For the past week media organisations across the globe, including The Irish Times, have been reporting on the Paradise Papers. A cache of over 13 million documents obtained from one of the leading firms specialising in offshore legal work, they give an alarming insight into the size and sophistication of the parallel global financial system that has grown up around a small number of tax havens.
By virtue of colonial and other links to the United Kingdom, the legal systems of these countries are the bedrock on which the offshore world is built. They provide the certainty which enables billions of euro to circulate every day out of the sight of regulators and tax authorities.
The most profoundly troubling aspect of what has been revealed this week is just that; by and large it is all legal and meshes seamlessly with the the onshore world in which most of us live and pay our taxes.
The same banks, law firms and accountancy practices that we deal with are plugged into this system and make a great deal of money advising their wealthy and powerful clients on how to use it.
This whole rotten edifice exists only because it is allowed to exist by democratically elected governments and politicians. And as we have seen this week, many of them are direct and indirect beneficiaries of its existence
Thanks to the work of the International Consortium of Investigative Journalists and its partners, this shadow world is being exposed to the disinfectant of daylight. The stream of stories that have gone around the globe will only feed the inchoate anger and disenchantment that is being seized upon by populist politicians of every stripe.
It may not amount to the death rattle of late-stage capitalism that some may hope for, but it will serve as a wake up call – if one is needed – to more moderate politicians that more urgent action is needed.
They will point, as Taoiseach Leo Varadkar did on Tuesday, to the work done by the OECD to rein in the worst excesses of multinationals in this regard. And there is much merit in the argument that change will only come about as a result of such painstaking international efforts.
But, when we are reminded – as we were this week – of the nature and consequences of what goes on beyond the scrutiny and reach of national authorities, the OECD’s main role in all of this seems to be to provide a fig leaf for governments unwilling to put the offshore genie back in the bottle.
Ireland is a case in point. We have benefitted hugely from our low corporate taxes and the risk of throwing the baby out with the bathwater is far from trivial. But so is the risk that moderate politicians will, by their inaction, leave the door open to more radical alternatives.