Bernie Sanders and The Panama Papers

As much as Bernie would like to blame the money laundering and money-hiding in the Panama papers on capitalism, in fact the vast majority of clients in those papers appear to be from socialist and strongly interventionist, populist governments.

Socialist countries tend still have winners and losers just like capitalist countries.  However, those winners and losers are not determined by success in making products and services in the marketplace, but in success in reaching a leadership position in the government or cozying up to those in government.  Soviet government elite had special privileges and special stores not accessible by ordinary Russians.  The Castro brothers and Hugo Chavez's daughter are among the richest people in the western hemisphere.

However, these wealthy leaders now have two problems.  First, they likely spend most of their time spouting egalitarian claptrap, so that they would like to hide their wealth in order to mask the obvious consistency problem.  Perhaps more importantly, their socialist policies have likely destroyed the country's economy -- there is, for example, no place any sane person would want to invest a billion dollars in Venezuela.  They need to get their money out of the country but because everyone else in a socialist country is also trying to get their money out, the self-same leader has likely instituted capital controls.  So the leader needs to put his or her money in a different country where it can actually be invested productively, and in doing so must evade their own capital controls.


  1. Dan:

    "In a capitalist country, the wealthy become powerful.
    In a socialist country, the powerful become wealthy."

  2. me:

    The powerful become wealthy anywhere, and the wealthy are powerful anywhere...

    Realistically, how many folks in WA (Senate, House, etc) have a net worth under $2M and an income under $2k/year? Sanders point has more to do with ensuring that hiding money abroad is hard, which I fully agree with. The entire "Taxes are for the little people" mentality is pretty disgusting.

  3. Tom Lindmark:

    They also need to get their money out because they know that if they lose their power a firing squad is a more likely outcome than a government pension. Ergo you stash the money elsewhere and make sure you have good escape plans when the proletariat comes for you.

  4. Not Sure:

    What's wrong with hiding your money wherever you think is best? What's disgusting is the idea that the government has a right to know what you have and where you keep it.

  5. jdgalt:

    I think this misses the point, because it concedes the wrongheaded idea that it's wrong to have money hidden away. As long as we're so grossly overtaxed, hiding your money is the only rational thing to do.

  6. wilfranc:

    Kind of like how the left sends their kids to private schools while making it harder for the poor to chose where to send their kids. Watch what they do, not what they say.