At the heart of much of the debate between the Clinton and Sanders camps is the role of asset wealth in a democracy: can it be used for good in a way that allows a rising tide to theoretically lift all boats even if wages stagnate, or is the mere fact that so much wealth is sloshing around in the hands of so few an intrinsic threat to democracy? Much of “neoliberal” Democratic centrism is built around the idea that one can use market forces to achieve fundamentally progressive aims without upsetting the corporate apple cart: if wages are stagnant, boost home prices to create wealth; if people can’t make ends meet from month to month, democratize debt through credit cards; if schools are underfunded, privatize them; if healthcare is unaffordable, compel Americans into private insurance through a mix of subsidy and regulation.
It’s not so much that these solutions don’t appear to work in the short term, or that they’re not in some ways better than the previous status quo: they do and they are, at least for a while. The problem is that they sort of sweep the problem under the rug, substituting a bigger problem down the road for the one they’re trying to solve. You can’t lower the price of foreign goods via trade deals enough to make up for the jobs lost. You can’t goose home prices beyond the ability of people to afford them without creating an economy-destroying bubble. You can’t quell desperation by providing credit, without ending up with a society in which the majority are in debt and few have the money to retire over time. And so on.
This fact has become increasingly clear to Americans of all stripes, but especially to 1) downwardly mobile blue-collar whites who used to think that they prospered over minorities by dint of their hard work and industriousness, and now flock to Trump in reaction to their betrayal by Reaganomics; and 2) younger Americans who realize that the deck is entirely stacked against them due to outrageous student loans, low-paying or contract-labor jobs, unaffordable housing costs, etc. Older, more established white collar types don’t tend to feel the bite of the broken economy in the same way, and therefore find themselves more attracted to incremental tweaks to the system.
The release of the Panama Papers is likely to add fuel to the argument that concentrated asset wealth is itself the problem. Even if no American names are found in the documents (because the firm didn’t want them and because it’s so easy to set up domestic ones), it’s more than obvious that not only is there too much sitting wealth in too few hands, those hands use legal loopholes or outright illegal behavior to hide their wealth from partial redistribution to those who actually make the economy work.
There aren’t incremental tweaks to address this problem: either tax havens will be eliminated or they won’t be. Either inequality will be reduced or it won’t. Politicians could make tax haven nations international pariahs and use trade agreements to punish them, but they choose not to because the international finance system is set up mostly to benefit the wealthy. Either the giant finance companies that enable and profit from this system are shrunk down to size, or the system will continue to operate the way it does.
Regardless of whether Sanders or Clinton prevails in the nomination contest (and Clinton almost certainly will), people in American and around the world have lost faith in philanthrocapitalism, the power of asset wealth to trickle down to the wage earners, and the benevolence of economic elites and the institutions that serve them. The Panama Papers will only hasten that trend and radicalize the public further toward disempowering the politicians and institutions that have served the comfortable asset classes so well at the expense of everyone else.
That’s the key difference between today and the 1990s. Back in the 1990s, it was credible to imagine that one could hand the keys of the economy over to the financial sector, and that everyone would grow richer together even if the rich grew fantastically wealthy and inequality increased. That argument was untrue then, of course, but at least it had not yet so obviously failed the test of trial and error. People know better now, which is why Reaganomics has run its course even in the Republican Party, and why an undisciplined septuagenarian socialist from Vermont will end up nearly tied in delegates with the most formidable, polished non-incumbent presidential frontrunner in modern American history. With the Panama Papers and related documents, the evidence continues to grow that bigger changes to the economic system are necessary than those on offer from the post-1980s center left.