Financial morality puzzles Pugwash

Credit: Tax Credits via Flickr Creative Commons Credit: Tax Credits via Flickr Creative Commons

Pugwash’s meeting last week was centered around the Panama Papers leak and the morality of whistle-blowing in general. In today’s information age, any leaked data spreads around the globe almost instantly, with no chance to take it back. When is it okay to spill the beans?

Before discussing the ethics and implications of the Panama Papers, some background must be established. Leaked by an anonymous source to the German news outlet Süddeutsche Zeitung, the Papers are comprised of 2.6 terabytes of data that contain 11.5 million previously-confidential documents detailing the use of tax havens by prominent public figures.

To begin with, because the source is anonymous, there is no knowledge as to how the information was acquired. And the information is enormous: more than 214,000 companies’ documents are included, with at least five heads-of-state involved.

The Panama Papers reveal how certain individuals and companies utilized tax havens. A tax haven is a way to bypass one’s home country’s taxes by stuffing money into different accounts overseas. This is a way not only to keep government eyes largely out of one’s finances, but also a way to pay fewer taxes in general. By sending money to companies in Panama, individuals and corporations could avoid the scrutiny and higher tax rates they would have had to face in their own countries.

Moving money internationally isn’t a crime; it’s an important part of doing business. However, some of the accounts in Panama are implicated in criminal activities like fraud or drug trafficking. Even when it is legal, most people don’t have the option to move money offshore to avoid taxes, and many feel that doing so is morally wrong.

One of the first points made in this week’s Pugwash meeting was that if all of the financial activity was legal, such as shuffling money, then there shouldn’t be a problem with it being public. Because all the rules were followed in the transactions, they should be open to view. However, a counterpoint was that just because something is legal doesn’t mean it should be available for anyone to view.

Another opinion was that, in this case, the leak was justified because it didn’t physically put anyone in danger, and it revealed morally questionable behavior that might be stopped as a result. Similarly, Edward Snowden didn’t directly put people in danger when he made the public aware of large-scale spying. In other cases, like Julian Assange and WikiLeaks, however, whistle-blowing might be less justified due to the sensitive nature of the material released, like on-going, undercover military operations.

What puts people at risk is debatable, though. While WikiLeaks did reveal military information that might have put lives in (more) danger, Snowden’s leak could have prevented the National Security Agency from using surveillance techniques that could have prevented terrorist attacks. In a more implausible scenario, the money being hidden in Panama could be being used for positive developments, which are now under attack because of the scrutiny brought upon them.

In this particular case of the Panama Papers, that last scenario is unlikely. It’s not inconceivable, however, for a situation to arise in which hiding money from the government isn’t such a bad thing, if the government of one’s country is corrupt or morally bankrupt. The Panama Papers seem to give governments more power, by revealing how people are avoiding their oversight, whereas Snowden and Assange’s leaks were limiting the government’s power by revealing to the people how the government overstepped its bounds.

It’s important to note that the government isn’t a single, monolithic entity. While the information about surveillance weakened the NSA and other government programs, it actually strengthened the ability of the United States Congress to legislate against those actions and rein in those programs. Whether Congress was aware or not of the wrongdoings occurring within the government, revealing that information to the public created a political will for change.

At least in the United States, the government is supposed to be of the people, for the people, and by the people. One suggestion was that this meant that the people have a right to know what the government is up to, giving the people the ultimate power of the government. A counterpoint was that people could mean the people as a whole, and not as individuals — not every John Doe and Mary Jane needs to know every detail about the government activity. And at least in the Panama Papers scandal, the information leaked isn’t about the government, but instead about private individuals and corporations. Do the people, as a whole or as individuals, have a right to that?

While Pugwash might not have definitive answers as to the ethics of whistle-blowing in general, one point of agreement is that tax havens should not be legal. Somehow, the loophole of sending money overseas under the guise of “investing” needs to be closed. And although the Panama Papers only name four Americans, this doesn’t mean the United States is in the clear.

Instead, a variety of trade laws and financial incentives mean that wealthy Americans looking to off-load their money can find more easily-accessible tax havens in places other than Panama. Regardless of the morally questionable means of gaining awareness, maybe the Panama Papers will lead to a tighter tax system.

Student Pugwash is a non-advocacy, educational organization that discusses the implications of science. This article is a summary of last week’s discussion on offshore accounts and financial ethics.