In early April 2016, it seems like the whole world erupted in outrage over the Panama Papers — a massive collection of documents leaked to a German newspaper detailing offshore banking accounts of the wealthy, the criminal, and people with something to hide.
It turns out a lot of politicians — especially in countries like China, Russia, Argentina and the United Arab Emirates — were among the names disclosed in the leak. Over $2 billion in funds were tied to a web of people associated with Russian Prime Minister Vladimir Putin.
There was immediate, global backlash. A lot of the stories we heard were about greed, money laundering, and tax evasion. For some reason, it just made people mad.
These are all important stories. Criminals should be stopped and prosecuted. But there’s another side to the story that most people missed.
In a quiet, thoughtful editorial a day after the Panama Papers became public, the Wall Street Journal made a point that should really get people fired up:
“The claim is that these leaks show how easily wealthy individuals have been able to use Panamanian bank-secrecy laws—long a target of global tax campaigners—to “conceal” their wealth.
“Governments have to enforce their tax laws. But it’s hard to see how the big question in this story is whether everyone with a company in Panama paid the correct amount of tax. The far more important question is how so many public officials in so many governments managed to accumulate so much money. (emphasis added)
“The mistake now would be to narrow the focus prematurely, zeroing in on tax avoidance that is a hobbyhorse of the political class but in this case is a distraction. The real news here are the incomes and far-flung bank accounts of the political class.” (emphasis added)
Talk about putting things in perspective. It seems like the very politicians calling for investigations are the ones who should be investigated.
Seriously — how did “so many public officials in so many governments manage to accumulate so much money”?
Clearly, if politicians are corrupt the problem is bigger than one sleazy bureaucrat taking money under the table. The bigger problem is a government big enough that it’s worth bribing someone.
If the Panama Papers show us anything, they show us that large, authoritarian governments create more opportunities for corruption. And while breaking down large governments is a simple solution to ending corruption, it’s not easy.
We have a few ideas about the proper role of government — check them out here.
What are your thoughts? Is the biggest problem that the rich don’t pay enough taxes, or that politicians have so much power they’re easily corrupted? Let us know on Facebook!