Monday, April 4, 2016

“Capitalism could face crisis of credibility as leaked documents illuminate global rules rigged for the rich and powerful” -Lauren McCauley

“…Rana Foroohar, assistant managing editor of economics and business at TIME magazine, argued Monday that the corruption exposed in the Panama Papers will likely build on the mounting populist frustration—captured by the Occupy Wall Street movement, global anti-austerity protests, and the 2016 U.S. presidential election—and could potentially ‘lead to capitalism's great crisis.’

“Foroohar writes: ‘The Panama Papers illuminate a key aspect of why the system isn’t working–because globalization has allowed the capital and assets of the 1 % (be they individuals or corporations) to travel freely, while those of the 99 % cannot. Globalization is supposed to be about the free movement of people, goods, and capital. But in fact, the system is set up to enable that mobility mainly for the rich (or for large corporations). The result is global tax evasion, the offshoring of labor, and an elite that flies 35,000 feet over the problems of nation states and the tax payers within them.

“‘Where do we go from here? I think we’re heading towards a root to branch re-evaluation of how our market system works–and doesn’t work. The debate over free trade is part of that re-evaluation. The calls for a global campaign against tax evasion are, too. I think there will also be intense scrutiny about the ease with which financial capital can move around the world—we’ve already seen that with the hoopla over tax inversions, but we’ll see a lot more backlash, in new areas.’

“Similarly, Vox's Matthew Yglesias points out that the Panama Papers tap into the same economic critique as the Bernie Sanders campaign. ‘Deliberate choices,’ writes Yglesias, regarding trade, tax policies, and global economic integration, ‘are made that advantage some and disadvantage others; working-class residents of rich countries generally get the short end of the stick, not because of choices that help the global poor but because of deliberate efforts to safeguard the interests of the global financial elite.’

“Indeed, one day after the Washington, D.C.-based International Consortium of Investigative Journalists began reporting on the leak, a few key villains have emerged, including: Russian President Vladimir Putin, Syrian President Bashir Assad, Argentine soccer star Leo Messi, Ian Cameron (father of current British Prime Minister David Cameron), and Alaa Mubarak, son of ousted Egyptian President Hosni Mubarak.

“In a column published at The Rules on Monday, Joe Brewer warns against reading the Panama Papers as ‘a few bad apples using legal financial instruments.’ Instead, Brewer argues that such financial manipulations date back to the era of colonialism and slavery, which ‘gave certain Western nations a huge amount of wealth that has since been used to rig global institutions like the International Monetary Fund and the World Bank in a manner that keeps this historic trend going strong.’

“‘What really matters is the architecture of wealth extraction that has been systematically built up in every country around the world,’ Brewer says, the purpose of which ‘was to hoard as much wealth as possible in the hands of a tiny elite…’”

For the complete article, Eggs Fly in Iceland as Panama Papers Spark Populist Anger in the Streets by Lauren McCauley, click here.

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