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  • 1. The High Cost of Cap and Trade • DHS: Everyone’s a Threat • Pyramid Schemes Put in Perspective May 11, 2009 www.TheNewAmerican.com ThaT Freedom Shall NoT PeriSh $2.95 Unattractive UNION
  • 2. Connect with something big — from virtually anywhere. Be one of the many dedicated Americans working together to build a better world. Visit JBS.org and get connected.
  • 3. Scott Farm Founded 1880 ding Fee a Am eric office • 701-869-2446 facSimile • 701-869-2829 The John W. Scott Farm P.o. Box 186 GilBy, north Dakota 58235 John W. Scott • Jack Scott email • jwsfarm@polarcomm.com To what avail the plow or sail or land or life if freedom fail?
  • 4. Vol. 25, No. 10 May 11, 2009 10 Design by Joseph W. Kelly; photo: ©iStockphoto.com Cover Story TraNsaTlaNTic UNioN 10 Unattractive Union by James Perloff — It is now clear that European nations were deceived into joining an economic union that became a political union, yet our leaders still seek a similar economic union with the EU. FeatureS 17 21 ENErgy 17 The High cost of cap and Trade by Warren Mass — Cap-and-trade programs to control carbon- dioxide emissions will further damage the economy. AP Images AP Images EcoNoMy 21 cancerous growth of government by Alex Newman — The private sector struggles while big 24 government grows even larger. HoMElaNd sEcUriTy 24 Everyone’s a Threat by William F. Jasper — Obama’s Department of Homeland Security and federal-state “Fusion Centers” target millions of Americans. ProfilE 28 Pyramid schemes Put in Perspective AP Images by Charles Scaliger — Kreuger and Madoff were caught doing what governments do as a matter of course through central banking. HisTory — PasT aNd PErsPEcTiVE 28 34 lessons of the Weimar republic by Michael E. Telzrow — Hyperinflation easily leads to loss of liberty. THE lasT Word 44 obama’s counterproductive Plan AP Images by John F. McManus 34 DepartmentS German Federal Archive 5 letters to the Editor 32 The goodness of america 6 inside Track 40 Exercising the right 9 QuickQuotes 41 correction, Please! coVEr Design by Joseph W. Kelly; photo: ©iStockphoto.com
  • 5. 73013
  • 6. LETTERS TO THE EDITOR Publisher John F. McManus Editor construing the constitution reverted back to his true Northeastern Gary Benoit In “Dangers of ‘Judicial Supremacy’ ” thinking. The next week on ABC News, he Senior Editor (March 2), Edwin Vieira, Jr. claims that ju- agreed with Maxine Waters on “bank nation- William F. Jasper dicial review — the power of the Supreme alization.” Maxine and Graham represent Court to strike down congressional and state conservatives? Is Graham’s staff “laughing Associate Editor Kurt Williamsen laws it deems “unconstitutional” — is not out loud” to think that The New AmericAN only “legitimate,” but also a practical neces- magazine put a conservative slant on him? Contributors sity, as the court must often “construe” the If you want to see “conservative” in Dennis J. Behreandt Christopher S. Bentley Constitution in the course of deciding what thought and action, follow South Carolina’s Steven J. DuBord the Constitution describes as “Cases” and Senator Jim DeMint. He does well represent- Selwyn Duke “Controversies” that come before it. How- ing South Carolina and the Constitution. Jodie Gilmore ever, judicial review is neither stated nor im- ThomAs PlowdeN Gregory A. Hession, J.D. Ed Hiserodt plied in the Constitution, but was simply as- South Carolina William P. Hoar sumed by the falsely brilliant John Marshall R. Cort Kirkwood in the specious Marbury v. Madison case The New AmericAN did not claim Lindsey Warren Mass Llewellyn H. Rockwell, Jr. (1803). The sole function of the appellate Graham (R-S.C.) was either “conservative” Alan Scholl jurisdiction of the Supreme Court is to ad- or liberal. We merely repeated an interest- Ann Shibler judicate on the basis of the laws in the case. ing quote he made. We rate how every mem- Liana Stanley The “construing” of the Constitution need ber of the House and Senate votes on key Michael E. Telzrow Joe Wolverton II, J.D. not and should not enter into it at all. Indeed, issues in our “Freedom Index,” a congres- judicial review has gradually led to the very sional scorecard based on the Constitution. Editorial Assistant judicial supremacy Vieira impugns in his Senator Graham’s cumulative FI rating for Denise L. Behreandt article. This is the view of Thomas Higgins the 110th Congress (2007-2008) was 53 Art Director in his classic Judicial Review Unmasked, as percent. — Ed. Joseph W. Kelly reviewed by the late Medford Evans (Ameri- Desktop Publishing Specialist can Opinion, November 1981). Steven J. DuBord Tim Keller Proper Parlance Research Watertown, New York In a “Letter to the Editor” published in the Brian T. Farmer April 13 issue of The New AmericAN, Mr. Bonnie M. Gillis Losch objects to the reference of “America’s Wayne Olson Political Posturing Judeo-Christian heritage.” Yes, America was Marketing Many times I’ve had the urge to fire off a established as a Christian nation, to which Larry Greenley letter to the editor, but only once have I done there is no argument from me. But to attempt Public Relations so, until now. In the March 2 edition’s Quick to discredit the Judeo-Christian heritage is Bill Hahn Quotes, compiled by John F. McManus, to be intelligently ignorant of those leaders there is a picture and quote by South Caro- who created our nation. History reminds us Advertising/Circulation Julie DuFrane lina Senator Lindsey Graham. Criticizing that these men were very well versed in the Obama’s stimulus package, Graham says, “If Old Testament. Therefore, the use of the this is change we can believe in, America’s phrase “Judeo-Christian” is very much in best days are behind her.” Oh, is Graham order in describing America’s heritage. The suddenly a conservative? use of the Ten Commandments by our Chris- Yes, we in South Carolina have read or tian folks is another example of the Judeo Printed in the U.S.A. • ISSN 0885-6540 heard of Graham’s pontifications, but it was background to our way of life, even though P.O. Box 8040 • Appleton, WI 54912 920-749-3784 • 920-749-3785 (fax) all a ploy by him to appeal to conservatives. the Christian version changed the wording of www.thenewamerican.com McManus took the bait! The stimulus pack- the sixth commandment to read, “Thou shalt editorial@thenewamerican.com age already had the votes to pass, so there not kill.” The Old Testament, Exodus 20:13, Rates are $39 per year (Hawaii and Canada, was “no risk” to Graham taking the conser- reads, “Thou shalt not murder.” add $9; foreign, add $27) or $22 for six months (Hawaii and Canada, add $4.50; foreign, add vative view. dAvid eiseNberg $13.50). Copyright ©2009 by American Opin- Quickly, Graham Tucson, Arizona ion Publishing, Inc. Periodicals postage paid at Appleton, WI and additional mailing offices. Post- master: Send any address changes to The New AmericAN, P.O. Box 8040, Appleton, WI 54912. EXTra coPiEs aVailaBlE The New AmericAN is pub- lished biweekly by Ameri- ➧ Additional copies of this issue of The New AmericAN are can Opinion Publishing available at quantity-discount prices. To place your order, visit Inc., a wholly owned subsidiary of The John Birch Society. www.shopjbs.org or see the card between pages 38-39. Call 1-800-727-TRUE to subscribe today! 5
  • 7. Inside Track Piracy solution: letters of Marque and reprisal Is there another alternative to paying tribute to Somali pirates, are spending in the ongoing War on Terror. When dealing with other than sending a huge naval expedition force to rout the pi- elusive, non-state actors like pirates and terrorists, Ron Paul’s ap- rates out of their lairs? Congressman Ron Paul (R-Texas) believes proach would seem to make much more sense than current poli- the Constitution’s long-neglected “marque and reprisal” provi- cies. There are very likely plenty of Special Ops/Special Forces sion may offer a viable option. Article I, Section 8 of the Consti- operators who are ready, able, and willing to have a go at the tution states: “The Congress shall have power … To define and Somali pirates. punish piracies and felonies committed on the high seas, … To declare war, grant letters of marque and reprisal, and make rules The guided-missile destroyer USS Bainbridge concerning captures on land and water.” tows the lifeboat from the Maersk Alabama to Throughout history, privateers have played an important role the amphibious assault ship USS Boxer. Three in combating piracy, and there’s good reason to think they could Navy vessels were used in this rescue. do so again. As in the early years of our nation, Congress could issue letters of marque and reprisal authorizing private parties — individuals or corporations — to go after pirates and/or terror- ists. Rep. Paul made the same proposal in 2001, introducing the “Marque and Reprisal Act of 2001” to target Osama bin Laden and other terrorists involved in the 9/11 terror attacks. Placing bounties on the heads of villains would cost only a few tens of millions of dollars, versus the hundreds of billions we news.navy.mil globalist Piracy solution: Empower the UN Our globalist-minded policy elites have the solution for piracy: option provided in the U.S. Constitution of granting letters of more power for the United Nations. Ratification of the UN Law marque and reprisal to private actors to pursue pirates. of the Sea Treaty (LOST) is a “top priority” for the new Obama The UN LOST would affect much more than our policies administration, according to Secretary of State Hillary Clinton. toward pirates. It would dangerously undermine national sover- Articles 100-107 and Article 110 of the UN Law of the Sea Treaty eignty and transfer vast new powers to the United Nations to deal with piracy. However, ratification of LOST would greatly control and/or regulate virtually all human activity on, over, or hamper U.S. ability to deal with pirates, as it would restrict hot under the oceans, including the seabed, coastal areas, and inland pursuit in territorial waters, pursuit on land, and interdicting and waterways (rivers, streams, and lakes) that empty into the oceans. boarding pirate ships on the high seas, and it would prohibit the (See “LOST: The Law of the Sea Treaty” in our March 2 issue.) obama: Hero or Villain in Pirate rescue saga? President Obama scored major political points for the successful The critique, which claims to be based on conversations with rescue of Captain Richard Phillips from his Somali pirate captors. Navy SEALs, notes: “Philips threw himself off of his lifeboat Media headlines hailed his “decisive leadership” in his baptism prison, enabling Navy shooters onboard the destroyer a clear shot under fire. However, scuttlebutt from the Navy community claims at his captors — and none was taken. The guidance from National that the rescue succeeded in spite of Obama’s indecisiveness and Command Authority — the president of the United States, Ba- interference, not because of his leadership. A harsh critique of rack Obama — had been clear: a peaceful solution was the only the standoff by an anonymous Navy veteran that is circulating acceptable outcome to this standoff unless the hostage’s life was widely claims that Team Obama attempted to micromanage the in clear, extreme danger.” The critique cites a litany of specific situation, overruling the on-scene commander and imposing ri- interferences that allegedly prolonged the standoff for days and diculous rules of engagement that repeatedly prevented the Navy endangered the life of Capt. Phillips. SEAL shooters from taking out the pirates. A Special Forces veteran contacted by The New AmericAN “What should have been a standoff lasting only hours — as said he “couldn’t vouch for all the specifics in the critique,” but long as it took the USS Bainbridge and its team of NSWC [Naval that all the main points “appeared to be valid on the face of it.” Surface Warfare Center] operators to steam to the location — be- The most obvious fact, he noted, was that when Capt. Phillips came an embarrassing four day and counting standoff between a heroically jumped into the sea, “the SEALs would have shot ragtag handful of criminals with rifles and a U.S. Navy warship,” the pirates or the Bainbridge would have blown them out of the the critique says. water,” except for being countermanded by Obama. 6 THE NEW AMERICAN • MAy 11, 2009
  • 8. “Efficient” socialism is Not the answer ficer … will work to streamline processes, cut costs, and find best practices throughout our government”; • Aneesh Chopra, who in his role “as America’s Chief Tech- nology Officer … will promote technological innovation to help achieve our most urgent priorities — from creating jobs and re- ducing health care costs to keeping our nation secure”; and • Vivek Kundra, who as Chief Information Officer “is respon- sible for setting technology policy across the government, and using technology to improve security, ensure transparency, and lower costs.” White House photo But can these experts really help solve our fiscal and economic woes? The fact that Obama himself has not demonstrated fiscal frugality as either a senator or president does not give cause for hope. In the U.S. Senate, for instance, he voted for creating the $700 billion TARP fund, thereby helping to create the projected President Barack Obama said in his April 18 weekly address that deficit of over $1 trillion he inherited for the current fiscal year. we can “get our deficits under control and move from recovery Then as president he lobbied for the $787 billion “stimulus” leg- to prosperity” by getting rid of “dozens of government programs islation and proposed a budget forecasting a $1.75 trillion deficit shown to be wasteful or ineffective” and, in general, making gov- for the current fiscal year. His budget also called for spending ernment more “efficient” and “accountable.” He also said that he $3.9 trillion this fiscal year and spending $3.6 trillion next year has “assembled a team of management, technology, and budget as compared to $3.0 trillion for fiscal 2008. experts to guide us in this work.” President Obama is advocating more government, not less. He Obama specifically pointed to the following experts: wants to make the socialism he advocates more efficient, but ef- • Jeffrey Zients, who “as the first ever Chief Performance Of- ficient socialism is not the answer. The EPa Proposes New regulations to control co2 Emissions The Environmental Protection Agency on April 17 proposed from automobiles and power plants is definitely on the regula- new regulations to control carbon dioxide (CO2) and five other tion block. The first step toward costly and far-reaching regula- “greenhouse gases” as “pollutants” under section 202(a) of the tions is that the EPA establish carbon dioxide as a regulatory Clean Air Act. While not mentioning what aspects of carbon- “pollutant,” even though all green plants need carbon dioxide dioxide emissions will be regulated, the carbon dioxide emitted for photosynthesis and all animals exhale carbon dioxide. “Mexico as the ‘Pier,’ arizona as the ‘docks’ ” “Mexico as the ‘pier,’ Arizona as the ‘docks’ ” — meaning that Therein lies the rub. While Munger and ImagineArizona por- Mexico serves as the initial port of entry while Arizona supplies tray only the benefits increased international trade would bring to the warehousing and transportation facilities — is the vision of Arizona, they are not considering how the U.S. economy would John Munger, chairman of the newly formed political action com- be harmed by increasing the flood of cheaply made foreign prod- mittee ImagineArizona. ucts that no American company can afford to compete with. Also, The Arizona Daily Star spoke with Munger and reported on this close cooperation between Arizona and Mexico will only April 10 that his goal is to have Arizona “encourage Mexico to serve to strengthen the move toward hemispheric integration that build a major deep-water port on the country’s northern west President George W. Bush began with his Security and Prosperity coast,” probably “near Guaymas, about 250 miles south of Ari- Partnership agreement with Canada and Mexico. zona in Sonora.” According to the Daily Star, Munger sees that the “shipping ports in Los Angeles and San Diego are near ca- pacity at a time of growing Asian markets.” The ImagineArizona website calls this an “opportunity” for Arizona to “become a criti- cally important and large part of a major international sea port serving shipping from all parts of Asia, including China, Japan and Korea.” www.TheNewAmerican.com 7
  • 9. Inside Track Hundreds of Thousands attend Tax day Tea Parties On April 15, the deadline for U.S. taxpayers to mail their income tax returns, hundreds of thousands of Americans from coast to coast participated in approximately 2,000 nationally inspired but locally organized “Tea Party” protests. Fox News featured live TV broadcasts from four cities — San Antonio, Sacramento, At- lanta, and Washington, D.C. — featuring Fox personalities Glenn Beck, Neil Cavuto, Sean Hannity, and Greta Van Susteren. Tea Party participants and their signs reflected a variety of ideological outlooks ranging from constitutionalist and libertar- ian to populist and neoconservative. The New York Times reported that in downtown Houston, a crowd of 2,000 filled the Jesse H. Jones Plaza and that, among them, were some who wanted Texas to secede. The Times noted that the tax protesters were joined by “anti-abortion activists, Libertarians, and fiscally conservative AP Images Republicans.” Amidst a sea of American flags, hand-painted signs bore messages such as: “Abolish the I.R.S.,” “Less Government Washington, D.C. More Free Enterprise,” “We Miss Reagan,” and “Honk if You Are Upset About Your Tax Dollars Being Spent on Illegal Aliens.” ous, with many finding out about and promoting various events The “Don’t Tread on Me” Revolutionary War-era flag was through the Internet and social networking. prominent at a number of the Tea Party rallies (including the one Newt Gingrich, who addressed a Tea Party rally in New York in Appleton, Wisconsin, where The New AmericAN is located), City, was the most prominent big-name neoconservative politi- as were signs to end the Federal Reserve. cian who was heavily involved in promoting the April 15 events. The event generally credited with inspiring the Tea Party move- The participation of establishment GOP politicians like Gingrich ment was a February 19, 2009 broadcast from the floor of the in a movement that’s also populated by Ron Paul Republicans Chicago Mercantile Exchange by CNBC financial commentator suggests that they view the movement as an opportunity to posi- Rick Santelli. During his broadcast, Santelli criticized the Obama tion themselves as anti-big government, garner support, and (in administration’s plan to use federal funds to refinance troubled general) further their political ambitions. It does not mean that mortgages as “promoting bad behavior,” and he suggested the they are suddenly willing to abandon their neoconservatism in idea of staging a “Chicago Tea Party.” Almost immediately after- favor of strict adherence to the Constitution. wards, websites began to spring up promoting the idea and a new Veteran readers of The New AmericAN know about Gingrich’s movement began. The clip of Santelli’s impassioned outburst has key role in placing the United States under the jurisdiction of been viewed on YouTube more than a million times. the World Trade Organization and NAFTA, among other inter- An excellent coordinated effort was provided to event organiz- nationalist positions he has taken. However, the vast majority of ers through websites created by sponsoring organizations such Americans who attended the Tax Day Tea Parties were undoubt- as TaxDayTeaParty.com, the American Family Association, Top edly entirely innocent of such knowledge. Conservatives on Twitter (TCOT), Smart Girl Politics, and the Nonetheless, the Tax Day Tea Parties provided a very welcome DontGo Movement. The new Glenn Beck 9-12 Project has also venue for hundreds of thousands of Americans to register their promoted the Tax Day Tea Parties on its website. Yet once the opposition to the trillion-dollar bailouts, corporate takeovers, movement took off, local events were more-or-less spontane- stimulus packages, inflationary deficit spending, etc. n AP Images AP Images Lansing, Michigan Olympia, Washington 8 THE NEW AMERICAN • MAy 11, 2009
  • 10. QuickQuotes Ruth Ginsburg one supreme court Justice likes the idea of relying on foreign law AP Images “Why shouldn’t we look to the wisdom of a judge from abroad with at least as much ease as we would read a law review article written by a professor? I frankly don’t understand all the brou- haha lately from Congress and even from some of my colleagues about referring to foreign law.” Speaking at a symposium held at Ohio State University, Justice Ruth Bader Ginsburg responded in part to criticism of her view given by Justices Roberts, Thomas, Scalia, and Alito. chief Justice opposes Use of foreign law in rendering decisions “If we’re relying on a decision from a German judge about what our Constitution means, no president accountable to the people appointed John that judge and no Senate accountable to the people confirmed that Roberts judge. And yet he’s playing a role in shaping the law that binds the people in this country.” Having taken this position during his confirmation hearing, Chief Jus- AP Images tice John Roberts has never backed away from his belief that foreign law should not be relied upon in issuing decisions. clever labeling Hides What something really is “There’s a great company called I Can’t Believe It’s Not Butter. At least they have the decency to tell you it’s not butter. Now we have something called ‘credit default swaps,’ because if they called it I Can’t Believe It’s Not Insurance, maybe nobody would buy it.” Congressman Gary Ackerman (D-N.Y.) made his point during hearings with financial regulators. scoffing at the reputed Worth of “Public opinion” “Public opinion may be defined as what people think other people are thinking.” In his inimitable way, columnist Joseph Sobran places little value on oft-cited public opinion. Bonuses for fannie and freddie Employees angers iowa senator “It’s an insult that these bonuses were made with an infusion of cash from the taxpayers. It’s hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year.” Hoping to retain many employees, the quasi-government companies known as Fannie and Freddie are awarding 7,600 of their personnel with more than $210 million in bonuses after receiving a $15 billion bailout from the government. Senator Charles Grassley (R-Iowa) notes that four of the top executives of these firms will each receive at least $1 million in hopes of retaining them. Treasury secretary Not Evasive about Taking over Banks “If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes. Where that requires a change in management and the board, then Timothy we will do that.” Geithner Interviewed on television, Secretary of the Treasury Timothy Geithner cited the government’s action that has provided bail- outs while forcing out the top executives of AIG, Fannie Mae, and AP Images Freddie Mac. He obviously does not believe that failing entities should be allowed to fail. Professor Protests obama Presence at Notre dame commencement “The invitation to Mr. Obama is a deliberate thumbing of the collective nose at the Roman Catholic Church.” Philosophy professor Ralph McInerny, one of the more prominent instructors at Notre Dame, believes the school’s invitation to the president to deliver the commencement address and receive an honorary degree should be rescinded. n — comPiled by JohN F. mcmANus Call 1-800-727-TRUE to subscribe today! 9
  • 11. TransaTlanTic Union Unattractive UNION It is now clear that European nations were deceived into joining an economic union that became a political union, yet our leaders still seek a similar economic union with the EU. by James Perloff ed States with Mexico and Canada. The curity and Prosperity Partnership” (SPP) foundation for such a union was initi- that President George W. Bush, Mexican T he New AmericAN has devoted ated with the North American Free Trade President Vicente Fox, and Canadian extensive coverage to the risks of Agreement, or NAFTA, which went into Prime Minister Paul Martin launched at what critics have dubbed a North effect on January 1, 1994. Like the older their Waco, Texas, meeting on March 23, American Union (NAU), in reference to European Common Market that eventu- 2005.* the incremental integration of the Unit- ally morphed into the EU, NAFTA, a sup- Few Americans are aware of the SPP posed “free trade” arrangement, provided James Perloff is the author of The Shadows of Power: the supranational architecture for future * For background, see our special October 15, 2007 The Council on Foreign Relations and the American integration. “Merger in the Making” issue. The issue is avail- Decline and Tornado in a Junkyard: The Relentless This process of North American integra- able online as a PDF: http://www.thenewamerican Myth of Darwinism. tion was later advanced through the “Se- .com/files/MergerInTheMaking.pdf 10 THE NEW AMERICAN • MAy 11, 2009
  • 12. coming together: In 2008, the leaders of Mexico, the United States, and Canada (Felipe Calderon, George W. Bush, and Stephen Harper) met to further empower the Security and Prosperity Partnership of North America (SPP). The SPP builds on the North American Free Trade AP Images Agreement to integrate the three countries’ military and security functions, populations, and laws — similar to the EU. arrangement because the major media ig- considered by many to have fathered the These sentiments were quietly certified nored it — except for CNN’s Lou Dobbs, concepts that resulted in the SPP. But in November of that year when the U.S. who said of the Waco meeting: “President writing in the July/August 2008 issue of House of Representatives passed House Bush signed a formal agreement that will Foreign Affairs (the CFR’s journal), Pastor Resolution 390, introduced by Nebraska end the United States as we know it, and registered disappointment with its prog- Republican Doug Bereuter. The resolution he took the step without approval from ei- ress. Though continuing to advocate conti- declared that the “United States and the ther the U.S. Congress or the people of the nental unification, he lamented that “North European community are aware of their United States.” America’s experiment in integration has shared responsibility, not only to further It soon became apparent that the plan stalled.... The April summit meeting [be- transatlantic security, but to address other would lead to eventual political consolida- tween U.S., Mexican, and Canadian heads common interests such as environmental tion of the countries, modeled on the Euro- of state] was probably the last hurrah for protection, poverty reduction, combating pean Union. It would destroy U.S. sover- the SPP. The strategy of acting on techni- international crime and promoting human eignty, nullify the Constitution, flood our cal issues in an incremental, bureaucratic rights, and to work together to meet those nation with cheap, job-destroying imports way, and of keeping the issues away from transnational challenges which affect the via a NAFTA “Super Highway,” and allow public view, has generated more suspicion well-being of all.” It further stated that uncontrolled immigration by erasing our than accomplishments. The new president “the partnership should be expanded pro- border with Mexico. will probably discard the SPP.” gressively from a transatlantic community Thanks to the vigilance of concerned But like a running back who, about to of values to an effective transatlantic com- activists, the alarm bells reached the halls be tackled, laterals the football to a team- munity of action.” of Congress, and in 2007 Rep. Virgil mate, the establishment has at least for the On the other side of the ocean, the Euro- Goode (R-Va.) introduced House Concur- time being shifted to another scheme: ce- pean Parliament passed resolutions in May rent Resolution 40, which resolved that menting the United States to the European 2004 and January 2005 advocating the es- Union in what is called the “Transatlantic tablishment of a “transatlantic market.” (1) the United States should not Partnership.” These intentions became actuated at a engage in the construction of a North Early rumblings of this American Free Trade Agreement partnership came in 2003 (NAFTA) Superhighway System; when the U.S. Department At a summit on April 30, 2007, President [and] of Commerce stated in a (2) the United States should not press release: “Commerce Bush announced the signing of a new allow the Security and Prosperity Secretary Don Evans and agreement whose expressed purpose is Partnership (SPP) to implement fur- his European Union coun- ther regulations that would create a terpart, Commissioner Erkki to “strengthen transatlantic economic North American Union with Mexico Liikanen, reaffirmed the im- integration.” Without the consent of and Canada. portance of the transatlantic Congress or a mandate from the American economic and commercial Robert Pastor of the ultra-establishment partnership at a meeting last people, this was an unconstitutional act. Council on Foreign Relations (CFR) is night in Washington, D.C.” www.TheNewAmerican.com 11
  • 13. TransaTlanTic Union Progression of the plan: Former President George W. Bush went to a G20 Summit on Financial Markets and the World Economy in 2008. AP Images Obama was at another G20 financial summit in April. Both presidents were in favor of a new global financial system. The meeting Obama attended ended with a tentative agreement to initiate such a system. White House summit on April 30, 2007. Entirely aside from the fact that Presi- dimentary world government in the form Standing beside Angela Merkel, president dent Bush’s committing the United States of the now-defunct League of Nations. of the European Council, and José Manuel to this arrangement with the EU, without World government is the pathway to Barroso, president of the European Com-the consent of Congress or a mandate tyranny because, by eliminating the sov- mission, President Bush announced the from the American people, was an uncon- ereignty of nations, it would concentrate signing of a new agreement whose ex- stitutional act, one must understand the all of the world’s political power in a background that has led to this develop- pressed purpose is to “strengthen transat- single regime — a frightening concept to ment, which is only the latest in a series lantic economic integration.” Specifically, contemplate. of events. the pact called for “joint work in the areas Because nation-states have tradition- of regulatory cooperation, financial mar- The governments of Europe and the ally, and rightfully, been suspicious of United States are dominated by an “estab- kets, trade and transport security, innova- ceding themselves to a world government, lishment” that intertwines multinational tion and technological development, intel- the establishment has adopted the tac- corporations, think tanks, central banks, lectual property rights, energy, investment, tic of grouping countries under regional competition, services, and government powerful foundations, and the major mass governments as a steppingstone to global media. In the United States, the Council on procurement,” as well as the “interopera- dominion. A Frenchman or German, in Foreign Relations is the establishment’s bility of electronic health record systems,” other words, might feel more comfortable chief bridge of influence to the federal “customs cooperation,” and other steps to- merged in a European federation than one ward economic integration. government, having dominated the cabi- that included Asia or Africa. nets of every president since Franklin D. Soviet dictator Joseph Stalin understood The Pattern Roosevelt. The CFR has counterpart or- this strategy well. He said: “Populations Some may ask: “What is wrong with eco- ganizations in countries throughout the will more readily abandon their national nomic integration? What’s the big deal world. Coordination of policy between loyalties to a vague regional loyalty than about cooperation? Isn’t it xenophobic establishment figures from different coun- they will for a world authority. Later, the paranoia to oppose it?” tries has taken place through such venues regionals can be brought all the way into a as the annual Bildergberger con- single world dictatorship.” ferences, begun in 1954, and the In a modern context, Zbigniew Brze­ The push for the Transatlantic meetings of the Trilateral Com- zinski said: “We cannot leap into world mission, founded in 1973 by government in one quick step. The precon- Partnership is a well-coordinated Zbigniew Brzezinski and CFR dition for genuine globalization is progres- one. At the hub of this movement is Chairman David Rockefeller. The sive regionalization.” Both the European goal of the CFR and its sister or- Union and the incipient North American a powerful but largely unpublicized ganizations is world government; Union are, of course, regional bodies. institution called the Transatlantic in fact, the CFR was founded for However, many nations have been re- that express purpose in 1921 after luctant even to join regional organizations. Policy Network (TPN), headquartered the U.S. Senate failed to ratify the The bait used to lure them in has been the in Washington and Brussels. Versailles Treaty, which would alleged prosperity of trade treaties. These, have committed us to joining a ru- while initially disguised as economic ar- 12 THE NEW AMERICAN • MAy 11, 2009
  • 14. rangements, cast the die for inevitable po- nated changes in laws. In Europe, laws cans should begin considering formation litical consolidation. are usually made by parliaments; thus the of a continental parliament.” (Emphasis The European Union is a case in point. Common Market led to the formation of added.) The EU actually started in 1950 as the six- the European Parliament in 1979, and the This view was echoed by University of nation European Coal and Steel Commu- European Economic Community simply Nevada economics professor Glen Atkin- nity. In 1957, this evolved into the Com- dropped the word “Economic” — which son in his paper “Regional Integration in mon Market, which was sold to Europeans had only been a pretense — from its the Emerging Global Economy: The Case as a purely economic structure that would name. Then came the European Union, in of NAFTA,” published in the Social Sci- enhance prosperity; its official name was which sovereignties have been drowned: ence Journal. He wrote, “The stage of the European Economic Community. national parliaments find themselves in- economic union requires a high degree of The chief architect of the Common creasingly subservient to the dictates of coordination or even unification of poli- Market was the shadowy Jean Monnet, the EU, as they see their laws, currencies, cies. This sets the foundation for political whom Time magazine called “the Father of court systems, militaries, etc., gradually union.” (Emphasis added.) Europe.” Monnet’s deceptive strategy was consolidated. explained by British Conservative Adrian The plans for a North American Union Bridging the ocean Hilton, who notes that Monnet believed likewise got their start with an economic Thus no one should be surprised that the arrangement: NAFTA. Although hyped as latest thrust toward world government — that Europe should become a federal a path to “prosperity,” Americans lost mil- the Transatlantic Partnership — is initially superstate, into which all ancient lions of jobs as cheap imports flooded the being foisted on us as an “economic ar- nations would be fused. ‘Fused’ is country. And our trade deficit soared: in rangement” (coupled, as was the Security the word he used.... For this to be 1994 (the year we joined NAFTA) it was and Prosperity Partnership, with assur- achieved without the peoples of Eu- $75 billion; in 2008 $673 billion. Our trade ances that consolidation will also provide rope realising what was happening, deficit with Canada and Mexico went from protection against terrorism). the plan was to be accomplished in $9 billion in 1993 to $98 billion by 2003. As we have noted, President Bush’s successive steps. Each was to be dis- But adding constitutional insult to this signed agreement with the EU’s leaders guised as having an economic pur- injury, NAFTA’s foremost purpose was to pledged “transatlantic economic integra- pose, but all, taken together, would lay the groundwork for consolidation. An- tion.” It established a permanent Trans- inevitably and irreversibly lead to drew Reding of the World Policy Institute atlantic Economic Council. And most of federation. wrote: “NAFTA will signal the formation, the agreement’s provisions — concerning however tentatively, of a new political unit trade, investment, energy, etc. — are eco- Once nations agree to complex trade — North America. With economic integra- nomic in nature. agreements, conflicts naturally arise over tion will come political integration. By Based upon the pattern set by the Eu- issues such as prices, tariffs, taxation, whatever name, this is an incipient form ropean Union and the SPP, however, it product safety, union relations, etc. Reso- of international government. Following is quite logical to conclude that this eco- lution of these conflicts requires coordi- the lead of the Europeans, North Ameri- nomic consolidation is only a prelude to intended merger with the EU. Just 12 days before President Bush signed the agreement, British Prime Min- ister Gordon Brown delivered a speech at the John F. Kennedy Presidential Library and Museum in Boston. Ironically, as he stood only 12 miles from where the first shots of the American Revolution were fired, the Briton invoked this quote from John F. Kennedy: “Today, Americans must learn to think intercontinentally.” Continuing, he gushed that “a global so- ciety demands new global agreements and integration by 2015: The EU’s members of parliament voted in March to initiate a new Transatlantic Policy Council “for systemic European Parliament high-level consultation and coordination in respect of foreign and security policy” with the United States. Its goal is to achieve “economic integration” and a “unified transatlantic market by 2015.” Call 1-800-727-TRUE to subscribe today! 13
  • 15. TransaTlanTic Union lations; the Center for Strategic and In- ternational Studies (CSIS); the Atlantic Council; the Aspen Institute; the Carnegie Endowment for International Peace; and the German Marshall Fund of the United States. The CFR’s role in advocating re- gional alliances and world government is well known to many readers of The New AmericAN. It is interesting to note the statements being made by others listed among the “Cooperating Institutions” that demonstrate they are moving lock step with TPN. For example, CSIS, which counts among its members such CFR heavyweights as Zbigniew Brzezinski, Felix Rohatyn, Har- old Brown, and Brent Scowcroft, released a report in 2007 called “Towards a Grand global cheerleader: U.K. Prime Minister Gordon Brown has been jetting around the world AP Images Strategy for an Uncertain World: Renew- in a bid to convince countries to institute world regulations over financial institutions and ing Transatlantic Partnership.” It said functions. The new regulations would be under the control of a global governing body. that “our long-term vision is for a zone of common security and collective action from Finland to Alaska.” strengthened global institutions to protect As Dennis Behreandt insightfully noted In 2009, in its journal Internationale and safeguard essential global resources.” in the May 12, 2008 issue of The New Politik, the German Council on Foreign Phyllis Schlafly counted the word “glob- AmericAN: Relations published an article by Paul al” 69 times in Brown’s speech. Clearly, Hockenos entitled “Rethinking US-Eu- he was softening the American public for The emphasis placed on “top down” rope Relations.” It declared: “It must be President Bush’s transatlantic agreement. is not insignificant. As typically used a partnership of equals across the Atlan- Indeed, the push for the Transatlantic by NGOs, that terminology usually tic and this will require real compromis- Partnership is a well-coordinated one. At implies that executive-level leaders es from the United States as well as the the hub of this movement is a powerful but will impose their desires on the citi- Europeans.” largely unpublicized institution called the zens of a nation, not the other way In 2007, the U.S.-based Atlantic Council Transatlantic Policy Network (TPN), head- around as envisioned, for instance, by issued a 35-page report entitled Transatlan- quartered in Washington and Brussels. America’s Founders. tic Leadership for a New Global Economy, In February 2007, just two months be- which advocated a “barrier-free ‘Enhanced fore the U.S.-EU Summit, TPN publishedIndeed, TPN’s website (www.tpnonline. Transatlantic Market.’ ” Among its many its white paper Completing the Transat- org) lists as its business members a host of specific recommendations: “The United lantic Market, which declared: “It is time multinational corporations, such as AIG, States and the EU should launch a new, for a complementary, top down approachCitigroup, Time Warner, IBM, Merck, GE, jointly funded effort to develop future en- to transatlantic cooperation through a joint and Coca-Cola. Peter Sutherland, the EU ergy technologies that will both improve commitment by the European Union and honorary president of TPN, is chairman efficiency and reduce global warming, as the United States to a roadmap for achiev- of both Goldman Sachs International and part of the development of a new, post- ing a Transatlantic Market by 2015.” the British Petroleum Company, as well Kyoto international consensus.” It calls for as former director of the sov- transformation of the International Energy ereignty-sapping World Trade Agency (IEA) into “the primary institution The once-powerful nations of Europe Organization. for global energy governance,” and a merg- Among the “Cooperating er of the World Bank with the IMF. In short, are progressively finding themselves Institutions” listed by TPN are it wants broad consolidation of power. reduced to the status of mere provinces what we might call a round-up The Atlantic Council is an old hand at of “the usual suspects” who ad- the transatlantic game. Officially founded of the EU. Should America unite with the vocate world government over in 1961, it grew largely out of the older At- EU, we can expect to follow suit, finding national sovereignty, such as: lantic Union Committee, whose members the Council on Foreign Rela- envisioned a U.S.-Europe merger which our Constitution scrapped and ourselves tions (CFR); RIIA (the CFR’s they dubbed “Atlantica.” In the 1960s, the little more than a colony of Europe. British counterpart); the Ger- council’s lobbying resulted in resolutions man Council on Foreign Re- being brought before Congress that would 14 THE NEW AMERICAN • MAy 11, 2009
  • 16. His mandate: Zbigniew have laid the groundwork for this merger. Brzezinski cofounded the The resolutions were consistently rejected Trilateral Commission with David by Congress, but with the further wither- Rockefeller. The commission is ing of national sovereignty, the council ap- dedicated to achieving global pears ready to renew its merger crusade. stability through coordinated policies amongst developed nations. The commission is Events Propel the Union forward regularly accused of undermining Neither the advent of Barack Obama nor individuals’ rights and freedoms the current financial debacle will slow the to gain unanimity among the Transatlantic Partnership, but can be ex- world’s governments. pected to accelerate it. During his presi- dential campaign, Obama named globalist Zbigniew Brzezinski as one of his top for- eign policy advisers, calling him “some- body I have learned an immense amount from.” Following the elections, Nicolas Sarkozy, president of both France and the European Council, said that “the European Union sees in this election the promise of Newscom a reinforced transatlantic partnership.” In the Spring 2009 issue of Internation- ale Politik, the German Council on Foreign Relations published an article called “A the Transatlantic Partnership. The Brus- Even the most affluent countries New Transatlantic Partnership” that actu- sels Forum — yet another internationalist will confront shrinking resources. ally complained of “the bruises that the tentacle of the transatlantic network — Each will have to redefine its national transatlantic partnership suffered during the recently declared: “Since the beginning priorities. An international order will Bush years” and opined that “if Europeans of the financial crisis in the fall of 2008, emerge if a system of compatible pri- could have voted in the 2008 US presiden- the world economy has deteriorated at an orities comes into being.... tial election, they would have voted over- alarming rate.... The U.S. and European The alternative to a new interna- whelmingly for Barack Obama.” governments must reassess the role of tional order is chaos. Indeed, in April of this year — just a the transatlantic partnership in the global little more than two months after his inau- economy and re-ignite it as the catalyst of The coordinated voices of many global guration — Obama traveled to Europe for global economic recovery.” elites, speaking through mass media or- a series of summit meetings with EU lead- In the United States, Henry Kissinger gans owned by the international establish- ers. Canada is now joining the Transatlan- has long epitomized the foreign policy es- ment, give the public an illusion that there tic Partnership. Canada’s daily Financial tablishment. He once told Hamilton Fish is a logical consensus for world govern- Post reported on March 5, 2009: Armstrong, editor of the CFR journal For- ment, with the Transatlantic Partnership as eign Affairs, “You invented me,” and be- its newest cornerstone. Canada and the European Union fore serving as Richard Nixon’s Secretary However, like NAFTA and the Europe- have agreed to begin free trade ne- of State, he acted as chief foreign policy an Union itself, there has never been any gotiations.... After months of “scop- adviser to Nelson Rockefeller, whom he mandate from the people of the nations for ing exercises,” the two parties have called “the single most influential person these globalist arrangements. come to an agreement on the areas in my life.” Experience has proven that if America they would like to negotiate, includ- Still a dominant voice in foreign policy, moves ahead with the Transatlantic Part- ing trade in goods, services and in- Kissinger published an article in the Janu- nership, the economic alliance will be vestment, and have now adjourned ary 12, 2009 issue of the International converted incrementally into a political to prepare their proposals to take Herald Tribune entitled “The Chance for merger. The once-powerful nations of Eu- to the negotiating table.... “At long a New World Order.” He stated: rope are progressively finding themselves last, Canada is poised to realize the reduced to the status of mere provinces immense potential of a closer trans- As the new U.S. administration pre- of the European Union. Should America atlantic relationship,” said Thomas pares to take office amid grave finan- unite with the EU, we can expect to fol- d’Aquino, president of the Canadian cial and international crises, it may low suit, find our Constitution scrapped Council of Chief Executives. seem counterintuitive to argue that the for international regulation, and ourselves very unsettled nature of the interna- — after over 200 years of the blessings of The financial meltdown is being used tional system generates a unique op- independence — little more than a colony as a stick to force us eat the “carrot” of portunity for creative diplomacy.... of Europe. n www.TheNewAmerican.com 15
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  • 18. EnErgy AP Images The High Cost futile cause? These protestors participating in a walk in South Burlington, Vermont, in 2006 want humans to “Stop Global Warming.” What of cap and Trade they may not have considered is that variations in the Earth’s temperatures are a natural — not a man-made — phenomenon. have read any of several well-researched Cap-and-trade programs to control carbon-dioxide books* disputing both the severity of glob- al warming and the theory that it is caused emissions are an unacceptably costly way to deal with the by man’s activities, will not easily accept supposed problem of man-made global warming. the argument that a massive and costly government program is needed to prevent a catastrophic ecological event. by Warren Mass ing to those limits, and then allow firms To make an informed decision about to trade the allowances.” whether a cap-and-trade program is advis- T he term “cap and trade,” in terms Aside from telling us how cap-and-trade able, therefore, requires that several ques- of a plan to reduce carbon-dioxide programs might operate, the reference to tions be answered. emissions into the air, is one that “tightening limits on emissions” gives away is heard widely of late as a proposed solu- the ostensible purpose of these programs: Is global warming real, or at least real tion for the supposed problem of global to fight that supposed ominous scourge of enough to be threatening? warming. It will be discussed with more the 21st century, global warming. This question is best dealt with by refer- frequency as cap-and-trade proposals that Those who have accepted the widely ring to our February 16 cover story or one failed to pass in the last Congress are re- promulgated theory that the melting of the introduced this year. But many people polar icecaps and rising of the seas is im- * See, for example, Hot Talk, Cold Science, and Un- are still a little hazy about what “cap and minent may believe that any economic cost stoppable Global Warming Every 1500 Years, by trade” actually means. One succinct ex- is worth enduring, if only global warm- Dr. S. Fred Singer; The Politically Incorrect Guide planation appeared in an article on the ing can be forestalled. However, regular to Global Warming (and Environmentalism) and Congressional Budget Office website: readers of The New AmericAN, especially Red Hot Lies: How Global Warming Alarmists Use “The government would set gradually those who have read our February 16, 2009 Threats, Fraud, and Deception to Keep You Misin- tightening limits on [CO2] emissions, cover story entitled “Whatever Happened formed by Christopher C. Horner; and Meltdown, issue rights (or allowances) correspond- to Global Warming?” as well as those who by Patrick Michaels. Call 1-800-727-TRUE to subscribe today! 17
  • 19. EnErgy about 95 percent of the earth’s of the Earth. But the system isn’t so simple. natural greenhouse effect, If the climate system worked this way, the David Sawyer of the Alabama Policy whereas carbon dioxide con- Earth would have reached its maximum Institute warned that a cap-and-trade tributes most of the remaining temperature eons ago, and stayed there: 5 percent. Global warming water vapor would have entered the air system could more than double electricity projections assume that water when the oceans were heated by sunlight; and natural gas bills for residents. vapor will increase along with the Earth would have warmed somewhat, Sawyer noted that putting “a chokehold any warming resulting from leading to more water vapor entering the the increases in carbon diox- air and more heating of the Earth, followed on our economy with the idea of saving ide concentrations.” by more water vapor, and so on. the planet is a complete ruse.” Dr. Spencer points out that such assumptions are What is the economic cost of reducing unproven, noting that “there carbon-dioxide emissions, either by cap of the books cited in the footnote. Suffice remain substantial uncertainties in our and trade or a direct tax? it to say that the issue is not as settled as understanding of how the climate system Whether one accepts the claims that carbon many in the media portray it to be. will respond to increasing concentrations emissions contribute to global warming, or of carbon dioxide and other greenhouse prefers to give equal weight to contradic- What impact, if any, do man-made CO2 gases.” He observes that the natural tory evidence, there is no dispute that a cap- emissions have on global warming? greenhouse effect that heats the Earth is and-trade program would be costly. As to In the April 3 issue of the Wall Street Jour- offset by natural cooling processes. “In how costly, we should consider the article nal, deputy editor George Melloan noted other words,” concluded Dr. Spencer, “Study the (scary) figures on cap and trade,” that, according to “serious scientists,” “the “the natural greenhouse effect cannot by Rep. Joe Barton (R-Texas) in the Fort greenhouse gases are a fundamental part be considered in isolation as a process Worth Star Telegram for April 11, 2009. In of the biosphere, necessary to all life, and warming the earth, without at the same it Barton noted: “[Cap and trade] is being … industrial activity generates less than time accounting for cooling processes sold as a way to save the planet by taxing 5% of them, if that.” that actually keep the greenhouse effect ‘emitters,’ but it will kill the economy and Furthermore, the theory that CO2 is the from scorching us all.” decimate your family’s budget.” prime culprit in so-called global warming Theories on runaway global warming Barton made the following predictions may also be flawed. In the compendium based on CO2 emissions postulate that of how cap and trade would affect the U.S. Earth Report 2000, Dr. Roy Spencer, se- increases in CO2 will cause some (minor) economy, citing the National Association nior scientist for climate studies at NASA’s heating of the Earth that will in turn cause of Manufacturers as his principal source: Marshall Space Flight Center, noted: “It more water vapor to enter the air from the • Job losses: 1.8 to 7 million is estimated that water vapor accounts for oceans, thereby causing dangerous heating • Family tax increase: $739 to $6,752 • Electricity cost increases: 44 to 129 percent • Gasoline price increases: 61 cents to $2.53 per gallon • Natural gas increases: 108 to 146 percent He added: “While the exact cost in- creases may be debatable, experts — in- cluding those working at the White House — agree that prices will go up.” The Huntsville, Alabama, Times for sen. John Warner (R-Va.), left, accompanied by Sen. Joseph Lieberman (I-Conn.), center, and Sen. Barbara Boxer (D-Calif.), right, during a 2008 news conference on Capitol Hill to discuss the environment and climate change. When Lieberman and Warner introduced the America’s Climate Security Act of 2007 (S. 2191) in the last Congress, the Heritage Foundation warned: “All such climate change measures warrant careful scrutiny, as they AP Images would likely increase energy costs and do considerably more economic harm than environmental good.” 18 THE NEW AMERICAN • MAy 11, 2009
  • 20. House Energy and Commerce Commit- tee Chairman Henry A. Waxman (D-Calif.) and Rep. Edward J. Markey (D-Mass.), chairman of the Energy and Environment Subcommittee, released a draft climate bill in March that they hope to send to the full House by Memorial Day. Another bill containing a cap-and-trade provision has already been introduced in the House. H.R. 1759, the Emission Mi- gration Prevention with Long-term Output Yields Act, was introduced on March 26 by representatives Jay Inslee (D-Wash.) and Michael Doyle (D-Pa.) and has been referred to the House Committee on En- ergy and Commerce. Perhaps to address concerns voiced by opponents of cap-and-trade plans that they AP Images will damage an already weak U.S. econo- my, Joseph Aldy, a special assistant to the rep. Joe Barton (R-Texas), ranking Republican on the House Energy and Commerce president for energy and the environment, Subcommittee, said that cap and trade “is being sold as a way to save the planet by taxing announced on April 8 that a portion of the ‘emitters,’ but it will kill the economy and decimate your family’s budget.” revenue received from any cap-and-trade plan must go toward relieving those who April 14, 2009 ran an article headlined scrutiny, as they would likely increase en- end up paying higher energy bills because “Cap-and-trade will hurt economy, group ergy costs and do considerably more eco- of the plan — an admission against in- says,” that quoted Dr. John Hill, director nomic harm than environmental good.” terest that energy costs are going to go of research for the Birmingham-based Al- The Heritage assessment cited a study up, just as critics claim. “There will be abama Policy Institute (API). Dr. Hill cast by Charles River Associates that put the those who are going to be vulnerable as doubt on the idea that carbon emissions cost (in terms of reduced household spend- we make this transition and … we need have much impact on global warming. ing per year) of S. 2191 at $800 to $1,300 to actually target the allowance value and The article noted that, regardless of per household by 2015, rising to $1,500 to revenues to those households, communi- differences of opinion concerning global $2,500 by 2050. Electricity prices could ties, and businesses,” Reuters news quoted warming: “All sides agree that carbon di- jump by 36 to 65 percent by 2015 and 80 Aldy as saying at an Energy Information oxide limits could raise the cost of elec- to 125 percent by 2050. The study noted Administration forum. tricity or heat generated using fossil fuels that while no analysis has been done on Advocates of cap and trade are promot- such as coal or natural gas. It also could the impact of S. 2191 on gasoline prices, ing it as a way to prevent global warming. raise costs for other industries that release an Environmental Protection Agency But U.S. Representative Marsha Black- carbon dioxide, such as cement plants.” study of a less stringent cap-and-trade bill burn (R-Tenn.) has another description The report also quoted API’s commu- estimates impacts of 26 cents per gallon by for it: “cap and tax.” Even New York City nications director, David Sawyer, who 2030 and 68 cents by 2050. Mayor Michael Bloomberg admitted that warned that a cap-and-trade system could And what benefit would ensue from cap and trade is a form of taxation when he more than double electricity and natural- these financial burdens? Again citing the told reporters at the UN Climate Change gas bills for residents. “Since when was Charles River study, Heritage noted that Conference in Bali, Indonesia, in 2007 that carbon dioxide considered a poisonous “even if the U.S. were a party to [the Kyoto the growing cap-and-trade industry is vul- pollutant?” Sawyer questioned. “To put a Protocol] and the European nations and nerable to “special interests, corruption, chokehold on our economy with the idea other signatories were in full compliance inefficiencies,” and should be replaced by of saving the planet is a complete ruse.” … the treaty would reduce the Earth’s fu- straight carbon taxes. ture temperature by an estimated 0.07 de- It makes little sense to impose a higher And finally, does the benefit justify the grees Celsius by 2050 — an amount too tax burden and another revenue-sharing cost? small even to verify. S. 2191 would at best scheme on Americans already beaten When Senators Joseph Lieberman (I- do only a little more.” down by the current recession, using the Conn.) and John Warner (R-Va.) intro- Despite the above findings, there is a prevention of “global warming” as a pre- duced the America’s Climate Security Act strong political movement in our nation text. Americans who think that the cost of of 2007 (S. 2191) in the last Congress, the determined to impose cap and trade or living is already high enough should share Heritage Foundation warned, “All such other forms of carbon taxes that will place their concerns with their representatives in climate change measures warrant careful a further economic burden on Americans. Congress before it is too late. n www.TheNewAmerican.com 19
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  • 22. Economy Cancerous Growth of government AP Images Thousands of unemployed wait in line for buses to a job fair in Manchester, New While every other major component of the economy is Hampshire, on April 9. More than five million shrinking, government at all levels has grown to consume people have lost their jobs since the recession officially began, and with the government nearly half of America’s gross domestic product. growing at an unprecedented rate, the numbers are only likely to increase. by Alex Newman new federal government workers will be ment payrolls increased by 40,000 just in needed just to spend the massive new bud- January and February. The private sector W hile government continues to get. White House Budget Director Peter lost well over a million jobs during the grow by leaps and bounds, Orszag explained that it was too early to same period. The Bureau of Labor Statis- the private sector is being make assumptions about federal employ- tics reports that in 2008 there were over squeezed. Much-needed capital for in- ment levels, but noted that “investing in 150,000 jobs added in government at all vestments is being spent on government skilled professionals will not only pay off levels, while the private sector lost close to projects while businesses and individuals over time but also immediately deliver bet- four million. Almost 100,000 people were are starved for credit. Government is hir- ter service to taxpayers.” hired by the federal government in fiscal ing — either directly, or indirectly through A March 2 Washington Post article year 2007, according to the Office of Per- government-backed “stimulus” projects quotes officials at the Department of Vet- sonnel Management. — while on the whole companies across erans Affairs saying that department plans the nation shed jobs. The people are being to hire 17,000 new employees. Accord- Uncle sam the Biggest Employer taxed more heavily to support this growth, ing to an anonymous official at the EPA While state and local governments employ either directly or through inflation to fi- quoted in the same article, that agency too over 20 million people already, the federal nance government borrowing, and until will be expanding. A 2007 report by the government has become the largest single there’s a policy change, it’s only going to Partnership for Public Service estimated employer in the country with almost three get worse. This has been the trend for dec- that the Defense and Homeland Security million employees (not including contrac- ades, but is accelerating at alarming levels Departments would need an additional tors and military personnel). For compari- under President Barack Obama. 83,000 workers over a two-year period. son, after the New Deal from 1933 to 1939 Government jobs are on the rise. A re- Even before becoming president, Obama there were about 700,000. Meanwhile the cent study by the Heritage Foundation es- promised to add 65,000 troops to the Army private sector is being ruined. Work weeks timates that around a quarter of a million and 27,000 Marines. averaged a mere 33.3 hours in February, According to a March 7 Bloomberg according to a Bloomberg article about Alex Newman is a freelance writer living in Florida. article, federal, state and local govern- surging unemployment. Overtime has Call 1-800-727-TRUE to subscribe today! 21
  • 23. Economy hemorrhaged over five million for other sectors of the economy such as jobs since the recession officially education. With increasing amounts of wealth began in December 2007. In the Of course, the growth of government taken from the productive economy to last quarter of 2008, the econo- means private hiring will continue down- my shrank at an annual rate of ward. The money the government siphons pay for government expansion, less 6.2 percent. And most forecast- out of the economy to “create” jobs in gov- will be available for investments and ers aren’t predicting a recovery ernment-favored segments of the private private consumption. This means anytime soon, if it ever arrives. sector will cause job losses elsewhere. Every “major component” of the With increasing amounts of wealth smaller businesses with fewer workers economy shrank last year — ex- taken from the productive economy to providing fewer goods and services. cept, of course, government. pay for government expansion, less will Several other fields dominated be available for investments and private by government are forecasted to consumption. This means smaller busi- also shrunk. Payrolls are being slashed. expand, even in the midst of an economic nesses with fewer workers providing After losing 651,000 jobs in February downturn. A CNN article from last year fewer goods and services. And contrary to and another 663,000 jobs in March, the cites the “environmental industry” as an- President Obama’s inaccurate assertions, official unemployment rate now stands other key growth area in the labor market. government spending will not result in a at 8.5 percent, according to the Bureau of According to a United Nations report, this net employment increase for the simple Labor Statistics. The official number of “industry” added 5.3 million jobs in 2005. reason that government managers cannot unemployed Americans is now up to 13.2 With admitted socialist Carol Browner allocate resources as efficiently as the free million, according to the BLS. Another serving as President Obama’s “global market. His continuous insistence on tax- measure of unemployment that includes warming” czar, expect companies like ing “rich” people overlooks another cru- the underemployed and people who have APX (Browner was on its board of direc- cial point; many of them are employers given up looking for work jumped to al- tors before her new government job) that who will now have less capital available most 15 percent, the highest figure since deal in carbon credits and related fields to to hire people with. this measure has been tracked. expand even more. While not directly em- For the first time since 1939, when the ployed by the government, many of these government Employees cost More data started being collected, more than “environmental” workers depend on gov- In addition to the increasing size of public 600,000 jobs have been lost every month ernment regulations for business. More- payrolls, government employees cost more for three consecutive months. Adding in over, the $787 billion American Recovery money than people in the private sector. March makes it four, and the numbers are and Reinvestment Act provides billions According to the Bureau of Labor Statis- only getting worse. The U.S. economy has of dollars for “green” projects, as well as tics, the average state or local government employee made $25,000 more than the average private-sector worker in 2006. AP Images The difference in 2000 was only slightly more than $7,500. In addition, civil ser- vants earn on average $5 more per hour in benefits than private employees do. Of course, it can be argued that this is not an apples-to-apples comparison because of the large number of people in the private sector who flip burgers and are paid ac- cordingly. Such jobs would skew overall private-sector pay downward compared to overall government-sector pay. However, the trend toward low-paying service-sector jobs is itself a product of the burden of big government on the private economy and White House Budget director Peter Orszag testifies before the Senate Budget Committee on March 10 trying to justify the enormous sums of money Obama is requesting. Government spending will continue to smother the private sector, and under the current administration, the problems seem to be getting worse. 22 THE NEW AMERICAN • MAy 11, 2009
  • 24. less and less. This hidden tax has allowed the government to grow and spend more money without directly imposing new taxes. But the effects will be the same: less private capital for investment and consumption relative to govern- ment spending. Since govern- Hundreds of prospective employees ment generally does not produce form a serpentine line hoping to anything (it doesn’t create wealth) land one of the precious few jobs and more often destroys it, living still available. This job fair in standards will likely be eroded Boston took place on March 23, with the number of people further. claiming unemployment Big government’s AP Images benefits setting a record for the 9th week in a row. Big-time Meddling A trend that has accelerated at breakneck speed recently is for helps explain why the disparity between But while public plans remain stable government to become involved in private pay for private- and public-sector jobs has and entrenched, pensions in the pri- business. Already the American taxpayer grown. vate sector have lost almost half of their is supporting dozens of banks, A.I.G., the The cost of public employees is about value. Most government retirement plans car companies, and others the government to sky-rocket as well, in part owing to have too, but taxpayers will be expected deems “too large to fail.” Treasury Secre- poor planning by public retirement plans. to make up the difference. Boston Col- tary Timothy Geithner is now asking for Most government employees have what’s lege’s Center for Retirement Research the power to take over even more. Con- known as a defined benefit plan, mean- estimates that in just the last year, state gressman Ron Paul has appropriately ing they will receive a guaranteed sum pension funds have lost over $865 billion, called these firms that operate at a loss in perpetuity (usually including cost-of- about 40 percent of their value. Taxpay- “engines of wealth destruction.” Since living adjustments to keep up with infla- ers can expect to feel the squeeze as baby money from productive and responsible tion). And very few of their plans are fully boomers begin to retire from civil service enterprises and individuals is being poured funded, especially now that baby boomers jobs, meaning even more money will be into them, expect the economy to contract are preparing to retire. Economist William siphoned out of the productive economy even further. And even though employees Hussar of the National Center for Educa- by government. of these companies are not directly em- tion Statistics predicts that over the next The federal government has several op- ployed by government, as far as taxpay- eight years there will be a need to recruit tions to meet their obligations, none of ers and the economy are concerned, they 2.8 million new teachers because of re- which will be good for the private sector. might as well be. tiring baby boomers, a growing student Since cutting spending or re-negotiating Even the government acknowledges population, and high staff turnover. There the benefits already promised are probably that all of this government spending will are currently 3.2 million teachers. out of the question, these options include adversely affect the nation’s economic Most private-sector workers, on the raising taxes, borrowing more money, or future. The Congressional Budget Office other hand, have a defined contribution printing up the shortfall. In the long run estimates that Obama’s “stimulus plan” plan, which means they contribute a cer- this will further increase the cost of gov- will lower U.S. Gross Domestic Product tain amount of their salary towards their ernment, meaning the private sector will by “crowding out” private investment. retirement but receive benefits based on have to make do with less. State and local “The reduction in GDP is therefore es- how well the invested fund performs. An governments face similar scenarios, but timated to be reflected in lower wages,” estimate by the National Bureau of Eco- since they don’t have the ability to print the CBO report said. “Workers will be nomic Research claims pension promises money, they will either have to beg the less productive because the capital stock made just by state governments will total federal government for a bailout, slash is smaller.” about $8 trillion in 15 years. “The taxes spending in other areas, or take the most As the private sector continues to suffer, needed to pay for these promises would likely course of action: raise taxes even government continues to grow. Right now push many of these states’ economies more. the growth is being financed by inflation, into a death spiral,” Chicago bankruptcy Workers who are still employed can also borrowing, and heavy taxation. But even- lawyer James Spiotto told USA Today. expect to see a decrease in the purchas- tually there will come a point when taxes The 2007 article, entitled “Pension Gap ing power of their salaries. With the rapid are too high to be sustained and foreigners Divides Public and Private Workers,” esti- increase in the money supply courtesy of are unwilling to lend the U.S. government mates just the unfunded portion of federal the Federal Reserve’s bailouts and “liquid- any more money. Will everyone be forced employee benefits at $4.7 trillion. ity injections,” dollars will become worth to work for the government? n www.TheNewAmerican.com 23
  • 25. HomEland sEcUriTy Everyone’s a Threat Obama’s Department of Homeland Security and federal-state “Fusion Centers” target millions of Americans as potential terrorists. by William F. Jasper F eeling the heat from veterans groups, pro-life organizations, con- servatives, and even Democratic members of Congress, President Barack Obama’s Secretary for Homeland Secu- AP Images rity Janet Napolitano was forced to make a slight about-face regarding a controver- sial intelligence report issued by her de- partment. In a string of media appearances Janet Napolitano, Homeland Security secretary, has halfheartedly apologized for the “Rightwing in mid-April, Secretary Napolitano half- Extremism” report (inset) issued by DHS. apologized for a Department of Homeland Security (DHS) report that has drawn se- are attractive to rightwing extremists.” It one of more than 42 million veterans vere criticism for targeting conservative warns that the DHS Office of Intelligence who have worn this nation’s uniform political opponents and associating them and Analysis “is concerned that rightwing during wartime. To continue to use with dangerous terrorists. extremists will attempt to recruit and radi- McVeigh as an example of the stereo- The DHS document that stirred up the calize returning veterans in order to boost typical “disgruntled military veteran” political firestorm is a leaked 10-page their violent capabilities.” is as unfair as using Osama bin Laden report entitled “Rightwing Extremism: What is the basis for this DHS concern? as the sole example of Islam. Current Economic and Political Climate The “Rightwing Extremism” report states: Fueling Resurgence in Radicalization and “After Operation Desert Shield/Storm in Rep. Bennie Thompson of Mississippi, the Recruitment.” The most harshly criticized 1990-1991, some returning military vet- Democratic chairman of the House Home- section of the report concerns the finger erans — including Timothy McVeigh — land Security Committee, voiced similar of suspicion it points at military veterans. joined or associated with rightwing ex- concerns. In an April 14 letter to Secretary The report, which was distributed to law- tremist groups.” Janet Napolitano, he wrote he was “dumb- enforcement agencies nationwide, warns: David K. Rehbein, national commander founded” by the contents of the report. “I of the 2.6 million-member American Le- am disappointed and surprised that the de- The possible passage of new restric- gion, was understandably concerned by partment would allow this report to be dis- tions on firearms and the return of the DHS slur against America’s military seminated” to law-enforcement agencies, military veterans facing significant veterans, casting them in the negative ste- he said. “This report appears to raise signif- challenges reintegrating into their reotype favored by leftists in the media icant issues involving the privacy and civil communities could lead to the poten- and Hollywood. In a letter to Secretary liberties of many Americans — including tial emergence of terrorist groups or Napolitano, Commander Rehbein wrote: war veterans,” Chairman Thompson cau- lone wolf extremists capable of car- tioned. “As I am certain you agree, free- rying out violent attacks. The American Legion is well aware dom of association and freedom of speech and horrified at the pain inflicted are guaranteed to all Americans — whether “Returning veterans,” the report continues, during the Oklahoma City bomb- a person’s beliefs, whatever their political “possess combat skills and experience that ing, but Timothy McVeigh was only orientation, are ‘extremist’ or not.” 24 THE NEW AMERICAN • MAy 11, 2009
  • 26. On April 16, Secretary Napolitano made the rounds of the morning TV shows, in an attempt to quell the growing outrage. “To the extent veterans read it as an accusa- tion … an apology is owed,” she conceded during an on-air interview on FOX News. “This was an assessment, not an accusa- tion,” Napolitano continued. “It was lim- ited to extremists — those who seek to commit violence within the United States. And all this was meant to do was to give law enforcement what we call ‘situational awareness.’” Situational awareness? Awareness about what situation, precisely? This “in- telligence” report admits that it contains no concrete evidence. It states: AP Images The DHS/Office of Intelligence and Analysis (I&A) has no specific in- formation that domestic rightwing Military veterans returning from fighting terrorists in Iraq, like these soldiers in the New York terrorists are currently planning acts City Veterans Day Parade, are seen by DHS as potential “rightwing” terrorist recruits. of violence, but rightwing extremists may be gaining new recruits by play- ents that are primarily hate-oriented bulletin out of Missouri targeting conser- ing on their fears about several emer- (based on hatred of particular reli- vatives, libertarians, gun rights advocates, gent issues. The economic downturn gious, racial or ethnic groups), and pro-life activists, and others. Much of the and the election of the first African those that are mainly antigovernment, criticism of Napolitano and the DHS re- American president present unique rejecting federal authority in favor of port has failed to draw the disturbing con- drivers for rightwing radicalization state or local authority, or rejecting nection between the DHS “Rightwing Ex- and recruitment. government authority entirely. It may tremism” report and “The Modern Militia include groups and individuals that are Movement,” a report issued in February Nevertheless, the DHS report claims that dedicated to a single issue, such as op- by the Missouri Information and Analy- “lone wolves and small terrorist cells em- position to abortion or immigration. sis Center (MIAC), a branch of the state’s bracing violent rightwing extremist ideol- Highway Patrol. MIAC is what is known ogy are the most dangerous domestic ter- The DHS report sloppily (or, perhaps, as a “fusion center,” one of 58 such fed- rorism threat in the United States.” cleverly and maliciously) demonizes mil- eral-state-local law-enforcement centers The report employs the word “right- lions of law-abiding Americans, conflating nationwide sponsored by DHS. wing” 50 times, and in nearly every in- them with violent, criminal groups such as The MIAC report turned into an espe- stance (47 times), it is in the context of Neo-Nazis and “white supremacists” sim- cially hot potato when it became known “rightwing extremism,” “rightwing ex- ply because they adhere to political beliefs that it specifically named political candi- tremist,” “rightwing terrorist,” or “right- at variance with those of the administra- dates and political parties, implying that wing terrorist and extremist.” Tellingly, the tion. By repeatedly associating “right- they and their supporters should be viewed report doesn’t bother to define any of these wing,” “extremism,” “terrorism,” “vio- as potential terrorists, and/or threats to law politically charged terms, a major derelic- lence,” “threat,” “dangerous,” and “white enforcement. The MIAC report states: tion of due diligence in such an important supremacist” with those who matter. It is similarly shoddy in using terms oppose abortion, gun control, favored by left-wing extremists to describe socialism, government bail- The DHS report sloppily (or, perhaps, their opponents on the right, such as “anti- outs, and amnesty for illegal government,” “hate-oriented,” “paranoid,” aliens, the DHS is reinforc- cleverly and maliciously) demonizes “dangerous,” and “violent.” ing a left-wing trope aimed at millions of law-abiding Americans, The closest the DHS report comes criminalizing and silencing to offering a definition is this troubling politically incorrect expres- conflating them with violent, criminal description: sion and dissent. groups such as Neo-Nazis simply because The DHS report is doubly they adhere to political beliefs at variance Rightwing extremism in the United troubling because it comes States can be broadly divided into quick on the heels of a similar with those of the administration. those groups, movements, and adher- federal-state law-enforcement Call 1-800-727-TRUE to subscribe today! 25
  • 27. HomEland sEcUriTy Like Secretary Napolitano, secret. Listed as “UNCLASSIFIED//FOR Missouri Governor Jay Nixon OFFICIAL USE ONLY (U//FOUO),” the There is an additional facet of the initially defended his agency’s DHS report tells law-enforcement recipi- DHS and MIAC reports that begs to be report. However, as a public ents it “is not to be released to the public, backlash against the report built the media, or other personnel.” Likewise, exposed: the strange and alarming during the last weeks of March, the MIAC report prohibits distribution to symbiosis between the federal he reversed course. Van God- those outside law enforcement. government (especially the Departments sey, the director of the fusion With nearly 60 of these DHS federal- center that produced the report, state fusion centers nationwide, there is of Justice and Homeland Security) and was replaced on April 6. His good reason to suspect that other similar certain private left-wing groups. superior, Department of Public reports attacking Americans’ constitution- Safety Director John Britt, was ally guaranteed rights have been issued or placed on administrative leave are being developed for dissemination. You are the Enemy: The militia pending an investigation of the report. This kind of political targeting is very subscribes to an antigovernment and Missouri State Rep. Jim Guest told The dangerous and underscores why the U.S. NWO [New World Order] mind set, New AmericAN he is especially concerned Constitution strictly circumscribes federal which creates a threat to law enforce- that the MIAC illustrates the growing prob- policing and reserves the vast majority of ment officers. They view the military, lem of increased intrusion by the federal police powers to the states. The Founding National Guard, and law enforcement government into state police functions. He Fathers wisely recognized that gradual as a force that will confiscate their hopes to uncover the sources of the po- encroachment by the federal government firearms and place them in FEMA liticized “intelligence” in the MIAC report could lead to nationalization and the concentration camps. [Bold empha- and the exact nature of Missouri’s relation- eventual use of a national police force to sis in original.] ship to DHS at the MIAC fusion center. impose tyranny. While it may be true that corruption and abuse of police powers at The MIAC report then states: “Militia investigate dHs the state and local levels will always be members most commonly associate with Members of Congress should be looking a concern as well, the magnitude of the 3rd party political groups. It is not uncom- into this matter as well. The dangerous danger pales in comparison to the menace mon for militia members to display Con- precedents established by the DHS and posed by a centralized agency with po- stitutional Party, Campaign for Liberty, or MIAC reports should not be allowed to pass lice authority over the entire nation. The Libertarian material. These members are simply because Secretary Napolitano was DHS-sponsored fusion centers are further usually supporters of former Presidential forced by public pressure to issue a half- evidence that the DHS is the lead agency Candidate [sic]: Ron Paul, Chuck Bald- hearted apology. She would not even have of what is rapidly becoming a de facto na- win, and Bob Barr.” done that had the DHS report remained tional police force. There is an additional facet of the DHS and MIAC reports that begs to be exposed: the strange and alarming symbiosis be- tween the federal government (especially the Departments of Justice and Homeland Security) and certain private left-wing groups. We might ask, for instance, how the DHS arrived at its conclusion that “the most dangerous domestic terrorism threat in the United States” comes from individu- als and cells “embracing violent rightwing extremist ideology.” According to the DHS report, this as- sessment is based on information “from law enforcement and nongovernmental organizations.” Who are these unnamed NGOs? That is not too difficult to fig- ure out. As we have noted previously in these pages and in our online articles, the wording in the government reports is very similar to what we find in diatribes against conservatives issued by hard-core left- wing groups such as the Southern Poverty Law Center (SPLC), the Anti-Defamation 26 THE NEW AMERICAN • MAy 11, 2009
  • 28. League (ADL), and the Political Research Associates (PRA). However, the connection goes beyond the mere filtration of biased verbiage by these above-mentioned groups into of- ficial bulletins; they and other organiza- tions have been working closely with the Department of Justice (DOJ) since the Clinton administration officially targeted “rightwing” opponents. The SPLC and ADL websites boast about their work- shops in which they train hundreds of federal and state law-enforcement person- nel in the dangers emanating from “right- wing” threats. The most important of the nongovern- AP Images mental groups impacting the DHS and DOJ in this regard is the Council on For- eign Relations (CFR), which is usually Terrorists? Every year, millions of law-abiding Americans, like these pro-life demonstrators in described by the elite media as “nonpar- Montpelier, Vermont, peacefully march in opposition to abortion. tisan” and “balanced.” It is probably ac- curate to view the CFR’s April 21, 2008 lent, ‘no-harm’ doctrine” that leads them to Napolitano is lying to the American people Backgrounder report, entitled “Militant simply target property for vandalism, rather when she says the Report is not based on Extremists in the United States,” as the than attacking people. The DHS report does ideology or political beliefs. In fact, her document that kicked off the current round not specifically mention the SPLC, but it is report would have the admiration of the of official government warnings of a new most likely referring to them when it quotes Gestapo and any current or past dictator in “rightwing” menace. a “prominent civil rights organization” on the way it targets political opponents. This According to the study, written by CFR the danger of military veterans being re- incompetently written intelligence assess- staffer Holly Fletcher, the main domestic cruited by “violent neo-nazis, skinheads, ment, which directs law enforcement offi- security danger to the United States comes and white supremacists.” The DHS-spon- cials across the country to target and report from “hate groups motivated by ultra-con- sored MIAC report specifically references on American citizens who have the politi- servative ideals that are often anti-Semitic SPLC as one of its sources. cal beliefs mentioned in the report, will be and racially motivated.” Fletcher shows Congressional and state investigations used as a tool to stifle political opposition a telling dependence on the SPLC, cit- should probe this alarming evidence in- and opinions. It will give a pretext for op- ing them as an authority several times. dicating that hard-core left-wing activist ponents of those Americans to report them She writes, for example, that “right-wing groups have become grafted onto govern- to police as rightwing extremists and terror- extremists are still considered the most ment agencies and are abusing federal and ists. You can imagine what happens then.” dangerous to the United States, says the state police powers to target their political The lawsuit was filed in the U.S. District SPLC.” And, she writes, “Left-wing and opponents. Court for the Eastern District of Michigan environmental extremist groups are not on behalf of nationally syndicated con- hate groups, according to the SPLC, be- Mounting legal opposition servative radio talk-show host Michael cause they do not espouse rhetoric that tar- Private legal efforts to redress the DHS Savage, Gregg Cunningham (president of gets specific groups that have a defining abuses are already underway. The Thomas the pro-life organization Center for Bio- characteristic.” More Law Center, a national public inter- Ethical Reform, Inc.), and Iraq War Ma- Surprise, surprise, the CFR/SPLC line is est law firm based in Ann Arbor, Michigan, rine veteran Kevin Murray. The law center precisely the attitude adopted by the DHS! announced on April 17 that it had filed a claims that Napolitano’s DHS has violated When the furor erupted over the DHS federal lawsuit against DHS Secretary Na- the First and Fifth Amendment constitu- “Rightwing Extremism” report, the DHS politano. The suit charges that her depart- tional rights of these three plaintiffs by and its media shills pointed to a DHS re- ment’s “Rightwing Extremism Policy,” as attempting to chill their free speech, ex- port issued in January entitled “Leftwing reflected in the DHS Intelligence Assess- pressive association, and equal protection Extremism.” This supposedly showed that ment “Rightwing Extremism,” violates the rights. The lawsuit further claims that the the department is being impartial and even- civil liberties of combat veterans as well as Department of Homeland Security encour- handed. However, the DHS “Leftwing Ex- American citizens by targeting them for ages law-enforcement officers throughout tremism” report is far from impartial. It fol- disfavored treatment on account of their the nation to target and report citizens to lows the CFR/SPLC lead, falsely claiming political beliefs. federal officials as suspicious right-wing that left-wing extremists are comparatively Richard Thompson, president and chief extremists and potential terrorists because benign because they adhere to a “nonvio- counsel of the law center, stated, “Janet of their political beliefs. n www.TheNewAmerican.com 27
  • 29. ProfilE less morals than Madoff: In the 1920s, Ivar Kreuger, a Swedish businessman feted around the world, acquired close to 200 companies, cooked their books, and drained them of assets. He also bilked corporate investors and was a womanizer. No amount of government precautions taken since Kreuger’s day deterred Madoff. tertained an unending parade of mistresses that included Parisian shop girls, students, and streetwalkers. Not content merely to manufacture “lucifers,” as they were then sometimes called, Kreuger diversified his portfolio to eventually acquire some 200 different corporations. He also was lauded for ex- tending huge loans to many governments foundering in the uncertain financial wa- ters of the postwar 1920s. Kreuger was credited for single­ handedly rescuing the likes of Poland, Greece, Ecuador, Guatemala, Hungary, Latvia, and Romania from outright bank- ruptcy, and with helping many others, including France and Germany, survive the turbulent period. He usually required Pyramid Schemes that countries who benefited from his largesse, including France and Germany, return the favor by granting his matches preferential trade status. Of the Germans, Put in Perspective he even stipulated that they ban all im- ports of matches from Russia, one of his major competitors. Kreuger also capitalized on his larger­ than-life reputation to issue large amounts of debentures, or unsecured long-term The real rub of the Ivar Kreuger and Bernie Madoff sagas is corporate debt, to thousands of Swedish investors. These so­called “Kreuger pa- that both men were caught doing precisely what governments pers” were extremely popular, since it was do as a matter of course through central banking. widely believed that the Kreuger financial empire was on very solid footing. Events in the early thirties changed all by Charles Scaliger man and financier was the toast of inves- that. The collapse of markets all over the tors and bankers in both Europe and the world laid bare balance-sheet weaknesses O n March 12, 1932, French po- United States. Kreuger, who was known far and wide. Banks and huge numbers of lice discovered a man dead of a as the “Match King,” had built his fortune other corporations that had failed to save gunshot wound in a sumptuous in the then-fledgling match industry. At for a rainy day, relying instead on the un- apartment on Avenue Victor Emanuel III the height of his influence, he controlled warranted belief that unending growth in Paris. After a thorough investigation, it an estimated three-quarters of the world’s would overwhelm shaky assets or exces- was determined that the man, a middle- match manufacturing. Kreuger maintained sive leverage, failed spectacularly. aged Swedish businessman, had died of a six or seven homes on two continents, in- In a climate of renewed financial vigi- self-inflicted shot from a 9 mm pistol. The cluding three mansions in Sweden, a per- lance, banks and other creditors began man’s name was Ivar Kreuger. manent suite at the London Carlton, and examining Kreuger’s activities in more Nowadays, the name of Ivar Kreuger is apartments in Berlin, New York’s Park detail. As suspicions mounted that the remembered by very few, but in the early Avenue, and the Avenue Victor Emanuel Match King’s financial house was built thirties, the flamboyant Swedish business- III in Paris. At his Parisian lodging, he en- on sand, banks became reluctant to ex- 28 THE NEW AMERICAN • MAy 11, 2009
  • 30. tend further credit. After Kreuger failed to convince the Sveriges Riksbank, the Swedish central bank, to extend an emergency loan (what would now be called a bailout), Kreuger knew the game was up and apparently took his own life rather than face scandal and ruination. (There remain some doubts that Kreuger’s death was suicide, but since he was cre- mated immediately and the gun that took his life disap- AP Images peared, the truth will never be known). When the balance sheets of the hundreds of Kreuger He should’ve been caught sooner: Bernard Madoff stole billions, but he should have been caught enterprises were examined, a decade ago — a financial analyst, Harry Markopolos, had been telling the SEC for that long that it quickly became apparent Madoff’s claimed assets were obviously bogus. that Kreuger had for years been running a vast Ponzi (pyramid) scheme. The Kreuger papers doff had been trusted with the assets of professional life as a plumber. He began his and other debts supposedly guaranteed by many of the world’s wealthiest and best- career in finance as a penny stock trader in Kreuger’s assets became worthless over- connected individuals, charitable founda- 1960, using money saved while working as night when it was revealed that most of his tions, banks, and investment firms. Now, a lifeguard and sprinkler installer. Married companies had negative worth. The man he told his sons, the game was up, and he for decades to his high-school sweetheart, who has been called “the prince of the first wanted to make a full breast. The follow- Madoff donated widely to a large number global finance state” had been exposed as ing day, his sons reported their father’s of charities, and sat on the boards of many an utter fraud. confession to the authorities, and Madoff of the nonprofit organizations he founded The collapse of the Kreuger empire had was taken into custody by the FBI and or helped to fund. far-reaching consequences, causing the charged with securities fraud. But evidence now being uncovered so­called “Kreuger crash” that affected As the extent of the Madoff Ponzi shows that, for decades, the munificent thousands of banks and investors, espe- scheme came to light, Wall Street learned Madoff led a double life, stealing inves- cially in Sweden and the United States. In that one of its own was responsible for tors’ assets and chalking up tens of billions the larger context of the Great Depression, hundreds of billions of dollars in stolen of dollars of non-existent investor assets. however, the Kreuger affair proved to be assets. The Madoff affair could scarcely Yet in spite of the duration of the fraud — a flash in the pan, and Kreuger himself have come at a worse time, with markets and years of warnings to federal authori- merely the gaudiest of a generation of fi- already reeling from the severest global ties by an astute financial analyst, Harry nancial hucksters who had built phantom downturn since the Great Depression. Markopolos, who began telling the SEC a fortunes in the inflationary economy of the Many institutions with a large exposure decade ago that Madoff’s claimed assets Roaring Twenties. In all, Kreuger’s activi- to Madoff’s scheme, like European bank- were obviously bogus — it was Madoff’s ties cost banks, investors, and governments ing giant Banco Santnader, suffered huge own confession, prompted, perhaps, by a hundreds of millions of dollars — a very losses, and at least two desti- formidable sum indeed by the standards of tute clients chose to commit the early thirties. suicide. As with the Kreuger Federal oversight is no guarantee of affair almost 80 years earlier, fast forward to Today the man on the street marveled protection against scam artists. The On December 10, 2008, prominent inves- that one con artist could have Madoff scandal may have been made tor, philanthropist, and former chairman of gotten away with so much for the NASDAQ stock exchange Bernie Ma- so long. worse precisely because investors doff sat down with his two sons Mark and Madoff, in contrast to consoled themselves that the federal Andrew to confess to them that the asset Kreuger, led a superficially government would safeguard them from management arm of his firm Bernard L. down-to-earth life. The son of Madoff Investment Securities LLC was hardworking Eastern European being victimized by large-scale fraud. nothing but “a big lie.” For decades, Ma- immigrants, Madoff started his Call 1-800-727-TRUE to subscribe today! 29
  • 31. ProfilE burden of guilt, that finally exposed the decade. The vaunted SEC, founded in the of England. As in the Roaring Twenties, charade. early thirties in no small measure because so too in the Roaring Eighties and Nine- We would do well to wonder how it is of the Kreuger affair, is supposed to nip ties: easy-money policies brought about that, in our day of supposedly seamless fraud in the bud, shining the light of day on by artificially depressed interest rates en- government vigilance over the activi- otherwise secretive brokers and financiers, couraged a bacchanal of debt, a disdain ties of investors, the U.S. financial sector and creating a climate of transparency that for savings, and an appetite for risk that could be rocked by two gigantic scandals would deny the Madoffs of the world cover overwhelmed the sober wisdom of more (Enron, of course, was the first) in a single for their dishonest ambitions. prudent generations. In such a climate, Yet, as both the Madoff individuals and institutions were eager and Enron scandals have to put their money in what in saner times It is a harsh but unavoidable truth that made clear, we are no less would be deemed very risky places. Ev- vulnerable today than was erybody was making money, and no one the entire basis for our modern financial the world in Ivar Kreuger’s believed that a day of accounting would system — the U.S. dollar — is fraudulent, time. The parallels between ever come. the two men, in fact, are But the mania of artificial economic a gigantic confidence game from which striking: both operated in booms eventually cools, and with it, more no one not living a subsistence lifestyle times of irrational economic sober counsels prevail. In Ivar Kreuger’s exuberance created by the case, the contraction of global finances in the forests of Amazonia or Papua New expansionary policies of eventually forced his hand. In Madoff’s, Guinea is protected. central banks like the Fed- the economic downturn probably per- eral Reserve and the Bank suaded him to come clean, knowing he could not conceal his wrongdoing much longer. let the Buyer Beware As the Madoff case shows, federal over- sight of the market is no guarantee of pro- tection against endlessly inventive scam artists. The Madoff scandal, in point of fact, may have been made worse precisely because investors, already giddy from market gains, consoled themselves that the federal government — the SEC in particu- lar — would safeguard them from being victimized by large-scale fraud. In reality, reliance on free-market forc- es rather than government regulation and oversight is a far sounder way to protect the market against fraud. If individuals and firms must judge for themselves the soundness of an investment, they will be far more vigilant, or less willing to put all their eggs in one basket, if they know they must assume the risk of being defrauded. Caveat emptor works as well with invest- ment portfolios and bank accounts as with used cars. But if investors expect the government to do due diligence for them, they are far less likely to concern themselves with the AP Images balance sheets of the investment houses and banks where they place their hard- earned money. The SEC has proven to be Madoff mad money: Actress Kyra Sedgwick (left) and her husband, actor Kevin Bacon, a burdensome failure, thanks to the Ma- are two of the rich and famous that Madoff bilked. Likely they were too trusting of Madoff doff scandal, yet the Obama administra- because they believed that the government scrutinized investment funds for fraud. tion, undeterred by the spectacular failure of government regulatory intervention in 30 THE NEW AMERICAN • MAy 11, 2009
  • 32. the markets, is proposing more, not less, be repaid. The entire United States federal Whether or not government imposes market regulation as the solution. government, addicted to deficit spending, its heavy hand on financial activity, scam But the real rub of the twin sagas of is operating the largest Ponzi scheme the artists large and small will always be with Ivar Kreuger and Bernie Madoff is that world has ever seen, defrauding not merely us. But in a day when the government is both men, in misrepresenting their assets a few investors but every U.S. citizen and expected to be intimately involved in the and using debt to conceal debt, have had every institution, public or private, on the marketplace, the reality of fraud and scan- the misfortune of being private citizens face of the Earth that holds U.S. govern- dal will actually be greater, and not only brought down for doing precisely what ment debt. because the Bernie Madoffs of the world governments, thanks to the legerdemain This is so because the money that the will find ways to operate under the radar of central banking, do as a matter of U.S. government uses to pay its obliga- screen. course. tions — the U.S. dollar — loses value con- It is a harsh but unavoidable truth that This is an obvious point that the news stantly thanks to the activities of the Fed- the entire basis for our modern financial media, in condemning Bernard Madoff, eral Reserve. The effects of this inflation system — the U.S. dollar — is fraudu- have refused to acknowledge. For if the (artificial expansion of the money supply) lent, a gigantic confidence game from Madoffs and the Kreugers of the world are higher prices and the gradual erosion which no one not living a subsistence are guilty of operating fraudulent Ponzi of the value of savings. This means that lifestyle in the forests of Amazonia or schemes (and they most certainly are), Treasury bonds and bills — instruments Papua New Guinea is protected. For on the governments that prosecute them are of debt which the government pledges to the day the dollar Ponzi scheme comes guiltier still. Even as Madoff — who has at repay — will be redeemed in depreciated apart, the day people realize that the U.S. least acknowledged his guilt and will pay dollars, effectively defrauding holders of government never intends to repay its for his crimes — is pilloried by the media government debt. It is thus ironic that, debts or can’t repay its debts, triggering and prosecuted by the state, the mandarins even as Bernie Madoff is rhetorically and an unprecedented global currency crisis at the Treasury Department and the Fed- prosecutorially hung in effigy, the Federal and the end of the dollar as the world’s eral Reserve continue to try to stave off Reserve has expanded the money supply reserve currency, the misdeeds of the Ma- the fact of impending national insolvency by about $1.2 trillion, which will trigger a doffs and Kreugers — penny ante play- by printing money and issuing horrendous calamitous decline in the value of the dol- ers by comparison — will seem almost amounts of new debt that will never, ever lar in the not-too-distant future. forgivable. n The honesT Company Fast Service: Usually Within adly Given Right Ov er The Phone Give the gift of ★ Firm Quotes Gl 60 Minutes! ★ No Gimmicks ★ No Hi dden Charges TRUTH Just $39 per gift subscription FAMIlY OwnEd — FREE ESTIMATES PluMBInG REPAIRS SEwER & dRAIn ClEAnInG • Water Heaters • Re-pipes • Kitchen Sink Drains • Sink Drains • Faucets • Gas Lines • Laundry Drains • Roof Vents • Toilets • Replace Water Lines • Tub/Shower Drains • Roof Drains • Garbage Disposals • Main Sewer Drains Allstate Plumbing Inc. • An effective educational tool to inform others about national and world events Serving the greater San Francisco Bay Area since 1993. • Recipient is reminded of your generosity Call Today! ☎ (800) 280-6594 throughout the year To Order ® Fully Insured (800) 727-8783 License # 694771 www.TheNewAmerican.com
  • 33. THE GOODNESS OF AMERICA a New face February 11 Pollette received his “new will be open again in time for the busy Last November, John Cannon, a resident of face.” He can wear his new glasses so he tourist season, and no business will be Aguanga, California, called Fox 11 News can see out of his right eye — for the first lost due to the damage. “We got together in Los Angeles for help solving a problem time since his cancer surgery. And after liv- — the community — and we got it done,” he was having with a medical claim. The ing with his deformity for three years, he said Troy Martin, whose company, Martin station was unable to help him, but during can now go out in public, no longer a man Steel, donated machinery and steel to the the course of the conversation, Cannon de- without a face, thanks to Matt Singer. effort. The community has demonstrated scribed to the medical producer the plight what can happen when the government of his neighbor, James Pollette. gets out of the way and private capital, On January 21, 2006, Pollette under- supreme self-sufficiency: labor, and ingenuity are allowed to “get it went a 23-hour surgery to remove cancer done.” Which is the way it should be! from his face. The surgeons had to remove The Way it should Be his entire nose, left eye, and surrounding These days it seems everyone has a hand tissue about the size of a baseball. As he out, expecting a handout from the Nanny Two Women Try to spread was (and still is) uninsured, facial recon- State. It is difficult to remember a time struction was impossible for financial when Americans were self-sufficient and the “Pay it forward fever” reasons. Pollette had lived with the severe independent, and would actually make a Many people in West Michigan were re- deformity of having only half a face for sacrifice when something was needed. cipients of kind gestures in March, thanks almost three years when his condition was So how refreshing it is to read about to two women and their “Helping Hands.” brought to the attention of Fox 11 News. a group of residents and business own- Grand Rapids WZZM Channel 13 reported Gerri Shaftel, the station’s medical pro- ers near Polihale State Park on the island on April 2 how these two women, known ducer, was so touched by Pollette’s story of Kauai. CNN.com reported on April 9, only as Karla and Amy, decided to perform that she sent a crew out to do a story on 2009 how this group of citizens took ac- random acts of kindness every day during him, which aired on November 18, 2008. tion to do what needed to be done. the month of March. The show described his dilemma, and in- Polihale was closed in December 2008 Some of those acts were small, such as cluded interviews not only with James and due to severe flooding that destroyed some paying the bill of the car behind them at a some friends, but with his goddaughter, facilities and an access road. As it is a state fast-food drive-thru (Day 6). Some were 10-year-old Mary Ann Simmons. The pro- park, the government was the logical first medium, such as paying for a stranger’s gram ended with a plea by Simmons for choice to repair the damage. The Hawaii gasoline (Day 2). Some of those acts were any doctors in the audience who could help Department of Land and Natural Re- large, such as on Day 1 when the ladies her much-loved friend and godfather. sources estimated the repairs would take made up 100 care packages for the home- FoxNews.com reported on April 2 the two years and cost $4 million. However, less. And Day 7 was supersized, with the amazing outcome of that program. Shortly as the state did not have the $4 million, the “30 Random Acts of Kindness in 1 Day after the show aired, Pollette was contacted construction was put off indefinitely. Challenge.” by Matt Singer, a prosthetic specialist who When several business owners whose The women’s blog (http://1-dollar-a- offered to make James a facial prosthesis livelihoods depend upon the park heard day.blogspot.com/2009/03/helping-hands- at no charge. Matt was joined in the gen- this, rather than whine and moan about it, project-month-in-review.html) describes erous gesture by oculist Stephen Haddad, they decided to take on the responsibility each day’s giving. Acts also included send- who volunteered to make a prosthetic eye, themselves. One of those business own- ing flowers to nursing-home residents, and optometrist Jeanette Yu, who would ers is Ivan Slack, whose company, Na- leaving exact change required at laun- donate a pair of glasses. pali Kayak, relies solely on kayak tours dromats and pay phones, leaving cards of Singer is a former Hollywood special- at the park. “If the park is not open … encouragement on random windshields in effects artist who has worked with such ce- bankruptcy would be imminent” for his a hospital parking lot, distributing scarves lebrities as Whoopie Goldberg and Robin business. So “we can wait around for the and umbrellas for the homeless, and even Williams. Looking for a more rewarding state or federal government to make this leaving bags of doggie treats in the park! career, though, he went back to school to move, or we can go out and do our part,” Why would they do these things? First, study maxillofacial prosthetics. His goal he told CNN. to boost the spirits of strangers and “make was to apply his talents “to help people in Slack and several other residents donat- someone’s day.” Surely they have suc- real need,” he told FoxNews. What an op- ed their own time, funds, and equipment, ceeded in that. And second, they hope that portunity he got in James Pollette! and got busy repairing the park’s damage others will catch the “pay it forward fever” After more than two months of hard themselves. Work that the government es- and will be inspired to do random acts of work and dedication, Singer’s “special ef- timated would take two years to complete kindness themselves. Let us hope they fect” for James was complete. Haddad’s took private citizens only eight days! succeed in that, as well. n prosthetic eye finished the project, and on Once the repairs are inspected, the park — liANA sTANley 32 THE NEW AMERICAN • MAy 11, 2009
  • 34. HisTory— PasT and PErsPEcTivE Lessons of the Weimar Republic The history of Weimar Germany illustrates how the social, political, and cultural destruction caused by hyperinflation so easily leads to the loss of liberty. by Michael E. Telzrow I n the wake of President Obama’s $3.6 trillion budget and a series of bank and industry bailouts by the Federal Reserve, the specter of hyperinflation haunts the United States. There are plenty of historical examples of what hyperinfla- tion can do to an economy. One need not necessarily look to 1920s Weimar Germa- ny for an example; present­day Zimbabwe provides the most recent version of the economic wreckage caused by government planning that devalues a national currency. But Weimar Germany is instructive in that it illustrates the social, political, and cul- tural destruction caused by hyperinflation that leads to the loss of liberty; for it was Weimar Republic Germany that gave birth to the political success of Adolf Hitler and the Nazi movement. Social and political revolutions often fol- low defeat on the battlefield, and so was the case with Germany in the wake of World War I. By the summer of 1918, it was apparent that Germany had lost the war. Even the absurdly optimistic reports from the High Command could not hide the fact that the German Army would not prevail on the field of battle. Five years of warfare in which soldiers from both sides were sacri- ficed in meat-grinder-like assaults on en- trenched positions had nearly wiped out an its real value: This German woman literally burns money in the wake of the unwise decision by the German government to print huge amounts of money to pay that country’s debts after WWI. The entire generation of German men. Since ar- inflationary measure was soon taken to the point where the currency became virtually worthless. riving in France in 1917, American troops had tilted the balance of power in favor of the Allies, and it was only a matter of time to engage the British fleet — a ludicrous non-commissioned officers were elected before the Yanks would turn the tide. command that compelled the majority of to lead defeated or mutinous units back Choked by an Allied blockade that sailors to mutiny. Demonstrations at Kiel, home. It was, in the end, perhaps the most threatened starvation at home, and bat- Germany, on November 3, 1918, ignited ordered military collapse in the history of tling a loss of confidence in Kaiser Wil- a larger mutiny and soon soldiers, sailors, warfare. Carl Zuckmayer, a young German helm II, the army readied itself for defeat. and workers from all over Germany were officer commenting on the scene, wrote, In order to deflect responsibility for de- organizing local “soviets” in order to take “Starving, beaten, but with our weapons, feat, army leaders handed over power to control of local governments. Senior Prus- we marched back home.” a civilian government under Prince Max sian officers no longer controlled the army, von Baden in October 1918. The begin- but in what became a characteristic of the Revolution ning of the end came when the German “1918 revolution,” mutineers and erstwhile Horrific losses in France’s Argonne For- naval command, as part of a last-ditch ef- revolutionaries generally maintained order est region put the final nail in the coffin, fort, ordered the fleet at Wilhelmshaven in their ranks. In many cases, junior and and on November 9, 1918, a cease-fire was 34 THE NEW AMERICAN • MAy 11, 2009
  • 35. The Versailles Peace conference, 1919, led to inflation in Germany and the rise of Hitler. The peace terms by the Allies demanded 14 percent of German territory, half its iron ore, and a quarter of its chemical and pharmaceutical products — along with cash payments. Germans were economically devastated by these demands, and so Germany began to print more money to pay its debts. call from General Groener at army head- quarters in Spa. It was then that Groener told Ebert that the kaiser had left Germany for Holland, and that he wished that the new government would lend support to the officer corps, and the Prussian military tra- dition, as it maintained order in the ranks. Groener also offered Ebert the support of the army if Ebert would help resist Bol- announced, and General Wilhelm Groener soon spread throughout the country. A few shevism by quelling the activities of some ordered what remained of the army to of these groups were considerably radical,of the more radical soldiers’ and workers’ withdraw from the front lines. The kaiser’s but many were born of a desire to end the councils. Ebert hated Bolshevism as much abdication followed quickly and Prince war and protect local communities from a as Groener; he preferred a constitutional Max von Baden, who had been acting as capricious transitional government. Still,monarchy, and in the end he pledged the chancellor since October, handed power there was no doubt among the citizenry new government’s support in exchange over to Social Democrat leader Friedrich that a revolution had taken place. for the army’s assistance in combating the Ebert. Between October 1918 and March 1919, Bolshevik challenge. A republic was quickly declared, but Germans endured revolutionary activity On November 11, 1918, the armistice its form was completely unknown at the was signed between German and Allied across the country as Marxists, socialists, time. In any case, the new “republic” had and nationalists each vied for power and representatives. The war was finally over to quickly deal with a host of problems influence. Taking advantage of the situa- and a new fledgling government was in including signing an armistice, demobi- tion, Marxists sought to overthrow capi- place. lizing an army, and gaining control of a talism and establish a proletarian state. The period between the armistice and growing revolution. The kaiser’s abdica- They had earlier broken with the Social the elections for the National Assembly tion forced other German crowned heads Democrats (SPD) and they now looked to in January 1919 was marked by tension to do the same. But unlike the Russian appropriate the revolutionary movement. between the SPD and the USPD, the lat- Revolution, where the communists spilled Even before the armistice was signed ter being constantly influenced by hard- the blood of royalty, and delightfully shot on November 11, SPD party leader Kurt left Marxist elements within the group. Tsarist army officers, this German revolu- Eisner and his followers seized control ofEbert spent most of his time governing tion maintained the strange sense of deco- Munich and declared it a Bavarian Repub- the transition from a war-time economy rum that characterized the unit mutinies a and finding ways to alleviate the economic lic. Just as Friedrich Ebert of the “moder- month earlier. They would not repeat the ate” Social Democrat Party was declaring hardships of the average German. Mean- brutality that the Bolsheviks had visited a new democratic republic on November 9, while, Marxist agitators spent their time upon the Tsar and his family. These revo- 1918, Karl Liebknecht of the Independent marching in the streets and planning upris- lutionaries displayed their anger by merely Socialists (USPD) was poised to declare ings. During December 1918, Ebert’s SPD cutting off officer rank insignia rather than the establishment of a new socialist resorting to lynching, as was the fashion in republic with support from the revo- Russia. Unnerved by an orderly crowd, an lutionary masses. Ebert knew that he Social and political revolutions often old Berliner was heard to remark, “I don’t needed the support of at least a small like these peaceful revolutions at all. We number of Independent Socialists in follow defeat on the battlefield, and shall have to pay for it some day.” order to head off Liebknecht’s push so was the case with Germany in the Soldiers wearing red arm bands signify- for a socialist republic. He got the ing them as socialists or “reds” began to support he needed with the forma- wake of World War I. It was Weimar stream into German towns, and as the Ger- tion of a Council of People’s Com- Republic Germany that gave birth to man army returned home it was demobi- missars consisting of three USPD lized in short order. Workers’ and soldiers’ leaders and three from the SPD. the political success of Adolf Hitler councils sprouted up initially in Hamburg, Liebknecht had been stymied. and the Nazi movement. Cologne, and Wilhelmshaven, and they Later that day, Ebert received a www.TheNewAmerican.com 35
  • 36. HisTory— PasT and PErsPEcTivE would secure an honorable and entry into the League of Nations was and lenient peace from the forbidden. More devastating, particularly Although not in exactly the same position Allies. Brockdorff-Rantzau for a country emerging from a costly war, as Weimar Germany, the United States was counting on the Bol- were the unspecified reparations forced shevik threat and Wilson’s upon Germany. By May 1921, Germany now finds itself under the rule of its own Fourteen Points to enable was required to make payment of 20 bil- charismatic leader and a Federal Reserve that Germany to remain a viable lion gold marks as an interim payment. European power. He knew On May 12, SPD Prime Minister Philip together seem bent upon debauching our that there would be some Scheidemann declared, “What hand must currency through inflation. Our disaster territorial concessions, but not wither which places these fetters on could be worse than Weimar Germany’s. he was not prepared for what would ultimately tran- itself and on us?” But for the Allies, these terms seemed spire at Versailles. just. Anti-German feeling ran very high, clashed with Liebknecht’s newly formed In the wake of four years of brutal particularly in the European countries Spartakusbund, leaving 16 dead in the warfare that had destroyed large areas of that had suffered at the hands of the Hun. streets. In January 1919, the Spartacists at- France and Belgium and resulted in the It was time to make them pay, and that tempted to overthrow the government but loss of millions of lives, the Allies were in feeling dominated the political scene for were crushed by the army and Freikorps no mood to proffer lenient terms. Germa- years after the war, particularly among the troops — volunteers raised by individual ny would lose huge areas of land, includ- French, who no doubt had had enough of army commanders. The failed uprising ing Alsace-Lorraine to France, and most of German militarism. Sadly, had the Allies ended with the murders of Liebknecht and West Prussia, Upper Silesia, and Pozen to not taken this approach, and instead had his close ally, Rosa Luxemburg. the newly formed Poland. Danzig would looked to ways to support an evolving Workers’ demonstrations and small- become a “free city” under the newly cre- German political institution, Hitler might scale disturbances continued, but the army ated League of Nations, and Germany was never have come to power. Defeat, coupled and the Freikorps ensured that the new re- to lose all of its overseas colonies. The in- with the harsh reality of Versailles, was a public would not veer sharply left. The Na- famous 231 “war guilt clause” shifted the traumatic experience for Germany. It re- tional Assembly elections on January 19, blame for the war entirely to Germany, and inforced the sense of betrayal — “the stab 1919, enjoyed an 83-percent turnout that Germany’s army was reduced to 100,000 in the back” allegedly perpetrated by Jews included, for the first time, women over volunteers. Its navy was to be limited, and socialists that had ultimately defeated 20 years of age. Ebert’s SPD the supposedly unbeaten party secured 38 percent of German army, and the repa- the vote, with the Catholic rations issue became a rally- Centre Party getting almost ing point for nationalists. 20 percent. Nationalist and monarchist parties secured Occupation and less than 15 percent of votes Hyperinflation cast. In February, delegates By 1920, political and eco- elected Ebert as the first nomic questions related to president of the republic in the reparations issue were the town of Weimar, from becoming a serious concern. whence the new government How could a weak Ger- took its name. man economy address the unimaginably high level of Challenges reparations? Germany had fi- Nothing influenced the new nanced the war through loans Weimar Republic and the and bonds (sound familiar?). subsequent history of Ger- Inflation was already present many more than the peace settlement signed at Ver- sailles. Foreign Minister The coming of the Weimar Count Brockdorff-Rantzau republic: Philip Scheidemann, without seeking approval of would lead the negotia- the SPD Party to which he tions for Germany. Earlier, belonged, announced from a he had been one of the few window of the Reichstag that who had supported a com- with the abdication of Kaiser promised peace in 1917, Wilhelm II, Germany was now a and he was confident that he republic. 36 TNA • MAy 11, 2009
  • 37. when Joseph Wirth’s government pursued a policy that further fueled inflation be- tween 1921 and 1922. Wirth’s policy was designed to show that Germany could not meet its reparations payment responsibili- ties. By printing more paper money, Wirth initiated a plan in which Germany would make reparations payments in increasing- ly worthless marks. Better to pay in cheap worthless marks, so Wirth thought. The Allies, particularly the French, had other ideas. On January 9, 1923, the French German Federal Archive used a shortfall in German coal deliveries as a pretext to invade and occupy the Ruhr region of Germany. Their aim was to “su- pervise” production of the coal that was part of the reparations deal struck at Ver- sailles. Payment of reparations “in-kind” would now be seized at its source. In the Million-mark note paper: 1923- eyes of the French, anything that weakened issue 50 million-mark banknote. Germany was a benefit to France. The Wei- Worth approximately $1 U.S. when mar Republic responded to the invasion by printed, this sum would have been advocating passive resistance. Industrialists worth approximately $12 million, were ordered not to comply with French nine years earlier. The note was orders or to hand over any coal stocks. practically worthless a few weeks A government-backed general strike later due to continued inflation. was called in the Ruhr, and was financed when the prostitute offered her services for entirely by the printing of even more paper “six billion and a cigarette.” Seeking plea- money. Fearing the loss of capital, credit rency. Those businesses that had issued sure in activities that had formally been was extended to factory owners so that stock found it easy to pay off their debts eschewed in favor of virtue became com- they might keep their operations running with worthless currency at a “mark equals monplace. Stefan Zwieg, a contemporary during the general strike. The loss of earn- mark” ratio. By November 1923, workers of Klaus Mann, summed up the Weimar ings, however, exacerbated the situation were being paid five times a week, real mood thusly: and led to spiraling hyperinflation. Within wages were down 25 percent, and banks six months, the currency completely col- were issuing notes by their weight. It was an epoch of high ecstasy and lapsed. With it went all confidence in the Hyperinflation brought with it new, ugly scheming, a singular mixture republic. Fear and panic followed as mil- more ominous signs of social degradation. of unrest and fanaticism. Every ex- lions of Germans found themselves in The German generation that valued thrift travagant idea that was not subject financial ruin. In August 1923, one dol- and fiscal responsibility now dealt with a to regulation reaped a golden har- lar was worth 4.6 million marks. Three situation in which plummeting home val- vest: theosophy, occultism, yogism, months later it was worth 4,000 billion ues destroyed the very concept of savings. and Paracelcism. Anything that gave marks! To keep up with the pace of in- Years of saving and scraping to purchase hope of newer and greater thrills, flation, 133 printing offices pumped out stability through home ownership went for anything in the way of narcotics, marks for the Reichsbank. Ordinary items naught and the lesson was not lost on a morphine, cocaine, heroin found a like bread cost millions of marks. It was younger generation that now saw saving tremendous market; on the stage in- impossible to keep up with the pace of as a pointless endeavor. cest and parricide, in politics, com- inflation but the Reichsbank tried by in- A youthful generation set adrift from munism and fascism constituted the creasing the money supply — a move that traditional moorings naturally gravitated most favored themes. made the situation even worse. to immorality. Marriage was no longer an By October it cost the Reichsbank more economically secure arrangement. Con- Passive resistance in the Ruhr was called to print the notes than they were worth. sequently, the commercial sex industry off in September, but not before the dam- This completely irresponsible and cata- bloomed, particularly in Berlin. Klaus age had been done. The new German clysmic action wiped out savings accounts, Mann, son of the author Thomas Mann, state was in danger of falling as extremist personal annuities, stocks, and pensions. later described an encounter with a Ber- groups like Adolf Hitler’s National So- While the middle class was being de- lin prostitute. “One of them brandished a cialist German Worker’s Party (NSDAP) stroyed, industrialists and large businesses supple cane and leered at me as I passed maneuvered for power. Inflation primed benefited from the devaluation of the cur- by,” wrote Mann. The exchange ended the pump of aggression and political ex- Call 1-800-727-TRUE to subscribe today! 37
  • 38. HisTory— PasT and PErsPEcTivE Busted by a “bailout”: Germans in the early 1920s suffered from the effects of war reparations, trade restrictions, political infighting, and, especially, inflation. Here a line forms outside a soup kitchen in Berlin. Malnutrition and starvation were widespread. tional ties that tethered the young to their families and communities were torn asun- der by the war and the post-war upheav- als. Weimar Germany was a liberating experience for young Germans, but they increasingly began to see the government as dominated by prewar political parties. The SPD and the Catholic Centre Party seemed stodgy and not capable of insti- tuting the rapid social change that enam- ored Germany’s youth. By the late 1920s, most German youths were more likely to identify themselves with the Communists (KPD), or the Nazi Party. They were sim- ply bored with what Goebbels described as an “old men’s republic.” Constant concessions to the left by weak governments fueled nationalist fer- vor. The hyperinflation debacle had also sapped much of the middle-class support for the republic. As today, those people saw the value of their homes and savings decline while debtors seemed to benefit tremism. A number of Marxist groups had ment was rampant, wages dropped, and from the easy-money policies of the Wei- threatened unrest in Saxony and Thurin- high prices dominated the market. But mar Republic. Leftists, too, had much to gia, and Hitler used the opportunity as a by 1924, it appeared that the problems complain about. For them, the republic call to arms in a Munich beer hall. Hit- of the early republic were over. Foreign had betrayed its socialist roots. ler’s secondary aim was to attain Bavarian Minister Gustav Stresemann success- Despite seeming stabilization, the so- autonomy. fully regularized foreign relations with cial, political, and economic problems Impressed with Mussolini’s “March on the Western Allies. In 1924, the Dawes that plagued the new republic never dis- Rome” in 1922, Hitler planned his own Plan married American economic inter- appeared. Much of it was self-inflicted — “March on Berlin.” In November 1923, ests with Germany, and reparations ar- the devaluation of its currency in order to Hitler seemed on the verge of success rangements became more manageable. punish the French, costly welfare schemes when some of his powerful supporters in In 1925, the hated French began leaving included in the state constitution, ineffec- Bavaria retracted their support for the for- the Ruhr, and by 1927, the disarmament tive coalition governments, and an ongo- mer army corporal. The Nazi putsch failed commission was withdrawn. By 1930, the ing yearning for the old days of Imperial after some of Hitler’s supporters were shot Rhineland was to be cleared of any for- Germany combined to set the stage for its in front of Munich’s Feldherrnhalle. Hit- eign occupation. Under Stresemann, Ger- failure. Finally, a worldwide depression ler was arrested and endured a short trial many had made remarkable progress on and the rise of a charismatic leader put an in which he received some public notori- the foreign-policy front, but there were end to the ill-fated republic. ety. After conviction, he served but a few other problems on the horizon for the new Although not in exactly the same posi- months of a five-year sentence in relative republic. tion as Weimar Germany, the United States comfort at Landsberg prison. It was there A specter of national decline sapped the now finds itself under the rule of its own that the architect of the Holocaust wrote strength of the republic. Fewer and fewer charismatic leader and a Federal Reserve Mein Kampf — the little book that would young people supported the Weimar sys- that together seem bent upon debauching lay out his twisted political ideology. tem; they were often more concerned with our currency through inflation. By “prim- drinking and dancing. Indeed, one of the ing the pump” in super Keynesian fashion, Stabilization and the Fall unfortunate outcomes of the First World the Obama administration courts an eco- Eventually the German currency was War was that many youths of 1920s Ger- nomic disaster that could make Weimar stabilized, but at a great cost. Unemploy- many grew up without fathers. The tradi- Germany look fiscally sound. n 38 THE NEW AMERICAN • MAy 11, 2009
  • 39. Virtue is a choice. Make it a habit. Virtue • the moral excellence evident in my life as I consistently do what is right Sponsored by Putting Character First!®
  • 40. “... the right of the people to keep and bear Arms, shall not be infringed.” EXERCISING THE RIGHT No Honor among Thieves have been much uglier. That gun held 60 Customers were mystified by the attack. Derek Clark, a member of a gang who rounds and I would have shot all 60 at They told reporters that the employees all tried to force its way into Derrick Murray’s them.” openly carry weapons, and the manager is home in Evansville, Illinois, on March 15, Murray was within his rights in firing a marksman who teaches shooting cours- proved the old adage that there’s no honor on Clark, according to a statement from es. The shop is also patronized frequently among thieves. He learned much about his Evansville Police Department detective by law-enforcement officers. “friends” as he fled after being wounded Sgt. Larry Nelson. “He had a right to by the alert homeowner. protect himself,” Nelson told reporters. Murray first learned of impending dan- Nelson also confirmed that no permit was Justice Prevails ger when the noise of several men break- necessary for Murray to keep the gun in In January the Waukegan Grand Jury de- ing down his door awakened him early. his home. liberated and then ruled in favor of armed Murray’s first thoughts were that if he did self-defense in a case involving an inci- nothing his four children, who thankfully dent in Waukegan in October 2008. were not home at the time, could grow up Troublemaker Picks A Chicago Tribune account of the case without a father. on January 9 indicates that a clerk, a fam- For personal protection, Murray keeps the Wrong Place ily member of the owners, at Peoples a semi-automatic rifle in his bedroom. He On March 4 at Schrank’s Smoke ’N Gun, Market was robbed at gunpoint. The clerk grabbed it and met the intruders as they a specialty shop in Waukegan, Illinois, a retrieved his own firearm and shot at Bran- broke through the door. One of the intrud- man made the foolish decision to rush an don Starks, 20, as the thief fled on a bi- ers was clearly armed. The gang members employee of the store through a gap in the cycle, still holding the weapon used in the tried to convince him they were police of- counters. robbery. Starks was hit and pronounced ficers, but their slang and foul language, and Police indicated that robbery may have dead shortly after that. He had been pa- the fact that they didn’t illuminate the scene been the motive. The primary suspect in roled from prison on a residential burglary with some type of lights gave them away. the assault and possible robbery remains conviction less than a month earlier. A sec- He fired at the man holding a gun, Clark. In- hospitalized due to his wounds, and is still ond man was with Starks, and police are terviewed after the attack by the Evansville heavily sedated over a month later. Po- still looking for that man. Courier, Murray said: “I just felt like I can’t lice have indicated that they will not file The clerk later faced possible charges in die right now, I got too many kids, I got too charges until they are able to communicate the case, but the majority of the public was much to lose. I can’t die right now.” with him. clearly on his side. At the time, a statement Murray hit Clark in the leg, and then The conflict erupted when the man by the local mayor revealed a popular sen- cautiously followed the wounded man rushed behind the counter in the shop, timent often left out of media accounts. as he crawled outside after the rest of his and began struggling and arguing with an “Any time you point a gun at me and if gang. employee. The conflict became a physical I’ve got a gun and I’ve got the opportuni- Outside, the gang members first half- struggle very quickly, according to Wauke- ty, I’m going to use it on you,” Waukegan heartedly tried to help the wounded Clark gan Police Commander Wayne Walles. Mayor Richard Hyde said. “With society into the vehicle. But they abandoned In a telephone interview with The New the way it is now and with the number of Clark, and Murray watched as the get- AmericAN, the employee, who declined to armed robberies you have, you’ve got to away car began to pull away, running over be identified, said that the attacker attempt- fight back.” Clark, then backing up and running over ed to grab his sidearm during the assault. An official explanation of the ruling by him again as the gang fled. Clark was It was at this point that the employee drew Deputy State’s Attorney Jeff Pavletic in later rushed to the intensive care unit at and fired three times in self-defense. the Chicago Daily Herald noted: “All the St. Mary’s Medical Center. The employee said that he shot the man results of an exhaustive investigation were Murray had no idea why his home was twice in the chest and once in the groin put before the grand jury.” He added: “It targeted, and the investigation continues area. The Lake County News-Sun report on was decided that the shooting was in self- as police attempt to identify the other March 5 confirmed that the suspect was hit defense and therefore justifiable.” Hurrah attackers. three times. The employee explained that for the grand jury and the Bill of Rights! “I’m still breathing,” he said. “I feel he was only slightly injured by flash burns Bad guys beware, it isn’t just the gun- good. And I can see my kids when they in the brief struggle, and was treated and shop owners and an occasional store clerk pull up in a couple hours.” Murray added returned to work. who stand ready to exercise their right to that he would have reacted somewhat The injured suspect was flown to Vista armed self-defense; many Americans — differently had the children been home. West Hospital, and then transferred to Ad- even those you may face in court — sup- “It would have been a death sentence,” vocate Lutheran General Hospital in Park port that God-given, constitutionally guar- he said. “You don’t do that to a man Ridge where he underwent several opera- anteed right. n when he’s with his kids at all. It would tions and was still being treated. — AlAN scholl 40 THE NEW AMERICAN • MAy 11, 2009
  • 41. give ’Til it Hurts, repeat Item: The Washington Post for March 31 reported: “The billions of dollars spent in U.S. aid to Afghanistan over the past seven years have been largely wasted, Secretary of State Hillary Rodham Clinton said Monday. ‘For those of you who have been on the ground in Afghanistan, you have seen with your own eyes that a lot of these aid programs don’t work,’ she said. ‘There are so many problems with them. There are problems of design, there are problems of staffing, there are problems of implementation, there are problems of accountability. You just go down the line.’ Clinton called the amount of money spent Cynthia Boll without results ‘heartbreaking.’” The secretary was speaking to reporters as she flew to The Hague to attend a con- “Billions of dollars … largely wasted,” was how Secretary of State Clinton described the U.S. ference to promote the Obama administra- aid spent on Afghanistan before she flew to the March 31 International Conference on Afghanistan, tion’s new policy for Afghanistan. where she held this joint press conference with Dutch Foreign Affairs Minister Maxime Verhagen. Clinton’s “blunt comments on past aid programs — which appeared to also in- pledge both to revamp the way America rica and parts of Latin America, Asia and dict the broader international effort — will works with the world — particularly with the Middle East are economically worse probably raise the bar for the administra- developing countries — and to improve off today than they were 20 years ago.” tion’s aid programs. ‘We are scrubbing America’s image abroad.” Indeed, many countries are worse off every single civilian program,’ she said. CorreCtIon: Insanity has been defined as because of such aid, not just in spite of ‘This is part of my mission as secretary of doing the same thing over and over again it. There may well have been good inten- state. We are looking at every single dollar and expecting a different result. This also tions by the donors, but that doesn’t mean as to how it’s spent and where it’s going might characterize the government-to- the results are any less harmful. Take the and trying to track the outcomes. We want government subsidy practice euphemisti- case of Micronesia. The late David Oster- to see real results.’” cally known as foreign aid. feld, a professor of political science at St. Item: The Christian Science Monitor for President Bush doubled “development Joseph’s College, wrote in Prosperity vs. March 23, in an article entitled “Economy assistance” and President Obama wants Planning: How Government Stifles Eco- forces Obama to rein in foreign-aid goals,” to do likewise — though apparently ham- nomic Growth: “The pauperization of Mi- reported: “The Obama administration is pered a mite by other multi-billion-dollar cronesia was a direct result of foreign aid. hinting that the economic downturn means bailouts at the moment. The United States acquired Micronesia the president is unlikely to reach his goal The fact that even Hillary Clinton has as a trust territory in 1945 following its of doubling foreign aid by the end of his acknowledged the widespread failures liberation from the Japanese. Outside pri- four-year term.” of foreign aid nevertheless should not be vate investment was discouraged because Some “development experts,” contin- viewed as a case of the government learn- it would, according to U.S. Navy officials, ued the paper, “note that the president’s ing its lesson. She is merely stating what ‘reduce the people to cheap labor.’ Instead, 2010 budget includes an almost 10 per- has become obvious to all too many oth- the people of Micronesia were given free cent jump in foreign aid — an increase ers. Nor, of course, is she or anyone in the food, clothes, and other supplies. The result they consider positive given the economic Obama administration calling for an end to was bankruptcy of many local stores and circumstances.... Though the development foreign aid, but rather is seeking one more undermining of the incentive to work.” community reacted ‘pretty positively,’ says reinvention of the process of delivering Both opponents and supporters of for- Steve Radelet of the Center for Global De- said “assistance” — which will undoubt- eign aid have been coming to such conclu- velopment in Washington, ‘there’s still a edly lead to many of the same inherent sions. More than a decade ago, the World wait-and-see attitude.’ problems as earlier handout efforts. Bank itself, even as it called for more fund- “The idea of doubling foreign aid to Even a task force in the (Bill) Clinton ing, admitted how poorly aid programs $50 billion a year by 2012 was a key el- administration admitted that “despite dec- had been working: “While the former ement of President Obama’s campaign ades of foreign assistance, most of the Af- Zaire’s Mobuto Sese Seko was reportedly Call 1-800-727-TRUE to subscribe today! 41
  • 42. amassing one of the world’s largest per- sonal fortunes (invested, naturally, outside his own country), decades of large-scale foreign assistance left not a trace of prog- ress. Zaire (now the Democratic Republic of Congo) is just one of several examples where a steady flow of aid ignored, if not encouraged, incompetence, corruption, and misguided policies.” Study after study has demonstrated that such aid has not helped the economies of the recipient nations or, even worse, has actually hurt their people. The mounds of literature about foreign aid and economic growth, as pointed out by Carol Adelman AP Images and Nicholas Eberhardt in “Foreign Aid: What Works and What Doesn’t” (Ameri- can Enterprise Institute), show that “these so, let’s give away twice as much : President Obama’s goal was to double foreign aid by 2012, state-to-state transfers inhibit competi- but in his fiscal 2010 budget, which he spoke about at this February 26 White House campus tiveness, create dependency, and absorb event, he settled for just about a 10-percent increase in light of the current economic downturn. or misallocate political resources or ener- gies in recipient countries; note that aid is not dependent on tax dollars. that in the 1970s, Africa had 10 percent motivated by nondevelopment donor and Giving away someone else’s money, of its population living in poverty; today contractor interests; and prove that aid en- which is what is done in Washington and that number is over 70 percent. To con- genders a lack of feedback and account- other tax-collecting capitals, is decidedly tinue down a path of depending on aid — ability, encouraging host country graft and not charity. Americans, nevertheless, do which doesn’t create jobs, or innovation, corruption.” remain a charitable and generous people or alternative and more transparent ways A Canadian Senate committee deter- and would likely be even more generous of development finance — the number of mined that the expenditure of $12.4 billion if not forced to support such a large and impoverished Africans could get to 80 or between 1968 and 2007 for the Canadian meddlesome central government. As noted 90 percent in our lifetime.” International Development Agency failed in a study by the Hudson Institute (“The Her work has attracted favorable atten- to make any difference in sub-Saharan Index of Global Philanthropy, 2008”): “In tion. (Accordingly, Dr. Moyo has garnered Africa. The international Oxfam group, in the U.S., private philanthropy, along with some harsh criticism as well, such as by like fashion, has just released a report that remittances, to developing nations consti- Michael Gerson, a former speechwriter for says most American aid in Afghanistan is tutes four and one-half times our official President George W. Bush who is a senior being wasted on consulting and subcon- aid abroad.” (Emphasis in original.) fellow at the Council on Foreign Relations tracting and duplication of effort. One expert who sees what is happening and an advocate of more aid, albeit in a When such shortcomings are apparent to with international government subsidies, reformed manner.) Economist Moyo also promoters of foreign aid in other countries, and hasn’t donned rose-colored glasses made her case in the Wall Street Journal, even the U.S. Secretary of State can con- about how a bureaucratic fix will make saying: “Over the past 60 years at least cede that which is evident. Yet, we are sup- things better, is Dambisa Moyo, the author $1 trillion of development-related aid has posed to believe that somehow her “scrub- of the new book called Dead Aid: Why Aid been transferred from rich countries to bing” of the next truckload of dollars will Is Not Working and How There Is a Better Africa. Yet real per-capita income today is make them so much more efficient. Way for Africa. Moyo was born in Zam- lower than it was in the 1970s, and more Foreign aid has also been described as bia, has her master’s from Harvard, and than 50% of the population — over 350 the transfer of wealth from the poor in a Ph.D. in economics at Oxford. She has million people — live on less than a dollar rich countries to the rich in poor coun- been a consultant to the World Bank, and a day, a figure that has nearly doubled in tries, which rings true for government aid. for eight years was the sub-Saharan eco- two decades. Even after the very aggres- But religious groups, private charities, nomic expert for Goldman Sachs. sive debt-relief campaigns in the 1990s, businesses, foundations, universities, and In a recent interview with Guernica African countries still pay close to $20 others do make a real difference, for the magazine, she explained that persisting billion in debt repayments per annum, a better, with their international aid work — with such foreign-aid giveaways “will stark reminder that aid is not free.” usually done at the local level and by those definitely make things worse. Remember As she writes in her book: 42 THE NEW AMERICAN • MAy 11, 2009
  • 43. With aid’s help, corruption fosters rampant and systematic corruption, The Cato Institute, among others, isn’t corruption, nations quickly descend all with deleterious consequences buying that sales pitch. For good reason. into a vicious cycle of aid. Foreign for growth. The cycle that, in fact, As Ian Vasquez of Cato observes, “The aid props up corrupt governments — perpetuates underdevelopment, and most obvious problem with that program providing them with freely usable guarantees economic failure in the is that it is based on a conceptual flaw: cash. These corrupt governments poorest aid-dependent countries. countries that are implementing the right interfere with the rule of law, the policies for growth, and therefore do not establishment of transparent civil in- The countries that are the worst off, and need foreign aid, will be receiving aid. In stitutions and the protection of civil the most aid-dependent, have been averag- practice, the effectiveness of such selective liberties, making both domestic and ing minus 0.2 percent growth annually for aid has been questioned by a recent IMF foreign investment in poor countries three decades. [International Monetary Fund] review that unattractive. Greater opacity and In the face of all of this evidence, many found ‘no evidence that aid works better fewer investments reduce economic liberals (and “compassionate” alleged in better policy or geographical environ- growth, which leads to fewer job op- conservatives) have decided the answer is ments, or that certain forms of aid work portunities and increasing poverty to have the United States and other West- better than others.’” levels. In response to growing pov- ern governments step up their subsidies to When governments are hurting the erty, donors give more aid, which those countries that have instituted reforms poorest and most vulnerable people in the continues the downward spiral of deemed appropriate to qualify for assis- world, the most humane policy is to stop poverty. tance. This was the rationale behind the doing that — not to find another way that This is the vicious cycle of aid. creation of the Bush administration’s Mil- simply leaves scars in different places and The cycle that chokes off desperately lennium Challenge Corporation (which, enriches a new crew of pen-pushing bu- needed investment, instills a cul- despite its name, is a government agency). reaucrats and power-hungry despots. n ture of dependency, and facilitates Gerson, above, is such a promoter. — williAm P. hoAr Given & CPAs, PC Associates, Roger Given, MBA, CPA Financial Advisor* FOR THE FINEST IN GROCERIES, MEATS, AND PRODUCE Comprehensive Wealth Management 2015 Bluffside Terrace Colorado Springs, CO 80919 (888) 822-4430 roger@givenassoc.com *Securities offered through H.D. Vest Investment ServicesSM, Member SIPC. Advisory Services offered through H.D. Vest Advisory ServicesSM, T.R.F. INVESTMENT CO. INC. Non-bank subsidiaries of Wells Fargo &Company, 2100 N KOLB ROAD • TUCSON, AZ 85715 6333 North State Highway 161, Fourth Floor, Irving, TX 75038, (972) 870-6000 (520) 298-2391
  • 44. THE lasT Word by JohN F. mcmANus Obama’s Counterproductive Plan O n April 10, President sion, an array of govern- Obama emerged ment actions that were then from a high-level doubled or even tripled by meeting with his economic President Roosevelt. Hoover team and proclaimed there raised taxes, provided gov- were “glimmers of hope ernment loans to failing across the economy.” He be- businesses, supplied states lieved some of those “glim- with federal funds, presided mers” included his stimulus over inflationary monetary program and infrastructure policy, and forced prices work that he labeled “prog- upward. The problem that ress toward getting the started with the 1929 crash economy back on track.” worsened. In 1932, while Nevertheless, he was forced he was running for election, to admit that unemployment FDR labeled Hoover as the had hit a 25-year high of 8.5 “greatest peacetime spender percent in March, and many in the nation’s history.” Hav- Americans are still losing ing won the presidency, he their homes and jobs. promptly outdid the defeated So, we ask: what more should a president do to deal with this Hoover by doubling or tripling every wrong-headed tactic. The serious economic downturn? Obama didn’t provide a specific Great Depression grew even greater and lasted all through the answer but, speaking in generalities, he offered, “We’ve still got 1930s. Roosevelt had violated the first law of holes: when you’re a lot of work to do.” So, without doubt, the nation can expect in one, stop digging. He dug hard all through the 1930s. more of what he has already done — more federal spending, Meltdown supplies a more recent example of how a nation more regulation, more inflation, and, in short, more of precisely should not attempt to cure a depression. Approximately 20 years what history confirms government should not do to deal with ago, Japan had earned the envy of the world as mankind’s new- recession’s scourge. History tells us over and over again that est economic marvel, even purchasing New York’s Rockefeller government action of the kind already taken and being planned Center. The Japanese success had stemmed from massive in- will make matters worse. flation and the inflation led to an inevitable bust that arrived Economist and historian Dr. Thomas Woods points out — and in 1992 when housing prices sank by 80 percent and the Nik- he isn’t alone — that getting out of a recession/depression can be kei stock exchange declined by almost two-thirds. So what did accomplished if government gets out of the way. In other words, Japan’s government do? Exactly what it shouldn’t have done. what President Obama and his team should do is nothing except Japan’s leaders launched huge public works projects, lowered abolish some government agencies. In Meltdown, his current best- interest rates to zero, provided loans to businesses, arranged for seller, Woods recounts how our nation dug itself out of a very se- bailouts for banks and even nationalized some, increased the vere downturn immediately after World War I. “By the middle of money supply, piled up enormous deficits, and dispensed a se- 1920,” he reports, “conditions were worse than they would be in ries of stimulus packages for the people. 1930 after the first year of the Great Depression.” Instead of deal- It is now 17 years since the recession hit Japan. And the prob- ing with the crisis with public works projects, Federal Reserve- lem that surfaced in 1992 is still plaguing the nation. created inflation, deficit spending for stimulus schemes, etc., the There is a lesson in all of this for the United States, and one government and the Federal Reserve essentially did nothing dur- would have to be completely daft to ignore it. The Obama admin- ing that period, and the nation recovered in less than two years. istration’s treatment of our nation’s economic ills — duplicating The way our nation dealt with the 1920-1921 depression isn’t and exacerbating actions taken by its predecessor — will make discussed by today’s economists, at least the vast majority who matters worse. Everything initiated by the Hoover-Roosevelt are captives to Keynesian socialist economics. There are two tandem is being repeated or planned. Each of the so-called cures reasons why they ignore what happened close to 100 years ago: administered by Japan is being copied. a) the problem was so short-lived, and b) it was solved, not by We are forced to wonder whether what our leaders are doing government, but by government standing aside and allowing the results from stupidity or from a calculated desire to deepen the people to dig the nation out of the hole. The lesson is clear, even morass so that world currency and global governance — the twin if most economists fail to mention it. recommendations being mentioned so frequently — will be ush- In his book, Woods shows that President Hoover initiated the ered in. What is certain is that America’s current economic reces- completely opposite response at the outset of the Great Depres- sion, already being felt worldwide, isn’t about to disappear. n 44 THE NEW AMERICAN • MAy 11, 2009
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