Interview: Brooke Harrington on buying impunity
...and going after Fascists' funds
I'm pleased to bring you this interview with Brooke Harrington, who is Professor of Sociology at Dartmouth College. She is the author of the best-seller Capital without Borders: Wealth Managers and the One Percent (2016), and of Pop Finance: Investment Clubs and Stock Market Populism (2008) and Deception: From Ancient Empires to Internet Dating (2009). A consultant for Amazon, Bank of America, the OECD, and other entities, she writes for publications such as the New York Times, The Atlantic, and The Guardian. Our conversation, which took place on August 3, 2021, has been edited for clarity and flow.
Ruth Ben-Ghiat (RBG): Reading Capital Without Borders, I was struck that the practices and values of the very rich resemble those of autocrats. The importance of loyalty and secrecy and the lack of accountability stand out. You conclude that wealth managers, lawyers, accountants and other enablers are creating an elite that, as you write, is "increasingly ungoverned and ungovernable."
Brooke Harrington (BH): There's a strong overlap between your work on Fascism and mine around the theme of impunity. The offshore world is an impunity zone. You can buy your way in. And once you do, you can buy your way out of accountability, not just for your taxes, but for just about any law that you might find inconvenient.
Some people reject the idea that any government should constrain them in any way. They really approach the power of the state as a tool which they should wield exclusively against others, but never be subject to themselves. And of course that's true of Fascist leaders. But the thing that I found most scary in my own eight years of offshore research was how widely shared the ambition of impunity really is. And that's really key to the appeal of Fascist leaders like Trump. Even though he can't personally make his followers immune or exempt from the law, he can make them selectively exempt, like, as he did at his rallies, when he would encourage his followers to beat up protestors and told them "I'll pay your legal bills."
That was sort of a ritualized version of this broader appeal, which I call aspirational impunity. It helps explain why a broad range of people respond to Trump. Yes, he's about white supremacy. Yes, he's about misogyny. And yet he actually picked up votes among people of color. He has a pretty substantial following among white women. What's that about? Well, everyone thinks they're going to get something from Trump. And I think one of the overlooked things that his followers believe they'll get from him is a few crumbs of his lawlessness, which they admire.
RBG: I always say that the essence of authoritarianism is "getting away with it." What strikes me in this description of the ultra-wealthy is also the arrogance and scorn they have for the rule of law - another commonality with strongmen.
BH: It is. Ultra-wealthy individuals wield a transnational, unaccountable power. Several of the wealth managers I spoke to, who literally worked face-to-face with folks like this every day, said to me, our clients are scary people. They regard states as play things. The law is their marionette. They interfere in democratic processes and legislative processes.
They gave me a picture of what the world looks like to not just Fascist leaders, but to the larger group to which Fascist leaders belong: people who've purchased complete impunity, for whom the rule of law and the boundaries of nation states are just a set of shopping opportunities. If you can't find what you want at one shop, you just move on to the next.
In the offshore world, countries use their sovereignty to compete for the business of the wealthiest people in the world. And they literally offer propositions to wealth managers like, you know, Dear Mr. Smith, we understand that you work with ultra-high net worth individuals from Azerbaijan. We would like to attract more of their business. Why don't you tell us what your clients want? And we will make the laws that are most appealing to them, or if you, yourself, Mr. Smith are an attorney, why don't you draft the laws and we'll pass them.
RBG: Talk about boutique service, or, more properly, bespoke service! Speaking of impunity, I see Trump and Silvio Berlusconi as people whose whole business model was based on inhabiting the gray zone between legality and illegality and then they simply imported this into politics.
BH: Well, wealth management offshore works through the gray areas. Some professionals develop the skill of adhering to the letter of the law while violating the spirit of the law. The reason that hardly anyone's ever been prosecuted after the Panama Papers and the Paradise Papers is that most of what those leaks revealed was not illegal activity. It was gray zone activity, stuff that was not explicitly illegal anywhere. It was maybe immoral, but not something that anyone could be prosecuted for doing.
RBG: How do we disincentivize professionals from working for unscrupulous individuals?
BH: To research Capital Without Borders, I talked to a total of 65 people, 65 practitioners in 18 countries. It was hard to get to them. I had to get my own credential as a wealth manager even to get face-to-face with them. About a quarter of them were what I would call hardcore, taking the position that all taxes were theft and they were doing good by protecting their wealth creator clients from the illegitimate seizure of their assets by rapacious, inefficient, illegitimate welfare states. There's no reaching those people.
Then there was the mushy middle - about 50% of the people I interviewed knew that what they were doing wasn't really respectable, but they rationalized it to themselves as helping families. But the truth is that by helping a half a dozen families avoid hundreds of millions of dollars in taxes, they are hurting all the other families by making sure there's not enough money to pay for decent roads, public education, hospitals, etc.
A quarter of the people I interviewed were really conscience stricken by the nature of their work. They often came from outsider backgrounds, like one person I spoke to who had been an accountant for Greenpeace before she fell in love with the son of a famous wealth manager, owner of a boutique wealth management firm in Switzerland, and went to work for the family firm.
Those people who know what they're doing is wrong are going to be the next whistleblowers. If I had the power and the budget to make change in this area, I would take out full page ads in the Financial Times, the Economist, etc, letting wealth managers know they can leak to us safely. Here's our PGP encryption key. We will make sure that you're treated the same as John Doe was treated [by the Süddeutsche Zeitung, which broke the Panama Papers story]. To this day, nobody knows who John Doe is. That was a watershed moment because all previous whistleblowers were named and hounded. Every single leak punches a big hole in the wall of secrecy that permits this impunity to exist.
This matters because in the 21st century, Fascism cannot exist without an offshore system: Vladimir Putin, Viktor Orbán, all of them depend on it. If you want to get to a Fascist in the 21st century, you turn off the money taps and those money taps are not in their home nations, they are overseas, in offshore financial centers.
Things like Magnitsky sanctions are also terrifying [to Fascist leaders] because they actually work. So, if something can be done to blow up the offshore system from the inside, like making it possible and socially desirable for more whistleblowers to come forward, that will strike a massive blow against all kinds of problems that seem intractable right now.
That includes the spread of Fascism, which is funded in large part by a strain of offshore financial networks, like the ones that were behind Brexit and behind the Trump campaign. Basically all the far right movements in Europe, like Matteo Salvini's in Italy, are funded by offshore accounts. You shut that down, and you shut down a lot of so-called right-wing populism. You also turn off the source of an exploding economic inequality around the world, which is politically destabilizing as well as undesirable for lots of economic and social reasons.
I would also try to convince people that it's socially desirable behavior to pay taxes. I think that's necessary to undo some of the Reaganite programming that we've had for the last 40 years, telling people that greed is good and government is the problem - add those things together and you get a moral legitimation for tax avoidance.
RBG: Did immersing yourself for so many years in this world change your view of human nature?
BH: It didn't change my view of human nature, except that I didn't realize how appealing impunity actually was to so many people. Being able to do things that are totally unacceptable, that are crimes in some cases, and get away with them, is intrinsically appealing to a much larger portion of humans than I would have realized. And I don't understand it, and in that sense, it has changed my view of human nature. It's raised a puzzle I didn't know was there.