Reaction to The Pandora Papers (Entrepreneur's POV)

In this video, we are going to talk about the Pandora Papers and what that basically means for you as a human being and how you should think about this in general. So first things first, we should define what the Pandora Papers are. So the Pandora Papers, if we take a look at my screen over here, you can see what it is. Leaked files from 14 offshore service providers tie more than 330 public officials, including 35 world leaders, to offshore fortunes. Now, the highlight over here says dozens of world leaders and hundreds of public officials used offshore tax havens to hide assets worth hundreds of millions of dollars. A massive investigation has been found. Okay. And this is who actually put this together. This is the ICIJ, the International Consortium of Investigative Journalism. And they talk about dealings from people such as Jordan's King Abdullah II, Czech Prime Minister, uh, can't pronounce that name, and Kenyan president. We'll just leave it at that. Okay, so who's behind it? You have basically a network of reporters launched a 2-year effort to sift through 11.9 million confidential files leaked to it, aided in the effort by more than 600 journalists from 150 media outlets. So this is talking about exposing the rich and maybe they're doing things that are unfair. So my first thought behind all of this is that the media is incentivized to do this. The more clicks that they can drive the more ad revenue they're going to be able to hit. By the way, the media does report on good and important news. It's not always going to be, you know, hit pieces, right? But if you think about it, what actually drives clicks at the end of the day? I remember there's this one saying called, if it bleeds, it reads. Basically, if it's going to cause any type of uproar or, you know, maybe war type of stuff going on or something that's going to trigger people, that's going to cause a lot more engagement, which is why when you look at Facebook or Twitter, what tends to get a lot of engagement is stuff where people are disagreeing on stuff because more and more people are commenting on it, right? And that's pushing engagement up. More and more people are viewing it. People are going to share stuff that is triggering as well. I mean, that's just human nature, but you got to think about the incentive. So Charlie Munger, who is Warren Buffett's partner, so great investors. Charlie Munger has always said that, you know, look, if you show me the incentive, I'll show you the outcome. The incentive for these news publications or journalists in general is to appease their bosses by driving more revenue. And again, they can report on things such as the weather, but maybe that's not as interesting as something that is a bombshell like this. Going back over here, let's take a look. You know, where are the 336 politicians from? And you have a bunch that are in Russia, a bunch that are in Ukraine, and then, um, you have a good chunk of people kind of just everywhere, right? And I know the, the Panama Papers came out about 5 years ago or so, and they report on kind of a similar report. I think they had a good chunk of people from the United States, but you can see, I mean, these people from all around the world. What's also important to understand is that You know, if you want to set up— people are complaining about the offshore companies. From a tax standpoint, offshore companies, they make a lot of sense depending on your tax jurisdiction. You know, setting up offshore companies to do business is not in itself illegal. And, you know, some people might have legitimate reasons to keep their finances secret. So you can keep your finances secret, but also you set up offshore companies to also potentially help with taxes, right? Which is why you see Apple has You know, as of this recording, a lot of tech companies, not even just Apple, they have companies in, you know, Ireland as an example, because Ireland is favorable from a tax standpoint. You know, when you look at all these other reports over here, you have to ask yourself the question too. So, you know, attacking the rich just to attack the rich is one thing, but you also have to be asking the question and thinking for yourself too. I think getting information is one thing, but also understanding how to filter through that information is another. You know, you can see what's highlighted: a huge leak of financial documents has put the spotlight on the hidden assets of some of the world's most powerful people. So it's really easy to have this narrative of the rich versus the poor. But you also have to think for yourself, for the vast majority of people that are quote unquote rich, how did they get there? How did their family get there in the first place? Like, why are they rich in the first place? Vast majority of cases, they earned that money by providing value in the marketplace. That's just how the world works. Everything you see around you is built by entrepreneurs. For example, this microphone, carpet back there, and, you know, that chair you see back there, right? Everything's built by entrepreneurs. People need to market, people need to build great products or services that they need to sell as well. And as long as they continue to provide a great product or service, they're going to continue to get more customers. And that's how they get value. And that, that's how they're able to acquire other assets. And what happens with the rich is once they start to acquire assets, the top investors in the world, they actually aren't incentivized to realize the gains necessarily. So they're buying more assets that produce more assets because the assets are producing a return. And that's how the game is played. That's how the world is set up. And so a lot of people that end up hating the rich, you know, I actually think that's, that's kind of misguided because, well, what have the rich done to you? I mean, other than the fact that the vast majority of them again have provided a lot of value to the marketplace. Let's come back to what you see on the screen over here. So King Abdullah of Jordan secretly spent more than £70 million on a property empire in the UK and US. And then in the red highlight over here, you see lawyers for King Abdullah said he used his personal wealth to buy the homes. And there was nothing improper about him using offshore firms to do so. So this one, I think we don't have enough information here. His lawyers could in fact be right, but obviously they're incentivized to say that he's right. If he did in fact secretly spend kind of sovereign money on this, then yeah, that is— it's illegal, right? So that's the first one on Jordan over here. Now, if we come back to Kenya over here, so the family of a Kenyan president were revealed to secretly have owned a network of offshore companies for decades. Again, there's nothing illegal about having offshore companies. Is there a tax advantage to doing so? Is it legal within your company? If it is, then, and there's a benefit for you, why would you not do that? Right? People find reasons to attack rich people all the time, but that's the wrong narrative because it shouldn't even be about attacking rich people. They're attacking people that are providing value to the marketplace, right? Again, I say that for the vast majority. And so a reframe here is to think about instead of going after the rich people, how can I provide more value to the marketplace? Right? How can I add value? Through products, services, how can I continue to level up my skills to get to the point where these people eventually provided for their families? Or maybe their, you know, their families, maybe their fathers or like their grandfathers, maybe they created all the wealth and maybe they're reaping the rewards from it. But you wanna get to that point as well where you kinda have a new set of problems, but maybe the problems aren't the same set that you have right now. Complaining is doing one thing, writing hit pieces is one thing, but actually doing something about it and then actually critically thinking through what's actually legal and illegal here, is important because you want to be able to form your own opinions, right? And this is me forming my own opinion. I'm not saying I'm right, but this is my opinion. You know, the Jordan one might be, you know, illegal, but this one, Kenya, like, okay, sure, he has offshore companies, but what's so bad about that unless he's doing illegal activity? Russia over here, you know, Russian President Vladimir Putin, he had a— apparently he had like a mistress on the side and, you know, she bought a bunch of assets in Monaco. Again, we don't know the full details here. What's the context behind them? Was it legal to do so? Was it his assets? Is this such a bad thing that he wanted to keep it a secret? Like, that's his personal life, right? I'm not saying cheating is necessarily a good thing, but that's his personal life. But is it illegal? No, it's not illegal, right? Was it a smart move for him to do so? A lot of people think about the wealthy not paying their fair share of taxes. You know, that's certainly one narrative, right? But you also have to think about, okay, for the vast majority of wealthy that are quote-unquote not paying their fair share, are they tax avoiding, which is actually illegal because you're Operating within the kind of the guidelines, right? What are the rules exactly, and what can I do to kind of minimize my tax burden? That's legal. Tax evasion is not legal, right? Tax evasion is just trying to straight up run from taxes and not paying your fair share. But when you start to spin a narrative and more and more people start to jump on it, this can spin into even a political narrative as well because political candidates can jump on whatever side they want to jump onto, and if they feel like that's going to help them win, they're going to do that, right? Again, show me the incentive and then you'll get the outcome. At surface level, based on what's being reported over here, doesn't seem that illegal. Czech Republic failed to declare an offshore investment. Company used to purchase 2 villas for £12 million in the south of France. Okay, that's probably more illegal, right? You've got to be reporting your holdings, right? That means you got to help the government because the government is— I mean, they, at the end of the day, they're kind of running things. This seems like it's operating outside of the guidelines or outside of the rules. So that's why I highlighted it in red. And Pakistan over here, the leak found Pakistani Prime Minister, his inner circle, including cabinet ministers and their families secretly owned companies and trusts holding millions of dollars. Again, if you own companies, trusts, offshore companies, whatever, maybe you don't want it to be in the spotlight. And that's okay because the dream is actually to be wealthy and not famous where people don't know who you are because the more powerful or the more wealthy you become, people paint a target on your back just because it's easy, right? People don't default to what's difficult. They default to easy level of thinking, right? That's not what you're here to do though. You're here to think critically. So I'm not going to keep going down the list here, but my point of showing you all this is that You have to think critically when it comes to whether it's the Pandora Papers or the Panama Papers. What is the incentive behind these people and how does that fit into your worldview? And how do you think about this critically, right? And then that's going to help guide your thoughts and you're going to continue to form your own opinions about things. I just like to worry about what I can control. What can I control? I can control how well I do. I can control how much effort I put into my products or services and how much value I provide to the marketplace. However wealthy or quote unquote rich I become, I mean, that's— I'm gonna let the market speak for itself and I'm gonna operate within the guidelines of the marketplace, within the rules. I'm not gonna try to, you know, evade taxes, right? Because I mean, I'm gonna do whatever is legal. You have to ask yourself again, as you look at these Pandora, or even if you read the Panama Papers, what is actually legal and what is illegal? More importantly, what can I do about all this? And does all this matter to me at the end of the day? Okay. So if you enjoyed videos like this, please hit the like button and hit the subscribe button as well. Because it helps us grow. And don't forget to leave your comments below, and we'll catch you in the next, the next video.