Treasure Islands - Nicholas Shaxson [118]
Offshore thrives on narrow self-interest combined with a culture of collusion. Its defenders are neurotically quick to impute mean motives and a hidden agenda to their critics. But men angling for promotion do not usually speak freely with the Wall Street Journal as they raise their voices in dissent.
The offshore intolerance is not confined to small jurisdictions. Rudolf Elmer, a Swiss banker who worked for several banks in several offshore centers before becoming a whistle-blower on some of the corruption he had seen, felt the pressure in Switzerland, a country of 8 million people.
Not long after speaking out and returning to Switzerland, he began to notice two men following him to work. He saw them in the parking lot of his daughter’s kindergarten, then outside his kitchen window. Then his wife was followed, and the men offered his daughter chocolates in the street. In 2005 he was imprisoned for thirty days, accused of violating Swiss bank secrecy. There has been no determination as to who might have been following him.
“I was bloody naive to think that Swiss justice was different,” Elmer said. “I can see how they might control a population of eighty thousand people in the Isle of Man,” he said. “But 8 million people? How can a minority in the banking world manipulate the opinion of an entire country? What is this? The Mafia? This is how it works. Jersey, the Cayman Islands, Switzerland: this whole bloody system is corrupt.”11
Ruling class ideologies that for years were beyond the pale in the larger democracies have been allowed to grow offshore, without restraint. As offshore finance has grown increasingly influential in the global economy, rebounding back and reengineering the onshore economies in ever more significant ways, so its attitudes have flourished, gaining the strength and confidence to capture the perceptions and attitudes of public life. This offshore consensus is evident in the intransigent arrogance of bankers who, having nearly brought the world economy to its knees, ask for still more and continue to threaten to relocate elsewhere if they are regulated or taxed too much. It is visible in the demands of the super-rich, who have come to expect and demand tax rates below those of their office cleaners. It is visible in the actions of the Irish musician Bono, perhaps the world’s most prominent poverty campaigner, who legally shifts his financial affairs offshore to the Netherlands to avoid tax and is still warmly welcomed in high society. The United States, the greatest democracy the world has known, is now in thrall to the worldviews of unaccountable, abusive, and often criminalized elites.
To a very substantial degree, indeed, we have offshore finance to thank for that.
10
RATCHET
How Secrecy Jurisdictions Helped
Cause the Latest Financial Crisis
THE PRACTICE OF USURY, OR THE LENDING OF MONEY at excessive interest rates, has a nasty historical taint. The prophet Ezekiel included it with rape, murder, and robbery in a list of “abominable things.” Plato and Aristotle called it immoral and unjust, and the books of Exodus, Deuteronomy, and Leviticus forbid it. In Dante’s Inferno, “lewd usurers” sit in the seventh circle of hell, and the Koran states that “whoever goes back to usury will be an inhabitant of the Fire.” When the ancient Greeks deregulated interest rates, indebted Athenians ended up being sold into slavery.
One can argue about the merits and evils of usury, but in a deregulated market the poor and vulnerable inevitably pay the most. Annualized rates of 400 percent or more are not uncommon.
Historically, the United States regulated lending rates carefully. In 1978, however, a new era began when the First National Bank of Omaha started enrolling Minnesota residents in its BankAmericard Plan. At the time, Nebraska let banks charge interest up to 18 percent a year, while Minnesota’s usury limits were 12 percent. Minnesota’s solicitor