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Want to be far from terrorism threats and have Bill Gates as a neighbor? Then New Zealand may be the place for you.
New Zealand has long had some attraction to English-speaking expats who do not mind being far from the rest of the world. Since 9-11 the interest level has notched up a level or three.
It took Peter C. Cooper one year to fall in love with America. While studying abroad in Kansas City, Kansas in 1969, the then 17-year-old New Zealander witnessed mass protests, talked nonstop politics and was bussed from one school district to another as part of the city's integration of racially divided schools. Now, at 56, Cooper splits his time between California and New Zealand. He became a successful developer by straddling the continents to lure his adopted countrymen to his homeland. His Mountain Landing development, on New Zealand's North Island, targets affluent Americans who want two things: security and a unique environment. The first stage of the development was completed last year, and 8 of the 46 available sites have been sold, mainly to U.S. buyers.
Americans' interest in New Zealand as a place to retire or to buy a second home jumped after the 9-11 attacks. Residency applications doubled from pre-attack levels. New Zealand is a 12-hour flight from the U.S. West Coast, and Cooper could add to his sales pitch a pristine environment: The Lord of the Rings meets The Piano.
Mountain Landing is an enclosed 1,000-acre development with a helipad that can shuttle homeowners in and out of their development at a moment's notice -- to hunker down in the face of a world calamity or be transported for a day of mountain climbing. The sites, between 1 and 12 acres, will go for between $3 million and $5 million. They are in the Bay of Islands, near the northernmost tip of New Zealand -- 1,000 miles from the nearest piece of non-New Zealand land but still convenient for the bright lights of Auckland, New Zealand's biggest city.
While Cooper is a pioneer in developing homes for U.S. buyers, he is not the first American to have invested in New Zealand real estate. Billionaire Julian Robertson, the 76-year-old former hedge fund manager, went there in 1980 to write the great American novel. Since then there has been no novel, but he has built two golf courses, both with cottages that cost up to $10,000 for a three-night stay. He has also set up two wineries. Another hedge fund billionaire, Paul Tudor Jones II, has large properties in New Zealand. Bill Gates has property in Nelson, New Zealand's sunniest region, at the northwestern tip of South Island. More recently Equity International, billionaire Sam Zell's private equity firm that focuses on real estate in emerging markets, invested $75 million in a company that operates housing for seniors in New Zealand.
"Visitors see New Zealand as one of a handful of last spots that are undiscovered. There is a lure," says Gary R. Garrabrant, chief executive of Equity International. There are other attractions. It is an English-speaking, developed country where land is relatively cheap, at an average $27,000 an acre for vacant parcels. (That figure, from Bayleys Real Estate Group in New Zealand, is up 92% over the past decade.) American investors do not feel a currency pinch at the moment because the the U.S. and N.Z. dollars have a fairly stable relationship (1 U.S. dollar equals 1.32 N.Z.).
Restrictions on ownership of property by Americans are light. Cooper says all he needed to make his development accessible to foreigners was to limit the individual properties to 12 acres and keep access to the beachfront public.
Unlike Australia, New Zealand does not levy transfer taxes on residential properties. New Zealand abolished death taxes in 1992. There are also no property taxes, and land sales other than by people in the real estate business are exempt from capital gains taxes.
Although the lower end of the housing market in New Zealand has recently taken a hit, demand for high-end property continues to be strong. Rachel A. Dovey, a real estate agent with Bayleys, says the rich American clients she deals with are looking for gated communities with things like access for helicopters and stables for horses. She expects demand for homes with luxury amenities to continue to be strong despite the worldwide housing crunch. One reason: The country's banks have minimal exposure to the subprime mess and so are in far better shape than their counterparts abroad to continue real estate financing.
International Living, an Irish organization that markets foreign destinations to investors and retirees, is promoting New Zealand as the Hawaii of 40 years ago. It has held two seminars on the country in the last year in Auckland. Both attracted more than 50 people. "We were not expecting that many," says organizer Grant Perry. "People were looking for the safety factor."
New Zealand 101
For those seriously considering a move to New Zealand, here are a few starting hints.
"Just as you would not get married after your first date, you should take the time to check out the place and make sure it is really what you want," says Jonathan R. Flaws, a partner at law firm Sanderson Weir in Auckland. Getting a 3-month visitor visa is a snap. You can renew the permit twice within an 18-month period.
New Zealand is small and isolated. Only 4 million people live in the island nation -- 1.4 million in Auckland -- and it is a 3-hour plane ride to the country's closest neighbor, Australia.
A big decision is whether to go for permanent residency. By remaining visitors, Americans escape a lot of red tape, but they are unable to work or take advantage of New Zealand's health care system. If a job is necessary, plenty of Web sites help Americans find out if they qualify for residency. One such site highlights the four ways Americans can pursue permanent residency: as a skilled migrant, family member of a citizen, investor or entrepreneur.
The older you are, the harder it is to become a resident. For example, the maximum age for the investor track, which has three levels, is 54, and one needs to deposit at least $1.9 million in investment funds, which must remain in the country for four years. Another requirement for investors: $750,000 for settlement funds -- for example, to buy a home.
For these reasons it is easier to remain an American and just visit for six months out of the year. This way you avoid the New Zealand income tax, which hits a bracket of 39% on incomes over the equivalent of $45,000.
To warm up, open a bank account and get a New Zealand address. Banks have migrant services branches to assist expats. Having an account guarantees access to funds when you arrive. The postal address can help you speed up getting documents like a purchase agreement.
It also helps to have a representative on the ground ahead of your arrival. New Zealand allows foreigners to appoint an attorney to sign legal documents on their behalf if they do not intend to reside there full-time.
See the New Zealand Immigration Guide. Kim R. Saull, vice chairman of the New Zealand Association for Migration & Investment, which runs the site, says Americans wishing to move to New Zealand have plenty of experts to whom they can pose questions. "The bulk of my U.S. clients make it over here and settle with a minimum of fuss," she says. "It is about as awkward an experience as moving from the West Coast to the East Coast. Often the biggest problems are in your head!"
Censorship is not the only thing wrong with Chinese reporting. The other one is corruption
China may be the economy of the future, but here we see another indication that it has a long way to go. Corruption is endemic in the economy, to some large but unknown degree. And the news industry is not only not a check on that tendency. It is actively complicit.
Zhou Jianguo and a colleague, flying the flag of a Chinese daily newspaper, drove for hours into the mountains to get to a mine accident that killed two during the May 31 weekend in Jingle County in the coal-rich heartland of Shanxi Province, southwest of Beijing. It had taken enterprising journalism to get to this story. At the end of a long day they were set to march up the stairs of a dilapidated concrete government building to confront a county work-safety official about the accident.
But that is where the reporting stopped. No story about the accident ever appeared in the paper, the Shanxi Legal Daily, or in any other news outlet. The newspaper denies employing anyone named Zhou Jianguo. Zhou and his colleague refused to allow a Forbes reporter to observe the encounter with the work-safety official. When their 10-minute meeting was over, the two men and the official, a man addressed as Director Li, declined to say what they had discussed.
What happened in that brief encounter that could make a fatal mine accident magically disappear? "Black journalism," according to our guide on the scene, a man known only as Old Zhao, a self-described businessman and journalist who arranged our meeting with the pair of reporters. Before going up to Director Li's office, the two younger men had huddled with Old Zhao, who then bluntly explained the reason Forbes could not go into the meeting. With a foreigner present, "it would be impossible for Li to pay them."
Wasn't the year of the Olympics supposed to herald a new era of integrity in Chinese journalism? It has and it has not. The Sichuan earthquake inspired some courageous Chinese reporters to defy censors in pursuit of the ugly truth about building standards. But government interference is not the only thing getting in the way of truth telling. In China's world of black journalism countless smaller tragedies routinely get shoved under the rug. Reporters race to the scene of coal mine accidents not to investigate them but to collect hush money. The more dead miners, the fatter the payoffs, especially for correspondents carrying the labels of leading national and provincial news outlets, media experts and Chinese reporters tell Forbes.
These bribes are part of a widespread culture of checkbook journalism in China, from reporters taking handouts at corporate press events to broadcasters selling precious airtime on the evening news to reporters blackmailing targets with the threat of exposure. Unlike government censorship, this corruption eats at one of China's more beleaguered professions from within its ranks. The trading of favors for cash is so prevalent that, like the honest cop in a corrupt police unit, an ethical journalist risks the scorn of colleagues.
"Most journalists in China live and work in the gray areas, or even the black areas. If I disclosed everything I would not be able to survive in China," says veteran investigative reporter Wang Keqin, who has written about dishonest journalists and paid a price. Wang is on a recommended health leave this year, living in a modest government-provided apartment in Beijing and drawing his base salary of $160 a month. (Journalists are paid an additional amount per article.) He does not own property or a car.
"If you look at the payroll, most of the journalists in Beijing make the same money as me, but why can they own luxury cars and live in villas?" Wang asks. "Because they use reports to make trades, trades with officials and businesspeople. They have a lot of gray and black income."
The shakedown artists include con men who pose as reporters and make up damaging articles with which to extort targets, and journalists who work in league with the lawbreakers they are supposed to cover, earning up to millions of dollars a year on the side. Scattered news reports about some of these excesses have appeared over the years in the Chinese media. Last year four people posed as national television reporters to blackmail a coal mine inspection station in Shanxi Province for $40,000, according to Shanxi Daily. In 2006 Yang Xiaoqing, a Hunan bureau reporter for China Industry & Economics News, was convicted of blackmailing a party secretary to suppress what authorities called a "fake" report about his crooked land dealings. In 2002 two journalists from the nation's official news service, Xinhua News Agency, accepted gold ingots to cover up coal mine accidents, according to China Youth Daily.
In fact, corruption is embedded in the business model of Chinese journalism. News outlets sometimes establish "bureaus" in far-flung cities not to collect news but to collect income, say Chinese journalists. "They essentially run a business-editorial operation," says David Bandurski, a researcher at the University of Hong Kong's China Media Project who has studied the dark side of journalism. "There is no journalism at all."
Journalists have many ways to drum up extra cash. At corporate press events cash-filled "red envelopes" -- in reality, usually white envelopes -- have been standard-issue for years. At fashion magazines editorial space and the cover are often for sale, in ways unknown in the West, and that is on top of the product-unveiling parties, the gift bags and the junkets to Europe.
Then there is the most coveted media space of all, a spot on China Central Television's 7 p.m. newscast, viewed by tens of millions. Ambitious low-level officials dream of snatching a few seconds of airtime to boost their profiles in the Communist Party. Beijing journalism professor Zhan Jiang, a former CCTV employee, explains:
"Local officials and entrepreneurs would most prefer to be on the news broadcast on CCTV at 7. I have heard that is like several hundred thousand [yuan, or more than $40,000]," Zhan says. "It is very hard for local officials to get on TV. Once they are on TV for like three seconds, five seconds, it would be very helpful to their futures and could increase their chances of getting promoted, and for that they would happily pay a million."
CCTV denies selling any airtime on its newscasts or having any corrupt reporters. But, along with the Xinhua News Agency, it exemplifies the twin pillars of Chinese journalism that make the profession so corruptible: official power and mass-market reach.
"They are invested with power because of this continuing role of the media as a sort of state functionary, so [people] basically trade in that political capital for commercial gain," Bandurski says. "It is this tension between commercialization and control, these two roles, that really create a garden of corruption and falsehood."
This almost official culture of corruption is so entrenched that few journalists dare to challenge it. Zhou Ze, an associate professor of media studies at China Youth University for Political Sciences in Beijing, even argues that blackmailing mine owners can be a good thing because "it increases their costs. Those mine owners might think, 'If I have to face this kind of endless blackmail, I would prefer to improve work-safety conditions.'"
One Shanxi reporter who offered to sell Forbes a purported video of journalists taking payoffs at a coal mine says that he and his colleagues call what they do to mine owners "black eating black." He explains: "For those black-hearted mine owners, we have to use the black methods to deal with them."
But this is no system of accountability. For coal mines, which last year had 3,786 reported worker deaths (and some unknowable quantity not in the official statistics), this shadow market does not deter deadly accidents so much as treat them as a business expense.
"There are many mines that have their own media consultant," says journalist Wang Keqin, who has investigated illegal mines in Shanxi. "Once the mine has an accident, all the reporters come, and the mine's media consultant would give red envelopes based on what kind of media you are. CCTV might get 50,000 to 100,000 [yuan, or $7,250 to $14,500], Xinhua might get 50,000. For provincial level media, it could be 30,000, and for small newspapers it could be a couple thousand to 20,000. This money is called the 'make-you-shut-up fee,' and it is also called the 'media public relations fee.'" Xinhua, for its part, denies having had any case of corruption in recent years and says it would fire a journalist found to have taken hush money.
It is this profitable racket that can motivate reporters, real or not, to drive long distances on a story and to recruit others to help raise more cash. Our guide, Old Zhao, did not seek hush money in our presence, but he tried to recruit the driver hired by Forbes to become a journalist for future missions, informing him that being able to write was not a prerequisite.
AM I TOO OLD TO LEARN A SECOND LANGUAGE?
The idea that the older one becomes, the more difficult it is to learn a foreign language is an urban myth. The fault is in learning by translation rather than immersion.
The first issue of the recently revived Escape From America e-zine includes this interesting article on learning a second language. There is no doubt that if one expatriates and wants to even partly fit in to the culture of one's adopted home, learning the native language is not an option. But those of us who have taken grammar school,high school, and/or college language courses and learned verb conjugation rules, etc. ad nauseum without ever having felt like we could carry on more than a rudimentary conversation, might wonder if that is really possible.
Apparently the problem has been the learning system. The trick is to replicate the environment in which one first learned to speak: Immersion in "massive amounts of comprehensible or meaningful input." This will enable you to verbally communicate. It you later want to write, analyze text, or whatever, then you can learn the formal rules of the language.
I primarily write about expatriation issues in Mexico, our adopted home. In fact, my wife and I just finished a "yet-to-be-published" eBook entitled: Sustainable Expatriatism. The research I have done for all my books and articles pertaining to expatriatism have clearly shown me that language is indeed the portal to the culture. This is a fact about which Cultural Analysts harp constantly: If you are going to learn the culture in your expatriation adventure, you have got to learn the language of the host country to which you have expatriated. Otherwise, in my opinion, you never become an expatriate.
Mexico is a case study about this issue. When we moved to Mexico in our middle 40s, we stood out among the expat crowd. We were not old, retired, wheeling about in scooters for people with ambulatory difficulties, or anything else that would indicate we were a part of the Jubilado Crowd. That is what we found in the Highlands of Mexico, like San Miguel de Allende, and on Mexico's Gold Coast. Most Gringo expats were retirees.
Soon after moving here, we began to discover that the vast majority of Gringos in Mexico do not speak Spanish even after living in the country for 10 years or more. Incredibly, there are those who have lived in the country for 30 years or more and still do not know enough Spanish to save their lives -- literally! And, of course, being the terminally curious person that I am, I had to know why.
I received this comment from a reader of one of my articles on this issue. Our exchange went like this:
A Reader's Response:
"It has been documented that the older one gets the more difficult it becomes to learn a foreign language."
Actually, there is no credible evidence to show that the older one becomes, the more difficult it is to learn a foreign language. This belief is almost an urban myth and is not linguistically sound. It is an emotional issue that prevents adults from trying and succeeding to learn Spanish.
"Affective factors such as motivation and self-confidence are very important in language learning. Many older learners fear failure more than their younger counterparts, maybe because they accept the stereotype of the older person as a poor language learner or because of previous unsuccessful attempts to learn a foreign language. When such learners are faced with a stressful, fast-paced learning situation, fear of failure only increases. The older person may also exhibit greater hesitancy in learning. Thus, teachers must be able to reduce anxiety and build self-confidence in the learner." (The Older Language Learner by Mary Schleppegrell)
It is also an ignorance issue in which the adult learner of a new language believes that the older he becomes, the less ability he has to learn a second language. Researchers Krashen, Long, and Scarcella showed that:
"Studies comparing the rate of second language acquisition in children and adults have shown that although children may have an advantage in achieving native-like fluency in the long run, adults actually learn languages more quickly than children in the early stages. (Krashen, Long, and Scarcella, 1979)."
The conclusion this study draws is adults can develop a working ability in the target language much faster than a child can. So just where did this hideous stereotype about adults learning foreign language originate? It came from some very old science.
There used to be a theory on "brain development" from the 1960s that taught that there was a "crucial period" an individual had before the brain lost its "plasticity," making learning a second language too difficult. (Lenneberg, 1967)
It was a belief that if you did not get your second language learning done before puberty, your goose was pretty well cooked. Modern studies have shown though some differences between how a child and an adult learns a second language do exist, the older learner has the distinct advantage. The adult learner of Spanish can learn the language faster because of the following:
The biggest obstacle for the adult is the emotional factor. Adults have bought into the myth that they just cannot do it. They are also afraid of making fools of themselves. I have often thought this is the reason children seem to learn Spanish faster than adults do -- they are not afraid of making mistakes and are not embarrassed when they do make mistakes.
- The adult's maturely developed brain has the superior ability to understand the relationship between semantics and grammar.
- The adult's brain is more mature in its ability to absorb vocabulary, grammatical structures, and to make more "higher order" generalizations and associations.
- The adult learner's better-developed brain is better at "putting together all the pieces" with a more developed long-term memory.
Children also seem to learn Spanish faster because of the natural method to which they resort. They approach learning a foreign language in the identical manner they did when they learned their native language. If you have children, you witnessed this event. Was there not a time when you just knew that your "yet-to-speak anything other than goo-goo and ga-ga" child understood far more than he was letting on?
A chief problem is in the phrase, "language learning." What most people do not realize is there is a difference between language acquisition and language learning. Language acquisition, the ability to engage in spoken fluency, involves a different area of the brain than does language learning.
Language learning is what happens when you learn grammar rules, syntax, and constructions. It is what someone does when he wants to learn to become an exegete [expert] of written text. Language acquisition is the development of spoken fluency and is what most of us want to do: Speak the language!
One comes before the other. Acquisition comes before learning. Long before you knew the difference between a verb and a pronoun, you had a high degree of spoken fluency.
Consider the situation with my little friend, Diego. When I met him here in Guanajuato, all he could do was say words. He could not construct a sentence. He was too young. But, he did what we all did when we learned our first language: he listened. This is how language acquisition comes about. We have an intense period of just listening. Then we try words. Soon, we experiment with sentences while continuing to listen to everyone around us until one day we can speak fluently.
Diego, from the time he was born (and maybe even in the womb) until attaining the fresh six years he has now, all he did was hear Spanish. Non-stop bombardment of his native tongue. Never once during his young six years did he know a part of speech. Never did anyone require him to parse a verb, write a sentence, or recite the parts of speech. He still cannot read but is recognizing words. He has developed a HIGH DEGREE of spoken fluency, but cannot read or write a word of Spanish or tell you the parts of speech. This is where we adults screw up. We take the unsound, grammar-first approach and develop an ability to interpret and translate written text. However, we can hardly string two words together when trying to speak. We are taught incorrectly. We are, in traditional classes, taught using the wrong approach.
Just think of having the spoken fluency of a 6-year-old Mexican child! (I would kill for that.) And yet, what do we adults do? We pay for classes that require us to learn translation techniques and wonder why we spent all that money when we cannot speak the language.
Another issue that must be dealt with in the adult learner of a new language is trying to convince him that forking out a small fortune for classes that will teach him something about the language is not the road to take if initially what he wants is to know how to speak and understand spoken Spanish. Even though adults could figure this out, they do not. I would love to meet an adult who took grammar classes and literature courses and who was able to reach the spoken fluency level he had achieved in his native tongue by the time his mother carted him off for his first day of school.
Really, think about this a moment or two. Did you attend a class to achieve the spoken fluency level you had when you started first grade? Did you learn first how to speak your native language before learning about the parts or components of your native tongue? You did not learn how to conjugate a verb or read Chaucer before learning how to speak. So why do we as adults resist the idea based on more than 40 years of research that we can indeed learn a second language and that enrolling in costly courses that teach us bucket loads of stuff about the language is not the way to begin?
"Older learners who have been exposed to a translation system rather than an immersion system are suspicious of an immersion system because it is not widely used. Furthermore, they seek translation that keeps them in the English way of thinking, preventing the second language from developing independently from the first language. Immersion systems have as their goal the elimination of internal translation. Furthermore, immersion systems provide the individual with authentic second language, enabling the person to achieve native-like fluency in the second language." (Harris Winitz, Ph.D., Language Development, Kansas City, Missouri
Regarding the traditional methods for learning a second language, Dr. Winitz goes on to say: "American systems concentrate so heavily on memorizing 'surface' grammatical rules that they provide only a set of limited vocabulary items. One needs perhaps 20,000 words to begin to sound somewhat native-like, but 100,000 words should be the goal of the second-language learner. Additionally, classroom conversational instruction should be avoided because the students mostly hear the speech of fellow students that is incorrect and poorly pronounced. In some conversational classes 95% of the input is from fellow students rather than from the native speaker."
If we want to expatriate to another country where the host country's language is different from our own, then we will have to deal with the language issue. Otherwise, all we will ever be are visitors (Cultural Imperialists?) and not expatriates. The answer to learning a second language is to completely overhaul our philosophy of language learning and turn to the identical method we unconsciously submitted to when learning our first language: Immersion.
We must seek true immersion. Immersion, as it is touted in most advertisements for learning your targeted language in a country in which it is spoken, is to come to a school overseas and sit in a class where the grammar is taught entirely in the language of choice. This is NOT immersion.
True or authentic immersion means to subject yourself to massive amounts of comprehensible or meaningful input. It is to seek a way to become exposed to the language much in the same way you did unconsciously to your first or native language. And, this is most certainly possible. Frankly, I do not believe you have to go to foreign country to do it.
If my reference to Cultural Imperialists seems a little harsh, listen to this, from Wikipedia:
"Cultural imperialism is the practice of promoting, distinguishing, separating, or artificially injecting the culture or language of one nation into another. It is usually the case that the former is a large, economically or militarily powerful nation and the latter is a smaller, less important one. Cultural imperialism can take the form of an active, formal policy or a general attitude. The term is usually used in a pejorative sense, usually in conjunction with a call to reject foreign influence."
A school in Zacatecas, Mexico, uses the Krashen, Long, and Scarcella approach. Its approach utilizes the linguistic science I have alluded to in this article. I would recommend this school above all others since it is sound in its science and teaches language acquisition first and language learning second.
The article author, Doug Bower, has is a freelance writer and book author who has lived in Guanajuato, Mexico, for five years. He apparently has no affiliation with the school in Zacatecas. His website is here.
UK TO BEGIN CRACKDOWN ON LIECHTENSTEIN ACCOUNT HOLDERS
Having paid £100,000 to an informant in possession of stolen client data from a Liechtenstein bank earlier this year, HMRC is apparently ready to start friendly followup conversations with those UK citizens thereby exposed. It sounds like HMRC will make a many-fold return on its modest investment.
The UK tax authority, HM Revenue and Customs (HMRC) is ready to open new tax evasion investigations into holders of accounts in Liechtenstein, as part of a wider crackdown on offshore bank accounts, it has emerged. According to reports in the UK media, HMRC is targetting about 300 wealthy Britons who have used Liechtenstein foundations to hide income and assets from the tax man. About £300 million ($599 million) in unpaid tax is supposedly at stake.
"We're dealing with very wealthy people who have used Liechtenstein's secrecy laws to escape UK tax regulations," an HMRC spokesman was quoted by the BBC as observing.
It is understood that HMRC has uncovered the identities of many of those account holders after it paid an informant in possession of data stolen from Liechtenstein's LGT Bank earlier this year. The tax department is believed to have paid £100,000 to the informant -- a former employee of LGT -- for the information. The same informant also sold the information to the German intelligence service for about €4.5 million, sparking a huge tax evasion scandal involving hundreds of wealthy Germans.
HMRC's investigation into the Liechtenstein account holders is likely to form part of a wider probe into offshore bank accounts which began in 2007 with an amnesty designed to encourage account holders to declare assets with the carrot being a more lenient-than-usual penalty regime.
About 44,000 people took advantage of the offshore disclosure scheme, but in March 2008, HMRC began sending letters to thousands more taxpayers who did not respond to last year's inquiries, seeking further information on funds held in offshore bank accounts.
It is now thought that HMRC is ready to launch the next phase in its war against offshore tax evasion, and will soon begin to pursue criminal investigations against some 3,500 Britons lasting up to three years.
IRS CRIMINAL INVESTIGATIONS HIT 8-YEAR HIGH
Actually, according to the referenced report by the U.S. Treasury Inspector General, the number of criminal investigations referred is at an 8-year high. However these are going into a growing backlog of cases deemed worth of prosecution. In addition, to same report notes that the number of retiring IRS agents will negatively effect the "productivity" of the Criminal Investigation Division (CID).
A report published recently by the U.S. Treasury Inspector General for Tax Administration (TIGTA) has found that the number of criminal investigations referred to the Justice Department by the IRS grew dramatically in 2007. This was highlighted by TIGTA in a statistical report of the IRS Criminal Investigation Division's enforcement activities for fiscal years 2000 through 2007.
"This report highlights several key findings," commented J. Russell George, Treasury Inspector General for Tax Administration. "Among those is an increase to nearly 65% of the Division's time spent on tax-related cases in 2007 -- an eight-year high," he observed.
According to TIGTA, in fiscal year (FY) 2007 there were 4,600 subject investigations, up 3% over FY2006, and nearly 50% higher than in FY 2002.
George noted that one area of concern remains the growing inventory of investigations referred to the Department of Justice for prosecution and the decrease in experienced agents.
"For the first time since we began reporting on its enforcement activities, the Division had more investigations awaiting prosecution by the Department of Justice than open subject criminal investigations within the Division," he noted.
This increase has come just as the Service is facing the growing challenge of hiring more agents to replace those who are leaving. "We believe that the continual loss of agents will negatively affect the Division's productivity in the near future," George predicted.
Due to the nature of this review, TIGTA made no recommendations. However, key CID officials reviewed the report prior to issuance and agreed with the facts and conclusions presented.
UK FINANCE ACT 2008 PROMISES “DRAMATIC” TAX CHANGES
We have already heard plenty this year of the UK's plan to change the taxation of "non-doms" -- UK residents who officially retain an overseas tax home. Now the full tax bill which includes those plans has been released. There is plenty there to digest, which your friendly accountant will only be too happy to help you with. A PricewaterhouseCoopers partner tells us that there is still "much to be done," including with the abovesaid non-dom rules, hence there is "much more to come" in next year's tax bill. One can only wonder how much smaller the accounting industry would be without all the government "help."
This year's UK Finance Bill, which was expected to have received Royal Assent on 21st July, completing the legislative implementation of the government's Pre-Budget Report and Budget announcements, changes the UK's tax landscape in many ways, according to PricewaterhouseCoopers LLP.
"This year's Finance Act has made some dramatic and far reaching changes to our tax system, commented John Whiting, tax partner, PwC. "Unlike most recent Acts, it will affect the position of almost all taxpayers ..."
The main areas of change within the 166 sections and 46 schedules of the Finance Act (some 451 pages compared to 309 last year) are as follows:
- Basic rate reduced to 20%
- Starter rate of 10% abolished
- Compensatory increases in personal allowances
- Transitional relief on gift aid for charities
Capital gains tax (CGT):
- Main corporation tax rate set at 28% for next year
- Small companies' rate increased to 21%
- Major recast of capital allowances, including phasing out of industrial/agricultural buildings allowances, reducing the main rate of allowance on plant and machinery from 25% to 20% and introducing annual investment allowances (100% allowance on the first £50,000 of plant investment)
- Single rate of CGT at 18%
- Entrepreneurs' relief introduced: £1 million at 10%
- Transfer of unused nil-rate band from a pre-deceased spouse
Residence and domicile:
- First rise in spirits duty since 1997
- Major recast of the way the "non-doms" (people who are resident in the UK but whose real home is overseas) are taxed
"Although the Finance Act is on the statute book, there is still much to be done in some areas to make the new rules workable," Whiting observed. "The non-dom rules will need changing and there is a lot more to come on HMRC powers. Next year's Act is already bulking up!" he concluded.
- New penalty regime extended to all taxes and a similar penalty regime introduced for failure to notify HMRC on time about tax liabilities
- Wide new powers of inspection for HMRC, including access to business premises, information gathering, records checking and set off
Further Delay in Foreign U.K. Profits Legislation Deals Blow to Business Certainty
The UK is engaged in a major internal debate over foreign profits taxation. Those wishing to understand the implications of whatever outcome arises will have to wait until at least 2010, it appears.
The UK Government's announcement of progress on the taxation of foreign profits on [July 22] shows promising signs of sensible legislation being developed on the taxation of passive offshore business income, but that policy is unlikely to be implemented before 2010 at the earliest, according to leading business and financial adviser Grant Thornton.
The proposals ... have moved a long way since the Discussion Document of June 2007 and it appears representations from business have been listened to, Grant Thornton stated. For example, hard-line proposals on the taxation of Controlled Foreign Companies have been dropped while the Treasury has moved closer to the possibility of a dividend exemption.
In its 2007 Budget, the government put forward proposals for eliminating the foreign dividend tax in order to reduce the administrative burden for international businesses, while at the same time putting in place tough measures on the permitted overseas activities of such firms, in order to prevent them from using the dividend exemption to avoid paying tax in the UK altogether. However, the UK Treasury made moves ... which appeared to indicate that it has stood down its proposals to change the way that the foreign profits of UK-based multinationals are taxed.
Heather Self, an international tax partner at Grant Thornton, is pleased that representations from business have been taken into account in the latest Government announcement and that there is further consultation to be had before the final package is put forward, but says the constant delays have created a complex and uncertain environment for businesses to operate in.
"Overall, the Treasury announcement is a sensible response to a constructive period of consultation, but it is disappointing that progress has been so slow and that we are unlikely to get more detail before the Autumn. The continuing uncertainty is damaging UK competitiveness, particularly if the UK wants to remain a gateway to Europe for new investors from countries such as India, China and Brazil," she commented, further stating:
"It is now unlikely that we will get any concrete policy on the taxation of foreign profits before 2010 at the earliest and at that point we may well be in the middle of an election."
Self says that [the] announcement confirms that the Government wishes to introduce an exemption for foreign dividend income received in the UK and that this will be as wide as possible, but that it remains concerned about the risks to tax revenue and therefore won't be implementing such a move next year.
"The dividend exemption will be warmly welcomed by business as it will allow large corporates to repatriate what is estimated to be billions of pounds of foreign income to the UK with limited or no UK tax. But the Treasury is worried that it will be missing out on a large slice of tax revenue by implementing the exemption so is wanting further consultation on measures to protect tax revenues," she explained. ... Self added:
"On CFC rules, we are almost back to square one, with a proposal that any changes may simply be improvements to the existing regime rather than an entirely new set of rules. This is a sensible withdrawal, although no mention is made of the Government's continuing difficulties with the European Courts on the application of CFC rules within the EU."
There is also confirmation that comprehensive interest allocation rules will not be introduced, "a welcome move," says Self, but there is a vague threat of "additional but still limited restrictions" on interest deductibility.
THE RULE OF LAW WITHOUT THE STATE
If anarchy is so bad, why is Somalia doing better since 1991?
Somalia's central government more or less bit the dust in 1991. The U.N. et al have been trying to reinstitute a government, but with about the same success as the U.S. has had creating a central government in Iraq.
Has the country plunged into the chaos that those to whom anarchy is a pejorative term would warn us against? The opposite, it turns out. A nontrivial list of statistics indicative of a population's welfare show modest to notable improvement. Several multinational companies have set up shop in the country. A 5-star Ambassador Hotel is operating in Hargeisa. Three new universities are fully functional.
What is the explanation? It turns out that a longstanding traditional tribal system of law, called Xeer, functions far more effectively in mediating disputes and generally keeping a civilized order than the system of central government-administered law imposed by Somalia's colonial rulers and post-colonial/pre-1991 governments. This system of law is to all evidence largely indigenous -- almost no foreign-sounding words implying borrowed concepts populates the legal terminology. It replicates many of the facets on English Common Law in its purest form. Law and crime are defined in terms of property rights, hence the law is oriented around restitution rather than punishment. There is no imprisonment, and fines are rare. There is no such thing as a victimless crime.
Fines beyond a make-whole amount can be imposed if the property destruction is deemed premeditated or malicious. Most interestingly, prominent public figures such as religious or political dignitarys, policemen, or judges are expected to lead exemplary lives. If such a public person violates the law, he pays double what would be required of an ordinary person. Since the law and crime are defined in terms of property rights, the Xeer is unequivocal in its opposition to any form of taxation.
If a person who is found guilty of property destruction is unable to make the victim whole, that person's family is responsible. This encourages strong family and community oversight to make sure there are no repeat offenses. Ultimately, a family can disown a repeat offender, in which case he becomes an outlaw -- he forfeits all protection under the law and, for his safety, must leave the country.
There is no monopoly of police or judicial services. Anyone is free to serve in those capacities as long as he is not at the same time a religious or political dignitary, since that would compromise the separation of law, politics, and religion. As mentioned above, if anyone performing in such a role violates the law, he must pay heavier damages or fines than would apply to anyone else.
All in all, we find the whole sitution extremely interesting, not to mention extraordinary. Attempts to superimpose a Western-style nation state on Somalia's geography result in violence and lawlessness, while leaving everyone to their own devices results in a working order. The long-standing traditions of the area clearly helped there -- once the artificial outsider edicts were no longer enforced the area reverted to practices in place since time immemorial -- so perhaps one cannot, ex ante, claim the ideas naturally apply everywhere. But the correlation with other systems of customary law is strongly suggestive, to our minds.
Were there such a category, Somalia would hold a place in Guinness World Records as the country with the longest absence of a functioning central government. When the Somalis dismantled their government in 1991 and returned to their precolonial political status, the expectation was that chaos would result -- and that, of course, would be the politically correct thing to expect.
Imagine if it were otherwise. Imagine any part of the globe not being dominated by a central government and the people there surviving, even prospering. If such were to happen and the idea spread to other parts of Africa or other parts of the world, the mystique of the necessity of the state might be irreparably damaged, and many politicians and bureaucrats might find themselves walking about looking for work.
If the expectation was that Somalia would plunge into an abyss of chaos, what is the reality? A number of recent studies address this question, including one by economist Peter Leeson drawing on statistical data from the United Nations Development Project, World Bank, CIA, and World Health Organization. Comparing the last five years under the central government (1985–1990) with the most recent five years of anarchy (2000–2005), Leeson finds these welfare changes:
Another even more comprehensive study published last year by Benjamin Powell of the Independent Institute, concludes: "We find that Somalia's living standards have improved generally ... not just in absolute terms, but also relative to other African countries since the collapse of the Somali central government."
- Life expectancy increased from 46 to 48.5 years. This is a poor expectancy as compared with developed countries. But in any measurement of welfare, what is important to observe is not where a population stands at a given time, but what is the trend. Is the trend positive, or is it the reverse?
- Number of one-year-olds fully immunized against measles rose from 30% to 40%.
- Number of physicians per 100,000 population rose from 3.4 to 4.
- Number of infants with low birth weight fell from 16 per thousand to 0.3 -- almost none.
- Infant mortality per 1,000 births fell from 152 to 114.9.
- Maternal mortality per 100,000 births fell from 1,600 to 1,100.
- Percent of population with access to sanitation rose from 18 to 26.
- Percent of population with access to at least one health facility rose from 28 to 54.8.
- Percent of population in extreme poverty (i.e., less than $1 per day) fell from 60 to 43.2.
- Radios per thousand population rose from 4 to 98.5.
- Telephones per thousand population rose from 1.9 to 14.9.
- TVs per 1,000 population rose from 1.2 to 3.7.
- Fatalities due to measles fell from 8,000 to 5,600.
Somalia's pastoral economy is now stronger than that of either neighboring Kenya or Ethiopia. It is the largest exporter of livestock of any East African country. Telecommunications have burgeoned in Somalia; a call from a mobile phone is cheaper in Somalia than anywhere else in Africa. A small number of international investors are finding that the level of security of property and contract in Somalia warrants doing business there. Among these companies are Dole, BBC, DHL, British Airways, General Motors, and Coca Cola, which recently opened a large bottling plant in Mogadishu. A 5-star Ambassador Hotel is operating in Hargeisa, and three new universities are fully functional: Amoud University (1997) in Borama, and Mogadishu University (1997), and University of Benadir (2002) in Mogadishu.
The Call to “Establish Democracy”
All of this is terribly politically incorrect for the reason I suggested. Consequently, the United Nations has by now spent well over $2 billion attempting to reestablish a central government in Somalia. But here is the irony: It is the presence of the United Nations that has caused virtually all of the turbulence we have seen in Somalia. Let me explain why this is the case.
Like most of precolonial Africa, Somalia is traditionally a stateless society. When the colonial powers withdrew, in order to better serve their purposes, they hastily trained local people and set up European-style governments in their place. These were supposed to be democratic. But they soon devolved into brutal dictatorships.
Democracy is unworkable in Africa for several reasons. The first thing that voting does is to divide a population into two groups -- a group that rules and a group that is ruled. This is completely at variance with Somali tradition. Second, if democracy is to work, it depends in theory, at least, upon a populace that will vote on issues. But in a kinship society such as Somalia, voting takes place not on the merit of issues but along group lines. One votes according to one's clan affiliation. Since the ethic of kinship requires loyalty to one's fellow clansmen, the winners use the power of government to benefit their own members, which means exploitation of the members of other clans. Consequently when there exists a governmental apparatus with its awesome powers of taxation and police and judicial monopoly, the interests of the clans conflict. Some clan will control that apparatus. To avoid being exploited by other clans, each must attempt to be that controlling clan.
Sounds a lot like some other countries that readily come to mind.
The turmoil in Somalia consists in the clans maneuvering to position themselves to control the government whenever it might come into being, and this has been exacerbated by the governments of the world, especially the United States, keeping alive the expectation that a government will soon be established and supplying arms to whoever seems at present most likely to be able to "bring democracy" to Somalia. The "warlord" phenomenon refers to clan and independent militias, often including leftovers of the former central government, who promise to establish a government under the control of their own clan. They often operate outside the control of the traditional elders and sometimes in opposition to them.
Hence the most violent years in Somalia were the years following 1991 when the U.N. was physically present, attempting to impose a central government. When the U.N. withdrew in 1995, the expectation of a future central government began to recede, and things began to stabilize. But the U.N. continued it efforts to reestablish a government through a series of some 16 failed "peace conferences." In 2000 it set up a straw government, the Transitional National Government (TNG). However, not only did the northern Somali clans not recognize the TNG, it was unable to control its intended capital city of Mogadishu. Today a combined "peace-keeping mission" of U.S.–backed troops from Ethiopia, Somalia's traditional enemy, and Uganda under the aegis of the African Union is in Mogadishu attempting to prop up the TNG and secure its control over the rest of Somalia. Violence soars.
The situation is curiously like an event in Greek mythology. The gods on Mt. Olympus were enjoying a festive party, to which, understandably, they had not invited Eris, the goddess of discord. Eris, just as understandably, took the matter personally. She had the blacksmith Hephaestus fashion a golden apple, on which was written ... "To the fairest." Then she opened the door a crack and rolled the golden apple into the festive hall. In no time at all, the gods were fighting over who should have the apple. The golden apple in Somalia is the expectation that there will soon be a central government. As long as there is that expectation, the clans must fight over who will control it.
Somalia and the Rule of Law
Now, I have gone this far without telling you much about Somalia. It is the Horn of Africa, that part of northeast Africa that juts out into the Indian Ocean just below the Arabian Peninsula. The Somali culture area includes all of the Horn and is home to some 11.5 million people. The colonial powers arbitrarily fragmented this culture area so that today parts of it fall under the jurisdiction of Kenya in the south, some in Ethiopia in the west, and some in Djibouti in the north. The remainder along the coast is now without a working government.
What these people have in common, even more than similar language, lifestyle, and physical character is a body of customary law, the Xeer, which differs from clan to clan in nonessential ways such as founding myths but is remarkably uniform with respect to its provision for the protection of persons and property. The Xeer provides a rule of law -- customary law, that is -- permitting safe travel, trade, marriage, and so forth throughout the region. The Xeer is most intact in the north of Somalia, which was under British rule. In the south, the Italians tried to eradicate it. Nonetheless, it survives to a significant degree everywhere, even in the urban areas, and is virtually unaffected in rural Somalia.
The Xeer is the secret to the whole perplexing question of Somalia's success without a central government, since it provides an authentic rule of law to support trade and economic development. Fortunately, we know something about the Xeer because of Michael van Notten, a Dutch lawyer who in the early 1990s married into the Samaron Clan in the northwest of Somalia, the 5th largest of the Somali clans, and lived with them for the last 12 years of his life. He took full advantage of that opportunity to research the Xeer. The result was his pioneering study, The Law of the Somalis (Red Sea Press, 2005). Van Notten died when his manuscript was half finished. Fortunately, he had largely completed assembling the ethnographic material. In his will, he asked that I edit and complete the manuscript for publication. The task ahead is to see the work translated into Somali.
Highlights of the Xeer
There is time in this short talk to give you only some of the highlights of the Xeer. First, law and, consequently, crime are defined in terms of property rights. The law is compensatory rather than punitive. Because property right requires compensation, rather than punishment, there is no imprisonment, and fines are rare. Such fines as might be imposed seldom exceed the amount of compensation and are not payable to any court or government, but directly to the victim. A fine might be in order when, for example, the killing of a camel was deliberate and premeditated, in which case the victim receives not one but two camels.
Fines are used in another interesting way. It is expected that a prominent public figure such as a religious or political dignitary or a policeman or a judge should lead an exemplary life. If he violates the law, he pays double what would be required of an ordinary person. Also, it should be noted, since the law and crime are defined in terms of property rights, the Xeer is unequivocal in its opposition to any form of taxation.
Second, in order to assure that compensation will be forthcoming even in cases where the perpetrator is a child, or penniless, or crazy, or has fled abroad, the Xeer requires that every person be fully insured against any liability he might incur under the law. If an individual cannot make the required payment, a designated group of his kin is responsible. Van Notten describes in an interesting way how this happens:
A person who violates someone's rights and is unable to pay the compensation himself notifies his family, who then pays on his behalf. From an emotional point of view, this notification is a painful procedure, since no family member will miss the opportunity to tell the wrongdoer how vicious or stupid he was. Also, they will ask assurances that he will be more careful in the future. Indeed, all those who must pay for the wrongdoings of a family member will thereafter keep an eye on him and try to intervene before he incurs another liability. They will no longer, for example, allow him to keep or bear a weapon. While on other continents the re-education of criminals is typically a task of the government, in Somalia it is the responsibility of the family.
If the family tires of bailing out a repeat offender, they can disown him, in which case he becomes an outlaw. Not being insured, he forfeits all protection under the law and, for his safety, must leave the country.
Customary law is similar in this and many other respects throughout the world. An instance is told in the founding legend of my own Clan MacCallum in Scotland. The founder of the Clan supposedly was exiled 1,500 years ago from Ireland because he was a hothead whom his family disowned for embroiling them in fights. In the loneliness of his exile on the North Sea, he became a man of peace. He could not return to Ireland, as he was no longer under protection of the law and could have been killed with impunity. So he went instead to Scotland and there founded our clan.
A third point about the Xeer is that there is no monopoly of police or judicial services. Anyone is free to serve in those capacities as long as he is not at the same time a religious or political dignitary, since that would compromise the sharp separation of law, politics, and religion. Also, anyone performing in such a role is subject to the same laws as anyone else -- and more so: If he violates the law, he must pay heavier damages or fines than would apply to anyone else. Public figures are expected to show exemplary conduct.
Fourth, there is no victimless crime. Only a victim or his family can initiate a court action. Where there is no victim to call a court into being, no court can form. No court can investigate on its own initiative any evidence of alleged misconduct.
Last, the court procedure is interesting. From birth, every Somali has his own judge who will sit on the court that will judge him should he transgress the law. That judge is his oday, the head of his extended family consisting of all males descended from the same great grandfather, together with their spouses and children. Several extended families make up a jilib, which is the group responsible for paying the blood price in the event a member kills someone of another jilib or clan. The oday, or judge, is chosen carefully, following weeks or months of deliberation by elders of the clan. He has no authority over the family but is chosen solely for his knowledge of human affairs and his wisdom, and he can lose his position if his decisions are not highly regarded in the community.
When an offense is committed, the offender goes first to his oday, who then forms a court with the oday of the plaintiff. If the two odays cannot resolve the matter, they form another court made up of odays representing additional families, jilibs, or clans. A virtue of each person knowing from birth who will be one of his judges, and vice versa, is that an oday knows each person in his extended family intimately and can observe and counsel him before what might seem to be a small problem escalates into a crime.
Once a court forms and accepts jurisdiction over a case, its first action is to appoint a recorder, who will repeat loudly during the hearing each important point made by the speakers. The court then announces when and where it will hear the case. When the court session opens, the court invites the plaintiff to state his case. The plaintiff has the right to appoint a representative to make the presentation on his behalf. During the presentation, the plaintiff has opportunity to confer with his family to make sure that he has not forgotten anything. When the plaintiff has finished, the court asks him to summarize his case and state his demands. Lastly, the court asks the defendant to present his defense and any counterclaims.
Then the court adjourns to deliberate on whether any witnesses should be heard. A disputed fact is admitted as evidence only when three witnesses have testified to its truth. The parties can also call in experts and character witnesses. If the victim has died or has been wounded, the court will instruct a religious dignitary to assess how the victim died or was wounded. These dignitaries assess injuries usually by applying the standards enumerated in the commentary of the twelfth-century Muslim scholar al-Nawawii's Minhaaj at-Talibiin. When the plaintiff has elaborated his case with witnesses and evidence, the defendant is given a chance to refute the plaintiff's charges, arguments, and evidence. It is not customary to cross-examine witnesses.
Finally, the court adjourns again to evaluate the evidence. If less than three witnesses support a fact, or if the witnesses contradict each other, the court will proceed to oath taking. There are several types of oaths. The simplest starts by the oath giver saying, "I swear by my virility." Alternatively, he can say, "I swear by Allah." A stronger oath is the so-called triple oath, in which he swears the same oath three times. A stronger oath yet is the one that is repeated 50 times. Also, there is the so-called divorce oath, in which the oath giver swears by his marriage(s). If it is later found out that he lied, his marriage(s) become null and void.
It should be noted that even when the plaintiff fails to convince the court of his case, the court will usually not rule in favor of the defendant until the latter has taken an oath of innocence.
In a longer talk, I could discuss the role of police and enforcement of judgments, but this much should give some flavor of the legal system practiced by the Somalis. It provides an effective rule of law entirely without the backing of a government.
The Xeer takes its place among such great legal systems of the world as the Roman law, the English common law, the Law Merchant, and the Jewish traditional law (Halacha). It must be extremely old and is believed to have developed in the Horn of Africa. There is no evidence that it developed elsewhere or was greatly influenced by any foreign legal system. The fact that Somali legal terminology is practically devoid of words from foreign languages suggests that the Xeer is truly indigenous.
Michael van Notten's book describing this system of law deserves to be better known and widely read. It is the first study of any customary law to treat it not as a curiosity of the past, but as potentially instructive for a future free society. In his book, Van Notten lays out some practical applications to the world in which we find ourselves today, applications I have not had time to touch on here. Whether or not the intervention of foreign governments, which has intensified with the refusal of Somalis to die or remain poor, will frustrate this potential, only time can tell.
I would like to end with a plea to help get this book into wider circulation. ...
Statist biographers fall all over themselves to heap praise on the mercantilist friend of plutocrats.
Thomas DiLorenzo -- author of the forthcoming book Hamilton’s Curse: How Jefferson's Archenemy Betrayed the American Revolution – And What It Means for Americans Today -- wrote in an article a couple of weeks ago how Hamilton as someone who started actively worked to undermine the checks and balances embedded in the U.S. Constitution the moment it was ratified. This time DiLorenzo fingers Hamilton as a supremely corrupt friend of the plutocracy. We can thank Hamilton and his ideas about what a "blessing" the public debt for the out-of-control system we have today. But his doting biographers seem oblivious to all this.
hagiography n.1. the writing of the lives of saints; 2. uncritical or idealized biography. ~~ Oxford Encyclopedic English Dictionary
Most Americans have been taught what William Lind calls a comic book version of their own country's history. One aspect of American comic book history, invented in the post-1865 era, is that from the time of the founding the citizens of the Northern states were generally more civilized, educated, and above all else, moral, than their hillbilly, slave-owning, gun-toting, tobacco-growing, fellow countrymen from the Southern states.
A second element of American comic book history is that the "nation" and its economy were supposedly created by a few Great Men. Abraham Lincoln, for example, is said to be a "redeemer president" who single-handedly gave us "a new birth of freedom." "Everything that is good in America today we owe to Lincoln," the Lincoln idolater Harold Holzer once told a television interviewer.
Similarly, Alexander Hamilton is frequently portrayed as a saintly, god-like, and super-human figure by America's court historians because of his fierce and highly effective advocacy of heavy taxation, public debt, central banking, protectionism, mercantilism, hyper-regulation, centralization of governmental power, and Big Government in general.
Biographer Ron Chernow calls Hamilton, a mercantilist who publicly rebuked the writings of Adam Smith, "the prophet of the capitalist revolution in America." Neoconservative pundit David Brooks has absurdly claimed that Hamilton single-handedly "created capitalism." Forrest McDonald once gave Hamilton all of the credit for America's becoming "the richest, most powerful and freest nation in the history of the world." Neoconservatives William Kristol and David Brooks began their crusade for "national greatness conservatism" (on display today in Iraq) with a 1997 Wall Street Journal article that called for a reinvigoration of "the nationalism of Alexander Hamilton." And when the Republicans took over Congress in 1994 House Speaker Newt Gingrich told Time magazine that his #1 hero was Alexander Hamilton (followed by John Wayne, Kemal Ataturk, and Father Flanagan).
One of the most recent examples of comic book history is a July 5 article in the Wall Street Journal Online entitled "Alexander Hamilton's Capital Compromise," by Fergus M. Bordewich. The article celebrates the fact that the house Hamilton lived in in New York City is being transformed into a shrine of sorts. In true hagiographic fashion, Bordewich makes several false claims about his saintly hero. The first claim, probably motivated by the fact that Hamilton advocated manumission -- the ability of slaves to purchase their own freedom -- is that Hamilton was "one of the most ardent abolitionists of his generation." There are several major problems with this assertion, however: Hamilton was a slave owner; he never advocated the abolition of slavery per se; he once purchased six slaves at a slave auction (for his brother-in-law, says biographer Ron Chernow); and he once returned runaway slaves to their owner.
Hamilton's wife Eliza was from a wealthy New York slave-owning family, the Schuylers, and retained some of the "house slaves" after marrying Hamilton. This fact is mentioned by Hamilton's hagiographers, but is usually excused. For example, in Alexander Hamilton and the Constitution Clinton Rossiter wrote that "Hamilton may have had a slave or two around the house," and "was too much a man of his age ... to push for emancipation." Moreover, what kind of "abolitionist" is it who attends a slave auction, purchases six slaves, and watches as they are manacled and delivered to a relative where they are doomed to be enslaved for the rest of their lives?
In his short article Bordewich presents the usual portrayal of moral and civilized Northerners like the "abolitionist" Hamilton, in comparison to retrograde Southerners like Jefferson. But even Ron Chernow writes of how, in Hamilton's time, "Slavery was well entrenched in much of the north" and "New York and New Jersey retained significant slave populations" long after the Revolution. "New York City, in particular, was identified with slavery." By the late 1790s one in five New York City households, like Hamilton's, owned slaves who were "regarded as status symbols." Slavery was not ended in New York City until the early 1850s (see Slavery in New York by the New York Historical Society).
Bordewich also praises Hamilton for his "audacious plan to consolidate the states' debts, and to create a system of credit for the national government which would enable it to recover the trust of the foreign bankers upon whom it depended for future loans." Mostly Southern Anti-Federalists "fiercely opposed the plan, predicting that it would lead to overbearing centralization and tyranny by New York and Philadelphia money men." The Anti-Federalists were right.
Hamilton schemed to nationalize the war debt, and all the debt held by the states not because he thought it would be the fiscally responsible thing to do, but because he wanted to create a large national debt, period. If the states were permitted to pay off their own war debts, this would not be possible. Hamilton called the public debt "a public blessing" because of his belief that it would tie the wealthy (who would own the government's bonds) of the country to the government, and they would in turn provide political support for higher and higher taxes, to make sure that there was enough money in the treasury to pay off their principal and interest. In his book Alexander Hamilton, William Graham Sumner wrote that the "controlling motive" of Hamilton with regard to the public debt was "political expediency," not fiscal responsibility. His purpose was "to strengthen our infant government by increasing the number of ligaments between the government and the interests of individuals." Wealthy individuals, that is.
Hamilton's policy of having the federal government nationalize all the old (state) government debt was an enormously corrupt scheme. New bonds were issued, backed by revenue from a new tariff that Hamilton was instrumental in putting into place. The old war debt was to be cashed out at face value. The plan "immediately became public knowledge in New York City," wrote John Steel Gordon in Hamilton’s Blessing, "but news of it spread only slowly, via horseback and sailing vessel, to the rest of the country." This created tremendous arbitrage opportunities for Hamilton's friends and political supporters. New York speculators embarked on a mad scramble down the eastern seaboard to purchase bonds from hapless and unsuspecting war veterans at prices as low as 10% of full value. As Claude Bowers described in his book, Jefferson and Hamilton: "Expresses with very large sums of money on their way to North Carolina for purposes of speculation in certificates splashed and bumped over the wretched winter roads. ... Two fast-sailing vessels, chartered by a member of Congress ... were ploughing the waters southward on a similar mission."
John Quincy Adams would later write to his father of how "Christopher Gore, the richest lawyer in Massachusetts, and one of he strongest Bay State supporters of Hamilton's [political] machine, had made an independent fortune in speculation in the public funds." New York newspapers speculated that Robert Morris, a staunch Hamilton supporter, made $18 million, while Governor George Clinton of New York pocketed $5 million. Hamilton himself purchased some of the bonds, but he insisted that they were "for his brother-in-law," just like the slave purchases that he made.
Hamilton succeeded in turning many wealthy people into lobbyists for statism. As Douglas Adair, an editor of The Federalist Papers, explained: "With devious brilliance, Hamilton set out, by a program of class legislation, to unite the propertied interests of the eastern seaboard into a cohesive administration party, while at the same time he attempted to make the executive dominant over the Congress by a lavish use of the spoils system. In carrying out this scheme ... Hamilton transformed every financial transaction of the Treasury Department into an orgy of speculation and graft in which selected senators, congressmen, and certain of their richer constituents throughout the nation participated."
Hamilton's "system of public credit for the national government," which is praised by Bordewich and all other Hamiltonian hagiographers, was in reality a recipe for financial irresponsibility and corruption. As John C. Miller wrote in The Federalist Era, after Hamilton's "system" was put into place, "the national debt soared to a total of over $80 million. To service this debt, almost 80 percent of the annual expenditures of the government were required. During the period 1790–1800, payment of the interest alone of the national debt consumed over 40 percent of the national tax revenue. For a nation whose government had been tottering on the brink of bankruptcy a few years before, this might well be regarded as a staggering burden of debt."
Hamilton prevailed politically despite the fact that his crackpot idea of a large public debt being a "public blessing" was a result of the fact that his economic thinking was "befogged in the mists of mercantilism," as William Graham Sumner wrote.
FIREFOX 3 IS KING OF THE WEB BROWSER HILL
New version of Firefox brings it to the head of the class in security, speed (except for startup speed), standards compatibility, and thrifty memory usage. In addition, its powerful new location bar enormously facilitates browsing.
Last week we covered a review of the latest version of the Opera browser. By seeming happenstance, the major new Firefox release, version 3.0, had its first non-beta release at essentially the same time. As this review from PC Magazine makes clear, the newest Firefox is a barn-burner. In fact the reviewer gives it the top grade, as much as he liked Opera.
We like both browsers a lot, and expect to use both. Having been imprinted by using Opera for over a decade, we retain a comfort level with the program that is not readily overcome. But Firefox has some add-on extentions that Opera cannot hope to match.
Three years in development, over 15,000 bug fixes and feature improvements, a new page rendering engine, remarkable performance gains, multiple OS integration -- you could say the several hundred engineers working on Firefox have been busy. And their work has paid off. Speedy performance, thrifty memory usage, and, in particular, the address bar that now predicts where you want to go when you start typing (what Mozilla insiders refer to as the Awesome Bar) firmly plant Firefox at the top of the Web browser hill, flying the flag of our Editors' Choice for browsers.
When you install Firefox 3, you do not have to worry about losing anything from Firefox 2 -- history, bookmarks, start page, search engine preference, and even downloads performed in the earlier browser version -- all will be there to greet you like old friends. The installer for Firefox 3 is available in 46 languages, from Afrikaans to Ukrainian. The U.S. English version weighs in at a 7.1MB for Windows, 17 for Mac OS X, and 8.6 for Linux. Installation is as painless as it gets -- it took me about 20 seconds on a far-from-new XP system.
Firefox 3 looks barely different than its predecessor, but it has undergone a minor face-lift -- in particular, the Forward and Back buttons, in combination, look like a sideways keyhole. The browser buttons and window frames have also been redesigned to conform with the look of whichever OS you are running -- Windows XP, Vista, Macintosh, or Linux.
The top new feature has to be the address bar, what Mozilla types call "The Awesome Bar", but which the development team has officially dubbed the location bar. As you type into it, a list of suggested Web destinations based on your browsing history pops up. It uses what Mozilla's phenomenologist Mike Beltzner has coined frecency -- a combination of frequency and recentness -- to determine the best suggestions. And, as icing on the cake, the search bar is now resizable, so you can divvy the space between the location and search bars to your taste.
When I tried it, the location bar's first suggestion was right on the money most of the time. Knowing that hitting the down arrow and Enter will usually get you where you want to go -- not to mention save you untold keystrokes and time -- will change your browsing habits. And not only does the feature match parts of words even if they occur in the middle of a URL, but when you type a phrase with spaces you will usually be taken where you want to go immediately. For example, when I entered Chase Manhattan, I was taken directly to chase.com, without the intervening search result page you see in other browsers.
Though the star Firefox places in the right side of the Location bar gives you a handy way to mark a page as a favorite, the difference between starring and bookmarking is a bit confusing, and I prefer Internet Explorer's bookmarks (Favorites), also represented by a star. Firefox's star saves the page as a bookmark in Unfiled, which means the page does not show up when you choose the top-menu Bookmarks item, but it does show up (if it is recent) in Smart Bookmarks and Places. In fact I find these two features overlap too much, and could use some streamlining.
A new download manager gives you the handy ability to pause and resume downloads and search for previous ones. The status bar at the bottom of the main browser helpfully shows you how many paused downloads remain, and you can resume a download even after shutting down the browser and restarting it. Downloads are automatically scanned for viruses once they have completely arrived.
The new password manager provides another nicety. Unlike every other current browser, Firefox does not bother with a dialog box that interrupts your logging in to a site. Instead, when you are entering a password, a discreet toolbar with the usual choices -- Remember, Never for this site, and Not now -- appears at the top of the window.
Firefox enhances bookmark management with three new toolbar links: Most Visited, Smart Bookmarks, and Places. Smart Bookmarks adds submenus for Most Visited, too, along with Recently Bookmarked, and Recent Tags. Places is more concerned with tagging and "starred" pages: An empty star appears to the right of the current page's address; clicking on it turns it to gold and gives you a quick way to designate it as a page you like.
The Add-ons manager now lets you search for extensions right from the dialog box rather than making you go to the Add-on Web site. Users can rate extensions with stars, helping them decide which extensions might be good to try. The updated manager also lets you control plugins such as Flash, the popular browser-changing extensions, and window-dressing Themes.
In at least one area where the browser was trailing Opera and Internet Explorer, Firefox finally caught up: Now you can zoom in on a full page, including images. ... One last favorite cool feature: You can now specify a webmail account -- even a Yahoo! Mail account without a POP address -- as the target for email links. Try doing that in Internet Explorer! ...
[F]or some time, both Internet Explorer and Opera have offered a one-click way to display a sidebar that lets you switch among history, bookmarks, and one or more other functions (feeds in IE; downloads, notes, and more in Opera). In Firefox you can get one-click access to the History sidebar, but you have to create the capability yourself by customizing the toolbar with a History button -- and there is no multipurpose sidebar. An extension called All-in-One Sidebar provides an Opera-like sidebar, but the extension has not been updated for Firefox 3 as of this writing. I would also like a one-click way to add a new tab -- again, you create a toolbar icon to provide the feature, but Opera and IE offer it by default.
Memory Use and Performance
In the past, Firefox's memory use tended to mushroom as you added page tabs. Developers have made memory use reduction a primary goal. The new rendering engine, Gecko 1.9, reduces memory fragmentation and identifies and removes memory leaks called cycles. You can read the gritty details on one of the developers' blogs, pavlov.net. I checked memory usage under Vista, which reports the more accurate private working set (which is the actual memory the app is using), running 10 media-rich Web pages in each browser. As you can see from the Memory Consumption chart, Firefox handily bested all comers, including its former self.
I also compared the cold and warm startup times of Firefox 3 with those of its Windows competitors. Cold startup -- the first time the browser runs after you power up the computer, is a better test, as it takes much longer than the subsequent (warm) starts. For these tests, I used the previously detailed Vista System. Firefox 3 improves somewhat over the earlier version, but as the Startup Test chart shows, still lags behind IE7 and Opera 9.
I came across just two compatibility glitches in testing: the problem with the My Yahoo! tooltips already mentioned and some slightly funky behavior when trying to add comments to a Picasa Web Album. I had no problem logging into online accounts hosted by major financial institutions, nor did I encounter difficulties with destinations, such as Zoho (which offers online office-productivity applications) that have tripped up other new browsers.
To more rigorously test compliance with Web standards, I ran the new Acid3 Browser compatibility test. Firefox 3 scored 71 out of 100, ahead of Firefox 2's 53, and way ahead of Internet Explorer 7, which only mustered a 12 (but note that intentional security measures caused some loss of points). ... Safari, at 75, bested the others. [Opera 9.5, as reported in a post last week, later tested at 81 -- the best of any browser.] Note that this test has less to do with whether sites will display correctly than it does with with proper execution of highly interactive Web applications that take advantage of DOM Level 2, scalable vector graphics SVG, and ECMAScript.
Clearly the new version adds much that Web developers will appreciate. Firefox 2 extensions will not work in version 3 without being updated, but the Mozilla Developer Center offers thorough instructions, and in many cases the process just involves a single parameter change reflecting the new version. Mozilla reps told me that six to seven thousand extensions have already been updated. Finally, the browser supports offline Web applications, giving Google's Gears some competition.
Firefox 3 may be the most secure browser around. It goes beyond the phishing protection in current browsers by also blocking sites known for distributing malware (viruses, spyware, trojans), as well as standard phishing sites that try to trick users into entering personal information and passwords. It uses a blacklist compiled by Google for this purpose, but the feature will work with other blacklist providers as they become available.
You can easily access information about the validity of any site you visit by clicking on the site's favicon -- the small icon to the left of the URL. For sites with valid identity information in the form of an Extended Validation (EV) SSL certificate, the favicon area turns green and the site owner information and encryption status are listed under a green cop image (called Larry the Security Cop, according to company reps) when you click on the favicon. You can see this in action at PayPal.com—a site you definitely want to be sure is genuine.
To wrap up the security enhancements, insecure versions of plug-ins will not run, and the browser integrates with antivirus software using the Microsoft Antivirus API. If you are letting your kids browse via Firefox, note also that the browser works with Vista's parental controls.
Mozilla has delivered a mighty salvo in the browser wars: Microsoft Internet Explorer 8, still very early in its development cycle, will have to be damned good and include killer features to compete. Whether that will be the case remains an open question. IE8 introduces some nifty new features and displays a commendable realignment with Web standards, but I have to say that the improvements in Firefox 3 trump what I have seen of IE8 to date. Speed, browsing enhancements like the predictive location bar, security, low memory use, and compliance with new Web standards have thrust Firefox 3 above the competition. Those factors, along with its wealth of extensions that let you customize it till the cows come home, keep it our Editor's Choice for Web browsers.
Ex-Samsung Chief Appeals Against Tax Evasion Sentence
The former Chairman of South Korean firm Samsung, Lee Kun-hee, has this week filed an appeal against his suspended prison sentence and multi-million dollar fine for tax evasion. Mr. Lee was formally convicted earlier this month after a three month corruption investigation concluded that he had failed to pay around 47 billion won ($46 million) in taxes.
Mr. Lee subsequently resigned from his post as Chairman, and was then ordered to pay a fine of around 110 billion won ($108 million), but, to the surprise of many prosecutors, was spared prison time despite the fact that tax evasion can be considered serious enough to earn a life sentence. Prosecutors have objected to the ruling, appealing for a heavier sentence.
You have to have a few screws loose to risk jail time, prestige, and position for more money when you already have more than you can possibly spend.
Mr. Lee took over from his father -- the founder of the company -- in 1987, and the business became a highly successful producer of memory chips. However, at the time of his arrest, according to a BBC report, prosecutors revealed that Samsung was suffering "structural problems."
Mr Lee's defence counsel, Lee Wan-Soo, spoke on Lee's behalf earlier this week, telling the Yonhap news agency that: "We are planning to ask the appeals court to rule on our position that the taxes were not evaded in a fraudulent or dishonest manner, and also the amount of the fine."
FATF Praises Hong Kong’s Anti-Money Laundering Efforts
International anti-money laundering groups have praised Hong Kong's regimes to counter crime and terrorist-financing. The comments were made in an evaluation report published on 21st July by the Financial Action Task Force (FATF) on Money Laundering, and the Asia-Pacific Group on Money Laundering.
The report commended Hong Kong for its good legal structure and conviction rate for money laundering offences, clear and broad obligations for reporting suspicious transactions and strong law enforcement. It said the city's supervisory regime over the banking, securities and insurance sectors is effective with comprehensive obligations and a broad range of sanctions, along with proactive and effective outreach to the private sector and international co-operation.
Hong Kong's formation of the Central Co-ordinating Committee on Anti-Money Laundering & Counter Financing of Terrorism chaired by the Financial Secretary was also a welcome development, it said.
On the report's suggestions for further improvements, the Security Bureau said it will formulate legislative proposals, enhance law enforcement in regulating remittance agents and moneychangers, and consult the industry.
As a taskforce member, Hong Kong is obliged to adopt the 40 recommendations for fighting money laundering and the nine special recommendations for combating financing of terrorism.
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