Foretelling the kind of public backlash other ultra-rich tax dodgers can expect following the weekend release of the so-called Panama Papers, tens of thousands of Icelanders rallied in Reykjavik on Monday demanding the resignation of Prime Minister Sigmundur Davíð Gunnlaugsson.
Gunnlaugsson is just one of the officials facing reprisal after a massive leak of 11.5 million documents from the global law firm Mossack Fonseca revealed a rigged system of elites who use shell companies in offshore tax havens to stash untold fortunes.
And as an estimated 22,000 Icelanders slung eggs and protested outside the Parliament building, observers wondered who would be exposed next and what the total impact might be on the corrupt global system that appears to have been built to specifically benefit the one percent.
"What really matters is the architecture of wealth extraction that has been systematically built up in every country around the world [in order to] hoard as much wealth as possible in the hands of a tiny elite."
—Joe Brewer, The Rules
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."
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.
SCROLL TO CONTINUE WITH CONTENT
Never Miss a Beat.
Get our best delivered to your inbox.
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."
"This leak is a blueprint for how the most vulnerable people in the world are harmed by financial secrecy."
—Eric LeCompte, Jubilee USA
"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."
And given that the global system of corruption was largely "architected" by Western corporations and elites, observers are suspicious about what they describe as "selective reporting" on the part of Western media companies, which admittedly filtered the leak by searching certain names associated with breaking UN sanctions regimes.
"The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda," charged Craig Murray, author and human rights activist who formerly served as the British Ambassador to Uzbekistan. "There is no mention at all of use of Mossack Fonseca by massive Western corporations or Western billionaires—the main customers."
Responding to such concerns, Stefan Plöchinger, editor of Süddeutsche Zeitung, wrote on Twitter: "Just wait for what is coming next."
And while many are waiting for the other proverbial shoe to drop, the CBC has already announced it will not release the names of the 450 Canadians exposed in the offshore leak, dismissing the group—which reportedly includes "lawyers, mining and oil executives, business people, and even known fraudsters"— because none of them were deemed "prominent personalities."
Amid the scandal, groups are calling on the U.S. government to take action to stem the tax evasion and corruption now laid bare.
"The Panama Papers is the biggest leak we've ever seen on how global corruption and tax evasion is facilitated," said Eric LeCompte, executive director of the religious development group Jubilee USA. "This leak is a blueprint for how the most vulnerable people in the world are harmed by financial secrecy."
Jubilee is asking Congress to pass the recently-introduced Incorporation Transparency and Law Enforcement Assistance Act (HR 4450, S 2489), which would make it more difficult for parties to set up offshore shell companies, which have a record of fueling "corruption, poverty, human trafficking, and armed conflict."