Don Your Panama Tin Hats

by .
Originally published in Social Stock Exchange

Manuel Noriega, the former military dictator of Panama who oversaw a regime of drug trafficking, racketeering and money-laundering, and lives out the rest of his days (he’s 82) in jail, must be laughing – bitterly, one presumes – over his gruel. After a week of splashed international headlines there’s a degree of battle-weariness already setting in: there’s only so much mud-flinging one can bear before the shoulders shrug, a grunted ‘they’re all at it’, and the pages turn, the website scrolls, onto something more immediately graspable.

But that would be a mistake.

For the leak of a massive amount of information – 11.5 million documents from the Panama-based law firm Mossack Fonseca about ‘offshore’ companies – is a pivotal moment in the continuing global battle for greater financial transparency, which started in the Great Financial Crash. It’s more than that – it’s a battle of moral outrage, where the ‘have-nots’ stare in wonderment at the insouciant ability of the ‘haves’ to have even more, through parking their wealth beyond the oversight of their national tax authorities.

Obviously enough this is at one level a tangled legal web, in which defenders of ‘offshore’ companies (which are mere shells, established not to produce anything but to hide money from prying eyes) correctly proclaim that no law has been broken. Yet a published partial list of individuals’ names in the ‘Panama Papers’ – a list that may not be reliable and certainly is incomplete – has no-one with a reputation for impact investment, trying to bring about social justice, or even for giving a few quid away to good causes. In fact some of the names are widely regarded as personally and socially odious.

Read the original article here.

But in scrupulous fairness all that can be said is that Mossack Fonseca did what the laws of Panama allowed, and the individuals who parked their money in ‘offshore’ companies did what the laws of their country may have allowed. After all, all they were doing was to take steps to ensure they paid the least tax possible – until that is they brought their money back ‘on-shore’, subjecting themselves to tax, or perhaps using illegal means to squirrel away that ‘on-shored’ money.

It’s a funny thing, tax. No-one likes paying it; most of us (grudgingly or otherwise) accept that it’s a social duty; all of us resent it if we think our tax money is being wasted or squandered by thriftless governments. Very few of us are rich enough to pay for the services of a Mossack Fonseca to set up ‘off-shore’ companies to avoid paying tax until we bring it ‘on-shore’ (if then). But let’s not berate Panama – there are tax ‘havens’ (nice euphemism, that) around the world, and the UK has several to account for. As someone who has never been rich enough to consider an ‘off-shore’ company, but who just moans yet pays his tax demands, I’ve always had to check the distinction, when writing about it, between tax avoidance and tax evasion.

We live in a world where tax avoiding is a perfectly legitimate activity and that’s all that the Panama Players have done. But there is a world of a difference between the legitimate and the ethical. We are, I think, moving to a world where legitimate tax avoidance is not only increasingly regarded as unethical and innately suspicious, but will, if it’s not rendered illegal, evoke a wide social backlash. Tax avoidance by prime ministers, presidents, international celebrities, corporate fat-cats, sends a terrible signal to the have-nots – if you don’t pay all your tax immediately when it’s due, why should anyone else? This is a serious threat to stable government anywhere, and undermines the confidence of electorates in democracy; autocracies don’t need to worry so much as they will simply go on ruling by some form of terror.

The calls for transparency, legal change, higher individual moral standards, punishment of those who fall below those standards, are getting louder and stronger. What is happening in Iceland today, for example, is reverberating around the democratic world. There, the latest polls show vote support for the Pirate Party – just four years old – at more than 40% in upcoming elections this autumn. Disorganised, a bit chaotic, accused of being amateurish and defying conventional politics by having no individual leader, with a decentralised online platform in which all members can participate in developing proposals, the Pirates would never had existed without the Great Financial Crisis. Now their demands for total transparency and direct democracy go down well with a population fed up traditional politics.

It is high time ethical behaviour was established at the heart of everything we do as a society: politics, investment, battling climate change, corporate life, working conditions, education… ‘Do as you would be done by’ seems a terrific rallying-cry to me.

Original article published here in Social Stock Exchange.

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