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Pandora papers: biggest leak of offshore data exposes financial secrets of rich (theguardian.com)
1312 points by pseudolus 3 months ago | hide | past | favorite | 594 comments



It's time to have a big talk about transparency.

Some of the people who defend the ultra-rich are also the ones who claim to be in favour of free markets. A small bit of economic orthodoxy is that for free markets to work, parties need to be informed (and externalities priced in, but that's another story). This is not just in terms of "this is the price of bananas" but also in terms of knowing eg what various salaries are, which businesses are profitable, etc.

How can we have free markets when we don't even know who owns what?

As for taxation, there needs to be an overhaul. Things need to be simpler, and I say this as someone who has used international tax advisors. There's no reason the tax guy's diagram of your business should be more complicated than your own diagram. Moving profits to other countries shouldn't be possible, or rather, it should be more fixed by the nature of the business than by the desires of the CFO. We simply hear too much about "selling IP rights" to subsidiaries and similar schemes that are clearly meant to lower tax rather than increase revenue. Granted some things will be legitimate, but it's important that some vague concept of fairness is adhered to. This again goes back to transparency. We invented corporations to help improve society, so we ought to know what kinds of things people are doing with them.

Edit:

Perhaps the way to see it is, if you say "we make money by selling coffees in the UK" you would expect that entity to report a tax structure that contains a bunch of coffee and UK related entries. Reporting to investors ought to mirror reporting to the taxman.


> We invented corporations to help improve society

I think it's easy to say this, but I'm not sure the history of corporations bears this out. Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean to control various types of precious resources and we all know what happened there.

I guess it all depends on who "society" is in your statement, because someone has always has to lose in a corporate structure.


> Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean

I don’t know the definitive origin, but one of Cæsar’s reforms in the Lex Julia was to require collegia be approved by the Senate (or Emperor) to be considered a legal body. The concept of corporations traces to at least then, almost certainly earlier, since corporate personhood is a logical result of the process of creating a legal system.

The novelty of the English and Dutch trading companies wasn’t their corporate personhood, but their distributed ownership as a joint-stock company.


Minor quibble - there is no single Lex Julia. Any law passed by Gaius Julius Caesar or his heir Gaius Julius Caesar would be called XYZ Lex Julia to distinguish it from previous and later legislation that happened to share the same name.

Sources - Caesar, Life of a Colossus and Augustus, First Emperor of Rome by Adrian Goldsworthy.


That's not really any different than referring to the law vs a law.

They both work in most contexts.


The VOC was established by the government because it didn’t like that there were many competing merchant companies. It wasn’t the first company, it was sort of the first public company.


Sure, I'm not trying to argue that VOC was the very first company. Companies of various types date back to the silk road. But large-scale corporations were largely conceptualized during mercantilism and their history is inextricably tied to colonialism, which can't be overlooked when people start saying things like "corporations were created to help society." They helped some people, but they also wiped out entire populations (see the Banda Islands).


I read a lengthy account of US Corporate history in graduate school (whose exact title eludes me at the moment). My impression is that in the US, there was a desire to tie transportation to broader physical markets, and include decreasing costs by owning the warehouse and distribution infrastructure. On the marketing end, a common brand name for a family of products was also owned by the corporation. An important early US example is the National Biscuit Company NABISCO. There were no US national food companies, as each market had the combination of brands, storage and distribution for the food product. The corporation held assets large enough to tie market regions together. It was not a small feat and was very much the Big Markets Tech of the time. Sears and Roebuck from Chicago form a different model, with non-perishable goods.

For international finance, early 20th century oil played a special role, not adequately described here.

As far as the parent comment about corporations "killing people" .. this is true but naive.. since the Romans and before, brutality was the norm, not the exception. Every educated person and most others knew about extreme forms of collective abuse, it had happened again and again. The very formation of civilization, including merchant and trade functions, was generally meant to be an improvement on past forms. Rarely, but with serious circumstance, some merchant company would rape and murder their way to fortune for a while. But karma is a bitch as they say, and those things did change. The tame history I cite above, was specifically aimed at making a better economic engine, for profit by ownership, which upon consideration was the chosen path.


As OP isn't forthcoming with their corporate history text, one of which I'm familiar and can recommend is Charles Perrow, Organizing America: wealth, power, and the origins of corporate capitalism. As a sociologist specialising in organisational behaviour and structures, Perrow brings a deep expertise and excellent scholarship to the field.

https://www.worldcat.org/title/organizing-america-wealth-pow...

Archive.org don't appear to have this, though ZLibrary / LibGen do.


Archive.org have it but not for digital loan unless you are officially "print disabled", but you can preview and full text search.

https://openlibrary.org/works/OL4468926W/Organizing_America

Which links to: https://archive.org/details/organizingameric00perr/


Thanks. Search wasn't turning that up for me at all.


Where and when was your graduate schooling?

Assigned reading will frequently be listed on syllabi. Older versions can be found through the Wayback Machine, if posted online (and from the early 1990s through about a decade ago, many were, unfortunately, integrated school information systems have largely hidden these behind registration walls).


That's really interesting, I'd read the crap out of that US corporate history book if you ever recall the name.


All that would not have been possible without the arrival of "modern" stock exchanges.

Also, their reorganization after each first generation of underhanded practices became recognized, otherwise attention could not have been as well diverted from the ability to leverage greed even more so than leverage the resources of the smaller investors.

Good historical reference sections on Wikipedia:

https://en.wikipedia.org/wiki/London_Stock_Exchange

>During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their rude manners. They had to operate from other establishments in the vicinity, notably Jonathan's Coffee-House.

https://en.wikipedia.org/wiki/Philadelphia_Stock_Exchange

https://en.wikipedia.org/wiki/Tontine_Coffee_House

https://en.wikipedia.org/wiki/New_York_Stock_Exchange

NYSE of course is where lots of the money ended up from the international slave trade, and not just from sales in North America.

Seems to me that's what allowed NYC to take the place of London as the world's financial center, since the UK frowned on slavery much eartier than the US.

Also early 20th century oil might have been the only thing with as good or better return than slavery had generated.


>can't be overlooked when people start saying things like "corporations were created to help society."

Uhm, who says that? Corporations were always created by people who wanted to cooperate to pursue their common interests.


That's not correct. Corporations, particularly in the limited-liability sense of the term, are created by society, not people. The laws of a jurisdiction provide a carve-out for a fictional entity that gets special rules to protect the people who act as its brain. But that's different from those people creating it.

And to this end, the only reason to create a corporation is to make society better. If they're not, we have the ability to revoke their charters, and we should use that more.


> And to this end, the only reason to create a corporation is to make society better

I'm sorry but this is patently false, the reason to create a corporation is to capture profit.

Want to make society better? There are numerous non-profit and government organizations that broadly aim for this goal which do not turn a profit. The goal of a corporation is to sell goods or services, and hopefully those goods or services do in fact better society. However, this is far too often not the case to make the argument that corporations exist to improve society. Look at how much control corporations have over our society today, they're practically invincible and indemnifiable in our current culture because they're so much more insulated legally than individuals.


Perhaps I was unclear, but you get that you're lecturing me about what I just said, right? What you are describing is the goal for a person to apply to have a corporation created for them to manage. That's not the reason that society allows corporate charters to exist. Society need not allow a corporate charter to be established that does not benefit that society, and can revoke them should they not be achieving the goals of the society that grants them.


What is the average person’s interest in creating laws aroubd i corporation? Doesn’t it stand to reason that it’s the people creating businesses that would be the ones suggesting the laws that protect themselves from liability?

The fact that corporate charters are never revoked points to the laws being in the corporations favor, not the citizens’


We allow those protections to allow people to take business risks without taking significant personal risk.

This encourages entrepreneurship. I don't think you'd see as many people trying to build widgets if they had to put their family's home on the line.

In exchange for those protections, we get widgets.


Sorry, I didn't mean to imply that LLC / incorporation has no benefit to society, it plainly does. I was responding to the conjecture that it's society at large that writes the rules. I figure the stakeholders writing the laws are the people who have the most to gain.


You're right. They absolutely are. They don't have to be.

From where I stand, corporations should be afraid of the societies that grant them their charters.


It is literally a direct quote from the post I originally responded to.


They actually wanted a way to raise money for war effort to break free from the Spanish influence.

It was a massive public money raising campaign to build war ships, guns and hire mercenaries, all under the guise of "exploring exotic commercial opportunities overseas".


>all under the guise

It's not a guise when other countries monopolize trade routes. It's simply a cost of doing business.


What I meant is their true motivation and intentions (war efforts) were different than what they made it appear with the VoC capital raising.

EDIT: in "The World's First Stock Exchange" [1], the author outlines this historical context of conflict between Netherlands and Spain, which spurred the VoC and - considered to be - the first stock market.

[1] https://www.goodreads.com/book/show/18847884-the-world-s-fir...


Yeah perhaps I should say I was thinking more about the limited liability form that got established sometime in the 1800s across a variety of western countries. The government orgs are a thing too, of course, but things that are that closely tied to government tend to have their own access to enforcement.

It's more that at one point during the industrial revolution, it became common that someone would make a private venture, incorporate it, and from there the law granted a number of modern considerations that we still live with. I'm thinking of limited liability and its effect on bankruptcy.


Also interesting that one of the examples given is using Intellectual Property to fiddle taxes. IP itself is another thing that is sold as "being done for the good of society" but if you trace the history, it was basically a way of handing out the King's total ownership of society to his friends, giving them a monopoly on salt or whatever, very similar to giving them a monopoly on trade with india.

I do think both (intellectual property and corporations) can actually be good for society if properly regulated, I just don't think that was the original intention, nor the current status quo and it won't naturally develop in that direction without concerted effort.


one of the firsts things they taught in law school was that the legal system wasn't just created to uphold "justice" but really to protect the wealthy and powerful


The first corporation depends of the definition used. If we are talking about joint-stock companies there were some form in China and in Europe before colonial expeditions to fund capital intensive enterprises like dams and mills (in the rare cases where it was not funded by the Lord/Abbey/State) Like so https://en.m.wikipedia.org/wiki/Bazacle_Milling_Company


The VOC did improve Dutch society, hell the Netherlands was able to defeat the Spanish empire thanks to the spice trade.


OP probably also thought about other societies involved, like the Indonesians, who did not really benefit, quite the opposite, and with far more people.


Or OP might have been considering the theory that "Fascism is Colonialism turned inward" and the impacts of that that the Dutch themselves later felt.


But then who gets priority here? The Netherlands or Indonesia? And it can easily be debated Indonesia as we know it would not exist without the VOC...


Would that be a bad thing?


Firsr corporations were basically groups of people killing, torturing and exploiting less advanced civilizations overseas. Over the time capitalism has developed towards more peaceful culture, not the other way around as people often imply.


I'm certainly not trying to imply that capitalism is more or less peaceful than it was in the 17th century, I guess the main point that I'm trying to make is that corporations exist to generate profit, they never really existed to improve society.

A lot of the shifts towards a more humane version of capitalism came through outside forces like organized labor (i.e. the 40 hour workweek, the establishment of child labor law, etc.). These were not things that corporations volunteered, it took lots of people threatening to stop the system in order to achieve many of the benefits we enjoy today. We'd still be working 7 days a week starting as small children if those outside forces didn't establish many of those fundamental changes for us.


> We simply hear too much about "selling IP rights" to subsidiaries and similar schemes that are clearly meant to lower tax rather than increase revenue.

Huh. Made me wonder if advocates of IP reform could claim improved tax sanity as a benefit.

Happily, not an original thought.

Here's the first hit via ddg:

Intellectual Property Law Solutions to Tax Avoidance [2015]

https://www.uclalawreview.org/pdf/62-1-1.pdf

"Multinational corporations use intellectual property (IP) to avoid taxes on a massive scale, by transferring their IP to tax havens for artificially low prices. Economists estimate that this abuse costs the U.S. Treasury as much as $90 billion each year. Yet tax policymakers and scholars have been unable to devise feasible tax-law solutions to this problem. This Article introduces an entirely new solution: change IP law rather than tax law. Multinationals’ tax-avoidance strategies rely on undervaluing their IP. This Article proposes extending existing IP law so that these low valuations make it harder for multinationals to subsequently litigate or to license their IP. For example, transferring a patent for a low price to a tax-haven subsidiary should make it harder for the multinational to demonstrate the patent’s validity, a competitor’s infringement, or entitlement to any injunctions. The low transfer price should also weigh toward lower patent damages and potentially even a finding of patent misuse. Extending IP law in such ways would thus deter multinationals from using IP to avoid taxes. Both case law and IP’s policy justifications support this approach."

Also...

> How can we have free markets when we don't even know who owns what?

Yup. Open markets require symmetrical information.


You call it "economic orthodoxy" but it's really nothing of the sort. There's not even really a technical definition of "free markets" so I don't know where you're getting your assertions.

I think you're kind of gesturing at the concept of "perfect competition", which is rigorously defined and does have technical requirements [0], one of which is perfect information. But it actually doesn't really apply to the tax situation of the owner.

In other words, for political and ethical reasons, there's a lot of reform that can and should be done, but I wouldn't dress up the argument in the form of "economic orthodoxy", unless you're talking about actual economic orthodoxies like lowering corporate income tax and preferring VAT to personal income tax.

edit: I should soften my confidence here, it's been a while since I did economics. At least, I've never heard of transparency extending beyond the good or service being a requirement for perfect competition... do you have a source for that, or can you clarify how it would affect things?

[0] https://en.m.wikipedia.org/wiki/Perfect_competition#Idealizi...


> unless you're talking about actual economic orthodoxies like lowering corporate income tax and preferring VAT to personal income tax.

Those are more political ideologies than anything.

By economic orthodoxy, I simply mean that it's a fairly common economic teaching that bad things happen when parties are uninformed. For instance Akerlof lemons is about information asymmetry.

I'm not referring to any specific model (monopolistic competition etc) but to the general observation that a fair few economic models point out that having wrong information causes problems.


> For instance Akerlof lemons is about information asymmetry.

Akerlof lemons have zero to do with knowing the salary of the CEO of the lemon company.


I don't understand - there is a job market, and like most markets here is information asymmetry. Companies have more information about compensation than workers. In this situation, having less salary information enable employers to take advantage of employees.

We're talking about this https://en.wikipedia.org/wiki/The_Market_for_Lemons right?


Are you so sure about that? Think about the CEOs themselves as the lemons... a lack of transparency can lead to the same adverse selection pressure that trends towards "lemon CEOs" flourishing, and pay transparency can help align the incentives somewhat.


"Free" and "market" are contradictions. Markets exist when individuals can amass capital irrespective of wider social needs, and this necessarily requires armed force, or the threat of armed force, to prevent people from collectively deciding about resource allocation. That's the state. Naturally the state also enforces many things besides ownership of capital, some of them better (like minimum wage and health and safety codes) and some worse. But the point is that even if you had the fantastical and anti-realistic "perfect information", markets wouldn't be "free".

At the same time, markets do "work". That is, the results of market interactions are what you might expect from market interactions: Accumulation of capital in fewer hands, economic cycles of various kinds, some motivation for innovation and lots of innovation for exploitation, war, scams and such...


You are being downvoted and its quite disturbing.

And you even didn't say anything controversial, hardly any options, but simple facts and conclusions drawn from the facts.

We can even bring out the comments by the Chicago school of economics - the birthplace of neoliberal free market ideology. Who with assistance from the government 'helped' south American countries by implementing more free markets than in USA. And as the result those countries imploded both politically and economically, and what does Chicago say? well obviously markets were not free enough.

They laugh at communist who say failed soviet counties were not communist enough, yet they do exact same thing with their experiments (actually, the difference is that they inflicted it on other countries).


> (actually, the difference is that they inflicted it on other countries) No difference there. Soviet communism was all about exportation.


As any ideology does, but soviet communism an oppose to radical free market was also self inflicted.

Which begs a question, if neoliberals believe in what they preach then why they only export it?


There is no such thing as “free” markets in the US or any other country. All markets are defined and limited by the laws, rules, and regulations in place to enable the market to exist in the first place. Unless you are talking about the “free market” of a lawless failed stare.


Also, sadly, unmatched competetiveness in the real world. Markets and states evolved because they out-murdered and out-robusted all other forms of organizing.


I think this hits the nail on the head. Wealth is protected by a vast array of national and international laws and institutions - everything from protection of intellectual property to the technicalities of making sure that you and I can't both own the same piece of property at the same time. In return for this, it's not unreasonable for national governments to require more transparency in terms of who owns what. (By the by, I think the real reason this doesn't happen is the obvious suspicion that it could lead to more progressive forms of taxation, e.g. wealth taxes.)


I agree completely.

For free markets to work, we need the following:

-Bankruptcy without bailouts to clear dead wood.

-Abolish patents as these simply limit free market competition and are a ploy to try to claim ownership on something that usually is one tiny fragment of human knowledge.

-Public tax records for everyone. Sunlight is the best disinfectant (and the best way to allocate resources)!

-Wealth tax instead of income tax.


> Abolish patents as these simply limit free market competition and are a ploy to try to claim ownership on something that usually is one tiny fragment of human knowledge.

Think this one through, what’s the incentive to invent or make a thing of there’s no protection? Because someone wants to?


A common bit of knowledge here on HN is that "Ideas are worthless, execution is everything". Most ideas do not occur to just one person at a time... typically dozens of people and groups are working on the next incremental advance in human knowledge. Patents are awarded to whoever has the most aggressive lawyers, not necessarily who actually had the idea first. Beyond that, most innovation is funded by government grants and universities and should be public domain, not some professors property. And most importantly - patents stop all new further innovation, especially when a company owns many patents in an area. Why do you think there is only 2 airplane companies - Boeing and Airbus? They own all the patents you would need to start a competitor.


Great, so then require a parent to be actioned upon. And patents don’t last forever so eventually Boeing and Airbus will have, in great detail, explained how their thing worked so others can copy it.


those sounds like good ideas but they make markets less free.

So why call it free market?


How is “bankruptcy without bailouts” making markets less free ?


Which "bailouts" are you referring to? The 2008 crisis, where the "bailouts" were actually loans, which were repaid with interest, providing profits for the taxpayer, or the current COVID bailouts, which provide the people with money, not needing repaid, that look like they're adding significantly to inflation?


They were bailouts, because, without Fed's guarantees, no financial institution would loan money to most of these badly-managed, reckless corps. And they are doing the exact same thing again, knowing they will be bailed out again.

"Profits for the taxpayer" - did you get a penny of the "profits"? The only people who profited were the executives of the bailed out companies - who deserved to lose their jobs, not double their wealth.


> reckless corps

Can you explain how they were rekless?

If i go to cassino and bet my life saving on black that's rekless. If I go to cassino and bet your life savings then 50% of times I am genius investor, or 50% of times i am really really sorry for your loss.

The problem is that those corporations are playing a game they cannot loose. Its only logical for them to push risk (therefore profits) more and more. They themselves created 'too big to fail' term.

I am not trying to make excuses for them, they are the people who captured regulatory institutions, and de-facto are self regulating - and in practice we all know where that leads. They are responsible for what happened and is happening.


Good list!

I would also..

- allow government to compete on the free market.

- allow government to force-purchase static businesses that are profitable but not innovating.

- require government to monitor such port folio and privatize where innovation is failing. Privatization of this kind should not be rushed and aim to get good value for the assets.

- print money against the new government assets minus earnings from privatization


> allow government to compete on the free market

So then we should disallow government from regulating the market? There is a conflict of interest in your conjecture.


Government has to make money some how. While it is good to extract wealth from people with deep pockets I believe profiting from transactions though taxation for the most part is discouraging economic activity.

I and many other people have a laundry list of skills that I could offer to others only if I fill out piles of paper work.

If little jimmy wants to wash 1 car he needs to register a business and get the business bank account?

If big Joe has 100 car washes and he is earning a stable income without expanding or innovating to much government could make a bid on it and offer him a job.

If say the US gov wants to force-purchase the google search engine it should pay handsomely for it. Say 1800 billion. Alphabet would do just fine bidding on the advertisement slots and selling them to their customers. (Such a large purchase should probably involve a referendum)

It is our government. If we want it to sell beer in town hall it should be up to us. If you and many others are against it it obviously shouldn't happen.


> Reporting to investors ought to mirror reporting to the taxman.

This would be a nice simple GAAR: you pay either the current corporate rate or 20% of the GAAP profits you report in your stockmarket statement, whichever is the larger.


Alternatively, governments need to open up these schemes to everyone so they become accessible to every middle class person. BUT they 'll also have to compete with other governments about providing better and transparent taxation options. Right now the schemes are limited not only to the rich but to the well connected rich


As far as the taxes bit, at least here in the USA I always felt that we should just get rid of corporate taxation entirely, and instead tax ya know, the CEOs etc the difference, which in effect means taxing capital gains like regular income for instance.

That would do wonders for businesses to simplify the tax schemes and really moves the taxation portion to the individuals.

I’m sure like any tax reform this has edge cases and stuff I know I haven’t considered but wouldn’t the upside be taxation happens more uniformly as a result?


If we get rid of corporate income tax (and we should), we should absolutely bill corporations for ALL use of publicly-funded infrastructure.

- use of public highways (reimburse in proportion to wear-and-tear, etc).

- use of public regulatory agencies like the FCC and FAA (to permit broadcast spectrum and airspace to be useful resources without everyone grabbing all of it all at once).

- very expensive use of US military to enforce international law, or to protect assets in foreign countries.

- use of publicly funded education to train their workforce.

I could probably go on for pages and pages but these are probably the big ones we spend the most money on.

I think a few months of this system and most corporations would be BEGGING to go back to simple income tax where they can game the system and scam their way out of paying what they owe.


That's great and all, but the tax revenue in absolute terms from corporations is probably several orders higher than what you can tax a rich CEO.

Just something to keep in mind.


Maybe part of solution is higher sales taxes , and less (or zero) other taxes. Ie tax mainly (only?) at the purchase of a good or service. I don’t recall seeing massive sales tax fraud scandals, atlease at any meaning scale.


Sales taxes are logistically simple but also highly regressive, so the wealthy wouldn't even have to use loopholes to enjoy an ultra-regressive tax system :).


Why is the point to tax the wealthy more? Why do we want to kill the incentive for starting companies and becoming wealthy?

My opinion, the left will only be happy with a 100% income tax and socialism.


> Why is the point to tax the wealthy more? Why do we want to kill the incentive for starting companies and becoming wealthy?

There isn't any evidence that tax rates much higher than those we currently have have been any obstacle to growth. Perhaps in theory, but many countries around the world and across history (including the United States!) have had much more progressive taxation regimes and it hasn't "kill[ed] the incentive for starting companies and becoming wealthy."


> Perhaps in theory, but many countries around the world and across history (including the United States!) have had much more progressive taxation regimes and it hasn't "kill[ed] the incentive for starting companies and becoming wealthy."

Which countries? And what happens when another country becomes more competitive than the US from a tax perspective? Will it destroy the country? certainly not. Will the US continue to be the world reserve currency and lead the world? Again, no.


The United States had very high income taxes from 1950 until 1980 (and also grew very fast during that period - much faster than in the period 1980-present). It is also worth noting that the United States was actually the leading advocate of very progressive income taxes during that period - convincing many other countries to adopt extremely high top tax rates on the wealthy. Today, most developed countries have higher top tax rates (and more progressive tax regimes) than the United States does - Germany, France, Sweden, Japan, etc. etc.

> And what happens when another country becomes more competitive than the US from a tax perspective?

This is a really important point and I'm glad you brought it up. The progressive taxation regime has been undermined over the past 30-40 years by the "Washington consensus" - the idea that free flows of goods and capital are paramount and that it should be US policy (as well as the policy of the IMF, World Bank, etc.) to pursue such ends via trade agreements and in exchange for loans. The issue is that free flows of capital leads to the exact problem you describe: a global race to the bottom on tax rates and a general nihilism about the possibility of an equitable tax regime. The long term challenge, then, is about building transnational agreements that are about more than just free flows of goods and capital: they must address issues of taxation as well.


The argument (with sales taxes) isn’t usually that they don’t let you soak the rich but that they’re too hard on the poor.

Almost by definition, somebody living paycheck-to-paycheck is spending all their income. So their sales tax bill is going to be basically whatever the sales tax rate is applied to their income (e.g., a 7% sales tax rate applied to all of their income). Somebody who saves some of their income isn’t spending that portion, so in a year their sales tax bill will be smaller than the sales tax rate (e.g., if they save 10% of their income, then they’re only paying sales tax on the 90% that they spent). You could say this isn’t hard enough of the rich, or it’s too hard on the poor. Usually “too hard on the poor” is an easier argument to make.

There are solutions, such as exempting food or other necessities (the poor probably spend a bigger portion of their income on food, so exempting food helps them more), or adding a luxury tax on things that the poor don’t buy, etc. Of course, then there’s an effort to define what should count as a necessity or what should count as a luxury. When I was a teenager, California sales tax did not apply to packaged food, but did apply to food bought at a restaurant. But there were exceptions to both of those cases: there was a snack tax that applied to some packaged foods (the list changed each year) so that some packaged foods were still taxed; and packaged food sold at a restaurant was exempt (I worked at Cinnabon, hot cinnamon rolls were taxed, after thirty minutes on the hot plate we let them cool down, refrosted and packaged them and they were no longer taxed; if somebody asked for packaged rolls when we were out, they got hot rolls in the box without paying sales tax).

It’s also true that “income” isn’t always the interesting number. Somebody with a million dollars in the bank and no income doesn’t pay income tax, but they do pay sales tax. Of course, if the money came from wages in a previous year, they paid income tax then. If the money was an inheritance, it might have been taxed but the US keeps changing the details of the estate tax.


> Why do we want to kill the incentive for starting companies and becoming wealthy?

Because raising taxes isn't going to keep someone who would already be considering starting a business from starting a business.

Do most people who start a business actually become wealthy?


> Because raising taxes isn't going to keep someone who would already be considering starting a business from starting a business.

How can you say that? Have you polled everyone starting businesses? This very thing happened to me with a distribution business in which taxes, and the potential for them being raised, made the business unprofitable compared to the same business running in China.

> Do most people who start a business actually become wealthy?

Subjective and impossible to calculate but by all means because not everybody can find a way we should kill it for everyone right? Because not everyone is smart enough to become a medical Dr, we should ban the profession or implement pay caps right?


What about VAT then? Value added tax as levied in the EU is not a sales tax. It's also a very popular fraud mechanism...


> How can we have free markets when we don't even know who owns what?

Why would we need to know who owns what in order to have a free market?


Most of the profit is based on information asymmetry or on being a monopoly (high barrier to entry).


Interestingly, creating difficult to understand or implement tax codes also raise the barrier to entry.


> How can we have free markets when we don't even know who owns what?

Good point, but take a number. We can't have free markets because most "regulation" is set up to favor some side or the other. There isn't even and fair competition. What we have is government sanctioned winners (and losers).

Before we get to who owns what, let's talk about how Uncle Sam can shamelessly put his thumb on the scale (read: bias and corruption) and too rarely be called out for doing so.


> How can we have free markets when we don't even know who owns what?

Great. Let's add more paperwork to the incorporation/reporting process.

> As for taxation, there needs to be an overhaul.

Taxation has a hard time changing the current laws because these are revenue for government. It can't do an overhaul but it can make new rules/regulations. Great, more paperwork.

> Moving profits to other countries shouldn't be possible, or rather, it should be more fixed by the nature of the business than by the desires of the CFO.

More paperwork, regulations, rules and advisors. That should simplify your tax diagram.

> Perhaps the way to see it is, if you say "we make money by selling coffees in the UK"

Many economic players are way more complex than a company selling coffee in the UK. These also happen to be the most influential and important nodes in your economy.

tldr: Tax is a really complex issue. ICIJ is, surprisingly, not that transparent in its funding and the people doing the funding/leaking these documents; I'm really doubtful they are doing it because they have "good hearts" or on any goodwill to help "society".


> Great. Let's add more paperwork to the incorporation/reporting process.

Many of the systems required to create a more complete accounting of assets already exist. For example, in the United States financial institutions already generate 1040s for profits/losses/dividends on financial assets; it wouldn't be particularly difficult for those forms to also include the actual assets themselves and their values. Local governments already collect property taxes (which, at various points throughout history have included a lot more than just property - such as cars/boats/etc.; equipment, etc. - so the infrastructure already exists to tabulate these other categories too) - it wouldn't be hard to transmit that data. I'm not arguing that it wouldn't take any work to have a transparent accounting of who owns what, but it's certainly not impossible - after all, we do it for income and no one seems to bat an eyelid. Not to mention that we live in an age of fast and easy electronic communications. Transparent wealth accounts have existed before in much more difficult circumstances (e.g. wealth taxes imposed on war profiteering by various governments after WWII) and it didn't prove to be an insurmountable burden.

> Taxation has a hard time changing the current laws because these are revenue for government. It can't do an overhaul but it can make new rules/regulations. Great, more paperwork.

Taxation is law - in fact, the tax code and how it is structured is probably the most important part.

> More paperwork, regulations, rules and advisors. That should simplify your tax diagram.

There is already an incredible amount of paperwork, regulations, rules and advisors involved in the gaming of the global tax system that already occurs. More transparency around asset ownership would help lead to a simpler global tax regime, not a more complicated one.


> but it's certainly not impossible - after all, we do it for income and no one seems to bat an eyelid.

Certainly, given we’ve been to the moon, will be on mars soon, and are standing on the brink of cures for some of the worse diseases we could figure it out. But then you’ve removed a measure of privacy. Why does everybody need to know what everybody else owns? Then comes the difficulty in tabulating this data. The rich will pay someone to do it. The rest of us will spend even more time each year figuring out everything we own vs got rid of that year.

Progressive taxes are a failure. Millions of words are in the current tax code and it still failed. Why add more words? Flat tax, no deductions, pull it at the income source. QED.

OR, we can keep futzing around trying to implement a “fair” tax code, only to find out in the end it’s impossible


> But then you’ve removed a measure of privacy.

I don't think such a system of accounts would need to be publically accessible. It could work similarly to income taxes - where the public is able to look at robust aggregate data, the IRS is able to collect taxes as necessary, and central banks are able to make good monetary policy based on real data.

> The rest of us will spend even more time each year figuring out everything we own vs got rid of that year.

For the vast majority of wealth that the vast majority of people own (property and financial assets), nothing would be required because (as I mentioned above) there already exist reporting mechanisms for those types of assets.

> Progressive taxes are a failure. Millions of words are in the current tax code and it still failed.

Why do you think progressive taxes are a failure? Taxes used to be much more progressive during a period of much higher growth (1950-1980). Over the last 40 years we've gradually made the tax system more regressive by lowering rates and inserting more and more loopholes (which primarily benefit the wealthy)


> I don't think such a system of accounts would need to be publically accessible. It could work similarly to income taxes - where the public is able to look at robust aggregate data, the IRS is able to collect taxes as necessary, and central banks are able to make good monetary policy based on real data.

OK, what will this do? Nothing.

> For the vast majority of wealth that the vast majority of people own (property and financial assets), nothing would be required because (as I mentioned above) there already exist reporting mechanisms for those types of assets.

Again, it sounds like you’ve changed nothing.

> Why do you think progressive taxes are a failure? Taxes used to be much more progressive during a period of much higher growth (1950-1980). Over the last 40 years we've gradually made the tax system more regressive by lowering rates and inserting more and more loopholes (which primarily benefit the wealthy)

For a few reasons, including the left constantly saying they’ve failed and they don’t have enough money. Another reason is income tax was originally meant for the wealthy, then inflation caught up. With an inflationary currency taxes implemented for the rich only will eventually apply to all, as income tax does today but didn’t before. Not to mention the massive overhead to process all of this data, we literally picked the most complicated way to do this.


> OK, what will this do? Nothing.

It will do several things. First of all, having robust publicly available aggregate data will spur better debate about the equitable distribution of wealth. Second, it will allow the IRS to easily collect wealth taxes should congress authorize those. Third, it will enable Central Banks to make better decisions - right now we're flying mostly blind, so to speak.

> For a few reasons, including the left constantly saying they’ve failed and they don’t have enough money.

I don't think "the left" is saying that income taxes have failed. I think "the left" is saying that income taxes are no longer as progressive as they once were for a number of reasons: (1) top tax rates are much lower than they once were; (2) income and capital gains are taxed differently; the low (and flat) rate of capital gains taxes mean that the wealthy pay effectively lower tax rates; (3) the huge number of loopholes introduced into the tax code predominantly help the wealthy and make the overall income tax regime more regressive than it would otherwise be.

I think the left also argues that income isn't the most accurate measure of an individual's capacity to pay taxes.

> Another reason is income tax was originally meant for the wealthy.

This is simply not true. Income taxes were introduced by most developed countries in the first half of the 20th century as (1) a check on inequality; (2) a reasonable way to expand the tax receipts of the federal government from something like 10% of national income to the 40+% of national income that countries require in order to invest in anything but purely regalian state functions. It has little to do with inflation, and tax brackets are constantly adjusted for inflation in every country that has implemented one. On the other hand, income taxes are progressive so by design they hit the wealthy harder (and always have done).

> Not to mention the massive overhead to process all of this data, we literally picked the most complicated way to do this.

The IRS budget is very small.

That point aside, progressive taxes are meant to tax people according to their ability to pay. A flat tax can never accomplish that. Most progressive taxes fall under three categories: wealth taxes, inheritance taxes, and income taxes. You need to collect a certain amount of data for all of them.


> First of all, having robust publicly available aggregate data

> I don't think such a system of accounts would need to be publically accessible.

Which one is it? Public or not?

> I don't think "the left" is saying that income taxes have failed. I think "the left" is saying that income taxes are no longer as progressive as they once were for a number of reasons

Yes, which I alluded to. Now tell me, when will this end? As I said, we have an inflationary currency, so of course todays taxes will not be enough in the future. Which is why this system is a joke to me. Why are you surprised the taxes are not enough anymore?

> This is simply not true. Income taxes were introduced by most developed countries in the first half of the 20th century as (1) a check on inequality; (2) a reasonable way to expand the tax receipts of the federal government from something like 10% of national income to the 40+% of national income that countries require in order to invest in anything but purely regalian state functions. It has little to do with inflation, and tax brackets are constantly adjusted for inflation in every country that has implemented one. On the other hand, income taxes are progressive so by design they hit the wealthy harder (and always have done).

https://en.wikipedia.org/wiki/Legal_history_of_income_tax_in...

The first income tax applied to those making more than $600/yr, which means the poor didn't pay. Today, the poor still pays, as that limit was never updated to the new "wealthy" level. Also because the left wanted a larger taxable base, for more $$$$.

Please avoid "other countries" as we're talking about the US and I have no clue or care about other countries tax codes or history.

> That point aside, progressive taxes are meant to tax people according to their ability to pay. A flat tax can never accomplish that.

How so? If you tax everybody at the same low rate, say 15%, then every can pay? Whatever the minimum bracket is in the current system, use that. This will result in less tax revenue, which is why the left hates this system.

Another way to put all of this, if you want Obamacare, lets open up those medical records to the public so we can decide if:

a) we can afford you being on it

b) if your conditions are correctable


> Which one is it? Public or not?

The aggregate data would be public and the underlying data points would not be. Just in the same way it's possible to have a robust discussion of income equality but I can't look up how much money my neighbor earns.

> Yes, which I alluded to. Now tell me, when will this end? As I said, we have an inflationary currency, so of course todays taxes will not be enough in the future. Which is why this system is a joke to me. Why are you surprised the taxes are not enough anymore?

No, this is not true. Income tax brackets are updated every year, and always have been, to account for inflation.

> The first income tax applied to those making more than $600/yr, which means the poor didn't pay. Today, the poor still pays, as that limit was never updated to the new "wealthy" level. Also because the left wanted a larger taxable base, for more $$$$.

The 19th-century income tax only lasted a few years, was not particularly progressive, raised very little revenue, and generally bears little to no resemblance to our current income tax. The income tax we have today dates to the early 20th century.

> Please avoid "other countries" as we're talking about the US and I have no clue or care about other countries tax codes or history.

But we should care about other countries because their experiences can inform ours.

> How so? If you tax everybody at the same low rate, say 15%, then every can pay? Whatever the minimum bracket is in the current system, use that. This will result in less tax revenue, which is why the left hates this system.

If you want to construct a modern state, you need progressive taxation to raise the 40-70% of national income a year in tax revenue (all "developed" modern states do this. Places like India and South Africa don't, which explains a lot...). If you believe we should go back to a 19th-century state which collects low taxes and does little redistribution, (1) inequality would balloon; and (2) I've got bad news for you, because most people in the United States support significantly more progressive taxation. (Not to mention that the United States would quickly fall behind the rest of the world due to lack of investment in education, which is one of the primary drivers of productivity growth.)


> The aggregate data would be public and the underlying data points would not be.

So now leaves the question, what does this report look like?

> Just in the same way it's possible to have a robust discussion of income equality but I can't look up how much money my neighbor earns.

Who's having these discussions? Certainly not the entirety of the political landscape is involved. This is a leftist idea, so perhaps the people on the left are having a robust discussion about wages, but the people on the right and some of the moderates (like myself) are tired of people saying they don't make enough (being self made from a poor family myself). Your idea here is yet another extension of this. You want to know what people make and own so you can determine how much tax they should pay, and if they're paying enough. I can short circuit this for you. We all know the left wants more taxes, the right wants less, and the majority of the moderates are siding with the right right now. We can safely avoid this massive headache and know the outcome desired by all parties involved.

> No, this is not true. Income tax brackets are updated every year, and always have been, to account for inflation.

OK you missed this one completely so I'll walk you through it a bit more. The value represented by the currency never changes. However the representation of that value does change over time and with an inflationary currency it keeps increasing. So the reason the the tax brackets and taxes are increased or updated, is because they need more money to get the same value from taxes as the previous year. With the left wanting to implement full on socialism, this will never end and we will go broke as a nation. Or put more simply, when 100% tax is implemented, and we need more, what happens then?

> The 19th-century income tax only lasted a few years, was not particularly progressive, raised very little revenue, and generally bears little to no resemblance to our current income tax. The income tax we have today dates to the early 20th century.

OK?

> But we should care about other countries because their experiences can inform ours.

No.

> If you want to construct a modern state, you need progressive taxation to raise the 40-70% of national income a year in tax revenue (all "developed" modern states do this. Places like India and South Africa don't, which explains a lot...). If you believe we should go back to a 19th-century state which collects low taxes and does little redistribution, (1) inequality would balloon; and (2) I've got bad news for you, because most people in the United States support significantly more progressive taxation. (Not to mention that the United States would quickly fall behind the rest of the world due to lack of investment in education, which is one of the primary drivers of productivity growth.)

So how did the US become the greatest nation prior to high taxation? How come high taxes was literally the trigger that started the rebellion? Some people have an idea that the only way to a prosperous nation is via socialism, and to those people I'd say they're brainwashed as the schools in the US have been doing for about 4 decades now.

My point remains, if we continue on this path, and seek to justify further taxes we will ultimately end up with 100% income tax. And that's really the point of all of this, to implement socialism.


> So now leaves the question, what does this report look like?

You can slice and dice the data how you like. Again, exactly how we currently do it with income data.

> Who's having these discussions? Certainly not the entirety of the political landscape is involved.

The entire political landscape is involved, as evidenced by your comment that you want lower taxes.

> You want to know what people make and own so you can determine how much tax they should pay, and if they're paying enough.

This is literally the goal of progressive taxation.

> We all know the left wants more taxes, the right wants less, and the majority of the moderates are siding with the right right now.

Polls show overwhelming support for increasing taxes on the wealthy.

> OK you missed this one completely so I'll walk you through it a bit more.

$1 doesn't have any inherent value by itself. The value of a dollar is determined by what you can exchange it for. $1 in 1921 was significantly more valuable than $1 in 2021 - you could buy a lot more with it. This is called inflation. As long as inflation remains relatively low and predictable, it doesn't really matter in the abstract whether something costs $1 or $10 or $100 (if inflation rises quickly, that's another story of course!) There exists a metric called the Consumer Price Index which measures this inflation, and therefore the value of a dollar across time. Income tax bracket cutoffs aren't increased over time in order to raise more revenue. They are increased in order to raise the same amount of revenue after adjusting for inflation. But again, this doesn't mean anything, because inflation theoretically increases the price of everything - wages, prices, etc.

> Or put more simply, when 100% tax is implemented, and we need more, what happens then?

The United States had a top marginal income tax rate of 80-90% for most of the period 1950-1980. The United States economy grew much faster during this period than the period 1980-present, when top marginal tax rates were much lower. The point isn't to implement a 100% income tax. It's to make the tax system more progressive, which enables further investments in education, research, and health care, which fuels growth.

> So how did the US become the greatest nation prior to high taxation?

By most economic measures, the United States wasn't the strongest country in the world until the first half of the twentieth century. Some of the reasons for that include lower levels of inequality with respect to education in the late 19th century compared to most European nations; the earlier implementation of progressive income taxes compared to those nations; greater investments in education compared to France and Germany (and especially the UK) that led to higher per capita productivity; not suffering as much economic damage from the two World Wars; etc.

> How come high taxes was literally the trigger that started the rebellion?

The revolution had nothing to do with high taxes (taxes were very low, in fact - see https://taxfoundation.org/taxation-representation-american-r...). It had to do with unfair taxation. And that's exactly what this whole argument is about: the wealthy pay unfairly low taxes because of tax havens and an inability to properly tax wealth.


// How can we have free markets when we don't even know who owns what?

Free markets exist regardless of how you choose to assign property to people. Be it violence or consensus. Ownership is to be decided by the parties involved in the exchange. 3rd partys are an easy solution.


> Ownership is to be decided by the parties involved in the exchange.

No, ownership is to be decided by governments who use force to protect property rights. They may take advice from the parties involved in the exchange, they may decide that neither party involved in an exchange was the owner.


No- ownership determines disposition of property, not government.

For instance, in most jurisdictions, a dispute between two (claimed) property owners can only be decided by them, in full agreement, with the courts stepping in only when a stalemate is reached.

But the judge can only decide the dispute, and can't, for instance, arbitrarily issue an order giving the property to a 3rd party, or decide a dispute where one of the parties haven't first come to the court seeking that resolution.

Similarly, a property owner can summon police to help enforce their property rights in the case of a trespasser, but police can't arbitrarily enforce the rights of 3rd parties without request.


What I see here is tax evasion. But done in a roundabout legal loopholish kind of way.

1. Establish profitable company in your home country.

2. Establish 2nd company in a tax haven country.

3. Give 2nd company some kind of ownership, and then pay rental fees, licensing fees, or simply set up a high interest loan that the 2nd company loaned the first.

4. Once you set up a way to make it look like you owe the 2nd company tons of money, now your 1st company no longer is "profitable" and actually in debt losing money, which means it doesn't need to pay taxes on the massive profit it's making.

While I believe it's legal it hinges on bad ethical practice. But many large companies do this, such as cruise ships and I think Apple.


> Once you set up a way to make it look like you owe the 2nd company tons of money, now your 1st company no longer is "profitable" and actually in debt losing money, which means it doesn't need to pay taxes on the massive profit it's making.

It’s called “transfer pricing” and it’s been going on for decades: https://en.wikipedia.org/wiki/Transfer_pricing

Short of a revenue (as opposed to income) corporate tax or VAT, it’s a very tricky problem to address. Maybe an excise tax on foreign remittances to match the highest corporate bracket.

Or you just scrap corporate tax entirely because it’s a terrible idea anyway.


Incidentally, this is the real reason why "Western" states are so hung-up on copyright enforcement: nevermind the movie bullshit, IP is a door throughout which profits can be arbitrarily shuffled around by the rich and the powerful. It creates a parallel reality where imaginary goods can be transferred from jurisdiction to jurisdiction, creating infinite possibilities for transfer pricing. And if anyone objects? Ahh, they clearly want to starve artists and creatives!

It's genius, and we all go along with it because how can you hate art and imagination? It's such a fundamental side of human nature. By turning its output into pseudo-goods, we think we're moving up in the civilization scale, whereas we're just enabling a parasitical accumulation of capital.


Can you explain how that works for someone ignorant like myself?


In general, every country you do business in will charge taxes based on the profit you make within that country. So what you do is:

* Set up a company in the country where you'd like to pay taxes, and give it all of your intellectual property.

* Set up subsidiaries in the countries where you don't want to pay taxes. Have them pay licensing fees to the first company for the IP, making sure to set the licensing fee high enough that the subsidiaries don't make much profit.

* Now most of your profit lives in the first country, no matter how much business you do elsewhere.


>intellectual property

A concept invented by and for lawyers. Call it imaginary property.


All property is imaginary. It's a human concept enforced by legal systems and force.

(Talking as someone who likes the concept of private property).


Physical property exists.


Physical things exist, the fact that they are attributed to certain humans as property is a social construct.


I don't think that it's productive to make up snarky names for concepts I don't like.


In this particular thread that is exactly what it is. A fiction to transfer wealth nearly tax free.


Imagine that there are two opposing views of a subject and then a big middle ground of people who don't care.

If the middle ground uses a term to describe a thing, then the wings have to use it as well. Or there has to be a real push by someone spending a lot of money on advertising to recast the concept. If someone goes around at the individual level making a thing of talking about "imaginary property" they are just going to look like an isolated crank. It isn't helpful.


On the other hand, when the attention of the middleground people is on exactly the aspect of the concept that one wishes to highligt, then that seems like the right time to highligt.

Tax-evasion done by money-transfers based on fictional value attributions of something. Seems exactly like "imaginary property" to me.


You can try. But the likely outcome is you'll spend a lot of time defending picking emotive word choices and the conversation is going to get distracted from substantive arguments.


> to recast the concept

I agree with both of you. I think the concept has to be recast, and that's going to be a very hard thing to do. I think a lot of money and effort was spent to cast these things as "Intellectual Property" in the first place.

However, it was on HN that I first saw the term "Imaginary Property", and I've seen that more and more lately. So there's hope. If usage of the term grows exponentially, it might happen.


Genuine question: does this require IP though? What prevents the subsidiary from paying the parent for "consultancy" or any other amorphous but non-IP service instead?


Most activities can be quantified, at worst by looking at sector averages. There is already plenty of tax law around those, about what you can and cannot realistically expect tax authorities to believe. The IP field, though, has massive value swings, that make it fundamentally uncontrollable. How much is the word "Starbucks" worth? How much is "Nespresso" or "Linizio"...? These can move hundreds of millions in one go, whereas you would struggle to achieve it with murky consultancy contracts over several years.


You might be interested in the OECD's way to make blatant tax avoidance like the original comment a little harder.

[https://www.oecd.org/tax/beps/]

Groups where the ultimate parent is responsible for roughly over 1Bn in revenue are required to submit Country By Country Reports covering all cross border transactions their details and their transfer pricing methodology, and, in many cases, the underlying documentation of those transactions (contracts, loan agreements etc.). These are digitally submitted via your local jurisdictions Tax authority and shared with all member countries. Companies as part of that group are required to lodge more detailed information at a local level on just their cross border transactions with others in the group. This allows for some level of check that information being reported is globally consistent between tax authorities, who are then able to identify and place controls on unwanted behaviours.


It should be noted this is framework is all very new. IIRC Country By Country reporting became compulsory in the UK only last year.


> Or you just scrap corporate tax entirely because it’s a terrible idea anyway.

If you scrap corporate tax would rich people hold all their wealth in corporations so as not to pay any personal income tax?


You tax it when they take the money out to spend it on themselves


Except they don't. They create corporations to do it for them.

As long as creating a legal fiction is a mere matter of having someone else do paperwork, you either need to extract tax from legal fictions, or kiss a big chunk of taxable activity goodbye.


I don't think that's accurate if we're talking about large publicly listed companies, the only way for shareholders to spend the money on themselves is to take it out via dividends or sell the stock for a capital gain.


Shareholders can take out a loan for spending money that uses the shares as collateral.


To pay back the loan they need to sell the stock which is a capital gains event.

The two main tax avoidance strategies would be people running and retiring overseas just before selling, or never selling and waiting for the cost basis to be reset upon their death.


This isn’t legal. A corporation that leases someone a car and a house is paying them a taxable income, regardless of it not being a cash income.


It is trivial to work around.

Spending would turn into various non-monetary and indirect compensations. It is going already but would get even more efficient.


That would require a progressive, rather than moralistic, sales tax.


The best way to "tax" the rich is to make them spend all their money. The more the rich consume, the more the less rich benefit. It's turtles all the way down after that.

So please order that custom yacht now, all you HN unicorns.


Not at all!

It only redistributes work toward what rich people want.

Investing into something actually useful would be much better.

Scenario A: yacht is bought - economy is redirected toward luxurious yacht building, people get paid to work on building a yacht

Scenario B: investment into housing - economy is redirected toward house building, people get paid to build houses

scenario A can be a good one only when this people would be unemployed and seeking a work otherwise. Or if you think that building luxurious yachts is more important than alternatives.


What if the point of taxes is not simply to redirect and redistribute funding, but also to reduce economic activity and, by extension, emissions and inflation?


> The best way to "tax" the rich is to make them spend all their money.

What a catastrophic idea. Do you want economy tuned to the tastes of the vain, wasteful, and capricious? In such economy there is no car, real estate, mobile phone, or clothes for you.


Here we see a trickle-down advocate in the wild, folks.


Yes, Yes, they would.


> Short of a revenue (as opposed to income) corporate tax or VAT, it’s a very tricky problem to address

There's another post in this thread about changing IP law itself to disincentivize these arrangements. Seems like a good idea.


> Or you just scrap corporate tax entirely because it’s a terrible idea anyway.

Then the owners will just get less salary but will have the corporation pay for their housing, transport food etc.

How does that help in making the system fair?


In the US, at least, the IRS takes a very dim view of this. Nearly all of it would be considered imputed income and would be taxable.


Well the fix for this is to tax revenue, not profits.


Several EU countries (France and UK) have, IIRC, made very clear that fictive debt or fictive licensing fees are fraud an would be judged as such.


The UK shouldn’t really raise its voice here, easily half the tax havens are UK dependencies: Cayman Isles, Virgin Isles, Jersey, Guernsey, Isle of Man, Gibraltar. It is inconceivable to me that the UK lacks influence to stem these activities, so the only conclusion is that it willingly accepts status quo.


There is a reason that London was the financial headquarters of the EU while it lasted. They are going to try to do what they can to attract EU capital now that the last of these rules no longer apply to them, and will be the de-facto tax haven for the rest of the world except for the five-eyes.


Well, the UK is well suited to finance in many ways, most of the legit. The way courts work for example. Maybe a bit like France and Italy have a natural talent for couture, say.

But the shady stuff is sure there, and shady. UK high end property market seems to be a Monopoly-esque money laundering machine, with the extra inconvenience of having physical real estate attached to it.

Maybe one good replacement market for NFTs.


> The way courts work for example.

What do you mean?


IANAL but I understand UK courts have a reputation for being quick, pragmatic, fair and unbureaucratic. Finance often turns on 'legal innovation', or introducing entirely new financial constructs, and where on the Continent a more prescriptive legal system is in place, UK law is more interpretation-based.

Possibly not a concern with many EU countries, but with some for sure: the legal system is also stable, doesn't change on the whims of the politicians, and appears to be genuinely un-politicised.

Since Finance heavily relies on parties promising huge contingent payments to each other, having a trustworthy and reliable arbiter is key. If I enter into an agreement where I pay upfront, and I'm guaranteed insurance-type payments for 20 years into the future, the legal apparatus is the backstop to my claims.


The City of London itself is a tax haven.

[0] https://platform-production.s3.amazonaws.com/therules-134-Ci...


This is debatable... The City of London is not really a tax haven as it has the same tax rate as the rest of the UK.

As the document whispers, what the City of London is, is a massive financial hub, that accommodates the offices and sales arms of many tax planning companies which sell professional services in London that would design structures to tunnel profits to various Crown Dependencies.

But you would find such services in any supercity. London is simply sitting at the crossroads of multiple hubs so it facilitates a lot of what's despised — but in itself, there's no haven in town!


Ireland: chuckles "I'm in danger"

This is literally their entire economy lmao.


It literally isn't.


> In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force (paid 50% of Irish salary tax), and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. (Wikipedia)

Are you sure about that?

If the EU enforces what they preach and Ireland loses its tax haven state they could lose a huge chunk of their GDP.


Pretty sure Ikea does it this way, and numerous others for sure.


Once a company becomes big enough it turns into 'yet another big one' that inherits the branding and the original activities but simply starts doing whatever else is doing to min-max everything beyond human ethics.

It's like having a very small company with only a few people. There won't be any HR because that kind of overhead isn't something you can afford or make use of. So you work 'for the boss' and if you need something your boss is also the person who makes the decisions. But when the company gets bigger, you now get HR between you and the boss, and suddenly you are insulated. You work for the company, and are beholden to HR. Every step after that is just more insulation, more min-maxing and just making things worse for the sake of scale. Usually.


HR does not get between you and the boss, but middle-management (hence the name) does. HR gets between the company and you if there is a chance of you damaging the company, other than that it is mostly (regulatory) window dressing and to save some cost on recruiting and onboarding.


Movies too. The studio charges the movie, so the studio is positive while the movie is in debt. Actors get a lumpsum and a percentage on the movie benefits.

In this case, it’s not shell companies, the studios actually have in-house expertise (=shooting most of the movie) while the movie mostly drives the scenario and the actors, so it’s harder to define what is illegal.

McDonalds also has a franchise system, although it’s easier to control whether the pricing offered to the franchisees is constant or proportional to benefits.


How can you say what is fictive and what not? Licensing fees and loans exist on market anyway.


The existence of valid licensing fees does not mean all licensing fees are valid. Surgeons are allowed to legally cut people, that doesn't mean we can't figure out when someone was illegally stabbed.

Let's not give up without even trying.


If a profitable company is making a loan it does not need to a subsidiary it controls, that's a fictive loan used to disguise a transfer.

When licensing costs are paid to a shell company with 3 employees in a country that is neither the place where the HQ are or where the company originates from, that's fictive.


Any time legislatures have a hard time defining the line between legal and illegal behavior, courts tend to take a “we’ll know it when we see it” approach. Justice might be served but rule of law is diminished.


Not really. “Fictive” just means “not real,” and courts have processes for judging whether things are real or not. The fact that courts still have to judge the actual facts of the matter doesn’t mean the legislature isn’t doing its job or that rule of law is diminished. It’s no different than courts judging the truth value of claims in a murder case or a fraud case.


a major difference between continental law and common law is the intent of the law though.

If the court can prove that they did not handle with the intent of the law, it can still be decided that this is fraud. In a common law system this is not possible.


Common law is based on precedent and common sense application of the law, so it is generally common law systems which are described as being open to interpretation.


Common sense has nothing to do with common law after a couple generations morph any type of sense a law could have made into something nigh unrecognizable. Go digging through case law in different jurisdictions and marvel at the contradictory interpretations that arise. This is why strategic changes in jurisdiction are a valuable part of litigative strategy.


You figure out what the intent is.

If the same owner is behind both, and there seems to be no other reason that avoiding taxes, guilty.


"oh no, our publicly very profitable company actually doesn't make any money because of all the.. license fees we pay, that we are clearly in a position to bargain for better, yet mysteriously do not! oh its such a coincidence that everyone in the C-Suite still makes money off the the shell company."

You can obfuscate fraud. But don't try that post-modern horseshit "what is being, man" on us.


That’s the thing about laws. It’s up to the courts to decide.


It is technically tax avoidance. Tax evasion = not paying taxes you legally owe, is a crime. Tax avoidance = using legal means to reduce the amount of tax you owe, not a crime (by definition).

This is why I support taxes such as those that France levies on digital revenue originating within their country. I also think it makes sense to wholly eliminate corporation taxes (which are not only avoidable, but are a form of double taxation) and replace them with these revenue taxes.


Australia has specific laws to stop the abuse of tax avoidance [1]. While at a high level they seem reasonable they haven't resulted in us getting the desired amount of income from multinationals [2]. The article I linked relates to big tech though, and maybe that's a separate argument when very little of the innovation happens in Australia, mostly just sales.

[1] https://www.ato.gov.au/general/tax-and-corporate-australia/a... [2] https://www.smh.com.au/politics/federal/tech-giants-pay-reco...

DISCLAIMER: Not a tax expert


Step 4 glosses over a ton of details but is sufficiently correct in Apple's case, which pioneered the Double Irish. That was supposed to stop in 2020, but unless you keep up with the world of corporate finance and global tax law, things keep shifting.

Apple's easy to pick on, they're one of the richest companies in the world and should pay more taxes. But for companies that are less successful, it's entirely possible that the second company is actually losing money. Without an appropriately sized army to track through the 200th company (tracking transactions between two companies is simplified to make the tax evasion easy to understand. Real world tax evasion is dramatically more complicated.)


What I never understood is, (how) does the money get transferred to the home country eventually? Doesn't it need to do that to have some utility? Otherwise, what's the point of just accumulating money offshore that you can't eventually use where you actually are?


There's a lot you can do, such as borrow against it as collateral, transfer it to other offshore companies in return for services (the entire deal happening in the tax haven - therefore not taxed), or even have it hold property which you can then use.


But if you use it to pay someone else offshore, presumably you get something in return at the home country, right? And you didn't pay for it there, right? So isn't the fair market value (or something along those lines) of whatever you eventually receive in the home country therefore taxable income? I don't understand how the value loop can legally close without taxation one way or another.


First of all, you can spend money on things outside your home country (second/nth house, buying a new yacht, etc.) and depending on how those are structured you can avoid that being taxable income. If someone takes a direct distribution or benefit in their country of residence and domicile then yes, those are definitely taxable events and careful tax avoiders pay their tax on these transactions.

Second your intuition is correct, often people do break the law at this point, it's just very hard to detect without files like this which is why the previous Panama/Paradise leaks have led to so many prosecutions and tax recovery actions. They made clear what otherwise was secret.

A common tactic is using the funds to buy property in which you then live as a tenant. In most countries (certainly in the UK) tenancy contracts are purely bilateral and non-public. There is no way for the government to know whether you are:

1) living in a property owned by a third party ownership company that you genuinely have no links to - btw many rich people do this for at least some of their homes so it's not like its an inherently suspicious activity. You can rent whole houses in central London for 10s of thousands a week.

2) living in a property owned by a company of which you are secretly the beneficial owner and paying market rent (to yourself). This may be allowed under some very carefully structured circumstances but usually not.

3) Like 2 but not actually paying rent. Definitely not allowed.

Technically they could find the difference between 2 and 3 if they audited your outgoings but they would first have to have a reason to even start doing that. It's not like you can take a tax deduction for rent, so this doesn't even show up on your taxes, they would literally have to pull your bank records to look for the expected outgoing rent. Telling the difference between (1) and (2) is impossible without the secret ownership information.

Another favourite is to use offshore accounts to buy things like jewellery, clothes, furniture, almost anything that isn't registrable property (i.e. anything other than real estate or vehicles). That is certainly illegal since you're taking a benefit which should be counted as income and taxed but good luck proving that.


Offshore entities can own properties in most open economies. They don't typically get taxed where they own the property or good, but where a profit is realized or an action takes place.

For example, in TFA it's mentioned that the Blairs bought an offshore company that owned a building in London; they really bought the building, but doing it this way allowed them to avoid property taxes in the UK that relate to ownership transfers ("stamp duty"). They could then hire out offices, and if they do that through the offshore company that "taxable income" would similarly disappear. Her Majesty's Revenues & Customs might eventually object to the arrangement, but if the offshore owners are not known, what are they going to do, bulldoze a historical central London property? Obviously not.


> what are they going to do, bulldoze a historical central London property?

Seize the property and auction it off to the highest bidder. The process would be quite similar to a foreclosure. The problem the UK has is more that the stamp duty has countless loopholes. If he doesn't actually owe tax, then legally that's the end of the discussion.

I have little faith that all the loopholes in a stamp tax can be closed. It would be much easier to enforce a property tax system. Events are abstract and ephemeral, but real property is tangible and immovable.

Survey the area to assess a property tax each year. Mail the assessment to the property's address, and include a unique account number for payment. You can audit that all land in the tax jurisdiction has been assessed, and that all assessments have been paid. The only thing you really need to be careful about is what criteria you use for the assessment. Market value is relatively safe for that.


That's effectively what Council Tax was originally meant to be, but after a while nobody could be bothered with the survey activity. They even closed the door to piecemeal re-classification, after enough people started challenging the band their property sat in, by passing legislation that basically states the band is fixed as it is until Parliament says otherwise (i.e. likely forever).


Council tax was never meant to be anything like property tax and was structured specifically to act in a different way.

For example: councils don't actually set their council tax rates by band. They set one rate which is the Band D rate. The rates of the other bands are then set based on fixed %s from that rate and the highest English rate (H) is only 200% of the Band D rate.

The value of the lowest valued band H (based on the 1991 price levels) property relative to the highest band D is 3.6x. So right away we see that as a % of property value the typical household (D is the most common) in any given place pays more than the highest valued local properties. Of course it is also the case that band H is open-ended.

There is then the fact that these are set and collected exclusively locally. That means that some of the lowest council tax rates in the country are in some of the richest places. Westminster and Wandsworth have Band D council tax in the £800s, Blaenau Gwent is over £2000!


> Council tax was never meant to be anything like property tax

Well, it was meant to look like a property tax, while at the same time ensuring it would disproportionately affect the lower classes, for sure. It was a Conservative measure, after all (which Tony Blair was obviously "intensely relaxed about", since it directed money to local authorities Labour controlled, hence it was never repealed). As wikipedia reports: "the Valuation Tribunal Service [...] states that: "The tax is a mix of a property tax and a personal tax".

> They set one rate which is the Band D rate.

Yeah, and they can't even be arsed to figure out if a Band D property in 1991 is still a Band D today - the roof might have fallen off since then, but hey, who's got time to do periodic surveys? Local councils have better things to do, obviously.


Probably stock buybacks. Company 2 then spends the profit on buying company 1's stock, which they basically burn. Stock prices go up and owners recoup value through capital gains.


How do you "burn" stock to raise the price in the home country? Sorry, I'm not following the scheme you're describing.


Company 2 bought stock in Company 1. Company 1 owns Company 2. Compamy 2 purchased stock that confers no rights or dividends.

The money still changes hands. Once you realize enough growth, you do a stock buyback. those stocks you issued to yourself? poof.

The magic of finance.


It boggles my mind that two companies can own each other cyclically like this, but regardless:

I still don't get the "poof" part. So we're saying C2 is paying C1 for its stock, and I imagine that revenue doesn't count as income for tax purposes since C2 now "owns" part of C1 in return. As I see it, that means C1 is effectively getting a loan from C2, putting part of itself as collateral. It can spend the loan to grow, which is nice, sure. Let's say it does that. Now you're saying C1 performs a stock buyback? Wouldn't that mean it has to pay more for the stocks (since they rose in value)? It'd have to bring that money from somewhere... but where? I mean all it can do at this point is pay back the money it got from C2, but then it's even, right? There's nothing left over after that, it's just repaying a loan as I see/understand it.


From growth. Remember, half the point of these havens is to shelter money from being taxable. Nothing else matters. You move it over there for favorable treatment. Company 2 received back money from Company 1 that they invested in, so it's off Company 1's books virtually, but not in reality.

This is the hell created by multi-jurisdictional legal fictions. Short of a multi-national crackdown, being able to nail down the vagueries a bunch of well compensated international accounting firms and lawyers can get up to is unlikely at best.


I mean even if the company grew 10x, it'd have to pay 10x to buy back its shares, so it wouldn't be profiting, right?

If I'm understanding this correctly, there are 2 things I'm taking away from this:

1. Cyclic ownerships should be illegal.

2. The investors (i.e. the public, for a public company) are getting scammed here. But it's not because of tax avoidance, but because company valuations (and therefore share prices) are just utterly meaningless, and people are... too oblivious to this? I mean, a "growth" in valuation would (to me) be coupled to increase in the company's net assets. So if company 1 sells a lot of its product and its valuation rises... that means it's gaining assets somewhere. Either that increase in assets is due to sales revenue at home (in which case it'd be getting taxed normally) or it's the stake it has in company 2, and presumably company 2's valuation is growing. But company 2's valuation is just coupled to company 1's, so there's no logical reason for it to rise independently. If it does, and the company is getting rich that way, that just means to me that people are behaving irrationally and paying more for the same thing, and that's what's making companies richer (rather than tax avoidance)? Alternatively if you look at it as company 2 having revenue and thus company 1's stake increasing in value, wouldn't there be an eventual tax on that money before any person can realize it at home, and thus shouldn't that correct the stock price downward? Or am I completely misunderstanding something here?

Edit: I think I'm seeing one way this works: the stock price does get corrected downward, but not enough to cancel out the growth, since the offshore company did gain material assets. But then who (as in which person) is getting rich without paying taxes at home, exactly? Either C1's shareholders are selling long-term capital gains taxes (in which case the complaint is about long-term capital gains taxes) or they're doing it short-term (in which case they're still paying income-equivalent taxes). Who's avoiding taxes here?


In the case of the US, you keep it offshore until you can pressure politicians to grant a tax amnesty.


You wait for a Trumpesque person to give you a tax-break and then you repatriate the money?


Problem is that if some companies employ these strategies, their competitors are forced to do the same as otherwise they would not be able to compete.

Not true for Apple of course... but an appeal to ethics won't work either, the laws need to be adapted. Business ethics itself is a funny term anyway.


Does this actually work in practice? I think most legitimate countries now impose a withholding for any payment to a tax heaven.


The step here that is illegal is the moment company 1 takes out a high interest loan from company 2.

Company 1's directors have to do what is in the best interests of the company. If they choose to sign up to a high interest loan which will take all their profits, that isn't decision-making in the best interests of company 1. That's the point they can be put in prison.

I just don't quite understand how nobody is prosecuting them...


When they save of bunch of taxes they have done what’s in the best interest of the company


They need to make decisions in the best interest of Company 1 and Company 2 separately.

An action done on behalf of Company 1 which slightly hurts company 1 but provides large gains to company 2 would be illegal (unless they can argue that it was part of a larger strategy to benefit company 1).


I assume the owners of Company 1 would need to bring the case, and if they're also the owners of Company 2 they would never want to.


Sighs a lot like Hollywood accounting


The thing with all of these is that the rich people are probably just as surprised as you are to show up in these leaks in most cases.

When you get barely rich, like single digit millions, the banks will start to offer you "family office" services. They basically just take care of everything for you. You send them all your money and all your debts (even your phone bills and stuff), and they promise to make sure there is more at the end of the year than the start. They invest for you, they do accounting and file taxes for you. You give them limited power of attorney so you don't even see the tax forms.

If you ask how it all works, they tell you it's really complicated and you should just focus on doing whatever it is that made you rich and let them worry about managing the money for you. Sometimes they do ethical stuff, sometimes not, depending on which bank and which consultant you hire.

I'm not excusing the people who are here, just explaining how some people who you thought were good people end up in these leaks.


Do you have a source for this claim? I can buy that they don't do the fraud themselves, they delegate it. But they generally delegate it knowing full well the kind of actions that are going to be taken. Rich guys also have lawyers and are not kept in the dark while a bank does shady stuff they didn't mean.

I also doubt these delegations are to mainstream banks. I think "special services" probably need to be engaged and there's no plausible deniability on what you're looking for when you engage them, even if you ignore the names and number of offshore accounts you run.


I could believe it's true of some rich people.

People who got rich through business or politics undoubtedly know what's being done on their behalf, because they couldn't have achieved their success without financial literacy.

But if you told me a champion boxer, football player or musician didn't know how their finances were organised? That could be believable.


I would like to see a source too (specifically for the "we won't tell you how we do it" part). Even in the BBC reporting, the Blairs were very specific how/why their name showed up in here, so it's not like they're "surprised"


It seems pretty preposterous to me that people could be surprised by finding out they have shady offshore bank accounts and what not. If you have a money person and he's not telling you what he's doing with your money that seems like it would set off red flags.

Regardless of if people really are completely ignorant of their own finances and financial strategy I think they are still responsible for it. If I told a judge that I wasn't paying attention to my toxic chemical collection which I kept on the front lawn next to a neighborhood park I wouldn't expect that defense to protect me from legal liability.


> It seems pretty preposterous to me that people could be surprised by finding out they have shady offshore bank accounts and what not.

I wonder about this. Complexity increases fees, so it's not difficult to imagine that people are willing to offload their finances to advisors, who then use overcomplicated tax avoidance strategies to increase their slice of the pie, as well as lock their customers into their services as much as possible.

It wasn't too long ago that we had a financial crisis caused, in part, by financial products that were too complex to price or analyze for proper risk mitigation.


I like the way you view it. A lot of non-rich people do not feel responsible at all for their wealth management. Some get lucky, and are very happy using their extra money to pay people to keep not thinking about this.


I don't believe this. Do you have not info in that?


I doubt there are such people, they know at least nominally. The thing is, it is not illegal, so unless you re an active politician it doesnt register as something materially unethical


I was very excited when Panama papers came out. Intrigued when Paradise papers leaked. But now? Damning evidence of outright crimes came out and nothing happened. In the UK IIRC it was found that David Cameron evaded some taxes via offshore funds, and? He said he’s very sorry and didn’t mean to, and that was it.

Everyone knew before and after the rich don’t pay taxes. We don’t need more evidence, we need action.


He didn’t evade any taxes. He avoided taxes and did nothing illegal. Same story with a lot of these latest leaks.

Immoral? Debatable. But the lack of action is because of the lack of a crime.

The action should be to propose new legislation that changes what taxes are collected, where, and when.

The main crimes exposed in these are money laundering rather than tax evasion.


I don't think there is much room to debate, this is certainly against the spirit of the law. Problem here is that the legislators would be responsible to change the rules they themselves take advantage of.


> I don't think there is much room to debate, this is certainly against the spirit of the law.

Who cares about the "spirit" of the law if the law doesn't work?

Any half wit can intend to create a law that functions in a certain way (has a certain "spirit"), but who cares if it doesn't do what it's supposed to do?


> Immoral? Debatable.

What is the argument that what they're doing is moral? How is anything about tax avoidance ethical?


> How is anything about tax avoidance ethical?

This is a bit odd for two reasons.

1. Taking steps to minimize your taxes is neither ethical or unethical, it's just basic common sense. It's like choosing to buy the cheaper apple when you go to the store. The whole reason why we have sin taxes and tax breaks is because legislators believe that it influences behavior and so they create this byzantine tax code in order to try to manage behavior. I guess whether you believe contributing to your 401K or claiming the mortgage interest deduction is immoral depends on your ethical code. To me, this is a category error -- if you think financial management can either increase or decrease your morality then you have a very decadent (and broken) moral code.

One can argue that such a complex tax code is bad policy, because it results in such a complex system that you need teams of lawyers to really understand it and take advantage of it, meaning that for ordinary people it's not worth it and the economy as a whole wastes far too much on tax professionals. But that never seems to stop anyone from clamoring for tax breaks for their pet cause.

2. The whole point of globalism as an enterprise is to support (and encourage) cross border capital flows. It is a system intended to allow foreigners purchasing up capital in the home country and home citizens doing the same overseas. These cross border capital flows finance trade deficits (without them, there would be no trade deficits).

But different nations have very different tax codes so this encourages a race to the bottom. Much like outsourcing labor. This race to the bottom effect is not some secret that requires an expose, it is an intended feature of the system. Why I am shocked, shocked, that americans would invest their money in the jurisdiction that yields the greatest tax-adjusted return. Just shocked!

This is why many people (such as myself) are opposed to globalism, but we are painted as silly xenophobes who don't want to eat French Brie. Well, OK, you wanted globalism -- this is globalism. And the only alternative to globalism is nationalism. Now one can make a claim that globalism as a value system is unethical and that only nationalism (or even better localism -- let each region have its own currency and borders and trade policy -- is ethical), but an individual who is stuck in a legal code that encourages and subsidizes globalism is not acting ethically or unethically when he buys a cheap TV from china, a car from Japan or sends his money to the Bahamas, as he is stuck with the tab of globalism (low interest rates, de-industrialization, political unrest, decline of solidarity, undermining of democracy, global financial crises) so he may as well enjoy the benefits -- access to the benefits of low wages in China and to the benefits of low taxes in the Bahamas. If you think one is unethical, then what about the other? And if you are being paid wages or earning returns determined by competition from the world, why not take advantage of cheap products and cheap taxes overseas? You cannot create your own private economic system just because you think the current one is a disaster.

Bottom line, if you don't like this type of tax arbitrage, then put a stop to it by discouraging (taxing) cross border capital flows. It would also put a stop to outsourcing and cheap TVs as well, and you would be instantly painted as a nationalist trade-war fighting xenophobe, but this is how you solve the problem, not by appealing to people to "buy American" or "store their wealth" in America with some faux ethical argument. Appeals to personal virtue to pay more than is needed (whether for TVs or taxes) ring pretty hollow.


Does this argument explain why I can't think of a single country that has put forth a concerted effort to discourage cross border capital flows? I don't think so. If I'm wrong please point out a case study. I think the fact that globalism ends up being a net positive for nations long-term is the reason they prefer to stick to it as a system. I'm not well-versed in economics as a whole, but it seems like PPP is one of the metrics that can somewhat approximate how well individuals in a nation are able to exercise economic power. And it looks like globalism does help increase that if the goods your country produces are uniquely positioned in some way (ie uniquely cheap, uniquely durable etc.). I remember many people predicting that the luxury-good level pricing of the iPhone meant that it would never take off in "non-developed" countries but clearly in 2021, that's far from the truth. I think what people want is access to high-quality and reliable goods/services, rather than globalism or nationalism as a system.

FWIW, I like localism the most due to the psychological/cultural/scaling effects that it produces and hopefully, there's a minimally harmful way to get there without getting stuck in a nationalist rut.


> Does this argument explain why I can't think of a single country that has put forth a concerted effort to discourage cross border capital flows

This is a complex topic in a country where many pressure groups are fighting over policies.

In terms of immediate winners and losers, on the pro-globalism side, the winners are:

* investors that benefit from the race to the bottom

* the professional and managerial classes whose salaries rise as companies become more centers of management/coordinate/design with productive labor formed elsewhere

* service workers in select urban areas dominated by business services and consulting sectors

The losers are:

* blue collar workers

* service workers in smaller urban areas and rural areas

But in terms of long term effects, the losers are the vast majority of society, because de-industrialization creates a lot of social pathologies as we became a society with a shortage of meaningful work, the decline in solidarity hurts the nation's ability to coordinate to solve problems and deliver services efficiently, and the global supply chains are fragile, with many points of failure.

But the larger point is that the proponents of globalism are those who espouse liberalism, from the university professor who believes humans are isolated machines that maximize lifetime utility to those committing street violence against "fascists" -- that is, anyone who believes in national solidarity. This array is effectively the shock troops of globalism. It is one large movement fundamentally rooted in the idea that the purpose of life is to enjoy yourself as much as possible before you shuffle off to the grave, rather than being a part of a chain of being with your ancestors and grandchildren, in which the purpose of life includes making sacrifices for your group in order to contribute to your group's overall long term success.

Thus a society gripped by liberalism is one in which everyone defects. Consumers don't buy american made goods out of a commitment to the wellbeing of their society. Companies don't hire american workers out of a commitment to their fellow countrymen's wellbeing. Taxpayers do whatever they can to offshore wealth. It's everyone for themselves, and those types of societies just don't last very long. This is why we see liberal democracies in Western Europe and North America being rapidly eclipsed and outcompeted by well organized nationalistic societies in Asia.

It is for these reasons that societies have historically put up boundaries and exacted punishment on defectors and adopted institutions to inculcate loyalty and patriotism. When those borders are knocked down and the institutions subverted, don't be surprised when you are stabbed in the back by your countryman who doesn't give a sh*t that you and he are citizens of the same country.

> And it looks like globalism does help increase that if the goods your country produces are uniquely positioned in some way

You are talking about gains from trade. The issue is not gains from trade but trade deficits -- e.g. one way trade. These large Global capital inflows are not used to finance trade, they are used to finance trade deficits.


Without meaning insult, I think you should review the outcome of the Panama papers leak again – it may have been a while. There has been a staggering amount of legal and financial recourse from the leak in countries spanning the globe.

Frankly, I don't know of much else like that leak in history in terms of its global impact.


No offence taken - would you mind sharing some details of the fallout you mention?


>We don’t need more evidence, we need action.

Are these exclusive?


They’re not, and sure, more evidence is not a bad thing.

Or is it? My reaction this time was “meh, this again”. I’m more and more desensitised. If anything, I found it demoralising.

So maybe it is actually counterproductive.


> I’m more and more desensitised. If anything, I found it demoralising.

Reminds of this explanation of the soviet era 'hypernormalization':

"The word hypernormalization was coined by Alexei Yurchak, a professor of anthropology who was born in Leningrad and later went to teach in the United States. He introduced the word in his book Everything Was Forever, Until It Was No More: The Last Soviet Generation (2006), which describes paradoxes of Soviet life during the 1970s and 1980s. He says that everyone in the Soviet Union knew the system was failing, but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the pretense of a functioning society. Over time, this delusion became a self-fulfilling prophecy and the fakeness was accepted by everyone as real, an effect that Yurchak termed hypernormalisation."[0]

[0] https://en.m.wikipedia.org/wiki/HyperNormalisation


Then, what are the purposes of the leaks. Street cred for the hackers, a moral checkbox off the list for a leaker, attempt at embarassment for the individuals/firms/banks involved?


Well, kudos to the leakers, and they are doing their bit, sure. I guess people with a penchant for investigative journalism aren’t the same ones as lobbyists, politicians etc. They are doing good work.

It’s more that without someone taking it to the next step, it is in vain. It feels like yet-another report in what the world will be like if we don’t stop CO2 emissions. It will be very bad. There are so many reports like that, I dont bother reading them anymore. More desertification. More hurricanes. Hotter summers, colder winters. Droughts and floods, death and disease.

Meanwhile CO2 emissions are still increasing YoY.


You know damn well what he meant.

* We don't require additional evidence, we need action.

What the fuck is with HN these days? Quit the snide bullshit.


Not the person you’re replying to but it was just a three word reply, which could be interpreted in whole bunch of different ways, so it feels like you may have made a bit of a leap here… :)


The commenter was succinct. They are pedantically subverting and misinterpreting OPs comment into an argument about exclusivity, when in fact OP displayed no such idea. It's a deliberate sleight.


i agree, thanks for speaking out


No problem, thank you for appreciating it. I try my best to be courteous but when I see someone acting disingenuously I call them out.


Users like that get the impression that being pedantic makes you look intelligent.


Or maybe they think that words matter and if you care enough about something to be calling people to action maybe you should care enough to phrase your words so they're less ambiguous.

Not everyone reads things the same way, even if you think it's the obvious and only way to interpret something. If they did, there would be a lot less misunderstandings online.

Someone pointing out ambiguity is possibly helping you refine your point and message, so if you encounter it maybe try to read it less as someone being a pedantic asshole and instead someone helping you express your message more successfully. At a minimum it will likely help you keep a good attitude or emotional state, which is nothing to sneeze at.


It was rhetorical and snide. We all know there is no exclusivity. OP is just asking for action for the amount of already acquired information. He isn't saying we shouldn't acquire more evidence.

There is no ambiguity, just verbal gymnastics played by those who want to comment in bad conscience as if they have somehow furthered the conversation.


>the rich don’t pay taxes

The top 10% of taxpayers pay 70% of the tax. Focusing on Tony Blair's 300k Stamp Duty avoidance is a penny-rich, pound-poor move.


I've wondered a lot about this with the Snowden and Wikileaks stuff, and I wonder about it with this topic too: the most salient part of this story, and about Panama Papers etc. before it, is how small a dent it seems to make in the discourse, and in the world as a result. At best, these stories get a good chunk of the airwaves for a couple of weeks, and then it's on to the next thing.

In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.

But I look around after reading those books and wonder what makes us so different. It's weird to live in this era. I read a Guardian article like this and look at the staggering sums, this entire "shadow financial system" devoted solely to one notion: I'm going to take as much as I can, in whatever way that I can, regardless of legality, and I'm going to give nothing back because I sincerely don't believe I owe anything back -- oh, and I'm going to keep it all a secret.

And I look around and not only don't see any riots; I sometimes get the feeling that people are actually envious, sometimes even respectful of the ingenuity it takes to manufacture these schemes. It's tough.

The only silver lining I can think of is what all the secrecy says: we're not just doing this in the open because we're still afraid we'll end up like the Romanovs if too many of you get angry. I think that while they're still afraid, there's still some hope.

EDIT: Reading some replies. It's weird to have to say this to such a smart crowd, but I'm not advocating riots as such; I'm advocating a substantive response. Of course riots are "bad" in some sense, but my observation is really about the odd contrast between the huge size of the "stimulus" (theft of wealth, much of it yours, on a staggering scale) and the tiny size of the "response" (newspaper articles and web forum discussions), especially when contrasted with other historical periods. So while I wouldn't "want a riot", seeing one would make me go "well, that makes sense".


> “how small a dent it seems to make in the discourse, and in the world as a result”

I used to think this. But now I think: maybe the ‘dent’ I’ve been looking for is essentially just excitement and hype, which isn’t change. The narrative that change happens through the mass public getting angry, forcing politicians to respond, is overblown at best. I think the boring truth is that nearly all progress in this area (and there is progress) happens through countless bureaucrats diligently working for years on court cases and regulation changes to make it harder for people to get away with this stuff. For such bureaucrats, a leak like this is going to be relevant and valuable for years, long after the media has moved on. The people implicated in the leak didn’t want the leak to happen, and there’s a reason. Sure, most are probably too powerful to get prosecuted and put in jail, but it does curb their options for future shenanigans, and they will probably lose some money. Sanctions do work. I think it’s probably always been this way too – the exciting, romantic parts of history (marches, revolutions) are the exception, we just pay more attention to them.


I like this in outline -- the notion that what you could call the "acute" effects (e.g. its impact on the news cycle) of a story like this may be more visible and less important than its "chronic" effects inside institutions, where people take more serious notice. (That's if I'm reading you right.)

I guess what I'm less sure about is the inevitability that you're painting it with. Seems a bit "whiggish" [1], in my reading, if for no other reason than seeing brighter days on this front in the past than in the present and immediate future.

[1] https://en.wikipedia.org/wiki/Whig_history


Yes, that’s a fair reading. I would add that it’s vitally important for the journalists to get the ‘acute’ part right, being mindful of media cycles etc, to properly establish the the leak in the public record and in the minds of relevant parties such as investigators and other journalists. But yes, the real work gets done in the years following. It’s lots of work by lots of people on lots of boring things. It won’t be cinematic. There won’t be a catharsis.

Wikipedia has an article on outcomes from the 2016 Panama Papers [1]. Lots of boring things.

I see what you mean about whiggish (good word). But well, I do think it is more or less inevitable that there will be outcomes that certain people don’t want, otherwise they wouldn’t have been trying to hide their finances from regulators. And I would speculate those outcomes will probably be pretty positive, if added up together, such that the journalists and whistleblowers involved in the leak should feel immensely proud. But my main point is that the extent of general public outrage over the original data leak is irrelevant to how positive the eventual outcomes will turn out to be.

In which ways do you think it was brighter on this front in the past?

[1] https://en.m.wikipedia.org/wiki/Reactions_to_the_Panama_Pape...


> The narrative that change happens through the mass public getting angry, forcing politicians to respond, is overblown at best.

It used to work. As recent as a couple decades ago at least. The Arab spring that swept Middle East and parts of North Africa in 2010s comes to mind.

Protesting and going to the streets, depending on where you are in this world, feels more like a dying art today rather than the stuff of revolution we've associated them with in the past. Feels wrong just typing that.

Maybe we've just become insensitive to it all and do not have the will to fight governments.

Maybe our collective thoughts and ideas are more homogenous than ever before.


As someone born in the eighties I'd mention that it has actually gotten less unthinkable that mass riots happen in the western world as I've grown up. If everyone's reaction to January 6th surprised you it's because when most of the middle-aged working folks (including the folks in the media) were growing up this was unthinkable. The Arab Spring happened "over there" and ditto for North Africa - it's only recently that we've had substantive protests domestically.

The WTO always brings a decent sized chunk of protest when it comes - but the biggest protest in my memory is Occupy Wall Street which ended up being incredibly peaceful and polite and thus absolutely ignored by the media. The largest one before that was probably the '92 LA Riots which I was born just late enough to not notice.

Most of the more media grabbing protests of my life time have actually been sports related - the Red Sox winning and the Stanley Cup Riot. I don't know how true your statement really is.


It's very simple - we are well fed.


This is my thought as well. We've reached a plateau where the average individual's circumstances are so comfortable that violent political action just doesn't make sense psychologically. The pie is so large that, even though we are getting a smaller and smaller slice compared to the elites, it doesn't trigger the type of primal response it did in the past.

Should we hope this continues? Probably. If the situation deteriorates to the point that revolution becomes palatable the result would be mass human suffering.


As the Romans said, "panem et circenses"; nowadays in the first world, even the relatively poor classes have access to a plenty of cheap entertainment and food; it's perhaps not good but it's enough to take off enough of the edge that people are merely angry but not so desperate (for the masses - individual exceptions of course happen, but they don't matter) to actually go ahead and risk their lives trying to change everything.


Actually it is even simpler than that - we increasingly hate our neighbor and therefore feel compelled to turn to the state for help, and view crusty rich old politicians (who work for the wealthy elites) as their saviors.


It is not dying art. Protests are now part of establishment, and are protected by police!


The revolution will be sponsored.


Up to 10 million people took to the streets on 15-Feb 2003 to protest against the Iraq war[0], including 3 million in Rome alone (the largest anti-war protest in history). It changed nothing.

[0] https://en.wikipedia.org/wiki/15_February_2003_anti-war_prot...


Honestly it's always been an implicit "threat of violence". I.e. it's an olive branch being extended to the powers that be, telling them that "we're willing to remain civil, for the time being, but we're giving you a stark warning that we're also willing to organize into large groups (demonstrated by the protesters mobilizing at all), and become violent if things don't change.

The thing that's changed is that the people in power are no longer taking the implicit threat seriously. The dog is snarling at them, yet somehow, it's unthinkable that they're about to be bitten.


> Maybe we've just become insensitive to it all and do not have the will to fight governments.

I don't think we have - the outrage machine seems to be growing. Wasn't there widespread violent protests for most of the year leading up to the election last year?

The problem is for the most part people's outrage and hatred has been redirected toward their fellow citizen and away from the ruling class, which is clearly not a coincidence.


Protesting in the streets, the way it's commonly understood today, is basically just a show. Why would the powers that be actually care about it?

A nation-wide strike, now that would get attention.


> Protesting in the streets, the way it's commonly understood today, is basically just a show. Why would the powers that be actually care about it?

Because that kind of show is how the ideas it promotes are normalized, which is the foundation on which other action is built.


Is it, though, in this day and age? It seems that, in the developed world at least, ideas are promoted and normalized via mass media and/or the Internet, and protests are rather the outcome of than than the cause.


> Is it, though, in this day and age?

Yes.

> It seems that, in the developed world at least, ideas are promoted and normalized via mass media and/or the Internet

Sure, and mass protests are how marginalized groups leverage the selection biases of the mass media for their message.


> As recent as a couple decades ago at least. The Arab spring that swept Middle East and parts of North Africa in 2010s comes to mind.

Which country has been better off after Arab spring?


In a way, it reminds me of the aviation industry, where regulations are put in place because something happened in the past.

At the same time, as regulation gets more complex, it creates new ways to be exploited. The same way more source code means more possibilities for bugs. The bureaucrats play a catch-up game and they are always at a disadvantage.


"At best, these stories get a good chunk of the airwaves for a couple of weeks, and then it's on to the next thing."

This is the true power of the media. It isn't whatever lies or truths they may tell, though those are impactful in their own way... it is the way they decide what we think about at all. The true power of the media is to inflate some tiny incident that happened to one person to a national-scale, multi-week crisis... and to be able to take national-scale, multi-decade crises and bury them to the point that it's right down there with "conspiracy theories" to think about them.

If you pay attention, you can see this sometimes in action. They'll push a story expecting a certain reaction, but if they don't get the reaction they expect, poof, it's gone. There's always a huge pool of stories to draw from, far larger than they need to send any message they want without having to necessarily lie at any point. They just have to control the spotlight of attention to get the results they want.

Sometimes HN denizens talk about breaking out of the filter bubble. This might be a better way of thinking about it... instead think of it as breaking away from the attention spotlight being pushed on you by the media. Almost the entire world is taking place outside that spotlight.


The media needs something engaging happening to have something to continue to report on. (Even if that thing is just public figures reacting to a thing.) If they lob a bombshell and see it explode, but there are no further consequences to that explosion — no “sequelae”, as the medical profession would put it — then they can’t very well continue to report on the explosion.

What makes further consequences happen? Powerful people taking an interest. The media is the fourth estate, but only insofar as their actions trigger reactions in the first-through-third estates. For a news story to “continue to happen”, it needs a patron in a position of power to actually care about what was reported, and act in response, in a media-visible way. News coverage is, and always has been, a feedback loop between journalists and the public figures they cover.

Which implies that if something is a “taken as a given” practice among pretty much everyone with power, then reporting on it won’t get any powerful patron riled up, and so won’t get anything done to feed back into the news cycle.

Democracy continues to function, separately from all this; voters read the news, get angry, and pressure their congressman, who then pushes for change in the house, causing ripples in the bureaucracy. But none of that is able to be framed in an incendiary “continuing coverage” format, because there is no heroic narrative to democracy, only the snowball effect of small actions — so the regular news media doesn’t attach to it at all, so it seems to just drop off the face of the Earth.

But it’s still happening; it’s just happening in a way you can only perceive with “I watch C-SPAN” glasses on.


I used to have so much faith (naively perhaps) in the major news networks. Maybe they used to be bastions of truth but I feel that is not the case. They are just a mouth piece of the elites at this point.

They have us divided and fighting each other so we're too busy to see the real cause of our discontent.

So much truth has been censored and replaced with lies in the last 2 years. But no one is calling them on it? There isn't even an apology or a retraction.

It's not news.

It's propaganda.


Real news is expensive, that is why so much of the news has turned into opinion pieces - it costs almost nothing to publish people’s opinions but it grabs eyeballs for advertisers just as well as real news.

When it’s not opinion pieces they are usually promoting someone’s book or hyping up some Lifetime special.

Even before reporting really started circling the drain I always noted how wrong the news got technology stories, and I wondered if all the other topics were just as off.


> Even before reporting really started circling the drain I always noted how wrong the news got technology stories, and I wondered if all the other topics were just as off.

https://www.epsilontheory.com/gell-mann-amnesia/


Yep, and the opinion pieces are just advertisements in disguise. So who are the advertisers paying for the content. They don't care about truth. It's just about profit or control.


Lowering quality and trading on your brand works in the short term, but long term, more and more people just quit those news channels, or quit reading the news altogether.


Yeah, it has gotten bad in that regard. Sunday morning shows is probably the least amount of 'book for sale' moments, but they are still there.


The underlying issue is that a lot of people can’t distinguish between news, opinion, and paid advertising. Not that the people are dumb, its just not a skill you are born with, and it is not something widely taught in schools. Instead of not watching the news they are getting wrapped up in whatever opinion their favorite Fox/MSNBC/etc personality is pushing. It is great for places like Buzzfeed but seems to be a loss for society overall.


I've said to my friends that I think America is in a strange place in history, where bread and circuses have become industrialized enough to truly anesthetize people's political will.

People have Netflix, the Internet, and video games all cheap and at the touch of a button; opioids, antidepressants, and illicit drugs are socially acceptable and easily obtained, sometimes even at a government subsidy; and almost nobody is physically starving or lacking rudimentary shelter (even the poor in America are fed, clothed, and housed to an extent almost unimaginable compared to the shattering destitution experienced in most of human history).

This was not the case in the past, when so many more people were subject to backbreaking manual farm and industrial labor, the real chance of starvation, malnutrition, or outright poisoning from unregulated industrialized food, cramped conditions in drafty, moldy buildings, grim disease, and worst of all, nothing to distract you from it all. One's free time was spent thinking about how unfair it all was, not watching TV. When people are stuck at the bottom of Maslow's pyramid, they have nothing better to do then get mad and start rioting.

But as long as the bread and circuses continue to be effective, the will to riot in the streets is gone. Who cares if a billionaire sneaks in a second yacht on the side? I can just open a bag of Doritos I bought for pennies and switch to the Kardashians. The strange thing is, would we not consider this positive progress?


A lot of people also have, arguably, less control over their circumstances than ever before.

Many Americans are effectively wage-slaves - unable to quit their jobs, because they rely on the income and have nearly no savings.

Rent has to be paid. Food has to be bought. Car insurance, taxes, dentist appointments - you can't stop making money, because you can't stop paying money.

Moving costs an up-front investment that you don't have. Land is expensive, and even if you had the skills to build your own lodging, it has to be up to code.

Pivoting to self-employment might seem easy in the age of Uber, but the reality is that it is incredibly difficult to earn yourself a living without playing by somebody else's rules. In the past, you could decide to earn a living as a fisherman simply by fishing and selling your catch. Handy with a hammer? Supplement your income on an ad-hoc basis by helping out your neighbors.

The stress of dealing with everyday life can be so overwhelming that the only thing a person has juice left for at the end of the day is turning on the television, scrolling twitter, and eating those Doritos. And that television (and even twitter) isn't telling you any ways out of the invisible, ubiquitous cycle you're stuck in.


I’ve been reading some oral histories from early/mid-20th century, midcoast Maine in the last month.

One theme is scarcity (and the ingenuity borne of it). People didn’t have a lot, so they needed to be clever with what they had. They worked incredibly hard, and invented/sought out tools to make their lives physically easier. They toiled for most of their lives, but they saw their known tool get easier as time went on (upgrading from jute to nylon netting, hydraulic winches instead of manual cranks, sonar instead of trial and error).

The people who worked (what seemed to me to be) the worst jobs had a common refrain: “the best thing about X is nobody tells me to do <hard thing> at <unreasonable time> in <unreasonable conditions>. I’m my own boss, make my own decisions, and it keeps me happy.” They owned all the highs, lows, and war stories of business ownership.

Also, a fun anecdote. They asked one guy “what would you tell somebody young who’s new into fishing?” He thought hard, then said “I would tell them to study hard and become a doctor or a lawyer or something, if they’re interested in money”. Made me chuckle!

Anyways, this is to say that it’s always been hard to seek out self employment or total self sufficiency. Generally, you could always trade off comfort for autonomy [1]. Nowadays, we as a society have made inhabiting that material discomfort nearly illegal, as you imply. We raised the floor of material suffering, but the emotional and psychological floor is only elastically attached to that material floor, with an elasticity coefficient that seems to vary widely from person to person. It seems to have been a monotonic transformation so far, but time will tell.

[1]: https://www.granolashotgun.com/granolashotguncom/hp5pmb0n95u...


> Many Americans are effectively wage-slaves - unable to quit their jobs, because they rely on the income and have nearly no savings.

Specifically in the USA it's even worse, since jobs are linked to healthcare.


I did mean the USA, my apologies for the confusion. We here in the US often forget about the rest of the Americas.


And it's not only in the USA. For the last 15 years I have seen my country Mexico fall deep into violence, killings, narco state, blatant corruption and abuse from the people in the government.

And nothing happens...

Time and time again someone I the "high society " gets killed, there are a couple of marches and everything stays the same. It's as if the actual majority of the population was fine living in this shithole.

It's so depressing.


Brilliant comment, my sentiments exactly.

Just to add on: I also believe that this is why we see virtue signaling so strongly today. The impact of one’s actions is quite secondary, for all the reasons you mention. So the illusion of change is just another circus for the mind to pass another hour.

I still think we live in the greatest point in time in human history, but this is a super interesting and equally concerning possibility.


There is a much easier theory. Democracy converges to an acceptable situation really quickly, then sits there.

If people are happy with the status quo, and it turns out that they were wrong about the nature of that status quo ... that still isn't necessarily a reason to do anything.


"Representative democracies" train people to be apathetic.

Since birth they are made to believe that the miraculous democratic republic they live in gives them agency, and that the reason they actually don't have agency is because their fellow citizens are stupid and can't vote for the right things.

The result is a feeling of justified helplessness. There's no feeling of outrage at the greedy tyrannical ruling class, because after all either you or your neighors "chose" them.

And if taxation laws are unjust, it's your neighbors' fault. They voted for red while blue would obviously have your best interests in mind. Nevermind the fact that both red and blue are part of the same wealth and social class, who benefit from the same laws.


Democracy is very successful in preventing political violence. Violence is incredibly destructive to people’s real daily welfare.


It's also incredibly successful in destroying social mobility, causing people to be stuck in ever-increasing levels of poverty - which is pretty destructive to peoples welfare too.

Not to mention it prevents political violence at the expense of causing extreme violence in foreign nations. As long as its not us, right?

I would say with this that unfortunately democracy = capitalism in the world we live in. And its really capitalism that causes those things, rather than democracy itself. I dont want to give the impression I hate democracy as an idea, just how we've implemented it.


The idea that there are "ever-increasing levels of poverty" in western democracies is transparently false. Would you like to try to provide some evidence for that?


> "ever-increasing levels of poverty"

people who say this are actually not saying the literal meaning of that sentence. I believe they mean that they observe ever increasing levels of wealth amongst some people, but not themselves or their friends/peers. Therefore, they equate the fact that they are not at the same relative level of wealth as some wealthy people, and thus, conclude that it must be that poverty is increasing.


And people who say this in response think that just because overall quality of life is increasing on average the people on the lower end of the spectrum cant be in relative poverty


> It's also incredibly successful in destroying social mobility.

I find it difficult to agree with this sentiment. Social mobility might have decreased in the last four decades. But in the longer perspective there has never been a more egalitarian and meritocratic social structure than in our time. And that structure exists mainly in the democratic states of the world.


OP was talking about representative democracy specifically, not democracy in general. There are other ways to go about it. In fact, there are ways to go about representative democracy that are drastically different from the status quo, e.g. https://en.wikipedia.org/wiki/Delegate_model_of_representati....

And there are democracies out there today that aren't capitalist, in the true meaning of that word:

https://en.wikipedia.org/wiki/Rebel_Zapatista_Autonomous_Mun...

https://pdfhost.io/v/Hrr2IgtuS_SocialContractoftheDemocratic...


> "Representative democracies" train people to be apathetic.

Is there any evidence that there is any system of government that does so less?


Not yet but i'm hopeful about ideas like liquid democracy https://liquidfeedback.com/en/


So what's better?


Personally I think Democracy could be nice. I think there are systems of governance that can allow everyone to have agency on their life without necessarily having to be rich enough to passport-shop.

Calling our democratic Republics simply "Democracy" is another cool helplessness-inducing newspeak trick. That language implicitly positions the system on the extreme-end of citizen-agency, so logically everything else must be more authoritarian.

In fact, assuming you live in one of these so-called "Democracies", think about how much your country's laws and policies impact you, and then think how much effort and input you provide to deciding those laws and policies. The ratio is most likely ridiculous.

We always say "direct democracy doesn't work because people don't care about every issue", but there's an universe of possibilities between Democratic Republic ("chose between red and blue every five years") and simplistic direct democracy ("country-wide majority vote on every government decision").


I'm open for alternatives and improvements on what we currently have. I still don't feel very clear after reading what you just wrote. I don't think the US has a pure representative democracy (citizens vote directly on many issues) and I also don't think representative democracy inherently leads to a binary red/blue decision, as I think number of political parties is often determined by the particular rules of the election process.

Do you have any suggestions on how to improve the system?


Not the original poster, but whenever the topics comes up I tell one of the following semi-jokes ( semi, because I am more and more convinced we should try at least one ):

1. Automatic jail time for anyone, who held public office after they leave on the assumption that must have done something. Side benefit: prisons would improve drastically.

2. Absolutely random election for every office in the land. This should spice things up. Side benefit: we would quickly find out what exactly they higher ups want to do about overpopulation of the planet.

3. Term limits for congress. It will never happen, but it is nice to dream.


Haha, I'm not sure about #1, however I like #2 and #3. I think sortition (#2) could provide new perspectives and help us know whether we like our current system or not.

I think overall I would prefer more short-term legislative experiments—the impression I get is that people (especially at the US federal level) try to write law or create programs ostensibly for the long-term, and I'm curious what a short-term experiment with reflection and re-evaluation would look like. E.g., trying sortition for one two elections, or a law that establishes term limits but has an expiration date.


Liquid democracy in 60 seconds: https://www.youtube.com/watch?v=Xln9CTzPbck


Liquid democracy is designed with the idea that people don't want to worry about every issue, but should be allowed to change their 'proxy' for whatever issue at any time they please not only election cycles. My representative should be registered to me and if I want another one I just pick one. https://liquidfeedback.com/en/


I see some potential upsides to this—flexibility, localized decision making, etc.—and am curious, what downsides do you see coming from it?


Switzerland


Why Switzerland?



I hear what you're saying, but I don't think anyone is surprised anymore that the rich and powerful are manipulating the financial system. There's also a sort of unreal, weird aspect to these leaks. I get the feeling reading the article that there's either a lot they're leaving out (possibly just because it's too soon for them to have combed through all of the information) or that these leaks are orchistrated in some way to make certain political opponents look bad while other prominent politicians remain un-named and unscathed. I just get a distinct feeling that while yes, this stuff is likely quite true, it's purposely not complete (not blaming The Guardian here, I'm thinking the leakers are maybe leaking selectively).

They mention King Abdullah II of Jordan, but how likely do you think it is that there could or would be any consequences for him? It seems highly unlikely.

Also, they mention that Putin is not named directly in these papers, but we can be pretty certain that he's been involved in all sorts of financial skullduggery. Yes, they say that some of his close associates are mentioned, but even if it can be tied directly to Putin with 100% certainty it would have little to no effect in removing him from power as his power over Russia at this point is too strong for such allegations to have any effect.

And Who benefits from making Zelinskiy look bad?

EDIT: Maybe we're not more shocked because we suspect that if we knew the whole story it would actually be much worse than this?


I think about this exact thing a lot. Of course, I have no evidence for it, but it's always on my mind in a story like this. It's always a certain slice of the global elite being embarrassed in the stories, isn't it?


Also suspicious that not a single person from the US is mentioned in these leaks.


> Yes, they say that some of his close associates are mentioned, but even if it can be tied directly to Putin with 100% certainty it would have little to no effect in removing him from power as his power over Russia at this point is too strong for such allegations to have any effect.

Very simple, USA orders global sanctions on the guy, and we will all see what next stupid thing it will provoke him into.

All these Magnitsky acts are silly, and useless when they keep going against accessories to the criminal regime, while not going against that criminal regime itself, and especially the chief motherfucker in charge.

The few times USA has ever attempted to sanction heads of states personally were few African states, Norko, and Philippines


>Putin is not named directly in these papers

yes that's absolutely damning. typical Putin /s

can you share more of your conclusions based on absence of evidence?


They’ve sedated us. Compared to the past you mention we live long lives, work comfortable jobs, have all we can eat media at our finger tips and therefore aren’t all that affected by the dodgy dealings of the elite. We’re comfortable enough with too little to gain through uprising. For any change against the elite to take hold you need a large group to rise up against them - and even the poorest amongst us in the west have smartphones and the other trappings of a comfortable enough life. Why risk losing that or facing any discomfort at all when we can just get on with things and ignore the corruption?


One way of thinking is that it's not that bad. The elites have to provide a minimum quality of life for everyone. People will naturally want more and more so that bar will rise over time. So long as elites provide this their reward is corruptly embezzling money and avoiding taxes.

Obviously I'd prefer it if they obeyed the laws and faced justice, but that seems not to be the world we live in. I'm not going to risk my comfortable life rebelling against them to make it more likely either. Instead, maybe the right move is to just keep pushing the quality bar higher.


what's on the other side of taking down a relatively (to the past) well run democracy? Do people actually think there's a utopia in anarchy? It will just be the rise of a different set of elites.



Depends on what the people do with it. In Pakistan, the ruling prime minister was deposed due the investigations initiated by the panama papers, and the new prime minister who came in after him, stuck to his anti-corruption narrative by getting rid of people in his cabinet who were proven corrupt.


And it looks like his chiefs are named..


It is definitely weird. It might be the fact that the average person today is so far removed from the events and their life just keeps going. Why expend energy on rioting when everyday life is fine? We all have a ton of other stuff to do.

On a sidenote, this is why I always preferred Brave New World over 1984. Easier to keep the population in control by keeping them satisfied.


Every day life is fine enough, and the majority has something to lose if they do act out. That threat to take what people have away is what works.


> In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages.

Read better history books. A bunch of people yelling into the air is not how change is effected.

Really the culprit here is the French revolution, back when things were physically rooted so if you could storm the palace and burn your debt the debt would really be gone. All the French organs of power were located in this city filled with seething people. But that is not the world we live in today. If you storm the whitehouse, you just trespassed on a famous building, you haven't captured the center of power. If you tear down a statue, you just lose popular support, you are not overthrowing anything by attacking the physical statue.

Power is not in buildings and it's not obtained by yelling.

Moreover the resentment of incredibly privileged people complaining that they are not as privileged as someone else is not how you gain popular support.

Yes, envy is still a powerful motivator, but the achillees heel of envy is that it's hard to unify a group of people who are driven by resentment. They constantly turn on each other. It's a very tricky thing, and if you are a would-be Napoleon, then shouting at birds isn't how you convert envy into a stepping stone for power.


People aren't going to riot if their lives are pretty good, regardless if others are cheating the system. Bread and circuses.


Yeh, this is it. Soma for the masses in the form of Netflix, cheap fast food, booze, legal drugs…


> booze

YMMV, but I'm 2L deep on local beer and it's not making me trust The Man yet.


Are you out in the streets, or looking for the truth in the bottom of a bottle?

If it isn't the former, the plan is working technically.


The man doesn't care if you trust him as long as you aren't getting in his way.


People kind of are rioting, though. The election of Donald Trump (and the rise of populist parties across Europe); the January 6th capitol riot; the Black Lives Matter movement - whatever you think of these things, they're all connected at some level to a deep-seated feeling of social injustice. Perhaps we're only at the start.


No, they're just going to try and cheat the system because 'everybody does it'. It sends the wrong message that corruption is okay.

I like the photo of Ilham Aliyev and his wife though. He looks like a villain from James Bond movie.


It's unsustainable, so people are waiting for the system to collapse. A few will riot, some will try to accelerate the collapse and benefit from it, of course, but most will wait and see.


I had a very similar thought. Kinda funny if it weren't so bleak.


I agree with you on the first sentence, but I don’t think it’s necessarily bread and circuses. Just peace and prosperity. Pax Capitalisma if you will

Bread and circuses was politicians getting into debt or Emperors dilapidating the treasury to buy the support of the masses, I don’t think that’s really the case here.

It’s more that if people are prosperous and safe they stop caring enough


>Bread and circuses was politicians getting into debt or Emperors dilapidating the treasury to buy the support of the masses, I don’t think that’s really the case here.

I would like you to think about this paragraph.

Now think about UBI. Now think about Modern Monetary Theory.

I see an attempt at distinction without a difference.


We have plenty of food and tv to watch and our phones to look at. Complacency is so high. Someone that is hungry and bored finds taking to the streets for a riot compelling because they have nothing to lose.

I find this complacency we have bizarre because the average working poor person seems pretty miserable looking at their phone and eating fast food. The Panama Papers could offer clues for why they work so hard and never seem to have a single penny at the end of each month after the bills are paid. But the Big Mac and the Juul Pod and their Facebook feed makes them too tired right now to care…there’s a new show on Netflix a friend told them about and maybe that will make them happy for a few hours.


One thing I'm curious about is if billionaire money is actually worth the same as our money, it seems like a sink. Once enough money is in the same place, moving it causes impacts that could devalue it. I mean you can buy cool boats(ships) and never lift a finger again in your life, but it's not actually usable on the scale we think right?


It definitely is. Jho Lo is a great example of this. He burned through billions, with a capital B, in only a few years time. Boats, houses, financing film projects (The Wolf of Wall Street, you can’t make this up), gambling millions of dollars at a time on single hands of blackjack. A member of his entourage abandoned the life because he couldn’t emotionally handle watching Lo spend more on bottle service at the clubs in a single night than his entire extended family would ever earn in their lives. I think most rich people are just relatively staid in their spending, despite the multi million dollar homes and all that.


That's why you move it in weird ways. Like fine art and crypto.


That's what charitable foundations/trusts are about.


"it ain't great, but it could be a lot worse..."


A riot is just going to make my life certainly worse for the slight chance of making someone else's life worse for reasons that really don't effect me.


I recently learned that my go-to park in Berlin, Gleisdreieck Park, was supposed to become an Autobahn in the second half of the last century. Protests have stopped it finally in the 90s [1]. Nowadays, Berlin is enlarging the Autobahn eventually leading to the removal of night clubs and nature. Why is the protest so small this time?

[1] German only: https://de.wikipedia.org/wiki/Park_am_Gleisdreieck


About 40 years ago (aged 10) I watched a hedgehog wander around a grassy area near the Brandenburg Gate. If you recall, that monument was part of the delineation between East and West. The hedgehog was walking on a minefield. Of course it was too small to set off anything but even now I remember it.

I was a British Army brat and we were stationed in Rheindahlen near MG at the time. The Berlin Corridor was pretty grim. It was a long straight concrete road with barbed wire fences on both sides. At the Berlin end we parked up in a large concrete plaza and presented passports through a metal hatch. Then we were allowed into the city. Berlin in 1980. I really wish I was older and could give a better impression of the place at the time but there are probably plenty of writers who can do the same and far better. It seemed to me at the time to be the same as any other (West) German city but a bit bigger! I think we were allowed a short trip to the East side via CP Charlie.

The Berlin I visited back then had bigger fish to fry than a contentious autobahn!


> how small a dent it seems to make in the discourse

"The discourse" is increasingly unglued from any kind of ground truths. The pandemic has just made that far more obvious. It's just people refighting the same wars.

> Or, you know, riots.

The US had a huge number of riots over the last year, and violent (but as yet unarmed) protestors stormed the federal and some state capitols. (There was also armed but not violent protest, https://www.bbc.co.uk/news/world-us-canada-52496514) Several cities briefly had "autonomous zones" and at least one police station burned down.


Yes, and none of these riots were about anything related to the economy.

In fact, it's precisely during this time that the Feds were hitting the printing press the hardest, directly increasing wealth inequality and thus, the US Black population being on average way poorer[1] and poverty indirectly being the number one cause of death, lowering US Black citizens' life expectancy more than US White citizens.

And yet 0 riots or public outcry about that, while countless more Black people will die because of these policies than the few who die of police brutality.

[1]: https://www.brookings.edu/blog/up-front/2020/12/08/the-black...

> In 2019 the median white household held $188,200 in wealth—7.8 times that of the typical Black household ($24,100)


I have the same feeling, like we were slowly indoctrinated into believing that upvoting is the only thing we can do and participation is worthless.

I recently watched this video[0] that shows how public perception over cars has been influenced over many many years into what we now have (and we now perceive as normal). I feel like it's somewhat related.

[0]: https://www.youtube.com/watch?v=oOttvpjJvAo


The really great victory of the rich is that they convinced half of the planet to defend them.


There have definitely been riots in the streets. In some parts of the world, there was with the Panama papers. But there weren't really many important Americans implicated in those papers. Here, we decided to riot over police murdering black people and the election of Trump, but it was honestly probably more about being sick of living with the pandemic than anything else. I think you have to be willing to riot first, then something has to happen for you to react to, and then we point at that event and say it caused the riots. But I think history is more of a series of catalysts than a true sequence of cause-and-effect.

Snowden changed the discourse, but it wasn't a catalyst for change, unfortunately. I guess we're just not ready to change. When we are, maybe we'll look back at these events as early precursors that showed stress in the system before it snapped. Or we'll view them like we do the Luddites: trying to reverse the inevitable course of history.

In my experience seeing a black neighborhood errupt in protests after seeing another black man killed - while I personally think that black man in particular was not innocent - that neighborhood was ready to riot. The police in that area were brutal, abusive, and racist. The people in that area were subject to segregation that saw them receive worse education and job opportunities than the white neighborhoods. The government was unresponsive to their needs and, on the contrary, viewed them as a nuisance bringing down property values, and hurting their stats on standardized test scores. Then a black man was killed and they said they'd had enough of this, and then everyone says "the went to the streets because that man was killed" - which is both true and irrelevant. A small breeze will knock down a house of cards, but the fact that the house is made of cards is more important than the fact that the breeze caused it to collapse.


Because each individual has never had less power than now. If we lived in a tribe of 15 people, we hold on average 1/15 of the power. In a medieval village of 200 people, we could easily organize the 150 people who are against that bad guy, invade the place where he lives, and kick him out of the village by force or teach him a lesson.

What are billions of us going to do now? As a group any action takes significantly more effort. Protesting to have any impact needs significant organization and involve millions. And even then, what's it gonna change but show up on the media? Anything else requires significant investment of one's time into organizing something. Precious time out of the little free time we have outside of work. The system is well made to protect the powerful. Power itself needs to be more decentralized, and get back closer to the people. But that doesn't work because we have countries with millions of people competing against each other. So there's no easy solution that I can see.

Perhaps some form of online voting and more agile democracy and communication between politics and people along with further decentralization.

Still, it's disheartening.


Personally I can't get myself worked up over this, mainly because I don't think it would make a difference if these people didn't do what they did.

Would our lives be any different if the king of Jordan had paid his taxes? Would the UK be better off if Blair hadn't found a way of saving a couple hundred grand off his latest real estate purchase? Etc

Also I have no shame in admitting I'd do exactly the same if I had that kind of money.


One of them. No. But I don’t think anyone is saying that one single instance would change everything.

If all of those who make a couple million a year who also avoid their taxes were to pay them, yes.


Change happens when the necessary force is applied. Sometimes this takes the form of violence, other times of pressure of some other lever of whatever system is in place, in any case it requires people investing in it. Now, the notion of people “fighting for what’s right” is romantic at best. People invest (read: act, put in time / opportunity-cost, resources, take risks, etc.) with the same rationales of any investment: is it worth to them specifically in terms of costs/risks/success-likelihood/payoff? When it comes to these things, the answer is just "no" for too many so that the critical mass required is not reached. We are at a point when most people in first world countries are just either comfortable enough or think have too much too lose (or both) that it takes stuff seriously threatening their way of life at scale to trigger any reaction with a relevant chance of real impact. As long as the bad stuff is either very-bad-just-for-some or not-bad-enough, basically we’ll see people (and lobbies, and companies, etc.) get away with anything.


> In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages.

Not always, but generally that only happens when enough people can’t feed their kids. We’re still too comfortable to risk it all. There’s also the issue of mass surveillance which can kill an uprising in the cradle.


> In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.

I think your somberness comes from an idealized, perhaps even fanciful look at the Human Condition. Personally speaking riots and even street demos against this are not what is needed here, but rather a significant amount of Human Capital into opting out of this system and creating a viable alternative.

Your pessimism is a symptom of a much bigger problem, not the source of the illness. Once you realize that you cannot reform this system you will be able to re-direct your energy toward that end and maybe find solace in the fact that we still live in the best time to be alive, if only because the amount of possibilities.


The thing is, there are no ingenuious schemes. Offshore companies are just a tool everybody knows about. For a wealthy 1% having an offshore company is just a norm. Or several of them, for that matter. And our everyday discourse is defined by those 1%. Jeff Besos owns The Washington Post, for damn sake.


Right, we all know offshore havens exist, we all know rich people and companies use them. So papers showing that these rich people are using these tax havens is not exactly surprising. That's not to condone this activity, it's just that I'm surprised anyone thinks the response would be otherwise. We know about this stuff already in general, this is just specifics and as the guardian points out it's not as if all this in even necessarily illegal. We just need to push harder to shut down these loopholes.


Maybe the average person is just too well off to care?

When you're barely getting by, or worse, have had family members die of starvation, it's more offensive, and you have less to lose, and so more likely that you'll take out the pitch fork and hit the streets.


I think the difference is that most of us are not starving, not sleeping cold or outdoors, are receiving an education for our children, are able to find some form of work, etc. Its hard to get people rolled up enough under those circumstances.


My current theory is that every time the masses take to the streets in outrage at the corruption of the system, the so-called "leadership" of the new social movement tries to divert it into their own political hobbyism.


Bank secrecy is as old and nefarious as switzerland, the public already assumes that this thing is happening and that power comes with corruption (or else why would people want power). For political parties to demand equal access to these tax-avoidance instruments is obviously politically a non-starter. The current capitalism/power complex puts everyday people on a treadmill where they wish to become the ones who can one day avoid taxes, rather than demand this to stop now. Therefore the loopholes keep shifting arount the globe. Taxation is what separates the plebs from the elites


Tax (in the UK and US, probably much of the rest of developed world) has never been more progressive. I have never understood why this isn't more widely known on HN.

Not saying we should maintain the status quo but if we want "substantive change" it would be helpful to start with reality.

https://www.ntu.org/foundation/tax-page/who-pays-income-taxe...


To paraphrase Seneca—the world has always been this way. This is not ‘new information’, and I’d say a meaningful portion of humans know this. The question is—so what? There is power, and manipulation of it. You are not in control of it. You are in control of what you do, though.

And as some in this ‘smart crowd’ will tell you, large and amoral tech corporations are a key reason we have much of the artificial wealth and technocratic elitism we enjoy and speak from.


In history books time is compressed and history is distilled. I can tell you that revolutions are the result of small dents like these that build up over years


I suggest you reconsider your position about nothing happening. Many people think nothing happened in response to the Panama Papers and those people are all wrong.

https://www.icij.org/investigations/panama-papers/what-happe...


Very few times does a riot legitimately change anything, even in response to great corruption. It’s precisely why such times are historically noted. Things like civil rights, the end of slavery in America, gay marriage, and women’s right to vote in America were all from decades and decades of bureaucratic labor.


Looks like there will be IRA reforms if/when reconciliation is passed = which is a direct result of ProPublica's reporting.

I do think this reporting does make an actual real life difference. Though cracking down on IRA exploitation is obvious low hanging fruit and a very simple one sentence type change in law.


> And I look around and not only don't see any riots;

Portland. Minnesota. Missouri. Berkeley. There are riots, currently about social justice, but the fight for a living wage is brewing because homelessness and poverty is on the rise. People need to have less to lose, and we're gettin' there.


In "Amusing Ourselves to Death" Neil Postman hypotesizes that people are increasingly anesthetized by their addiction to amusement, as pushed in increasing amounts, and duller form, by the media. Now there are only armchair riots, our pitchforks are the virtual keyboards on our mobiles.


Without saying this is only good or this is only bad, I honestly think we have reached a level of general wealth, e.g. enough to eat for everyone and enough to endlessly distract everyone (TV, social media, games, etc.), that most people won't really get worked up by such things anymore.


1. That amount of wealth is highly abstract and hard to get worked up about. 2. It's not blasting you in the face every day on twitter/facebook. 3. The useful idiot class (most peeps that respond on sites like this) always just talk about OmG WhY DoNt OthEr PeoPle Do StUfF???!?!?!


There are no morals in the world anymore, we are driven by money. To buy that rolex, that BMW, that beach house. These things have been made accesible to more people than ever - so people don't want this to change for the worse. Status quo is good.


Generally, people are willing to completely disrupt their lives by revolting, when they are starving and/or homeless. We let a lot slide because overall, many of our lives are good enough to not want to risk it all through action.


There was a substantiative response, in the form of Occupy Wall Street.

Directly following that event, we all got distracted with the race politics that suddenly came to the forefront.


I think it's making a dent in the younger generations. Not only due to the leaks, but the economic results of a system that continually rewards corruption.


Well some of us are pro small government and pro big business. You are on HN, a large percentage of us are business owners and executives


I don't want to start a political flamewar but apart from the selfish people you describe, there are also a lot of people who genuinely believe that reducing the size and role of government will result in a better society for all. There are also a lot of people who believe in financial privacy. In fact, those are fairly common beliefs in the US. It's not that surprising that those people aren't rioting.


It sounds real condescending to say "it's weird to have to say this to such a smart crowd."


Well, just fancy having to even explain yourself with an "EDIT: Reading some replies....."


> In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.

> But I look around after reading those books and wonder what makes us so different.

Quality of life improvements. Basically, ye olde historical riots yielded immediate and noticeable improvements for the people: rollbacks of food prices (there were a couple of riots over beer price hikes!), shorter workdays, work-free days, workplace safety measures, the likes.

In modern days, outside of affordability of healthcare, systems are so ossified that even a violent revolution won't make much actual change. Just look at BLM - decades of peaceful and finally violent protests and yet, nothing much has materially changed as a result. So why should someone take part in a riot and risk arrest when there is no hope of stuff changing for the better?

Another big factor is decades of anti-union brainwashing. Hard to organize a mass protest when anything even remotely tied to collective organization got branded as communist/anti-patriotic and thus as "bad, avoid it" and that was indoctrinated from school age onwards.


Look no further than Australia. Life is good. That is all.


> At best, these stories get a good chunk of the airwaves for a couple of weeks, and then it's on to the next thing.

Wrong. Someone here from a third-world and small country. Some people got prosecuted because of these leaks. I'm pretty sure some people out-there are packing their bags and heading toward an exit. Legal process is very slow but it does exist and now that everything is public, there is a high risk of being prosecuted.

But there are always "but"s.

1. This was done legally and lawyers have made sure that every step is legal.

2. These people own the political/legal system (ie: Putin).

3. These people are dead, on the run, broke, already in jail, used third-parties and hid their identity, etc...


The wealthy hiding their wealth doesn’t matter until we have a wealth tax. The current system is based on income, sales and a little bit of property taxes (which is hard to hide.)


> In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.

We’ve had people in the streets in rage, riots, and legislative responses to lots of things recently, though not the things that tend to animate the upper-middle class tech-libertarian crowd, which is out of touch with the day-to-day concerns of...pretty much everyone else.

Whether those responses will be meaningful is disputed in the moment and will only be clear with historical distance.


> I sometimes get the feeling that people are actually envious, sometimes even respectful of the ingenuity it takes to manufacture these schemes.

I think this is an accurate assessment (at least for the US). One of the only logical reasons as to why we as a society allow this is that there are enough individuals that aspire to be these insanely wealthy folks that we make sure that these scenarios remain possible.

Ironically, robbing your country and hiding your cash has become the American dream. For example, if I were to say:

“Aspiring to be like Elon Musk is genuinely the most pathetic way to spend a human life imaginable.

His fortune is built on apartheid and all of the torture and death it entails. Yes, Elon Musk and his family should rightly be judged morally as being active participants in the system that tortured and murdered countless black Africans. The fact that his family (and the money that they extracted from South Africans) left South Africa as soon as segregation started to wane is indicative of this.

He isn’t some sort of hero or genius, or even supervillain. He’s just managed to become what nerds masturbate to when they picture their (nonexistent) futures.

Finally, the wealth that he holds is only his because of his staff figuring out how to avoid paying for your roads, hospitals, schools, parks, research etc. He is only rich because you are not. To want to be like Elon Musk is like wanting to be a tumor attached to a nearly-dead host.”

Here’s what will happen, because this is the internet:

People with <0.00000001% of his net worth will jump in with one of a small handful of responses:

(These are all paraphrased but you never know, some might be verbatim)

1. I bet he actually does pay fair taxes…

2. Actually, I think his family didn’t profit from apartheid because…

3. Because you’ve used emotionally charged language in this post, I’m going to treat everything written here as patently false. While my decision to ignore what you’ve said is entirely based on my emotions, it is your fault for not being nice enough to me/Elon.

4. Fuck you. You owe him respect because [insert business here] has or will save the world someday, or not. It’s up to him. And while I’m not advocating for being afraid of him, in the back of my mind I get anxious about him being displeased every time I see him criticized and the best way to assuage that anxiety is to dunk on a stranger.

5. I don’t think we should use Elon as an example here because he’s such an easy target. The fact that he has so many “haters” is, to me, proof positive that he’s a saint. In fact, since criticizing him makes you a hater and everything haters say is False (as in the Boolean value), no criticism of him is True.

6. Any combination of the above + “I am/know somebody who is a Tesla shareholder, therefore it’s good”

While it might seem that I’ve meandered away from the topic at hand, I haven’t. The weird impulse to defend the uber-wealthy is precisely why we allow billionaires to run amok.


People can be nuanced in their responses. I do not respect Elon's overeagerness in trying to indirectly consider himself as demigod.

However i appreciate his zeal in creating an impact in a sector that would had otherwise not happened so fast. Not saying that he is solely responsible and deserves all the credit, however he understood how the system works and focused on doing some change.

Even people higher up in the food chain do not necessarily have all the power to effect change within a short span.


>And I look around and not only don't see any riots; I sometimes get the feeling that people are actually envious, sometimes even respectful of the ingenuity it takes to manufacture these schemes. It's tough.

What riots did you participate in? If none, are you among the ones you assume to be envious?


That clearly isn’t what they said.


Life for us masses has never been better.

Lots of crooks in power, sure, but if you know history that's how it's always been. How human societies typically work like that, and maybe they have to.

The numbers look big, but in terms of dollars per citizen, how much money are we really talking about?


> The numbers look big, but in terms of dollars per citizen, how much money are we really talking about?

I'm not sure what you intended with this, but it's a really good empirical question. Since we have no reason to believe any one of these "leaks" is exhaustive, we don't ever know the true denominator, so we can't estimate dollars-per-citizen with any confidence.

But we do know the realities of being poor. So if the true dollars-per-citizen-per-year figure turns out to be as little as, say a thousand dollars, I think a lot of people would be justified in eyeing their pitchforks. Hell, an extra fifty dollars a month in the developed world would make a massive difference for millions who struggle.

Personally, I believe that the true number is very plausibly in this range.


> I'm not sure what you intended with this, but it's a really good empirical question.

It's an honest question, and I am genuinely curious of the numbers in these revelations. How much bigger the real number is we can only guess.

> Hell, an extra fifty dollars a month in the developed world would make a massive difference for millions who struggle.

Sure, but that assumes such a system is possible, and that it is desirable. I'm doubtful on both.


I think it’s because most people actually don’t want to pay taxes. They understand that the rich are able to go offshore and are somewhat jealous of them. But people want access to this, they don’t want to participate in some kind of class warfare against a group they want to be a part of.


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