Doug Casey on the Paradise Papers

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by Doug Casey, Casey Research:

Justin’s note: People are outraged over the Paradise Papers.

The Paradise Papers are a collection of more than 13 million confidential documents. They relate to offshore investments.

Someone stole these documents from Appleby, a law firm based in Bermuda, and leaked them to the press.

But that’s not why people are upset. Instead, they’re mad that rich people are using offshore accounts to pay less taxes.

It’s completely ridiculous. So, to make sense of this, I called Doug Casey…

Justin: Doug, what do you make of all this hysteria surrounding the Paradise Papers? Should the public be upset, or even surprised, that rich people are trying to reduce their tax burden?

Doug: It’s a sign of the times for several reasons. And none of them are good. It’s a sign of terminal moral sickness.

First, the mob is howling about the fact that rich people would dare to get their money offshore to jurisdictions where the taxes are lower. The cancer of envy is very advanced in the Western body politic. Envy is different from, and much worse than jealousy. Jealousy says: “You have something I want. If I can’t get my own, maybe I’ll take yours.” Envy says: “The very fact you have something I want, but don’t think I’ll ever get, makes me hate you. I’ll destroy both you and the object if I can.”

Number two, it shows the average person now resents rich people for having a modicum of privacy in today’s world. Privacy is a signature of civilization—there is no privacy in primitive societies, where everyone can see and hear what’s going on in the next hut. Today the average guy intuits that Google, the NSA, Facebook, and a hundred other entities, including his new “smart” refrigerator, know everything about him. He resents that some people don’t want to be an open book to the world, and can avoid it.

And finally, there’s no outrage about the fact that these papers were stolen from a law firm. Nobody is even acknowledging that an actual crime was committed. Nobody cares about the thieves being punished. Instead, they’re on an envy-driven witch hunt against the victims.

There’s no outrage at all, except against the victims, which is very disturbing. It’s yet another sign that one of the central values of Western civilization is going under.

Justin: I agree that there should be much more outrage over the actual crime that was committed. But doesn’t the average Joe have reason to be upset by this? I mean, “the system” clearly favors the rich, right?

Doug: Of course. The system of income and asset taxes is totally corrupt. The problem isn’t some people evading and avoiding tax to preserve their assets. The problem is that the hoi polloi want to see them pay their “fair share”—whatever that is—instead of eliminating or greatly reducing taxes. Rich people have the money to hire lawyers to make sure that laws are passed, and manipulated in their advantage. They have the money to hire accountants to take advantage of all the loopholes in the laws. They have the money and the connections to bribe politicians to make sure things are passed in their favor.

So yes, the system is very much oriented towards the rich people, and that’s not good. But it wouldn’t be that way if the world wasn’t so politicized, where the government’s not in a position to pass out favors.

In other words, the rich are getting richer, but it’s largely because the government is getting bigger and more powerful, and the rich are able to take advantage of it, for the reasons I mentioned.

And to keep the pot from boiling over, they give the plebs some welfare benefits. Free this and free that. Some bread and circuses, as it were.

The whole society has become quite corrupt. It’s become a giant circle jerk, where everyone is trying to live at the expense of everyone else.

So, you’re right. The plebs have plenty of reason to be angry about the rich patricians. Bill Gates and Jeff Bezos alone have more assets than the lower 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of American society put together. They deserve to be multibillionaires—they’ve created a lot of wealth. But they were also complicit with the government in the process, helped by public funds.

But the rich have plenty of reason to be angry, too. They’re paying almost all the taxes, while the bottom 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} not only pay nothing, but are net recipients. Which is very corrupting.

This is all indicative of an underlying atmosphere of class warfare in the United States, and all over the world. It’s explosive.

Justin: Doug, you said earlier that this is “a sign of the times.” Does that mean that this anti-rich rhetoric will get louder?

Doug: I think so. You’ve got to keep in mind that since the so-called “Great Recession” started in 2007, interest rates have gone to zero in nominal terms, and less than zero in real terms.

This has made it possible for the wealthy people to borrow obscene amounts of money, and take advantage of the bubbles this money has created in the financial markets.

At the same time, these policies have encouraged poor people to buy houses, cars, trinkets from China, and so-called educations that they can’t afford. Consumer goods that depreciate.

When we get out of the eye of this hurricane, and enter the storm’s trailing edge, it’s going to last much longer, be much worse, and be much different than the unpleasantness of 2008 and 2009.

I’ve said that many times before, but it bears repeating again and again. The natives are going to get quite restless, because the same thing is going to happen. They’re going to lose their houses, they’re going to lose their cars, they’re going to lose their jobs.

This time we’ll likely see high retail inflation. The high inflation is going to devastate them in any number of ways, making it even harder for them to get ahead than it is now. Times will get much worse, not just economically, but politically, and sociologically. Perhaps militarily, which is really scary. They might start a serious war. I don’t know if it’ll be with North Korea, or Iran, or Russia, or one of a dozen other countries.

A serious war, not a sport war, which is the kind we’ve had so far in Iraq and Afghanistan.

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