The circle has broken

Responsible administration

The circle has broken

“Integrity means wholeness”, said Aristotle. If the circle of common moral values and norms breaks down, we risk irresponsibility and decline of good governance. The ‘Panama Papers’ are a clear example of a broken circle. Citizens vote for a government based on a plan for the future promised by political parties. To realize the plan, citizens pay tax. The government answers to the citizens about the implementation and results of these plans. The ‘Panama Papers’ show a growing group of citizens and business who eschew their civil responsibility. Probably they still meet legal criteria and loopholes, but giving a clear explanation fails badly. What is the difference between dodging and evasion? The consequence is that an ever-smaller group of citizens will pay the expenses of society. The pillar ‘solidarity’ of democracy gets in the doldrums.

A current example of a broken circle is offered by the city of Amsterdam. Airbnb and the city agreed the about the possibility for citizens to rent their houses to tourists to compensate the lack of hotel rooms. With the agreement the city breaks with two aspects of the circle of good governance. First the municipality is not able to control Airbnb. The company trades in The Netherlands, but legally Airbnb is not established here. Therefore there is no obligation to hand over information to the Tax Department. So Airbnb can make profit, but doesn’t need to justify the financial results. It’s clear that the company doesn’t pay enough taxes. Secondly the renting of apartments is a big success. However, again the municipality does not know the exact revenues of the owners and therefore how much tax money it had missed. The media talks about 26 million euros a year.

The parallel between the ‘Panama Papers’ and Airbnb is that legal rules not always fit with the dynamics of society. Companies and citizens can enlarge their interest without the control mechanism of accounting themselves. This is not always bad and probably legally. But it results in an unconformable feeling in society. If the law permits keeping information without transparency, it hurts and affects the democratic agreement to keep our society together in good shape. People literally become pessimistic and cynical.

“Integrity”, as said by Aristotle, “not only contributes to ones’ happiness but precisely to the happiness of the whole society.” That goes wrong now!

Recovery of the cycle

The freedom of doing is one of the achievements of democracy. Now these abuses are no longer seizable and sometimes scandalous, reassessment of integrity is needed. How can we maintain the support to common values and norms and protect the general interest against these free riders? The (international) community now tolerates holes in legislation and therefore weakens the (national) defence of our democracy and solidarity. A strong strategy is needed to make the whole circle again.

Henk Bruning

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