February 2005 Selected Offshore News Clips

(Especially noteworthy articles’ headings highlighted in gold.)

RETIREES FIND MORE FOR LESS IN PANAMA

Tax breaks, lower prices and a laid-back lifestyle draw a growing community of Americans to one of the nation’s small towns. “Boquete gave us the opportunity to have a great, comfortable lifestyle,” said Sutton, 50, who with wife Dinah put $5,000 down on their brand-new house without even seeing it. Loading groceries into his car in front of Romero’s, the local supermarket, he said, “This isn’t Albertson’s, but it’s close enough.” About 500 foreigners live in Boquete and its environs, but last year builders got permits to construct 2,000 more housing units in expectation of a real estate boom. Rising demand for property has caused a tenfold increase in land values in two years, said Judith Urriola, manager of the local branch of Banistmo Bank. Sutton and his wife pay $50 per month for government health coverage that would cost $1,200 in San Diego.

Other U.S. retirees are making similarly radical moves, attracted by Panama’s favorable tax treatment of foreigners -- a carrot dangled by most Central American governments, the relatively low cost of living, the lush surroundings, and the eternally mild climate. In recent years, retired foreigners have been drawn to Costa Rica, Nicaragua and parts of Mexico. But Panama’s moment seems to have arrived. Boquete has turned up on several “Best Places to Retire” lists published in recent months in U.S. newspapers and on Internet sites.

Asked to define what Boquete retirees have in common, John Villegas, an Arizona retiree who publishes the Internet newspaper the Boquete Times, said, “They have strong ties to their past and recollections of better times, nuclear families, respect for the law and civility. And they have no qualms about looking outside U.S. borders to recreate those good old days.” Like most other Latin American countries, Panama does not keep statistics on the number of foreign retirees living within its borders. But immigration officials here and throughout the region agree that the numbers are rising.

If you think the Torrijos tax increase was controversial...

The government, making some adjustments in the course of a whirlwind process, has raised our taxes. One way or another, it had to be done. On a several levels, however, it would have been better to have done it in other ways. Tax reform may have been a high-stakes game, but the risks and prizes are nowhere near as great as in the next major economic measures to come. Social Security reforms will be presented, debated and passed starting right after Carnival. There is a good chance that when the National Assembly meets in regular session again in March, at the top of their agenda will be a proposed free trade agreement with the United States.

WILL THE INDIAN TORTOISE CATCH THE CHINESE HARE?

Intoxicated by the buzz of Shanghai, a visitor is tempted to conclude that, like the city’s skyscrapers, China’s economy will keep growing to the skies. By contrast, teeming Bombay more readily conjures up India’s faded past than a glorious tomorrow. Yet as the finance ministers of Asia’s two billion-strong giants attend the Group of Seven meeting for the first time, some economists are making the case that India can boast better long-term prospects than its neighbor.

In the early 1980s, India and China both churned out annual output per head of about $500. Today, China is more than twice as rich, with GDP of $1,100 in 2003 dwarfing India’s figure of $530, according to the World Bank. While India notched up average annual GDP growth of 5.9% from 1993-2003, China raced ahead at a 9.0% clip. But a more favorable demographic profile, a stronger capacity for technological innovation and Western-style democratic institutions provide the potential for India to raise its game and catch up with its neighbor. “It will be much easier for China to go from $500 to $1,000 than from $1,000 to $5,000,” said Dominique Dwor-Frecaut of Barclays Capital in Singapore.

Unlike China, India has spawned a number of world-class firms with a strong innovative capacity underpinned by enforceable property rights and an independent, if lumbering, judiciary. “It has a political culture and civic society that is a lot more conducive to the development of technology and strong domestic global champions,” Dwor-Frecaut said. Daniel Lian of Morgan Stanley in Singapore agreed that the protection India affords to intellectual property rights would be crucial in luring Western capital. Allied to low wages, that could make it a better bargain than China for global investors. India’s democracy and Western-leaning institutions are also attractive for the West, Lian said in a report. Fast-expanding China, by contrast, is viewed as a rival.

SOME IN U.S. VOTING WITH THEIR FEET, HEADING FOR CANADA

“It’s the sort of place Norman Rockwell would paint, where everyone watches out for everyone else and we have block parties every year,” said Key, a 56-year-old Vietnam War veteran and former magazine editor who lists Francis Scott Key, who wrote The Star-Spangled Banner, among his ancestors. But leave it he intends to do, and as soon as he can. His house is on the market, and he is busily seeking work across the border in Canada. For him, the reelection of George W. Bush was the last straw. “I love the United States,” he said as he stood on the Vancouver waterfront, staring toward the Coastal Range, which was lost in a gray shroud. “I fought for it in Vietnam. It’s a wrenching decision to think about leaving. But America is turning into a country very different from the one I grew up believing in.”

In the Niagara of liberal angst just after Bush’s victory on Nov. 2, the Canadian government’s immigration Web site reported a surge in inquiries from the U.S., to about 115,000 a day from 20,000. After three months, memories of the election have begun to recede. Yet immigration lawyers say that Americans are not just making inquiries and that more are pursuing a move above the 49th parallel, fed up with a country they see drifting persistently to the right and abandoning the principles of tolerance, compassion and peaceful idealism they felt once defined the nation. America is in no danger of emptying out. But even a small loss of population, many from a deep sense of political despair, is a significant event in the life of a nation that thinks of itself as a place to escape to.

“The number of U.S. citizens who are actually submitting Canadian immigration papers and making concrete plans is about three or four times higher than normal,” said Linda Mark, an immigration lawyer in Vancouver. Other immigration lawyers in Toronto, Montreal and Halifax, Nova Scotia, said they had noticed a similar uptick, though most put the rise at closer to threefold. “We’re still not talking about a huge movement of people,” said David Cohen, an immigration lawyer in Montreal. “In 2003, the last year where full statistics are available, there were something like 6,000 U.S. citizens who received permanent resident status in Canada. So even if we do go up threefold this year, we’re only talking about 18,000 people.” Still, that is more than double the population of Gettysburg, Pennsylvania. “For every one who reacts to the Bush victory by moving to a new country, how many others are there still in America, feeling similarly disaffected but not quite willing to take such a drastic step?” Cohen asked.

Reflections on an expatriate life: Escaping To Asia.

Paul Theroux, the travel writer, commented in the beginning of Dark Star Safari that when he left on his trip through Africa he wanted to disappear. When I left the U.S. after 40 years of life there, I cradled the same thought. The American story of male middle-age crisis is the man who leaves the house to buy a pack of cigarettes and never returns. Where do they go? Texas? California? Florida? Bali? Some place warm probably and with a seeming surplus of young, available women.

When my entering middle age crisis hit, I had just finished up a long delayed Ph.D., separated from my wife of seven years, saw my son move off to live with his mother after spending most of his life with me, and realized that what I was doing was not making me happy or sane. One day I was planning for the new school year in my middle class school in Marin Country, the next day I had a job offer in the mountain jungles of Irian Jaya, one of the more remote places on the planet. What is it that makes a person leave their life, family, friends, and country for someplace unknown?

SOME THOUGHTS ON AFRICA AND LATIN AMERICA

It started to dawn on me about five years ago in Auckland that I wanted to get out of business and law. At around that time it also dawned on me that I wanted to get into college teaching in the less developed world. I wanted to bless students in South Africa with my enormous insight and wisdom gained over the years and in various continents. My humble self unfortunately could not manage to land a teaching position at a university there. I tend to be rather an optimist by nature. I reckoned to do it in another country in the region. However, my applications to universities in Namibia, Botswana, Malawi and to a few private outfits in Kenya and Zimbabwe did not lead to a bunch worth mentioning. After expanding my search to other regions in the less developed world, I have eventually ended up spreading my wisdom in Latin America -- in Colima, Mexico.

In hindsight, I cannot claim to be awfully unhappy about how things have turned out. In private chats every now and then, I am fond of rambling about “my wild days in Africa”, a term that reflects my lifestyle there quite well. The alternative that has gradually materialized appears to be more appropriate for a junior elder -- a quiet and pleasant lifestyle in the boondocks of Latin America. However, there are other -- less personal -- reasons why I am now more inclined to live in Latin America than in Africa.

U.K. PRIVY COUNCIL DECISION SHOULD NOT HALT CARIBBEAN COURT

The recent ruling in the UK stopping Jamaica from replacing the Privy Council with the Caribbean Court of Justice (CCJ) as the court of final appeal should not delay the planned establishment of the Caribbean Single Market and Economy (CSME) or the operation of the CCJ. The Privy Council in the UK has ruled that the three Acts, collectively passed by the majority in the Jamaican Parliament to abolish the right of appeal to the Privy Council and to substitute a right of appeal to the CCJ, were not passed in accordance with the procedure required by the Jamaica Constitution and are accordingly void. Effectively, this means that the Privy Council is still the court of final appeal for Jamaica and, further, the CCJ, at the present time, has no jurisdiction in Jamaica even as a court of original jurisdiction for trade disputes within the Caribbean Community and Common Market (CARICOM).

This is a set back for the advocates of the CCJ who want a Caribbean Court to replace the British Privy Council as the ultimate court of appeal from the Courts of Jamaica and other countries in the Caribbean. These advocates regard appeals to the Privy Council as anachronistic, seeing the requirement for such appeals as a lingering left-over from colonialism and a mark against the true independence of sovereign Caribbean states.

By the same token, the Privy Council decision is being claimed as a victory for those who hold to the view that the Caribbean legal and judicial system is not yet mature enough to allow for a truly independent court of final appeal that could withstand local pressure and interference from whatever source, particularly governments. It is important to understand, however, that these were not the arguments that the Privy Council considered. It is equally important to appreciate that the ruling of the Privy Council applies to Jamaica only.

U.S. SINKING IMMIGRANT-CARRYING BOATS NEAR ECUADOR IN NAME OF COUNTERTERRORISM

U.S. counterterrorism officials have set up a high-seas gantlet deploying Coast Guard cutters off Latin America and arresting foreign nationals trying to leave their own countries. Coast Guard crews have blocked at least 37 Ecuadoran boats and detained more than 4,575 suspected illegal migrants over the past four years, records show. Then, over the past two years, they have sunk a dozen emptied migrant boats they deemed “unseaworthy” -- setting them ablaze and firing on them with their .50-caliber guns.

The crackdown fits into a new worldwide strategy that U.S. Department of Homeland Security officials describe as “pushing our borders out”. Enforcing U.S. laws abroad is crucial, they contend, to control record illegal immigration, estimated at 500,000 a year, and close security gaps terrorists could exploit. Not only off Ecuador , but “anywhere in the world”, Lt. Cmdr. Brad Kieserman, operations legal chief at U.S. Coast Guard headquarters said, Coast Guard and Navy ships will “go to the source of transnational crime and interdict it before it gets to the United States.”

Some analysts see this as contemporary gunboat diplomacy. If foreign armed forces stopped U.S. boats in this way, “we’d call it an act of war,” said John Pike, director of the Washington think tank Global Security. “There is no world government to enforce international law. It’s always been the case that the strong do what they can, and the weak do what they must.” Others say U.S. officials are pushing too far, straining the already faint goodwill and support that the U.S. needs to fight terrorism, the illegal spread of weapons, and other threats.

“To have U.S. ships off the coast of Ecuador sinking boats is not the best public relations for the United States,” said Robert Leiken, director of immigration and security studies at the Nixon Center think tank in Washington. If stopping illegal immigration is the goal, cracking down on U.S. employers who hire illegal workers would be far more effective, Leiken said. “Basically, we have one continent which is so far not penetrated by Islam; there’s very little Muslim radicalism in Latin America,” he said. “I’d think we’d want these people on our side.”

CONFESSIONS OF AN ECONOMIC HIT MAN

How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions

John Perkins describes himself as a former economic hit man -- a highly paid professional who cheated countries around the globe out of trillions of dollars. 20 years ago Perkins began writing a book with the working title, “Conscience of an Economic Hit Men”. Perkins writes, “The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits -- Jaime Roldós, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Roldós and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.

John Perkins goes on to write, “I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop.” But now Perkins has finally published his story. The book is titled Confessions of an Economic Hit Man.

Says Perkins, “Basically what we were trained to do and what our job is to do is to build up the American empire. To bring -- to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we’ve been very successful. We’ve built the largest empire in the history of the world. It’s been done over the last 50 years since World War II with very little military might, actually. It’s only in rare instances like Iraq where the military comes in as a last resort. This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that.”

IF THE CHILDREN ARE THE FUTURE, WE’RE SCREWED

Last week was a busy one on the creeping- fascism index. So busy, in fact, that I finally accepted there is even such a thing as a creeping- fascism index. Over the past few years, I have held fast to a belief that America is too sprawling, too diverse and too fundamentally committed to its Constitution to ever change its flag to red, white and black. Now I am not so sure. It was not a delayed reaction to the Patriot Act, Guantanamo, Iraq or the confirmation of torture hombre Alberto Gonzalez that did it, but a modest blip on the post-9/11 radar: a poll finding that a third of high school students think the First Amendment “goes too far”.

At least that is what they think of the First Amendment once it is explained to them. After interviewing 100,000 teens in the largest study of its kind, the John S. and James C. Knight Foundation reports fast shrinking respect for bedrock constitutional freedoms of speech, press and assembly. Among the findings widely commented on last week -- but not widely enough -- only 51% said newspapers should be allowed to publish content without state approval. Three-quarters actually thought flag burning was illegal -- and did not care -- while almost one-fifth said Americans should not be allowed to express unpopular views.

News of the poll triggered a few easy comparisons to the fear-driven conformity of the early Cold War. But that analogy is wishful thinking. Even at its worst, the paranoid patriotism of the 1950s existed uneasily alongside a respect for and knowledge of American history and the Constitution. What we have now is the worst elements of the 1950s without the literacy and understanding of the American creed that made possible the corrective revolts of the 1960s. The poll is an ominous sign of more than just another paranoid burst of American politics, one that will flame out or be eclipsed by some inevitable Aquarian renewal. It is a glimpse into the brain of the first videogame generation to come of age during the war on terror. Post-9/11 political culture plus ADD equals those poll results. There is no good reason to expect the trend to reverse on its own.

MULTINATIONAL ORGANIZATIONS: GLOBAL PROTECTORS OR OPPRESSORS?

The “oil for food” and other recent U.N. scandals made many aware the U.N. is quite literally out of control. What is not well known is that the U.N. is only one of now dozens of international organizations that increasingly exercise control over citizens in all countries and misspend taxpayer monies. From the end of World War II, many new multinational organizations have been created, most with the ideal of promoting world peace and prosperity in one form or another.

These organizations are set up and funded by the member governments, often accompanied by self-righteous announcements about all the good they will do. In reality, most often the organization is set up with a high-minded charter, a staff is hired to do the work, and the politicians who created the organization move on, giving it little, if any, oversight. These organizations’ professional staff quickly learn they are largely in charge of setting the agenda and operational structure. Being human, they often feel they know better than the founders what the agenda ought to be, and, of course, they want an organizational structure and physical environment comfortable for them. Usually, much time and money are spent meeting staff needs that may or may not be in the interests of the intended recipients or the client state’s taxpayers.

Bureaucrats, being bureaucrats, tend to want enhanced power and budgets. They can increase power by “mission creep”, expanding the original purpose, which requires more staff and money. They lobby donor government officials for more funds and look for independent ways to acquire resources. Both our liberties and our pocketbooks will face continued danger unless adequate oversight is brought to the international institutions.

HOW TO BE A BUM

It seems my earlier article “I Am A Bum” has touched a nerve with modern America. Many readers out there seem to be inspired by my total lack of success. Cries for help have poured in from across the land. Here I thought I was just some crackpot spewing a heap of hooey. Ok, so maybe I am. Still, how can I sleep at night if I do not answer these desperate pleas for help? The Secret to becoming happily worthless needs to be shared. No self-respecting lay-about could sit back and let fellow humans wallow in the depths of prosperity. Well... actually I could but I do not have anything else to do.

So, here I must offer my 12-step manual for chucking it all and becoming a sincerely contented failure. After all, the true American Dream is not becoming rich and famous. That is the dream according to Hollywood and Corporate America. The reality is they are pulling a big scam on you to get your money. It is working too. Nope. Real Americans dream about the Endless Summer Vacation. It is a place where The Man cannot poke them with a cattle prod to stimulate production. So here is The Secret on how to do it (or not do it, as the case may be).

THE BILL GATES OF ESCORT GIRLS STOWED HER MILLIONS OFFSHORE

Her innate business sense could have seen her excel in any industry. Margaret McDonald, product of a middle-class home and convent education, chose to go into prostitution. At 45, she is thought to have been one of the world’s most successful madams, managing 500 callgirls in 25 countries and building a multi-million-pound fortune. Her reign ended with a 4-year jail sentence for pimping. But released early, she was unrepentant, bragging of the empire she had built up and how she had hidden away her millions. She told interviewers for a documentary about her life that she was 33 when she started charging men to have sex “for fun”. Soon she had built a business that spanned Europe, in which movie stars and international businessmen would hand over £650 for a single hour with one of her girls. “For me it was just like setting up a company,” she told the interviewer. “I see myself as the Bill Gates of the escort world.”

It all came to an end when a German callgirl was detained by police. McDonald was arrested in Paris in May 2002, convicted in October 2003, and served half her sentence before being released in May 2004. French police believe she amassed millions of pounds. McDonald herself admits she made £20,000 a month tax free. “I’m not telling you where the money is. I’m not telling anyone. It’s tucked away offshore, very safely. I’m not a resident in England, in case the tax people are watching,” she told the documentary makers. In fact, the money is in several accounts in Jersey.

FIVE DAYS IN HONG KONG

I just got back from spending Chinese New Years in Hong Kong with my wife and son. Hong Kong is a great place, especially if you like good food. The second night we were there, we were treated to the Chinese New Yea’qs fireworks display. It was awesome. Imagine Disneyland’s biggest fireworks celebration, multiply that by five, make it 30 minutes long, and you can imagine what “Shock and Awe” really looks like. Actually, we spent the entire time staying in a hotel in Kowloon, which is just across the harbor from Hong Kong itself. Hong Kong rocks. What a fun town!

It had been about 10 years since I was last in Hong Kong. Things have changed so much. In spite of reverting back to the communist mainland, the economy of the entire area is booming. There are brand new buildings and skyscrapers going up everywhere. They have built a brand new airport about 30 minutes taxi ride into the city. During my first night at the hotel I sat at the coffee shop and was amazed at just how much of an international city Hong Kong really is. For you folks who have been there before, that will not surprise you, but it did me. For I expected that, since the communist mainland had taken back Hong Kong, it would have gone downhill somewhat. How wrong were my expectations....

FIRST THEY CAME FOR LYNNE STEWART ...

First they came for the communists, and I did not speak out -- because I was not a communist;
Then they came for the socialists, and I did not speak out -- because I was not a socialist;
Then they came for the trade unionists, and I did not speak out -- because I was not a trade unionist;
Then they came for the Jews, and I did not speak out -- because I was not a Jew;
Then they came for me -- and there was no one left to speak out for me.

    -- Pastor Martin Niemöller, 1945

Now they are coming for the lawyers, and we must all speak out. Last week, after 13 days of deliberations, prominent New York civil rights attorney Lynne Stewart was convicted of conspiracy, providing material support to terrorists, and defrauding the U.S. government. Her 7-month trial was held in the same federal courthouse where the Rosenbergs were tried for conspiracy to commit espionage more than 50 years ago. Stewart faces between 35 and 45 years in prison.

Stewart was indicted in March 2002, based on governmental monitoring of conversations between Stewart and her client, Shiek Omar Abdel Rahman, which occurred two and a half years before September 11, 2001. Rahman is serving a life plus 65-year sentence for conspiring to bomb several New York City landmarks and soliciting crimes of violence against the U.S. military and Egyptian President Hosni Mubarak. Beginning in 1997, the Bureau of Prisons, at the direction of the Attorney General, imposed special administrative measures (SAMs) on Rahman, limiting his access to the mail, the media, the telephone and visitors.

Stewart was obliged to sign an affirmation agreeing to be bound by the SAMs, before being allowed to see her client. She agreed “only to be accompanied by translators for the purpose of communicating with inmate Abdel Rahman concerning legal matters” and not to “use my meetings, correspondence, or phone calls with Abdel Rahman to pass messages between third parties (including, but not limited to, the media) and Abdel Rahman.”

The government charged that Stewart allowed the Arabic translator to read letters to Rahman regarding Islamic Group matters, and to conduct a discussion with Rahman regarding whether Islamic Group should continue to comply with a cease-fire in Egypt. It also alleged that Stewart concealed those discussions from prison guards, and announced to the media that Rahman had withdrawn his support for the cease-fire, in violation of the SAMs. Stewart denied these allegations, and testified that she believed in good faith that relaying Rahman’s statement calling for more consultation about the Egyptian cease-fire did not violate the SAMs. Her good-faith belief, Stewart tesfitied, was based on actions of former U.S. Attorney General Ramsey Clark, another of Rahman’s attorneys.

Why did the government wait so long before indicting Lynne Stewart? According to Heidi Boghosian, executive director of the National Lawyers Guild, Stewart was a “prime target for the Attorney General, who needed desperately to show that the Justice Department was actively fighting terrorism.” When Stewart was indicted, John Ashcroft had arrested only one person since September 11 -- John Walker Lindh. “By indicting Stewart,” noted Boghosian, “Ashcroft effectively sent the dual message that he could indict other lawyers who represented clients with unpopular beliefs and that such clients do not deserve defense.”

HUNGER FOR DICTATORSHIP

Students of history inevitably think in terms of periods: the New Deal, McCarthyism, “the Sixties” (1964-1973), the NEP, the purge trials -- all have their dates. Weimar, whose cultural excesses made effective propaganda for the Nazis, now seems like the antechamber to Nazism, though surely no Weimar figures perceived their time that way as they were living it. We may pretend to know what lies ahead, feigning certainty to score polemical points, but we never do.

Nonetheless, there are foreshadowings well worth noting. The last weeks of 2004 saw several explicit warnings from the antiwar Right about the coming of an American fascism. Paul Craig Roberts in these pages wrote of the “brownshirting” of American conservatism. Several weeks later, Justin Raimondo, editor of the popular Antiwar.com website, wrote a column headlined, “Today’s Conservatives are Fascists.” His fellow libertarian, Mises Institute president Lew Rockwell, wrote a year-end piece called “The Reality of Red State Fascism”.

The warnings from these three writers would have been significant even if they had not been complemented by what for me was the most striking straw in the wind. Earlier this month the New York Times published a profile of Fritz Stern, the now retired but still very active professor of history at Columbia University. Stern had emigrated from Germany as a child in 1938 and spent a career exploring how what may have been Europe’s most civilized country could have turned to barbarism. In his Times profile, he sounds an alarm of the very phenomenon Roberts, Raimondo, and Rockwell are speaking about openly.

LOOSER PERPETUAL TRUST LAWS LURE $100 BILLION IN ASSETS

While President Bush renews his bid to eliminate the federal estate tax, thousands of families are taking matters into their own hands -- moving money into long-lasting trusts that can avoid those taxes forever. In recent years, a wave of states started allowing so-called dynasty trusts to last for hundreds of years -- or even forever -- undoing a centuries-old law that prevented perpetual trusts. Now, new research has found that about $100 billion in assets has flowed into personal trusts in those states from the time the laws changed through 2003. For the financial services firms administering them, the trusts amount to about a $1 billion in annual trustee fees.

The study comes at a time when such trusts are facing congressional scrutiny. The Joint Committee on Taxation staff, in a report on options to improve tax compliance and shut tax loopholes, described a way to crackdown on dynasty trusts by limiting the perpetual tax breaks associated with them. However, there have been no bills considered by congressional committees on the matter this year. Some estate planners are encouraging clients to fund their dynasty trusts now, in case the trusts’ tax advantages go away. However, “we are being very careful to be balanced on this and trying not to create fear that’s unwarranted,” says Robert S. Keebler, a tax partner with accounting firm Virchow, Krause & Co., in Green Bay, Wisconsin.

The dynasty trusts have other benefits as well. For example, assets in the trusts are generally protected from creditors in the case of lawsuits, bankruptcy or divorce. As a result, dynasty trusts still might remain viable even if Congress repeals the estate or generation-skipping taxes, or limits the trusts’ perpetual tax benefits. Although dynasty trusts have been heavily promoted by banks and trust companies, until now nobody had quantified nationally how much money has moved into the states that have loosened their trust laws to allow them.

CANADIANS FIND OFFSHORE TAX HAVEN ON THEIR DOORSTEP

For all those Americans who, disgusted by the results of last Novembe’qs presidential election, are threatening to move to Canada, here is an activity to occupy them as they make the great trek north: They can wave at all the Canadians moving south. Though most of the attention of late has been focused on Americans planning to defect, the fact is that hundreds of thousands of Canadians spend much of the year in the U.S. There are so many of them that there is a term for those indulging in the southward migration -- “snowbirds”. Not surprisingly, the movement has its own advocacy group, the Canadian Snowbird Association.

There is also a book. Idle perusal of the shelves of a Victoria, B.C. bookstore turned up The Border Guide: A Canadian’s Guide to Living, Working and Investing in the United States. It was written by Robert Keats, himself fittingly cross-border, with dual citizenship and certification as a financial planner in both countries. Keats, whose financial planning business is based in Scottsdale, Arizona, says there are two prime motivations for Canadians to move to the U.S. One, not surprisingly, is weather. “The’qve had enough of snow and ice,” he says. The other is taxes. “The U.S., believe it or not, can be a tax haven for Canadians,” Keats says.

Because of treaties, the U.S. can actually offer a lower income tax rate for Canadians than some better-known havens. Canadians, Keats notes, face higher marginal income-tax rates than Americans, have few opportunities for tax-free income such as bonds and do not get the same level of deductions -- no home mortgage interest write-off, for example. (Those who plan to move from the U.S. to Canada are in for a shock when the tax bill comes, he says.)

HIGH-TECH PASSPORTS ARE NOT WORKING

In the old days (before World War I) the traveler simply pulled his boots on and went. The idea that he might need a piece of paper to prove to foreigners who he was would not have crossed his mind. Alas, things have changed. In the name of security (spies then, terrorists now), travelers have to put up with all sorts of inconvenience when they cross borders. The purpose of that inconvenience is to prove that the passport’s bearer is who he says he is. The original technology for doing this was photography. It proved adequate for many years. But apparently it is no longer enough. At America’s insistence, passports are about to get their biggest overhaul since they were introduced. They are to be fitted with computer chips that have been loaded with digital photographs of the bearer (so that the process of comparing the face on the passport with the face on the person can be automated), digitised fingerprints and even scans of the bearer’s irises, which are as unique to people as their fingerprints.

A sensible precaution in a dangerous world, perhaps. But there is cause for concern. For one thing, the data on these chips will be readable remotely, without the bearer knowing. And -- again at America’s insistence -- those data will not be encrypted, so anybody with a suitable reader, be they official, commercial, criminal or terrorist, will be able to check a passport holder’s details. To make matters worse, biometric technology -- as systems capable of recognizing fingerprints, irises and faces are known -- is still less than reliable, and so when it is supposed to work, at airports for example, it may not. Finally, its introduction has been terribly rushed, risking further mishaps. The U.S. want the thing to start running by October, at least in those countries for whose nationals it does not demand visas.

THE BEAST IS BACK: “REAL I.D.” FOR AN ALL TOO REAL WORLD

Even in a relationship that has clearly gone somewhere beyond abusive, it can hurt to be reminded how little our “partners” in D.C. -- supposedly our agents, in fact, representing our own interests and using only powers we have delegated to them -- really respect us. No matter how loyal and supportive we try to be -- they ask us to trouble ourselves to vote, and more than half of us do, and it seems to make them so proud -- well, every once in a while the velvet glove comes off and we get bitchslapped hard with an open iron slap. Not a fist -- that would acknowledge that they actually think we are formidable enough in our own defense that serious force is required.

Such a moment is H.R. 418, the “Real I.D. Act” passed by the House last week. Laws like H.R. 418 are designed to severely tighten those gaps in which we can live and do business, with our government or with others, with privacy and dignity intact. Oh, there is much ruin in a nation, and Americans have had their virginity as a supposedly free people violated so often that outraged cries are, perhaps, more ironic indulgence than a source of believable moral dudgeon. Still, it feels good to say that, even though H.R. 418 is not the law of the land yet, the fact that a majority of our elected representatives in the House voted for it is a disgrace.

FLORIDA HOMESTEAD LAW ENABLES DEBTORS TO KEEP THEIR HOMES

As his creditors and the plaintiffs in the WorldCom lawsuit circle, John Porter, WorldCom’s former chairman, will be able to keep them largely at bay. He lives in Palm Beach, Florida and as a Florida resident, is protected by the state’s homestead exemption. When he sells his oceanfront estate -- if he gets the asking price -- he will be able to hold on to about 80% of $16.9 million. His case has brought renewed attention to a part of Florida’s constitution enacted more than 100 years ago to protect the tiny homesteads of poor settlers struggling to pay their debts. The trouble is, critics charge, the exemption has turned into a way for the rich to shelter money through their multimillion-dollar estates.

Florida is one of five states with an unlimited “homestead exemption” that allows residents who declare bankruptcy to keep their homes, no matter how much they owe. The other states are Texas, Kansas, Iowa and South Dakota. Florida also allows a home to be shielded even if the owner has not declared bankruptcy. If a Florida homeowner has not “committed fraud, it’s virtually impossible to break the homestead” protection, said Michael Goldberg, a bankruptcy attorney at Akerman Senterfitt in Fort Lauderdale.

Porter’s home is not fully shielded under the state’s homestead exemption, which applies to lot sizes up to a half-acre within a city, and up to 160 acres outside a city. Porter’s home sits on roughly five-eighths of an acre -- which means proceeds from the home’s sale will be apportioned, with Porter keeping nearly 80% covered by the exemption and creditors getting the rest. Porter must reinvest the proceeds in another home or other exempt asset, such as a life insurance policy, to protect his portion after the sale closes.

THEY’VE GOT YOUR NUMBER (AND MORE)

A potential disaster has taken place. It has received virtually no attention. You have probably not heard of ChoicePoint. Over the last twenty years, ChoicePoint has compiled a private data base on Americans that dwarfs anything the I.R.S. has. Unlike the I.R.S., ChoicePoint has a comprehensive computer system that is state of the art. The information covers name, address, Social Security, transactions, and much, much more. Last week, the company notified over 30,000 people in California that it has experienced a breach in security. Hardly any of these people had ever heard of ChoicePoint. But they are in bed with ChoicePoint, like it or not. So are you.

ChoicePoint maintains a dossier on virtually every American consumer, according to Daniel J. Solove, George Washington University professor and author of The Digital Person. The Atlanta-based company says it has 10 billion records on individuals and businesses, and sells data to 40% of the nation’s top 1,000 companies. It also has contracts with 35 government agencies, including several law enforcement agencies. So, what exactly has happened? The company is not quite sure. Neither is the government.

Criminals posing as legitimate businesses have accessed critical personal data stored by ChoicePoint Inc., a firm that maintains databases of background information on virtually every U.S. citizen, MSNBC.com has learned. The incident involves a wide swath of consumer data, including names, addresses, Social Security numbers, credit reports and other information. ChoicePoint aggregates and sells such personal information to government agencies and private companies. While the criminals had access to ChoicePoint data, it is not clear what, if any, information was stolen, said Chuck Jones, a ChoicePoint spokesman. Last week, the company notified between 30,000 and 35,000 consumers in California that their personal data may have been accessed by “unauthorized third parties”, according to another ChoicePoint spokesman James Lee. The words “may have been accessed” are not reassuring to me. I am in the database. Now I wonder who has access to it.

What does it all mean? We are not sure yet. This much we know: the concerns that you have had about providing your Social Security number to strangers are now on the front burner. You have worried that someone might pass on this information to criminals, who would use this information to penetrate your accounts and start spending your money. It looks as though thieves got this information wholesale: a volume discount operation of historic proportions. Subsequent research by ChoicePoint revealed that about 50 fake companies had been set up and then registered with ChoicePoint to access consumer data.

U.S. CONGRESS DEALS A BLOW TO CLASS ACTION SUITS, BUT LEAVES BASIC TORT SYSTEM INTACT

Trial lawyers and Democrats have long protested that Big Business is exaggerating the woes of America’s tort system in order to tilt the system in favour of rich defendants. If so, this dastardly plan is certainly working. On February 10th, the Senate approved by 72 votes to 26 the Class Action Fairness Act, which is designed to push class-action suits away from places like Madison County, Illinois to the fairer federal system. As we went to press, it looked as if the House would pass the bill too, giving Mr. Bush a chance to sign it into law when he returns from Europe.

In political terms, this is a big victory for Mr. Bush, who pushed class-action reform in his re-election campaign. He can also boast bipartisan support, as 18 Democratic senators deserted the lawyers’ lobby, which has given their party so much. Indeed, in general the lawyers were out-muscled by the US Chamber of Commerce. Mr. Bush and his business allies are now keen to move on to the other two parts of his tort-reform plan: sorting out the asbestos-litigation mess and medical-liability reform. But what exactly will this week’s new measure achieve? Opinion, inevitably, is split between lawyers, who think it goes too far, and reformers, who wish it had gone much further.

The bill hits trial lawyers in their pockets, by limiting their fees to a proportion of the amount of money the plaintiffs actually collect rather than the theoretical amount awarded to them, if the award is in coupons rather than cash. (In a big case, companies often compensate plaintiffs with coupons, which are either fiddly or too small to redeem.) But the bill’s main aim is to stop “forum-shopping” -- looking for magic jurisdictions. It says that any big class action (one that has more than 100 plaintiffs and more than $5 million at stake) must go to federal court.

The claim that this is the toughest tort-reform package in a decade is no great boast. Since trial lawyers have kept all chance of reform locked in their vice- like grip, there is virtually nothing to compare it with. The new law may well restrict the number of class-action lawsuits, but it does nothing about the underlying principles of the tort system. A more radical plan might simply have changed the system to remove the punitive incentive to sue -- for instance, by paying all punitive damages to the state in the form of a fine for bad behavior. Even if they get most of what they want, the Republicans will merely have curbed the more outrageous abuses; they will not have pushed through structural reform.

NAPOLEON IN EGYPT: THE LESSONS OF HISTORY

“My glory is declining. This little corner of Europe is too small to supply it. We must go East. All the great men of the world have there acquired their celebrity.” ~~ Napoleon Bonaparte

One of the fascinating things about the history of Western civilization is its recurrent bouts of manic utopianism. Stretching back at least to Alexander the Great, movements have appeared with astonishing regularity organized around various abstract philosophies agitating for a new, “higher” stage of human existence and social perfection. The Inquisitions, the Crusades, communism, fascism, etc., have never brought utopia, but they have left a horrible trail of blood and sorrow.

It is a matter of historical curiosity that this behavior is predominantly a trait of Western civilization. Only rarely have non-Western societies been consumed by a fiery creed which has prompted them to engage in massive ideological bloodletting or fanatical attempts to convert the world by force of arms. Pol Pot and Chairman Mao, both of whom engaged in mass ideologically-driven domestic atrocities, are perhaps the exceptions that prove the rule. What is the origin of this Western neurosis? Is it nature or nurture? Can the West be cured?

It was with just such thoughts in my mind that I recently perused Alan Moorehead’s classic book The Blue Nile. First published in 1962, it is a wonderful historical narrative of the storied branch of the Nile River which originates in the highlands of Ethiopia. While the whole book is filled with fascinating tales and poignant historical anecdotes, the contemporary reader is drawn to the middle portion which tells the story of Napoleon’s ill-fated attempt at nation-building in Egypt. The tale reinforces Marx’s dictum that history repeats itself, first as tragedy and then as farce.

ECONOMIC KIWI FRUIT

In 2001, the U.S. Congress cut income tax rates for the first time since 1986. However, it did little to reduce the extreme complexity of the tax system -- and may have made it even more complicated. And things have gone downhill ever since. The tax code and regulations are now 46,000 pages long, up from 26,000 in the mid-1980s. The number of different IRS tax forms jumped from 400 to 500 in the past 10 years. Congress is now considering proposed reforms to decrease this complexity. Before embarking on a new path, and potentially repeating some of the mistakes that undermined the 1986 reform, U.S. policy makers may want to learn from reforms in other nations. New Zealand’s tax code overhaul in the 1980s and 90s led to incredible economic growth. This experience provides a good role model for the U.S. to follow.

NZ has one of the simplest income tax systems in the world. It was not always the case. At the beginning of the 1980s, New Zealand had an old-fashioned system with high tax rates and lots of loopholes. Not surprisingly, the economy was suffering from years of stagnation, high unemployment and fiscal disarray. The widespread view was that the tax system was failing. It was not raising sufficient revenue to finance the nation’s bloated welfare state in spite of extremely high marginal tax rates. The tax complexity and the huge amount of loopholes gave great incentives to tax avoidance and evasion. Consequently it was commonly described as unfair and corrupt.

Subsequently, New Zealand’s tax system was dramatic transformed. Combined with other reforms such as trade liberalization and elimination of agricultural subsidies, NZ’s economy boomed. The country got rid of inflation, unemployment dropped and the deficit disappeared. NZ shifted its income tax towards a simpler and flatter structure using a broad-base, low-rate principle. The top marginal personal income tax rate was reduced from 66% to 33%. The tax base was extended and most loopholes removed to reduce complexity and compliance costs to a minimum. The NZ tax base is broad by international standards but avoids double-taxing certain types of income,e.g., there no second layer of tax on capital gains.

In recent years, some small countries with stable political and monetary arrangements have become quite wealthy by offering a business-friendly environment and low tax rates to individuals and corporations, such as Switzerland, Luxembourg, and Iceland. Clearly, New Zealand has joined their rank with great success. Unfortunately, the current labor government is not as wise as its 1980s predecessor. Spending is going back up along with regulatory costs. Notwithstanding a bit of back-sliding, New Zealand remains a great success story.

NO NEW TAXES IN ST. KITTS-NEVIS 2005 BUDGET

Prime Minister and Minister of Finance, Dr. Denzil Douglas delivered a tax free budget to a packed National Assembly. Not only were there no new taxes and levies, but, fuel surcharges passed on to consumers were far less than anticipated. The entire country was bracing for an astronomical increase in petrol and liquefied petroleum gas, given the fact that the St. Kitts and Nevis Government was the only Caribbean administration still absorbing the global increases in fuel prices. The non-imposition of new taxes was a major relief, as it came on the heels of a public realization by the Government that something significant had to be done about the debt situation in the country.

The Prime Minister himself has admitted on several occasions that the national debt needs to be checked, but, he said the work of the Inland Revenue Department had seen a steady increase in revenue collections and therefore the government saw no need, at this time, to increase taxes as a means of meeting debt obligations. The Prime Minister and Minister of Finance said debt was a definite problem and challenge for the government, but it was not out of control since the asset base of the government and country was still relatively strong and therefore could easily attend to the medium and long term challenges of the country. He said further that an aggressive approach would be taken to privatizing some state assets, so as to generate much needed non-tax revenue.

Not surprisingly, the Prime Minister and Minister of Finance frowned once again on the notion of a reintroduction of Personal Income Tax, stating that his party, the St. Kitts-Nevis Labour Party, was opposed fundamentally to such a tax and furthermore that it considered the existing Social Services Levy, which was introduced by the previous Peoples Action Movement Government, as a disguised form of income tax. He said this government had no plans of tinkering with the salaries of workers, at this time.

ID THEFT VICTIMS COULD HAVE TROUBLE RECOVERING DAMAGES FOR LOSSES INCURRED

The recent security breach at data aggregator ChoicePoint that exposed at least 145,000 consumers to identity theft and renewed a call for regulation of the data industry will likely leave victims of the breach twice bitten -- first from the identity theft itself and second from thwarted attempts to recover damages for their losses if they decide to seek recourse. Legal experts say that people who suffered losses as a result of the breach will find it difficult to get compensation from ChoicePoint for selling their personal data to con artists, even if the victims can prove that ChoicePoint was negligent in screening customers who purchased their data. That is because courts have been unwilling to penalize companies when victims of identity theft are not their direct customers.

Experts are hoping the ChoicePoint case may begin to swing court opinion, which could force companies like ChoicePoint to take better care of consumer privacy and data in the absence of federal legislation. “There is a lot of political support behind consumer frustration in this area,” said Charles Merrill, a New Jersey-based attorney who focuses on information technology cases. “I think that information security liability may be the next ‘toxic tort’ -- like asbestos. The time is right for it.”

Since 9/11, ChoicePoint has positioned itself as a homeland security company to provide government agencies with data to help them authenticate and verify the identity of individuals. This strikes an ironic chord for privacy advocate Richard M. Smith, who noted that the company’s inability to verify and authenticate the identities of its own customers led to the recent breach in which scam artists illegally purchased consumer data from the company and stole the identities of more than 700 people. It was not the first time ChoicePoint has had a security lapse. In 2002, the company acknowledged that it had left an internal corporate database viewable by anyone with a web browser.

TO THE ANTI-REVISIONIST ESTABLISHMENT, EVERY CHALLENGER IS “FRINGE”

How interesting it is that the mainstream left and neoconservative right are equally appalled by Tom Woods’s book, The Politically Incorrect Guide to American History. But it makes sense. Unlike many libertarians, I never really thought of the conventional history taught in schools as uniformly “leftist”, but rather as simply pro-establishment. Statist liberals and conservatives both have a stake in preserving the historical interpretation that upholds Lincoln, Wilson and FDR as the great heroes in the sweep of American history.

Notice one of the frequent critiques you will hear from the mainstream: So-and-so’s view sounds just like the “fringe” right (or the “radical” left)! Those who dare question the conventional wisdom on the Cold War are attacked as being in bed with the “anti-American” left. Those who point out Allied atrocities in World War II are condemned as being sympathetic to the “reactionary” right. A consistent libertarian history will be mischaracterized as being pro-Southern slavery, pro-Kaiser, pro-Nazi, pro-Communist, pro-inequality, pro-racism, pro-“Islamofascist”, or pro-anything bad that the U.S. state supposedly expanded to defeat. These attacks often come from people who have adopted the worst possible memes of establishment history.

Mainstream forces, both left and right, seek to maintain a story of history most favorable to the status quo. They have small disagreements with each other, but by and large accept the historical case for the expansive U.S. state. It is little wonder that many of the most trenchant and fundamental, however imperfect, critiques of American history, and especially of the largest expansions and projects of the warfare state, appear on the fringes, outside mainstream historical opinion. As truly problematic as the fringes are, with their fair share of kooks and troubling economic and historical theories, they are much less inclined than the mainstream to show enthusiasm for violations of civil liberties, the war on drugs, perpetual warfare, or the corporate-social democratic state as it now functions. You will see the far left and far right more willing to condemn the atrocities at Waco and Ruby Ridge and U.S. military interventions and police-state terror -- and stand accused of sympathizing with all the views and sins of those enemy regimes and fringe elements pitted against the U.S. government.

Such accusations are a ruse. Those who seek fundamental change in the system are simply less attached to the conventional myths and legends. When those myths and legends involve the whitewashing of great atrocities, such as the firebombing of Tokyo, the carpet bombing of Cambodia, or the invasion of Iraq, it comes as no surprise that the people who consistently bring attention to such white elephants in American history are branded as extremists and friends of the fringe. Surely many on the fringes would be very dangerous if they enjoyed power and universal, unquestioning obedience. But a principled sensitivity to peace, individualism and liberty, when applied to history, can hardly do evil.

SUPREME COURT THREATENS TO SHRED A BEDROCK CONSTITUTIONAL PROTECTION OF PRIVATE PROPERTY

After a landmark eminent-domain case was argued before the U.S. Supreme Court last week, I am left with the depressing realization that the court is populated with justices who are not capable of making the most basic constitutional distinctions, or of even understanding the crucial property-rights issue at stake. The case, Kelo vs. the city of New London (Connecticut), involves this question posed to the court, “Does the Public Use Clause of the Fifth Amendment permit condemnation of private property for transfer to other private parties solely for the purpose of promoting ‘economic development’?” Any Joe off the street could understand the Fifth Amendment’s simple words. No person shall be “deprived of life, liberty or property without due process of the law; nor shall private property be taken for public use without just compensation.”

So, the government cannot kill you, imprison you or take your stuff without giving you a chance to make your case, and it can take your stuff only for a public use. And it must pay you a fair price for it. Yet the justices, like those medieval scholars who argued about the number of angels who can dance on the head of a pin, seemed to be focused on irrelevancies and unable to grasp the fundamental issues. “Do you really want the courts in the business of deciding whether a hospital will be successful ... or a road will be successful?” asked Justice Sandra Day O’Connor.

Well, the issue here is whether the state can take property from one private property owner and give it to another private owner for the sake of economic development. Nothing in this case in any way questions the ability of government to take property for a genuinely “public use”, such as a road, hospital, prison or school. For the longest time, the courts had no trouble distinguishing a road from a chain store. And, excuse me for noticing, shouldn’t the justices be more concerned about the civil liberties of individuals than about inconveniences placed on the government? The Constitution -- the document the high court is supposed to defend and interpret -- is about protecting individuals from the government, not about protecting the government’s interests. I am left concerned not only about the state of property rights in America, but at the state of the high court where, apparently, the simple words of the Constitution count for little.

TELECOM EXECUTIVE ACCUSED OF EVADING $210 MILLION IN TAXES USING OFFSHORE STRUCTURES

A Washington telecommunications entrepreneur has been accused of evading more than $200 million in taxes by hiding almost $500 million in personal income through an elaborate network of offshore corporations. The Justice Department said that Walter Anderson, 51, took in vast sums throughout the 1990’s and evaded paying about $170 million in federal taxes and $40 million in taxes to the District of Columbia. Mr. Anderson was arrested at Dulles International Airport in Virginia after a federal grand jury in Washington returned a 12-count indictment against him last week. Charges include obstructing the I.R.S., tax evasion, and fraud.

The Justice Department said that Mr. Anderson was involved in starting long-distance telecommunications businesses as the industry was being deregulated, and that he realized in the early 1990’s that the merger of his first successful company, Mid-Atlantic Telecom, with another company would result in substantial taxable earnings. To avoid paying those taxes, the DoJ said, he formed an offshore corporation in the British Virgin Islands, Gold & Appel Transfer, and hired a trust company to serve as its registered agent and sole director. Gold & Appel was owned by another British Virgin Islands company previously formed by Mr. Anderson. Mr. Anderson structured his dealings so that he had complete, albeit hidden, control of the corporations, prosecutors said. They said he further obscured his holdings by forming another offshore corporation in Panama, transferring Gold & Appel shares to that entity and having the shares sent to a mail drop in Amsterdam that he had rented under an alias.

The indictment said Mr. Anderson concealed his illegal dealings from his accountants, repeatedly tried to thwart I.R.S. inquiries, sometimes used the alias “Mark Roth” and falsely proclaimed himself a citizen of the Dominican Republic when he opened accounts with a New Jersey bank. From October 1992 to July 1996, prosecutors said, Mr. Anderson transferred his interests in Mid-Atlantic telecom and two other telecommunications companies to the offshore companies he had formed, thereby creating the impression that the companies, not Mr. Anderson himself, should be liable for taxes as the telecommunications companies appreciated in value.

Mr. Anderson did not report the net earnings of Gold & Appel on his federal and District of Columbia tax returns as he was required to, prosecutors said. They said he sometimes claimed that he lived in Florida, which has no state income tax, during the time specified during the indictment, when in fact he resided at two homes in Washington. At other times, prosecutors said, Mr. Anderson wrongly obtained a Virginia driver’s license and registered his car there to avoid paying District of Columbia “use taxes” on paintings and other expensive items purchased outside of Washington but for use there. From 1987 through 1993, officials said, Mr. Anderson failed to file a tax return.

Prosecutors noted that it was difficult to catch determined tax cheats but said that some countries known as tax havens had been cooperating with American investigators more often since the 9/11 terrorist attacks. The government has stepped up investigations but managed to recommend only 1,400 tax prosecutions out of the 130 million tax returns filed annually. For budgetary reasons, the I.R.S. relies almost entirely on data reported to it on computer files, not on traditional detective work, to help identify tax evaders.

“POLITICALLY INCORRECT” HISTORY HAS NEOCONS STEAMED

Thomas E. Woods Jr.’s Politically Incorrect Guide to American History, recently put out by Regnery, the venerable conservative publisher, has caused a storm of controversy, the outlines of which define the parameters of the politically permissible. In today’s constricted political “debate” -- especially when it comes to foreign policy -- only two flavors are allowed: right-wing neocon and left-wing neocon. A “right-wing” writer who opposes foreign interventionism, condemns World War I as the senseless slaughter it indubitably was, and shows how FDR (and the Brits) dragged us into a World War II is bound to come under attack from the battalions of the neoconized Right as well as the Left, and the frenzied response to the Woods volume has not disappointed.

Woods’s defense of the right of the states to defy the federal government -- and even secede! -- cuts too close to the bone in an era when the gulf between “red” and “blue” states is every bit as deep as the chasm that separated North from South in the run-up to the Civil War. And the Woodsian critique of Reconstruction -- which looks, from here, every bit as merciless and stupid as the “de-Ba’athification” of Iraq in the wake of our “victory” -- earns the ire of the neocon critics, too. But there is a complete aversion to answering Woods’s arguments: that slavery, clearly an odious institution in the author’s eyes, would have withered on the vine without the Civil War; that Lincoln was a tyrant who closed newspapers, arrested his political opponents, and trampled on the Constitution; that the Civil War was as much about sectional pride and tariffs as about slavery -- and that the slaughter of the war was a tragic and entirely avoidable event.

The whole whole episode underscores two key points about the neocons, the first being that they cannot and will not tolerate any dissent from the Grand Consensus, especially coming from the “ultra-reactionary” Right. The Woods book represents their worst nightmare: it is the voice of the Old Right, the limited-government, culturally conservative, and anti-imperialist Right of Robert A. Taft, John T. Flynn, and Garet Garrett. They stood for a foreign policy that put America first -- not the abstract ideal of “freedom”, or the defense of our puppets and allies, or the idea of America’s alleged “global leadership”.

The neocons, with their domestic program of “big government conservatism” and their foreign policy of perpetual war, are politically vulnerable at their very base. They fear Tom Woods far more than Michael Moore, Noam Chomsky, and Naomi Klein combined, because he represents a real threat to their claim to the mantle of conservatism, and that, above all, is something that cannot be tolerated. The viciousness of the attacks on Woods underscores neocon sensitivities on this subject. They, after all, were Scoop Jackson Democrats and errant Trotskyites not so long ago, and the Woods book is an unwelcome reminder that conservatism is, for them, an alien tradition -- which is the second point to be made here.

Woods, says a clueless critic, hates America. But his opposition to a foreign policy of global militarism is rooted in Jefferson, Washington, and John Quincy Adams, not Marx, Engels, and Lenin. His is a profoundly American creed, one that sees the quest for Empire as a source of corruption, and will not be so easily dismissed as “ultra-reactionary”. For its antiwar message alone -- and its very readable layout, with little squibs and pull-quotes featured throughout -- it is worth buying and reading no matter where you are coming from on the ideological spectrum.

PROPOSED U.S. LAW ON BANKRUPTCY HAS ASSET PROTECTION TRUST LOOPHOLE

Bankruptcy legislation being debated by the Senate is intended to make it harder for people to walk away from their credit card and other debts. But legal specialists say the proposed law leaves open an increasingly popular loophole that lets wealthy people protect substantial assets from creditors even after filing for bankruptcy. The loophole involves the use of so-called asset protection trusts (APTs). For years, wealthy people looking to keep their money out of the reach of domestic creditors have set up these trusts offshore. But since 1997, lawmakers in five states -- Alaska, Delaware, Nevada, Rhode Island and Utah -- have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code. People who want to establish trusts do not have to reside the five states. They need only set their trust up through an institution in one of them.

“If the bankruptcy legislation currently being rushed through the Senate gets enacted, debtors won’t need to buy houses in Florida or Texas to keep their millions,” said Elena Marty-Nelson, a law professor at Nova Southeastern University in Fort Lauderdale, Florida, referring to generous homestead exemptions in those states. “The millionaire’s loophole that is the result of these trusts needs to be closed.”

The Senate bill is favored by banks, credit card companies and retailers, who say it is now too easy for consumers to erase their debts through bankruptcy. It is almost identical to previous versions that have been introduced in Congress, unsuccessfully, since 1998. Perhaps because the current bill was written so long ago, some legal authorities say, it does not address the new state laws that have allowed APTs to flourish. Money held in APTs can elude creditors because federal bankruptcy law exempts assets governed by “applicable nonbankruptcy law”. Intended to preserve rights to property under state law, the exemption makes it difficult for creditors to get hold of assets that they would not be able to seize through a nonbankruptcy proceeding in state court. APTs have become increasingly popular in recent years among physicians, who fear large medical malpractice awards, and corporate executives, whose assets are at greater peril now because of new laws.

While it is difficult to quantify how much money is sitting in domestic APTs, their popularity is undeniable, bankruptcy specialists said. Current federal bankruptcy law protects assets held in a type of trust, known as a spendthrift trust, traditionally set up by one family member to benefit another. But current law does not protect the assets of people who set up spendthrift trusts to benefit themselves. And the law limits the purposes of the trusts that qualify for exemption -- retirement planning or paying for education are two approved purposes. By contrast, domestic APTs can be set up by the same people who plan to benefit from them. In addition, there are no caps on the dollar amount of assets they can hold and no restrictions on their purpose. (The trusts cannot be set up by people who are already insolvent.) Ms. Marty-Nelson recommends that the bankruptcy bill should at least apply such a cap to domestic APTs. Better yet, she said, the bill should exclude these trusts from the federal exemption altogether.

THE PADILLA RULING IS A VICTORY FOR FREEDOM

As I have been writing for the past two years, it is impossible to overstate the importance of the Jose Padilla case. The power assumed by the U.S. military and the Bush administration in the Padilla case constitutes what is arguably the most ominous and dangerous threat to the freedom of the American people in our lifetime. Fortunately, this past Monday a U.S. district court in South Carolina put the quietus to the assumption and exercise of such power. The court’s ruling was a major victory for freedom, the Constitution, the Bill of Rights, and the rule of law. Unfortunately, however, the government is appealing, hoping to overturn the district court’s judgment.

Jose Padilla was arrested at a Chicago airport almost three years ago on suspicion of having conspired to commit terrorism. The ordinary procedure -- the procedure that has been followed in the U.S. since our nation’s founding -- would have been to charge him with federal crimes dealing with terrorism, indict him, bring him to trial before a jury, and, if convicted, sentence him. That’s the way the U.S. criminal justice system has worked for more than 200 years. With Padilla, the Pentagon has tried to do something completely different, something that is alien to the American way of life, something that was obviously modeled on the procedures employed by the military regimes in Chile and Argentina. Securing a statement from President Bush that Jose Padilla was an “enemy combatant” in the “war on terrorism”, the Pentagon took the position that it could bypass the entire federal criminal justice system set up by the Constitution, including rights and guarantees stretching all the way back to Magna Carta. These included habeas corpus, due process of law, trial by jury, and right to counsel.

Make no mistake about it: If the Pentagon’s power to arrest Americans for terrorism and punish them without federal court interference is upheld by the courts, the floodgates will be open to omnipotent military power in America. American life will never be the same again. Life will be transformed by such power in ways unimaginable. No one will be safe from military arrest, including newspaper editors, government critics, and dissidents. Any person – any person – deemed to be an “enemy combatant” and taken into military custody will have no recourse to avoid punishment, except for the “good faith” of the Pentagon, the government organization that is responsible for plunging this nation into one of the most shameful torture, sex abuse, rape, and murder scandals in its history, not to mention the resulting cover-up.

There can be no doubt that the Pentagon is salivating over the possibility of wielding the same power over U.S. citizens that it has been wielding over foreigners ever since 9/11. This includes the power to send detainees to U.S. gulags in different parts of the world for indefinite detention and punishment without interference from the courts. Fortunately, in a testament to the wisdom and foresight of our ancestors, who established the judicial branch of government with independent judges, the federal judiciary has stopped the Pentagon dead in its tracks. We can hope only that the federal judiciary stands firm in the defense of the Constitution, the Bill of Rights, and the criminal-justice system that has distinguished our nation from all others in history -- stands firm in the defense of our freedom.

BUSH MAY NOT HAVE READ DOSTOYEVSKY -- BUT HIS SPEECHWRITERS HAVE

In a world aflame with war and terrorism, George W. Bush’s second inaugural address was a match flung onto an oil slick. By the time his 17-minute peroration reached midpoint, it was clear that was his intention: “Because we have acted in the great liberating tradition of this nation, tens of millions have achieved their freedom. And as hope kindles hope, millions more will find it. By our efforts we have lit a fire as well, a fire in the minds of men. It warms those who feel its power; it burns those who fight its progress. And one day this untamed fire of freedom will reach the darkest corners of our world.”

“A fire in the mind” -- such a felicitous phrase. It aptly and succinctly describes the feverish mental state of our neoconservative policymakers, who set out to build an empire in the Middle East and now, with this speech, clearly envision much more. It also describes the mental state of some of the characters in Dostoyevsky’s The Possessed (or The Devils), from which the fiery metaphor is taken. Michael Barone pointed out the allusion in his U.S. News column, wherein he described Dostoyevsky’s work as “a novel about a provincial town inspired by new revolutionary ideas. After a turbulent literary evening, a fire breaks out, and one townsman says, ‘The fire is in the minds of men, not in the roofs of buildings.’” Well, not quite. The novel is about a group of revolutionaries who plot the destruction of a small provincial town -- and, by extension, the whole of Russia and of human civilization.

Bush’s peroration was suffused with fire, it burned with the steely-eyed fanaticism of the ideologues who forged it, full of phrases that soared so far above the real world that a good many listeners had trouble believing their ears. Does the president seriously believe “the survival of liberty in our land increasingly depends on the success of liberty in other lands”? Surely he did not really mean to explain away the exponential expansion of big government in America as due to the lack of civil liberties in, say, the former Soviet Union or the oppression of women in Saudi Arabia? In a vain attempt to reassure the panicked, Bush senior made a rare intervention. “People want to read a lot into it,” he said, “that this means new aggression or newly assertive military forces. That’s not what that speech is about. It’s about freedom.” In other words, it is all talk and no action. But there is already plenty of action going on in Iraq and good reason to expect more.

In Dostoyevsky’s day, urban radicals influenced by Marx and emboldened by Bakunin went out into the countryside proclaiming the doctrines of socialism and syndicalist anarchism, to little effect. They committed sporadic acts of spectacular violence and functioned roughly. Such groups as the Narodnaya Volya (Peoples’ Will), whose militants assassinated two Russian czars, were 19th-century versions of al-Qaeda. Dostoyevsky’s novel is a dark chronicle of the psychology that energized their terroristic brand of nihilism. The “fire in the minds of men” eventually engulfed all Russia; The Possessed bitterly foreshadowed the red inferno of the 1917 revolution.

The neocons threw their hats in the air as Bush embraced their core agenda. “This is real neoconservatism,” Robert Kagan exulted to the Los Angeles Times. “It would be hard to express it more clearly. If people were expecting Bush to rein in his ambitions and enthusiasms after the first term, they are discovering that they were wrong.” Others were not so ebullient. “If Bush means it literally, then it means we have an extremist in the White House,” said Nixon Center president Dimitri Simes. “I hope and pray that he didn’t mean it … [and] that it was merely an inspirational speech, not practical guidance for the conduct of foreign policy.”

Peggy Noonan found the speech “startling”, and confessed it left her “with a bad feeling, and reluctant dislike” evoked by such grandiose phrases as “we are ready for the greatest achievements in the history of freedom.” This, she averred “is the kind of sentence that makes you wonder if this White House did not … have a case of what I have called in the past ‘mission inebriation.’ A sense that there are few legitimate boundaries to the desires born in the goodness of their good hearts.” Drunk with power, flush with Pyrrhic victories, and convinced that they are on the right side of history, the “mission inebriation” that bedevils this administration is Ms. Noonan’s polite way of describing megalomania. That American policymakers will likely end up like Dostoyevsky’s revolutionary conspirators -- increasingly committed to state terrorism in pursuit of some utopian vision -- seems horribly and tragically inevitable.