The Panama Papers Are the Tip of the Iceberg: Cracking Down on Wealthy Cheaters
Updated: Aug 28, 2018
As you might be expecting from the headline, I am going to be talking about the Panama papers in this article, but the Panama papers revelations are just the tip of the iceberg, so before I get there, I have to spend some time talking about an array of other members of the .1 of the one percent who apparently have no concern whatsoever about breaking the law. I want to highlight this issue not only because I am angry to hear about all this cheating, but because we as a society have to do something serious about it: The costs are just too huge. It is bad enough that governments all over the world are shorted hundreds of billions of tax dollars owed, and the rest of us taxpayers have to bear the consequences. What is just as bad is that legitimate, law-abiding businesses who are doing the right thing are having to compete against the cheaters, making it less likely that good businesses succeed, and making it less likely that most businesses will play by the rules and be good corporate citizens. When governments allow lawbreakers to go unpunished, there will be a lot more law breaking.
Let’s start with the Koch brothers and their circle of friends who give big checks to organizations that hate government. You don’t have to get very far in Jane Mayer’s superb book Dark Money to find a list of hyper-wealthy corporate conservatives who are (a) willing to invest money in far right causes, and are (b) lawbreakers on a massive scale. As Mayer makes quite clear, there is a clear connection between the two much of the time. She gives a list several of the richest men who are known to be part of the Koch brothers’ network of rich friends and invest in their preferred causes and candidates, and talks about their transgressions. As she wrote about Wall Street financiers Steven A. Cohen, Paul Singer, and Stephen Schwarzman, “All might have been principled philosophical conservatives, with no ulterior motives, but all also had personal reasons to fear a more assertive federal government…” Prosecutors investigating Cohen’s firm described it as “a veritable magnet of market cheaters.” Singer is probably America’s leading vulture capitalist, famous for buying up the distressed debt of countries and cities and then, ironically, using his clout with other government officials to squeeze hard to get those countries to cut off money for education and pensions so that he can make millions in profits. Schwarzman is famous for comparing proposals to tax carried interest at a higher rate to Naziism.
Then there was the high frequency stock trader who the IRS has investigated for illegally avoiding paying billions in taxes; Ken Langone, who became well-known during the financial crisis for giving his buddy Dick Grasso $139.5 million to head the New York Stock Exchange, a position from which Grasso had to resign because so many people were outraged by the sweetheart deal; Richard Strong, banned from the financial industry for life following improper trades (can you imagine how corrupt you have to be in the financial industry in order to get banned for life?); Phillip Anschutz, founder of Quest Communications, who tried illegal maneuvers to avoid paying already low capital gains taxes; Richard Devos, founder of Amway, who pleaded guilty to defrauding the Canadian government; Sheldon Adelson, who was investigated for bribery charges to foreign governments and who a series of investigative journalists have linked to Asian mafia figures in his casinos in China.
And of course, we can’t forget the Kochs themselves, who have been in almost continuous trouble with government authorities for all manner of issues. For a handy summary of their transgressions, check out this remarkable Rolling Stone magazine article: Inside the Koch Brothers’ Toxic Empire. While they came by their far right politics from their father, who was a founder of the John Birch Society and believed Dwight Eisenhower was a communist, their hatred of the government is certainly driven by the fact that certain government agencies like the EPA expect them to actually follow the law.
Mayer notes how many of the Koch associates who share their affinity for right wing, anti-government causes are in the finance industry, but it is not just the Kochs’ friends who apparently don’t mind breaking a law or three. Depending on which media or think tank estimate you go with, the financial industry has paid between $200 billion and $250 billion in fines to the federal government for all manner of illegal behavior since 2009 — the robo-signing perjury scandal, the LIBOR scandal, abuses in mortgage securities, the HSBC money laundering for drug cartels scandal, conflict of interest scandals, tax avoidance scandals. Those are a lot of scandals, folks. And the most amazing thing about all this wanton law breaking was that many legal analysts thought these banks were getting off easy compared to the crimes that were committed.
Again, though, it isn’t just Wall Street, and it isn’t just the Koch brothers’ friends. There are also a whole set of emerging issues in the tech industry. For example, check out this recent article on the sharing economy: The Sharing Economy Doesn’t Share the Wealth. It describes how companies like Airbnb and Uber are figuring out how to avoid paying huge amounts of taxes that their competitors in the hotel and taxicab industry have to pay. And then there is this:The Rise of Commercial Operators on Airbnb. In it, the hotel industry, in conjunction with a team of professors at Penn St, documents how Airbnb is setting up a series of illegal hotels in cities around the country, where the owners of housing operate in every way like a hotel except for having to comply with none of the safety and security and zoning laws by which the rest of the hotel industry operates. Meanwhile, Airbnb is going to Republican state legislatures around the country and trying to get states to pre-empt any regulation of these illegal hotels by cities who might be concerned about the havoc being caused by them.
Oil companies, big banks on Wall St, tech giants — and I haven’t even gotten to the Panama papers yet, the massive money laundering and tax avoidance scheme on the front pages of newspapers all over the world. Too many of the top .1 of the one percent, who already have every advantage over everyone else in the world, have become so greedy and so utterly amoral that they are fundamentally eroding our society’s democracy, government and sense of morality. If the rules aren’t enforced for those at the top, why should anyone else in society have a respect for those rules.
This is why it is urgent for government to crack down on the tax cheats, the money launderers, the bankers and big oil companies and tech industry titans who break the law. This is a very big deal. The community banks and credit unions who make their money the old fashioned way by lending it out to people in their community, the people who run honest hotels, the small business people trying to compete fairly in the community: they deserve a level playing field. And the rest of who work hard and play by the rules, we deserve a country where the wealthiest among us have to play by those same rules.