McArdle on the Panama Papers

Megan McArdle wrote last week of the "Panama Papers" -- a massive dump of confidential information exposing numerous world kleptocrats as dodgers of the taxes they are so fond of others paying -- that they "reflect well on capitalism." Regarding the "predictable ... flurry of people rushing to blame 'global capitalism'," she noted:

... What we've seen from the papers so far is not so much an indictment of global capitalism as an indictment of countries that have weak institutions and a lot of corruption. And for all the outrage in the United States, so far the message for us is pretty reassuring: We aren't one of those countries.

Consider the big names that have shown up so far on the list. With the notable exception of Iceland, these are not countries I would describe as "capitalist": Russia, Pakistan, Iraq, Ukraine, Egypt. They're countries where kleptocratic government officials amass money not through commerce, but through quasi-legal extortion, or siphoning off the till. This is an activity that has gone on long before capitalism, and probably before there was money. Presenting this as an indictment of global capitalism is like presenting Romeo and Juliet as an after school special on the dangers of playing with knives.

McArdle goes on to make further good points about some of the legitimate reasons people may wish to hide assets. Although I do not regard even the freest countries in the world as remotely capitalist, I agree with much of what she says, although with the further qualification that I advocate eventually ending taxation.

-- CAV