Offshore News Digest for Week of May 16, 2005

GLOBAL BUSINESS

PANAMANIAN PRESIDENT SPEAKS AT BUSINESS EXECUTIVES’ SUMMIT

“I am glad that the Panamanian Business Executives Association has decided to dedicate its annual conference to the subject of the canal. Also, that it is doing what ought to be done: studying the past that brought us to this point and analyzing our future prospects about the interoceanic waterway. Since Panama accepted that its midsection would be opened to serve international maritime commerce and the military requirements of the epoch, the canal has become, more than a marvel of engineering, into an architecture of problems. Consciousness about a territory segregated from our sovereignty and the foreign military presence forged a special sensitivity and a feeling that its recovery sealed our identity as a country. The canal was, at the same time, a source of wealth and source of conflicts.

“After nearly three-quarters of a century of negotiations, Panama found a formula to eliminate the conflicts and take advantage of the riches. ‘Perpetuity’ lasted less than 100 years, and the scantiness of the payments was transformed into important assets of the nation. It is hard to find, in the history of the peoples of the world, a country like Panama that’s able to show such a surprising credential of having arrived at a negotiated settlement to its conflicts. Throughout our history, from the Spanish Conquest to the 20th Century, in the face of the possibility of shedding our blood in the terrible fratricidal conflicts, as has occurred and occurs in other countries, we Panamanians have always opted for dialogue and negotiation. …

“Panama has been through extraordinary historic events. Now, with the canal in our hands, and as owners of our own destiny, it’s up to us to reach an agreement to get out of poverty and to set our country on a course toward new horizons. Within this aspiration to realize our potentials, to turn into a competitive country, into a transportation center, into a tourist destination, into a communications center, the canal is a keystone. We’re going to prepare ourselves for the debate that will bring us to decide if we are going to widen it and how we’re going to do it. …”

Window of opportunity closes soon in Panama real estate.

If you want to live free of real estate taxes in Panama for the next 20 years, you had better hurry up. A window of opportunity closes on August 31. The present deal, an effort to spur construction and create employment, is worth tens of thousands of dollars to ex-pats planning to retire in this peaceful haven or to buy winter homes here. Investors have rushed to save millions, and high-rise apartment buildings, hotels and shopping centers have been springing up like weeds, with the Panama City skyline a forest of cranes. But the deadline for obtaining construction permits under the deal is August 31. Completion must be before August 31, 2006. The tax-free status is transferable when the property is sold. What this means is that a considerable amount of older property is coming onto the market, and good deals can be had. But real estate taxes are relatively steep in Panama.

Properties with a registered value of $30,000 or lower do not pay Panamanian property tax. Many homes in urban developments cost less than this. Tax is paid as follows on properties of a higher value: 1.75% from $30,000 to $50,000, plus 1.95% from $50,000 to $75,000, plus 2.10% on values above $75,000. For example, a property valued at $150,000 would attract the following annual tax: 0.0175($50,000 - $30,000) + 0.0195($75,000 - $50,000) + 0.0210($150,000 - $75,000) = $350.00 + $487.50 + $1,750.00 = $2,412.50.

GE to buy stake in Panama private bank.

Diversified conglomerate General Electric said that its consumer finance subsidiary would acquire a 49.99% stake in Panama’s BAC International Bank Inc. for an undisclosed sum to boost its presence in the Central American financial services market. BAC, a privately held bank based in Panama City, is one of Central America’s biggest banks and has 178 branches in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and other countries, GE said. The bank, whose Credomatic unit is a leading debit and credit card issuer in the region, has roughly $1.9 billion in deposits and $1.7 billion in credit card loans, mortgages, and other assets, according to GE. GE said it expects the acquisition to close in the next few months, pending regulatory approval.

Country profile: Panama

Located between North and South America, and between the Atlantic and Pacific oceans, Panama is of immense strategic importance. This has made it a target for intervention by the U.S., which in 1989 invaded Panama to depose a former ally, Manuel Noriega, and until 1999 controlled the Panama Canal. Panama has the largest rainforest in the Western Hemisphere outside the Amazon Basin and its jungle is home to numerous species of tropical plants, animals and birds. By the turn of the millennium international banking, manufacturing and shipping provided more jobs and tax revenue than the canal. The economy also benefits from the commerce generated by the Colon free trade zone, the second largest in the world.

Martin Torrijos, son of former military leader Omar Torrijos, defeated his main rival, ex-president Guillermo Endara, to win the May 2004 presidential elections. He took office on 1 September 2004. Mr. Torrijos pledged to modernise the Panama Canal, to tackle corruption, and to investigate alleged violations of human rights under the rule of his father. He said he would pursue a free trade agreement with the U.S. A businessman and leader of the Democratic Revolutionary Party (DRP), Mr. Torrijos drew support from his late father’s reputation during his campaign. Omar Torrijos became a hero after negotiating the 1977 treaty with U.S. President Jimmy Carter that led to the handover of the Panama Canal in 1999.

Panama’s media are free to present news and comment. Restrictive media laws which penalized “insults” against state officials were repealed in 2005. Broadcasting is dominated by the private sector. Corporacion Medcom operates the two most-popular TV networks. The country has some 100 radio stations and several other TV networks.

ONLINE GAMBLING SITES BANK ON ATTENTION OF INVESTORS

With its red telephone boxes, British bobbies on the beat and quaint period charm, Gibraltar is the last place you would expect to find a fast-expanding Internet industry. Gibraltar, after all, is where Nelson launched his campaign to defeat the Franco-Spanish fleet at Trafalgar in 1805. 200 years later the tax haven has become a hub for the international online gaming industry and home to such companies as 888.com, Party Gaming and the online casino operations of Ladbrokes & Coral, the British bookmakers. With 888.com and Party Gaming, two of the largest operators in the sector, eyeing initial public offerings on the London market, a spotlight has been shone on what is still a nascent industry.

888.com has appointed CSFB to prepare a flotation that could value the group at up to £1.6 billion ($3 billion). Party Gaming, meanwhile, has appointed Dresdner Kleinwort Wasserstein and Investec to run a strategic review that could also lead to an IPO. U.S. banks had shied away from the Party Gaming advisory role on concerns about the legality of online gaming in the U.S., where Party Gaming and 888.com have millions of customers. The appointment of CSFB by 888.com is therefore being seen as a milestone for the industry because of the bank’s size and U.S. exposure. Online sports betting is illegal in the U.S. although interpretations differ when it comes to Internet poker and casino games, such as blackjack.

John Anderson, chief executive of 888.com, says previous legal cases have established that online gaming is not illegal. “There have been several attempts at bringing in bills in the U.S. [to kill online gaming] and they have all failed,” he said. It may not be illegal, but the absence of online gaming businesses located in the U.S. suggests that other operators do not share Anderson’s confidence. Three years ago Eliot Spitzer, the New York attorney general, put pressure on Citigroup Inc., which resulted in the bank ceasing its processing of payments relating to transactions on online gaming sites.

FROM CRISIS TO COMMONWEALTH: CAFTA AND DEMOCRACY

The 1990s profoundly changed the history of Central America: the Sandinistas were decisively defeated in Nicaragua’s first free elections, and the contra army was peacefully demobilized. El Salvador negotiated a peace accord that strengthened civilian rule and human rights, and disarmed the guerilla army. Guatemala followed suit with a national peace accord. When President Bush 41 left office in January 1993, every nation in Central America was headed by a democratically-elected leader for the first time in history. But with the advent of peace and democracy, Central America once again faded from U.S. headlines.

Our domestic debate over the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA) is about much more than trade. The people of Central America fought and struggled, and many died, because they believed that democracy would bring not only peace, but also a better life for them and their children. Now the people of the region are asking the U.S. to help secure the work of democracy through a closer economic relationship that could provide a new foundation for building opportunity. Yet never has the gap between Central America and the U.S. loomed larger. Central Americans are talking about freedom, democracy, and hope. Meanwhile, our domestic debate has been dominated by topics such as sugar and whether CAFTA will codify international labor conventions that the U.S. has not even ratified itself.

Our domestic debate pays slight attention to the historic opportunity to stabilize and support Central America while promoting America’s strategic interests and values. At root, the debate on CAFTA is fundamentally about America’s role in the world and our relations in this hemisphere: 1.) We must decide whether we will sacrifice the strategic interests of the United States and the future of Central America … for a spoonful of sugar. 2.) We must decide whether we will leave hundreds of thousands of Central Americans in poverty and hopelessness … because of the short-sighted protectionism of U.S. labor unions. 3.) We must decide what message to send to struggling democracies in other regions, such as the Middle East, Southeast Asia, and Africa … where economic reformers are pushing for freedom and need our support.

In short, we must decide whether to promote America’s strategic interests – or its special interests. The world is watching. If we retreat to isolationism, Daniel Ortega, Hugo Chavez, and others like them – autocrats of left or right – will push ahead. From a strategic perspective, the choice should not be hard. In many ways, CAFTA is the logical culmination of twenty years of democratic and social progress in Central America, nurtured and encouraged by the U.S.

BERMUDA MAY EMERGE RELATIVELY UNSCATHED FROM INSURANCE PROBES

Regulatory probes of the insurance sector are far from over, according to a leading insurance economist. But Dr. Robert Hartwig, insurance economist at New York-based Insurance Information Institute, predicted Bermuda’s insurance sector will survive any fall-out from the high-profile investigations, despite some questionable business dealings allegedly involving some Bermudian companies.

The Island’s reputation as a leading insurance sector has come under scrutiny since regulators in a wide industry probe turned their attention to commercial insurance giant American International Group’s dealings with offshore companies it secretly controlled. Regulators at the Bermuda Monetary Authority (BMA) said they are conducting their own probe into the AIG matter, after New York Attorney General Eliot Spitzer, the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice turned their attention to possible abuses by the commercial insurance giant. At least one Bermuda AIG executive was fired for refusing to cooperate with investigators, and four staff who worked for him quit in the wake of his being let go. In addition to its own investigation, Bermuda has also said it will tighten laws on how certain reinsurance deals are reported.

In the U.S. investigation, questions were raised about numerous offshore insurers that AIG appeared to have significant ties to earlier in the year, including Barbadian Union Excess and Bermuda-based Richmond Insurance – companies AIG later admitted to controlling. The net effect of AIG admitting control of entities is that it now has to consolidate some of those numbers onto its books, thereby reducing its net worth by an estimated $1.2 billion. A widespread probe of the insurance sector, led by Mr. Spitzer, first focused on controversial kickback payments from insurers to brokers who placed business for them, as well as allegations of illegal bid rigging. Since then, regulators have turned their focus to how insurance and reinsurance are accounted for, including questions over possible misuse of non-traditional insurance products like finite risk.

The scrutiny of finite risk – a loss mitigation product that was largely developed by Bermuda players – has led to concerns that companies will shy away from these non-traditional forms of risk management. At least one Bermuda finite risk reinsurer, Inter-Ocean Reinsurance, has bowed out of the market since the probe took this turn. But Dr. Hartwig thinks the fears about finite risk – with several Bermuda insurers and reinsurers subpoenaed for information on either their use or sale of this type of product by either Mr. Spitzer’s office or the SEC – will not ultimately spell the end of this market.

Bermuda’s challenges in a new global order.

The text of former Premier Sir John Swan’s speech to the Bermuda branch of the Institute of Directors that he delivered this past Saturday.

MOVING TO A NEW SENSE

For two years now, my husband, Fred, and I, have lived in Mexico. It has been such an interesting time. I cannot remember any other short span in my life which offered such diversity, wonder, and sense of peace as these last years have. We never planned to become residents of Mexico for a long stay. We figured that one year would give us a good feel for the country, and then we would move on to other parts of the world to explore. On our agenda has been New Zealand, South America and Europe. Well, two years later we are still here, still enjoying life, learning the language, still learning a new sense of what life is about. It is difficult to explain to people who have never been to, nor even wanted to, visit another country and experience life through the eyes of a stranger … your own. Tourism is a beginning. Sometimes going to a place for a week’s vacation is the start of the appreciation of life there, creating a curiosity for more information.

Over these two years we have reveled in the experiences this country has to offer. Before we shopped at the local markets, we learned (and wrote down…just in case) the words for all the vegetables, fruits and foods we needed, and watched as the vendors smiled in amusement at our strange accents. The markets are an amazing combination of sights, sound and smell; people loudly hawking their wares, while others sit silently against the wall waiting for people to buy. The people are such combinations of features, too. You can readily see the Indian, Spanish and Cuban influences.

Some of the things I have noticed over our time here: Mexicans can be Italian, Chinese or Irish. I do not know why I never thought of that before, but it made me understand my ignorance! Other cultural things: Shoe stores seem to be a very big business. Women still wear high heels, no matter if they are walking the steep streets of colonial Xalapa, Veracruz, or the flat streets of the Yucatan. Every taxi and bus has a rosary or two hanging on the mirror, and the drivers make the sign of the cross when they pass a church or cemetery.

People in Mexico are much more patient with foreigners than Americans are. They try to help at every turn, have ready smiles and love their children. Families spend time together, and you see grandmas, grandpas and children holding hands, talking and walking together. People work very hard in Mexico. Folks seem to eat out a lot, as the costs are so reasonable. We have learned so much from our research and experiences that we have formed a website which answers many questions about moving to and living in Mexico. Maybe they have the right idea … we seem to see many old people, so obviously the slower pace has kept people living longer and healthier. Whatever their secret, we like it and intend to stay a while longer … we have moved to a new sense.

TAXES

GERMAN GOVERNMENT CONFIRMS MASSIVE TAX SHORTFALL

Against a backdrop of weakening economic growth and growing unemployment, the German government has confirmed a bleak outlook for tax revenues for the period through to 2008, which are expected to fall way short of targets. Following a meeting of a panel of tax experts last week, Gerhard Schroeder’s government now expects tax receipts to fall €67 billion short of targets over the next three years, the finance ministry confirmed in a statement. Federal tax income alone will fall €10 billion below previous estimates next year.

Given the wide discrepancy, the opposition has called upon the Finance Minister Han Eichel to draft a supplementary budget. However, Eichel rejected the need for new budget plans, saying that such an argument “does not currently make sense.” Should Eichel be forced to draft a supplementary budget, it will be the fourth consecutive year that the government has been forced to change its budget plans owing to the country”s weak economic performance.

Nonetheless, the finance minister was not prepared to accept that Germany’s fiscal mess is entirely of the government’s own making and has repeatedly blamed opposition conservatives for blocking tax legislation that he says would have brought in an additional €17 billion and lowered the budget deficit below EU limits. Germany, the EU’s largest economy, is forecast by the EC to be the slowest-growing economically in the 25-nation EU this year.

TAX JUSTICE TAX NETWORK SPOKESMAN DENIES ANY COMMUNIST CONNECTIONS

Former States of Jersey economist John Christensen has rebutted suggestions that the Tax Justice Network, for which he is a spokesman, has communist connections. Mr. Christensen was responding to a humorous reference to claims by an unidentified source about the origins of the organization. The emailed information indicated, among other things, that the Tax Justice Network was linked to the Fabian Society and communist ideals.

Mr. Christensen, who now lives in the UK and campaigns against offshore finance centers like Jersey, says that the claim is “profoundly inaccurate”. He believes that the original source was an article entitled “The Injustice of Tax Justice”, published in The Washington Times. The Washington Times is owned by the Moon Foundation, established by the Reverend Sun Myung Moon.

Mr. Christensen wishes to make clear that he is not a member of any political party, although he offers advice to any organisation that requests it. He said, “The Washington Times article is entirely without base and can only be construed as an attempt to smear the Tax Justice Network and those associated with it. To my knowledge the article’s author has never spoken to any of my colleagues, or to anyone associated with the TUN.” Mr. Christensen, a former assistant adviser to the States of Jersey, resigned from his post in 1998. Tax Justice Network, an organization he co-founded, describes itself as “a response to harmful trends in global taxation, which threaten states’ ability to tax the wealthy beneficiaries of globalization.”

ASSET PROTECTION

LABOUR PARTY MINISTER PUT MILLIONS IN TAX HAVEN

A multi-millionaire businessman who became a Labour minister last week has admitted holding part of his personal fortune in an offshore tax haven that experts say could have helped him avoid £3 million in tax. Lord Drayson, the new defence minister, established offshore trusts and companies in the Isle of Man that handled £30 million he raised from the sale of his pharmaceuticals business. Experts say such arrangements are normally set up to avoid tax. His actions, disclosed after inquiries by The Sunday Times, will embarrass the government, which has repeatedly sought to stop wealthy Britons avoiding tax by moving fortunes offshore.

He closed his offshore companies on March 8 this year – the week before Gordon Brown, the chancellor, introduced new laws to restrict British residents’ use of tax havens. Last week financial experts said a scheme such as Drayson’s could have saved millions in tax. His decision to put the companies into liquidation in March is described as “immaculate timing”. Drayson admitted holding “financial interests” offshore but said he brought his money back to Britain in the autumn.

The chancellor is known to take a dim view of wealthy individuals who employ leading accountants to devise sophisticated tax avoidance schemes. The issue has become particularly sensitive because the middle classes have been hit by a series of tax rises – including a clampdown on schemes to avoid inheritance tax on family homes – to pay for Labour’s spending on public services.

Rise and rise of an offshore man.

Just over seven years ago, in his second budget, Gordon Brown promised to clamp down on the “shadowy men in sunny places” promoting offshore tax avoidance schemes. The new Labour government had just been hit by one of its first ministerial rows after it emerged that Geoffrey Robinson, the paymaster-general, had benefited from sheltering his money in a trust in Guernsey.

At the time it is unlikely Brown was familiar with the name Dr Paul Drayson. But he was just the sort of person he was hoping to deter from going offshore – a successful British businessman benefiting from the booming economy. The year before, Drayson had made a fortune with the stockmarket flotation of PowderJect, a small pharmaceutical company he had set up with his wife and father-in-law. Then, in January 1998, shortly before the budget, Drayson opened offshore companies on the Isle of Man, where businesses and their owners can pay virtually no tax on profits. He set up two companies in Douglas, the island’s capital, to hold his and his family’s shares in PowderJect.

Over the next few years, more than £30m passed through the Draysons’ offshore trusts, called Ventana and Amalfi, and offshore companies, Vardale Limited and Sherdley Limited. PowderJect’s company accounts detail how the Draysons were the benefactors of the trusts and companies that held millions of shares, largely tax-free. They also set up St. Tropez Charters, which bought their yacht with money from the Isle of Man companies. The family’s recent decision to bring its money back to the UK was neatly timed. Within months, Brown had closed the loophole and introduced a hefty tax penalty for people repatriating their fortune. The Isle of Man regulatory authorities said last week that Drayson and his wife’s companies were liquidated on March 8 this year – the week before Brown introduced new laws to restrict British residents’ use of tax havens to avoid tax.

Timing has been a hallmark of Drayson’s career. He first came to public attention in 2002 after PowderJect won a £32 million contract from the Department of Health to supply smallpox vaccines. It emerged Drayson had given two £50,000 donations to Labour, one during the procurement process for the vaccine.

THREE STEPS TO DISAPPEARING

Being a leading skip tracer who is hired to find people, I have also helped individuals disappear. I have dealt with corporate whistle blowers, wives stalked by ex-husband’s and others just looking for a new start. I receive emails from individuals who seek new identities. Questions range from, how to get a new passport, a birth certificate and a driver’s license. I express repeatedly new identities do not work. If you have ever been finger printed or perhaps left some hint of DNA behind you cannot escape it.

I recently was on a radio show and the host asked if it is possible to buy someone’s identity? My answer was simple: you never know whose identity you are buying. Does that person have a warrant or a tax lien you do not know about? What skeletons dwell in their closet? What about if you take this unknown person’s identity and you tell your new friends you are from Dubuque, Iowa. Now, you are sitting at the beach sipping Mai Tai’s and a couple of tourist show up in your age range and start talking about a place you know little about. Then, imagine if the tourist sipping on his or her Mai Tai knows the person whose identity you are assuming.

I call it the fluke factor, if you have no control over something then the fluke factor comes into play. The reality of life is you have zero control over the people you meet or the situations you walk into. I am on the road a lot, have met childhood friends in the remotest of places as well as friends of friends in places like Paris and Dublin. Americans overseas tend to gravitate towards each other like teenagers in a mall on Friday night. It is difficult to avoid other Americans when you are in a foreign country. New identities to me are always a nefarious situation … it is a red light shinning, blaring trouble. There are many ways to disappear or be more private in this world, even in the world of DNA, fingerprints and big brother. New identities usually have the word felony standing behind them. My advice is to get a good lawyer if you feel the need for a new identity.

If you are looking to disappear, leave life behind, or just start over and not have people from your past find you, there is hope with a little misinformation, disinformation and reformation it can be done. Some people believe that they can just pick up and go, the problem with that is if someone is looking for you, they have your whole past and present to search. They have your family and friends to contact, store memberships, airlines, car rentals, banks, credit card statements, subscriptions, library records, phone records, emails, IP addresses, the list is as long as the person’s imagination and budget. A little homework before you go, see my three steps to disappearing.

THOUGHTS ON OFF-SHORE INVESTING

Have you ever watched the so-called investment experts on CNBC? They remind me of TV sports analysts who seem to think they always know who is going to win and never admit when they were wrong. Almost everyone jumps on the bandwagon, dishing out the exact same advice from their collective ivory tower. Few have the courage to question, to think differently – they praise investor confidence and brag about huge profits during a bull market run-up, then they chastise irrational exuberance after the market crashes, as if they did not have any part in it. Just once I would love to see one of them on national television accepting responsibility for their mistakes and oversights. But I digress…

The mind-numbing mantra of “stocks, bonds, mutual funds” pervades American investment canon. Any other deviation from the norm is immediately labeled as high-risk, fraudulent, or illegal. People seem to rule out global investment from the realm of possibilities, and yet, quite literally, there is a whole world of opportunity out there. In my business, I travel overseas seeking profitable, low-risk investment prospects … yes, they exist. And they are everywhere.

So what do we mean by “off-shore” investing? At its simplest, “off-shore” means “international”. Over the last 20 years, the government, movies, and media have portrayed off-shore investing as a dirty, illicit trade undertaken by drug dealers and terrorists. Nothing could be further from the truth. Tax evasion is illegal. Investing your money overseas is not. For example, maybe you think the new Honda hybrid car so fantastic that you want to buy stock in the company. You could purchase shares of Honda on the New York Stock Exchange in U.S. Dollars, or you could purchase shares of Honda on the Tokyo exchange in Yen. Or you could purchase shares of Honda on several other markets across Europe and Latin America. Each of these shares represents ownership in the same company – Honda is Honda, regardless of which country’s exchange facilitates the transaction. If you buy from one of the international exchanges, you would be investing off-shore. If you buy shares into an international or emerging markets mutual fund, technically you are investing off-shore. …

PRIVACY

THE BIG DEAL

The idea of a federal ID has been trial-ballooned for several years now, with the public showing little enthusiasm for the idea. Nevertheless, Congress has voted favorably upon a bill that does establish such an ID, and will go into effect in about three years. There will be grumbling, of course; some of it quite strident. But time heals all wounds, including political ones, and the majority of Americans will accept it. “After all,” they will say, “what’s the big deal? Just another piece of paper to carry around.” And, at least in the beginning, that is all it will be: a slight nuisance at times, otherwise insignificant. Besides, as we will constantly be told: is a little inconvenience not worth it in the fight against terrorism? Isn’t an ID a small price to pay to make America safer? Well, how can you argue with that! What are you, some kind of anti-American kook?

What makes it, denials notwithstanding, a big deal is not nearly so dramatic or inflammatory as airliners crashing into skyscrapers, or people being blown up by suicide bombers. Consider human nature. Can anyone believe that a new government bureaucracy in charge of the ID program will simply issue the ID’s – in the form of a driver’s license – and then sit back and do nothing? In theory, that would suffice. Each person with his or her own ID, with picture and relevant data encoded. Nothing more to do except show it to any officious person demanding to see it. It would be like the present driver’s license – seldom seen and given little thought.

But bureaucracy does not work that way. You cannot make a name for yourself in government by simply sitting back and doing nothing. You must enlarge your power and influence. This is true of private business as well, but with the difference that the good or service produced privately is one you can accept or reject. When Uncle Sam produces an Edsel, however, you will buy it or else. An ambitious bureaucrat in charge of federal IDs will find plenty to do. The capacity of modern computer chips is amazing: he will need to decide what data to include in your ID, but since tons of data can be stored there, why not? It will be like the modern cell-phone, where making calls is almost incidental. Your personal ID may include information about the radio stations you listen to, the magazines you subscribe to, the people that you see frequently, the phone calls you have made, etc. Getting this information may involve some prying and snooping, but remember, it is part of the war on terrorism. And, ultimately, it will protect the children! You would be a heartless fiend to oppose it.

And once the information is obtained and stored, what to do with it? Who can access it? Why, that is enough to keep a bureaucrat busy for months. Questions of constitutionality will not be entertained, because the very idea of a federal ID is unconstitutional to begin with. Besides the Constitution is a dead letter, anyway. The ID, in whatever form, is merely the camel’s snout under the tent. It will not take very long for everyone to realize that there is no need to encumber folks with any special sort of document. Ultimately, common sense and right reason will prevail, and important ID information will be kept on a chip implanted under the skin.

In the end, it is a question of timing. The personal federal ID will signal, to those of any perception, the final collapse of individual freedom in the United States – even though the collapse is gentle and fairly slow. If the government can get away with it, the sky is the limit to the expansion of government activity. So what is the big deal? Liberty. If that word makes you uncomfortable, or sounds old-fashioned, get right in line for one of those new IDs. You will love it. So will your rulers.

REAL ID ACT HAS PROBLEMS

Congress just shot a big hole in a state Department of Licensing proposal to allow most motorists to renew their licenses by mail or online. Without a public hearing or public input of any kind, the Senate has passed a bill that will require drivers to provide proof of citizenship before they can obtain or renew their driver’s licenses. Up until now, Washington was one of nine states that did not check citizenship or immigration status of someone seeking a driver’s license. The provision was part of the Real ID Act of 2005, a 7-page bill that supporters say will make it harder for terrorists to enter the country.

Opponents said the bill will have little effect on terrorism, but will turn thousands of undocumented immigrants in this state into illegal drivers and fuel the black market for illegal identification. “Those people are probably going to keep driving,” said Paul Soreff, chairman of the state chapter of the American Immigration Lawyers Association. “The act assumes undocumented immigrants are going to go home, but they are not.” The Real ID Act of 2005 is controversial at best and does little to tackle the immigration problems facing this nation. The suite of issues swirling around immigration policy, in particular the 9 million to 12 million unauthorized immigrants in the U.S., begs for a comprehensive bill focused on immigration reform.

One area where the Real ID Act is found to be really lacking is the manner in which it was rubberstamped into law. The bill was tacked on to the $82 billion spending bill to support the military operations in Iraq and Afghanistan. The act should have been debated in the light of day, not hung on the military spending bill. The approach used by its supporters speaks volumes about their confidence in passing a stand-alone Real ID Act of 2005.

FAST TRACK FOR UK ID CARDS

The cabinet has decided to rush through its controversial identity cards legislation, one of the centrepieces of the forthcoming Queen’s Speech, to try to take advantage of the Tories’ post-election disarray to get it through the Commons, Whitehall sources have confirmed. Ministers privately believe they can overcome any renewed Labour rebellion over the legislation by relying on the backing or abstention of some Tory MPs to get it through its second reading vote within a fortnight. They have also made it clear that they will use the Parliament Act to force through the House of Lords their equally contentious plans for a new criminal offence of incitement to religious hatred.

In the Commons, the government’s reduced majority, down from more than 160 to 67 on May 5, leaves it vulnerable to backbench rebellions – a particular headache for a prime minister determined to embed reforms before he stands down. There were signs of a rapprochement between the government and its most outspoken critics, who have indicated they are unlikely to mount a serious challenge over ID cards.

The home secretary, Charles Clarke, might concede to strengthening the ID cards commissioner’s powers and the introduction of extra safeguards over access to the national identity register. Janet Paraskeva, chief executive of the Law Society, which opposes the proposals, said, “They will push this legislation through while the opposition parties are still in some disarray. We will see a rush on ID cards whether or not they soften the edges.” The Tories have been split over the issue, but are now united in opposition. They would not support ID cards without wide-ranging assurances.

BURN YOUR LICENSE

During the Vietnam War, people protested the draft and U.S. policy in Vietnam by burning draft cards. It was a symbolic gesture – a way of refusing to be counted as a citizen willing to fight a morally dubious battle, a way to avoid becoming a statistic in the graveyards of the cold war. As of last week, we have a new card to burn. I am talking about the new driver’s licenses and ID cards ushered into existence by the passage of Rep. James Sensenbrenner’s Real ID Act, which zoomed through the House and Senate without debate by piggybacking on an appropriations bill. It mandates that all licenses include a digital photo, as well as “machine-readable technology with defined minimum data elements”. In other words, your license will include some kind of tech – probably a magnetic stripe or radio frequency identification (RFID) chip – containing all your personal information.

Because there will be national standards for how this information can be stored, it appears anyone will be able to acquire readers for them. You can expect machines to start reading your cards in bars, buildings, state parks, taxicabs, and stores. Say your local bar owner decides to install a mag stripe reader so the bouncers do not have to look at IDs. When you slide your card through the reader, a lot more than your age will be revealed. Although the Department of Homeland Security has yet to decide what the “minimum data elements” will be, it seems likely they will include at least the information currently visible on your card, i.e., name, age, address, biometrics. Possibly more. If that local bar owner chooses, he can store your information and sell it to a large data company looking to sell marketers a list of people who drink alcohol in urban areas.

Why is this creepy, aside from the idea that going to a bar may mean you get spam about drinking Guinness? Well, suddenly a lot more businesses and other entities will be collecting your personal information in not-very-secure databases. That leaves you much more vulnerable to identity theft and fraud. But the databasing does not stop with your local bar. The DHS wants to use these cards to create a massive electronic warehouse with everybody’s name and information – a warehouse whose contents they will disclose to Canada and Mexico too. Basically, it will become a citizen-tracking machine if they can ever get it together to make state and federal databases talk to each other. Part of the law does require state DMVs to open their databases to the DHS if they want to continue receiving federal funding, thus potentially creating a vast repository of everybody’s photographs, associated with their name, location, and driving records.

This is just the latest step in the strange metamorphosis our driver’s licenses have undergone over the past several decades. Originally issued as a simple license demonstrating the holder’s ability behind the wheel, the driver’s license has gradually become a de facto identity-authentication card.

LAW

GLOBAL BATTLE OVER VITAMIN SUPPLEMENTS HIGHLIGHTS NEW LAWS WITH WORLDWIDE REACH

In an unprecedented action, the World Health Organization (WHO), the UN (UNICEF), and an AIDS activist group that promotes drug therapy in South Africa, joined forces in opposing vitamin therapy that exceeds the Recommended Daily Allowance (RDA), and in particular vitamin C in doses they describe as being “far beyond safe levels”. These health agencies suggest nutrients primarily be obtained from the diet and warn that supplemental doses of vitamin C that exceed a 2000 milligram per day upper limit could cause side effects such as diarrhea. The AIDS activist group also suggests patients receiving doses beyond the RDA should undergo proper counseling and informed consent before being placed on high-dose vitamin C.

As outrageous as these statements sound, they burst into public view recently with an ongoing battle between Dr. Matthias Rath, a former Linus Pauling researcher, and The Treatment Action Campaign in South Africa. The public battle ensued after Dr. Rath published a full-page ad in the New York Times and the International Herald Tribune advocating vitamin therapy over anti-AIDS drug therapy. Coinciding with these full-page newspaper ads is a legal battle underway in South Africa where The Treatment Action Campaign seeks to censor statements made by Dr. Rath. Dr. Rath cites a study by Harvard Medical School researchers that showed dietary supplements slow the progression of AIDS and resulted in a significant decline in viral count. [New England Journal of Medicine 351: 23–32, 2004] Harvard researchers responded by saying vitamin therapy is important but may not replace anti-viral drug therapy.

This battle over vitamin supplements may be a foretaste of what will happen later this year when a worldwide body called Codex Alimentarius will meet to establish upper limits on vitamin and mineral supplements. Codex is governed under the auspices of the UN and WHO. These health organizations are tipping their partiality for drugs over nutritional supplements. For example, Codex may establish a 2000 mg upper limit for vitamin C as previously proposed by the National Academy of Sciences, or as low as 225 mg which was recently established by German health authorities. Controlled studies do not support the use of either number. Dr. Rath is reported to recommend 4000 milligrams of daily vitamin C for AIDS patients.

World health organizations appear to be solely backing AIDS drug therapy at a time when a highly drug-resistant strain of HIV that quickly progresses to AIDS has been reported in New York [AIDS Alert 20: 39–40, 2005], and drug resistance is a growing problem [Top HIV Medicine 13: 51–57, 2003]. It is only a matter of time until all current anti-AIDS drugs fail. Of particular interest is selenium, a trace mineral included in Dr. Rath’s anti-AIDS vitamin regimen, which appears to slow progression of the disease. The strong reaction by world health organizations against vitamin supplements causes one to wonder if they are afraid vitamin therapy will actually prove to be a viable alternative to AIDS drug therapy.

MONEY-LAUNDERING CRACKDOWN URGED IN CANADA

Canadian regulators and police need a high-profile case to help signal to money launderers that they are serious about stopping them from doing business in this country, a top forensic accountant says. “We have less of an enforcement mentality here than they do in countries like the United States and the United Kingdom and we haven’t really seen any high profile cases of large financial institutions being reported in Canada,” said Jim Hunter, a partner with KPMG specializing in forensics.

“Until people read something in the newspaper, I don’t think they’re going to take it seriously,” Hunter said. “We need some high-profile enforcement action in Canada and then people will take it seriously and then money launderers will think maybe Canada is not the place for me.” About 80 of KPMG’s senior forensic accountants from around the world hold their annual meeting today in Vancouver. Hunter said that money launderers and those that finance terrorism will always take the path of least resistance.

CLEARING THE AIR ON THE PATRIOT ACT

When Assistant Attorney General Christopher Wray stepped down as head of the Justice Department’s Criminal Division a few days ago, The Washington Times reported his allegation that critics have “misled the public” about the secretive search powers authorized and expanded by the Patriot Act. As a former Member of Congress who voted in favor of the legislation in 2001, I believe many provisions in the Act are appropriate for the government to uncover and prosecute acts of terrorism. I believe just as strongly, however, that other provisions go far beyond this vital mission and undermine our constitutional freedoms and Fourth Amendment rights. In making this point openly, whether in Town Hall-style debates with Justice Department officials, or in testimony before the House and Senate Judiciary Committees, I am hardly “misleading” anyone.

When Congress passed the Patriot Act just 45 days after September 11, we recognized that some of the powers allowed were extraordinarily intrusive and eroded our normal system of checks and balances. As such, we made sure certain sections of the act would sunset on December 31, 2005. The current call for review and expiration of these sections is therefore not a “mistake”, as charged by Mr. Wray, but a sound, deliberate, and lawful decision – passed by Congress and signed by President Bush. In fact, Attorney General Alberto Gonzales himself has said he is willing to discuss possible amendments to the law (although he has not yet embraced the types of reforms we believe are needed).

Justice Department officials, like Mr. Wray, also tend to obscure the reality that some of the powers authorized for “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism”, as the USA Patriot Act was sold to the American people, are really being used in non-terrorism cases. Through the ongoing oversight hearings Congress is holding, we have learned more about the government’s increasing use of secret search powers not in terrorism cases but in run-of-the-mill criminal cases. One of the most controversial portions of the act is Section 213, the “sneak and peek” provision. This allows law enforcement agents to secretly search our homes and offices, take whatever they wish, and yet not notify us for weeks, months or indefinitely. Mr. Wray also asserts that “The American people should know that every provision is subject to oversight by the courts.” This is not the case.

One of the biggest spin maneuvers by supporters of the Patriot Act is the claim that only the extreme left opposes any of the law’s provisions. I am chair of a coalition called Patriots to Restore Checks and Balances (PRCB), which includes the American Conservative Union, Gun Owners of America, and many other leading conservative organizations, all of which support our military and our law enforcement, but all of whom also believe that modest, substantive reforms to certain parts of this sweeping legislation are necessary to keep those powers in balance. When leading conservative groups share some of the same concerns as organizations on the other end of the ideological spectrum, I think it is time for Congress to ignore the hyperbole of the defenders of the status quo and pay attention.

WILL THE COURT GRANT US FREEDOM?

On the face of it, who can object to the Supreme Court’s decision that permits wine consumers to buy directly from out-of-state wineries? This is just the free market at work. The state laws that prohibited the practice were nothing but a legal leftover from prohibition days and a mercantilist privilege granted to politically powerful distributors who thought only of their monopoly. The commerce clause of the Constitution is good for nothing if not to prevent this kind of state-to-state protectionism. Right? Well, that is the impression you get from those who are toasting and celebrating and proclaiming a glorious day for wine lovers. To these enthusiasts, it is enough that consumers are now permitted to do something they were previously prohibited from doing, and that is all there is to it. Yes, it was an act of power by the Supreme Court, but power used for good ends. Or so they say.

It has been a very long time since liberty lovers have been able to celebrate anything, so I can understand the impulse. But let the libertarian conscience speak here. What precisely are you celebrating? The Supreme Court, which has been, with very few exceptions, a major force for statism for as far back as one can look, has employed its power not against the federal government but against a lower order of government. If we celebrate this, are we developing a habit of mind that pleads with the powerful to somehow impose freedom on others? And what would be wrong with this?

Well, there is the not-small matter of federalism. Under this idea, higher orders of government should not interfere with the juridical powers of lower orders. In the American setting, this means states should manage their own affairs, however badly, rather than be managed by the central government. Why? The positive case is that, over time, laws are least bad and oppressive when they are closest to the people. In these conditions, we are more likely to experience government by the people. If that is not the case, smaller units of government permit people to move from one jurisdiction to another, and the competition between units drives the whole system towards greater liberalization. Capital and labor flow to areas that permit more liberty, even as despotic jurisdictions drive away new wealth and talent.

There is also the negative case for federalism. The higher order of government is not an impartial arbiter. Its interest in the liberty of lower orders is dubious at best. It is very likely invoking that liberty as an excuse to expand its jurisdiction – its empire. Once that power is acquired, it is likely to be abused. The supposed concern for liberty that higher level of government uses to trample on lower orders is never applied against the higher order itself. American history demonstrates this well. Part of the propaganda for the ratification of the Constitution included the claim that it would liberate Americans from state-to-state protectionism. In fact, as Scott Trask has shown, the real motive force behind the Constitution was not to abolish tariffs, which were either minimal or non-existent, but rather to prevent some states from establishing free trade relations with foreign countries at the expense of mercantilist interest groups in the U.S. In other words, the Constitution was not backed in order to bring about free trade but to prevent free trade from becoming the full reality it might have been under the Articles of Confederation.

The early history of American political debates divided very clearly along Jeffersonian and Hamiltonian lines. The Jeffersonian position favored free trade, decentralized government, and the libertarian position generally. The Hamiltonian view favored centralized government, protectionism, and a regulated national life. When the Supreme Court claims to be achieving Jeffersonian goals with Hamiltonian means, there is a solid reason to be suspicious. As Murray Rothbard emphasized, the principled libertarian position is: universal rights, locally enforced. Do you think the Supreme Court is giving you liberty? Ask yourself why the court pounced on state regulations instead of addressing the regulations by the pound enforced by the federal government that constitute far more of an imposition on consumers and retailers. When the Court starts striking these down, I will celebrate, but until then I will continue to observe the federal government doing what governments do, namely amassing power unto itself.

TRIAL BY JURY

The Sixth Amendment to the U.S. Constitution reads in part as follows: “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed. …” Trial by jury is one of the essential prerequisites of a free society. As our American ancestors understood so well, it is one of the ultimate safeguards against tyranny and oppression. The famous English legal commentator William Blackstone described trial by jury as the “palladium of our civil rights.”

Why were our ancestors so insistent on enumerating trial by jury among the constitutional guarantees in the federal criminal-justice process? Why were not they satisfied with judges’ deciding the guilt or innocence of an accused, as is done in most other countries? Why did they want ordinary citizens to make this determination rather than experienced judges? There is, of course, the issue of judicial corruption. Lawyers do not like to admit it but oftentimes judges are corrupt, not only in the sense that they are formally on the take but simply in their biases toward prosecutors. This is especially true with respect to judges who have assumed the bench after long careers as prosecutors; such judges often partner themselves with the prosecution, either implicitly or explicitly, and issue whatever rulings they can to ensure a conviction.

Jury tampering to secure a particular result is much more difficult to accomplish, especially since the composition of the jury is unknown until the time of trial. The short-term nature of jury service obviously makes it much more difficult for one side or the other to establish a corrupt relationship with one of the jurors. Another problem with judges is that over time they become like other government bureaucrats – so encrusted with a mindset of laws, rules, and regulations that they are unable to distinguish law from justice. Steeping themselves every day in the law books, regulatory manuals, briefs, memoranda, oral arguments, and court opinions, what becomes foremost in the mind of most judges is simply, Did the accused break the law?

On the other hand, a jury composed of ordinary people from all walks of life is more likely to ask a deeper and much more profound question when faced with whether to permit the government to punish a defendant: Is the crime which he is accused of committing just, and, if not, should the jury acquit him even though it is clear he committed the crime? There is one important aspect to remember in all this: In every criminal trial, the verdict of the jury is final. That is, no matter how the jury rules, there is nothing either the judge or the prosecutor can do to change or modify the verdict. If the verdict is “not guilty”, the accused walks out of the courtroom at that moment as a free man. Under the prohibition against double jeopardy, the government is precluded from bringing the same charges against him.

A good example of this phenomenon, which has come to be known by the term “jury nullification,” once occurred during the 1960s in my hometown of Laredo, Texas. The feds were prosecuting a man for possession of marijuana with intent to distribute. The man took the witness stand and confessed to the crime, explaining tearfully that he had needed the money because of financial difficulties suffered by his family. The presiding judge had a reputation for doling out maximum sentences for drug offenses. The jury, feeling sorry for the man, voted to acquit him. When the jurors returned to the courtroom and announced their verdict, everyone, including the defendant, his attorney, the prosecutor, and the federal judge, was shocked at hearing the words “Not guilty”.

The judge screamed at the jurors, telling them that they were the dumbest people who had ever served on a jury in his courtroom and advised them that their names would be permanently stricken from the federal jury rolls in Laredo. Nevertheless, the federal judge told the defendant that he was discharged from custody. He walked out of the courtroom as a free man. That is what is meant by the jury’s verdict being final. Why would our ancestors consider the jury to be one of the last bastions against tyranny and oppression? Because jurors might well decide not to convict their fellow citizens of unjust crimes, while prosecutors and judges would be fixated simply on enforcing and interpreting the laws that Congress enacts.

The great 19th-century lawyer Lysander Spooner provided one of the best summaries ever of the role of the jury in his masterful work An Essay on the Trial by Jury: “For more than six hundred years – that is, since Magna Carta, in 1215 – there has been no clearer principle of English or American constitutional law, than that, in criminal cases, it is not only the right and duty of juries to judge what are the facts, what is the law, and what was the moral intent of the accused; but that it is also their right, and their primary and paramount duty, to judge the justice of the law, and to hold all laws invalid, that are, in their opinion, unjust or oppressive, and all persons guiltless in violating, or resisting the execution of, such laws.

Unless such be the right and duty of jurors, it is plain that, instead of juries being a “palladium of liberty” – a barrier against the tyranny and oppression of the government – they are really mere tools in its hands, for carrying into execution any injustice and oppression it may desire to have executed.

REPEAL THE SEVENTEENTH AMENDMENT

Every once in a blue moon someone in Congress (usually Congressman Ron Paul of Texas) proposes a law or resolution that would actually improve the prospects for human liberty and prosperity. It is rare, but not nonexistent. One such case is Senate Joint Resolution 35, introduced into the U.S. Senate on April 28, 2004, which was recently brought to my attention by Laurence Vance. S.J. Res. 35 reads, “Resolved … The seventeenth article of amendment to the Constitution of the United States is hereby repealed.” That is Section 1. Section 2 reads that “The Senate of the United States shall be composed of two Senators from each State, chosen by the legislature thereof, for six years …”

This was the original design of the Founding Fathers. U.S. senators were not directly elected by the voting public until 1914. Thus, S.J. Res. 35 proposes a return to founding principles and is therefore a most revolutionary idea. A good overview of the history of the Seventeenth Amendment is Ralph A. Rossum’s book, Federalism, the Supreme Court, and the Seventeenth Amendment. Rossum correctly points out that the system of federalism or “divided sovereignty” that the founding fathers created with the Constitution was never intended to be enforced by the Supreme Court alone. Congress, the president, and most importantly, the citizens of the states, were also to have an equal say on constitutional matters.

The citizens of the states were to be represented by their state legislatures. As Roger Sherman wrote in a letter to John Adams, “The senators, being … dependent on [state legislatures] for reelection, will be vigilant in supporting their rights against infringement by the legislative or executive of the United States.” Rossum also quotes Hamilton as saying that the election of senators by state legislatures would be an “absolute safeguard” against federal tyranny. George Mason believed that the appointment of senators by state legislatures would give the citizens of the states “some means of defending themselves against encroachments of the National Government.”

The adoption of the Seventeenth Amendment in 1913 (along with the income tax and the Fed) was a result of the deification of “democracy” that began with the Union victory in the War to Prevent Southern Independence. The war was fought, said Lincoln at Gettysburg, so that “government of the people, by the people, for the people” should not perish from the earth. This of course was absurd nonsense, but Lincoln’s silver-tongued rhetoric was apparently persuasive enough to those residing north of the Mason-Dixon line. The direct election of senators was said to be more democratic, and therefore would reduce, if not end, corruption. There was a good bit of corruption involved in the election of senators, but the source of the corruption was … democracy!

The Seventeenth Amendment was one of the last nails to be pounded into the coffin of federalism in America. The citizens of the states, through their state legislators, could no longer place any roadblocks whatsoever in the way of federal power. The Sixteenth Amendment, which enacted the income tax in the same year, implicitly assumed that the federal government lays claim to all income, and that citizens would be allowed to keep whatever their rulers in Washington, D.C. decided they could keep by setting the tax rates. From that point on, the states were only mere appendages or franchises of the central government.

The federal government finally became a pure monopoly and citizen sovereignty became a dead letter. Further arming itself with the powers of legal counterfeiting (the Fed) in the same year, the federal government could ignore the wishes of great majority of the citizens with reckless and disastrous abandon, as it did with its entry into World War I just a few years later. If Americans ever again become interested in living in a free society, one of their first orders of business should be the repeal of the Seventeenth Amendment.

ACLU ACCUSES FBI OF “SPYING” ON ACTIVISTS

On the same day that the FBI warned a Congressional committee about the danger of “domestic terrorism”, the American Civil Liberties Union accused the FBI of using terrorism as a pretext to spy on activists who “oppose the war in Iraq, the USA Patriot Act, and other government policies.” The BBC reports that senior officials from the FBI and the Bureau of Alcohol, Tobacco, Firearms (ATF) and Explosives told a Senate panel that they are “increasingly concerned” about “violent animal rights extremists and eco-terrorists”. The law enforcement officials said they were particularly concerned about the activities of two groups, the Animal Liberation Front (ALF) and the Earth Liberation Front (ELF).

But CNN reports that there was a fair amount of skepticism from some senators about the FBI and DEA’s assessment of the threat level from these groups. Independent Sen. James Jeffords of Vermont noted that the number of people possibly threatened by any action of ALF or ELF numbered perhaps in the dozens, “but an incident at a chemical, nuclear or wastewater facility would threaten tens of thousands.” Democratic Senator Frank Lautenberg of New Jersey wondered if the FBI was considering any one who protested government policy as a potential terrorist.

Meanwhile, the ACLU issued a statement that said “the FBI and local police are engaging in intimidation based on political association and are improperly investigating law-abiding human rights and advocacy groups.” The statement was based on information gathered from numerous Freedom of Information Act requests.

CROOKED COPS ARE ENEMIES TO FREEDOM

Some cops lie and commit crimes. So says an admitted former crooked NYPD cop, Robert Cea in a new book featured on the front page of the New York Daily News. According to this cop’s own admission it is a regular practice to lie on the witness stand, falsify police reports, selectively enforce crimes, and do dirty work and strike shady deals with criminal “informants”. Cea’s former collaborators in the NYPD are, of course, dismissing the claims, but the rest of us should pay good attention to the issues being raised. Even if one argues that the vast majority of law enforcement officials are good and honest, there are more than just a few bad apples that are poisoning their departments and making a mockery of justice.

Negative news stories and negative accusations from the political left regarding police usually have nothing to do with the allegations made by Cea, but instead obsess about supposed “racism” in departments or “racist” acts committed on the job. The real problem with police today is not racism, but inherent corruption and arrogance that is prevalent in law enforcement agencies all around the country. The problem is the law enforcement culture itself which does basically whatever it wants without any accountability from above.

What Cea is describing in his book are practices that are well-known to any local cop just about anywhere, not just large powerhouses like the NYPD. Honest cops will attest to the crimes being committed by their co-workers. And it happens everywhere, all around the country and nobody in any position of power is doing anything to stop it. Instead of accountability, these same cops get mainly praise and popular pundits implore us to show even more fawning adoration for the law enforcement culture.

Who is willing to stand up to the abuse? Not many people. Cops routinely lie and cover for each other. Judges are not totally oblivious to the excesses of law enforcement, but usually just do not care and are willing participants with police. Defendants and regular people stand little chance for a fair trial or fair hearing. The situation is even worse at the federal level. The FBI, IRS and other “investigative” and law enforcement federal agencies do basically whatever they please and many times are more corrupt than the people that they are investigating. Federal prosecutors and federal judges work hand in hand at making sure the accused are convicted regardless of what the facts really are. Anyone who has been targeted by the feds or has a family member who has been knows exactly what I am talking about.

YOU HAVE BEEN DRAFTED: UNCLE SAM WANTS YOU FOR THE WAR ON DRUGS

Congressman Sensenbrenner’s draconian mandatory minimum sentencing bill is now garnering national attention. This bill would have serious consequences for our democracy, requiring you to spy on all your neighbors, including going undercover and wearing a wire if needed. Refusing to become a spy for the government would be punishable by a mandatory prison sentence of at least two years. We are especially concerned about a section of the bill that turns every American into an agent of the state. Here is how it works: If you “witness” certain drug offenses taking place or “learn” that they took place you would have to report the offense to law enforcement within 24 hours and provide “full assistance” in the investigation, apprehension, and prosecution of the people involved. Failure to do so would be a crime punishable by a mandatory two year prison sentence.

In addition to turning family member against family member, the legislation could also put many Americans into dangerous situations by forcing them to go undercover to gain evidence against strangers. This is what we are up against in Congress, and it is not going to be easy. Sensenbrenner, the chair of the powerful Judiciary Committee, usually gets what he wants. Lots of people are afraid to challenge him. But we have a duty to our children to stop our country from turning into a police state. I am sure you feel this duty, as well.

OPINION & ANALYSIS

FAILING EVERYWHERE YOU LOOK. WE’RE ON PLAN

Our capacity (when I say our I mean “us”, America, the USA, the Bush government, the loonies in charge) for making messes goes way past anything that can be the simple result of incompetence or stupidity. It has to be the result of a deliberate plan.

I know I should not sign up for membership in the conspiracy cadre, but sometimes the evidence forces your hand. How can we: 1.) Be buggering things so badly over in Iraq (having so elegantly “fixed policy around plans”), while at the same time and in every way, 2.) be pushing the economy of the homeland pell-mell toward final financial disaster (hey, how about that new $9,000,000,000,000 national debt “limit”? – the very word limit is a laugh riot in this instance), and also 3.) be playing the very hell, at great cost, with failure as a certain result, down in South America, where we are propping up everyone’s virtue with fire and bombs?

I am referring to a story I just read, dated May 15, from the Independent (UK), “America’s drug plan collapses in chaos”. The story begins, Washington’s “war on drugs” in Colombia is collapsing in chaos and corruption, and the drug producers are winning. The so-called Plan Colombia, which has cost the U.S. more than $3 billion in the past five years, is being abandoned. Last year, the hugely expensive effort to poison coca bushes by aerial spraying ended in failure. More bushes were flourishing in January this year than in January 2004.

Coca is a gift of Nature. Only sheerly crazy people would ever think of spraying it with poison and fire. We spray it with fire and poison. Ergo. But not all of us USA citizens are crazy. I do not think I am crazy. But we have a crazy government and are therefore responsible for it, although I fail to see what we can do about it but wait for it to fall on its nose, which it is sure to do sooner or later. I pray for that hour, while also dreading it. The trouble with crazies in high places is the “collateral” wreckage they make of everything as they finally go down in the flames they have so generously sprayed on everyone else.

But then that thought returns. Maybe these people are not crazy. Maybe they are clever like a fox. They want ruin. It is mother’s milk to them. I know people (that conspiracy cadre I mentioned) who say that is the case. This is all a deliberate scheme to reduce us to a nation of poverty-stricken, blithering, uneducated idiots hated the world around, seen by every last man, woman, and child of Europe, Asia, and Africa (not to mention South America and Australia) as so many Darth Vaders intending hateful death for the whole planet and inviting it upon ourselves in a blowback that really, truly, will make history. If so, then we are indeed on plan.

IRAQ FALLS APART … AND IN WASHINGTON, THE CENTER CANNOT HOLD

There was panic in the streets of Washington, the Capitol emptied, and Congress scattered in fear – all because a small plane had entered the airspace over the Imperial City. “Run, run, run!” It was, of course, nothing to laugh or gloat about. All of us remember that day in September: the shadow of it hangs over us, darkening our present with presentiments of disasters to come. Yet the reaction of the authorities and our leaders assembled in the mighty city of Washington was telling. Here was the capital city of the greatest, most powerful empire the world has ever seen, prostrate before the threat of a two-seat Cessna 152, which is smaller than most cars. How quickly the illusion of safety – and strength – dissipates.

After spending hundreds of billions of dollars in a “war on terrorism” in which no expense has been spared and no risk – including the risk of alienating the rest of the world – is considered too great. After sacrificing liberty to “security”, after following our war-maddened president into Iraq and, perhaps, beyond, what have we got to show for it? Only the fear in the eyes of our government officials as they fled out into the street. Before the all-clear sounded, these lines from Yeats came to mind:

“Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world…”

The War Party screeches for “military victory”, as one “libertarian” butt-boy of the neocons put it – no matter what the cost, to the Iraqis or to the U.S. Fresh from his U.S.-government-sponsored trip to Iraq – where he lectured the Iraqis on the virtues of “limited” government, even as his “students” began to erect a theocracy – this longtime top official of the Washington-based Cato Institute – supposedly a “libertarian” thinktank – has enlisted in an army of banshees bent on blood. He and his ilk are part of what Pope Benedict XVI describes as a satanic force “still at work in the world unleashing ‘evil energy’.” I hope he enjoyed his taxpayer-funded $35,000 cab ride from central Baghdad to the airport – because, come the (libertarian) Revolution, we are going to make him pay back every penny of it, with interest.

We who have fought the War Party long and hard, and are now – at long last! – winning the hearts and minds of the American people, know that such hubris cannot but be repaid with divine fury – and the sooner the better. The neocons’ comeuppance is imminent, or so we hope. How many investigations are even now tracing their treason? The battering of Bolton is just a warm-up for the main event. As the new Pope put it in an address on the meaning of the Book of Revelation in the Bible:

“‘History, in fact, is not in the hands of dark forces, left to chance or just human choices,’ he told thousands of people in St. Peter’s Square. ‘Above the unleashing of evil energy, above the vehement interruptions of Satan, above the so many scourges of evil, rises the Lord, supreme arbiter of history.’”

Against the everyday horrors unfolding in Iraq – and on the floor of the U.S. Congress – we have some hope that the power of evil is limited. Lately, we can bring ourselves to imagine that it can be pushed back and eventually defeated – even as we remember that evil isn't the norm, and that before Sept. 11, 2001, it was in retreat. We cannot return to that halcyon era. However, what we can do is begin to understand that signal event, not only its meaning but the specific circumstances surrounding it. As we peel back the layers of the mystery, we get closer to the truth of how to forge a rational response.

The Bush administration’s response to 9/11 has been anything but rational. That is why the threat of terrorism is greater today than ever. As members of Congress and other government officials ran from the U.S. Capitol, squealing with terror, surely an approximation of this thought must have crossed their minds. For the first time since 9/11, the city of Washington, D.C., went into Code Red – the highest state of emergency. It is about time. Because ever since the neocon coup d’état that Bob Woodward wrote about in Plan of Attack, American patriots have been trying to alert the country that it is Code Red as far as the future of America is concerned. The danger, not only to our liberty but to our physical safety and our survival as a free people, has never been greater.

Staging an “attack” to promote fear and paranoia.

How could a Cessna, described appropriately in one account I read as the aeronautical equivalent of a flying car, be allowed to fly so far into the tightly-guarded airspace over the American Berlin, get to less than three miles from the White House, before somebody thought to scramble first a helicopter and then fighters, to intercept the aircraft? The answer is simple: that airplane was allowed to come deep inside the restricted DC corridor long before any response was made. No other explanation makes sense.

RECLAIMING LIBERTY

Here is a new book from one of the Kennedys. No, I do not mean another ghost-written socialist screed from the Massachusetts criminal gang of that name. I mean a lively and provocative contribution to the literature of freedom by the Louisiana Kennedys, Reclaiming Liberty by James Ronald Kennedy. They who previously gave us best-sellers like The South Was Right! and Why Not Freedom! Reclaiming Liberty is a detailed response to the frequently heard complaint, “You have told us what’s wrong with the country. Now why don’t you tell us what we can do about it?”

The author dedicates his work to “two of the intellectual giants on whose shoulders I stand to see before us a day of liberty” – Murray N. Rothbard and M.E. Bradford. That should tell where Ronnie Kennedy is “coming from”, as they say. The author has sought to develop a sound Constitutional and free market diagnosis of the defects of the current U.S. – in terms that are ready for common discourse. But in a much rarer effort, he has offered concrete positions that are usable in such practical pursuits as election campaigns – “an audacious vision and a plan to implement it.” This is how a Presidential campaign platform conducted in the interest of liberty might look. In fact, there is reason to believe that the work is part of an exploratory gambit for a presidential effort by the author’s twin brother, Walter Donald (Donnie) Kennedy.

We may not agree with all of the prescriptions, but they are well worth contemplation. Many of us have given up on the electoral process entirely, I suspect. Nonetheless we ought to respect Reclaiming Liberty’s political realism and understanding that an electoral campaign, even if doomed to losing, can be a mighty educational tool. My great concern over the publication of this platform is that the Republicans will have plenty of time to steal its rhetoric and bury its principles before 2008. They cynically stole and then buried the anti-government anti-Liberal ideas that George Wallace had demonstrated were vote- getters. They performed the same trick with the religious and moral concerns that became a power in the Eighties. That is what Republicans do and have always done … preach to the concerns of decent folks, get elected, and then serve the real interests they represent: plundering politicians, petty fascists, and government-connected “free enterprise” corporations.

MEDIA COVERAGE OF INTELLIGENCE MANIPULATION REFLECTS ACCEPTANCE OF IMPERIAL PRESIDENCY

Delayed for two weeks after first reported and buried in the back pages of most major U.S. newspapers is the blockbuster story that key players in the British government believed the case for the invasion of Iraq was “thin” and that the Bush administration was manipulating intelligence to provide a rationale for an aggressive U.S. policy. In contrast, a merely symbolic and exhortative visit to Iraq by Secretary of State Condoleezza Rice is headline news in the same papers. The media coverage of those two stories – in inverse proportion to their importance – is a symptom of the decline of the republic and the ascension of the imperial presidency.

On May 1, 2005, the Sunday Times of London published a verbatim summary by a British official of a July 23, 2002, meeting on Iraq involving the British Prime Minister and some of his closest advisors. The summary of the prime minister’s meeting reaches the jolting conclusion, that, “It seemed clear that Bush had made up his mind to take military action, even if the timing was not yet decided. But the case was thin. Saddam was not threatening his neighbours, and his WMD capability was less than that of Libya, North Korea, or Iran.” The realization that the case for the invasion was threadbare and that the Bush administration was cynically bolstering it by inflating intelligence should be rocking the American media and public. Yet even after the summary was published in the British media on May 1, the New York Times, the flagship of American journalism, concluded on May 8 that “critics who accused the Bush administration of improperly using political influence to shape intelligence assessments have, for the most part, failed to make the charge stick.

The U.S. presidency has become so powerful compared to what the nation’s founders had intended that the public has come to expect that the chief executive and his entourage will lie to us for our own good – even on issues as vital to the republic as war and peace. In fact, the people, through their representatives in Congress, no longer have a real say through a declaration of war, whether the nation engages in violence or remains at peace. In recent conflicts, in contravention of the founders’ constitutional intent, the president has usurped such decisions and the docile Congress, if asked at all, usually rubber stamps them. Citizens of ancient Rome slumbered as profligate, unnecessary wars of conquest turned their republic into a despotic empire. Unfortunately, it looks as if the American republic is headed down a similar path.

EMBARASSMENT OF RICHES: THE TIMES DECLARES CLASS WARFARE

Class anxiety must still exist in some quarters of America. At least, somebody out there is still buying copies of popular recent excursions through Americ’qs class structure, such as Class: A Guide Through the American Status System by leftish literary critic Paul Fussell and Bobos In Paradise: The New Upper Class and How They Got There by conservative columnist David Brooks. Now The New York Times has decided to weigh in on the issue by inaugurating this past Sunday a series that looks at “Class in America”. According to the Times, “Class is rank, it is tribe, it is culture and taste. It is attitudes and assumptions, a source of identity, a system of exclusion. To some, it is just money.”

The Times begins by noting that “merit has replaced the old system of inherited privilege.” However, the Times asserts, merit “is at least partly class-based. Parents with money, education, and connections cultivate in their children the habits that the meritocracy rewards. When their children then succeed, their success is seen as earned.” The implied objection seems to be that because one’s parents taught one to work hard, study, be polite, and save money, then one has not earned one’s success. How in the world does the Times expect someone to become successful without those attributes? Rarely is it possible to earn success while being lazy, ignorant, rude, and a spendthrift.

The Times is very worried about growing inequality. “The slicing of society’s pie is more unequal than it used to be, but most Americans have a bigger piece than they or their parents once did,” notes the Times. The article somewhat grumpily adds, “They appear to accept the trade-offs.” It will be interesting to see if the Times series can spark a new round of class warfare – if not between the lower and upper classes, at least among the chattering classes. F. Scott Fitzgerald once supposedly declared to Ernest Hemingway, “The very rich are different from you and me.” To which Hemingway replied, “Yes, they have more money.” That about sums it up for me.

Thoughts on poverty.

One reads much about the poor in America, their piteous lives, their blighted hopes, and the unrelieved downtreading of them by various social ogres such as oppressive corporations who sell them greasy hamburgers. This I submit is goober-brained nonsense. America has precious little poverty, if by poverty you mean lack of something to eat, clothing adequate to keep you warm and cover your private parts, and a dry and comfortable place to sleep. In the “inner cities” or, as we used to call them, slums, there is horrendous cultural emptiness, yes, and the products of the suburban high schools are catching up fast. But poverty? The kind you see in the backs streets of Port au Prince? It barely exists in the U.S. The problem is that the poor do not know how to be poor.

As a police reporter for the better part of a decade, I have been in a lot of homes in allegedly poor parts of cities. Physically they were not terrible. Some (not many, really) were badly kept up, but that is not poverty. The residents could have carried the garbage out to the dumpster in the alley. They just could not be bothered. Ah, but they were indeed morally deprived, culturally and intellectually impoverished, or what we used to call shiftless. I have come into an apartment in mid-afternoon and found a half dozen men sitting torpidly in front of the television, into homes where the daughter of thirteen was pregnant and on drugs. The problem was not poverty. If the daughter could afford drugs, she could afford food.

Most of these homes would have been regarded as fine by the graduate students of my day. They would have put in board-and-cinderblock bookshelves and a booze cache and been perfectly content. The reality is that the wherewithal of a cultivated life of leisure, if only in tea shirts and jeans, is within the reach of almost all of the “poor”. If I had to live in really cheap welfarish quarters in Washington, DC, which I know well, on food stamps and a bit of cash welfare, what would I do? I would have a hell of a good time.

FEAR: THE FOUNDATION OF EVERY GOVERNMENT’S POWER

“[S]ince love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.” – Niccolò Machiavelli, The Prince, 1513

All animals experience fear – human beings, perhaps, most of all. Any animal incapable of fear would have been hard pressed to survive, regardless of its size, speed, or other attributes. Fear alerts us to dangers that threaten our well-being and sometimes our very lives. Sensing fear, we respond by running away, by hiding, or by preparing to ward off the danger. To disregard fear is to place ourselves in possibly mortal jeopardy. Even the man who acts heroically on the battlefield, if he is honest, admits that he is scared. To tell people not to be afraid is to give them advice that they cannot take. Our evolved physiological makeup disposes us to fear all sorts of actual and potential threats, even those that exist only in our imagination.

The people who have the effrontery to rule us, who call themselves our government, understand this basic fact of human nature. They exploit it, and they cultivate it. Whether they compose a warfare state or a welfare state, they depend on it to secure popular submission, compliance with official dictates, and, on some occasions, affirmative cooperation with the state’s enterprises and adventures. Without popular fear, no government could endure more than 24 hours. David Hume taught that all government rests on public opinion, but that opinion, I maintain, is not the bedrock of government. Public opinion itself rests on something deeper – fear.

Were we ever to stop being afraid of the government itself and to cast off the phoney fears it has fostered, the government would shrivel and die, and the host would disappear for the tens of millions of parasites in the United States – not to speak of the vast number of others in the rest of the world – who now feed directly and indirectly off the public’s wealth and energies. On that glorious day, everyone who had been living at public expense would have to get an honest job, and the rest of us, recognizing government as the false god it has always been, could set about assuaging our remaining fears in more productive and morally defensible ways.

LOVE AFFAIR WITH GOVERNMENT

Just what accounts for the people’s love affair with government? Make any attempt to discuss decreasing the amount of government (let alone eliminating it entirely) in our lives and people recoil in horror. “Well, what about roads? Don’t you think government is needed so we can have roads?” No. “OK, what about national defense? We need government to protect us from them foreigners.” Why must government have a monopoly on defense services? Government by its very nature tramples on our natural rights, yet 99 of every 100 people believe that government provides the essential framework for our lives. Why is that? Professor Daniel B. Klein an Associate Professor of Economics at Santa Clara University calls it “The People’s Romance”.

In a paper entitled The People’s Romance: Why People Love Government (as much as they do), Klein has determined that people have a “yearning for encompassing sentiment coordination” by analyzing mutual coordination and focal points. In Klein’s view people have this urge (The People’s Romance) despite it denying individual self-ownership. For many people, what makes us Americans is government intervention. It is government that provides people a “common frame of reference, a set of cultural focal points, a sense of togetherness and common experience…” Klein explains. Thus, even those who advocate for smaller government still insist that Social Security, the U.S. Postal Service, the public school system, public transportation, the U.S. military and so on are required.

The key, as Klein points out is that people feel that the government is a part of them, “they fancy themselves part of the governing set.” Studies show that primitive people tend to socialize through dance and exhibit remarkable uniformity in rhythm. The beat of the drums provides the rhythm, organization and structure for the participants, who then act in uncanny unison. Government is the coordinating drummer in today’s society, providing the authoritative leadership and direction as opposed to development by way of a spontaneous order. Klein cites economist Adam Smith who frequently wrote,“qthat man yearns for coordinated sentiment like he yearns for food in his belly.”

Is there any hope for a return to a true conservative or libertarian society that America’s founders envisioned? It may already be happening, albeit slowly. The single greatest People’s Romance indoctrination program is the public school system. But, more and more parents are opting out of the system, choosing either to home school or private schools. We can only hope that these trends continue. Civil society depends on The People’s Romance fading away.

WAR WITH CHINA?

I regard a war with China – hot or cold – as perhaps the greatest strategic blunder the United States could make, beyond those it has already made. The end result would be the same as that from the 20th century wars between Britain and Germany: it reduced both to second-rate powers. In the 21st century, the real victors would be the non-state forces of the Fourth Generation, who would fill the gap created by the reduction of both Chinese and American power. Given my foreboding – in George W. Bush’s Washington, it seems the rule is that any blunder we can make, we will make – I was struck by the title of Robert D. Kaplan’s article in the June Atlantic Monthly, “How We Would Fight China”. Kaplan has written some excellent material on the breakdown of the state and the rise of non-state elements.

Here, however, I think he gets it wrong. Kaplan sees the 21st century being defined by a new Cold War between China and the U.S., rather than the clash between states and non-state forces. I believe this phenomenon will be far more century-shaping than any conflict between states. While Kaplan writes about how the U.S. could use naval power – subtly – to contain a rising China, within the framework of a Bismarckian Realpolitik that accommodates everyone’s interests, he recognizes the danger to all of a Cold War turning hot. He writes, “Only a similarly pragmatic approach (similar to Bismarck’s) will allow us to accommodate China’s inevitable re-emergence as a great power. The alternative will be to turn the earth of the twenty-first century into a battleground.”

Regrettably, there are influential voices in Washington that want a war with China, the sooner the better. The most likely cause is Taiwan. Few in Washington understand why China is so adamant about Taiwan remaining officially part of China. The reason is China’s history, throughout which her greatest threat has not been foreign invasion but internal division. China has often fractured, sometimes into many parts. Today, Beijing fears that if one province, Taiwan, achieves independence, others will follow. China will go to war, including with the U.S., to prevent that from happening.

Correctly, Kaplan observes that China is not able to successfully fight a sea and air war with America. China has committed itself to significant military spending, but its navy and air force will not be able to match ours for some decades. The Chinese are therefore not going to do us the favor of engaging in conventional air and naval battles, like those fought in the Pacific during World War II. So how would China fight us? If we send some carrier battle groups to intervene in a war between China and Taiwan, I think China will do something Kaplan does not mention. She will go nuclear at sea from the outset.

HOME

I am homeless in manifold ways. Though I have had residences to call my own, were any my true home? I later came to see material objects as less important than what they represented, and, thus, came to choose better what to venerate. My true home, I have come to feel, is in that place I alone can inhabit.

Feelings for my more general home, that is, my native heath, are more involute, and, therefore, more difficult to crystallize and exposit. In the past, I have been a fervent nationalist and patriot, yet, as I have grown older, and my experience has grown, and my horizons expanded, I have fallen away from the view, “my country, right or wrong”, to a more objective and, in many ways, subjective, assessment of my country’s conduct of its internal and external affairs. I feel, truly, no longer very much affiliation to this American government as it currently stands. The State, indeed, condemns itself with every similarity to the doomed enterprises of the past, the lessons of which it will not heed. In every society which has followed the path of militarism, the way of the sword, inevitably the end has been horrible, destructive, and utterly avoidable. The actions of the State as I write this, in the Asian subcontinent, bear witness to the basically vengeful nature of Statism.

The American government, and many governments elsewhere, are attempting to foist collectivist, societal thought, which is anathema to me, on their citizenry through propaganda campaigns. The idea they appear to be trying to convey is that the answer to the excesses of government at the national level is more and bigger government, at an even higher level, a premise I find not only illogical, but irrational. For this reason, if no other, I no longer feel as if the United States is truly my home.

As I have stated elsewhere, I will never betray my country, but it is not only capable but desirous, it increasingly seems, of betraying me, and likely will at the first opportunity. I truly fear that to remain in this country much longer will mean imprisonment if not execution for me and those who believe as I do. Make no mistake, death squads and “disappearing” citizens are not just things that happen in other people’s countries. If they are not already operating here, the time is not far off when they will begin. The groundwork is being laid as this is written, both by the agencies of the State and their willing accomplices in the State-run media, for the general citizenry to turn a blind eye to these officially sanctioned crimes.