My Blog List

Tuesday, March 31, 2015

Titling Indiana Law "Religious Freedom Act" is Newspeak

There are a number of great articles on why the Indiana Law is an exercise in licensing Oppression rather than actually protecting religious Freedom. So I'll keep this as short as I can manage.

Essentially the problem with the law is in it's details. Two of them:

  1. "that the Indiana statute explicitly recognizes that a for-profit corporation has “free exercise” rights matching those of individuals or churches." []
  2. Second, the Indiana statute explicitly makes a business’s “free exercise” right a defense against a private lawsuit by another person, rather than simply against actions brought by government. []

Both these features mean that the law is intended to make it harder for the discriminated to sue someone claiming a religious exemption from serving them in their "public accommodations." Why is this a problem? Because it means that had such a law been in place in the 60's, no civil rights demonstrators could have forced stores to serve black people if the Corporation claimed that it had a religious belief that serving black people was "against it's religion. Public accommodation laws don't mean that a Kosher store has to sell ham, but they do mean that if people come into a Kosher store to buy goods, the store owners can't eject them because they are heretics, Christians, Reform or secular Jews. This law is designed to subvert that, and it has already led to signs asserting a "religious" right to not serve Gay people when they enter them. Public accommodations laws are designed to prevent religious oppression, not infringe on the religious rights of those serving the public. When someone opens his doors for business and invites the public in, his right to discriminate on any basis other than the ability to buy the goods becomes a matter of public equity and justice and a civil right. If our courts weren't corrupt I'd be sure that this law wouldn't stand a court challenge, but since we have a corrupt SCOTUS we need to take more direct action to stop this.

The law has similar text to previous religious freedoms laws but those two details make it very different.

The Atlantic Article notes:

“the new wave of “religious freedom” legislation was impelled, at least in part, by a panic over a New Mexico state-court decision, Elane Photography v. Willock. In that case, a same-sex couple sued a professional photography studio that refused to photograph the couple’s wedding. New Mexico law bars discrimination in “public accommodations” on the basis of sexual orientation. The studio said that New Mexico’s RFRA nonetheless barred the suit; but the state’s Supreme Court held that the RFRA did not apply 'because the government is not a party.'” [Atlantic Article]

I agree with the many folks who are pointing out how outrageous this law really is. Even it's proponents try to link it to previous laws (which had bad consequences but weren't this explicitly evil). I listened to the Religious discrimination law defender Brian Brown this morning on Bruce Dupuyt's talk show (which I watch instead of Morning Joe and his Faux lite crowd) making the "law is the same as that of Clinton's" argument and otherwise repeatedly lying about the law until he finally answered the direct question at the heart of it; he believes that businesses should not have to serve gay people if they don't feel like it for "religious" reasons. He claimed that refusing to serve gays is not "discrimination". The upshot is they have an opinion that is repugnant to most people and want to soft pedal it to those who find it repugnant. He thinks people have a first amendment right to discriminate against people on the basis of religious belief. He admitted it on the air after repeatedly denying it. When I heard that I decided I needed to weigh in on this subject.

Further Reading:
Mike Pence is Lying through his Teeth
What Makes Indiana Religious Freedom Law Different []
Text of Law:
Full Text:
"AN ACT to amend the Indiana Code concerning civil procedure.
"Be it enacted by the General Assembly of the State of Indiana:
Chapter 9. Religious Freedom Restoration"
“Sec. 1. This chapter applies to all governmental entity statutes, ordinances, resolutions, executive or administrative orders, regulations, customs, and usages, including the implementation or application thereof, regardless of whether they were enacted, adopted, or initiated before, on, or after July 1, 2015.”
“Sec. 2. A governmental entity statute, ordinance, resolution, executive or administrative order, regulation, custom, or usage may not be construed to be exempt from the application of this chapter unless a state statute expressly exempts the statute, ordinance, resolution, executive or administrative order, regulation, custom, or usage from the application of this chapter by citation to this chapter.”
“Sec. 3. (a) The following definitions apply throughout this section: (1) "Establishment Clause" refers to the part of the First Amendment of the Constitution of the United States or the Constitution of the State of Indiana prohibiting laws respecting the establishment of religion. (2) "Granting", used with respect to government funding, benefits, or exemptions, does not include the denial of government funding, benefits, or exemptions. (b) This chapter may not be construed to affect, interpret, or in any way address the Establishment Clause. (c) Granting government funding, benefits, or exemptions, to the extent permissible under the Establishment Clause, does not constitute a violation of this chapter.”
“Sec. 4. As used in this chapter, "demonstrates"means meets the burdens of going forward with the evidence and of persuasion.”
“Sec. 5. As used in this chapter, "exercise of religion" includes any exercise of religion,whether or not compelled by, or central to, a system of religious belief.”
“Sec. 6. As used in this chapter, "governmental entity" includes the whole or any part of a branch, department, agency, instrumentality, official, or other individual or entity acting under color of law of any of the following: (1) State government. (2) A political subdivision (as defined in IC 36-1-2-13). (3) An instrumentality of a governmental entity described in subdivision(1) or (2), including a state educational institution, a body politic, a body corporate and politic, or any other similar entity established by law.”
“Sec. 7. As used in this chapter, "person" includes the following: (1) An individual. (2) An organization, a religious society, a church, a body of communicants, or a group organized and operated primarily for religious purposes. (3) A partnership, a limited liability company, a corporation, a company, a firm, a society, a joint-stock company, an unincorporated association, or another entity that: (A) may sue and be sued; and (B) exercises practices that are compelled or limited by a system of religious belief held by: (i) an individual; or (ii) the individuals; who have control and substantial ownership of the entity, regardless of whether the entity is organized and operated for profit or nonprofit purposes.”
“Sec. 8. (a) Except as provided in subsection (b), a governmental entity may not substantially burden a person's exercise of religion, even if the burden results from a rule of general applicability. (b) A governmental entity may substantially burden a person's exercise of religion only if the governmental entity demonstrates that application of the burden to the person: (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”
“Sec. 9. A person whose exercise of religion has been substantially burdened, or is likely to be substantially burdened, by a violation of this chapter may assert the violation or impending violation as a claim or defense in a judicial or administrative proceeding, regardless of whether the state or any other governmental entity is a party to the proceeding. If the relevant governmental entity is not a party to the proceeding, the governmental entity has an unconditional right to intervene in order to respond to the person's invocation of this chapter.”
“Sec. 10. (a) If a court or other tribunal in which a violation of this chapter is asserted in conformity with section 9 of this chapter determines that: (1) the person's exercise of religion has been substantially burdened, or is likely to be substantially burdened; and (2) the governmental entity imposing the burden has not demonstrated that application of the burden to the person: (A) is in furtherance of a compelling governmental interest; and (B) is the least restrictive means of furthering that compelling governmental interest; the court or other tribunal shall allow a defense against any party and shall grant appropriate relief against the governmental entity. (b) Relief against the governmental entity may include any of the following: (1) Declaratory relief or an injunction or mandate that prevents, restrains, corrects, or abates the violation of this chapter. (2) Compensatory damages. (c) In the appropriate case,the court or other tribunal also may award all or part of the costs of litigation, including reasonable attorney's fees, to a person that prevails against the governmental entity under this chapter.”
“Sec. 11. This chapter is not intended to, and shall not be construed or interpreted to, create a claim or private cause of action against any private employer by any applicant, employee, or former employee.” Taken 11:46 3/31/2015

Sunday, March 29, 2015

Depreciation, Stock, Sustainability and Money

I love boats, and need cars. But both are a pain in the rear end to own unless they are treated as capital assets or capital goods and related to some income generation. The Joke is that a boat is a hole in the water you pour money. The reason this is true is that any kind of machinery depreciates. This got on my nerves when we were doing acquisition projects for the Government. When working with Government program folks we could talk about "sustainability" and "sustainment" but when you talked to the acquisitor project managers their eyes would turn glassy. Both businesses and government depend on institutions with machines, buildings, capital goods, what Adam Smith would have called "Capital Stock". The real Capital Stock of a business are these productive goods.

cap·i·tal goods
goods that are used in producing other goods, rather than being bought by consumers.

Yet you look up Capital Stock in the Dictionary and you get:

Capital Stock
"The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents the size of the equity position of a firm and can be found on the balance sheet (or notes) of a typical financial statement."

Obviously the two definitions are divergent.

The Capital Stock Bait and Switch

Capital Stock is issued at the Initial Public Offering (IPO) and represents the abstract value of a company. If it represented the real initial investment in the company then it would depreciate along with the assets it represents. Most companies by the time they break even have had almost all their variable capital goods refreshed dozens or even hundreds of times, goods like like generators, printers, computers, other hardware, replenished over a period of sometimes less than a year, and have required maintenance and refreshment spending on fixed goods and buildings as well. In short the initial capital stock under Adam Smith's definition of the term has depreciated and required periodic capital refreshes and the original investment if it were the actual capital of the firm would be gone. A company generates revenue and part of that becomes the real capital stock of a firm.

Thus Capital Stock" is an ownership title to the profits of the firm but doesn't reflect the companies actual capital value except by accident. Since much of the productive value generated by a company is from Capital Goods Plus Labor and raw materials = finished goods sales. The after sales stock values of a Company represent a combination of it's sales and savings on labor or sustainment and can be manipulated. Moreover Profit = Sales - Costs - Debt maintenance so if the real capital investment comes from debt (or stealing wages) then the more debt and the more stolen wages, the higher the short term profit. But since the real value of a company is the depreciated Sum of it's Total Stock - Debt these two numbers don't equal, so this is a built in source of instability.

I think John Turmel talked about this in his videos and I've seen this discussed elsewhere, but this sort of convenient abstraction has real consequences. Companies regularly run themselves into the ground. People like Romney when he was at Bain Capital will buy companies, load them up with debt, extract inflated Capital Stock and sell it high. And then laugh as the company goes bankrupt after they get out of dodge and run for President. A system of ownership that reflects reality would not only be better for stock investors in the long run, but would be better for everybody as our current system has this designed in con of "Capital Stock Paper" representing corporate value instead of the companies "Capital Stock."

An Appreciation for Depreciation

I think this lack of appreciation for depreciation also reflects why our money supply is always unstable and collapsing too. Money loaned into existence to cover investments in sustainment, debt creation and that ignores depreciation creates instability. A business that owes more than it's actual Stock Value (as in Capital Goods) can't pay back that loan on demand. And since money creation is hinged on these sorts of fake calculations too (Stock market paper values aren't the only ones) it's no wonder we have continual instability and collapses.

Creating Money

When Banks pretend to create money from depositor money they really create IOUs (new money) that pretend to be based on deposits but are really just IOUs. Turmel explains it in his article on what he calls the "LETS Banking system" []:

"The famous "reserve ratio" of a "fractional reserve system" sets the limit on the amount of new money the private banks may create. It simply means that a fraction of all deposits is sent to the Bank of Canada's reservoir and the bank is then allowed to turn on the tap to match the deposits remaining in their reservoir. Banks create most of the money in circulation. To go step by step through the fractional reserve banking system's plumbing with a 10% reserve ratio, let the Bank of Canada turn on its tap and put $100 of "high-powered" new money into circulation. Each time a loan is made, the borrower always eventually deposits it into the banking system. "

And he shows how the process allows them to print money:

Transaction:Central BankAccountsIOUNew Money
Deposit old $100: 10 90
Loan out new $90 for $90 IOU 90 90
Deposit new $90: $9 BoC $81 Bank 9 81 0
Loan out new $81 for $81 IOU 81 81
Deposit new $81: $8 BoC $73 Bank 8 73 0
Loan out new $73 for $73 IOU 73 73
Deposit new $10: $1.00 BoC $9.00 Bank 1 9 0
Loan out new $9.00 for $9.00 IOU 8.10 8.10
[............................... to infinity] Src:
$100 $900 $900 $0
Old New New

He then notes:

"Where the system started with only $100, after the expansion is over, the Bank of Canada is holding the original $100 as the banks' 10% reserves and the banks' reservoirs are holding the other $900 of the savers' new deposits. So, $900 newly created dollars were added to the system by the private fractional reserve banks for every $100 issued by the Bank of Canada. This limit is the inverse of the reserve ratio. A reserve ratio of 5% would generate total new money of 1/.05 = 20 times the initial high-powered Bank of Canada money. This is how an ordinary bank creates new money as new loans based not on the production possible but on past savings of money."

How Money is Destroyed

I'll ignore his commentary because the next part is what's important here:

"Just as money is newly issued from the tap when a bank makes a loan, money is destroyed down the drain when a borrower makes a principal payment. Interest payments go back into the reservoir and not down the drain."

And note, as with Corporate Stock versus original capital Stocks (Capital Good) loan repayments don't have any bearing on whether the economy still needs the money, or whether it it wisely spent or poorly spent. It not only vanishes. It precipitates the vanishment of multiples of itself as the banks must reduce their loans due to the reduced reserves.

"When a large withdrawal is made or a large failure is written off the banks' books, the reverse reserve ratio process takes place. Since losses are covered from reserves upon which are based the loans, when their reserves go down, they have to call that amount in loans. It's quite an automatic doomsday mechanism. It was bankers calling in loans which precipitated the 1929 stock market crash. As people fail to meet their call and those loans are written off again reducing the bank reserves, more loans must again be automatically called in. The process gets worse and causes the banking system to fail."

And he notes the risk that this puts any banking system relying on "fractional reserves".

"Any cabal of rich men can precipitate such a "credit crunch" by simply moving their savings to another country which forces the banks in the target country to start calling in loans. Such private power over the world's financial system is inappropriate." "LETS Banking system" []

And of course this is what happened when Andrew Jackson eliminated the third? National Bank. Money issued by private banking notes is inherently unstable. And part of it is because the loans that back note creation reflect capital goods and real wealth and liquidating them to pay debts is suicidal.

The Questions

So the questions become:

One: If reserve banking is inherently risky then why do we require reserves. Wouldn't it be better to force banks to pay a risk premium and treat deposits as a bailment unless specifically turned over for money lending? Turmel suggests that too. [see] Is the reserve banking system really this unstable? If so why is it dominant world wide?

Two: If Company Capital Stock has little to do with the actual stock value of a business and simply represents initial investment long discounted, why don't we have a system of ownership that reflects the actual present value of a company and both receives and rewards refreshment investments systematically and in a way that accurately reflects Stakeholders?

Saturday, March 28, 2015

The Death of Henry George

Unsound Followers And Authoritarian Thinking

In my last blog on the subject I noted Henry George's undated quote about a newspaper article that had gotten his ideas wrong where he said the:

"unsound supporter is, in fact, more dangerous than an opponent. . . . " []

I know from wide reading that such "unsound supporters have undermined or corrupted the legacy of many people. And even when an integral movement is spawned, they will appear again and again, using sound ideas for unsound purposes or turning sound ideas into an unsound ones by corrupting the logic and messages. Sometimes they invent narratives that never happened, or forge authorship onto something they themselves wrote. Unsound followers base their reasoning on the a-priori assumption that their teacher's logic is infallible.

Authoritarian Thinking

When someone accepts everything someone says on faith that is known as "authoritarian thinking." Taking the word of a teacher is taking that word on "authority." Some of this faith or trust is unavoidable. Few or us are mature enough to understand every nuance of a persons' thought without considerable study. And even when we study extensively we are all subject to delusions, fear and mistakes - and so even if we study everything on a person we can get it wrong. As a friend noted:

"Faith Saves Time" ~ Garrison Keilor, entertainer.

The words "unsound follower" refer both to people who run with ideas on "faith" and to those whose reasoning is faulty, deluded, or mistaken. The reason that teaching critical thinking is critical to the survival of humanity is that even the most faithful follower, "fan" really can turn out to be an "unsound follower" without the ability to use critical thinking. Even the greatest of our sages is, was, a fallible human being. Even great thinkers like Sir Isaac Newton, or Aristotle, were not, ultimately, infallible. If they can teach people the use of reason and critical thinking. Then they can analyze the logic of a set of syllogisms and decide for themselves whether they are "sound" or "unsound." This is important because even what starts as a "sound" ideology and prove unsound as circumstances change. And as I said before, even the most sound ideas can prove unsound in the hands of fanatic follower who don't read between the lines.

Thus it is better to train people to think for themselves than to have followers who don't bother to understand what is being said and the purpose of what it is said for. Sometimes what looks like an unqualified truth can turn out to be "more complicated." In life circumstances change. When circumstances change and the policies no longer work as intended, those followers, who never really understood the concept or reasons, in the first place will drop the whole line of reasoning for some other. The faithful lose faith not due to the unsoundness of their teachers, but for not understanding the context of the teachings or being willing to bring those teachings into the real world. Thus the Foolish hold onto unsound faith despite not understanding reality and do crazy things. Faith should be a source for joy and wisdom, not a set of shackles tied to a sinking ship.

Unsound followers versus enemies

This is what happened to Keynesian thinking (which wasn't just the product of Keynes as many of his ideas were developed in parallel by American Scholars) when the issue was Stagflation and the conditions of the 70's, instead of liquidity traps and the conditions of the thirties. People who never understood Keynes in the first place dumped him for Friedman's "Monetarism", which in turn failed completely. Many of those economists had never really been part of the Keynesian Critique in the first place. They were only too happy to jump back on Neo-liberal, "Austrian", or neo-classical ideas and once again preach the myth of the sanctity of markets and other modern pagan notions. Essentially some enemies of Keynesian ideas used the excuse of it's purported "failures" to bring back their own failed ideas or resurrect ideas that were more convenient to their employers - as Keynesianism was based on a deep critique of Capitalism.

Other folks, who understood what the economists of the thirties labored for, continued to labor in obscurity to develop "Neo-Keynesianism" by continuing to develop the mathematical principles of Keynesianism and develop models and understandings that were even broader than his generation. Older economists like John Kenneth Galbraith resisted the anti-Keynes narrative and even fought back against it. The younger ones simply laid low, because the monied men were buying chairs and being an open Keynesian in the late 1970's or 1980's guaranteed obscurity and inability to get tenure. Even so by understanding the principles, the methods, the logic and the observations they were able to apply the reasoning to other situations. Now "neo-Keynsianism" is making a comeback thanks to Paul Krugman, Joseph Stiglitz and Piketty.

Rebellion And Corruption

By simply taking a teachers principles on faith as a formula for solving all the problems in the world one makes a teacher an "authority" but in the process destroys the integrity of the subject. Teachers aren't gods. The greatest teachers teach others to think for themselves. There are Marxists critical of other Marxists. There is even room for rebelling against a teacher and saying "you were wrong."

But Marxism went wrong because of Marxists. They turned Marxism into a religion, together with inquisitions, claims of "orthodoxy" versus "heresy" and in the process they robbed it of integrity and turned it into another instance of the Chicken Dance Hierarchy game.

Rebellion is only a betrayal if the result is corruption, lies and failure. Even Friedman was not a Friedmanista. I remember reading an article where he praised Keynes' writing. Even so Friedman clearly saw himself as Keynes enemy. Sadly Reason doesn't guarantee "the right thing" as we have moral choices over which principles we value the most.

And likewise, Henry George's followers divide into camps that see him as a Godlike authority and others who understand the principles behind what he said.

Henry George and The Principle behind the point

So, back to Henry George, when he talked about the "unsound follower" he was referring to the integrity of his economic theory of Taxation. Already folks were distorting the principles of Land Value Taxation (which is why I was trying to find out what year he made those comments). He wanted to enforce that for his followers:

"Unless he sees that taxes on land values or economic rent, which is what we mean by the Single Tax, must be borne by the owners of the valuable land from which it is collected, and that it cannot fall on users of land as users" []

He first made his statements about the "Single Tax" in the context of a world where wealth was almost exclusively embodied in land, where capital formation was an unalloyed good, and where the issue with land ownership was more about monopoly and oppression in governing land, than availability:

"in his famous book, ‘Progress and Poverty’ which he wrote in 1879. The book was greatly accepted selling a huge 3 million copies and above. In the book George discussed that poverty was an invariable result of the mass land ownership held by land owners and monopolists via economic rents through the advancement brought about by free market economy that gave rise to great wealth amassed by social and technological advances." []

Henry George printed that book during a period of great transitions, including the end of Reconstruction:

"in 1877, allies of the Republican Party candidate Rutherford Hayes met in secret with moderate southern Democrats in order to negotiate acceptance of Hayes’ election. The Democrats agreed not to block Hayes’ victory on the condition that Republicans withdraw all federal troops from the South, thus consolidating Democratic control over the region. As a result of the so-called Compromise of 1877 (or Compromise of 1876), Florida, Louisiana and South Carolina became Democratic once again, effectively marking the end of the Reconstruction era." []

Henry George's "Single Tax" was predicated on a world where corruption and legal abuse were mainly centered on land ownership and abuse. But with the end of Reconstruction, the corruption of reconstruction was turned national and centered on the spread of banking power, trusts and corporations.

First Henry George wanted State Control of Utilities:

"George was a staunch advocate of state ownership on certain things like land, telegraph, water supplies, invention and scientific investigation. George proposed taxation and state regulation on natural monopolies like water and electricity which formed the base for an industry to grow. George was liberated on the railroad constructions which he willingly suggested, to be given to private ownership systems if need be as far as the rail tracks were state owned. George criticised state monopolies and proposed a more flexible and open system of government-supported incentives for invention and scientific investigation. George proposed municipal control on water supplies and state sanctioned telegraph systems." [[]]

Indeed in his 1890 platform he had explicitly laid out the rationale:

"With respect to monopolies other than the monopoly on land, we hold that where free competition becomes impossible, as in telegraphs, railroads, water and gas supplies, etc., such business becomes a proper social function, which should be controlled and managed by and for the whole people concerned, through their proper governmental, local, state or national, as may be. " [Paragraph 11 of 1890 Georgist constitution]

And the foundation for this argument is the same as his argument for Land Value Tax. Railroads, telegraph lines, water supplies and ultimately invention and scientific discovery ultimately belong to the commons and are a common inheritance. A person has the right to own the rent from an invention, but not to hoard the invention itself. A railroad has the right to operate and own railroad cars, but not to build or tear up railroad tracks where-ever it pleases. The arguments are the same as for the land value tax.

Things get more Complicated

Had this vision been implemented from the beginning his "single tax" would have been enough to reform things and keep the political economy stable and free. But by 1891 things were getting more complicated. By the 1880's we had entered the “Gilded Age”

"“Gilded Age” of the 1880s and 1890s, the influence of large-scale corporations dominated not just the U.S. Congress but also the courts. Nowhere was this more evident than in the U.S. Supreme Court’s decision in the 1886 Wabash case, excerpted below. With Wabash, the Court overturned its 1879 decision (Munn v. Illinois) allowing states to regulate railroads. Perverting the original intent of the Fourteenth Amendment, the Court decreed that corporations were legally “persons” entitled to the Amendment’s protections. (Just three years earlier, the Court had ruled the Civil Rights Act of 1875 unconstitutional on the basis that the Fourteenth Amendment was binding only on states, not individuals, thereby severely jeopardizing the very rights—of freed slaves—the amendment was explicitly designed to protect.) The Wabash case barred states from regulating interstate commerce, asserting that only the federal government could do so. In 1887, Congress passed the Interstate Commerce Act, which railroad barons found more appealing than the more restrictive state laws." []

Corporate Privilege and Money Privilege

We had to create three income taxes instead of a single tax on economic Rents from land, because in the corrupt period that George Witnessed after his the money power increasingly shifted from "monied men" with Gold and Silver, to bankers holding mountains of paper nominally backed by inadequate deposits supposedly secure in vaults and treated as a bailment both legally and morally, but actually lending all but a token amount to anyone who needed money and could be induced to borrow it. This unstable form of money creation did two things.

First it created money, properly inflating and stimulating the economy for a time like someone getting a shot of Cocaine. But second, the money lent into existence rarely could create enough of a return to continue such an expansion forever, and since it always was lent against assets mortgaged or otherwise offered as security, the wealth created by the money privilege had a way of falling into the hands of the bankers. The bankers win when the investment pays. And they collect ownership when the economy runs into trouble due to inevitable war, disaster, economic dislocation or bad weather. This banking power is really the power over the government of money and it was regulated via an income tax that was meant to fall on the privilege of lending notes not printed under congressional authority. Secondly, when the money is paid back, instead of continuing to circulate, it would begin to contract. Banks could not treat their deposits as bailments because they would loan notes against them. Eventually people would go to the bank trying to get their notes back, and find the bank owners and managers had made off with the funds. The term for this sort of con artist is a 'grifter' and my friend John Turmel explains that every Banker is essentially a grifter. [see

The other thing it did was to create the incentive for creating means of avoiding liability for this sort of grifter behavior. That means was the "Trust" and the "Corporation", both of which are legal instruments for hiding ownership and concentrating power over that ownership. The earliest corporations were governments of cities and towns, or Religious Orders. Corporations allowed people to take a "vow of poverty" and live like kings. The title of CEO or President is equivalent to that of a Duke or a King.

Henry George and the Fight Against Corruption

Henry George was a Reformer. Unlike Marx, who practically lived in a library, or Keynes who was an academic and a bureaucrat, George actually ran for office and fought for his principles. His fame from writing "Progress and Poverty" helped him some in his career running for Office, first in California and later in New York City:

"In 1880 George moved to New York City. By this time he had turned into a notable writer and a great public speaker. During this time George associated himself with the Irish nationalist community although he had a British origin. This alliance made him start his travels abroad for giving speeches in Ireland and Scotland where land was a politically held issue" Read more at ["]

Fighting Tammany Hall

He also fought Tammany Hall:

"In 1886 George ran for the election of mayor for New York City being the United Labour Party candidate. This party was a short-lived political society of the Central Labour Union. George had many votes that made him come second only to Republican candidate Theodore Roosevelt. According to popular belief (by great many supporters of Henry George) the election was fraudulently won by Tammany Hall candidate Abram Stevens Hewitt. In 1887 George tried for the third time in the 87’ New York state elections where he came third in the election for Secretary of State of New York. George’s United Labour Party was soon struck by divergence within the party that led to internal rifts. United Labour Party comprised of many Marxist members. ‘Georgist’ notions played the central belief system for the party. George was greatly criticised for his free trade policy." [Read more at]

Tammany Hall was an incredibly corrupt institution from 1887 until at least the 1960's. Reformers had a hard time defeating the machine. Henry George literally gave his life fighting it.


Henry George and his Stroke

Henry George worked himself hard. After years of struggle his book success only meant, more years of struggle:

"In December 1890, at the end of a new round of speaking tours of Britain, Australia, and New Zealand, George suffered a stroke, which left him, in Louis F. Post's words, "a victim to premature old age in his fifties." He turned his attention to writing a comprehensive Science of Political Economy" []

Ultimately his son would have to finish his "Science of Political Economy." He was too busy practicing his teachings to devote full attention to creating an academic work.

Rerum Novarum

The author says he was "distracted" by reading "Rerum Novarum" and diverted from writing a refutation. But the reality is that "Rerum Novarum" was an incredibly important work that influenced and still influences politics. Rerum Novarum influenced Catholic Fascists and General Reformers alike. And George's reply was itself a masterful exegesis that owes to John Locke and masterfully responds to the Claims it made for the rights to property.

"Being created individuals, with individual wants and powers, men are individually entitled (subject of course to the moral obligations that arise from such relations as that of the family) to the use of their own powers and the enjoyment of the results. There thus arises, anterior to human law, and deriving its validity from the law of God, a right of private ownership in things produced by labor — a right that the possessor may transfer, but of which to deprive him without his will is theft." []

This of course is the Natural Rights argument as argued from the POV of monotheism. And the benefit of using a Religious argument is that it is an answer to the authoritarian arguments of religious authorities. That further emphasizes the distinction between property acquired by labor (mans part in creation) and that that comes from creation:

[condition of Labor]
"This right of property, originating in the right of the individual to himself, is the only full and complete right of property. It attaches to things produced by labor, but cannot attach to things created by God." [condition of Labor]

He then uses a number of examples starting with:

"Thus, if a man take a fish from the ocean he acquires a right of property in that fish, which exclusive right he may transfer by sale or gift. But he cannot obtain a similar right of property in the ocean, so that he may sell it or give it or forbid others to use it...." [condition of Labor]

And citing other examples he then concludes:

"To attach to things created by God the same right of private ownership that justly attaches to things produced by labor is to impair and deny the true rights of property. For a man who out of the proceeds of his labor is obliged to pay another man for the use of ocean or air or sunshine or soil, all of which are to men involved in the single term land, is in this deprived of his rightful property and thus robbed." [condition of Labor]

He then goes on to explain the right of property in similar fashion:

"While the right of ownership that justly attaches to things produced by labor cannot attach to land, there may attach to land a right of possession." [condition of Labor]

And he wisely quotes the Pope:

“God has not granted the earth to mankind in general in the sense that all without distinction can deal with it as they please,”

And then he argues with the Pope, drawing on his earlier arguments and on Locke:

"regulations necessary for its best use may be fixed by human laws. But such regulations must conform to the moral law — must secure to all equal participation in the advantages of God’s general bounty." [condition of Labor]

The Pope had condemned socialism in "Rerum Novarum" [] And George segues off of one of the Popes arguments when he says:

The principle is the same as where a human father leaves property equally to a number of children. Some of the things thus left may be incapable of common use or of specific division. Such things may properly be assigned to some of the children, but only under condition that the equality of benefit among them all be preserved." [condition of Labor]

The Pope had argued:

"he first and most fundamental principle, therefore, if one would undertake to alleviate the condition of the masses, must be the inviolability of private property." "Rerum Novarum"]

And Rerum Novarum would become the the banner of the counter-reformation against Socialism for the next 100 years and into the present. It being quoted by Mussolini and early Fascists, and by later fascists, neo-liberals and conservatives. George was arguing against Authority. He had to be careful. So his exegesis had to be more extensive:

"This right of private possession in things created by God is however very different from the right of private ownership in things produced by labor. The one is limited, the other unlimited, save in cases when the dictate of self-preservation terminates all other rights. The purpose of the one, the exclusive possession of land, is merely to secure the other, the exclusive ownership of the products of labor; and it can never rightfully be carried so far as to impair or deny this. While any one may hold exclusive possession of land so far as it does not interfere with the equal rights of others, he can rightfully hold it no further." [condition of Labor]

I don't think that the Pope ever read his reply. But it was important that he write it. As otherwise it would have been his word against God's. So he goes on:

"Thus Cain and Abel, were there only two men on earth, might by agreement divide the earth between them. Under this compact each might claim exclusive right to his share as against the other. But neither could rightfully continue such claim against the next man born. For since no one comes into the world without God’s permission, his presence attests his equal right to the use of God’s bounty. For them to refuse him any use of the earth which they had divided between them would therefore be for them to commit murder. And for them to refuse him any use of the earth, unless by laboring for them or by giving them part of the products of his labor he bought it of them, would be for them to commit theft." [condition of Labor]

His argument from "The Perplexed Philosopher" is simpler, but it's the same one. The Pope wasn't arguing for an "equal right to land. He used his arguments to argue for an absolute right to land. Something that Henry George rightly notes when enforced denies the right to property in land to the majority:

"God’s laws do not change. Though their applications may alter with altering conditions, the same principles of right and wrong that hold when men are few and industry is rude also hold amid teeming populations and complex industries. In our cities of millions and our states of scores of millions, in a civilization where the division of labor has gone so far that large numbers are hardly conscious that they are land-users, it still remains true that we are all land animals and can live only on land, and that land is God’s bounty to all, of which no one can be deprived without being murdered, and for which no one can be compelled to pay another without being robbed. But even in a state of society where the elaboration of industry and the increase of permanent improvements have made the need for private possession of land wide-spread, there is no difficulty in conforming individual possession with the equal right to land. For as soon as any piece of land will yield to the possessor a larger return than is had by similar labor on other land a value attaches to it which is shown when it is sold or rented. Thus, the value of the land itself, irrespective of the value of any improvements in or on it, always indicates the precise value of the benefit to which all are entitled in its use, as distinguished from the value which, as producer or successor of a producer, belongs to the possessor in individual right." [condition of Labor]

Henry George as late as 1891 knew that the foundation of an equal right to property in land, is the recognition of the concept of the commons. It was the same argument for land reform in Ireland or New Zealand, England or the United States, or in other countries. An absolute right in property infringes on an equal right to property in home, industry, survival. His was a deductive argument from principle.

And he concludes by stating some basic principles of fairness in taxation:

Taxes and legal policy must:
No "taking" unfairly:
"not take from individuals what rightfully belongs to individuals."
"not give some an advantage over others, as by increasing the prices of what some have to sell and others must buy."
Temptation to corruption:
"not lead men into temptation, by requiring trivial oaths, by making it profitable to lie, to swear falsely, to bribe or to take bribes."
"not confuse the distinctions of right and wrong, and weaken the sanctions of religion and the state by creating crimes that are not sins, and punishing men for doing what in itself they have an undoubted right to do."
"not repress industry. It must not check commerce. It must not punish thrift. It must offer no impediment to the largest production and the fairest division of wealth."

So from his point of view, his tax wasn't "socialism" as blasted by Rerum Novarum. But only a matter of fairness. And his footnote reaffirms the concept of unearned rent he was basing his arguments on:

"...economists are agreed that taxes on land values irrespective of improvement or use — or what in the terminology of political economy is styled rent, a term distinguished from the ordinary use of the word rent by being applied solely to payments for the use of land itself — must be paid by the owner and cannot be shifted by him on the user." [condition of Labor]

Here he reiterates the argument that taxes on land rents can't be shifted to the User.... Because:

"land has no cost of production, since it is created by God, not produced by man. Its price therefore is fixed" —

He then lays out the three forms of rent:

  1. (monopoly rent), where land is held in close monopoly, by what the owners can extract from the users under penalty of deprivation and consequently of starvation, and amounts to all that common labor can earn on it beyond what is necessary to life;
  2. (economic rent proper), where there is no special monopoly, by what the particular land will yield to common labor over and above what may be had by like expenditure and exertion on land having no special advantage and for which no rent is paid; and,
  3. (speculative rent, which is a species of monopoly rent, telling particularly in selling price), by the expectation of future increase of value from social growth and improvement, which expectation causing landowners to withhold land at present prices has the same effect as combination.
  4. [condition of Labor]

Then reiterating the impossibility of taxes on economic rent being shifted to the land user and further explaining that where:

"rent depends on mere monopolization,..., the taking by taxation of what the landowners were able to extort from labor could not enable them to extort any more, since laborers, if not left enough to live on, will die."

In this way he hoped to convince the Pope to give his blessing to the LVT tax. It didn't work. But at least he gave it a try. He went on to give even more detailed refutations of the Pope's encyclical, which would all fall on deaf ears. But I like this quote from St. Thomas of Aquinas:

"Human law is law only in virtue of its accordance with right reason and it is thus manifest that it flows from the eternal law. And in so far as it deviates from right reason it is called an unjust law. In such case it is not law at all, but rather a species of violence." [condition of Labor]

This could be stated as the core of Henry George's moral philosophy and of reformers who would succeed him.

William Jennings Bryan and Currency Reform

Throughout the 1890's he fought on behalf of the reform movement and within the city Government of New York. His 1890 stroke slowed him down and prematurely aged him, but he continued to fight up til the last day of his life. In 1896 he campaigned for currency reform and William Jennings Bryan. People have been propagandized to believe that the reformer in that election was William McKinley, but in economic terms it was the Populists under Bryan who were fighting for real reforms against the corruption and incompetence of Grover Cleveland and William McKinley:

"The industrial depression and currency famine that reached its most acute stage in the summer of 1893 dragged along into 1896. Every field of industry in the country had suffered more or loss during the protracted depression. Through the West and South the popular belief was that the cause of this lay mainly in an artificial shrinkage of the currency."[Bio By Henry George Jr.]
"the demand now swelled to thundering tones for the remon[e]tisation and free coinage of the silver dollar In the East at least among the working men the tariff protected trusts the railroads and other monopolies were denounced as having much to do with the hard times President Cleveland had no sympathy with any of this and he added fuel to the fire of strong feeling for he used his office against what Mr George among many others conceived to be popular rights and in support of property rights by protecting and fostering the monopolies and by making great concessions to the bank and bond powers" [Bio by Henry George Jr.]

So Cleveland, who was a Democrat, openly sided with William McKinley and the "haves" against the rest of the people of the country and a plurality of his own party:

"when the election lines were eventually drawn and William McKinley representing the House of Have was nominated by the Republican party and William J Bryan at the hands of the radical majority in the Democratic convention and for the House of Want became the champion of free silver anti monopoly and equal rights Cleveland openly took the side of the House of Have and directly and indirectly worked for its success The Life of Henry George by Henry George Jr.
"Since a young man Henry George had advocated as the best possible money paper issued by the general Government paper based on the public credit He regarded the silver coinage proposal as another form of the protective idea to raise artificially the price of the silver commodity But economically unsound as he held this principle to be and expensive as he believed its adoption would prove to those least able to help themselves the mass of the working population he thought it greatly preferable to the principle of privilege which the monopolistic powers gathered around the gold or so called sound money candidate represented." [Henry George Jr. Bio]

So in 1897, he wasn't campaigning only for a Land Value Tax, but for reforms in money issuance and other legal reforms which would have removed privilege in general from the wealthy classes and evened the playing field for everyone. In 1897 he wrote a short work called "A Menace and a Promise" (More in my Blog entry on this "Virtue and Vice" In it he both warned of where we were headed and spoke of his abiding faith that we aren't "fated" to fail, but can continue to progress and improve together:

“these evils are not imposed by natural laws, that they spring solely from social maladjustments that ignore natural laws; and that in removing their cause we shall be giving an enormous impetus to progress.”

Henry George dedicated his life to fighting corruption. Indeed he died while running for mayor saying he didn't expect to win but was there to "raise hell". [More at "Two Cities" Post]

"George died on 29 October [1897] just four days before the elections where he had campaigned as mayor representing as an Independent Democrat" [ Read more at]

Some of my friends, who have been arguing about whether proposals for Treasury issued money are or should not be part of Georgism, can learn a lot from looking at What Henry George Actually did.

"By means of his vigorous oratorical style and his direct and simple writing, George had popularized a doctrine that combined trenchant criticism of inequality in modern society with celebration of the potential contribution of technological development and individual endeavor to the social welfare. His ideas had powerful, if divergent, meanings for urban workers, Irish rural laborers, political foes of Britain's landed gentry, Catholic and Protestant preachers of a social gospel, women residing in New York's slums, businessmen aspiring to lift taxes from their own enterprises, and literary enthusiasts of global free trade. Adherents of the Single Tax remedy for urban squalor were to appear frequently in the ranks of reformers during the Progressive Era and beyond." []

Further Reading

Other Posts on Henry George:
Progressive Taxation and Land Value Tax
Spencer Versus Locke and Henry George
Review of "A Tale of Two Cities" article
General Articles on Economics
Satans Usury []
Rerum Novarum: []

John Locke

For more information on John Locke and his relationship to other people read any of these posts:
Spencer Versus Locke and Henry George
Edmund Burke Versus John Locke
Locke Talked of the Importance of the Collective
The Concept of Commonwealth as Antidote to Tyranny
Commonwealth According to Locke
The Real Right to Property is Contingent on Reason
Common Property and the Commons
Rights Come from Below
Ayn Rand Argues against the Enlightenment
John Locke on the Virtues of Liberty
Tyranny Definition - John Locke

Post Script

suffered something close to a stroke last spring. I had untreated high blood pressure and that seems to have contributed. For that reason I guess I can relate to Henry George and the difficulties of his last years. I know that he felt very strongly about his theories and had struggled with the logic and reason that created them.

Unrelated information related to future inquiries

Thursday, March 26, 2015

Did Cotton and other GOP politicians take money from Israel?

If I had the resources I would be following up on my post from last week: What is One Voice, Who is Tom Cotton? And what game are they playing? [], because the question becomes were those donations from the "Emergency Committee for Israel (ECI)" really from American donors, or was any of that money from the Israeli Government? If so, that is one of those infractions that is actually defined in the constitution!

"no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State." [Constitution Article 1, Section 9]

Now I'm sure that Bill Krystol is too clever to leave a paper trail to the Israeli Government. Still a committee with a name like that has to have links to Israel. I wonder how much of his funding comes from Israel? I wish I had the means to investigate.

It's pretty obvious that the Israeli Government is heavily involved in the anti-Iran effort, because they were caught spying on the negotiators and feeding back information to those 47 members of congress who sent a letter to the Iranian Delegation. Getting spy information from the Israelis is illegal for the folks giving it to Congress, but probably not for the Congress members.

Israel caught spying:
Wall Street Journal Article "Israel Spied on Iran Talks" []
"The spying operation was part of a broader campaign by Israeli Prime Minister Benjamin Netanyahu’s government to penetrate the negotiations and then help build a case against the emerging terms of the deal, current and former U.S. officials said. In addition to eavesdropping, Israel acquired information from confidential U.S. briefings, informants and diplomatic contacts in Europe, the officials said."

If this were a left wing group, the Right Wing would be hauling everyone of them in front of the "House UnAmerican Committee, but thanks to money?... Crickets.

Who the members of the "Emergency Committee for Israel (ECI)?

ECI is the front for ECIPAC, which was created to drive a wedge between Jews and the Democratic party in general and the Obama administration specifically. (More: [])

"Unlike earlier neoconservative-led endeavors (like the Project for the New American Century) that made alliances with hawkish elements in the Democratic Party, ECI is a decidedly right-wing affair. ECI board members have included William Kristol, editor and founder of the Weekly Standard and cofounder of the Foreign Policy Initiative; Rachel Abrams, the wife of the convicted Iran-Contra veteran Elliott Abrams who passed away in 2013; and Gary Bauer, a well-know Christian Zionist who leads the lobby groups American Values and Keep Israel Safe and serves on the executive board of John Hagee's Christians United for Israel."

Pollak is a "take no prisoners type:

"Commenting on Pollak's and Hoover's work on ECI, Clifton wrote: "It's pretty clear that Pollak and Hoover, along with the people behind Keep Israel Safe and Stop Iran Now, are part of the extensive neoconservative echo chamber which seeks to create the appearance of a diverse coalition of grassroots groups calling on the US to prevent Iran from going nuclear by any means necessary. Things as simple as a looking at the registration on a domain name reveal that these groups are part of an intensely partisan (both Republican and Likudist) campaign to push the U.S. into a military conflict with Iran. And CNN, which just last week summarily fired a senior editor for a tweet praising the late Sayyed Mohammed Hussein Fadlallah, is amplifying their message." []

Pollak is also dual citizenship:

"Pollak got his start in neoconservative and Likud Party politics shortly after graduating from Vermont University in 2003.[11] After graduation he moved to Israel, where he worked as an assistant editor for Azure, a magazine published by the Shalem Center. The Jerusalem-based center appears to be a Likud Party-aligned group that claims on to engage "in research, education, and publications in areas that include Jewish moral and political thought, Zionist history and ideas, Biblical archaeology, democratic theory and practice, strategic studies, and economic and social policy." One of its projects is the Adelson Institute for Strategic Studies, which is funded by major Republican Party donor Sheldon Adelson." []

So ECI, if not funded by Israel, is working for the Likud.

Scheunemann, the Israel Project and War-Mongering.

ECI was the child of another group, One of which was "Israel Project", whose task was to stir up a war against Iran. In 2008 Ralph Scheunemann was McCain's top foreign policy advisor. It was probably he who was inciting McCain with his "Bomb, Bomb, Bomb Iran" arguments. He moved on to running the Orion Strategies and to working with Krystol and his old friends to found the ECI. Which initially operated out of his Orion Strategies office. see [ taken 2010] At that Time Jim Lobe wrote:

"Like the new ECI, the CLI appears to have been the proto-typical astro-turf group or letterhead organization (LHO). In an interview with Deborah Solomon published by the New York Times Sunday Magazine last week, the chairman of CLI‘s advisory board, former Secretary of State George Shultz, had this to about his role and involvement:
Shultz: "There was a group — there was a committee that didn’t really exist, was a name, and it supported the war. Solomon: What do you mean it didn’t exist?"
Shultz: "It didn’t exist in the sense that it never met, and I don’t even know who the members of it were.

And Jim notes:

That’s often how neo-cons work."

And that is also how intelligence services work. I once was involved in some strange stuff. Afterwards I was told; "it never happened." Only with intelligence agents suddenly the people involve disappear too. So this is something different, a little. These folks don't care if folks know who they are.

So the real force behind CLI is the same bunch behind ELI:

"Randy Scheunemann ran a very small firm in Washington called Orion Strategies, which had only a handful of clients, most of which were fairly prominent Eastern European governments: Latvia, Georgia, and several others who were seeking membership in NATO. And that was Scheunemann’s job, to help stir up interest and get them support for joining NATO." []

So who knows who Scheunemann is working for presently, but his foreign strategies are independent of anyone in the Democratic party or the White House. And Scheunemann was an NRA lobbyist in 2008:

"Randy was also, lesser well known, but an outside lobbyist for the National Rifle Association for several years and is advising McCain, to some extent, on gun issues. His primary role is chief foreign policy adviser. But in a profile I did of Scheunemann a few months ago, he indicated to me that, yes, he did weigh in as well on gun issues with Senator McCain. Randy’s a hunter." []

And of course both He, Krystol and others are veterans of infamous previous efforts to ginn up fraudulent wars:

"Along with neoconservative figures like Robert Kagan and William Kristol, Scheunemann served as a director of the now-defunct Project for the New American Century (PNAC), a letterhead group that played an important role in building support for the Iraq War and an expansive "war on terror." He also headed the Committee for the Liberation of Iraq (CLI), a post-9/11 advocacy outfit that pushed for war in Iraq. Like PNAC, CLI played a key role forging a coalition of Beltway figures who supported a Middle East agenda that had at its core toppling Saddam Hussein. Other CLI members included Sens. John McCain (R-AZ) and Joe Lieberman (I-CT)." [bold my addition] []

Now, ironically, "Randy was working with " ... "Ahmed Chalabi in championing intervention in Iraq." And Chalabi, turned out to be an agent for Iraqi Shia, closely aligned with Iran. [Democracy Now article] And his Orion group has since the time of Peter Stone's article increased it's source for lobbying money because he leads both:

"Orion Strategies (which he owns) and the Mercury Group. Clients of the Mercury Group have included Swiftships Shipbuilders, Barrett Firearms Manufacturing, BP America, Air Force Memorial Foundation, Lockheed Martin, National Shooting Sports Foundation, and Sporting Arms and Ammunitions Manufacturers." [Rightweb article]

So Randy is tied to the Arms Industry, and the Arms Industry has a real economic interest in starting new wars. A war with Iran means contracts, turnover of arms, and profits. Win/Win for McCain, the lobbyists, and the Senators who seem to be in their hip pocket. And of course, this isn't just a plot by some Jewish Conspirators. It's also the project of some Right Wing Dominionist and Neo-Millenial groups Christians United for Israel which is a similar mix of Right Wing Religion and self interested arms manufacturers.

Were any laws broken?

The law relating to subversion or sedition by members of Congress is very murky. Especially since it's Congress' job to write such laws. But there was a clear violation of protocol if not the law by the Israel Lobby, the 47 Senators, and the Netanyahu regime. Whatever their protestations that they didn't spy on our actual officials. If nothing else, the level of corruption is amazing. Both the American lobbyists, Likud and Congress seem more concerned with selling arms and ginning up yet another war than the actual security of either the USA or Israel. Israel's national interests are not served by continuous bellicose warmongering against Iran. Even if the Sunni Arab leadership is secretly cheering them and ISIL is glad to see them ignoring their conquest of territories adjacent to Israel. Anyway. I've been looking for what laws might have been broken. Certainly the parties lobbying to derail talks with Iran were in violation with 18 U.S. Code § 798 - Disclosure of classified information

"Whoever knowingly and willfully communicates, furnishes, transmits, or otherwise makes available to an unauthorized person, or publishes, or uses in any manner prejudicial to the safety or interest of the United States or for the benefit of any foreign government to the detriment of the United States any classified information—...obtained by the processes of communication intelligence from the communications of any foreign government, knowing the same to have been obtained by such processes—... Shall be fined under this title or imprisoned not more than ten years, or both. [18 U.S. Code § 798 - Disclosure of classified information]

However, the Israelis and the lobbyists have a get out of jail card:

"Nothing in this section shall prohibit the furnishing, upon lawful demand, of information to any regularly constituted committee of the Senate or House of Representatives of the United States of America, or joint committee thereof."

So no law was broken, because Congress can spy on anyone. And unless one can prove a direct money trail from Israel to Cotton and the other Congressmen, nothing is going to happen. Money is free speech and the Arms industry is just talking to Congress. And as I described in the previous article on Cotton, the same Arms manufacturers, Hedge Fund investors and lobbyists who paid Cotton also bankroll the Likud.


This post is a follow on to these Posts
And earlier:
Source for donation information for Cotton:
Mondoweiss: Emergency Committee for Israel Spends Big on Rep. Cotton []
Further Reading and Sources:
Orion Strategic Services:
Which is a vehicle for Randy Scheunemann []
Bill Krystol:

TPP and it's assault on sovereignty and common people

Updated 3/26/2016 (and 4/27/2016): I last blogged on the TPP in 2013. Ed's been covering the TPP, mostly focused on Labor Rip Offs. But I've been focusing on the ISDS provisions. I blogged on this 10 days ago (3/16/2015) and now the Ed Show just did a segment on the Investor Sovereignty provisions of TPP. The ISDS courts have been a tool to infringe the sovereignty of our trade partners. Now we are about to get the same treatment. At that time the ISDS provisions were blatantly unfair to most potential litigants and were obviously meant as a tool to protect investors and create a world wide Banana Republic system. (See []).

See the Leaked Documents here:

Now they are claiming some procedural reversals and that somehow the Tribunals will be paragons of transparency. but a lot of these "reforms" look like PR ploys to me so I'm more than skeptical. And there is no fundamental change proposed for the Corrupt tribunal system at all. So they look like window dressing to me. The ISDS system was why I didn't want fast track in 2013 and why I still don't want it. The Trans Pacific Partnership and other ones involving ISDS arbitration are dangerous agreements and ones handing over sovereignity to partial tribunals run by a cabal of insider lawyers working for the giant mega-companies. The changes outlined won't change that.

Ed Show, Warren andd Wikileaks on the "Investment provisions"

Ed Show:
#TPP Investment Chapter @Wikileaks complicates #Obama’s #FastTrack push: #NoFastTrack #ISDS
@SenWarren is right to warn us about the dangers of #ISDS. @wikileaks confirms: … #NoFastTrack
@WikiLeaks Reveals #TPP Proposal Allowing Corporations to Sue Nations @Democracy Now #ISDS
How #ISDS lets #BigPharma attack #publichealth & access to #meds: … @WHO
I scooped the New York Times, but this is their article:

The Dangers of the ISDS, TPP Provisions

The TPP has this article (quotes taken in March 2015) on these "Neutral" courts, or Tribunals called Investor State Dispute Settlement (ISDS) "Courts";

isds: []
"In U.S. agreements, the investment rules enforced by ISDS provide investors in foreign countries basic protections from foreign government actions." such as:
"Freedom from discrimination: An assurance that Americans doing business abroad will face a level playing field and will not be treated less favorably than local investors or competitors from third countries." isds

Freedom From "discrimination" usually means Impunity

Freedom from discrimination usually means that American investors and foreign investors will not have to face the wrath of citizens and will have lawyers and judges who represent them.

"Protection against uncompensated expropriation of property: An assurance that the property of investors will not be seized by the government without the payment of just compensation." isds

Normally this is a good thing. But one man's "uncompensated expropriation" can be another's righting of a wrong. [as has happened with injury lawsuits such as what happened to people poisoned by Exxon's oil extraction in Ecuador]

"Protection against denial of justice: An assurance that investors will not be denied justice in criminal, civil, or administrative adjudicatory proceedings." isds

In other words, the Tribunals will be able to deny citizens justice in some cases in favor of investors. A blanket protection against "denial of justice" that excludes "ordinary courts" is not justice, but it's counterfeit.

Impunity in Financial power

"Right to transfer capital: An assurance that investors will be able to move capital relating to their investments freely, subject to safeguards to provide governments flexibility, including to respond to financial crises and to ensure the integrity and stability of the financial system." isds

A Grifter is someone who can take his/her money and run

This is what investors really want anyway. They want to be able to be grifters legally and swindle or loot one country and then take the proceeds out of the country and move on when they've finished looting the coffers.

Impartial Arbitration?

"While ISDS does not provide additional substantive rights relative to U.S. law, it does provide an additional procedural right: the right for foreigners to choose impartial arbitration rather than domestic courts when alleging that the government itself has breached its international obligations, whether by discriminating against a foreign investor, expropriating the investor’s property, or violating the investor’s customary international law rights." isds

Except that impartial arbitration means lawyers who are hand picked by the same companies asking for the arbitration. The same companies and judges are usually also company lawyers. "Impartial" is a misnomer in most of these modern arbitration. The lawyers have an interest in protecting the investors. (see below)

Over-ruling Rule of Law

The article continues:

"ISDS arbitration is needed because the potential for bias can be high in situations where a foreign investor is seeking to redress injury in a domestic court, especially against the government itself. While countries with weak legal institutions are frequent respondents in ISDS cases, American investors have also faced cases of bias or insufficient legal remedies in countries with well-developed legal institutions. Moreover, ISDS can be of particular benefit to small and medium-sized enterprises, which often lack the resources or expertise to navigate foreign legal systems and seek redress for injury at the hands of a foreign government. Indeed, SMEs and individuals have accounted for about half of all cases brought under international arbitration." isds

Bias is only high against investors when they have done something wrong. That is another reason that investors so want an ISDS. An ISDS substitutes the biases of common folks for the biases of the well connected. They want the bias to be high against those pursuing claims against them!

Banana Courts!

"There is a long history of providing neutral forums for disputes that cross borders. Within the United States, for example, the rules of civil procedure allow for federal jurisdiction in cases involving citizens of foreign countries (or even citizens of different U.S. states) to eliminate biases that may occur within state courts. Internationally, there are a wide variety of judicial or arbitration mechanisms – including State-to-State dispute settlement and forums permitting direct actions by private parties – to create neutral means for resolving differences between parties from different countries; for example, the International Court of Justice, the World Trade Organization, and the Inter-American Court of Human Rights." isds

True enough. And these "neutral" courts have frequently been an agent of colonial governments or neo-colonial company interests in the past. "Neutral forums" are experts at imposing oppression and supporting "banana Republics."

How Neutral? The Devil is in the details!

The real problem with the ISDS is that for all it's protestations that it won't affect the ability of states to regulate the environment and protect consumers. Investors wouldn't demand arbitration if it didn't give them some advantage or if they were merely concerned about some evil dictator expropriating their country. Arbitration has been and regularly is used to stiff consumers and workers currently. And regardless of efforts to claim that it can be moderated by laws saying "no you can't do that", the very constitution of the tribunals argues that there are no protections for just that problem!

The Aussies see the issues

This article ( Notes:
"Arbitral tribunals set up under ISDS provisions are not courts. Nor are they required to act like courts. Yet their decisions may include awards which significantly impact on national economies and on regulatory systems within nation states. Questions have been raised about the consistency, openness and impartiality of decisions made in ISDS arbitrations." Frenchcj09jul14

And he notes the following issues:

Vague formulation of major treaty provisions leaving a wide range of interpretations open to arbitrators;
Which means that while there might be a header note that investors couldn't use treaty obligations to say, invalidate a settlement with villagers poisoned by reckless oil drilling in a place like Ecuador. In the hands of an unscrupulous tribunal and unscrupulous judges that can very well be the outcome. And while the current negotiations may prevent illegal shells there are no substantive protections against:

loopholes which enable abuses such as nationality shopping by companies which create subsidiaries abroad specifically to take advantage of the agreements;
If those subsidarities happen to be legal.

But of course what scares me is the following:

• lack of transparency with varying degrees of secrecy attaching to arbitral processes depending upon the institutions or rules which are applied;

And given history the fact that the current round of negotiators are claiming this issue is being addressed tells me;

a; it is a serious issue and
b; I don't want to rely on assurances but to see any treaty debated on the Senate Floor and not subject to fast track!

And the point of the following points:

• a relatively small pool of arbitrators — arbitrators appointed to ISDS arbitrations are said to be mostly male (95%) and from Europe and North America;
• role-swapping by arbitrators who appear from time to time as counsel in ISDS cases;
...Is that there is a massive issue (beyond risk) of arbitrators who are really company lawyers. They cannot be expected to be "unbiased" or "neutral" if they work for the companies going to court. ISDS might get good outcomes when two companies due each other. But when it's you or me fogetaboutit!

But it's worse than that. ISDS is an elite process:

• the high cost of ISDS arbitrations — estimated by OECD as averaging about $8 million each;
• associated with the high cost and potentially high awards, a growing phenomenon of third party funding of claims by banks, hedge funds and insurance companies in exchange for a share of the proceeds ranging from 20% to 50%;

All of which argues that the ISDS concept is corrupt from the start. And what makes it worse is that all this includes:

• absence of effective review or appeal processes;
• inconsistency in decisions on similar provisions

These features of lawsuits on environmental and health issues in the United States are already undermining the integrity of our own system. Judges regularly seal settlements. Companies settle cases, not just because they know they'll lose but because they want to suppress the information of the case from getting out to other victims. ISDS would make this a worldwide practice!

The nearly identical issues were laid out in a powerpoint, conveniently directed to investors:

ISDS Issues from a Legal Viewpoint

listing risks for ISDS from a Justice Viewpoint:
Legitimacy: ad hoc tribunal of three arbitrators assessing state conduct

Which again, reflects the "industry capture" of the judging. It means essentially the same lawyers are Judge, Jury, executioner, and at least one party to the cases they try. This is the recipe for injustice. When the lawyers on each side of arbitration represent the same paying customers that isn't justice, that is corruption. And as noted above there is a real problem with:

Transparency: private and confidential proceedings

Whatever the negotiators say will be the case!

Nationality planning is just a fancy term for country shopping:

Nationality planning: use corporate structuring to obtain treaty benefits
Consistency of arbitral decisions regarding similar treaty provisions

The reason companies like arbitration is that they can use secrecy, country shopping, and legal loopholes to get decisions favorable to themselves. It's why they like these treaties! And the provisions for appeal mean that the crookedness, once put in the treaty is difficult to appeal or rectify:

Erroneous decisions cannot be corrected

And if a decision is hard to correct if erroneous. Think of what happens due to:

[Lack of] Arbitrator independence and impartiality
Conflict of Interest:
Financial stakes

Protections for Trade or for Outlaw Multinational Investors?

The Trade negotiators claim to address some of this in their arguments for selling TPP to voters. They claim that the treaty addresses these objections with the following:

"Full transparency in cases. Governments must make all pleadings, briefs, transcripts, decisions, and awards in ISDS cases publicly available, as well as open ISDS hearings to the public. One key objective of these provisions is to allow governments that are party to the agreement, as well as the public at large, to carefully monitor pending proceedings and more effectively make decisions about whether to intervene." isds

If so this is the opposite of how ISDS currently operates. We want to see the treaty language!

"Public participation in cases. Tribunals have the clear authority to accept amicus curiae submissions. In U.S. cases, amicus briefs have been submitted by a variety of NGOs, including the Sierra Club, Friends of the Earth, and Center for International Environmental Law. (Documents in all investor-State cases filed against the United States are available on the State Department website.)" isds

Again, opposite of current ISDS laws and rules.

Suits brought by "commoners" = Frivolous

But the following is dangerous, because in the hands of expert lawyers working for the corporations being sued. A claim of injury becomes "frivolous" and the only claims taken seriously would be between parties with wealth.

"Mechanism for expedited review and dismissal of frivolous claims and claims outside the tribunal’s jurisdiction. This mechanism enables respondent countries, on an extremely expedited basis, to move to dismiss (1) frivolous or otherwise unmeritorious claims (akin to provisions under the Federal Rules of Civil Procedure) and (2) claims the tribunal is not empowered to resolve." isds

...And of course using standing (claims the tribunal asserts it doesn't have jurisdiction over -- meaning nobody does) to block injury claims is old hat in the US courts.

Sham Corporations

TPP does acknowledge that the ISDS already has a long history of Abuse. They propose to "fix" one of the issues that have expressed that; "sham corporations."

"Denial of benefits for sham corporations. This provision prevents the use of shell companies to access ISDS." isds

But of course we know that differentiating between sham pirate companies and perfectly legal privateers is a matter of whether they have a few documents from the appropriate courts. So this is a hollow provision.

Parallel Claims

"Restriction on parallel claims. This provision prevents a party from pursuing the same claims both in ISDS proceedings and domestic courts (i.e., restricting “forum shopping”)." isds

Which effectively means that it will be difficult for people to appeal the ISDS! Since most parallel claims are the result of people not getting satisfaction in one of the courts and so appealing.

Statute of Limitations

"Statute of limitations. A three-year statute of limitations protects respondents against old claims, which are difficult for governments to defend in part because access to documents and witnesses becomes more difficult over time." isds

And this also will be something that hurts ordinary people, as Investors know right away if they have a claim or not, but ordinary folks frequently don't even know they have a problem for 5-10 years, or can't get access to the courts in time due to obstruction by local authorities.

"Challenge of awards. Both parties to an arbitration have the option to challenge a tribunal award." isds

If parties have an option to challenge a claim that is a change from the previous operation of the ISDS. Otherwise it contradicts other statements about the law. This is another reason to not want to support Fast Track. Moreover, this doesn't help consumers, since appellate courts often are controlled even more by corporate lawyers than ordinary courts.

Even so we need to see this in writing. The following would be an improvement. It allows class actions.

"Consolidation. On request, tribunals may consolidate claims raising common questions of fact and law, which may increase efficiency, reduce litigation costs, and prevent strategic initiation of duplicative litigation." isds

But it's also not really something that should be a reform.

"Interim review of ISDS awards. Parties to the arbitration are permitted to review and comment on a draft of the tribunal’s award before it is made final." isds

Nor is this.

Favoring Creditors over Debtors

"Prudential exception. This exception provides that nothing prevents countries from taking measures to safeguard the stability of their financial systems. If such measures are challenged, this provision allows the respondent country and investor’s home country to jointly agree that the prudential exception applies and that decision is binding on the tribunal." isds

This reflects years of the IMF and World Bank using it's power to force countries to make paying foreign investors a priority over paying their own workers and their own financial security.

Limitation on Sovereignty

"Tax exception. This exception defines and limits the coverage of government tax measures under the investment provisions. In addition, this provision provides that if the respondent country and investor’s home country agree that a challenged measure is not expropriatory, that decision is binding on the tribunal." isds

Again, this is a protection for investors against citizens of the country facing a claim.

"Mechanism for treaty Parties to issue binding decisions on how to interpret treaty provisions. A binding interpretation mechanism enables TPP countries to confer after the agreement has entered into force and to issue joint decisions on questions of treaty interpretation that bind all tribunals in pending and future cases." isds

Closing the barn door after the horse leaves!

"Independent experts on environmental, health, or safety matters. In most ISDS cases, the disputing parties retain and appoint the experts. This provision provides arbitral tribunals with the power to appoint experts of their own choosing on environmental, health, and safety matters to ensure maximal objectivity in the evaluation of claims challenging such measures." isds

This contradicts assurances that the the ISDS will not hurt people suing on environmental or health issues. We all see how there are always experts who are willing to say what their bosses want to hear.

"Limitations on obligations: Clear limiting rules and definitions, including guidance on interpretation on the obligations frequently subject to litigation, to safeguard against subjective or overbroad interpretation – for example, the incorporation of U.S. Supreme Court standards on indirect expropriation and a clear tying of the “minimum standard of treatment” obligation to requirements under customary international law (i.e. the general and consistent practice of states that they follow from a sense of legal obligation)." isds

I'm not sure what this means. But I'm also not sure it's new or a reform. When people are seeking rights, we don't really want Officials defining them. These kind of tribunals are instruments of tyranny.


I'm still waiting to see the actual language before rendering final judgement. If what is disclosed in the Trade negotiator website is even half true, the current treaty is better than it was in some ways, two years ago. Sadly in some ways it is now worse. And since the devil is in the details and so far what I'm seeing is contradiction and sham assurances. I'm not confident that the assurances are even true or sincere.

Sources and Further readings:
Leaked Documents:
Obama Defends TPP (Vox article)