Mark Braude teaches history at Stanford University and is the author of Making Monte Carlo: A History of Speculation and Spectacle.
We're dutifully outraged by the Panama Papers, but should we be surprised by what they reveal? They confirm precisely the kinds of self-interested practices we've come to expect from the global 1 per cent. We should be most angry about how banal this all sounds by now.
Offshore banking is only the symptom of a larger problem: Elites have no qualms about conducting their finances in ways that harm their own communities. Having the savvy to work the latest tax dodge is at the very core of what it now means to be privileged. The private jet is passé; the new status symbol is the numbered account. Real power is invisible.
How is hiding money from one's government now seen as enviable, rather than treasonous? The history of Monaco, an early centre of offshore banking, provides some answers.
In 1855, Prince Florestan legalized games of chance in his tiny territory (roughly half the size of New York's Central Park), making it one of the few places Europeans could legally gamble.
A few years later, an impresario with a shady past, François Blanc, founded the Monte Carlo resort. Though his was the first town ever built on the profits of wagering, Blanc promoted it as a health spa. Thanks to this sleight of hand, his border-hopping clients felt they had gained entry into an exclusive club of fellow lovers of luxury simply by setting foot in the remote enclave.
In Monte Carlo, well-heeled gamblers learned to celebrate the very act of escaping the laws of their own countries. If you could afford it, travel freed you to conduct a financial transaction (for this is all gambling is) outlawed at home. Profits came exclusively from outsiders, as Monégasques were barred from the casino unless for work.
Monte Carlo's message – spread globally, with the rise of the mass press – was that the fast life was the best kind of life. While funding aviation displays, car rallies and speedboat races, Blanc's descendants suggested that Monte Carlo's spinning wheels promised mobility, both social and physical. One big win could free you to move however, whenever and wherever you pleased.
Gambling profits also freed Monaco's prince to abolish income taxes in 1869, rewarding his subjects for turning their land into a global playground. He unwittingly steered Monaco toward the banking trade that ultimately superseded its original industry. It became, in Somerset Maugham's words, "a sunny place for shady people."
The emergence of Monte Carlo's paradoxically cosmopolitan yet self-interested world view echoed a broader shift in elite identity. Privileged status had long been linked to a sense of duty. Nobles enjoyed financial perks, yet in theory (if not always in practice) they were expected to render service – administrative, judicial or military – to their communities in return.
With the rise of industrial capitalism and the democratic state, one could become elite without lands or titles. In turn, the idea that elite identity should be rooted to a particular locality largely disappeared. As industrialists and media barons made fortunes with rail, steam and engine power, they mixed with the landed gentry to form a more fluid ruling class.
Mobility offered the path to privilege and became its most blatant symbol. Now, power is no longer fixed in any one physical place. Elites live perpetually in transit, touching down – Davos, Dubai, Hong Kong, Panama, Palo Alto – as needed. Today's jetsetter (or at least his or her money) can cross borders with a button's click.
Monaco prospered by offering gambling when it was largely prohibited and, later, by allowing people to secrete money away from their home nations. But were they wrong in doing so?
Confining certain financial practices to places where no questions are asked and then vilifying these places (while not actually abolishing their practices) allows us to excuse the darker aspects of capitalism while still participating in the system.
Our leaders have been caught filtering personal wealth into places where government and banking interests work in close collusion. These microstates seem strange and foreign, aberrations in the histories of modern capitalism and nationhood. But perhaps it's time to stop thinking of the "offshore" as some kind of oddity. Strange little places like Monaco and Panama might show us more clearly than anywhere else how our world truly works.