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Rapturous riches: What the paradise papers show us about life at the top
Members of the elite, whether celebrities, politicians or the rich, are not having a very good time of it lately. Misconduct, fraud and abuse have been revealed among the famous, the politically powerful and those who grease the wheels of the tax-efficient vehicles used by the super-rich. In a heavily mediatised environment it is increasingly easy to rapidly broadcast leaked data. This means that few groups or individuals are immune from scrutiny and moral censure by the masses. A synoptic society in which the many watch the few has, if not reversed power imbalances and inequalities, helped to re-shape the ground on which debate about practices, such as those revealed in the so-called Paradise Papers, now takes place. What these papers reveal is the morally bankrupt practices of the wealthy as they pursue generally legal but circuitous routes to evade paying tax on wealth, goods and services consumed in the countries of which they are citizens. Societies in which the very rich feel that they get little for their taxes are suffering as these evasive routes are pursued at the same time that many governments have pursued stringent austerity programs that have weighed most heavily on the poor and excluded.
The Paradise Papers are one of a series of new insights generated by leaked information, the notable forerunner was the Panama Papers of 2016 which also revealed huge volumes of wealth circuiting to run rings around local tax collectors. We can perhaps picture the irritation and perhaps anxiety of many of those named, brought back with a bump to the ground of their named taxation jurisdictions. Yet much of what has been revealed is not shocking to many, here there is a sense of confirmation of what wider declining trust in public institutions, political life and our elites and ‘betters’ has suspected for some time – we are not in this together. This is yet another chip in the façade of legitimacy and respectability of the wealthy and political elites. Yet the mechanisms by which tax is legally avoided continues to operate as a significant industry in its own right (Shaxson’s Treasure Islands is still the essential reading here, but also his work with John Christensen on the so-called Finance Curse) and we would be right to raise our voice still further in condemnation of practices that highlight the robber baron mentality of many of those among the super-rich who seek to reside in nations that they would prefer to contribute as little as possible to.
Despite all of this, blaming the wealthy themselves goes only some way to addressing the challenges faced by bringing flows of money that evades or avoids national tax regimes. The reality of the millions of papers now leaked offers a picture of life at the top in which evasion and avoidance are they everyday business of global capitalism and capital. Many of the wealthy seek to maximise their position by vesting their wealth with institutions charged with looking after the protection and sustainable growth of these monies. Rightly however questions are now being asked about the leakage of essential revenues for public services and collectively consumed goods, like education, health, policing and so on. Even those with strong market orientations now recognise the unfairness of these mechanisms and the damage that they do to social cohesion in the longer-run.
What can be done? The most obvious call would be for concerted action against global architectures of avoidance, evasion alongside a stronger policing of laundering that supports organised crime networks and the criminal practices of criminally sourced wealth. We might also suggest that an industry of wealth management and investment which operates on a ‘no questions asked’ basis serves to conceal the violence or criminality underlying much wealth. Yet cuts to public services have included those to financial policing that might help to reclaim these flows of wealth, an easy political ‘win’ if ever there was one. Many jurisdictions recognise that to act aggressively against tax avoidance may drive wealth offshore. Such arguments should be consigned to the dustbin of history however. Tax is a moral issue and, as many have argued, not only the sign of a civilised society but core to providing public services and infrastructure upon which citizens and private corporations all rely. While the Paradise Papers raise questions about the offshore environment and elaborate shell structures that allow anonymity (until it is breached through such leaks!) we also know that laundering through property in the UK and City of London are significant and heavily under-estimated problems.
Like the Panama Papers before them the Paradise Papers bring into the public eye many who clearly have only disregard for others and a feeling that rules and regulations are for the little people. In the meantime the ‘little people’ have been damaged by a political economic regime that has enabled offshoring, the avoidance of culpability for poor corporate performance and the rising wealth concentration among the 1% and its various sub-fractions. If one were being very cynical it might be suggested that those benefitting from these practices were more or less of the same social networks of those in power and that claims to be tough on corruption, avoidance and evasion ring pretty hollow.
Something can and should be done about tax avoidance. Increased funding for a denuded HMRC would be one thing but a more legitimate political leadership that has the guts and integrity to challenge those working the morally hazy culture of wealth management, whether corporations or individuals, needs to begin immediately. It seems very likely that further leaks will damage the credibility of political and social elites. This damage will likely impact on electoral successes and losses while also whipping-up further social anger. One possible risk is that the excesses of wealth and concealment revealed by Paradise and Panama drive reductions in social cohesion and polarisation that are profoundly damaging to political projects built around consensus and ideas of the common good. If it weren’t for yachts, secluded gated communities and thick walls our political and social leaders would hear very clearly the rising anger in people’s voices.
Life at the top continues to be very good. Writers like Gabriel Zucman estimate that around 10% of the globe’s wealth is offshored and concealed by corporations and individuals. In the meantime anyone working in the social sciences offering an empirical assessment of social conditions could lecture us at length on how bad things are getting for many people. With gaffe’s like the chancellor’s suggestion that nobody is unemployed it is hard not to see sections of the political elite as a wealthy and insulated class that no little of the social pain they have set in train.
Rowland Atkinson is Chair in Inclusive Societies at the University of Sheffield and author of Domestic Fortress: Fear and the New Home Front (Manchester University Press). He tweets @qurbanist.
Image: Photo by John Cameron. Photo taken of a Huracan covered in over 1,000,000 Swarovski crystals, parked in Chelsea