than the GFC in 2007-08.  From the “consciousness-minded” to the mercantile industrialist to the entrepreneur, the sense that the game is rigged is universal but equally universal is the perception that there’s not a damn thing that you can do about it.  This is not the case.  But like most other systemic failures, when massive “leaks” are released, it’s important to look at what else is moving in the shadows while the focus is on the “leaks”.  For example, during the week that the world was focused on the Panama Papers, no one seemed to focus on the 2016 National Trade Estimate Report on Foreign Trade Barriers issued by the White House.   In this document, the Obama Administration addresses the motivations behind the Trans-Pacific Partnership Agreement signed in February 2016 in Auckland.  So while we’re talking about tax shelters, we’re explicitly working to install tax policies that favor U.S. trade advantage for the estimated $131 billion per year from our trading partners in the Pacific, “because we know that when the playing field is level, our workers and businesses can compete – and win – in the global economy.”  Cool thing is that when level means “flowing in favor of the U.S.” the winning is a bit easier.  Create enough noise in the Atlantic and Caribbean and no one will look in the Pacific!

So what’s it going to be?  123 years from now, will this bluster in the Caribbean be yet another in the long line of humanity being robbed, feeling like it’s incapable of responding, and then being primed to be robbed again?  Is this another time when we acquiesce to the establishment and our notion that corruption is a necessary evil?  Are we unwilling to call out the violations of social dignity because somewhere we know we’d do it ourselves if we had the resources and the power to do so?  Or are we ready to play on a different playing field – one that doesn’t require leveling because all the contours and sand traps are known to all the players?  Are we willing to use models that are not based on corrupt incumbencies and be courageous enough to face a world in which our “salaries”, “assets” and our “economic status” do not define us but our productive engagement and social utility does?  

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Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave