Monday, April 04, 2016

From WikiLeaks to Edward Snowden to the Panama Papers - The Manifest Corruption of Western Democracy

When did graft, corruption and skulduggery become the default operating system of Western democracy?

It traces back to the introduction of neoliberalism and the ascendancy of illiberal democracy. Today we live off the rancid leavings of Reagan, Thatcher and Mulroney and the Big Lie by which they transformed our lives. So much of their malignant legacy lives on even in supposedly progressive governments that it's hard to imagine reclaiming our democratic freedoms without tossing the lot of them and the rigged institutions they have put in place.

Glenn Greenwald of Edward Snowden fame sees ominous similarities between the Snowden and Panama Papers scandals.

FROM THE START of the reporting based on Edward Snowden’s leaked document archive, government defenders insisted that no illegal behavior was revealed.

But illegality was never the crux of the scandal triggered by those NSA revelations. Instead, what was most shocking was what had been legalized. ...As the ACLU’s Jameel Jaffer put it after the Washington Post’s publication of documents showing NSA analysts engaged in illegal spying: “The ‘non-compliance’ angle is important, but don’t get carried away. The deeper scandal is what’s legal, not what’s not.”

Part Deux - the Panama Papers

Some of these documents undoubtedly reveal criminality: either monies that were illegally obtained (and are being hidden for that reason) or assets being concealed in order to criminally evade tax debts. But the crux of this activity — placing assets offshore in order to avoid incurring tax liability — has been legalized. That’s because Western democracies, along with overt tyrannies, are typically controlled by societies’ wealthiest, and laws are enacted to serve their interests. Vox’s Matt Yglesias this morning published a very good explainer of various aspects of this leak and he makes that point clear:

'Even as the world’s wealthiest and most powerful nations have engaged in increasingly complex and intensive efforts at international cooperation to smooth the wheels of global commerce, they have willfully chosen to allow the wealthiest members of Western society to shield their financial assets from taxation (and in many cases divorce or bankruptcy settlement) by taking advantage of shell companies and tax havens.

'If Panama or the Cayman Islands were acting to undermine the integrity of the global pharmaceutical patent system, the United States would stop them. But the political elite of powerful Western nations have not acted to stop relatively puny Caribbean nations from undermining the integrity of the global tax system — largely because Western economic elites don’t want them to. …'

Proving that certain behavior is “legal” does not prove that it is ethical or just. That’s because corrupted political systems, by definition, often protect and legalize exactly the behavior that is most unjust. Vital journalism does not only expose law breaking. It also highlights how corrupted political and legal systems can be co-opted by the most powerful in order to legally sanction atrocious and destructive behavior that serves their interests, typically with little or no public awareness that it’s been done.

Greenwald's right. The Snowden scandal and the Panama Papers scandal go very deep, right into the heart of Western democracy, Canada included. It's rotting our society from the inside and out.

In my old Vancouver neighbourhood, tear-down (bare lot) values now exceed $2-million for what, in my time, was a neighbourhood of tidy, modest post-war bungalows. Yet that neighbourhood is unique in Vancouver. It has the lowest average declared incomes. People there declare subsistence incomes or declare nothing at all. Yet many of them own not one but multiple properties and leave most of them sitting vacant.

Everyone knows. Those houses are being bought up with illicit monies from offshore. It's money laundering on a grand scale and it ensures that my kids and their friends will never be able to afford to live in the neighbourhoods where they were born and raised.

And what are our governments, provincial and federal, doing about it? SFA - Sweet Fuck All.  If those properties were held by known drug dealers the Canadian Revenue Agency would move in. Based on the value of the assets they would calculate an appropriate "deemed income" that would be required to buy and maintain the properties. Then they would levy taxes, plus hefty penalties and interests, on that deemed income and slap a lien on the properties until they could be seized and sold. Easy, peasy. 

Only they're not doing it. Why not? Because Canada's political apparatus is in a gluey relationship with our major banks and accounting firms and their benefactors don't want them meddling. It's corruption, plain and simple, and it reaches deep into our provincial legislatures and the House of Commons.

That is the foul legacy of Reagan, Thatcher and Mulroney and their Big Lie by which they duped us into accepting neoliberalism. We couldn't imagine it would usher in corruption and the ascent of illiberal democracy. It did. It's here. It's hard to imagine how we'll get ourselves out from under this, reclaim our democracy from the political apparatus that has so cravenly sold us out, without throwing the whole sordid mess over.


Toby said...

Mound, I think Global Warming will get us out of neo-liberalism. It will do so much like WWI and WWII did by causing massive destruction and life loss. When the temperature is up by 2 degrees our present governments may not matter at all.

The Mound of Sound said...

It will be a game changer, Dana. There was a paper released a year or two ago that predicted from 2025 until 2040, every region would enter a new climate paradigm where every year would be hotter than the previous hottest year prior to 2014. The shift is supposed to begin across the Caribbean. Some places will become uninhabitable. Once "wet bulb" temperatures hit 35C human life is unsustainable. At wet bulb 35,the body can no longer shed heat through perspiration. There's a term for it, "human hothouse" syndrome.

The Mound of Sound said...

Sorry, Toby. I don't know why I wrote "Dana." The response I put to your comment got me looking for more info about the "human hothouse"syndrome. That led me to a paper on greenhouse gases and a reference to methane. We know that methane is far more powerful but far shorter lived than CO2. What I didn't know until today is that, as methane degrades, it turns into CO2. Great, just great.

Ben Burd said...

"Some of these documents undoubtedly reveal criminality: either monies that were illegally obtained (and are being hidden for that reason) or assets being concealed in order to criminally evade tax debts. But the crux of this activity — placing assets offshore in order to avoid incurring tax liability — has been legalized."

My point entirely one which you blew off in a previous post.

What we need is for Governements to implement taxes on Worldwide Income, not just Canadian based income.

and BTW I do agree that it is corruption and collusion between the elites and rich.

The Mound of Sound said...

Ben, you might want to check this out. Vice has been writing about Mossack since 2014 around the same time that The Economist got on to this story.

AniO said...

Jane Jacobs wrote about this problem in a quirky little book called "Systems of Survival." This is the result of running the government like a business. Business values in government inevitably lead to corruption. It has happened as she predicted.