The Panama Papers actually reflect pretty well on capitalism

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.

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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.

The only American I’ve so far seen identified was a Chicago-area financial coach I’ve never heard of. Moreover, even the folks who may be putting money offshore won’t necessarily be doing so to avoid taxes or hide nefarious activity. Hedge funds, for example, are often incorporated in the Caymans for boring reasons having to do with quirks in the U.S. tax code (which would tax foreign investors on certain types of transactions) rather than to hide income or let Americans avoid their legally owed tax liabilities.

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