Arms Lobbyists and War-Mongering

Modern Pirates, Lobbyists and War-Mongers

In my post "Did Cotton and other GOP politicians take money from Israel? [http://holtesthoughts.blogspot.com/2015/03/did-cotton-and-other-gop-politicians.html] I dug up material about some major lobbyists for foreign countries and the disproportionate influence they are having on our politics and foreign policy. My anti-Israel friends may think I've gone over to their side, but the evidence I saw was of an mafioso-esoteric layer, not one where one side is saintly and the other nefarious and dirty. The people involved don't really care about either side. They'll sell weapons to both sides. I saw evidence of nefarious, dirty, sneaky types all over the place, but mostly connected with the Reagan Administration and it's program to win millions and defeat "Communism" if the Communists aren't buying. These are people who work together while plotting against each other. Just as scandals connected to the Reagan and Bush Administrations trace to Watergate related events, world events trace to the piracy and freebooting of our Arms Dealers, Secret Agents and "Cold Warriors."

I might never have gotten at the material, completely or factually at all, except that it became a "who done it" of American Politics. If the Dems hadn't been the target of the 1980 "October Surprise" efforts of the wealthy backers and corporations behind the Reagan Counter-revolution the energy to dig into these criminal behaviors or to expose them would have been lacking. Indeed, it turns out Carter was trying to exchange arms for the Hostages, covertly, too, and the Reagan War-monger crowd outbid him. The "October Surprise" that sabotaged Carter's efforts to end the Hostage crisis with the Iranians back in 1980, was because Reagan's wealthy backers were running their own programs. These illegal, "extralegal" and subversive programs continued long after Reagan won election. They funded the dirty wars in Central and South America. And that is what attracted my interest. My wife was traumatized by what the Argentine military did during that period. I'm a little protective.

I'll present the timeline as best I can but the story is bigger and murkier than I can simplify it from. Rather than rehash the details I'm trying to focus on what I believe was the big picture. Starting with the:

The Cast of Characters

Adnan Khashoggi

For example while looking up the biography of Adnan Khashoggi the Wikipedia article notes "(Arabic: عدنان خاشقجي‎; born 25 July 1935) is a Saudi Arabian businessman. At a peak net worth of up to $4 billion USD in the early 1980s, he was considered one of the richest men in the world" [http://en.wikipedia.org/wiki/Adnan_Khashoggi]. At the height of his power he owned the Kingdom 5KR, which is now owned by Al-Waleed bin Talal.

http://upload.wikimedia.org/wikipedia/commons/thumb/2/2c/Kingdom_5KR_-_005.JPG/250px-Kingdom_5KR_-_005.JPG

This ship was used as a setting for some scenes the Bond movie "Never Say Never Again" where Bond chases a character who could have been loosely based on Adnan Khashoggi (or any wealthy arms dealer) "Maximillian Largo" was being chased after stealing and dealing in Nuclear Warheads at the behest of the "Dr. Evil" Ernst Stavro Blofeld. The parallels were there. Khashoggi ran his business from his ship in a way that has been a pattern since before John Pierpont Morgan used to do his more shady dealing from his yacht the "SS Corsair". I read an article about JP Morgan flying a black pirate flag but have never been able to confirm it. He did fly his yacht colors and did claim descent from Henry Morgan. He is also famous for negotiating the "Corsair Compact" aboard one of his yachts [https://www.jpmorgan.com/pages/jpmorgan/about/history/month/jul] in which he got the major railroads to collude on prices.

Image from http://www.ssmaritime.com/Corsair-IV-1.jpg

Adnan Khashoggi:

"Khashoggi headed a company called Triad Holding Company, which among other things built the Triad Center in Salt Lake City, Utah, which later went bankrupt. He was famed as an arms dealer, brokering deals between US firms and the Saudi government, most actively in the 1960s and 1970s. In the documentary series The Mayfair Set, Saudi author Said Aburish states that one of Adnan's first weapons deals was providing David Stirling with weapons for a covert mission in Yemen during the Aden Emergency in 1963. Among his overseas clients were defense contractors Lockheed Corporation (now Lockheed Martin Corporation), Raytheon, Grumman Aircraft Engineering Corporation and Northrop Corporation (which have now merged into Northrop Grumman)." [http://en.wikipedia.org/wiki/Adnan_Khashoggi]

Adnan Khashoggi was never working alone, but at the height of his power and influence he was a major player in international dealings in oil, weapons, major weapons systems (aircraft, bombs, rockets, jets). But his dealings were as much outside "official channels and within them.

"He was implicated in the Iran–Contra affair as a key middleman in the arms-for-hostages exchange along with Iranian arms dealer Manucher Ghorbanifar and, in a complex series of events, was found to have borrowed money for these arms purchases from the now-bankrupt financial institution the Bank of Credit and Commerce International (BCCI) with Saudi and US backing. In 1988, Khashoggi was arrested in Switzerland, accused of concealing funds, held for three months and then extradited to the United States where he was released on bail and subsequently acquitted." [http://en.wikipedia.org/wiki/Adnan_Khashoggi]

In the Iran Contra case, Khashoggi was a bit player in a game of international intrigue and high level sedition and sabotage that makes organizations like Spectre seem like amateurs. Renegade elements of the USA government, led by Oliver North after the election and by William Casey before the election made deals with the Iranian Ayatollahs at the very same time period they were painting the Iranians as terrorists and members of the Axis of Evil. But he made billions, and if some of it later disappeared, he's not doing so bad. The official timeline was:

Background:

The 1953 Coup - the Brits and USA Secret Services conspired to overthrow the reformer Iranian leader "Mossadegh". This led to the "election by coup" of the son of the previous Shah who'd been ousted by popular revulsion.

Reza Shah Pahlavi

1953-1979 : Mohammad Reza Shah Pahlavi (known as “the Shah") is secular and authoritarian ruler of Iran. Iran is one of the United States’ strongest allies in the Middle East.

The Shah ran a repressive government that was secular, corrupt and tried to modernize top down. The model for these regimes was Fascist even when they allied with communist countries. Top down rule, liberalization of education, coupled with a violent secret police, prison and execution system to keep people in order. He made many enemies, and the leaders of the expat community mostly moved to France and lived in Paris.

 

The Ayatollah Khomeini Revolution

 

1978 : Riots and demonstrations break out across Iran, largely in response to the Shah’s secularism and close relationship with the U.S.

The riots were actually in response to the Shah's repressive, corrupt government and use of Secret Police. The religious response was one of the tools of those revolting, and sadly the religious resistance was the largest faction resisting the Shah. Religious Iranians saw liberating women, friendships with Israel, and being "too secular" as evils along with the corruption that made the Shah and his relations incredibly wealthy while keeping the wealth for themselves. Sharp leaders formed temporary alliances between secular liberals like Bani Sadr and the Ayatollah, who was living in France at the time. The Ayatollah, by keeping quiet on controversial subjects and speaking in abstracts, seemed a progressive hero to many, until he returned to Iran.

1979 : Riots and demonstrations grow increasingly numerous, frequent, and violent, ultimately culminating in the Iranian Revolution.

January 1979 : The Shah leaves Iran, and the country is declared an Islamic Republic by Ayatollah Ruhollah Khomeini. The Ayatollah severs all ties with the U.S. and declares Israeli illegitimate.

November 4, 1979: Muslim Followers of the line of the Imam, a fundamentalist, anti-imperialist group made up predominately of young radical revolutionaries, seized the U.S. embassy in Tehran. End of cordial diplomacy between the two nations

These people called themselves "students" but they hadn't been studying in 2 years and it later turned out that they were professional revolutionaries and the core of later religious militia/police/army cadres.

In 1980 Carter had his deputy Secretary of State Cyrus Vance lead "the official diplomatic effort, Hamilton Jordan spent thousands of hours working secret channels." But it appears that the Cons had their own side channels. [http://www.pbs.org/wgbh/americanexperience/features/general-article/carter-hostage-crisis/]

The public story of the Carter Administration includes large offers of carrots if the Ayatollahs would free the hostages. But the Ayatollahs wanted Reza Pahlavi's head more than they wanted material goods. And when the USA sent helicopters to try to rescue them they appear to have decided to stick their thumb in the face of the President. They might have done the same even without the advice and offers of the Presidents Industrialists and advisors. The New York Times article says:

"in March 1980, four months after followers of the Ayatollah Ruhollah Khomeini had seized the United States Embassy in Teheran and taken the hostages, Casey approached two Iranian-born wheeler-dealers, the brothers Jamshid and Cyrus Hashemi, who had ties to the Khomeini regime. Casey asked them to set up a meeting with representatives of the Iranian Government. Thereafter, the Hashemis purportedly arranged for Casey to attend two meetings in Madrid in the summer of 1980 with Mehdi Karrubi, an Iranian cleric close to the Ayatollah. According to Mr. Sick, Casey subsequently had one last meeting in Paris about two weeks before the election to clinch the deal." [http://www.nytimes.com/1991/12/22/books/the-case-for-a-conspiracy.html]

But that is not the only narrative. In other versions of the narrative the Reagan Operatives were

"Richard Allen, subsequently Reagan's first national security adviser, Allen aide Laurence Silberman, and Robert McFarlane, another future national security adviser who in 1980 was on the staff of Senator John Tower (R-TX)." [http://www.wrmea.org/1987-october/did-iran-delay-hostages-release-to-ensure-reagan-s-election.html]

"In any case there are a number of witnesses who say (despite the denials) that the meeting did occur and was a success. Robert Perry writes

"In 1994, I found a classified summary of the FBI bugging. According to that summary, the bugs revealed Cyrus Hashemi deeply enmeshed with Republicans on arms deals to Iran in fall 1980 as well as in financial schemes with Casey's close friend and business associate, John Shaheen." [https://consortiumnews.com/2010/080610.html]

Meanwhile the Carter Administration was working it's own deal without knowing what the Cons were doing:

"Bani Sadr, however, says the secret deal was made, even as the Iranians publicly reached an agreement with the Carter administration to release the hostages in return for the unfreezing of $4 billion. The Iranian who secretly met with the Reaganauts in Washington, Bani Sadr says, was either Parvis Sabati, Manucher Ghorbanifar, or both." [http://www.wrmea.org/1987-october/did-iran-delay-hostages-release-to-ensure-reagan-s-election.html]

 

Cyrus Hashemi: Arms for Hostages & Refugees

 

To the Republican Operatives around Reagan double and dirty business was old business. Casey had recruited one of the key Iranian players a year before the hostages were taken. Parry Reported:

"the Iranian banker was recorded [by the CIA/NSA] as boasting that he and Casey had been "close friends" for years. That claim was supported by a CIA memo which stated that Casey recruited Cyrus Hashemi into a sensitive business arrangement in 1979." [https://consortiumnews.com/2010/080610.html]

Casey was never at a lot of places during the time from when he was recruited by the OSS to his death. But he definitely was in Paris, despite the denials and bi-partisan cover-up that occurred later. In the book "The Secret Wars of the CIA" Casey comes across as someone for whom the boundaries between personal business, self enrichment and public service are non-existent. This seems to be a pattern among the sociopaths who dominate international business and politics.

Parry notes:

"The secret FBI summary showed Hashemi receiving a $3 million offshore deposit, arranged by a Houston lawyer who said he was a longtime associate of George H.W. Bush. The Houston lawyer, Harrel Tillman, told me in an interview that in 1980, he was doubling as a consultant to Iran's Islamic government." href="https://consortiumnews.com/2010/080610.html">[https://consortiumnews.com/2010/080610.html]

Lloyd Cutler writes:

"Hashemi tried to serve as an intermediary for the Carter White House because, at the request of his lawyer, several of us met with him in New York in the fall of 1980." "Hashemi claimed a family relationship with Hojatolislam Hashemi Rafsanjani, then speaker of the Iranian parliament and now president of Iran." He was already involved in arms deals with Iran by then, and "A few weeks later U.S. Customs and Justice Department officials notified us of evidence that Cyrus Hashemi, along with his brothers Jamshid and Reza, were involved in illegal arms exports to Iran via Kennedy Airport; when confronted, they had said they had our permission." The State Department denied they had any permission to export weapons.

Which is consistent with what an Iranian expat/national would think if he was dealing with people running an extralegal operation. The deal with Hashemi fell through because "." He admits "It is plausible that the Hashemis also were in contact with Republicans, as Jamshid now claims." And if Casey had recruited him in 1979 it could be that Casey is the one who got him in trouble in the first place. He also concedes that "Rafsanjani and his Islamic Republican Party did not consolidate their internal power until the fall of 1980."

 

Genesis of the Israel connection.

 

If the United States couldn't officially support Iran's military, Israel could! And if, instead of giving Arms to the Iranians they sold them, this could be a profitable effort for all involved. The nice thing (for arms dealers) is that they could do this semi-legally. During the Shah years Israel had developed relationships with top Iranian officials, some of whom avoided being jailed or executed. As Khomeini started to take over in 1979, Israel used the chaos to try to rescue Jews from Iranian persecution. Their first project was known as Shulhan Arukh (שולחן ערוך) or laid table; and rescued 40,000 of Iran's 100,000 Jewish Community. The director of this operation was an operative left behind when most of the Israeli Government withdrew their Embassy. Khomeini had kept SAVAK and military Officers in place, despite the fact that a large amount of the reason for the revolution was SAVAK behavior. These became contacts for Israel, Arms dealers, and their CIA and GOP contacts. For the Israelis the motivation for dealing with iran included Israel's interest in protecting the nearly 200,000 Jews living in Iran. Iran had been a refuge and conduit for Iraqi Jews fleeing Iraqi (and other) persecutions before, during and after the 1947 war, now there had to be some way to withdraw the remaining Jewish population (those willing to leave) in the face of the vicious anti-semitism of the new Ayatollah regimes.

So Israel had a motivation to sell or broker Arms to the Iranians.

September 22 1980-90 : Iran-Iraq War.

According to Lloyd Cutler during the official negotiations with the Carter Administration the:

"Iranians asked us to release undelivered military spare parts bought by the shah's regime. We agreed in principle to do so upon return of the hostages and supplied a list of what was available. But the Iranians surprisingly dropped this request and it never became part of the January 1981 agreements. Was this because of some secret deal with the Reagan team to obtain a larger quantity of American arms from the incoming administration?" [Baltimore Sun Article]

So where would be the evidence that he kept his bargain? The Larouchis published an article by Robert Dreyfuss in 1980 titled "Iran's armed forces receive covert aid from Washington" [http://www.larouchepub.com/eiw/public/1980/eirv07n37-19800923/eirv07n37-19800923_042-irans_armed_forces_receive_cover.pdf] alleging that in September 1980:

"quietly begun a major military airlift to resupply the Iranian armed forces with spare parts, arms, and ammunition, including heavy weapons. American C-130 air transport planes are ferrying this equipment to at least three secret NATO bases, including a location in the Azores, where the cargo is then transferred to Iranian transports for the rest of the journey!" [LaRouche Article]

This may have been from La Rouche, but this was corroborated. But apparently what Carter offered was a drop in the bucket compared to what the Republicans offered. And, apparently Likud Operatives as well. Consortium News reports:

“But the evidence points in that direction, and there are some points that are not in dispute. For instance, there is no doubt that CIA Old Boys and Likudniks had strong motives for seeking President Jimmy Carter’s defeat in 1980.”062410.html

Betrayal of Carter

When Casey was appointed CIA director in early 1980 these "old hands" cheered:

“Inside the CIA, Carter and his CIA Director Stansfield Turner were blamed for firing many of the free-wheeling covert operatives from the Vietnam era, for ousting legendary spymaster Ted Shackley, and for failing to protect longtime U.S. allies (and friends of the CIA), such as Iran’s Shah and Nicaragua’s dictator Anastasio Somoza.”062410.html

Carter had tried to stop (or at least moderate) ongoing dirty wars in Central and South America and the operations of Secret police like SAVAK and the agents not only of the above list but also including the dictators in Chile, Peru, Argentina and Bolivia. To these CIA officers dirty wars and the utter defeat of Communism, socialism, and uppity or rebellious people world wide was the mission. Protecting "Democracy" was code for how to win people over, kill enemies and make fortunes. It looks like we now know these Cold Warriors were in covert rebellion against the President.

At least the current rebellion is open.

“As for Israel, Likud Prime Minister Menachem Begin was furious over Carter’s high-handed actions at Camp David in 1978 forcing Israel to trade the occupied Sinai to Egypt for a peace deal. Begin feared that Carter would use his second term to bully Israel into accepting a Palestinian state on West Bank lands that Likud considered part of Israel’s divinely granted territory.”062410.html

Likud's goal was to gradually ethnically cleanse the West Bank as a threshold for regaining "Judea and Samaria" which were the Biblical Israel homeland.

“Former Mossad and Foreign Ministry official David Kimche described Begin’s attitude in his 1991 book, The Last Option, saying that Israeli officials had gotten wind of “collusion” between Carter and Egyptian President Anwar Sadat “to force Israel to abandon her refusal to withdraw from territories occupied in 1967, including Jerusalem, and to agree to the establishment of a Palestinian state.”062410.html

Which of course was anathema to the Likud, even if the stated position of Israel was to trade land for peace.

Kimche claimed: “This plan – prepared behind Israel’s back and without her knowledge – must rank as a unique attempt in United States’s diplomatic history of short-changing a friend and ally by deceit and manipulation.”062410.html

I remember the goals of Jimmy Carter were all being stated out in the open. He wasn't doing any secret side deals. But believing that is typical paranoid behavior of people who have their own secret agenda. I followed the Camp David accords. But both were willing to agree to some general outlines. Carter was negotiating out of love for the people over love for governments. To this day I don't believe that Israel was going to negotiate seriously without someone pushing them. So while from the POV of Begin that might have seemed a betrayal, Begin's reaction was a betrayal of his promises at Camp David. And how did Israel come to know of Carter's discussions with Sadat?

“However, Begin recognized that the scheme required Carter winning a second term in 1980 when, Kimche wrote, “he would be free to compel Israel to accept a settlement of the Palestinian problem on his and Egyptian terms, without having to fear the backlash of the American Jewish lobby.”062410.html

So in the name of stopping a final peace plan, Begin helped the Republicans sabotage the peace process by sabotaging Carter's re-election.

“In his 1992 memoir, Profits of War, Ari Ben-Menashe, an Israeli military intelligence officer who worked with Likud, agreed that Begin and other Likud leaders held Carter in contempt.” [062410.html]

Which is something they had in common with the GOP Cons.

“Begin loathed Carter for the peace agreement forced upon him at Camp David,” Ben-Menashe wrote. “As Begin saw it, the agreement took away Sinai from Israel, did not create a comprehensive peace, and left the Palestinian issue hanging on Israel’s back.”062410.html

35 Years of Peace Undermined by the Likud

Begin was the one betraying Carter, and the attitude of the Likud was the usual projection of bad intentions that people with bad intentions regularly do.

We can thank Carter for nearly 35 years of relative peace between Israel and her neighbors. If Carter didn't succeed in getting peace between Israel and the Palestinians the blame for that falls on the Likud and the GOP. Neither Reagan nor the two Bushes did anything to advance peace and the result has been 35 years of apartheid, low level violence, terrorism and ethnic cleansings. This has contributed to undermining the peace of those countries that Israel made peace with and is now unravelling Israel's relationships with it's neighbors. If Begin hated and despised Carter, his hatred was like taking poison and hoping your enemy will die. Israel was a heroic place before 1968. Since 1980 it has been involved in atrocities and dirty dealings. It took the election of Clinton to get talks started again, and by then the situation with the West Bank was even more intractible.

“So, in order to buy time for Israel to “change the facts on the ground” by moving Jewish settlers into the West Bank, Begin felt Carter’s reelection had to be prevented. A different president also presumably would give Israel a freer hand to deal with problems on its northern border with Lebanon.”062410.html

Begin's invasion of Lebanon resulted in the attrocities of the Sabra and the Shatila, destabilized Lebanon, and turned Israel's northern border into one even less secure than before. It may have undermined the PLO but it set loose Hezbollah to take their place.

Sound familiar? And the Inner Circle of CIA Agents and their friends outside the Government but still operating in Arms companies, Wall Street, and who knows where else felt:

"As for the CIA Old Boys, legendary CIA officer Miles Copeland told me that “the CIA within the CIA” – the inner-most circle of powerful intelligence figures who felt they understood best the strategic needs of the United States – believed Carter and his naïve faith in American democratic ideals represented a grave threat to the nation." [https://consortiumnews.com/2010/062410.html]

The cynical CIA operatives figured that "national security" = Wall Street, Main Street and personal profits, not naive democratic ideals.

The Iranians may well have decided to negotiate with both sides and "take advantage" of GOP and Israeli willingness to sell arms. This certainly would have taken the pressure off of them to deal with the Carter administration until their own power was consolidated, which was around the same time as the Reagan/Carter Election.

Free For all

Once the war broke out between Iran and Iraq Arms Dealers of all stripes found they had leverage with the Iranians again. The Iranians balanced that leverage by taking hostages. With the USA that was through Kidnappings. With Israel they had a two thousand + year old population of Iranian Jews. The USA "arms for hostages" of USA secret dealings were paralleled by an Israeli "arms for emigration" effort by Israeli leadership. Both dealings were secret. If aircraft carrying Jews, or hostages, were seen as flying for purely humanitarian reasons, then everyone would see it as pure patriotism and nobody would suspect any ulterior motive. The Iranians would be seen as generous humanitarians, and would get much needed arms for their war with Iraq. This also provided a get around because the Ayatollahs had restricted emigration to those rich enough to give up everything they had in order to leave. Selling Arms to a desperate Iranian military was one avenue to get around this. It would be a mix of bribery and extortion on both sides. For Israel rescuing oppressed Jews was part of their mission, and selling arms could more than finance that rescue. It would enrich everyone involved if they wanted to take the money.

 

Operation SeaShell

 

As Ronen Bergman wrote in “The Secret War with Iran: The 30-Year Clandestine Struggle Against the World’s Most Dangerous Terrorist Power,” pub. 2007, Israel made a fortune selling arms to Iran throughout that war. Bergman writes:

"First, Israel could not come to terms with the military, intelligence, and diplomatic losses that it had sustained with the disruption of relations with Iran after the revolution. Arms exports would at least give it a foothold in Tehran. In Israel’s defense establishment, the lesson had been learned from many cases over the years that swiftly supplying weaponry and military know-how to a totalitarian state will bring the supplier as close as possible to the rulers, because the weapons are their means of holding on to power."

“Second, it was hoped that the infusion of weaponry would intensify the Iran-Iraq war and lead to the mutual destruction or, at least weakening, of two enemies

"Third, Israeli officials feared a victorious Saddam" . . .

Fourth: “More than anything else, the weapons industry wanted to make money. As one Israeli Defense Ministry official, a key figure in Operation Seashell, recalls: “I do not remember even one discussion about the ethics of the matter. All that interested us was to sell, sell, sell more and more Israeli weapons, and let them kill each other with them.” p. 43

And there was a fifth reason. They used arms as a trading lever to help Iranian Jews leave Iran.

According to Ronen Bergman,

"Israel sold Iran US$75 million worth of arms from stocks of Israel Military Industries, Israel Aircraft Industries and Israel Defense Forces stockpiles, in their Operation Seashell in 1981.[1] Materiel included 150 M-40 antitank guns with 24,000 shells for each gun, spare parts for tank and aircraft engines, 106 mm, 130 mm, 203 mm and 175 mm shells and TOW missiles. This material was transported first by air by Argentine airline Transporte Aéreo Rioplatense and then (after the 1981 Armenia mid-air collision) by ship."

According to Trita Parsi, Israeli support for Iran consisted of several elements:

"Arms sales to Iran that totaled an estimated $500 million from 1981 to 1983 according to the Jafe Institute for Strategic Studies at Tel Aviv University. Most of it was paid for by Iranian oil delivered to Israel.[2]:107 "According to Ahmad Haidari, "an Iranian arms dealer working for the Khomeini regime, roughly 80% of the weaponry bought by Tehran" immediately after the onset of the war originated in Israel." [Trita Parsi]

"Arms shipments from the U.S. to Iran in the Iran-Contra Affair facilitated by Israel." [Trita Parsi]

"Israel's June 7, 1981 attack on Iraq's Osirak nuclear reactor which set back Iraq's nuclear program. In fact, Iran bombed them first, back in 1980, but they only damaged secondary buildings." [Trita Parsi]

"Israel is also reported to have supplied instructors and non-armaments help to Iran for the war effort. According to Mark Phythian, the fact "that the Iranian air force could function at all" after Iraq's initial attack and "was able to undertake a number of sorties over Baghdad and strike at strategic installations" was "at least partly due to the decision of the Reagan administration to allow Israel to channel arms of US origin to Iran to prevent an easy and early Iraqi victory." [Trita Parsi]

"Israeli arms dealer Yaacov Nimrodi apparently signed a deal with Iran's Ministry of National Defense to sell $135,842,000 worth of arms, including Lance missiles, Copperhead shells and Hawk missiles. In March 1982, The New York Times cited documents indicating that Israel had supplied half or more of all arms reaching Tehran in the previous 18 months, amounting to at least $100 million in sales. The Milan weekly Panorama reported that Israel had sold the Khomeini regime 45,000 Uzi submachine guns, anti-tank missile launchers, missiles, howitzers and aircraft replacement parts. "A large part of the booty from the PLO during the 1982 Lebanon campaign wound up in Tehran," the magazine claimed." [Trita Parsi]

Book with details of Mossad Operation:

"The Secret War with Iran" by Ronen Bergman[http://books.google.com/books?id=NkxZcHL1xdYC&lpg=PP1&ots=hkVy43U066&dq=Ronen%20Bergman%2C%20The%20Secret%20War%20with%20Iran&pg=PA36#v=onepage&q&f=true]

Also: Ronen Bergman, The Secret War with Iran, Free Press, 2008, p.40-48

Trita Parsi: Treacherous Alliance:

Cut-able reference: [http://mondoweiss.net/2012/01/nyt-gives-big-platform-to-israeli-journalist-to-espouse-fear-doctrine-for-israeli-attack-on-iran]

PDF: http://qawim.net/ar/files/Treacherous-Alliance-The-Secret-Dealings.pdf

 

Arms for Hostages Deals 1980-1983

 

Operation Demevand

 

In his book Crimes of a President, By Joel Bainerman:

"Although it never got into the mainstream press, the alternative press; The Nation, The Village Voice, The Progressive and In these times has given extensive coverage to operation Demevand. Named for a Mountain Range in Iran, this was a White House operation to sell massive amounts of arms to Iran Covertly and Illegally." [The Crimes of A President]

"Barbara Honneger, in her book October Surprise, gave one of the earliest reports on massive arms sales from the U.S. to Iran (pp. 179-183). Although many of the sources remained anonymous, she has to be given a lot of credit for investigating a secret agenda that up until then had gone virtually undetected. Her sources told her that arms shipments began in 1981, and by 1986 more than $15 billion worth of arms had been redirected to Iran. She quotes Richard Muller, a former colonel in the Marine reserves, as claiming that secret NATO military supplies stored in reforger stores throughout Europe." [Inside the Covert Operations of the CIA]

And this was all before the formal "Iran Contra" sales began.

"The proceeds went to the Pentagon's "black budget" for covert activities. " [Inside the Covert Operations of the CIA]

Crimes of the President

Chapter 5 "How many Weapons did the Reagan-Bush Administration really sell?

October surprise Books:

By Barbara Honneger

By Gary Sick

During Thom Hartman's interview with Honneger:

"...the Iran arms sales that surfaced in the Iran side of the Iran-Contra scandal were indeed the tip of the iceberg of just a few hundreds of million dollars of illegal arms shipments to Iran. That was just the tip of the iceberg of literally billions that started flowing right after Reagan took the oath of office."

 

After 1983

1983 : U.S. actively engaged in arms embargo, Operation Staunch.

Operation Staunch was a public cover. It had the benefit of bidding up the price for black market and covert sales. According to "Crimes of the Presidnet" Markups of weapons during the period when it was enforced were more than "ten times more than ordinary sales prices." "During the time of the embargo the numbers of countries selling weapons to Iran boomed from 40 countries to 53 countries." An embargo raises the profits for illegal arms sales.

Perhaps that is why the same folks who backed arms sales to Iran in the 80's want to sabotage peace talks now. Maybe they want the covert channels to reopen.

1983 : Adnan Khashoggi first meets with Robert McFarlane, Theodore Shackley meets Iranians Manucher Hashemi, Manucher Ghorbanifar and Hassan Karoubi.

January 1984 : McFarlane formally requests the NSC to formally examine ways to influence Iran. Report conveys an impasse.

March 1984 : Religious fundamentalist group Islamic Holy War kidnaps William F. Buckley, the CIA chief in Beirut, Lebanon. More American hostages taken in the following years.

1985 : Ghorbanifar and Khashoggi meet in Hamburg and devise skeleton of plan that will become Iran arms deal.

Summer 1985 : Israeli representatives drawn into discussion

The Middleman of the deal, Roy M. Furmark, between Khashoggi and Ghorbanifar would later testify:

"Furmark said he was the one who first brought together the two key middlemen in the arms deal by introducing Saudi Arabian arms dealer Adnan Khashoggi to Manucher Ghorbanifar, an Iranian businessman, at a Persian rug auction in Hamburg, Germany, in June, 1985. The two men have acknowledged arranging four arms sales to Iran." [http://articles.latimes.com/1986-12-17/news/mn-3247_1_arms-sales]

During that meeting:

"In my last meeting, (with Casey) I told him that Ghorbanifar thinks some of the money may have gone to the contras," Furmark said. He said he told Casey: "It looks like $15 million is missing." [http://articles.latimes.com/1986-12-17/news/mn-3247_1_arms-sales]

And note, all this is going on at the very moment that:

July 1, 1985 : President Reagan publicly denounces bartering with terrorists.

July 3, 1985 : McFarlane meets with Israeli David Kimche, who is in the U.S. on behalf of the Israelis who had met with Khashoggi and Ghorbanifar. The arms-for-hostages deal is first outlined, as is the prospect of improving the U.S.-Iran relationship.

July 16, 1985 : McFarlane meets with Reagan and his Chief of Staff Regan while Reagan is in the hospital recovering from surgery. They discuss the possibility of selling arms to Iran via Israeli in order to get the release of the hostages and to open communications with Iran. The details of this visit are hazy, but McFarlane came away from it with the idea that the President had encouraged him to go forward with discussions with the Iranians and Israelis.

August 1985 : Reagan approves the plan to allow Israeli to sell U.S.-made weapons to Iran.

August 20, 1985 : first load of missiles sent from Israeli to Iran.

September 15, 1985 : American hostage Benjamin Weir released. Colonel Oliver North brought in to deal with logistics

November 1985 : second load of missiles sold. Major General Richard Secord brought in to help replenish Israeli’s supply of weapons.

https://www.brown.edu/Research/Understanding_the_Iran_Contra_Affair/timeline-iran.php

 

Adnan Khashoggi

 

Arms dealers like Khashoggi served as go-betweens and made millions:

"Furmark said he told Casey that Khashoggi had arranged the financing of two arms shipments from Israel to Iran in August and September of 1985 for $1 million and $4 million. He said Khashoggi had then arranged a third shipment in February, 1986, for $10 million."

And like all Criminals the deals get financed:

"He said it was a fourth transaction, involving $15 million in May, 1986, that led to problems. Furmark said two Canadian investors, Walter E. Miller and Donald Fraser, had provided $10 million in "bridge financing" to Khashoggi for the deal. The Canadians have had extensive business dealings with Khashoggi in Vancouver, Salt Lake City and the Cayman Islands."

And This financing introduces risk:

"Furmark said unidentified 'European and Middle East sources' had provided the money for the $4-million transaction, the $10-million transaction and $5 million of the $15-million transaction.

Iran Contra may have only involved a small cabal of GOP operatives running a renegade operation in the Federal Government, but it involved some big players in the arms industry:

"Mr. Khashoggi knows the true source of the money used here, and I think only he knows," Furmark said, and "that two "partial shipments" of arms were delivered in July and August, 1986, but the Iranians paid only $8 million of the $15-million deal. Adding $3 million for handling and shipping, that left Khashoggi, the Canadians and the other investors $10 million in debt" [http://articles.latimes.com/1986-12-17/news/mn-3247_1_arms-sales]

Khashoggi claims he got stiffed. Which might account for the beginnings of his financial troubles after Iran Contra. Or maybe the money was coming from other sources like the USA and Arabian Governments. Or maybe the "stiffed" tale is a cover story.

"In 1990, a United States federal jury in Manhattan acquitted Khashoggi and Imelda Marcos, widow of the exiled Philippine President Ferdinand Marcos, of racketeering and fraud" [http://en.wikipedia.org/wiki/Adnan_Khashoggi]

That case fell through, but prosecutors have been after Adnan Khashoggi non stop since then, and he he's kept a low profile (selling his boat among other things).

"Mr Khashoggi’s fortunes declined in the late 1980s, thanks to overspending on festivities, ill-advised investments and his entwinement in scandals including the collapse of the Bank of Credit and Commerce International, the fall of Ferdinand Marcos and the Iran-Contra affair—though he was never convicted of criminal wrongdoing. He now claims to be broke. That hasn’t stopped a tenacious creditor and its lawyers hounding him for an 11-year-old debt of $21m to a securities-clearing firm. In a move that would break new legal ground if successful, they are trying to get the American judgment against Mr Khashoggi enforced in his native Saudi Arabia." [http://www.economist.com/news/finance-and-economics/21578447-intriguing-twists-and-discoveries-case-against-former-arms]

"It also emerged that someone with the same name as an official in the Saudi embassy in Washington, Hassan Yousef Mohammed Yassin, had paid at least one of Mr Khashoggi’s legal bills. When the diplomat was subpoenaed for information, he invoked immunity through the embassy’s Washington-based lawyers, who threatened to seek unspecified “sanctions” under the Vienna Convention unless the request was dropped. This fuelled suspicions that the Saudi state was throwing a protective arm round Mr Khashoggi for some reason, though there is no clear evidence of this, nor that the diplomat was the same Mr Yassin who paid the bill. Mr Khashoggi’s sister subsequently said that they had a cousin with that name." [http://www.economist.com/news/finance-and-economics/21578447-intriguing-twists-and-discoveries-case-against-former-arms]

Khashoggi's belt tightening:

Al Waleed Bin Talal

The man who bought Khashoggi's boat:

"Al-Waleed is the founder, the chief executive officer and 95 percent-owner[6] of the Kingdom Holding Company, a Forbes Global 2000 company with investments in companies within various sectors such as banking and financial services, hotels and hotel management companies, mass media, entertainment, retail, agriculture, petrochemicals, aviation, technology, and real estate" [http://en.wikipedia.org/wiki/Al-Waleed_bin_Talal]

I doubt Saudi princes get directly involved in sordid details anymore. And even the front men have front men. So the days of a Khashoggi or a Hashemi getting caught with actual goods are probably over. They merely need to own shares in the companies doing the business.

"In 1999, The Economist expressed doubts about the source of income of Al-Waleed and whether he is a front man for other Saudi investors. "You could barely clothe a Saudi prince for such sums, let alone furnish him with a multi-billion-dollar empire. Nevertheless, by 1991 Prince Alwaleed had felt able to risk an investment of $797m in Citicorp", wrote the magazine." [http://en.wikipedia.org/wiki/Al-Waleed_bin_Talal]

I could write more, but I wanted to focus on parallels between then and now. Then regressive and greedy forces who despised notions like "peace", "democracy" and human rights deliberately sabotaged a US President to prevent peace and undermine his foreign program. The spirit of piracy is alive and well. It may be dressed up with charters and legitimate trappings, but modern privateering isn't much different from it's 16th and 17th century predecessors. Anyway to make a buck, smuggling, slavery, piracy, freebooting, war; as long as there is profit in it you can find an investor, and if you can find an investor you can find canon fodder to deliver the product.

Further Reading:

Mondoweiss article claiming Israel having nefarious motives: [http://mondoweiss.net/2011/12/israels-myth-of-invincibility-drives-a-dangerous-idea-attacking-iran]

October Surprise, By Barbara Honneger: [http://www.amazon.com/October-Surprise-Barbara-Honegger/dp/0944276466]

Review by Thom Hartmann: [http://www.thomhartmann.com/blog/2006/04/transcript-barbara-honegger-october-surprise-apr-25-2006]

October Surprise: America's Hostages in Iran and the Election of Ronald Reagan, Gary Sick

Consortium news files on the subject:

https://consortiumnews.com/archive/xfile.html

https://consortiumnews.com/2010/080610.html

Lloyd Cutler notes that Hashemi throws out some interesting comments in a Baltimore Sun article:

http://articles.baltimoresun.com/1991-05-22/news/1991142130_1_hashemi-rafsanjani-cyrus

The Security State Always comes home

From Blue Nation

When we humans are told to be afraid of terrorists. Usually the government is talking about violent individuals or groups, sometimes state sponsored from abroad, who are attacking our people. Sadly, officials often are working for people who see the potential "terrorists" as ordinary citizens. This is especially true when the system is already corrupt. What happens then is that often the violent terrorism is not only used to justify domestic terrorism and repression, but sometimes it is even covertly egged on and funded. When we use spies and spook agents overseas, almost inevitably those personnel and methods eventually come home.

It's well documented that we've had an actively repressive security state since 2001

Back in 2013 I did some investigating into what happened to the Occupy Movement. Their persons, efforts and camps had been systematically oppressed, attacked and wiped out by Police forces. I'd noticed that the most aggressive police in New York City had all been wearing white dress uniforms, while the "men in blue" had behaved a lot more normal. It turned out that even the "men in blue" had been egged on to attack demonstrators. Rather than the repression and violence being an over-reaction to protester misbehavior, many of the attacks had been on orders. This all came out in lawsuits and "Freedom of Information" responses. I blogged on this in several posts in 2013:

In a post written in August 2013 named Bush's Loogie I described the history, background and some of the hijinks and how Terrorism got used as a bait and switch ploy for officials to go after peaceful protesters against criminal Wall Street behavior. I also talked about how the "Fusion Centers" created to fight terrorism became an instrument of (often State Governor based) represssion:

http://holtesthoughts.blogspot.com/2013/08/bushs-loogie.html

In Bush's Loogie I also described the case of Brenda Dowhan, who is an example of hundreds (thousands) of persons hired to infiltrate peaceful movements to gain intelligence or provoke them to break the law so they can be arrested.

In September I followed it up with reference to what happened to Naomi Wolfe, Occupy, and how the crackdown was programmed from before Occupy was even started!

"Occupy Crackdown coordinated from before Occupy created" [http://holtesthoughts.blogspot.com/2013/09/occupy-crackdown-coordinated-from.html]

I also introduced us to the Domestic Security Alliance Council (DSAC) which is a partnership between "retired" FBI officials and representatives of the largest USA corporations. At the time they had a public website and weren't exactly hiding what they were doing. They were basically hijacking US security efforts for their own purpose, which was to manage protests against Wall Street's criminal behavior, and to use the FBI department charged with investigating that behavior to do so!

I followed that up with an article on Spetember 9 titled:

The Domestic Security Alliance Council (DSAC) versus Democracy

In that article I went into detail from public information about what DSAC is about and why this is a repressive organization. Since then I've learned more of the history of USA Corporate Spying and Freebooting and that has led me to make Smedley Butler's 1930's book "War is a Racket" a reference book and almost a bible on what is wrong with our War-profiteering and War-mongering Security State. There is a Smedley Butler Society:

http://www.warisaracket.org/index.html

The book is online and can be read here:

http://www.ratical.org/ratville/CAH/warisaracket.html

Ultimately war-mongering and war-profiteering only benefit the lucky among the 1% and about .01% super wealthy who can afford the high stakes gambling involved in arms dealing and international intrigue. James Bond may be fantasy, but it turns out that organizations like "Spectre" are based on real mafioso behavior by arms dealers and renegade officials. That has to be investigated. Doing so can be fatal. Nothing has changed since Butler's time:

http://riseuptimes.org/2012/09/12/dick-cheneys-halliburton-sold-nuclear-technology-to-iran/

So I wanted to write a follow up to those posts from 2013 with an update that affirms what I learned then:

(Back in 2012) http://www.justiceonline.org/fbi_files_ows/

How Wall Street Used Government Forced to Crush Occupy (2015 Article)

This post is more a review post. Here is the article that inspired it:

How Wall Street Used Government Forces to Crush Occupy

In that article the author notes the definition of Terrorism used by the FBI:

“Domestic terrorism” means activities with the following three characteristics:

- Involve acts dangerous to human life that violate federal or state law;

– Appear intended

(i) to intimidate or coerce a civilian population;

(ii) to influence the policy of a government by intimidation or coercion; or

(iii) to affect the conduct of a government by mass destruction, assassination. or kidnapping; and -Occur primarily within the territorial jurisdiction of the U.S."

Of course, the weasel words the FBI used was "potential for domestic terrorism", because everyone has the potential (maybe near zero) to do domestic terrorism so if the word "potential" is included in the meaning then they can watch folks with impunity. But the author notes that while the Occupy Wall Street protesters met none of the above definitions, except maybe that they were endangering themselves by taking on authority, the Police and authorities met all of them.

Essentially the report reaffirms what we found out in 2013 and 2014:

" FBI documents just obtained by the Partnership for Civil Justice Fund (PCJF) pursuant to the PCJF’s Freedom of Information Act demands reveal that from its inception, the FBI treated the Occupy movement as a potential criminal and terrorist threat even though the agency acknowledges in documents that organizers explicitly called for peaceful protest and did “not condone the use of violence” at occupy protests. These documents show that the FBI and the Department of Homeland Security are treating protests against the corporate and banking structure of America as potential criminal and terrorist activity. These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America."

As I pointed out 2 years ago, DSAC was (and is) an arm of Wall Street and Corporate America. So why should anyone be surprised? The whole thing is a real turkey:

The Security State eventually eats It's own

What gets me is that we don't seem to be able to change anything.

Since I wrote this article a lot of information has come out, along with details of just how corrupt and repressive organizations like DSAC, State and Local Police Forces and renegade FBI and CIA agencies are. Nothing has really improved much. If anything the government seems to be out of the President's control in this area and I'm worried he'll be assassinated by these people if he tries to do anything about them. The Secret Service is regularly showing it's intoxicated incompetence, and his own agency heads (DEA) regularly insult him and ignore him and Eric Holder. I was afraid Obama's election was going to be a relatively mild people in our neo-Fascist storm, but it's been stormy with Congress and Officials alike in open sedition and subversion efforts. The Security State always comes home, and it eventually eats it's own. We become what we hate, and a lot of the people who have exaggerated fears of what the Soviets, Maoists or other tyrants did in the name of Communism seem poised to engage in mass repression at home.

Post Script

Lest anybody presume that the Security Police State is something new, it's not. Secret police and police treated as standing armies and occupying forces were a feature that began with the second phase of colonialism, when it came to be dominated by "monied wealth" and institutionalized corporations.

In the USA oppression was usually adhoc and local. My investigations started with historical crimes dating back to before the Wilson Administration. The problem is that we've had a police state for some communities for year. And we demanded it. "Stop and Frisk" targets "poor communities" which just happen to mean mostly minority communities. You can hear, from time to time, sweet ladies talk about how "stop and frisk" get's bad guys off the street. And sure enough it regularly puts poor black people in jail for having some pot in their pocket or for being in the wrong place at the wrong time. To people living in such places these are occupation police state tactics. The statistics say that minorities get targeted by police, and this is just the dark side of human nature. People tend to go after the easy targets first. So instead of feeling sympathy for the poor and sick, they become marks.

Alan Grayson went to an interview today in which he said something so obvious it ought to be trite:

http://rt.com/shows/watching-the-hawks/243453-mainstream-media-distrust-factors/

"When you put people to work making bombs, you end up with bombs. When you put people to work making bridges, you end up with bridges."

Holte's Law applied to Rothbard on LVT

I was looking to see what the Royalists (Von = Lord) such as Von Mises and Hayek had to say about Georgism. And I came to Rothbard's writings. Rothbard wrote about Henry George, but I also have to invoke "Holte's Law" in reading him, which is if an Austrian School propagandist likes it, be skeptical. And the Corollary, if an Austrian School propagandist hates it, it's probably spot on. Rothbard despised Henry George. And more importantly, if you want to find out the truth among a pack of liars read the enemies of your liar friends. They'll either tell you the truth, or give you diamonds mixed in with their dreck you can sort through. Thus when the Austrian folks invoke:

"Rothbard's Law: the tendency of people to specialize in what they are worst at." [http://mises.org/library/progress-and-poverty-how-book-came-be-written]

I invoke Holte's law. Rothbard attacks George with this strawman:

"George saw the credit-fueled land speculations of the 19th century and concluded that these unproductive activities were due to private ownership of land, which he proposed to end in the name of promoting prosperity. It was a mistake of cause and effect." http://mises.org/library/progress-and-poverty-how-book-came-be-written]

Rothbard and the Austrians feared George enough to try to both attack him and try to appropriate his name (damning with faint praise). That in itself recommends him to me. First Henry George was not advocating socializing ownership of land. He wanted to tax unearned land rents. That is not "ending private ownership" at all. Why would Rothbard make a false argument? I think it's because he spent his life specializing at teaching Austrian Economists, something he could never do that well because Austrian Economics is mostly dreck. Rothbard can't even describe Georgism accurately, writing:

"According to the single tax theory, individuals have the natural right to own themselves and the property they create. Hence they have the right to own the capital and consumer goods they produce. Land, however (meaning all original gifts of nature), is a different matter, they say. Land is God-given. Being God-given, none can justly belong to any individual; all land properly belongs to society as a whole."

Single taxers do not base their argument for Land Value Taxation on Land being "God-Given", nor on "none can justly belong to any individual", they simply don't say that. I've had long arguments with Georgists who will explain how that is just not an accurate statement of his ideas. On the contrary people have a "God-Given." Georgists explain that the right to "property in land" has to be a common right because it is a right that all deserve and not just an aristocracy, no matter how broad:

"If production gives to the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not the production of labor, and the recognition of private property in land is wrong. For the right to the produce of labor cannot be enjoyed without the right to the free use of the opportunities offered by nature, and to admit the right of property in these is to deny the right of property in the produce of labor. When non-producers can claim as rent a portion of the wealth created by producers, the right of the producers to the fruits of their labor is to that extent denied. There is no escape from this position." [http://www.henrygeorge.org/rightful.htm]

But if that were the only straw in Rothbard's argument it would be belied by his admission that Georgists don't believe in simply taking land and make the argument that unearned rent is a big portion of the problem. Rothbard then puts up more straw:

"The deficiency in that argument is the neglect of the time factor in production. Capital is the product of human energy and land . . . and time. The time-block is the reason that people must abstain from consumption, and save. Laboriously, these savings are invested in capital goods." [http://mises.org/sites/default/files/Single%20Tax%20Economic%20and%20Moral%20Implications_2.pdf]

This is straw because it a; is extrinsic to the argument he's "refuting", and b; Henry George doesn't neglect time factors in his argument because what is essential to his argument is the notion that there is a moral ownership to be gained from people's labor. Henry George acknowledges the importance of capital and specifically exempts it from Taxes for that reason. Not only is the time factor important in values, but the reality of depreciation means that most physical investment requires constant reinvestment to maintain value. Something Rothbard neglects.

His next caveat raises questions to me:

"The single tax theory is further defective in that it runs up against a grave practical problem. How will the annual tax on land be levied? In many cases, the same person owns both the site and the man-made improvement, and buys and sells both site and improvement together, in a single package. How, then, will the government be able to separate site value from improvement value? No doubt, the single taxers would hire an army of tax assessors. But assessment is purely an arbitrary act and cannot be anything else. And being under the control of politics, it becomes purely a political act as well. Value can only be determined in exchange on the market. It cannot be determined by outside observers." [Rothbard Critique]

I've raised this issue, and since it's coming from Rothbard, I'm sorry I did. The easiest way to get around this would be to levy the tax at point of sale. But LVT folks, in reality, usually don't lobby for a 100% tax but some version of a partial tax, and the issue of assessing land values can be based on the same kinds of data that come from current real estate taxes. He calls it defective because of this, but so is every other tax in some way. Those that are easy to calculate are usually regressive and fall mostly on workers and poor. Income taxes tend to fall on workers, or fail to account for capital investment. So on the one hand whenever Rothbard says anything red flags go up for me. But on the other hand, the best way to test an argument is to test the arguments of the critics.

Rothbard then claims that a Land Value Tax would be arbitrarily applied. His assumption is on the assumption of the natural right of ownership:

"In our world, the only naturally free goods are those that are superabundant—like air. Goods that are scarce, and therefore the object of human action, command a price on the market. These goods are the ones that come into individual ownership. Land generally is abundant in relation to labor, but lands, particularly the better lands, are scarce relative to their possible uses." [Moral Implications_2.pdf]

Rothbard's assumption is that any common property will be misallocated because:

"Compelling any economic goods to be free wreaks economic havoc."

But common ownership doesn't imply making it "free" to the user. It just means that the governance of that resource needs to be done in the interest of the common-wealth and not the private separate wealth. Private ownership is an avenue to inequality and there is no evidence to support the libertarian/Conservative contention that freedom = economic havoc. Though in the case of goods that are held for purely private use, when ownership is not connected to labor and the person who owns the good is not responsible for paying for external costs, downstream costs and other externalities -- the resource definitely gets misallocated.

And Rothbard's comment "a 100 percent tax means that land sites pass from individual ownership into a state of no-ownership as their price is forced to zero" belies that the tax is designed to fall on unearned rents and speculative appreciation and isn't designed to fall on capital goods or the housing/buildings on the land. On the contrary a high LVT rate will encourage owners to put money into increasing the value of the capital goods that use that land in order to avoid the tax on economic rent. As someone said the LVT tax is designed to make landlords efficient rent collectors for local government. It might make landlords actually work for a living. What it definitely wouldn't do would be to "no-ownership" as a properly designed LVT tax won't fall on home owners or production facilities. It's designed to make the land work. And that is if you buy his arguments that the LVT tax would actually be at 100% of the assessed value. It just doesn't follow (non sequitur) that:

"favoritism and “queuing up” will settle allocation, instead of economic efficiency. In short, there will be land waste on a huge scale. Not only will there be no incentive for those in power to allocate the sites efficiently; there will also be no market rents and therefore no way that anyone could find out how to allocate sites properly."

Which of course is balderdash. Even if there were the risk that a 100% tax on land rents would dissuade people from owning land for renting to others, it would not dissuade productive use or home use. But all Rothbard and the other Austrians were betraying was their craving for economic Royalism over any kind of commonwealth:

"For in any economy, a useful resource cannot go unowned without chaos setting in; somebody must manage and own—either private individuals or the government. "

The idea that people can be trusted to manage a common resource is foreign to them. Yet we know that private ownership is as chaotic and prone to mismanagement as pure anarchy. But the alternative according to the American Way of doing things is; commonwealth.

Now I tell a story. When this country was first settled, the first instincts of the Royalist Elite were the same as those of the Vons and Vans of the Austrian School, to replicate the aristocratic structure of Dark Ages Europe. My State of Maryland, was founded on this principle. It was to be the property of Vast Estates owned by foreign landlords. That didn't work. The folks brought in as slaves (on 7 year contracts if white, or permanently if black) ran away or otherwise rebelled. The authorities went to permitting property because aristocratic control equals slavery and stifles innovation, personal liberty and survival for the majority. Rothbard feared Henry George and that is why he misrepresents his teachings.

Further Reading:

http://mises.org/rothbard/georgism.pdf

http://www.henrygeorge.org/rightful.htm

Henry George as an Excellent Economics Teacher

Austrian Economics is but a handmaiden to aristocracy and privilege. George's arguments about Land value segue off off John Locke's arguments for the right of commoners to own property and his arguments against royalty. It is precisely because we all have an equal right in property that unearned values in land must be taxed. He gets attacked by both socialists and elitists because of this. But he's just right.

Further Readings:

http://mises.org/rothbard/georgism.pdf

http://www.henrygeorge.org/rightful.htm

http://holtesthoughts.blogspot.com/2015/03/the-target-of-progressive-taxation-and.html

http://mises.org/library/progress-and-poverty-how-book-came-be-written

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." [http://www.theatlantic.com/politics/archive/2015/03/what-makes-indianas-religious-freedom-law-different/388997/]
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. [http://www.theatlantic.com/politics/archive/2015/03/what-makes-indianas-religious-freedom-law-different/388997/]

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 [http://www.theatlantic.com/politics/archive/2015/03/what-makes-indianas-religious-freedom-law-different/388997/]

Text of Law: http://www.indystar.com/story/news/politics/2015/03/27/text-indianas-religious-freedom-law/70539772/

-----------------------------------------------------------------------------

 

Full Text:

"SENATE ENROLLED ACT No. 101"

"AN ACT to amend the Indiana Code concerning civil procedure.

"Be it enacted by the General Assembly of the State of Indiana:

SECTION1.IC34-13-9 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2015]:

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.”

http://www.indystar.com/story/news/politics/2015/03/27/text-indianas-religious-freedom-law/70539772/ Taken 11:46 3/31/2015

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

noun

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" [http://turmelpress.com/bankmath.htm]:

"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 Bank	Accounts	IOU	New 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: http://turmelpress.com/bankmath.htm
	$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" [http://turmelpress.com/bankmath.htm]

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 http://holtesthoughts.blogspot.com/2015/02/satans-usury-john-turmel-and-some-basic.html] 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?

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. . . . " [http://holtesthoughts.blogspot.com/2015/03/the-target-of-progressive-taxation-and.html]

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" [http://www.cooperativeindividualism.org/george-henry_on-whom-does-the-single-tax-fall.html]

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." [http://www.thefamouspeople.com/profiles/henry-george-192.php#XqHFujmBG82R5xcx.99]

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." [http://www.history.com/topics/us-presidents/compromise-of-1877]

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." [[http://www.thefamouspeople.com/profiles/henry-george-192.php#XqHFujmBG82R5xcx.99]]

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." [http://historymatters.gmu.edu/d/5746/]

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 http://holtesthoughts.blogspot.com/2015/02/satans-usury-john-turmel-and-some-basic.html

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 [ http://www.thefamouspeople.com/profiles/henry-george-192.php#XqHFujmBG82R5xcx.99"]

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 http://www.thefamouspeople.com/profiles/henry-george-192.php#XqHFujmBG82R5xcx.99]

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" [http://www.anb.org/articles/15/15-00261.html]

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." [http://www.wealthandwant.com/HG/the_condition_of_labor.htm]

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" [http://w2.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html] 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."

Equality:

"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.

[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 http://www.thefamouspeople.com/profiles/henry-george-192.php#XqHFujmBG82R5xcx.99]

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." [http://www.anb.org/articles/15/15-00261.html]

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

Excerpts:

General Articles on Economics

http://hgarchives.org/historical-collections/books-and-periodicals/

Satans Usury [http://holtesthoughts.blogspot.com/2015/02/satans-usury-john-turmel-and-some-basic.html]

http://historymatters.gmu.edu/d/5746/

Rerum Novarum: [http://w2.vatican.va/content/leo-xiii/en/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html]

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

http://www.dailykos.com/story/2005/03/18/100364/-George-H-W-Bush-links-to-the-Kennedy-Assassination