That none of the laundered money has been returned so far is a problem. But how much of what type of problem is this? That, in turn, depends upon exactly what we mean by laundered.
Those who've used political power to steal money from the taxpayer, jail them -- of course. Some governments, some regimes go so badly wrong that the politicians simply sign cheques to themselves, withdraw cash directly from the treasury. This is clearly theft, is criminal, and should be treated as such.
There's a more pervasive form of corruption where people outside government are given economic privilege. Perhaps a loan from a state bank that doesn't have to be repaid. Or an import license, or a special tax or tariff rate. That then again breaks down into two types -- do they have to pay for this with political support or do they have to pay for it with a payment back to the politicians?
The current state of play in Bangladesh is that there are certainly rumours, accusations, of both of those having happened, privilege granted with that necessity to repay. There are also accusations of more direct plunder, commissions, and slices of government contracts.
These are, in current law, all punishable and where a fair trial finds guilt should indeed be punished.
But there's a further, wider, meaning of laundered. Which is people taking money out of the country without having the full authorization to do so. People who have, say, been over-invoiced for imports, or under-invoiced for exports. This then means funds piling up outside Bangladesh when they should be inside.
The problem here is that yes, these things would also have been illegal. There would almost certainly have been tax dodged as well as the funds moved offshore. But the funds moving offshore themselves, well, is that a crime of such awfulness that it cries out for vengeance?
In the economic sense -- and note that economics does not cover either morals or ethics, those are different subjects -- quite possibly not.
For what we actually want is that the necessary funds are invested in aiding Bangladesh to grow. Further, we want the investment to be in things which really do make Bangladesh grow. Not in some fantasy of a politician's plans, but in something that actually works.
What we do about the laundering of money over the past couple of decades depends upon which type of laundering it was, mortal or venial
So, why were people trying to move funds out of Bangladesh? Why weren't they investing more capital inside the country? Because the opportunities to make profitable investments weren't there. Which is odd, most odd. Because with an economy in our state of development, our rate of growth, investment should be very profitable indeed.
That offshoring -- that type of laundering which is offshoring -- is a symptom that we've not got the investment climate right. For if we had then people would be investing domestically, by preference.
The solution? Get the investment climate right, of course. There's plenty of global capital looking for usefully profitable places to invest. The whole claim about money laundered offshore is that there's lots of domestic money which should be domestically invested but which isn't. So, if we get the structure and incentives right then we will be able to attract a lot of that investment we desire.
That is, the trick to getting people to invest is making them want to invest. The rule of law, secure property rights, reasonable levels of taxation and, as Adam Smith himself pointed out, much of the rest of it will just happen all by itself.
To borrow from Christianity, there are mortal and venial sins. A mortal one -- stealing directly from the treasury, accepting bribes while in political office -- is one that will be punished by eternal damnation. A venial sin, on the other hand, is something bad, something wrong, but something that can be worked off by doing the right and good things from now on.
What we do about the laundering of money over the past couple of decades depends upon which type of laundering it was, mortal or venial. The first, the big one, must be punished and publicly. The second, well, the best answer is to change the rules so that no one wants to do it anyway.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
