Panama City, the place where kids hide their piggy banks from the nanny state.
Panama City, the place where kids hide their piggy banks from the nanny state. GTS Productions/

We are entering a strange world and it's hard to see or say how things from the past might end up in the future that's currently taking shape all around us. The past 40 years have been dominated by two sectors: finance and energy, in the form of fossil fuels. But two very recent events have shocked this order: one is the Panama Papers and the other is the unveiling of the Model 3. These shocks are not freakish but consistent with many others that began right after the crash of 2008.

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But how do we begin to make sense of the Panama Papers and Model 3? For one, you have to forget much of what is written in most economics textbooks and journals and turn to two rather dusty figures: Karl Marx and Joseph Schumpeter. The first thinker's work can help explain the roots and consequences of the Panama Papers; the second, Model 3.

The Panama Papers is a massive leak of confidential documents that expose how the global political and financial elite hide their wealth to avoid taxes—meaning, to avoid contributing to the welfare of their societies, be they rich or poor. Why this is Marxian in nature is, one, the moral indignation it has provoked, and, two, it has made visible what has been mostly invisible for the past four decades: that the interests of the rich are truly divorced from the interests of their societies. This indignation and exposure will further erode the ideological edifice (neoliberalism) that has since the 1980s justified wage stagnation, deepening inequality, and the increased upward flow of social capital (which is what money represents). The future will see that this ideology, as Marx would call it, did not survive the crash of 2008.

The Panama Papers will be good for Bernie Sanders and bad for Hillary Clinton. Politically, the former is consistent with the current post-2008 world; the latter, with the one before the crash. Sanders is not a neoliberal; Clinton is. The Panama Papers will certainly contribute details to this distinction.

Here is what Thomas Piketty, a French post-Keynesian economist (unlike mainstream economists, post-Keynesians include Marx's work in their thinking), had to say about tax havens in Capital in the 21st Century, a book which is the General Theory of Employment, Interest and Money of the post-2008 world:

[If] one adds up the financial statistics for the various countries of the world, one finds that the poor countries also have a negative position and that the world as a whole is in a substantially negative situation. It seems, in other words, that Earth must be owned by Mars.
You will not find this kind of statement in a book concerning orthodox economics or academic finance.

But the fact that an amount equal to 10 percent of global GDP (Piketty's estimate of Mars' ownership of Earth—some go as high as 20 percent) is not factored into mainstream assessments of the global market economy is madness. 10 percent of the global GDP, which is around $75 trillion USD, is larger than the second-largest economy in the world, China's. Indeed, standard economics (and this may surprise many) does not even take money as a whole seriously. It is seen as a mere medium of exchange. Marx, as well as John Maynard Keynes, did not see things in this impractical way, which is why they have been ignored by this profession.

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As for the Model 3, its success, which even surprised its maker (nearly 300,000 preorders for the sleek and "affordable" electric car), has revealed the potential for a major technology shift in the automobile industry to be very real. This is Joseph Schumpeter's creative destruction in action, and the CEO of Tesla Motors, Elon Musk, is playing the role of Schumpeterian entrepreneur to the max.

But the success of this futuristic product (which seems ensured) will not save the world. What is most likely to happen is it will contribute to the existing downward pressure on oil prices. Why? Because it is distorting a mirror that, up to this point, has very clearly shown that the future will be exactly like the present. Now that there is some uncertainly about the world ahead, those who can extract petroleum cheaply will reason that it's better to sell oil in a world that is still dependent on it than speculate on one that may or may not be. Model 3 in this case will be very bad news for Texas, North Dakota, and, of course, Alaska, whose GOP-controlled government is still praying that oil prices will recover and its petrol socialism restored. If this does not happen soon, income tax will have to be reintroduced to deal with that state's mounting deficits.

Model 3 and Iran, which desperately wants to sell its oil for any price the world will pay, might mean that we may never see expensive oil again. However, this is not good news for the environment. Cheap oil has put many Americans back in their beloved gas guzzlers. That's the world we are trapped in now.

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