News of the Panama Papers dropped quietly on Sunday night (U.S. time), but it rapidly exploded, expanding rapidly like one of those flowering tea balls in the fertile hot waters of the Internet. It was that delicious combination of elements that captures headlines and starts thinkpiece engines everywhere running full steam ahead: The largest document leak in history, paired with the sheer unadulterated greed and structural inequality it revealed. Journalists, fact checkers, and researchers have been studying the documents for a year (way to keep a secret!), and plan to release the rest of the 11 million documents over the coming months.
This, like Watergate, like Wikileaks, is a watershed moment in history. It was also the result of an inevitable collision of factors that any world government, and, for that matter, tax evader or offshore bank, should have seen coming: While people have always been angry about the gap between rich and poor, they're really angry now. Though the "recession" may be over, the gap between rich and poor is persistently widening, putting paid to the claim that neoliberal policies have brought about economic recovery.
As governments in Britain and Australia insist that cuts to vital social services are the only way to survive, as the United States deports Bangladeshi asylum seekers to certain death, as Turkey and the EU strike an uneasy deal that has hundreds of refugees being deported from horrific detention centers in Greece back to Turkey, people are angry.
And they had good reason to be even before the Panama Papers were released, because the writing has always been on the wall — somewhere on the globe, there's a lot of money, but it's invisible, to all but a privileged few. Costs of living around the world are rising, but wages and benefits aren't keeping pace, leaving people at a growing social disadvantage.
There's a bubbling financial crisis, even if it's not one of the "too big to fail" variety. In fact, that's part of the problem — the middle class is disappearing, the working class is being choked out, and they're getting restless. The financial crisis is in poor neighborhoods across the U.S., where people are being evicted because they cannot pay the rent. It's in refugee communities in Germany, where people who risked everything for a better life are finding a hostile welcome and few financial opportunities. It's in the firetraps of cheap textile factories in Southeast Asia, the ghost towns of Mexico.
Eventually, there comes a tipping point.
The Panama Papers are the fuel for the fire
It was perhaps inevitable that the combination of anger about tightening financial situations paired with outrage about social situations — a radical right obsessed with scapegoating refugees, horrific terrorism incidents in Europe, rising political tensions in Russia — has created a behemoth. While the Panama Papers were released to draw attention to the gaping holes in government regulations that allow this sort of behavior to develop and continue — and to pressure governments to tighten their weak regulations on offshoring money — they were indisputably the result of anger over global income inequality. The anonymous figure feeding documents to the Süddeutsche Zeitung was, to put it bluntly, pissed.
Swiss bank accounts may have long been the emblem de jour of tax evasion, hidden wealth, and power, but long ago, major corporations along with the wealthy were moving their funds to offshore accounts not just in Panama, but in the Maldives, the Seychelles, the British Virgin Islands — it turns out that money likes to holiday in the same place rich people do.
The shift to offshoring was partially the result of crackdowns in the U.S. and in Europe to discourage to abuse of Swiss banks and the nation's money laundering-friendly practices, and it was also just smart diversification from the point of view of incredibly wealthy people and corporate entities — just like forming corporations in Delaware to take advantage of the state's ridiculously lax incorporation regulations, which make it an ideal host for shell companies. (Ever noticed that nearly all of the financial corporations you work with have return addresses in Delaware?)
Paired with tactics like the infamous double Irish tax arrangement (which sounds like something much more saucy that it really is), wealthy individuals and the companies they own or control could successfully avoid tax liability, leaving workers to bear the brunt of taxation and depriving their countries of vital social services — it would be much easier to manage the U.S. budget deficit, for example, if these companies were actually paying their taxes.
Rich people have been evading taxes for a long time, and it's always been a truism that the more money you have, the more deftly you can hide it. There's the famous anecdote about Warren Buffett and his secretary, with Buffett claiming his tax bracket is likely lower than his secretary's. While his comment was ostensibly designed to illustrate the problems with how the U.S. approaches taxation, it skated right over the fact the Buffett, and the companies he invests in, no doubt have billions secreted away in accounts run by freewheeling banks that are more than happy to turn American dollars into profits.
The Panama Papers are about money, and how billions are being shuffled around a giant board by very sophisticated people who know how to turn the movements of money into a crafty shell game. But more importantly, they're about who doesn't have money, and how people who don't have money are growing increasingly furious about it — often the warning signs of a revolution.
It doesn't escape notice that the Bernie Sanders campaign exploded in a way that not even his advisors expected over the same period of time that researchers were quietly working on the Panama Papers, nor that the people of Iceland took to the streets nearly instantaneously to condemn their prime minister as soon as they found out about the full extent of his involvement.
Iceland's fury is a warning sign of things to come
Icelanders have a lot of experience in venting their rage over financial inequalities, and it's not surprising that they were able to mobilize so quickly when the Panama Papers went public to demand that their prime minister resign. Understandably — the highly damning documents indicate that he profited rather handsomely from the financial crisis that brought Iceland to its knees.
Iceland had been hit particularly hard in the financial crisis, and struggled to recover — and Sigmundur Davíð Gunnlaugsson became an important figure as the country found its footing. The revelation that he and his wife held millions of dollars in bonds and took home a tidy chunk of change when the nation's banks settled with their creditors doesn't look good, and he's only making it worse; walking out of an interview definitely wasn't a smart move.
Doodling in parliament probably wasn't a good call either.
Keep in mind that Iceland is a country where protestors chased members of parliament down the street while protesting the nation's desperate financial situation in 2010.
In the coming weeks, as the Panama Papers flood the news, as analysis starts pouring out, as we start to see more and more world leaders and public figures implicated, there is going to be tremendous pressure for change. Suddenly, the commonly understood and generally known is about to be very, very concrete. We all know that corporations and wealthy individuals dodge taxes, as this form of corruption is woven throughout society and we're not naive.
But now, the Panama Papers are putting faces to names, and the results could be explosive. Between poverty, anger about the refugee crisis, escalating violence from the right-wing across Western nations, Islamophobic rhetoric, fear of terrorism, growing tensions with Russia, and anger about a very broken political system, the streets of the West could get very, very ugly.
Around the turn of the century, there was an explosion of protest — WTO, the G8 protests in Genoa, vast protests at the Republican and Democratic national conventions in 2000. The protest movement was the outgrowth of a frustrated and disaffected generation that had absolutely nothing on the desperate oppressed that will be taking to the streets in coming weeks.
Those protestors may have chanted "What do we want? Class war! When do we want it? NOW!," but it's this generation of protesters that's going to turn that into reality, and it's highly probable that a lot of vulnerable parties are going to be caught up in the maelstrom.
Photo: Eddie/Creative Commons