As regulars may know, there is no hard editorial line in these parts about certain views, such as intellectual property rights (steady on, old chap, Ed). Take the case of the “whistleblower” site Wikileaks. Samizdata’s founder, Perry de Havilland, has come round to taking the view that whatever collateral damage might be caused by Wikileaks, that the benefits outweigh the bad. I am less sanguine than that; I fear that the activities of Wikileaks may make governments become even more secretive. I admit that much of this stems around attempts forecast the unknowable. For all I know, Perry may be proven right and my reservations are unfounded.
But as they say about making omelettes and breaking eggs, a lot of eggs can be broken on the way to culinary goals. And this latest story, concerning a fired Julius Baer banker who has decided to publish reams of client data on Wikileaks two days before he goes before a court, is instructive. Sure, some people who use offshore bank accounts via Zurich or wherever are up to no good, and deserve to be exposed. This is particularly the case if such persons are politicians who favour high taxes, socialist economics and the rest. When it turns out that such folk are salting away their wealth in Zurich, Zug or Geneva, it is delicious to see their discomfiture. But – and it is a big but – many people who bank offshore are not primarily looking to hide ill-gotten gains or adopting a double standard; they are people who wish to take advantage of free capital movement and “vote” with their wallets for a low tax jurisdiction. “Exit” is often more powerful than “voice”; the ability to leave a jurisdiction, as I have said before, is one of the few incentives to make oppressive regimes marginally better behaved.
Consider what Wikileaks might want to expose next: health records? The insured art collections of certain people? You can see how leaking such data could be a gift to would-be kidnappers and extortion artists. This is not a theoretical issue. Dan Mitchell and Chris Edwards, in their book, “Global Tax Revolution: the Rise of Tax Competition and the Battle to Defend It”, published in 2008 by the Cato Institute, point out that in some parts of the world, a high proportion of individuals bank offshore because their domestic governments have habitually robbed them in the past. Disclosure of financial details can lead to a person having his daughter’s body parts mailed through with a letter threatening further horrors unless a payment is made. Bank privacy is not, therefore, something that only criminals take advantage of, although that business is often portrayed that way.
Like I said, omelettes and broken eggs. We’ll see how this dish turns out.