What does money even mean? The Panama Papers
You might be forgiven for wondering what all the fuss even is about the Panama Papers. Over the last decade we have lived through increasing evidence that money isn’t even a real thing. Tyler Durden’s ideas from Fight Club, where he preaches that money is just a number on a computer screen, are easy to believe.
But money does matter. And it is real. Kind of.
Because money, although in itself just an idea that we’re all forced to live with, does represent something very real. Work. Money is the way that we keep track of work.
We know this because we never exchange money for money, not really, we only ever exchange money for work.
For hours spent in a field, in an office, at a factory, in a mine, behind a till, on the road. The cash we use to pay for things only exists because, at some point, somewhere in the world, for some purpose, one human being did something that another human being wanted.
Before we had money, we bartered. We would do a straight swap. This much grain for these many sheep. And broadly speaking, the thing that was equal there was the number of hours work each group of stuff needed before that swap.
This is why we pay lots for books, but little for stacks of plain paper – the book represents more hours, because it had to be written and checked and edited and so on. Both the book and the stack of plain paper also represent hours of work in tree logging, wood processing and paper making. But, per page, the book is (or should be) more expensive.
Each pound or euro or dollar or yen represents an amount of work that has been done.
And this is why money offshore and in tax havens matters.
James Henry of the Tax Justice Network said yesterday that there is “At least 21 to 32 trillion [US] dollars of individual private wealth offshore.”
Let’s take the low figure – $21tn.
If we write it out long form, that’s $21,000,000,000,000.00.
Which is a staggering amount of money. If you divide it up, that’s $3,000.00 for every person on Earth.
Looking at that, it can be easy to just stop there, and think of the $3k figure as something that can just help us understand what a huge number 21 trillion is. But it’s not just a huge number. Because every one of those 21 trillion US dollars represents an amount of work that has been done.
Now. Let’s think back to the barter example. The farmer and the shepherd exchanged their grain for sheep. They didn’t need to keep track of it for later, because it was a straight swap. They only need money if the farmer wants the sheep, but the shepherd doesn’t want anything from the farmer. The shepherd then needs an OIU from the farmer that he can give to someone whose stuff he actually wants. This third person can then go to the farmer and say that they want the grain the farmer would have given to the shepherd. Money is just easier.
You might notice something though. In the above example, the IOU doesn’t exist for very long. Everyone gets what they want quite quickly, and the IOU doesn’t hang around for ages, with the farmer wondering how long he has to keep a few sheep worth of grain around in case someone walks up to his front door tomorrow with the IOU.
We have $21tn worth of IOUs sitting in savings accounts. Savings accounts that don’t just not belong to governments, but are all but out of the reach of governments. That money is locked away. (Although hopefully not forever.)
This means that for every person on the Earth, there are $3,000 worth in hours of work that should be waiting to walk up to their front door.
In the UK, $3,000 is about £2,000. For my husband, that’s two months work after tax.
If we scale that up for the number of people on Earth, that’s 1.167 billion years. That’s a quarter of the way to the death of the Sun. That’s a lot of work.
It gets worse though, because the UK, relative to most of the world, has high pay per hour.
The UN says that about 20% of the world’s population, 1.2 billion people, live on less than $1 a day. Three thousand days is eight years and two months. Without weekends. I don’t even want to think about how many lifetimes of the Sun are owed to the people of Africa.
Money that is moving is being useful. While it’s moving, things can get done. People do work, and have work done for them in return. But when you put money to one side, it stops being useful. It sits like water in a bog. It goes bad.
If we look around us, pretty much anywhere in the world, it is possible to see work that needs doing that is not being done. Usually because somewhere along the way, there isn’t the money to do it.
What the Panama Papers are very clearly showing us is that there is the money to do it. That money exists. But with the help of politicians and tax codes around the world, that money has been allowed to go stale in private offshore accounts.
We need that money. We are owed that money. Not because we want to keep it ourselves and become the new dragons, but because of the work it represents.
There is so much around us that needs to be done. So many people who need help. So many ecosystems at risk, both evolved and engineered.
As a planet, we just can’t afford to have that much potential work, potential good, sat around on computer screens in tax havens, going stale.