Wealth International, Limited

Offshore News Digest for Week of November 14, 2005

Note:  This week’s Financial Digest may be found here.

Global Business Taxes Asset Protection Privacy Law Opinion & Analysis



When Allen and Suzi Moore of Newburyport, Massachusetts went searching for a vacation home, they wanted a place relatively close by, where they could hunt and fish in rustic simplicity. After months of research, in 1986 they visited Cape Breton, an island connected by a causeway to the Nova Scotia mainland. It is a four-hour drive from Halifax (and a 1½ hour flight from Boston). A year later they found their Walden: a cozy three-room cabin on the banks of Cape Breton’s Margaree River, some of the finest Atlantic salmon water in North America. They have since planted a raspberry patch and apple and plum trees on their 10 acres, and have added two cabins. Their favorite time of year is foliage-rich October. “On rainy days we fish for Atlantic salmon,” he says. “And on sunny days we go after woodcock and grouse.”

The Moores got in early on Cape Breton, the long-overlooked, easternmost part of the peninsular province of Nova Scotia, whose mainland has been a hot real estate ticket since the early 1990s. Mainland Nova Scotia was said to feel like New England 50 years ago, a friendly, uncrowded maritime paradise with vast tracts of cheap, desirable land. It was discovered by wealthy Americans and Europeans (mostly Germans), who showed up in droves to buy waterfront property for $200,000 an acre in Chester and other tony shore towns west of Halifax. But those mainland bargains are harder to find now.

Cape Breton today is where Nova Scotia was a decade ago. Its oceanfront acreage, compared with the mainland’s, goes for less than half the price – and a mile or two inland, it is cheaper still. Lots on the Margaree River are available for $850 an acre, says Realtor Michael Coady. “The Margaree River is so bountiful and interesting,” says Allen. “There’s really no reason to go anywhere else.” Fishing is not the only attraction. Cape Breton has endless miles of good woodcock and grouse cover. Highlands Links golf course in Ingonish Beach is the top-rated course in Canada, more than worth its $71 greens fee.

As with most “last best places”, creative folk found it first. The notorious American sculptor Richard Serra has a house here. So does composer Philip Glass. But perhaps the most famous early settler was Alexander Graham Bell, who fell in love with Cape Breton because it reminded him of his home country of Scotland. He spent most of his final 37 years on Cape Breton, working on projects as varied as the vacuum jacket (a forerunner of the iron lung), man-carrying tetrahedral kites and, most famously, the hydrofoil.

Link here.


Self-styled champions of democracy insist that “Communist” China ought to look to democratic Taiwan for guidance on how to reform its political system. Ironically, many political reformers agree, but not in the sense that champions of democracy mean. By observing real-life political developments on mainland China during the 50s, 60s, and 70s, and on Taiwan from the 80s till today, political reformers on both mainland China and Taiwan have learned two enormously valuable political lessons: 1.) Communism does not work. This lesson was learned watching desperately as Mao Zedong’s economically suicidal, coercive egalitarian policies destroyed mainland China’s economy and society. 2.) Democracy does not work. This lesson was learned watching incredulously as Lee Teng-hui and Chen Shui-bian’s economically suicidal, pro-independence policies destroyed Taiwan’s economy and society.

Taiwan’s ill-fated experiment in democracy has provided Chinese political reformers on both sides of the Taiwan Strait with an unmistakable lesson. Taiwan has shown them that democracy is as much a recipe for social, economic, and political disaster as Communism. These two important lessons will stand the Chinese nation in good stead as the coming century unfolds, because the adoption of Communism and democracy are the two most catastrophic blunders committed by developing nations in the late 20th and early 21st century.

Democracy is structurally defective. The defects of democracy, its ineffectual constraints against the expansion of power, its predisposition to reward fascist demagoguery, are defects in its incentive structure. Such defects were unwittingly designed into the system from its inception. Such defects cannot be “fixed” by “reformers” waving brooms in the air and promising to sweep out the cobwebs of the previous administration. The only solution to the insoluble problems of democracy, is to jettison the system altogether start over with a clean slate.

A future, reunified China has an unprecedented opportunity, one that seldom arises in history, to try a radically different political system that does work, that genuinely ensures human beings’ natural rights and individual liberty. That system is known as “market anarchism” or “anarcho-capitalism”. Ironically, if China were to move boldly forward and adopt such a system, it would actually be returning to its historical roots, to the great Daoist philosopher Laozi’s “wu wei er zi” (govern by doing nothing).

Link here.


The Ministry of Financial Services and Investments’ decision to enlist PricewaterhouseCoopers, the professional services firm, to undertake a branding study and analysis of the Bahamas as an international financial services center has been hailed as an important step forward for the jurisdiction’s development by the Bahamas Financial Services Board. The research survey, known as “The Bahamas Strategy & Branding Survey” will be sent to a wide range of organizations within and outside The Bahamas in order to collect and analyze information that will assist in policy development, identify opportunities for developing financial services and determine how the “Bahamas Brand” is presented to the international investment community.

It is hoped that the conclusions of the survey will help provide a yardstick by which to measure the Bahamas against other offshore jurisdictions and enable the BFSB to target its activities more effectively. To date, the BFSB has gone about its business by highlighting to potential international investors the Bahamas’ strengths, which, it believes, lie in its skilled workforce, national sovereignty, respect for privacy and the rule of law, absence of direct taxation, modern legal framework, attractive lifestyle and location.

However, the BFSB has acknowledged that competition for business within the offshore world is becoming fierce, and that the Bahamas is perhaps falling short of the competition in certain areas. For example, while the Bahamas is a leader in private wealth management services in the Americas, it has failed to make inroads into other markets.

Link here.


“Ben Bernanke is going to have a challenge,” said Joseph Stiglitz, a Nobel-prize winning economist at Columbia University. “He’s inheriting an economy that has some fragility going forward. The high level of debt, rising interest rates, problems of oil – all of this means he is going to have to manage the economy in a very difficult situation.”

Really. Good thing Bernanke is lily footing his way around the Senate then, huh? Yesterday he promised to “maintain continuity with the policies and policy strategies established during the Greenspan years.” Bravo. Can’t wait.

For our part in the circus, we sent – as we have been threatening to do – 537 copies of our new book Empire of Debt to all the Senators. And their cohorts across the rotunda. And the Commander-in-Chief down the street. The cover letter we sent with the book suggested that continuing the policies of Alan Greenspan, while it might be what the country wants, is not likely to yield the desired result. Please read below. …

Link here.

“We Came, We Saw, We Borrowed”

U.S. Comptroller General David Walker has joined a growing number of economists and officials warning about America’s debt problems. In a November 15 interview with USA Today, Walker laments the country’s “deficits in its budget, its balance of payments, its savings – and its leadership.” He likens the U.S. “to Rome before the end of the empire.” But bestselling author Addison Wiggin takes the comparison one step further.

“Throughout history, every empire has found a way to pay for its expansion,” Wiggin says. “Yet today, politicians have a different mantra. Instead of, ‘We came, we saw, we conquered,’ it's ‘We came, we saw … we borrowed.’” Wiggin’s latest book, Empire of Debt, co-written with Bill Bonner, takes a close look at how America – and its people – became so dependent on debt, and how tremendous that debt has become. For example, last year the government’s total annual deficits hit $7 trillion, according to Comptroller General Walker. That is roughly $24,000 the government owes for every American man, woman and child.

Wiggin and Bonner believe the only way to prevent the nation from following Rome’s footsteps is to spur the government into action. That’s why their company is sending a copy of Empire of Debt to every U.S. senator and representative on Capitol Hill. Additional copies are going to the Federal Reserve and President Bush. But Wiggin is not hopeful the politicians will do what is necessary. “You can always count on politicians to do the wrong thing,” he says. “It’s important for everyone to understand the danger and to prepare for what could happen when the government’s response falls short.”

Link here.


Politics, like fall foliage, turns faster in Vermont. The state was out front opposing slavery and first to approve civil unions. And if the activists who met here last month succeed, the state will set another precedent – first to secede since 1861. No, this was not a clandestine meeting of militants. It was a convention for Vermonters, held in the plush, gold-domed capitol. And its keynote – that separating from the U.S. is a just remedy for the federal government’s trampling of state sovereignty – is echoing beyond the snow-capped Green Mountains.

From Hawaii to South Carolina, dozens of groups across America are promoting a similar cause. Their efforts are not politically popular – yet. But they are reviving one of the most passionate debates in U.S. history: Can a state legally secede? For the Second Vermont Republic (SVR), the group that hosted the convention, the answer is “yes”. “If we had a right to join the Union, we certainly have a right to disband from it,” SVR founder Thomas Naylor told the assembly. In his view, Vermonters should join the cause if they “Say the U.S. has lost moral authority and is unsustainable, ungovernable, and unfixable,” and “Want to help take back Vermont from big business, big markets, and big government – and do so peacefully.”

Naylor’s talking points are not unique to Vermont. Separatist groups with diverse causes share the view that the federal government has grown too big and too powerful. Many say obedience to the Constitution would restore America’s lost liberty. But some insist that the federal government long ago overstepped its constitutional powers, leaving secession as a valid recourse. The Free State Project (FSP) is another group determined to reclaim constitutional liberty. Its libertarian members have pledged to move to New Hampshire to restore limited government. But FSP is not promoting secession, which, according to spokeswoman Amanda Phillips, usually has caused more problems than it has solved. “We can accomplish our goals by working within the constitutional framework,” she says. FSP’s reluctance to rock the boat points to a major obstacle U.S. separatists face: public uneasiness about secession.

Ever since the Civil War, many Americans view secession the way President Lincoln did, as an unlawful act of rebellion by the slave-holding Confederate States. Indeed, Lincoln saw it as a tyrannical threat to the principle of democracy. But movements like SVR counter with two points. First, they argue that secession is a continuing theme from America’s formative years. And second, they say that Lincoln was not a noble savior of the Union, but a racist warmonger intent on strengthening federal authority.

Link here.


Two explanations have been offered for the recent riots in the French “banlieues”. One puts the blame on “multiculturalism”, a policy that tolerates the cultural habits of Arab immigrants – habits that run counter to Western civilization and have become a Trojan horse of Islamic fanaticism. The other blames the “color-blind” model of French republicanism, which failed to notice that the children of immigrants were in need of targeted state assistance. Anyone who has followed the vicissitudes of France’s welfare state realizes that neither of these arguments cuts to the core of the problem. France’s multiculturalism is mostly rhetorical. In practice, that country’s brand of republicanism has actually imposed a renunciation of immigrant culture, sometimes in implacable ways. And the welfare state cannot be the answer to a problem caused by – well, welfare!

Immigration creates tensions, but a system that is porous and open will diffuse them in a way that a stratified society imposed by a welfare state cannot. The absence of “positive discrimination” towards second-generation Arab immigrants cannot be the reason why upward mobility is non-existent in a country in which “positive discrimination” towards well-organized pressure groups has created a privilege-based system that heaps advantages on some at the expense of others. The worst losers in that type of system are precisely those who start from a disadvantage – such as North African immigrants in Seine-Saint-Denis and other suburbs.

One would think 6,000 charred cars, the destruction of countless shops and other types of property in 300 towns and the horror France has gone through would persuade the French to question their model. However, the response of the government and the reaction of the French elites indicate otherwise. In typical fashion, the French mercantilist system is responding by creating more welfare benefits in a country in which the state consumes half the nation’s GDP and has stifled economic growth. The government has announced that assistance to struggling young students will be increased five-fold and that 100,000 second-generation immigrants will get government jobs without going through the competitive process. These solutions are exactly the cause of the problem – the welfare state.

Half a century ago, French economist Jacques Rueff persuaded the authorities to undo many laws that shackled the French economy and depressed the social order. The government even created a “French Committee for the Suppression of the Obstacles to Economic Expansion” (a wonderfully bureaucratic title for undoing bureaucracy). Although reform only went halfway, the results were spectacular and France’s unemployment stood at a mere 1% for years. Like Germany’s Ludwig Erhard, Rueff was not quite a classical liberal but he understood the welfare state was a danger to European prosperity. France desperately needs to bring that man back to life.

Link here.



The IRS has had serious shortcomings in its internal controls and financial management systems that caused it to sap its resources in the preparation of its financial statements in the fiscal years of 2004 and 2005, according to a recent report by the U.S. Government Accountability Office. As a result of the controls and systems flaws, the IRS did not keep effective watch over its financial reporting or legal and regulatory compliance, according to the GAO. Thus, the revenue service did not “provide reasonable assurance that losses, misstatements, and noncompliance with laws material in relation to the financial statements would be prevented or detected on a timely basis,” the report concluded.

The GAO did note that the IRS’s financial statements for fiscal years 2005 and 2004 were fairly presented “in all material respects”. It also acknowledged that the IRS has “continued to make great strides in addressing its financial management challenges and has substantially mitigated several material weaknesses in its internal controls.” But the GAO still considers issues related to the IRS’s controls over financial reporting, management of unpaid assessments, collection of revenue and issuance of tax refunds, and information security to be material weaknesses. What is more, the accountability office asserted that the IRS did not always comply with a law concerning the timely release of tax liens.

“IRS’s most serious financial management weaknesses are rooted in its continued reliance on outdated automated systems,” the GAO report added. “The lack of a sound financial management system that can produce timely, accurate, and useful information needed for day-to-day decisions continues to present a serious challenge to IRS management.”

Link here.


Instead of including a provision for major AMT relief in 2006, House Ways and Means Committee Chairman Bill Thomas (R-California) opted instead to propose a two-year extension of reduced tax rates on capital gains and dividends. His bill, scheduled for a committee vote on November 15, is sure to provoke controversy, not only in the House but when the House and Senate have to reconcile their final 2006 tax bills into one.

Since 2001, lawmakers have routinely issued a temporary increase on Alternative Minimum Tax exemption levels to prevent millions of taxpayers from falling prey to the tax, which was originally intended only for the very wealthy. Thomas has said in various reports that a decision to avoid calling for a “patch” on AMT exemption levels could spur momentum for tax reform by revealing the full impact of the AMT. Meanwhile, a Senate tax bill, introduced by Sen. Charles Grassley (R-Iowa), chairman of the Senate Finance Committee, does call for temporary AMT relief.

The capital gains and dividend extension is contentious in its own right. Under current law, the 15% rate (5% for low and middle-income taxpayers, reduced to 0% in 2008) is set to increase after 2008. Thomas’s bill calls for current rates to be extended through 2010. Opponents of the measure say it is hard to justify an extension of a tax break that disproportionately benefits higher-income taxpayers when lawmakers, under pressure to reduce the deficit, are also proposing to cut spending on programs like Medicaid and food stamps, which affect the poor and working poor.

Link here.

Senate tax bill nixes extension of tax-cut on capital gains and dividends.

After postponing its vote three times in less than a week, the Senate Finance Committee on passed a revised tax bill that has one big change from the original. Sen. Charles Grassley (R-Iowa), chairman of the committee, dropped a controversial provision calling for an extension of the reduced tax rates on capital gains and dividends. The provision called for capital gains and dividends to continue to be taxed through 2009 at 15% (5% for low and middle-income taxpayers, reduced to 0 percent in 2008). Those rates are currently set to increase after 2008.

But the provision met with stiff resistance from the Democrats on the committee, as well as one Republican – Sen. Olympia Snowe of Maine – whose vote was needed to pass the bill. Opponents of the measure say it is hard to justify an extension of a tax break that disproportionately benefits higher income taxpayers when lawmakers, under pressure to reduce the deficit, are also proposing to cut spending on programs which affect the poor and working poor. Publicly, Republican members of the Senate Finance Committee who have been pushing for the extension say they will get it one way or another.

Link here.


Beyond the proposal for the FairTax itself, Neal Boortz and John Linder’s book, The FairTax Book, has even more verbiage to offend libertarians than it does points we can cheer. For example, the authors seem quite stressed over individuals using things such as Offshore Financial Services and Eurodollar transactions to avoid death taxes and other taxes. Moreover, the authors want the U.S. to become a tax haven for businesses, but bellyache about other countries being such tax havens

Part of the FairTaxers’ propaganda that the intended sales tax rate will generate as much revenue as all of the current income-based federal taxes do today is based on three unrealistic assumptions: 1.) no increase in black market activities, 2) governments at all levels paying the tax, and 3.) no additional exceptions to what is taxed being implemented. It is claimed that businesses will no longer need to keep payroll records - then, inconsistently, the authors state that businesses will in fact report the number of quarters of employment to the Social Security Administration, while the FairTax.org website states, “Employers continue to report wages for each employee … for the determination of benefits.” [emphasis added] The authors believe that when people avoid any taxes it causes an increase in other people’s taxes – despite the fact that at other times they tell us politicians will always spend any additional money they receive.

The authors celebrate the prospect of broadening the tax base for the unconstitutional Social Security program and bemoan the fact that currently Social Security taxes are not levied on dividends. Apparently it is offensive that the IRS would demand that golfer Lee Trevino pay gift taxes on heart surgery he paid for his caddy, but not offensive if he were forced to pay their hefty sales tax on that same surgery. Revealing a near-psychotic level of naïvety, the authors tell us that the kind of abuses suffered under the IRS “simply wouldn’t happen” once the FairTax is implemented (pp. 145–146).

In the Q & A, we are told that questions and objections unanswered in the book itself is why we have talk shows and email and that the Neal Boortz Show is the unofficial clearinghouse for the FairTax. Yet Boortz has avoided answering the objections I have raised (as well as those of others who have contacted me). The authors attack doubters who point out that the plan calls for a sales tax rate that is 30% of an item’s price, claiming that such critics “never miss a trick.” Yet Boortz and Linder wrongly claim that their misleading, but more appealing, 23%, is the proper figure. To further muddy the waters concerning the intended national sales tax rate the book refers to a $100 item as one priced at $77 with the $23 worth of tax. Once upon a time, one of the touted virtues of the proposal was to bring the tax rate out in the open for the taxpayers … now the intention is to hide the tax within the price as politicians currently do with gasoline prices.

Denying the lessons of marginal economic analysis, we are told the deductibility of charitable contributions has no effect on the decision to contribute – in their enthusiasm for this new tax scheme these guys will claim anything to tout the FairTax, it seems. In defiance of all common sense, law, and history the authors claim that politicians will only be able to change the tax rate itself, not which items the tax is applied to, once the FairTax becomes law.

The authors call for reaching for the possible. But surely there are better possible goals to reach for than building a movement to institute the FairTax. How about for instance, a movement to limit government to its Constitutional functions? A virtue claimed for the FairTax is that it was not written by politicians, though of course the final bill will be. The authors claim in contrast that the income tax was written by politicians, though they ignore their own recounting of how the income tax came from the mind of Karl Marx. They have the audacity to state that “income taxes are seized. Consumption taxes are paid.” It is time to apply the often-stated Boortz challenge: try not paying your [sales] tax and see how voluntary they are.

I did not read this book and write this critique because I like shooting down other people’s ideas, or have no ideas of my own. Here are a few alternatives to the FairTax: 1.) The Liberty Amendment is supported by the most libertarian/strict constructionist member of Congress, Ron Paul of Texas. The two authors could have written a book called Constitutional Government and developed a following for this amendment – but they did not. 2.) The Read the Bills Act is a piece of legislation deserving of support; but this hoopla over the FairTax helps to keep people from knowing about it. 3.) Walter Williams has proposed a Constitutional Amendment worthy of support, but again, it is not well known in part due to the energies devoted to the FairTax scheme. 4.) Milton Friedman, through the National Tax Limitation Committee, has proposed constitutional changes as well. 5.) Harry Browne detailed a way to eliminate all taxes, except the current import duties and excise taxes.

I can only conclude that neither of our two authors wants Americans to know anything about these – and many other – worthy ideas since they do not mention them in the book, discuss them on the radio, or tout them on the Internet. With seemingly no shame at all, the authors actually brag of their efforts to fund the current expenses of the grossly bloated federal government. Rising to new levels of silliness the authors tell us the FairTax will have none of the flaws of the current income tax. Yes, America is better than the income tax, as the authors say, but it is also clearly better than the FairTax. And finally, in calling the FairTax movement the “Second American Revolution”(!) the authors apparently believe the American Revolution was not about individual rights and limited government but about a way to fund the British Empire more efficiently, in lieu of a tax on tea.

Link here.



The DIFC has marked yet another milestone in its development as a pre-eminent regional financial services hub as Sheikh Maktoum Bin Rashid Al Maktoum, Ruler of Dubai, enacted the DIFC Trust Law 2005, which provides a comprehensive framework for the creation of trusts in the DIFC. Consisting of ten major sections, the new legal framework encompasses matters such as choice of governing law, place of administration, creation, validity and modification of a DIFC trust, office of trustee, and duties and powers of trustees.

The Trust Law, DIFC Law No. 11 of 2005 follows closely the enactment in September of the Personal Property Law No. 9 of 2005, which defines the rights and obligations of parties in relation to property other than real estate (land and buildings) located in the DIFC, and the Law Relating to the Application of DIFC Laws (Amended and Restated) No. 10 of 2005.

Link here.


Despite the seemingly unending torrent of citizens’ data pouring into the hands of identity thieves, Congress is unlikely to pass any data-security bills by the end of the year, according to Hill watchers. And consumer advocates say that is a good thing. After the nationwide uproar when ChoicePoint admitted it sold 145,000 dossiers to Nigerian identity thieves, 20 states followed California’s lead and passed laws requiring companies to notify citizens when their data had been compromised.

Now, companies are already acting as if the country had a national notification law, said Gail Hillebrand, a senior attorney at Consumers Union. In addition, Hillebrand said the strict state laws are more consumer-friendly than any proposals in Congress. “I would rather see Congress fail to act than pass a weak federal bill that gives less notice than consumers are already getting due to stronger state laws,” Hillebrand said. Chris Hoofnagle, director of the Electronic Privacy Information Center West, echoed Hillebrand’s assessment, adding that as new state laws go into effect in the beginning of 2006, federal lawmakers will face pressure from states that do not want their legislation overridden by Congress. “Consumers will get a better deal with no federal bill this year,” Hoofnagle said.

In particular, Hoofnagle and Hillebrand point to portions of several congressional bills that would require notification only if the company determines it is likely that identity theft will happen. By contrast, California requires businesses or agencies to notify anyone whose name and Social Security number, or credit card number, was acquired by an unauthorized person. Though banks and data brokers have long opposed federal privacy legislation in favor of self-regulation, both industries are now asking Congress to step in to create a single national standard and cap the limits on their liability in case of a breach.

Link here.


George Orwell’s 1984 is the story of a future society where individualism has been eliminated, where propaganda is used to control the masses, and where perpetual war is being waged to maintain the “peace”. It is a world where false is true and wrong is right, where history is constantly being rewritten to support whatever the regime is currently doing – and where Big Brother watches your every move. It can be summed up in the words of one of 1984’s characters, O’Brien, when he said, “If you want a vision of the future, imagine a boot stamping on a human face – forever.” But even in the middle of this totalitarian “utopia”, there is one man, Winston Smith, who dares to question authority, and who seeks a life and love for himself.

The parallels between our modern world and that of 1984 are uncanny. The Ministry of Truth, the Thought Police, the political manipulation of language to distort reality, the hidden censorship of political correctness, and the war on terror as a control mechanism – all echo the themes of 1984. So much so, that reading the news headlines often makes it seem disturbingly prophetic. 1984 is ultimately a depressing story. Winston Smith believes he is thwarti, a conspiracy which cheats him of his love, Julia, and ultimately of his own sanity – when he is incarcerated in the Ministry of Love, and subjected to the horrors of Room 101.

1984 is a chilling read for sure, and implies that the omnipotent state will ultimately win. It is rarely that a book instills real fear in the reader. However, even as Winston Smith lives out his days in diminished manhood, he clings on to one idea – that if there is any hope at all, it lies with the “proles” – the ordinary people … the masses … the great unwashed. These people were cannon fodder, and largely ignored by the powers that be. Smith’s hope was that one day the proles would “wake up”, and in so doing, would, by force of numbers, sweep away the vast illusion of totalitarian state power.

And this is the all-important point. It is an ILLUSION. State power is only effective as long as those subject to it “believe” in it. The state has no power except what we grant it. Its power is derived from our willingness to give up our own power. Thus, the state’s primary role is to instill in its subjects the idea that it is absolutely necessary, and that without it, life would be miserable and chaotic (like present-day Iraq, perhaps). The only thing that can destroy this illusion is if people simply ignore it and act as if it was not there.

The state’s ultimate power is its ability to control the flow of information. And that is exactly how “Big Brother” operated in 1984. All information was in constant flux – managed and massaged to suit the purposes of the party. In 1984, the ordinary people were completely subjugated because of the state’s control over information. In contrast, the internet bypasses the state information control apparatus. On the net, one has access to nonofficial news sources and opinions. It is literally impossible to censor the bulk of what goes on online. In this way, the modern aspiring “total” state has serious competition, because it cannot fully control the flow of information.

In 1984, the road ended in Room 101. But in the real world you have the opportunity to take a different road. You CAN defeat Big Brother in so many different ways. It is just a matter of “waking up” and seeing where the power really resides – with YOU. You have the power to withdraw your permission, to withdraw your support. You can do this in a multitude of ways – both minor and major. And you can find support networks of like-minded people, where the “how” of this is revealed. The internet can be your gateway to personal freedom … your portal to the real world – the world without the charade of state power. But you have to want freedom. You have to desire it intensely. If you want to be FREE, then it is time to wake up and ACT.

Link here.



In response to a proposed rule (PDF file) by the Federal Communications Commission, EPIC filed comments opposing the expansion of a wiretap law into voice-over-IP communications. The Commission’s expansion of the Communications Assistance for Law Enforcement would require developers to build security backdoors for government wiretapping into a wide range of devices and applications, putting privacy and security at risk.

Link here (PDF file).


On October 15, 2003, the FBI sent Intelligence Bulletin #89 to 17,000 local and state law- enforcement agencies around the country. The bulletin warned of pending marches in Washington and San Francisco against Bush’s Iraq policy and stated, “While the FBI possesses no information indicating that violent or terrorist activities are being planned as part of these protests, the possibility exists that elements of the activist community may attempt to engage in violent, destructive, or disruptive acts.” The FBI catalogued some of the new threats to public safety: “Several effective and innovative strategies are commonly used by protesters prior to, during, and after demonstrations. … Protesters often use the internet to recruit, raise funds, and coordinate their activities prior to demonstrations. Activists may also make use of training camps to rehearse tactics and counter-strategies for dealing with the police.”

Saying that dissenters are attending a “training camp” is intended to suggest that they are akin to the killers who attended Afghan terrorist training camps. And the fact that protesters use the Internet is as irrelevant as that earlier generations of protesters used the U.S. mail. Since FBI computers are far behind the technology curve, FBI analysts may be unaware that Internet use is pervasive among Americans of all political stripes. After warning about the danger that “extremist elements” could engage in “vandalism,” “trespassing,” and “the formation of human chains,” the FBI cast suspicion on almost anyone attending a protest: “Even the more peaceful techniques can create a climate of disorder, block access to a site, draw large numbers of police officers to a specific location in order to weaken security at other locations, obstruct traffic, and possibly intimidate people from attending the events being protested.” The FBI promulgated the doctrine of collective guilt for all demonstrators – as if anyone on the streets in the same city as a masked anarchist troublemaker is as guilty as the person who throws the brick through a Starbucks window.

There are other warning signs that the FBI is off the leash. In February 2004, the FBI’s Joint Terrorism Task Force issued subpoenas for information on an anti-war meeting held at the Des Moines, Iowa, campus of Drake University. The subpoena demanded “all records of Drake University campus security reflecting any observations made of the November 15, 2003, meeting, including any records of persons in charge or control of the meeting, and any records of attendees.” The feds also subpoenaed four anti-war activists, including the leader of the Catholic Peace Ministry, to compel them to testify before a grand jury. After controversy arose over the subpoenas, the feds issued a new subpoena muzzling Drake University officials from making any public comments about the prior subpoenas. The feds lost control of the spin on the investigation and, after widespread criticism, canceled the Drake University subpoenas. There is no way to know how many other subpoenas may have been quietly complied with by colleges or other organizations that eschewed a public confrontation with the feds.

Though the Posse Comitatus Act of 1878 prohibits the use of the military for domestic law enforcement, the Bush administration is successfully pushing to have the U.S. military become more involved in domestic snooping. It took more than a decade after the first big anti-war protests in the 1960s before Americans learned how far the FBI had gone to suppress and subvert public opposition to the Vietnam War. There have been no congressional hearings spurred as a result of FBI Intelligence Bulletin #89 – despite the FBI’s stark animosity to free speech therein. Is the FBI now considering a similar order to field offices as the one it sent in 1968, telling them to gather information illustrating the “scurrilous and depraved nature of many of the characters, activities, habits, and living conditions representative of New Left adherents” – but this time focused on those who oppose Bush’s Brave New World? Because of the Bush administration’s secrecy policy, Americans cannot know how far the feds have already gone to suppress dissent.

Link here.


Israeli scientists have come up with a non-invasive lie detector that can be used at airports and can tell if you are lying to security staff. Tested in Russia, the two-stage GK-1 voice analyser requires that passengers don headphones at a console and answer “yes” or “no” into a microphone to questions. Apparently the software picks up uncontrollable tremors in the voice that give away liars or those with something to hide. The device, designed by the Israeli outfit Nemesysco, has already found one person to be planning something illegal among the testing team. The test takes between 30-75 seconds.

However, it is unlikely that they thought this one through. Everyone is guilty of something. It will catch those who have used drugs, while having no intention to smuggle the things. So if you have ever had a joint in your life, or had your mum pack your bag for you, you can expect to be harassed by Airport security for the rest of you life. Still it least it means that politicians will never be allowed to fly again.

Link here.



The business community cheered the nomination of Samuel Alito to the U.S. Supreme Court. Along with new Chief Justice John Roberts, the conservative Alito would help guide the court to more pro-business decisions – at least that is the consensus view.

If it were only that neat. A conservative ideology by no means assures a pro-business view on the big cases. Sure, conservative judges can be expected to swat away cases that attempt to uncover novel theories of liability, for instance. But Alito and Roberts may be less inclined to support big business when that means departing from core conservative values, such as preserving the powers of the states against the federal government and giving deference to the decisions of regulatory agencies.

Link here.

Does Judge Alito reflect George W. Bush’s “libertarian streak”?

Supreme Court nominee Samuel Alito is so far from being a libertarian that I thought even the DC libertarian establishment would sit this one out. It seems, however, that I have overestimated our friends in the nation’s capital. Thus we are presented with an article from the Cato Institute, by George Mason University law professor Ilya Somin, praising Alito’s “libertarian streak”.

Judge Alito has an unusually lengthy history of judicial opinions and other writings from which we can form ideas about his view of the law. From all of this, Professor Somin has taken a tiny handful of cases to make his case that Alito has a “libertarian streak” – and, as we have seen, even most of those cases provide no evidence for any such claim.

I will not speculate as to why an ostensibly libertarian organization would want to get behind Judge Alito, or anyone George W. Bush would consider worthy of the Supreme Court, let alone stretch so far to do so. They, of course, can waste their time and efforts however they like – I am rather confident that Alito will be confirmed with or without their help. I only hope no one is taken in by their campaign, and moved to spend their own resources supporting this unmistakably statist judge on the bogus premise that doing so will somehow advance liberty.

Link here.


Many folks accept, some with a sense of high probability, that the U.S. will suffer a terrorist attack, perhaps of horrific proportions. If that happens, as General Tommy Franks and others have suggested, democracy could well fail and the U.S. Constitution could be brought down and replaced by martial law. An attack would leave a terrified U.S. populace, many of them so desperate for a sense of order, so lustful for revenge against the terrorists (to be identified by the War Machine, of course) that they will follow the U.S. Government in lockstep. Nuke Iran and Syria immediately (as neocons have wanted to do for quite some time)? No problem. Arrest and intimidate anyone who dares speak out against the government? Hey, national security is at stake. Vigilantism waged against dissident “traitors”? We are fighting for the survival of Western civilization, for God’s sake.

It can happen here. Consider the moral character of those in the White House and consider the demonstrated failure of Congress to stop them on their long march to disaster. Americans would be wise to adopt the attitude toward government leaders held by their ancestors. In 1787, citizens harbored disdainfully little trust in government. After viewing the original version of the U.S. Constitution, they found no explicit enumerations of a citizen’s right to bear arms, to speak freely, to get a fair trial, etc. Show it to us in writing, demanded the patriots and thus, two years later, was born the Bill of Rights. They assumed, and so should we, that government leaders, unchecked, have limitless potential for harm toward the citizenry.

This is the government, after all, that runs a gulag network of CIA prison camps. Senator Joe Lieberman, Honorary Co-Chairman of the hawkish, right-wing Committee on the Present Danger and a firm supporter of the war in Iraq, has this to say: “The fear … of federal military usurping state and local authority and, in the worst case, martial law imposed by a president has to give way to the reality of lives on the line.” Michael Ledeen, a fellow of the American Enterprise Institute, and close and trusted White House adviser, said, “Paradoxically, preserving liberty may require the rule of a single leader – a dictator – willing to use those dreaded ‘extraordinary measures’, which few know how, or are willing, to employ.”

The leaders of the War Machine – with their gulags, their lies, their senseless, immoral war – do not treat enemies and purported enemies terribly well. In the event of martial law, it would be naïve indeed to suspect that they would treat Americans any better. Patriots – left, right and center – should unite under the American flag to stop the War Machine today while they still can.

Link here.


The Bush Administration, through an amendment introduced by South Carolina Senator Lindsey Graham, has just successfully stripped federal courts of jurisdiction to hear applications for habeas corpus brought by those unilaterally declared enemy combatants without any process and held by the U.S. indefinitely throughout the world and even in the U.S. This was accomplished by means of a last minute amendment to the Military Authorization Bill, brought up on the floor of the Senate without committee deliberations and virtually no advance warning to the American people that it was happening.

It was not only human rights groups like the Center for Constitutional Rights, but many in the military or retired from the military who opposed the Graham amendment: Judge John Gibbons, who argued the landmark CCR case Rasul v. Bush before the Supreme Court, John Hutson, Dean of Franklin Pierce Law Center and former Judge Advocate General of the U.S. Navy, and the National Institute for Military Justice, among others, wrote open letters to the Senate to oppose the dismantling of habeas corpus.

The Graham amendment will create a thousand points of darkness across the globe where the U.S. will be free to hold people indefinitely without a hearing and beyond the reach of U.S. law and the checks and balances of the courts enshrined in our Constitution. The last time this country suspended habeas corpus was for the internment of tens of thousands of Japanese Americans during World War II, a travesty that is now universally recognized as a blot on our nation’s history. The purpose of the writ of habeas corpus has always been to relieve those wrongfully held from the oppression of unchecked executive power. The most reliable way to determine whether someone is properly held or a victim of injustice is to have a right to judicial review of the detention. This has been understood at least since the proclamation of the Magna Carta in 1215.

While the Administration and its supporters have tried to characterize the men being held at Guantánamo as the worst of the worst against all evidence, the fact is that even the military has admitted that they often apprehended the wrong people. Most have no ties to Al Qaida, many were turned over to the U.S. for bounty, and many more were just in the wrong place at the wrong time. If they have no way to appeal their innocence or their status, they will be left to rot in detention indefinitely. As has been the practice of this Administration, this latest scheme was accomplished stealthily and in secret. The Center for Constitutional Rights vows to continue to fight for the rule of law. We will not allow American democracy to be eroded a little at a time, until, finally looking around, we can longer recognize what has become of this democratic nation.

Link here.

Power Uber Alles

Perfidy loves company. George W. Bush instructed his British puppet, Prime Minister Tony Blair, to get moving on the detention issue so that he, Bush, would have company when he attacked the Constitution’s guarantee of habeas corpus. Habeas corpus prevents authorities from detaining a person indefinitely without charges. The guarantee of habeas corpus ensures that no one can imprison you without a trial.

The Bush administration wants the power to detain indefinitely anyone it declares to be an enemy combatant or a terrorist without presenting the detainee in court with charges. In England the power to arrest people and to hold them indefinitely without charges was taken away from kings centuries ago. Bush apparently thinks he is the reincarnation of an absolute monarch.

The puppet Blair set to work. He soon discovered that at most he could try to pass a law that permitted the British government to hold a detainee for 90 days, a far cry from Bush’s desire for indefinite detention. Blair took what he called his “anti-terror” legislation to Parliament and was handed his first-ever defeat as Prime Minister. The British Parliament knew enough history to realize that Blair’s “anti-terror” legislation was in fact the opposite. Parliamentarians perceived Blair’s proposal as a police state trick that could be used by an unscrupulous government to terrorize Her Majesty’s subjects by the use of imprisonment without charges. The British Parliament refused to put up with such injustice. 11 of Blair’s former cabinet ministers joined in voting down the legislation.

That happened on Wednesday November 9. On November 10, the Republican controlled U.S. Senate voted 49 to 42 to overturn the U.S. Supreme Court’s 2004 ruling that permits Guantanamo detainees to challenge their detentions. How dare the US Supreme Court defend the U.S. Constitution and the civil liberties of Americans when we have terrorists to fight, argued the Republican senators. What are civil liberties, the Republicans asked rhetorically, but legal tricks that allow criminals and terrorists to escape.

The Labour Party dominated British Parliament will not allow 90 days detention without charges, but the Republican controlled U.S. Congress favors indefinite detention without charges of whomever Bush wants to detain. Nothing more effectively undercuts the image that Bush paints of America as the land of freedom, liberty and democracy than the Republican Party’s destruction of habeas corpus. The name of Lindsey O. Graham, Republican senator from South Carolina, the sponsor of this evil legislation, will go down in infamy in the book of tyrants.

The Bush administration is in violation of the U.S. Constitution, the rule of law, the Geneva Convention, the Nuremberg Standard, and basic humanity. It is a gang of criminals. The Republican Party is so terrified of losing power that it supports a tyrannical administration that has brought shame not just to the Republican name but to all Americans. When a Republican next campaigns, all he can say is “vote for me because I want power to lock you up and torture you.”

Link here.


The course that congressional leaders are following this week to extend controversial domestic spying powers of the USA Patriot Act was never animated on Schoolhouse Rock or taught in high school civics classes. A considerable stretch of the Patriot Act II’s path to law lay behind closed doors among a small group of lawmakers accompanied by advisors from the White House. The process is reminiscent of the method by which the original Patriot Act was passed in 2001. During lengthy committee debate in the House back then, minority members fought strenuously for numerous safeguards for civil rights in view of the government’s expanded surveillance powers, and they succeeded in inserting several. However, the committee’s work was dismissed summarily by congressional leaders and replaced by a version of the legislation backed by the Administration. The leadership’s bill was rapidly brought for a vote on the floor before some members had time to even read it.

This time around, it was the Senate that fought for the Bill of Rights, unanimously voting earlier this fall to restore some checks and balances to the FBI’s powers to demand the personal records of ordinary Americans from a wide variety of businesses. The House approved a bill much more to the Administration’s liking, and this week conferees from both chambers met to iron out the differences. The end product, as it stands today, guts the Senate’s safeguards. Only the conferees know what took place in their closed sessions, but civil rights advocates warn that Congress is poised to repeat the mistakes made four years ago. “It’s very similar to the process in 2001,” said Bob Barr, former Republican representative from Georgia. “We believe it’s a very inappropriate and dangerous game to play. Politics seems to be driving this whole game. The Senate worked long and hard to fashion a compromise.”

The concern among a coalition of critics spanning the gamut of political leanings is that the Administration took control of the conference on Capitol Hill. For American businesses that face rising costs in complying with an exploding volume of FBI surveillance orders since the passage of the USA Patriot Act, the secretive bout of law-crafting adds to the defenselessness that they endure under the act. Manufacturers, banks, real estate firms, bookstores and other businesses banded together to press for checks and balances to the FBI’s powers, but that effort appeared to be no match for the administration’s determination to further bolster those powers.

Businesses and privacy rights advocates want foremost to dissuade the FBI from conducting unlimited, indefinite or unwarranted searches of ordinary Americans. Recent reports suggest that the FBI now issues tens of thousands of NSLs (National Security Letters) – orders for a wide variety of records that they issue unilaterally without any judicial review – annually, compared to a few hundred annually prior to the terrorist attacks of Sept. 11, 2001. “They have become the weapon of choice by the administration to conduct fishing expeditions,” Barr said about NSLs. “It’s simply a matter of filling in a couple of blanks. It’s an extraordinary power that has become ordinary behind closed doors.”

Link here.


On July 12, 2002 the U.S. Ambassador to the U.N., Negroponte, said “Some members of this Council are members of the International Criminal Court while others, including the United States, are not and never will be. … The President of the United States is determined to protect our citizens – soldiers and civilians, peacekeepers and officials – from the International Criminal Court. …” What reasons prompted these statements? Why was the U.S. one of 7 nations in July of 1998 that voted against its formation while 120 voted in favor and 21 abstained? The roster of nay-sayers included Iraq, Libya, People’s Republic of China, Israel, Qatar and Yemen. Does the ICC weaken or strengthen statism? Does it lead toward more or less justice? Does it tend toward less or more aggression?

Evaluation of the ICC varies according to one’s perspective. From an economic perspective, does creation of the ICC improve everyone’s well-being on the planet? Does it make anyone better off without making anyone worse off? The answer is no. States fund the ICC through taxes, and they involve coercion. The Court can arrest and detain defendants. That is coercive. The ICC continues a system of nation-states by which the provision of justice is cartelized by States or political authorities, raising the barriers to entry of private judicial service providers. That makes many people worse off. States are parties to the ICC. From the perspective of these member States or its controlling persons, they voluntarily entered the Rome Statute, so they must have considered this an improvement in their welfare.

The ICC makes a step in the direction of a monopolistic supra-national world government. It establishes a distant bureaucracy that removes the individual further from directly influencing the provision of judicial services. The ICC, being funded by taxes and controlled by States, need not respond to individuals. It is partly beholden to the States that created it, partly dependent on public opinion, and partly influenced by its own bureaucracy and members. It is a political instrument whose power is checked and channeled mainly by the States that control it.

Individuals inside and outside this organization can in the future seek to expand its covered crimes and its jurisdiction. Member States might support such endeavors. The result can be to turn the ICC into an instrument of monopolistic control or tyranny. This may now seem very far-fetched because the ends of the Court are noble, but we have seen this happen before in the case of the U.S. Constitution. A fundamental flaw of the ICC is that it is of political origin. Moreover, that origin is States, so that the Court is twice-removed from any notion that some may have of sovereignty of the people.

The quest for justice is never-ending. Large and powerful States that intrude on their own citizens and on citizens of other countries are self-evidently destructive of justice. The ICC by its construction is an extension of States. It extends the ambit of international institutions that build upon the system of States. While I wish it well in checking the grave crimes it is now and will be adjudicating in the future, I do not endorse or support it in principle. I think it leads us astray. In my opinion, it is obvious that the path to greater justice is reduction of arbitrary State power accompanied by markets for judicial services. Accomplishing this will by no means be a cakewalk.

Link here.



When I moved from Arkansas to Mississippi in early 2005, I brought with me three Bibles and a shelf of books by Peter Drucker. That gives you some idea of how much I appreciated his writing. I began reading the ones I had not read, and re-reading those that I had read. The obituary in the New York Times did not begin to describe his accomplishments. The one in the Washington Post was better.

He was a pioneer in management studies. Yet his books went beyond management into social theory. He is the source of the idea of the “knowledge worker”, as distinguished from the “industrial worker”. He saw what a profound effect this would have on society long before his peers did. He understood the use of demographics. Some of his most notable predictions about America were based on trends that were already visible demographically – yet only he spotted them. He believed in decentralization of business. He understood that business management in a market economy is a way to reconcile the conflicting goals of the many (workers) with the goals of those who employed them. Society always seeks to do this. Management has achieved this. The result has been economic growth that has transformed the world.

He understood that the discovery of management techniques in the twentieth century was one of the most momentous discoveries in man’s history. He understood how management made America’s victory in World War II possible, how low-income, low-education workers could become highly productive through training and by breaking down their tasks into a series of component steps. He had no grand scheme of management, no cookie-cutter management technique. There is no “Drucker theory”.

He was highly successful as an author, a consultant, and a speaker. Before him, there was no literature on management. He was the right man in the right place in 1939 when his book appeared, The End of Economic Man. From that day until the 1990s, he cranked out book after book. They all sold well. He was giving interviews almost to the end. The only living author I can think of who has had as long a career, equally distinguished, is Jacques Barzun, whose magnum opus appeared in 2000, From Dawn to Decadence, a history of Western culture from the Renaissance until 1999. They have provided models – targets – for my own writing and longevity.

Link here.


I have been terrified since the event of 9-11, not because of the accused terrorists, nor the illegal, abusive activities of political governments. For I know exactly what they are, who they are, and their nature. I have been terrified by you, my fellow human beings! Yes, by YOU. Because you now are running the opposite way from liberty toward the political governments, which are the very institutions that we, generations after generations all around the world, have fought hard against to take back our liberty and dignity. I am terrified by your amnesia.

Throughout our history as humankind, political governments never gave us, the people, anything, even the protection that is supposed their job. They enslave us, and we have to protect ourselves against the power of our own governments. They always find ways to take, and steal away from us our property, our liberty, and our dignity. Remember it is we, the people, who have fought hard and sacrificed in many different ways to force them, the Kings, Queens, Presidents, Generals, etceteras, to give in, give up, and give back our rights, our dignity, our life as free peoples. All legal documents such as the constitutions do not give us our rights and liberty. These documents only recognize our rights after we, the people, have fought so hard for generations to force the political governments to give in by writing these documents. So please do not mistake that THEY, the political governments, gave us these documents, but we have fought and forced them to do so. They did not give. That is why political governments always try to bend and ignore the documents if we stop fighting.

The battle for liberty never ends, for the political government always tries to steal away our rights, our liberty as much as they can, and only give in and give back as little as they are forced to do so by us. We must not forget this.

We, Buddhists, Muslims, Christians, Jews, have lived peacefully together, have done business, exchanged goods and services, even married without any problem, until political government gets in and takes control. Our histories, our experiences speak for themselves. I am not a Jew, or a German, to speak of the experiences under Hitler. I am not a Russian, or a Chinese, to tell you about Stalin and Mao regimes. I am a Vietnamese, and I will tell you about the Vietnamese experience of political government.

Link here.


Has plenty of company in the academic community, who concur and believe that further investigation is needed.

The Brigham Young University physics professor who believes the WTC collapsed from a controlled demolition is not alone in the academic community, as a group of more than 60 colleagues from two universities also agreed with Professor Steven E. Jones’ conclusions. Jones said in a telephone conversation from Provo, Utah, he first presented his explosive conclusions at BYU on September 22, to 60 people from the BYU and Utah Valley State College faculties, including professors of Engineering, Electrical Engineering, Geology, Mathematics and Psychology.

After presently scientific arguments in favor of the controlled demolition theory, Jones said everyone in attendance from all backgrounds, conservative and liberal, were in total agreement further investigation was needed. “I was quite surprised how my conclusions were received,” said Jones, adding he plans to give two continue telling the public how he came to his startling conclusions essentially ripping apart the official government story that jet fuel brought down the towers, including Building 7. “In fact, after I researched how Building 7 fell, I am certain there existed pre-positioned explosives to bring down the three buildings.”

Link here.


In the aftermath of Hurrican Katrina, we are left with the ugly fact that in the richest country on Earth, 20% or 100,000 residents of a major city were unable to evacuate when disaster approached, because they lacked their own transport and the initiative to hitch a lift or walk to the nearest bridge. That is pretty sick, and cries out for an explanation.

A lack of self-sufficiency is clearly the key. Many living in cities choose not to own a car, because feet, buses, trains and taxis are more cost-efficient ways to travel. But if a giant tsunami were poised to break over Manhattan tomorrow, I doubt if many pedestrians living on the Upper East or West Side would wait around to see it. In New Orleans too, 80% of the population noticed the weather forecast, heard the government admit that its levees might not hold, and made their escape in good time. It would seem amazing to me that someone without a car could not or did not hitch a ride with a neighbor who had one with available space. Yet in the underclass, apparently that did not take place. Apparently, its members did not think to ask, the need to take care of themselves had been drowned out too long ago by the government-induced culture of dependency and welfare. That process has a long history. Here is how it happened, and how it is continuing today.

  1. They were enslaved. Notice, this horrible practice would have been impossible without the force of government, whose laws and courts forbade black slaves to regain ownership of their stolen lives and which returned them to their masters if they escaped.
  2. They were hobbled. When freedom came at last, few knew how to use it and once again, government did everything it could to keep them from finding out, branding them as second class citizens so as to protect the jobs of low-talent whites. The smart slave was the one who performed just that minimum of work needed to avoid punishment – the exact opposite of the route to success in an open job market. Each rising black generation was taught the exact inverse of a successful work ethic. The outcome was no contest. A century and a half after “emancipation”, poverty in America is predominantly black.
  3. They are excluded from “nice” white suburban neighborhoods when the White Flight took place in the ‘50s and ‘60s as proliferation of cars permitted. The exclusion continues today and is achieved ever so subtly using zoning laws that pretend to protect the environment. Thus were the ghettos created.
  4. They are bribed to not compete in the labor market. The bribery takes the form of welfare checks. No need to get a job – government will ensure you have enough to live on, with free medical care as needed, maybe.
  5. They are forbidden to work for less than a government-decreed wage rate, and potential employers are forbidden to hire them just in case the bribe is not high enough.
  6. Their family life is destroyed by bribing them further. Single mothers get government checks only for as long as they do not live with a father for their children. All the values that a two-parent family might bring those children, in terms of later upward mobility, are obscured.
  7. They are mis-educated by being forced to attend government schools – which in the ghettos are frequently nightmares of indiscipline which make learning impossible. Upward mobility is thereby again slowed to a trickle.
  8. They are terrorized and held in dependence on government “protection”, such as it is, by the “War on Drugs”. This ingenious device achieves three objectives at the same time: (a) It imprisons those young black males who show promising skills of entrepreneurship, who might otherwise succeed in business and prosper; (b) it intoxicates all their customers by the “forbidden fruit” syndrome, so rendering helpless for work the next most promising layer of young people; and (c) it turns most of them into real criminals (to rob so as to get the next fix) thereby reinforcing the white perception that blacks are incurably uncivilized.
  9. They are further terrorized and kept dependent on government by being forbidden to own their own handguns. Handgun prohibition began in the late 1800s as a racist measure in the South. At first only the cheapest were outlawed – the only kind poor blacks could afford, of course. That odious origin is reflected today in government bias against “Saturday night specials”.

All nine of these systematic government tools for repressing black Americans have been and are supported by voters, both “liberals” and “conservatives” for reasons that look different but are surprisingly close. The result, which shocked everyone when the test came in New Orleans, is therefore a direct consequence of massive government action – of the entire political process that made all nine of those actions possible. The only question is whether it was all deliberate and cynical, or just a tragic mistake – a case of noble motives and unintended consequences.

Take your pick. Those are the only two alternatives. The entire political class is either dead stupid, for the consequences are perfectly clear and the logic above is easy to follow, or else it is cynical and viciously racist. Either way, the result is an underclass whose slave mentality lies close beneath the surface, a century and a half after it was supposed to end. For myself, I do not think the political class is particularly stupid.

Link here.

How the market might have handled Katrina.

Now that the furor over the botched response to Hurricane Katrina has largely subsided, we can calmly examine an aspect of the episode that most commentators have neglected. Let me motivate the examination by first making the (perhaps surprising) claim that I do not think the FEMA bureaucrats did anything particularly outrageous. Yes, it is true that the main damage to New Orleans was caused not by the hurricane per se, but by the government’s poorly designed levee system. It is also true that, given the flooding, the federal presence only made matters worse. FEMA officials almost seemed to purposely sabotage relief efforts, by blocking private shipments of aid, detouring volunteer firefighters to Atlanta for two days to receive sexual harassment training, and even telling “First Responders” to wait before responding! And of course, the escalating threats against “price gouging” only further staunched the flow of vital supplies into the ravaged region.

In response to this less than helpful federal activity, many citizens accused President Bush of racism. Although I agree that Bush (like any politician) would have been more attentive to the needs of rich donors who supported his party, I am not sure that overt racism is the explanation. As William Anderson observed, FEMA’s response to the disaster was the epitome of government behavior: the State’s primary objective is always to establish its own control, and then as an afterthought it may deign to help people (albeit in a bureaucratic and counterproductive fashion). To understand how reasonably well-intentioned government employees could have made the horrible decisions outlined above, let us consider the situation they faced.

The FEMA officials were “in charge” of relief efforts for the ravaged areas. As news reports of the disaster alerted the nation to its severity, thousands upon thousands of people and agencies offered help. In that scenario, what were the overwhelmed officials supposed to do? They obviously did not have a fully specified – let alone useful! – contingency plan to which they could refer. Since they had no idea where, say, 500 bottles of water should be delivered, is it so surprising that they so often said, “Thanks for the offer, but hold off on shipping it here until we get back to you”? The full complexity of the problem becomes apparent when we consider that some offers should have been refused.

Those familiar with Austrian economics will immediately recognize the similarity between FEMA’s woes and those of a central economic planner. As Ludwig von Mises famously demonstrated, socialist economy is simply impossible. Beyond the incentive problems, there is a much more fundamental calculation problem: without private ownership of the “means of production”, there are no meaningful prices for capital goods and raw materials. Therefore, the socialist planners cannot use the profit and loss test to decide if a particular enterprise uses up “too much” of the scarce resources in comparison to the benefits people get from the goods and services the enterprise yields.

However, it is too glib to simply say “calculation problem” when considering FEMA, and then move on to other examples of government folly. In the typical exposition, the reason the private entrepreneur is not himself plagued by a calculation problem is that his customers’ expenditures give him the ability to bid away the necessary resources from other entrepreneurs. If the good or service he makes cannot fetch enough revenues from customers to “cover costs”, then that is the market’s way of saying, “The resources you want to use in your line are more urgently demanded elsewhere, according to the preferences of the consumers. Therefore you go out of business.”

But how does this work in the case of disaster relief? Is the laissez-faire economist really advocating selling bottles of water and first aid kits to the highest bidder? No they are not, and this is a point often overlooked even by pro-market writers. Despite the clichés to the contrary, the market does not allocate goods to those who are willing to pay the most for them. On the contrary, in a free market goods are “allocated” to whatever use the owners decide. The function of market prices is not to dictate how resources are deployed, but rather to let the owners make an informed decision.

After Katrina, plenty of individuals (including shareholders acting through corporations) were willing to donate their property (including labor services) to help the victims. Naturally they were not looking to make a buck, but market prices were still essential to coordinating relief efforts. Following a natural disaster, certain established production routes are disrupted and consumer preferences are suddenly different. Contrary to popular belief, it is in such situations where the dynamism and adaptability of the free market are needed most. There does not need to be anyone “in charge” of disaster relief, just as there does not need to be anyone in charge of computer production or tuna fish.

In a truly free market, private relief agencies would still exist. They would solicit donations and use the funds to help in ways they deemed most important. The crucial difference between private organizations and FEMA, however, is that the former would have to engage in voluntary activities. In particular, they could not prevent others from trying rival strategies for assisting the victims. Thus, although individuals would still make mistakes (everyone is fallible), the overall relief effort would be far more effective, because competing agencies would quickly make such mistakes obvious.

Link here.


We are more likely to die on the road than be killed by a terrorist act.

Forgive me if I am not shaking in my shoes over the risk of terrorism on our shores. There is a risk, of course, but it is being greatly exaggerated. After 30 years in journalism, I have learnt three things: how easy it is to scare the pants off a public looking for bad-news stories to spice up humdrum lives, how many interest groups stand to benefit by manipulating the public’s emotions, and how much more we would be able to do to reduce risks to life and limb if only we would assess those risks in a more cool-headed way.

There are plenty of things that offer a greater threat to our wellbeing than local terrorism which are not getting nearly as much attention or money lavished on them. It is well known to psychologists that humans have a tendency to overestimate small risks while underestimating big risks. The risk of being killed in a terrorist attack is very much lower than the risk of being killed on the road. Yet after the attacks of September 2001 in America, many people switched from traveling by air to traveling by road, presuming it to be safer. A study by psychologists at Cornell University estimated that this switch led to an increase of 240 driving fatalities a month over the rest of 2001. The public had returned to its senses by the end of the following year but, even so, it is estimated that 1200 road deaths can be attributed to effect of September 11.

According to the U.S. Center for Disease Control, the odds of an American dying in a terrorist attack are about one in 88,000. The odds of dying by falling off a ladder are one in 10,000. And, according to an article in Foreign Policy magazine, even in 2001, car crashes killed 15 times more Americans than terrorism.

In the welter of stories about terrorism, I have been surprised how few commentators have noted the obvious … that many groups have an interest in exaggerating the threat of terrorism. Starting with governments, our long-known tendency to unite against an external threat has made terrorism a windfall gain. Most have not resisted the temptation to play up the threat rather than calm us down. Politicians have become more concerned to be seen responding to the public’s media-incited worries than to fix the problem. Hence the continuing stream of legislation to give the police and security agencies the powers they need to protect us. The question no one dares to ask is why it has taken the pollies so many goes to get it right. And is this it, or will there be more fiddling down the track?

The media’s motives are narrowly and amorally commercial. The punters love a good scaring, and we are happy to oblige, which makes us easy prey for the political spin doctors. These mutually enjoyable terror games would be harmless if time and money grew on trees. Since they do not, we would probably save more lives putting the same effort into fixing black spots on the highways.

Link here.


Former associate editor of the Wall Street Journal and former Assistant Secretary of the U.S. Treasury Dr. Paul Craig Roberts expressed his dire warning that the U.S. government has fallen into the hands of psychopaths and that the Neo-Cons in the Bush administration may be set to stage another terror attack in the U.S. as part of a “black” operation to demolish growing dissent and coerce the public to rally behind the government once again.

During an interview with the Alex Jones Show, Roberts cited a Capitol Hill Blue article concerning a leaked memo circulating between top Republican leaders. The memo outlines potential strategies to bring their agenda back online, including the capture of Osama bin Laden, a drastic turnaround in the economy, or a resolution of the war in Iraq. The most alarming option includes a terrorist attack that would validate the President’s war on terror and “restore his image as leader of he American people.”

This document adds to the mountainous pile of smoking gun evidence of government complicity in staged terror attacks and other false flag operations. It has now been declassified, as we already knew, that the Gulf of Tonkin never happened. It was staged to get us into Vietnam. Operation Northwoods was the official U.S. government plan to carry out 9/11 style attacks against the American people and blame it on foreign enemies as a pretext for war. Publicly published PNAC documents before 9-11 had saliva stains all over them as Dick Cheney and others talked about helpful Pearl Harbor attacks.

Roberts went further than he has ever gone before in stating that while the Neo-Cons publicly embrace torture and pre-emptive war, past despots like Hitler and Stalin at least tried to hide their use. Paul Craig Roberts said that the U.S. government is in the hands of dangerous psychopaths who are a disgrace to the human race and who should be arrested as war criminals and turned over the the Hague.

Link here.


Understanding the true nature of a free society entails asking ourselves two basic questions: What does it actually mean to be free, and what is the legitimate role of government in a free society? Reflecting on those two fundamental questions might provide the way out of the political and economic morass in which our nation finds itself.

Our Founding Fathers brought into existence the most unusual society in history. Imagine no income taxation, Social Security, Medicare, Medicaid, welfare, compulsory schooling, drug laws, gun control, paper money, travel restrictions, or central bank. Not even any immigration controls. Americans once engaged in occupations or businesses without licenses, permits, or regulations. They were free to enter into mutually beneficial trades with others without governmental interference. With no taxation on income, they were able to accumulate unlimited amounts of wealth and to decide how to dispose of it. Their standard of living soared, especially in comparison with the rest of the world. Americans traveled anywhere in the country and all over the world without government approval or supervision. Indeed, they did not even have passports.

There was no involvement in European or Asiatic wars taking the lives of countless American men. No conscription, except for the War Between the States. No militarism or glorification of military armaments. Rejecting big professional armies, Americans embraced the concept of citizen-soldiers: a nation of civilians who trained themselves to fight and who were prepared to do so if America was ever invaded. This unusual way of life is what Americans understood by the term “freedom”. This is the freedom that Americans celebrated every Fourth of July. This is what it once meant to be an American. This is what it once meant to be free.

What guided Americans in the late 1700s and throughout most of the 1800s was one overriding principle, that the greatest threat to their freedom and well-being lay with their own federal government. They believed that the stronger and more powerful the government, the less free the people and the weaker the nation. Conversely, the weaker the government, the freer the people and the stronger the nation. Thus, they used the Constitution to call into existence the weakest and most restricted national government in history.

What was the result of this weak, restricted government with few powers over the lives and fortunes of the citizenry? The most economically powerful nation in history … and the most prosperous nation in history … and the most charitable nation in history … and the freest nation in history. Although there were major and minor exceptions, that was the paradigm of freedom on which our nation was founded and which guided it for more than a century. Unfortunately, that is no longer the paradigm under which Americans now operate.

Today, Americans suffer under a system whose features are the ones that our ancestors rejected. People’s income is now subject to unlimited taxation, and the more people earn the more the government takes. The primary role of the federal government is now to take care of people with the money that the federal government collects from them in taxes and borrows from them through the sale of government securities, which fuels inflation. The federal government has the power to regulate the most minute aspects of people’s economic activities, even extending to what people grow or consume on their own property.

Since the early part of the 20th century, Americans have suffered the ravages of irredeemable paper money as well as a central bank that has, decade after decade, gradually debased the currency, enabling government officials to confiscate people’s wealth and savings through inflation. Involvement in foreign wars is now an accepted part of American life, and has resulted in the deaths or maiming of hundreds of thousands of American men and women. An enormous standing military force has become a permanent feature of American life – an imperial force that extends throughout the world, requiring ever-increasing amounts of tax money to finance. While military service has been voluntary since the Vietnam War, everyone knows that forcible conscription of the citizenry is a permanent standby option.

What are the results of this modern-day welfare-state, warfare-state paradigm? The most powerful government in history! A government able to provide welfare for millions of Americans and foreigners alike. A military force potentially capable of conquering any individual nation in the world. An executive with the power to send military forces into action across the globe on his own initiative. A government with the power to jail anyone anywhere forever without charges. The world’s “only remaining superpower!”

There has been a major negative result of all this, however. As our ancestors knew would be the case, this all-powerful federal government has produced one of the weakest and most frightened nations in history. The welfare state has produced a mindset of almost hopeless dependency among the American people. Just utter the phrase “repeal Social Security” to anyone over 65 and you will see exactly what I mean. Nearly every American over 65 will go into a state of nervous shock upon hearing that phrase. “How would I ever survive without my Social Security?” is how they respond, ignoring the quite obvious fact that Americans survived – and prospered – without such a socialist scheme for the first 125 years of our nation’s history.

This mindset of welfare-state dependency, however, is not limited to the elderly. It pervades the minds of people throughout American society, transcending all age groups and economic classes. Despite the devotion to the principles of free enterprise that they ostensibly learned in their public (i.e., government) schools, Americans are terrified of the free market. Just suggest to them, for example, the idea of separating school and state and turning education over completely to the free market and you will see what I mean.

The fact is that Americans have lost confidence in themselves and in others. They have lost faith in freedom and the free market. And they are a terrified people. Americans are terrified of losing their welfare. They are terrified of losing their jobs. They are terrified of foreigners, especially immigrants who might out-compete them or “take their jobs away.” They are terrified of the “terrorists,” which is why federal officials always trot out that term – “terrorists” – whenever they want to terrify the people into blindly supporting whatever they are doing. What they are not scared of, unfortunately, is their own federal government – their benefactor, their caretaker, their provider. The federal government has assumed the role of their parent – or even their god. The welfare-warfare paradigm has resulted in the most powerful government in history and quite possibly the most dependent, terrified nation in history.

In order to achieve a free society, it is imperative to confront two truths. First and foremost, the political-economic paradigm under which Americans live today is opposite to the political-economic paradigm under which our forefathers lived and upon which our nation was founded. The profound words of Goethe come to mind here – that none are more hopelessly enslaved than those who falsely believe they are free. Second, it is impossible to achieve a free society by simply reforming the welfare-warfare paradigm, even if the reforms are packaged in free-enterprise verbiage. (Again, think of Goethe’s observation.) A nation which has embraced the welfare-warfare paradigm, no matter how reformed and improved, will be an unfree nation of weak, dependent, terrified people. As our forefathers understood so well, the only way to achieve a free society and a strong nation is to rein in the federal government and weaken it.

With the manifest failure of virtually every aspect of the welfare-warfare paradigm – from Social Security to the drug war to the “war on terrorism” to the war on Iraq – the time could well be approaching when Americans begin asking the important questions that our Founding Fathers asked: What does it mean to be free, and what is the legitimate role of government in a free society?

Link here.


We can think of scarcely a single war that was not begun in treachery and fraud. Nor can we think of any that was not carried out with woodenheaded imbecility. Military history makes the whole profession look nearly as incompetent as psychology or marriage counseling. Were it not for the corpses, you could get a good laugh from it.

Almost every account of war, from Thucydides, to Clausewitz, to Keegan, is a farce of missed cues and pratfalls combined with backstabbing and cluelessness. Troops never seem to get where they are supposed to be when they are supposed to be there. Armies walk into obvious traps with their eyes wide open. Generals reach beyond their supply lines and routinely run out of ammunition or food. Orders are mixed up … or lost … or handed to the enemy. When a victory is gained, it is as much a result of luck as of skill, and then subsequently reversed by further bungling. Most of mankind’s wars, far from being stories of valiant heroism, are absurd farces that even the cavalry horses must have laughed at, until they starved to death.

World War I was famously badly scripted. If it had been a movie rather than an actual event, the actors would have turned up their noses and refused to have anything to do with it. Audiences would have sniffed and turned away in disbelief. But put the actors in uniform, and they are ready to play any part – no matter how preposterous. Told to go “over the top” and advance across a “no man’s land” with the enemy shooting at them, the soldiers acted like dumb mules – that is, they did as they were told. It was a case of “lions led by donkeys,” said the popular press. The top brass were idiots, wrote the columnists, but our boys performed magnificently. And yet, when looked at with an unsentimental eye, they all look like jackasses.

On the Eastern front, the Russian army was commanded largely by German-speaking officers. Often as not, their orders would fall into the hands of the enemy – meaning, the Germans, who could read them without translation. If they fell into the hands of their own Russian troops, meanwhile, they were unintelligible. The Russian army in WWI must have been among the most incompetent ever put into the field. But at least it was better in many respects from the Soviet Army that Stalin threw against the Germans 26 years later. In the intervening years, Stalin had had most of the decent officers shot. You would think the officer class might have seen what was coming and marched on the Kremlin before Stalin moved against them. But the top brass never seemed to anticipate anything. Those in charge of the guns let themselves be shot.

Real military man – even one of great genius – never asks questions, not even the questions that are critical to his survival. Time after time, we see vast movements of troops and weapons operating in complete ignorance. The legendary “fog of war” seems to seep into the brains of commanders and soldiers alike. Alexander, perhaps the greatest general of all time, marched his troops through the Gedrosian desert, where tens of thousands of them perished from thirst and hunger. Had he bothered to ask directions? Yes. Apparently, he just wanted to see if he could do it. Napoleon attacked Russia, and later, so did Hitler. Both of them were apparently unaware of the Russian weather. Neither had thought to properly outfit his troops for the cold winter. German generals even carried copies of Caulaincourt’s history of Napoleon’s bitter experience in their pockets.

From one debacle to the next, the blunderers of all ranks and social status march blindly ahead. Early in America’s War Between the States, General Stonewall Jackson noticed that a good defensive position was practically impossible to take. Advances in riflery made the defenders much more lethal from a much greater distance than they had been. Soldiers could stand their ground as the bodies of attackers piled up in front of them. “Remember the stone wall,” Jackson used to remind his fellow officers, urging them to let the Yankees do the attacking. But Jackson got his arm shot off, by his own men, predictably, and barely had his body reached room temperature when General Robert E. Lee forgot the advice. He ordered a fatal Napoleonic charge against Union positions at Gettysburg. It was obvious even then, a half a century before Passchendaele, that being the attacker was a losing proposition. But attack is just what German, British, and French troops were ordered to do – with inevitably disastrous results. Later, after the Europeans had learned their lessons, along came the fresh faced Americans – who attacked some more.

Even when the officer class is painfully close to the facts, often it cannot come to putting two and two together, nor bring itself to take the obvious action. Recall the systematic purges of the military in Russia. The German general staff was no better. In early 1945 and even long before, Germany was going down to defeat. Every officer knew it. The Russians were closing in on Berlin from the East. In the West, the allies were across the Rhine. And there in his command bunker, Der Fuhrer was barking mad. If he were out of the picture, there might have been a chance to save something. At least they could have organized a rational endgame defense, shifting troops to the east to hold off the bloodthirsty Russians while allowing the Americans to advance to Berlin. But the same officers who had ordered the deaths of millions in more than four years of warfare, who had watched thousands of their soldiers and friends die in combat, prison camps, and before Hitler’s firing squads, could not seem to summon up the gumption to put a bullet into one single especially vile and addled head.

But that is the glory war. Gamelin, Grandmaison, Haig, Pershing, Paulus, Kluge and millions of nameless dead men … we remember them all. Gutless, witless, fighting today’s pointless wars with yesterday’s senseless tactics, they were nevertheless humans, just like us. It is the heart that remembers them on Remembrance Day. The brain is appalled.

Link here (scroll down to piece by Bill Bonner).
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