Paradise for Plutocrats and the Crimes of Oligarchy

Here we go again. In the latest revelations, widespread tax cheating and secret offshore financial manipulations hide massive amounts of wealth, both ill-gotten and ordinary corporate profits. The International Association of Investigative Journalists (ICIJ) has released “The Paradise Papers,” millions of documents that provide new devastating evidence of the history and current efforts of the most powerful and wealthy individuals, criminals and corporations in the world to hide their wealth and avoid responsibilities.

Release of “The Panama Papers” did a similar service about a year before the release of the “Paradise Papers.” As the International Consortium of Investigative Journalists put it, “A giant leak of more than 11.5 million financial and legal records exposes a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies.” The Panama Papers had exposed how criminals, politicians, wealthy individuals, and major corporations have hidden cash and other assets with the help of the legal maneuvering and loophole exploiting made possible by the Panamanian law firm, Mossack Fonseca. Panama police have since arrested the founders of Mossack Fonseca as part of money laundering investigations.

1108_Foreign_ParadisePapers_Enemies of the People

The Super-Rich steal from Everyone Else, making them Enemies of the People.

Given what we have learned from the Panama Papers, it seemed unlikely that Mossack Fonseca could be the only offshore law firm operating to facilitate international criminal financial dealings. Well, sure enough, The Paradise Papers, also released by the ICIJ, reveal another giant complex of operations, this time exposed by the release of 13.4 million records. The release was shared by the ICIJ with major news outlets, including the Guardian, the BBC, and the New York Times. The documents exposed “ties between Russia and U.S. President Donald Trump’s billionaire commerce secretary, the secret dealings of the chief fundraiser for Canadian Prime Minister Justin Trudeau and the offshore interests of the queen of England and more than 120 politicians around the world.” According to the ICIJ,

“The leaked documents, dubbed the Paradise Papers, show how deeply the offshore financial system is entangled with the overlapping worlds of political players, private wealth and corporate giants, including Apple, Nike, Uber and other global companies that avoid taxes through increasingly imaginative bookkeeping maneuvers.”

paradisepapers-740x419_Reveal

The Paradise Papers expose the Corrupt Practices of Global Oligarchs.

I was not surprised to learn that the Paradise Papers revealed ties between Russia and Donald Trump’s billionaire commerce secretary, Wilbur Ross, a private equity tycoon. His shipping company (which he did not divest when taking office as promised) “has received more than $68 million in revenue since 2014 from a Russian energy company co-owned by the son-in-law of Russian President Vladimir Putin.” Furthermore, the Paradise Papers implicate over a dozen of Trump’s cabinet members and major donors in the financial manipulations exposed by the documents.

So, what does it all mean? Is it merely a matter of the wealthy paying to have their money managed effectively by specialists? Well, it runs much deeper. Brooke Harrington, a certified wealth manager, Copenhagen Business School professor and author of Capital without Borders: Wealth Managers and the One Percent, suggests otherwise. The ICIJ quotes Harrington as follows: “There is this small group of people who are not equally subject to the laws as the rest of us, and that’s on purpose,” They “live the dream” of enjoying “the benefits of society without being subject to any of its constraints.” And, of course, the benefits they enjoy so far surpass what the rest of us can even imagine, that the constraints they avoid deeply damage the public interest around the world.

That, of course, is what Trumpism is all about. Every cabinet appointment, every executive order, every tweet of this “empty clown suite” aims to suppress the modest protections of the people, the land and resources of the nation from the predatory behavior of the oligarchs he represents. The line between legal and criminal behavior of the worlds oligarchs, with whom Trump has been entangled for many years, is quite blurry. The power of using agents like offshore law firm, Appleby by drug traffickers, kleptocrats, and money launderers to hide criminally obtained money, draws the world’s biggest oligarchs, politicians, and criminals together in both their financial interests and their methods of seeking secrecy.

Only the amazing coordinated research by dozens of ICIJ members could have exposed the “Offshore Magic Circle,” an informal collection of the world’s biggest offshore law firms in the financial secrecy business, of which Bermuda based Appleby, exposed in the Paradise Papers, is only one member. Multiple unexplored offshore tax havens serve the special interests of greed, corruption, and criminality of the world’s oligarchs. We don’t know to what extent the current U.S. President is a player or merely a pretender to plutocratic power, but we do know that his key associates are engaged in the middle of the Paradise for Plutocrats.

Panama Papers: Plutocracy, Kleptocracy, or Both?

plutocracy  [ploo-tok-ruh-see]

noun, plural plutocracies.

  1. the rule or power of wealth or of the wealthy.
  2. a government or state in which the wealthy class rules.
  3. a class or group ruling, or exercising power or influence, by virtue of its wealth.

kleptocracy  [klep-tok-ruh-see]

noun, plural kleptocracies.

  1. a government or state in which those in power exploit national resources and steal; rule by a thief or thieves.

1815-20; klepto- (combining form of Greek kléptēs thief) + -cracy

Related forms:

kleptocrat [klep-tuh-krat] (Show IPA), noun

kleptocratic [klep-tuhkrat-ik] (Show IPA), adjective

[Dictionary.com Unabridged, Based on the Random House Dictionary, © Random House, Inc. 2016.]

~ ~ ~ ~ ~

Never begin an essay with a dictionary definition. It is bad form. You should assume the readers of your work understand the words you write.

Well, the Panama Papers may provide us an excuse to violate that rule. In fact, I offer here two dictionary definitions, because the two words involved are so close in meaning. Is a plutocracy also a kleptocracy? Are most societies run by the wealthiest members also societies in which the rulers are thieves? Given revelations published in the “Panama Papers,” and given what many people have suspected all along, that would appear to be the case.

Who Rules?

In various posts on this site I have used the word plutocracy to describe the fact that in the industrialized world, if not the rest of the world as well, the wealthy class rules politics, culture, and the economy. We maintain a façade of democracy, but really…who rules? Ask William Domhoff,[i] who has studied the ruling class in America since before I was in graduate school in the 1960s. Domhoff cleverly got into the social circles of the very rich and observed their behavior just like and ethnographer might observe some remote tribe in the Amazon rain forest. C. Wright Mills,[ii] in his classic, The Power Elite, wrote of the extended reach of the political, military, and economic elites that President Dwight Eisenhower had warned us against in his farewell address to the nation in 1961 with the iconic phrase, “The Military Industrial Complex.”

Mills, Domhoff, and others were astute observers of the trends already present in the U.S. in the 1950s and 1960s, already shaping the corporate state. I wonder whether they could grasp how far the concentration of power would go and what form it has taken today. But the crimes of the extremely rich are far more complex and deep rooted and pervasive than such otherwise exceptionally valuable analyses would suggest. And the corporate state has grown deeper and more complex with the help of digital technology than could have been imagined over a half century ago. The leveraging of the political power by digital technology has produced an astoundingly concentrated plutocracy in the U.S. and elsewhere in the industrial world.

Another Kind of “Big Data”

We usually think of “big data” as all the demographic and personal data big organizations collect on all of us to better market their products and perform political surveillance. But there is another kind, data on the economic infrastructure of the political and financial elites of the world.

It is only by way of the power of “big data” and the professional persistence of the members of the International Consortium of Investigative Journalists could all of this been exposed in its massive detail. These dedicated journalists carried out textual database analyses of 11.5 million digital files or about 2.5 terabytes of data anonymously leaked from a Panamanian law firm. By the collective efforts of investigative journalists around the world, the first indications of the vast scope of global corruption of the super-rich was brought to light. The revelations so far only scratch the surface of deep global kleptocracy.

More recent social science has revealed the characteristics of the new corporate state that feed the kleptocracy. Sheldon Wolin’s work developing the theory of “inverted totalitarianism”[iii] shows how the corporate state operates as a complex organizational dictatorship under the guise of democratic forms but not substance. Wolin’s project focused on the operational characteristics of the corporate state, but not how the rich and powerful steal from the commonwealth.

Plutocracy IS Kleptocracy

The integration of the nation-state with the corporate and financial elites form the corporate state, controlled by those elites. The Panama Papers give some indication of how widespread among the super-rich some key techniques of global kleptocracy. Many people had heard of secret overseas accounts held by corrupt politicians and the super-rich in places like the Cayman Islands. But most people had no idea of the extent of their use by political and financial elites to hide and launder bribes and stolen money, and to avoid taxes on profits, both legal and illegal. The kleptocracy many suspected has been revealed in far more detail than anyone imagined possible. And so far, only the tip of the data-iceberg has been exposed to the light of investigative journalism.

So, what does all this mean? Well, first, it is clear that much more depth and breadth of corruption pervades the global political economy than even the most cynical critic imagined. Second, the data reveal that, given the corruption exposed, nothing short of massive transformation of the political process can realign global politics and economics with the interests of the publics they are supposed to serve.

Remember, all corporations are chartered by the government, supposedly for particular economic purposes that are allowable by presumably being consistent with the public interest. Today, that has become a fiction waiting to be made real again, even as the fiction of corporate personhood has reached its ascendancy. Realigning political economy with the public interest will be a hard battle to win. But the physical necessity of fighting global warming will force the hand of the both the corporate state and the super-rich. Little time remains. Will their economic interests continue to override the human interest in survival?

______________

[i] G. William Domhoff, Who Rules America ? 1st ed. 1967

[ii] C. Wright Mills, The Power Elite. New York: Grove Press, 1962

[iii] Sheldon Wolin, Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism. Princeton: Princeton University Press, 2008.