It has been about two months since the Panama Papers were supposed to shock the world. The Prime Minister of Iceland resigned thanks to the papers, but that was only supposed to be the tipping point for a tidal wave of corruption and scandal.
But nothing of the sort has happened. The latest, biggest news about the papers appears to be how Spanish film director Pedro Almodovar is fighting back over the papers’ claims. And as Curt Nickisch with the Harvard Business Review noted, the biggest implications of the papers appear to be taking place on the market, as firms who have been exposed have lost about $230 billion in terms of market capitalization since the leak, or about $200 million per firm.
Losing $200 million may seem like a lot, until you realize that is only worth about 0.5 percent of market capitalization of these firms. Remember: using Mossack Fonesca, the Panamanian law firm from where the papers were leaked, is only worthwhile if you or your corporation is incredibly wealthy.
Now if I was inclined to be generous, I could argue that this loss in market capitalization has occurred in Costa Rica because investors wanted nothing to do with firms which cheated the people out of taxes. But that is nonsense. As Nickisch observed, this loss in capitalization is because investors believe “corporations may face punishment for too aggressive or even illegal tax avoidance or even tax evasion” or that they may suffer from angry customers.
But the reality is that nothing of the sort has happened. Compare the reaction of the Panama Papers to the 2008 financial crisis. Even those who knew nothing of finance learned the names of those companies and banks which nearly drove the global economy into the ground. Bear Stearns. AIG. Goldman Sachs. These names have become epithets for greedy, corporate fools with a shortsighted obsession with profit.
But can you name a single company or individual tied to the Panama Papers off the top of your head? If you are truly knowledgeable, you might know that British Prime Minister David Cameron has some ties to the papers, but he has still managed to avoid any serious consequences. Because for better or for worse, the people just are not that interested.
For better or for worse, the Panama Papers have changed little, whether in the United States where few individuals were named or elsewhere. Now, there are two reasonable explanations for this.
The more positive explanation, one used by defenders of the status quo, is that the Papers just are not that important and those who leaked the papers oversold and under delivered on the juicy names inside.
The more reasonable explanation is that the people just don’t care about corruption, or that the media is refusing to report on this. But while the Panama Papers may have been supposed to trigger a new revelation of corruption which saw the wicked behind bars, it seems that the only real penalty is that some companies will experience a hit on the stock market.
In some way, that is oddly fighting for such a moneyed society.