There Are No Borders for the Rich

There Are No Borders for the Rich

For the ruling class, the nation-state is an indispensable fiction.

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You’d think it a reasonable assumption that the people most invested in the idea of the nation-state would be the same people who lead them; that the men (and regrettably, it is mostly men) who go out of their way to run for president, weasel their way into a parliamentary post, or seize power by other means would want to maintain the facade that their borders, their anthems, and their founding myths mean something. You’d think that a figure whose rhetoric leans on national pride would put faith in his country and its people and that an individual charged with shaping policy would at least feign confidence in the bylaws of his own making.

This moral consistency need not arise from genuine conviction, which is hard to come by in politics, or even strength of character, which is rarer still, but from a basic sense of self-preservation—an instinct to keep their ship more or less watertight until they can disembark. Why, then, are hundreds of politicians from almost half the world’s countries so down on their homelands that they’ve resorted to hiding their money elsewhere?

These more than 330 political scalps are the International Consortium of Investigative Journalists’ latest gift to the world: a gigantic data leak, known as the Pandora Papers, that reveals the offshore machinations of the world’s most powerful and well-connected individuals. The list includes the usual suspects, like members of Vladimir Putin’s entourage and imperial sleaze Tony Blair. But there’s also Abdullah II bin Al-Hussein. Since 1995, the king of Jordan bought 15 homes worth more than $100 million in the US and the UK, including a $33.5 million California mansion, through dozens of shell companies. If a king—the most literal type of sovereign!—won’t put his money where his monarchy is, shouldn’t we conclude that the nation-state is dead?

Fifteen years ago, it might have been tempting to explain the phenomenon of offshore wealth with clichés about “flatness” and the inevitability of globalization. Borders, as the story went, were on the verge of obsolescence, and footloose capital was following the rational ordinances of the market, which could not be constrained by a piddling national state. Just look at all these sweatshops bringing jobs to the third world. Heck, look at the European Union!

That narrative didn’t age well, except where it did. For most of us, nationalism is still kicking: With or without Covid-19, most borders are more tightly controlled than ever, and it remains difficult if not impossible for the average person to choose what country they live in. Most of us can’t put our savings in a company controlled by a trust that will never pay estate taxes. That’s because most of us live in a world of borders and nations—and the jerks who run them.

Meanwhile, the oligarchs, criminals, and UHNWIs (that’s “ultra-high-net-worth individuals,” for the proles) can manage their affairs with the insouciance of Thomas Friedman circa 2005—even if they have their own countries to run. To borrow an expression from Brooke Harrington, the Dartmouth economic sociologist who in 2016 wrote Capital Without Borders, a prescient study of wealth management, these people are “parasitic” on the nation-state system: “They need it to stay alive to use it for their own purposes,” she told me.

If we dispense with the notion that there is something sacred about the nation, we can see it for what it is: a tool for the ruling and corporate classes to divide and conquer everyone else.

For the ruling class, you see, borders are useful. Sure, you can write restrictive laws to keep migrants out; demonizing foreigners might even help you get a nice crowd at a campaign rally. But every one of these stateless nationalists, as we might call them, also knows that you need borders for another reason: to keep your money encased and concealed. The discrepancies between the laws of sovereign nations are what enables jurisdiction shopping, which is at the core of the offshore economy.

The nation-state, for these people, is therefore an indispensable fiction; if you blow up nationhood tout court, then you can no longer exploit the sovereignty of the Cayman Islands, or indeed of the US, to get an anonymous bank account and a break on capital gains. The nation-state is dead. Long live the nation-state!

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