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Book Review: Meltdown by Thomas Woods

March 31, 2009, 2:47 pm

Since the financial collapse began with the collapse of Bear Stearns hedge funds in the summer of 2007, numerous books have been published attempting to put the blame on one factor or another. All of the likely scapegoats have been named: greedy CEOs, CDOs, deregulation, Asian investors, and so on.

While books with sensational titles like Financial Shock, Chain of Blame, The Trillion Dollar Meltdown and others have pointed to one market or moral factor or another as the cause of the crisis, most seem to assume that greed was invented in 2002 with the run-up in home values and resulting real estate bubble.

Some of these books have even pointed to various government programs or policies that allowed financial manipulation and greed to run rampant in the housing market. Funnily enough, though, every one of the authors points out more government intervention and regulation as one of the solutions to the financial crisis.

The new book by Thomas Woods called Meltdown is different. Instead of taking a collection of symptoms of the real estate bubble, he examines the root cause of the problem that signaled to builders, borrowers, and lenders that everyone needed a new home, everyone could qualify for a home loan, and real estate prices never fell.

Woods points out the Federal Reserve's manipulation of interest rates as the main cause of the housing bubble and the resulting collapse of that bubble. And he has a point -- how much damage could CDOs, the Community Reinvestment Act, ACORN, and subprime mortgages could have done in the absence of artificially cheap money?

These other market players, including the Wall Street investment firms, were taking their cues from the Federal Reserve, which had inflated the tech boom of the 1990s and transitioned seamlessly into inflating the real estate boom after the mini-recession of 2001.

Woods also points to other government policies also helped to distort the housing market. As Woods states, "Blaming 'greedy lenders' or even foolish borrowers begs the question. What institutional factors gave rise to all the foolish lending and borrowing in the first place? Why did the banks have so much money available to lend in the mortgage market -- so much indeed that they could throw it even at applicants who lacked jobs, income, down payment money, and good credit?"

But more important than just analyzing the causes of the housing market bubble is Woods' examination of the proposed solutions.

Spending packages, stimulus packages, anti-thrift packages, corporate bailouts, industry bailouts, and personal bailouts are what the government has fed us so far as solutions to the crisis. The fact that none of them have worked so far is, of course, used as justification to create more programs and expanding existing failures.

Woods analyzes why these types of government programs have not worked in the past during economic downturns. In fact, his arguments against the Hoover-Roosevelt market manipulations during the Great Depression are quite convincing. The more government takes from the private sector to fund various programs, the longer the economy will take to recover. The less it does, the faster the recovery.

In the end, it is not how deep the downturn in the economy but the length of time needed to recover that is most important. While government programs have attempted to prop up artificial economic indicators, it has prolonged the agony of families and businesses that get hurt from such "stimulus" policies.

But Woods always keeps the focus on or near the Federal Reserve as the culprit and cause of the boom-bust cycle. With a central bank forcing down interest rates artificially and creating disincentives to save money for long-term projects, how could businesses not take advantage and embark on unsustainable investments?

The best part about Meltdown is that it is short enough to be finished in a day or less. However, there are numerous topics that this short review does not even touch on (myths about Keynesianism, the Great Depression, and sound money, for instance). Hopefully the book will be released in paperback form later this year and updated to include the latest government bailout debacles.

However, despite whatever steps the government takes next to rescue the economy, get its heart started again, jumpstart its dead battery, or backstop its slide into depression, it will be important to keep an eye on the Fed. Having created nearly $10 trillion of new money in a little over a year can not but further erode the strength of the dollar. Regardless of the next media-created scapegoat, greed was not invented in 2002 and will not be eradicated by jailing a small time financial swindler.

Read Meltdown to understand how the government has granted a monopoly to the central bank to counterfeit and defraud us all. And then take action to defend against the manipulations of the market this institution uses to create one economic disaster after another.

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Special Post: "The Venture Capital Well Runs Dry" Article Review

January 27, 2009, 1:01 am

Citation
Fisher, Eric. (2009, January 26). The Venture Capital Well Runs Dry. Street & Smith’s Sports Business Journal, 11.38, 1+.

Purpose
The purpose of this article was to examine trends in venture capital investments in the sports industry in light of current economic conditions.

Summary
The severe downturn in the American economy has affected venture capital investment in the sports industry in a number of ways, particularly at companies concentrating in digital media. Digital media startup companies have always looked to the venture capital market for funding, but recessionary conditions in the market have begun to curtail traditional lending, as well as investment by venture capital investors. In the year 2008, such investment projects fell by a considerable amount, and digital media companies have been forced to become more competitive or to settle for less funding. Investment money is still available for deals, but firms must have more than just a good idea and a rough business plan in order to be considered by a venture capital firm. A more robust business plan, a track record of success, and a consistent level of audience growth is now necessary. Firms must also be developing a product or service that is innovative, rather than an attempt to compete with similar offerings by larger corporations. As well, companies must not rely on either advertising-based or subscription-based revenue models, as venture capitalists are demanding a more balanced combination of the two. The value of digital media projects has been declining in the recession, but this has created investing opportunities at the right price level. While venture capital firms may not see much return on their investment in the short- to medium-term in the economy, there is an incentive to fund startups at lower prices now with an expectation of high returns in three to five years.

Conclusions
Stricter investing criteria make it more difficult for digital media firms in the sports industry to obtain capital. Frequently, startup companies like the ones in this industry rely on venture capital investors more than commercial banks for funding. While funding for new companies has significantly contracted and companies’ values have adjusted downwards, the stricter investing criteria indicate that managers whose projects that can show a track record of success and continued growth will receive funding. The capital market has not frozen for digital media companies in the sports industry, but only the most deserving companies will receive funding while the economy continues to suffer.

Implications
The article shows that, more than a credit or investing crisis, the economy may be experiencing a value crisis. Managers of firms expecting 2006 prices for their digital media products or services may have few interested investors. Digital media firms whose values have declined due to overall declines in the economy can still find funding for projects, but only if they are able to work with less capital up front. On the positive side, venture capital firms still have access to investment money, despite the recession, and are willing to put it into projects with little expectation of a quick return. Management from firms providing and demanding capital can still create mutually-beneficial deals for their companies. The fact the investment criteria has become stricter will force managers to come up with good ideas and establish a proven track record before they can expect private funding for their projects. This will only make the digital media component of the sports industry stronger in the future, as nonperforming companies will have to reorganize or abandon their projects.

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Ron Paul's "Pillars of Prosperity" Part IX: Spending, Taxes, & Regulations

February 8, 2008, 5:37 am

One of the most intriguing figures of this election season so far has been Congressman Dr. Ron Paul, a Republican from Texas. He has long been the most consistent defender of liberty and free markets in all of Congress, possibly in all of American history, having served ten terms thus far and now running for the Office of the President. The grass-roots movement that has coalesced around his candidacy, dubbed the “Ron Paul Revolution,” has shown an amazing intellectual depth, echoing Dr. Paul’s own extensive awareness of history, economics, and politics. Unfortunately, his voice has been effectively silenced, cut out of the mainstream media, and an important, consistent, and logical argument for returning the nation to its constitutional foundations is being ignored by the controllers of the largest media companies in the nation, not allowing his message to reach the average person.

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 9 – Spending, Taxes, and Regulations” is discussed here.

In the final section of the book, Ron Paul has collected a number of miscellaneous writings on various topics relating to the free market and government intervention. The main themes which have also been examined throughout the book are prominent in these discussions, including government overspending, intervention in the economy in an effort to help the poor, and the discriminatory practices of Congress in handing out benefits.

The government’s willingness to spend every penny and more that it can tax and borrow has been a frequent issue Paul has raised throughout his speeches. When the politicians can not tax or borrow further, they go to the Federal Reserve, which prints up the money to cover the shortfall. But this new money causes inflation, and the banking system contributes to the problem. Paul states that, due to the fractional reserve system, money is multiplied six times. A $1.5 billion creation of new money will eventually result in a $9 billion increase in the total supply of dollars.

Paul argues that the issue of the federal debt limit is essentially a joke. Designed to keep a lid on Congress’ spending, the politicians have frequently voted to increase the limit, rather than reign in the size of government. This is like a compulsive shopper giving himself a higher credit limit care of his lenders, which is exactly like not having a limit at all. Paul also likens the practice to “making minimum payments on a credit card. Notice that the principal never goes down. In fact, it is rising steadily.” Nothing can stop the government from ever increased spending, as it reaches one self-imposed limit after another with only higher limits and more spending.

The growth of government, though, is not just a problem with either side of the aisle. Paul has long argued that the Republican Party has lost its way, giving up positions that got them elected in the first place, such as cutting spending, no deficit spending, and eliminating waste in government. The GOP, though, has instead sold out to the entitlements crowd. But this has not even helped them gain more power or respect from the special interest groups, as the Democrats offer to spend even more than the Republicans on every issue.

A good example of this trend toward growing government is the issue of nondiscretionary funding. If the money must be spent and control is out of the hands of Congress, then these programs are out of the control of the people. Nondiscretionary entitlement spending, according to Paul, is a statist’s dream, encouraging the welfare state at home and the American Empire spread across the world.

This government intervention and willingness to spend more money than it has is the true cause of the growing gap between rich and poor. Congress, though, only proposes more welfare and intervention, rather than examining the source of the problems. But increasing federal welfare funds also increases federal control and fosters dependency. The recipients are dependent on government for their money, and the bureaucrats are dependent on more people being on welfare to provide job security.

Paul’s solution to the welfare problem is for government to end the huge tax burden on individuals so that they have more money to donate to charities to help the poor. Whereas government destroys culture and creates dependency, charity encourages self-reliance. Paul writes that, “The history of the failed experiments with welfarism and socialism shows that government can only destroy a culture; when a government tries to build a culture, it only further erodes the people’s liberty.” People who are able to keep only small amounts of their paychecks can not afford to contribute to solving some of these social problems.

Another problem that could be solved with fewer regulations and lower taxes is that of minimum wage. Imposing wage controls on the economy drives a wedge between the supply of labor and demand for labor. This actually increases unemployment, the one problem that the minimum wage was designed to fix. Paul proposes lower taxes and deregulation which he argues would promote job growth.

But the spending, inflating, and government intervention is not just a problem itself, according to Paul. Another more serious issue is the discriminatory means by which Congress hands out its benefits. While it has passed laws to make it more difficult on the average person to discharge their debts through bankruptcy, Congress has bailed out several high-profile institutions using taxpayer money. Lockheed Corporation, the City of New York, Chrysler Corporation, and the Long Term Capital Management hedge fund are just a few of the companies or governments that Congress has considered taking money away from poor and middle class individuals and giving it to the fiscally-incompetent wealthy.

Even before these private corporations or governments get into enough trouble to consider bankruptcy, they can receive billions of dollars of the people’s money in corporate welfare benefits. For example, the two largest beneficiaries of aid from the Export-Import Bank are Boeing Corporation and the nation of China. It is inconceivable that the poor and middle class of America should be subsidizing corporations and competitors in foreign nations.

Before Enron collapsed in late 2001, it was also the recipient of billions of dollars in welfare. The company was one of the largest beneficiaries of the Eximbank, receiving nearly $600 million courtesy of the average American. The Overseas Private Investment Corporation also provided the company with nearly $1 billion to pursue twelve projects in foreign countries, many of which turned out to be complete wastes (the power plant Enron financed and built in India remains unused to this day). The funding provided to the company in the form of loans will not be repaid, and the bill will end up being paid by the average American.

Companies like Enron also benefit from indirect government intervention in the market. The fact that the company met all of the regulations and rules required by the Securities and Exchange Commission gave investors, trusting in government institutions, a false sense of security because their financial statements were not in question by the SEC. The easy credit provided by the Federal Reserve also allowed Enron to receive uncollateralized loans from large banks. These loans also will most likely never be repaid now.

Of course, no government intervention would be complete without a contradictory intervention to complete the cycle of irony. On one hand, Congress passed the Sarbanes-Oxley regulations (which Paul would get ride of) in the wake of Enron’s and Worldcom’s collapse, which were designed to provide more openness in financial reporting. On the other hand, they continued waging a war against the financial privacy of individuals with more attacks on personal liberties after 9/11 under the banner of the open-ended War on Terror. Concealing their own intentions to attack financial privacy rights of the people, these previously rejected proposals were resurrected, colored with the broad brush of “fighting terrorism,” and thrust on a fearful public.

Throughout this book, Ron Paul’s consistent message has been that of limiting the power and size of government and increasing the liberties and power of the people. The enormous tax burden on the people, along with thousands of regulations interfering in the free market, and the unaccountability of an overspending, inflation-creating government have significantly eroded the people’s awareness of their own power to control the government that has supposedly been created to protect their life, liberty, and property. Paul has always stated that it was his intention to leave a record of his beliefs on the proper role of government and practice the principles he holds regarding government intervention into welfare spending and the free market. This book, Pillars of Prosperity: Free Markets, Honest Money, Private Property, is a valuable part of that record and shows that the Congressman is one of the few politicians who believes that the principles of liberty are what make this country great, rather than the politics of special interests.

Part I - The Economics of a Free Society
Part II - Mises and Austrian Economics: A Personal View
Part III - Reforming Social Security
Part IV – Giving Money Back to the Taxpayers
Part V - Money and Banking: Gold versus Fiat
Part VI - Free Trade: Real versus Phony
Part VII - International Affairs
Part VIII - How Government Distorts the Housing Market
Part IX - Spending, Taxes, and Regulations

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Ron Paul's "Pillars of Prosperity" Part VIII: The Housing Market

February 7, 2008, 1:39 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 8 – How Government Distorts the Housing Market” is discussed here.

This is another shorter section of the book presenting some of Ron Paul’s statements on government involvement in public housing and the real estate market in general. His statements are especially relevant now, as many of his predictions have come to pass and have led to the housing market meltdown now being experienced. Subprime lenders have gone out of business even as more homeowners than ever are facing foreclosure and fewer homes are being built or sold.

Government intervention in the housing market creates the bubbles that attract capital from other sectors of the economy. Money that could have been invested in other productive capacity, or education or transportation is instead put into real estate. As Paul has argued in other sections, this diversion of capital that creates bubbles is a symptom of Federal Reserve monetary manipulation through the lowering of interest rates. Low interest rates indicate to home builders that they should be investing in long-term capital and building more homes. When the rates rise, and buyers can not afford the homes, the builders find out that they have put up more homes than were necessary, and prices must come down from artificial highs.

As with most problems in the economy, Paul sees the housing market bubble as being caused by the Federal Reserve. Especially when interest rates were lowered to near zero percent in the early part of this century, consumption was promoted over saving. The bubble began to accelerate in real estate as long term capital projects became easier to finance with loose credit. Banks were also taken in by the low rates and loaned money to buyers and builders who did not qualify for the payments, but the banks counted on the value of the properties continuing to increase.

The Government Sponsored Enterprises also contribute to the problem of malinvestment, because the government guarantees that these investments will be taken care of in the event of serious problems. Institutions like Fannie Mae, Freddie Mac, and the National Home Loan Bank Board have a credit line through the US Treasury, and the Federal Reserve is allowed to take their debt and monetize it. The GSEs are essentially underwritten by the government, which allows them to attract capital in the absence of sound management and accounting. Paul argues that, “After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurances that they follow accepted management and accounting practices.” They also receive billions of dollars in subsidies from the federal government each year, increasing the distortion of the housing market.

Public housing is a sector of the housing market that is in even worse condition, according to Paul. The government first got involved in providing homes to poor people in 1937, and the Department of Housing and Urban Development (HUD) was created in 1965. The results of intervention so far have been far from promising, with endemic corruption, drug-ridden housing, projects that only last for a short period of time, and cost too much. As Paul states, “There are more homeless now, after spending nearly $600 billion over these last 20 years, than we had before.” It is clear that public housing programs courtesy of the federal government has been a near-complete failure and has actually driven away prudent investment in this sector of the housing market.

Another problem with public housing is that there are so many regulations and taxes that it is difficult for builders to provide affordable housing for the poor. Paul’s solution is to repeal these taxes and regulations and let the market take more care of those people in need of housing: “A better way of guaranteeing an efficient housing market where everyone could met their own needs for housing would be for Congress to repeal taxes and programs that burden the housing industry and allow housing needs to be met by the free market.” Government, again, is the problem, and proposing more government intervention will not solve the problems that government creates.

In this short chapter of the book, Paul argues his case that the bursting of the housing bubble had its roots in the special nature of the Government Sponsored Enterprises and the interest rate manipulations of the Federal Reserve. Both attracted capital in the housing market that would not otherwise have been diverted there in the absence of the easy credit and government guarantees. But no matter how much government intervention occurs in a market, there always comes a time when the bubble bursts, usually because of the Fed reversing policy and raising interest rates to cool down a market. This intervention results in the inevitable collapse that was caused in the first place by intervention, but the public, politicians, and Wall Street only call for more intervention to solve the problem, just as we are witnessing now with lower interest rates.

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Ron Paul's "Pillars of Prosperity" Part VII: International Affairs

February 6, 2008, 1:01 am

This section is really a continuation of the previous discussions on free trade and managed trade by the international bureaucrats. Instead of a more general overview of what free trade consists of, Ron Paul spends more time looking at specific institutions and policies that undermine trade, such as the International Monetary Fund, World Bank, World Trade Organization the American practice of giving direct foreign aid to other countries, deservedly or not. He has consistently argued that US foreign policy is often a choice between countries obeying the US government and receiving generous aid packages, or becoming the target of economic sanctions and war.

The practice of giving out American taxpayer money to foreign nations has been a complete failure, according to Paul. Although it is meant to prop up socialist governments or to be used in the support of their economies, the aid only promotes the status quo, while taking money from poor Americans to give to the rich elite in poor, Third World Nations. This helps neither Americans nor people living in foreign countries.

Not surprisingly, though, the entire concept of foreign aid is sold to Americans as helping them, as well as helping poor people in poor countries. For example, Plan Colombia and its successors have been sold throughout the years to the American people as fighting the “War on Drugs” and the “War on Terror.” In fact, though, the real purpose is to provide a subsidy to the Colombian government and US oil companies to protect their pipelines from damage in the civil war that has been going on in the country for decades.

Foreign aid also helps these poor countries cover up the weaknesses in their economies and weakens the American economy. Paul writes that “foreign government welfare, and there is no better name for it, takes money out of the productive sectors of the economy – the paychecks of middle-class Americans – to reward economic mismanagement and political corruption.” The foreign governments are able to put the aid money in sectors that would not be able to compete in a free market, and this fosters corporatism. Businesses can ally themselves with the government and receive the international welfare from the US politicians. This obviously leads to the political corruption that is endemic in Third World nations that receive foreign aid, with families and cronies of the leaders setting up shell businesses and absconding with the aid money.

Even though most countries do not benefit from US foreign aid, refusing to do as the government instructs results in even more serious consequences, usually in the form of economic sanctions, such as are on Cuba and Iran and were on Iraq during the 1990’s. As he states, “Congress passes legislation calling for regime change, sanctions are imposed, and eventually we are told that only an attack will solve the problem.” According to Paul, this act is just one half-step short of war and will usually lead to war, with Iraq being the most obvious example of sanctions that failed to depose the dictator, caused tremendous damage to the people of the nation, and led to an undeclared, no-win war in the Middle East.

Paul argues against both foreign aid and sanctions for their propensity to lead to war, which has far more negative consequences to the American people and economy. To finance the wars, the government must inflate the money supply, taxes increase during wartime, and deficits skyrocket. But even in the waging of the war, all of these extra funds get sent overseas, which creates the desire for certain segments of the US economy for protectionist policies and tariffs. The government also grows during war, with a corresponding loss of civil liberties for the people.

But sanctions, even when they do not lead directly to war, have extremely negative effects on the economies of both countries who are parties to the sanctions. In addition to costing jobs and hurting the people of the nations, sanctions also cause the people to back dictatorial leaders who would not have popular support if sanctions were not imposed. As well, they hurt American businesses that have markets closed to them by government fiat, not by the working of the free market.

Besides the US government’s involvement in this whole charade, there are a host of extra-government agencies who also participate. The World Trade Organization, despite its stated benefits, does not promote free trade and it attacks American sovereignty. According to Paul, membership in the organization is illegal, as the government is bound by WTO decisions and obligated to change laws that the WTO panels deem necessary. Likewise, the Export-Import Bank subsidizes the main competitors of American business, with China receiving more aid than any other country. The World Bank, as well, promotes state-run corporate capitalism by lending money to Third World dictators who steal the money, run off, and leave the people to pay the bills, which they are frequently unable to do.

However, it is the International Monetary Fund that draws most of Paul’s ire in this part of the book. Just a few of the ills of the system he mentions include the IMF’s promotion of worldwide inflation, foreign aid to insolvent nations, and the fact that membership in the Fund specifically forbids countries from linking their currency to gold. Although its stated purpose was to provide reserves to solve international payment problems, the IMF instead creates liquidity throughout the world, facilitating a transfer of wealth in the form of subsidies to Third World socialists and First World banks. As Paul states, “By creating added liquidity, the IMF can indeed redistribute wealth, but it cannot create new wealth.”

Thus, billions of dollars from the IMF goes to large international banks and when the loans to the poor nations go bad, the American taxpayer is left with the bill. According to Paul, “the IMF forces American taxpayers to subsidize large, multinational corporations and underwrite economic destruction around the globe.” This is despite the fact that the institution has over 100 million ounces of gold on reserve and no reason to burden taxpayers; when their programs go under water, the bureaucrats appeal to the US government for more money to bail out the banks that made the bad loans.

But this possibility of receiving a bailout courtesy of the American people goes a long way to creating the moral hazards that make the collapses a certainty. Banks know there will be no consequences for their poor lending decisions, so they keep investing in bad sectors of poor economies, and the recipient countries of IMF funds end up with huge amounts of unserviceable debt. These very conditions were seen in the failure in Argentina and the 1997 Asia crisis, when numerous countries’ currencies’ values dropped dramatically in the space of weeks or months.

The cost and problems associated with these international policies, according to Paul, far outweigh any supposed benefits received by the American government or taxpayers. In fact, many of the policies only create more problems that the bureaucrats will then feel the need to step in and “solve” with more of the same solutions that caused the original problem.

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Ron Paul's "Pillars of Prosperity" Part VI: Free Trade: Real versus Phony

February 5, 2008, 8:38 pm

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 6 – Free Trade: Real versus Phony” is discussed here.

One of the more common charges that Ron Paul has been labeled with throughout his presidential campaign, when he has not been ignored entirely, is that of being an “isolationist.” This has mainly come from those who believe that printing money, manipulating gold prices, micromanaging international trade, providing foreign aid and welfare to come corporations an nations over others, invading countries, dropping bombs, and putting economic sanctions on countries for ten or forty years are to be considered wise, free trading policy. Paul has routinely defended against the absurd charge by labeling the above acts as economically isolationist, while stating his own beliefs about free trade between nations, low tariffs, no economic sanctions, and peace.

Paul’s case for his vision of free trade comes from, of course, the Constitution of the United States. He cites the interstate commerce clause as being motivated by a desire of the framers to make sure that the states of the Union could not put trade barriers on each other. He also argues that tariffs are a tax on the consumer who has to pay more for foreign goods, and an indirect subsidy to the industry that benefits by the tariff and can then compete despite weaknesses. “Make no mistake about it, these tariffs represent naked protectionism at its worst, a blatant disregard of any remaining free-market principles to gain the short-term favor of certain special interests.” In a real free market, there would be no protectionist tariffs.

Even in the case of tariffs to protect American industry, though, no government intervention would be complete without an accompanying irony that contradicts the first action. Paul also states that foreign aid and military subsidies (like defending Japan and Korea more than half a century after World War II and the Korean War) actually subsidize business competitors in foreign nations. Taxpayers send their money to the government in the form of taxes, and the government promptly ships the money overseas as a subsidy to countries like China. This encourages the exportation of jobs due to lower production costs overseas, and then American industry, which can not compete, requests protectionist tariffs. Either way, the government gets more money at the expense of the consumer: first in the form of taxes, then in the form of tariffs, both paid for by individuals.

Paul also argues against what he sees as managed trade agreements, such as NAFTA, GATT, and the World Trade Organization (WTO). All of these benefit special interests instead of promoting free trade, and represent a loss of US sovereignty to international organizations. Free markets do not require constant intervention by extra-governmental agencies, which can impose on the United States and force the government to change its laws to protect businesses in other parts of the world.

The WTO commits especially egregious errors in this regard, according to Paul. Based on the decisions of its panel, it can dictate trade policy and even tax law to America, and Congress is then obligated by the terms of membership to change the laws. Not surprisingly, this constant back and forth between nations and special corporate interests results in a low-level, continuous trade war. Combined with the fact that constant government intervention in markets causes prices to rise, the WTO seems to be more interested in maintaining the status quo in higher prices, rather than going along with the free market phenomena of generally falling prices.

Thus, organizations like the WTO and agreements like NAFTA, instead of strengthening free trade, have instead fostered economic isolationism. This comes in the form of increased hostility from our trading partners, as well as threats of economic sanctions against the United States if it does not change its laws to conform to the demands of the WTO. One world central planning of trade does not fit into a free market system, as Paul argues.

Furthermore, these types of agreements most often benefit powerful, politically-connected corporations, rather than the people that Congress so often invokes to rationalize away its counterproductive policies. While quoting the general welfare clause of the Constitution, these politicians take money from the general public and hand out very specific welfare to big business. As Paul states, “Most little people never get benefits from this. It is the large corporations that lobby us so heavily to endorse these programs.” This is at the expense of the general welfare of taxpayers and a direct subsidy, courtesy of these taxpayers, to special interests.

One of these corporate welfare institutions is the Export-Import Bank, which provides government subsidies for American companies. But the government does not have any resources and produces nothing, so it must steal money from taxpayers to benefit these large, politically powerful corporations. The end result is a redistribution of wealth from the poor and middle class to the wealthy. According to Paul, “The case for the Eximbank is further weakened considering that small businesses receive only 12-15 percent of Eximbank funds the vast majority of Eximbank funds benefit large corporations.” As a case in point, he cites the fact that Enron had received $1.9 billion in government subsidies from the Export-Import Bank, Overseas Private Investment Corporation and other government institutions.

The artificially strong dollar, backed by military might, oil being priced in dollars, and its status as the reserve currency of the world, has allowed the US to continue running its worldwide welfare-warfare state. Foreigners who still accept the dollar allow America to finance this extravagance, and the government obliges by handing out welfare to poor and rich individuals, foreign nations, and corporations. But none of this constitutes free trade even if it was meant to benefit the average person (which it most certainly was not), according to Paul, who argues against these blatant government and extra-government interventions. He states the case better than anyone else: “What most Washington politicians really believe in is government-managed trade, not free trade. True free trade, by definition, takes place only in the absence of government interference of any kind.”

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Ron Paul's "Pillars of Prosperity" Part V: Money and Banking: Gold vs Fiat

February 4, 2008, 1:01 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 5 – Money and Banking: Gold versus Fiat” is discussed here.

This part of the book is by far the longest, taking up nearly half of the total content in almost 200 pages. As such, it would be improbable to do a completely thorough review of such a long section, so only a brief overview of some of the topics discussed will be presented. From the title it is clear that Ron Paul discusses his views on monetary policy, the banking system, and his preference of stable money backed by gold.

Many of the ills of big government are a direct result of our flawed monetary policy, according to Paul, which encourages government and people to spend more than they take in and live beyond their means. Since the politicians in Washington are not able to fund through tax revenue all of the welfare benefits and keep the American Empire spread throughout the world, and they can not borrow enough from overseas to make up the shortfall, inflating the money supply through the Federal Reserve’s printing press is relied upon. Thus, one of the main ways that Paul recommends reducing inflation, decreasing the size of the government, and preventing unnecessary wars is to decouple money and politics by deregulating the value and supply of money, and end the system of the Fed manipulating interest rates and inflating the currency.

Inflation is not a problem of the free market. Only the government can cause prices to rise by diluting the supply of money and printing more of it. When the government blames rich Arabs for rising fuel costs, or labor unions, or greedy businessmen, it is shifting the focus to symptoms. The real cause of the inflation, however, is with the government, as prices would generally fall in a free market economy. This problem, though, is not even recognized by the politicians. When weaknesses appear in the economy, both the right and left sides of the aisle, instead of addressing the problem of government intervention, request that the Federal Reserve keep inflating the money supply, at ever increasing rates. Combined with the fractional reserve banking system, which allows a bank to loan out far more money than it has on deposit, this system greatly debases the value of the dollar.

Paul cautions that this system can not last forever, although the United States has done a remarkable job so far of keeping the system of paper money going. This is more a result of collusion between central banks of the world and the military might of America, though, rather than a vote of confidence in fiat currencies themselves. For decades, the government has been able to export its inflation by selling Treasury bills to foreign governments. Through this method, the banking system creates even more dollars that keep up the perception of wealth, even though Americans are producing less and living far beyond their means.

But even in the event that foreign central banks slow down their purchases of US debt, the Federal Reserve is there to step in. The Fed will increase its own purchase of government debt in order to prop up the dollar. The central banks also devise agreements whereby they can prop up or drive down the value of certain currencies of foreign nations, or try to drive down the price of gold. Propping up the dollar by helping out the Federal Reserve and buying Treasury bills is high on their list of priorities, due to the dollar’s status as reserve currency of the world. Keeping the price of gold down, though, is even more important.

Concern for the price of gold and the manipulation of that price through the sale and leasing of gold concerns Paul. He states that the Fed and other central banks have dumped gold on the market in order to keep its market price artificially low. The banks do this because a high gold price is a vote of “no confidence” in the paper system, which would lead to more people recognizing the real weaknesses in fiat money. This is a realization that the central banks would rather people do not have, as they would lose their ability to control the wealth of countries.

It is this manipulation of the currency that seems to concern Paul most. Besides the fact that the Constitution gave Congress no authority to create a central bank to print paper money, Congress goes even further. It ignores its responsibility, stated in the Constitution, to maintain a sound money system. First of all, the Federal Reserve is not audited, and only provides information to Congress on its own terms, even discontinuing the publishing of important economic figures. The Government Accountability Office is forbidden to audit the Fed, due to its independence from politics. However, Paul states that this independence is nothing more than a legal fiction, and Congress should not be ignoring its responsibility to provide constitutional money and a free market. The Fed promotes the opposite of both of these.

Another extra-governmental agency that Paul criticizes is the International Monetary Fund, for its gold sales and the fact that it is an international welfare agency funded by American taxpayers. Because of its nature as a foreign aid vehicle providing money to Third World nations whose dictators steal the money and whose people will never be able to pay back the loans, Paul believes it should be under the control of Congress. Especially since the IMF has stores of gold that it could sell but instead requests money from the American government, its independence and usefulness are very questionable.

How did the dollar become the reserve currency of the world, giving the American government a license to print money, inflate the currency, provide welfare to individuals, foreign governments, and corporations, and maintain a worldwide empire? Paul sees the beginnings of the system appearing in the first part of the 20th century with dollar diplomacy. After World War II, when the dollar became the basis of the international gold exchange standard, it became the world’s preferred reserve currency. When the US defaulted on its gold payments in 1971, it managed to persuade Saudi Arabia and OPEC to price oil solely in dollars. This contributed to the furtherance of dollar hegemony, as there was a worldwide demand for dollars with which to purchase oil. Also, foreign producing countries, who wished to sell their products in rich American markets, received dollars for their goods, spreading the currency even further.

The overwhelming military might of the United States must also not be overlooked, according to the book. The system created an artificial demand for the dollar, which had been “as good as gold” until 1971, and then was backed with oil sales. But the real backing of the dollar is the military, which allows America to rule its empire without saving money or producing goods.

As mentioned above, this is only a very short overview of some of the issues that Paul discusses in this section of the book. Just a few other ones worthy of mention include a lengthy defense of the gold standard which presents his arguments against the most common positions of opponents of the system, the impossibility of monopolies in a free market, the uselessness of the CPI and PPI indicators in gauging the strength of the market, and how much money has been spent on welfare but which has resulted in more homeless than ever. Some of his interactions with Federal Reserve chairman Alan Greenspan are also transcribed, which clearly indicate the futility of asking government bureaucrats a question, as they will only be met with unresponsive answers on technical points of difference, rather than addressing the substance of the argument. The overall concern with stable money and free markets, and arguments against the fiat currency, fractional reserve banking system, though, permeates throughout all of Dr. Paul’s selections in this part of the book, and sets up the reader for the final sections.

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Ron Paul's "Pillars of Prosperity" Part IV: Giving Money Back to Taxpayers

January 31, 2008, 1:01 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 4 – Giving Money Back to the Taxpayers” is discussed here.

This section of the book, similar to the discussions on Social Security, is mainly presented through the various pieces of legislation that Ron Paul has supported. All of them focus on providing tax credits, repealing certain taxes, or attacking the federal income tax as a whole. It is no secret that Paul’s belief is that the 16th Amendment, supposedly authorizing the income tax, should be completely done away with and replaced with nothing.

Instead of doing away with the income tax and replacing it with a value-added tax, or a flat tax, his solution is to reduce the size of the federal government so that its expenses can be paid through other means. The income tax did not even exist before 1913, and repealing the income tax now would allow for a government the size of what the US had in ten years ago, which was not insubstantial. The size of the government should be cut back, according to Paul, because of the numerous ills of big government (socialism, central planning, the business cycle, special interest lobbying, perpetual war, attacks on civil liberties, destruction of the value of money, and so on).

Thus, it is no surprise that many of the bills that have been supported or introduced by Paul have to do with allowing the people to keep more of their money. Some of these include the Family Health Tax Cut Act, which would have provided a tax credit to families with children with serious medical problems in order to provide medical care; as well as the Teacher Tax Cut Act, which would have provided credits to teachers, counselors, librarians, and all employees who work in the public K-12 public education program. If the entire tax can not be repealed all at once, then it should certainly be reasonable to allow people to reduce their tax burdens.

Some of the other bills he has supported attempted to do away with certain aspects of the tax system that he (and most logical people) views as unfair. For example, there is a tax on the sale of livestock sold by children who participate in an agricultural education program. With so many laws being passed in Washington sold to the public as “for the children,” it certainly does not make sense to expose them to the complexities and absurdities of the income tax code before they are even able to vote for the candidates who will pass laws about and administer the system, does it? But the Congress, those ultimate protectors of “the children,” is only too happy to take their share of a child’s revenue from the sale of livestock used in an education program.

Paul attempts to prohibit another thinly-veiled attempt at outright theft by the IRS when he introduces the Public Safety Tax Cut Act. Certain local governments are in the habit of using volunteer public servants to provide for firefighting, for example, and these volunteers may be given incentives to encourage their participation. These incentives usually include the waiving of fees for water, sewer, or garbage pickup services. The IRS, though, decided to tax the value of these incentives as income to the volunteers, even though they may receive no money directly from them, and they may be one of the main recruiting tools used to procure volunteers. Paul attempts to overturn this ruling, exempt the incentives from the personal income tax, and then goes another step: he even wanted to provide a tax credit to these volunteers for their time and effort.

Another of his concerns is education. With the Teacher Tax Cut Act, he attempted to provide tax credits to workers in the public school system, and with the Family Education Freedom Act, he looked at the other side of the coin: those who send their children to school. The purpose of this bill was to provide a $3,000 tax credit so parents could send their children to any private, public, or religious school, or home school them, without feeling unduly financially chained to the public school offered locally. Paul makes the point of pointing to the concept of consumer sovereignty, another term borrowed from Austrian Economics, to emphasize that it should be the market that chooses which forms of education succeed or fail.

But Paul does also take aim directly at his target of eliminating the income tax and IRS completely. He has introduced the Liberty Amendment, which does exactly this by repealing the 16th Amendment to the Constitution. But this amendment would go even further, by specifically prohibiting the federal government from passing any laws not authorized by the Constitution. As Paul states, “The income tax opened the door to the era (and errors) of Big government.” Thus, it was the imposition of the income tax that led to the trend of massively increasing the size of the government..

Of course, this section would not be complete without at least one attack on the other institution equally or more responsible for Big Government: the Federal Reserve System. The federal income tax transferred more of the peoples’ money to Washington, allowing an enormous growth in the size of government. But growing government breeds more growth, which can not be contained by revenue or borrowing, especially with a legal printing press like the Fed. One of the many consequences of this is that all restraints of spending are thrown out the window, while such other companions are invited in, like the business cycle, debasement of the currency, and growing deficits.

It is this philosophy of spending that Paul eventually returns to, as well, in discussing tax cuts. His thoughts on this issue are quite prescient, as Congress is now planning to issue $150 billion in tax rebates. But, according to Paul, the politicians do not even know what will happen with a tax cut, whether the economy will be stimulated and for how long. And the idea that some bureaucrats have which considers a tax cut a “cost to government” falls even wider of the mark. Spending is the problem in the first place, and the peoples’ money is simply not Congress’ to spend.

Although the government does not know what will happen with any tax decrease, Paul does profess to know what happens when an income tax is imposed or when taxes go up. The fact that a large amount of money is taken out of the economy all at once will certainly not stimulate growth. The very process of taxation takes peoples’ earnings out of the market, taking from them the decision-making power that creates value in goods and services, and puts that power in the hands of the central planners.

Thus, Paul’s concern with giving the people their money back or allowing them to keep it in the first place, fits neatly into his philosophy of free markets, and the fact that markets work more efficiently than government planners will ever be able to manage. His beliefs in the individual sovereignty of the people is also represented in his attempts to repeal certain taxes, overturn unfair, unproductive IRS rulings, and do away with the 16th Amendment entirely. Rolling back the size of government and increasing personal freedom would work in conjunction with each other, just as the income tax, Federal Reserve, growth of Big Government, and loss of civil liberties have worked together to bring the country to its current instability.

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Ron Paul's "Pillars of Prosperity" Part III: Reforming Social Security

January 30, 2008, 1:01 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 3 – Reforming Social Security” is discussed here.

In this relatively short (six pages total) section, Ron Paul outlines some of his positions on the issue of Social Security. It is not really any secret that the system is broken, unfair, and soon-to-be insolvent, with much of the trust fund consisting of the equivalent of IOUs from the government, as receipts in excess of current expenses are spent by Congress, instead of being allowed to collect interest in a secure fund that would allow the system to survive. When Social Security takes in more than it pays out, the government sells the fund a bond, taking the actual money and spending it.

With Paul’s well-known propensity for voting against anything that could be considered spending by the government, as well as cutting back current levels of spending, his position on the Social Security question is pretty basic, and has been presented in numerous interviews he has done. Essentially, he would allow the younger workers to opt out of the system and take care of themselves, with the end goal being the abolishment of the entire system. In the meantime, those who are dependent on Social Security payments for their retirement or medial benefits would still receive their payments. No one would have benefits eliminated.

The source that Paul presents for this solution is cutting back on the nearly one-trillion dollar per year military budget, saving hundreds of billions of dollars by bringing troops home from across the world. Instead of providing subsidies care of the American taxpayer to governments like Japan, South Korea, and Germany, where the US still stations troops to provide for the defense of these countries, this money could be used to pay the promised benefits to those who are in the Social Security system.

The section of the book discussing Social Security, though, presents more of Paul’s arguments against the flaws in the system itself, and Congress’ willingness to lower benefits and take the money in the trust fund for its own benefit, rather than his arguments for shutting down the American Empire. Of course, it should be mentioned that the over spending, borrowing, and raiding of the trust fund are all integrally related to the 700 military bases in 130 countries. But Paul’s arguments in this chapter, surprisingly enough, are not against the Social Security system itself; he argues for the protection of the fund, and his positions are presented through his discussions of four pieces of legislation he has supported over the years.

The first of these, the Senior Citizens’ Freedom to Work Act (H.R. 5), aimed to repeal earnings limitations on seniors who choose to work, in addition to being eligible for collecting Social Security benefits. If seniors decide to provide some benefit to the economy, if they are too valuable and are paid too much, the government will reduce their benefits. This is unacceptable to Paul, who argues that these benefits were promised to the workers for paying into the system for many decades. Reducing their benefits because they choose to continue working encourages seniors to keep collecting their government checks while providing no services to the market. Ironically enough, these seniors became eligible for Social Security benefits by paying into the system through working; and now the government tries to reduce their benefits if they keep working.

The Social Security Tax Relief Act (H.R. 4865) aims at another ironic policy of the federal government: namely, that of taxing income from Social Security payments. This bill’s purpose was to repeal the 1993 tax increase on benefits. Paul states that repealing this tax had been one of his goals in Congress for a long time. He argues that taxing these benefits is a form of double taxation, where workers were taxed to pay into the fund and are then taxed when receiving their eventual benefit from the trust fund. Taxing Social Security benefits is also an underhanded method that Congress uses to reduce the total amount of benefits paid out. In addition to their inclination to seize any excess money in the trust fund, the fact that Congress would also attempt to reduce benefits represents nothing more than double theft of a worker’s income, while calling it a benefit.

It is this raiding of the fund that is the target of the next legislation presented in the book. The Social Security Preservation Act, introduced by Paul in 2003, attempted to require all payments made into the trust fund to be used solely to pay out benefits. Any excess receipts would then have to be invested in interest-bearing certificates of deposit. He is obviously concerned with Congress’ ability to make good on the promises it has made to the American people to pay them their benefits for paying into the Social Security system. This bill’s purpose was to protect the system from the massive deficit spending making even greater the temptation to steal from the trust fund due to the “conservative” policies of the Bush administration and Republican Congress which was in power at the time.

The final bill presented accompanies some of the most surprising information in the book up to this point. The name of the bill is the Social Security for American Citizens Only Act and was introduced by Dr. Paul in 2003. Paul discusses two serious problems with the Social Security system that this bill is designed to address. First, it ends the practice of totalization, which has been used to determine eligibility of Americans who spent time working in other countries and was not paying payroll taxes.

But the most astonishing portion of the bill is its forbidding of the government from paying Social Security benefits to noncitizens, as if this should have to be spelled out specifically to lawmakers! Even more astounding is Paul’s statement that the United States currently provides benefits to citizens of 17 other countries. He is also targeting a rumored deal between the American and Mexican governments, which would make hundreds of thousands of Mexican citizens eligible for benefits, even if they come to America and work illegally, and worked for less than the required amount of years to qualify for benefits. But they would be able to collect Social Security back in Mexico regardless of this fact.

Paul presents a quite logical argument against this absurdity and the illegal immigration problem as it already stands when he states, “How many more would break the law to come to this country if promised U.S. government paychecks for life? Is creating a global welfare state on the back of the American taxpayer a good idea?” He also equates this policy of providing Social Security to noncitizens as another form of foreign aid, which Americans are already forced to provide, in addition to all of the voluntary donations the American people contribute to foreign countries and charities. It is inconceivable that any person would volunteer to pay taxes into a fund to provide retirement benefits to citizens of other countries, or think that this is a good idea.

Although this is the shortest section of the book thus far, it contains some of Paul’s least-discussed positions in relation to the problem of Social Security. Although he has stated numerous times that he has never voted to spend a penny of the trust fund, and he would like to give young people a choice to get out and fund the system with savings from dismantling the Empire, it is clear that Ron Paul has been waging a smaller battle for years in Congress to preserve the system and make sure that the government makes good on its promises to the American people.

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Ron Paul's "Pillars of Prosperity" Part II: Mises and Austrian Economics

January 29, 2008, 1:01 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 2 – Mises and Austrian Economics: A Personal View” is discussed here.

This short essay, originally published by Paul in 1984, represents his personal reflections on the influence of the Austrian School of economics on his political life. He states that his original decision to run for office was based primarily on the wage and price controls established by President Nixon in 1971.

Once he was elected as a representative, Paul has tried to influence policy through educating his fellow colleagues in the principles of the free market and the dangers of interventionism. He does admit the difficulties in pursuing this path, with politicians relying on the usual techniques of Washington, which aim to serve the special interests of various powerful pressure groups. However, this type of utilitarianism is ultimately doomed to failure, as it breeds more and more economic interventionism.

Paul states that every argument made by politicians on the House floor is based on utilitarianism, rather than principle. In such an environment, it is all to easy for them to rationalize any position at any time for any purpose and serve as little more than demagogues. They even begin to believe in their own central planning abilities. What these unprincipled positions represent to Paul, though, is the average Washington politician’s lack of will in standing up to and resisting the special interests. “For the most part, the Members [of Congress] are well-intentioned, ostensibly pragmatic do-gooders –- ‘pragmatic’ enough to latch on to the interventionism most beneficial to their particular political needs and to provide an intellectual defense.” Thus, the pressure groups are able to convince representatives to defend almost any policy, persuading them to abandon principle and argue how one position or another is the best right now.

It is clear that the Austrian subjective value theory has heavily influenced Paul’s opposition to intervention in the free market. In fact, he says that the theory explains why intervention does not work, and refers to Austrian economist Ludwig Von Mises’ explanation that prices under a socialist system can not be established. Either the people use their judgment to establish prices and what should be produced, or the government arbitrarily imposes prices and production through force. The argument of the labor theory of value, used (consciously or not) by politicians to establish and secure “fairness” in the economy distorts the market; the subject theory of value explains that planned economies are simply impossible.

Another argument that has obviously influenced Paul is that money is a commodity in the market. In the hands of government, though, politicians try to make money a product of the State. This is another unnecessary, dangerous intervention in the market, though, as the value of money must be determined subjectively by the market. Even the positions of pseudo-free market advocates of the Chicago School of economics miss this point through their “quantity value” of money, which supports the manipulation of the money supply and interest rates by a central bank. Also, by its condemnation of commodity money and rejection of the subjective theory of value, monetarism proves itself to be wrong.

A short but interesting analysis is made by Paul when discussing the pivotal year of 1913 in the history of the United States. Mises had published his “The Theory of Money and Credit,” but America, led by Woodrow Wilson at the time, chose the path of central banking with the creation of the Federal Reserve System and the institution of the income tax. According to Paul, “The subsequent cost in human suffering and loss of freedom has been immeasurable.” Much of Paul’s career has also been a response to the interventionist legacy of Wilson and an attempt to put the country back on the path toward free markets and liberty.

It is this acceptance of economic interventionism, through the central bank and fiat currency, which creates such social woes as the business cycle, unemployment, international crises, and war. The business cycle is caused, according to Paul, by the distortion of interest rates, which causes malinvestment in certain sectors of the economy, leading to skewed economic calculation due to the manipulated credit creation. Preferential treatment by the government of business and constituencies also contribute to weaknesses in the market.

But when the bubble inevitably bursts, the real causes are never examined. Instead, recoveries lead to more spending and credit creation, which is directed to another segment of the economy, looking for a new bubble to form to keep the speculation going and the entire system from collapsing.

Paul has always been concerned with government intervention in the market, arguing along the lines of Mises that American interventionism will eventually lead to a German-style of fascism. Big government in bed with big business, with the apparent private ownership of business and corporations, which receive most of their largesse from the government, which imposes its authoritarian control over the economy, will be the result of increased meddling with the market. Such rules allowing for emergency impositions and an economic dictator are already on the books; according to Paul, this is the inevitable outcome of economic intervention.

As he lists the consequences of these policies, such as excessive nationalism, protectionist policies, economic isolationism, militarism, and war, it is difficult not to hear echoes of the current state of America in the world, waging war thousands in two countries thousands of miles from its shores, more dependent than ever on imported energy resources, and increasingly distrusted by governments across the world, with a currency that is quickly falling in value.

In the final part of the essay, Paul returns to his focus on individual liberty, arguing against Mises’ position on utilitarianism and natural rights. Whereas Mises believed there was no room for a concept of natural rights, Paul argues on the basis of semantics that “Though Mises states that the ‘idea of natural law is quite arbitrary,’ I might suggest that so are the interpretations of utility… Only a concept of natural rights can condemn the ‘perceived’ utility of interventionism.” In the absence of a philosophy of natural rights, the socialists can rush into the vacuum, claim utilitarianism, and win the argument for government intervention.

When a philosophy of natural rights and individual liberty is combined with the utilitarian argument against government interventionism becomes much more powerful. In fact, according to Paul, the power of natural law is such that “those who accept a natural rights philosophy have no choice whatsoever but to accept laissez-faire capitalism.” There simply is no place for the government to intervene in the free market, if people would accept the concepts of natural rights and personal freedom.

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Ron Paul's "Pillars of Prosperity" Part I: The Economics of a Free Society

January 28, 2008, 1:01 am

Over the life of this blog, I have, when discussing monetary policy or various reasons for the state of the economy, linked to a small number of Dr. Paul’s writings, mostly on his economic beliefs, presented in articles and speeches before Congress. Not wanting to change the point of the blog to examining deeper political issues, I had chosen to remain institutionally neutral in terms of political positions. Thankfully, though, Dr. Paul has published a new book, entitled Pillars of Prosperity: Free Markets, Honest Money, Private Property, which contains an extensive compilation of his thoughts on economics and presents an excellent opportunity for a special book review. As a series of special posts, over the next few days (as time allows), I will attempt to examine each part of the book and present a summary of his positions, which have been woefully underrepresented to most Americans. “Part 1 – The Economics of a Free Society” is discussed here.

In the first part of the book, Ron Paul’s overall economic thoughts are outlined, starting with is long-held belief that the path the government has been on for decades is a crisis in the making. This is due to the out of control spending, high taxes, regulation of the market, inflation, invasion of privacy, massive welfare spending, massive military spending, and interventionism overseas.

Paul is obviously concerned that the crisis will have much to do with the destruction of the dollar, which will lead to higher prices. The government will feel the need to intervene in the economy, resorting to “Nixonian-Keynesianism” in the form of wage and price controls. The currency destruction will also create a rush out of the dollar as foreign governments dump the dollar in favor of more sound money.

The role of government in general is also examined. Should the US government be the protector of life, liberty, and property; or should is be the ultimate provider and policeman of the world? Paul strongly argues for the former, with a government based on a constitutional foundation, as opposed to the current system of authoritarianism. As he states, “Current problems that we now confront are government-created and can be much more easily dealt with when government is limited to its proper role of protecting liberty, instead of promoting a welfare-fascist state.” Taking aim at the failed Drug War, he argues that it is based on the concept that the government needs to protect us from ourselves and throw nonviolent drug users in prison, and even curtail the rights of individuals and healthcare professionals to utilize alternative medical practices. On the other hand, he also argues that the government, while infringing on the right to liberty with these types of laws, also infringes on the right to life by legalizing and subsidizing the practice of abortion, both in the US and in other countries. This he sees as dangerous and ironic, which is also a somewhat accurate description of nearly every action governments take.

The theme of international interventionism is also discussed at considerable length, as the move toward more centralized, world government is viewed by Paul with extreme caution. “For over 50 years, there has been a precise move toward one-world government at the expense of our own sovereignty,” he writes. Extra-governmental, international institutions such as the International Monetary Fund and World Bank are funded by the American people, who have no say in what their money is used for, and where it is applied. Poor Americans have their money taken from them and given to an international, unaccountable institution, where it is then given to corrupt leaders in other nations in the form of kickbacks.

Of course, this trend of government giving out favors is nothing new, according to Paul. He mentions former Congressmen who, once they leave office, team up with members of the opposing party in lobbying for special interest groups. After all, the entrenched interest groups need the support of both parties to obtain their handouts from the government in the form of taxpayer money. But government benefits, either to corporations, interest groups, or welfare recipients, causes two problems at once: it takes away money from someone else, and it makes the receiver dependent on government.

The main culprit in this corrupt system, according to Dr. Paul, is the banking system itself, with the Federal Reserve as the head of the snake. The Federal Reserve and the government has undertaken a form of central economic planning, through the tools of fixing interest rates, subsidizing credit, attempting to stimulate the economy, aiding the sick, federally managing education, and creating other welfare programs. This system allows the government to administer these enormous programs and wage perpetual war anywhere in the world whenever the interests of America are involved. The Federal Reserve manipulates interest rates and creates credit out of thin air, allowing us to live well beyond our means with low and negative savings rates, resulting in the fact that “we have abandoned a necessary part of free-market capitalism, without which a smooth and growing economy is unsustainable.” The bubbles in the economy, such as the recently burst housing market bubble, are created from the Federal Reserve creating easy credit; and the nonexistent savings rate, a key driving force of true capitalism, is allowed and encouraged by the system.

In fact, Paul argues that the market system now in place has no evidence of capitalism at all. It is instead a form of “Keynesian inflationism, interventionism, and corporatism.” “A system of capitalism presumes sound money, not fiat money manipulated by a central bank.” According to Paul, this will have to come to an end one day, and it is up to us to determine if it ends gracefully or in a full-blown crisis.

Because of the standing of the dollar as the reserve currency of the world, we have been able to get away with this on such a large scale for so long. Due to the Bretton Woods agreement, the world accepted the dollar as if it was as good as gold until 1971, when the US defaulted on the gold exchange rate. Luckily, though, by this point the dollar was the established reserve currency, which allowed the government to continue its policy of credit creation and inflation.

The manipulation of the gold price itself for many years, as well, contributes to the ongoing belief in the system. Paul cites the fact that, from 1945-1971, the US sold nearly 500 million ounces of gold for $35.00, in order to prop up the value of the dollar. This manipulation still exists today and is practiced by many more governments than just the American one, and is a well-documented occurrence.

But all of this manipulation and intervention can not last forever. Eventually, inflation will catch up with the system, and no amount of government-rigged indicators of “low inflation,” such as the CPI or PPI, will prevent the crisis. Even now, the value of the dollar has been declining, as resources costs and food costs are increasing. Yet, the Federal Reserve stays quite about terms such as “inflation” or “recession.” But inflation is not just rising prices; it is more accurate to define it as an increase in the supply of money and credit, evidence of which is abundant in the market over the past half year, from the Fed injecting billions of dollars into the subprime mortgage bond market, to the new proposal to send millions of Americans tax rebate checks while doing nothing to decrease government spending.

Amidst all of these dire warnings, Paul offers one solution after another in an effort to prevent the potential crisis. Many of the solutions he presents focus primarily on a return to a smaller role for government which protects private property and equal rights and promotes free markets and a sound monetary system. This include returning to a sound money system, reduction of federal spending, lowering income taxes, abolishing taxes on savings, dividends, and capital gains, reducing regulations, ending subsidies to special interests, and no protectionist policies for certain sectors of the market.

Cutting the size of government is integral to all of the policies that Paul discusses. Both domestic welfare to special interest groups and military spending should be ended, as well as doing away with subsidies to various industries or corporations. As well, cutting government does not mean token cuts in the proposed increase of the size of government, according to Paul. The result of decreasing an increase is still a net increase, which does nothing to save the individual or promote the cause of liberty with less government intervention.

These solutions, though, would require the Congress to put a stop to the seemingly endless sideshows of investigating corruption and fraud in the market. These “excesses of capitalism” are presented as failures of the free market, when they are actually the logical consequences of constant government intervention in the market. Billions of dollars have been spent and tens of thousands of pages of regulations have been written on regulations, and more of them will not solve the problems caused by the ones already on the books.

If Congress actually desired to end the largest source of fraud and corruption, it would investigate itself, according to Paul. Shifting the blame onto markets, corporations, or capitalism is missing the real source of the problem; namely, easy credit created by the Federal Reserve, along with interest rate manipulation.

After the near-complete loss in faith of the government by the American people, less than 20% of whom actually cast a vote for the winning president, more government is clearly not the answer. This is central to Paul's argument in this first section of the book, as well as his faith in the individual to act logically and ethically in a free market. It is the passing out of favors, welfare spending, and the loss of individual liberty that are at the heart of this current loss of faith in big government. The government can not create trust in markets. Only trustworthy people can do that.

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Special Post: Metallica - The Anti-War, Anti-State, Pro-Liberty Metal Band?

October 29, 2007, 2:12 pm

I know that a title such as the one above is patently self-evident and possibly redundant, but has Metallica recently made a subtle statement on their libertarian views of the current state of the world? It seems they have done just that in their choice of songs to include in their set lists at the recent Bridge School Benefit in late October, an event at which Metallica played two consecutive nights. In a surprising move, they opened each night by playing four cover songs which they had never before performed. The choices of songs that they felt important enough to play, though, gives an indication of what they may be thinking of the war, the state, and life in general in these United States of America at the present time.

Metallica have been writing songs with anti-war messages for over two decades now. An obvious example, which they played at the Bridge School Benefit, is "Disposable Heroes," from their Master of Puppets album released in 1986. With lyrics such as "Bodies fill the fields I see, hungry heroes end / No one to play soldier now, no one to pretend," and "Bred to kill, not to care / Do just as we say / Finished here, greeting death / He's yours to take away," the emphasis is clearly on the disconnect that soldiers have in killing people they do not know for reasons given to them from people who care more about winning than any moral or personal considerations. Similar thoughts are echoed in songs such as "One" about the plight of a soldier who has been left with no limbs to move, or senses to use, or way to communicate with the world, and therefore no real reason to survive, but who also lacks the ability to end his life.

A distrust of being controlled and manipulated has also been a stable message of Metallica dating back at least to the Ride the Lightning album and the song "Escape." The song that was played at the Bridge School Benefit, though, is a clearer example. "The Unforgiven" is the story of an Everyman who, from soon after the time he is born, is controlled throughout his life. Although he vows "That never from this day / His will they'll take away," his only reaction to a life of being controlled is to label his controllers dub them unforgiven. HIs battle, though he fights it throughout his life, results in his complete lack of care and a regret-filled death. Those controlling the man are never named, but certain characteristics point to a "Brave New World" style State conditioning the individuality out of the man: "The young boy learns their rules," "This whipping boy done wrong," They dedicate their lives / To running all of his," and other lyrics, while not eliminating the possibility of other influences besides the State, seems to point to a system that aims to train and control people against their will to eradicate their own tendencies to better serve the state: "He tries to please them all."

So, Metallica has demonstrated an attitude, through songs spanning both the Old and New eras of the band, of being consistently anti-war and anti-state. Their image, of course, took a big hit on the anti-state position with their battle against file-sharing software such as Napster, when they relied on institutions of the state to defend their claim to intellectual property rights. Having examined Metallica's position on this in great detail, but not having explored the other side of the argument much, I will not try to defend either side in this essay. But moving on from this divisive event in the band's history, we can now explore the statements the band may have been making in their choice of cover songs to play at the 2007 Bridge School Benefit.

The first song played on both nights was Rare Earth's "I Just Want to Celebrate." This song contains a number of pro-liberty statements, such as "I put my faith in the people / But the people let me down / So I turned the other way / And I carry on, anyhow." Of course, this may be a defense of the charge against the band every time an album comes out that they had sold out, but it still illustrates Metallica's emphasis on individual freedom and not caring what the mob thinks. But furthermore, is the line "Had my hand on the dollar bill / And the dollar bill blew away" another in a string of celebrities decrying the falling value of the American dollar? Obviously this is a more subtle message than models wanting to be paid in other currencies, and rap stars flashing Euros in music videos, but it is a message nonetheless, especially as Metallica has deep roots in Europe, with drummer Lars Ulrich being originally from Denmark.

Nazareth's "Don't Judas Me" is a clearer example of being pro-liberty, and may even contain some accurate assessments of the media and its affects on the American population. "Treat me as you like to be treated" is a seemingly straight-forward statement that has been analyzed in its various forms for centuries. The choice of this song, in the midst of media propaganda about the threat of Iran and a police state out of control with daily taserings and intrusive searches at airports, is especially interesting. "Please don't headshrink me / Don't disguise your innuendos / Make no lies to me," and "Please don't number me / Don't betray my trusted promise / Please don't anger me / I find it hard to bear no fairness / Don't frustrate me, manipulate me," could be Metallica's subtle warning to fans to do some research on their own and not trust anyone using a position of power as a bully pulpit. This would fit well with Metallica's own statements that they feel it inappropriate to use their fame to espouse overtly political views, and may indicate a distrust of a government that used their recordings as tool to torture enemy detainees in Iraq, who were unused to heavy metal music.

This focus on a media out of control and glorifying in negative messages is carried through to the next song on the first night, Garbage's "I'm Only Happy When it Rains." Lyrics such as "You know I love it when the news is bad / And why it feels so good to feel so sad" indicates a view that revels in bad news and a misery loves company attitude. Is this choice of song Metallica's statement that only being fed news through the state-influenced media will make listeners willingly complicit in the negative messages? Without a direct statement from the band, of course, the conclusion is left to speculation, but the overall tone of these first three songs seems to show a focus on individuality and a distrust of labeling and easy answers given by a centrally-controlled source, such as the Old Media or the State. Of course, singer and guitarist James Hetfield was himself briefly a subject of the negative news machine, when he was stopped at an airport and reported to be a potentially suspected terrorist, due to his beard. If someone who sells 100 million records worldwide can be considered a terrorist and detained at the airport, who is immune? Of course, the message is that no one is not a suspect.

The last two songs are more overtly anti-war than the others previously described. The first is "Veteran of the Psychic Wars," by Blue Oyster Cult. this one may also be a dual statement on the media manipulations and war itself. Obviously, psychic wars going on here at home are just as important as the real war in attempting to convince the people that war is useful and going well. Weariness of a war going on far too long, along with an assault on personal liberty and privacy, is the message of lines such as "But the war's still going on dear / And there's no end that I know / And I can't say if we're ever... / I can't say if we're ever gonna to be free," and "It's time we had a break from it / It's time we had some leave." Metallica has covered BOC before on 1998's album "Garage, Inc.," but did not use such an anti-war song. Again, the band's own personal involvement in the war, through the use of their songs as an "enhanced interrogation" technique, and the reports of Hetfield being stopped at an airport, may indicate their awareness of a need to make as much of a statement as possible opposing big war and big government. As the song finally asks, "Did I hear you say that this is victory?"

The final cover song that Metallica chose to play at the Bridge School Benefit is Dire Straits' "Brothers in Arms." Although the song, throughout most of it, seems to glorify in the commeraderie of being soldiers for a common cause, the emphasis on this concept of "brothers in arms" is turned on its head in the final lines. The song emphasizes the strength of bonds that are formed "Through these fields of destruction," "As the battles raged higher," and "In the fear and alarm," which may indicate that strength is found in becoming closer to those allies with whom one fights a battle. But, the final lines of the song are "We're fools to make war / On our brothers in arms," using the same "brothers in arms" line to show that all humans have common bonds, no matter that "There's so many different worlds / So many different suns." When individuals go to war for a state, they are making war on their own brothers. Individuals, says the song, have more in common amongst themselves than they will ever have with an abstract state. This message is emphasized in the concert itself as James Hetfield repeats the final lines ("We're fools to make war / On our brothers in arms") numerous times until the end of the song.

So, have Metallica's experiences since the war against terror began affected their views on war, liberty, or the state? It certainly seems as if they have, based on their choice of songs to cover for the Bridge School Benefit concerts. Although these ideas have been expressed in various Metallica songs throughout their history, never before have they played a set with such consistent messages. In fact, that is the aspect of the shows that struck me immediately, having read much on the history of Metallica and their personal views on issues affecting the world. It is mainly through an artist's work that they communicate to us and we can communicate with them, and each concert a band plays is an expression of their own communications with their work and the work of others. In their choice of cover songs, Metallica seems to have laid out a subtle message about their current views of the world and an anti-war, anti-state stance that has only been reinforced over the past years with public events, such as the torture issue and the airport, and their own personal reflections.

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Special Post: "Blackwater" Book Review

October 8, 2007, 12:13 pm

The book that will be reviewed here is Blackwater: The Rise of the World's Most Powerful Mercenary Army, by Jeremy Scahill. The book was published just a few months ago in 2007, and is Scahill's in-depth examination of the private military contractor firm Blackwater USA, based in North Carolina. While other private corporations have numerous contracts with the federal government in places and times of war (for example, Halliburton), the more worrying aspect of Blackwater's role in war is its military mission. Blackwater USA provides, essentially, armies for hire.

However, the book Blackwater also spends just as much time explaining the circumstances and political environment that allowed Blackwater USA to come into existence and increase its participation with the federal government exponentially. Scahill sees the rise of outsourcing government responsibilities in conflicts beginning in earnest with the first Bush presidency with Dick Cheney as Defense Secretary, increasing during the years Clinton was in the White House and Cheney spent his time with Halliburton, and then growing exponentially during the current Bush administration with a Cheney vice-presidency.

Obviously, the main link in this equation is Dick Cheney's interest in outsourcing more and more of government services, including the government's sole right to the use of force. This is the factor that disturbs Scahill the most, along with the sheer unaccountability of Blackwater USA.

Through some legal maneuvering, Blackwater and its mercenaries, though most of the company's existence, has been exempt from the Uniform Code of Military Justice (UCMJ), the court-martial system. This system theoretically imposes codes of conduct and accountability on soldiers who participate in combat and is the foundation of American military law.

Scahill quotes Democratic Congressman Dennis Kucinich to underline his point about the murkiness of the legal environment in which Blackwater USA's contractors operate: the contractors "do not appear to be subject to any laws at all and so therefore they have more of a license to be able to take the law into their own hands." Thus, mercenaries may be able to kill, imprison, torture, or otherwise act outside of the boundaries of the law that govern the actions of official American soldiers.

Blackwater also, according to Scahill, has another problem of accountability. Namely, the author provides some examples of the company not providing necessary security or resources to their contracted mercenaries, which resulted in unnecessary deaths of these contractors. The most visible was the ambush of four Blackwater USA contractors in Fallujah, Iraq, in late March 2004.

Images of the aftermath of this ambush were played on news stations worldwide, as images were shown of Iraqis burning the contractors' vehicles and even burning the contractors' bodies themselves before hanging them from the infrastructure of a nearby bridge. Most news agencies failed to mention that these "private military contractors" were essentially hired soldiers who were providing security for another government contractor, but were understaffed and underarmed, with no clear idea of what they were getting into.

The families of these Blackwater USA contractors see the company as responsible for the death's of their loved ones, but Blackwater has been fighting their lawsuits by claiming the mercenaries knew they were going to be serving in war and had signed waivers acknowledging the possibility of being maimed or killed. However, the families believe that the contractors would be alive if they had had the proper number of men and resources with them on the mission in Fallujah, and that Blackwater knew the dangers and failed to provide the necessary protection the men would have needed to defend or fight off any potential ambush or attack from Iraqis.

The book also raises many other important issues in the story of Blackwater USA, including its relationship to the Christian Right, its hiring of mercenaries from other countries that did not support the war in Iraq (focusing mainly on Chile), the vast differences between the pay of a regular soldier and a mercenary, and its ties to the Central Intelligence Agency through Blackwater's vice chairman Coffer Black.

Scahill also provides much more detail on the families of the Fallujah contractors and their relationship with the company, and general information on the role of mercenary armies in other countries and throughout history. The book cites numerous sources in each of its nineteen chapters and focuses on using mainstream news media sources, Congressional hearings, and the author's own direct interviews with families of the contractors killed in Iraq.

The main points of the book seem to highlight another instance of governmental outsourcing of services to companies that have strong connections to the current administration, an issue raised by countless other books, magazines, articles, and websites. With the privatizing of actual combat and the use of force, however, a new chapter in private contracting has begun.

Outsourcing any government service raises the issue of private companies taking advantage of government largesse, but a private company given the responsibility of performing actions formerly reserved only to soldiers who are governed by a strict code of justice gives rise to the possibility of private armies, wielding more power than the government, paying its own contractors more than the government pays its own armies, and being accountable to no laws other than the laws of a capitalist system that encourages profit over the safety of its own employees and the satisfaction of its target market.

A corporatocracy in itself is a frightening scenario, without the possibility of a private corporate army able to impose its will without the accountability of military law or governmental oversight.

The author has also given numerous interviews about the implications of his book and one of the main questions to be raised, interestingly enough, has been to the effect of "Couldn't we have expected this? The administration has outsourced nearly everything else; what's the big deal this time?" This is, of course, a disturbing question, having taken for granted that a system of corruption and awarding of ever larger government contracts to private companies.

The fact that private armies being deployed in Iraq, Afghanistan, and even New Orleans during Hurricane Katrina has become commonplace and just a matter of course makes this book even more important and timely.

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Special Post: "The Road to 9/11" Book Review

October 1, 2007, 1:39 am

Peter Dale Scott, Professor Emeritus of English at the University of California, Berkeley, has written numerous books over the years examining what he terms the "deep state" of American politics. His newest book, The Road to 9/11: Wealth, Empire, and the Future of America, looks at the current crisis in America manifested through the current War on Terror, but with a thorough discussion of the roots of Islamic fundamentalism, the role of the deep state in supporting the growth of extremism, and how these relationships have served to "blow back" at the United States. Even this, though, contributes to furthering the plans of the deep state, though, always at the expense of the public state.

The book provides an overview of how elements hidden in the American government, throughout the past thirty years at least, have continually supported short term oil or security interests at the expense of the public's (and their own) long term interests. Scott's 423-page book is nearly half-filled with endnotes, which gives the reader many further avenues of study, because the book itself is densely packed with information. An important aspect of the book is that, like other studies he has done, Scott does not name specific parties as guilty of one crime or another, accuse the U.S. government of facilitating the attacks of 9/11, or rely on untested and untestable hypotheses to come to his conclusions. As the book states, "this book makes a more general argument that the bureaucratic paranoia inside the American deep state, undisciplined by the available wisdom of the public state, helped years ago to create al Qaeda and then to create the circumstances in which, almost inevitable, elements in al Qaeda would turn against the United States." Throughout the work, he meticulously connects the dots between the same players, institutions, and concepts that have so influenced American foreign and domestic policy.

First, though, any reader of this book should quickly come to understand Scott's distinction between the public state of politics, and the deep state. The book examines "the top 1 percent's direct or indirect control of certain specific domains of government, beginning in the 1940's with the creation of the CIA... Those parts of the government responding to their influence I call the "deep state (if covert) or "security state" (if military)." Once the reader understands the fundamental difference between the public and deep state, superficial distinctions (such as Republican or Democrat) disappear, as the hidden elite work together behind the scenes for their shared interests more often than they work against each other for the good of the public.

The erasure of these superficialities is apparent when Scott examines the three presidencies of Ford, Carter, and Reagan. Gerald Ford's short period in Oval Office is seen as the pivotal administration in recent American history, as it brought to the forefront of American politics the team of Dick Cheney and Donald Rumsfeld in the White House and George H.W. Bush as Director of Central Intelligence. But even further, Scott sees this presidency as the defining moment in the battle in the deep state between the old conservatives (influenced by the Rockefellers and the Council on Foreign Relations ) and the neoconservatives (influenced by the American Enterprise Institute ).

Although Ford was replaced by Jimmy Carter, the foreign policy ideas of the previous administration were continued by the new National Security Adviser Zbigniew Brzezinski. It was under Carter that aid to the Islamic militants in Afghanistan was first provided, even before the Soviet Union invaded the country in 1979. It was Brzezinski's goal to drag the Russians into their own Vietnam War, turning public opinion against the USSR, bankrupting the nation, and destabilizing the Soviet Union in general. This policy of supporting the Afghan mujahideen continued under Reagan's administration, mainly under the guidance of CIA Director William Casey.

Scott also examines numerous other connections and undercurrents to the Afghan War. The often-overlooked role of the Bank of Credit and Commerce International is examined, as is the increasing flow of heroin from Afghanistan to the United States during this period (and afterwards). One of the more enlightening parts of the book is a chapter called "The Al-Kifah Center, Al Qaeda, and the U.S. Government, 1988-1998," which examines various relations between the government, the support of institutions heavily influenced by Islamic extremism in America, and the growth of al Qaeda throughout the world. Scott also examines the role of FBI and CIA informant Ali Mohamed, "a close ally of Osama bin Laden," and connections between the Saudi establishment, US establishment, and al Qaeda.

However, some of the most revelatory information in the book concerns plans for the Continuity of Government (COG), that had been worked on by Cheney and Rumsfeld and originally disclosed during the Iran-Contra affair. According to Scott, the COG plan "called for 'suspension of the Constitution, turning control of the government over to FEMA, emergency appointment of military commanders to run state and local governments and declaration of martial law during a national crisis.' The plan also gave the Federal Emergency Management Agency, which had been involved in drafting it, sweeping new powers, including internment." Disturbingly, the same team that worked on COG plans was put back together in May 2001 by President George W. Bush to constitute a task force on terrorism. Furthermore, the attacks of September 11, 2001, resulted in the first implementation of the COG plans.

Another connection that the book points to is that the same team, headed by Cheney and Rumsfeld, had been part of the Project for a New American Century, which argued for greater military involvement in the Middle East. In effect, the events of 9/11 allowed this team to implement the two plans they had been working on since the 1980's: wars in two Middle Easter countries and various parts of the COG planning, including warrantless detentions and warrantless eavesdropping. As Scott asks, "Were these practices decided on after 9/11, as the Bush administration maintains? Or were they already being prepared for as part of the COG planning revived by Cheney and FEMA in May 2001?"

In the final chapters, Scott examines how COG was implemented on 9/11 by Cheney, and the failures of the 9/11 Commission to look at this issue in any detail, covering up Cheney's actions on that day. The omissions of the 9/11 Commission Report point to what really may have happened on that day, and the chapter is quite revealing. It is also an in-depth discussion that needs to be read in its entirety for Scott's arguments to be followed completely.

In the end, though, The Road to 9/11 points out how influences in the deep state on American politics have served various interests of the establishment and elite of the country, while putting the public in greater danger of the attacks the government is supposed to protect against. Even further, the catastrophic attacks of 9/11 have led to the implementation of two relevant plans that higher-ups in the administration currently in power had been working on for years, in some cases decades. Whether these plans were in the public's interest or not after such an event, the fundamental problem for Scott lies in the fact that this deep state has taken such widespread control of the government, reducing the public state to little influence. Scott sums up his book by stating "over the past half century, the open politics and representative institutions of the American res publica (the public state) have been progressively subordinated to a res privata (a restrictively controlled locus of top-down decision making in the deep state)."

The final pages of the book discuss various ways that the public can begin to take back their power, and provide the entire work with hope in the public state in the face of urgency to combat the influences of the deep state. It will be an understanding of people by people that bridges the gap between the civilizations of America and the Islamic world, not continuing military involvements, and it is only through the free exchange of information and ideas, through the internet and other non-state or corporate controlled media that this exchange can take place, and the true role of the public in restricting the private state and creating a multinational civil society can be restored.

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Special Post: "U.S. History Uncensored" Book Review

September 24, 2007, 2:27 am

Carolyn Baker's book U.S. History Uncensored is designed as a supplement to the standard version of history offered by textbooks, college professors, and high school teachers. However, this does not mean that the material presented in the book should be considered tangential to the main themes of US history since the Civil War; to the contrary, Baker’s work presents a far more coherent view of the rise of corporate power at the expense of the individual, the emergence of the American Empire, and the most pressing issues facing the entire world today.

The work, though, is not even really a “book;” rather it is “a curriculum abstract for U.S. History, 1865 to the present,” and provides more of a framework for the student to consider Baker’s positions and do independent research on the various topics examined. In many of the 33 chapters, readers are encouraged to view documentaries, search out other books on the topic, or read supplementary articles presented directly in the text. Helpfully, Baker gives web addresses to locate many of these sources, many of which may not be offered at the local bookstore or movie rental.

Through the end of the Civil War, through the rise of the Robber Barons, the conferring of “personhood” on corporations, and the continuing transfer of wealth and power to large corporations and the government, the book looks at the most important events of recent American history and examines the influences behind the stories and popular myths, such as the Civil Rights movements, the xenophobia that began the eugenics movement and allied it with big business and public schooling, and various Cold War events.

The most important event of the time period Baker examines, though, is “1947 when the National Security Act was signed into law creating the Central Intelligence Agency and a black budget, which absolved the Agency from all accountability to Congress or the American people regarding its activities and expenditures.” This transferred public power and money to a secretive agency that has done much harm to Americans living in the US and American interest abroad. Some of the issues briefly examined include relationships with drugs, mind-control experiments on American citizens, and involvements in various assassinations and plots to overthrow governments.

While Baker traces the paths of American history from growing corporate power to increasing government involvement in the world and secret dealings at home and abroad, her main concerns are with the three most pressing issues facing the world right now, and an examination of these are what the book leads to in its final chapters. Without understanding how events and decisions have led to these newest unprecedented problems, there will be no effective reaction to solve them, and most citizens are unaware of the significance of the issues. According to Baker, the “Terminal Triangle of Peak Oil, Climate Change, and Global Economic Collapse” are “inexplicably ominous for our planet and its inhabitants – and absolutely unprecedented.” These chapters are some of the most important in the book, and various experts are quoted on each of the issues.

Just as important is the question of why these issues are not being dealt with the government or talked about in the media. But Baker presents these answers indirectly, for the most part, and the discussions of recent American history will provide readers with the map to be able to find the answers on their own. Large corporations benefiting from the Terminal Triangle, who own the media and operate the revolving door between business and government, have no reason to inform consumers of these issues. And this same government/business partnership also operate, fund, and present the national elections, making large-scale change unlikely.

After presenting such a dismal map with little reason to hope for change, Baker thankfully presents her views on how to work through the problems now facing America and the world. Focusing on local solutions and sustainability, Baker provides such recommendations as “not only must we move through our fear of the topic of money, we must come to understand how it works in our communities,” and “sustainability cannot be created in isolation. Crucial in one’s ‘options portfolio’ is a sense of community.” Thus, while there may be no hope in distant governments, which will continue to wage wars for the last remaining resources on planet Earth and take away more of the average citizen’s liberties in a “war for freedom,” change can occur more easily on the local level, and create a higher moral and spiritual standard of living for every citizen, instead of gross profits for a few abstract corporations and the central governments they control.

Baker’s book is recommended as an examination of both America’s past, from its rise after a devastating Civil War to become the largest empire in history, as well as its future. It gives the reader an understanding of the likely course of future events, based on over one hundred years of history of the US government favoring corporate profits over civilians, other nations, and the planet in general. Most importantly of all, Baker gives readers a new perspective on hope as a tangible, controllable idea that can be enacted at a local level, instead of an abstract, dogmatic belief in a government that will promise to deliver hope but offer further loss of life and liberty for the majority of citizens it was originally designed to protect.

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Special Post: "All the Shah's Men" Book Review

September 17, 2007, 10:56 am

In the week after the sixth anniversary of the attacks of 9/11/2001, it is appropriate to review some of the questions raised by the event and America's current relationships with countries in the Middle East. Especially with the drums of war beating between Iran and the US, Stephen Kinzer's book All the Shah's Men, originally published in 2003, is worth reviewing again.

In this slim (260 page) book, Kinzer examines the 1953 CIA-sponsored coup that removed from power democratically-elected Iranian Prime Minister Mohammed Mossadegh. After nationalizing the oil industry, previously run by the British, Mossadegh was the target of the CIA's first successful major operation to overthrow a government.

The book focuses briefly on the historical context of Iran, examining the various groups that have influenced the region, from the Zoroastrians, to Alexander the Great of Macedon, to the new Arabs that “came armed not only with the traditional weapons of war, but with a new religion, Islam.” Iran also became the country with the largest concentration of Shiite Muslims, which form a minority in the Islamic world. The differences between the more mainstream Sunni Muslims and Shiites stem from what Kinzer identifies as “differing interpretations of who deserved to succeed the prophet Mohammed as caliph, or leader of the Islamic world, after his death in 632.”

Through the high regard that Shiites hold for the Prophet’s cousin Ali and Ali’s son Hussein, who were both killed, Iranians culture was given “a legacy of religious zeal and a willingness, even an eagerness, to embrace martyrdom at the hands of God’s enemies.” This attitude endured through the time of Mossadegh himself, who became another example of an Islamic leader of the people standing up to a corrupt establishment that had lost is popular support, as is examined throughout the rest of the book. Kinzer’s overview of the history of Iran ends with the ruler Reza Shah, an authoritarian ruler who consolidated the rampant corruption of the nation in his own hands, turned the people against him, and established ties to Nazi Germany during World War II.

Another aspect of Iran’s history that can not be left out is the discovery of vast amounts of oil in 1908. The British government’s interests in the oil-producing regions was a constant cause of conflict, although most leaders of Iran were happy to sell off the country’s oil for their own personal benefit at the expense of the people of Iran. Also mentioned is the respect that Iranians had for the United States, mainly due to the fact that, “Neither the young Mohammed Reza Shah nor his various prime ministers managed to capture the public imagination during the 1940’s. The only figure who did was a flamboyant American soldier, General H. Norman Schwarzkopf.”

The main part of the book, though, looks at the short rule of Mohammed Mossadegh, his battles with Britain over the oil, the CIA’s role in his overthrow, and even his personal life and habits. This is also the most enlightening portion of the book, as it shows how popular opinion was turned against America through its covert intervention in the country. Although President Truman was uninterested in playing a role in the coup, his successor President Eisenhower approved the plan, called Operation Ajax, laid out by Allen Dulles and his brother John Foster Dulles. Sold as a way to prevent a communist takeover of the country, the CIA sent Kermit Roosevelt to the country to begin the planning for the coup.

Mossadegh himself had gained support through the international community and in Iran for his stance against the British oil interests, nationalizing the industry and removing all representatives of Britain from the country. With no covert operatives to carry out the overthrow, the British turned to America’s Central Intelligence Agency for assistance. The Iranians had no way to refine or sell their oil after the retreat of the British, who took with them all of the technical knowledge and imposed a blockade on ships attempting to purchase Iranian oil. This plunged the economy into recession and made the lives of the common Iranian citizen even worse, even in the absence of Britain’s practice of withholding profits from the Iranian government and not providing for the welfare of the workers of the refinery.

Through propaganda and the paying out of significant amounts of money to dissidents and revolutionaries for hire, the CIA was able to take advantage of the depressed economic conditions of Iran and begin arranging support against Mossadegh. Even through one failed coup attempt on August 15, 1953, Roosevelt decided to push on and attempt to overthrow the government soon after the failure. Mossadegh, according to Kinzer, was not expecting the plotters to try again so quickly and tragically ordered his supporters not to stand against the anti-Mossadegh demonstrators. By the 19th of August, Mossadegh had been overthrown, and the Shah of Iran, Mohammed Reza, was installed as leader of the country.

Kinzer examines in detail the decisions made by Mossadegh to protect his government from the overthrow and sees his downfall primarily in his trusting nature and respect for American visitors. Being lied to and told that Americans in Iran were being outrageously mistreated, he “seemed genuinely pained by these fanciful stories and alarmed at the prospect of Americans leaving Iran… he issued a decree banning all public demonstrations. He even telephoned leaders of pro-government parties and ordered them to keep their people at home. He disarmed himself.” Thus, on the fateful day of the coup, pro-Mossadegh supporters stayed at home, leaving only CIA-financed anti-government groups to take to the streets and stage demonstrations that led to the eventual overthrow that night.

Through twenty-five years of a brutal dictatorship led by the Shah and his secret police force Savak. When the government was overthrown in 1979, and the mullahs came to power, the Shah was given safe haven in the United States. This led to the taking of the American embassy in Tehran and the Iranian hostage crisis, as Iranians feared another coup led by the CIA that would reinstall the Shah. “The hostage-takers remembered that when the Shah fled into exile in 1953, CIA agents working at the American embassy had returned him to his throne. Iranians feared that history was about to repeat itself.” Even further, when America began supporting the leader of neighboring Iraq, Saddam Hussein, in the 1980’s in the Iran-Iraq war, the most militant factions in Iran became even more powerful, and the religious leaders of the country began supporting terrorist organizations like Hamas and Hezbollah, which influenced the actions of the mujahideen in Afghanistan, led by Osama bin Laden.

Kinzer’s book is a detailed look at how the overthrow of a popular leader, even with his faults, stubbornness, and seeming affinity towards being martyred for his principles, led to far worse consequences than the nationalizing of British oil interests. Opinion was turned against America, who was seen as the lapdog of the British Empire, and the roots of Middle Eastern terror were laid and cultivated that much swifter. In a case study of how the CIA concept of “blowback” leads to unintended consequences, All the Shah’s Men allows the reader to more completely understand “why the hate us.” As Kinzer himself states so clearly, “It is not far-fetched to draw a line from Operation Ajax through the Shah’s repressive regime and the Islamic Revolution to the fireballs that engulfed the World Trade Center in New York.”

The book does not blame American policy in general or Operation Ajax specifically for the events of 9/11, but instead shows how covert interventions that overthrow democratically-elected governments in any country in the world will lead to negative opinions of the people of the country against the overthrowing government. While not a justification for the attacks of 9/11, Kinzer’s argument helps us understand how American policies overseas are viewed from the perspective of the people of these countries, and gives us a historical context for the seemingly irrational behaviors of suicide terrorism and the hatred of America by certain factions of the Islamic world.

Oversimplifying and confusing the people of the country with its rulers is also a mistake, according to Kinzer, who states in one of the most interesting passages of the book, “On my flight back to Tehran I sat next to a middle-aged businessman who, like everyone I met in Iran, detested the Islamic regime and thought well of Americans.” By threatening the rulers of this country, popular opinion rallies around the government, even if it is detested. As Robert Pape explains in his own study of terrorism, occupation is a much worse situation for countries than a current corrupt regime. Kinzer’s book shows that antagonizing a nation’s leaders, rather than appealing to and supporting its people, can lead to far-reaching negative consequences that will manifest themselves in the most seemingly unexpected ways.

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Special Post: "33 Questions about American History..." Book Review

September 3, 2007, 12:18 pm

"Every chapter taught me something new and unexpected," reads one of the reviews on the back of the book 33 Questions about American History You're not Supposed to Ask, by Thomas E. Woods, Jr. This is as an appropriate summary of the book as one could expect, as Woods sets out to revisit some of the most common myths of American history and look at them in the light of non-politically correct thought. As the description of the book states, "there's the history you know and then there's the truth." It is this not so idealized truth that Woods presents to answer his thirty-three questions.

As a whole, the book is quite enlightening and filled with conclusions supported by numerous citations of books, various government and private studies, and scholarly articles. In a book this short (around 260 pages), having nearly thirty pages of endnotes and citations shows that Woods has done a fair amount of research and fact-checking. Thus, while the discussions of questions that are presented may contain much information contrary to conventional wisdom, the book encourages readers to verify the correctness of every chapter. Assumptions are not made when discussing facts and historical events, but Woods does draw out some overarching themes throughout the book, in addition to dispelling some commonly-held myths about American history.

One of the themes that Woods discusses in several chapters of the book is the issue of small government and free markets versus big government and a command-type economy. Woods shows that the “Wild West” was not really all that wild, despite a marked absence of government institutions and protectors. Instead of lawlessness and violence, “even in the absence of government, the old West was far less violent than most American cities today. Frontiersmen developed private mechanisms to enforce the law and define and enforce property rights.” Another example of big government interference in private enterprise is the example of Hoover’s and Roosevelt’s interactions in the economy during the Great Depression. Woods shows that both presidents intervened in the market, enacting controls and spending programs that only caused the Depression to become longer, deeper, and more financially ruinous to the general population.

Another theme that is present in various chapters is that of the powers of Congress and the Presidency, and how they have changed over time and their original intents in the Constitution have been distorted. Woods examines the claim that the US Constitution is a “living, breathing document,” by showing that this is exactly the result the framers wanted to avoid: the British constitution was considered to be a living, breathing entity that forced itself upon the colonies. The Founding Fathers wanted a Constitution that was a written agreement between the people and the government and was able to be changed through various methods, but would not just change with the times. The book also looks at the interstate commerce clause, which the federal government now uses to regulate all gainful activity, which was not the founders’ intent. Woods argues that the phrase “among the states” refers to “commerce between one state and another, not commerce that occurs in one state and merely concerns of has effects upon others,” although the government has distorted this into regulating everything and anything that may affect commerce, which have granted it “extraordinary power to interfere in Americans’ lives.” The role of the government was meant by the Constitution to be small, although it has taken on more and more powers to legislate the lives of Americans.

The powers of the president of the United States are also examined by Woods, who determines that the president now wields much more power than was originally granted. Theodore Roosevelt is seen as the instigator of the rise of the “imperial presidency,” due to his increased visibility in Americans’ lives, and the extraordinary use of presidential executive orders (1,006 total). However, Congress has also transferred the power to the president to send troops anywhere in the world without a declaration of war. This transfer of power is now so complete, according to Woods, that “In 2002, on the eve of war with Iraq, Congressman Ron Paul (R-TX) insisted, as he had throughout the Clinton years, that if the country were to go to war, the Constitution required that Congress approve a declaration of war… He was told by prominent Republicans that his position was outdated and that things weren’t done that way anymore.” In his discussions of questions relating to the theme of the Constitutional powers of the federal government, Woods demonstrates that powers originally granted to the states have been usurped by the federal government, which has resulted in a consolidation of powers in the Congress, judicial branch, and especially the presidency.

There are a number of other themes that Woods examines, such as civil rights myths, government welfare programs, and the legacy of President Clinton’s intervention in Kosovo. Many of the questions raise issues that are little-discussed in mainstream accounts. The root of the problem, according to Woods, may be traceable to the public school system, which teaches students the same myths and the same one-sided stories. This racket can only result in the propaganda of the greatness of big government, the evils of the free market, and the godlike status of presidents. As Woods states, “the same group of people who hold a monopoly on the power to tax and the power to initiate force also wield an effective monopoly on the power to educate future generations of Americans.” Thus, a healthy skepticism is recommended for all official party-line type discussions of these programs and roles.

The book, in the end, is an invitation to critical thinking of some of the major myths of American History. Woods does not attempt to denigrate his targets or examine the issues in minute detail, instead offering a second look at American history. Even though everyone may not agree with Woods’ on all of the issues, it is more important to him that people know that there is another side to many of the best-known stories of America, and draw their own conclusions, rather than take the official public school-taught propaganda at face value.

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Special Post: "Dying to Win" Book Review

August 27, 2007, 10:30 am

The book that is the subject of this review is Dying to Win: The Strategic Logic of Suicide Terrorism, by University of Chicago professor Robert A. Pape and originally published in 2005 but updated in 2006. The subject matter is an overview of the over 400 suicide terrorist missions that have been carried out between 1980 and 2005, as well as a discussion of what motivates campaigns of suicide terrorism around the world. The information contained in the work is truly a paradigm-shifter in terms of how suicide terrorism should be viewed and how the 'War on Terror" can be won.

The book was recently recommended by Congressman and presidential candidate Ron Paul in a reading list to Rudy Giuliani on the topic of American foreign policy and the motivations for suicide terrorism. During a presidential candidates' debate in South Carolina on May 15, Giuliani stated he had never heard of Paul's explanation of the 9/11 attacks against America, and Paul decided a reading assignment was in order. As a ten-term Congressman and author of numerous books on monetary and foreign policy, and the most ardent defender of personal liberty and less-intrusive government, Paul's recommendations should carry great weight in the political arena. He often refers to history and analysis to back up his arguments, and has recommended Pape's Dying to Win several times during his campaign thus far.

Pape divides the book into three main sections, each of which examines a different logic of suicide terrorism. The book also contains extensive appendices, which present the data and analysis that Pape used in his studies.

In the first major part of the book, "The Strategic Logic of Suicide Terrorism," the author examines broadly why campaigns on suicide bombing are waged, and dispels some of the more conventional wisdom ("They hate us for our freedom," and so on). According to Pape, al-Qaeda, Hamas, the Tamil Tigers, and all organizations turn to suicide terrorism against democratic countries for three main reasons: because they wish to gain control of a territory but are weak in conventional weaponry, they believe that the public will of democracies are more easily swayed, and they have learned that suicide terrorism yields results.

Pape examines various campaigns of suicide terrorism and shows that these reasons are the ones most often cited by the various groups for the actions. Hamas wishes Israel to leave the occupied territories of Palestine, and thus targets Israelis, while al-Qaeda wishes to end US foreign occupation of the Arabian peninsula and other Muslim regions, and thus targets America. Even though al-Qaeda has targeted other nations, as well, their strategic motivation is to place greater military and economic burdens on the US and remove the support of allies. However, Pape argures that suicide terrorism has been largely unsuccessful at its broader goals of ending perceived occupations, and has achieved only smaller, more inconsequential concessions from their targets.

The second part of the book examines "The Social Logic of Suicide Terrorism," which discusses the community support of campaigns of suicide terrorism. Papes argument is that nationalism is a stronger motivational factor than any other, although organizations have also inflamed religious differences. When countries are faced with a foreign occupation, they are more likely to rally around their own sovereignty and oppose the occupation. When the occupying country is also of another major religion (Hindu Tamil Tigers and Buddhist Sri Lanka, Muslim al-Qaeda and Christian United States), terrorist organizations use the difference to inflame the nationalistic tendencies even further, creating a perceived threat to the homeland's chosen religion if the occupying force altered the national religion.

To support his argument in this section, the author tests his theory on the major suicide terrorist campaigns that have been waged around the world since 1980. In each of the cases, there was a stronger tendency towards this type of terrorism when a foreign democracy was occupying a homeland and that foreign nation had a religious difference. In fact, when religious difference was not present, the campaign of suicide terrorism was less sustained or aggressive. Perhaps the most enlightening part of this section looks at non-Muslim suicide terrorism to show that there is not an inherent aspect of Islam that encourages suicide as a terrorism tactic. In the case of the Hindu Tamil Tigers in Sri Lanka, Islam is not the major religion of either party, yet this group is responsible for more suicide terrorist attacks than any other.

The last section of the book discusses what would motivate a person to volunteer to give up his or her life in an attempt to kill as many others as possible. Pape argues in "The Individual Logic of Suicide Terrorism" that suicide terrorists are motivated by altruistic reasons more than any other, including a desire to improve the lives of the community and put an end to the foreign occupation. Pape differentiates between egoistic suicide, altruistic suicide, and fatalistic suicide, showing that most terrorists who willingly strap bombs to themselves or drive truck bombs into buildings fit most accurately into altruistic suicide. This is an important point, as it shows that terrorists desire to improve the lives of their families and community by ending the foreign occupation, rather than simply killing others of a different religion because of fundamental beliefs. Again, religious differences are used to make suicide acceptable as a tactic, but foreign occupation is the main motivational factor.

Pape also examines the demographic characteristics of suicide terrorists, which dispels the myth of the depressed, young male suicide bomber who has no job and no education. To the contrary, suicide terrorists are often "educated, socially integrated, and highly capable people who could be expected to have a good future." Suicide terrorists are also spread across very broad demographic lines, with some organizations (PKK in Turkey ) using nearly 70% female bombers, while others (al-Qaeda) prohibit females from becoming warriors at all. Many more terrorists are also middle income earners than unemployed or low income, and often more motivated by secular beliefs than fundamental religious beliefs.

Throughout the book, Pape stresses that it is foreign occupation that is the main motivational factor that encourages suicide terrorism. This aspect is also viewed in the light of current US foreign policy, which is attempting to spread Democracy in the Middle East through force of arms in an attempt to neutralize the effect of Islamic fundamentalism. Unfortunately, this strategy is the very one that causes suicide terrorism, as it is built on a foundation of foreign occupation of Muslim nations by a Christian American army. This is the reason for the increase in suicide terrorism against American targets since 2002-2003, and explains the emergence of the tactic against Americans in Iraq. Until the invasion of Iraq, there was not a single suicide terrorist attack in the country, but the number of bombings has risen from 20 in 2003 to 125 in 2005.

As a work of analysis on the tactic of suicide terrorism, Dying to Win presents a logically coherent argument that is backed up by the facts of each major campaign of suicide terrorism. The author provides an exhaustive account of the individual bombings of each campaign and tests his theory in the light of the characteristics of them. His conclusions that foreign occupation is more important than any other factor should give American politicians some pause, as the cause of, and solution to, al-Qaeda's campaign against the US becomes immediately apparent, even if victory is not easily achieved. Hopefully more politicians will become aware of Pape's analysis and encourage a more subtle, understanding policy towards the Middle East, rather than rely on simplistic concepts of Us vs. Them or Good vs. Evil to explain the threat of suicide terrorism to America. Policy-makers in Washington have a constitutional duty to protect the nation from threats against our national defense, and this book provides the basis for a strategy of victory against terrorism, instead of the doomed-to-failure policy now being enacted.

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Special post: "Metallica and Philosophy" Book Review

August 20, 2007, 4:38 pm

The book that is the subject of this review is Metallica and Philosophy: A Crash Course in Brain Surgery, edited by William Irwin and published 2007. It is part of a growing genre of books that examine such pop culture icons as The Matrix movies, the Lord of the Rings series, The Simpsons television show, and others through the lens of philosophy. The book is made up of a series of twenty short essays examining the band Metallica, the interpersonal relationships between the members, and the lyrics in the context of some of the main ideas of Western Philosophy.

The main purpose of the book, and the series as a whole, is to introduce the average reader to the "great ideas" of philosophy while providing a more entertaining venue. Philosophy is very often studied only in places of higher learning and only grudgingly by its students, who must force themselves to delve deeply into the reading material and gain what insight they can. Knowledge of this sort does not come easily, and attempting to answer the most profound questions of existence and being human requires difficult thinking. Thus, the editors of the series seek to show that studying philosophy can be more entertaining, though, and "thinking deeply about TV, movies, and music doesn't make you a 'complete idiot.' In fact it might make you a philosopher, someone who believes the unexamined life is not worth living and the unexamined cartoon is not worth watching." Metallica, as one of the most successful bands in history, gets the philosophical treatment in this installment in the series.

As a student who took numerous philosophy courses in college and who has read another installment in this series (The Simpsons and Philosophy ), these kinds of books have always been intriguing. The question begs to be asked: is the book written for philosophers interested in Metallica, or Metallica fans interested in philosophy, or is there a difference? It is unlikely that many Metallica fans will find themselves in the Philosophy section of their local Borders unless they are interested in philosophy. But it is equally difficult to imagine the stereotypical college professor picking up a book titled Metallica and Philosophy. However, the fact that over twenty authors contributed to this series of essays shows that there are a number of professors, authors, and students of philosophy who also share an appreciation for the biggest heavy metal band of all time. The themes that are found in the book also show that the authors knew the lyrics and history of Metallica well enough to offer valuable insights as to the philosophical context of Metallica's work.

With twenty essays contained in the book, it is impossible to review every theme presented. The essays serve as introductions to the great questions of philosophy, and use James Hetfield's lyrics as the greatest source material. Issues such as insanity and capital punishment are examined through various songs, as well as the band's relationship with religion and the answer to the meaning of life. Quite heavy topics, no doubt. However, each essay is written with the ultimate goal or readability in mind. While the themes often examine the abstract, the authors use frequent examples, such as quoting lyrics, or use anecdotal examples from the history of the band. This makes the ideas much easier to understand and the essays do not get caught up in long period of exposition on esoteric matters. Many of the essays could have been slightly longer for a fuller discussion of the issues, but the length of each was sufficient to raise a theme, examine it in the context of philosophical thought, and lay out some conclusions or areas for further research.

Besides analyzing lyrics, though, a number of the essays also examine the overall context and history of Metallica, and attempt to answer some of the more contentious points raised over the years. These include the issue of the band "selling out," their image of nonconformity with traditional rock roles, and Lars Ulrich's battle with internet file-sharing website Napster. Did Metallica sell out when they released an alternative hard rock album, LOAD? What role did nonconformity play in shaping Metallica and why can they not return to it ever again? Was Napster about money or something more, and was Lars' argument fundamentally correct? The answers are examined in detail in the book, and they may not be what the reader expects. As one of the authors writes, "Hey, philosophers are supposed to be objective -- I don't like it anymore than you do!" But these events and themes are the ones most often discussed when speaking of Metallica, who have been accused of selling out since their second album in 1984. The old arguments of either side are given new teeth when examined through the context of philosophy.

The book is a a welcome introduction or reintroduction for Metallica fans to philosophical ideas and thinking. For the serious philosopher who has spent time reading the original works cited in the essays, it may be just a casual summary of the themes in a heavy metal context. But for Metallica fans who desire to know more about the motivations of the band and get inside their heads, as well as understand the reasons that they find themselves drawn to Metallica and heavy metal in general, Metallica and Philosophy provides an ideal overview of these most important concepts.

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Special Post: "Legacy of Ashes" Book Review

August 13, 2007, 7:57 pm

The subject of this book review is Legacy of Ashes: The History of the CIA, authored by New York Times reporter Tim Weiner and published in 2007. The book is based on more than 50,000 documents, many from the CIA's own archives, as well as interviews with former director of central intelligence and employees of the agency. It charts the course of the Central Intelligence Agency from its previous incarnation as the Office of Strategic Services in World War II through its inception in 1947 up until the present day.

Unlike most histories of the CIA or accounts dealing with the agency's activities, Legacy of Ashes presents the case that the CIA was never very effective, suffering one humiliating setback after another. This is a quite different look at the activities of the agency, as numerous other accounts examine more conspiratorial aspects of various operations. These books often grant the CIA abilities which Weiner argues it never had; namely, a clear understanding of the world, the ability to infiltrate communist movements in the Soviet Union and third-world countries, and reasonable planning as a result of good leadership.

In fact, in reading the book, it almost seems to appear that Weiner is presenting the "Homer Simpson" view of the CIA: blundering headlong into situations it never understood, putting untold numbers of people in harm's way that often led to their torture and death due to the agency's own incompetence, and further compounded with laziness and alcoholism. Throughout the CIA's history, there are numerous accounts of various operations where agents were dropped into communist countries with instructions to begin resistance movements and infiltrate the Soviet system, only to be promptly identified, captured, tortured for information, and exterminated. Failure after failure did not deter these types of operations, or cause more than a momentary frustration on the part of the CIA in not knowing how the Soviets knew so quickly and so clearly everything that the US was doing to undermine it.

With each unsuccessful covert operation, the main objective of the agency was to cover up the incompetence -- not learn from previous mistakes. The agency, especially under director Allen Dulles, utilized access to the media to prevent any leaks of these mistakes. As long as the people of America did not hear about the failures, and the documents could be destroyed or classified until long after the fact, they simply did not exist.

Weiner's book also examines the very precarious relationship that each president of the United States had with the Central Intelligence Agency. From President Truman, who wanted a daily newspaper on what was happening in the world, to Nixon, who blamed the CIA for his failure to win the presidential election in 1960 and used it for his own illegal purposes as president, to Clinton, who displayed less interest in foreign affairs than any president before him, the agency was pulled from one extreme to another throughout its existence. Presidents used the CIA for illegal acts against American citizens and to overthrow unfriendly governments, putting the agency in jeopardy of being caught and the bright light of public scrutiny shined upon it. Others dismissed or totally ignored the CIA, causing it to languish and its work to become less and less relevant. Weiner mentions George W. Bush's 2004 remark that the CIA was "just guessing" about the Iraq War as a "political death sentence."

An important distinction that Weiner raises in this book is the difference between the intelligence-gathering aspect of the CIA and the "cloak and dagger" operations. One seeks to understand the world; the other seeks to change the world. The agency, though, attempted to do both and was unable to perform either action effectively. A far greater share of the CIA's budget was devoted towards covert operations involving propaganda, assassinating heads of state, and overthrowing democratically-elected governments. Many of these operations failed, and the most successful of them resulted in the infamous "blowback:" unintended consequences like a hatred of the USA in Iran, hundreds of thousands of dead civilians in Guatemala under an oppressive regime, and the Islamic holy war that was directed at America as soon as the Soviets had left Afghanistan at the end of the Cold War.

These failed attempts to mold the world in the CIA's eyes, along with the lack of interest and resources available for intelligence gathering and analysis, have resulted in an agency that missed one important event after another, while predicting things that never existed. The CIA underestimated the Soviet's and India's ability to build a nuclear weapon, the testing of which came as complete surprises to the agency. They also predicted that Iraq had weapons of mass destruction before the US invasion in 2003, among other predictions and suggestions, nearly all of which turned out to be wrong.

The agency, under every one of its directors of central intelligence, had never achieved its role of providing the US with a clear understanding of the world. It seemed to be at its most effective during covert operations, overthrowing governments, creating its own image of itself in American media, trading weapons for hostages, or conducting extraordinary rendition programs in secret prisons around the world. None of these covert actions, though, ever resulted in one continuously positive consequence for the agency or the United States. Weiner argues that the same problems that faced the agency in its beginnings are the same ones facing it now: an inability to gather intelligence and effectively analyze it, a willingness to take on illegal covert operations without a thought to potential consequences, and a lack of qualified personnel to carry out any of its activities.

Obviously, the CIA is an easy target to take shots at when it is down, possibly at its lowest point in public opinion of its existence. However, Legacy of Ashes' central point is to argue that the agency was never really up to begin with, and its few shining success stories are overshadowed by a long history of failed missions and an unhealthy but potentially justifiable resentment against America. Weiner's book misses issues (such as the CIA's role in the international drug trade ), but his unique perspective on the history of the agency presents one of the most intriguing looks at the CIA ever published. For anyone who wants to understand the role of this agency in the world in general and its relationship to each of the holders of the office of the President of the United States, Legacy of Ashes answers the most important questions that can be asked, and refreshingly presents all of its answers on the record, with no use of confidential sources or classified documents. It is an unparalleled, timely, and significant history of the Central Intelligence Agency.

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Special Post: "Making 36%" Book Review

August 7, 2007, 2:09 pm

When Dr. Terry Allen, author of Making 36%: Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad, first approached our site about peer-reviewing his book on options investing, I immediately assumed it was going to be about real estate options. Imagine my surprise when I began browsing through the book and realized it dealt with making money through stock options investing, an entirely different game. Intrigued by the subject matter and its unique presentation, though, I proceeded to discover an entertaining, useful, and clear explanation of Dr. Allen's methods. Both the content of the book and its presentation, along with my own inexperience, combined to create a remarkable learning experience.

The presentation of the book may be the first place to begin this review. Skimming through the book and glancing at its cover, one can not help but to pick up a strong golf influence. On every other page of the book, a quote is provided with the majority being related to golf. This aspect immediately draws even a casual observer to question, "What does golf have to do with stock options investing?" Thus, the book's unique format and dressing require the reader to begin asking questions of the book and reading further to find the answers. In getting a reader to delve further into the subject matter, the book succeeds quite well.

The question, though, deserves an answer, and Dr. Allen provides it within the first few minutes of beginning the book. In a quite inspired idea taken from his wife, who was able to sell numerous copies of her gardening book through specialty stores instead of the local Borders, he focused the marketing of the book to golfers who desire to learn more about investing and making more money in the market. By implication, golfers already in the financial business may learn a more efficient way to manage their money and actually have more time to spend out of work, with their families, or even on the golf course itself. Marketing the book specifically to golfers may seem like a double-edged sword, by dissuading non-golfer investors from picking up the book, but the focused targeting of a specific group of investors (ones that golf) is likely to generate interest in a book that seems much more personal by its intimate relationship with the sport. The book would be much less powerful as a generic stock options investing book sitting on a shelf at Borders with several dozen other generic investing books.

The main part of the book is divided into two sections with nine chapters each, corresponding to eighteen holes of golf, plus a "19th Hole" at the very end. The book also contains several appendices at the end, which go even further into detail of certain aspects of the 36% Solution. Whether read in conjunction with the main sections or held for further reference, the material presented in them is often interesting and explain more technical aspects of stock options investing.

The first section of the book deals mostly with the theoretical concept behind Dr. Allen's 36% method and examines some of the myths and conventional wisdom about investing in general and stock options in particular. Topics discussed include the prediction of flat market results over the next few years, reasons to stay away from individual stocks and mutual funds, and the fact that information the average investor receives is outdated and has already been acted upon by larger, more informed institution investors. The role of brokers and analysts are also examined, as well as a short autobiography of the author and the first real introduction to stock options and their real risk.

With this conceptual introduction, the second half begins to explain the more technical aspects of options investing and Dr. Allen's methods. While this section displays much more difficult terms and deeper investigation into the subject matter, suffice it to say that the 36% Solution is much easier to understand than would commonly be assumed for these types of investments. Some of the language is necessarily difficult for the uninitiated, but there are numerous subject points broken down into smaller explanations and numbered lists of what to do in certain situations. These methods provide the reader with instructions for implementing the strategy in accordance with easily referenced guidelines.

The final chapter of the book is a much-needed guide on how to get started using Dr. Allen's methods. The book is designed to provide the reader with all of the tools necessary to start on his or her own, but further resources are offered through a website, www.TerrysTips.com. For the new stock options investor fresh off the golf course, these resources will probably be very much appreciated. The more experienced investor may have an adequate understanding of how the strategy is to be used, but the site's resources are available to all.

In conclusion, for a mainly hard assets (gold and silver) investor with no experience playing golf and even less investing in stock options, the book served as the clearest introduction to the world of stock options investing that could be desired. The most important part of the book is its recommendation and explanation of a specific strategy to use when investing in stock options. Having little experience in the matter, it is difficult to judge the effects of the strategy, but Dr. Allen provides numerous testimonials and a track record of his own investments ,which lend credibility to the book's claims, and there is no reason to doubt them. As possibly the quintessential antithetical reader of such material, I gained much information from the book and found its unique presentation to provide an entertaining and easy-to-understand explanation of Dr. Allen's 36% Solution. The book is highly recommended for readers willing to work a little harder with their investments for the possibility of substantially increasing their income, whether they are currently investors, stock options experts, or golfers.

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Special Post: "Angels Don't Play This HAARP" Book Review

August 1, 2007, 12:39 pm

The book that is the subject of this review is Angels Don't Play This HAARP, published in 2004 by Dr. Nick Begich and Jeane Manning. The topic of the book is an overview of the High-Frequency Active Aural Research Project (HAARP), a program of the United States Air Force and Navy being conducted in Alaska. The book examines the historical context of this project as well as the main problems the authors see with HAARP.

HAARP is an array of antennae that has the power to focus large amounts of electromagnetic radiation into the ionosphere. It is essentially a ground-based Star Wars system that has capabilities ranging from destroying incoming missiles to affecting regional and global weather patterns by sending energy into earth's ionosphere. Further uses of the project include over the horizon radar and the disruption of global communication systems, including satellite communications.

Many of the concepts that made their way into HAARP can be found in patents originally filed by Bernard J. Eastlund. The authors trace the patents' ownership through several defense contractors, as the companies who owned them, and thus were responsible for HAARP, changed hands from the small firm of APTI to military contractor E-Systems, until E-Systems was bought out in 1995 by Raytheon, one of the largest defense contractors at the time.

The authors spend much of their time focusing on various capabilities of the HAARP antenna array and relating these potential uses to the disturbing negative effects they may produce, along with the secrecy and material omissions that have accompanies HAARP since its inception. Just a few of the main issues that are examined include the main difference between HAARP and other ionospheric heaters that makes HAARP much more powerful, the weather-modifying effects of heating the ionosphere, and its potential for altering the mental processes of human beings.

The first of these, the aspects of HAARP that make it more powerful than so-called "conventional" heaters, is examined mostly in relation to the patents themselves. Using Eastlund's concepts, the HAARP array is able to take large amounts of energy produced on the ground and focus it into a small area in the ionosphere. Heaters built previous to HAARP were only able to send energy that would diffuse in the upper atmosphere and would not have the energy-focusing capabilities of HAARP. The authors see this development as anything but a progression, as there is no realistic way to predict what this energy-focusing enhancement may produce. After previous failures of "great ideas" of man to manipulate the earth's electromagnetic balance (such as the 1958 Project Argus in which three nuclear weapons were detonated in the Van Allen radiation belt, and the early 1960's dumping of copper "telecommunications shield" needles into the ionosphere), there may be little reason to trust the government with another weapon of massive power and unknown effects.

The ability of the antenna array to modify weather is another capability that the authors examine in some detail. Especially due to the official environmental report's omissions, there may be significant effects on the environment, weather, and wildlife that are not being addressed or discussed. Also due to the project's lack of oversight, Begich and Manning hold little faith in the government's willingness to confront these potential issues. They point out a number of the most glaring risks to the environment and life which are not discussed in the official Environmental Impact Statement. This is another example of the main problem of HAARP, which is its lack of effective oversight.

Most disturbingly of all of HAARP's potential uses, however, is its ability to affect human brain functioning. Because the human brain works on specific frequencies which the HAARP project can also produce, it can theoretically affect thinking in nearly any area of the world at will. The small amount of energy required to manipulate the brain (much less than the power needed to run a light bulb) and the high energy capabilities of the array serve to present a clear danger to every human still possessing mental functioning. Another use of HAARP in relation to human feelings and thinking relates to the issue of resonance. Every chemical has a certain frequency, and by injecting small amounts of certain chemicals into humans and then using HAARP to simulate the chemical's frequency, the feelings generated by the chemical can be enhanced many times over. The possibilities of these uses become nearly endless and this is another area of research the authors recommend for more open discussion.

The book is designed to be an introduction to the authors' argument that the HAARP project suffers from a surprising lack of oversight and public discussion. The material is presented in a very readable manner and explains how the workings of the program and its potential uses and implications. In such a short book (around 200 pages), there are over 300 sources cited, which bring a level of credibility to the research, which is based on patent information, articles, and first-hand accounts and interviews by the authors. The book presents various other related tangents for the researcher to follow, as well as a much-needed call for more public discussion on issues such as electromagnetic weapons, human behavior modification, and weather manipulation. All of these issues are well worth open discussion, as the capabilities of HAARP may produce global results. An increase in the public education about these matters, and a greater measure of accountability and interdisciplinary study of the project are what the authors call for in the end, and these modest goals should be considered a minimum for any project with such awesome capabilities and potential uses.

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Special Post: "A Full Service Bank" Book Review

July 25, 2007, 5:55 pm

The book that is the subject of this review is A Full Service Bank, written by James Ring Adams and Douglas Frantz and published in 1993. It offers the reader an account of the rise and fall of the Bank of Credit and Commerce International (BCCI), which resulted in the most massive bank failure in history. This account of the story of BCCI is told from a historical point of view, with the authors providing a story from beginning to end of the general history of the bank and the specific undercover operations that put the first cracks in the bank's structure.

The authors begin the account by providing the most relevant information regarding the geopolitical and historical reasons for the bank's existence, and its structure as a bank that existed everywhere but was regulated nowhere. The Pakistani founder of BCCI, Agha Hasan Abedi, after witnessing the large-scale nationalization of industries that took place in Pakistan, decided to found his new bank in countries with strict banking secrecy laws, such as Luxembourg and the Cayman Islands. This dual organization called for two different auditing firms to track the courses of BCCI's financial dealings, which ensured that neither firm would have a complete picture of how the bank operated.

This secrecy and overall unaccountability assisted the bank in two of its major initiatives: laundering drug money from Central and South American countries and illegally entering the American banking industry. The former activity was neither condoned nor discouraged, while the latter was one of Abedi's goals since beginning the bank. Both of these themes are examined in the book in great depth.

Throughout the mid-1980's, as more and more banks were caught in dubious transactions, there was a push by US regulators and federal agencies to begin cracking down on money laundering. Various undercover operations were undertaken by the Internal Revenue Service, the Drug Enforcement Administration, and Customs. The operation most involving the Bank of Credit and Commerce International, though, was a Customs job named C-Chase. Although it started out as a simple drug money laundering operation, with the goal of nabbing major players in the Columbian Medellin cocaine cartel, once the investigators found the trail of BCCI, they were determined to bring the bank down.

This time period coincided with some of the greatest losses the bank had sustained, due to ill-informed commodities trading decisions. With huge outflows of cash, the bank had to keep deposits coming in all over the world in order to keep its giant Ponzi scheme going. New deposits were taken to pay old customers and to cover the losses. BCCI's secrecy allowed it to maintain the appearance of a profitable bank, even as it may never had turned a profit during its entire lifetime. But as the losses had to be covered, new large depositors were not turned away, regardless of the source of their money. Into this environment the C-Chase operation crossed paths.

The main undercover agent in operation C-Chase was Bob Mazur, who, by the use of his "James Bond briefcase," was able to record numerous BCCI officials being told that the nature of Mazur's deposits was drug money. While most of the officials did not want to hear of the source of the money, they did nothing to close the accounts or send Mazur someplace else for his laundering. In fact, some of BCCI's employees even recommended new ways of laundering drug money and implicated themselves even further. The operation ended up indicting no less than eighty-four individuals involved in the drug running and money laundering. The bank ended up with a $14 million fine and the bad press shone some of the first light on the unaccountable bank.

The second event that the book looks at closely is BCCI's purchase and control of First American Bank. Because the bank could not purchase an American bank, BCCI had to maneuver around the system and gain secret control. Investors purchased First American Bank with loans given by BCCI. These loans were never intended to be repaid, and BCCI collected the collateral once the loans went into default, by gaining controlling shares of First American. In this way, BCCI came to own an American bank, in contravention of the law.

Throughout the book, the authors chart the course of BCCI's secret ownership of American banks, with First American being the primary one, due to its location in Washington, DC. The managers of First American repeatedly state to regulators and the Federal Reserve that BCCI does not have an ownership interest in the bank, even though they met repeatedly with Abedi, whom they stated was the original investors' financial adviser.

Once BCCI fell, though, its involvement as owner of First American was discovered, as well as its interests in other American banks. The catalyzing events that resulted in the bank being closed by regulators were a series of independent audits ordered by the Bank of England. These were some of the first objective looks at the Bank of Credit and Commerce International, and each new audit scared the regulators more and more. Secret, unrecorded transactions, hundreds of millions of dollars in loans that were never repaid, and the huge losses in commodity trading all combined to give the overall impression of a bank that may have lost several billion dollars in its existence. Even with the offer of help from Sheikh Zayed of Abu Dhabi, the regulators decided that the bank had to be shut down, and it was on July 5, 1991.

The book also touches upon numerous other threads involving BCCI, including working relationships with terrorist Abu Nidal and Panamanian dictator Manual Noriega. Also mentioned is Senator John Kerry's investigation into narcotics and money laundering, and New York District Attorney Robert Morgenthau's own investigations. In this account of the bank, the authors view the C-Chase operation as being one of the most important events that led to the unveiling of BCCI's hidden, illegal dealings. The story of operation C-Chase takes up much of the account, but each event is placed within its appropriate historical context.

In contrast with another account of BCCI, The Outlaw Bank, which we reviewed previously, the authors of A Full Service Bank are not present in the story. This is a straight-forward history of BCCI and the operations that led to its downfall, using primary sources such as transcripts of Bob Mazur's taped conversations and the authors' own interviews of major players. This method of presenting the story allows the authors to take a step back with the reader and analyze the entire context of the BCCI story, without the breathless, unabated action of The Outlaw Bank. In order to understand the bank's role in the world at that time, though, a reading of both books is necessary, as the subject of this review does not go into such depth in examining the Black Network of the bank and its involvement in arms deals. However, Adams and Frantz's book should be read first, as it provides a more coherent story of BCCI, told from a third-party perspective.

A Full Service Bank is a clear, well-written account of the "Bank of Crooks and Criminals International," and its treatment of the subject manner provides the reader with a context in which the bank operated, as well as various areas of investigation that can be pursued after reading the account. It is difficult to imagine a better introduction to the bank and the events that led to its downfall, even if the treatment of the bank's dealings in Asia, Africa, and the Middle East are only dealt with superficially. In essence, this book is a story of discovery, presenting the C-Chase operatives discovery of a huge money-laundering bank and international regulators' discovery of the true nature of the bank that existed everywhere but was regulated nowhere. In this aim, the book succeeds remarkably in presenting a coherent story of BCCI.

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Special Post: "Harry Potter and the Deathly Hallows" Book Review

July 20, 2007, 11:59 pm

First, a couple of admissions before you read the actual review. I read this book in the space of two days of constant reading, so this may well turn out to be a hasty review based on my first impressions of the book. Also, please do not read the review if you do not want to read spoilers, as I do not want to rely on vague allusions to things that happen when discussing what actually happened. This is your fair warning: ***SPOILER ALERT***

Harry Potter and the Deathly Hallows, recently released on July 21, 2007, is undoubtedly the most widely-anticipated book of the year, completing Harry's seven-year journey through the wizarding world to confront his nemesis Lord Voldemort, along with a host of other issues. With any finale of such a monumental and popular series, there are bound to be victories, disappointments, criticisms, and praise for nearly every plot decision made by the author. The final product, though, is a remarkable end to the Harry Potter series, and a fitting conclusion to the problems raised in the previous books.

After reading the previous book, Harry Potter and the Half-Blood Prince, numerous plot lines had been developed that left me worried about J. K. Rowling's ability to wrap them all up neatly and provide a satisfying conclusion in one more book. The issue of Harry Potter finding the remaining Horcruxes in the space of one book, while it had taken the previous six to locate and destroy only two Horcruxes seemed the most pressing issue. Additionally, the fact that no one, including Harry and Dumbledore, were quite sure what the Horcruxes were and where they would be located presented an even more apparent problem. Furthermore, Rowling used the theme of the Deathly Hallows to further the plot, and spent much time examining Harry's attempts to understand such universal themes as how to deal with death and the search for truth.

Remarkably enough, although not unexpected, Harry, Ron, and Hermione manage to locate the missing locket and determine where the other Horcruxes were hidden by Voldemort, including the cup of Hufflepuff and Ravenclaw's lost diadem. Even Neville plays an important role in the fall of Voldemort by taking care of the snake Nagini, and Harry eventually learns that, because of Voldemort's attack on him as a baby, he is the final Horcrux. Learning that he must sacrifice himself to Voldemort in order to end the war is one of the more dark yet touching sequences in the book, as Harry discovers that Voldemort can not be defeated unless the part of his soul trapped in Harry is destroyed. Harry bravely sacrifices himself and manages to survive Voldemort's curse, causing Voldemort to destroy the Horcrux on his own.

The theme of the Deathly Hallows themselves also play a large role in the story, as Harry learns what they are and that he already possesses two of the three Hallows. He also learns that Professor Dumbledore made it his quest to discover all three of them, although his motives were not quite as pure as Harry's. Through gradual revelations of the life of Dumbledore, Harry learns that the exalted professor had just as many flaws as any other human being, along with an irritating tendency to leave Harry in the dark about nearly everything. But Harry eventually learns some valuable truths about Dumbledore, even though they may have been unpleasant truths for him. Instead of following in Dumbledore's footsteps and pursuing the Hallows to gain enormous power to defeat Voldemort, Harry makes the more wise decision to do his best to reduce Voldemort's power.

One of the most intriguing questions of the series has been the issue of Severus Snape and whether he was "good" or "bad." It turns out that the answer to the question is a not-so-simple "a little bit of both." Harry discovers, through Snape's memories, that Snape always loved Lily Potter and had turned away from Voldemort the minute that he threatened Harry's mother. Although Snape acted out of his selfish attachment to Lily, and emphasized Harry's resemblance to James Potter who had tortured him as a youth, Snape had worked with Dumbledore to protect Harry until the very end. His last act before dying from the snake Nagini's bite, is to give Harry the last pieces of the puzzle to understanding that Snape and Dumbledore's efforts to protect him resulted in Harry ending up as master of the Deathly Hallows, as well as the destroyer of Voldemort's Horcruxes. Without Snape, selfish and mean as he was, Voldemort may have proved even more dangerous, or Harry may not have learned some important truths about Snape, Harry's mother Lily, and even Aunt Petunia.

The two major themes of death and truth run through nearly every page of the book. While feeling lost and inadequate to the task of locating and destroying Horcruxes, Harry slowly learns about Dumbledore's past actions that reflect none too well on the professor. Dumbledore comes out looking as though he made some grave mistakes in his past, even touching upon the Dark Arts and the subjugation of Muggles, as well as having manipulated Harry for much of his life in order to protect him and lead him to his eventual defeat of Voldemort. Harry realizes that Dumbledore had led him to the correct path, but that it would be up to Harry and his friends to walk the path and overcome the problems faced along the way.

Death also plays a large role in the book, with several of the supporting characters entering the clearing at the end of the path by the end of the story. Hedwig, Mad-Eye Moody, Lupin, Tonks, Dobby the house elf, and Fred Weasley are some of the casualties along the way, along with a number of Death Eaters and their supporters. The book does not skirt around the issue of mentioning the war in the wizarding world, and in war it is expected there will be casualties, many of them bitter and seemingly arbitrary. Harry learns how to deal with the death of close friends and the importance of continuing his quest even though he knows more death may come before the end, but that Voldemort must be defeated for the war to stop.

The book used the challenges facing Harry and his friends, and the introduction of new challenges as ways to keep the story moving forward and to illuminate various aspects of previous books. Much more of the history of Dumbledore, Snape, and the wizarding world at large was revealed in this book than in any other in the series. Rowling showed that Voldemort's quest for power took him from the forests of Albania to distant caves to medieval towers and even to the desecration of a grave, all in an attempt to gain one more tool to escape death and kill Harry Potter. Harry, on the other hand, followed a quest to learn the truth about his family, his strained relationship with Snape, and the vague life and teachings of Albus Dumbledore. Not surprisingly, Harry defeated Voldemort in the end by attempting to reduce Voldemort's power and understand the events that had so affected his life. Voldemort, as an aspiring immortal villain, trapped in an infinite present of gaining more power, was defeated by the simple disarming spell of a boy who understood the road he had traveled, leading from his childhood, though happiness, tragedy, and hope, on into a brighter future for the wizarding world and the Muggle world.

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Special Post: "The Octopus" Book Review

July 18, 2007, 3:02 pm

The book that is the subject of this review is The Octopus: Secret Government and the Death of Danny Casolaro, written by Kenn Thomas and Jim Keith, and revised and updated by Kenn Thomas in 2004. The subject matter dealt with is the various conspiracies and secret government dealings that journalist and writer Danny Casolaro was researching before is his untimely death in 1991, supposedly just as he was about to complete his own lines of investigation. A few of these topics Casolaro and the writers of The Octopus examined are worth mentioning to give the casual observer a general overview of what this book examines.

Obviously, the strange circumstances surrounding Danny Casolaro's death are examined at length. Ostensibly ruled a suicide, there were enough odd events that point in the direction that Casolaro was murdered and made to look as if he committed suicide. Some of these aspects include the fact that Casolaro had communicated to friends and family that he was, in fact, generally happy in life and was excited at having tracked his research to its end. The police investigation after the death made mistakes and may have involved the involvement of higher government agencies than a simple local suicide would warrant. The body, furthermore, was embalmed without the family's notification, making an autopsy more difficult later on. Years after the death, the FBI reopened the investigation to determine whether the death could be ruled a suicide or murder.

Much of Casolaro's research focused on the near-legendary PROMIS (Prosecutor's Mangement Information System) computer software program, created by a company called Inslaw. The software was to be sold to the government and used primarily by US attorneys tracking criminal cases between various offices. However, the government stopped paying Inslaw, forcing the company into bankruptcy and igniting a lengthy legal battle between Inslaw and the Department of Justice, which resulted in a judge ruling that the DOJ had stolen the PROMIS software. The decision was eventually overturned on appeal due to a technicality. The software, though, has been reported to be used, modified, enhanced, and sold to foreign governments with "back door" access, allowing the US government to track virtually any data that ends up in the system.

The authors also examine a number of events, based on Casolaro's notes, that the members of the secret government have been involved in. Just a few of these worth mentioning include the failed Albanian operation at the beginning of the Cold War, the overthrow of Arbenz' government in Guatemala in 1954, the Bay of Pigs, Kennedy Assassination, Watergate, and the bombing of Pan Am flight 103 over Lockerbie in Scotland, among others. It does not appear that Casolaro went too deeply into each of these areas, although much of his research does not survive, but he aimed to tie together all of these events as having been manipulated by the secret team he nicknamed "The Octopus." The Octopus was identified as consisting of eight members, some widely known and others more obscure, who operated outside the boundaries of government oversight or accountability and funded by drug money.

One of the more intriguing aspects to the Octopus story, although it is not based on Casolaro's direct research, involves the death of Diana, Princess of Wales in 1997 due to a car crash. Co-author Jim Keith researched much of the material for this section, and connects some of the dots between Dodi Al Fayed, Diana's partner, and the major players of the Octopus cabal. Ironically enough, Keith himself died of strange circumstances shortly after publishing a story stating that Diana was pregnant at the time of her death, but before his next article naming the Muslim doctor who examined Diana.

The last event that the book examines is the alleged use of the PROMIS software by Osama bin Laden in the wake of the September 11, 2001, attacks on the World Trade Center and the Pentagon. Bin Laden may have purchased the software from Russia and used it to avoid being captured after the attacks. Although it is a very short section, it points out the continuity of these conspiracies through various presidential administrations, from the original theft of PROMIS to the use of the software by the most wanted terrorist in the world. Some of the same players in the original drama have now returned to power in the Bush II administration, and the same questions remained unanswered by the same people.

In the end, the book is a good introduction to various conspiracies and some of the well-known and lesser-known participants in each of them. The two-hundred page review of Casolaro's research and related events may seem to jump around from topic to topic at times, but the various tentacles of "The Octopus" would seem to make this inevitable. Although the book may not convince many skeptics, it provides many different avenues for further research for those with an open mind. The sheer number of topics mentioned leave the reader feeling as if they have just scratched the surface of the secret dealings of Casolaro's and the authors' Octopus.

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Special Post: "Harry Potter and the Order of the Phoenix" Movie Review

July 13, 2007, 3:21 pm

As a long-time fan of the Harry Potter book series, it is always with trepidation that I approach a new Harry Potter movie. With the recent release of Harry Potter and the Order of the Phoenix, I felt even more uneasy than usual. As the longest book in the series to date, it was almost painful thinking of all the potential cuts that would be made to package an 800+ page book into a two-and-a-half hour movie. After my relative disappointment with the movie adaptation of Harry Potter and the Goblet of Fire, I admit I was quite worried about the new Harry Potter movie.

Thankfully, though, the movie met nearly every expecation I had. Everything in the book had been culled except for the main thrust of the plot and all of the action, but this resulted in the most action-packed, breathless Harry Potter movie thus far, from the dementor attack, to Harry's first kiss with Cho, to the final battle between Dumbledore and Voldemort. The only drawback to this approach is that major themes were presented as simple one-time occurrences and some of the continuity of the book was lost in the movie.

One main theme where this was apparent was Harry's detention punishments by Professor Umbridge. The book focused much more on the physical torture being inflicted on Harry and his resilience in the face of the unfair, brutal detention sentence. Another theme only briefly mentioned in the movie is the interaction of the adult members of the Order of the Phoenix and their desire to shield the children from its meetings and actions. The students, on the other hand, do their best to penetrate the secrets and learn what they can about the Order. The movie only glosses over these interactions, which make up significant portions of the book.

However, in such a short movie, it was amazing that so many themes were hit upon. Although it is in more of a "Greatest Hits" type of format, there are really only a few scenes or themes that did not make it into the movie. One of the more powerful scenes in the book that I found missing from the movie was the students' visit to Ron Weasley's father in the hospital after the snake attack, where they were also introduced to Neville Longbottom's parents, who had been tortured into madness by the Death Eater, Voldemort follower Bellatrix Lestrange. This visit provided some valuable insight into both the main characters as well as Neville, in an emotionally powerful scene. Although it was not central to the book, it was a scene well worth seeing in the movie.

Arguably, the character of Dolores Umbridge is the most irritating professor to have graced the halls of Hogwarts during Harry's years there. The movie does a remarkable job of bringing out the most unlikeable traits of the Professor Umbridge. From her irritating cough, "Hem, hem," to the use of Ministry of Magic Educational Decrees to take away the students' rights and privileges and take over control of Hogwarts, to the arrogant attitude that results in her eventual downfall late in the story, it is hard to imagine a more grating character. The actress who plays Umbridge does so masterfully.

The special effects in the movie, as in all of the Harry Potter movies, are great, and the acting is believable. While it could not have been easy paring down a book of this size into a more manageable movie, the end result is a wonderful revisitation of Harry's world and the best summary of the book that could be expected. For anyone who has not read the books or seen any of the other movies, all this talk of "He Who Must Not Be Named," Muggles, and wizards wearing black masks of death will seem absurd and confusing, but for those of us Harry Potter fans, the movie only makes the week-long wait for Harry Potter and the Deathly Hallows that much slower. In fact, in my case, the movie did exactly what I am sure it was designed to do: when I got home, I pre-ordered the book on Amazon.com and will be eagerly reading in when it gets here on Saturday.

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Special Post: "The Underground History of American Education" Book Review

July 11, 2007, 8:34 pm

The Underground History of American Education is the third book by John Taylor Gatto that we have reviewed (Dumbing Us Down was reviewed here and A Different Kind of Teacher was reviewed here ). This book is by far the longest and most in-depth of the three books and represents a well-researched and acutely-argued contribution to the debate about modern compulsory schooling.

Instead of being merely an overview of some of the ideas that have made their way into the school system, Gatto's 400+ page, textbook sized book begins with a look at ancient philosophies, such as the Egyptians and Greeks, and also examines the educational backgrounds of the founding fathers of America. He sees our current school system as Egyptian in nature, with a predetermined place for every citizen and learning geared towards that position. Future factory workers will be given only as much education as they need to listen to superiors without asking questions, future elites will be encouraged to understand every side of an argument so they can persuade others. Very few, if any, students will be able to rise above their place in life. The founding fathers of our country had little or no "school," as Gatto explains, but each gained a remarkable education from learning on their own.

The focus of Gatto's research and arguments, though, center on the period beginning in the mid-1800's through the early 1900's. There is also much analysis of the history of schooling in the mid-to-late 1900's and early 21st century, but the real groundwork was laid in the critical periods of the mid-1800's and early 1900's. In particular, 1852 was the first year that a law was effected making school mandatory for children in Massachusetts. Although this law, and similar ones passed around the same time, had little teeth, it was an important step in the process of designing a well schooled citizenry, as opposed to a well educated one.

The school system as we have it today is the product of several different philosophies, including scientific management, behaviorism, Fabianism, all kinds of social and evolutionary racism, and the lure that the most prominent social engineers faced to create a utopia. Once great numbers of undesirable immigrants (Celts, Slavs, and those of European Latin descent) were coming to America, a great cry was sent up to "Americanize" these new immigrants and force them to become as much like the rest of Americans as everyone else. Little regard was paid to the fact that this was blatantly racist, and that few Americans up to that point had ever been "Americanized." Yet, school was seen as the great social engine that could Americanize the new immigrants.

The most powerful idea to make its way into modern schooling, though, was a school system based on the Prussian version. Children in Prussian schools were forced to go to school and were taught as little as possible, making them children for life with a near-total dependence on the state and superiors to make their decisions for them. This is one contributing factor of the great military might of the Prussians, and their system was emulated heavily in America.

All of these ideas were funded, for the most part, by the foundations set up by the great trusts and businesses of the late 1800's, such as Rockefeller's General Education Board, the Ford Foundation, and the Carnegie Foundation, as well as the Morgan banking interests. All of these businesses knew that, in order to dissuade people from becoming entrepreneurs and being able to think critically about being treated shabbily and forced to crawl through coal mines for pennies, children would have to be trained to become totally dependent on someone telling them what to do. The compulsory school laws were given the enforcement they needed and parents were forced to send their children to factories that would mass produce employees.

Several more concepts found their way into the school system to effect an even more powerful ability to manage masses of children. A dumbing down of material took away the chance for children to develop the habit of reading deeply and thinking critically. With the laws becoming compulsory, there was a purposeful injection into the school system of vast numbers of children who did not want to be there, causing a further dumbing down of education. Textbooks suddenly stopped discussing topics such as death or evil, and faith in religion was replaced by faith in science. Strict teacher licensing requirements precluded anyone with anything useful to teach students from teaching them, unless the were willing to become licensed.

Numerous layers of bureaucracy were added to school system, along with untold numbers of administrative positions, bloating the budgets of schools and creating more busy work for these grownup children. Teachers would get their curriculum from administrators, who got it from the state, who got it from the federal government, who got it from numerous foundations, think tanks, and colleges. Thus, school has come to serve two purposes much more important to the economy than the actual education of children. The first was to create a jobs project, creating useless administrative positions and necessitating more teachers to teach kids who did not want to go to school and would not learn. Second, modern schools provide a useful testing ground for new ideas that are brainstormed in the colleges, foundations, and think tanks.

According to Gatto, what all this adds up to is a broken school system that works remarkably like it should. Few students ever learn in spite of school how to think critically about themselves and the world they live in. Most people who have been schooled end up working jobs that hold no joy for them as they take more busy work orders from a superior who knows even less than they do about the world, constantly avoiding any pain-inducing situation that would cause them to grow, and consuming everything they possibly can, completely at the whims of various marketers and television commercials. Docile, unhappy consumers are exactly what an economic system based on monopolistic capitalist ideas needs to function, and this is exactly the result that has been engineered. No solution to the problem of school can be long-term as long as this type of economy exists.

To conclude, though, The Underground History of American Education is an exhausting yet intimate look into the modern schooling system. Even a review of this length can only begin to scratch the surface of this book, and after reading it, it is amazing that any family would trust their children to get a quality education from a group of strangers being given orders by other strangers they are not even themselves aware of. For the vast numbers of people who are products of the school system and look back on it with the realization that they learned very little and had their entire youths wasted, Gatto writes, "School can't be that bad, you say. You survived it, didn't you? Or did you? ...Has it made a crucial difference for good in your life? Don't answer. I know it hasn't. You surrendered twelve years of your life because you had no choice. You paid your dues, I paid mine But who collected those dues?"

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Special Post: "Metallica: This Monster Lives" Book Review

June 29, 2007, 4:56 am

The book that is the subject of this review is Metallica: This Monster Lives: The Inside Story of the Hit Film Metallica: Some Kind of Monster, written by Joe Berlinger with Greg Milner and published in 2004. The subject of the book should be obvious by its various titles and subtitles, but it is an inside look at the film in question by one of the two directors of the project. Joe Berlinger, along with his partner Bruce Sinofsky, spent nearly two and a half years with the band Metallica, documenting their struggle to undergo therapy and repair their broken relationships, record a new album, and face their inner struggles.

Berlinger focuses on three main themes throughout the account: Metallica's story, the story of the documentary film, and his own personal story. The book is told in a mostly chronological sequence, but many discussions necessitate a simultaneous looking forward and backward for the reader to understand the context. This is, of course, quite logical, as the film came together from Metallica's story, which was put together by the directors months after the actual scenes were shot. A short look at each theme should give a potential reader a taste for what the book contains.

Metallica's story in the film Some Kind of Monster, in a nutshell, is the story of an immensely popular rock band being shaken to its core as its bass player of fifteen years leaves, the members realize they have never taken the time to overcome the emotional and psychological walls they have built, and the struggle to "clean house," all while employing the help of a full-time performance coach/therapist and trying to write and record a new album, and then beginning a world tour in support of said album.

In the book, Berlinger elaborates on many of the most important and moving scenes in the film, including the infamous confrontation between rhythm guitarist and vocalist James Hetfield and drummer Lars Ulrich soon after James returns from rehab for alcohol and other addictions, in which Lars actually shouts the F-word in James' face. Other scenes that are examined closer in the book include Lars' meeting with former guitarist Dave Mustaine, the Ramones cover songs and their context of Dee-Dee Ramone's death, and the first gigs that Metallica played after getting back together, including the show on the back of a truck in a parking lot at an Oakland Raiders football game.

Many of these scenes were gems of Metallica documentary film making, but they did not fit the context of the movie's story arc. With thousands of hours of film that the directors had to sift through, many scenes were pared down, intercut with each other, or simply dropped altogether. Berlinger also takes the reader through the "back end" part of the documentary, from its initial concept as a historical commercial piece, to the threat of it appearing as a mini-series on VH1 or Showtime, to its final product as a two hour and twenty minute documentary film. These themes were absent from the film itself, as its subject was Metallica, not the making of a documentary about Metallica, but Berlinger adds more interesting context to the making of the movie.

Berlinger also examines his film-making history and his relationship with his partner Sinofsky throughout the book. At the beginning of filming, the two were not on the best terms, and Berlinger was attempting to overcome the disgrace of being involved in the movie Blair Witch 2: Book of Shadows. As they become involved in watching Metallica sort through their personal and professional relationships, though, the two begin to gel as a team again, just as Metallica come together in the end to complete their album and begin a tour. Sinofsky offers a brief forward to the work, echoing the same problems the two were experiencing, but the very fact that he wrote such an endearing forward should go to prove that the two are on much better terms. They both attribute much of this conciliation to their work with and observance of Metallica.

For Metallica fans, one of the most intriguing aspects of the book is the use of various quotes and transcriptions of conversations among the members of Metallica, producer Bob Rock, and performance coach Phil Towle. Nearly every chapter opens with dialogue that sheds more light on the dynamics within the band culled from the thousands of hours of film that were shot for the movie. The final Appendix also contains snippets from interviews that Berlinger conducted with the band in regards to their feelings on the movie. They provide valuable insight as to their intentions to produce such as personal documentary, and its effect as a mirror that they can always look back to in the future.

Metallica: This Monster Lives provides the reader with a very personal inside account from one of the few people ever to get this close to the biggest heavy metal band in the world. It provides a unique perspective of the band as seen from the eyes of a professional documentary film maker, who focused his attention on the much larger picture of the band's story through its fracture, near-dissolution, and renewal. For anyone who has ever sought to understand Metallica's album St. Anger, the film Some Kind of Monster is absolutely essential, and for anyone who has seen the movie, Berlinger's book is absolutely essential to understanding the structure and making of the film, as well as its context in the history of Metallica.

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Special Post: "A Different Kind of Teacher" Book Review

June 25, 2007, 10:50 am

The book that is the subject of this review is A Different Kind of Teacher, which is a collection of essays and speeches given by the author, John Taylor Gatto, and released in 2001. This is Gatto's follow-up to his previous collection, entitled Dumbing Us Down, which was reviewed here previously, and represents a growth of the author's disillusionment with the modern school system of the United States.

The essays and speeches are grouped into three main sections, each with their own purpose. The first section," Schoolrooms Speak Bluntly," examines some of the circumstances under which Gatto developed his ideas of school, while the second section, "Analyzing the System," delves much further into the history of schooling as an institution that parents are forced, under threat of law enforcement, to send their children for their entire natural young lives. The final section of the book, "The Search for Meaning," is the author's analysis of how school actually teaches children and its results in society, what really matters in life, and what conversational and critical thinking skills a child should develop and which development school discourages.

Gatto displays great skill and passion in his criticisms of compulsory schooling, and suggests that no amount of "reform," money, or other solutions will ever contribute to repairing a system that breaks children. In fact, the more dysfunctional their students turn out, the more proof that school has done its job. These results are contrasted by the author with famous individuals who had failed at school but excelled at educating themselves, such as Benjamin Franklin, as well as with examples of his own students who simply had no time to waste by going to school. These anecdotes, including a short essay written by one of Gatto's students, provide a stark contrast with the author's description of children who have been put through the school institution from start to finish.

These children, according to Gatto, are much more likely to be unable to think critically, take responsibility for their own lives, and find themselves with no real meaning in life. The emotional dependency created by the school system encourages this, as children are taught to chase after A's, gold stars, standardized test grades, and other meaningless achievements. They are meaningless because the student is given no opportunity for self-reflection and the grades are based on standards that are a result of research by professional think-tanks who simply practice their theories, untested or not, on unsuspecting children. States, administrators, and teachers are given these standards to enforce with no critical analysis of them and are put under enormous pressure to have their students and themselves conform to these directives from above, and parents are told how angry to be at their children based on these same abstractions.

Gatto also sees the roots of social ineptness in the modern schooling system. Because students are alienated from each other and forced by strangers to compete with other strangers in competitions that many of them are simply not interested in, there is little other possible result than the current litigious nature of society, where seventy percent of the world's lawyers make their home in the US. People are forgetting the concepts of family and community life, denying responsibility for their lives and this is a direct result of the irresponsibility that schooling allows its students.

There is no solution to these problems to be found in our concept of school as it exits at the present. According to the author, schooling serves a much different and contrary position than does education. A person can always educate himself on any subject that they are interested in, whether it be learning about the history of his family, how to build a house, or how to master solitude. Learning for an educated person is always interdisciplinary, according to Gatto, and so is life. A product of schooling, though, will be dependent on other forms of authoritarian teaching, such as television, to provide superficial compartmentalized "subjects," with no relation to each other and no possibility for analysis. This type of schooling has both the questions and the answers delivered in prethought thoughts designed as pretty packages written by the newest wave of advertising executives and soap opera writers.

Possibly the most insightful parts of the book are when Gatto displays his mastery of language and with to get his point across. For example, in discussing the role of school in the economy, he states that "Our own economy requires a managed mass of levelled, spiritless, anxious, family-less, friendless, godless, and obedient people who believe the difference between Coke and Pepsi is a subject worth arguing about." And further in the book is when he brings up the topic of what really matters in life: "The truth is, if we can believe advertisements, what matters to most Americans is personal ownership of machines... Yet here we are, all of us, frantically lost in a tunnel of loneliness, cut off from each other, disliking ourselves, envying those with superior machines."

A Different Kind of Teacher goes to great length to explain that the only kind of teacher is oneself. The result of decades of mass forced schooling has been vast numbers of people who are still dependent on others to tell them what to do, even though this makes them less and less happy with themselves and others. As Gatto states in the last essay in the book, "An educated person writes his own script through life;" a schooled person, on the other hand, follows a tragic script given to him by someone he has never met and who cares nothing for him, and he follows this script to its tragic end of constant anger, desperation, and depression.

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Special Post: "The Politically Incorrect Guide to the Constitution" Review

June 18, 2007, 4:29 pm

The book that is the subject of this review is The Politically Incorrect Guide to the Constitution, by Kevin Gutzman and published this year in 2007. As with all of the books in the "Politically Incorrect Guide to.." series, the subject matter is the lesser-known side of a popular topic: in this case, the United States Constitution. Gutzman provides an historical and topical examination of the original intent of the Constitution and how the views of the founders have been distorted over time by the three branches of government. However, the judicial branch is clearly held most responsible for the changes, additions, and convolutions to constitutional law.

In fact, if any book suffers from the lack of a subtitle, this is it. A few come to mind off-hand as potential nominees, such as "How the Supreme Court Ruined Everything," or "The Founders' Losing Battle with the Judgeocracy." After reading the book, it is clear that the decisions rendered by the Supreme Court over time have eroded the states' rights that Thomas Jefferson held so dear and accomplished the consolidation of power in the hands of the federal government.

Of course, Gutzman is not positing a vast conspiracy of any sort that designed to take away the liberty of state and local governments to decide their own social laws on contracts and place this power in the hands of the national government. The court, though, from its inception realized that it was designed to be the least powerful branch of the government and various chief justices decided to alter that power balance as much as possible.

After some preliminary battles between the Court and the original intent of the Constitution, Gutzman sees the "imperial judiciary" beginning in earnest with the fourth Chief Justice, John Marshall. Gutzman states that Marshall's chief legacy was the writing of "the defeated Federalist Party's constitutional views into American constitutional law." Despite the fact that the people of the United States at the time voted into office politicians who advocated states' rights and limited power of the federal government, Marshall was the main advocate of using the Court to strengthen the central government and apply the same laws throughout the Union, even overriding state laws.

Marshall's position was at odds with the beliefs of Thomas Jefferson, who saw the growing power of the Supreme Court as a threat to the constitution. Jefferson believed that laws were the social agreements that people agreed to be governed by and judges were to apply the meaning of these agreements as clearly as possible. In contrast, Marshall and various other judges believed in a "natural law" underlying all laws and that the role of a judge was to examine laws in relation to these universal statutes. This, of course, replaced the role of the people in deciding their laws with an aristocratic Philosopher Counsel that would determine the rules that all people should live by.

Most of the book focuses on various Supreme Court decisions on a range of social issues that were being debated at the time. From President Abraham Lincoln's suspension of habeus corpus to slavery and the original intent of the Fourteenth Amendment to the Constitution, to the flip-flopping done on the issue of segregation, Gutzman illustrates that the Court has rarely acted in the interest of the people or the states, and instead consolidated power with the federal government. Although some states threatened secession at various points in time, Lincoln eventually stated that secession was an impossibility and the Civil War was fought to prevent the southern states from dissolving the Union.

The book moves through historical decisions one after another, hitting on the irrationality and vagueness of the antitrust laws, the Court's battle against Franklin Roosevelt's New Deal legislation and FDR's decision to replace the judges with his own partisan appointees who would follow his policies. It is in the discussions of religion's role in the government that is the most interesting, however.

Originally, the Constitution was intended to prevent the federal government from institutionalizing a state religion for the entire Union. State religions, however, could have their own religion, and often did. It was not until the twentieth century that Justice Hugo Black put up the wall of "separation between church and state," and denied state or local government's the right to deal with religion as they wished. This took the power of deciding on the role of religion in a community out of the community itself and installed it firmly with the Supreme Court. The First Amendment, originally intended to limit the power of the federal government, was extended to state and local governments, as well, reversing the intent of the Founders. Gutzman remarks that Christianity was the main target of the Court's decisions, stating that "any religion is okay, so long as it is not Christianity."

As well as the victory against religion, the Supreme Court also took on issues of morality, criminal law, and discrimination, as well as the ever-popular-to-discuss-and-argue-about Roe v. Wade abortion decision. The decisions rendered by the court served to further transfer the rights of states to govern as they will and place it in the hands of the federal government or the Supreme Court itself. Gutzman sees these decisions as a complete inversion of the original intent of the Founding Fathers and the Constitution itself: "The Court has overturned the right of the people of the states to govern themselves, overturned the Tenth Amendment, and thus overturned the Constitution -- and called it the "rule of law." In fact, this may be Gutzman's main argument and an adequate summary of the entire work (although too long to be a subtitle).

The book hits on another of additional topics, as well, including the teaching of constitutional law in school, which examines various cases but does not discuss the original intent of the writers of the laws the Supreme Court has decided upon. This leaves law students with a firm understanding of the decisions rendered upon various laws and their applications over time, but no idea if these applications were intended for the subject laws in the first place. Thus, one mistake is piled on top of another, until the original mistake is buried under years of precedent.

Gutzman's work is an interesting and useful guide to the US Constitution, its original intent, history and its application (and perversion) over time. While the book could easily be quite a bit longer and the issues discussed in more detail, it is quite ideal as an introduction to the history of arguably the most important document to the history of the United States and possibly the best agreement ever made between a government and its people.

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Special Post: "The Outlaw Bank" Book Review

June 8, 2007, 6:59 pm

The book that is the subject of this review is The Outlaw Bank: A Wild Ride into the Secret Heart of BCCI, by Jonathan Beaty and S.C. Gwynne. It was originally published in 1993, and tells the story of the infamous Bank of Credit and Commerce International and how the author’s penetrated some of the most closely-held secrets of the bank and it’s so-called Black Network, which was alleged to have been involved in money laundering, drug trafficking, and weapons sales in both the First World and Third World countries.

The authors separate their story into four distinct sections. The first and third sections deal mainly with their own experiences in tracking down the BCCI story. The second section of the book presents a brief overview of the economic conditions and geopolitical and historical situation that allowed the bank to flourish. The final section of the book ties up some of the loose ends and analyzes the entire story of BCCI and its dealings throughout the world from its start in 1972 until it was shut down in 1991.

Throughout the book, the authors make it a point to switch between the more technical and dense issues of financial markets, black markets, and history, and their own involvement in the story as reporters for Time magazine and independent researchers. This provides the book with a much faster-paced narrative than most books that present the historical facts and analysis, as the authors of The Outlaw Bank were able to penetrate very deeply into the bank’s hidden dealings in weapons and the black market in general. These corrupt dealings were so rampant in the bank that Robert Gates, former Director of Central Intelligence under Bush I and current Secretary of Defense under Bush II, referred to the bank three years before it was shut down as the “bank of crooks and criminals,” an apt analogy.

In fact, it is this involvement the authors had with various players in BCCI’s “Black Network” that provides the most interesting parts of the story. BCCI made it a policy to buy influence in as many governments as possible, one reason being to compromise or buy off any possible regulation of its illegal activities. The bank was also a principal player in money laundering and drug trafficking, with some of their more famous clients being Manuel Noriega of Panama and the Columbian drug-trafficking Medellin cartel.

Some of the more interesting aspects of this Black Network involve the weapons deals that BCCI facilitated. These transactions are often described in the book in detail or provided in lists of exhausting deals between various governments. Every major country in the Middle East is identified as a client of BCCI in one way or another, including Iraq, Iran, and Israel. BCCI also shows up in the story of George W. Bush, when he was a director of Harken Energy that, without having any offshore drilling experience, was awarded a drilling concession for an offshore oil field in Bahrain that was worth millions of dollars.

Other areas that the authors focus on include the bank’s involvement with William Casey and the CIA, the secret BCCI ownership of American bank First American, New York District Attorney Robert Morgenthau’s case against BCCI, and the unwillingness of the US Justice Department to look seriously into the wide-ranging allegations against the bank. The authors present these topics throughout the book as their paths cross with the major players in the BCCI story, and show that the threads in this story lead to nearly all of the major players in the Middle East during the era in which BCCI operated.

The final point the authors have to make is that no significant banking regulations have been changed to prevent another BCCI from appearing, fleecing billions of dollars from its depositors, operating illegal throughout the world, and shutting down with virtually no assets available to pay back its creditors. The only difference between BCCI and other banks was simply scale: BCCI was the most corrupt, largest Third World bank ever to have been shut down. And there is nothing to prevent another BCCI from engaging in the same exact activities.

The Outlaw Bank provides a very interesting look into the public and private dealings of the most corrupt bank ever shut down, as well as how it was aided and protected by some of the most powerful departments in the US government and elsewhere. Although the book is more difficult to find now than when it was released, it is well worth locating and reading. The authors provide a well-written and easily-read analysis a unique perspective of the story of the Bank of Credit and Commerce International.

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Special Post: "Pawns in the Game" Book Review

May 31, 2007, 12:57 pm

The book that is the subject of this review is William Guy Carr's Pawns in the Game, originally published in 1955. The work is Carr's attempt to understand and explain the vast Satanist conspiracy that has been at work throughout history and its goal of creating a One World Government to control every nation. The book's main thesis is that this World Revolutionary Movement, through the manipulation of various events and groups of people, have effected numerous government overthrows and silent coups d'etat, and are continuing this plot even as he was writing.

Carr examines a number of historical and present-day events to illustrate his points about the international conspiracy, which is being run by the highest levels of the Illuminati. Events such as the English revolution in the mid-1640's, the French revolution in the late 1700's, and various aspects of the creation of the Soviet Union and the two World Wars were begun or exacerbated by the presence of this shadowy cabal.

The Illuminati, now acting as the international bankers, according to Carr, have used the tool of monetary manipulation to gain and keep control of governments. They are the controllers of every influential country's central bank, holding the power to create wealth, destroy great fortunes, and consolidate their own power through the use of funding both sides of every war to ensure their own profits, and periodic currency devaluation.

One distinction that the book mentions a number of times is that no single religious, ethnic, or political group can be held responsible for the international conspiracy. In fact, the Illuminati often sow dissent in the ranks of any group it deems useful for the purpose, regardless of their being Jews, communists, Americans, or otherwise. Carr's focus on this issue seems to be a response to the possible charge of anti-Semitism, and he gives the illustration of the Holocaust as an example of the World Revolutionary Movement's brutal sacrifice of millions of Jews to further their own designs.

Another theme that plays a large part in the book is that of subversion. It is more commonly used when Carr is discussing communist influence in political movements and governments, but he contends that these movements are small parts of the international conspiracy. They aim to propagandize the public, convert the youth to revolutionary causes, and convert nations to communism.

In fact, the use of propaganda to further political aims is one theme that recurs in many of the events Carr describes. He relates all of them to the practice of L'Infamie during the French Revolution in 1789. Influential persons who do not agree with the Illuminati are shamelessly decried in the press, often to the point of humiliation, loss of power, and death. This is one of the most effective tools of the conspirators, regardless of the truth of the propaganda: as long as it persuades public opinion to oust a potential enemy and install a friendly regime, it is effective.

The book, though, while presenting Carr's argument clearly, suffers from the same flaws as many other books with similar themes. With such broad theories of an international conspiracy to effect a One World Government, there is precious little actual documentation. Unfortunately, the author relies on the reader's understanding of the events he describes, but does not provide sources for many of the claims. This is not to say that the claims are false, of course, but citing source documents for various historical events, whether they be other books or contemporary media articles, would give the reader an indication of the ground the author is standing on.

If nothing else, the author raises enough issues that encourage more independent research by the reader. Various threads that Carr ties together can be untied and examined, and he manages to raise many important themes. The engineering of revolutions and wars, monetary manipulation, and fact that the world has moved closer to a world government (with a European Union already established and a North American Union being discussed now in 2007) all validate many of the points raised in the book. Whether these events were engineered by an international Satanic conspiracy dedicated to the destruction of Christianity and the abolishment of sovereign nations is a question that the reader will have to answer on his or her own. But Carr provides some of the clues and themes that have been used in the past.

In conclusion, the book is well worth a read by anyone interested in the conspiratorial view of history. Thankfully, it does not implicate a specifically Jewish or Communist conspiracy, displaying a more subtle approach to the shadowy elite that the author contends runs the world. The book may not convince skeptics of the theory, but it does provide a cohesive thesis and various avenues for further research. As with any book of this nature, it encourages the reader to begin asking questions and seeking answers, even if its own answers raise only more questions.

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Special Post: "Barry & 'the Boys'" Book Review

May 18, 2007, 6:55 pm

The book that is the subject of this review is Daniel Hopsicker's Barry and "The Boys:" The CIA, the Mob, and America's Secret History. Hopsicker originally published it in 2001 and updated it in 2006, adding more information in an Introduction and tying this book in with his most recent work. The book's subtitle neatly explains the subject matter, although many more issues are examined through their relatioships with the infamous drug smuggler Barry Seal.

In fact, the sheer number of issues, events, and people that Hopsicker touches on makes it a very daunting task to attempt to review the book. From before World War II, to the Bay of Pigs, to Vietnam, Iran-Contra, Mena, Arkansas, and our current administration, Hopsicker ties together some of the more notable names that have been involved in both the public history of America and the "secret history." Being unfamiliar with some of the subject matter, this review will focus more on the style and mechanics of the book, rather than most of the actual content.

As a summary of the work, though, the book focuses heavily on the life of Barry Seal, whom Hopsicker calls "the biggest drug smuggler in American history, who died in a hail of bullets with George Bush's private phone number in his wallet." Through his relationship with various military-intelligence personnel, and as a CIA employee and pilot, Seal played a part or knew the main participants in nearly every major event in recent American history. He attended a summer camp for the Baton Rouge Civil Air Patrol with Lee Harvey Oswald, and is suggested to have flown a getaway plane out of Dallas on the day of the Kennedy Assassination, for instance. Seal was also heavily involved in flying drugs into the country during the time of the Iran-Contra events, and his plane ended up in the possession of George W. Bush after his death. In the 380-page book, though, these issues are examined in depth, along with dozens of other events.

The sources for the book seem to be mainly interviews that Hopsicker or his associates conducted, and most of them relate to various aspects of the secret history or the life of Barry Seal. This makes the book a great primary source, and there are very few anonymous sources providing information. Seal's wife is interviewed, along with high school friends, coworkers, and government employees. As issues come up, Hopsicker introduces a player and his or her role, and relates the event back and forth to other events, reminding the reader of the relevance of what has come before and what will come later. This helps casual readers (such as this reviewer) keep all of the names and places a little bit straighter, since the same names seem to keep appearing in various places and times.

The writing style itself is quite easy to read and a bit casual, compared with other books of a similar nature. Hopsicker is very much a part of the story, as he and his researchers attempt to put together the complete picture of the events that surrounded Barry Seal. With each interview and new name added to the mix, the picture becomes more clear, chapter by chapter, until the book traces a single unbroken line through over sixty years of history involving covert wars, drug smuggling, bipartisan political corruption, and various shell corporations and financial intrigues.

Obviously, the author ran into some legal issues with the publication of the book, though, as one chapter is filled with blacked-out, redacted material. Nearly every name is unreadable for an entire chapter while Hopsicker traces the evolution of one of the shell companies mentioned in the book. This detracts slightly from the readability of the material, and it seems that previous versions were missing the chapter completely, which is unfortunate, but the material in the chapter does not seem central to Hopsicker's main thesis. Of course, this is hard to tell for sure with so much cut out, but the names mentioned in the chapter are not repeated throughout the book, as there are few other blackouts in the remaining thirty-seven chapters.

A 60-page Appendix at the end of the book contains numerous pictures from the life of Barry Seal, as well as documents from his personal records. These provide a treasure trove of resources to browse through to learn more the various issues that Hopsicker examines, especially the trail of ownership of Seal's planes that were used to smuggle drugs. Following the trail of shell corporations set up simply to shield the true owner of the planes is one of the more tangled yet enlightening portions of the book, and the Appendix explains more of these details with the use of the actual source documents.

A final useful aspect of the book is that Hopsicker has obviously read much about the subject matter he aims to tackle, and provides other recommendations of books that followed the track. Some of these authors, such as Alfred McCoy and Peter Dale Scott, are well-known and respected, and their works provide additional avenues of research for the reader of Barry and "The Boys". By attempting to add to the information already available from other sources, Hopsicker is able to build on these works and provide his own contributions, rather than simply offering a summary of other works.

Barry and "the Boys" may provide an ideal introduction into the topic of the secret history of America's involvement in covert wars and drugs, and it is certainly a work to be referred to and read more than once. In fact, as more of the names connected to Seal appear again and again (as they have even since the book was originally published in 2001), the work is more important than ever. As Hopsicker states numerous times in the book, it's a "Small world," and it seems that everyone knows everyone else sometimes, except the general public who knows no one and is told as little as possible. Seal, as a tragic figure who rose to the heights of power in the covert world, met his end when he grew a little too big for his own britches and decided to "talk." Hopefully Hopsicker will be given the opportunity to speak more of the truth as well, as he is saying some important things in this book.

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Special Post: "Dumbing Us Down" Book Review

May 10, 2007, 10:43 pm

The book that is the subject of this review is John Taylor Gatto's Dumbing Us Down: The Hidden Curriculum of Compulsory Schooling. It is a collection of several essays and speeches written by the author, who is an advocate of reforming the American educational system.

Gatto's basic premise is that our schools do exactly what they were designed to do, and they do it brilliantly. Unfortunately, though, schools have not been designed to educate anyone; on the contrary, they are designed to churn out mass production citizens, much like an assembly line can mass produce cars that are nearly identical in their finished products. This process does not call for the education of students -- it simply calls for their imprisonment in the school system for hours a day, along with a continuance of school in the form of homework and television. In fact, Gatto also includes modern television programming as contributing to the false education that masquerades as "schooling."

Instead of receiving an actual education, students of schools follow a different kind of lesson plan. Some of the lessons they learn include confusion, class position, indifference, emotional dependency, intellectual dependency, provisional self-esteem, and the fact that students can not hide. This education results in graduates who have never been given the time to develop an individual personality, can not self-reflect, and whose self-esteem and self-confidence are completely based on external factors, such as grades, gold stars, or a positive performance review by a superior. The constantly ringing bells of school to signal a period change also result in students being taught that nothing in life is worth finishing, so nothing is worth starting. It is simply better to accept one's place, even though no one can quite understand why the place has been given to them, or what they are supposed to do with it if no one tells them what to do.

The author also argues that the modern school system creates psychological problems in students, who end up with a life full of dependency and aimlessness. The products of school, according to Gatto, are indifferent to the adult world and refuse to grow up, have very little curiosity, a poor sense of the future, a poor sense of the past, a mean streak directed at other students, teachers, and others, uneasy with any situation requiring intimacy, materialistic, and unable to handle new challenges. Of course, these problems make students the perfect product needed in an economy founded on mass production and cheap labor.

In terms of solutions, Gatto recommends homeschooling with a focus on family and community involvement. Schools, social clubs, and professional organizations, because they are merely networks, will not be able to replace a child's community and family life. No matter how many networks a person has, these will not meet a person's emotional needs. Gatto gives the example of asking the reader how quickly they began forgetting the names of classmates, teammates, or fellow club members, and comparing that with the number of aunts and uncles the reader has forgotten. This is designed to reinforce the idea that ties of family and community are more important to an individual's individuality than loose bonds associated with most networks.

Gatto's conclusion is that there is no right way to educate people as a whole. They need to educate themselves, find their own interests, and develop their own internal processes. Mass schooling will only result in more mass people, who are controlled by mass media and work in an economy that requires mass obedience to menial jobs. Dumbing Us Down: The Hidden Curriculum of Compulsory Schooling details the problems and solutions to the widespread psychological problems of numerous members of society, and pins the blame squarely on the insight that mass production students, who have weak family and community ties and are always competing for a "good grade" from a superior, who are lonely, desperate, and unhappy, lacking the experiences of educating themselves and indifferent to almost everything except their present environment, are the perfect finished product of schooling. As Gatto emphasizes, "education and schooling are, as we all have experienced, mutually exclusive terms."

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Special Post: "The Burning Tigris" Book Review

January 22, 2007, 1:03 pm

The Burning Tigris by Peter Balakian examines in great detail the massacres of over a million Armenians by the Turkish government during the late 19th century and during World War I. With over 1,100 footnotes to the work, Balakian leaves no stone unturned in this monumental work which focuses on a little-known area of Armenian, Turkish, and American history.

The story starts with the first massacres of Armenians in the late 19th century, and the first instances of organized killings by groups of Turks. As Christians, the Armenians (and to a lesser extent, Greeks and other Christian ethnic groups) were treated the the ruling Muslim Turks as second class citizens, at best, and expendable, at worst. This was in contrast to the fact that Armenians made up a large part of the intellectual and economic life of Turkey in the late 19th and early 20th centuries. With the first of the massacres, however, the stage was set for future atrocities against the Armenians.

The rise of the "Young Turks" as leaders of the government was the point at which the plan to eliminate the non-Muslim groups was accelerated. The Young Turks, who came to power in 1908 under a guise of standing up for the rights of all the groups living in the country at the time, furthered the destructive path of their predecessor: Sultan Abdul Hamid II. The expectations of the Armenians for the brighter future promised by the Young Turk government, however, were met only with prejudice, hatred, and violence from the new rulers, who initiated a plan to eliminate the Armenians entirely.

With Turkey's involvement in World War I, on the side of Germany, the government saw its opportunity to begin the systematic genocide of the Armenians. On one occurrence, April 24, 1915, in Constantinople, the Turks rounded up the intellectual and artistic leaders of the Armenians and proceeded to eliminate the vast majority of them. This scene, and many more horrifying ones, were played out across Turkey. Men and boys were burned alive, shot, stabbed, drowned, starved, and deported. Women endured the same fates as the men, along with various forms of sexual torture committed by the Turks. The trail of burned villages and dead Armenians extended across the entirety of Turkey.

Balakian cites sources as diverse as official government documents, correspondence from ambassadors, consuls, diplomats, and other witnesses to the events. The same descriptions of massacre and torture are played out over and over again in different regions of Turkey and are seen by numerous representatives of foreign governments and aid institutions.

The Turks culminate their activities in a nationwide deportation of the Armenians, who are forced to march from the homes hundreds of miles away into the desert, given no food or water, with intermittent killings and rape committed along the way. As can be expected, few Armenians survive the mass deportation.

By the end of the war, between one million and 1.5 million Armenians meet their fate at the hands of the Turkish government's genocide, effectively wiping out two-thirds of the Armenian population of Turkey. If not for the philanthropic and activist involvement of important American organizations who provided aid to the Armenians, the number of dead may have been even more catastrophic. Such organizations as the Rockefeller Foundation and the Red Cross provided aid during the initial massacres and during the wide-scale genocide of World War I.

Balakian goes on to further examine the response of the world to the Armenian genocide from the end of the war until the present day. Unfortunately, the genocide has been pushed into the background of 20th century genocides, with Turkey actively denying the entire mess as Armenian propaganda, and America failing the Armenians both after the war, and even now, refusing to invoke the anger of Turkey by acknowledging the genocide. In fact, the US will not officially support using the word "genocide" to describe the systematic elimination of over one million people, in contrast to numerous other countries who have accepted the massacres as a genocide.

America's giving in to Turkish influence is, of course, based on the lack of power exercised by the new Armenian nation, and the strategic location of Turkey. With two-thirds of its population destroyed, the Armenians were given their own country far from their original homes in Turkey, and were forced to accept the aid of the U.S.S.R. in order to gain protection against further attacks by Turkey after the war. Even with their current freedom, their military power and natural resources do not compare with those of the more influential Turkey.

And even now, America protects its military, economic, and political interests in Turkey, by its active complicity in the downgrading of what happened in the late 19th and early 20 centuries, culminating in the century's first genocide. In this case, unfortunately, the winners have decided what history speaks for Armenia. And oil, as it has almost since its discovery and widespread use, runs thicker than the blood of millions of people.

With his book The Burning Tigris, Peter Balakian has given a definitive account of the Armenian Genocide and America's successes and failures in aiding the remaining Armenians. Thoroughly sourced, well written, and accurately descriptive, this book brings to the light one of the darkest, most horrifying occurrences of the 20th century.

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Special Post: "Dillon Read & The Aristocracy of Stock Profits" Book Review

November 27, 2006, 4:03 pm

This book that is the subject of this review contains valuable information regarding foreclosures nationwide, including the trap that many homeowners in various areas have fallen into within the past several years as the housing bubble has come and gone. While not directly related to helping a homeowner stop foreclosure, the information can be used to protect against falling into the trap again.

In fact, this review may be seen as a companion and background piece to our article on equity investing within a community to stop foreclosure.

Dillon, Read & Co., Inc. and the Aristocracy of Prison Politics is a book that was published as a series of articles online. The author is Catherine Austin Fitts, a former Wall Street investment banker and Assistant Secretary of Housing/Federal Housing Commissioner for George H.W. Bush.

The book follows Fitts as she discovers the prevailing visions of policymakers, both public and private, who are exercising control over the country and the world. Topics that are covered include drug smuggling, money laundering, the "War on Drugs," the housing bubble, and general corruption in Washington and Wall Street.

As Fitts draws the map of where the United States has been heading over the past decades, the perspective is at turns historical, informative, and autobiographical, as fits the situations.

The beginning point of the map is Fitts' work at Dillon, Read & Co., a Wall Street investment banker, during the transition when Reagan took office. Ownership of the firm changed hands, and leveraged buyouts became the new trend on Wall Street.

Another landmark that Fitts points us to is the story of RJR Nabisco, one of the largest food companies in the world that also markets cigarettes. It is RJR's involvement in the drug trade and money laundering that Fitts focuses on, especially the use of cigarettes as an alternate form of currency in the black market, and RJR's complicity and knowledge of the situation. In fact, the EU has brought a suit against RJR, detailing how the laundering scheme worked for drug smugglers.

To illustrate government involvement and complicity in drug running in the US, Fitts examines the Mena, Arkansas, and South Central Los Angeles, California cases. This is also where Fitts introduces the reader to Stanley Sporkin, the CIA General Counsel during Iran-Contra, and a judge in Federal Court. According to the author, this appointment left "the CIA with a legal license to team up with drug dealing allies and contractors."

The next topic Fitts looks at is how leveraged buyouts work. In essence, the buyer purchases the company on credit. The credit is backed by the target companies future ability to pay back the credit. This puts the creditors in charge of the company, essentially, regardless of which company originally purchased the target. She also points to the KKR takeover of RJR Nabisco, which Dillon, Read & Co. was involved in.

After leaving Dillon, Read & Co., due to their losing sight of the line "between financial engineering and financial fraud," Fitts was appointed as Assistant Secretary for Housing - Federal Housing Commissioner for FHA. In this position, Fitts runs into a number of situations showing that the government was quite complicit in losing the money of citizens in order to benefit private interests.

Fitts also moves into the area of prison politics and financial investment in companies that run prisons. This is where her argument begins to put some of the pieces together regarding the drug connection, government complicity in smuggling, and prison profits. Many of the aspects of these lucrative prison investments have their beginning in the outsourcing of public management of prisons to private companies traded on Wall Street. Fitts uses Cornell Corrections as a typical example, as well as its connection to Dillon, Read & Co.

Fitts states that the capitalization of prison companies is based on the price of each prisoner. For example, for each additional prisoner Cornell houses, he or she is worth roughly $24,000 to the company and its shareholders. In effect, this makes putting more people in its prisons a goal of these companies. This is where the drug connection comes into play. As the government allows and aids drug smuggling, citizens are caught and sent to jail, increasing the stock prices of prison companies. And many public names end up on the boards of these private companies, after leaving Washington.

Fitts, after leaving HUD, begins her own investment firm, Hamilton Securities. After making attempts to make money for HUD, as well as helping communities, some of Hamilton's investments end up putting together a program called "Community Wizard." This intriguing program was designed to allow citizens to go online and view exactly where government money was being spent in their communities. The only problem with the software was that it would expose the excessive waste of government projects, and the insider deals and financial arrangements made between government and private interests.

The public would also be able to see that money spent for the "War on Drugs" was being spent in areas that had the most drugs and large turnovers of houses; i.e., drugs would be brought in, citizens would be arrested for drugs and sent to private jails, their houses would go back to HUD, who would allow other private interests to make money on the defaulted homes.

Of course, the government could not allow Fitts to continue on with this line of examination and make it available to the public. So, in a lengthy lawsuit against Hamilton, the government was able to destroy or seize most of the software and information, all without ever winning a case against either Fitts or Hamilton Securities. Problem solved.

Fitts also touches on a huge number of other topics relating to these issues, including Dillon's eventual cashing out of Cornell, the Carlyle Group, the Harvard Endowment, Richard Grasso's meeting with Colombian FARC drug smugglers, Citigroup, and others.

And where does Fitts' map lead? In the end, she shows us how the vast majority of policymakers are not interested in changing how thing work; they are more than content to "go with the flow" of things. And private citizens, who may hate "the system" and yearn for change, are being gladly used as the conduit for "the system" that they hate.

Dillon, Read & Co. and the Aristocracy of Prison Politics was written to show us how the worlds of government and private businesses are in fact the same world. She leaves us with the hope of creating a new, better world on a smaller, community-focused basis, where money and power are taken out of the hands of large government and big businesses, and put back into the communities in which we all live.

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