Monday, 25 April 2016

What the Mossack Fonseka Papers Leak Means For Global Inequality

You may have noticed that in the title I call the recent tax leaks the Mossak Fonseka papers and not the ‘Panama’ papers. That’s because I feel the title is symbolic of the way the establishment like to disguise political crisis. The people of Panama are not the ones hiding billions of pounds in tax havens nor are they the ones gaining mass money and power at the expense of the many. Yet, despite this, time and time again the establishment attempt to pass of their mistakes as if they are the mistakes of the majority. Reckless financial sector gambling results in one of the biggest economic meltdowns the world has ever seen: just blame reckless buying habits and people that can’t pay back th­­­­eir debts! Years of poorly managed and unjust foreign policy triggers a mass humanitarian crisis: simply label those that want to help migrant’s bleeding hearts, while trying to let in as few migrants as possible. Now with the Fonseka papers, many politicians and financial institutions are rightfully getting put in the firing line, however, we should be looking deeper at what these revelations tell us about power and wealth and what we should be doing to change things.

The corporate media cannot be trusted with the truth about the Leaks

At the moment it is not known who leaked the papers, however, whoever did it was probably motivated by a genuine desire to expose the secrets of the elite and the system that enables them to hide their unjustly obtained savings from the public. Despite this, they made the all too often repeated mistake of letting the mainstream media handle the findings! People who, due to their own interests and the people whom they represent, are often reluctant to give us the whole story. At the moment the leak is managed by the international consortium of investigative journalists, which despite dressing itself up as a respectable press organisation is clearly ridiculously biased, being funded by organisations such as the Ford Foundation, The Rockefeller family and the WK Kellogg foundation. As such, the mainstream media have been completely cherry-picking the information based on their interests.
The way that mainstream media coverage has been handled is that all of the media attention based around the panama papers has been directed to enemies of the west, or in cases like that of David Cameron’s dad are people who are already known to have engaged in tax fraud. It really shows how biased the mainstream media are when the only person mentioned in the mainstream media who is not already known to have a dodgy background is the prime minister of Iceland, while the official ICIJ page does not list a single US leader, Public official or politician as being involved in the scandal. If the ICIJ actually had any respect for the public, they would at least acknowledge that the main clients of groups like Mossak Fonseka are corporations establishing networks of offshore shell companies. This should not be a surprise however, every time a leak like this happens the press pretend they are holding power to account, when in reality they do nothing of the sort. Instead, events like this should inspire us to set up alternative media networks and organisations aimed at spreading the truth.


A quick look at the politicians and business leaders in the leaked documents shows that those benefiting from tax havens are overwhelmingly rich, white men. This should be enough to act as further evidence that positions of power within society, are held overwhelmingly by certain groups of people. While I am not advocating that we create a class of female, multi-racial tax dodgers, those negatively affected by tax dogging are undeniably the world’s poorest. Financial secrecy and the resulting lack of public funds threatens access to public services, and shifts the tax burden on to those that can least afford it. In addition to this, the resulting austerity that is supposedly used to save money, disproportionately affects the poorest in society.
 Not only do the leaks show that the narrative of ‘there’s no money left’ is utterly wrong, it shows that those who have been campaigning against austerity – groups such as UK Uncut, the IWW and the anarchist federation – have been following not just a moral approach but a realistic and sensible approach to economics. However, this revelation is simply not enough, based on these findings, we must first campaign for an end to austerity and then for an end to the corrupt financial system which allows such leaks to happen in the first place. Capitalists face threats to their power on two main fronts, from the workers who they exploit and from other companies who they have to compete with. As such, not only will most capitalists inevitably want to find a way to protect their money, but will also want to discourage any investment in public infrastructure that is going to have a democratising effect and provide for people regardless of their economic standing. Capitalists and government ministers defence of this since the revelations, has been that it is not illegal to avoid tax. However, surely this proves the existence of mass inequality and a two tier class system, when a certain amount of the population can be given tax exemptions by law, and yet the vast majority of the population have no choice in the matter!
Contrast this to a democratised economic system, where people have direct control over their workplaces and communities, and things are produced to meet human needs and not for the mindless pursuit of profit. People involved would have a direct interest in investing any money back into the community where they, their family and friends work. The same rule can also apply to outsourcing of workplaces to foreign countries, if workplaces were democratised, what incentive would there be to outsource entire industries to other parts of the world. While I personally tend to favour the abolishment of money and markets as a whole, rather than just democratising workplaces, the tax leaks should serve to make us a more free society. All we must remember, is that what the Mossak Foneska papers call for is not another A to B march organised by Trotskyites, but a non-hierarchical movement committed to directly trying to better people’s lives.

How tax scandal effects developing countries

Despite effecting people in the West a considerable amount, it is equally important that, in order to offer a fair and intersectional analysis, we must look at how tax scandals such as this one effect poorer and developing countries.
A recent study by action aid, makes clear how developing countries can lose billions, due to tax treaties that limit their right to levy taxes, and take away tax power from governments. The study mainly points to Britain and Italy, which has the largest number of restrictive treaties with low income African and Asian Countries. Another example given by the study is Uganda, where the government is unable to tax certain earnings paid to Ugandan corporations, whose owners are from the Netherlands. Not surprisingly then, over half of the investments in Uganda are from the Netherlands. In addition to this, the IMF estimate that developing countries lose about 200 billion dollars a year in tax avoidance. What needs to be focused on here, is how the current system has failed to reduce global inequality. Capitalists and politicians often shout about how free trade deals increase global equality, and level the playing field for business. Ironically, when the Panama Free Trade Agreement was being negotiated in 2011, the now democratic presidential frontrunner, Hillary Clinton sung its praises. Despite this, such deals are only there to create legal pathways for companies to avoid tax and increase profits while wrecking a countries infrastructure .This loss of government money again impacts things people need to live and have a comfortable way of life such as healthcare and education. This means that when the wealthy fail to pay their fair share, human rights are severely compromised!


Finally, I would like to end by pointing out that that the Tax leaks are not simply an economic issue, and are instead explicitly focussed on human rights and on the power of people to change things.  The UN report, Inequality Matters, shows that when individuals feel left behind by their political and economic system, this sparks anger and political conflict. In light of the Tax Leaks, this can be seen with regard to the people of Iceland forcing their Prime Minister to resign, and calls in the UK for David Cameron to resign. As previously stated, I think change needs to come at the hands of non-government based organisations. Also, in order to truly tackle inequality and Tax Scandal, we need to tackle these problems at their root cause.