Wealth International, Limited

Offshore News Digest for Week of November 21, 2005

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

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The aisles are packed on a Sunday afternoon at the Escazú branch of the PriceSmart warehouse-store chain in San José, Costa Rica, one of four mammoth outlets the San Diego retailer has opened in this Central American capital. Most of the shoppers filling their carts with Prego spaghetti sauce, Gorton’s fish sticks and Pringles potato chips are not upwardly mobile Latinos, though. They are retired Americans, part of a large cadre of foreign-born pensionados, who have settled here in the past 20 years. Costa Ricans like to say theirs is the only country in Latin American, and perhaps the world, boasting a greater number of Americans – as many as 20,000 retirees are here from the U.S. and Canada – than the number of its own émigrés abroad. That may be a stretch, since it requires counting some of the 1.4 million tourists who come here each year, an average of 30,000 Americans on any given week. Yet it gets at an important economic phenomenon.

Thanks to a decades-old policy of offering tax incentives and other perks to attract English-speaking retirees, Costa Rica has pioneered what is fast becoming a popular economic-development tool for the small, largely impoverished nations of the Caribbean basin: importing a high-spending consumer class unencumbered by school-age children, with the expectation that their dollars will quickly follow. In Costa Rica’s case, retirees contribute significantly to the $1.4 billion a year in direct spending by Americans here, the government says. (It does not differentiate between retirees and long-term visitors.) The multiplier effects – salaries in health care, construction, retail and other services – could bring the total benefit to $4 billion, nearly 25% of Costa Rica’s GDP.

Moreover, the retirement wave is synergistic. Early pensionados invested in second careers – running bed-and-breakfast hotels near the beach, or operating travel agencies – which attracted more tourists and more retirees. With the prospect of more than 30 million Americans starting to retire next year, many developing countries expect a windfall. Which raises the question: Should the U.S. “outsource” baby boomers’ golden years? The U.S. already depends heavily on immigrants to serve retirees, in the many kinds of services they need. Sending U.S. retirees abroad eliminates one step in closing that labor gap.

Foreign retirement is becoming quite the norm elsewhere. In Europe, more than a million German, Scandinavian, Dutch and British citizens live most of the year far from home – mainly near the Mediterranean coasts of Italy, Spain and Greece. Those retirees and their hosts enjoy the benefits of a “superstate” joining their nations under the E.U. Last year, Malaysia launched its “My Second Home” program aimed at attracting rich retirees from Hong Kong. Applicants are allowed to bring one maid. None of those benefits are available yet in this hemisphere, but demand for foreign retirement havens is rising.

None of those benefits are available yet in this hemisphere, but demand for foreign retirement havens is rising. In fact, the retirees’ market is so good for Costa Rica that the country has dropped some of the incentives it first used to lure retirees in the 1970s and 1980s – such as allowing them to import a car duty-free – and is considering raising the minimum income a foreigner must have in order to live here to $1,000 a month from $600. Panama, Honduras, Belize and Nicaragua also are actively courting American retirees, mainly by offering tax-free status to anyone willing to buy or build a house there. Beyond concomitant adjustment issues, there is a more elemental question: Is courting retirees something poor countries can afford to do?

Link here.


The queue at Miami International Airport’s immigration counter is packed with individuals and families from Central and South America, many of them hoping to start a new life in the U.S. But another group of migrants is moving in the other direction – Americans seeking retirement homes in places such as Mexico, Panama, Honduras, Belize, and even Nicaragua. Retirement villages and sheltered housing are big business for developers and property companies and the U.S. has a huge retirement village sector, based largely in Florida and other southern states. However, driven by the rising prices of these properties and the soaring cost of healthcare – as well as the hurricanes that recently have ravaged the U.S. south – many American retirees are looking to resettle overseas.

“Argentina and Uruguay are both countries where the prices are still good for Americans, and you can get good value for your money,” says Barbara Perriello, who as travel director of Agora Travel runs property investment tours to countries such as Argentina, Uruguay, Nicaragua and Honduras. Property taxes and building costs in these countries, are often far lower than those in the U.S., she says. “In Argentina you can build for about $70 per square foot, and that’s high end,” she says. “And in Nicaragua and Honduras, it’s still about $80 per square foot – so you’re looking at much cheaper costs.” Less developed countries are welcoming the newcomers with open arms. With their eyes on a potential source for revenue, governments are busy adjusting their investment and visa rules to create conditions that will encourage a new wave of immigrants.

“People are looking for bargains but that doesn’t always take first place,” says Lyle Burke, president of Tropical Pathways, which runs property investment tours. “There are people who say they’d love to go to the South Pacific or Europe, but in the end it comes down to being close to grandchildren, so the Caribbean and Central America tend to be the places where you see most people going.” With Costa Rican property having risen sharply in price in recent years, the Panamanian administration is hoping it can take Costa Rica’s place as one of the top destinations for US retirees. It is certainly seems well placed to do so.

For a start, much of the infrastructure is American, built during the years when the U.S. administered the Panama Canal. As a result of those years, there is also a cultural familiarity with Americans that makes many feel at home there today. Non-stop flights from Miami to Panama City take three hours and four from Houston, giving US citizens easy access to their families back home. And, crucially in at a time when violent storms seem to be on the rise, Panama is not in the hurricane zone, unlike a lot of its Central American neighbors. In addition, the Panamanian administration has been working to make its tax and immigration rules favourable to foreign retirees.

Link here.

Panamá unemployment lowest in 20 years.

The present rate of unemployment, equivalent to the 9.6% of the working population, is the lowest it has been in Panama for the last 20 years. “In 1986 we closed in on 10.6% and since then always we were over 10%. But now, thanks to three years consecutive of economic growth, we managed to break that barrier and we have even lowered to 9.6%,” commented the director of Public Policies of the Ministry of Economy, David Saied.

This index of unemployment is also one of lowest of Latin America, according to the Organization the International of the Work: Mexico (3.9%) and Chile (8.3%) are in better positions, but Panama surpasses in this ranking to many stronger economies, like Brazil (10.3%), Argentina (12.5%), Venezuela (13.2%) and Colombia (15.0%). “Residential tourism and the agro exportations are two of the main motors that have created this. Also the informal sector continues growing strong, over 5% in the last five years,” Saied added.

Link here.

Inflation in Panamá up to 3.6%.

The consumer price index (IPC) continues to break records. In October it reached 3.6%. Inflation has not been this high since 1982, during the Noriega, when the figure reached 4.2%, according to the Comptroller of the Republic. During the last 20 years, the IPC was never higher than 2%. Price changes have been induced by the higher cost of fuel, which in October reached $4 per gallon. The price of the so-called canasta basica, a fixed package of basic consumer goods, went up to $204.52, higher than has ever been recorded by the Ministry of Economy and Finance.

A builder comments: “As a builder here in Panama I have seen significant increases in material costs in the last few years. When coupled with the increases in labor costs and taxes, it is seriously eroding our ability to be competitive in the international market. When we began constructing homes in 2000 we were able to build in the high $40 a square foot for homes without insulation, heating or air. (We are in the highlands). Now we are looking at the mid $50’s for the same type of homes. This is still well below building costs in the U.S. but we are not so much competing with U.S. home-builders as we are with other international destinations.”

Link here.


St. Kitts and Nevis’s per capita income is over 70% higher than the average for the Eastern Caribbean Currency Union and ranked third worldwide in attracting Foreign Direct Investment. This was disclosed by St. Kitts and Nevis Prime Minister and Minister of Finance, Dr Denzil Douglas, during an address to the annual National Consultation on the Economy. Dr. Douglas told the 150 delegates drawn from the social and economic partners, the private and public sectors and regional and international financial institutions that the St. Kitts and Nevis economy has consistently outperformed many others in the region over a long period of time. He said that although the twin-island Federation is the smallest nation of the Western Hemisphere, “we continue to rank among the most advanced countries of the world in respect of our social progress.”

According to Dr. Douglas the Federation’s recent showing in the UN Human Development Index is testimony to the overwhelming fact and the major economic indications suggest that the St. Kitts and Nevis economy has been among the strongest performers in the region for many years. “For instance, our per capita income of US$8,889 or EC$24,000 is some 72% higher than the average for the Eastern Caribbean Currency Union as a whole, and although our population is only 8% of the population of the ECCU, our economy accounts for some 12.6% of the GDP of the ECCU,” said Dr. Douglas, who added it is an indication that the St. Kitts and Nevis economy has consistently outperformed many of the economies of the region over a prolonged period. Dr. Douglas said that during the period 1980 to 2003, St. Kitts and Nevis experienced growth averaging 4.7% per year, the highest in the OECS for that 23-year period.

Prime Minister Douglas disclosed that during the 1980’s, FDI in St. Kitts and Nevis amounted to 11.3% of GDP, 12.5% in the 1990’s and 22.8% since 2000.

Link here.


As an old friend of W.G. Hill, the most prolific author on the PT concept, which extols the merits of personal liberty, privacy and international living, I thought I would address some of the advantages Nova Scotia has as haven for PT’s (Perpetual Travelers). Being a PT means different things to different people, but Nova Scotia has a lot to offer PTs across the board: privacy, cheap real estate, a low cost of living, unspoiled natural beauty, friendly people and lifestyle opportunities to suit virtually every taste.

Nestled in the North Atlantic on Canada’s east coast, Nova Scotia is Canada’s second-smallest province (about half the size of Pennsylvania) with a population of just under 1 million people. This little-known paradise has long been a favorite escape for Canadians and Europeans “in the know”, but few Americans outside of typical tourists make it to this secretive outpost. Why? Well, perhaps it is because Nova Scotia is not a destination you stumble across by accident. Almost completely surrounded by water, it lies hidden between the Atlantic Ocean, the Bay of Fundy, the Northumberland Strait, and the Gulf of St. Lawrence. Also, the very private people here want things kept low key.

Nova Scotia is one of those places that can seduce you through its sheer natural beauty. The seemingly endless stretches of picturesque coastline, a lush green countryside, the beautiful colors of autumn, and cheap and plentiful seafood, make it one of the most livable places in North America. If you like England, Ireland and Scotland, you will love Nova Scotia. In today’s frantic world, Nova Scotia offers PTs an unparalleled escape, with old-world European architecture, great restaurants and leisure opportunities, and slow-paced towns that have not changed much in 100 years, where fishing and enjoying the outdoors is a way of life.

Some other reasons to consider Nova Scotia as either a full-time or summer retreat include that Canada has some of the strictest personal and financial privacy laws in the world, and Nova Scotia’s are among Canada’s toughest, and the cost of living in Nova Scotia is up to 50% lower than in many American, European and Asian urban centers. Though prices are quickly rising, some oceanfront and lakeside lots can be had for as little as $15,000 (or a charming 3-bedroom home on several acres can be yours for under $65,000). Non-citizens may buy property without restrictions. So, if you are budget-conscious, enjoy your privacy, and have a 19th-century mindset, then you owe it to yourself to investigate what Nova Scotia has to offer.

Link here.


Ten years of in-fighting over who should run the Internet and last week’s World Summit on the Information Society meeting ended with a deal to create the Internet Governance Forum. It will have the international representation everyone except the U.S. wanted governance of the Internet to have, but will not be able to do anything. For the moment ICANN wins in the sense that it gets to continue overseeing the operation of the domain name system. ICANN has many critics, both outside and (formerly) inside its organization but in the end, although many people have suggested alternatives to the current system, none of these have gained enough traction to become a threat. ICANN was operationally safe. Now it is safe by international policy as well.

There have been some good analyses of this deal, notably by Canadian intellectual property specialist Michael Geist and ICANNWatch, and basically they boil down to the same thing: the U.S. keeps ICANN but the issues that WSIS was really created to address remain unsolved. We are no closer to agreeing on what sovereignty a government should have over its country code namespace, how to solve global problems such as spam, cybercrime, the digital divide, or even just the basic question of what governing the Internet means.

It is logical if the U.S. thinks that the longer it can keep the oversight of ICANN to itself the more likely it is that eventually that will just become the permanent status quo. The thing is that long-term it is hanging onto an asset of decaying value. The domain name system that ICANN oversees is vital when it comes to using email and the Web, but it is irrelevant to the newer areas of big growth – instant messaging, peer-to-peer networks, Internet telephony, and the next big thing, IPTV. And, if you recall, there is general agreement that email is broken (because of spam) and URLs increasingly only matter as search results to click on. When this battle over Internet governance began, the Web was just beginning to emerge as the first successful commercial use for the Internet, and domain names were the key to success. The organization that controlled the domain name system, therefore, was the ultimate in Internet power. No more. The longer the fight goes on, the less valuable the spoils will be.

Link here.


Forget The Sunscreen, Bring Your Patience

The sub-header is not medical advice. Of course you will need your sunscreen in the harsh sun of the Dominican Republic. But it is a cautionary tale for new and would be residents as to exactly how long it takes to achieve a fairly simple task. New residents who come from cultures where provision of goods and services is but a phone call away are easily identifiable here in the Dominican Republic during their first few months. They can appear frustrated, short tempered and wear an incredulous look. Yes, getting even simple things achieved can take a lot longer than you are used to. It is part of the charm of the country. No neurotic 100 miles per hour lifestyle here, accompanied by cries of “I haven’t got time.” Dominicans always have time … for people. It is just tasks that take a little longer! A hint. Never let your frustration show for real. Be laid back about all of this, demonstrate that you, too, understand the mysteries of the term mañana. And smile.

This is a 100% true story. I decided that instead of manually writing raffle tickets and the like, I would purchase a stamp (the sort you press in an ink pad) with the appropriate information. I went in search of a producer of same. The stationers’ in Puerto Plata were unable to supply but advised of a company nearby which did. I duly went to this company, provided my information, the exact size required (to fit a raffle ticket which I provided) and was told it would be ready two days later. In the end, a 10 minute job took some two and a half weeks. By Dominican standards, that is not bad. Bad would be three months. It is all a matter of perspective. New and potential residents, start early, it will get done eventually. Never lose your cool, or if you pretend to, let them know afterwards that it was “pretend”.

Link here.


In recent articles I’ve been telling people that Margarita Island is probably the cheapest place to vacation or live in all of the Caribbean. The one possible exception I thought might be the Dominican Republic. I just received an e-mail from a couple who want to come see Margarita Island and who are currently living in the D.R. I asked them why they were thinking of moving, and to my surprise their reply was, “Many reasons to leave the D.R.: 1.) Beer is one dollar each and up at the supermarket and $2- $3 each at hotels, 2.) driving is VERY dangerous here, 3.) my electric bill averages $600-$700 per month, 4.) local phone home is $11 per hour of usage, 5.) internet DSL VERIZON is $100/month, 6.) gasoline is now $ 4.20/gal. lon, 7.) electricity problems – not continuous like America, we have rolling ON’S where cities have no electricity for 10, 15, 20 hours per day, 8.) Johnny Walker black label is $35 for a 750ml bottle, and 9.) I am 6 foot 5 inches and weight 240 pounds and do NOT feel that safe in the city. I am always looking over my shoulder for danger coming my way. EVERYONE I know has been robbed. I do mean Everyone.”

So, in all fairness, how can I know Margarita is the cheapest place to retire in the Caribbean? One way is to make a comparison. A beer (local) at the supermarket is 20 cents, at a bar/restaurant 41 cents to to 63 cents. A mixed drink in a nice bar will run $1.87 to $2.00. Electric Bill - we use an electric stove, convection oven, freezer, refrigerator with icemaker, and central air runs 24/7. Our electric bill has never been over $80 a month. Water is around $4 per month. Telephone bill is a basic $35.50 per month not counting local, cell phone, and long distance calls. If you use a telephone kiosk in one of the shopping centers for calls to the states, it is about 8 cents per minute. Internet DSL is a flat rate of about $35 per month. Direct TV with U.S.A. channels is $36.80 a month. Gasoline (91 octane) for my big Toyota Landcruiser is 15 cents a gallon. Johnnie Walker Black Label is $30 for 1 liter. A premium large frozen chicken is $1.40. A loaf of wheat bread in supermarkets is $1.57. Our maid works 8 hours for $10.40.

Recently I needed some work done on the Landcruiser. Tune up, new plugs, rotor, etc., alternator rebuilt, new bolt, some electrical work, changed out one battery and charged another. All this a little over 3 hours. The parts were fairly expensive (but not by U.S. standards) and the labor was less than $19. The mechanic is a young guy, does good electrical work, and really tries hard to please. Finding a good “all-round” mechanic is very difficult.

I have written about crime in the past, but I will touch on this subject again. Yes, there is crime. Mostly theft, some robberies. However, in our neighborhood we might walk the 5 blocks to the all-night Pharmacy for a bottle of milk at midnight without fear. There are places we will not go even in the daytime, much less at night, and some areas we do not even drive through after dark. It is not necessary to go to these areas, and if you do go for drugs or “whatever”, you probably will risk being robbed.

Link here. Author’s Web site here.


Ecuador has been in the headlines lately, and none of it good. Squabbles with the International Monetary Fund … interrupted oil exports … citizens marching in the streets. A lot of people look at that and might decide to stay away. I look at it and see a buying opportunity. And that is because Ecuador is a slice of paradise. Its short-term troubles give you a chance to buy real estate there on the cheap.

The fact is, every decade or so, Ecuador goes through the most “civilized” civil unrest you will ever see. People go on strike – but still show up to do their jobs. When and if the government changes, life goes on. A friend of mine drove through a protest during the last change of government. I asked her about it and she said, “Oh, that’s why everyone was banging on pots! I thought Ecuador had won an important soccer game.”

And Ecuador’s currency is the U.S. dollar. Any temporary economic downturn in that country just makes the greenbacks in your wallet worth more! Meanwhile, Ecuador offers numerous advantages as a place of residence, including legal advantages, tax advantages, easy residency, and easy citizenship. Most of the people of Ecuador are very poor. For those who have a little money, life there can indeed be an inexpensive slice of paradise.

Ecuador is small as countries go – about the size of the state of Colorado – yet it is also one of the most diverse countries in the world. You can live in the bustling city, quaint colonial towns or quiet villages. You can choose high mountains, a coastal life or even live in the Amazon. The cities offer every creature comfort and a huge variety of activities. The entire country (especially the Amazon Jungle) has incredible biodiversity – one of the highest in the world – and abounds with birds, flowers and wildlife seen nowhere else. Ecuador’s Pacific coast offers empty beaches, fishing, even surfing, and the Andes are filled with pristine forests, rivers and lakes.

The economy offers excellent opportunity. Ecuador is one of the world’s top exporters of banana, shrimp, roses, fresh flowers, tuna, and palmetto – plus, tourist opportunities abound. The U.S. dollar has been Ecuador’s currency for five years. What is more, inflation dropped in each of the past five years. Perhaps most important of all, Ecuador is a peaceful country with friendly people that are very welcoming to foreigners. You will not see any “Yankee Go Home” graffiti.

Link here.


This past February I first alerted readers of Escape Artist to the incredible potential latent in the Eastern European country of Romania. Several readers who contacted me purchased land through a realtor that I advised them of in an area outside of the city limits of Bucharest at €40 per square meter. That land today is now fetching an estimated €200 per square meter. I was cautioned by colleagues to refrain from quoting the above figures as they seem quite sensational. Indeed, they are representative of unique successes and do not represent the average gain to be expected on property held in the Bucharest area for less then one year. However, such gains are possible and it is not uncommon to hear of such success stories occurring from transactions made on the current market.

These exceptional cases serve as an indicator of the general trend of rapid growth in value of raw land in what is known as “the new suburbs of Bucharest”. The price of land has gone up by 60-70% over the past several months, due to the high level of demand on the market triggered by the high profitability of investing in land. In a previous article I indicated land as potentially the best investment for the average investor in Romania. It poses the least hassles and headaches and tends to generate the most profit-growth in the shortest time. The verified rate of growth of property values between the time that I made this suggestion to readers and the publication of this article, given further credibility to my speculations.

The key to raw land investment in Romania is a.) knowing where to invest and b.) when and how to sell. Bucharest as the capitol of Romania and soon EU capital city is the the star attraction of all Romanian land investment opportunities. Prices in the downtown area of the city may have all but peaked after years of significant growth but the trend of high growth in a short time frame has just begun in the area outside of the city limits which is pegged as the new Bucharest suburban district.

Bucharest is inhabited by more then 2.5 million people and that number is expected by many authorities to more then double to over 5 million by 2010 by the rapid development of new housing complexes inside of the city and the expansion of city limits with the introduction of new American-style suburban living there – now available to the average Bucharestian who is experiencing higher earning power coupled with increase access to credit. Northrop Grumman, the large American construction firm, is already in the market constructing new homes along with scores of other European and international building firms of reputation. They are fully convinced that the projections for suburban Bucharest will become a current reality. The savvy world investor, according to surveys, now identifies Romania as one of the top three investment locations in the world (along with China and Brazil) and the number one opportunity in Europe.

Link here.


With the exception of Chile and Colombia, most of Latin America finds itself stalled in deep economic and institutional backwardness, and there is little hope of future improvement. Indeed, politicians there appear more concerned with opinion polls than with the substantive policy reforms which must be undertaken. Their solutions are only short-term fixes, damp cloths which relieve the pain but do nothing about the sickness that caused it.

Latin American countries must follow the example of the Asian nations that made significant economic breakthroughs despite comparative disadvantages and the instability which has characterized the region in recent years. Singapore is an excellent example. The city-state was able to overcome its status as a poor, third-world colony and develop into a powerful exporter of high-tech and medicinal products.

Singapore was colonized by the British in 1824, but was attacked by Japan in 1942 and remained under Japanese control for three and a half years. The British retook control of the colony in 1945 and in June of 1959 declared it an independent state in the British Community of Nations. In 1963, Singapore briefly joined the Federation of Malaysia, before breaking away in 1965 when it regained full independence as the Republic of Singapore. Independence brought many challenges to the city-state, as it found itself a small island nation lacking natural resources, populated by a heterogeneous mix of races (predominantly Chinese, Indian, and Malaysian), and surrounded by rebellious neighbors who threatened the region’s stability.

Singapore’s economic success has allowed the city-state of only 4.5 million inhabitants to overcome several recent obstacles – the Asian crisis of the late 1990s, the bursting of the high-tech bubble barely two years later, and the harsh economic impact of the SARS virus in 2003. Singapore’s prosperity is largely a result of its commercial openness and institutional strength. The key elements for growth are all in place: a reliable legal system, consistent protection of intellectual property rights, an educated workforce, tax breaks for large corporations, an almost complete lack of corruption, a reformed pension system, and a liberalized financial sector. Indeed, the World Bank’s Doing Business Report 2006 asserts that, among 155 countries evaluated, Singapore is the second easiest place to do business – a company can be set up in the city-state within six days.

In this business-friendly environment, Singaporean firms have concentrated on the manufacture of high tech goods, petrochemical products, and medicines. Faced with competition from other Asian nations courting the major manufacturers of high-tech goods, Singapore is now seeking to develop its medical product industry. While Singapore is among the freest places to do business, the People’s Action Party, headed by the Lee family, governs the nation with a heavy hand, restricting the social and political freedom of its inhabitants and confronting political adversaries head on. Yet, there is no doubt that Singapore is a democratic country where the growing influence of foreign investors has contributed to a gradual westernization of its internal rules.

The key to prosperity is open markets with a strong rule of law. Open markets allow for the free flow of human and non-human capital, and the rule of law protects private property. The Latin American countries need to learn that lesson and start to target their efforts and resources to more profitable markets.

Link here.


While Costa Rica’s legislature agonizes over ratification of CAFTA (the Central American Free Trade Area), the country’s trade deficit for the first 10 months of the year rose to $2.13 billion from $1.97 billion for the whole of 2004 despite a 10% rise in exports during the same period to $5.83 billion. The electrical components and microprocessor industry topped the list of exporters, accounting for 20% of all goods leaving the country. The trade deficit for the same period last year was $1.07 billion.

Costa Rica’s government wants to move towards freer trade with the country’s partners, but legislators and the unions are not so sure. President Abel Pacheco submitted the CAFTA to the Legislative Assembly in late October, in the face of threatened strikes. The legislative process is expected to take up to six months, but the outcome is seen as likely to be positive. The business community had been demanding that Pacheco send the agreement to the assembly, saying that by waiting, Costa Rica could lose business opportunities, foreign investment and jobs. With the approval of CAFTA last week in Nicaragua, Costa Rica remains the only signatory country that has not ratified the agreement.

Meanwhile, Kenneth Valley, Trinidad & Tobago’s trade minister, and Manuel Gonzalez Sanz, his Costa Rican counterpart, have signed a comprehensive bilateral free trade deal which will eventually eliminate tariffs on all goods traded between the two nations. The deal will remove tariffs on 90% on goods traded between the two nations immediately, while tariffs on all remaining goods will be removed over the coming four years. “This agreement with Costa Rica is a pioneering effort providing the opportunity for us to develop access, investment, and dispute settlement among others,” minister Valley observed. The deal will provide Costa Rica with access to the Caribbean Community (Caricom), which is in the process of establishing a free market, and of which Trinidad was one of the first participants.

Trade between Costa Rica and Caricom reached US$200 million in 2003. The Costa Rican economy has traditionally been based on tourism and the export of agricultural products such as bananas and coffee. Low prices for these two commodities have caused problems for the country since 1999. Its Pacific and Caribbean coastlands are lined with luxury hotel resorts. The introduction of a free trade zone fiscal regime has however resulted in a major national economic transformation with non-traditional goods now accounting for 68% of exports and agriculture representing only 17% of GDP.

In 2004 growth was an estimated 3.9%, down from 5.4% in 2003. Inflation increased to 11.5% from just over 9% in 2003, and unemployment grew to 6.6% from 6.3% in 2003. However, some economic sectors complain of skill shortages. GDP per head is $9,600 at purchasing power parity, according to an estimate for 2004. Costa Rican labour costs are relatively high for the area, but it attracts inward investment due to its skilled labor force, absence of labor problems, political and economic stability, and the attractive fiscal regime.

Link here.



God Forbid! – The Sunday Times is reporting that Lord Drayson, the new Labour defence minister, is a multi-millionaire businessman and has admitted holding part of his personal fortune in an offshore tax haven that experts say could have helped him avoid £3 million in tax. Imagine that! What a crime! He apparently established offshore trusts and companies in the Isle of Man that handled the £30 million he raised from the sale of his pharmaceuticals business. But his actions will apparently embarrass the socialist Labour government, which has repeatedly sought to stop wealthy Britons avoiding tax by moving fortunes offshore. How dare they minimize their tax bills!

The socialist media in the UK will make a big deal about this. It is all part of an insidious attempt to blur the massive distinction between tax evasion – which is a crime – and tax avoidance, which is legitimate and every tax payers right. Remember the communist creed requires “from each according to his ability: to each according to his need”. It failed miserably in the Soviet Union and China (both of which have now adopted free market economies). Sadly, the communist elites in the EU (now calling themselves socialists) are still trying to impose that philosophy on EU resident tax payers.

Of course, one of the major usages of offshore jurisdictions is to minimize the taxes that are payable in one or more onshore jurisdiction. For example, a company that operates in multiple onshore jurisdictions may be able to legitimately lower its effective worldwide tax bill by having a group holding company incorporated in a “tax neutral” jurisdiction like Bermuda. Such structures are perfectly legal and, as Judge Learned Hand famously stated, it is NOT unpatriotic for a company or individual to lower the tax they are required to pay within the bounds of the law.

There is nothing sinister about such tax minimization arrangements and the technical term for such a strategy is “tax avoidance”. Tax avoidance is legal and smart. Way to go Lord Drayson.

Link here.


The OECD’s “harmful tax competition” project suffered another setback as low-tax jurisdictions refused to acquiesce to the Paris-based bureaucracy at a November 15-16 Global Forum in Melbourne, Australia. The OECD had hoped that so-called tax havens would agree to emasculate their attractive policies in order to help high-tax nations stop the flow of jobs and capital to low-tax nations.

The OECD’s anti-competition project began in the 1990s and resulted in the release of a “tax haven” blacklist in 2000, a move that was widely criticized since many OECD nations – including Luxembourg, Switzerland, the U.K., and the U.S. – conveniently were omitted from the list even though they were tax havens according to the OECD’s own definition. Battered by accusations of discrimination, the OECD suffered a defeat as it was forced to agree that low-tax jurisdictions were not obliged to surrender their fiscal sovereignty unless OECD member nations agreed to abide by the same misguided policies. This is the famous “level playing field” condition.

This year at the Melbourne Global Forum, no OECD member nation agreed to eviscerate its tax and privacy laws to facilitate extra-territorial tax collection by foreign governments. This means the so-called level playing field does not exist. Not a single low-tax jurisdiction from the OECD’s original blacklist has agreed to surrender its fiscal sovereignty in the absence of a level playing field. The OECD was not able to convince four of its own member nations (Austria, Belgium, Luxembourg, and Switzerland) to become “participating partners”, thus the level playing field does not exist and almost certainly never will exist. Singapore and Malaysia were among the nations that attended the Forum and rejected the OECD, while many others did not even bother to show up.

Andrew Quinlan, President of the Center for Freedom and Prosperity, remarked, “I am delighted that the Global Forum was a flop.”

Link here.


Until recently, I was dead-set against the idea of a National Sales Tax (NST or “Fair Tax”), and somewhat aghast at the idea that some of my fellow libertarians would waste precious time and resources actually proposing an entirely new federal tax. Could we not just work on proposing ways to reduce taxes, and let the statists work on proposing new taxes? What were they thinking!? (or, as one very patient person has taught me to ask of myself and others, “What, were they thinking?” – a subtle but important difference).

But now I have seen the light. I am pro-fed-sales-tax all the way. After all, the government needs that money – gosh, even with what they have so far, they are already in debt! And it would cause great hardship (beyond the obvious political hardship, that is) and inconvenience to a lot of folks who depend on that money – we certainly cannot just propose cutting them off all at once. As soon as they see how much they are paying in sales tax, they will surely take up arms to lower the tax anyway. Well, except for those people who are net receivers of the tax, that is – which will be just the same number of people who are net tax-receivers now. And just think of the secondary benefits! Sure, we will still be paying exactly the same amount in federal taxes, but we will have gotten rid of the IRS – there is something to be said for that, surely? And it will be so much simpler and convenient to have your money taken from you – no messy forms, no invasion of privacy. And a regular check from the government for everyone – at least if they register their address with the feds like good like citizen-droids. I can really get behind that … it makes the sales tax concept so much more progressive!

In fact, I like this new “progressive libertarian” way of taxing so much, I think we need to extend this model to other areas where the state is overbearing and evil. We could have “libertarian” wars of aggression against other countries – maybe replace the Pentagon with a Hexagon and choose targets of foreign aggression by throwing a dart at a board – progressive libertarianism in action! Because, of course, it would be so inconvenient to the warfare part of the welfare-warfare state to just do away with foreign aggression altogether. And, inconvenience is so … well, so inconvenient. We would not want to inconvenience the folks at Haliburton by making them look for respectable and useful work, would we?

All it takes is a willingness to think outside the box and get with the program – to understand that government is not going away no matter what we do, so it is better if we forge our own chains rather than let someone else do it. Because at least in that case we will have more comfortable shackles, and that is what really counts these days. To some people, anyway.

Link here.



A law firm’s office in Ireland houses an obscure subsidiary of Microsoft that helps the computer giant shave at least $500 million from its annual tax bill. The four-year-old subsidiary, Round Island One Ltd., has a thin roster of employees but controls more than $16 billion in Microsoft assets. Virtually unknown in Ireland, on paper it has quickly become one of the country’s biggest companies, with gross profits of nearly $9 billion in 2004.

Giant U.S. companies whose products are heavily based on their innovations, such as technology and pharmaceutical firms, increasingly are setting up units in Ireland that route intellectual property and its financial fruits to the low-tax haven – at the expense of the U.S. Treasury. Much of Round Island’s income is licensing fees from copyrighted software code that originates in the U.S. Some of the rights to these lucrative assets end up in Ireland via complex accounting rules on intellectual property that the Treasury is now seeking to overhaul.

Through a key holding, dubbed Flat Island Co., Round Island licenses rights to Microsoft software throughout Europe, the Middle East and Africa. Thus, Microsoft routes the license sales through Ireland and Round Island pays a total of just under $17 million in taxes to about 20 other governments that represent more than 300 million people. Microsoft’s effective world-wide tax rate plunged to 26% in its last fiscal year from 33% the year before. Nearly half of the drop was due to “foreign earnings taxed at lower rates,” Microsoft said in an August S.E.C. filing. Microsoft leaves much of its profit in Ireland, including $4.1 billion in cash, avoiding U.S. corporate income taxes. But it still can count this profit in its earnings.

Round Island One is a key component in a drive by Microsoft to place its intellectual property and other assets into tax havens. In the past three years, Round Island has swallowed up other Microsoft units, from Israel to India, moving much of their tax liability to Ireland. Within the U.S., the rights to many of Microsoft’s products and copyrights are managed by a subsidiary in Nevada, which, unlike the company’s headquarters state of Washington, does not tax royalty income on intellectual property. The Nevada unit, Round Island LLC, is the corporate parent of Ireland’s Round Island One.

Links here and here.


Because WHVP has so many U.S. clients, Swiss money manager Robert Vrijhof, founding partner of Weber Vrijhof Hartmann & Partners, Ltd., explained, they were frequently asked whether the company could manage money in Individual Retirement Accounts. After consulting with U.S. legal counsel, they discovered that it was indeed possible for U.S. persons to take their IRAs offshore with WHVP. You need a self-directed IRA – in which you are permitted to make the investment decisions, or hire an external portfolio manager (their minimums start around $300,000). The U.S. trustee for your IRA will open an account in your IRA’s name at a private bank WHVP works with – they decided to find a trustee on our own because some of their clients said they were having difficulty convincing their own IRA trustees to allow their IRA to hold an offshore bank account.

Why might you want to take your IRA offshore to begin with? Mainly, for the same reasons that you should consider moving other “nest-egg” assets offshore. First, to diversify your assets outside U.S. markets and (crucially) outside the sinking U.S. dollar. Most U.S. brokers and financial advisors cannot or will not focus on a non-U.S. investment strategy. It is certainly prudent to create one or more international nest eggs. By investing offshore, you are creating “lifeboats” of wealth that are only protected (at least in part) against turmoil in U.S. securities markets or further decline in the U.S. dollar.

Second, offshore investments makes your wealth less visible. If someone is sizing you up as a target for a lawsuit, these assets will not show up without some digging. Offshore wealth is not invisible, however. There are tracks to follow, if you know where to look (and the IRS does). That is especially true in an IRA, which must at all times be 100% U.S. tax-compliant. But what you will avoid with offshore investments is the growing network of companies advertising the ability to identify U.S. assets, including account numbers, account balances, and much more. That is especially true if you do business in Switzerland, with its strict bank secrecy laws.

The third and potentially most powerful benefit is that the assets you hold offshore are not subject to disruptions in U.S. markets. After the Sept. 11, 2001 bombings, U.S. financial markets were closed for four days. During that time, no one could trade stocks, bonds or mutual funds listed on U.S. exchanges. In contrast, the Swiss markets continued to function in the wake of the attacks.

Link here.


It seems that it is impossible to move these days without someone wanting a proof of ID. If you want a credit card or to open a bank account or book a flight or even to open a facility with your local video shop – all of these actions will be met with a request for proof that you are who you say you are and you live at the address that you claim is your home. It is enough to make anyone paranoid and almost everybody feels a twinge of nervousness when someone in authority questions them but we have all just about come to accept the annoyance and hassle with a resignation that comes from having been through the drill enough times for it to be routine. In fact the only time I have ever known anyone to be happy to have their ID checked is when my daughter went to the bar to buy alcohol (in the U.K.) on her 18th birthday and was asked for her ID.

These odd moments aside and despite the hassle and delay, it is important to remember that when you are standing at the counter while the guy behind the desk photocopies your passport, this extra bureaucracy also drives him and his company to distraction. They are merely complying with rules and regulations designed to protect them from being inadvertently caught up in illegal activity. The problem is that the police, customs and other regulatory authorities demand increasing levels of proof of identity, forcing those who deal with members of the public to become ever more vigilant. When it comes to moving funds around the globe, even more concerns are raised by the authorities because the incidence of money laundering is surprisingly common.

Until 1989, money laundering was generally thought of as the act of disguising the proceeds of crime to provide them with a clean trail and removing their association with the criminals. To most people, the mention of money laundering is met with a knowing look and a comment that alludes to the drug trafficking world. That is not surprising considering the huge sums of hard cash that were derived from the drugs business and exchanged for other currencies before being transmitted around the globe to hide their origin. Naturally, most governments had an interest in clamping down on the movement of these sums in order to restrict the activities of the drug smugglers.

The definitions changed in 1989 when the anti-money laundering regulations broadened their focus to include the funding of terrorist activity and at this point, the proof of ID demands increased considerably. The term “know your client” was always a sales phrase designed to ensure salesmen understood the needs and desires of their customers but after 1989 “KYC” became the focal point of the financial services industries around the globe. Knowing your client has now taken on a new meaning and it is literally the act of knowing before any transaction can take place that a client is in fact the person they purport to be. This means that everyone has to be screened to ensure they are bona fide and not involved in illegal activity.

When you want to establish an arrangement with a currency dealer to exchange your funds into another currency and transmit them to another country, as odd as it sounds, you should actually welcome the fact that your identity is being verified. You should be very wary of doing business with any currency dealer who does not ask you for proof of your identity before allowing you to use their services to transmit or exchange funds. Currency companies are required by law to gain and retain this information before doing business and so if you are accepted as a client without the company in question asking for any ID documents, you would do well to seek an alternative supplier for your currency needs. I can only guess at the hassle that would come from having all your worldly wealth tied up in a frozen bank account while you argue the case to have the funds released.

Link here.


The United States Senate has adopted an amendment championed by Sen. Carl Levin (D-Michigan) that would bar the award of future contracts through several government departments to U.S. companies that have set up headquarters offshore to avoid American taxes. “We should not reward the tax haven games played by U.S. companies who want to enjoy U.S. benefits without paying their fair share of U.S. taxes,” Levin commented in a statement. “It is unfair to the U.S. companies that pay their taxes and have to compete with these tax scofflaws, and it is unfair to all the other honest taxpayers forced to make up the difference," he added.

Levin continued, “The companies targeted by this amendment claim to have moved their headquarters to a tax haven when, in reality, their primary offices and production or service facilities remain right here in the U.S. There is no reason to reward this tax dodge or companies that have renounced their U.S. corporate citizenship by giving them new federal contracts that are paid for with taxpayer dollars.” The ban would be similar to the ban that already applies to Department of Homeland Security (DHS) contracts. A Levin amendment that was signed into law last year strengthened the DHS ban.

Link here.



Your cell phone calling records are not as private as you think. As Philadelphia-based CBS 3’s Natasha Brown found, companies are making money selling your cell phone calling records to whoever wants them. Who you call. When you call. How many times you call. Believe it or not, it is all for sale. Joan Sill’s calling records cost us $110 from LocateCell.com. “This is my husband’s cell phone number, my mother’s number, friend’s phone numbers,” said Sill. She is a producer at CBS 3, and she confirmed we got all the numbers she dialed in the last 30 days. “I would never think that anybody else would be able to easily find out,” said Sill.

Neither did a woman whose identity we disguised. Her estranged husband bought her cell phone calling records from another website. “He found a cell phone number he didn’t recognize … called it and left threatening messages to a person that he didn’t even know,” she said. “I called him and I said, ‘Hey! What are you doing?! How did you get those numbers?’ ‘I went online.’”

Online to websites that sell private records for a price. Anyone can buy anyone else’s calling records – without permission. Just give them a cell number, a name, and an address. How are these web sites getting these numbers? Court records say, it is low tech. They say, some websites call wireless companies and pretend to be customers or even employees. Other experts suspect websites pay off employees or they steal the records right off wireless company websites. We bought our records from LocateCell.com. That company did not say how they got Joan’s records. But they said in an email, their services have helped find runaway kids and dangerous criminals – and that getting cell phone records is not illegal.

Link here.


The federal government wants to peer into your computer communications, forcing companies that provide high-speed access or Internet-based telephone service to design – or redesign – their networks to accommodate surveillance. The Federal Communications Commission gave broadband Internet service and voice-over-Internet Protocol (VoIP) service providers 18 months to ensure that their networks are wiretap-ready. This followed the FCC’s formal release of the order in September. Privacy advocates say law enforcement agencies already can wiretap Internet services. They criticize the FCC for overstepping its bounds by requiring businesses to devise systems to the specifications of the federal government.

“This is like saying, ‘Everybody has to keep their doors unlocked because the FBI might need to get in,’” said Mark Rasch, a former attorney who handled computer crime cases for the Justice Department and is now senior vice president and chief security counsel of Solutionary Inc., an Omaha, Nebraska, computer security consulting company. “The harm of everybody keeping their doors unlocked all the time is much greater than the benefit.” A coalition led by the civil liberties advocate, the Center for Democracy and Technology, asked a federal appeals court judge to overturn the FCC order last month.

But law enforcement officials, including Homeland Security, argue that they must expand surveillance to combat terrorism and other crimes as new technologies emerge. The battle underscores the daunting technological challenges law enforcement officials face and how the government will encounter strong resistance to regulating the Internet. The FCC order comes after the VoIP industry strongly resisted a ruling earlier this year requiring the services to offer the same 911 service traditional telephone companies provide.

Link here.


It is known as the “Great Firewall of China” to the rest of the world, but to the Chinese government it is the “Golden Shield”. China’s internet filtering system, the most sophisticated and extensive in the world according to a recent report by Harvard Law School, is in the front line of the Chinese authorities’ attempts to maintain control of an increasingly fractious society by preventing the spread of political dissent. But blocking websites such as Amnesty International, or ones that relate to the banned Falun Gong movement, or Tibetan independence, is just one part of the government’s efforts to control Chinese cyberspace.

A small army of technocrats, numbering up to 40,000, is employed to watch over China’s 100 million-plus internet users, or “netizens”, the second-largest internet population in the world after the U.S. They have been bolstered by a raft of new regulations introduced earlier this year that restrict what websites and bulletin boards can talk about or report.

Link here (full article available to subscribers only). Link to Wikpedia (free online encyclopedia) entry, “Internet censorship in mainland China”, here.


Honeywell’s device, a hovering robot carrying video cameras and other sensors, is currently being created and tested. The first round of testing on the drone (Micro Air Vehicle) has been completed, reports Bob Martin of CBS affiliate KRQE. The battery powered craft can stay in the air for 50-60 minutes at a time, and moves around at up to 55 kilometers an hour. The Micro Air Vehicle has flown more than 200 successful flights, including flying in a representative urban environment.

“If there is an emergency, you could provide ‘eyes’ on whatever the emergency is, for police or Homeland Security,” explains Vaughn Fulton of Honeywell. In the meantime, the U.S. Army has prepared a promotional video showing the craft zooming over war-zone streets. Drones have been given to the military to test during training exercises. “It has the same system most fighter jets would have,” explains Fulton.

The vehicle will be used for reconnaissance, security and target acquisition operations in open, rolling, complex and urban terrain. It will be equipped with Global Positioning Satellite. Troops in Iraq could get the craft in a year or two. The spy drone would be deployed for domestic use shortly thereafter.

Link here.


Founder of the GNU project (GNU + the Linux kernel + other programs comprise the typical “Linux” distribution), Richard Stallman, got in trouble at the UN World Summit on the information society in Tunis for putting tin foil around his RFID. Stallman is no fan of RFIDs because they hold personal data as securely as a sieve holds water. He was miffed that RFID cards were being used despite promises at the last UN conference in 2003 that they would not be.

He bought an entire roll of aluminium foil and wore his foil-shielded pass prominently and unwrapped it to go through any of the check-points. During his keynote speech Stallman gave a moment’s talk about the RFID issue, and passed his roll of aluminium foil around the room for others to use. Soon everyone was shielding their passes and afterwards Stallman was taken aside by UN security who refused to let him leave the room to talk to press, because he was flouting their security measures. Apparently it took a fairly high level shouting before Stallman was allowed to continue with his series of speeches.

Link here.


Council tax valuation officers are to enter homes to check for features such as extra bedrooms and extensions. Whitehall documents reveal that valuation officers will make house calls to “obtain factual information from internal inspections”, as part of the revaluation exercise of 22 million homes across England. The Valuation Office Agency, responsible for the revaluation of homes and businesses, sought the advice of the Office of Surveillance Commissioners on entering homes. The office gave assurances that taking photographs of properties would not contravene existing privacy legislation.

The new approach is an attempt to improve on the old method carried out in 1991 – when valuation officers carried out mostly external assessments, often driving up and down the street to classify homes into one of eight property bands. This time, valuation officers want more time to look in and around people’s homes to note important features, such as extensions, to carry out a more thorough valuation. Though the government has insisted from the start that revaluation would prove “revenue neutral overall”, a number of properties are expected to jump up bands due to property housing boom hotspots and the increased value of houses through home improvements.

Caroline Spelman, the Tories’ local government spokesman, said, “Labour’s council tax revaluation will mean an army of nosey clipboard-inspectors invading people’s homes, including their bedrooms.” When council tax was introduced in 1993, most valuations were done from behind a desk, and inspections were external. “The privacy of law-abiding citizens will be ignored because of Labour’s compulsion to levy stealth taxes on hard-working families and pensioners.” She said a “Big Brother” database would include new inspection codes that would allow the Valuation Office Agency (VOA), an arm of the Inland Revenue, to check which properties had been inspected.

A spokesman said, “There will not be armies of people sticking cameras through your window. It may be – and this will be on only a very few occasions – that you receive a letter asking for a visit.”

Links here and here.


Think that automatic number plate recognition (ANPR) is only there to catch the guilty, the uninsured, the tax dodger? Think again. Britain’s top traffic cop has plans for a national surveillance network of cameras that will track every car, everywhere. Meredydd Hughes wants the cameras installed every 400 yards on motorways, as well as at supermarkets, petrol stations and in town centers.

The unobtrusive, dull-looking and small cameras will be installed as a trial on the M42 to enforce variable speed limits, after which the plan is that they will be installed every 400 yards along every motorway. Data from the cameras will be collated nationally with the aim of tracking every car, information that will be stored for two years, whether you are guilty or not. It will be managed from a new control centre in Hendon, in north London, from where as many as 50 million number plates will be processed daily.

The system is going ahead under the pretence that it is just about checking tax and insurance. But as some observers have already noted, checking every vehicle’s tax and insurance details every 15 seconds is massive overkill. Unless of course, it is also planned that the system could make Gatsos obsolete and act as speed cameras too – which ties into the Government’s idea of enforcing speed limits rigidly.

Link here.

U.K. vehicle police spies rely on very dodgy data.

Following a story last week about the police and the DVLA’s number plate-checking experiment, it turns out that the driving authority’s data is only around 40% accurate. The information came to light in a report into the year-long trial, which occupied 23 police forces using new automatic number plate recognition (ANPR) technology. The plan is to detect crims by cross-checking the identity of the driver against the DVLA and police databases.

The report, commissioned by Home Office and carried out by PA Consulting, found that the quality of the data worsened as the trial progressed. Apparently, the police had to resort checking on tax discs visually rather than relying on DVLA data because of “decreased confidence in using the DVLA databases as the primary means of stop.” Recommendations made by the report into ways of improving accuracy include more linking of police and MOT databases and a “vehicle intelligence data warehouse” – although this sounds a lot like a duplication of what the DVLA is supposed to do now.

For those keen on retaining some privacy, the report points out the technical difficulties of making databases talk to each other, and that funding of the project remains an issue.

Link here. Law-abiding drivers set for the police “net” – link.


Prying neighbours have been setting up video cameras outside their homes – ostensibly to catch thieves – and then using them to spy on bathrooms and bedrooms in the house next door, according to “disturbing” complaints received by the State Privacy Commissioner. The acting commissioner, John Dickie, said much of the spying had occurred in northern Sydney and followed disputes between neighbors. Mr. Dickie said many complaints involved multiple camera.

The commissioner’s annual report, tabled in Parliament last week, said the practice had increased but police and councils were had no remedy for such complaints. “The activity seems to fall between the cracks of existing laws,” the report said. “It is an area of disputation which ought not be allowed to continue without some recourse being available.” The report said most cases involved a “streak of malice and more than a hint of retribution.” The commissioner’s report also raised concerns about the use by employers of criminal record checks and the publication of judgements on the internet.

Link here.


At the 1977 Libertarian Party Convention, mind-expansion advocate and LSD guru Timothy Leary gave a speech that few of us took very seriously. He spoke of something called the Internet, a network that would connect computers worldwide, allowing participants from around the globe to sign on and retrieve text, photographs, audio and video instantaneously, and to communicate in realtime with anyone in the whole world who also had a computer and a connection. He said that it would be the new revolution against the current social order and stifling status quo. He predicted it would be much, much bigger than drugs in its ability to overthrow the establishment. Whereas tuning in, turning on and dropping out had been of great interest to a somewhat narrow subset of the population, everyone would be able to use the Internet, in his own way, and thus the new revolution against the old order would transcend class, age, nationality and all other demographics. The bourgeois would have just as much interest and use for it as the so-called counterculture. And nothing would ever again be the same.

As I said, no one at the time really believed it. We figured Leary had just done a little too much acid and his imagination had gotten the best of him. The network of information he described seemed totally impossible – and yet it exists, precisely as he predicted it, right now. In fact, even Timothy Leary might be surprised to see the newest developments. Hardly a week goes by without some substantial revolution in cyberspace.

A lot of people say the Internet is overrated. They think it is just a bunch of vanity sites and ranting and raving kooks – and while they acknowledge it is nice that you can buy products online and have them delivered to your house, they doubt the net will prove as revolutionary of culture and industry as is predicted of it. Ever since the dot-com Boom of the late 1990s and the subsequent bust, many are inclined to dismiss the alleged greatness of the net. Some see it only as a novelty or fad that will hardly evolve far past its current size and scope. These people could not be more wrong. The Internet is not just not overrated – it is vastly underrated.

In the Internet we see our greatest hope for freedom and for the continual progress of humanity. In the Internet we see the anachronistic and obsolete institutions of society being pushed aside for a new dawn of better things. In the Internet we see the key to diminishing the power and status of the state and liberating ourselves from its oppression and deception. Let us first consider an indirect but nevertheless essential reason to have hope for freedom, thanks to the World Wide Web. The Internet is proof of libertarianism in action. In this unregulated sector of society, we have seen more progress and changes and improvements than in any other sector in any comparably short period of time. No other invention went so far so quickly. And all of it rests on the economic principles of spontaneous order that we have been touting for years, but had to wait until now to see fully realized.

Perhaps nothing right now is so astonishing as a demonstration of the wonders of spontaneous order as that online encyclopedia, Wikipedia – the largest collection of encyclopedia articles in the world, which are written completely by volunteers. It now boasts more than 810,000 articles in English, as well as hundreds of thousands more in dozens of other languages. Each article was written, edited and rewritten by whoever in the world decided to contribute. The division of labor, the capacity of people for consensus building and totally voluntary cooperation, and the general goodness of most people to respect each other’s boundaries are on display at this one site, and the entire world is better informed as a result. Wikipedia is a microcosm of a phenomenon online that many statists would have denied was possible before it came about. The good side of humanity – the charity that we libertarians are so used to insisting exists and does not need government to thrive – is right there. It is online, for everyone to behold.

I need not argue for the importance of a free, independent press as a bulwark for freedom, as a guardian of truth against political deception and an irreplaceable service to the people. Everyone in this room knows the significance of a press that will speak truth to power. For many years, however, the establishment press has not done so. There was the wonderful anomaly of the Nixon years, and a few other aberrations, but the mainstream press has, for as long as I have been alive, been a reliable mouthpiece for the political establishment. Thank goodness for the Internet! Nowadays, people know that anyone can start up a web page, and of the millions of people ranting out there, it is known that you cannot believe every word – or even most of them. And yet, the truth largely comes out through the processes of reputation. The Internet is not built around an arbitrary traditional hierarchy, nor is it mindlessly egalitarian. The error of opinion is unlimited and, only rivaled by the efforts of good people to combat it, the truth does, more than in the old media, come out. Thomas Jefferson also said that, if it were up to him, he would choose a world with newspapers but no government rather than a world with government but no newspapers. Thanks to the net, we might get to see the day when both artifacts are finally swept into the status of irrelevancy they deserve.

The state and its old media simply cannot keep up. At Antiwar.com and LewRockwell.com and hundreds of other sites we see the truth coming out every day. A politician lies, and as soon as someone with a computer knows, we all know. A bomb kills another innocent family and the photos and video footage are on your desktop in an hour. A famous columnist tries to pass off a slimy smear or a dishonest argument in the mainstream press, and suddenly a thousand people are debunking him and ridiculing him on their independent blogs. The Internet really is the destined home for libertarianism, and our greatest hope for freedom. On it we see the free market of ideas and services flourish even as the politicians try to stamp out civil society in realspace. On it we see the truth win out over the political and media establishment. On it we see the spirit of liberty.

The state cannot catch up to, it cannot match, and it cannot begin to comprehend the full power of the Internet. Politicians are baffled by it because it does not conform to their assumptions about the world, about human organization, about the need for central planning. The glorious Internet is a major source of confusion for all with a statist mindset. The Net is revolutionizing society, all toward more voluntary, civil and efficient methods of organization. It has given us all a way to participate in speaking the truth and standing up to the state. The Internet is ours – it belongs to the people and especially the friends of freedom and peace who feel so at home online because it is so free and so much the way we would like to see the rest of the world.

And so, when the revolution comes – when the state declines and freedom triumphs – the Internet will have played a deciding role. And I am hopeful of that future, and the move our culture is making toward it. Thanks to the net, our wildest imaginations and dreams might come true, and our destiny and our society might prove to be – just like LewRockwell.com, and just like so much of the Internet culture – anti-state, anti-war, and pro-market.

Link here.



Leading figures in U.S. education and business are calling for further improvements to student visa policy as data show international enrolment at U.S. universities fell for the second consecutive year. The number of international students enrolled at U.S. universities fell again during 2004-2005. The 1% decline was an improvement over the previous year, when enrolment fell 2.4%. That fall – the first time international student enrolment had fallen since the 1970s – crystallized concerns that declining numbers of international students could hurt U.S. competitiveness.

U.S. universities have responded by recruiting more aggressively overseas, a move officials said helped slow the rate of decline. The State Department also made significant changes to its visa policy this year – including the extension of visas for science and engineering scholars working in sensitive areas – though the impact of this move will not be reflected until next year. The policy changes, as well as speedier visa application processing times, have been welcomed in education and industry. Processing times slowed to a crawl in many regions after tougher standards were imposed in response to the September 11 terrorist attacks.

But academics and industry groups are lobbying for more changes to student visa policy. Some want a one-year automatic visa extension to international students who graduate with advanced scientific, technology or engineering degrees. Current policy dictates they return home after completing degrees. A broad study on innovation released last month by a panel of industry leaders and academics – including Craig Barrett, Intel’s chairman, and Norman Augustine, former Lockheed chief – listed student visa liberalization as one of the top 10 actions that would improve U.S. competitiveness.

Link here.


Despite the near universal scorn with which most members of Congress hold our Constitution, it is still the law of the land. And while it may appear to be all but dead, the document contains a number of powerful tools that can be used to beat back the powers of darkness that have overtaken this country. The Constitution gives Congress all the power it needs, as well as a mandate, to end American imperialism – be it in Iraq, Afghanistan or any of the other 140 countries in which we have left our troops to rot – no matter what a warmongering President, or his gang of bloodthirsty followers, may say. We just need to find enough in Congress who have the courage to use that power.

With that being said, it might be helpful to provide a summary of the congressional powers as they pertain to allowing presidents to invade small, unarmed desert nations 8,000 miles away. The short version, and excuse me for shouting, is … JUST SAY NO!!! But, let us go back to the beginning. …

Link here.


As a result of such continuing concerns, an unusual coalition of Republicans and Democrats in the Senate and House was sufficiently upset at the latest proposed revisions in the Patriot Act that leaders agreed to drop the immediate consideration of it, partly to avoid a threatened filibuster in the Senate. Congressional leaders still plan to finalize reauthorization of the Patriot Act by year’s end, but the delay was a disappointment to the White House and at least a temporary victory for civil libertarians on the right and left.

Sen. Russ Feingold, D-Wisconsin, one of the leaders of the insurrection against the immediate renewal of the Patriot Act and the lone vote against the original legislation, said, “I remain committed to doing everything I can to stop any bill that does not contain adequate protections for our rights and freedoms.” With such staunch opposition in the Senate, the bill is likely to be changed in some small way to break the logjam and beat the law’s year-end expiration date. Most likely, a change will be made to the length of time the revised law would be in effect, but less clear is whether the measure will be modified to address other concerns.

Lawmakers said they had raised specific concerns about the Patriot Act with administration officials more than a year ago, but those concerns had gone unheeded in the last-minute push to renew the law. “I don’t think that a number of key advisers have served the president well, because this is important,” said Sen. John Sununu, R-N.H., a member of the coalition that upended the bill. “We can protect civil liberties and still fight the war on terrorism.”

The main sticking point to emerge between the House and Senate is the sunset provision, which places an expiration date on the law. Senators insisted that the law should expire in four years, but the House had sought a 10-year expiration. A draft agreement put the sunset provision at seven years. But House members and senators worried about the erosion of civil liberties insisted upon the four-year timetable. “On issues as important as the civil liberties of fellow American citizens, you review it and review it on a constant basis, no matter who is in the White House or who is in the Justice Department,” said Sen. Larry Craig, R-Idaho. “It is fundamental to the strength and the character of our country.”

Senate Judiciary Committee Chairman Arlen Specter, R-Pennsylvania, who joined the dissenting lawmakers at a press conference, said he considered the sunset issue to be the final, most important difference between the House and Senate. Besides concerns about the sunset deadline, many lawmakers said they were unhappy about provisions allowing law enforcement searches of library records and business records, sneak-and-peek searches where a suspect is not present when his or her home is being searched, and national security letters that prevent a suspect from challenging a gag order in court that prohibits him from publicly talking about any allegations against him. “My concerns go way beyond the sunset,” Feingold said. “We should not allow even four more years of the violation of people’s rights with regard to their business and library records, when they’ve done absolutely nothing wrong, without any real standard.”

Link here.


Meet Deborah Davis. She is a 50 year-old mother of four who lives and works in Denver, Colorado. Her kids are all grown-up. Her middle son is a soldier fighting in Iraq. She leads an ordinary, middle class life. You probably never would have heard of Deb Davis if it were not for her belief in the U.S. Constitution. When honest, law-abiding citizens cannot commute to work on a city bus without a demand for their “papers”, something is very, very wrong.

One morning in late September 2005, Deb was riding the public bus to work. She was minding her own business, reading a book and planning for work, when a security guard got on this public bus and demanded that every passenger show their ID. Deb, having done nothing wrong, declined. The guard called in federal cops, and she was arrested and charged with federal criminal misdemeanors after refusing to show ID on demand. On the 9th of December 2005, Deborah Davis will be arraigned in U.S. District Court in a case that will determine whether Deb and the rest of us live in a free society, or in a country where we must show “papers” whenever a cop demands them.

Link here.


When I opened my copy of True Crime: New York City, a white piece of paper fell out and fluttered to the ground. It was a disclaimer, hastily printed and stuffed into the case: “This game is not approved, endorsed or connected in any way to the New York City Police Department. … The game is fictional and does not represent the views, policies or practices of the NYPD.” It is no wonder New York’s real-life cops were worried. In True Crime, you play as Marcus Reed, a reformed street thug who becomes a cop – and quickly discovers that the police force is a carnival of sleaze and corruption. As you wander the city on patrol, you are allowed – hell, you are encouraged – to break the law and enrich yourself.

When I busted a perp who was holding up citizens in Central Park, I discovered he was carrying illegal gun parts. I could have turned them in – but instead I nicked his goods, turned him loose, then sold the stuff at a pawn shop to buy an even more badass weapon. Pretty soon I had descended into a twisted evil-cop rampage. I jacked cars from innocent civilians, pistol-whipped perps within an inch of their lives and planted evidence on second-rate criminals so I could pretend to have made a big bust. Then one day, as I was running over an innocent pedestrian during a car chase, I had an epiphany. Family-values types often deplore the brutality of today’s action titles. But have they ever closely examined who is committing this carnage?

Nine times out of 10, when you are blowing people’s chests open with hollow-point bullets, you are not playing as a terrorist or criminal. No, you are playing as a cop, a soldier or a special-forces agent – a member of society’s forces of law and order. Consider our gaming history. In Doom, the game that began it all, you were a Marine. Then came a ceaseless parade of patriotic, heart-in-hand World War II games, in which you merrily blow the skulls off Japanese and German soldiers under the explicit authority of the U.S. of A. Yet anti-gaming critics did not really explode with indignation until Grand Theft Auto 3 came along – the first massively popular modern game where the tables turned, and you finally played as a cop-killing thug.

Why were these detractors not equally up in arms about, say, the Rainbow Six series? Because games lay bare the conservative logic that governs brutal acts. Violence – even horrible, war-crimes-level stuff – is perfectly fine as long as you commit it under the aegis of the state. If you are fighting creepy Arabs and urban criminals, go ahead – dual-wield those Uzis, equip your frag grenades and let fly. Nobody will get much upset. Indeed, conservatives have long been fans of the Dirty Harry beat-down. Consider what Bill Clark – a former NYPD office who consulted on True Crime: New York City – said about the game in a recent news report: “Marcus is the type of cop we all wished we could be. He doesn’t need warrants to burst into buildings, search cars, or people. He doesn’t have to deal with politics or property damage or paperwork.”

These days, Dick Cheney is fiercely lobbying to grant the government virtually the same powers. And indeed, Congress is set to re-up the Patriot Act, preserving and extending the CIA’s special, magnified powers to detain and wiretap suspects – their “extra life” upgrades, as it were. If art imitates life, maybe it is no wonder that we have seen a rise in games that blur the lines between criminals and state authority. The irony is that, in reality, New York’s actual police have moved in the opposite direction. They have become more successful at keeping the peace by being less bloodthirsty. In the ‘90s, they drastically reduced the city’s crime rate by “community policing” and beat walking, the sort of quiet, low-key work that makes a city genuinely secure.

Link here.



A concerned reader who has been attentively observing the “signs of the times” makes a thoughtful comment and poses some pertinent questions: It appears that our police forces in America are changing and that we are developing into a Police State/Surveillance Society. What is the traditional model for police forces in America? Are they in the process of being militarized? If so, for what reason? How can we reconstruct the American concept of police?

The answer is yes. The orientation and underlying concept of police enforcement in America have, indeed, been changing, but changing so quietly as to be hardly noticeable except by a few careful observers. The traditional orientation of police enforcement has been local rather than national. It was the sheriff, the highest police official in the county, and his deputies who were unquestioningly in control of maintaining peace and apprehending law breakers.

Incorporated cities and municipalities have the same local orientation, but the titles change to chief of police and policemen on the beat. The general concept used to be that law enforcement was applied by the sheriff’s deputy or policeman on the beat right where problems occurred. This historic view has changed because of political pressures and monetary influences from the national level of government. But even now the sheriff, as the highest-ranking police officer in the county, still has authority to tell federal agencies and their SWAT teams (FBI, BATF, DEA, IRS, and federal marshals) how they must conduct themselves in his county. Sadly, very few sheriffs have the intestinal fortitude to buck the evolving national-statist system because doing so might threaten their careers or their standing with federal agencies on whom they have become financially dependent.

Link here.


Nearly every urban setting in the world is fraught with conflicts between groups, so much so that political commentators can speak of votes and candidates mostly in terms of the demographic composition and impact of the vote. It is not only in Baghad were people struggle over the levers of Power. Rather, every election turns on the “religious vote”, “the black vote”, the business vote, the women’s vote, etc. This is a sad commentary on the modern city, founded in the middle ages as a place of peace and commerce and which became the very foundation of civilization.

Why do these conflicts exist and why does the city – the cultural center of commecial civilization characterized by peace and prosperity – attract them? The Marxists say that that urban conflict is rooted in the war between capital and labor, the racialists says its root is in the exploition of one race by another, and feminists view it as a working out of a perpetual struggle over sex. Religion evidentally plays a role as well, as the case of Iraq demonstrates. And yet none of these factors speaks to the root cause of urban conflict. For the answer, I offer this reflection from my book Democracy: The God that Failed (now in paperback). It is the state and no other institution or social force that turns peaceful urban civilization into a war-zone.

Human cooperation – division of labor – based on integrated family-households and on separated households, villages, tribes, nations, races, etc., leads to improved standards of living, a growing population, further extensification and intensification of the division of labor, and increasing diversity and differentiation. As a result of this development and a rapid increase of goods and desires which can be acquired and satisfied only indirectly, professional traders, merchants, and trading centers will emerge. Merchants and cities function as the mediators of the indirect exchanges between territorially separated households and communal associations and thus become the sociological and geographical locus and focus of intertribal or interracial association.

To maintain law and order within a big city, with its intricate pattern of physical and functional integration and separation, a great variety of jurisdictions, judges, arbitrators and enforcement agencies in addition to self-defense and private protection will come into existence. There will be what one might call governance in the city, but there will be no government (state). For a government to arise it is necessary that one of these judges or arbitrators succeed in establishing himself as a monopolist. That is, he must be able to insist that no citizen can choose anyone but him as the judge or arbitrator of last resort, and he must successfully suppress any other judge or arbitrator from trying to assume the same role (thereby competing against him).

The state – a judicial monopoly – must be recognized as the source of de-civilization States do not create law and order. They destroy it. Families and households must be recognized as the source of civilization. It is essential that the heads of families and households reassert their ultimate authority as judge in all internal family affairs. Households must be declared extraterritorial territory, like foreign embassies. Free association and spatial exclusion must be recognized as not bad but good things that facilitate peaceful cooperation between different ethnic and racial groups. Welfare must be recognized as a matter exclusively of families and voluntary charity and state welfare as nothing but the subsidization of irresponsibility.

Link here.


Judith Miller, the Bush Administration propaganda mouthpiece forced to retire from The New York Times, is hardly an anomaly. American journalism is contaminated by widespread institutional corruption. Yet coming on the heels of the same paper’s humiliation by phony reporter Jayson Blair and Stephen Glass’s reign of error at The New Republic, the Miller mess’s further contribution to the media’s ever-diminishing credibility – the Gallup poll finds that 49% of Americans consider the news mostly or completely unreliable – has prompted industry insiders to propose cures so toothless that they only expose the cluelessness of those proposing them.

Miller, who cut-and-pasted the White House’s Saddam-has-WMDs press releases into the Times to help build support for the invasion of Iraq, is being characterized as a rogue reporter by the same editors who encouraged and published her tripe. And the punditocracy is going along. She “should be promptly dismissed for crimes against journalism, and her own newspaper,” Greg Mitchell wrote in the industry trade journal Editor & Publisher. “And Bill Keller, executive editor, who let her get away with it, owes readers, at the minimum, an apology.” Slate.com media critic Jack Shafer, on the other hand, would settle for a mere “explanation”.

The sad fact is that Miller and Blair, rather than rare exceptions, reflect the endemic vices of elitism, unaccountability and star worship that afflict our journalistic institutions beginning with top management. It will take more than another pro forma mea culpa to rebuild their eroded credibility. Systemic changes are essential …

Link here.


The history books have it right in describing the Pilgrim’s first harvest in 1620 as meager, followed by a miserable winter. It is also true that help from nearby Native Americans made for a better harvest in 1621, which led the Pilgrims to celebrate the Thanksgiving feast we all learned about as children. Yet here is the little-known part of the story. The harvest in 1622 was another failure, to the point that the remaining Pilgrims faced starvation. Why? Because during their first three years, these Pilgrims practiced “farming in common”. The farmland belonged to the colony, and so did the food. Portions were rationed out.

So in the spring of 1623 the Pilgrims decided to take a calculated risk. They allocated individual plots of land for ownership among the families and members of the colony. In turn, each of the new owners was responsible for their property and for what it reaped.

I am sure you can guess the outcome of private ownership and individual incentives. The harvest in 1623 was plentiful – and that was the year when the Pilgrims chose to set aside an annual day of thanksgiving to God. In a few short years, the colony produced abundance beyond its needs, and it was equipped to begin trading the surplus. They considered this turn in their fortunes to be miraculous. With the benefit of hindsight, what they had discovered was the miraculous benefits of private ownership and free markets.

Link here.


The emotional capstone in the film Under the Tuscan Sun is a scene where writer and protagonist Frances Mayes is finally acknowledged and possibly welcomed with a glance, a nod, and a slight tip of her elderly neighbor’s hat. Despite her many strenuous efforts to achieve this acknowledgement, it occurred only after she stopped obsessing, worrying and agitating. With that old man’s tip of the hat, the whole world synchronizes, and settles into its natural wonderfulness.

Thanksgiving reminds us to be grateful for gifts already received, generally unwrapped, often intangible, usually simple and at times wondrous. The existence of those we have loved, love today and will love tomorrow is always at the top of the list.

This year, beyond the good gifts in our lives, there is also room for a political Thanksgiving as well. For those who crave limited government and human liberty, it may seem that our current American era of war socialism, nationalistic fervor against evil enemies, and the brave new State led by a corrupt plutocracy and standing armies leaves little to celebrate. But when you gather with family and friends this Thanksgiving, remember there are at least ten political gifts we have been given in 2005. …

Link here.
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