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Global Corruption in the Age of Technological Transparency

Never before has technology had so much potential to deliver us from bondage. We’re in proverbial uncharted waters, trying to make sense of a world where modern technology has brought us closer together than ever before — and yet, it’s a world where secrecy and corruption still hold sway from the shadows.

Has government corruption changed with the rise of technology? Oh, yes. At its most simplistic, the truth is this: Modern technology has made it harder than ever before to keep secrets from the electorate — whether you’re a young Arab Spring protester in Tunisia or you’re getting arrested on the steps of the US capitol because you’re tired of money’s controlling influence in politics.

We’ve reached a turning point, where technology has finally democratized the dissemination of information and made it both possible and morally imperative to come together to fight corruption. A recent string of huge strides forward tells us we’re only barely getting started.

Without any further preamble, let’s take a look at the ways that technology is delivering us from corruption — and sowing the seeds of a true, worldwide populist movement that may change the face of politics forever.

 

The Panama Papers

You’ve almost certainly heard by now about the infamous Panama Papers — a series of leaked documents that lay bare literally an entire world’s worth of greed and corruption. The Panama Papers have revealed the sordid world of tax havens — used by the most elite mammals and corporations to hide their untold wealth from those pesky tax collectors.

It would be difficult to oversell the importance of this leak. Tax havens have been a thorn in the side of the true Progressive movement in this country for some time, and win or lose, certain Presidential candidates have made their abolition a cornerstone of this campaign season.

And now that technology has delivered us the truth about tax havens and Panamanian shadow banks, the gears of democracy — and justice — are turning once again. Slowly.

Thanks to the revelations brought to light by the Panama Papers and tech startup Neo Technology, world leaders everywhere are shaking in their expensive boots — or have already tucked their tails and resigned in disgrace, as was the case with Iceland’s prime minister, Sigmundur Davíð Gunnlaugsson. There’s even turmoil in the UK, where citizens are clamoring for Prime Minister David Cameron to do the same.

The Panama Papers will almost certainly be just the first wave of revelations concerning worldwide corruption, and the fallout will be both transformative and long-lasting. Journalists working to sift through the thousands upon thousands of pages of records promise that there are more bombshells incoming — including information that could implicate high-ranking US officials, if rumors are to be believed.

 

The Public As Whistleblowers

If recent events are any indication, the public — that is to say, the ordinary citizens of the world — has more power than ever before to blow the whistle on shady practices and fraud perpetrated both against, and by, the Federal government.

In fact, a particularly powerful piece of whistleblower legislation has been around since the days of Abraham Lincoln — it’s literally still called the “Lincoln Law” by some folks — and it says that whistleblowers may receive protection if they wish to expose fraud against the government.

But what happens if the government is the party responsible in the first place? It turns out that’s a little trickier. Whistleblowers-turned-folk-heroes like Julian Assange and Edward Snowden, responsible for Wikileaks and the mass surveillance revelations, respectively, are now forced to live their lives in hiding overseas, for fear of reprisals by the governments of the world.

Some call them patriots, others call them agitators or even traitors — but history will surely remember these men as brave freedom fighters who did the right thing, even at great personal cost.

But right now, they need to celebrate their victories in foreign embassies, far from the United States Justice Department — because the other truth to come from all this is that we have the tools, but not the will, to see true reform come to fruition. So long as men like Edward Snowden live under the long shadow of reprisals from the governments they’re trying to save, the revolution cannot proceed in the Western World.

 

‘Arab Spring’ and Beyond

And yet, while the US likes to pretend it’s the center of the developed world, technology-fueled reform has, if anything, been of even greater consequence elsewhere in the world.

Consider the Arab Spring — a series of both peaceful and violent demonstrations that rocked the Arab world beginning in late 2010. The Arab Spring began in Tunisia, but has now brought the fires of revolution to Egypt, Libya, Yemen, Bahrain and Syria. It was directly responsible for the Syrian Civil War, which still has the world tied in knots and on the brink of an even larger conflict.

Here, too, technology has played a significant role in fueling both dissent and reform. Influential social profiles, bloggers, and social media users had a great deal to do with raising awareness of the Arab Spring’s purpose and goals, as well as the dissemination of information regarding protest events and public demonstrations. Bloggers have actually been put to death in certain parts of the world for taking part in this movement.

But is it all due to technology? The Atlantic’s Jared Keller and others espouse doubts that Twitter was truly “revolutionary” during the Arab Spring, but even social media skeptics should recognize that technology surely played a not-insignificant role, even if it might have been slightly overemphasized. The truth is, in countries where media channels are either suppressed or outright owned by the government, less traditional means of communication (Twitter, blogs, etc.) have been absolutely indispensable for demonstrators with revolution in mind.

 

The Age of Forced Transparency

We know better, now, than to take them at their word when Presidents and would-be Presidents promise transparency. And that’s why the best news to come out of the tech world in recent memory is the fact that governments will soon not have much of a choice but to be transparent. The age of forced transparency is here, and it means secrets will only become harder and harder to keep.

It also means that we’ll be free once more too — even if we don’t trust the people involved with government, we’ll at least be able to reclaim a modicum of trust in the system itself.

And that’s a very powerful thing. People want to know that their government is working for their interests — we call our politicians public servants, after all — and soon enough, we’ll have the tools at our disposal to know whether they’re upholding their end of the bargain — whether they like it or not.

 

‘Democracy Spring’ and Technology’s Double-Edged Sword

But technology is both a gift and a terrible burden. For example: Have you heard of Democracy Spring?

You probably haven’t, and it’s because the mainstream media outlets in the United States have quite deliberately refused to cover it.

Democracy Spring is an ongoing series of protests in the United States that seeks to shed light on American corruption — particularly money in politics and voter disenfranchisement. The movement represents a coalition of some 100 American progressive groups, and has included the participation of non-traditional media outlets such as The Young Turks. Democracy Spring demonstrations in Washington, D.C. have resulted in as many as 1,400 arrests, including famous actress Rosario Dawson; Harvard professor Lawrence Lessig; both Ben and Jerry, of Ben & Jerry’s Ice Cream; and leaders of the Sierra Club, Greenpeace, the NAACP and the AFL-CIO.

American technology made this demonstration possible — it allowed us to share information and come together in common cause. It made it possible to rip the lid off American corruption and really take an honest look at the real problems facing this country — problems that have nothing to do with Muslims and “creeping sharia,” Mexican immigrants, or “political correctness run amok.” It’s a return to the real issues and the hard truths: That America currently has no functioning democracy, and that our two major political parties are industries unto themselves, unconcerned with the travails of the working class.

But technology can also be used to silence movements such as Democracy Spring, and since America’s media companies have a nasty habit of sharing CEOs and board members with some of the very same corporations being protested, there has been virtually no mainstream media coverage of the Democracy Spring demonstrations — or the hundreds of high-profile arrests.

Is technology a double-edged sword? Can it be wielded both in the name of peaceful reform and blatant corruption? Can it both empower us and cripple us?

The answer to both these questions is yes — and knowing this makes our mandate very clear. When leaders like Tom Wheeler, current chairman of the FCC, commits himself to breaking the back of America’s incumbent media monopolies, we must speak out publicly in his defense. When breakout Presidential candidates become the public face for a spirit of protest and reform that has been both dormant and hungry for an entire generation, we owe it to ourselves to ask what Establishment politics have done for us lately.

And perhaps above all, we should remind ourselves that the Internet is not just some recreational bauble for killing time — it may well be the most powerful tool ever devised for bringing about true and lasting change.


Staff Writer
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Holly Whitman is a writer and journalist based in Washington DC. She loves to share her thoughts on the intersection of politics and culture, and writes on everything from feminism and human rights to climate change and technology.

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46 thoughts on “Global Corruption in the Age of Technological Transparency

  1. There’s a lot here to go though:

    Tax havens. Tax avoidance is not illegal. Hell, if I had enough money, I’d be doing it. Apple does it. Most corporations can do it, routing revenue through lower tax countries rather than their home country. Tax dodging is another thing.

    Public whistle blowers: “but history will surely remember these men as brave freedom fighters who did the right thing, even at great personal cost.” Maybe. History is written by the victors, and if the world sinks into oppressive gov’t control, the would will remember this, if at all, as criminals. You know it’s still illegal for someone with a security clearance to read classified documents even if they are in the public domain? I can’t speak for other countries, but america has not embraced public whistle blowers. The last two admins have prosecuted them very harshly.

    Forced transparency: “and that’s why the best news to come out of the tech world in recent memory is the fact that governments will soon not have much of a choice but to be transparent. The age of forced transparency is here, and it means secrets will only become harder and harder to keep.” You want to back that statement up with something Holly? Because I’m not seeing a “forcing mechanism”. Everyone knows how to slow roll FOIA, security classifications still exist, and if the gov’t ensures that public encryption such, only they will have better encryption.

    Democracy Spring. “problems that have nothing to do with Muslims and “creeping sharia,” Mexican immigrants, or “political correctness run amok.” ” SOME people actually view those issues as real issues. The fact that you don’t isn’t really relevant. Some might even choose to say they are more important than corruption, or perhaps more easily fixed.

    “That America currently has no functioning democracy, and that our two major political parties are industries unto themselves, unconcerned with the travails of any other class.” I fixed that statement for you, and I do agree on that.

    Yah, I’ve seen a whole lot of monopoly busting by the FCC. Oh, set to boxes to be made avail for purchase by customers. Wow. You want to end telecom monopoly, get two or three cable / internet providers for each county. Making set top boxes purchasable is small peanuts compared to that.

    ” it may well be the most powerful tool ever devised for bringing about true and lasting change.” Oh it’s already done that. Porn is free. Shopping is easier. Talk to me when we get 100% sure communications. My pessimism might change then.

    But this was a good post, my negativism aside, and I’m interested to see the conversation is generates.

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    • “You know it’s still illegal for someone with a security clearance to read classified documents even if they are in the public domain?”

      What? No it isn’t. If someone told you that, they’re wrong.

      It *is* illegal for someone with who sees a classified document that is being displayed and discussed in public to treat that document as though it has actually been declassified, until they’re notified that it has been. The idea being that while of course everyone knows about it, you might know more than is actually in that document, and if you go around talking about it you might reveal something that isn’t actually known. You can *read* the document all you like, you just can’t *talk* about it.

      Classification is like keeping kosher; the majority of the rules are about putting a barrier between yourself and an actual mistake.

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      • Your answer is more correct than my comment, but I seem to recall during the whole wikileaks thing our security office stating that looking at the site could cause legal trouble for the company and the individual..ie just reading it.

        They blocked the site shortly thereafter.

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        • There’s also a difference between “illegal to read it” and “will lose your security clearance, and thus your job, for reading it”. The latter being what most folks with security clearances are anxious to avoid, I surmise.

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        • The basic view was “Just because it’s been leaked to the public doesn’t mean it’s declassified, so if you’re talk about that stuff that’s in the papers it we’re going to consider you to be spreading classified material and we can fire you, revoke your security clearance, or even arrest you”. (Not that we had security clearances. We had to pass rather thorough background checks after 9/11, but we were all ‘sensitive’ data not classified)

          They did not split hairs or say it was to prevent “further leaks”. They flat out said (at least that was the briefing I got, working through a government contractor at the time) that they considered it STILL classified and thus discussing it (even if you had no access to the original information) was disseminating classified material. I know that they didn’t mean “We don’t want you to leak stuff that hasn’t been leaked by accident” because we were explicitly told this in response to the drone leaks and nobody they were talking to had ANY access to anything within shouting distance of the military.

          They might as well (and for all I know DID) give this lecture to the guys working in HUD or the IRS, because all we could know was what was in the papers.

          And we got told that talking about it at work, reading about it at work, or otherwise even hinting about it was firing grounds and/or felony charges for revealing classified information.

          They were never going to charge anyone, of course. PR would be way too bad. (And honestly, the guy — civil servant — laying down the rules was practically eye-rolling himself. He was not hiding the fact that this was obviously coming down from on-high, from screaming people in DoD and CIA trying to futilely pretend it wasn’t happening and also to hopefully prevent future leaks by means of stupid threats to everyone and their dogs too)

          The overreaction was ridiculous, and it’s one reason I eyeroll any time Clinton’s “classified emails” stuff comes up. I wasn’t shocked at ALL to hear that it included people talking about a NYT article on drone strike’s. I’d been told the same thing. Personally. By a government civil servant who thought the whole thing was just as stupid as everyone else did.

          FYI, it took years before certain names didn’t automatically block news stories or web pages.

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          • Yep, that seems accurate. My recollection was we had no briefing, just an email from security. And we have a secured facility with lots of cleared folks where I was then. Thank god I never got a clearance.

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            • When the wikileaks stuff came out, there was a mass Army email telling us not to look at the site b/c of the classified info. It reminded us that just b/c the info was made public didn’t mean that it had been declassified.

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          • It’s the sturm und drang over wiki leaks et al that upper management put on middle management that ticks me off so much about the Clinton emails. I was the eye rolling middle manager that towed the lion and had to tell my peeps and then enforce all the reactionary new rules about what was going on.

            Now, I see that upper management didn’t give two snot boogers about the rules, not if it was inconvenient. (I mean I’m not that terribly suprised, upper mil management on Afghanistan staffs played the same game of rules for thee but not for me, but I thought that was just the Army being the Army.)

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          • “The basic view was “Just because it’s been leaked to the public doesn’t mean it’s declassified, so if you’re talk about that stuff that’s in the papers it we’re going to consider you to be spreading classified material and we can fire you, revoke your security clearance, or even arrest you”.”

            yeah that’s actually something you explicitly agree to when you sign the paper that says “you’re briefed”. It’s not some crazy weird overparanoid condition they just invented out of thin air.

            “…we got told that talking about [Snowden] at work, reading about it at work, or otherwise even hinting about it was firing grounds and/or felony charges for revealing classified information.”

            I have never, ever, ever ever EVER seen anyone suggest anything like this. I mean, sure, you say it happened to you, I can’t say “nuh-uh”, but I can say that I haven’t ever seen anything like it happen anywhere that I’ve worked. And nobody has ever implied that someone could lose a security clearance just for reading something published in unclassified sources.

            Now. That’s not to say we were encouraged to go around typing classified terms that we knew into Google, or to go onto blogs and leave comments like “oh hey, you guys are wrong about this particular piece of classified information but I can’t say any more (wink)“. But it’s not at all the case that there was some general statement of “you’re not allowed to acknowledge the existence of Edward Snowden and you’ll go to jail if you do”. If anyone said that, they were way off base.

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            • yeah that’s actually something you explicitly agree to when you sign the paper that says “you’re briefed”. It’s not some crazy weird overparanoid condition they just invented out of thin air.

              They point was they were telling it to people who HADN’T been briefed. Whose only connection to the information was that we had a contract with the same government, albeit so far away that the only group more ludicrous to connect would have been Fish and Wildlife.

              They blocked everything — including news articles (the NYT wasn’t accessible for days until they got the key words set up to just block articles). It was always fun to have a “block” message on a google search because somehow your search triggered a result that had some vague keyword. (Turns out “drone” is also a verb, for instance).

              And indeed, they flat out told us they’d revoke our access to government sites if we were caught talking or emailing about it. Which was “firing us” because I couldn’t do my job if I couldn’t wander onto government property when I needed to deal with something.

              And what makes you think they CARED they were way off base? Every employer I’ve had for twenty years has made sure I knew that discussing compensation with other employees would get me canned. I didn’t even know that was an illegal threat (I could sue if I was fired under such grounds, quite successfully — assuming they were dumb enough to claim that was the reason) for years.

              The threat against our job was the point. The “possible felony charges” were just the extra stick, because even then these morons thought they could sweep it up somehow and so the CIA and DoD screamed at every other segment of government in a futile attempt to uncrap the bed.

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              • ” what makes you think they CARED they were way off base? ”

                The point is not whether THEY cared, the point is to refute Damon’s statement about “…it’s still illegal for someone with a security clearance to read classified documents even if they are in the public domain”, and your story about it as well. They’re being presented as the Actual Way Things Really Work Because America Is The Most Awful Place, and it really is not like that at all.

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                • Is it illegal?

                  That’d be an interesting case. Do you have any court cites on hand?

                  Now I get a little fuzzy where “illegal” and “firing” get involved when it comes to national security (especially with all those secret courts) but I think we can agree that, for instance, that Bob the Analyst isn’t allowed to go digging through desks looking to snoop through classified material he’s not cleared for.

                  Is that illegal? Or just cause for termination? I really AM fuzzy on this.

                  (In any sense, that was the logic used. Reading the NYT article was akin to reading classified material left inadvertently out).

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  2. Damon’s post indicates why doing anything about global corruption is not going to be easy. The key line is “if the world sinks to oppressive gov’t control.” To people on Damon’s side of the ideological spectrum, the solution to these issues or problems is to reduce the power and scope of government in order to preserve freedom as they see it. To people leaning towards my side of the ideological spectrum that is only going to exasperate things because it will give the wealthy and powerful even more license to run riot because the one institution capable of checking them and reigning them in, at least potentially, would no longer be able to do so. As Damon pointed out, tax havens are not illegal and neither were most of the shenanigans that gave us the Great Depression. Our solution is better rather than less government. Better government is an oxy moron to many people though.

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    • I’m all for better government. In fact, I think we’d need less of it if it was better! I’m unclear on how to actually accomplish that though, given human nature.

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      • Make a better game (this is what I get from listening to a game theorist, naturally — but as he’s also experienced in the art of blackmail… and rather more heavily into politics than I am) — have politicians be more responsible to the voters, destroy and disable machine politics, find ways to disincentivize voters voting for people simply because “I know the name”.

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        • That’s a lot work for such a tiny amount of words. Maybe find a way to incentive voters rather than a disincentive?

          I’d expect this process would take decades and I’m not even sure it’s possible. Might be better to just let the current system fall apart and start anew.

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          • We let the current system fall apart, and it falls down hard, Damon.
            What do you think happens if we lose the globally networked economy?

            There’s a pretty easy set point of technology that you can get back to, without terribly much work — that’s about 1820’s tech. Iron, dirty iron (steel), coal, horses and steers.

            Past there? we’ll see.

            Incentivizing voters is a decent idea — the more you’re running actual issues, rather than names — the better you get actual results. It’s really easy to get “I am an X” tribal identity mode on, if you’re running names.

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              • I live near Slippery Rock. We’d probably still be able to get oil out, hereabouts. Not so in most places stateside.

                Without a global economy, internal combustion engines may still exist, but expect to see their use rationed very very heavily.

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  3. Lee has it right on the Panama Papers. The problem as I see it is that events and facts really don’t matter. I’ve been in a cynical mood lately. What revelations like the Panama Papers do is merely act as another point that shores up a person’s ideological beliefs.

    People see the revelations of the Panama Papers as being that we need more government, more oversight, and we need this to prevent the off-shoring of taxable incomes. The libertarian and right-wing side see the lesson as being taxes are too damn high or that there is nothing wrong with moving capital off-shore and it should be easier for everyone to do so.

    Most people do not have strong ideologies even if they are partisan and regular voters. A whole slew of things goes into their calculus from geography to identity and family history. It seems that the United States does have enough firm ideologues and partisans on all sides to prevent change and reform more often than not.

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  4. but history will surely remember these men as brave freedom fighters who did the right thing, even at great personal cost.

    or Assange as a sexual predator that threw his main source and his entire organization under the bus for self promotion and self preservation. And Snowden as the guy who took refuge under the guy most implicated by the Panama papers.

    The Young Turks

    which has the same name as the dudes that did the Armenian Genocide, and one of whom is skeptical that it happened.

    Ben and Jerry

    then used their corporate resources to speak out about their arrest protesting that people are using corporate resources to speak out about stuff.

    That America currently has no functioning democracy,

    If my eyes were rolling any harder, I could hook them up to an electrical generator to recharge my phone.

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    • IIRC, the Young Turks were also darkly talking about how Hillary stole NY just last week (it veered between “Closed primaries are suppressing my vote!” to “Hillary scrubbed 120,000 Bronx voters!”. I think they were talking up some lawsuit). It’s hard to take them seriously, you know, when they use the language of voter suppression and rebellion to talk about the jackbooted thugs of a closed primary.

      Meandering back to the point — I admit to wondering who leaked the Panama Papers and why. The lack of Americans is still interesting, but I get the impression Panama isn’t where Americans go to hide money anyways.

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      • The states of Delaware and Wyoming will gladly let Americans set up shell corporations.

        American states compete among themselves for tax avoidance. New Jersey is wondering about budget shortfalls because a billionaire resident is moving to Florida. NYC charges their own income tax. The rule is something like if you spend 181 nights a year in NYC, you have to pay it. There are lots of rich people with fancy NYC housing but are officially residents of Connecticut or PA.

        Lots of NYC apartments are also officially owned by shell companies to hide the identities of owners

        The interesting thing about a lot of com

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      • The lack of significant American presence is not surprising to me. American tax levels are pretty low by global standards, the IRS is pretty decent at ferretting out tax dodgers and the penalties for getting busted are sharp. The risk/reward ratio is a lot different for Americans.

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        • North,
          “the penalties for getting busted are sharp”
          you have no evidence for this, because within the past 10 years, the IRS did this whole “forgive the tax evaders” thing where Romney and a bunch of other people got off scot-free for hiding stuff in overseas accounts. (This is why he’s never released his income tax forms. It’s on there in black and white).

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          • Forgiveness is an entirely different kettle of fish Kimmie, that’s where the IRS basically says “We’re gonna just turn our back and when we turn back around the cookies had better be all on the table in which case we’re not gonna raise a fuss.”

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  5. “The Panama Papers will almost certainly be just the first wave of revelations concerning worldwide corruption”

    Wikileaks was waving around Swiss bank accounts with names attached years ago.

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  6. ” history will surely remember these men as brave freedom fighters who did the right thing, even at great personal cost.”

    Hopefully we’re not going to lionize more figureheads like Rosa Parks, despite your hagiography.

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  7. ” The truth is, in countries where media channels are either suppressed or outright owned by the government, less traditional means of communication (Twitter, blogs, etc.) have been absolutely indispensable for demonstrators with revolution in mind.”

    Yes, blenders and microwaves make great means of communication.
    Speak Truth to Power!

    [You might say that I’m enjoying being a bit more cryptic than normal, because I’m pretty damn sure you aren’t going to be able to cite the country.]

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  8. I’ve already addressed Edward Snowden’s ambiguity thoroughly and well: he exposed things that needed exposure, like the prevalence of abuse of surveillance technology and the overuse of secrecy classifications. But he also did so in a manner that indiscriminately made public other things that maybe ought to have remained secret: information gathering techniques and methods of not identities of human intelligence assets (“spies” to us, “traitors” to those whose secrets they provide us).

    Snowden is a microcosm of the phenomenon chronicles. Having become addicted to secrecy, breaking ourselves of it promises to be uncomfortable at best. We can endure individual politicians’ disgraces — but can we endure it when we discover, as correctly points out, that much that was unseemly in the shadows turns out to not be illegal at all?

    We already have a hard time with politically “pre-convicting” disliked figures and then being outraged when an actual court fails to sliver a guilty verdict for reasons we do not understand. We are quick to say such a result is the product of corruption and elite privilege rather than the system working as intended. Much more of this is in our future — as the OP points out. Perhaps it is possible that all the information this democratized technology disseminates will over-catalyze changes to the system itself offered in the name of “reform” and we cud lose as much freedom here as we gain over there.

    Sobriety and calm are advisable, though these are the opposite of both the current mood in the body politic and the opposite of that which feeds necessary reforms.

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    • Isn’t the old line, the real scandal is what is legal.

      I suppose the question is really about who set up the system and for what benefit. Maybe all the actions revealed by the Panama Papers are legal and the system working as intended. But many people feel like this system working was set up by the already rich to keep themselves as such. Meanwhile the rest of us getting moralizing messages about tightening our belts

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      • Liberal sites regular get into fights on why the people who gave us the Great Recession weren’t indicted and prosecuted. There actions might have been reckless but they seem to be legal. You can’t prosecute somebody who did not break the law even if they did something that they should not do.

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        • Lee,
          They weren’t killed because they didn’t actually destroy the global economy.
          Legality is of little concern when people are actively destroying significant quantities of the world’s entire population.

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  9. “The age of forced transparency is here, and it means secrets will only become harder and harder to keep.”
    This is hilarious. Do you know anything about cryptography?

    Actually, I’ll write a post on “Why we ought to support Trump this General Election” if you can intelligently analyze Eliot Spitzer’s “fall from grace.” And that’s something that’s bloody obvious if you use a bit of common sense.

    You are relying on people “inside” to report things (unless you’re actually supporting Anonymous). But the problem with that is that even someone being forcibly tortured can have reasons to not report it. Given that, it’s genuinely hard to find A Person of Conscience (particularly for something stupid and minor, like you need to bribe the housing authority to get a building permit).

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  10. I don’t think corruption is a useful lens to describe the tax avoidance strategies outlined in the Panama papers. Instead there are two different things going on here:

    1) Tax law isn’t full of exploits because it was designed that way to benefit a cadre of wealthy international elites, it’s full of exploits because any set of cadged-together rules that builds up over time will naturally trend toward becoming a bloody mess. Since there’s a lot of money to be made in finding the points where this giant pile of kludges produces low tax bills, a market of people who can help others use these exploits springs up. Rich people have more potential tax to avoid, so they are the ones with the strongest incentives to pay people to help them avoid tax. The only way to fix this problem is to remove the ticket of special breaks and deductions and differential rates that create the exploits in the first place. A simple tax code puts tax consultants out of business.

    2) In practice, a tax haven is a country that chooses to levy less tax than other countries think they should. The Panamanian government is under no obligation, legal or moral, to act as a tax agent for the UK, or the US or anyone else. If other countries want Panama to be more accommodating in their tax laws, why not try offering them something of value in exchange for what you are asking them to give up. I know threats are more authentically American, but why not try being nice for one, for the novelty value if nothing else.

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    • I know threats are more authentically American, but why not try being nice for one, for the novelty value if nothing else.

      Yes. It’s called FATCA (https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act). And it can make it quite difficult for Americans living overseas to find a bank willing to open an account.

      By virtue of our political and military power and by virtue of the central role of the dollar and the U.S. financial system, United States foreign policy leans heavily on what are essentially threats (FATCA, sanctions, designations etc). It can be effective, but it’s also probably speeding up the process of other countries designing financial arrangements that sidestep the U.S. financial system. Although, in the long run this may be a good thing for Americans.

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    • Simple tax codes?! What is wrong with you? Do you know how many lobbyists and tax attorneys and accountants would have to find new work if we simplified the tax code?

      Why do you want to put those poor people out of a job? Think of the lobbyists! They have waterfront condos they have to pay for!

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  11. makes a good point above. The word corruption is nebulous, even more so when we deal with it in common usage. We use it to talk about everything from quid pro qou bribes and payoffs to the appearance of too cozy a relationship between interests to malfunctioning bureaucracies.

    The Panama Papers thing is interesting. My guess is that nothing that comes out of it will be as big as the initial splash. From what I can tell, there are three types of actors implicated; there are (1) bad guys using offshore to hide their ill-gotten gains, think Putin and his cronies; (2) good guys using tax havens to hide from the bad guys, think Putin’s political enemies; and (3) the sort of tax dodging that most people think of when this topic comes up. We already know that the first group are bad guys. Knowing how they hide their money is helpful, but I’m not sure it overshadows how they get their money. As for the second group, not sure anyone will care how some high profile person from a shady person uses a hidden bank account to pay for his kid’s school tuition so that she can’t be traced.

    The third category is where the obvious interest is. I guess we’ll see how big that category is. The Icelandic PM’s story is interesting in that it’s not obvious why he was hiding money offshore. Was it to get around capital controls? Evading capital controls is a big deal if you’re the head of government, but does anyone care if a private citizen does it? I guess we will see how this plays out.

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    • j r:
      Evading capital controls is a big deal if you’re the head of government, but does anyone care if a private citizen does it?

      I’m definitely interested in seeing the wider implications of events such as this. Will it result in a crackdown on these measures or countries making global pacts to rat out individuals? Or instead, will it result in a public consensus of “well, they did it so why can’t I?” We shall see, although I’m more inclined to lean towards the latter given the public outcry over many of the implicated individuals. Not to mention global governments favoring hardline approaches.

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    • “Evading capital controls is a big deal if you’re the head of government, but does anyone care if a private citizen does it?”

      If it’s LEGAL, I got no issue, especially if 1) the “civilian” population can do it 2) given my general low opinion of politicians.

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