Counterfeit Crime: Criminal Profits, Terror Dollars, and Nonsense 9780773590632

Table of contents :
Cover
Copyright
Contents
Acknowledgments
Preamble
1 Clone Artists and Copycats: Global Pandemic or Counterfeit Crime?
2 The Underground Economy: A Ruse by Any Other Name?
3 The Criminal Entrepreneur: Predator, Parasite, or Free-Market Pioneer?
4 On the Track of the Black Greenback
5 Ghosts of Terror Wars Past and the Roots of the Military-Industrial Complex
6 The Geopolitics of Theopolitics and the Rise of Black-Collar Crimes
7 Middle East Meets Midwest? Theopolitics, Crime, and Terror in the USA
8 Brand-Name Terrorism, la Crise d’Octobre, and Lessons for a Post-9/11 World
9 Criminal Profits, Terror Dollars, and Yet More Nonsense
Notes
Index

Citation preview

counterfeit crime

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Counterfeit Crime Criminal Profits, Terror Dollars, and Nonsense

r . t . n ay l o r

McGill-Queen’s University Press Montreal & Kingston • London • Ithaca

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©  McGill-Queen’s University Press 2014 isb n 978-0-7735-4346-1 (cloth) isb n 978-0-7735-9063-2 (eP DF ) isb n 978-0-7735-9064-9 (eP UB) Legal deposit fourth quarter 2014 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100% ancient forest free (100% post-consumer recycled), processed chlorine free McGill-Queen’s University Press acknowledges the support of the Canada Council for the Arts for our publishing program. We also acknowledge the financial support of the Government of Canada through the Canada Book Fund for our publishing activities.

Library and Archives Canada Cataloguing in Publication Naylor, R. T., 1945–, author Counterfeit crime: criminal profits, terror dollars, and nonsense / R.T. Naylor. Includes bibliographical references and index. Issued in print and electronic formats. ISB N 978-0-7735-4346-1 (bound). – IS BN 978-0-7735-9064-9 (eP U B ). – ISB N 978-0-7735-9063-2 (eP DF ) 1. Commercial crimes.  2. Commercial crimes – Government policy.  3. Transnational crime.  4. Transnational crime – Government policy.  5. Terrorism – Government policy.  I. Title. HV6768.N 39 2014

364.16'8

C 2013-908500-9 C 2013-908501-7

This book was typeset by Interscript in 10.5 / 13 Sabon.

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Contents

Acknowledgments vii Preamble 3 1 Clone Artists and Copycats: Global Pandemic or Counterfeit Crime? 24 2  The Underground Economy: A Ruse by Any Other Name?  50 3  The Criminal Entrepreneur: Predator, Parasite, or Free-Market Pioneer? 76 4  On the Track of the Black Greenback  98 5  Ghosts of Terror Wars Past and the Roots of the Military-Industrial Complex 118 6  The Geopolitics of Theopolitics and the Rise of Black-Collar Crimes 137 7  Middle East Meets Midwest? Theopolitics, Crime, and Terror in the U SA  178 8  Brand-Name Terrorism, la Crise d’Octobre, and Lessons for a Post-9/11 World  197 9 Criminal Profits, Terror Dollars, and Yet More Nonsense  209 Notes 229 Index 275

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Acknowledgments

I want to extend warm thanks to many colleagues with whom I collaborated, argued, or shared fine wine (as well as some really bad stuff) over the years, particularly Peter Andreas, Margaret Beare, Alan Block, Jack Blum, the late Bill Chambliss, Michael Hudson, Mike Levi, Sam Noumoff, Dan O’Meara, Nikos Passas, Francisco Thoumi, and Phil Williams. I learned to respect these individuals for their commitment to intellectual integrity rather than to career advancement. Not only is that choice increasingly difficult to make today, but it has become ever rarer to find those willing to try. I want to offer special thanks once more to Phil Cercone and his staff at McGill-Queen’s University Press (plus the ever tenacious but still patient Claude Lalumière) for facing the abnormal financial and political constraints normal in publishing today to take on this book as well as seven of its predecessors. My gratitude extends, too, to many people with whom I have had no formal academic or professional association for their encouraging responses to previous books, plus literally thousands of students who listened to me sound off about these issues during a forty-year (so far) university career. For some time now I have made a bittersweet practice of dedicating my books to the memory of certain colleagues much my senior who were a source of inspiration and support during my formative years. Among the things they taught me was not to fear affronting the kind of disciplinary frontiers and professionally approved methodologies that academics, gathered into their usual self-referential cabals, reflexively defend. Whatever its original merits, today the intellectual, professional, and even financial security conferred on academics permits them to climb into their chosen box, lock it firmly

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viii Acknowledgments

behind them, then throw the key out the window before shuttering that window, too, from the inside. But, if they refuse to use those privileges to at least sniff the air outside that box from time to time, they don’t deserve to have them. This time my acknowledgments must be expanded to include someone both outside the ivory tower and inside my general age bracket who, in his columns over many years in The Village Voice, The Wall Street Journal, The Nation, and Counterpunch, was a major influence not just on my way of thinking but on how I chose to express the results. I recall fondly in 2007 our first phone conversation – many more e-conversations followed. When, to my delight, he asked if Counterpunch could publish excerpts from my book Satanic Purses, I took the occasion to inform him that his father’s wise words – “Don’t believe anything until it’s officially denied” – had for about two decades been posted on my office door to guide at least some of my students and annoy at least some of my colleagues. I vividly recall a feeling of profound unease in the summer of 2012 the first time I opened the weekend Counterpunch and found that his column, always a highlight of my week, was missing. On a hunch I sent him an email asking if he was okay. His reply? He had been too busy. With what, he didn’t elaborate. I got the answer like a kick in the stomach a short time later with the first line I read in the 21–23 July weekend issue: Alexander Cockburn, 1941–2012.

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counterfeit crime

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Preamble

“In the halls of justice,” the great American satirist Lenny Bruce once observed, “the only justice is in the halls.” He based his judgment on firsthand evidence, dying at age forty, not so much from his heavy drug use but from, according to his Billboard obituary, “an overdose of police.”1 During a long career hobnobbing with criminologists, justice apparatchiks, law-enforcement types, forensic accountants, lawyers on both sides of the court divide, and even with the occasional recipient of their professional curiosities, I came to understand the depressing kernel of truth in Lenny Bruce’s observation – with one major qualification. The real problem is not a surfeit of “police,” a necessary institution even if today’s trend toward transforming police forces into paramilitary hit squads is not. Rather the pressing need is to understand how so many places got themselves overdosed on “policing” via a proliferation not just of cops in battledress but also of security firms, private investigative agencies, compliance officers, insurance investigators, claims adjusters, fraud examiners, tax assessors, plus functionaries of assorted other oversight agencies, professional and public alike – all under the ever-vigilant eyes and ultra-sensitive ears of the security-and-intelligence complex.2 This seems to threaten a dystopian future in which one half of the working population earns its living by probing, monitoring, and “regulating” the other half – a big chunk of whom are gainfully employed in collecting overdue debts from the rest. It is a curious state of affairs, indeed, in which Edward Snowden can be accused of espionage and treason for informing the public at large that a global spy apparatus has been

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trying secretly to overhear, observe, and analyze their every conversation, movement, and financial transaction, while rationalizing its actions by the need to defend Freedom from the twin menaces of Crime and Terror. A predecessor volume, Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy, had already targeted some major myths surrounding the Crime War raging at the time of its publication, as well as directing opening shots at the then-recently declared Terror War.3 Apparently my aim back then wasn’t very good, or perhaps just not very lethal. There was no sign that those responsible for either tragic farce so much as ducked their heads, let alone retreated with their hands in the air like the bad guys in old American Westerns, or in modern American Middle Easterns. No doubt these strategic geniuses were too busy studying the latest charts of “crime” and “terror” trends upside down to pay much attention to what outsiders had to say.4 Apparently my aim improved enough in a subsequent book, Satanic Purses: Money, Myth, and Misinformation in the War on Terror, to draw return fire from the then-deputy director of counterterrorism of the US Justice Department.5 “If Naylor were to be believed,” declared the terrorism expert in a review, “I and my colleagues should most certainly be disbarred.”6 Alas, no one took the deputy director up on his kind suggestion – although instead of being “disbarred,” a long spell “rebarred” in one of those open-air cages in the Guantánamo concentration camp might have been more appropriate penance. Meanwhile the fires set by those “wars” continue to burn today, with even more heat but ever less light. For that reason a successor volume seems not out of place. At first glance the chapters gathered here – some new, some revised, updated, and expanded from their original forms – seem more eclectic than those in the preceding books. Yet despite an apparent diversity of subject matters, these chapters have common themes best highlighted by giving some background to each. Chapter 1 has as its apparent theme today’s ever-expanding “war on intellectual-property crime.” Yet it is much more than just a critical look at a trendy new (or, rather, newly trendy) criminal offense. It provides an opportunity to dissect the misapprehensions, exaggerations, and simple falsifications, much driven by barely hidden agendas, that underpin so much that passes today for “criminal justice,” not to mention “economic development.”

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Preamble 5

On the surface the emergence of a new offense – or a dramatic shift upward on the most-unwanted lists of an existing one like “intellectual-property crime” – ought to be simple enough. The media discover another menace to public peace, prosperity, and progress; an alarmed population clamours for decisive action; and the political opposition excoriates the government for failure to act forcefully. Meanwhile the government has been calmly pondering the situation until the time comes to respond with appropriately targeted vigour. Then everyone goes back to sleep, secure in the notion that legal mechanisms are in place to prevent a recurrence. No doubt from time to time those in authority really do try to meet genuine public concerns in a coherent way, rather than just getting stampeded by general hysteria. But, contrary to the tooth-fairy version of events, major changes in law and/or enforcement priorities, not to mention the enforcement tools chosen, can also result from the hijacking of the legislative, investigative, and enforcement process by those with ulterior objectives – political, ideological, or, as with profit-motivated crimes, economic in nature, or maybe some combination of them. There is no better example than those currently strenuous, almost frantic, efforts to protect so-called knowledge-intensive products and high-price consumer luxuries from a reported epidemic of piracy and counterfeiting. Yet stripping away legalistic obfuscations, the real purpose of the contemporary offensive against copycats and patent pirates has to do not with protecting clients but with ensuring that only current business holders of brand labels, trademarks, and industrial designs get to rip off the public. In that way a corporate-planned impermanence of a product can be offset by a legally enforced permanence of the supplier’s name, therefore securing a flow of rentier income, raising stock-market value, and, of course, puffing the quickresale value of the “intellectual property” those corporations pretend to be so concerned with protecting.7 On top of this gets built an infrastructure of investigation, enforcement, and prosecution that, the taller and broader it gets, and the more vested interests see the opportunity to turn the issue to their advantage, the less any of the to-do has a genuine connection with the original justification. The need for a crackdown on product counterfeiting and ­industrialdesign piracy is supposedly all the more compelling because of a mystical new force called “globalization” – one of those terms so vapid that it means whatever any party to this dialogue of the deaf and the

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dumb wants it to mean. This has reputedly so upset normal trade and investment patterns and, along with them, political relations among nations as to create preconditions for an extraordinary upsurge in criminal activity that calls, naturally, for an equally extraordinary response. What somehow gets missed in all the sturm und drang is the fact that the very spread of international trade was pioneered across the ages not by law-abiding business leaders but by brigands, pirates, and smugglers – not that the distinction is sometimes at all clear today either.8 Also ignored is that the groundwork for today’s most important technologies, not to mention its pure science discoveries, was laid firmly in place in the nineteenth and early twentieth centuries, if not much earlier, mainly by amateurs who, while taking on a much more challenging job without today’s enormous research infrastructure to back them, rarely reaped any serious monetary reward.9 Subsequently their inventions, themselves the product of decades or even centuries of trial and much error by persons long lost in the anonymity of time, were captured, glitzed up, sliced and diced, then commercialized by corporate interests. To the extent those current “owners” actually do sponsor serious additional work, rather than just peddling minor modifications as if they were inspiring innovations, they draw on entire networks of scientists and technicians whose training (and technical apparatus) is now largely paid for by the general public, the one party that never seems to be present when the time to divvy up patent, trademark, or copyright profits rolls around. Allegedly the situation for today’s downtrodden consumer-­products conglomerates is made even more precarious because the threat from Organized Crime launching itself headlong into trademark and copyright violations has been in recent years further compounded with the infiltration of the racket by Organized Terror – plots against the foundations of Judeo-Christian Civilization are now, it seems, paid for by things like counterfeit Rolex watches. That, in turn, calls for more effective monitoring of trade, financial flows, and, certainly not least, electronic communications where cybercriminals in the employ of crime cartels and spies from hostile governments lurk to sweep and scoop, then zip or zap the precious secrets off to forbidden locations. This alarming (to whom and why is another matter) scenario has, ironically enough, helped to buy general acquiescence to the emergence of a national surveillance state in places that used to brag of being liberal democracies.10 (Set a spook to catch a spook?)

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Preamble 7

Meanwhile the favourite headline villains have shifted from swarthy, dope-peddling Hispanics to cunning, slanty-eyed Asiatics, although both still get left in the dust by Islamic fanatics with rags wrapped around their heads and AK-47s clenched in their fists. The second chapter moves from the particular in the form of “intellectual-property crime” to the general in the shape of the “underground economy,” that supposed mass of illegal economic activity composed partly of explicitly criminal acts and partly of “informal” off-the-books transactions. Both activities are the work of entrepreneurs sometimes depicted as thumbing their noses at polite society, sometimes lauded for pioneering a selectively free economic system, sometimes both, depending on mood, need, and opportunity. From a presumed-to-be small start in the early 1970s during what was then the worst crisis to hit the capitalist world since the end of World War II, quickly the underground economy grew to allegedly alarming proportions, then seemed to drop from the headlines for a couple decades. It reared its hydra head again with the worldwide financial crash of 2007–08, the ensuing stagnation, and the spectacle of politicians, senior functionaries, and top economic advisors flailing about in search of not just a “solution” but a seemingly convincing explanation that would preclude any need to radically rethink the socioeconomic status quo. No less an authority than the Council of Europe labelled an alleged post-crisis explosion of underground activity as a “threat to democracy, development and the rule of the law.”11 That growth of illegal activity is being used now, much as it was in the past, to support demands for big tax reductions on behalf of upper-income groups, rollbacks of government regulations to benefit corporations already wielding far too much power, and cutbacks in transfer payments to those at the lower end of the socioeconomic ladder waiting (usually in vain) to clamber up a rung or two. If this is a valid prescription for reducing the propensity for entrepreneurs to break the law, presumably a logical crime-fighting follow-up is to guarantee bailouts to inept bank robbers, hand out entrepreneur-of-the-year awards to ecstacy traffickers, and congratulate gang rapists for their public mindedness. Yet, looking back at the emergence of the underground economy concept itself in the 1970s, the main thing that seemed to be growing in the places where the fuss was greatest was the absurdity of its logical underpinnings, the statistical fallacies used to approximate its size, and the political expediency behind claims about causes and cures.12 Nor was there any mystery then, any more than now, about the real agenda.

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For example, in 1971 a prominent corporate lawyer and tobacco industry shill named Lewis Powell penned a stark warning to the US Chamber of Commerce entitled “Attack on the American Free Enterprise System.” It invoked the need for a merciless counter-offensive against enemies of business entrenched in the universities, media, and courts and attracted enough favourable attention for President Richard Nixon to nominate the author of the memo to the US Supreme Court. There in 1978 Justice Powell steered the first move to endow corporations with political rights hitherto reserved for people by letting them contribute to the campaigns of their favourite politicians.13 The much denounced 2010 Court decision allowing corporations to plant campaign ads on behalf of their nominees merely completed the process begun by Powell of converting politicians into objects amenable to being traded, along with pork bellies, on the Chicago Mercantile Exchange.14 The ideological uproar over the underground economy back in the 1970s did something else that seems underappreciated but very relevant today. It marked the opening salvo of a radical social experiment that matches, in a twisted way, the one launched by the Bolsheviks in 1919, but it goes far beyond. In effect the world economy was to be transformed along the lines of an orthodox economictheory textbook. If the Bolshevik Revolution trampled on vestiges of opposition within the confines of the old Russian Empire, the FreeMarket Revolution, using different means, did the same on a grander and deeper scale – not least because it incorporated into its project, through mass violence where necessary, the so-called Third World along with, at a later stage, the flotsam and jetsam of a collapsing Second World.15 And it achieved those results despite the fact that the theoretical model on which it is based is so riddled with factual and logical error that, were it not for decades of systematic brainwashing, no one could take it seriously.16 Consider, for example, the very concept of “free market,” the ideological sine qua non of contemporary economics and of the political structures built using it as a rationalization. Far from being the “natural” road to liberty and prosperity, the “free market” is a fairly recent piece of top-down social engineering by an increasingly powerful state based on a blueprint enunciated clearly by the celebrated founders of modern Anglo-American economics – the ones whom today’s economists laud without bothering to read. The real institutional ancestors of the “free market” were not the “truck and barter” sessions of open village markets where relevant knowledge really was

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Preamble 9

almost free and prices set as much by moral and social values as by prospects of short-term economic gain. Rather they were land enclosures to dispossess the peasantry, savage enforcement of gaming laws to cut off non-market food supplies, the criminalization (and frequent execution) of beggars, and the building of prisons or workhouses to guarantee a supply of forced labour, a vocation that could start by age four. The general acceptance of chattel slavery provided it was done “over there” didn’t hurt either.17 All of that was followed up in the nineteenth century when British industrialists, world leaders of the emerging “free-market” economy, were clamouring for more cheap labour. They got it by a one-two-three punch. Fresh enclosure laws turned great swathes of common countryside into private property; the repeal of poor laws, which had formerly provided a modicum of social security in home parishes, forced people to scratch out at best a bare subsistence in distant urban mills; and the tradesmen (the male form is historically appropriate here), who, organized into self-­ governing and mutually protecting guilds, had been responsible for technical change and innovation through the centuries, were reduced to just more homogenized muscle power – while their technology, once freely available, was increasingly appropriated as just more private property.18 Economists today would describe the result as a “highly elastic supply curve of labour.” That ongoing “free-market” project is also the reason for loud echoes of 1970s rhetoric heard today from the IMF, the European Central Bank, the US Treasury, and the corporatocracy. They collectively insist on the need to make labour markets more “flexible” by destroying remaining collective bargaining power, to make business more “competitive” by further slashing government oversight mechanisms, and to make public finances more “responsible” by chopping social transfers.19 Yet the results of the string of austerity (for some people) measures that governments insist upon are inevitably to drive more people to scrape for a living off-the-books that have, to all intents and purposes, been closed on them. That, supposedly the cure for the underground economy plague, on the contrary leads almost inevitably to a rise in some sort of shadowy (and no doubt some shady) activity, which can then be seized upon as a rationalization for a further slashand-burn job on the Western world’s tax-and-transfer systems.20 True – if taxes, regulations, and prohibitions are reduced enough, illegal economic activity will disappear – by definition. But so too would any semblance of civil society. Not to worry. As former Prime

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Minister Margaret Thatcher, the “Iron Lady” who hated coal miners, used to say while leading the wrecking job on Britain’s public services and welfare system – there is no such thing as society. Certainly not after she was through with it. Thus did the post-World War II welfare state, with its focus on assuring social security, building public infrastructure, and educating the population at large, give way to the modern functionalist state with its focus on guaranteeing corporate welfare, dropping bombs on the public infrastructure of countries too weak to fight back, and manipulating the thoughts and actions of populations kept in line by the carrot of glitzy toys and the stick of ever-heavier legal sanctions. The canons of free-market fundamentalism, backed by the cannons of military and paramilitary power, once successfully peddled as the elixir of prosperity and freedom by intellectual snake-oil salesmen – think Ayn Rand and her cult followers – turned out to be the road toward a “soft” form of totalitarianism along which could be herded an increasingly docile population of electronically lobotomized consumatons. Chapter 3 emerged from a growing frustration with the sloppy discourse used by policy wonks setting agendas, justice bureaucrats drafting laws, cops enforcing them, government lawyers prosecuting consequent offenses, and the infotainment complex cheering the results.21 What has been largely missing is a serious effort by any responsible level of the criminal justice system to move beyond simplistic stereotypes to elucidate the logic behind underworld flows of goods and money, to analyze “organizations” and their motivations in terms that don’t read like they came out of the dustbins of third-rate Hollywood screenwriters, and to get a convincing handle on just where social harm from particular acts does (or does not) lie. Instead debates over crime-control policy routinely degenerate into exchanges of “snarl words” – phrases designed not to illuminate but to obfuscate, not to point out complexities but to reduce them to slogans, not to enlighten but to energize the listener into fact-free action.22 That technique becomes ever easier to use in a world where communication consists increasingly of three-line text-bites circulated on so-called social media – until the promoter of the instant-cause-of-the-day gets caught, literally as well as figuratively, masturbating in a public park.23 The implications are more than just theoretical. Loose language and loopy logic allow enforcement and prosecutorial arms extra degrees of freedom by playing on fear rather than fact.24 The result a string of judicial atrocities. These turn up flagrantly in the US, for

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Preamble 11

example, in the number of residents of death row eventually exonerated by DNA testing (how many never had the chance?), or in incidents like the legal lynching of Rafil Dhafir, a doctor who tried for years to send food and medicine home to Iraq while it was dying slowly under the West’s grim pre-invasion economic siege, only to run afoul of the nefarious combination of “economic sanctions” and “anti-terrorism” laws.25 What this represents is the shifting of the court system from a forum for determining guilt or innocence to an assembly line for processing those presumed guilty, therefore making the justice system a bargaining forum between prosecutor and defense over which charges to press and how long a sentence to request. This is particularly well advanced in the US because of institutionalized racism, drug-war hysteria, anti-Muslim pogroms, and prisons-for-profit, but certainly a (rapidly) growing trend outside that country as well.26 Witness, too, how the Harper regime in Canada reacted to another dramatic fall in measured crime rates by building super-prisons – and to another radical dip in even liberally construed terrorist offenses by trying desperately to buy US F-35 fighters, perhaps the most outrageous boondoggle in the militaryindustrial complex’s own criminal history. The damage goes even further. Few people in the West today seem to have caught on to how the progressive loss of their liberty and privacy, the flip side of the explosive growth of government or government-sanctioned espionage, while greatly exacerbated by the recent Terror War, had its roots in the earlier Crime War – its inflated rhetoric, its exaggerated numbers, and its insistence that the crux of the problem lay not in social factors but in individual malfeasance. That lopsided diagnosis gets combined with the stereotypical view about the all-pervasive nature of “criminal violence,” the standard rationalization, along with the ever-more-entrenched Green Scare, for increased levels of state violence.27 Combined, the result is to rationalize the orientation of “solutions” overwhelmingly toward increasing punishment of individuals rather than toward rectifying underlying conditions, much the way the prevailing economic ideology shifted to calling for more rewards for “entrepreneurs” rather than for more support for those at the receiving end of entrepreneurial zeal. This is compounded by the propensity of judges today to condone police and prosecutorial atrocities. There was a time, and it was not ancient history, when judges in criminal cases took seriously, for example, the concept of illegal entrapment. In the US one of the most

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compelling instances was when John Z. DeLorean, an automobile magnate with a sixteen cylinder ego in his head and a Hollywoodstarlet-turned-top-model on his arm, found himself desperate for money to finance his dream for ever more ludicrous-looking sports cars. He was then baited by a former drug-smuggler-turned-FBIinformant with a chance to supercharge his business. All DeLorean had to do was to pay the informant a commission and pony up cash for the stash. The judge declared the police conduct “illegal entrapment.” Even though DeLorean was videotaped referring to a suitcase full of cocaine as being “good as gold,” even though his defense team didn’t bother to call witnesses, DeLorean was found innocent on all charges. Afterward his lawyer crowed to the press that the message had been sent to the “country at large to all of our citizens … we won’t tolerate the type of conduct the Government involved in in this particular incident.”28 But then, DeLorean was not Muslim – in fact, after getting a divorce and pleading publicly for money to cover his court costs, he became a Born-Again Christian. Just in time, too. If DeLorean were caught today, he would face a different legal climate. The media blandly reported something that ought to ring every fire and burglary alarm bell across the continent, if not across the world. This is not just the propensity of police and security forces to invent plots, then lure people into incriminating themselves but that, as USA Today put the matter in its usual pablumesque terms: “[S]ting operations are the latest and perhaps clearest reflection of a broad shift by federal law enforcement away from solving crimes in favor of investigating people the government thinks are criminals. Such tactics are common in law enforcement’s efforts to prevent terrorist attacks, but they are also becoming a staple of its fight against everyday street crime.”29 Meanwhile neuroscientists are triumphantly reporting progress in using brain scans to figure out who might be a recidivist.30 Great news. That might soon permit judges, who in the US can already add on extra years for particular crimes the jury ruled that the defendant did not commit, to lengthen the sentence even more in anticipation of the next offense.31 Of course, crimes motivated by the lure of buckets of bucks – whether those crimes take the form of trafficking recreational drugs or peddling bogus gold-mine shares, faking art and antiquities or smuggling endangered wildlife, rigging defense deals or just writing mortgage contracts with fine print below the visual ability or above

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Preamble 13

the cerebral capacity of the target – need to be thoroughly understood. But only in their proper context and with due regard to their relative significance. Rather than fundamental causes of a systemic malaise, they are more like the scum that rises to the top of any cesspool, useful partly for what they reveal about a system’s weaknesses but more because they provide an opportunity to strip off the rosy veneer to take a closer look at the rot below. The awkward truth is that the modern (legal) market economy is riddled with con games and rip-offs buried in the fine print of contracts that few have the time to read, the capacity to understand, or the independence to refuse. Take, for example, the difference between today’s consumer-loans “business” and the old-fashioned loan-sharking “racket” that the first has largely eclipsed. The consumer-loans racket – oops, business – relies on collection agencies who harass over the phone, then trace and seize by judicial order, while a loan shark might just hire a bikergang member with a baseball bat to do the collecting – or so a popular stereotype suggests. That, incidentally, is the kind of image banks seized upon to agitate for the end of usury laws and for “liberalization” of the business of consumer loans when they were trying to get the population hooked en masse on credit cards. The reality seems to have been that violence in loansharking, while obviously it did occur, was the exception rather than the rule.32 On the other side, collection agencies threaten, if not the physical person, then the current property and future prosperity of whomever they are shaking down, using as a club the beating to death of that person’s credit standing. Which of the two is “legal” is clear enough; which of the two is more honest is another question.33 Chapter 4 shifts the focus from crime (and terror) to criminal profits (and terror dollars), the control of which is the new panacea for facing down and winning against these great (and greatly contrived) challenges of the contemporary world. In the 1970s the main reason for excitement over illegal financial flows became the growth of offshore financial havens along with tax evasion and capital flight. During the 1980s and on into the 1990s, it shifted to mass hallucinations over drug-money flows. More recently, of course, the principal frenzy has been over so-called terrorist finance, a category that never seems to be applied to things like the Pentagon budget.34 In fact another category of funds can also get tossed into that leaky barrel of allegedly illicit liquidity – the financial resources of “pariah” governments – roughly speaking, those on the wrong side of a political divide and therefore

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subject to the usual arbitrary, hypocritical, and selective acts of economic warfare.35 These, of course, are now referred to as “economic sanctions” in the same kind of terminological whitewash that bequeathed to the world “international humanitarian interventions” like the one where NATO cluster bombs tore apart people shopping in the vegetable market of Nis, Serbia. As with just about everything in the analysis of profit-driven crime, rationalizations for following the money trail quickly bog down into a logical and terminological quagmire, replete with three-whiskey rumours parading as fact and with various forms of illicit financing mushed together to form the suitable jarring (if geophysically rather improbable) image of a giant snowball of burning-hot money rolling down a mountainside. The implicit, and sometimes explicit, assumption is that all illegal money – whether from drug-money laundering, tax evasion, capital flight, or terrorist plots (or maybe just shirking child-support payments) – behaves in much the same way, exhibits roughly the same features, and uses the same kind of institutional mechanisms to be hidden, moved, and laundered. Hence they are all susceptible to being controlled or defeated by the same methods. In reality different categories of illicit money have different roots and follow distinct routes.36 The cops-and-robbers view of the world, dividing actions neatly into legal and illegal, fudges key distinctions in its rush to find a magic bullet to “combat” the supposed deluge of dirty dollars. Of course the advantage of sticking all these forms of illicit money together in one soiled suitcase regardless of origin, function, and ultimate destination, territorial and/or occupational, is also that it deftly exaggerates the threat, if any, from any one component by association with the others. It also deflects attention from the most important of them, tax evasion – at least until the recent crisis made the financial elite conscious that tax evasion in other places threatens the value of the securities whose purchase allows them to legally evade taxes at home. Instead the main focus is on things that are either of secondary importance, like the overhyped problem of drug-money flows, or, from a strictly financial point of view, trivial, like so-called terrorist finance. The payoff from the diversion is that it helps to rationalize the conversion of national and international financial systems into central components of a worldwide, ever-more intrusive, US-controlled espionage network.37 On the surface, this obsession with minutely identifying and tracking funds through the financial system seems inconsistent with the rhetoric of deregulation. But it represents a shift of state attention

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Preamble 15

away from the asset to the liability side of the ledger, away from protection of ordinary citizens and businesses against abuse of financial power toward putting the actions of those citizens and businesses under a police-and-security looking glass. In effect deregulation on the asset side is the quid pro quo major financial institutions get for increasing cooperation with the national-security state on the liability side. The advantage to the big banks is that the anti-moneylaundering apparatus imposes a relatively higher cost, and therefore loss of competitive advantage, on smaller institutions. In that way it serves, as “regulatory” intervention so often does, to further entrench the power of the already powerful, who react by whining in public about government interference with the divine right of capital – or by using their presumed indispensability to extract yet more concessions, tax breaks, and subsidies. The challenge in criminal prevention ought not to have been to stop gangsters from breaking in to take over the commanding heights of the economy, the popular spectre that never managed to crawl out of its closet, but to prevent banksters already at the top from breaking out with the loot, something they have managed to do by the sackload in broad daylight and with almost complete impunity. In contrast to all the hype about criminal money infiltrating and corrupting the legal economy, the barbarians were never at the gate – they were already safely inside the gated communities. The chapter 4 distinction between criminal profits, evaded taxes, flight capital, and “terror” treasuries leads logically to the chapters on terror, terror wars, and so-called terrorist financing. Much as happens with Crime, although occupying a later position in the Alphabet of Evil, Terror is sometimes written and always spoken with a capital T. Obviously it is immoral not to empathize with those at the receiving end of indiscriminate acts of criminally, politically, or ethnically driven violence. However, those feelings get delegitimized if they are selectively applied. Compare the ongoing sympathies for helpless civilian victims of 9/11 to the crude dismissal of hapless civilian victims of US drone attacks across the Islamic world. Note the contrast between the endless revisiting of the horrors of the Warsaw Ghetto to the deafening silence over the Gaza Ghetto – over the bloodbath regularly imposed on it by land, sea, and air and the ongoing subjugation of its population to slow starvation, moral as well as physical.38 Chapter 5 takes a look back in history to find the roots of modern “terror wars” in the bungled US campaign against Libya (more specifically, Tripolitania) early in the nineteenth century.39 That campaign, like more contemporary ones, used mass propaganda with

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strong religious-cum-racial overtones to turn a military fiasco into an ideological triumph and, not coincidentally, to justify in the US its first tentative moves toward the creation of its military-industrial complex. From the USA ’s first frigates in the late eighteenth century to its plans for the weaponization of space today, the “war on terror” in one version or another provided an unbeatable rationalization. Although this chapter was originally written in the wake of the Anglo-American invasion of Iraq in 2003, it seems even more relevant now after the US followed up the mock-judicial assassination of Saddam Hussein at the hands of its vengeful proxies by aiding, abetting, and openly celebrating the public mutilation and murder of Muammar Qadh¯afi.40 Interestingly, the NA T O -sponsored rebellion against the Qadh¯afi regime began in the same area of eastern Libya from which the US had attempted in the early nineteenth century to stage a coup to oust Tripoli’s then-ruler. Much the way US commercial designs combined with strategic ambitions in the Mediterranean led to the US-led regime-change scheme at the start of the nineteenth century, so was that of the early twenty-first prompted by a combination of economic and geopolitical interests, plus the very public availability of someone so weak (except in dealing with opposition among his own population) and buffoonish (except in running cover for his own family’s accretion of power and wealth) that the campaign would be almost costless (to NA T O) and certainly without the military embarrassments of its predecessor. The less-than-glorious outcome of that earlier escapade had been long before laundered in the Marine hymn’s words “To the shores of Tripoli” even though the US military’s only action in the vicinity of the Tripolitan capital back then had been an unmitigated disaster. In the run-up to the new campaign, Muammar Qadh¯afi was branded a sponsor of international terror – even though there was never any real proof that the Libyan intelligence service was responsible for the infamous bombing of a civil aircraft over Lockerbie in 1988. By contrast, back in the early nineteenth century the snarl word used against the dey of Tripoli was “piracy” – perhaps because US politicians had already pre-empted the term “terror” to describe what they intended to visit on Libya in retaliation for Libyan corsairs seizing US ships. Just for the record, what they denounced was not piracy, something not only contrary to international maritime law but also proscribed in the Qur’an, ¯ but legal privateering, something

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Preamble 17

that the US was the last major Western power to outlaw for its own ships five decades after the Libyan affair.41 (Privateering by Unionflagged vessels was one of the US federal government’s main economic weapons against the Confederacy.42) Over the course of centuries, it seems, when it comes to “terror wars” neither convenient selectivity nor inflated rhetoric nor hidden agendas seem to have changed very much – except perhaps that terror wars are now a greater menace to the security of the population of the countries supposedly being defended than the terrorist actions they are nominally designed to stop. Chapter 6 shifts focus from the usual stress on Islam – a term that Western media pundits, military empire-builders, and ethnopolitical lobbies have turned into a borderline obscenity – as a factor in stirring up “terror,” to the role of the Christian Right with its millenarian dreams and schemes in stoking or at least rationalizing international conflict. Its machinations are seconded by the Israel lobby (or is it the other way around?) and welcomed by the Pentagon itself. In a remarkable renaissance of the same kind of coalition of the Bible and the gun that figured so prominently in the abortive American campaign against the “Barbary pirates,” the Pentagon has joined its voice to the clamour from the other two in stoking Islamophobia in what will be ultimately a vain if bloody struggle to maintain a twentieth-century geopolitical order in an increasingly entropic twenty-first-century world. Simultaneously any atrocities committed by Western military forces engaged in what the Islamic world sees (with good reason) as a resurgence of the Crusades will no doubt spark an occasional act of blind revenge, something that the Christian Right, the Israel lobby, and the military can take it as a rationalization for their provocations to continue. Granted the Christian Right asserts its influence on the home front, too. However, contrary to the kind of nightmare scenario that sends shivers up and down what passes for spines among the New York literati and Hollywood glitterati, that kind of political aggression rarely takes the form of Holy War against established institutions of civil government with a view to turning a host country into some kind of medieval theocracy. (That is an accusation frequently directed, sometimes with justice, against Islamic militants when they are seen to be fighting on the “wrong” side; yet it gets curiously dropped again when they are perceived, even if temporarily, to be “on our side.”) Rather the main danger from the Christian Right within the US, and

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increasingly noticeable in places like Canada or Australia as well, emerges because at the same time it agitates for a militarized foreign policy along the lines of neocon fantasies about a thousand-year empire, it also promotes a reactionary domestic economic agenda that blends smoothly with the “free market” nostrums pushed by neoliberals. Thus prominent figures of the Christian Right, the smug sanctimoniousness of their words matched by the unrepentant hypocrisy of their deeds, praise the Lord and pass if not the ammunition then the collection plate, sure that a fair chunk of the change, not to mention the high-denomination bills, will be diverted to Christian pursuits like supporting Jewish settlements in Occupied Palestine or the upkeep on mansions and luxury limos at home. None of this seems to attract very much critical attention from the regulatory or fiscal arms of Western governments – who shy off out of fear of being charged with harassing (non-Muslim) religious institutions and their leaders. In centuries past, religious organizations were expected to be economically (and financially) autonomous. Sometimes they were downright rich from holdings of land, collection of tithes, charges for religious services, and endowments from wealthy individuals seeking to ensure that when the most dreaded day of their lives came, the Pearly Gates would swing wide open. Little of that wealth, though, was in liquid form. Sometimes it still is not. There is some degree of credibility in the Vatican’s frequent pleas for believers to pony up more cash while it sits on one of the world’s greatest treasure troves of artworks. Recurrent rumours, not easily dismissed, insist that periodic cash shortages faced by various diocese and the Vatican itself result at least partially from the number and size of secret payments to quiet parental complaints about priests molesting young boys (and, sometimes but far less often, girls) consigned to their care.43 The artworks, of course, were deeded in trust, something probably inviolable, unlike the children, until just before Judgment Day, when the cops will have other things to worry about than priests peddling Old Master paintings on the local black market. On the other hand, when that dark day draws nigh, the spot price for shotgun shells will probably beat the stuffings out of Da Vinci futures. That both the monetary income and property holdings of religious institutions were exempted from tax made sense at a time when they would run educational institutions along with health and welfare services for the population at large. But over the last two centuries

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Preamble 19

years those functions have been largely secularized while the churches have been left with tax exemptions along with virtual carte blanche to attract donations and rake in poorly disguised business income. With that has come very wide scope for autonomous decisions about how to handle (or mishandle) the money. Of course, cases of religious organizations engaged in dodgy dealings date way back. The Middle Ages witnessed monasteries trying to attract a larger share of the pilgrim trade by raiding other Christian sites to steal bits and pieces of defunct saints – this on top of a miniplague of peddlers of thorns from Christ’s crucifixion crown or vials of Mary’s breast milk. Nor are old established churches free from scandal in more recent times. Witness the Vatican Bank’s involvement in tax evasion, capital flight, and money laundering that leapt into public scrutiny during the Banco Ambrosiano (and related) scandals of the 1980s, along with a raft of recent investigations by the Italian police into its activities. Today the main problem seems not to be well-established churches (or their equivalents in non-Christian belief systems) with longestablished trust funds and formalized administrative structures. Rather it is new religious sects with looser financial controls, more fluid ambitions, powerful central figures, rapidly growing followings, big-time political influence, and, certainly not least, a greater need for outside revenue. It is exactly those types of denominations that form the core of the modern Christian Right. Furthermore those traits get combined with Prosperity Theology, whose preachings, like those of the kindred faith of neoliberal economics, hold that earthly wealth is a sign of God’s blessing, particularly if a goodly chunk gets kicked back to the Church or, more specifically, to the person doing the preaching – who is apparently franchised to collect the heavenly tithe on behalf of the Almighty. The result has been a wave of religiously based frauds going far beyond routine tax evasion to embrace embezzlement, extortion, sale of fake religious artifacts, misuse of religious and charitable cover for business purposes, money laundering, “affinity fraud” scams, phony investment deals with religious overtones, and other fiscal, financial, and commercial crimes. Chapters 7 and 8, by shifting the scene of terrorist action from foreign to domestic fronts, pose a basic question common to both. What if terrorist outrages (real ones) are not the work of centrally controlled transnational conspiracies of the sort conjured up after

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9/11, or even “informal networks” that cooperate from time to time, an alternative model that achieved quite a following after it became almost impossible for any serious analyst to stick to the first? Instead, what if these acts were the work of random, often spontaneous, individuals and/or grouplets who shared common grievances but not common infrastructure, let alone joint bank accounts or supplies of weapons provided secretly by foreign sponsors? How then would the optimal policy choices change? These two chapters also serve as reminder to societies whose attention span is measurable with a micrometre of their own recent history. It allows a different kind of look at possible similarities in motive and means between domestic and foreign based threats and at the remarkable contrast between the responses.44 Like terrorism abroad, domestically spawned US terrorism of the last three decades, the subject of chapter 7, had roots in genuine economic and social grievances, however morally wrong or misdirected the reactions to those grievances were. While white liberal snobs lost little time in sneering at the country bumpkins with their Constitutional fundamentalism, belief in arcane conspiracies, and pride in their gun collections, those über-urban intellectuals and media pundits failed to use any of the time so saved to ponder whether or not these dumb hicks occasionally had a point. When something nasty did happen, it was not the product of any grand conspiracy; religious fundamentalism played only a peripheral role as an expedient rationalization; the money involved, raised largely by petty fraud and penny-ante scams, was trivial so that any losses were easy to replace; and policies to meet the problem were based on neither mass invasions nor (often badly) targeted assassinations, the only options seemingly on the table today to deal with opposition “over there.” Rather the answer lay in regular police work, at least before that became brutalized and corrupted by the Crime and Terror war frenzies. Of course, addressing the real grievances might also have done some good in assuring against a recurrence; but that would have been too much to ask. Another forbidden question is how many subsequent acts of socalled domestic terrorism in the US and elsewhere in the West, whether by dusky immigrant loners or by white-bread white-bred “militia” members, were really genuine and how many the result of police infiltration and manipulation. Virtually all post 9/11 “Islamic” terrorist plots in the US have been hatched, incubated, then nurtured by the FBI. On the other hand witness the 2012 legal debacle over the

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Preamble 21

so-called Hutaree Militia, a Michigan sting operation in which the police conned a bunch of simple-minded gun-nuts into self-incrimination. This one ended with the judge rebuking the government for bringing such a contrived case to his court. That sort of satisfaction is felt by few American Muslims who face constant “justice system” harassment for no good reasons beyond bigotry, opportunism, and the hope of turning them into informants.45 At least in the militia case, two pleaded guilty to possessing machine guns, something that probably made them heroes rather than pariahs among their peers.46 Chapter 8, at first glance, seems a geopolitical oddity, set as it is in one of the more obscure sites of the contemporary world – not Outer Mongolia or Burkina Faso, but Canada, specifically Quebec, even more specifically Montreal, for reasons that go beyond the author’s civic pride.47 To understand its message this chapter needs a brief revisiting of the heady political atmosphere of the late 1960s and early 1970s. That was a time when radical opposition groups (“petit-bourgeois romantics,” scoffed hard-line Marxists) confronted Western powers and their local allies across a number of places in the “Third World” – another term whose inherent vacuity gets disguised by capitalization. Countries like Uruguay, Argentina, Colombia, and the Philippines were particularly well represented by ideological rather than ethnological insurgencies, though the latter hosted both. Much the same phenomenon emerged, too, in parts of Western Europe. Italy was especially riven by violent radical factions, although those also sprang up in Germany, France, and Spain, not to mention Ireland, where they were grafted onto historical struggles. Meanwhile back in the US the Weathermen and other similar groups staged bombings and holdups. Some of those “organizations” who in the 1970s raised havoc, although often more in the overwrought imaginations of the political class than in the reality on the ground, have become legends, at least in the minds of surviving members who still dine out on their presumed exploits. Or their members may, like Black Panther kingpin Eldridge Cleaver, have done a radical career shift. In Cleaver’s case that meant the interrelated vocations of peddling designer jeans so tight they made a man’s privates stick out, speaking at Republican Party conventions, and publicly praying with televangelist Billy Graham.48 The same spirit apparently moved the late Jerry Rubin, one of Cleaver’s 1960s-generation comrades in the revolt against “the pig power structure” of American capitalism. The Yippie leader, celebrated for tossing

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handfuls of bank notes down onto the floor of the New York Stock Exchange to send brokers scrambling to grab them, later became an investment counselor arguing in public that “wealth creation is the real American revolution.” Of course, in his earlier “revolutionary” phase, Rubin used to brag that he and his chums dropped LSD especially heavily in the hope of reducing their IQ s. There is no need to pick on just fallen US radicals. Take a look at the recent antics of Danny-the-Red-Turned-Green Cohen-Bendit, poster-boy of the Western European anarchist set during the May 1968 student-worker uprising in France, who now, as a prominent member of the European parliament, proselytizes in favor of panEuropean monetary orthodoxy under German hegemony. Likely very few today remember from the old days the judgment of Georges Marchais, leader of the French Communist Party, that Cohn-Bendit and his ilk “will quickly forget their revolutionary flame in order to manage daddy’s firm.” That was not quite how it turned out in fact, but pretty close in spirit, particularly now that Germany’s muchlauded Green Party attracts a bigger percentage of the country’s upwardly mobile high-earners than even the unabashedly businessfriendly Free Democrats.49 While memories of those years and those actors live on in many places, who outside an aging Montreal cocktails-and-dinner circuit remembers the Front de libération du Québec? Yet a dissection of its structure (almost nonexistent), membership ranks (trivial), modus operandi (random), and financing (totally ad hoc) reveals important lessons in how wrong is the standard diagnosis of so-called Islamic Terrorism today. In fact, dissecting the F L Q ’s rise and fall may even hold out a clue to understanding the radical groups that may spring into action in the wake of any massive discrediting of today’s political and economic status quo. While rigor mortis Marxists dream of a revival of mass movements, forgetting that the core of the crisis today is not the immiseration of the North American and Western European working class so much as its virtual extermination, the more likely political consequence – barring just more mass apathy or an even stronger revival of millenarian fascism – is the re-emergence of 1960s type radical grouplets. Members of these “organizations” will leap onto the public stage, shoot from the lip if not from the hip, then disappear, only to have some die-hards rematerialize under a new name spouting the old slogans, perhaps backed up a little later by a few bombs whose main impact is to reinforce most people’s

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Preamble 23

attachment to the status quo.50 The chapter also illustrates very well a maxim that so many concerned individuals, mainly those who consider themselves on the “left” or “progressive” side of the political spectrum, fail to understand, namely that in many, perhaps most, civil conflicts it is possible for both (or more) sides to be wrong. The final chapter brings together in summary form key themes of the book: the ignominy of modern anti-money-laundering initiatives where the crime gets fitted to the punishment, or at least to how much money an enforcement system hooked on the myth of “narcobillions” hopes to extract from it; the ever heavier reliance on sound bite and stereotype in the analysis of crime and crime-control issues, not to mention racial and religious slurs in “research” about terrorism; the search for simplistic and reductionist solutions to complex social problems; the triumph of political opportunism over coherent policy debate; and the rapidly multiplying costs to society at large via the untrammelled expansion of the official and commercial espionage webs, now joined at the heart as well as the hip, and the trend to militarization of police forces. It ends by citing what I believe to be the best advice (from someone with considerable expertise on such matters) on how to combat any possible threat to citizens of the West from terrorist plots hatched outside their borders, namely to start respecting those borders. Western governments increasingly insist that “illegal immigrants” – including people fleeing those “humanitarian interventions” so beloved of Hollywood icons unable to keep their surgically remodelled snouts in their own troughs – respect that principle on the way into their countries. But the notion of applying the same rules of conduct on those Western countries toward their dealings with the rest of the world does not seem to generate a large or enthusiastic set of recruits among those in a position to implement such a provocatively simple and effective strategy. Tant pis – for the rest of us.

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1 Clone Artists and Copycats: Global Pandemic or Counterfeit Crime?

These are perilous times.1 A whole string of insurgencies, revolutions and social upheavals threatens the West from places whose very names cause shivers to run up and down civilized spines – Afghanistan, Iraq, Yemen, Egypt, Libya, Syria … even Mali! That one must have sent prime-time political pundits scrambling to consult Google Earth before the on air light started to blink. Toss in the storm clouds that gather over Iran at predictable points in the US electoral cycle, and it is easy to lose sight of the fact that there is another “war” raging out there, perhaps the biggest and nastiest yet – and one that “we are losing.”2 This time, though, the threat comes not from the Comintern – that was neatly dispatched not through a sneak attack by US ICBMs but through a frontal assault by Harvard MBAs. Rather the source of the new menace is the emergent Crimintern that threatens nothing less than the breakdown of the international trade and financial order. This threat, the experts say, reveals itself in several distinct ways that the civilized world ignores to its peril. First, while smuggling is an old story, something changed dramatically in recent decades. Because of “globalization” along with unprecedented technological change, government control of borders weakened sharply just when the variety and volume of goods (along with people and money) crossing them accelerated greatly. This change in the pattern of world commerce applies not just to legal trade but, most alarmingly, to illegal as well. Second, today’s smugglers do not conform to the old “organized crime” model of centrally administered, transnational hierarchies typical when things like “narcotics” dominated underground traffic. Increasingly at work are informal networks with multiple links in their chains of operation, embracing people, companies, even countries as distinct

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Clone Artists and Copycats 25

“nodes,” whatever that’s supposed to mean.3 These networks can decentralize and disperse, making them harder to crack. Worse, since they use super-exploited labour and pay no taxes – quite unlike today’s respectable corporations with millions locked up in Asian sweatshops and billions stowed away in tax havens – they can outcompete legitimate competitors. These, in turn, may be forced to turn to illegal means, including partnerships with those same networks of illegal traders.4 And apparently there are now more places of refuge, a more accommodating infrastructure for illegal trade and finance, and, of course, more corrupt officials along with bent businessmen to make it all work. Third, while part of this illicit trade, as before, involves absolutely banned things like recreational drugs, especially problematic (and, no doubt, underappreciated by a drug-addicted enforcement apparatus) is the growing propensity for fakes and counterfeits of legal goods to crowd markets and drive legitimate firms out of business – a transformation neatly summarized in a 2013 Wall Street Journal story headed: “Fake Goods Rival Drug Profits for Asia’s Criminals.”5 Since the Wall Street Journal is a Rupert Murdoch newspaper, its opinion has to be given as much credibility as it deserves. The result is that, according to no less an authority than the former editor of Foreign Policy magazine, “Global illicit trade is sinking entire industries while bolstering others, ravaging countries and sparking booms, making and breaking political careers” – something apparently aberrant in the history of legal trade. Fourth, in the last couple decades the rapidly growing illicit component of world trade has embarked on “a great mutation” that must have rung alarm bells in every intelligence service in the protoWestern world, not to mention dinner bells in the lavish homes of the world’s biggest arms dealers. “It is the same mutation,” says that former editor, “as that of international terrorist organizations like al-Qaeda or Islamic Jihad … The world’s first unmistakable glimpse of this transformation came on September 11, 2001.” Therefore illegal trade is not just an economic and moral challenge; it also “offers terrorists and other miscreants means of survival and methods of financial transfer and exchange.”6 Fifth, along with the explosive growth of illicit traffic has come the undermining of governmental powers not just at the borders – something that all those travellers being fondly fondled by the US Transportation Security Agency might question – but deep within, what with all their international connections, their political

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influence and their newfound, ill-gained wealth. Indeed, traffickers have become so rich as to corrupt not just this or that official but entire political parties and governmental systems, particularly in places where the illegal sector threatens to, or actually does, dwarf the legal. These five attributes combined mean a transformation of world economics and politics, and of their interconnections, adding up, in effect, to a systematic criminalization of both. That, in turn, requires transforming the response. This cannot take the form of further protection to home industries. Such efforts in the past simply fostered the rapid growth of contraband, as the conventional wisdom of economic orthodoxy repeats with a vehemence oddly inconsistent with any evidence. That would be a surprise, no doubt, in marginal countries like Britain, the US, and Germany in succession, which built their industrial might on high tariffs and subsidies for domestic industries. Instead the challenge requires a more nuanced and coordinated response. This involves using new technologies like biometrics to track perpetrators and fancier security devices to detect fakes and copies. It calls for redesigning governments to make bureaucracies more “flexible” (i.e., freer from normal moral or legal restrictions?). It requires “bringing together cops, lawyers, accountants, economists, computer scientists, and even social scientists into tightly-integrated, highly functional teams with operational latitude,” a term that would not be out of place in a Pentagon press release. This “is a challenge … But it is not insurmountable.”7 No one has to take any of this on faith. Supposedly hard data to back up such assertions “come from the most reliable sources possible – ­usually international organizations and governments or nongovernmental organizations whose work is generally deemed [by whom?] to be serious and reliable.”8 Take, for example, the “relentless rise of money laundering,” a phenomenon so extensive now that IMF data puts laundered funds at 2–5 percent of world GDP, an impressively fine-tuned estimate of the ratio of an unknowable to an unknown. These are alarming developments, indeed. The only problem is finding any evidence they are actually true. global delusion

Proponents of the crime-run-amok story hinge much of their argument on the effects of something called “globalization,” which plays about the same role in contemporary political debate as the concept

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Clone Artists and Copycats 27

of “aether” did in premodern physical chemistry. Infinitely expandable and endlessly adaptable, globalization is a term that, by really meaning nothing, can be used as a convenient surrogate for just about anything, usually without the disadvantages of requiring proof or inviting refutation. One of its attributes is that there is so much more international trade today than … than … than when? No doubt there is a lot more today than at most points in the past. After all, there are also a lot more people, a lot more economic activities, and a lot more things that people do oriented to market exchange rather than self-­sufficiency. At what point does an upward movement in amount (absolute or per capita, and affecting what percentage of the population?) translate into a qualitative rather than just a quantitative change? Anyway the real issue is not absolute amount of trade but sharp leaps in its rate of increase or in its volume relative to something like GDP, for whatever that measure is worth. The “burgeoning trade” notion, when not just another vacuous generalization, usually takes as its base of comparison to today, the disturbed conditions of the 1930s and 1940s rather than the late nineteenth and early twentieth centuries when, from a relatively low starting point, world trade showed a rate of increase probably unmatched since.9 Furthermore by restricting comprehension to the recent past, it neatly sidesteps having to take into account things like the pan-Mediterranean-and-far-beyond trading and financing system at the peak of the Roman Empire. Not just high-valued luxury goods but consumer essentials moved readily and regularly from one end of the empire to another. Yet more important was its search for energy and basic building materials (in a word, wood) from further and further abroad.10 Even the much maligned Vikings (more farmers and traders than pirates) took their ships from a stingy biophysical environment at home over thousands of miles of seas and rivers, leaving behind for future archaeologists the evidence not in severed skulls but in cleverly wrought tools from home and coins from afar. Not to be forgotten either, except by those who today hyperventilate over “globalism,” is that the old jingle about East-is-East-and-Westis-West ceased to be accurate not during the recent outsourcing plague but when a Chinese invention called gunpowder arrived in late medieval Europe and a European invention called artillery turned up in China a few decades later.11 Even more dramatic was the impact of the post-Columbian (Christopher, that is) exchange that – in the

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course of throwing the world ecology out of balance, transforming the global financial system, and setting off a revolution in agriculture and demography on every continent – also made sixteenth-century Mexico City perhaps the world’s first truly cosmopolitan urban centre. There, people from Africa, Asia, Europe, and the Americas were drawn together by and for trade and communication that may have been slow by today’s standards but were astoundingly rapid by those of the time.12 Indeed one of the most consistent features of tracts on how everything has changed so radically since the 1990s is that they are generally written by sage commentators who, by apparently embracing at least implicitly the doctrine of the end of history, free themselves of any obligation to know something about it. As to claims that the ongoing shift of industrial capacity from West to East today is another manifestation of “globalism,” China was for centuries, perhaps millennia, the world’s greatest industrial power and leading source of technological innovation. For example, in early modern times, most improvements in European agriculture, by far the most important economic sector, were at least indirectly, often directly, derived from things practiced in China for hundreds of years before. Han China (207 BCE-AD 220) was a full millennium in advance of the West, too, in energy application – coal to make iron and steel, percussion drilling for and use of natural gas in industry, and much more.13 In fact until as late as the mid-nineteenth century the West in general, and Britain in particular, faced a drain of precious metals to China, a reflection of the West’s insatiable demand for fine Chinese goods while China had no need for the junk from Western sweatshops. Indeed the world’s first (and only truly successful) drug cartel, better known as the British East India Company, set out in league with the British government to use opium trafficking as a tool to reverse that drain. On one level all that has happened recently is China’s return to traditional prominence in the world economic pecking order. Con­trary to pop stereotypes, China is no longer just the world’s cheap-labour pool and toxic-waste dump, or the world’s premier supply of counterfeit luxury goods, abundant though those features may still be. Rather it is increasingly a hub for aeronautics, telecommunications, shipbuilding, nuclear energy, and space technology.14 In this context the counterfeiting issue is useful mainly to delegitimize genuine advances. It also hides the fact that the real reason for the chronic US unemployment and flat wages is not Chinese violations of intellectual property

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law – or some intensive program of cyber-espionage that the US, with a level of staged hypocrisy worthy of an Oscar, now levels at China to explain that country’s industrial advances.15 Rather high unemployment and low wages in the US reflect both the short-term greed of its business elite and desperation of its political class to maintain the international hegemony of the US dollar, something that bolsters the incomes of the financial class at the expense of a rapidly diminishing skilled working class while it dumps the ever-rising costs of supporting the US military onto the rest of the world.16 A far more defensible strategy for China-bashers would be to recite the horrendous human, social, and environmental cost of China’s recent urbanization and industrialization drive of which the Three Gorges Dam is but one, albeit particularly appalling, example. The recent plague of dead pigs and ducks in Shanghai’s Huangpu River, apparently tossed in when the government banned the practice of using carcasses to make dumpling filling, may be even more of a moral condemnation.17 But raising that sort of issue would carry the danger of someone pointing out how far China still has to go in terms of those kinds of accomplishments to catch up to the West. (Has everyone conveniently forgotten the pan-European horse-meat scandal?) Globalization gurus also wax eloquent over the revolutionary role of modern communication and transportation technology. Obviously those things can have a major effect on economic exchanges, illegal as well as legal. The real revolution, though, had nothing to do with jet planes or microelectronics. It came in the first half of the nineteenth century. With the widespread use of the steamship and railway, for the first time not only could goods and people, whether bound for legal or illegal activity, travel en masse on a regular schedule indifferent to nature’s whims but information about availability of and price differentials for goods could race across the globe. It was not the late twentieth-century computer that gave birth to modern markets with mass speculation in commodities and securities, but the mid-nineteenth-century telegraph.18 In short, with respect to flows of production, distribution, and commercial information, the key to radical change was (and remains) not brilliant ideas, though those certainly existed, but the capture of fossil sunshine and its conversion into useable energy at hitherto undreamable proportions. The notion that knowledge (as some sort of abstract concept differentiated from practical applications honed

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down through the ages) is the central factor driving economic growth is something repeated endlessly with a stridency that increases in inverse relationship to logic or fact. True, since World War II, flows of goods, money, and people across borders seem to be accelerating, or at least did until the crisis of 2007–08. But, just as abundant coal was the real driver of the nineteenth-century Industrial Revolution, the most important impetus to post-World War II expansion was a glut of cheap oil, something that Arab chemists in Baghdad had learned how to distill back in the ninth century. The low price of oil in turn reflected the success of British and American petroleum companies, backed by their respective intelligence services, in ousting any leaders in the modern Middle East who threatened to get too big for their burnooses. And the dramatic further acceleration of world trade (from the 1980s until the recent crash) was driven largely by the Cold War decision of the US and Britain, backed by Saudi Arabia, to flood oil markets, dropping the price low enough to, if not cause, then at least hasten, the bankruptcy of the Soviet Union, as well as hampering Iran’s ability to buy weapons to defend itself from US-sponsored invaders during the long Iran–Iraq War. Those strategic decisions combined with a US and UK government-mandated flood of oil from Alaska and the North Sea in one of the most wasteful episodes of resource looting in recent history meant that oil prices stayed low, barring a few shortlived upturns, for nearly a quarter century. That neatly coincided with a glut of shipping capacity to drop transportation costs of bulk goods, including those pouring out of China, to historically unprecedented levels. Far from technological brilliance, what was at work was nothing more than short-sighted and cynical opportunism, the real costs of which will haunt humanity for the foreseeable future. Still, there is no question that electronic communication technologies, for example, have had a major impact. Nor is there any denying that they were, at the start, remarkably useful in stretching supply chains and driving down costs by eliminating the need for inventories or multiple suppliers, therefore supplementing the effects of cheap bunker oil and excess freight capacity in accelerating international exchanges. But the fact that manufacturers and distributors alike have let the lure of short-run profit seduce them into abandoning the older practices of relying on multiple suppliers, local wherever possible, and of maintaining inventories of parts and products to ensure

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against any sudden breaks in their supply chain, also means a sharp increase in vulnerability to supply shocks. The most dramatic of these was probably the economic impact around the world of Fukushima, probably a foretaste of the “natural” catastrophes human meddling with the biosphere will continue to produce with ever greater force and in ever greater numbers. Meanwhile with the transformation of communication technologies in the hands of the general public from tool to toy, their main effect seems to be to clutter, misinform, and immobilize. On the other side, given the alacrity with which the modern state itself applies new technologies for information and surveillance – phone and email sweeps, massive data pools, facial recognition software, e-­photographic and biometric information, and much more – any assistance modern communication technology gives to those intent on ill is more than offset by the increased power of the state and its agencies to detect and resolve, or to get up to even worse forms of no-good themselves.19 If “globalization” means anything at all, it is simply a modern term for a process evolving over thousands of years by which information about trade and financial opportunities spreads across national and/ or regional frontiers, and goods and money shortly follow. If so, then citing “globalism” as a criminogenic factor in the modern world economy amounts to the claim that over time illicit entrepreneurs, like legitimate business people, seek opportunities from ever-expanding long-distance communication and transportation – not exactly the most penetrating insight. Obviously more contraband goods, more soiled money, and more illegal immigrants cross borders today. But how does that compare to the amount of legal goods, legitimate (more or less) money, or ordinary travel for business or pleasure? Is there any proof that the proportion of illegal is increasing faster than the legal, not to mention the added problem of making such a comparison when so much that is illegal today was perfectly legal, even eminently respectable, in the past? The reverse, too, is true. Indeed, given the rapid progress of neoliberalism in dismantling (certain types of) state intervention in favour of so-called free markets, illicit traffic (in the narrowly defined sense) across borders is more likely shrinking relative to the total. What is increasing is the amount of fuss made about it, and the careers built on constructing platitudes to describe it.

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m a f i a fa m i ly o r r o ta r y c l u b ?

A second purported characteristic of this new economic age is that smugglers and other nasties are eschewing the previous “Organized Crime” model of transnational hierarchies in favour of loose and adaptable networks with which the authorities have much more trouble coping, particularly given the degree to which government functionaries are bribed or intimidated into cooperation. This has given such an advantage to illicit entrepreneurs that otherwise innocent businesses are being drawn into those networks of dishonesty for sheer survival. One problem with this theory is that the Organized Crime model was always a joint police-politician-press myth, endlessly recycled until anyone pointing out that “the Mafia,” or its subvariants across the world, did not exist so much as an “organization” than as a socially entrenched mode of behaviour was treated with the same wide-eyed disbelief as someone in Middle Ages who tried to deny that the world was flat – and with the same kind of threat of at least symbolic burning-at-the-stake.20 In reality profit-driven crimes have always been overwhelmingly the preserve of individuals, biological families, or informal groupings, with the periodic (and essential) assistance of bent business types and corrupt functionaries. Sometimes hierarchical structures evolve. However, they attract not just the jealousies of competitors but a disproportionate share of the attentions of regulators.21 Besides, their main role is usually not to do business but to resolve disputes among underground entrepreneurs unable to avail themselves of normal legal procedures, or to levy taxes on outsiders who try to trespass on local turf. If illegal business from the 1990s on began to shift toward the “nodes and networks” model, underworld entrepreneurs were transforming themselves from what they always were, namely informal ad hoc associations, into what they are now, more informal ad hoc associations – hardly a “transformation” about which earth-shattering books are likely to be written. On the other hand many well-informed works exist describing exactly this formula as an explanation for the success of trade diasporas of which the Chinese one provides the most compelling example – although the Armenians or the Jains from India might demand equal billing. For centuries, perhaps millennia, ethnically based informal alliances across borders have moved goods and money around the world, sometimes with the implicit or explicit assent of

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state or imperial authority, sometimes in defiance of it, with no real distinction between the legitimate or the converse in choice of merchandise or method. Indeed that Chinese model, based not on the magic of the market but on quanxi (personalized networks of influence predicated on reciprocal obligation), has been the single most important social factor, greatly outpacing M BAs (real or counterfeit) from Harvard Business School, in setting the stage for Chinesedominated commerce on a worldwide basis.22 Nor ought there to be anything surprising about the way in which underground entrepreneurs seamlessly merge with the upper world of legitimate business, or for governments whose nominal role is to regulate and prevent such developments to be active participants. Consider the system by which Imperial Britain in the mid-nineteenth century flooded China with cheap opium. First, the East India Company, at that time still the government of British India, set out to wreck the traditional handloom weavers of India to permit dumping of cheap British machine-made textiles, leaving hundreds of thousands to starve. Second, it converted Bengal, once the richest part of India, into an opium-producing hinterland. Third, that opium was processed in Calcutta in forms designed to appeal to Chinese tastes and packed in ways to facilitate smuggling. Fourth, it was auctioned, often on credit, to independent operators who actually did the smuggling, albeit under the protection of British gunboats who chased off, assuming Chinese importers had not already bought off, Chinese government vessels. When queried about their activities, the East India Company then could claim it had no role in the actual smuggling. Besides, in a dramatic precursor of today’s work of the World Trade Organization in bringing the magic of the “free market” to the entire world, a series of nineteenth-century opium wars forced the Chinese to legalize the trade. A more recent example of the symbiosis of crime and legitimate business is provided by today’s most important recreational drug (outside of booze). While the so-called Medellin Cartel, which reputedly controlled tens of billions of dollars annually in cocaine sales, was a figment of the drug-addled imaginations of US law-enforcement, the Virginia Cartel, made up of five big Anglo-American tobacco companies is all too real. Its underground traffic really took off after World War II, once US soldiers had spread a taste for “blond” tobacco in European countries that had formerly favoured local “black” stuff. Smugglers purchased cheap and fast war-surplus naval vessels to run

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US-brand cigarettes from places like Tangiers in Morocco into countries in Europe that protected their local firms by tariffs and their tax revenue by state distributional monopolies. Soon Big Tobacco took the system worldwide. To this day the Virginia Cartel ships en masse to what are euphemistically called “free-trade” centres, where cigarettes are sold, often on credit, to wholesalers. They, in turn, hire or sell to career smugglers who move the merchandise into the target country, along with loads of whiskey, weapons, and electronics. Since any sensible smuggler wants a two-way cargo flow, on the return leg their boats or planes carry everything from cocaine to illegal immigrants.23 Starting in South America, this pattern was later repeated in Southeast Asia and Eastern Europe, something that reflects less “globalism” than the fact that demand for tobacco products in the rich Western countries has been falling as addicts either kick the habit or have the habit kick them.24 China is the next big target – the Virginia Cartel has not forgotten that, in the early years of the twentieth century, China was its largest and most profitable market. In other words, original tobacco trafficking operated smoothly, much like the nineteenth-century opium racket, not because smugglers had suborned the tobacco companies but for precisely the reverse – the tobacco companies back then recruited, financed, and even advertised on behalf of smugglers. getting the goods on the illicit entrepreneurs!

A third supposed characteristic of this economic era is a sharp shift in the nature of illegal trade. Commodities can be contraband for three distinct reasons: they can be prohibited outright (like recreational drugs); they can be legal only if taxes are paid (as with booze and tobacco); or they can violate intellectual-property rights. In the past most smuggling was assumed to occur in commodities that were either prohibited or specially taxed. No doubt both still contribute substantially. But it does seem true that a lot of things on the underground freight manifests today, although no one has a clue just how many, violate regulations with respect to patents, copyrights, and industrial designs. However, what is really new is not the amount of “intellectual-property crime.” Since the very idea is such a modern and ever-expanding legal contrivance, and the commodity set at play in the world economy constantly changes, it is impossible to arrive at any comparative historical data. Rather what is new is the response.

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Even in fairly recent times the issue of counterfeit goods was not regarded as significant for the US or the world economy as a whole, particularly given the low esteem in which stuff made in Asia was held.25 However, by the 1980s, an increasing share of world trade seemingly depended on brand recognition. Simultaneously ever more production was outsourced to places offering the contradictory combination of virtually slave labour to enhance profits along with a lax attitude toward “intellectual property rights” to threaten those profits. Hence by the 1990s the US, backed by an ever-faithful Britain, led not a worldwide campaign against sweated labour but a global War on Counterfeiting. This has culminated in recent efforts to ram through a global Anti-Counterfeiting Trade Agreement (similar to the World Trade Organization) to enforce a uniform worldwide intellectualproperty rights system to target “counterfeit” goods, generic medicines, and copyright infringement on the internet. It could therefore be an enormous step in assuring to corporate gatekeepers the ability to charge tolls backed up by criminal sanctions on anyone trespassing on the intellectual enclosures those corporations created out of other people’s efforts and collective property, not to mention out of hundreds of millions of years of nature’s own work. What gets conveniently lost in all the uproar is the fact that main role of “intellectual property” law has always been to convert other people’s inventiveness, along with the massive public support that increasingly goes into creation and implementation, into private rentier income, and that holders of the resulting privileges have always been happy not just to milk what they have but to take control of and shut down other technological and intellectual breakthroughs if they threaten the monopolies already in place.26 What gets lost, too, is the fact that industries supposedly based on technical progress (rather than on artisanal tradition, intergenerational experience, and hand-me-down skills) can advance faster in the face of weak or nonexistent “intellectual property” protection. James Watt, lauded along with Newcomen as the father of the steam engine – when working models had actually existed in classical Rome and ancient China – used patent law to block anyone from marketing a superior form of the apparatus, probably delaying the so-called Industrial Revolution. Arguably, the steam engine really took off only after Watt’s patent expired, clearing space for improved versions. Interestingly, far from being discomfited, Watt’s own business prospered, too.27

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Much the same was true for electricity, the sine qua non of virtually everything that supposedly distinguishes the glittering modern age from its sombre predecessors. Light bulbs had been in use for nearly fifty years before Thomas Edison applied for a patent in 1879, then lost it four years later when the US patent office finally realized that his light bulb was a knock-off from someone else’s already patented model. It was not that Edison stole the core idea – as with so much else, there were countless inventors busy inventing, only to be beaten to the patent office by people sometimes peddling something much inferior. Similar examples can be found in the early history of everything from industrial chemicals to modern aircraft.28 Yet today, backed by sponsoring governments, corporate holders of these privileges have launched a highly successful campaign grounded on myths perpetrated by modern economic theory about a knowledge-based economy in which great inventors-cum-creators smash intellectual, technical, and commercial barriers to lead consumerkind toward some sort of electromagnetic nirvana – or would do so were it not for the wily Orientals snooping and spying, then carting the produce of other people’s inventive brilliance off to a Shanghai sweatshop for copying.29 Even this, though, represents another astonishing example of convenient amnesia. For centuries Britain protected its industries with high tariffs and subsidies while destroying those of other countries through economic warfare and military conquest. It, along with other Western European countries, also banned the emigration of skilled craftsmen to keep their knowledge at home, while opening the door to their influx from abroad. Then, when its manufacturers had built up sufficient lead, it launched a crusade to sell the virtues of free trade to the rest of the world. Parenthetically, the theoretical foundation of the case for “free trade,” the so-called Law of Comparative Advantage that economists today treat with the same awe physicists confer on the Second Law of Thermodynamics, was actually a con job. What happened in historical reality was not that two (or more) countries got together to negotiate a mutual reduction of restrictions on foreign trade to both their advantages. Rather the British unilaterally slashed their import tariffs on basic consumables – cutting the cost of things like wheat and sugar at a time when bread with molasses was the major fuel for human muscle power. This was simultaneously a way to cut wages and erode the formerly entrenched power of the landed class

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and the old West India planters in the House of Lords. Therefore it was a logical extension of a previous Reform Bill that actually did little to “reform” a corrupt political process so much as shift the main locus of political power from the House of Lords to the House of Commons, where representatives of the emerging manufacturing centres had far more clout. In other words, the unilateral policy shift, by chopping the cost of what were then quaintly called “wage goods,” really functioned to make it easier to dump British goods abroad at the expense of foreign competitors. That it simultaneously attacked living standards at home at a time when the foreign market was still the prime target was a matter of indifference – or even a bonus, as it kept the lower orders in line. Nor did the emerging superpower miss the obvious lessons. Stealing industrial designs from other countries was built into the constitutional DNA of the USA from the start. But who in power there today dares to remember that Alexander Hamilton in his 1791 Report on Manufactures openly called for the US to wage an intellectual property war against other countries who were more advanced even, as he stated explicitly, if this involved breaking a host country’s own laws.30 Almost on cue, over the nineteenth century the US advanced its industrial growth by openly copying from other countries industrial designs and technologies and enticing away their skilled craftsmen while molding its own intellectual property laws to preclude legal recourse. In the late nineteenth and early twentieth centuries, too, Canada deliberately wrote its patent laws to strip protection from any foreign applicant who did not actually manufacture on the basis of the patent inside Canada within a few years of the patent being issued. This was done deliberately to force US firms to begin their subsequent transnational march by taking the easiest step first, a few miles northward, or else to license their technology to Canadian upstarts, most of whom vanished into the mother-corporation’s maw in the following decades.31 When the US finally got converted to “free trade” religion, its main problem was that not only did much of the world resist its entreaties for a “level playing field” but even inside rich countries so-called intellectual property crime was regarded by the public, and often by police and prosecutors, as a minor offense, if an offense at all.32 True, with food and pharmaceutical products, some people were poisoned by fakes – as to what proportion of those potentially deadly fakes were imported as opposed to locally made, no globalization guru

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seems to have taken the time to determine. But even that possibility of serious harm requires two major qualifications. One is that laws already protect the afflicted consumer of the product as distinct from the affected holder of a patent or trademark – if countries are already sloppy about enforcing existing protections, it may be politically expedient but hardly effective to just pass another layer of rules and regulations to be ignored. The second is that something like a bogus Rolex watch does not pose the same threat as a contraband heart drug. Nor is it clear how much that knockoff item will actually dampen the market. People willing to shell out $4,000 for a watch are hardly likely to buy a $40 replica. In at least some cases the main thing protected is the social pretensions of an elite of consumers upset when a plebe can sport for a tiny fraction of the price something that, on a quick view, yields the same social status as their own exorbitant acquisition. Ultimately it is at least arguable that the real fakery is not the imitation but the con job by the legitimate companies against clients foolish enough to pay full price. Somehow, too, the need to protect “inventors” gets extended to those who merely reproduce with minor variations or, even worse, who decide to privatize, capitalize, and eventually securitize bits and pieces of what little remaining commons humanity still possesses, including language itself. As to the spread of biopiracy, usually rationalized by some minor molecular manipulation whose actual work was probably done by an underpaid lab assistant or exploited grad student, that is another horror story of ever-growing dimensions. Still, because of the pressure of corporate vested interests, the US imposed against some countries trade and credit sanctions, while inside its borders anticounterfeiting measures have become increasingly draconian.33 Yet, no matter how tough laws may be, they are useless if police agencies (and judges) refuse to take them seriously. Historically, collaring counterfeit goods lacked the sex appeal of chasing commies or crack dealers; while judges balked at imposing stiff fines and long sentences whose main effect was to raise the share price of companies that made the “real” article. However, in recent years that has changed. Part of the solution was found when industry discovered the menace of Organized Crime. At the end of the 1980s and on into the early 1990s, the media retailed tales of Chinese criminal “organizations” (so-called Triads), sometimes in league with China’s People’s Lib­ eration Army, trafficking in fake goods. This campaign culminated

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with the spectacle of a Vietnamese-American gangster busted in 1991 with a counterfeit Rolex and Cartier “factory” in his home, then bragging over the airwaves (though not likely without clearing it with lawyers, both his own and the state’s) about his multiple millions from fake watch sales.34 Yet another boost came after 9/11 with the realization that behind so much product piracy stood Usama bin L a¯ den and his minions. Consumers who purchased these goods, and merchants who sold them, were no longer just greedy and shortsighted; they were complicit in high treason and mass murder. A formerly victimless crime now had victims in spades.35 At that point the fourth feature to supposedly characterize this modern age of criminal commerce comes into the picture. blame it on usama

Among the greatest shocks of the New Economic Age was the realization that terrorist groups like al-Q¯a’idah had made not just key infrastructure like the World Trade Center but the US economy itself the target of their holy war. Allegedly they were both probing for a soft underbelly where “the sword of Islam” could strike with maximum effect and searching for operating funds.36 Apart from their notorious (and completely fanciful) traffic in things like conflict diamonds, one way to accomplish both ends was product counterfeiting.37 Sale of fake consumer goods could be lucrative and, if conducted on sufficient scale, could erode customer confidence in the high-tech marvels of modern American industry – something to which any Indonesian toiling twelve hours a day for gado-gado (peanut sauce) in a Nike sweatshop could readily attest. Such a crisis of confidence might even threaten the economic recovery program enunciated by Vice-President Cheney when, in the aftermath of 9/11, he advised Americans to respond to the assault on their values by more shopping.38 This farce was aided and abetted by Interpol, the Paris-based organization that serves as an information clearing house for police forces around the world. Originally created after World War I in Europe, where its primary duty was to combat counterfeiting of the currencies of recently emerged, financially weak states, Interpol had a chance to again become proactive, this time in a worldwide War on Counterfeiting that initially focused on brand-name goods before

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extending to copyright and electronic espionage. Its secretary general, a former senior official of both the US Treasury and Justice Department, something that in a rational system would have been viewed as a double disqualification, in the first-ever address of an Interpol boss before Congress, informed the legislators that “intellectual property crime is becoming the preferred method of funding for a number of terrorist groups.”39 There was plenty of evidence. Allegedly a “suspected al-Qaeda member” once sent a crate of counterfeit cosmetics from Dubai to Copenhagen, perhaps en route to the US. What appalling duplicity! “It is possible,” the secretary general noted, “that the funds generated were remitted to al-Qaeda indirectly through zakatbased … giving.”40 He neglected to mention that it was also possible that the funds were remitted to the US Treasury directly through quarterly tax installments. In addition, bin L aden’s legions of sup¯ porters in Australia were supposedly implicated in counterfeiting Louis Vuitton bags. If so, they had lots of company in the region. Once the Louis Vuitton outlet in Pusan, South Korea, had to bribe a street peddler to clear the sidewalk in front of the store where he was offering cheap knockoffs to prospective clients.41 Others concurred with the Interpol chief that the world had witnessed “a steady increase in counterfeited brands since Sept. 11, 2001” that had “created a deep concern among intelligence agents who fear many of these criminal organizations are tied directly to al-Qaeda.”42 Still, the story was not all bad. Representatives of industry told Congress that the very success of the anti-terror effort in drying up funding in the Middle East had driven terrorists into counterfeit goods. To prevent these groups from recouping, it was time, the affected industries felt, for the world’s law enforcement agencies, prosecutors, and judges to take the threat from intellectual property crime more seriously.43 Interpol’s secretary general made the connection quite clear: “In general law enforcement does not treat I P C [intellectual property crime] as a high priority crime,” he stated. “In contrast, terrorist financing is regarded as a high priority for law enforcement agencies.” And what more needs be said than that? No doubt the anti-counterfeiting war can be further aided by the high-tech detection devices that industry boosters call upon for greater deployment. Indeed the same kind of gadgetry that in the name of Crime and Terror control can now pick up a face to compare it in a fraction of a second to millions already on file, automatically alerting the relevant cop-and-spook agencies, when mounted in the

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eyes of so-called bionic mannequins, records the reactions of clients in luxury-goods outlets, helping producers to fine-tune sales gimmicks.44 Talk about a high-tech double-whammy – they don’t come better than that! i n va s i o n o f t h e b o d y - p o l i t i c s n at c h e r s

The fifth big change to manifest itself in world commerce since the presumed watershed of the 1990s is that corruption is supposedly reaching deep inside countries from which it was formerly rare to subvert not just their border controls but their very economic and  political souls. Corruption, everyone agrees, is a nasty thing, although, like beauty, it exists mainly in the eyes (or imaginations) of political voyeurs. In the past most attention focused on difficulties foreign companies faced dealing with “Third World” countries – although arguably the real problem was the reverse. At that stage corruption was defined simply as the payment of bribes in cash or occasionally in kind. Hence, most of the anti-corruption drive originated from transnational corporations worried that their competitors might gain an edge, particularly if those competitors had the right to deduct bribes against their taxable income back home – supposedly banned in the US but practiced openly in Britain, for example. Those corporations, supported by allies in major donor institutions, also found the crusade against corruption a handy way to knock down barriers posed by state regulations or by differences in property and commercial law in target markets; while the IMF and World Bank took corruption as a pretext to insist in the name of “efficiency” that targeted countries slash public expenditures and privatize state functions. Those services then became available only at prices ever fewer could afford. As to how seriously the big transnationals took their own anticorruption rhetoric – more than thirty years after the US passed its Foreign Corrupt Practices Act, Wal-Mart found itself embroiled in a major scandal involving payoffs to senior Mexican officials with the company’s own top officers implicated in the cover-up.45 Soon after, Chevron admitted paying a former Ecuador judge for false testimony to help it to elude a $19 billion judgment over the world’s worst case of oil contamination.46 True, more and more the anti-corruption focus is inside particular countries, especially poorer ones, where corruption among public

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functionaries probably reflects just a failure to pay civil servants (including police) adequately. In that case it is at least as much, perhaps more, a symptom of financial problems as a cause. Furthermore, in places where public services are scarce and/or mediocre, payoffs are widely accepted, along with nepotism, as a second-best means of keeping a creaky bureaucratic apparatus at least partially functional. This was well illustrated by the Public Works minister of the Indian state of Uttar Pradesh getting caught on a T V camera telling local bureaucrats that, “If you work hard, and put your heart and soul into it…then you are allowed to steal some … But don’t be a bandit.”47 Perhaps he had in mind as a counter-example the state’s former chief minister who was accused of lavishing public money to build statues of herself and to buy diamond jewellery.48 The reality in most societies throughout much of history, and still true in wide swathes of the world today, is that, rather than price and purchasing power being the sole determinants of access to goods and services, people expect that extended family, peer group, and other forms of personal relations, along with material gifts, take precedence. Among the privileges subject to intra-group favouritism have commonly been those provided by various levels of government, not least because it reflects which faction, sect, clan, or oldboys club is ascendant at the time. Logically those who profess an enduring love affair with the market ought to be happy when corruption in the sense of actual cash payment, rather than one favour done in return for another, takes place. Corruption involving a direct payment for some specified act is a big step away from social reciprocity and in the direction of a genuine “free market” in privatized public services. Anyway, the real menace is corruption at the upper reaches, something long encouraged by major Western countries to build up slush funds by which their allies could pay for weapons, stage a countercoup in event of need, and/or just keep the national wealth out of the hands of a successor regime that might use it in ways hostile to Western interests – all the while applauding the “democratic” credentials of whatever thug they have most recently backed to take power.49 Besides, “corrupt” senior government officials are easier to keep under control by the threat of exposure and/or loss of their nest eggs. If they do get out of line, conveniently timed stories of their enormous wealth hidden abroad, even though they usually turn out to be gross exaggerations, serve both to undermine their positions at home and

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provide a rationalization for military intervention supported and financed from abroad. When the money doesn’t get found, at least in anything like the mega-sums claimed, the rationalization becomes not that it never existed but that it was too well hidden.50 Trust the new government, though – it will keep looking. Typically, too, leaders of successor regimes seize on the alleged corruption of their predecessors to purge the civil service in order to prepare space for appointments of their own cronies. The new leaders can also blame economic problems that they face not on any dismantling of economic protection and social security demanded by their participation in some “new world order” but on the “corruption” of the old regime. Some concerned commentators take worries over corruption to a new level by asserting that, thanks to the spread of trafficking, the rot has now reached deep into Western countries from which it was previously absent. Somehow what gets missed from that kind of claim is that the political history of most Western countries can be written largely as an epic of nepotism, cronyism, bribery (in the crude cash sense), and massive theft from the public purse, assuming it is still possible to find a historian with the courage to do so.51 Equally absent from most accounts about the problem of corruption is any consideration of either the moral qualities or the economic expectations of those people who enter public life. The intense businessdriven attack on the public sector in the name of neoliberal theology can only degrade the very notion of service to the public. No doubt it equally debases ideas held by those people who enter public life as to what their fellow citizens will let them get away with. The graband-run fixation now so prevalent in business decision-making, the attitude that makes the boundary between business and econo­ mically motivated crime increasingly fuzzy, has its mirror image in a propensity to use a public-service position not as a duty but as an opportunity. There are longstanding precedents. Take, for example, the cozy relations that long existed between governments in the West and what is now popularly called the military-industrial complex. This was something famously warned against by US President Dwight Eisenhower in his farewell address, leading to the obvious question: where were you, Mr President, when all this was happening? Although corruption in arms supply can be traced back centuries, if not millennia, and was something early US presidents from Washington to Lincoln railed against in public while accepting in private, it was

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transformed in the late nineteenth and early twentieth centuries when the major powers strove competitively to produce giant warships differentiated from previous military procurement exercises by two critical features. First, they required huge commitments of time and money on the part of the contractor, usually to the exclusion of all other business. So the contractor had to ensure that regime change didn’t lead to mind change. And that required cultivating a close technical, political, and, where possible, financial accommodation with the state or its senior servants. Second, rather than enormous public expenditure assuring a tight monitoring of costs that ought to have been a deterrent against blatant theft, the size of the pot led (and still leads) to an apparently irresistible impulse to plunder, as well as for politicians to manipulate the project to their electoral advantage.52 Those considerations, entrenched in major European countries (and Japan) by the early twentieth century, certainly applied to the US, too. Although the roots of its military-industrial complex can be traced back to the Barbary Wars of the late eighteenth and early nineteenth centuries, it was the Spanish-American War and consequent lunge for world empire that caused the US to launch its own massive naval-building program. Today, of course, air force suppliers occupy the pride of place formerly given to naval contractors. Witness how the F-35 fighter-plane program managed to double in (estimated) cost over seven years – en route not just into the clouds but probably all the way to the moon – without anyone in power simply grounding it once and for all.53 Furthermore the arms industry has not just grown in relative size over the post-World War II period but also steadily extended its grip. Today, fraudulent cost inflation, bribery, influence peddling, industrial espionage, trading with embargoed locations, and laundered payment flows are the norm in weapons production, while hypocrisy and deception along with blatant waste of public resources are the sine qua non.54 Nothing better captures its modus vivendi than revelations that a former head of BAE, Britain’s biggest arms peddler, received two luxury penthouses from companies fronting for the Saudi royals who brokered many billions of pounds in “defense” deals with the corporation. In this case what corruption did was allow BAE to take even more money from Saudi Arabia and funnel a small percentage as a quid pro quo for future deals back to its local hirelings. Whoever got damaged in the process, it was certainly not BAE nor the British balance of payments.55

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Anyway, focus on “corruption” per se steers public debate onto a second-order issue. With the military the main subject of concern should be not why this or that procured item costs so much or how this or that weapon ended up in some unauthorized destination. Rather it should be how so much of society’s productive potential became – and remains – captive of an industrial complex that is dedicated to the manufacture and sale of something that is, at best, useless from the point of view of promoting human wellbeing and, at worst, extremely detrimental. Arguably this greater corruption at the societal level, the product of colluding corporations, opportunistic politicians, and a military establishment intent on self-perpetuation, dwarfs the payoffs and kickbacks, padded invoices, and phony enduser certificates that are merely the daily bread of the arms business. In how many other major industrial sectors is the same thing true? The obvious conclusion is, or ought to be, that contemporary corruption in the West at large has little or nothing to do with “globalization” or with any supposed shifts in the nature and volume of world trade flows. Its essence is caught by events like when Lord Fink, hedge-fund tycoon and treasurer of the ruling Conservative Party, was caught trying to host a private dinner in the House of Lords for American Express Platinum and Centurion cardholders.56 At least his lordship didn’t offer them titles of nobility in return for their donations, unlike Tony Blair.57 Besides, corruption in the West usually takes much more subtle forms than paying easily traceable bribes. It manifests itself dangerously, for example, in regulatory agencies captive of the industries they supposedly regulate, in a revolving door relationship between government and business through which top personnel routinely come and go, and in the ability of the powerful not just directly through campaign contributions and lobbying but more insidiously indirectly through molding public opinion – sometimes via tax-exempt institutes and foundations the big money sets up and pays for – to shape the regulatory environment and to influence the degree of enthusiasm with which it is enforced. Of course the politicians will fight in public to clean up a situation they are busy in private further dirtying. “I am in this race,” declared candidate Barack Obama back in November 2007, “to tell the corporate lobbyists in Washington that their days of setting the agenda are over.”58 Quite right, too, as it turned out. Agents of big business no longer had much need to lobby a government that made a practice of anticipating their every wish and then appointing

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industry lobbyists as “regulators” to make sure the Administration kept its promises. As to the “regulations” they are supposed to enforce, typically they are drawn deliberately to be complicated. Partly that reflects the toing and froing of interest groups. But complexity also makes the regulations easier to game. It gives the regulated the excuse of not understanding. And it assures regulators a guaranteed sinecure advising businesses how to steer around the rules once those regulators return to the private sector. In comparison, a few bribes, even substantial ones, seem rather inconsequential. The Numbers Runners Of course, no one has to take any of these cries of alarm about the rise and spread of the nefarious Crimintern on faith – there are, the experts tell us, reputable sources to back up the claims.59 Take, for example, the assertion that laundered money, apparently to be taken as a rough indicator of the spread of illegal international activity, represents 2–5 percent of world GDP . That number comes from no less authority than the I MF . But that number was not the result of supercomputers grinding meticulously researched field data through an nth-order nonlinear differential equation model. Rather it was invented by an aide to the I MF chief when the boss desperately needed a figure to feed to reporters at a press conference. To be fair, though, since the ratio of an unknowable to an unknown could be anywhere from 0 to 100 percent, the I M F may have been right.60 However, leading commentators are quick to point out that the 2–5 percent figure is probably conservative, that “some estimates run as high as 10 percent of global GDP.”61 The scientific basis of that 10 percent ratio has been amply confirmed by the frequency by which it has been used to explain the scope and dimensions of illicit activities all over the world. For example, the late Raul Salinas, brother of a former Mexican president, allegedly took a 10 percent kickback on Mexican privatization deals, the same cut siphoned off from public contracts by the husband of the also late Benazir Bhutto in Pakistan during her tenure as president or by Amin Gemayel in Lebanon during his. The same figure has been presented as the percentage of fraudulent claims on the US (and, separately, the New York) Medicaid/ Medicare programs, of smuggled CFCs successfully intercepted by US Customs, and of US airline spare parts that are fake, stolen, or sold without proper paperwork. It is supposedly the proportion of art

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thefts done by outsiders (rather than by owners intent on insurance fraud). Indeed it has a special relevance to the art world for it has also been cited as the share of stolen art recovered by Customs and police, the proportion of Russian art treasures not yet stolen, the percentage of appraised value demanded in ransom cases involving stolen art, and the share of Rodin drawings on the market that are actually genuine. Going further, careful calculation has also established 10 percent as the proportion of US tobacco brands on the Canadian contraband market and of smuggled cigarettes that UK Customs manages to intercept. It is the tax rate imposed by guerrilla groups on illegal gems mined in Afghanistan and the share of Zambian emeralds reported to the official monopoly – the same, incidentally, with Myanmar rubies and Tanzanian tanzanite. (On the other hand it is also the proportion of Colombian emeralds that today reputedly evade the official mono­poly in that country.) It has similarly represented the percentage of retail coupons fraudulently cashed in the US, of Miami cops on the take, and of al-Q¯a’idah members killed or captured in the US invasion of Afghanistan. Probably the most telling use of this scientific ratio came when an enforcement officer in Canada ruefully reported to the press that: “For every drug plane we catch crossing the Canada-US border, nine get through undetected.”62 Of course, there is much more data available than just those dealing with money-laundering trends to bolster the argument. Take, for example, calculations regarding the extent of world trade in counterfeit goods, surely one of the most relevant statistics given the special role in today’s smuggling played by intellectual property crime. In 1995 the International Anti-Counterfeiting Coalition, with approximately 200 American corporate members, made the first major attempt to estimate annual losses worldwide – and arrived at a modest figure of $200 billion. (Forbes magazine, hardly a place to find a radical critique of capitalist institutions, put the likely deficit at about $10 billion per year.) To get the $200 billion figure, the IACC apparently took an estimate of the total number of counterfeit items sold (how it got that number is a good question), then multiplied by the full retail price of genuine articles on the assumption that people able to divert $40 from their welfare cheques for a fake Rolex would, if the copy were not available, spend $4,000 on the real thing. Based on this, the IACC computed 210,000 lost jobs. Thus industries that had for decades outsourced in order to attack wages and working standards inside the US now cited job losses from counterfeiting to

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get governments to further entrench their monopolies – when the real issue was not US jobs but whether US corporations or Asian counterfeiters got the profit from destroying them.63 A few years later, with the al-Q¯a’idah hysteria at its peak, the F BI “estimated” that in the year 2002 fake goods cost US businesses alone $200–250 billion per year. That was a fair chunk of a world total now at $450 billion worth of fake goods traded each year. By 2003 the word was that pirate goods accounted for 9 percent (why not 10 percent?) of world trade, and the share was poised to double in the next two years!64 Yet the only thing this and so many other recent estimates about the burgeoning criminal sector prove is that it is not necessary to take the square root of a negative sum to arrive at a purely imaginary number. The ultimate critique of these kinds of arguments is not their use of bogus “data” or their gross oversimplifications or their substitution of pop slogans for logic or fact but that today the real socioeconomic problems have nothing to do with production of a few fake Rolex watches or sweatshop sneakers sporting counterfeit Nike icons. Rather they are the spread of irresponsible corporate power and, along with it, the progressive disenfranchisement of peoples, the destruction of social safety nets, and the gross deterioration in the distribution of income and wealth, along with ecological brigandage run rampant across an increasingly fragile world. Nothing captures the real dangers more than the new push for the so-called TransPacific Partnership, virtually a return to the nineteenth-century “concessions” by which European countries (and the US) carved out pieces of technically sovereign states where European and American laws would be applied to their own citizens working there as well as to any of the host state’s citizens welcomed into those enclaves of civilization. The result of the TPP, along with parallel and equally backroom NAFTA-EC extension talks, would be to remove foreign businesses and investors from the laws of the host state, permitting them to challenge in so-called international tribunals health, worker, and consumer safety rules, along with environmental laws that might affect their profitability, with any damages assessed by the courts to be paid by taxpayers of the blighted country. Sold as another step toward “free trade” it is nothing of the sort – tariffs and similar barriers were long ago cut to the bone. In reality, “intellectual property” protection, in contrast to the standard economist rationalization for free trade, is not about cutting prices to buyers but about restricting

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competition from upstarts elsewhere in the world while hampering perhaps permanently any future home-government efforts to reregulate the corporate sector.65 As to fears over any negative effects of a long-overdue watering down of so-called intellectual property protections, let the last word go to Abraham Gesner, the New Brunswick medical doctor and amateur chemist who earned the nominal distinction of being the first person to distill kerosene from coal. That discovery soon captured the market for lamp fuel and later became the sine qua non of jet travel. Although Gesner was probably unaware that Arab chemists using petroleum as a feedstock had probably beaten him by about a thousand years, when he wrote what became the standard reference work on kerosene chemistry, he asserted sensibly and modestly: “The progress of this discovery in this case, as in others, has been slow and gradual. It has been carried on by the labors, not of one mind, but of many, so as to render it difficult to discover to whom the greatest credit is due.”66

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2 The Underground Economy: A Ruse by Any Other Name?

Who could forget that heart-stopping summer of 2008, when the capitalist world, still giddy from nearly two decades of post-Cold War triumphalism, had to avert its self-satisfied gaze from dollar signs twinkling like stars in deep space to stare in trepidation down a seemingly bottomless financial black hole! There was no lack of Sundaymorning quarterbacks to claim that they alone had seen it coming and no shortage of instant experts to pontificate about causes – taxes (on businesses) too high, social security too profligate, government regulations too onerous, and so on.1 To be sure, there were also those who pointed an accusing finger at a previous binge of economic “deregulation” that had liberated the world’s financial behemoths to plunder at will.2 But that was a little like blaming a drunken engineer for a train wreck long after most of the maintenance staff had been fired, the replacement parts outsourced to China, customer complaints rerouted to call centres in India, and the bulk of the tracks torn up to be sold as scrap.3 In reality the “Great Recession” that followed the crash was the culmination of thirty to forty years of ideological deconstructionreconstruction that, translated into economic policy, saw a reasonably stable postwar capitalist order with (more or less) full employment, (modest) social security, and some (occasionally effective) economic regulation systematically dismantled. Alas, it seemed that Vladimir Lenin, supposedly consigned to the scrap heap of history by the fall of the Berlin Wall, had been right all along – the bourgeoisie really will compete to sell the rope to hang themselves. But they had help, not least from the academic economics profession, whose most mediagenic members, their comfortable salaries usually guaranteed

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by the state for life, proselytized endlessly about the need to open the economy to the winds of free competition – particularly if they could rake in some consulting cash on the side by explaining how to do it. Although its roots reach back much further, the modern assault on notions that government action to counter abuses of corporate power, moderate the excesses of great wealth, and maintain a reasonable social safety net were not just common decency but common sense actually began in earnest more than a quarter century before the recent crash and crisis. During the 1970s the Western economy faced the apparently baffling combination of high unemployment and soaring inflation, two things not supposed to occur at the same time. Out of that conundrum came the great debate, resurrected by the 2007–08 crash and ongoing Depression, on the causes, effects, and presumed growth of the so-called underground economy. Actually it wasn’t so much a debate back then as a one-sided shouting match as free-market fundamentalists, flexing their political muscle after decades of being consigned to the quack corner of the ivory tower, seized the opportunity of a discredited orthodoxy to conjure up the spectre of a morass of steamy, seamy off-the-books business activity into which polite society was doomed to sink if it didn’t repent past sins. Somehow the economy was at risk of being suffocated by the same kind of government interventions that had ensured profitable stability in previous decades. High taxes, restrictive regulations, and outright prohibitions, the party line insisted, didn’t just cause more incidents of illegal activity – presumably increasing population, growing wealth, and a higher proportion of exchanges done via the market pretty much guaranteed that result anyway. Rather, they created a system of interconnecting black markets that was not just large but growing faster than the legitimate economy. Unlike innumerable instances of smuggling, tax-cheating, or flaunting industrial regulations stretching back centuries, even millennia, this parallel but warped economic universe reputedly existed on such as scale as to threaten to suborn legitimate business, debase the regulatory apparatus, and undermine the fiscal integrity of the state. That was quite a feat for what was more like a handful of hippies peddling dime bags of dope along with a few grandmothers selling macramé wall-hangings without reporting the awesome take on their tax returns. Apart from making tax revenues plunge, therefore threatening a string of budget deficits, a big underground economy, so the story

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went, meant that income levels were a lot higher and unemployment rates a good bit lower than they appeared in official data. The “logical” deduction was that the old prescription for social peace and economic advance through (somewhat) progressive taxes, a reasonable (compared to now) social security system, and an active (rather than today’s debilitated or somnambulant) regulatory apparatus seemed not only unnecessary, given the existence of so much hidden income and employment, but actually harmful. Thus was the underground economy bugaboo born.4 There was another possible story. It might have suggested that in major Western countries claims about the vast extent and enormous impact of all these off-the-books machinations had no logical or statistical foundations. It might have offered the possibility that, far from being a reflex of the “natural” propensity to truck and barter allegedly beating in every human breast, those people who did move into the shadows to earn a living might do so less out of volition than because opportunities in the legal economy were so limited or so unappealing. It might have suggested, too, that in many “developing countries” the statistical, regulatory, or fiscal arms of government were, because they lacked resources or political support, simply incapable of doing their job so that any “underground economy” existed more by omission than by commission. In fact – in a shattering glimpse of the obvious – any underground economy that actually was present might be just a reflection of the very logic of the market-based “modernization” widely touted as a supposed cure for that kind of “distortion.” None of that counted. Political faith demanded the existence of a curtain behind which the truly enterprising, to evade the heavy hand of the state, would meet to do their deeds unless appeased by a radical program of regulatory rollbacks, privatizations, and tax cuts. In that way the concept of an underground economy became, while not the first, one of the most effective propaganda weapons deployed to beat back modestly progressive features of the post-Great Depression and post-World War II years. It preceded by a good three decades the too-much-debt-demands-austerity-for-debtors-and-tax-cuts-forcreditors refrain used today to turn remaining social security from a civil right into a public disgrace, relieve even more the tax obligation on people who already pay too little, and inform the growing ranks of unemployed that they ought to be pleased to be finally masters of their own fate.5 It achieved all this despite the fact that evidence offered for a large, aggressively growing underground economy in

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major industrial countries not only would never have met the “beyond reasonable doubt” requirement of a criminal process or the more modest “balance of probabilities” criteria of a civil one but arguably would not even have constituted the “probable cause” necessary prior to Terror War hysteria for a search warrant or a wiretap. Instead, the proof offered of the supposed growth of the underground economy, and of its purported causes, was more appropriate to a post-Alice in Wonderland world in which the rule was to first summarily pronounce sentence, then defer the trial indefinitely since it was no longer necessary.6 heart of darkness?

Back when all the uproar over the underground economy began, how well an economy was doing was supposed to show up in its rate of growth of gross national product (since replaced by gross domestic product).7 This was roughly the value in inflation-adjusted terms of final goods and services produced in a given year, excluding all non-market activity, for example, that done within households or inside the volunteer sector. After all, since those things had no price, in economists’ logic they also had no value. Meanwhile G N P (now G DP) per capita became the usual way to measure the level of economic welfare a country offered to its citizens. Of course, G N P -G D P numbers also excluded, this time inadvertently, any market transactions that had escaped the roving eye of the country’s statistical agency, the stern judgment of its regulatory bodies, or the eager grasp of its tax collection service. If normal businesses deal in goods and services that are inherently legal (whether they are ethical or socially useful is another matter) and do so in technically legal ways, underground entrepreneurs have a different idea of good economic citizenship. In the “informal” sector, they avoid reporting their activities, dodge regulations like licensing laws, and evade taxes. Their actual activities, though, are illegal not because of what is done but because of how it is done. Inside the underground economy is an explicitly criminal part where the goods and services traded are actually illegal in themselves. This is not the domain of the pushcart operator selling T-shirts without a peddler’s license, nor of the restaurateur whose favourite clients pay in cash without the burden of sales taxes while the restaurateur pockets the money without the nuisance of income taxes.

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Rather, it is the realm of the heroin trafficker and the peddler of snuff movies. Like the informal, the criminal sector may hide its activities from the statistician, regulator, and tax collector; unlike the informal it is also a potential target for the criminal justice system. Those convinced not just of a large and growing underground economy but of the economic threat its existence posed had their beliefs reinforced by certain “indicators” that odd things were happening. In some countries, tax receipts as a percentage of G N P (or G DP) were falling. That was taken to mean not that corporations were getting all manner of tax breaks, not that outsourcing and accounting games ensured that profits disappeared off the books at home to magically reappear inside tax havens abroad, not that the earnings stream was shifting to favour property incomes subject to lower tax rates than wages-and-salaries, not that rich individuals and businesses were abusing the nonprofit sector to make business income appear as if accruing to some untaxable trust or charity, but rather that, because the tax and regulatory burden was so heavy, people were hiding more of their earnings by operating in cash. If more proof was needed, at a time when banking facilities were modernizing and credit-card transactions greatly increasing, the public seemed to make a dash for cash. The preferred explanation was not that people have an objection to letting banks charge them for the use of their own money, not a dislike of giving the seignorage from printing money to private monopolies rather than to public institutions, not a fear that the government of their country (like that of Cyprus recently) might try to pander to big foreign creditors by throwing local bank depositors under the wheels of the international financial juggernaut, but rather that people who prefer the anonymity of cash must have something to hide.8 Added to those possible factors was the conviction, particularly in the US, of a purported explosion of drug trafficking and its attendant ills. In fact the drug numbers, along with property crimes committed by “addicts” (looking like extras from Night of the Living Dead), were shamelessly puffed by politicians searching for a way to frighten their way to re-election and by police agencies agitating for larger budgets and more powers.9 Much the way Cold Warriors exaggerated (or just invented) a military threat from abroad to ensure for the Pentagon an ever-expanding budget, thus exacerbating the very international tensions they claimed to be trying to counter, Drug Warriors hyped the “narcotics” threat to get more money

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to get more toys and more chances to brandish those toys at will. That, in turn, would drive the drug trade deeper underground, increasing street prices. And that could feed back to provide “evidence” on which to base yet higher estimates of the total value of drug trafficking, justifying even more resources and powers committed to combating it.10 Not least of the factors stoking excitement was the discovery during the 1980s of a gaping hole in the world balance of payments.11 Normally a country could cover, for example, a deficit on its current account by a surplus on capital account; to the extent a country paid more for its imports than it earned on its exports, the gap could be covered by money borrowed from financial institutions abroad or sent over by foreigners investing in the country. However, not only did country after country find that its inflows and outflows failed to match, but, when summed over all countries, the world as a whole ran a logically impossible balance of payments deficit with itself. The explanations were predictably subterranean – covert payments for cocaine imports, capital flight from “unstable” countries, entrepreneurs fleeing oppressive tax regimes, and so forth. While all those were bound to exist, more or (more often) less, in the final analysis adjustments like reconciling different national accounting standards, better estimation of international shipping costs that get hidden in flag-of-convenience jurisdictions, or improved measurement of shortterm capital movements largely eradicated the gap.12 It did not, however, do much to dampen the enthusiasm of those intent on warning about the damage done by the burgeoning underground economy. Duly alerted and already convinced, economists went to work to figure out how big the problem really was. In the US, estimates for the underground economy ran as high as 35 percent on top of official G N P , the measure then in use. In Brazil the estimates started at 7 percent in the early 1980s and shot up to more than 100 percent by the early 1990s. Mexico in the 1980s saw its underground economy supposedly treble while the legal one registered virtually no net growth. Argentina’s underground economy in the same decade was reckoned to be rising at double the rate of the measured one. And so on around the world: in Germany 15–30 percent, in India 35–50 percent, in Taiwan 25–45 percent, in Pakistan 20–50 percent, in Canada all the way to 50 percent, and so on. The implications seemed revolutionary. If GNP were so consistently underestimated, then unemployment numbers had to be too high,

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eliminating the need for government deficit spending as a tool for macroeconomic stabilization. If many individuals were successfully running unrecorded enterprises, incomes must be well above what official numbers showed, questioning the logic of the welfare system.13 A burgeoning underground also seemed to explain a fiscal oddity. Historically government revenues rose on the economic upswing and fell on the downturn, while expenditures did the opposite. The resulting surpluses in good times and deficits in bad functioned as “automatic stabilizers,” damping down economic activity when it threatened to overheat and subsidizing it when things turned down, while still leaving government with the possibility of balancing its budget over the longer term. But during the 1970s government revenues fell short of what past trends would suggest, while deficits grew steadily. Post hoc ergo propter hoc. To true believers the proper response was obvious. Once income tax rates (which encourage evasion) were slashed, once unemployment insurance payouts (which people really didn’t need) were chopped, and once welfare payments (which reduced incentives) were cut back, eager entrepreneurs beavering away in the shadows would emerge into daylight again, and the deficits would vanish. It apparently slipped the minds of those holding these convictions that in the immediate postwar era major Western countries, including the US, had marginal tax rates at the top end as high as 90 percent – yet tax revenues were abundant and the economy boomed. Nor did it bother advocates of “liberalization” that they had quietly turned a definition of the underground economy (the portion of G N P-G DP that evades regulations, taxes, and prohibitions) into a cause (i.e., a presumed general predilection of people to evade regulations, taxes, and prohibitions). And there were a few other questions left not only unanswered but conveniently unasked ... g r o s s n at i o n a l p u f f e r y

For one thing, why all the fuss? GNP - G D P is almost useless or even counter-indicative as a measure of economic well-being. It doublecounts by chalking up both the value of things produced and the value of any capital equipment or social infrastructure burned up in the process. By pretending that higher prices of things reflect not just price inflation, something the measures are supposed to factor out, but “quality” differences, the deflation adjustment is reduced and

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the “real” GDP increase shows up higher. With a big population shift since World War II from the countryside, where a large degree of self-sufficiency was possible, into cities where everything had to be bought, combined a couple decades later by a sharp rise in the percentage of women taking paid employment, what was really just the monetization of something that already existed showed up in the national income accounts as a rise in the real value of the goods and services available to the population. Nor is that all. In recent years a growing percentage of people’s spending is on things they don’t really want to buy but have no choice – like heavy locks for their doors in communities riddled with crime because of chronic unemployment caused by government cutbacks, or the fuel and health cost of being caught in a traffic jam while driving desperately to a below-minimum-wage job at the other end of a city whose tramway system was closed for repairs twenty-five years before. Once those kinds of things are factored out, much, perhaps in some cases most, of the wellbeing supposedly represented by increased expenditure on “goods” – no value judgment here! – disappears.14 Not surprisingly, too, volumes have been filled about how natural or manmade calamities ranging from climate chaos to industrial accidents raise measured GNP -GD P .15 Let a pulp mill spill chlorine into a spring-fed municipal water supply and, to the extent that citizens then have to purchase bottled water at 1,000 times the cost per unit volume, GD P rises. One response in Alaska to the Exxon Valdez disaster – the fault, of course, of a drunken captain – when millions of barrels of oil fouled beaches and wiped out wildlife was delight over the huge cleanup sums the event would pump into the Alaska economy. That was seen again when BP ruined the already badly damaged ecology of the Gulf of Mexico and fishermen began renting out their boats to the cleanup effort for a higher income than they used to get catching fish already poisoned by all the earlier oil spills. That, of course, points to the biggest statistical scam of all: letting the industrial machine gobble up nonrenewable resources and ruin surrounding ecosystems with poisonous wastes while counting the results as a plus to human wellbeing.16 In the final analysis GNP-GDP is nothing more than a highly qualified measure of monetized economic activity, not of economic wellbeing. While economists delude themselves with diagrams depicting circular flows of income and expenditure in which, in defiance of the most basic laws of the biophysical universe, no raw materials or energy

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ever enter and no wastes ever leave, the economic process really consists of a linear throughput of finite energy and matter to be converted into stuff people want to, or have to, buy. Since some energy and matter is degraded in the process of production, and the products are eventually discarded, what GNP-GDP ultimately measures is how fast humans convert nature into garbage. That hardly seems something a sensible society would make its central measure of success. The only sane policy would be to dump the concepts of GNP and GDP altogether and adopt more reasonable, probably multiple, measures of human wellbeing.17 Apart from their ideological role, current measures have three pernicious effects: they induce across the globe an ultimately self-defeating waste-race; they function as an incomesupport program for people doing fatuous econometric research; and they perpetuate misunderstanding of genuine sources of value while fogging debate over alternatives.18 To be fair, GNP -GDP was never intended for the purposes to which it was/is being applied. National income accounting came into its own in World War II as a way for governments to estimate in monetary terms the resources available to pursue the conflict. Its AngloAmerican pioneers were skeptical about the accuracy of the numbers that today’s low-tax, anti-regulation zealots use uncritically and were sometimes adamant that the results did not reflect human welfare. However, the emerging profession of neoliberal economists in the US leapt on the notion of using national income as a pseudoscientific measure of wellbeing. The political implications were profound. Before the 1930s it had been largely taken as given that an extra dollar meant more in terms of welfare to a poor than to a rich person. But, much the way Victor Hugo had defined democracy as guaranteeing equally to the rich and the poor the right to sleep under bridges, economic orthodoxy now held that a society’s welfare could be approximated by the total amount of purchasing power regardless of its distribution. That made calculations much simpler and kept the political implications of a maldistribution of G N P out of sight. Furthermore GNP could be easily recruited, as it was during the Cold War, to demonstrate that, thanks to the magic of the market, the West was growing much faster than the U S S R and was way ahead in per capita terms. For the US in particular, winning the world G NP sweepstakes, too, meant that it could look more attractive to foreigner investors, acting as an implicit guarantee of the US dollar’s continuing status as the international currency, thus assuring

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that the US could, if it needed, borrow on world capital markets at cheaper rates – or just print money to spend worldwide free of charge. Not least, the apparent economic success measured in G N P terms seemed to confirm the US model as the one true path to economic progress. Subsequently the GN P -G D P measure was imposed on other countries as part of the criteria they had to meet to qualify for loans and trade concessions.19 Instead of substituting something more sensible, virtually the entire “world community” now participates in a GDP-measuring contest that culminated recently with China potentially claiming first place – as millions of tons of its topsoil blows away, its rivers are turned into torrents of liquid poison, its large cities find their air unbreathable, more of its population becomes debilitated by miserable working conditions, and its historical treasures get looted by antiquities smugglers.20 On the other hand, China now has an impressive coterie of billionaires with a fair number of them sitting in parliament. If that isn’t a sign of economic success, what is? the numbers racket

Even taking official GNP-GDP numbers at face value, how did anyone really know that the underground economy was so large and growing so rapidly? To do so required moving from possible indicators of clandestine economic activity (like increased use of cash) that could have multiple explanations to actual estimates of hidden income. Back in those early days, there were four main approaches.21 One was to use surveys to guesstimate a hidden labour force of moonlighters, benefit fraudsters, and illegal aliens, to generalize the results over the whole population, then to figure out how much in total they were earning – as if people would give a straight answer to a knock on the door and a question about their unreported earnings or their methamphetamine consumption. A second was so-called discrepancy analysis that figured (very simply put) that, if there were a gap between national expenditure and national income, each measured using different data sets, the difference is about equal to whatever income is not being reported. Somehow what got forgotten was that for every person buying cocaine covertly on the expenditure side, someone is getting the same amount in underground earnings on the income side, so the whole thing is a wash. A third was tax audits that only work to find income unreported by people who file tax returns – that

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would exclude from any resulting measure of the underground economy the earnings of anyone who didn’t report any income to the tax collector.22 The methods that generated the most excitement used monetary traces. At their simplest they started by assuming that the underground economy worked overwhelmingly in cash. That would have been news to an Australian Labour Party backbencher, formerly national secretary of the Health Services Union, who was caught in 2011 using his official credit card to pay thousands of dollars for services in a Sydney brothel.23 (Ex-New York governor Eliot Spitzer, a man with similar appetites, preferred to pay with wire transfers.24) On the other side the legal is assumed to use a mixture of cash and bank instruments. Shifts in the ratio of cash to checks (and more recently credit or debit card purchases) are then assumed to trace approximately the growth of clandestine transactions relative to legal one. Pioneered in the US this technique had, among many others, one “slight” flaw: since about 80 percent by value of US cash ended up circulating in other countries, a simple monetary calculation imputed to the US underground economy much of the covert activity taking place everywhere from Albania to Zanzibar. These monetary approaches had plenty of subvariants (some fancier ones focusing on transaction flows over time rather than on money supply at a point in time), but the main result seems to have been a growth industry exposing their logical and statistical failures.25 Today more convoluted methods are used that usually boil down to permutations and combinations on old themes.26 Not only did various techniques produce estimates that were all over the map, precluding use in any coherent policy, except maybe a policy of eliminating policies, they all missed the central point: most underground activities (at least the types that generate serious money) are already captured in existing national income numbers. In that case adding an estimate of the underground economy to existing measured GD P data double-counts. There are two distinct ways in which economic activity can be underground: its existence can be hidden; or its nature can be disguised to make it appear legitimate. A prostitute, for example, might walk the streets and accept cash. If so, there is no record; taxes go unpaid; and GNP -GDP is understated. Then let that same prostitute move upscale to work under the auspices of a massage parlour or escort service accepting cheques or credit cards or even Eliot Spitzer’s

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wire transfers: although that transaction might be misrepresented in terms of what the payment was actually for, it would still get picked up in the national accounting system, and the seller would likely pay at least part of the taxes due. In fact, because of police and taxinspector pressures, the more illegal income someone earns, the greater will be their need for a suitable front to account for it. When illegal incomes are successfully laundered, by definition they are reported in the accounts of the cover business; so they are also at least partly included in calculations of the size of the legal economy. On the other hand, most illegal activity left in the unrecorded part is likely so small in scale and value that it isn’t worth the effort to try to measure or tax. In short, any numbers purporting to show a burgeoning underground economy might well have been a statistical fluke resulting from a sophomoric mistake. caesar’s due?

Advocates of “liberalization” today have no real objection to nonpayment of taxes, provided it is their taxes that get if not exempted then drastically reduced. And so it came to pass, with income tax rates on upper bracket groups in free fall and those on capital gains jetting toward ground zero. (Germany, long a zero-capital-gains-tax haven, is the major exception: it introduced that kind of tax in 2009.) The rationale for cuts has long been that a government’s attempts to increase revenues by higher tax rates actually reduce revenues by encouraging evasion. That proposition was tested in the US during the Reagan Administration. Taxes, especially on upper brackets, were cut sharply; and the Internal Revenue Service claimed that evasion soared.27 Only much later did the principal architect of those cuts admit that the real objective was to axe government revenues in order to rationalize further reductions in public spending, although not the part slated for the military or the intelligence services. No one likes to pay taxes. But higher rates are as likely to lead to higher levels of grumbling as to higher levels of evasion – except in cases of financial desperation or the complete discrediting of the social compact, at which point the society has more important things to worry about. Underground-economy enthusiasts, raging over how taxation sapped the vitality of the entrepreneurial class from which endless good things flowed, not only overlooked a wartime 90+ percent top bracket coexisting with soaring productivity but

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missed the fact that, in the 1950s and on into the 1960s, keeping tax rates on upper incomes high (although below wartime peaks) contributed to social peace and economic growth. It encouraged bosses both to pay decent wages to keep their labour forces happy and to plough back more business earnings into further investment rather than fork it over to the government in income taxes.28 Since “prosperity” during those heady postwar decades relied on maintaining a balance between business investment and consumer demand, relatively high rates on incomes of the business elite meant more money put into production instead of being siphoned off as managerial salaries or dividends; while relatively low rates of tax on labour income meant more expenditure to buy the resulting goods and services. It also meant, incidentally, that stock prices depended on longterm growth based on reinvested earnings in contrast to today’s zeal for maximizing short-term gains by leveraged buyouts, fat dividend payments, or cashing out stock options on a company bound for the scrap heap in a few years. The truth is that the main thing driving tax evasion was not and is not the marginal rate, even if unusually high. Really at work in different degrees in different places were (and still are) three things: changes in the structure of the economy; shifts in the mood of compliance; and a decline in enforcement, either the will or the capacity – or possibly both.29 The modern machinery for income-tax collection worked well in a world where production was dominated by manufacturing corporations selling mainly at home, with standardized accounting methods and large labour forces whose personal income taxes were deducted by the company from their pay, then remitted directly to the government. Then during the 1970s corporations reacted to competitive pressure from newly industrializing states in two ways. The first was a wave of subcontracting by large companies to nonunion shops at home. For example, big merchandising outlets palmed off manufacturing of brand-name goods to domestic sweatshops staffed by moonlighters, welfare recipients, or illegal aliens. Workers got below minimum wage in cash while employers avoided paying social security contributions on their behalf. Then the products would be sold through a formal marketing chain to end up both in discount outlets and trendy boutiques – the main differences being the brand labels, the level of pretense, and, of course, the prices. That made the luxury emporium a bigger profiteer from underground activity than

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the discount clothing mall. This practice depended on the existence of an underclass – what, in more honest days, Karl Marx called “the reserve army of the unemployed” – that sustained itself in the underground economy while acting as an existential drag on wages in the overground, hardly something that overground business has ever found an impediment to profitable operations, past, present, or, in all likelihood, future as well. The result was the rise of small-scale, “informal” production units that could more easily work outside the tax-and-transfer system using a poorly paid labour force of “contingent” (part-time and subject to arbitrary dismissal) workers. If in the 1930s capital had sometimes resorted to criminal elements to “discipline” labour (by busting unions along with the heads of their organizers), it seemed to find in the last decades of the twentieth century that it could do the same more politely via the “underground economy.” Far from being in some way deviant from normal capitalist development, the growth of the “underground economy” was perfectly symbiotic with it and operationally essential to it, as it is to this day.30 To compound the fiscal impact, inside the rich Western countries the share of “services” in GNP-GDP started to rise, and has continued to do so even if “service” now means stocking shelves in box stores on one side of the income and wealth divide along with peddling synthetic collateralized debt obligations on the other. The catch was/is that services rarely show a clear technical relationship between material input and value of output, making them much harder to audit. Furthermore, the services sector, even more so than modern manufacturing, is largely organized into small firms (even if they are just franchise operations), so that probably the same number (or fewer) of tax inspectors have to audit an increased number of establishments. Then came a second structural shift. Although, like the subcontracting wave, outsourcing started in the 1970s, it sped up in decades to come, not just exceeding but supplanting the early infatuation with downsizing, union busting, and using sweated labour right at home. And its fiscal consequences were different. Outsourcing meant that products could be transferred from one subsidiary of a transnational corporation to another in a different jurisdiction at prices set to make profits show up in the least-taxed place where the corporation had a presence, even if the local facilities consisted of a brass plate among a dozen others on the door of a tiny office where a lone secretary sat watching soap operas all day

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long. This practice of “transfer pricing” used to be a way for Western corporations to milk poor countries. By manipulating transfer prices, they could not just evade taxes but also dodge exchange controls, undercut tariffs, cheat local partners, and break labour militancy. Since the 1970s, transfer pricing has become not just a fiscal headache but a serial migraine for rich countries, too. Corporations, in perfect legality (and therefore without any impact on the size of the underground economy), shift profits to the lowest-taxed jurisdiction through networks of subsidiaries, then wait for an amnesty to bring the money home at an absurdly low tax rate, all the while accumulating more “abroad” in preparation for the next round. Actually the notion of having corporate bank balances “abroad” so large they would threaten, if they were held in cash, to sink the small coral atoll on which they are accumulated, is fatuous – the only contact those balances have with Treasure Island is the heading on a particular column in the corporation’s books at headquarters in New York and similar places. In 2005, a law with the Orwellian name, American Job Creations Act, gave US companies one year to “repatriate” profits at an onerous tax rate of 5.25 percent. The result was that $312 billion “moved” back home. Of that total, 60 percent of the benefits went to fifteen of the largest corporations. They responded not by expanding investment and employment but by laying off more domestic workers, closing plants, and shifting yet more production abroad. This is not to suggest they just wasted the money. Something like 90 percent was absorbed by dividend payments and stock buybacks – puffing the stock market and therefore helping to setting the stage for the great crash to come. After that event, the corporate sector simply amassed even more billions “abroad,” then lobbied for a repetition of the amnesty.31 Compared to these kinds of legal manipulations, any fiscal shortfall caused by illegal immigrants working sixteen hours a day for cash in New York sweatshops seems trivial indeed. Similar changes made personal income tax collection more difficult. With increased international mobility of financial wealth and the proliferation of tax and bank secrecy havens during the 1970s, 80s, and 90s, an ever greater share of the personal tax burden fell on the least informed or least mobile income earners, who are usually at the lower ends of the pay scale. If the rich react to taxes by moving their money abroad, the poor may react to the resulting increase in their own relative tax burden and/or to cuts in their social services

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by moving into the domestic underground. That suggests once again that the real impetus to any expansion of underground activity is not taxes that are too high, but taxes that are too low – on the wealthy. Compounding the fiscal impact of structural changes is a deteriorating mood of compliance. Tax revolts in the past have reflected not just individual greed, though there has been plenty of that, but also political consciousness. That shows up, for example, in the long tradition of “war tax” evasion, the most defensible form of tax protest, or in the considerably less laudable demands of radical-right groups who insist, at least in the US, that income tax is unconstitutional.32 More important though, in negatively affecting the mood of compliance is poor public services (real or merely perceived) that make the population feel it gets little for its tax money. That can feed on itself: more evasion gives the government a fiscal pretext for more cutbacks. Perhaps the most important factor afflicting that public attitude is inequity in the distribution of the tax load. Partly as a result of a series of tax “reforms” during the last two decades, the US now boasts the most regressive distribution of both income and wealth among the industrialized countries, worse even than Britain, and the worst income and wealth distribution in its own history for at least the last century.33 Among other countries, too, dramatically so in southern Europe, upper income groups are engrossed in a similar race to the fiscal bottom. This is true even without taking account of the amount of money the rich have stashed away in tax havens abroad. One recent rough guesstimate put the worldwide figure at $21–32 trillion, translating into maybe $280 billion per year in lost taxes – although, as always, big numbers can be the result of a search, not for truth, but for headlines.34 Over the last couple of decades a series of “tax reforms” have delivered a triple blow to fiscal receipts. First, they directly reduced taxes legally owed by the well-to-do. Second, they increased the incentive for other taxpayers to evade. Third, they helped to trigger a political backlash against the tax system that in turn feeds the demand for more “reform.” Ironically that campaign for tax cuts seems largely paid for by the ultra-rich themselves, who can deduct the costs from their remaining taxes by working through the front of a “charitable or educational” organization, another fiscal nightmare. Since 1970, US nonprofit institutions have grown four times faster than the economy as a whole to the point where, by the turn of the millennium, they collectively controlled more than $1 trillion in assets

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and employed more people than the federal and all fifty state governments combined. The same appears in other wealthy western countries, though not to the same extreme. (In Canada nonprofits grew about in tandem with GDP.) The trick is for a nonprofit organization to set up a for-profit business that enables it to shift its costs from the charitable to the business side and its revenues from the business to the charitable side. As a result, the for-profit side pays less tax (its costs are artificially raised while its revenues are decreased); and the nonprofit looks larger and more efficient (its available funds are raised, and its costs lowered) in the eyes of outside donors. The result of more nonprofit economic activity is lower tax receipts at any given level of GDP regardless of any underground component. Meanwhile the government successfully offloaded more of its social responsibilities by, in effect, taking money from the middle class (through more taxes) or the working class (through social service cutbacks) and handing it to the religious, charitable, and “public service” organizations – i.e., to the NGO sector at large – in tax exemptions.35 Parenthetically this has the further effect of depoliticizing what used to be sources of social dissent. Once the great causes of the day become the raison d’être of tax-exempt foundations set up by rich individuals or big corporate donors, socially conscious do-gooders who formerly rallied to a cause tone down their rhetoric to avoid irritating their sponsors. The rallying cries of yesteryear like “make the rich pay” get reworked into “let the rich pay” with the further at least implicit proviso of “if they really want to.” A final factor that in some places undoubtedly accounts for falling revenues is reduced enforcement. Partly this reflects political opportunism; one of the easiest ways to win electoral support and campaign funds, or to pre-empt opposition attacks is to rage against an allegedly oppressive tax system.36 On the other side, at least in parliamentary systems where the executive is drawn from the legislature, the kiss-of-political-death for any ambitious politician is to be handed the portfolio of minister of National Revenue, with popularity and prospects sinking further each time a voter looks at their pay stub. It remains to be seen whether the recent show put on by erstwhile rich countries in beating up on the Swiss and demanding a reckoning from their own wealthy corporations is genuine or intended just to placate the Great Unwashed while their social services and public infrastructure get alternatively hacked and privatized. Based on past performance a modicum of skepticism would not seem out of place.

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In other words, structural change, deteriorating attitudes, and (selectively) reduced enforcement capacity are enough to explain any loss of revenue no matter how high or low the marginal tax rate may be. But they imply a quite different course of remedial action and therefore rarely figure in public discourse. Meanwhile the supposedly burgeoning underground economy will continue to be blamed for any fiscal shortfall, blithely ignoring one simple fact. With truly off-the-books activity – for example, when an underground worker or a business, legal or illegal, collects unrecorded cash – a fair relationship exists between the amount of underground activity and the amount of evaded tax, although this has to be nuanced by the fact that most participants in the underground economy probably earn too little to be liable for much in income taxes.37 But the most serious form of income-tax evasion occurs when wealthy individuals or corporations report earnings, then fabricate deductions. In this case, since the actual level of monetized economic activity is (more or less) caught in the national income accounts, unpaid taxes have no direct impact on the size of the underground economy relative to G D P . As to the respective importance of the two forms of evasion, obviously it would take a regiment, perhaps a full division, of waiters working under the table or plumbers working under the sink for their fiscal defalcations to come anywhere near to the amount that can be diverted by a single rich individual or a reasonably large corporation.38 la magia del mercado

By the early 1990s, with the myth of a burgeoning underground economy widely accepted in the West, so-called developing countries learned to celebrate the growth of their own underground sectors as a manifestation of the spirit of free enterprise. This promised to lead them out of the trap of state-led stagnation into a nirvana of freewheeling capitalist bliss.39 Such a belief gained ground even though the only non-Western poor countries that had up to then managed to climb the ladder of industrialization did so by explicitly rejecting the preachings of laissez-faire economics, following instead a path of state-directed economic development.40 These less-blessed places might have underground activity, too, probably much more than any likely to exist in a wealthy Western country. But rather than the underground growing relative to the overground, people and their

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economic activity simply shifted over the decades from the unrecorded traditional economy into the unrecorded informal economy. In quantitative terms, it might well have been a wash. That development ought to have been easy to foresee based on a simple glance back at the early history of Western capitalism – until the study of economic history was marginalized or deleted from university economics programs. In that former era the vast majority, both rural and urban, still relied on the traditional economy; the emerging market sector was the sphere of well-to-do urbanites, a tiny share of total populations. The push for change came mainly from the state seeking tax revenues to extend its powers. Collecting taxes is, not surprisingly, a lot easier if people use money to buy and sell in organized markets rather than haggling and bartering with their neighbours. This transition was pushed along by massive land enclosures to switch agriculture away from local self-sufficiency toward feeding the urban market, as well as forcing displaced peasants into the cities for survival. In that way the decline of the rural informal sector gave rise simultaneously to both the urban proletariat and the urban “informal” economy. The “criminal” component of urban life also exploded; so much so that large areas of major cities in Europe and North America became no-go areas to any stranger with a bit of change jiggling in his purse but without a bevy of armed guards walking alongside – assuming the guards didn’t just rob him first.41 Fast forward to the 1980s and 1990s. In much of the “developing” world, rapid population growth combined with a Big Mac Attack on peasant land holdings (converted from local food crops to corporate farming for export) forced masses of rural poor either onto marginal land, where the only profitable crops might be raw materials for illegal drugs, or into sprawling urban shantytowns.42 In some places, droughts or wars that wrecked already weak commercial infrastructure exacerbated the shift. Thus, a precarious traditional rural selfsufficiency, based as much or more on customary exchanges or on barter as on cash in formalized markets, gave way to urban desperation. Out of that was born the “informal” sector. It consisted mainly of very small-scale “firms” using minimal fixed capital, employing simple techniques, and relying on pools of labour chosen mainly by place of origin or family ties. Any financing required probably came from extended family members or underground money-lenders. The

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main activity of these informal “firms” was and still is very basic fabrication or small-scale retailing with the motivation not capitalist profit-maximization but simple survival.43 Neither the traditional rural economy, where subsistence complemented by local markets was the rule, nor the informal sector of urban centres, where petty trading, unofficial services, and some handicraft production were the main means of economic survival, was of much interest to local elites more intent on skimming from government coffers or on acting as compradors on behalf of transnational business entities. Besides, the masses congregating in great urban slums usually provided their own social services, limited though they were. Furthermore those who believe that informal entrepreneurs are free of the heavy hand of the authorities ought to have told that tale to the unemployed youth who, denied the right to sell fruit and vegetables on a Tunisian street in order to support his family, set himself ablaze, burning down the regime itself – although it, unlike the youth, recovered after some fast cosmetic surgery. The real story is simply a shift from formal to informal forms of license fees and taxation. Police officers, revenue agents, and bureaucrats – whose low (formal) pay can be at least partly imputed to evasion of taxes by the rich or to the demand for deficit reduction imposed by international creditor institutions – supplement their overground pay by shaking down and extorting underground enterprises. It is a fair inference that a lot of these informal sector operators would prefer to be part of the legal economy with its implied obligation to respect (fair) licensing requirements and to pay (reasonable) taxes: they went “underground” because they had no choice. If all of this activity seemed to escape the scrutiny of national statistical agencies and the grasp of the tax collectors, that hardly reflected its urge to hide so much as that no one bothered to look. In some countries, national statistical offices compile their numbers based on what a few firms periodically decide to tell them, and no one (except overpaid armchair analysts from the World Bank or its regional progeny) takes the results very seriously. In some places tax agents rake in more in bribes than in revenues with the result that a post of collector of national revenue or Customs inspector can be a prized plum for political leaders to hand out to relatives, cronies, or others who need to be squared away.44 In yet other places it is an open question why governments, severely strapped for funds and/or captive of an elite whose investment portfolios are managed in New York, London, or

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Geneva and whose primary residence might be in Monaco, would bother to catalogue activities in the urban slums. There is little tax revenue at stake; and any attention paid to the economically disenfranchised might lead to demands for proper public services that the government either could not or did not want to provide. To be sure, poorer countries obviously do have major economic problems. But those have little to do with cash deals by operators of pushcarts or chauffeurs of the minibuses that take the place of the public transportation that the government will not or cannot build. Their real problems, when not just the economic legacy of colonialism, lie in the failure of governments to staff courts with honest judges, to implement wide-ranging and long overdue reforms in administrative structures, to put muscle behind an efficient and fair tax system, and to rein in tax-evading capital flight by those with plenty of cash and little sense of responsibility. Thus the issue has never been too much government, but too little government that is clean and effective at things other than suppressing dissent, a government that the population at large could respect rather than alternatively despise and fear. underground redux?

From the start, the “underground economy” was an analytical and logical absurdity whose implications and applications varied from the foolish to the perverse. It amalgamated two things that obey different rules, so much so that aggregating informal market activities with market-based crimes may represent not just a case of adding apples and oranges but an attempt to compare the retail value of a can of apple juice to the cost of planting, managing, and harvesting a citrus orchard. It also made for bizarre policy advice. How would a tax cut bring out of the underground a business whose decision to go offthe-books was the result of a ban on dumping PCBs into the municipal water supply, much less one whose principal inventory consists of DVDs of kiddy porn? How likely would someone in a dirty trenchcoat peddling ecstasy in a bombed-out neighbourhood step forward during a tax “reform,” no matter how low the marginal rate? Besides, the bald reality is that there is no underground economy in the sense of a set of interrelated black markets with their own production methods, distribution systems, information flows, financial institutions, and enforcement mechanisms. What exists instead

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is a lot of disconnected activities of varying degrees of illegality, mainly the work of persons who conduct both formal and informal, legal and illegal, transactions in different proportions at different times. Both the actions and the actors can be as much or more closely related to the formal economy as they are to each other, while much of the informal really just represents a relocation of traditional ruralbased economic activities to an urban context, not any new addition to the overall level of economic activity. What has so often been conceived and presented as a matter of black and white – the first on the fringes of society, the second at its core – really involves a continuum within society coloured in various and frequently changing shades of grey. If there is some relationship between trends in the (more or less) legal and in the (somewhat or very) illegal activities of a modern economy, the causation is the reverse of what orthodoxy claims – trends in the “underground” do not lead changes in the overground, but vice versa. Those in charge of policy apparently missed, for example, the link between the post-crisis plunge of California’s formal economy and the subsequent burgeoning of its marijuana crop, so extensive, it seems, that price collapses can only be averted by police raids periodically taking some surplus off the market – assuming it doesn’t just re-enter through a different set of not-so-invisible hands. Far from underground activity being in some way a detraction from or alternative to more-or-less legal business, at various points in history, including the present, the very growth and prosperity of the “legal” economy seems to rely on passing ever more economic functions to its underground reflection, particularly in times of profound redistribution, upward for property income and downward for wages and ordinary salaries. As to the claim that the way to stop the growth of the underground economy is to get the state off the backs of the entrepreneurial class, its proponents just happened to have overlooked the fact that government somehow fails to shrink in size and power. Instead it has used the current “crisis” and a purportedly burgeoning underground economy – the one that in 2011 the wise men of the Council of Europe sternly denounced as a “threat to democracy, development and the rule of the law” – for five purposes.45 The first purpose is to shift the fiscal burden from upper- to lowerincome groups. This was beautifully summarized in the 2012 UK budget with its triple cuts: tax allowances for the elderly cut and

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frozen, an extra £10 billion cut from welfare, and, just to make it all fair, the top tax rate for the rich cut from 50 to 45 pence on the pound, not that many of them actually pay anywhere near so much.46 Second is to maintain the assault on wages and working conditions. That is so obvious that Lord Young, the advisor on “enterprise” to the British prime minister, told the cabinet openly and frankly that the beauty of recessions is the way they push down wages and therefore buoy up profit prospects of businesses. According to his lordship this advantage applied particularly to new businesses – probably because they don’t have to face expenses like paying lawyers to challenge and defeat existing union contracts. While the shell of the British trade union movement went livid, a spokesman for the prime minister’s office brushed off complaints with a simple but profound truth: Lord Young was simply stating a “factual point and nothing else.”47 Third is to downplay the social consequences of current economic and financial policies, for example, with claims that, since people in the underground are still working and earning money, then what’s the fuss all about? As the New York Times gravely put the matter: “The happy news is that the size of the underground economy means that more Spaniards are working than it might seem, and that the official unemployment figure of 24.4 per cent – the highest in Europe – may be overstated by as much as five to nine percentage points, economists say.”48 No doubt too many economists would say that; the real question is why anyone would listen to them.49 The grim reality in Spain, when the USA’s “newspaper of record” made its sunny diagnosis, was a real unemployment rate of 27 percent, rising to about 50  percent for youth while tax rates on the self-employed and on smaller, artisanal businesses went through the roof – over the course of a year sales taxes rose from 8 to 21 percent, income tax hiked from 15 to 21 percent, and a minimum contribution to “social security,” which offered only niggardly pension benefits and no unemployment insurance coverage, was set at €250 a month.50 Fourth is to prepare the psychological way for the same kind of massive sell-off of public assets that Latin American debtor countries faced during the 1980s “debt crisis.”51 It could be worse this time round as the ideology that everything has a market price spreads to previously unthinkable realms – like Greece today putting its islands on the auction block. The Emir of Qatar casually picked up six.52 Just in time, too, since Greece is now under pressure to put

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state-owned real estate slated for sale into a Luxembourg-based holding company managed by “foreign experts.”53 Fifth is to use the underground economy, specifically its reputedly burgeoning criminal component, to rationalize not just upperincome tax cuts, privatization of public goods, and regulatory rollbacks in the name of free enterprise but simultaneously the opposite. With suitable exaggeration of the explicitly criminal part of the underground, especially the drugs sector, the concept supports (much as it did in the 1970s during the opening phases of the still-raging War on Drugs) law enforcement demands for higher budgets and more arbitrary powers, helping in the process to feed the insatiable maw of the prison-industrial complex.54 The result, at least in countries with privatized prisons, is a source of extra profit for “corrections” companies – as if people emerge from prison “corrected” rather than embittered and primed to commit worse offenses, assuming they were really guilty to start with. Those companies, in turn, can kick back a share into the election slush funds of politicians voting for laws with long mandatory sentences.55 Somehow or other this trend occurs in the face of data showing that crime rates across the rich world have reached a four-decade low.56 That infatuation with a nonexistent crime wave pays another dividend, too. People thrown into prison cease to count in the unemployment rolls, already deflated by shifting “definitions” of what constitutes unemployment.57 Appropriately enough, in the UK, the country that first created a “free market” for labour by stripping people of economic independence and tossing beggars into workhouses or debtors’ prisons, new factory jails are being built that “allow” prisoners to earn money for their families, thus reducing the need for the families of prisoners to go on the dole.58 At least in the future they won’t have to outsource so many jobs to China where wages at least for the more skilled operatives are starting to rise. Despite lack of understanding of its origin, nature, modus operandi, or broader political implications, the purported size and course of this alleged underground economy have been measured with techniques that produced inconsistent and indefensible results, though, wherever possible, large ones. Yet, when sector-by-sector estimation methods replaced fancy manipulations of macro statistics, the underground economy almost disappeared. For example, in Canada, during the peak of the underground economy fad, numbers turned out in universities and private-sector propaganda mills ran as

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high as 50 percent of formal GD P . Yet a detailed examination on an industry-by-industry basis by the national statistical agency put it at less than 1.5 percent, perhaps 2.5 percent if a wild guess about the criminal component were included.59 Similarly in Australia a decade later, the Bureau of Statistics pronounced the underground economy at less than 2 percent of GD P .60 Those low numbers are consistent with common sense. In a modern industrial economy with a properly endowed statistical agency, an experienced tax-collection apparatus, and reasonably competent police forces, the very notion of a large underground economy, particularly one subject to the kinds of fluctuations that routinely show up in the estimates, is a logical contradiction. If the underground economy were really so large or so subject to wide variations, it would be a trivial matter to observe, regulate, and tax it, or to eliminate its main criminal components. In general, if appropriate public institutions are in place with the freedom and resources to do their jobs, an underground economy can exist when and only when it is small and well hidden, at which point, whatever concern some of its activities may invoke in the justice apparatus, it ought to be of minor significance to the tax and regulatory environment.61 Nonetheless, since the 2007–08 crash and crisis, economists have revived the old game of torturing the data until it tells them what they want it to say.62 If anyone objects, the reaction takes three forms, roughly in order: first, a self-satisfied sneer of dismissal directed against the non-­initiated; second, a purging from the ranks of any who offend against the canons of orthodoxy; third, a circling of the wagons to repel any subsequent invaders lest there be any further disturbance to professional somnolence.63 If today’s economics “mainstream” were simply confined to the halls of academia, then, beyond inflated maintenance costs, this head-in-thesand attitude (a politer description than the obvious anatomical alternative) would be of little public concern. But what goes on inside those closed circles can spill over into or, more likely, take its cue from and provide a justification for, decisions in the larger sphere of governance. In the midst of the “Great Recession” the conventional response to the financial debacle and to the rapid run-up of public debt loads resulting from bailing out banks wrecked by their own greed and stupidity has not been a forced return of misappropriated wealth, much less a massive restructuring of the financial system. Rather it has been to further sacrifice ordinary incomes, job security, and social services and to

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privatize public property that survived the earlier “liberalization” orgy, the one that the myth of the underground economy did so much to rationalize and encourage.

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3 The Criminal Entrepreneur: Predator, Parasite, or Free-Market Pioneer?

Everybody loves a good crime story starring tough cops against ruthless malefactors, with a supporting cast of stubborn prosecutors who buck political interference and best duplicitous defense lawyers to see that Justice is done. Perhaps that taste reflects a need to escape periodically into comforting fantasy in apparently dangerous times. Or perhaps it represents a search for moral certainty in a world that seems increasingly fraught with confusion. On the surface, the realm of criminal justice seems one place where principles are clear along with a common agreement that those who transgress generally accepted rules of social conduct need to be called sharply to account – begging the questions, of course, of just who defines that “common agreement,” who determines when “generally accepted” is acceptably general, and who decides when and how violators need to pay their “debt to society.” That very term conjures up a body of righteous citizens nodding appreciatively to wise words from a seasoned judge. That is not a bad, if somewhat idealized, image of juries that were once made up largely of well-educated professionals – exclusively white males, of course – who could listen attentively to lawyers quoting the classics to back up their points. Today, with a trend to much longer trials and the more well-to-do citizens too busy chasing money or too unconcerned with justice as long as it doesn’t reach its long hand toward them, the jury likely contains more than its share of refugees from the late shift at McDonald’s who think that Justinian is their neighbour’s cat. That is assuming anyone bothers to call a jury together. In the USA today, both state and federal, and in Canada, perhaps 95 percent or more of felony cases are handled by a backroom deal

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between the defense lawyer and the prosecutor (who holds most of the cards), not by a trial where actual evidence might factor into the mix – assuming the forensic labs didn’t mess it all up, the police don’t compare notes to back up each other’s stories, and star witnesses for the prosecution haven’t been paid off with a get-out-of-jail-free card or (in the US) a cut from any asset seizures the process yields.1 Under these circumstances a bungling amateur, or worse, a complete innocent, might draw a long spell of hard time while the pro walks away with a handshake and pocket full of cash, ready to do their civic duty again any time. As to the purported clarity of the principles involved, once beyond the realm of pop fable and pulp fiction, the reality is rather different. What seems beyond the pale in one era may seem a minor transgression to be laughed off in another. Or in reverse. Opium trafficking, slave trading, and privateering (piracy under a national flag) were, until quite recent times, much more likely to secure for their perpetrator a knighthood than a noose. In Medieval Europe usury was more than a crime; it was a sin, punishable by being banned eternally to Dante’s seventh circle of Hell with a heavy bag of money around the culprit’s neck – something that to today’s financial whizkids probably sounds more like an annual bonus than a criminal deterrent. Usury still is a sin in countries where Islamic law prevails; and, according to the Qur’a¯ n, the same punishments prescribed by early Christianity apply. But stern proscriptions get hedged with exemptions and exceptions whenever someone from the publicly pious ruling family is privately in on the deal.2 Probably usury ought to be still a sin in the West, too, given the recent depredations of its vulture banks. In fact the West and the world at large would be well advised to take a look back more than 4,000 years to when the Sumerian city state of Lagash issued the first known legal proclamation – it mandated a general cancellation of debts to prevent massive transfers of property to the creditor class; whereas the trend in more recent commercial and financial law seems the reverse.3 Perhaps it was only appropriate that after the 2003 Anglo-American invasion of Iraq, Lagash became one of the most heavily looted of all Sumerian archeological sites in that country. By contrast to the West, in the old Soviet Union two of the most serious economically motivated crimes were “exploitation” and “speculation” – hiring labour outside the household and buying with intent to resell at a profit, both essential operating principles of

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a market economy. During the later years of the union those kinds of previously banned transactions took place not in the shadows but more or less in the full light of a dawning capitalist day. Many, if not most, of the novice business types who led the drive to capitalism in the former East Bloc were trained not in previously nonexistent business schools but in the black market. This transformation was cheered on by some of the five-watt stars twinkling in the US academic-economics firmament. After winding up their lecture on the advanced resolution function form of game theory, the kind with reverse ordered preferences, modular rationality built into its utility map, and an extended form payoff matrix, they jetted off to Moscow brandishing copies of Milton Friedman’s Free to Choose. That was for the edification of a population about to see its industrial infrastructure collapse, its natural resource wealth handed over to a cabal of well-placed crooks, universal access to public services vanish, and a state-guaranteed pension system obliterated in inflationary chaos. Today in the West, prominent on the list of economically motivated crimes are violations of intellectual property laws. The US in recent years has pushed particularly hard for strong action against piracy of patents, trademarks, and industrial designs. Somehow it slipped that country’s mind that in yesteryears it had toiled just as arduously to build its industrial supremacy by stealing without accreditation or compensation technology developed elsewhere – much the way its companies today plunder biological material around the world, then rush home to get “intellectual property” protection. Of course, there is nothing unusual about shaping criminal law to politically convenient specifications and economically expedient ends. Just as today’s terrorist becomes tomorrow’s freedom fighter, en route in some cases to becoming a distinguished international statesman, perhaps even with a peace prize to their name, so today’s violator of laws that ban things like peddling OxyContin on street corners could become tomorrow’s martyr, if not to free speech, then to “free markets,” maybe with one of those fake “Nobel Prizes” in economics to mark the occasion.4 w h at ’ s i n a n a m e ?

For all the time (and money) devoted to legal wranglings over the precise meaning of terms during court battles, the language used in public

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(and police) discourse about the nature of and harm done by various acts can be remarkably unenlightening, sometimes to the point of absurdity. Take, for example, “computer-assisted crime.” There are now divisions of police forces dedicated to it. Obviously a lot of today’s “economic crimes” (another terminological pot-pourri) use a computer at some point – to hack into bank accounts, produce fake documents, advertise dope for deep discount sale, or maybe just invite over a buddy for a toke and a joke. “Computer-assisted crime ” is about as informative as “pen-and-paper assisted crime” would have been a couple of tech generations back. Similarly scams pulled off over the telephone – varying from offers for grossly overpriced or misrepresented merchandise to requests for advance payments on nonexistent services to “discount travel” at a price that ends up topping a first-class ticket – get lumped together in cop-speak as “telemarketing fraud.” That makes as much sense as referring to burglary through a second-floor window as “ladder fraud.” Sometimes “commercial crime” is used synonymously with “economic crime”; at other times “white-collar crime” is interchangeable with both, even though “economic crime” or “commercial crime” logically refer to acts while “white-collar crime” presumably means actors, or did when top level management jobs went overwhelmingly to Anglo-Saxon males in overstarched shirts. It is hard to “make the punishment fit the crime” – another of those vacuously reassuring aphorisms beloved of people too intellectually indolent to deal with complex realities – if no one really understands what the harm actually is or who is really responsible. There are even efforts to assimilate “economic crime” with “organized crime” (itself notoriously resistant to sensible definition) on the apparent assumption that it requires an exceptional degree of “organization” to commit complex business-related offenses.5 Tell that to “rogue traders” credited with bringing multibillion dollar financial houses to their knees or sometimes to their graves – although dumping the rap onto a solitary trader might be just a senior management ploy to avoid responsibility for deals that are not only dumb but probably illegal. If individual traders really can run up and hide losses of $2.5 billion all by their lonesome selves the way Kweku Adoboli was supposed to have done at the Union des Banques Suisses, there is something more fundamental amiss in today’s financial behemoths than just a sloppy check of character references by their human resources departments.6

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Not least, consider the term “corporate crime,” beloved, unfortunately, by exactly those whose concerns over the abuses of big-business power are the greatest and whose criticisms are otherwise the most trenchant. In a backhanded way “corporate crime” reinforces decades of misrepresentation by courts that endowed business organizations with many of the rights of persons, along with the distinctly nonhuman privilege of potential immortality, simultaneously allowing at least some of the blame to be placed on a corporate entity itself rather than on those actually responsible for its decisions. It’s a little like trying to indict Little Boy and Fat Man for the bombings of Nagasaki and Hiroshima. Once an offense, no matter how arcane, is on the books, cops, prosecutors, and bureaucrats in regulatory agencies try to extend its reach to embrace an ever-wider assortment of supposed transgressions, while its very existence builds up an ever-larger coterie of vested interests who resist efforts to modify or remove it. The more offenses on the books, the greater the ease of finding something, probably several things, with which to charge someone, pressuring them into pleading guilty to some of the lesser ones to avoid the penalties associated with the greater – or (something rampant in the US today) to just cough up some cash to bounty-hunting cops and prosecutors without any formal admission of guilt on their record. That kind of opportunism might help to explain the persistence on Canadian statute books for decades (and only removed in the 1990s) of heinous offenses like pretending to be a witch, issuing fake onecent coins, failure to reveal a previous prescription, and boat captains seducing female passengers (though not, of course, vice versa) – although simple bureaucratic lethargy probably played a big role, too, in explaining their longevity. Perhaps the biggest confusion derives from the very term “Crime,” best capitalized as a metaphysical concept akin to Original Sin.7 “Crime” applied to all profit-driven offenses manages to lump together some actions that involve force or fraud and some that operate via “free market” exchange; some that have victims and some that have clients; some that occur by stealth at night and some that take place in a boardroom by day; some that are plotted by men with black eye patches in the back of smoky dives and some cooked up by people in the latest brand-name sportswear on the golf course. The only thing they really share, apart from the motive of money (itself only a partial explanation) is that they violate statutes prescribing criminal sanctions for certain acts. Yet what constitutes a criminal violation can be as

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much (or more) the result of public hysteria, political opportunism, and cynical manipulation by special interest groups as the product of calm calculation of social costs and the best way to prevent repetition. t h e u n h o ly t r i n i t y o f p r o f i t - d r i v e n c r i m e s

Of the three categories of economically motivated crimes, the most straightforward are predatory in nature – everything from pursesnatching to ransom kidnapping to extortion and much beyond. The objective could vary from a wallet full of $20 bills to 16,000 barrels of maple syrup – the target, believe it or not, of a major heist in Quebec in 2012.8 A predatory crime involves involuntary redistribution of existing wealth from one party to another, probably using force or the threat of it, although simple deception sometimes suffices. At first glance it also seems the crime category in which ethical principles are clearest – since someone has been harmed by someone else, restitution or compensation to the victim follows logically. In principle the commandment “Thou shalt not covet thy neighbour’s house” seems to make matters crystal clear – although during the US mortgage crisis mass repossessions by financial institutions using fake signatures casts some doubt on how seriously that, like most of its nine relatives, is taken today. Pure though the moral issues might seem in principle, they were never so simple in practice. In the Anglo-Saxon tradition, modern law covering predatory acts started to take shape in England with the fifteenth-century Carrier’s Case. A merchant had contracted for a carter to carry bales of goods to another town. En route, the carter broke into the bales to steal some merchandise. Arrested, he was charged with felonious theft, a charge used previously, for example, against bandit gangs who rustled cattle, not against respectable tradesmen carrying commercial merchandise. One legal opinion held that there could be no theft since the carter had legal possession of the bales when the event occurred and logically could not steal from himself. In the final analysis the case was decided through the artifice of interpreting the contract to mean that the carter had legal possession only of bales, not of contents. This set an important precedent not just for members of the legal profession to spend most of their time, and make most of their money, quibbling over semantics while ignoring the core issue but for applying the law dealing with larceny to a whole host of offenses formerly only civil in nature.

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That also served as a spiritual precursor to today’s trend to criminalize actions formerly dealt with as regulatory, if not just civil, matters, or even things that merited resolution by nothing more complex than a swift kick in the pants. Law enforcement grew up focused heavily on predatory crime and, as a consequence, has remained heavily imbued with a Manichean view of the world – the thin blue line forming a frail but steadfast defensive barrier to protect the innocence of civil society against rapine, plunder, and murder. The appeal is obvious: there is much more moral rectitude in an officer of the law returning a snatched purse to an elderly lady who responds with smiles and gracious thanks than in grabbing a dime bag of grass from a snotty fifteen-year-old who reacts with a string of four-letter words. That uncouth brat was engaged not in a predatory but in a marketbased crime. With predatory crimes, both the act and the method are illegal and the harm fairly easy to assess once stumbling blocks like those on the road to the Carrier’s Case were removed. With this second category, market-based crimes, the act (selling banned substances) is illegal, although whether it should be is sometimes subject to contention. However, the method (market exchange) is perfectly legal, although some of history’s greatest political thinkers were convinced that it should not be. Trafficking in contraband goods dates back centuries, if not millennia, although the offense was usually not the object itself but failure to pay taxes due on it. Today’s most important market-based offenses date from fairly recent decisions to criminalize personal vice – gambling, prostitution, use of recreational drugs etc. Though laws might have existed on the books, until the late nineteenth and early twentieth centuries personal vice was generally accepted (or was it “acceptably general”?) to be a problem for the person with the vice, and perhaps for their family, but none of the business of “society,” however that might be defined. The shift was not the result of some sudden and profound alteration in public mores. Rather in the US, the country that has so often (though fortunately not always) set precedents for much of the West, the shift was the handiwork of an ad hoc and sometimes changing coalition of political and economic interests. It agitated for, among other things, criminalizing prostitution and banning the unlicensed sale of “narcotics.” Its greatest victory came in 1919 when it pushed the federal government into prohibiting the manufacture and sale of alcoholic beverages. This unfortunate move, claim critics, unleashed

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a maelstrom of criminal consequences including the birth of modern “organized crime” – a concept so fraught with confusion that only someone in an alcoholic daze could take it seriously. Obviously many who demanded a ban on recreational booze were motivated by honest if exaggerated beliefs. Women’s organizations formed to press for the vote backed the new crusade on the rationalization that strong drink created domestic violence – rather than helping to bring out that violence in the subset of males already prone to it. The same year that the US Senate approved a constitutional amendment to turn a wartime ban on distilling grain – something that could be profitably sold to European countries whose agricultural workforce had been harvested for duty in the trenches – it also abolished sex-based discrimination in voting. Ratification of both measures by enough states followed the next year. While both were landmarks in the political empowerment of women, or, more specifically, of white middle-class women, Prohibition is impossible to explain without noting other social forces at work, some with less laudable goals.9 Some big-business interests saw Prohibition as a way to boost productivity by reducing absenteeism and improving workplace performance, as well as to blunt union organizing in saloons that functioned, much like English pubs, as clubs for working men. Besides, they had proof of the ills of alcohol. In an early manifestation of what later became known as “experimental economics,” Irving Fisher, primary US founder of neoclassical economics, arranged for a group of working men to slug down whiskey before the morning shift, then compared their work performance to the results when they were sober. The conclusion was that alcohol caused productivity to drop 10 percent. That working men drank beer, not shots of neat whiskey, and did so after work, happened to get overlooked. Preachers of another form of fundamentalism were as eager as their modern equivalents to leap on a passing bandwagon and themselves beat the bass drum if that promised them increased public exposure. Alcoholic beverages, their claim went, were contrary to God’s will – apparently this Jesus dude had a special dispensation for his water-into-wine caper. A federal government eager to extend its policing powers at the expense of states didn’t hurt the cause either. Meanwhile the rationalization-de-jour was that booze “addicts” were responsible for a veritable crime wave, especially in the form of theft and robbery, to earn the money to support their

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habit. That was a story reproduced three quarters of a century later with “recreational drugs” substituted for alcohol. Thus, with bigbusiness money, charismatic leaders, an attention-grabbing pitch, and a guaranteed audience of small-town W AS P s resentful of the presumed decadence of life in big cities with heavy immigrant populations, the case was (as a future C I A chief might have described it) “a slam dunk.” That Prohibition didn’t accomplish its alleged objectives and had plenty of negative consequences was irrelevant. The third category consists of commercial crimes, the preserve not of machine-gun-toting bank robbers but of golf-club brandishing corporate executives. Their perpetrators are not people in black leather jackets who torch a building so that its owner can claim the insurance but real-estate developers who earned a citation from their local Chambers of Commerce after their bulldozers uprooted an old-growth forest to throw together a bunch of tacky condos primed to start falling apart again as soon as the purchase checks are cashed. In other words the offenses are committed by apparently legitimate entrepreneurs (or investors) producing and/or selling legal (not the same as socially useful or morally uplifting) goods and services (including financial instruments) through a normal-looking business enterprise but using illegal methods. Those who suffer could be: workers cheated on pay and benefits; suppliers who await payment only to have their client declare a long-planned bankruptcy; or the public as a whole, fooled by phony product guarantees or bogus merchandise. The victim could also be the biophysical environment as a consequence of things like illegal dumping of toxic waste. A cardinal sin of justice systems almost everywhere in the world is that they give no status to nature itself, just to people claiming to be injured as a consequence of insults to their private property. In that way the system reinforces the notion that everything else on Earth exists only to serve human demands.10 Because commercial crimes deal in inherently legal goods and services in illegal ways, they involve “fraud” in one form or another. That, in theory, makes the morality unambiguous, although actually determining whether fraud (a definitionally moving target if one ever existed) really occurs, how it takes place, and the sums involved can take ambiguity to dizzy new heights. It seems clear when a predatory offense has been committed – just ask the person with a cracked skull and a missing Rolex. (It was probably fake anyway.) A market-based offense, too, is in principle obvious enough – at least if the cops set

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up a camera in a back room to watch a sack of snowy white powder exchanged against a wad of crisp bank notes. But with commercial crimes where does sharp business practice end and a hustle begin? At what point does a high-pressure sales tactic become a swindle? When does effective advertising become deliberate deception? To be sure, sometimes the distinction between commercial and predatory crimes is fuzzy. Take old-fashioned (and now almost obsolete) loan-sharking, for example. Is the crime predatory because money is extorted under threat or commercial because a loan is made at illegally onerous terms? Maybe both; maybe neither. Rarely is someone forced to borrow from a loan shark; and, if that borrower is so forced, it is not the loan shark but the person to whom the borrowed money has to be paid that does the forcing. Sometimes it seems that the main offense loan sharks commit, apart from cheating on income taxes – unless they just file under the professional category of “private banker” – is to encroach on the turf of licensed banks, who are no slouches either when it comes to squeezing money from their clients. Given all the fine print in the written terms that formal financial institutions foist on their borrowers, knowing full well that few will read them and even fewer understand them if they do, borrowing from a loan shark is likely cleaner and clearer even if somewhat more expensive – although given all the tricks buried in conventional loans to covertly hike payments, even that last feature needs to be proven rather than assumed.11 Today respectable financial institutions sell fancy instruments to their clients that are preprogrammed to blow up and make loans knowing they can never be repaid so that the client just gets dug in deeper and deeper. The lending institution can then sell delinquent loans to another business entity whose collection departments are equipped with the legal equivalent of brass knuckles.12 Justice in instances of commercial crimes is particularly difficult to obtain. Sometimes law enforcement officers, juries, or even judges don’t understand what the offense is – or, since a commercial crime logically calls for compensation to victims, how to value the damage. Much of the investigatory function formerly performed by ­commercial-crimes divisions of police forces has been outsourced to the private sector. It hires ex-police investigators at higher salaries, then, in the name of free-market efficiency, passes the cost onto the victims who, in turn, would have to pay lawyers to try to recover that, too. Unless the victims are major corporations, they may just decide it just isn’t worth their while pursuing the case.

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Sometimes the issue is not which category a crime falls into but whether it ought to be a crime in the first place. Take, for example, a particularly notorious but recently minted type of commercial crime, that of insider trading on stock markets. This was first conceived of as an offense involving officers of corporations about to merge who took advantage of that knowledge to speculate to their own profit. It was extended to nab employees of law firms planning mergers and acquisitions, senior personnel of investment banks involved in financing them, financial reporters who got leaks, even janitors who picked up discarded memos in the trash. If any of them used such information to anticipate stock-price movements for their own gain, they were guilty of insider trading. Thus, with cab drivers who listened to conversations in the back seat equated with hedge-fund partners exchanging forbidden tips over brandy and cigars, it became unclear just where the frontiers between “inside information” and the zealous search for (or opportunistic discovery of) data on which to base a stock purchase really fell. Simultaneously the core issue ceased to be breach-of-fiduciary-duty (especially by officers in investment banks involved in mergers) and became simply obtaining profit that other people thought should rightfully be theirs from correctly guessing stock price movements. Yet for an individual or small firm to trade on privileged information to capture the profits from market movements that take place for independent reasons is quite different in action and results from giant financial corporations rigging chunks of the market to make it move in a particular direction. The bald reality is that the only reason investment banks are so large today, apart from being able to nourish themselves off the public teat in times of self-inflicted trouble, is that they have access to enormous amounts of market information from many different founts about many different companies. Virtually all that information must come not from public sources but from private conversations, most, no doubt, over expense-account meals in high-end restaurants. Does anyone really expect serious prosecutions for the LIBOR scandal, one of history’s greatest market-rigging operation and done with the explicit participation of the Federal Reserve and the Bank of England? The response to that kind of stuff, if the news happens to leak out, is usually for the big boys to publicly throw a minor figure or two under the wheels. If that doesn’t suffice to calm the financial press editorial writers, maybe they accept some

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headline-catching fines that are a small fraction of the extra take, with the impact reduced all the further if the fines are tax deductible.13 With true insider-trading on the stock market, what is at issue is not a contest between predator and prey over forcibly or fraudulently redistributed wealth, but a quarrel between two sets of investors over distribution of profit, exactly the kind of dispute that ought to be (and was in the past) left to the civil courts to resolve. The real reason for criminalizing insider trading was probably to send a message to the “small investor” that stock markets are something other than just a crap game legally rigged to favour the true insiders. In that case the legislation is a bigger con than the act of insider trading itself, and certainly claims far more victims.14 c r i m i n a l a s s o c i at i o n o r a s s o c i at i o n of criminals?

The pop stereotype is that predatory crimes are generally the work of individuals or, at worst, gangs, lurking in dark alleyways. Marketbased offenses, though, seem associated in the public (and police) mind with something called “organized crime,” as if any crime short of purse snatching didn’t require some sort of organization. This concept involves applying to a group the notion that the whole is larger than and qualitatively distinct from the sum of the parts, with the further proviso that it ought to be so treated in law. That in turn seems to justify two legal departures. One is harsher punishments to members of an “organized crime” group than would be received by an individual charged with the same offense, in effect creating two classes of offenders, differentiated not by what they do but by who they are. The second is to make membership in proscribed organizations an offense per se. At that point association rather than action becomes the crime even if legislators, dimly aware of the slippery slope that represents, perform logical somersaults to try to gloss over that fact. 15 Though the roots go back further, at least in North America the mythology of “organized crime” seems to have been imbedded in the popular conscience during the bootlegging era in the US, then updated during the still ongoing “drug war,” the main difference being not so much product of choice but the darkness of tint on the complexion of the main suppliers. In pop accounts, media coverage, and prosecutorial press releases so-called drug cartels are routinely

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likened to Fortune 500 companies. But in reality drug action, like most things, occurs via loose and constantly adapting networks of participants ranging from primary producers to secondary processors to exporters to importers to regional distributors to wholesalers to retailers to money washers, operating generally at arms length. A comparison to the formalized structure of a major legal business corporation is not just fatuous – it is dumb. Equally baseless is the notion of huge amounts of criminal profit derived from market-based crimes waiting to take over the commanding heights of the legal economy in order to corrupt its functioning – as if people already inside were incapable of that job all by themselves. While it is true that some career criminals are rich, most seem to have modest incomes that they dissipate quickly in fast living. When they do invest in the legal sector, especially as they age, they are more likely to put their money into building a retirement plan than staging a fraudulent bankruptcy. Nonetheless the popular notion of the billionaire narco-baron reclining in a gold plated bathtub lighting Havana cigars with $100 bills has been drilled into the public consciousness, aided and abetted by publicity stunts from the likes of Forbes magazine. It periodically honours whomever currently holds the media title of numero uno crime lord in its annual billionaire rankings, even though neither it nor the best informed police intelligence unit has a clue how much any of them are really worth.16 Far from controlled by great “cartels” wallowing in cash, most illegal markets seem competitive, probably more so than a lot of legal ones where retailers might be locked by suppliers into sales arrangements so tight that no self-respecting corner dealer in crack or smack would tolerate them.17 Illegal-market entrepreneurs, too, are no less anxious to maintain customer loyalty than legal ones; maybe more. After all, their opportunities to manipulate clients through intensive advertising in the mass media are rather limited. If predatory offenses can involve gangs defined as merely the sum of their individual members, and market-based ones supposedly revolve around “organized crime groups” with a collective existence allegedly more complex than that of a mere gang, commercial crimes are frequently associated with the highest form of collective economic existence. From this emerges the concept of “corporate crime,” a reference not to the actions of individual executives or managers but to those of the corporate body itself – with the implication that the corporation per se ought to be held to account.18

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That opens a real can of corporate worms. How can a corporate mens rea be defined short of the corporation being presumed to act independently of its senior management personnel, a belief better suited to bad science-fiction novels? Do corporations charged with criminal offenses merit jury trials like other defendants? If so, presumably the jury must be comprised of the defendant’s peers – ExxonMobil’s guilt or innocence being objectively pondered by BP, for example, then maybe vice versa as a return favour. Should normal protections to persons facing prosecution, for example, against selfincrimination, be extended to corporations? If so, presumably the corporation would have the right to refuse to answer any questions about how its computer files were mysteriously erased and the warehouse holding its old paper records burned down just before a tax raid. Even if the police used improper methods, for example, subjecting the corporation to day-and-night interrogation in a windowless room with a couple of shaven-skulled thugs ostentatiously hefting baseball bats, they would probably have difficulty extracting a confession. The real issue, of course, is whether it is possible for “corporate crimes” to exist independently of the actions of managers and executives. If the answer is “no,” punishing the corporation per se takes responsibility away from the individuals who are really are to blame, while threatening to shift the costs of a guilty verdict onto innocent bystanders – employees, suppliers, creditors, and ordinary shareholders. If top managers are forced out, they likely depart their posts by leaping joyously off the top of the headquarters building with golden, maybe even platinum, parachutes, then get hired back as consultants, perhaps with free use of the company helicopter to get them back to the top of the building again. The bottom line is that the corporation does not behave in a criminal way – that’s the privilege of those who run it and who, under present legal circumstances, all too often are able to run away from it when things go awry, leaving the wreckage but carrying the cash. To be sure, sometimes top honchos take a fall – usually if they have embarrassed the political status quo, as Leona Helmsley did by broadcasting the truth about modern tax regimes, or been so arrogant as to make powerful enemies inside their own empires, as Conrad Black did unrepentantly. Granted, even a short sentence in a minimum security lock-up is no joking matter, particularly to “whitecollar” offenders with their snooty concerns over social status. But at least Black found a way to moderate his travails by teaming up with

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another inmate, formerly a professional chef, to lift so much choice food from the commissary that they sometimes needed a golf cart to haul away the loot. No doubt some of his contemporary detractors, probably including some formerly unbashed sycophants, would smirk that he had plenty of practice in his previous gig.19 t h e l aw a n d u n i n t e n d e d c o n s e q u e n c e s ?

Back in the late nineteenth and early twentieth centuries, when the US federal government decided it had a duty to improve the moral deportment of its population and launched its offensive against the sex trade, it opened two main fronts. The first, in the form of the aptly named Mann Act (since only males were charged) banned the interstate movement for purposes of prostitution of women – de facto white, although the suffragettes who agitated for a law had mentioned Chinese victims, too. (No one seemed overly concerned about black ones, who were more likely to be abused.) Allegedly to keep its boys pure at heart as well as physically unblemished with joyfully transmitted diseases, the government followed up during World War I by closing the country’s most notorious red light district, Storyville in New Orleans, even though it had been licensed by the state of Louisiana on the model of similar districts in France and Germany. Red light or, in American jargon, sporting districts of major cities played important social roles not in corrupting the morals of a population, or at least of a certain segment that probably needed little assistance on that score, but in keeping the consequences of inevitable vices concentrated in one location, the better to contain and control. This applied not just to brothels but also gambling dens and the rowdier drinking establishments. While these districts existed, they also limited the danger in certain high-risk professions. Most prostitutes operated under the eye of both madams (houses of prostitution being one of the few equal-opportunity enterprises at that time) and police officers who took payoffs for dealing with rowdy or abusive customers. Shutting down places like the affectionately named Free State of Galveston or the Omaha Sporting District or the Sporting District of San Antonio led prostitutes to migrate into other urban areas, where they upset the sensibilities of stalwart citizens including, no doubt, some of those who had previously frequented the brothels. Streetwalking also increased the women’s vulnerability to predators, who now included cops intent on shaking

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them down as well as violent customers whom brothel bullies had formerly kept in line. The result, too, was to increase the role of pimps who traded their services as “protectors” for a rising cut of the prostitutes’ income. They might also, from time to time, raise those incomes further by beating their “girls” and robbing clients who were no longer in a position to complain to the police.20 To this day the sex trade seems indelibly associated in the public mind with violence against women. That is sometimes correct, although at other times it may reflect not objective reality so much subjective abhorrence of the very act of selling sex. All the focus on violence also gets caught up today in a general attack on illegal immigrants by their association with crime and corruption, even though the overwhelming majority, forced from their homes by Western-sponsored “humanitarian interventions” and “free trade” deals, are bound not for brothels but for sweatshops and for the poison factories euphemistically called farms. Even strictly within a country any propensity of the sex trade to violence against women depends heavily on context. Predatory pimps and assault by clients are more likely a feature of poorer and neglected neighbourhoods where few other jobs exist, prices for prostitutes’ services are low, and policing is sparse or corrupt – although sexually driven violence is not unknown either in certain upscale New York hotels. The further up the income and class ladder, the less likely, though still possible, violence is going to be. Rather than being consigned at an early age to the graveyard of dead laws, the Mann Act went on to a cosmopolitan existence. It was used, for example, to prosecute men for having sex with “underage” women. When the FBI went after Charlie Chaplin, whom it long had in its gun sights because of his left-wing views, they charged him over his relations with a co-star and mistress, then at the tender young age of twenty-four. He was acquitted. The same law has since been employed against Mormon polygamists. It almost got reassigned from Vice War to Terror War when the US was looked for a pretext to arrest an American Muslim Imam named Anwar al-Awakli. The rationale was to be that he had crossed state lines with two prostitutes.21 Probably because there was no proof that the women were either prostitutes or forced to cross, that attempt was shelved. Awakli, though, took the hint and hightailed it for Yemen. After some years tracking his whereabouts and monitoring his doings, the US decided to use a different kind of charge, delivered not by bailiff but by drone, to literally blow the case to pieces. Just to be sure there were no loose

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ends, two weeks later the commander-in-chief authorized the same treatment for Awakli’s sixteen-year-old son, like his father, and unlike what the “Birthers” claimed about Barack Obama, born in the USA. The career trajectory of the Mann Act’s much-heralded companion in the US Vice War, the ban on recreational booze, has a history no more edifying than the laws to prevent and punish “morals” offenses. Even though, unlike the Mann Act, Prohibition was repealed, its long term consequences were worse, not least because of the number of well-entrenched myths it left behind. It would be hard to find a media commentator or scriptwriter, not to mention career criminologist or police-academy instructor – at least in North America and probably everywhere else where second-hand US T V shows and movies get dumped – who hasn’t been inculcated with images of Eliot Ness and his Untouchables kicking down doors at gunpoint to shout “Treasury agents, hands up!” before escorting a file of formerly Tommy-gunwielding scofflaws to the waiting paddy wagons. Granted, many contemporaries, probably including a lot of cops, must have felt that congressmen capable of passing a law prohibiting the production and sale of alcoholic beverages had to have been drunk at the time – or perhaps they, like those who almost unanimously passed the US’s infamous Patriot Act, had accidentally left their reading glasses at home. Nonetheless the police did their duty – at least until they found out what a bonanza collecting unofficial booze taxes could be. Prohibition probably didn’t reduce overall booze consumption in either quantity or value; it just shifted the form (e.g., from beer to “whiskey” of dubious pedigree) and quality (downward) and changed the distribution of the resulting income. What used to go to the government in taxes went to crooked entrepreneurs in profits, part of which was passed on to the police in bribes. Facing this persistence of demand, justice bureaucrats insisted on raising penalties against the suppliers while politicians searched for scapegoats. Since they had trouble admitting that the citizenry at large rejected the legitimacy of a major government initiative – even though the U S A had in its history several open insurrections against booze taxes – the reassuring alternative explanation was foreign conspiracies. The biggest and baddest of these were Italian-led “syndicates” who had taken the lead in satisfying the nation’s booze habit and, incidentally, its allegedly growing appetite for opiates, at least for those for which the Yellow Peril had not already sewn up the market.22 Those Italian

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gangsters and their traffic in booze were also blamed for the plague of competitive violence that allegedly swept US urban centres. The reality was rather different. In rural areas and small towns, illicit alcohol was usually homemade for personal use or cooked up for local sale by a class of producers whose heavy weaponry consisted of a shotgun to blast at scavengers insufficiently intimidated by scarecrows in the grain fields. This was particularly true after the Great Depression caused farm prices to plummet and left huge stocks of perishable grain, especially corn, with no market unless it was transformed into whiskey – where it stored far better and mellowed rather than rotted with age. There were other options, too. Those people without access to the kind of raw material most farmers had at their fingertips, and who lived within a reasonable distance of the Mexican or Canadian borders, could easily smuggle their own supplies of finished product, as well as accommodating friends and neighbours. They were aided and abetted in the 1920s by the rapid spread of the automobile. Henry Ford, initially an ardent Prohibitionist, was much more important than Al Capone in keeping the nation happily besotted. Even in cities, most of the alcohol was homemade or provided by doctors who ran in conjunction with pharmacists a scam prescribing booze for medicinal purposes. The gang presence was mainly in the provision of genuine imported stuff in a few urban centres to an upscale clientele too smart and wealthy to drink local rotgut. Here and only here did serious violence seem to occur. Various outfits hijacked each other’s loads and torched speakeasies that bought from the competition. Yet most of the time even in these cases there seemed to have been a modus vivendi whose occasional breakdown might spark a brief and self-rectifying conflict. Ultimately the real reason for the repeal of the anti-booze laws was not a high level of violence or some dramatic dawning of the light of reason or the wannabe moral guardians of the popular soul giving up in disappointment, maybe to retreat to a cabin in the woods to drink themselves to death. Credit for the end goes to more mundane factors. The collapse of income-tax and Customs revenues during the Depression pushed the federal government toward restoring its tithe on recreational alcohol, in the old days its principal source of excise tax revenue. Big-business interests that formerly supported Prohibition on the grounds that it would reduce absenteeism now faced a huge labour glut that assured the good behavior of those who still had

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jobs. The political elite realized that easy access to booze could alleviate symptoms of public misery during the Depression and blunt the appeal of radical movements, the kind of socially stupefying role that television would play so effectively in decades to come. Not least, the share of the market that Prohibition permitted the artisanal producers to capture whetted the appetites of big-business interests who used legalization as a device to drive out small operators and sew up the trade. Then they simply increased prices to compensate for the cut they had to give to the state in return for their new “legal” status. Now virtuous, they threw their weight behind the prohibition of cannabis instead; and top bureaucrats from the old anti-booze office made a seamless switch. Yet the stereotype of Prohibition-era cities riddled with random machine-gun fire persists. That is because, in addition to feeding the self-image and ambitions of the justice apparatus, it allowed explanations of the principal cause of the problem to be shifted from bad policy to bad people, a reflex carried over into the modern Drug War. high on drug money?

It does little good to argue that the best way for the US to relieve itself and much of the rest of the world of the damage done by dangerous drugs is to simply shut down most of its large pharmaceutical companies, which maim or kill far more people each year. Despite hundreds of billions of dollars dissipated on illegal drug control (or just using drugs as a pretext to spend on other things), despite the debasement of the justice system, so overwhelmed with cases that the plea bargain has almost completely displaced a genuine trial, despite the progressive militarization of police forces, despite the concurrent erosion of basic civil rights, despite the fact that the average black American male now has about 30 percent chance of spending time in prison, nothing fundamental seems to have changed on either the supply or demand sides of the market equation since the “war” was declared – except to diversify supply chains and to add to the flow a deluge of home-brewed concoctions. (The law of entropy is apparently one that neither police academies nor law schools favour on their curricula.) That in turn led not to a rethinking of the whole mess but to a scramble by regulators to add new substances to the banned list.

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The reason for what some might think is an irrational, shallow, and self-defeating response is not just because legislators and policymakers are impervious to facts, although institutional autism is always a danger. Nor is it just that the more complex governance becomes, the more those trying to steer it react to dysfunctional complications by pouring more resources into exactly the policies, laws, and institutions that created the problem. Those are certainly an important part of the explanation. But add to them the fact that in some ways the “war on drugs” has been a brilliant success, provided it is judged in terms not of its effect on drug use but of its impact on the constituencies that most benefit. These favoured groups include the military-industrial complex, which reacted to the end of the Cold War by offering services and hardware specifically tuned to the “Drug War” – with one general decreeing the Andes to be a “Ho Chi Minh Trail for drug dealers.” Add to that an intelligence establishment that saw chasing criminals as a substitute for chasing “Commies.” Both, of course, soon found a more lucrative and durable raison d’être in the looming Green Peril, especially once the word got out, just by coincidence, that Usama bin L a¯ den and his disciples had magically become major world players in the illicit drug trade. Not to be forgotten are all those politicians who preferred to blame “crack” rather than themselves for the degradation of city cores, an ongoing process as more capital fled the US for cheap-labour oases and low-tax havens abroad. Toss in police bureaucracies, who saw the Drug War (and still do) as a tool to extract larger budgets and more arbitrary powers – the Terror War to them is icing on an already large and succulent cake. Figure as well those Hollywood scriptwriters and TV talk-show hosts who would be discomfited by the end of the Drug War that provides them with endless opportunities to recycle the same ideas and indulge in the same rants. Don’t omit the propensity of N G O cratic do-gooders to link their own favourite cause to whichever one is currently garnering the most cash and clout. For example, animal-rights activists blamed drug traffickers for the growing trade in endangered species – one image of an anaconda stuffed with cocaine sufficed for the link. Similarly people alarmed by the threat of intensified fishing to  tuna stocks and marine food webs lobbied for tighter curbs on fishing by trying to convince officials that drug cartels had taken over tuna fleets as cover for smuggling their product.23 Then, too,

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consider the prison-industrial complex, whose appetite for profit can only be appeased by not simply constructing new incarceration facilities but by keeping them filled with if not paying then paid-for clientele. The prisons-for-profit lobby reacted to falling crime rates in the US by pushing for longer sentences. (Bribing the occasional judge to step up the rate of inmate production also worked wonders.) On the other hand, some were smart enough to insert in their contracts minimum occupancy clauses that force state governments to pay them full fare even when cells go empty.24 Certainly not least, take note of how the drug war advanced the cause, in line with neoliberal ideology, of turning criminal justice into an increasingly self-financing business opportunity. Because market-based crimes, of which drugs likely generate the most revenue, involve voluntary transactions, crime-control policy focuses not on restitution to victims, the correct reflex with most predatory and commercial crimes, but on grabbing the “proceeds” – with particularly ugly effects. In the old days the state had to prove not only on criminal criteria (i.e., beyond reasonable doubt) that someone had committed a crime but also on the same criteria that assets (financial or physical) the state wanted to seize were the proceeds of that crime. Then came, first in the US as part of the Reaganera Drug War, then elsewhere in the West, civil asset forfeiture. In its least harmful form, this permits a court after a criminal conviction to proceed under civil (balance of probabilities) criteria against assets on the grounds that they were likely the product of the crime just proven. (This is the way it was originally set up in Canada, for example, where criminal law is exclusively a federal matter.) In a nastier form, rife in the US and envied elsewhere, police and prosecutors can skip the criminal process altogether. They can just grab, at least in their dreams, heaps of $100 bills, piles of sparkling jewels, sprawling mansions with Olympic-sized swimming pools, and fleets of Lamborghinis, but not yet flashy mistresses (although the sable coats off their otherwise bare backs might be fair game) without requiring proof that a crime had been committed – while throwing onto the owner the burden of proof that the stuff is of innocent origin. Even worse, the practice leads in some countries, the most guilty of which needs not be named, to “proceeds” being forfeited not to the state but to the agencies that did the seizing. Those losing their lunch money, Mickey Mouse watch, two-bedroom bungalow with outdoor hot tub, and secondhand van – the cops took a pass on the

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Mexican cleaning lady’s polyester apron – are forced to initiate legal action, if they can still afford it, for restitution. Still, even though there is no need in the US for a civil asset seizure to occur in tandem with a criminal prosecution, the first can make the second easier – it can strip a target of the means to pay lawyers and even allow the government to freeze money already paid to them, accelerating the pressure for a defendant to go for a plea bargain rather than a trial. Worst of all, with the steady growth of sting operations, undercover drug cops can now stage a controlled sale on a piece of property they covet, allowing it to be seized as an instrument or proceed of crime, even if the owners had nothing to do with the (contrived) offense. They can also put a real trafficker they bag to work entrapping other people in return for a share of what the police seize.25 With the drug war producing such heady results, inevitably forfeiture got extended to almost every field of criminal enforcement; states passed their own versions. The result is an ever growing list of people who are victims, not of crimes by outsiders, but of offenses against common decency and common sense by the enforcement and prosecutorial arms of government, based partly on the myth of crime out of control, partly on scare stories about the level of criminal violence, but above all else on the legend of massive amounts of criminal funds in general and drug money in particular washing through the national and international financial systems.

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4 On the Track of the Black Greenback

A bureaucracy, once created, rarely folds its tent, to then ride off quietly into the sunset after its official mandate has been fulfilled. Impelled by an overwhelming instinct for institutional self-preservation, it may insist that the problem it was created to address is still lurking in the shadows, waiting for humanity to drop its guard so the menace can rear up again, bigger and badder than before.1 Or it may seek an alternative mandate, however contrived, to justify a continued existence. Take, for example, the Financial Action Task Force, the US-controlled watchdog set up during the Drug War craze to bully countries into conforming to the USA’s anti-money-laundering model.2 Faced with the disturbing prospect that the new post-9/11 threat from an imaginary Islamintern might relegate the hunt for nonexistent narco-billionaires to the back pages of checkout-counter tabloids, FATF officers baldly declared that it seemed “logical” to see if reporting systems put in place to combat the laundering of drug money could be “expanded or used for other ends.”3 Far from logical, there are good reasons to believe the opposite. Given the actual record of the existing anti-money-laundering (AM L ) regime, any guidance it can give about how to handle other aspects of illicit money flows will be mainly by contrary example – because the A ML system put in place since the 1980s was shaped not by a rational quest for an effective way to deal with a well-understood problem but by a mix of myth, hyperbole, and delirium.4 The result is a system that manages to be at the same time clumsy and intrusive, yet at best marginal with respect to its intended target, criminal profit. It is also counterproductive with respect to things like fiscal enforcement, its latest bureaucratic intrusion, and irrelevant to the grossly exaggerated problem of “terrorist finance.”5

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the aml regime in theory and practice

The AML regime consists of five main elements: (1) the creation of a new crime called “money laundering,” something about as redundant as inventing a standalone offense called “driving the getaway car” to deal with bank robberies; (2) the imposition of extraordinary financial-reporting requirements that have become increasingly intrusive over time and, even worse, have been a major structural pillar in the gradual erection of a national-security state; (3) a loosening of legal criteria along with a reversal of the burden of proof to facilitate confiscation of reputed “proceeds of crime” by the state or sometimes its agencies, threatening to turn police forces into self-financing bountyhunting organizations; (4) the progressive extension of the AML regime beyond normal banks to conscript everyone from Wall Street hedge-fund managers to corner pawnshop operators as snitches in the anti-crime-and-now-anti-terror crusade; (5)  the internationalization of the AML regime’s sight and grasp from the US where it began to other places whose circumstances and needs might be (in fact almost surely are) radically different. All this was driven by the theory, stunning in its simple-mindedness, that removing the “proceeds of crime” removes along with it: the motive (criminal profit) to commit more crimes; the financial means (criminal capital) to commit them; and any accumulated funds (criminal wealth) that criminals could use to infiltrate and corrupt (two different things, routinely confounded) the commanding heights of the legal economy – as if today’s big-business barons need lessons from some ghetto crack dealer on how to rig markets, loot pension funds, or fleece clients. During the 1980s a number of wide-eyed beliefs seemed to rationalize the strategy. One was the presumption – held with degrees of conviction inversely related to degrees of proof – that humungous sums of criminal money under the control of giant transnational crime “cartels” were washing through the national and international financial systems. Another was an unflattering police opinion of the moral fibre (or rather its absence) of bankers, by itself a perfectly reasonable assumption but focused incorrectly on what they did on the deposit rather than on the loan and investment side of their books. Yet another belief, often underappreciated in significance, was the fear that, if US banks did face additional deposit-side regulation, they could lose their international competitive edge, especially to their Swiss, British, and Canadian competitors. This was articulated

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explicitly in 1989 by Senator John Kerry when he declared that imposing US-style AML regulations on foreign banks was necessary to ensure they didn’t poach US business. Even back then, presidential hopefuls were fully aware that, if the road to the White House was not actually paved with gold, most of the paving contracts had already been handed out to Goldman Sachs. So, step by plodding step, regulation by cumbersome regulation, form by irritating form, the current AML system was put in place: currency transactions forms to report all deposits and withdrawals of cash or monetary instruments above $10,000; IRS 4300 forms (in the US but not yet elsewhere) to report all expenditures using more than $10,000 in cash or other bearer instruments in retail outlets like jewellers, furriers, car dealers, etc. catering to luxury tastes; suspicious activity (AKA suspicious transaction) reports filed by frontline financial personnel if anyone made a transaction that seemed … well, suspicious; and know-your-client rules, an open-ended invitation to open-ended snooping by financial businesses whose raison d’être is usually not to scare away potential customers but to reel them in. There were only two things missing. One was solid evidence that any of this paraphernalia – constantly expanding its scope and scan – was really necessary. The second was any agreement on sensible and defensible criteria by which to assess whether or not it actually worked. To introduce a set of policy initiatives that add up to a radical change in the way both law-enforcement agencies and financial institutions conducted their business without an effective means to assess its efficacy constituted not simply an act of political irresponsibility but of collective insanity. Yet the world at large followed (actually was mainly coerced into following) the US lead in creating an ever-more intrusive financial bureaucracy and in cooperating increasingly across borders to deal with flows of (selectively defined) criminal money. To this was soon added the task of facing down new threats that were nowhere on the agenda at the time of the system’s conception. The Flaws in the Flows Even if the A ML regime were capable of significantly denting explicitly criminal income flows – a claim for which no proof has ever been offered for the good reason that none is logically possible – that would hardly prove its usefulness to deal with things like tax ­evasion, capital flight, and terrorist financing.6 Whatever their superficial

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similarities that boil down to the fact that they all involve money, they differ from each other and from conventional “proceeds of crime” in ways that a rational and efficient control strategy would need to take into account. Too bad one doesn’t exist. Proceeds of crime are, by definition, illegal in origin. So most proceeds start their international circuits by sneaking out of some “rich” country – the greater the national wealth, the fatter the potential prizes, although the competition for shares of it is likely greater, too. Subsequently the proceeds change pedigree abroad in order to proudly return home with their origins, geographical and occupational, disguised. Once back, the money could be spent on the good (or bad) things of life or ploughed into investments to generate yet more income, this time likely of a legal nature. If not, there would have been little point putting it through a laundering cycle. Flight capital, by contrast, is mainly of legal origin. Unlike shortterm speculative money that flits around the world chasing differences in interest rates or anticipating changes in exchange rates, flight capital flees economic, political, or social conditions (war, revolution, inflation, or just plain taxes) in its home country, usually but not always a relatively poor one or at least one with a highly skewed income distribution. Needless to add, it is people at the upper end of the income and wealth pyramid whose money does most of the flying, usually first class, while the lower orders rely on “coyotes” to sneak them across borders relieved of any cash the organizers of the racket haven’t already taken. Flight capital leaves home covertly, its degree of disguise depending on how well the country of origin can enforce its exchange controls for as long as they continue to exist. One of the things on (or rather under) the table in the Trans Pacific Partnership agreement currently under private negotiation by major governments and big transnational firms is a multilateral ban on exchange controls that could limit the ability of transnational investors to siphon profits out of the countries in which they set up shop. Capital flight can drain foreign exchange reserves and suck out money that would otherwise be saved and maybe invested at home while eating away the fiscal resources of the government. By exporting capital, too, a relatively poor country simultaneously exports the entrepreneurial capacity even of business people who remain – instead of chancing their money on something potentially useful at home, they convert it into things like US government securities or

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Miami condos. Once capital flight causes a financial crisis, as it almost inevitably will, in come the I M F , the World Bank, and more recently the European Central Bank to make textbook demands: “fiscal discipline” – i.e., cuts in subsidies and increases in taxes that can precipitate riots inducing yet more capital flight; “deregulation” – i.e., opening the economy, especially the financial sector, to takeover by foreign institutions that are then free to export profits, interest, and capital; and “privatization” – i.e., the cheap sell-off of public assets to “foreign investors” who may well be local flight-capitalists working through the front of offshore companies to reinvest at home. In that way those who caused the problem through capital flight get to use that same money, now probably returning at a more favorable exchange rate, to buy up public assets back home at double bargain prices. Rampant in Latin America during its 1980s “debt crisis,” the practice became prevalent again recently in southern-tier European countries swept by capital flight, then bullied into privatizing public assets by the European Central Bank and the Brusselsbased eurocrats.7 But, of course, that’s not criminal – it’s the magic of the market at work. Capital flight is not just a problem for exotic places inhabited by tinted people with unpronounceable names speaking incomprehensible languages – unless that description also fits Detroit because of its burgeoning Arab population. Currently eyes, ears, tongues, and writing hands have focused on the city’s recent flirtation with bankruptcy, a consequence of the usual gang of slick sales types convincing the usual gaggle of naïve civil officials that the key to fiscal salvation was to play the derivatives markets. It seems that those sales types forgot to tell those officials that if everything went bust the big banks – thanks to the 2005 Bankruptcy Reform Act pushed through by the banks themselves – took priority over other creditors, even to the point of having a preceding claim on assets accumulated in the pension fund on behalf of city employees.8 Yet that was only the tip of a dirty iceberg. The city’s real problems had begun back in the 1970s, with a steady shrinking of the US automobile business and the internal flight of US capital from northeast to southwest, soon crossing the Rio Grande not in pursuit of Pancho Villa but of a cheap labour pool and wide-open toxic dumpsite, then across to Asia.9 The interest-rate swap agreements were one of Detroit’s attempts to dig itself out of a  financial hole that was decades in the making, only to find itself in even deeper. Five years after the big financial crisis hit, the city contemplated

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following the lead of Greece by selling Belle Isle (“a picturesque island park in the Detroit river”). Unlike Greece’s islands, here the would-be buyer was not the emir of Qatar; rather it was a gang of billionaire libertarians intent on setting up their own country. That, of course, was something the emir of Qatar had no pressing need to do – he already owned one, lock, stock, and oil barrel.10 With capital flight, the usual sequence of movements is different than with criminal money. True, flight funds, like criminal profit, may exit the home country via covert means – cash carted in a suitcase, misinvoicing of trade deals, lateral transfers, back-to-back loans, etc. – then change identity abroad.11 But unlike laundered funds the money (apart from any that returns in disguise to buy up privatized assets) generally takes permanent refuge in a rich country, to be spent in glorious living or tucked away in obliging private banks, perhaps with further efforts to hide its origins in order to avoid legal complaints or political reprisals back home. In other words, unlike criminal funds that normally book a return trip under a different name, flight capital usually buys a one-way ticket out. Money that evades taxes combines features of both capital flight and proceeds of crime. To begin with, most money that runs away to avoid paying taxes is legal in origin, only becoming illegal because of tax or exchange control evasion. Like flight capital, it probably leaves its country of origin, rich or poor, disguised, for example, as payments for foreign-sourced goods and services. Once again, the money changes identity abroad. Then, in contrast to criminally earned funds that come back openly be enjoyed in plain sight, albeit wearing dark glasses and Saville Row suits, those from tax evasion, assuming they do return home, do so covertly to evade detection by the tax collectors. Money of criminal origin can also evade taxes, but that is likely the sign of a sloppy or incomplete wash job – money cannot be truly laundered unless it can survive a tax audit. Terror dollars are different yet again. While by definition they are intended for illegal purposes, they seem probably, in fact almost certainly, of legal rather than of illegal origin. Their sums are generally small: hence they might be raised with ease even in a “developing” country. Unlike criminal proceeds, flight capital, and evaded taxes, all of which might use a haven institution to pull off an identity change, the amounts involved in terrorist financing (on the usual definition) are too small to have to worry about tax-haven banks or offshore trusts. Therefore they may be able to evade the international

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financial system along with its controls completely. They could be shifted abroad by courier, by simple telegraphic transfer, or by informal banking setups like hawala – even though all the post-9/11 antihawala hysteria failed to nail down up a single case where hawala was used for terrorist purposes. They could move around the world mixed with migrant worker remittances or charitable donations, then enter the destination country maybe through nothing more sophisticated than an envelope stuffed with cash and consigned to the postal service. There the only serious danger of detection comes from postal clerks with sensitive fingers and hungry families. These four basic categories of illicit funds are so different in origin, nature, and purpose that it seems absurd to think a common apparatus, policy, or set of rules or bureaucratic initiatives could possible work to control them all.12 First, there are different economic motives behind the original acquisition of the funds. Proceeds of crime are earned through prohibited actions. Illegal capital flight is money usually of legitimate origin seeking financial safety in violation of exchange controls. Evaded taxes generally result from illegally withholding payments out of money earned legally. Terror dollars involve deploying money however obtained (though, quite likely, legally) for crimes with no financial motive. Second, the various types of shady money differ in the point at which illegality occurs. With proceeds of crime, the offense is primary, and the funds are the direct result. With both tax evasion and capital flight, the offense is secondary – withholding taxes on legally earned income and/or moving it abroad in violation of exchange controls. With terror dollars, the offense is tertiary, occurring after the money has been raised (usually legally) and then moved (again probably legally) to its point of use. These distinctions reveal something odd about the practice of characterizing money used for a terrorist act as “laundered.” Proceeds are so defined by the act that created them, i.e., by the predicate offense. Subsequently they go underground; and the intent of the laundering cycle is to permit them to once again see the light of day. But terror dollars can only be defined as such after they have been used, at which point they generally disappear. True, money in the hands of those actively planning a terrorist attack could be designated as terror dollars or pounds or euros or riyals or ... But – assuming the whole thing is not just another sting operation to con some poor lost immigrant in order to capture the lead on the six o’clock

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news – the only way to know that plans are afoot to make illegal use of (probably legally obtained) funds is to know what the plotters are plotting. In that case it suffices to arrest them to pre-empt the act. After that, anything done to the money is irrelevant. To be sure, persons planning such acts may take evasive action to keep the funds out of sight until their coup takes place. But the ultimate function of a genuine money-laundering sequence is for the swag to ultimately resurface to enjoy the sunshine of normal economic life, something that hardly applies to money employed in the bombing of government buildings in Oklahoma City or Oslo. It is reasonable to charge someone who knowingly assists with the provision of funds for a terrorist attack as a co-conspirator, but logically someone can only “launder” funds that are already soiled – until the notion of thought crime gets codified into law, something, alas, that may be closer than anyone wants to admit. Someone trying to conceal the existence and/or movement of legally derived money is, properly speaking, a tax-evader or flight capitalist – or even an alimony dodger. However, a law-enforcement apparatus hooked on drug money and a national security establishment fulminating over the Green Peril act on rather different assumptions. Bowing to both, the justice system seems to have permitted prosecutors to redefine financial transactions to suit their bills of indictment rather than vice versa. The third difference is in respective amounts. Even if sums accounted for by individuals are minor, capital flight and tax evasion summed over the economy can involve totals that are substantial with respect to the country of origin, the machinery of covert finance through which they pass, and perhaps even the place of ultimate destination. By contrast terror dollars in virtually every known instance are trivial in amount, both individually and in total. Horrendous acts do not require humungous sums – even on a welfare cheque almost anyone can afford a pressure cooker, some nails, and a bit of ammonium nitrate fertilizer. The notion that a great ball of terror dollars is about to roll over Judeo-Christian Civilization is an illusion peddled by the same coalition of political criminals who brought mass murder to Iraq and to so many other places after it. Proceeds of crime probably fall somewhere in between. Their relative significance will vary with time and place, and their impact will depend not just on how much is involved but on the nature of the offense and the ultimate disposition of the funds. However, it is safe to say that particular crimes (unless committed by and for major

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business institutions) only rarely yield sums sufficient to constitute a financial rather than merely a moral threat. If a country is so rife with criminality as to find the total proceeds of economically motivated crimes taking place on its territory sufficient to threaten the stability of its financial system, that country requires a far more radical treatment than having its citizens or visitors fill out deposit forms at a bank or transit declarations at Customs. Despite the relative sizes of the categories, most political and public attention today is focused on terrorist finance, with criminal proceeds second. Tax evasion usually runs a distant third, with capital flight nowhere on the international radar screen except as a vote of non-confidence in the economic management of places “over there.” Yet the potential for economic, political, and social damage done is obviously in reverse order. True, politicians taking the heat over the blatant class nature of their austerity measures talk more and more today about chasing income tax evaders. But the rhetoric ignores the facts that high-income rates have already been cut so deeply, and the wealthy have switched over so far to collecting capital gains rather than income, that there is little pressing need for them to continue to take the risk of searching for a tax haven if they have the best of them right at home.13

AML in Action Something else that makes these categories radically different is how amenable they are (or are not) to control by AML-type contraptions. The AML apparatus has two distinct, frequently confused objectives: to block the entry of illegal funds into the legal financial system; and to facilitate finding, freezing, and forfeiting them once they are inside – without, it seems, any advocates of its virtues seeming to be concerned about, or perhaps even aware of, the contradiction. With criminal proceeds, the original target, the strategy of blocking entry poses the danger that the money will stay within the underworld economy, where it can multiply, without the burden of taxes, faster than if it actually entered the legal sector. Yet there are many benign (economically speaking) reasons why, for example, a marijuana dealer might seek to make proceeds appear just as respectable as money “earned” by an investment bank selling to a union pension fund CDOs prepackaged to fail. Someone who made a legally illegal rather than morally illegal bundle may prefer to leave money to their

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biological rather than criminological heirs, the two categories, contrary to TV cops-and-robbers serials, being rarely congruent. The criminal may try to create a more stable income stream free from the risks of theft or seizure, not that in this era of civil forfeiture there is much difference between those two fates. Or a person earning illegitimate funds may seek a legal-looking source of income as cover. Granted, sometimes professional criminals in wealthy industrialized countries do take over overground business firms with a view to milking them by illegal means or using them as cover for illegal acts, but the targets have been generally in declining and backward sectors of manufacturing or small-scale service industries rather than big corporations. Firms high on the corporate ladder prefer to keep crooked activities strictly in-house where their lawyers can advise when laws are getting bent dangerously close to the breaking point. The recent fuss about “Mafia money” penetrating the high-tech wind-farm business or trying to collect fraudulent carbon credits in Europe smacks more of oil company propaganda than of criminological reality. The second AML-regime objective is to facilitate seizure of criminal assets. Supposedly this would reduce the incentive to commit crimes. Perhaps. But there are counterexamples. In the modern marijuana trade, for example, raids can serve to stabilize prices in the face of potential gluts by taking the surplus off the market, leaving gross income across all participants perhaps even higher. Furthermore when the police make well publicized (and likely exaggerated) seizures of cash, they send out a signal that this is a hot crop. One sure thing about entrepreneurs, underground as well as aboveground, is that they almost always seem to think they are smarter than the ones who didn’t make it – in business, legal or illegal, one piece of dumb luck usually suffices to create a self-proclaimed genius. Police actions also send a message to local toughs that they ought to pre-empt future cop activity by raiding the pot growers first, making off with their cash at gunpoint before the police do, and perhaps grabbing the crop as well.14 If they were really smart, of course, they would take a leaf, so to speak, from the commodity speculator’s book of tricks, raiding a whole lot of grow-ops, caching the crop, then feeding it onto a desperate market that their own actions sent soaring. And if they are really really smart, they will use the proceeds to buy a seat on the US Futures Exchange, the one specializing in energy trades, in anticipation of the day when the pot lobby wins legalization on the grounds that hemp oil is the most efficient and cleanest form of biofuel.

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To be fair, it may well be that the AML system does manage from time to time to block infiltration and/or facilitate forfeiture of criminally earned money – assuming successes are not just well-publicized and well-inflated results of police sting operations. Most likely the only result of minor successes is that the petty and incompetent get weeded out while the smart ones figure out ever cleverer ways to beat the system. If so, the threat of seizure could drive ever more sophisticated laundering via legal financial institutions instead of the converse. The deterrence-through-forfeiture argument further fails to capture subtle nuances of criminal money flows. To understand the crooked path of criminal proceeds, take a simple accounting identity: gross income minus costs equals net income or profit. Assume for simplicity all gross income comes from illegal activity. Costs, though, are different. Some money could be paid out to suppliers of the legal goods and services (e.g., vehicles, warehouses, etc.) required for the illegal business to conduct its transactions with clients. Some could be paid to suppliers of illegal goods and services. Some suppliers of legal goods and services might divert part of their profits to finance unrelated crimes; some suppliers of illegal goods and services might divert part of their profits to the Society for the Prevention of Cruelty to Animals. Furthermore, there could be outside investors: one might be a local loan shark gloating over a prospective coup, desperately needed since the commercial banks put him out of business; another might be the entrepreneur’s maiden aunt happy that her ne’er-do-well nephew has finally decided to take seriously the night-school classes in business management that she paid for by cashing in the treasury bills in her retirement account. Once suppliers and investors are squared away, the entrepreneur is left with net income that can be diverted to pander to a taste for cocaine and crumpet, reinvested to earn yet more criminal money, or saved as cash buried beside his beloved Doberman in the rose garden. In all those cases the loot probably does not need laundering. But if, instead, the underground entrepreneur wants to invest the money in legitimate businesses or even just use it for child support payments due to three previous wives, it will first need laundering. At that point the A ML apparatus gets to pounce. Looked at in reverse, the greater the threat from detection and subsequent forfeiture, the more the incentive to maintain savings in underground ways, and the less the incentive to invest aboveground in forms that are strictly legal.

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If the A ML regime can only hold out the prospect of very limited success (or none at all) against criminal profits, it fares even worse with other types of illicit financial flows. The apparatus might occasionally block entry of proceeds into the legal financial system but will be useless with respect to terror dollars, given their small sums, (generally) legal origin, and ease with which they can dodge the formal financial system anyway. Since evaded taxes are overwhelmingly the preserve of legal businesses, they are already inside the formal banking institutions. Flight capital, too, starts its circumnavigation of the world financial system from a starting place already inside. As to actual seizure, that may occasionally occur with proceeds. Funds evading taxes or exchange-controls are already subject to existing laws that permit administrative freezing and forfeiting – there is no need for all the extra paraphernalia of the AML system. That system rarely, if ever, works against terror dollars, although in the US case crude attempts to make it effective crippled Islamic charities for more than a decade and tarred a generation of American Muslims with the terrorist brush, opening them to every form of discrimination, including religiously and racially inspired murder. At least once an entire mosque in New York was secretly designated by the police as a “terrorist organization.”15 Only a naïve optimist, or a complete dupe, could believe this labelling was an exceptional incident. Besides, since terror-dollar sums are so small and easily replaced, seizing the money without also seizing the plotters is largely pointless – unless the money trail leads to the would-be terrorists, in which case it is the trail itself, not the seizure of the funds, that is effective. Not least, if the idea of seizing hidden hordes of criminal malefactors to stop them from taking control of key parts of the legal economy is largely delusional, it is complete nonsense applied to terror dollars that are deployed not to buy things up but to bring them down. In short, the A ML regime is at best of marginal value in terms of achieving its original objectives. On the other side there is ample proof of the heavy costs: the creation of a regulatory nightmare, both at home and in other places where the traditions, institutions, and priorities may be different; gross intrusions on privacy, not that the N SA and its foreign affiliates have left much of that standing; reversal of the burden of proof via civil-forfeiture proceedings; even an artificial, contrived, and ultimately unnecessary offense called money laundering that has tipped the balance of power in criminal procedures further in favour of the prosecution and produced the

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ludicrous result that people convicted of managing the money after the fact can face substantially higher penalties than those responsible for “earning” it. Not least on the bill of indictment, the AM L system is palpably even less useful in other tasks for which it might be deployed. s e v e n d e a d ly f i s c a l s i n s

One of the many bad ideas to circulate from time to time in official Washington circles is the notion of making tax evasion a predicate offense for charges of money laundering, something the US implemented with Canada doggedly following suit.16 This represents a major step toward creating a de facto merger of criminal and fiscal enforcement, contrary to a long tradition in Anglo-Saxon legal practice that insisted on a division of those two functions. There are seven good reasons to maintain (or restore) that separation. First, although in most countries tax evasion is ultimately a criminal offense, the main job of tax collectors is to raise revenue for government, not to toss people in prison. That’s why tax authorities use civil procedures, relying on criminal only as a weapon of last resort. If someone earns money through criminal activity, then subsequently evades taxes, the result is two distinct forms of illegality that need to be treated separately. After all, if someone in the plastics business dumps phthalates into the community water supply, then murders the inspector who came out to investigate, presumably no one would object to them being charged with both a regulatory offense with respect to illegal waste disposal and homicide under the criminal code, as well as being potentially subject to civil action for damages to afflicted private citizens. If that entrepreneur also took a phony deduction against taxable income for the imputed costs of legal phthalate disposal, then just pocketed the money, the tax authorities might also get in on the action. However, that makes four distinct offenses requiring investigation and action via four distinct legal processes. A proliferation of agencies is usually a bad thing, but a criss-crossing of their respective powers and responsibilities is an administrative nightmare as well as a prescription for a judicial reign of terror. Second, criminal-code enforcement is by definition selective. At any point in time only a very small percentage of a country’s population is likely peddling heroin, and those who do so are marginal (or marginalized) figures in the society – if not, then, once again, the country has

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problems far beyond the capacity of ordinary criminal law to address. However, at any time a larger percentage of the population and as well as a number of “respectable” corporations are busy fiddling, if not faking, their taxes. They will continue to do so until today’s crop of political leaders get up the courage to do what they really want to do – abolish taxes on corporate income and on personal capital gains altogether. Evasion in a sane world – i.e., one that ensures an equitable sharing of the burden and allows citizens to be fully informed about (and exercise some control over) what is happening with the funds – raises critical issues about the nature of tax policy and can also prompt questions about the perceived legitimacy of government that can’t be reduced simply to a problem of crime control. Third, attempting to view tax evasion through the prism of criminal enforcement actually trivializes the offense, if not the punishments. While individuals and families, sometimes entire neighbourhoods, can be adversely affected by gross acts of criminality, the entire society is at risk from large-scale tax evasion, much of it now legalized, when it translates into a destruction of public services and a failure to replace essential infrastructure. (On the other hand, if massive tax evasion could be redirected to force cuts in military expenditure or subsidies to oil companies, it ought to be celebrated, not prosecuted.) The problem of large-scale tax evasion and its consequences, mainly negative but potentially on occasion positive, therefore needs to be treated as something above the whims of criminal law. Fourth, the operational purpose of tax law is quite different than that of prohibitions against the commission of economically motivated crimes. With drug trafficking, for example, the objective of legal procedures is to prevent actions that generate income. But charges of tax evasion are not intended to stop a flow of income, even though under certain circumstances they might do so. Since earned income, whether legal or illegal in origin, is taxable, the objective is to ensure that a “proper” share is paid to the public authority. Incidentally this also means that it is absurd to think of tax evasion as a pre-dicate offense for money-laundering charges – they are both post-dictate offenses, occurring only after a flow of income has been generated. It is rather difficult to launder money that has not yet been earned, and rather strange to demand that taxes to be paid on what might or might not materialize in the future. Fifth, while the primary objective of the AM L regime is seizing the proceeds of crime, tax law can only apply to one subset of them.

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With predatory offenses based on the forcible or fraudulent redistribution of existing wealth, there are no taxes due – and restitution to victims rather than forfeiture to the government is the appropriate response. That is why, when police forces get to keep what they seize, they might focus on wealthy perpetrators of market-based offenses rather than potentially violent perpetrators of predatory ones. Sixth, the A ML rationalization sees the criminal as simply a costbenefit calculator, and the point of forfeiture is to decrease probable benefits relative to probable costs. In orthodox tax-evasion theory, the solution is similarly to cut rates to reduce the benefit of evasion while increasing penalties. But, just as the currently fashionable theory of criminal motivation ignores a whole host of social, psychological, and cultural factors, so too the standard cant around tax evasion is out of sync with economic, political, and institutional reality. The really important influences behind any increasing difficulties in ensuring income-tax compliance are not that tax rates are too high: they are shifts in economic structure, a deterioration in the public’s mood of compliance, and a weakening of enforcement capacity. While legal sanctions are necessary to discourage evasion, the real driving factors need to be addressed primarily as issues of social and economic policy, not matters of criminal law.17 Seventh, while of course it is desirable for various regulatory and enforcement branches of government to exchange information, the best way to preserve the integrity of a fiscal system premised on selfassessment is to ensure that, except under extraordinary circumstances that ought to be argued case by case, information sent by citizens to the tax authority remains strictly private, firewalled in fact, to block unauthorized fishing expeditions by cops or spooks. If tax authorities detect in that information something to suggest criminal or even “terrorist” activity (with proper cautions due to its usually loose and remarkably expansive meaning), they would submit that tip to the police or national security agencies, either of whom, in the current climate of proliferating sting operations, might be the ones actually instigating the alleged offense. But that does not mean giving cops or spooks carte blanche to fish through tax information nominally in pursuit of the elusive cocaine billions of the late Pablo Escobar or the equally chimerical Terror Treasury of the somewhatless-late Usama bin L a¯ den. Yet the trend is exactly the opposite. It is, as usual, most advanced (or regressed) in the US where the early vice wars were fought not

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just by regular cops but by treasury agents with the same kind of hardware. That tradition continues today – I RS agents train at firing ranges with AR-15 military assault rifles equipped with thirty-bullet magazines, perhaps in preparation for their next confrontation with anti-tax “militia” types in the boondocks. US Treasury enforcement has also become an arm of foreign policy, with agents sent abroad to pursue “anti-terrorism” cases and to trace assets of leaders targeted for overthrow. Even in places where revenue officers still turn up for work in business suits rather than of flak jackets, tax systems have plenty of opportunities for abuse, for example, their use by those in power to settle scores and harass political opponents.18 But even when today’s fiscal systems are run strictly in accordance with the letter of the law, their ever more complex nature forces ever more citizens to rely on ever more expensive professional advice to exercise what ought to be a simple civic responsibility. Along with that comes an arbitrariness by which rules get enforced requiring further commitments of time and money for someone in the fiscal firing line to extricate themselves. Meanwhile one place after another seems to have followed the US lead in offering both anonymity and cash rewards for tipsters. That raises an obvious question: which is worse, some evaded taxes or a population suspicious of friends, family, and neighbours, not to mention jilted lovers and business competitors, who might be telling tales to the authorities? A society that has to depend on paid snitches to protect its fiscal base suffers a much larger deficit on the moral than on the budget side of its balance sheet. chasing green herrings?

The most important rationalization today for not just the continuation but the strengthening and broadening of the global financial espionage apparatus is its supposed role in blunting the reverse crusade launched by Usama bin L aden with his countless thousands of ¯ fanatical followers and equally unaccountable millions (or was it billions?) in operating funds. That’s quite a party trick for someone who fled US bombs with a handful of retainers in the back of a Toyota pickup truck and spent his subsequent limited time on Earth hiding out in Pakistan, perhaps hooked up to a portable dialysis machine. In the months after 9/11, the media were abuzz with tales of these bin L a¯ den terror billions. These were supposedly derived from his

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ultra-rich Saudi backers (who banned him from his homeland and froze his assets), his brilliant investments in the Sudan (which wiped out his investors), his operations in the “conflict diamonds” market (which turned out to be a propaganda stunt by ambitious N G O s and reporters in search of a scoop), his stranglehold on the Afghan opium trade (something not even the most powerful indigenous warlords in the country ever come close to achieving), and the many other rackets allegedly launched on his behalf by his acolytes around the world. Naturally, given the growing business concerns at the time, counterfeiting brand-named goods was also tossed onto the rap sheet. With this came fables about his control of everything from offshore banks to hawala operators. That all this turned out to be bogus has failed to provoke any evident embarrassment on the part of the peddlers of the fantasies or of the American prosecutors who wrote that kind of nonsense into their bills of indictment.19 The bin L a¯ den fiction aside, the economic and financial activities of what ought to be described as guerrilla or insurgent groups (some of whom, like the governments they oppose, use terrorist tactics from time to time) actually follow a rational and predictable, though much less mediagenic, pattern of trying to match fundraising to tactical and strategic goals.20 That has implications for how vulnerable their financial assets and income might be to some sort of super-AM L apparatus. Despite claims from national-security types whose knowledge seems largely derived from reading New York Times op-eds written by other national-security types inhabiting the office next door, criminals and insurgents can sometimes form temporary alliances of convenience. But the two groups inhabit quite different worlds with very different objectives and strategies. Economically motivated criminals are bent business people – their overwhelming ambition is to make money, for the pleasure it brings and for the power it confers. However, to a guerrilla organization, money is simply one resource they may require to achieve radical political change. True, a criminal may also have political ambitions but usually to join the existing power structure, not to overthrow it. By contrast, guerrilla groups in their more developed form (and not yet corrupted as some have been by the embarrassment of riches their rackets produce) have to assume responsibilities remarkably like those of the governments against which they plot – although the very failure of those governments to assume such responsibilities may be a key point in giving the guerrilla groups popular appeal.

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In the earliest stages of insurgency, the group engages in hit-andrun, or often hit-and-miss, operations against the state and its symbols. At this point the group is simply a loose band of brigands; and its logistical and financial needs are overwhelmingly military. Its fundraising is just as episodic, and dependent heavily on things like robberies, with proceeds taken in cash or in kind. Some outside support may be available, but it is sporadic and undependable, unless the insurgency has managed to become a de facto affiliate of a major Western intelligence agency. Offshore institutions and international financial flows play little or no role, making the transnational AM L regime useless. As the insurrection matures, a guerrilla group entrenches itself in an area whose control it contends with the state. Its targets become not just political symbols (to send a message to the population that the state is subject to challenge) but economic structures and basic infrastructure. That can further weaken the state’s presence, cause legal businesses to flee, push up unemployment, and force the state to divert more resources to security. Since the group now has a strong presence in a fixed area, it can shift from simple predatory acts to parasitical ones – ransom kidnapping and “revolutionary taxation” of local businesses. Financial needs are also greater – the group is larger, its actions more sustained and formalized; and as the state is gradually marginalized, the insurgent movement has to start providing some of the social services formerly the responsibility of the government it is displacing. Still, most fundraising will be in local currency or in actual physical commodities necessary to support its activities. While the group may raise money through front organizations, moving and storing it in local banks, only rarely would it make sense to channel funds through international circuits. Even in those rare instances, the methods chosen will be simple, geographically contiguous, and covered by appropriate fronts. Then, in the final stage of insurgency, the group chases the government, its military forces, and its officialdom from the area. At this point the guerrilla group takes on more the attributes of a permanent movement, perhaps secessionist, perhaps just intent on using its liberated zone as a launching point to move to an open civil war with the forces of the state. To fulfill what are now a fairly full roster of governmental functions, the guerrilla group needs steady fiscal resources. At this point it is likely to depend not merely on direct taxes on businesses although those are likely still in force but on the

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promotion of exports from its bailiwick. Things like gold, gemstones, valuable timber, and rare minerals easily find foreign buyers who may oblige by paying in the form of heavy weapons. Securing territory also makes easier an inflow of funds from supporters outside the country, possibly ethnic kith and kin, possibly ideological backers, but also quite possibly money and weapons from one or several (competing or cooperating) foreign intelligence services. Now it is clear that an AML regime can have little impact on the flow of resources to an insurgent group in the first stage, the one in which the needs of the rebels are at their minimum and their capacity for self-reliance at its greatest. Any outside assistance is sporadic and small scale; to the extent that rival foreign intelligence services might be involved in courting the insurgents, they can always invoke the sacred notion of “national security” to block any criminal enquiries into the flow of resources, whether money or weapons or most likely both. Nor can very much be expected of AML procedures to curb the second stage of an insurgency when the bulk of financing needs come from levies on enemies of the revolution at home and/or institutions of the state and its formal economy. Only in the third stage does the group evolve into a de facto government of a defined territory. At that point its flows of funds are regularized, and its economic interactions with the outside world grow to be more than marginal. Perhaps then a careful effort to find and freeze its external funding is possible. Yet it is precisely at this point that the group wants above all recognition and respectability. Hence, it is also at this stage that it is least likely to engage in any actions that could credibly be designated “terrorist,” at least outside the borders of the struggle. On the other hand, if the ideology of the insurgent group, or the successor regime its struggle puts in place, runs contrary to the wishes of the “international community,” that community starts its chant about human rights abuses as a rationalization for a triple whammy – NATO drops bombs, the International Criminal Court hones indictments, and Western treasuries cooperate in freezing assets. In other words, to the extent an AML regime has any impact at all, it becomes just another tool of economic warfare, to permit government(s) of hostile or covetous outside powers to engage in the kind of “humanitarian interventionism” that has in the recent past served to saturate Iraq with depleted uranium, bomb petrochemical plants in Serbia, and feed arms to turn traditional resource feuds in the Sudan or Somalia

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into wholesale civil war, leaving everyone expressing surprise when some isolated and retaliatory act of retail terror follows the wholesale version. The flaws in the follow-the-money strategy are apparent; the damage done equally so. Yet once dramatic new directions in law and policy are undertaken, very quickly vested interests build up to maintain them, in this case an enormous anti-money-laundering industry that might eventually generate more revenue (and impose more costs) than the criminals it is supposed to help trap. Along with that structure has comes a set of entrenched attitudes based on facts-byrepetition that, once embodied in actual institutions, are exceedingly difficult to dislodge. Realistically the most that can be hoped for, after the current terror-dollar panic subsides, is some minor modifications to eliminate a few of the worst excesses leaving the existing bureaucracies, attitudes, and legislative anomalies more or less intact. Even mild reforms, almost certain to be focused on operational issues rather than points of principle, are likely to be aborted or reversed once the next allegorical war gets declared. It is difficult to predict on just what newly emergent evil the subsequent rounds of generalized hysteria will be focused. But it is easy to guess what will be sold to the public as the most effective tool with which to combat it.

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5 Ghosts of Terror Wars Past and the Roots of the Military-Industrial Complex

The USA was under siege: its citizens murdered or held hostage abroad; its overseas economic lifeline threatened; even its flag desecrated by a mob of maniacal camel-jockeys who envied its freedoms and coveted its wealth. Back home appeasers aplenty were willing to buy a shameful peace at a price far in excess of thirty pieces of silver. But political visionaries knew the importance of standing tall before the axis of evil and of rejuvenating the armed might that had been allowed to decay following a long struggle for the country’s very existence against a superpower foe. They also knew how to use a few dramatic twists of the truth to turn a crisis, real or contrived, into an opportunity to rally the nation around a common threat, puff the military budget, expand central government authority, suppress internal dissent, and defend the profitability of US business abroad, all with the vocal blessings of the country’s religious leaders. Even better, they could dump the costs onto poorer sections of the population through fiscal manipulation in the name of patriotism. No doubt they acted, too, in the certainty that contemporary pamphleteers and future historians alike would approve, applaud, and cover up. Familiar though all this sounds, it took place not at the beginning of the twenty-first century but at the end of the eighteenth.1 seeking redemption

Those who played political midwife to the new country in 1776 had a daunting task. Colonists who had thrown off British rule were in no mood to again concede instruments of potential coercion, even to

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local leaders. For some of the former colonies, too, their less than perfect union during the rebellion had been a wartime expedient en route to full independence. The British exploited the disunity, negotiating peace, not with the Continental Congress, but with each excolony individually, while trying to tempt some back to the old flag. Against such obstacles, the would-be founding fathers knew that to build a real country, apart from instilling in the people a common sense of mission, there were two urgent requirements – stable revenues for the central government and a permanent military force, the first a prerequisite to the second, and also, as it turned out, vice versa. From that moment forward, financial power and military might would complement each other in the USA’s march across both continental and world stages. Yet, when the foundations of both were being set in place, the overwhelming share of the (non-slave) population lived in largely self-sufficient farm-based communities for whom standing armies and permanent navies were of marginal interest, even anathema, since that population knew who would end up paying for them, one way or another. After a revolution with the stirring motto of “no taxation without representation,” it was doubly hard to impose the required taxes. In 1787, Daniel Shays, a veteran officer of the Revolution, led disaffected citizens of Massachusetts in a revolt against heavy taxes and high official salaries. It was only the first. In 1789 the federal government created the infrastructure to collect federal Customs revenues and, two years later, agreed to assume state debts in exchange for states concurring in internal taxes, particularly on recreational alcohol. But in 1794 resentment on the frontier over new taxes that hit whiskey (which local farmers not only produced and drank but even used as money at a time coin was very rare) more than wine (which Eastern urbanites preferred) helped to precipitate a new uprising. Faced with a threat to both the public finances and federal authority, President George Washington ordered in almost as many troops as had fought in the Revolution.2 Thus, the emerging US Army found its first major task, not slaughtering Indians in the West or conquering Hispanic territories in the South or trying to gobble up remaining British colonies in the North, all tasks left to Washington’s successors, but enforcing a new tax code. The USA had its first War on Crime; a War on Terror would follow shortly. Under orders from John Adams, the second president, the army had to repeat the job in 1797. This time the rebellion (with a tax on

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housing the immediate casus belli) was led by an officer (later sentenced to death) who had served with the forces putting down the previous one. A bit over a decade later, Thomas Jefferson, the third president, faced yet another fiscal insurrection (against his Embargo Act) to which he, too, responded by unleashing the military, an institution that, as a “founding father,” he had decried as inherently dangerous to American liberties.3 He also seemed to have forgotten his earlier convictions that “a little rebellion now and then is a good thing.” But then that had been said a few months before the final Constitution, which Jefferson had a big role in creating. When it comes to issues of political morality, where people stand usually depends on where they sit, and the result usually approximates a game of musical chairs.4 Perhaps more contentious than a standing army was a navy that threatened to cost much more and, by its very nature, meant a constant rather than episodic drain on the public purse. The Eastern elite was fully aware that, if the French fleet had not intervened to help the colonists, the Revolution might have foundered. The Continental Congress had announced a program to build three battleships; but it ran into such delays and cost overruns (a precedent for future American “defense” industries) that the effort to grow genuine military muscle was abandoned. Although the 1787 Constitutional Convention called for money to “provide and maintain a navy,” Congress was full of penny pinchers; and the public, besides being averse to taxes, was still suspicious of centralized power. Fortunately a solution was at hand.5 For decades, even centuries, respectable mothers and fundamentalist preachers had terrified their children or their flocks respectively with tales of depredations by the “Barbary pirates” and the fate of any good Christian who fell into their heathen hands – slave labour for males and something allegedly worse than death for young women, whose opinion on the choice was rarely solicited.6 Stories abounded, too, of sumptuous palaces filled with gold, precious stones, rich tapestries, and captive girls (or boys) to cater to depraved tastes, all paid for by loot from honest merchant ships or from the sale of Europeans or Americans into slavery. These fables invoked the same confused mixture of revulsion and envy as would tales of the legendary wealth of Arabian “oil sheiks” a few centuries later. Meantime churches took the lead in collecting money to redeem hapless (white) captives.

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The lead in Europe was taken by Redemptionist religious orders touring the countryside to raise money. Their harrowing tales, supported by people wearing what were supposed to be the very chains they bore during their own captivity (although why they would return home still carrying all that weight is somewhat of a mystery), was not totally fictional.7 Thousands of Europeans over the centuries, and some Americans more recently, had been taken prisoner, with some ransomed and others enslaved, by corsairs flying the colours of the so-called Barbary States – Morocco, Algiers, Tunis, and Tripoli – even though authority in those places seldom extended much beyond the major urban areas on or near the shores of the Mediterranean. While most corsair depredations had been against coastal cities of Spain, Sicily, and Italy in the early seventeenth century, when the corsairs were reaching their peak, they ventured into the Atlantic and raided as far as Ireland. However, the standard yarn missed a few details. First, the corsairs were not pirates, by definition stateless outlaws. Those did exist in the neighbourhood, for example in Salé on the Atlantic coast of Morocco, where professionals in that line of work were mainly of Dutch and English origin. Rather corsairs were privateers representing powers either sovereign like Morocco or quasisovereign (de jure tributaries of the Ottoman Empire but de facto almost independent) like Algiers, Tunis, and Tripoli. In that respect the corsairs were merely following European practice, acting in accord with what then served as international maritime law. Since merchant ships often carried as many guns as smaller naval vessels, governments normally granted to their major commercial ships “letters of marque,” in effect licenses to steal from merchant vessels flying the enemy flag, sometimes redefined at sea as any flag with whom the country hosting the privateers did not have a formal treaty. In addition, naval vessels were granted the incentive of “prize money” to capture ships and cargoes from the other side(s). If the same principles were applied to Muslims as to Christian Europeans, captured corsairs would be treated as prisoners of war. However, labelling them as pirates made them akin to today’s “illegal combatants” to be imprisoned in perpetuity, enslaved, or tortured and executed, especially if they were “renegade” Christians who had converted to Islam. As laments about Christians in bondage poured from the pulpits, European privateers, with more numerous, larger, and better armed ships, raided North African towns, seized Muslim ships, and

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sold survivors into slavery. The favourite venue was in ardently Christian Malta, a state created by an ex-crusader order, whose slave market was at least as lively, and active for longer, than the one in Algiers. This occurred with the enthusiastic support of the sponsoring governments as well as the spirited endorsement of the Christian clerical establishment.8 Second, the emergence of the corsairs represented rough justice. The Barbary States rose to prominence after the late fifteenth-­century Reconquista in Spain, followed in the early sixteenth by anti-Muslim pogroms that sent hundreds of thousands fleeing to North Africa, dreaming of revenge for the loss of their homes and property and for the slaughter of family and friends.9 In Tunis colonies of refugee Moriscos even reproduced their former villages right down to the street names. These refugees took with them their anger and, in some cases, their skills as navigators, while small enclaves of survivors still hiding out in Spain were happy to provide guidance and assistance to forays by their exiled kinfolk. Early corsair raids were conducted as much out of a spirit of vengeance as out of a search for pecuniary gain. As so often in history, one set of “terrorist” acts was a direct response to a prior, in this case much greater, one. Third, while living conditions of captives could be harsh, that was by no means an inevitable outcome. Captives were immediately interrogated to determine their value based on their social status back home; and that largely determined their fate. Officers or wellto-do civilian captives, while kept on a tight leash when first taken, soon gained more-or-less free run of the Moorish cities where they were held. Usually there was little chance of escape; besides, once their ransom was negotiated, they had little incentive to make a break. While waiting for the funds to arrive, some might be transferred to a “slave prison” run by the good Catholic Duke of Tuscany, who operated a sort-of halfway house in return for a cut of the ransom money.10 The most frequent complaint of those still waiting in the North African cities seems to have been boredom, or fear engendered not so much by their captors but by periodic outbreaks of bubonic plague – although given the reputed superior cleanliness of North African cities at the time, their chances of avoiding disease were probably better there than at home. Below that group were “middle class” captives, who, unless the Redemptionists took up their cause, were less likely to see home again. While many would be sold into slavery to local owners, and

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hence become technically “private property” of their buyers, that was not necessarily a bad thing. Artisans not only were valued for their skills but might be set up in business, paying a share of their earnings to their master from whom they might also have a deal to eventually buy their freedom. These skilled craftsmen then joined communities of volunteer émigré workers who had fled economic and social conditions in European cities to make a better life in North Africa – today, of course, the flow is sharply in reverse and embarrassing memories of the status quo ante neatly excised from the Western conscience as well as from most of its history books. Indeed, much of the fuss in Europe about working-class captives (or voluntary émigrés) probably reflected more fear of losing skilled craftsmen (at a time when European states put up legal barriers to their emigration) than concern over their treatment in Muslim lands.11 Then there were those at the bottom of the social ladder. Someone of little economic value could be auctioned and enslaved at hard labour, in which many died. Those sold to a farmer could face a particularly short and miserable life, underfed and overworked, in a way not dissimilar in spirit, if worse in practice, to the lives of Algerians and Moroccans today labouring without social benefits, wage protection, or job security in agribusinesses spreading across southern Spain, the former homeland of their sixteenth-century ancestors. Almost as bad would be the fate of being consigned to the galleys as an oarsman. Yet Englishmen who had been captured by both corsairs and Christian (Spanish or French) privateers reported that conditions were superior on Muslim ships: they were cleaner and the galley slaves reputedly got a share of the plunder – although, if so, probably not a particularly handsome one.12 Even for most of those truly enslaved, conditions were probably not as bad as for those sold in the slave markets of Havana, New Orleans, or Kingston. Children in particular might be adopted into the families of their purchasers. The lash, employed routinely against captives in Europe and America, was, despite its endorsement in Islamic law, rare in Barbary. Branding was unknown, and slavery was neither perpetual nor hereditary. Nor was slavery a matter of race, something that could hardly be an issue in such an ethnically heterogeneous setting. Some slaves from sub-Saharan Africa, once freed, rose to positions of power, even of leadership. In theory slaves could change their status by converting to Islam, something that did not seem to work in reverse for Muslims held by

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Christians – who sometimes tried to Christianize their African slaves to increase their docility. Not only did Islamic law forbid the enslavement of fellow Muslims, but the Qur’an ¯ made a virtue of freeing any 13 slave. Although no doubt masters found ways to evade the law, and the authorities always discouraged conversions, even welcoming priests to minister to the captives, some did “turn Turk.” Captured European sailors, too, may have had their attitude toward their fate coloured somewhat by the fact that so many had been pressed or tricked into joining their national navy or merchant marine in the first place. Some Europeans who sailed with the Barbary fleets were simply fortune hunters, ex-privateers who lost their places because of peace treaties between their countries of origin and the countries on whose shipping they formerly preyed and who willingly joined the Barbary ranks. That seems to explain why in the late seventeenth century so many (guesstimates, probably exaggerated, run to half) of corsair captains were actually of European origin; and their reputed ferocity may have reflected the fact that, if captured, they would be subjected to barbarous treatment before being murdered by their outraged former compatriots, with the blessings of the Church, of course. Back in Europe, the Barbary corsairs were decried as the Satanic scourge of some imaginary entity called Christendom (predecessor of today’s Judeo-Christian Civilization), which had a remarkable habit of tearing itself to pieces in dynastic wars fought on the basis of race and religion.14 Back then, too, the stories told by Redemptionist priests and the alleged freed slaves they might have in tow, along with, it seems, a number of charlatans just pulling a con, were, together with lurid books by “survivors,” the only source of information for the population at large about Arabs or Muslims. There was at the time no Murdoch-run media conglomerate to appropriately twist the record. If Redemptionists raised the required funds, and if the money was not just embezzled or diverted to local concerns, it could be turned over to intermediaries to arrange international transfers in a variety of currencies. These brokers were sometimes Barbary Jews whom the Muslims trusted and who had sometimes fronted the money to outfit or repair corsair ships. Another practice was to give funds to City of London merchants for whom buying captives, along with booty taken from European ships, was just another item in the business they routinely conducted with the Barbary States. Or the money could be entrusted to priests who went strangely without fear to a places allegedly teaming with

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bloodthirsty Satan-worshipping monsters. Sometimes the local government would help them set up churches and clinics.15 If Europe’s fears of the Islamic hordes were fed by the relatively recent presence of the Arabs in Spain (where in reality they were mainly Berber in origin), Sicily, and Southern France and the continued presence of Turkey in the Balkans, the USA, far from the action, was more inclined to view the Muslim menace through theopolitical lenses. Before the Revolution, hard-line Protestants had defined for America the role of helping to create a thousand-year Kingdom of God on Earth and of combating the Antichrist. After the Revolution, religious millenarianism tended to be supplanted, at least in the minds of the political class, with a civil version that saw the US as an empire of liberty whose task was to spread its own definition of civilization among savages, across the continent, and beyond.16 The same religious leaders who gloried in the enslavement or slaughter of Indians, or who gave thanks for any smallpox plagues visited upon them, wanted equal treatment for the dusky savages overseas. One American who was “redeemed” from Barbary reported in 1798 that his captors had been “more like monsters than human beings … who, impious, insult the rights of man.” Significantly he presented this depiction in his “Poem on the Future Glory of the United States of America.”17 To the eighteenth-century American mind, Muslim became synonymous with Pirate, much as it would become interchangeable with Terrorist two centuries later.18 Helped along by those images, money to redeem (white) captives was collected by religious congregations with such gusto that in one instance that would have warmed a modern televangelist’s heart there was enough left over to build a new church. Erected in New York at the corner of Broadway and Wall Street, it aptly captured that unique combination of faith, fantasy, and greed that would underpin so much US foreign policy in the future.19 Yet the Churches had competition. Theatres along the Eastern Seaboard, too, were keen to get into the act, so to speak, by raising money to redeem captives from the Saracens, caricatures of which strutted and pranced on their stages.20 Any resemblance between this and the typical portrayal of Muslims and Arabs by the New York literati and Hollywood glitterati today is far from pure coincidence.21 Fourth, rather than a growing threat, by the time the US turned its thoughts to the corsairs, Barbary fleets had been in sharp decline for over a century; while major cities of the Barbary Coast, lauded by some travellers as more advanced than those in Europe in respect for

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law and civil order, had found an economic raison d’être selling not slaves but grain to Europe.22 Christian Redemptionists still claimed vast numbers of captives in Saracen hands; Father Pierre Dan, one of the best known, had insisted back in 1634 that Algiers alone held 25,000 Christian slaves, a figure that won widespread acceptance among propagandists and scholars alike – not that sometimes there is much to distinguish them when it comes to touchy subjects like this. Yet, only fourteen years before, when an English fleet raided Algiers, ostensibly to free captives, it found no more than forty. Certainly by the late eighteenth century, with galley slavery almost extinct and other forms of local forced labour largely outmoded, remaining Christian captives were taken mainly for political reasons or, what was basically the same thing, as prisoners of war. At the beginning of the nineteenth century, the USA held a million blacks in hereditary bondage, while the French, British, Spanish, and Portuguese colonies held millions more without any chance of redemption. At that time the Barbary States held an estimated thirteen white Americans awaiting exchange or ransom.23 Fifth, far from having to deal with shifty savages, European powers found it easy to negotiate treaties to free both captives and commerce. “Piracy” for Barbary leaders was not some sort of seaborne jiha¯ d, whatever their occasional propensity to cloak it in religious garb. Corsairs of genuine Muslim background would have been fully aware that the Qur’a¯ n prohibits piracy; hence the need for de facto licenses from the state, like any other privateer. The awareness that privateering was more a matter of political economy than of religious zeal is also made evident by the number of “Christian renegade” captains of corsair vessels who had no shame about public drunkenness. In short, privateering was partly a profession and partly an extension of diplomacy by other means – a tool to press European powers for political recognition particularly as the regents struggled to free themselves of Ottoman tutelage. The deys (Turkish appointed overseers) of the Barbary States were in the uncomfortable position of representing the Ottoman Sultan and trying to pacify a remarkably heterogeneous, independentminded, frequently feuding, and on occasion politically ambitious group of subjects, while making do with few resources. They got a percentage of the loot of ships, including the captives – much the way privateers flying European flags had to turn over a chunk of the

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take to state officials or risk being charged with piracy. Since the returns were sporadic and, after the seventeenth century, declining, the deys instead depended increasingly on payments for the right of peaceable passage from the governments with whom they signed treaties. But this led to disappointment and disapproval from powerful corsairs and their merchant allies. While back home payments in money and naval stores to the deys were denounced as blackmail and extortion, the Christian powers, major and minor, were really securing a bargain: their ships got protected passage, and they were spared the expenses of mounting major naval reprisals against Barbary at a time when wars between the various Christian countries were frequent, bloody, and increasingly expensive. Furthermore, despite misunderstandings, Barbary States had a reputation for keeping their word – even if rebellious corsair captains were sometimes ready to sabotage diplomatic relations. On the other side Barbary regents were outraged by instances of Christian bad faith – for example, when European ships deliberately diverted away from Alexandria, their declared destination, to deliver Muslim pilgrims en route to Mecca into the hands of slave dealers in Italy; or when an English ship sold several paying Tunisian passengers into slavery in Malta, precipitating a declaration of war by Tunis.24 After a few ineffectual attacks – including one during the Tunis war that destroyed ships owned by the Turkish Sultan and briefly cost England its trading privileges with the Ottoman Empire – the English made good relations with the Barbary regents the cornerstone of their Mediterranean policy. Presumably by then England had also figured out that, over the course of three centuries, it had lost more ships to Dunkirk pirates alone than to corsairs from all Barbary States combined.25 Over the course of the eighteenth century, as the corsairs weakened, diplomatic initiatives became more successful. Despite periodic problems, France and England maintained good relations with Barbary states, especially Algiers – which the French were quietly plotting to seize anyway. The Barbary States had no intrinsic grudge against any Christian power apart from Spain and to a lesser extent Portugal. By the late eighteenth century, they even struck treaties with those two. So there seemed no serious ideological impediment to peace with Christian powers – with one exception where the impetus to religiously sanctioned war came from the other side.

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in god we trust

Morocco, even before it had treaty relations with the US, launched a pre-emptive peace bid by freeing a US ship and crew taken by its corsairs in 1784. Early US governments did make some tribute payments. When an American consul called on the dey of Algiers, he was informed of the dey’s admiration for George Washington, whose picture the dey requested.26 Nonetheless in the late eighteenth and early nineteenth centuries, the USA took up the former British mantle of duplicity, helped by a set of consuls who, with their penchant for mixing public and private business, developed reputations as sharp dealers with little concern for good faith.27 Prior to the Revolution, any protection to British ships resulting from Britain’s treaties with the Barbary States also applied to those of the American colonies. On the other hand, merchants and shippers of the northeastern seaboard colonies were enthusiastic about not just privateering but actual piracy; those, together with simply cheating their governments in military contracts (about half the funds voted for military operations were allegedly stolen), were some of the main sources of wealth accruing to the eastern American elite. Things got even better during the Revolution, when American privateers from either the Continental Congress or individual colonies, equipped reputedly as many as 2,000 ships with letters of marque to seize about 3,000 British vessels, though those numbers smack a little of patriotic propaganda unless rowboats are included.28 Not surprisingly, after the Revolution the British began to instigate Barbary corsairs to attack US-flagged vessels. The Barbary regents had taken the reasonable position that, since the US had declared independence from Britain, much as the Barbary regents hoped to do from Turkey, the US was required to strike its own treaties.29 As the experience of other countries and the US itself in the late eighteenth century showed, a few cash payments – provided they arrived at agreed times – could have secured peace for American shipping. Many leaders in the US urged exactly that course. James Madison contended that it was cheaper to pay subsidies than to go to war. (He could have cited, if he knew, the lessons from England’s 1620 raid, which reputedly carried a price tag double the cost of simply ransoming those held.) He also worried that an American navy might increase chances of conflict with Britain. Others suggested that the US hire Portugal, which for many years had bottled up corsairs in the

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Mediterranean, to protect American vessels. In fact it was only the belated peace treaties between the Barbary States on one side and the Iberian countries on the other that allowed the corsairs access to the Atlantic, looking for more prizes to replace those they could no longer take legally from Spain and Portugal. Other US political leaders considered economic sanctions on Britain the real cause of the problem.30 However, there were powerful voices urging a radically different course. a n c h o r s aw e i g h ?

“Would to Heaven we had a navy to reform those enemies to mankind, or crush them into non-existence,” lamented George Washington. It was perhaps the first statement by a president of the “dead or alive” policy against Islamic Terrorists that would figure so vividly after 9/11. John Jay saw further advantages of the war option. It would both “lay the Foundation for a Navy and tend to draw us more closely into a foederal system.”31 That notion of using an external threat to politically consolidate the home front would appeal in the decades and centuries to come to other federal leaders, including Thomas Jefferson. While generations of hagiographers would portray Jefferson as a great pacifist, and those outraged by the duplicity of George Bush II (or of his formerly exalted successor) would invoke Jefferson’s spirit as a counterpoise, Jefferson shared with Bush (and apparently Obama) a conviction that the US was placed on Earth to light the torch of liberty and to carry it around the world to places where, if people failed to show sufficient respect, it could be used to burn down their homes.32 Touted, too, as a great civil libertarian, Jefferson as governor of Virginia pushed for loyalty oaths at a time when (in the opinion of local observers) perhaps one third of the population of the ex-colonies supported independence, about the same supported continued ties to Britain, and the rest were indifferent. Initially Jefferson did not call for concentration camps for those who refused to swear allegiance to the new state. For the time being it sufficed, in his opinion, to impose on them triple the tax burden of loyal citizens. He had also supported bills of attainder that designated individuals or groups for punishment without trial, even though such bills had been among the colonists’ main complaints against the British and were abolished in the Constitution. “What institution,” he had asked

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“is insusceptible of abuse in wicked hands?” Since the hands were now American, presumably abuse was by definition impossible.33 This was perhaps the inspiration, two centuries later, for both the Clinton and Bush administrations to recapture the spirit of the Bill of Attainder in the course of their own Wars on Terror when they applied regulations written to permit the freezing of assets of targeted states to “organizations” and then to individuals who “supported” them. Jefferson’s Virginia, too, was also the first place in the US to pass an act empowering the governor to expel “suspicious aliens” in the event of war. When in 1785 Algiers (reported by some commentators as “Algeria” either for lack of historical knowledge or as an attempt to exaggerate the threat) declared war against the US, amid panic over a pending invasion and reports of “an infinite number” of US ships captured (when not a single one had been – there were none in the vicinity), then-Governor Patrick Henry invoked that law against sleeper cells. After the militia rounded up two Algerian men and one woman, he decided to give them neither liberty nor death but to deport them.34 Jefferson’s most important legacy, though, was probably his role in the creating for the US a permanent modern military machine. Most political leaders supported in principle the idea of a navy while arguing over its nature, its objectives, and therefore its cost.35 Federalists favoured big battleships to project US power toward Europe, mark the country’s entry onto a world stage, and serve as an instrument for territorial expansion in the Americas. On the other side, to most Republicans (the earlier version) the point of a naval force was simply to protect commerce, and only in time of crisis.36 Jefferson saw things somewhat differently. “We ought to begin a naval power if we mean to carry on our own commerce,” Jefferson declared.37 In contemplating the Barbary challenge, he added: “Can we begin it on a more honorable occasion or with a weaker foe?”38 He elaborated that “these pyrates are contemptibly weak.” True enough – their economies had been shrinking for decades, their cities depopulating, and their fleets reduced to a handful of poor vessels with mediocre artillery and untrained personnel.39 That to Jefferson was a major lure, much the way two centuries later Iraq, bombed and bled back to the Stone Age by a decade of Anglo-American air power and a medieval sanctions regime, would prove irresistible to the vampire instincts of the Bush Administration with its British attack-poodle “blairing” at its heels. Jefferson also felt

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that it would be cheaper to build a few modern frigates, more powerful than anything in the Barbary fleets, than to pay subsidies. Granted, there were also operating costs to consider. To cover those he proposed to hijack Ottoman vessels, kidnap Muslim passengers and crew, and sell the captives on the Malta slave market. Further revenues could be generated by selling the cargos stolen from Muslim merchant ships by US frigates during the conduct of their anti-piracy campaign.40 There were good reasons for Jefferson’s impatience. In the early years of the Republic, progress of the navy had been slow. The turning point came when, with British encouragement, corsairs from Algiers again began threatening US ships. By invoking fear of the Saracen Hordes, the Washington Administration in 1794 secured passage of a bill to authorize construction of six frigates and to establish a marine corps. The more ardent militarists lauded the bill as the first step toward their neocon dream for the US to create a fleet so large that no other country would be able to challenge it.41 The administration spread construction across major port cities to buy the support of several congressional districts, a practice followed in big military procurement contracts to this day. Even then, only congressmen from Northeastern Seaboard states were enthusiastic. Hence the bill passed with a clause that required the government to simultaneously seek peace by negotiation and to stop naval construction if negotiations were successful. Once again construction was fraught by heavy cost overruns and long delays. Only three frigates were completed; they were still unarmed when, in 1796, the duplicitous chiefs of the rogue Barbary States had the temerity to normalize relations. George Washington had to stop construction even as he lamented the impact on jobs and the shipbuilding business. For the USA’s first president there were no fears about the potential emergence of a military-industrial complex. The setback was only temporary. Something else on the geostrategic front put wind in the sails, so to speak, of the pro-navy crowd. Much credit for American success in throwing off British rule really belonged to France, which had supported the insurgents with blood and treasure. In 1794 the US showed its appreciation by striking a treaty with Britain to give the US access to the British Caribbean. Revolutionary France, then under attack by a British-led coalition, took the American action as a repudiation of the Franco-American alliance. So it freed French privateers to go after US ships in the Caribbean.

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The result was to drive maritime insurance rates for US ships to crippling heights.42 With the Eastern Seaboard suffering a commercial depression and with phony fears stoked throughout the South of a French invasion via Louisiana, the stage was set for another round of naval construction, to the delight of New England merchants and the shipbuilding industry, especially if they could contrive to dump much of the cost on western farmers through something like another whiskey tax.43 To reduce the potential for political division (east versus west; commercial versus agrarian interests), the construction program took place in the context of an anti-French propaganda campaign – without, alas, french fries to rename or a California wine industry to urge restaurants to dump French vintages as happened in response to post9/11 French reluctance to join the Anglo-American invasion of Iraq. The culmination – back in early post-colonial times  – came in the so-called XYZ Affair, when someone, probably close to the upper echelons of the war-hungry Federalist Party, leaked a story that France’s minister of Foreign Affairs had demanded a $12 million loan for France plus a personal bribe of $250,000 in exchange for normalization of relations. The uproar helped to provide cover for a series of measures – the Naturalization Act extended the required time for citizenship from five to fourteen years; the Alien Act facilitated the arbitrary arrest and deportation of foreign-born males; and the Sedition Act allowed the government to prosecute criminally critics of its policies.44 Although the laws were applied only marginally before they expired, they were succeeded by the Enemy Alien Act that still permits the president to detain or expel anyone of age fourteen or over who is a citizen of a country with which the US is at war, with no hearing and no need for the government to prove disloyalty or danger.45 In both spirit and substance, these laws were a dress rehearsal for some of the worst features of the Patriot Act and similar measures about two centuries later. Skirmishes with French privateers, though, were not the real purpose of the emerging fleet. Nor was a war in the Caribbean to lower insurance rates a stirring subject about which to write patriotic hymns. In 1800, when peace with France coincided with the election of Thomas Jefferson as third president, the stage was set for a conflict that would show the American flag in the Mediterranean, at Europe’s back door, and help train sailors (and marines) for the next contest with Britain.

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…

to the shores of tripoli?

Because Joel Barlow, the consul who negotiated the U S A’s first treaties with the Barbary States, detested established churches, he put into the Tripoli Treaty the subsequently notorious Article 11, declaring that the US was not founded on the basis of Christian religion and that religion ought never to be a pretext for war. Cited in future court cases and inducing near apoplexy in generations of the Christian Right, this clause may have been inserted at the demand of the dey of Tripoli, who was fearful of the U S A invoking its Christian heritage to justify an aggressive war against Islam.46 Barlow had striven to avoid war; but his successor, William Eaton, a spiritual predecessor of today’s neocon artists, insisted that the only thing ragheads understood was “terror,” something which the U S A’s new president was itching to give them.47 When the US violated its treaty obligations to the Barbary States by cutting subsidies it had pledged to pay, most rulers were still eager to maintain peaceful relations, including the dey of Tripoli, who ran the least important of the privateering bases of the Mediterranean.48 Tripoli was so insignificant a threat to US commerce that it was not even on the original US treaty list – its treaty was at Barlow’s own initiative. The dey had negotiated on the understanding that the US would recognize Tripoli as a sovereign power rather than as a dependency of the Ottoman Empire. The US seemed to agree. While US treaties with Algiers and Tunis were written in Turkish, that with Libya was in Arabic, just like the US treaty with the independent state of Morocco. When the dey later asked for confirmation in writing that Washington accepted his sovereign status, he received no reply. Still seeking peace, when a Tripolitan corsair (one of the few) took a US ship, he intervened to secure its release, while the US government reacted with dark threats. Finally, the dey threw a temper tantrum at the failure of either his payments or an answer to his letters to arrive, expelled William Eaton, and cut down the American flag. Jefferson had what he needed to order the US Navy into action. Although denied a formal declaration of war by Congress, Jefferson took the dey’s actions as license to launch the first of what would be subsequently euphemized as “police actions” – before some P R genius dreamed up “humanitarian intervention.”49 There followed a derisory four-year campaign in which the US attempted to impose on Tripoli a naval blockade, only to be profoundly

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embarrassed when the Tripolitan side captured the largest warship in the US Navy along with its 300–man crew. In response US frigates subjected Tripoli to ruthless bombardment, a dress rehearsal for what would be visited upon Libya in the new millennium. The damage would have been worse if a US plan to sail a ship loaded with explosives deep into the harbour before blowing it up had not been thwarted by Libyan shore defenses. The American crew who died were, of course, lauded as military heroes rather than derided as failed suicide bombers.50 Then came another striking victory. The exiled William Eaton, from a Cairo base, plotted to replace the dey with a pliable, exiled elder brother. He led a mixed detachment of mercenaries and Marines across the desert to capture the weakly defended town of Dernah. It had no real impact on the outcome: the conquering force was soon besieged in turn; and the dey, who had never wanted war, soon secured from the US government the peace he had been seeking. A new treaty reduced (but did not eliminate) the subsidies and gave Tripoli recognition as a sovereign power. Nonetheless the USA’s first foreign contest had a big impact back home, even inspiring a stirring line in the Marine Corps hymn: “to the shores of Tripoli.” Under the circumstances it would have been mean-spirited to point out that US forces were largely foreign mercenaries who came in by land to Dernah, a few hundred miles east of Tripoli. While the US population, or at least the probably very small part of it that both knew and cared, was exulting in its first great victory over Islamic Terror, Mediterranean states were taking note of what seemed from their perspective an impressive Libyan military performance. For them there was no “shock and awe” from the USA’s first overseas campaign, while its first “regime change” plot had been a failure. The American setback in Tripoli probably ensured that the US would not become a colonial power in North Africa – that honour would go primarily to France, with Spain, Britain, and Italy vying for their share. Arguably the USA’s subsequent decision to focus its lunge for empire westward, across the continent, then over the Pacific, grew at least in part out of less-than-inspired results in the Mediterranean; but there is little point trying to explain that to people deep in the bowels of the Pentagon today.51 Furthermore, American self-congratulations to the contrary, the war did nothing to curb Barbary “piracy.” It was already a shadow of its former self. Effective action to suppress the remnant had to

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await the conclusion of the Napoleonic Wars, when the British fleet returned to “police action” in the Mediterranean; an Anglo-Dutch expedition smashed the remaining Algiers corsairs while the French dusted off a long-delayed plan to seize the city and the territory around it. On a world scale, the end of state-sponsored attacks on merchant shipping came only after an anti-privateering convention signed in the middle of the nineteenth century by the major powers, with the notable exception of the US. It is unclear if the US was making a principled stand in defense of private enterprise or rehearsing for its future position on international agreements like the Kyoto Accord.52 Nonetheless, in terms of the larger objectives, the war was a brilliant success. By drawing on the Islamophobia deeply imbedded in the Western consciousness since the Crusades, the Barbary campaign rallied the new nation against the Saracen hordes in much the way the Bush Administration, following a deeply contentious election, capitalized on 9/11 to impose a neocon agenda on a divided population, or rather extend and deepen an unpopular agenda his predecessor had already begun to implement. The first American war against Islamic terror also set an important precedent for future leaders to use foreign crises – sometimes real, often exaggerated, on occasion contrived, and usually blamed on evil aliens – to project power abroad while serving at home to mold opinion, suppress dissent, and justify an expansion of state authority. It served, too, to justify dramatic changes in the fiscal system and perhaps somewhat placated whiskey drinkers (yesterday’s lower-income taxpayers) for their sacrifice – the whiskey excise tax, previously denounced by Jefferson, was brought back during the war of 1812 – or at least put them in the position where they would face accusations of lack of patriotism if they complained. This was a portent of the Bush-era fiscal revolution, when the story about the enormously negative impact of 9/11 provided an excellent pretext to bring in an emergency tax-cut package to stimulate not the American economy in general but the investment portfolios of well-heeled Republican Party supporters. The campaign also convinced the public and Congress that the Navy and the Marine Corps were essential, undercutting calls for cutbacks in military expenditure in much the way that 9/11 would justify pushing the military budget above its Cold War peak, tearing up nuclear arms-restraint treaties, and accelerating plans for the militarization of outer space.

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Similarly it demonstrated at little cost that the US could be a world power, even if the proof consisted of beating up on a marginal enemy with no desire and little capacity for war – another omen. Thus it gave the USA’s emerging armed forces a critical boost in morale and training in preparation for foreign wars to come, which they did in seemingly endless succession, mostly against enemies as reluctant as the dey of Tripoli. They included a 2011 return to Libya itself for another “humanitarian intervention,” this time meting out to Muammar Qadh¯afi the gruesome fate at the hands of US-armed mercenaries that the US would probably have wanted to inflict on the dey of Tripoli two centuries before. This time, the intervention potentially carried the additional prize of loosening the grip of the former Libyan state on the country’s prized low-sulfur oil, raising the obvious question – just who are the privateers?53 Not least, after 9/11, those intent on tough action could cite the (appropriately massaged) story of this first victory against Islamic Terror as precedent to strike hard and fast with no concern about international law – since it did not apply to criminals or to terrorists, let alone to those who combined both vocations.54

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6 The Geopolitics of Theopolitics and the Rise of Black-Collar Crimes1

“I am shocked, shocked!” the USA’s commander-in-chief declared, “to find that gambling is going on in here.” Well, not quite. Certainly President Obama made no secret of his fondness for Casablanca, the World War II film classic, perhaps because its title, translated into English, defined the outer limits of his political vision.2 The president’s startling discovery, though, was not a gaggle of brigadier-­generals hunched over for a round of five-card stud in the White House Library or even a gang of tattooed, shaven-headed noncoms playing Russian roulette in the Pentagon basement. What alarmed him enough to take time off from the selection process for Muslim targets for the murderby-drone program was the news that someone in the very nerve centre of US military power was teaching and preaching the need for total war against the enemies of Judeo-Christian Civilization.3 The lieutenant-colonel in question had insisted to his class that Muslims “hate everything you stand for and will never coexist with you, unless you submit.” As a teacher dedicated to speaking, if not truth to power, then at least the truth about power, he had included a warning that the US might have to give to Mecca and Medina the Hiroshima-Nagasaki treatment in order to teach the ragheads a lesson that any survivors would never forget. The chairman of the Joint Chiefs of Staff was just as flabbergasted as his boss. “Totally against our values,” he asserted. Apparently the chairman had never been treated to a tour of the remains of Fallujah, Iraq’s City of Mosques, which the US military had reduced to yet another Mesopotamian archeological site. He added that the course content was not only objectionable but, even worse, “academically irresponsible.”4

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That would have been news to close to 1,000 tax-exempt religiously based universities and colleges across the US, for some of whom anti-Muslim rhetoric is part of their institutional raison d’être.5 After all, what is more important for the American people’s education: corrupting the public mind with blasphemies like evolutionary biology or warning the citizenry about the looming Green Peril? Ignored in the alarmist rhetoric is that the majority of those who identify themselves as Muslims do so either as a purely spiritual obligation (like most Christians) or as that plus a cultural identification (like most Jews). Only a minority seem committed to Islam as a way of life; and even that group divides roughly into three categories.6 To be sure, one faction consists of radical political Islamists who believe that the state has become the vehicle of a corrupt elite. That is a view shared increasingly by broad populations with no desire to stone adulterers – a punishment, incidentally, prescribed nowhere in the Qur’a¯ n. To radicals the political status quo demands that a covert cadre stage an armed takeover of the state, an objective that may require in their minds meting out the occasional nasty surprise to their own state’s foreign sponsors. Another set, still relatively small, interprets the Qur’a¯ n literally, eschews modern science, and is usually ready to accommodate the existing political system in exchange for being left in peace. Members might be pleased if the broader society transformed itself in their self-image but show little inclination to waste time and energy to achieve that result. A third group consists of those who proselytize widely among the masses. They have little interest in the violent overthrow of the state, though the state may have a big interest in the violent suppression of them, as recent events in Egypt so well showed. Rather, their objective is to use the sacred texts to transform society from below by persuasion. While their interpretations of religious doctrine vary considerably, what they have (more or less) in common is what the West might type as “left-wing” attitudes toward social welfare and income redistribution combined with “right-wing” attitudes toward culture and family. Thus, lumping political radicals (who use Islamic jargon to rationalize plots against the state or foreign enemies) together with traditionalists (who, like medieval Christian monks, advocate retreat from the secular world) and “fundamentalists” (who stress Islamization at home through grass-roots activism) is more the preserve of Fox News anchors or of “national security

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experts” from the American Enterprise Institute than of serious analysts of today’s political turmoil. r i g h t e o u s w r at h ?

These distinctions ought not to come as a surprise, even inside the Pentagon. Christianity, too, has interfaced with the political order at different times in different ways for different purposes. There were and still are, though they have been quieter in recent years, those who wield the Bible like a blunt instrument to rationalize everything from bombings to bank robberies. There were and still are ample examples of those who withdraw from modern society, eschewing contact with the corrupting influences around them. Then there are the ones whom religion inspires to mass activism in an effort to change the nature of the political and social system. In the US, for example, in the not-so-distant past, Church-based groups were often associated with progressive elements in the Demo­ cratic Party or even with Christian socialist movements. Similarly in Canada, the New Democratic Party emerged from an awkward coalition of Prairie-based Christian socialists, with a Baptist minister for a long time at the helm, and leaders (including ex-Marxists) of the largely Eastern and urban trade-union movement. Across Latin America and beyond, some Jesuit priests espousing the Theology of Liberation were active (until stopped by a CIA-Vatican counter-­ campaign) in mobilizing the peasantry to demand land reform and the urban poor to call for basic amenities like affordable electricity and clean water. Still, the notion that early Christian activists in the US were all lefties would be flat wrong. They had little in common except maybe antipathy to what they saw as growing “Popish” influence, the product of Irish and, later, Italian immigration. Those early Christian activists included Christian socialists but also apologists for slavery. Some, in a search for social justice, demanded that the state break up concentrations of economic power while advocating an isolationist foreign policy. Others were happy to see the US spread its gospel of commercial freedom at gunpoint across the continent, then around the world.7 Nor did early Christian activists seem to have had a problem holding beliefs that appear in modern eyes contradictory. William Jennings Bryan simultaneously called down fire and brimstone on the moneyed

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powers of his day, excoriated the Supreme Court when it ruled that taxing the rich at a higher rate than the poor was a violation of the rights of property, allied himself with organized labour to fight the application of antitrust law to unions, while crusading to get Darwin banned from US schools – although some of his successors, seeing the handwriting, if not on the wall, then at least on the classroom blackboard, tried to reconcile evolution with religious belief.8 Even during the Great Depression, when numerous pastors rallied to the progressive side under the umbrella, for example, of the Social Gospel movement in the US or the Cooperative Commonwealth Federation in Canada, others combined fundamentalism with political fascism in defense of the white race and the capitalist system. Yet others in the face of fears of a mass uprising – the right blaming Franklin Roosevelt for fomenting it, the left praising him for averting it (when he actually did neither) – preferred a backdoor approach.9 Representatives of established Church, big business, and machine politics formed a theopolitical cabal to defend “the system” and advance US military and economic power. Sometimes referred to as “the Family” and operating like Opus Dei in Catholic Europe, it still exists near the centres of political power, manipulating, nudging, and persuading more or less off the public radar screen.10 Meanwhile the crass media distract the Great Unwashed with sex scandals featuring fallen televangelists and the “left” twitters over Rockefeller-cumBilderberg conspiracies. Today “progressive” Christian movements can’t be written off entirely – a coalition of major churches in Britain savaged the Tory government’s slashing of the welfare budgets rationalized by myths about poverty and its cures.11 In North America, and no doubt elsewhere, too, the public clout of these progressive groups has been much reduced in favour of others that, although also starting from a close reading of the Bible, arrive at diametrically opposed conclusions. Unlike earlier conservative Christian movements who tended to preach submission not just to God but to the political status quo, along with a disdain for material wealth, emergent versions are politically demanding and view earthly riches as divinely ordained. They dislike the welfare state along with other symptoms of activist government (except maybe the police and military); and, in terms of foreign policy, their leaders have moved from predicting Armageddon to helping it come to pass.

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A number of factors might explain this shift. First, decades of post-World War II prosperity negated in the eyes of the white working class any need for radical redistributive policies – since the main beneficiaries, at least in the US, would be blacks, Hispanics, and recent immigrants. Nor has the economic turnaround since the 1970s with real incomes flattening countered that shift, although the recent collapse in the value of “middle-class” assets, especially houses and pension plans, may eventually do so unless mass anger can continue to be channelled into more Crusades against the Green Peril.12 Second, that early postwar period of rising incomes went hand in hand with unrelenting anti-Soviet propaganda, including a pogrom against left-leaning civil servants, intellectuals, artists, and especially union leaders, of which the rantings of Senator Joseph McCarthy formed only a minor sideshow. Interestingly one component of that anti-Communist propaganda campaign in the US and abroad was the purging of institutionalists and social democrats from major university economics departments along with the triumph – partly funded by the military – of neoliberal ideology posing as “science.”13 Along with that came a deliberate bolstering of the US image as a paragon of Christian capitalist democracy in contrast to atheistic Communist totalitarianism. The resulting Red Scare purges incidentally created the template for the Green Scare round-ups half a century later. US fundamentalist religion was not simply encouraged during the opening decades of the Cold War but actively exported, with covert programs (in which Billy Graham, Pat Robertson, and Ted Haggard, among others, learned their trade) to smuggle Bibles into Warsaw Pact countries. The rightward shift in religious doctrines was no doubt aided further by the fact that the fastest growing trends in modern Christianity suffer from theological schizophrenia. In theory Jesus trumps Moses. Therefore logically the New Testament takes priority over the Old, just as a Muslim sees the Qur’a¯ n superseding (but not invalidating) the Bible where the two conflict. However, for today’s Protestant “fundamentalists,” the reverse (except for the Book of Revelations, with its Old Testament-like apocalyptic images) is more likely the case. It is almost as if the pre-eminent Hebraic prophet (with his stern commandments) stands taller in the eyes of the new breed of Christian activists than their own supposed (and rather milquetoast by comparison) spiritual mentor.

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Certainly there are many things in the New Testament that the Christian Right might well want to gloss over. “Blessed are the meek, for they shall inherit the Earth” clashes with the modern stress on material success and the right-wing attack on state-mediated social security, two themes that in the US facilitated the de facto merger between religious “fundamentalism” and the modern Republican Party. Similar trends appear in many countries across the world. In Canada, for example, the Conservative Party, run by a coalition of Bay Street Banksters, Calgary Tar Babies, and Bible-Belt Zealots, has dominated the political stage for a decade, bolstering the military, terrorizing and purging the civil service, slashing upper-income tax brackets, and genuflecting to the Israel lobby on foreign policy. Similarly, “Blessed are the merciful, for they shall obtain mercy” cannot find much favour with either those demanding stern Biblical punishments or with big corporations who made the prisons-forprofit sector one of Wall Street’s darlings. In the same vein, “Blessed are the peacemakers, for they shall be called the children of God” is somewhat inconsistent with the strident calls for Holy War against modern manifestations of the Antichrist, and therefore for a larger military budget, no doubt one of the subtexts of the prayer meetings that leaders of the Christian Right hold in the Pentagon – and beyond. Imagine the difficulty trying to sell that blessed peacemakers stuff in Fort Jackson, for example, where aspiring soldiers, holding rifles in one hand and Bibles in the other, are told that accepting Jesus Christ as their personal saviour is as much a part of their basic training as vigorous physical exercise.14 Quite likely the Good Book those grunts were holding was not the standard King James version but a special military edition of the Holman Bible. Written in “reader friendly” language and full of heartwarming gratuities like the Pledge of Allegiance, verses from the Star Spangled Banner, General George Patton’s 1944 Christmas prayer card from the battlefield, and special “study tools” for those who serve in “difficult situations,” this Bible, with covers designed to appeal to the pride of each of the USA’s four armed forces, is manufactured by a subsidiary of the Southern Baptist Convention, the world’s largest Baptist denomination, and distributed through Christian bookstores, commissaries, and PXs on US military installations – no doubt with the encouragement of the many military chaplains drawn from Christian-rightist denominations.15 In seeking to join the generals in a curious new version of holy matrimony, the Christian Right might have trouble with parts of the Old

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Testament, too – for example with the Sixth Commandment: Thou Shalt Not Kill. To that problem, however, there have been two solutions. One is simply to cite any of the myriad of Old Testament celebrations of genocide that seem to override that commandment. (Samuel 15:2–3 is particularly useful in this regard.16) The second is to call upon more contemporary authority. Thus the late Jerry Falwell, the anti-abortion, anti-civil rights religious leader who insisted on a literal reading of the Bible, decided that, perhaps because of declining educational standards in the US, people misunderstand essential parts of it. According to him, the Sixth Commandment really meant to say: Thou Shalt Not Murder.17 Something like the notorious “Highway of Death” during Gulf War I – when US planes blocked both ends of a huge Iraqi military convoy beating a hasty retreat from Kuwait, then systematically slaughtered tens of thousands of desperately fleeing conscripts – certainly would not constitute mass murder in the eyes of Falwell, who had advised President George I on the eve of the war. Rather it was a preventive, humanitarian intervention. After all, everyone knows that the object of the war was to stop Saddam Hussein from committing further atrocities against his own people. As to the so-called Eleventh Commandment, the frequent references in both Old and New Testaments to the evil of an excessive maldistribution of wealth or the need to periodically cancel debts that were keeping the population in servitude? Presumably that commandment needs to be understood in its modern form: “thou shalt not get caught.” Within today’s broad coalition of the Christian Right are various factions with doctrines varying from the idiosyncratic to the psychotic. Each seems intent on propagating its own beliefs while denigrating those of the competition. However, they also have things in common. Members of the Christian Right (unlike genuine traditionalists) are generally not rooted in nor obsessed with the past.18 Nor are they like members of some monastic orders who prefer to sit on distant mountaintops to contemplate eternity along with their navels – unless they belong to the senior ranks of South Korea’s largest Buddhist order, a half dozen of whom were forced to resign recently after being caught drinking, smoking, and playing high-stakes poker at a memorial event for a dead Zen master.19 Rather, these Christian rightists, like careful shoppers in a theological supermarket, root through the past to select what is useful for furthering their agenda in the present.

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Nor do mainstream Christian rightists seek to overturn the “founding principles” of the US or its political institutions, merely to return them to their supposed spiritual roots. Hence the emergence of a minor industry reinterpreting US political history to prove that the Founding Fathers who largely insisted on the separation of Church and State really were devout theocrats on the model of seventeenthcentury witch-burning Pilgrims.20 Since to Christian rightists the US itself is a divine construct, they are happy to participate in the existing political process, not so much by taking power directly – a proven flop in 1988 when George I trounced Pat Robertson for the Republican nomination – but by infiltrating both party ranks and public services. Permeating party ranks is largely a matter of rallying the troops to cheer foregone results during the convention and to march faithfully to the polling booths come election times. Insinuating acolytes into the public service, traditionally more of a challenge, is easier today because of that proliferation of church-linked academic institutions whose professorial staff pronounce sagely on matters of public policy, particularly in subjects like economics, civil law, and foreign affairs, though noticeably less on biology or geology. Thousands of their students graduate annually with degrees worth at least as much as those obtainable, perhaps with an end-of-semester discount, from mail-order colleges across the US. They are thus equipped to take positions in the multitude of faith-based offices attached to government departments, particularly after the George II Administration opened almost every financial channel except the doors of Fort Knox to Christian Rightists seeking to advance their agendas. To be sure, some critics charge that these religiously based academies teach their students not to think but to obey, not to reason but to perform by rote. However, that is the norm, too, in almost any “mainstream” university economics program. Hardly a surprise given that the methodology and message of both are fundamentally (no pun intended) the same – references to “God” simply replacing “the Market,” or vice versa. If believers in either theology have in the last couple decades risen far and fast in terms of power and influence, progress must be even more rapid when the two belief systems are welded. That is most spectacular with Prosperity Theology, stressing that wealth is a sign of Heaven’s blessing. Although seemingly a recent trend, in fact its doctrines descend directly from the early days of industrialization in Britain, when the ancestors of today’s Christian

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Right decided that the emerging market economy was God’s instrument to reward proper Christian behaviour (notably theirs) with wealth and health and to punish the unrepentant sinner (notably workers who got out of hand) with poverty and illness.21 Because today’s “fundamentalist” leaders share broad political objectives, they have been able, despite doctrinal disputes, to weld a series of coalitions that maximize their clout in Washington.22 Such coalitions have to be choosy about whom they admit. They exclude, naturally, traditionalists who prefer their own company and maintain a lifestyle as close as possible to what they regard as a Biblical ideal. Most sects of the Amish, for example, avoid use of modern technology, keep to themselves, refuse to proselytize, avoid conflict with the secular authority, provided it agrees at least implicitly not to bother them, and even prefer to settle their own occasional financial disputes internally. The coalition as well usually shuns association with cults built on personal faith in leaders who spout idiosyncratic doctrines. For example, there was bound to be some difficulty arranging a meeting of minds between Christians awaiting the Messiah and followers of the Unification Church, who insisted that the Messiah, in the shape of the late Reverend Sun Myung Moon, had already arrived.23 Their proof? Back when Moon was a young man in Korea, Jesus Christ himself made an unscheduled visit down on the mortal plane to instruct Moon to finish Christ’s work on Earth. A short time later, Moses and Buddha also dropped in to chat. Out of these celestial comings-and-goings – from which Mohammed was conspicuously absent – Moon’s Holy Spirit Association for the Unification of World Churches was born. Such cults may on occasion identify with the same political causes as the Christian Right – the Moonies certainly do. But, because of the overtly self-promoting character of the belief system their leaders espouse, not to mention the sometimes disreputable character of the leadership itself, those cults are rarely linked to the Christian Right in a public way. Moon’s six prison terms, for instance, might have been somewhat of a public relations liability – although the fact that the last one was for tax evasion probably erased a fair bit of the stigma.24 On the other hand, Moon probably bought his way to quasirespectability in 1995 by bailing out Jerry Falwell’s Liberty University to the tune of nearly $4 million. Of course that was small potatoes if there is any truth to tales about the amount of Moonie revenues

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flowing in from newspapers, an auto manufacturing plant, luxury resort properties, banks, tuna fleets with a complementary sushi-distribution arm, a tropical flower business, and, reportedly, a lock on the production of American assault rifles for the South Korean army. Moon’s efforts to link with more reputable elements in the Christian Right accelerated with his sponsorship of a series of World Peace conferences in which Moon himself distributed Christian Bernard gold watches to prominent attendees as a symbol of his “unchanging love.”25 Moonies and their ilk aside, the core of the coalition is an amalgam of fundamentalists and Pentecostals, often lumped together under the (misleading) term “evangelicals.”26 The differences are not so much creed as form. At a fundamentalist gathering, the pastor gives what purports to be a strict interpretation of Biblical text, then, just to keep the process objective, explains further what it means. But at a Pentecostal event the crucial thing is a “charismatic” experience (most notoriously in the form of “speaking in tongues”) through which God communicates directly to the believer – though since God’s personalized message may come in difficult-to-comprehend forms, it may require the communications expertise of the pastor to interpret it. Long anathema to orthodox churches, to whom the idea of a personally packaged revelation goes against the notion of a formal liturgy controlled by the ordained hierarchy, in the early twentieth century Pentecostal believers were often expelled or quit to form their own denominations, only to rebound after World War II to such an extent that they, particularly when conjoined with Prosperity (“Jesus was rich!”) Theology, are now probably the fastest growing Christian trend, not just in the US but across Latin America and beyond, while mainstream denominations suffer a steady hemorrhage. Granted, the charismatic experience of direct communication from God is not restricted to Pentecostals. For example, in the mid-1950s a young science-fiction writer named L. Ron Hubbard was called upon to visit Heaven – twice. When he came back down to planet Earth he founded the Church of Scientology, an institution that seems to spend less time preaching to potential converts as it does fighting the revenue authorities over its tax-exempt status and warding off civil damage suits from people claiming to have been conned by church “auditing” sessions. Hubbard himself spent his final years floating around the world on his yacht looking for a safe harbour, although his church, thanks in good measure to its Hollywood links,

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still has the wind in its sails – however battered they may have been by the recent storm over Tom Cruise’s divorce.27 Aside from their stress on the charismatic experience, Pentecostals generally are not much different in theopolitical beliefs than the majority of other right-wing Christians today. Most dissension between them disappears when the time comes to defend their most important jointly held theological principles: the sanctity of private property and the sacred nature of the state of Israel. As a result there can be close cooperation between them, well captured in the alliance between Pentecostal leader Pat Robertson and fundamentalist kingpin Jerry Falwell in the old Christian Coalition. Among their shared theological beliefs was that the US ought to launch a pre-emptive nuclear strike against the enemies of Christendom. After all, out of the ashes true Christians would emerge unscathed, en route to eternal life.28 While most Christian rightists are Messianic, awaiting the Second Coming of Jesus and the Day of Judgment, they disagree, sometimes vehemently, as to whether the second coming will succeed (post-millennialism) or precede (pre-millennialism) the establishment of God’s Kingdom on Earth, an event signalled by the conversion of most of the planet’s (surviving) population to Christianity.29 This is more than just an arcane dispute over the timetable for Armageddon; it can influence the relative importance that different wings of the Christian Right might assign to foreign versus domestic affairs. p r i n c e o f p e a c e ? g o d o f wa r !

The most prominent trend in the pre-millenarian camp, at least in North America, is Dispensationalism. Although its roots can be traced back at least to the seventeenth century, it seems to have really begun with John Nelson Darby, an ex-Church of England priest who had rejected trappings of the “visible” church (its formal priesthood, sacraments, rituals, etc.) to bring to humanity the true “invisible” church. The core doctrine he and his followers propagated was that God had divided his dealings with “mankind” into seven “dispensations” by which humanity’s obedience was tested. So far humanity seems to have failed miserably six times – the seventh and most apocalyptic was soon to come. In the mid-nineteenth century, Darby made a number of trips to the US to sell his brand of revivalism. There, his most influential convert was Cyrus Scofield.30 A northerner who had fought for the

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South in the Civil War, Scofield subsequently achieved a reputation as a political fixer, financial swindler, and hard drinker who later saw the light and soon after secured his first pastoral post – in Texas. But for a rather different attitude to military service (Scofield lied about his age to get into the army) and for the possibility that his booze problem was exaggerated in retrospect to highlight his spiritual rebirth, there is much in Scofield’s career that might have inspired a recent US president.31 Scofield’s greatest contribution to the cause was what became known as the Scofield Reference Bible. Scofield decided that, while people wanted to study the Bible, they did not know how to do it. Nor were they interested in just another set of commentaries. Instead, perhaps drawing on his previous experiences forging promissory notes, he decided that his own Biblical studies could be linked physically with the Bible on a page-by-page basis. Therefore, while the main text was and remains the complete King James Edition, Scofield (and, in later printings, his followers) added a set of “reference” notes. In these they merged the message of unrelated Biblical passages from both Old and New Testaments along with elaborations to link the Biblical text to their own agenda. The notes were far from comprehensive – Scofield and later editors selected only a few passages that they wanted to highlight.32 They insisted that the notes were only to assist the reader in understanding the message. The result was that, rather than wrestle with obscure Biblical language, these “fundamentalist” Dispensationalists rely not just on the actual Bible but on recently added interpretative notes.33 Thus did Scofield (and others later on) send out to the faithful in one of the bestselling Bibles of all time the word that not only was Jesus returning – literally rather than spiritually, hitherto the mainstream view – to assume the role of terrestrial sovereign with Jerusalem as the seat of formal political power but that the event was drawing nigh.34 Still, for most of humanity the scenario they sketched was far from happy. Jesus would first pay a surreptitious visit during which a chosen few true Christians would experience “the Rapture” – they would be lifted out of their clothes and up into heaven to witness from that vantage point the terrible events to follow. The possibility of achieving eternal life without the inconvenience of a bodily death is probably among Dispensationalism’s top selling points. Seven years later would come Armageddon, in which Jesus pulls off a second Second Coming, this one a little more visible, and defeats

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Satan to establish the Kingdom of God. During the subsequent thousand-year reign, (some) Jews will finally accept the primacy of Jesus; humanity will be divided into feckless goats bound for Hell and faithful sheep (an interesting behavioural analogy); while the saints are resurrected to live suspended in heaven above Jerusalem, although without the company of all the virgins that the Qur’a¯ n promises to its faithful. Incidentally these pious Christians seem to have a rather stingier view of the possibilities of redemption than do Muslims. Islam, properly speaking, goes out of its way to facilitate followers of other religions accepting the faith and therefore being guaranteed salvation by doing nothing more than reciting in Arabic before witnesses: “There is no God but God and Mohammed is His prophet.” At the same time Muslims accept that “peoples of the book” (i.e., Christians and Jews) already have a specially protected place in the divine scheme of things, even if some of the more rabid of today’s selfdescribed Muslims seem to overlook that stipulation, as the Christian population of Syria found out at the hands of the US-equipped, Saudi-financed “freedom fighters” deployed against the Assaad regime. Simultaneously, committed Muslims tried to guard against anyone playing word games with the Qur’a¯ n by demanding that it always be reproduced faithfully – later on translations were allowed only if the original Arabic text appeared on one page with the vernacular opposite.35 The Dispensationalist interpretation of Biblically predicted events was complemented in the 1990s by a set of bestselling Apocalyptic novels that true believers seem to accept as equivalent to gospel. In them Christ dispatches the infidels in an orgy of bloodletting, during which Jesus has only to speak for flesh to melt from bones. This, by the way, is the fate not just of men but of horses as well. For some reason the equine species is exempted from the compassion God reputedly shows for little falling sparrows. With the success of the Left Behind series, it is no longer a matter of “fundamentalists” following a sort-of Schaum’s Outline, like the one Scofield concocted, but a question of putting their faith in something akin to a classic comic-book version of the Bible.36 Fortunately for those with investments in weapons production, the peace that ensues after the Second Coming will not last. At the end of Jesus Christ’s thousand-year reign, Satan will break free of his chains and the final battle will be fought, which will destroy the

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world. (So why, in God’s name, worry about greenhouse gases or protecting habitat for the spotted owl?) This will be followed by another resurrection of the righteous, who will join Jesus in battle against Satan at the cost of most of their lives, a final judgment on the unrighteous in which most Jews are also exterminated, then at last will dawn the New Heaven and the New Earth. Of course there is a catch. None of this can occur until after the ingathering of Jews to the Promised Land and the recreation of the state of Israel from the Nile to the Euphrates (i.e., all of Palestine, a hefty chunk of Egypt, a nice slice of Iraq, most of Jordan, and pieces of Syria and Lebanon, too). It requires as well the rebuilding of the Temple of Solomon on the (conveniently cleared) site of al-Haram ash-Sharif (the Dome of the Rock and al-Aqsa Mosque), the third most holy shrine in Islam and the place from which Mohammed reputedly rose to heaven. At that point, Dispensationalism morphs into Christian Zionism.37 That, too, is an old story. In 1882, William Blackstone, an American lay preacher motivated by both literalist beliefs in the Old Testament and shock over anti-Jewish pogroms in imperial Russia, began agitating for a Jewish state in Palestine more than a decade before Theodore Herzl published what is supposed to be the original blueprint. Blackstone not only lobbied successfully for the support of much of Congress, but he recruited the backing of representatives of key parts of big business, namely oil (John D. Rockefeller), finance (J.P. Morgan), and the mass media (Charles Scribner).38 More than a century later, these, along with the military-industrial complex, would unite with Protestant rightists and political Zionists to put a Born-Again Christian named George W. Bush in the White House and launch a Crusade against the latest version of the Evil Empire. In his day, Blackstone accomplished little for the cause. More successful were its adherents in Britain. There, among the believers, were David Lloyd George and Lord Balfour of the infamous Declaration, who together pulled off a remarkable triple-cross. First, the British government promised independence from Turkey to the Arabs (including those of Palestine) who rallied to the Allied side in World War I. Second, to woo central European Jews away from allegiance to Germany and Austria-Hungary, they offered Palestine to the emerging Zionist movement as a “homeland” for Jews. Third, Britain and France made their own side deal to divvy up the Turkish Empire.

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Meanwhile, back in the US, political “fundamentalism,” after metastasizing across the South and West, went into remission after World War I, the victim of urbanization, a growing interest in scientific rationalism, and broader acceptance of “licentiousness.” The Depression and the rise of the secular left damaged it further. Nor did most people worry much about a future Biblical Armageddon during World War II, when it seemed already at their doorstep. Still, fundamentalism was down, not out; shortly after the war, a truly miraculous event occurred. The turning point occurred in 1948. Until then, except for a few like Blackstone, American fundamentalists were hardly friendly to Zionism or to Jews, two distinct matters. Largely isolationist, they felt that the USA , as a divinely inspired entity, ought not to get involved in Europe’s troubles. Furthermore they saw Hitler as part of God’s judgment on the Jews. But the creation of the modern state of Israel electrified fundamentalists: it suggested that Biblical prophecy was about to be fulfilled. This belief was further bolstered in 1967, with Israel’s seizure of Jerusalem and the remaining parts of Palestine, as well as its expansion into Egypt and Syria. This event, which Muslim eyes saw as a renewal of the Crusades, seemed to the Christian fundamentalist to further cement preparations for the Biblically ordained ingathering of Jews. There was a major detour along the path. During the Cold War, the US government’s overwhelming commitment was to contain the “Soviet threat.” Accordingly its intelligence agencies set out to recruit the Christian Right, a process that began shortly after World War II and, if anything, accelerated in the increasingly frigid atmosphere of the late 1970s and especially the 1980s. No longer focused almost entirely on Eastern Europe, American fundamentalist and Pentecostal preachers spread across Latin America and parts of Africa, putting both their money (bloated with tax-exempt contributions) and their mouths (stuffed with proverbs) to work in the name of Christ and anti-Communism in order to counter indigenous guerrilla movements and win support away from Catholic parishes that had embraced the Theology of Liberation. Even if Ronald Reagan chatted affably about the possibility that his generation might see Armageddon (with the same sincerity with which he had formerly shilled for GE ), it was not so easy to convince serious Rapture Christians, fervid anti-Communists though they

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might be, that any geriatric Politburo member could be the real Antichrist. Anyway, the Bible specified a location far from Moscow where Good and Evil were to have their final and fatal (to everyone but true believers) confrontation. There was no doubt in the minds of genuinely committed Biblical literalists who the real enemy was. Indeed, no less a figure than Reverend Sun Myung Moon spelled it out precisely. In his 1979 The Way of Unification he insisted that, while Communism and democracy were historical enemies, so, too, and for much longer, were Islam and Christianity. Islam, he claimed, was not a “real faith.” Perhaps still smarting from Mohammed’s snub during his youthful confab with Moses, Bhudda, and Jesus, Moon insisted that Islam was an agent of international Communism.39 (That, incidentally, did not prevent Moon a couple years later from sending his journalists to snap pictures of mujahideen fighters in Afghanistan supposedly besting the Red Army with Islamic faith and American-supplied weapons.) Moon’s 1979 sermon also anticipated the days when the roles of agent and principal might be reversed: “If the democratic world defeats the Communist Party and that declines, they, in cooperation with the Islamic realm, will again attack the democratic world.” Thus, in the spirit of true unificationism, religious whackos of the world were beginning to unite in search of another Evil Empire even before the incumbent had expired. If the US Christian Right had any doubts about the correct geopolitics of theopolitics, others already busy in the heartland of the action were happy to provide guidance. fa i t h , h o p e , a n d ta x - e x e m p t c h a r i t y

Although Jewish fundamentalism had deep roots in Eastern Europe, it had little or nothing to do with notions of recreating historical Israel in the Much-Promised Land. Quite the contrary. The Orthodox rabbinate en masse bitterly opposed the objective of political Zionism to create a secular state of Israel, not only denouncing it as heretical but attempting to block fundraising. That rabbinate also opposed messianic Judaism with its themes of a pending Apocalypse followed by Redemption that, in turn, was linked to the end of Exile and the rebuilding of Solomon’s Temple. In spite of official opposition, messianism remained a powerful undercurrent of religious belief. In fact political Zionists were able to tap into the sentiment yearning for the end of “Exile” and to link it, practically and ideologically, to latenineteenth-century European colonial expansion.

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Even so, when Israel was carved out of (most of) Palestine at the end of World War II, the majority of its founders, although forced to concede some points to the religious establishment, seemed to owe more to Marx than to Moses. As a result, relations with Orthodox Jews remained ambiguous. Some Haredim sects had long lived in Palestine-Israel; but in the early decades they kept their distance from politics, avoided use of state institutions where possible, and regarded secular Jews as beyond hope. Other sects made compromises in return for state funding and, to advance their agendas, participated in politics as minority members of ruling coalitions. The 1967 war gave a dramatic boost to the fundamentalist camp. From that point forth, a religious nationalism that combined messianism with territorial expansionism assumed an ever-stronger position on Israel’s political scene, particularly after its proponents formed an alliance of convenience with the secular Right to advance their mutual interests.40 Much the same would soon occur in the US. Jewish fundamentalism arrived in the US in the early twentieth century along with mass migration from Eastern Europe, the rabbinate representing the new immigrants fearing loss of faith in a land of greed and licentiousness. But, once again, it did not identify with the state of Israel, neither the Zionist project nor even the post-1948 reality. In fact during the 1950s clashes occurred in the US between political Zionists (sometimes Soviet-inspired) and Orthodox Haredim, who hated both socialism and sacrilegious Zionism. This was accentuated when both American Zionists and Israeli leaders suggested that Zionism had replaced traditional Judaism as a Jewish ideology. After the creation of the state of Israel, the American Jewish mainstream, though sympathetic, kept its distance despite energetic efforts of a Zionist core. Meanwhile, in terms of US domestic politics, Jews made up, as they did for most of the twentieth century, much of the moral and intellectual backbone of US liberalism and provided a great deal of the energy of its trade-union movement. Yet, for American Jews, as for Israeli society, the 1967 war was a turning point. Some secular Jews took that war and its territorial consequences as a sign from a God in which they had previously rather limited belief. At the same time some (but not all) of the Haredim began to regard secular Jews as potentially redeemable and to concede to the earthly manifestation of Israel an important role in achieving that redemption: it could provide both the inspiration and the location for a massive return to the faith. Thus political Zionism and

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Jewish fundamentalism began to merge both in the US and in Israel and, along with parallel developments among Christian fundamentalists, tightened the bonds between the two countries. The symbiosis was neatly captured in the 1970s by the emergence of Gush Emunim (Bloc of the Faithful). These radical religious Zionists, with levies drawn from the ranks of American newly recommitted Jews, represented the wedding of messianism with territorial expansionism and, much like Dispensationalists, gave religious texts the spin necessary to rationalize the result. In an exercise in theological legerdemain that would have done Cyrus Scofield proud, Rabbi Avraham Kook, Gush’s spiritual mentor, announced that the recreation of the state of Israel and the arrival of the Messiah were separate events and that it would require human intervention (namely through annexation, expulsion, and colonization) to turn the first into the second. 41 It was easy to find theological justification for expropriation and colonization in Palestine – Gush claimed to be simply repeating the accomplishments of Joshua, who had subjugated, then destroyed, the Canaanites. The result by the end of the century was nearly 200 paramilitary settlements. Although Israeli society still had plenty of dissenters (remarkably more vocal than Jews of “liberal” political bent in the US) who opposed territorial expansion, the enthusiasm for colonization infected the broader society so much that by the mid-1980s two thirds opposed vacating the settlements in any future peace deal, half wanted the permanent annexation of the occupied areas, and over a third (now closer to half) looked favourably on chasing out not just the Palestinians in the territories but also those inside Israel who had survived the mass expulsions of 1948. Meanwhile there emerged, along with Gush, the “legal” arm of expansionism, a series of Jewish terrorist groups who, with covert support from elements in the government, army, and intelligence services, carried out assassinations and land seizures at gunpoint while hatching plots to destroy al-Haram ash-Sharif, motivated by a (more or less) shared ideology: the need for the mass return of Jews to Eretz Yisrael, the extension of Jewish rule over all of the Promised Land, the supremacy of Old Testament law, the reconstruction of the Temple of Solomon, and, finally, the arrival of the Messiah. This was an ideological shift of enormous importance. Old-line political Zionists had stated repeatedly that the creation of a Jewish state (“Just as Jewish as England is English”) would make Jews into

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a “normal people” and therefore serve to combat anti-Semitism. After 1967 religious expansionists took up a different refrain. To them anti-Semitism, redefined to embrace all criticism of Israel, would inevitably grow until the Messiah had returned. One remarkable feature of the post-1967 resurgence of religious expansionism and the de facto deification of the previously secular state was the degree to which those ideological trends were fed by American Jews migrating to Israel to tell the local population how to be properly Jewish. Israeli Jews lived through a series of wars and – despite a powerful undercurrent of militarism and chauvinism – usually realized that, in the long run, they would have to cut a deal with the Arabs; they were just determined to have the winning hand, preferably with five aces, in any negotiations. To American fundamentalist Jews, who had soaked up the post-World War II America-über-alles ideology and could always head back stateside when the going got rough, not only was any notion of peace with Israel’s Arab neighbours a delusion, not only did theological obligation preclude any compromise, but it was blasphemy to contemplate peace before the whole of Biblical Israel was “redeemed.” If they had any doubts, they had a growing host of Christian pre-millennialists inside the US to join them in shouting Hosannas and mobilizing for battle against the Islamic hordes. They could even count on some post-millennial rivals joining the chorus, denouncing Islam for denying the divinity of Jesus and insisting that, however much they might disagree with all the focus on the proximity of Armageddon, they had no doubt about which piece of real estate Jesus would choose to perform his encore.42 home on the range?

While most members of the Christian Right are pre-millennialists, the post-millennial camp has had considerable influence, albeit more on the domestic than the international front. Since post-millennialists believe that Jesus is in no great hurry to start his weary thousandyear reign, they feel that Christians must devote their attention to the details of life on Earth, returning contemporary societies to their Biblical roots and preparing the ground for the Apocalypse rather than dissipating energy in the-end-is-nigh reveries. The most notorious post-millenarian strand is probably Reconstructionism, something liberals in the US regard with a dread grossly disproportionate to the size of the “movement.” In fact attacks on Reconstructionism

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and dire plots imputed to it amplified after a public spat between its two principal figures, the death of its founder, defections, and a collapse of its donations. Actually Reconstructionism has never been an organized religious denomination so much as a set of simple but uncompromising beliefs that have influenced, overtly or covertly, a variety of congregations and leaders.43 Although a pre-millennialist, Pat Robertson used his Christian Broadcasting Corporation to spread Reconstructionisttype economic doctrine. Yet his erstwhile Christian coalition partner, Jerry Falwell, once typed Reconstructionism as “scary.” While the roots of modern Reconstructionism can be traced back to nineteenthcentury Europe, it owes its contemporary coherence to Rousas John Rushdoony, an Armenian who brought into the US his Biblical absolutism, his dismissal of post-Enlightenment “rationalism,” and his loathing for Islam, blaming it, rather than rising Turkish xenophobia, for the fate of Armenians in the declining Ottoman Empire. Inside the US he worked for the William Volker Fund, one of the country’s first far-right “think tanks” and, appropriately enough, the one that sponsored the Austrian libertarian economist Friedrich von Hayek in coming to the USA as well as subsidizing the Englishlanguage publication of von Hayek’s widely influential The Road to Serfdom. Although apparently a coincidence, the link of the two men seemed to anticipate a de facto merger of libertarian economics and theological absolutism later promoted by Gary North, Rushdoony’s son-in-law.44 While Rushdoony was inclined to the intellectual, North had the organizational energy to try to reach out with the Reconstructionist message to fundamentalist and Pentecostal congregations, driven by a conviction that, when the US finally fell apart under the weight of unpayable debt, social unrest, and foreign invasion, the task of picking up the pieces would fall to the churches. The extreme anti-state message of some Reconstructionists of libertarian bent sets them apart from most of the Christian Right. In general fundamentalists and Pentecostals do not want to abolish the existing state. Rather they want to make the US government stop minding God’s business. Christian rightists dislike social security, not just because it involves the government redistributing “their” money, though that is certainly one complaint, but because to them assisting the less fortunate ought to be an act of charity by the giver not a right guaranteed to the receiver regardless of race, colour, or (certainly not!) creed. As such, charity ought to be intermediated

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through the church, more specifically through their church. To the Christian Right, education is another natural church responsibility. Yet Christian rightists do admit essential functions for the state. In general they would differentiate, for example, between a sin, best taken care of by God, or, in his absence, by God’s self-selected representatives on Earth, and a crime, something defined and handled by the political order, preferably harshly. Reconstructionist purists go much further.45 Since almost every aspect of present-day earthly life is replete with sin, they call for a comprehensive program of social, political, and economic “reconstruction” on strict Biblical terms. If, to an “ordinary” fundamentalist or Pentecostal, the Bible sets the ultimate standards against which secular law and governance ought to be judged, true Reconstructionists believe in theonomy, the principle that God’s Old Testament laws are not just primary, but the sole basis of legitimate governance unless they have been specifically superseded by some later revelation. Reconstructionist thinkers, in line with “Biblical law,” have in the past demanded capital punishment for many crimes-cum-sins including apostasy, blasphemy, heresy, sorcery, adultery, prostitution, sodomy, and homosexuality. It follows logically that since Reconstructionism calls for a return to Biblical purity, there is no need to mess around with lethal chemicals or electrical charges. If stoning and burning of condemned criminals were good enough for Moses, they should be good enough for modern justice.46 To be sure, not all crimes merit the death penalty. Many can be dealt with by “just restitution.” If a thief is caught, his services can be sold to someone who is economically successful. The buyer acquires cheap labour for his enterprise, and part of the profits can be used to compensate the victim. Meanwhile the criminal, learning a useful social skill, can emerge at the end of his term of servitude with both the experience and the self-discipline to become a useful member of society.47 Perhaps it would be churlish to point out that something similar was tried in England during the seventeenth century, to provide indentured labour for tobacco plantations in the pre-sugar-and-­ slavery Caribbean. The problem was that proprietors, with a legally limited time to make profitable use of their charges, just worked them to death before the end of their term. Slaves, who represented a much heavier initial investment and were available in perpetuity, were likely to live longer.48

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Nor do Reconstructionists neglect basic family values. They seem to regard women as the property of their fathers – until they are married, at which point title passes to the husband. If Taliban leaders had ever gotten a peek at some of these notions, they might have been torn between writing to UNIFEM in protest or filing a complaint with the WTO for infringement of intellectual property rights.49 Reconstructionists are sometimes called “Dominionists.” That is because another part of their belief system derives from Genesis 1:26. By this passage, they insist, God did not merely entrust the rest of Nature to mankind’s care (as less literally minded Christian sects might claim) but gave mankind dominion over all other things. In the neoliberal reconstruction of Reconstructionism, that means everything on Earth is or is capable of being turned into absolute private property, but only in the hands of true Christians. That has implications, too, for environmental issues. Reconstruc­ tionism objects to government curbs on the exploitation of what some people falsely perceive to be irreplaceable natural resources. Since those resources were placed on Earth by God to bless his supreme biological creation, God would be happy to reward their rapid exploitation by always creating more. To be fair, Reconstructionists are not alone in citing theological grounds for plundering nature. In the early 1950s Billy Graham, a registered Democrat then employed by the Republican Party to boost the presidential credentials of candidate Dwight Eisenhower, teamed up with Big Oil to make Oil Town U S A, a feature film to laud both the free market and “virtuous” exploitation of God-given resources.50 Nor is the Reconstructionist stance against environmental regulations an exception. One of its core principles is that the free market in general is Biblically sanctioned (by the requirement of personal responsibility), and that, as a result, socialism is by its very nature anti-Christian. It stands to reason that if government activities, and therefore expenditures, are to be cut drastically, so too taxes, particularly since high taxes on the wealthy represent “baptized socialism.” Reconstructionists go beyond a simple call for tax cuts, seeking the elimination of estate, income, wealth, and corporate taxes. If there are genuine public functions required – probably not including prisons since so many offenses carry the death penalty and others require only “just restitution” – the answer is a “flat tax” levied at the same rate on everyone, another idea popularized in secular terms by economic fundamentalists.

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While advocating the abolition of most taxes and public expenditures, the economic gurus of Reconstructionism do not neglect things like Medicare and social security. If these could be done away with, pumping about $100 billion into the hands of the private sector, their absence would promote a sense of responsibility among the able-bodied, while cases of genuine misfortune could be handled, in a view widely shared among Christian rightists, by private charity working hand-in-hand with the Church – whose other hand would be busy reshaping and running the educational system. Of course, those views on social security and Medicare, probably radical when Reconstructionism was just picking up steam, are now almost mainstream – albeit the mainstream in North-American political economy today resembles less a babbling brook of clear, cool water than it does the Mississippi carrying its overload of industrial sludge and agrochemical waste to create massive dead zones in the Gulf of Mexico each spring. Since the churches are expected to assume those additional responsibilities, they require the financial means to meet them. If the government is to be stripped of most, perhaps all, forms of revenue, that pretty much excludes state subsidies, anathema in principle anyway. One alternative is a restoration of “tithing,” a contribution by every believing income-earning adult of 10 percent of their take. Nor is this all. If anything on this Earth needs “reconstructing,” it is surely the financial system. Forget about Jesus who got everyone confused with that money-changers-out-of-the-Temple stunt. The real prophet here was Moses, who, it seems, had read von Hayek carefully enough to become an ardent believer in the gold standard, to object to paper money, and to call down the wrath of God on advocates of fractional-reserve banking. Indeed, Gary North even suggested that the US government melt its gold hordes into coins to be distributed free to the citizenry while imposing on banks a 100  percent cashreserve ratio.51 However, one thing Old Testament Law decidedly does not reject is old-fashioned usury. Among the remarkable discoveries of Recon­ structionist economics is that the Biblical injunction against collecting interest has been misinterpreted for thousands of years. This edict was apparently meant to apply only to charitable loans made either to brothers-in-faith or to resident aliens who live voluntarily under God’s civil laws but who have fallen on hard times through no fault of their own. Centuries of erroneous teachings by religious scholars notwithstanding, the law does not prohibit interest-bearing commercial loans.

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Nor does the ban apply to charitable loans made to foreigners: as heretics or apostates, they could be exploited at will.52 Hence no good Christians need fear for their souls if they pass their nights praying for the Federal Reserve to hike the prime rate and their subsequent days preying on those who collapse under the resulting debt load. After all, everything they gain from such a free-market exchange is just another sign of God’s favour. In conjunction with tithing, it also represents a greater ability of the believer to contribute to the work of God’s representatives on Earth. Nor is that theme unique to Reconstructionism. Rather it seems to have been picked up by certain of Reconstructionism’s pre-millennialist rivals to form one of the guiding principles of contemporary Prosperity Theology. sucker’s succor?

Since its rapid economic expansion began in the early nineteenth century, the US has gone through various periods when its internal distribution of wealth changed sharply for the worse. Sometimes that was associated with episodes of particularly flagrant theft from the public domain. For example: the massive stealing from the government of lands that the government had previously stolen from aboriginals; or the dumping onto the public of the cost of building infrastructure like railways while the ownership remained vested in a few well-placed individuals; or industrialists buying from the government for a token price plant and equipment built at taxpayer expense for a war effort.53 More recently the tools have included cheating the population at large out of social services through tax breaks for the rich lobbied through legislatures already corrupted by money generated from previous tax breaks. These periods have usually been followed by demands from the have-lesses for government action to shift the balance back. Wise political leaders, even if themselves from highly privileged backgrounds – as they almost always have been – understood the importance of maintaining a veneer of equality of future opportunity, whatever the actual facts. The dynamics of the economy itself – bouts of inflation, structural shifts, and financial crises – sometimes watered down the impact of previous periods of plunder, rather than bolstering them as they now seem to do. Despite periods of political backlash, over time US economic society has remained reasonably stable, mainly by assuring mass docility via the prospect of income gains

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even if at a much slower rate than those of the elite. It also helped that immigration, legal or not, assured a marginalized class that would always be available to replace anyone who managed to take a tentative step up the socioeconomic ladder. However, in the last few decades the US, and the “developed” world at large, seems to have entered an era in which not only has the trend moved once more toward ever greater concentration of wealth (and power) but, at least within North America, the geographic distribution of that wealth (and power) has shifted so as to threaten to make that change permanent.54 More specifically, since the 1970s, a period of sharply rising energy prices and interest rates, North America (the US leading Canada, which doggedly tries to catch up) has seen a concentration of corporate power, a rapid decline in the trade-union movement, stagnant working-class incomes, and a shift in the centre of economic gravity to the South and the West, where energy costs and wage rates were lower, a prelude to the massive outsourcing to Asia typical of the 1990s and beyond. Within the US, as the Rust Belt lost out to the Bible Belt, before both lost out to the overseas Sweat Belt, the giants of energy and “defense” found themselves surrounded, applauded, and almost worshipped by “fundamentalist” boosters, to the political disadvantage of older Eastern wealth with its veneer of liberalism. More surprisingly perhaps, the Christian Right, with mega-churches spreading among the pizza joints and cellphone outlets in suburban and exurban malls, made its presence increasingly felt in the Rust Belt, too, perhaps because of the desperation that structural changes in the economy had left in their wake. In response the Republican Party shifted, such that the wing representing established wealth and traditional isolationism declined in favour of new money and advocates of a more aggressive foreign policy, while the party gained a mass following in areas where previously it had been poorly represented. A big part of the strategy lay in wooing fundamentalists and Pentecostals (plus aging white male workers irritated by Civil Rights legislation), who, because of generally lower than average incomes, had been traditionally ignored by Republican strategists. This, the joint work of Republican strategists and politically ambitious Christian leaders led by the likes of Falwell and Robertson, was a brilliant strategy. If people focused their attention on the approach of Armageddon, they would pay less heed to declining paycheques or to the hacking away of the welfare state in the name of fiscal conservatism. Besides,

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there were countless “think tanks” financed by tax-deductible corporate contributions to reassure them that their future was, like the streets described in Revelations 21:21, paved with gold. Meanwhile religious foundations swilling at the public trough insisted on the theological importance of being self-sufficient. Not least there was an abundance of new entrepreneurial theocrats happy to not only spread the Republican word but to make a practical demonstration of how God’s will manifested itself in earthly treasure. Religious institutions have always been aware that piety is not exactly its own reward. On top of the games of peddling crucifixion thorns and vials of Mary’s breast milk, different Christian orders in early times launched raids on each other’s holdings of holy relics as well as the Catacombs in Rome in search of prestigious icons that could better bind their followers and divert a larger share of the pilgrim traffic to their monasteries.55 When it comes to establishing their own churches as tools for plunder, today’s prosperity theologues could not hold a looted silver candelabra to Henry VIII. When he set up his national church – Catholicism without the nuisance of a pope or a Latin bible – he made off with the precious metal hordes and real-estate holdings that the Church of Rome had in England.56 But others made a reasonable effort, if not to catch up in quantity, to reflect the lessons in quality. The prevalence of entrepreneurial churches particularly in the US reflects not just its national wealth hanging like overripe fruit awaiting holier-than-thou pickers, not just the role that religion (selectively) has played in the country’s self-­justification, but also that, lacking any dominant state-defined religion, the US has always been open, at least fiscally, to con artists with winning smiles and convincing spiels. Of course, mainstream religious bodies, too, have a financial side. They need revenues to meet expenses even without the need to pay for labour (usually volunteer) or taxes (nonexistent). Sources might include: regular shakedowns of the faithful during services; charges for things like weddings; bequests in wills; the take from bingo games; kickbacks from people using the church facilities, especially its congregation lists and social events, to peddle everything from Tupperware to silver futures; and income from various businesses pretending to be important for supporting theological duties. But the main financial burden churches impose on the public is their exemption from taxes, both income and real estate, the last especially harmful to exactly those municipalities most prone to boast about their god-fearing populations. Such exemptions made some sense in

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an era when churches ran schools, hospitals, and various charities. But in most countries, certainly in North America and Western Europe, those responsibilities have been largely taken over by various levels of government, while the public authorities have lacked the guts or the integrity either to remove the tax benefit or, at a minimum, to impose proper regulatory scrutiny on its uses and abuses. In a sense today’s fundamentalists are at one with secularists in disputing the logic of removing the church’s social-welfare obligations but leaving it with tax exemptions that used to help finance those responsibilities. The two, however, draw diametrically opposed conclusions about the proper corrective action. On top of the load imposed on the general public through the tax exemption, congregations sometimes have to deal with ecclesiastical conmen. To be fair to emergent religious organizations who take most of the rap, traditional religions have been responsible for more than their share of scams and frauds. Witness, for example, repeated scandals over the role of the Vatican bank in running a capital-flight business, helping wealthy Italians evade taxes, and laundering money for criminals and intelligence services alike.57 Nor are such episodes always the schemes of officials at the centre of power. Recently police began an investigation into the mother superior of a Rome convent who befriended a rich elderly lady facing death, even bringing her into the convent during her last earthly days, then forging a will leaving everything the woman possessed (a lot of money plus an expensive apartment) to the convent.58 A good part of the problem lies precisely in the competition between older, mainstream church bodies and their upstart competitors with looser financial structures, more fluid ambitions, charismatic leading figures and rapidly growing financial needs. The key difference is that the older ones, who in the past might have also benefited from direct (as well as fiscal) subsidies from the state, probably have well-established trust funds on which to draw to tide them over any current account deficit caused by declining membership. That is rarely true, or at least not as true, of the recently emerged ones. Even their tax exemptions might be subject to greater scrutiny, or on occasion contested, by the state. Hence the greater stress on donations. That in turn translates into a particularly strong drive to recruit more members, as well a tendency perhaps to be more aggressive in fuzzing the frontier between business income (permitted only if “passive,” whatever that means) and church activities, as well as a

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penchant for greying the boundary between conducting permitted “passive” forms of business and committing outright fraud. Another increasingly cloudy distinction within these new sects is the difference between church services and vaudeville acts. That also raises another important distinction. When the US and in fact the West at large first saw a remarkable growth of new “entrepreneurial” religious organizations during the 1960s and beyond, some were just cover for rackets. The Brotherhood of Eternal Love, for example, was a spin-off from a California motorcycle gang. Thanks to a successful application for tax-exempt charitable and religious status by the only member without a criminal record, the brotherhood evolved in the 1960s into what the police insisted was the largest LSD operation in American history (as if they had the slightest bit of hard data to back up such a claim) as well as its (more probable) role as a pioneer in running Afghan hashish to North America.59 Too bad most of the profits ended up being lost by the sect’s principal financial advisor (a prominent Wall Street broker) in a series of bank crashes and securities swindles. That financial advisor, a disgraced member of the Mellon oil-and-banking dynasty, made a deal while the chemists and sales reps took a heavy fall.60 Less amusing was the Nation of Yahweh, an offshoot of the “Black Hebrews” and derided as a “black supremacist” sect by its detractors. Its founder, modestly named Yahweh ben Yahweh (God, son of God), set up in Miami in the 1970s the Temple of Love and recruited, among others, bankers, lawyers, and policemen. The sect eventually counted twenty-two temples across the US, with assets supposedly valued at $100 million – a more sensible appraisal put them at about $8 million, almost all in donated real estate. His followers were allegedly required to sign over their wealth and, if possible, take jobs in places where they could pull off jobs on behalf of the Church treasury – something members of the parent Black Hebrews were already notorious for doing. Inside its main compound in Miami, other disciples worked without pay to turn out Yahweh-brand soft drinks, fashion designs, and literature to be sold in the streets. Yahweh was eventually sentenced to eighteen years for murder and arson, released after eleven, and died of prostate cancer in 2007. According to a breathless press, his followers, loaded with jewellery, drove to the last rites in luxury limos to celebrate the passing of their founder, an event supposedly foretold in the Holy Scriptures, which they took as another sign of the approaching Apocalypse.61 Meanwhile

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the sect’s continued existence and its in-your-face attitude continues to draw the ire of organizations like the B’nai Brith, no doubt upset at the sect’s claims that its members, rather than those of the B’nai Brith, represent the truly chosen people.62 Far more successful, geographically and financially, was the enterprise of Maharishi Mahesh Yogi, the so-called Flying Swami, who held the trademark for Transcendental Meditation. With TMtm in his pocket, so to speak, his theological views spread rapidly across the English-speaking world, especially once the Beatles endorsed them. Oddly, while the English rock group sang of revolution and peace, among the major purchasers in the US of the Maharishi’s services were prisons and the Pentagon. For a time, there seemed no stopping the Maharishi, who got his picture on the covers of Life, Look, Newsweek, Time, Esquire, and The Saturday Evening Post and in The New York Times – whereas leading members of the Brotherhood of Eternal Love or the Nation of Yahweh probably had to be content with a bad sketch on a wanted poster. The financial returns came in as – income from training courses, books, cassettes, posters, etc., and donations from believers. They poured in, tax free, to fund foundations, schools, “research institutes,” and even one of America’s first theologically based universities. These turned out studies proving that TMtm reduced crime, curbed violence, improved health, and even led to better stock market performance. In fact so successful was the financial side of Maharishi’s operation that a network of tax-exempt trusts and investment companies specialized in property deals. The organization’s ambitions expanded to the point where it called for building 3,000 Peace Palaces and conversion to organic farming of about 2 billion hectares, about 8 percent of the world’s land area, to be financed by €10 trillion “worth” of tax-exempt bonds – issued through Dutch offshore facilities, perhaps because the sect’s efforts to buy a piece of Surinam to set up its own theocratic country came to naught. About $40,000 “worth” actually got into circulation. On the other hand a rival to T M during the 1970s and 1980s rush to set up pseudo-Asian cults in North America had a remarkably different fate. Starting with a collection of happy followers in saffron robes, chanting and banging drums on street corners, by the mid-1980s the North American leadership of the Hare Krishnas had degenerated into a drugs-and-sex-addled cult, with top people later arrested for gunrunning and murder.63

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That trajectory was typical of the era’s upstart sects, moments of celestial glory before falling off most people’s apostolic radar screens and crashing down to Earth, often with scandals, fines, and even prison sentences. It was and is quite different with the emergent fundamentalist and Pentecostal sects of the modern Americas (North, Central, and South), which have insinuated themselves into mainstream theology and politics while doing their best to erase the difference between the two. g i m m e t h at p r i m e - t i m e r e l i g i o n !

The key distinction is that these sects did not materialize from the kind of outer space occupied by people using LSD to levitate canonical debate or, like Scientology’s L. Ron Hubbard, called up to heaven so regularly that he deserved a bulk discount on travel costs. Rather, these sects have genuine roots in local soil. Their success is due to a mix of factors: growing alienation from older movements; the lure of showmanship in place of stern moralizing; and the rightward shift of Western politics.64 Another difference is that the core theology of perhaps the fastest growing trend in the Pentecostal-Charismatic movement seems to blend remarkably well with the predominant secular ideology of current times as well as addressing that critical weakness – money – emerging sects used to have vis-à-vis old-line ones. According to exponents of Prosperity Theology, an outgrowth of a faith-healing fad that swept the US in the 1950s, wealth is a sign of God’s blessing. Since God works in mysterious ways, God decided to make the free-market economy his primary tool. Then, if those who obtain God-given wealth in heavenly approved ways donate a fair chunk of their gains to their local pastor, God will reimburse them manifold. Even Bernie Madoff lacked the nerve to promise – as, for example, John Hagee does – reimbursement at a divinely inspired rate of up to 100 to 1. True, the donation formally goes to the church, not to the person exhorting parishioners to acts of reimbursable-plus generosity. As Louis XIV might have said: L’église, c’est moi! While preaching openness to divine messages, Prosperity theologues typically ensure their churches remain closed to earthly ones, especially in the form of a request for more information from a tax authority, fraud investigator, or nosy reporter, things that never worried Louis XIV – or Henry VIII for that matter.

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Not that those things seem to bother much the really successful prosperity theologues either. Although in exchange for giving religious organizations exemption from income, business, and property taxes, plus bulk mailing discounts from the post office, plus the right to sell products tax free by claiming they are used to spread the gospel, the US federal government, like that of most Western countries, makes them report their financial activities annually – then reportedly audits only about 1 percent of those reports, with most audits alleged to be perfunctory to the point of uselessness. That regulatory laxness can reflect lack of capacity to supervise about one million religious, charitable, and educational organizations registered across the US by states as well as by the federal government. It can also reflect fear by tax authorities of potentially bad PR from being seen to harass churches, or prior infiltration of the tax offices by acolytes of IR S-targeted sects, something Scientology was accused by enemies of doing. Not to be ignored, either, as a deterrent is intimidation of regulators by the powerful politicians that the most successful of the new religious movements seem to always have in their pockets. The exemption on income tax alone represent a triple blow to public finances: the donor gets a tax deduction, the church pays no tax on the gift, and the church can collect interest and capital gains on any donated money that it invests without tax consequences. Meanwhile the exemption from property taxes can play havoc with municipal governments, some already at the brink even before Wall Street banksters took so many of them for a multibillion-dollar ride. The combination of a quaint definition of generosity (give and it shall be given back manifold), tight control from the top by a charismatic, often authoritarian, figure, and lack of scrutiny by the tax authorities is a perfect prescription not just for tax evasion (routine) but for outright fraud and, even worse, for those frauds to go unreported. Members of new religious congregations, even if badly swindled, are deterred from complaining to public authorities. They might be afraid that lack of faith in the scheme might be equated with lack of faith in the sect itself. Perhaps they take failure of the fruits promised to materialize as a sign from God of their own unworthiness and avoid protesting for fear of angering the Supreme Accountant. They could be deterred by possible rejection from a community of believers who rescued them from the kind of loneliness common in modern urban society. This seems particularly true among the elderly, who figure disproportionately among victims

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both of religious and telemarketing scams. For some, embarrassment may trump anger. Others defrauded are no doubt aware that much of the expense of investigation will fall on them personally, given the growing dependence of regulators and prosecutors on prior work done by private-sector forensic accountants. Perhaps worst, yet others may be impelled by straitened financial circumstances to plunge back into the same types of schemes in a desperate attempt to recover. As a result, no one has a clue how many cons against members of the congregations get pulled off in today’s churches, whether mainstream or emergent, local or transnational, confined to a cute little fieldstone church or boasting a hideous sprawling suburban cathedral, featuring doctrines spread strictly by pastoral word of mouth to a few score local citizens or blasted to the masses across the nation, indeed around the world, with the fanciest modern communications tools.65 Over and above standard tax evasion, frauds can take all manner of forms: embezzlement; diversion of church funds to private ends; use of churches to sell Ponzi investment schemes in Biblically correct items like nonexistent gold mines; sale of bogus, grossly overpriced, or even harmful counseling services; peddling faith-based snake oil that can supposedly heal everything from AIDS to a flagging sex drive; and so forth. Most of those sorts of things are the mark of small-timers who strike and run. But not always. Take, for example, Jim and Tammy Faye Bakker. After getting their start with Pat Robertson’s then-new Christian Broadcasting Corporation, they struck out on their own with the P T L (Praise the Lord) program and the Heritage USA theme park. With programming that then set new lows for tasteless glitz – though today it would appear mild – their gross take may have topped $1 million per week. A lot of it came from selling lifetime memberships that entitled the buyer to stay for three nights a year in a luxury hotel in the theme park. They sold thousands even though the hotel could accommodate no more than five hundred people at a time, siphoning off the money to keep up the theme park and their own fancy lifestyle. When a scandal broke over Jimmy’s tryst with a secretary who required hush money, he resigned as head of P T L in favour of Jerry Falwell, spent some time in prison, then emerged, divorced, to get back into the sky-pilot business. This time he stuck to the standard pre-millennial line without the Prosperity Theology twist of which he was one of the pioneers. Maybe that was because of sincere regrets – maybe it was out of memories of a bill for $6 million in tax

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arrears. However, on one key issue, he was in full agreement with his colleagues: the danger to Christians in the Middle East posed by Islamic hordes and Muslim mobs.66 Perhaps because of the bad taste left by that and several similar sex-and-money scandals in the 1980s, most truly successful prosperity theologues today ensure they are well protected on the legal front, which permits them to publicly revel in their success in a way that would have made Tammy Faye Bakker blush beneath mascara laid on with a trowel. Yet no one can accuse the new stars of hypocrisy. They practice what they preach, amply attested to by their limos, mega-mansions, and investment portfolios. The result is a sick symbiosis – the more the pastors flash the cash to the congregation, the greater the incentive for the congregation not to holler for the fuzz but to donate even more in the hopes that the great provider in the sky will shower down blessings sufficient for them, too, to own a small fleet of Lamborghinis. On the other hand, all those signs of wealth do strike a marked contrast with the rather smaller sums certain pastors report on their personal income tax returns. Since their actual churches, of course, don’t have to file tax returns (as distinct from an annual financial report), the easiest route is to collect money in the name of the church, then transfer it to the pastor in the guise of “expenses” or allow the pastor use of facilities including the vacation homes, tennis lessons, and private jets necessary to keep up the good work, all of that simply a reflection of the gratitude of their parishioners. There actually is a good reason for upstart churches to insist that believers donate generously. Lacking, just like the once-flourishing 1960s-style sects did, old trust funds or direct state aid (as distinct from indirect support via tax holidays) new churches unaffiliated with old denominations depend for their revenues overwhelmingly on individual gifts. The size of the inflow then becomes an index of how well the pastor has taken the measure of his flock, or at least of the length of its wool, before submitting it to an oratorical fleecing.67 Take, for example, Rod Parsley, pastor of the World Harvest Church, boss of several grassroots organizations, and founder of Valor Christian College, all run like a closed family business. When most Pentecostal pastors talk about love, they generally mean love of Jesus or of humanity or even of their wife to counter rumours of illicit affairs. Rod Parsley will have none of that. “I just love to talk about your money,” his detractors claim that he tells his

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congregation. “Let me be very clear – I want your money. I deserve it. This church deserves it.” He promises to his followers that, over and above what they routinely donate during his services (during which they could be solicited two or three times), if they pledge 10 percent of their income, God will reward them no less than hundredfold. Reputedly Parsley also asks them to burn household bills so they can donate the money to him in the expectation that God will ensure they are free of debt in the future.68 In case those efforts don’t yield enough to support the good work, Reverend Parsley also peddles “covenant swords” and “prayer cloths” that will provide relief not just from financial cares but also from physical and emotional illnesses.Time left over from those duties he spends in communitarian activities such as endorsing ultraconservative candidates for political office – something that led to a group he later disparaged as “liberal” clergymen filing a complaint with the I R S. That investigation, Parsley was happy to report to his followers, turned up nothing untoward.69 He celebrated his victory by declaring during the 2008 presidential campaign of John McCain, his public favourite, that the USA cannot “fulfill its divine purposes until we understand our historical conflict with Islam….The fact is that America was founded, in part, with the intention of seeing this false religion destroyed.”70 While McCain rushed to repudiate Parsley with a speed that rivaled how fast his Democratic opponent wrote off his own previous association with Reverend Jeremiah Wright, others probably applauded.71 No doubt that included John Hagee, another Pentecostal-cumProsperity theologue with a similar-to-Parsley penchant for running like a family business his 5,000–seat Cornerstone Church, along with a companion nonprofit foundation. When a journalist managed to acquire Hagee’s 2001 tax records, she claimed that Hagee had added to his million-plus salary another $125,000 for his wife and an undisclosed sum for one of his daughters – plus, of course, all the “expenses” the church and nonprofit covered on his behalf. There was also some question about how the royalties from the sale of his many books and tapes (over $12 million worth of gross sales) ended up not declared on his personal income tax but tucked away tax-free in his retirement account. Still, Hagee did not seem worried. Back in 1995, when the tax collectors first started asking him questions, he got excellent legal advice to make his position airtight and sue the US postal service when it

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tried to deny him the special bulk-mailing discount provided to nonprofit organizations. More recent critics were answered with the simple assertion that: “I deserve every dime that I’m getting.” His followers agreed, one of them noting: “I know the reason that he earns what he earns is that God has blessed him.” Certainly Hagee gives his parishioners a great show for their money, preaching along with a jazz band, a 125-member choir, and a plethora of men with platters walking the aisles while Hagee instructs church members to hold their money toward heaven and repeat after him “Give and it shall be given.” Then he helpfully adds: “If you’re not prospering it’s because you’re not giving.” Meanwhile elderly female volunteers answer the phone lines, taking thousands of requests for special prayers each day, some leading to more donations. Donors who are particularly generous – like those who tithe 10 percent of their income to Hagee’s church or give to special causes like shipping Jews “back” to Israel – merit a special prayer from Hagee himself.72 While the major pre-millennial preachers virtually to a man (as they usually but not always are) pander shamelessly to the Israel lobby, Hagee goes a giant step further. To the horror of some of his colleagues, he even announced that God gave a special dispensation to Jews so that they could be saved without having to recognize the divinity of Jesus. On the other side, he (like Moon) warned of a pending Russian-Islamic invasion of Israel, denounced any initiative from Israeli governments that could be construed (or more likely seriously misconstrued) as a “peace feeler,” called for a pre-emptive attack on Iran, and insisted that “Those who live by the Koran have a scriptural mandate to kill Christians and Jews.” Perhaps that warning explains why he was the first non-Jew to receive the San Antonio B’nai Brith’s Humanitarian of the Year award. If someone suggested that this Prosperity Theology stuff smacks of slick marketing, that would probably bring a knowing smile to the face of Ted Haggard, former president of the National Association of Evangelicals – 45,000 churches with 30 million adherents. In a few years he grew his New Life Church from rented space in a strip mall to a 14,000–person congregation where he would bestow on some (publicly) surprised parishioners financial blessings by asking the rest of the congregation to lay money at their feet. Describing himself as a non-fanatical charismatic and taking the credit for rallying the fundies behind George II in 2004, Haggard was also famed for two other things. One was his marketing philosophy based on his observation

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that contemporary consumer society and modern religious belief were simply flip sides of the same coin. The second was his efforts to replace the traditional command-and-control-from-the-top model of theological enterprises, the sort practiced by Parsley and Hagee, with a “free market” version that allegedly encouraged up-and-comers in his organization to push their own novel ideas. Despite Haggard’s sermons on the need for premarital chastity and post-marital fidelity, on the evil of homosexuality, and on the curse of recreational drugs flooding the USA, he had some unconventional notions about what Christian denunciation of those activities actually meant. These came to light when a male prostitute spilled the beans on their relationship, including a mutual fondness for crystal meth. Maybe inspired by Bill Clinton’s admission that in olden times the president had smoked marijuana but didn’t inhale, Haggard, after a long period of procrastination, admitted that he purchased methamphetamine but just threw it away. Although he resigned as president of the evangelical association, after a few years he, like Jim Bakker, was back in business, insisting that in the past he had “over repented.”73 However, on another matter in which he was formally outspoken, his views were not likely to change, namely his warnings about “the sinister spirit of violence and hatred that inflames so many fundamentalist Muslims,” an attitude, he insists, that is “taught in the Quran.”74 Those were views shared, surprisingly in this instance, by one of the most successful of the current crop of prosperity theologues. Benny Hinn began his career with the Miracle Crusade road show, in which he got members of the audience up on stage to sing “How Great Thou Art,” leaving some ambiguity about whether the compliment was directed to the almighty or to his immediately available earthly stand-in. The climax of the show came when Hinn asked those in need to join him on stage. According to less than impressed observers who may (or may not) have had grudge or an agenda, his assistants prescreened out any with serious and permanent disabilities while those suffering merely chronic illnesses were particularly welcomed. One theory of his success holds that, after the supplicant’s emotions were sufficiently whipped up, their brains released endorphins that dulled any pain so they could announce to the cheers of the audience that they had been cured. Meanwhile volunteers (no need for wage disbursements here) passed around baskets and the great man himself exhorted the audience to ever greater acts of generosity.

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Later in his career Hinn transcended the limits of the road show format with a TV version under the intriguing name This Is Your Day. His reputation was further enhanced by astute political prophecies, for example, his insistence that Fidel Castro would not live past the 1990s and that with Castro’s demise all the homosexuals in the US would be destroyed by “the fire of God.”75 Although detractors have put Hinn’s salary as high as $2 million per annum, he himself claims a much more modest but never specified sum. In any case it excludes his travel budget: reservations in the presidential suites of luxury hotels with a large allowance for generous tips, along with upkeep on his seaside mansion to recover periodically from his exertions. With so much money flowing in and then out again, there surely had to be proper oversight. Hinn himself is chairman for life of his church foundation, as well as president and CEO, with power to appoint and dismiss the other directors. However, he does take orders from higher ups – for example, the time he was instructed directly by God to build the $30 million World Healing Center, then abandoned the project to pour the money into his other operations. To those who express concerns about the concentration of so much financial power, he had a telling answer: “I love my precious Lord too much,” he declared, “to ever trifle with the money entrusted to me by His dear people.”76 The one shadow hanging over Benny Hinn’s career was his parentage. His claim to Jewish blood was quickly discredited, along with his assertions that his father had been mayor of the City of Jaffa after it was emptied by Haganah gunmen of its Arab inhabitants. The reality seems to be that he was born in 1952 to a Palestinian family of Greek Orthodox religion that migrated to Canada after the 1967 war. Mesmerized by an evangelical faith healer, in 1983 he set up his own operation in Orlando, Florida, claiming that God was using him, too, as a conduit for healing. While Hinn has never quite escaped the black cloud of his ethnic origins, he certainly deserves credit for doing his best to dispel it, preaching publicly about the indestructible nature of Israel, calling on Israel to always defeat its enemies, and leading Christian tours to the Israeli occupied West Bank. There the faithful can purchase bottles of holy water and theological relics recently made in Israel. They can even sign up at a Jewish settlement for lessons shooting at targets sporting the chequered keffiyeh headdress popular among Palestinians,

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thanks to a company offering “the values of Zionism with the enjoyment of shooting which makes the activity more meaningful.”77 o n wa r d j u d e o - c h r i s t i a n s o l d i e r s ?

Until the 1967 war in the Middle East, when Israel seized the Sinai Peninsula, the Gaza Strip, the West Bank of the Jordan, and Syria’s Golan Heights, the Israel lobby had three sources of influence in US politics. One was moral, based on manipulation of US guilt over the Holocaust. A second was exhortatory, based on leading positions some pro-Israel Jews had achieved in US intellectual and artistic centres. The third in theory was electoral. This, while harped on by the radical right, was really the weak link. Until 1967 American Jews tended to keep their distance from pro-Israel politics. Furthermore Jews represented only a small percentage of the US population. Besides, any threat of a mass mobilization was illusory – American Jews, although largely Democratic in sympathies, exhibited as wide a variety of opinions on political and social issues as the public at large. Even in the last presidential election with the prime minister of Israel openly endorsing Mitt Romney, approximately 70 percent of American Jews backed Obama. However, as the 1980s gave way to the 1990s, the lobby acquired two important assets. In forty years the per capita income of American Jews moved from below to more than double the national average. That, as with every other ethnic community similarly blessed, served to move attitudes further toward the conservative end of the political spectrum. With the rapidly growing cost of elections, this also meant that the wealth of a small number of right-wingers could become a significant factor in campaign finance, as Mitt Romney’s courting of gambling czar Sheldon Adelson, ranked as the eighth richest man in the United States, showed only too well.78 The second asset was the growing alliance with the Christian Right, permitting the Israel lobby to potentially mobilize to its side tens of millions of Christian fundamentalists-cum-Pentecostals praying for Armageddon. Thus could the Israel lobby cooperate with the Christian Right to try to reward or punish congressmen and senators based on their degree of loyalty to Israel.79 The payoff was clear enough during the 2012 Israeli assault on Gaza, which the sitting members of both houses of the US Congress unanimously supported – even though by then opinion polls showed that more than half of young Jews in the

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US would not regard Israel’s disappearance from the world’s political map as a personal tragedy and only 10 percent of American Jews of all ages saw Israel as their highest political priority.80 Far from some Zionist conspiracy, the union of come-to-Zion with go-to-Zion was very much a consensual alliance between the Israel lobby and the Christian Right from which both gained. Both concurred, for example, on the need to facilitate the resettlement of the world’s Jews in Israel, albeit for rather different purposes. To political Zionists of more secular bent, the ingathering was to strengthen their territorial hold; for the more religiously inclined, it was also to ensure redemption. But to Christian Zionists, Jews were to assemble in the Holy Land, helped along with travel money from the likes of John Hagee, as a prelude to mass conversion. In the meantime the two could hold hands and smile in public. Christian Zionists, too, have also sponsored the “return” of thousands of Jews (many with dubious pedigrees) from places as far afield as Ethiopia and Russia. They provide money to US-based “foundations” whose objective is to destroy the Haram ash-Sharif in preparation for rebuilding the Temple of Solomon. They have been generous to Jewish zealots seizing and resettling ever more Palestinian land – some congregations even have “adopt a settlement” programs. Christian Zionists finance and staff radio and television stations beaming pro-Israel news and views to Muslim-inhabited areas. They actively proselytize in places like southern Lebanon (until being ejected along with the Israeli army by Hizbu a¯ llah), conquered Iraq, or Occupied Palestine – though for the most part they confine their attempts at conversion to Muslims for fear that success in converting Jews en masse would delay the Second Coming. Of course, any hint of opposition in Washington to Israeli military actions in Lebanon or Occupied Palestine leads to a flood of protests not just from the Israel lobby, whose (always exaggerated) political hold over American Jews has eroded steadily, but more and more from the massed legions of the Christian Right.81 Thus did the influence of both work in remarkably similar directions. Since the only way Dispensationalists can be guaranteed eternal life without the inconvenience of a prior death is by maintaining the security of the state of Israel, they insist that the US support Israel unreservedly until the Rapture – at which point most of the world’s Jews can be written off and a minority who have genuinely embraced Jesus raised along with other true believers up to Heaven,

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perhaps with the aid of a few powerful mushroom clouds. Of course, there was still a way to go before Israel ruled from the Nile to the Euphrates – but presumably such a result would only require plenty of US money and fancy weaponry, something the Christian Right and the Israel lobby agree that the US has a theopolitical obligation to provide. Indeed, the enthusiasm with which the Christian Right embraced the US invasion of Iraq in 2003 was a result of its conviction that the US was both destroying Babylon and paving the way for Israeli expansion. Along with a shared commitment to the ingathering of Jews comes a shared attitude toward the indigenous people of Palestine, toward Arabs at large, and toward Islam as a faith. To leading exponents of  the new muscular Christianity, Islam is an “evil” religion; and Mohammed is routinely depicted as everything from a voluptuary to a brigand to a terrorist.82 Bolstered by their frenzied hatred of Islam, pastors in the Bible Belt have assumed the role of the medieval Catholic hierarchy in calling for battle against Satan’s Islamic armies to “liberate” the Holy Land.83 What makes it easier for the two central parties, Christian Rightists and political Zionists, to share this mindset is the fact that Christian Rightists regard the US much the way today’s religious Zionists look at Israel, as a nation chosen by God to fulfill his will. What is necessary to fulfill God’s will seems to bear a remarkably close relationship to what is required to fulfill for both countries their political and territorial ambitions. It helps, too, that both share a common sense of historic mission stemming from their conquest of what they conveniently and retroactively define as a wilderness, albeit the US has largely resolved its aboriginal problem through obliteration whereas Israel continues to wrestle with its own through expulsions, incarcerations, assassinations, and mass evictions. In both countries, religious dogma and xenophobic patriotism have become tightly, perhaps inextricably, bonded not just among receptive parts of the public, not just within the ranks of leading politicians, but most dangerously within the military, too. That reached such a level that the USA’s commander-in-chief had to take time off from more pressing concerns, like directing his drone-warfare program – described by the chairman of the House Homeland Security Committee as a “policy of Righteousness and Goodness” – to publicly distance himself from the anti-Islamic ravings of a lieutenantcolonel in the Pentagon.84 This was followed by stern action from the

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military command in the form of a letter of reprimand to US soldiers in Afghanistan who were caught burning copies of the Qur’an ¯ and urinating on Muslim corpses (“a series of mistakes” was the official verdict).85 Just after the judge in the martial law case against Bradley Manning (the soldier who revealed, among other things, the gratuitous murder of a group of Iraqi civilians on the ground by a cackling gaggle of machine-gun wielding US soldiers from the air) announced that instead of 160 years Manning would only face a possible maximum of 90 or so, the sergeant who led the piss-on-’em squad was demoted to corporal. That was a stinging blow for justice and a ringing signal to the Islamic world that the modern USA stands by its historical principles.86

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7 Middle East Meets Midwest? Theopolitics, Crime, and Terror in the u s a

In the wake of 9/11, the USA struck back on two distinct fronts. The first, of course, was military. In short order US bombers, cruise missiles, and Special Forces headed for Afghanistan to take out the “command and control centres” from which the perpetrators had committed mass murder. That most evidence pointed to a plot hatched in Hamburg by the suicide pilots themselves might, in less urgent times, have raised questions about the effectiveness of the USA’s intelligence services or the accuracy of its Air Force’s navigation equipment. Hamburg, nearly firebombed out of existence during World War II, probably breathed a sigh of relief. The second front was legal, specifically an attempt not only to round up the “sleeper” cells presumed to have been planted throughout the US but also to engage in a worldwide effort to find, freeze, and forfeit “terror dollars” before they could be put to work. Behind both the military and the legal-financial initiatives was the notion that not just 9/11 but a series of previous outrages against Americans, notably but far from exclusively, the 1998 bombings of the US embassies in Dar es Salaam and Nairobi, were the handiwork of a sophisticated, hierarchically controlled Transnational of Terror inspired and directed by Usama bin L a¯ den and financed from his alleged billions. These in turn were derived variously from his family fortune, his criminal rackets all over the world, and outpourings of support from his well-heeled followers, particularly those in Saudi Arabia, with the money transferred covertly through Islamic charities and the notorious hawala (underground banking) system. Yet, with each day that passes since the terrible events, it becomes clearer that this widely accepted argument about the causes of and

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appropriate responses to 9/11 is liberally laced with myth and misinformation, with a heavy leavening of deliberate disinformation tossed in for good measure. In fact, when the conventional tale is broken down into constituent parts, it is hard to find anything in it that stands up to scrutiny.1 The role of bin L a¯ den in various terrorist outrages has been grossly exaggerated; al-Q¯a’idah turns out to be largely a law-enforcement fable akin to the Mafia myth that has long confused public discourse and muddled legislative responses to crime; the notion of a general Islamic resurgence against the West is a fantasy peddled by the legions of instant “national security experts” whom the purported threat permitted to crawl out of the woodwork and into the T V studios; most stories about the bin L a¯ den terror-treasury are fairy tales retailed by people overendowed with ambition or imagination and underendowed with knowledge or common sense; and the usual portrayal of things like the “underground banking system” or Islamic charities is the result largely of ignorance combined with ethnoreligious bigotry.2 In fact, the very notion of an aggressive Islamintern out to destroy the moral and financial foundations of Judeo-Christian Civilization is preposterous. Leave aside the simple fact that terrorist activity, with its resulting death and destruction, had actually been falling for two decades prior to the event.3 Except for the upsurge in deaths caused directly by 9/11, it continued to fall even as the US government, seconded by the British one, proclaimed the opposite, mainly to rationalize their own crimes in Afghanistan and Iraq. They continue to proclaim that largely as cover for fresh atrocities by their intelligence forces and military, directly or via proxies, in Yemen, Libya, and Syria, with, no doubt, many more places to come. If the understanding of the al-Q¯a’idah phenomenon has been riddled with hyperbole and hysteria, so too notions of the optimal way to respond. If al-Q¯a’idah was/is really an organization in some coherent and corporate sense, the optimal strategy might have been to decapitate and incapacitate it by military and legal (including financial) means. Its leadership could be neutralized, its cadres incarcerated, its terror treasury seized. A single, well-aimed blow ought to do much of the trick for the first, while a few mop-up operations took care of the rest. On the other hand, if, as it has become increasingly popular to believe, it was/is really an informal network (whatever that means) or even a network of networks (compounding the confusion), the

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a­ pproach might have been to round up its adherents, cell after cell, in a series of targeted strikes over time. That might require, in addition to selective and short-term military action, longer-term vigilance and transformation of the legal environment (mainly by reducing rights to due process and assembly, plus massive interception of electrical and electronic communications) to permit the forces of “law and order” to do their job. But what if al-Q¯a’idah, if it existed as anything except an ex post construct in the minds of those struggling to understand things well outside their immediate experience, is really just a brand name adopted by a set of spontaneously formed grouplets with largely local roots and therefore prompted by largely local grievances? What if these grouplets share not so much a coherent ideology but a set of somewhat similar grudges and a very similar propensity to express them in acts of sometimes gratuitous and indiscriminate violence? If that is true, what is the solution? Is the problem susceptible to any general approach, or is it best left to local actors to resolve in accordance with local conditions? Would that also suggest that, once the local conditions start to change, the problem, provided it was successfully contained in the short run with normal law-enforcement methods, might well go away by itself in the long run? These seem difficult questions, indeed. To answer them, though, those who wish to understand how certain groups in the Middle East can use theopolitical faith to rationalize acts of seemingly gratuitous violence have no need to hire anthropologists to ruminate over al-Q¯a’idah shards from the Tora Bora caves while Israeli experts on “Arab terrorism” comment empathetically on primetime T V. It suffices to take a serious look at events strictly at home. Three years before the Nairobi and Dar es Salaam bombings, and six before the 2001 tragedy at the World Trade Center, a truck loaded with ammonia fertilizer laced with racing-car fuel exploded to rip apart the federal building in Oklahoma City, killing 169 people.4 Although the usual fingers quickly pointed to the usual Middle Eastern suspects, especially Saddam Hussein – since Usama was not yet a media star – the USA ’s worst incident of domestic terrorism to that date turned out to be a strictly homegrown affair. Yet perhaps it had a spiritual if not a political affinity to events in the Middle East. It did occur at a time when “Christian fundamentalism” was spreading rapidly across the country and when groups of conspiracy-addled gun-nuts citing Biblical justification were r­ obbing

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banks and armoured cars, running phony religious charities, and staging bombings and shootouts with federal authorities, particularly in the Midwest, against a background of foreclosed farms and boarded-up shops. Was it possible that the heady mixture of political alienation, material deprivation, and theological incitation, which from time to time leads to an explosion, literal or figurative, in the Middle East could be as American as a pre-Thanksgiving turkey shoot – and also claim a large number of innocent victims? True, Mohammed Atta, the architecture student presumed to have been operations chief for 9/11, was no farm boy – but neither was Timothy McVeigh. bitter harvest

The Midwest had seen hard times before. The worst had been during the Great Depression, when catastrophically low commodity prices swept the region like a financial dust storm. Then nature responded to ecologically disastrous agricultural practices by severe drought in an already dryland area and by high winds that scooped up millions of tons of topsoil, dumping it as far away as New York and Washington, not exactly places known for their intense cultivation of cash crops. The Midwest was rescued partly by the New Deal farm-subsidy system (which guaranteed revenues high enough to cover costs) and much more by World War II (which reduced the farm population while it drove up demand for produce). After the war, the area benefited further when the US, in economic competition with the USSR, began to dump abroad surplus grains as “food aid.” The result was to promote consumption of wheat in former rice-eating areas, undercut indigenous farmers, and subsidize the emergence of corrupt pro-USA elites who got rich distributing US agroproduce. This was more than just another taxpayer subsidy to big US grain companies. Under the terms of the program, grain, usually from US government stockpiles, was sold cheaply to governments of poor countries who paid by depositing what was due not in US dollars but in their national currency into local bank accounts from which the US could draw to buy allegiance or plot mischief as mood or exigency warranted. Meanwhile, in the US, huge amounts of chemical fertilizers and increasingly lethal pesticides caused output to grow (temporarily) so rapidly that the US soon began paying farmers not to cultivate.5 That anomaly fed the backlash. During the Red Scare of the 1950s, the Republican Right took aim at the legacy of Franklin Roosevelt.

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Among their demands were the dismantling of the farm support system. Because of the political power of farm states, the supports remained largely intact – for a while; by the 1970s, they seemed irrelevant. Following major US sales to the U S S R, grain prices shot up; and the US government, along with commercial banks, began urging farmers to buy more land and to invest in fancier equipment to increase further their level of output – and their load of debt, a rather striking prelude to the bank-stoked house-purchasing mania of the next couple of decades. Market demand relieved the US of the need to stockpile, and former food aid programs based on cheap quasi-commercial sales shifted toward emergency projects to feed the acutely hungry in crisis situations. Simultaneously, dramatically increased profits for big grain companies allowed them to diversify into all aspects of upstream processing. For a time family-farm prosperity disguised the underlying trend toward greater corporate power. Then, after 1979, when prices and interest rates reversed trends and began shooting up, the bottom fell out. At much the same time that the deindustrialization of the Northeast began, the Midwestern economy, its farms, and the smalltown businesses dependent on them entered a major crisis, exacerbated by cuts  in farm subsidies. Unserviceable debts, escalating costs, and ­unpayable taxes led to a wave of foreclosures, while the base of US agriculture increasingly shifted from the family farm to the agro-­ industrial firm. Surviving farmers were stripped of autonomy to henceforth labour as de facto serfs producing raw material (assembly-line chickens, steroid- and antibiotic-laced beef, and genetically modified grain) for a handful of giant corporations. The burgeoning fast-food industry could then shove the resulting agro-chemical sludge in ever-larger helpings down the maws of consumatons who responded by increasing steadily in numbers and girth.6 Appeals from farmers for government help were to no avail – given demographic shifts, the Midwest was more important to politicians as a source of electoral slush funds from expanding agri-business corporations than as a source of votes from a shrinking share of the national population. The result was a dramatic rise in suicides and a harvest of new recruits for right-wing rural insurgent groups that had already taken root in Midwestern soil.7 Seeds of the “rebellion” had actually begun to sprout the decade before with a minor outbreak of publicly proclaimed tax evasion on the part of a few right-wing libertarians, their leaders no doubt

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quoting Thomas Jefferson in his pre-presidential, pro-rebellion phase. Run-ins with the IRS gave the “movement” its first martyrs. As the 1970s dawned, others joined largely spontaneously, bringing their own favourite causes like opposition to gun control or to abortion, the first setting the stage for later shootouts with the Bureau of Alcohol, Tobacco and Firearms, the second preparing the way for future bombings of abortion clinics and the murder of participating physicians. Social conditions certainly seemed ripe for trouble – tensions from the 1960s race riots and the Vietnam War still lingered; federal politics was wracked by scandal; inflation accelerated; unemployment rose; real wages stagnated; and the wily Orientals of the “oil cartel” seemed intent on destroying the economic foundations of some concoction that would hardly please local residents called JudeoChristian Civilization. Moderating the impact of these forces was the fact that throughout the 1970s farm prices were high and interest rates reasonable. So the rural community as a whole continued to till the fields, wave the flag, and curse the A-rabs. By the 1980s, however, with the dual whammy of falling prices and rising costs, discontent had turned ugly. The Radical Rural Right (R R R ), sometimes using shallow religious rationalizations for violent political initiatives, moved from mouthing slogans to open confrontation with both the federal government and what seemed to them (with considerable justification) an exploitative economic system. white hoods?

There had been plenty of precursors to articulate the grievances of those in the rural areas who felt politically and/or economically disenfranchised. What these groups often had in common was a racist philosophy and strong opposition to more central government control. The Ku Klux Klan was the most notorious. Yet, far from a widespread organized conspiracy, the original KKK began when six young Confederate veterans created a club modelled on a college fraternity with absurd initiation rituals and vows of secrecy. Meanwhile, across the South, opposition to Reconstruction had already bred a series of local vigilante groups who chased off black freeholders and sowed terror, often on behalf of white landlords, among black rural labourers and sharecroppers. These groups acted as well as extrajudicial law-enforcement agencies to punish alleged crimes by blacks, the

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great majority of which crimes, if they existed, seem to have been petty thefts driven by economic desperation. Some of these vigilante groups modelled themselves formally on the KKK, with its strange uniforms and vows of secrecy. Although there was soon a token KKK “leadership” structure headed by an ex-Confederate general, most klans were set up and run on a strictly local basis; and many adopted the name without even token affiliation with the “organization.” Some acted, as had their vigilante predecessors, as extralegal enforcers; some specialized in intimidating voters who might be tempted to vote Republican (how the political world has changed!); some even acted as muscle to protect moonshiners from federal revenue agents. The only things they really had in common were resentment of federal authority, including taxes that were markedly higher than in the pre-bellum South, antagonism to black emancipation, and the paraphernalia pioneered by the original set of jokers, some of whom came to view their namesakes with a jaundiced eye.8 A century later something similar took shape, accompanied by the same misunderstandings of the structure and operations of those involved. Although depicted in later scare stories as a tightly knit interstate conspiracy, Posse Comitatus and its successors were less an “organization” than a set of informal grouplets. These were linked mainly by a (more-or-less) shared critique of the US political and economic system sanctified by an idiosyncratic reading of the U SA ’s two most sacred texts: the Constitution, with its original Ten Amendments; and the Bible, with its pristine Ten Commandments. Although no doubt some “members,” particularly in leadership roles, used these texts selectively to rationalize political action, others no doubt made a genuine attempt to understand their tribulations in terms of divine will and to respond accordingly, particularly if God was telling them to forget all this effete other-cheek stuff and to hit back hard. Just as radical Islamists hold to quite a distinct theopolitical creed than the great majority of Muslim fundamentalists, so too the beliefs of Posse Comitatus types were/are very different from those of mainstream Protestant “fundamentalists.” Since to mainstream Christian Rightists the US itself is a divine construct, they do not seek to discard the founding principles of the US or to overthrow its political institutions but merely to return them to their allegedly spiritual roots, something that would be quite a surprise to all the Deists and Freemasons who wrote the US Constitution and guided the for-

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mation of its governance structures. Orthodox Christian Rightists also regard Jews as the (temporarily) chosen people and the rebirth of Biblical Israel as the first step toward the glory of Armageddon, when Jesus will vanquish forever Satan’s Islamic hordes. By contrast, Posse Comitatus and some other R RR groups follow the “Christian Identity” faith. This holds the US to be the Promised Land and the White Race (of Northern European origin) to be the Chosen People. Jews, by contrast, are the seed of Satan: they spend their time plotting to dilute the purity of the White Race by encouraging them to crossbreed with inferior coloured peoples and by financing and training Blacks to take over the urban centres.9 Posse types, like most Identity followers, combined religious belief with worldly concerns. As survivalists, they stored not just weapons and ammunition but also freeze-dried and nonperishable goods to prepare for Armageddon or federal forces, to the extent the two could be differentiated. Unlike mainstream fundamentalists, Posse adherents and their R R R fellow-travellers rejected the legitimacy of the existing political process.10 Instead they shared with radical political Islamists the (often hard to refute) view that the “justice” system was, at best, corruptly biased in favour of the wealthy and/ or, at worst, simply another tool in the hands of a repressive state. This led R R R groups to create alternative legal institutions premised on the primacy of community will and of local authority over other levels of government. This is similar to how Egypt’s al-Gama’a alIslamiyya, for example, tried to establish its own Islamic mini-state in a Cairo slum and to finance it by mandatory levies posing as charitable donations called for in the Qur’a¯ n, until army tanks brought the group’s aspirations to an abrupt end, with the surviving leadership rotting in prison. (During the brief Egyptian Spring – more like a surprise mid-winter thaw – survivors were pardoned, later to run off into the Sinai to join a guerrilla war against the new military dictatorship.) In keeping with their spiritually similar doctrine of local sovereignty, Posse followers and similar grouplets refused to use ID cards or licenses issued by the government; and the various factions attempted to establish “sovereign” entities ranging in size from townships to entire states with their own legal systems. The result was a series of “Christian Common Law” courts set up to dispense a rough-and-ready form of justice based on a mishmash of Biblical text, Constitutional fundamentalism, and old-fashioned lynch law.

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Posse Comitatus and its successors also focused their anger and energy on denouncing and defeating the tools of economic exploitation deployed against Christians by the Money Czars. If anything represented to them a black year, it was 1913, which saw the birth of both the Federal Reserve and the income tax. The first they viewed as a private monopoly presiding over a financial system based on usury and phony (paper) money – they recognized only gold and silver as legal tender.11 The second they deemed simply unconstitutional. Together these twin institutions functioned (along with the cartel of big agro-business companies) as instruments of a Jewishled international conspiracy whose objective was to economically enslave Christian peoples by stripping them of control of the land. Thus, in a vague way, the R R R also shared with radical political Islam notions of Zionist plots – although Israel’s scorched-earth campaigns in Lebanon and no-earth campaigns in Palestine give to the denunciations of insurgent Islamists more superficial credibility than hallucinations about a Jewish One World Government conspiracy could ever confer on the USA ’s Radical Rural Right. Posse’s reaction to the threat was more than rhetorical. Posse members would try to block farm tax auctions and disrupt foreclosure sales, while intimidating and harassing town clerks. Some moves were more pre-emptive in nature, particularly with the fiscal and banking systems.12 To avoid the scrutiny of the I RS , Posse adherents worked across several states, through barter houses whose membership lists were confidential. This permitted members to convert cash into silver bullion and gold coin without receipts or records. Posse experts ran seminars on how to reduce apparent income by devices like bogus family trusts, to inflate deductions, and to get off the tax rolls altogether. They also deployed faith against the demon of the income tax. Such a blessed union of the sacred and the secular was personally embodied by the Archbishop of the Life Science Bible Church “linked to” Posse Comitatus. He spent two happy years selling ministerial credentials and the tax exemption that supposedly went with them for anywhere from $1,000 to $4,000 a hit before being imprisoned in 1981 on twenty-one counts of tax fraud. The point of Posse tactics was not really to win but rather to create an example for others on the premise that, while the “system” can punish a few transgressions, it will crumble if faced with a massive tax revolt. Their pamphlets and seminars advised those facing litigation to defend themselves (since lawyers tend to make deals at

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the client’s expense) and to flood the court with challenges based on their reading of the US Constitution. Apart from insisting that the income tax is unconstitutional, they could make a Fifth Amendment objection – that filing tax returns is an act of self-incrimination. Finally, they were advised to insist on trial by jury, which would give them an opportunity to propagate the message and to find a more sympathetic ear than they could expect from judges. Some tactics were more aggressive. One was to file forms telling the IRS that certain sums had been paid to certain people – usually judges, law enforcement officers, or other IRS agents – to trigger tax investigations of the targeted individuals. They would similarly file phony liens against the property of public officials, judges, and tax collectors to impede property sales and wreck their credit ratings. Since the monetary system, with its usurious banks and paper money, was as repulsive as income tax, another tactic was to print phony money orders and cash them at banks or use them for payment at stores – provided they could find tellers or sales clerks sufficiently somnambulant, sloppy, or stupid to go along. Adherents of the Posse creed would also draw cheques on nonexistent bank accounts, collect the cash, then disappear before the scam was uncovered, something possible only in a country with a multitude of small banks that jealously guard their independence to the point of refusing to crosscheck with their competitors. Posse followers would create other types of paper purporting to be federal government-issued bonds, either attempting to cash them or, more commonly, use them as collateral for loans. In 1989 the F BI arrested a person whom it claimed was Posse’s “director of counter-insurgency” in a scheme, so the agents said, to counterfeit US money, exchange it abroad for bona fide foreign currencies, bring the foreign exchange home, then convert it back to US notes to finance paramilitary activities. Posse was not alone even in the early years. For example, The Covenant, the Sword, and the Arm of the Lord (CSA), founded in 1971 by a former “fundamentalist” preacher, was a paramilitary survivalist group with its own settlement near the Arkansas-Missouri border, where, convinced that US society was facing economic collapse, famine, rioting, and war – notions that today might gain a lot more credibility than at the time – the group stockpiled arms, food, and survival gear and trained in the use of weapons. The main point of the settlement, the group insisted, was “to build an Ark for God’s people,” apparently so they could float their way to survival during the com-

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ing upheaval. The group also allegedly set fires in a rival church and a synagogue and plotted to blow up a natural gas pipeline. To obtain resources, its leader reputedly instructed members to steal, using as his inspiration Biblical stories of how the ancient Israelites plundered the tents of the Philistines, ancestors of today’s Palestinians.13 The “hay day” (so-to-speak) of Posse Comitatus was probably the late 1980s, after which it declined, perhaps partly because of successful prosecutions, probably more because of competition. The ongoing farm crisis spawned an array of other “organizations” – We the People, the Farmers’ Liberation Army, the Aryan Republican Army, the North American Freedom Council, the Silent Brotherhood, the Christian Patriots, the Family Farm Preservation, the National Freedom Movement (Freemen), the United Tax Action Patriots, and more. Like Islamic insurgents, these constituents of the Radical Rural Right operated in isolated grouplets. Security concerns alone would have dictated minimization of operational ties; ego and paranoia pointed in the same direction. Their interaction took the form mainly of sharing political ideas rather than the means, financial or logistical, to put them into action. What they had in common, apart from the fact that core members had perhaps been at the losing end of a struggle with either the I R S or the banks over ownership of property, was a more or less shared set of political and economic grievances and a general pattern of anti-government actions.14 Other groups reproduced Posse tactics. The Montana Freemen held seminars for people from across the US to hear about phony liens.15 Digital technology greatly facilitated counterfeiting money orders that, adherents were told, could be used to make deposits, settle debts, or buy merchandise. The notion that they were committing fraud was hardly a deterrent to those who felt that they had been on the receiving end of legalized robbery through the tax and credit system. Anyway, since financial instruments normally issued by banks were not backed by gold or silver, they were already fraudulent.16 One group created its own financial institution, the Common Title Bond and Trust, to issue “sight drafts” to members and therefore provide them with an ordained legal tender; one of their ministers ended up in jail for trying to use the drafts to buy farm machinery.17 Also in the Posse spirit, members of the Montana Freemen produced fake $50 bills. Some merged economic with military action by holding up banks and armoured cars, though the frequency seems to have been exaggerated. For example, the Aryan Republican Army was accused

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of “at least” twenty-two bank robberies in several states during the 1994–96 period – not bad for a group that consisted of six white supremacists. Reputedly the take from some raids was considerable. For example, once, members of the Silent Brotherhood were said to have raked an armoured car with machinegun fire and made off with $3.6 million. Subsequently the group “treasurer” instituted a bonus system; and, so the story goes, the group was so flush with cash that, by the late 1980s, it supposedly paid scientists to develop weapons of mass destruction – a tale with as much credibility as similar charges against Usama bin L a¯ den.18 Such a context – genuine economic hardship combined with thundering fantasies of theologically sanctioned political vengeance – nurtured Timothy McVeigh. But it would take something quite different to transform him from just another “guntoting redneck” (if he ever was) into a mass murderer.19 g u l f wa r s y n d r o m e ?

David Koresh and his Branch Davidians were an offshoot of the Davidian Seventh-Day Adventists (themselves the result of a split with the mainstream Seventh-Day Adventists who had previously diverged from more traditional Protestants by accepting core beliefs of Messianic Judaism). They had holed up in their Waco compound to await Armageddon, in the meantime helping their polygamous leader to follow the Biblical commandment to be fruitful and multiply. Aside from an aversion to taxes, the “cult” didn’t show much interest in confronting the federal government – it just wanted to be left alone. Its members betrayed a fondness for guns; they were, after all, living in Texas. So whether by coincidence or design, the group found itself in the sights of the Bureau of Alcohol, Firearms and Tobacco, an agency that had few friends anywhere on the political spectrum, just before its director was due to appear before Congress to beg for more money – perfect fodder for another grand conspiracy theory confounding coincidence with causation. Federal agents had already levied charges that they stockpiled illegal weapons at Koresh and his “cult” – why they were more deserving of a term commonly used, in defiance of its proper meaning, to deride and demean than any other fundamentalist faction was never clear. Yet apparently all had been legally obtained, which was not very difficult to do considering their Texas location. Besides, gun charges are like drug offenses – handed down selectively out of ­political conven-

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ience, including the need to rationalize actions taken for other reasons. The accusations also included trafficking in psychoactive substances, although Koresh was known to have proselytized against them. The importance of this last accusation was that it permitted the federal agents to invoke their Drug War right to call on the army for material assistance. Hence, after the BATF bungled its own raid, leaving four agents dead, FBI agents with military support laid siege. They shone huge floodlights continuously on the compound, woke the inhabitants at dawn with blaring music and amplified shrieks of rabbits being slaughtered, cut off electricity and water, and drove tanks around the complex to crush automobiles, smash bicycles, and tear up the gardens in which the cult grew its own chemically untainted food – the Davidians had been in the 1950s among the postwar pioneers of organic agriculture. Anyone leaving the compound was publicly arrested. Finally they pumped in tear gas and launched an armoured assault during which the compound burned down. In total seventy-six people were killed, all of the children and most of the adults inside – some died in the flames, some were killed by asphyxiation, others were hit by FBI sharpshooters. (The FBI afterward claimed that some of the victims had shot each other.)20 Coming shortly after the Ruby Ridge incident, in which federal agents gunned down the wife and son of a reclusive white supremacist who had previously refused their invitation to infiltrate and inform on one of the militia groups, it was reputedly the last straw for Timothy McVeigh – though he didn’t seem to have been exactly hesitant about looking for that pretext.21 The U S A ’s political dissidents love to hatch, embellish, and circulate arcane conspiracy theories. Every few years, for example, passions get renewed around the Kennedy assassination. The conspiratorial mindset usually includes the insistence that Great Men must have great, or at least convoluted, deaths. The possibility that John F. Kennedy might have been killed accidentally by a bullet from one of his own security guards – the Secret Service agent reputedly stumbled backward and discharged his weapon when the car in which he was riding suddenly accelerated in response to Lee Harvey Oswald’s initial shot22 – would, if it had any possibility of truth, be politically too embarrassing for the government to admit in public. This was particularly the case if it also happened that Kennedy was unable to duck after the first shot because the previous night’s sex orgy had injured his back and forced him to wear his brace.23 In any event, such an explanation would be dismissed out of hand by the Assassination Cult as just more government disinformation.

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The Oklahoma bombing provided similar opportunities: instant “experts” contested the explosive properties of ammonia fertilizer; while others claimed that the atrocity was hatched by the government itself. All this anticipated by nearly two decades critics of the conventional explanation of 9/11 who insisted, based in part on an examination of the original specifications for the World Trade Center buildings, that the job was really a “controlled demolition” ordered by the government to advance, among other things, its plans to invade Iraq and seize its oil. (A more believable alternative scenario might have focused on the nature of the 1970s New York construction industry – it probably set new lows for skimping on materials and scamping on construction.) On the other hand, if 9/11 skeptics looked for domestic rather than foreign-based explanations, the Oklahoma bombing several years before allowed the usual gang of Islamophobes to leap on the public stage to insist that the atrocity was the product of some foreign plot, probably Middle Eastern in origin. After 9/11 came further claims that Terry Nichols, who had assisted McVeigh, had visited the Philippines and met with Ramzi Yousef, architect of the first World Trade Center attack – allegedly Yousef, commonly portrayed as a bin L a¯ den acolyte although Usama claims they had never met, had shown Nichols how to successfully explode an ammonium nitrate bomb, information that used to be available cheaply from “libertarian” bookstores, easy to dig up in any decent public or university library, and freely accessible off the internet.24 Yet, the ease with which McVeigh was apprehended after the event was a tribute not to the skill with which foreign conspirators set him up to take the fall but to his own inexperience – like driving around without a rear license plate. That he was so easy to locate and arrest may have also reflect the fact that he and his co-conspirator really did act without the help of some covert organization of religiously inspired fanatics with supposed Terror Treasuries overflowing with the proceeds of robbery, extortion, currency counterfeiting, and financial fraud.25 less than meets the eye?

Although the Radical Rural Right committed its share of newsworthy crimes – including bombings and assassinations – ultimately, there was less to it all than met the eye, unless the eye had a propensity to peer through lenses tinted by personal, professional, or political ambition. Despite lofty and/or frightening names, most groups were little

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more than legends in their own minds; some were out-and-out scams; and a few took their religious ethics as a little more than a pretext to redistribute fellow citizens’ private property. Still, both police and others with particular agendas had no qualms about turning the phenomenon into a formal organization with a defined core membership in the “thousands” to which could be added up to “ten times” that number of “supporters” all “linked” in one grand conspiracy.26 Not only were there really no organizational ties among different groups, there was also no financial relationship between them, much less an overall “financier of terrorism.” Early estimates of the amount of the monetary resources the various RRR grouplets could command also turned out to be inflated – for the usual reasons. The F BI once claimed that the National Commodity and Barter Association, “linked to” Posse Comitatus, served more than 20,000 people and laundered up to $500,000 per day.27 Yet Posse itself never had more than a few thousand “members,” mostly loud-mouthed thrillseekers with little to launder except their shirts. When offices of the barter house were raided across several states, the police seized precious metals worth no more than two million dollars, less than the take from a reasonably good jewellery store heist. Nor was the raid exactly a brilliant legal success. A judge held that the federal warrants were too broadly defined, thus impinging on freedom of association, and ordered the return of seized bullion and documents. However, six of the defendants were eventually found guilty for laundering money on behalf of tax protestors, and their appeal was denied.28 Furthermore, far from threatening the financial foundations of the state, the impact of all the barter-house deals and tax seminars and phony paper was trivial. When some “members” of the Montana Freemen (AKA Silent Brotherhood) tried to put fake $50 bills into circulation, places in the area, out of fear of counterfeit, refused anything bigger than a $20. Individuals who issued phony bank instruments were almost always acting alone, not out of desire to bring Wall Street to its knees but out of personal financial hardship. Only a small amount got into the financial system where it could pose only a minor nuisance to a few small institutions. Much the way police hatch sting operations, bait them with government money, then wow the public with tales of how they cracked great criminal (or now, more commonly, Islamic terrorist) conspiracies, so probably with RRR financial frauds. The FBI no doubt infiltrated some groups (or it could be accused of failing to do its job) and at least once provided

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perpetrators with a computer and copier (the kind of stunt an earlier generation of judges might have excoriated as illegal entrapment). Even the notion of a mass armed confrontation with the state turned out to be as genuine as the money orders and property liens. There were some isolated shootouts, but apart from Waco, during the only major standoff of the era, the so-called survivalists ran out of food and surrendered quickly. Charges against groups, too, turned out to be as inflated as their financial resources and numbers. For example, The Covenant, the Sword and the Arm of the Lord was easily broken in 1985, after an F B I raid in which “hundreds” of weapons were seized, along with supposedly large amounts of cyanide; and the group’s leaders were tried and imprisoned – for firearms violations, not for plotting to poison the water supply of nearby cities, as the initial claim went. Overall, during the Posse era, the amount of anti-government violence, while it certainly claimed victims, was minor compared to the 1960s, with its anti-war demonstrations, race riots, and political assassinations. What blew it out of all proportion was its media value when there was little else sufficiently dramatic to frame endless Pizza Hut and Wal-Mart advertisements, along with the unfortunate propensity of law enforcement to cry “wolf” at the sight of the occasional rabid field mouse. Granted, after the F B I proclaimed victory over groups like the Posse, by the early 1990s the alarm bells began to ring again with the apparent proliferation of “militias,” some of which shared personnel with defunct R R R groups. The Militia Movement was likely greater in total numbers than all R R R groups of the 1980s. But relatively few members spent their energy and ammunition blasting the doors off of armoured cars. Most seem to have been simple gun nuts who liked to run through the woods in army surplus combat fatigues pretending that the terrified rabbits that they blew apart were reincarnations of the Viet Cong – or had been dropped down to Earth by black helicopters as the advance guard of One World Government forces. If religion played any role in their political lives, it was more likely the kind of Bible-thumping fundamentalism that prayed for the ingathering of Jews to Palestine and cheered loudly whenever Congress voted to give ever more money and ever more lethal weaponry to Israel. In any event, that era’s only really significant act of anti-governmental mass violence (as opposed to the occasional shootout with state troopers, local sheriffs, or Park Rangers) had nothing to do with the Militia Movement per se or, for that

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matter, with the Radical Rural Right in general, except perhaps for a shared mindset of economic disenchantment and political anger.29 So it was with Timothy McVeigh. Far from a Protestant ultra-­ fundamentalist, he was a lapsed Catholic who accepted Catholic rites again just before his execution, while members of RRR groups usually wielded their Bibles like blunt instruments – and would likely explode with rage at the very idea of a Catholic priest invited to their last moments on Earth. Reportedly McVeigh was even prochoice (or, more likely, just indifferent), while at least some in the R R R were rabidly, sometimes murderously, anti-abortion. He did briefly hook up with the Ku Klux Klan, purchasing a White Power T-shirt at one of their shindigs to protest the Black Power T-shirts he saw around his military base. But apart from that he showed no interest in race war, even denouncing the racism in (though otherwise expressing an appreciation of) the notorious Turner Diaries, virtually a parallel bible for the R R R . Most RRR types were poorly educated and perhaps a little on the slow side – McVeigh, based on his letters and statements, seems to have been intelligent, alert, and articulate, even if his judgment was criminally flawed. The closest he came to the rhetoric of the R R R was not his gun fetish – something that just made him a modern all-American boy, to the point of winning a prize as top gunner with a 25mm cannon when he was in the army. Rather it was his insistence that “taxes are a joke … More taxes are always the answer to government mismanagement.” No doubt a period of compulsive gambling with resulting debts, compounded by a government demand that he return $1,058 in overpayment of his military salary, deepened those convictions. But then a lot of people from sharply different ideological perspectives are today coming around to similar views. It is a rather long stretch from being an anti-tax militant to a mass murderer who could write while in prison facing the death sentence: “If there is a hell, then I’ll be in good company with a lot of fighter pilots who also had to bomb innocents to win the war.” That analogy affords another crucial clue to his thinking. The reason McVeigh chose the federal building as a target was likely not because he was angry that the government took too much of his money in taxes – given his economic position, it is doubtful he had to pay any – nor because it was the place from which Black Helicopters would be launched in a military takeover of the US. At the time R R R types were ridiculed for that belief; but, given the spreading use of domestic drones, probably a lot of them

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written off as paranoid nut-bars are today giggling into their moonshine. Rather, to McVeigh, Waco had meant that American police had become effectively an army of occupation – a view that recent Occupy movements ousted from public parks may also view with considerable more sympathy. The building he bombed was de facto the police’s local headquarters, or at least a reasonable stand-in. As to the building’s daycare centre, he probably told the truth when he said he had not known it was there. However, his attempt to rationalize what he did by comparing it to the US military knowingly bombing similar facilities in Iraq seems a less-than-convincing bid for a more positive epitaph. Nor, during that troubled era in the Mid and Southwest US, was there any conspiracy to finance a major act of domestic terrorism, including the Oklahoma City bombing. None was necessary. Even the Oklahoma City blast cost only a few thousand dollars, maybe less. One possible source of outside financing speculated on at the time was the proceeds of the robbery at the home of an Arkansas gun dealer – whose cache of cash, along with gold, silver, and jewels, seemed to indicate that he at a minimum shared McVeigh’s rather strong views about government profligacy. In reality, it seems that McVeigh and his partner in the bomb plot financed it all out of their meager back pockets. Rather than a grand conspiracy fired up by radical groupthink and financed by foreign terror-dollars, what was at work were the politics of reaction on the part of a disgruntled, frustrated loner and his buddy. All the ex-post efforts to blame it on Saddam or Usama were obviously either opportunistic or just infantile. Yet, oddly enough, the real roots of McVeigh’s disillusionment with the US government seems to have been planted not with Waco but with the same events that turned Usama bin L a¯ den from US ally to hardened enemy. During the 1991 war against Iraq, bin L a¯ den was outraged by the presence of infidel troops in Saudi Arabia, allegedly to protect against an invasion everyone else knew was not on Saddam Hussein’s agenda. Once the war began, McVeigh, then a good soldier, found himself aghast at the atrocities committed by the US against helpless Iraqis. Particularly appalling, so he claimed, were the mass slaughter of Iraqi conscripts fleeing Kuwait and the scorched-earth campaign of the “allied” forces, which McVeigh later compared to Nagasaki and Hiroshima. That seemed the fuel for the fire; the spark that lit the fuse was his outrage at the Waco massacre. The tragedy of Oklahoma

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City, including the death of nineteen children in a daycare centre, followed. But then, stripped of all the politically convenient hyperbole and laid bare for critical scrutiny, almost all the great “terror” events in the Middle East would likely look much the same. What a dissection of Oklahoma City means is that, in a backhanded way, Middle East and Midwest really did have something in common. The resemblance also shows up in another surprising way. Far from the harbinger of a new and escalating round of RRR or militia violence, the Oklahoma City bombing took the wind out of the sails of an already becalmed movement, much as public outrage over 9/11 probably would have led across the Muslim world to a revulsion against mass terror tactics and extinguished most sparks of sympathy for violent political Islam in the region had the US government not chosen to pursue a course of action guaranteed to give the perpetrators some sort of twisted legitimacy. Whether that was through short-sighted stupidity or long-term calculation will remain a subject both serious historians and conspiracy nuts will debate for decades to come.30 There is one way in which there was an enormous difference between the Midwest’s Radical Rural Right and Middle East’s Radical Political Islam, namely the USA’s official response. The people who held up banks and armoured cars were depicted as criminals, not as Pistol-Packing Protestants. Financial shenanigans were met not with a draconian expansion of the anti-money-laundering laws but with a quiet tightening of enforcement for standard fraud offenses. No one suggested that the Turner Diaries, undoubtedly read by far more people than the so-called al-Q¯a’idah instruction manual, justified the FBI to secretly comb library records or scan online retail book sales. Most remarkably, the death of 169 people in Oklahoma City lead to neither the mass incarceration of militia members in Guantánamo concentration camp nor a decision to carpet-bomb Montana or Washington State, birthplaces of the most violent of the new Christian Identity-based groups. In fact when a member of one of the groups was caught in Texas late in 2003 with a sodium cyanide bomb (a genuine weapon of mass destruction) along with a hundred other explosives, illegal weapons, half a million rounds of ammunition, and plenty of white-supremacist anti-government literature, more than a decade later the White House has still not gotten around to launching an invasion of the Lone Star state.31

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8 Brand-Name Terrorism, la Crise d’Octobre, and Lessons for a Post-9/11 World

Despite all the claims that “the world changed” on 9/11 – something the world actually has a propensity to do with every passing second – the West’s first postmodern War on Terror was actually declared some three decades before that event by the government of another rather more obscure country only a short distance north of, but a far cry away from, American minds. There, in a remarkable portent, civil society was reputedly put under siege by interlocking terror cells in a conspiracy inspired by foreign ideologues and financed partly by crime, partly by secret contributions from hostile countries. The concerned government responded, much as did that of the US after 9/11, by deploying its armed forces (albeit to patrol the streets at home rather than to drop bombs on towel-heads abroad) and by invoking measures similar in spirit to the Patriot Act. These were directed not just against the actual perpetrators of terrorist acts but also against those who provided material support, financial or logistical, or who simply proselytized in favour of the cause de jour. In that instance the problem was not ultimately resolved by military intervention or extraordinary legislation, though the army and politicians were happy to bask in the glory; rather, the solution was routine police work. Public outrage at the terrorist acts in the short run together with a profound change in underlying social conditions in the long run sufficed to prevent any recurrence, at least until now. vive le québec libre!

On 16 October 1970, after two political kidnappings in Montreal, Pierre Trudeau, prime minister of Canada and a man renowned as a  passionate defender of liberal values, proclaimed, with the near

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unanimous support of his parliament, the War Measures Act. It was a piece of legislation dating from 1914, previously used only in the two world wars or their immediate aftermath, for example, to help crush the Winnipeg General Strike of 1919. In effect the entire country, which, but for a small role in Korea in the early 1950s, had been at peace for twenty-five years, was again officially at war. Canada, Trudeau and other senior government figures insisted, was facing an “apprehended insurrection,” the product of a “seditious conspiracy.” Even before the War Measures Act was invoked, the Canadian Army had been sent to patrol the streets of Montreal and to guard certain political leaders in Ottawa. (Others denied military protection protested at the apparent belittling of their status, until they, too, got to pose for their neighbours with a couple of bored soldiers standing on their front lawn.1) After the Act went into force, normal civil rights with respect to things like political protest along with major restraints on police power were suspended.2 The initiating event had been the kidnapping of James Cross, a British diplomat, from his home on Montreal’s elegant Redpath Crescent by a group of self-proclaimed members of the Front de libération du Québec. Their most important demands for his freedom were: the release of twenty-three “political prisoners” (convicted of bombings, robberies, and murders) held in Quebec prisons; sanctuary in either Algeria or Cuba for kidnappers and released prisoners alike; the rehiring of postal workers recently fired by the federal government; $500,000 in gold bars; and the reading over the most popular radio channel of the F L Q manifesto, a hodgepodge of simplistic Marxist slogans and patriotic incantations based on a rather idiosyncratic reading of Quebec’s history.3 At first, responsibility for handling the crisis rested with the Government of Quebec, who, with the support of major opinionmakers, was inclined to negotiate. While the matter was certainly treated as urgent, it was left to the Sureté du Québec (the provincial police) to resolve. Then, convinced that the government was dragging its feet as the cops searched for the hideout and worried that the original set of kidnappers was backing off from critical demands, another group of FLQ “members” who had been in the US, reversed their car and headed home, trying to pick up some weapons en route. Back in Montreal they kidnapped Pierre Laporte, Quebec’s minister of Labour and Immigration and probably the most powerful political

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personage in the province after its premier. In response, the federal government proclaimed the War Measures Act. Some days later Laporte’s strangled body was found in the trunk of an abandoned car. The imposition of wartime emergency regulations subsequently became the stuff of political legend. To staunch federalists it was a shining example of standing firm to face down the radical tide. To separatist leaders, it was a federal conspiracy to thwart democratic mass action. Indeed some, anticipating the spirit of post-9/11 conspiracy theories, claimed that the entire crisis was concocted by the feds who had infiltrated and manipulated the F L Q to produce just such an atrocity in order to discredit legal separatists and pave the way for military rule in Quebec. Although some federalist leaders were certainly happy at what they perceived to be a golden opportunity to deliver a body blow to the separatist movement, the main instigators for the suspension of civil rights seem to have been police forces, both the Sureté du Québec and the (federal) Royal Canadian Mounted Police, delighted to find themselves unshackled from normal peace-time constraints. Under the War Measures Act, the FLQ was outlawed, with even former “members” subject to arrest and imprisonment; it became a criminal offense not just to provide the “organization” with material support, financial or otherwise, or to assist in its communications but to speak publicly in its favour. Even landlords who allowed premises to be used for FLQ purposes could be fined and jailed, though none were. The same punishments could be meted out to members of or sympathizers with other groups who indicated approval of FLQ actions or objectives, or who advocated even in a private conversation criminal activity to achieve political change. Meanwhile police could search without warrant and arrest and hold without bail. They did so with such gusto that, in an unusual departure from the prevailing herd atmosphere, an editorial cartoon in Quebec’s leading English-language newspaper showed federal Minister of Transport Jean Marchand, Pierre Trudeau’s righthand man, holding a Montreal telephone book under his arm and announcing “Nous avons maintenant des listes de suspects.” As always in such affairs, there was an official version (both of the nature of the threat and of the reasons why the government response took the form it did) and a later, considerably more nuanced one. As always in such affairs, too, events are explicable only with reference to the general political environment at the time.

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genesis

During the late 1960s and on into the early 1970s, Western Europe, particularly Italy but also France and Germany, saw the emergence of urban radical groups who resorted to bombings and assassinations of key economic or political figures, with bank robberies, extortions, and ransom kidnappings to finance their activities.4 These troubles had their echoes in the US with the spread of both militant black civil-rights and student anti-Vietnam War groups. Canada, as usual, remained largely immune, with one exception. It was a time of rapid growth of Quebec nationalism. While in the past that sentiment had been safely diverted by ambitious politicians to be used mainly to secure their own power bases or to squeeze more money out of Ottawa, in the 1960s nationalism was combined with demands for social justice and endorsed by a burgeoning population of university students along with a trade-union movement that was flexing its muscles. Soon there were several openly operating separatist movements. The perceived danger to the federalist establishment seemed to increase dramatically when the principal nationalist groups successfully merged under the leadership of dissident veterans of the old-line parties into the Parti Québécois. It pledged to contest Quebec elections, then, if it won, to hold a referendum on sovereignty. Indeed, what brought Pierre Trudeau to the leadership of the federal Liberal Party and then to the prime-ministership of Canada was his visceral opposition to Quebec nationalism in all its forms and his commitment to wrestle the demon of separatism to the ground. In October 1970 he seemed to get his chance. Along with the peaceful, democratic nationalist movement, there had emerged a violent fringe. Throughout the 1960s Quebec saw a series of bank robberies and bombings of political inspiration. Most bombs were amateurish affairs that often did not explode, produced little damage if they did, or hit minor symbols of the federal presence like post-office boxes. But a few were lethal, for example, in 1963 when one claimed the life of the night watchman at a Canadian Army recruiting post. The largest blast occurred in 1968 at the (then overwhelmingly anglophone) Montreal Stock Exchange, the centre, so a communiqué from the bombers read, of capitalist exploitation in Quebec. Approximately twenty people were injured, several seriously. During these years there were other incidental deaths in terrorist actions, for example, in a robbery at a firearms store. But there were

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no political assassinations; and kidnappings were unknown. Canadian and Quebec politicians still thought nothing of wandering about unguarded. However, at the end of the 1960s, things began to heat up. That era saw particularly bitter strikes, especially in construction, into which radical separatists insinuated themselves, although, contrary to the accusations of the authorities and the bosses, more as political profiteers than as instigators. With labour troubles came another wave of bombings. It was still far from the Apocalypse. From the supposed founding of the FLQ in 1963 to the crisis of October 1970, some 200 bombs went off in Quebec, of which an indeterminate number were of criminal rather than political origin. By contrast in the fifteen months prior to October 1970, the US saw 4,300 bombs that killed 43 people and injured 384.5 Then in 1969 F L Q “members” began to debate a change in tactics. Following examples in places like Uruguay, some embraced the idea of kidnapping foreign diplomats as a means both to publicize their cause and perhaps to raise money. While successful police infiltration stymied early plots, in 1970 they were ready – and so was the ambiance. That year the Parti Québécois was challenging federalist parties in a provincial election campaign in which it was expected to run a solid second. In a rising panic, federalist politicians fanned public fears that the Parti Québécois was merely a front for the F L Q , which in turn was portrayed a tool of Communist subversion, usually Cuban in origin. (Cuba, so the story went, was trying to open a second front against the US by stirring up revolution in Quebec.) Early one morning shortly before the election, reporters were invited to the headquarters of Sun Life Assurance, one of the biggest financial institutions, to watch Brinks trucks loading securities ostensibly heading to Ontario. Headlines screamed of massive amounts of capital fleeing Quebec in anticipation of the upheaval that would follow a separatist victory – the incident was subsequently renowned in Quebec history as the “Brinks coup.” The Parti Québécois still managed to receive 23 percent of the vote, but elected only 7 of 104 deputies to the National Assembly, while none of its leaders won in their ridings. Although those results could be imputed at least as much to a traditional gerrymander that favoured conservative rural districts over modern urban ones, anger focused almost exclusively on federalist machinations. Bombings began again, particularly when the election was followed by more nasty labour disputes.

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In the increasingly tense atmosphere, several months before the FLQ “members” who conducted the subsequent kidnappings had actually met to plan their own response to the election, a federal cabinet super-committee deliberated, at the prime minister’s orders, under what conditions the War Measures Act might be invoked. Furthermore, the Quebec minister of Justice had already begun to stoke public hysteria, proclaiming: “We have proof that there are 3,000 terrorists in Quebec, following a line set for them by foreign powers, particularly Cuba. They are financed from abroad.” Soon the plot expanded to include Moscow and Algeria. The temperature rose further after French-language television interviewed in a Palestinian refugee camp in Jordan two more self-proclaimed FLQ members who declared that, while their comrades back home were busy with useless bombings, they were learning the art of selective assassination of political leaders. After the kidnappings all restraint vanished. Federal Transport Minister Jean Marchand repeated to a somber nation: “The most pessimistic estimate is that the FLQ has nearly 3,000 members.” Of course, the minister admitted that there might be some doubt about the exactitude of the figures. But “one thing we know for sure: there is an organization with thousands of guns, rifles, machine guns, bombs and about 2,000 pounds of dynamite, enough to blow up the heart of Montreal.” Having planted firmly the image of great skyscrapers representing the commercial and financial centre of the city crumbling into the dust, the minister went on to invoke the threat of sleeper cells. “They have infiltrated into all the vital strategic places in Quebec.” Others would elaborate that FLQ adherents had wormed their way into the Canadian Army and Air Force, even into the Royal Canadian Mounted Police; that their actions would soon be backed by massive public demonstrations; that they had set in motion a plan for a special provisional government to take over Quebec to lead it to socialism and independence; that they were working in stages according to a formal script inspired by Mao Zedong; even that, according to a hair-raising tale told in the federal Parliament, a Quebec woman had been kidnapped and murdered with the initials FLQ carved in her stomach. In some accounts, too, the amount of dynamite in FLQ hands was inflated to as much as 9,000 pounds or 18,000 sticks, making, combined, a de facto weapon of mass destruction. Indeed, there were even reputedly terrorist training camps in the Laurentian hills northeast of Montreal, apparently so well hidden as

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to never attract the attention of the many thousands drawn regularly to the idyllic beauty of the area’s lakes, forests, and ski hills. These terrorist activities were supposedly guided by a couple of homegrown philosophers of violence whose rantings would have attracted little serious attention were it not for the government’s need to point the finger at purported instigators.6 All of this together served to rationalize not just the War Measures Act but a special anti-terrorist force of 13,000 soldiers and cops under the command of the director general of the Sureté du Québec at a time when active underground separatists numbered perhaps thirty-five.7 As with the al-Q¯a’idah legend three decades later, virtually nothing in the official story turned out to have much relationship to the truth. Simply put, there was no such thing as a Front de libération du Québec. Over the 1960s a succession of groups were created spontaneously, with little connection to each other, except that as one was busted or just broke up, a few still-enthusiastic members might join or form another. The first such grouplet was the Comité de libération nationale, formed in 1962 by four members of the legal separatist group Rassemblement pour l’indépendance nationale. At its peak it had no more than twenty adherents, many of whom soon left to constitute the more impatient Réseau de résistance. The Comité never graduated much beyond writing revolutionary slogans on walls. The Réseau, however, initiated thefts of dynamite and bombings of federal symbols. It divided its mighty ranks of perhaps thirty members into two wings: a political one and a military one with the grandiose name Armée de libération du Québec. The political wing’s most sophisticated terror weapon was the mimeograph machine, the key, members were convinced, to changing the false consciousness of Quebec’s francophone population. The military wing conducted a couple of successful raids on Quebec armouries. Then came its 1963 bombing of a Canadian Army recruitment centre in Montreal, which killed the night watchman. The police had little problem rounding up the AL Q members (full of youthful zeal but hopeless in terms of security) or retrieving most of the stolen weapons, using ordinary police methods under normal criminal law.8 The A L Q was followed at various times by the Front républicain pour l’indépendence, the Partisans de l’indépendence du Québec, the Chevaliers de l’indépendence, and the Armée révolutionnaire du Québec, which killed the manager of a firearms store during a raid, getting its leaders sentenced to death (later commuted to life

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imprisonment). Most of these groups at different times referred to themselves, and came to be referred to by others, as F L Q . Thus F L Q was an increasingly popular brand name that various grouplets could freely appropriate to give themselves an apparent scale, continuity, and organizational foundation that they did not actually possess, or to give the media a way to keep things simple enough for audiences whose main interest was really how well the Montreal Canadiens were doing in the Stanley Cup playoffs. Francis Simard, one of those involved in the Laporte kidnap-murder, described the formation of his particular unit: “We became a group, but without a name or a constitution or statutes. When the time came to identify ourselves, we decided on the F L Q ... We didn’t join a group: we took the name of a movement that had become us.”9 Not only were there an assortment of grouplets, but they lacked agreement on strategy. Some deplored bombings as counter-productive; others lauded them as blows to keep the system off-balance.10 While almost all used trendy leftist jargon, some had a genuine commitment to radical social change, others were simply angry anglophobes. Nor were bombings necessarily the result of a coherently organized campaign. “Waves” of bombings were sometimes the work of single individuals, which stopped when the particular person either was apprehended or simply turned to other pastimes. Even the last set of bombings before October 1970, timed to coincide with a bitter construction strike, was done by one individual who, along with a couple of friends, had put together the Front de libération des travailleurs du Québec, although his “cell” later adopted the FLQ label as well. The two October kidnappings were equally the work not of an organization with a coherent plan into which the kidnappings fitted as a tactical move but of nine people who in turn split into two discordant groupettes, each of which made things up as they went along. When those nine F L Q “members” deliberated the possibility of kidnapping diplomats, five were in favour, four opposed. The five then constituted themselves as the Liberation Cell, so called because of their intent to use their hostage, whoever he or she turned out to be, to force the release of the twenty-three “political prisoners.” (In fact the only two genuine political prisoners, so-called F L Q theoreticians, had already been freed by an appeals court ruling that their earlier conviction had been contrived by the government to punish them for their opinions.) Once the majority had made their decision in principle, but with no designated target, the four in opposition

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decided that their role would be to find money to support the others. How they tried to do so exposed another central myth. Far from being financed from abroad, as the Quebec Justice minister claimed to believe, F L Q actions were paid for from local resources. Nor did the “movement” have a central treasury – each grouplet took care of itself. Militants who had jobs contributed out of their salaries; dynamite and guns were stolen. When their own resources were insufficient, a frequent occurrence since most members were students or unemployed, some diverted the proceeds of bank loans, while others engaged in credit-card fraud – for example, the purchase on credit of goods that were resold for cash to friends. Since this took time and energy for low returns, some turned to bank robberies. When the gang of four headed off to the US, it was to run a scam in which they would sell American Express travellers’ cheques on the black market for a certain percentage of their face value, then report them stolen to get a full refund. However, while they were there, they heard the news of the Cross kidnapping. So they turned around and headed home. Their decision to kidnap Pierre Laporte was made only after they decided that the government was stalling; when they issued their own demands, they added the requirement that the government rehire the fired postal workers, a demand their comrades in the liberation cell had dropped.11 In other words, even though the nine involved in the events of October 1970 had formally met, which many FLQ “members” do not seem to have done, there had been no coordination as to targets and no agreement on objectives. In fact these were subject to radical change on an ad hoc basis – those who grabbed and murdered Pierre Laporte were precisely the ones who had originally dissented from the strategy of kidnapping. Even the financing arrangements were haphazard. Nothing better summarizes this fearful manifestation of “terrorist finance” than the fact that, after adopting the lofty name “Chénier financing cell,” the four who seized Pierre Laporte managed to feed themselves and their captive, and to pay for trips across the city to plant communiqués, only by lifting $60 from their victim’s pocket.12 dénouement

The original kidnapping of the British diplomat had been handled in a cool-headed way, as an important but not exceptional police matter. The premier of Quebec thought nothing of leaving for a state

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visit to the US. Pierre Laporte, the minister of Labour and Immigration (or, as FLQ communiqués rudely preferred, minister of Unemployment and Assimilation), was grabbed on his front lawn while playing football with his nephew, with no police escort in sight. After the Laporte kidnapping, the roof fell in. Senior politicians in the Trudeau government in Ottawa stressed publicly the compelling need not just to combat the FLQ but to reassert federal moral leadership in Québec. This was cheered on, perhaps even manipulated, by the government of Montreal. Mayor Jean Drapeau, an old-fashioned machine politician with a flair for self-promotion, faced a municipal election in which a coalition of social-justice groups was mounting a serious challenge. Their leaders were among those that the police rounded up, along with “subversive” literature in their homes. (In one case the cops seized a copy of Paul Samuelson’s Economics: An Introductory Analysis, the standard textbook used to teach right-wing orthodoxy in North American universities, but did not pick up a copy of Karl Marx’s Capital right beside it.) With the opposition discredited and decapitated, Drapeau’s party swept 92 percent of the vote and captured every city-council seat. While doubtlessly the amateur nature of the campaign run by activist groups only recently stuck together into a quasi-political party played a role in the lopsided victory, there can be little doubt that the politics of fear were also powerfully at work. In the aftermath, the federal government took the opportunity to replace the War Measures Act, which, by definition, could only be used in very exceptional circumstances and for limited periods, with a new, more saleable Public Order Act permitting the government to ban the FLQ or any other association that advocated a change of government in Québec or a change in its political relationship to Canada by violent means. In effect the civil libertarian Trudeau got his wish: to criminalize association and exhortation if it might serve to advance the one political cause he truly detested. The War Measures Act itself was eventually repealed and replaced by the Emergency Measures Act, which, while permitting much the same arbitrary actions, had the virtue of requiring any measures undertaken under it to be vetted under the Canadian Bill of Rights, which did not exist at the time of the October Crisis. Yet neither the War Measures Act nor its successors had anything to do with the end of violent separatism in Quebec. Virtually all of those arrested en masse – including some of Quebec’s best-known

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poets, singers, and union leaders – were released very quickly with not much to complain about except embarrassment, inconvenience, or, at worst, a nasty rap over the head with a telephone book. In fact being one of those arrested during the crise d’octobre became a badge of social distinction in Quebec for decades after. In the aftermath the F L Q itself was rolled up – through ordinary police work. James Cross was safely released. His kidnappers went into exile in Cuba before petitioning to return home, where they served time. Once out of prison, instead of reverting to planting bombs, one of their leaders made a career in renovating houses, including the Montreal home of Canada’s then governor general.13 Pierre Laporte’s assassins, by contrast, were arrested and convicted, to general approval. By killing their hostage they had nothing left with which to bargain and had forfeited public sympathy. Public revulsion also made it much easier for the police to cultivate informants and to infiltrate any remaining grouplets (those who didn’t simply peter out on their own). Even those “theoreticians” who had supposedly inspired and guided FLQ actions spent the rest of their public careers denouncing political violence. Perhaps the only irregular police action came a few years after the events, when a leader of the earlier generation of FLQ militants was assassinated in exile in Paris. The suspicion among his sympathizers was that the murder was done by a hit squad recruited by the Security and Intelligence Branch of the Royal Canadian Mounted Police to ensure that he never carried out an alleged threat to kill the premier of Quebec in revenge for the October events.14 That is probably giving Canadian police forces credit for a ruthless efficiency they were unlikely to possess. That same RCMP managed a few years later to so blunder its efforts to infiltrate the legal separatist movement as to prompt the federal government, or at least give it a pretext, to strip the RCMP of its security and intelligence functions, which were then vested in a new civilian agency. After many years with really nothing to do, the Canadian Security Intelligence Service finally found a post-9/11 raison d’être in harassing citizens of Muslim and/or Arab descent. As to the notion that the federal government, by using the events, could also strike a blow against peaceful separatism, there was a chance to test that hypothesis during the 1976 Quebec provincial elections, which the separatist Parti Québécois won handily. Many who had been sympathetic to the cause in principle but apathetic in practice had been angered and energized by the federal actions. The

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Parti Québécois took several elections since, most recently in summer 2012. Indeed the very victory of a democratic separatist movement, even though it has failed (twice so far) to win a referendum on independence – or, “sovereignty-association,” the term used to try to sugarcoat what may turn out to be a very bitter pill – was enough to ensure that the violent separatism of the so-called Front de libération du Québec vanished from the political scene.15 When a bomb goes off in Montreal today, it is most likely the work of rival biker gangs or linked to the almost comically endemic corruption in the city’s construction industry. Much the same would undoubtedly hold true throughout North Africa, the Middle East, and Central Asia if nature were allowed to take its course. Egregious terrorist acts, in and of themselves, would lead to general revulsion. Indeed, across much of the Muslim world, 9/11 had precisely that impact – until the US government decided to fritter away its moral capital with a set of special atrocities of its own. Any genuine victory by peaceful Islamist movements who practice what they (rather than the IM F and US Treasury) preach would do far more to discredit violent political Islam than bunkerbusting bombs or mass incarcerations based on race and religion – provided the US did not foolishly plot with the military leaders of the old regime to smash the democratically elected alternative. The only long-term effect of those kinds of responses is to legitimize and strengthen what they seek to crush and destroy. Alas, the US government, along with its “allies” abroad, has a rather different view.

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9 Criminal Profits, Terror Dollars, and Yet More Nonsense

When the topic around the chattering-class dinner table turns from Chablis and chèvre to Crime and Terror, there are probably three principles on which virtually everyone can concur – more or less. First, it seems self-evident that criminals ought not be left, eyes wide with delight, with the financial rewards of their crimes jingling in their pockets – although that ought to apply as much, or a lot more, to Wall Street banksters as to back street gangsters. Second, it seems a no-brainer that if there is good reason (ethnoreligious bigotry and political expediency just don’t cut it) to suspect that funds are likely to be diverted to “terrorism,” they need to be pre-emptively frozen – subject to the old proverb that one person’s terrorist is another person’s freedom fighter. (Or maybe the same person’s at different times, as NATO’s choice of new recruits for wet jobs in Libya and Syria showed so well.) Third, given the complexities of today’s economic world, there is probably broad accord on the need for accurate financial intelligence – although the best financial intelligence is useless without enough human intelligence to figure out what it means, and today the sheer volume of the first seems to excuse or maybe even cause a decline in the second. So the principles seem clear: take away from criminals the proven (on criminal, not civil, criteria) profits (as distinct from proceeds) of crime; freeze money suspected (on rational and publicly defensible grounds rather than just because certain political lobbies have set the agenda) to be destined for acts of (sensibly defined) terror; and improve financial intelligence gathering (in the sense of better, not more) with due regard to the right to reasonable financial privacy, to the extent that is still possible. Where disagreement is more likely is over the laws and regulations by which those principles are put into

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practice. To be fair, problems can exist with any policy initiative because of five features of the environment in which it was articulated and implemented: 1 Moral panic: when a policy is rushed into practice while predicated not on a clear understanding of the targeted problem but on public fear usually combined with political opportunism; 2 Fuzzy logic: when a policy is formulated based on muddled rationalizations combined with simple-minded stereotypes, something frequent in both anti-crime and anti-terror initiatives; 3 Flat-earth syndrome: when a policy, which perhaps started as reasonable, over time gets so out of sync with reality as to become dangerous, counterproductive, even absurd; 4 Mission creep (which easily evolves into mission sprint): when a policy created for one reason is allowed, even encouraged, to be diverted to other uses, probably badly thought out and squarely inappropriate; 5 Faith-based initiatives: when a policy is implemented not only without a sound basis but without credible criteria to appraise its effectiveness and guide adjustments. What is remarkable about the follow-the-money strategy is that it suffers from all five at once. The original idea was hatched in an atmosphere of near panic with grossly inflated expectations, fanned by politicians and police alike, about what it could accomplish. It was rationalized less by logic than by deference to the era’s ideological fads. It has seen any effectiveness it might have had in dealing with its purported objectives progressively reduced by radical changes in national and international financial realities. It was, post 9/11, precipitously given a new high-profile task for which it is manifestly unsuited. And it has been deployed without sensible criteria that would permit an informed judgment about whether or not it actually works. Consider each of those five features in depth. 1 Moral Panic The follow-the-money strategy was conceived more than a quarter century ago in the face of widespread conviction that polite society was under siege by giant, hierarchically structured criminal organizations

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so flush with cash as to threaten to infiltrate and corrupt legal markets, or even subvert entire countries, aided and abetted by bent bankers – primarily Swiss, of course. Country after country reported burgeoning underground economies, sometimes larger and growing faster than their legal sectors, while stories proliferated about billionaire drug dealers hard at work in in modern office blocks where high-speed computers monitored trade volumes, exchange futures, and interest-rate swaps. I have fond memories of an event billing itself as the first international conference on money laundering, at which an award-winning financial analyst for the US Drug Enforcement Administration told me that her agency had been about to seize the fortune (pinpointed at somewhere between $2–14 billion) of the late Pablo Escobar, the capo di tutti capi of the so-called Medellin Cartel, only to be deterred by fear of bringing down the Tokyo stock exchange. She offered this observation while we were listening to the keynote speech by the US attorney general – who stunned his audience with the revelation that a Corn Flakes box stuffed full of greenbacks weighed eighteen pounds. He failed to add that a politician stuffed full of self-­importance can tip the scales at many times that amount. US senators threw their weight, so to speak, behind the new policy of seizing criminal assets on the assumption that it might not just deter crime but permit the government to close the budget deficit. Given the presumed magnitude of the threat, society had to fight back – and the magic bullet was an attack on the horde’s hoards. Thus fiscal and moral rearmament in a single well-directed blow! Who could object to that? In such an atmosphere, if anyone suggested that the real problem facing the international financial system at that time (much as now) was wild currency speculation, an epidemic (of now largely legalized) tax evasion by the rich, a tsunami of capital flight, and a crush of foreign-currency debt, and that the rush to criminalize money laundering and to introduce new asset-seizure laws was the result largely of hyperbole and confusion, they risked being denounced, as I was, by a senior officer of FinC E N , the US Treasury’s financial tracking arm. “Anyone,” he told me over the phone before a joint appearance at a Toronto forensic accounting conference, “who thinks like you do is, in my opinion, a sympathizer with the world’s terrorists and drug dealers.” I didn’t make the obvious rebuttal: “Dude! Anyone who thinks like you do, doesn’t really think at all.”

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Yet, since that time, numbers purporting to show a world awash with many hundreds of billions in drug money or swamped by underground economies burgeoning out of control have been largely discredited, at least in the eyes of those who don’t desperately need to believe; and the notion that most profit-driven crimes are the work of great transnational crime cartels trying to take over the Fortune 500 has been largely relegated to third-rate police thrillers, where the idea probably began. Nonetheless, these deep convictions about the need for long convictions prompted a rush to radical action on the financial front, even if it was the wrong action on the wrong front, bolstered by a superficially appealing but grossly oversimplified argument. 2 Fuzzy Logic The core idea was that finding, freezing, and seizing proceeds of crime would take away the motive (criminal profit) for further crimes, the means (criminal capital) to commit them, and the consequent capacity (criminal wealth) of malefactors to corrupt the legal economy – a job the people already inside there seem to have been perfectly competent to handle all by themselves. Granted, if someone knows there is no money in a bank, they are unlikely to try to rob it – or to buy up its shares, though they might try to short them. But generations of criminologists have concluded, and common sense would back them up, that criminal motivation, far from understandable by simple reductionism, is a messy and unpredictable mix of social, political, economic, and cultural factors. Linear logic applied to nonlinear relationships can yield nothing useful in terms of either direction or proportions of changes. It might, for example, try to predict the future flow of drugs onto the market from the fact that a local dealer is currently making lots of money. Yet at a certain point, unknowable in advance, the accumulation of a stock of wealth built up from previous flows of income might lead the dealer to retire suddenly from business, to make a violent lunge for total monopoly, to face steppedup harassment from the cops, to get driven by paranoia into endless wars with competitors, or to just drown himself (the male form is somewhat more apt here) in booze and broads, not to mention an ever-growing urge to sample the sales merchandise more frequently in order to be sure of customer satisfaction. There is nothing inherent in the relationship between flows of drugs to market and stock of

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profits accumulated by a dealer to predict which of those will occur – and any of them could throw the entire supply chain into chaos. All that was brushed aside by the ideological currents of the 1980s and beyond. Instead, the criminal came to be regarded as just another somewhat kinky manifestation of “economic man” (in those days before “gender-neutral” language became de rigueur) who calculated expected net benefits from crime adjusted for the probability of arrest and punishment in order to make a “rational choice.” The assumption underlying the follow-the-money policy apparently was that a threat to take away the take might convince a wouldbe bank robber to get a license for their gun, then apply for a job as a security guard, or might coax someone running a grow-op to burn down their greenhouse in favour of farming organic alfalfa. Meanwhile the notion of letting police forces keep the loot from asset seizures – in  some places without the inconvenience of genuine proof that the money actually came from a crime – was seen as a neat application of private-sector financial incentives to improve the performance of a public service, perhaps as a prelude to adding policing to the list of things slated for full privatization. No doubt the same gang that gave the world prisons-for-profit and military-security-for-hire was smacking its fat lips in anticipation. To be sure, there was and is a certain moral logic in the idea of taking away from criminals the proceeds of crime, but it was and is extremely simplistic, operationally messy, and built on absurdly bloated expectations. 3 Flat-Earth Syndrome The follow-the-money strategy was initiated on the implicit assumption, accurate at the time, that commercial banks (whose role was to accept deposits, make conventional loans, and provide paymenttransfer facilities) were the keystones of the financial apparatus. Since then those roles have been greatly weakened by several developments: the phenomenal growth of the repo market, where investors sell securities to other investors while agreeing to buy them back at a slightly higher price at a fixed time in the future; the rise of a non-bank credit market where corporations use commercial paper to borrow directly from other businesses with temporary surpluses; the now-notorious structured finance market, in which large pools of debt (home mortgages, credit card balances, car loans, commercial real-estate borrowing, even student loans) are securitized for sale to

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every kind of institutions from hedge funds to pension plans; and, in general, a giant shadow banking system based on derivatives trading. Two months before the 2008 crisis hit, the Bank for International Settlements estimated over-the-counter derivative contracts to have a notional value (market value would be very much lower) of more than $500 trillion. That was a wild guess – no one really knew where all the derivatives were, who owned them, who owed what on them, how much might eventually be realized, or the amount of damage they would succeed in causing.1 Under these circumstances, it seems patently absurd to be trying to wade through a batch of currencydeposit or suspicious-transaction reports to find the $400 necessary to pull off something like the first World Trade Center bombing in 1993 or even the few thousand dollars Timothy McVeigh required for ammonia fertilizer, diesel fuel, and an old truck to bring down the Oklahoma City federal building a few years later. 4 Mission Creep When a high-profile policy fails to live up to expectations, there are three possible responses. One is to shut it down. That course of action is usually impossible in the face of all the vested interests that the very creation of such an apparatus calls into being. The second is to try to modify appropriately its modus operandi, something that requires frankly admitting its shortcomings, radically deflating expectations, then taking the public and political heat. No one ought to hold their breath waiting for any of that to happen. The third, and most likely, is to find for it a new mission. Within days of 9/11 a senior official of the Financial Action Task Force, the US-dominated financial overseer whose job it is to bully other countries into following US-based initiatives, mused that it would be “interesting” to see if the apparatus put in place to find, freeze, and forfeit criminal money could be used “for other purposes” – and this from an organization that a short time before the event had concluded that the proceeds-of-crime apparatus was unsuitable for the task. On the other hand, perhaps it seemed an “interesting” inference because much the same stereotypes used in the Drug War were being recycled into the Terror War. Judeo-Christian Civilization was again under siege, this time by a godfather of terror running a hierarchically structured transnational cartel of miscreants, with formal divisions in

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charge of everything from recruitment to propaganda to fundraising via rackets like drugs, conflict diamonds, counterfeit currency, and various financial and commercial swindles, including (naturally) the purportedly burgeoning traffic in counterfeit brand-name luxury goods. No less an expert than George W. Bush insisted that “al Qaeda is to terror what the Mafia is to crime.” The only important difference seemed to be that Usama bin L aden, unlike Pablo Escobar, was less ¯ interested in taking over the commanding heights of the economy than in knocking some of them down. There was another similarity, too. When subject to detailed scrutiny, virtually everything in the pop picture of the new Islamintern, like the old Crimintern, turned out to be greatly exaggerated or even dead wrong. Few, if any, of subsequent terrorist atrocities have revealed a credible operational link to the 9/11 plotters – perhaps because suspects have trouble articulating properly while stretched on a board with a cloth over their face and water being poured into their nostrils and mouth. Indeed, it is fascinating to watch responsibility being transferred successively from al-Q¯a’idah to its so-called “branches,” then to its “affiliates,” then to persons “running an al-Qaeda franchise,” then to groups “linked to” or “associated with” al-Q¯a’idah, down to the more recent manifestation, people “inspired by” it.2 That was the explanation, for example, for the behaviour of those plotting the bombing of the London Stock Exchange, even though in these turbulent times the idea may have occurred to any number of old-age pensioners.3 Even scarier, al-Q¯a’idah, it seems, now even runs an e-zine with the title Inspire. The fact that a coalition of Christian groups and charities runs a British magazine with the same title simply shows the importance of the war on brand name and copyright violation as an auxiliary to the greater struggle against Terror itself.4 The ability of the al-Q¯a’idah menace to assume so many disparate forms, then disappear into so many different guises, helps to make it geographically peripatetic, therefore remarkably capable of opportunistic deployment from one theatre to another. The main determinant of where this many-headed hydra turns up seems to be the ebb and flow of self-proclaimed US strategic interests or with the latest marching orders from the Israel lobby. Hence al-Q¯a’idah in Afghanistan gets joined successively by al-Q¯a’idah in Iraq (that was run by a bitter rival of the supposed chief of the Afghan parent), by al-Q¯a’idah in the Maghreb (a conveniently relabelling of a collection of ragtag guerilla

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groups, including some death squads set up by the Algerian army), by al-Q¯a’idah in a desperate Palestinian refugee camp in Lebanon (where the population was angry at Lebanese army abuse), and by al-Q¯a’idah in Somalia and Yemen, both places needing a pretext for the US and its allies to further torment societies already torn asunder by poverty and civil war. Subsequently Nigeria’s Boko Haram movement, which began as a religiously led grassroots rebellion against corruption and discrimination before being relabelled a “terrorist organization,” has been granted al-Q¯a’idah affiliation.5 That is a label also stuck by the media on both Tuareg nationalist and Islamist Ansar Dine rebels in northern Mali, even if they are forever killing each other. As a result “members” of those last organizations are now deemed suitable for the fond attentions of the Pentagon’s own latest franchise, AFRICOM.6 What’s next? Al-Q¯a’idah in northern Alberta, threatening the tar sands? After all, Islamic terrorists and ecoterrorists both show a strong affinity for the colour green; that seems sufficient in these troubled times to presume a transnational conspiracy.7 It has perhaps never occurred to the terrorcrats in Western government offices that the more fuss they make about the alleged spread of al-Q¯a’idah, the more outfits are going to appropriate opportunistically the name for their own use, a process that inevitably feeds on itself, as the F L Q phenomenon in Quebec so vividly showed over four decades ago. As in Terror, so in Crime. After the smash success of the Godfather movies, New York cops reported picking up on wiretaps ItaloAmerican suspects talking to each other with phrases straight out of the script. As to all the stories of Usama’s billions from a life of transnational crime, they have turned out to be fairy tales. The pattern seems to be that funds required for terrorist incidents (keeping in mind the promiscuous way that label gets applied) are small in amount and locally raised, usually from legal sources. Some economically motivated crimes may require substantial investments to produce large returns, but with politically motivated crimes there is no relationship between the impact of the act and the financial requirements to pull it off. Yet that hallucination managed to take a policy originally built on logic that, while woolly, perhaps had some very limited applicability, at least in the moral sense, and put it to work in a field where it has no rational basis and zero relevance. When criminal profits and terror dollars are examined dispassionately, about the only thing

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they have in common is that they both consist of money. So, too, do the contents of Church collection plates – although, given the nature of some of today’s prominent theocratic enterprises, what gets dumped in those plates could constitute the motive and the means for fraud, tax evasion, embezzlement, and theft. First and foremost, profits from crime are proceeds in the sense of existing only after an economically motivated crime is committed. They are inherently illegal, entering the legal economy in search of apparent legitimacy. They can be substantial in amount only in rare cases where criminal activity is highly successful, something more a Wall Street than a backstreet phenomenon. They are vulnerable to detection mainly on entry into the formal financial system – where the proceeds of the really significant (in terms of size) contemporary crimes are already safely ensconced. They remain in that system for further investment, accumulating in value with time. They are targeted by the police for seizure after the fact. Such a seizure may impede subsequent criminal actions that require the funds as capital, although that is usually just a fond hope, especially since so many of the assets taken have a strong air of being innocent as charged. By contrast, terror dollars are a form of preceeds, existing prior to committing a politically motivated crime. They generally start as legal in origin, becoming definably illegal only after use or after clear proof exists of intent to use them. However, unlike proceeds of economic crime, whose sums expand as the returns from their use grow, preceeds of political crime are usually very small in amount – unless the Pentagon budget is included. Unlike conventional criminal money, terror dollars easily avoid the formal financial system and seldom trigger red flags if they do enter. They exit quickly, then dissipate once the act they finance is committed. They would have to be seized pre-emptively for any useful impact. But because of small size and legal origin, they could be easily replaced. Blithely assuming that an apparatus created (however sloppily) to try (without much apparent success) to deal with the (greatly exaggerated) threat of drug money can be simply redeployed to handle any terror-dollar menace is not merely questionable but downright foolish. Recall that the original strategy attempted to take away the money not out of moral principle so much as in an effort to eliminate the motive and means for further crimes. With terrorist acts the motive is hardly money. It is political anger – although given the record of American, British, and French meddling in the Middle East,

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and the never-ending string of Israeli outrages cheered on and paid for by the West, the real surprise is not that terrorist attacks against Western targets occur but that they are so few and far between. For those that do occur the most important asset is not money but determination; and no one has yet found a way to freeze determination in a bank account. There is another important distinction with serious implications in terms of potential “collateral” damage from a follow-the-money strategy. Assuming that the apparatus really does work from time to time to trigger alarms, with criminal money, the most likely giveaway is a large cash deposit recorded on a cash transaction report, a device that has many faults but at least has the virtue of being (sort of) objective. With terror dollars, generally small in sum and legal in origin, the alert will almost always be the result of a suspicious transaction report (known in the US as a suspicious activity report), filed on the basis of a purely subjective judgment by frequently youthful, generally ill-paid staff who handle direct relations with retail clients and likely make determinations on the basis of Hollywood- and New York-concocted stereotypes. Even before the Terror War, an examination of STRs in Britain showed that they were several times as likely to be filed against Western Asian as against WASP clients engaged in the same kind of transaction. Nor is the potential damage just personal. The combination of public ignorance, media-stoked bigotry, and political opportunism prompted the US to shut down by legal order or simple harassment dozens of Islamic charities, their officers slandered and in some cases deported, without anyone tracing a penny of their money to anti-US terrorist action. Witness, too, the debacle over hawala, that ever-­ so-mysterious underground banking system that operates before witnesses, issues receipts on demand, has its rates published in newspapers, and in Afghanistan was so effective that the World Bank preferred to use it rather than rickety and crooked banks for transfers. (The huge Kabul Bank scandal proves how wise a course that was.8) The post-Patriot Act drying up of hawala meant, among other things, the final economic collapse of Somalia, already wracked by famine, drought, and civil war. Someone might ask the crew of all those ships hijacked off the Somali coast how effective was the closing of hawala flows in stopping crime and terrorism in the region. Maybe preventing foreign trawlers from looting local fish stocks and foreign freighters from dumping radioactive and toxic waste on the

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politically paralyzed country would have been a somewhat smarter way to accomplish that end. The larger lesson is that laws and law-enforcement tactics created to deal with “normal” infractions of criminal law are palpably unsuited for politically motivated offenses. Criminal laws usually do not fluctuate on a daily basis, if only because the process of working a proposal through the bureaucracy, then enacting it via the relevant legislative bodies, takes so long – though evidently not nearly so long as removing them (as per the century or so required to cease the symbolic burning of witches in Canada). There is usually some degree of consensus, however misplaced or misinformed or manipulated public concerns may be. And there is customarily a modicum of general scrutiny and public debate. Granted, that does not guarantee against outcomes that are opportunistic or dangerous or both. Take, as an example, how in 1997 police forces in Canada managed to get themselves an “organized crime” law of the sort they envied in European countries. In vain Justice mandarins in Ottawa pointed out that Anglo-Saxon law, unlike European norms, contains a concept of “conspiracy” that does the same job – and then some. (After all, the literal meaning of conspiracy is to breathe together, and what could be more effective than that in spreading wide the guilt-net to reel in all the big fish?) To try to blunt the police offensive, those officials called a gathering of civil interest groups for a two-day debate in Ottawa where senior cops unveiled charts of the looming menace that looked like organizing scripts for The Godfather IV.9 At the end the minister of Justice tried to mollify the police, who were looking very unhappy, with the assurance that, although they would not get the law they wanted, the justice department would throw them a bone. A lot of people, including myself, left relieved that the worst had been averted. A few months later on return from an extensive trip abroad during which I was out of touch with Canadian news, I read a headline story that an Organized Crime bill had passed the House of Commons and was heading for Senate. I phoned my contacts in Ottawa to plead for a chance to present my views before the upper chamber. The answer was – too late. The prime minister had decided to call an election and wanted to make sure he had good relations with the police forces going into the campaign, especially in Quebec, then the scene of a biker gang war in which a child was accidentally a victim and a journalist was shot and wounded. The prime minister, fearing an accusation of being

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soft on crime, did the politically proper thing, assuring his short-term electoral success at the expense of logic and legal sense for the indefinite future. The new law declared that if five or more people committed a “series” (undefined) of “serious offenses” over the previous five years, they would be treated differently from fewer people doing the same over a different period of time. Of course, that was just the thin edge of the wedge. Following protracted police and prosecutorial complaints, the number of persons required was cut to three, anyone charged with a “gang-related” offense was to be denied bail, longer term electronic surveillance was approved, the provisions for confiscation of so-called proceeds of crime were expanded, and all that became necessary for a court to rule that an individual participates or actively contributes to a criminal organization’s activity is that they hang out with any member, or use “a name, word, symbol or other representation” associated with that “organization.”10 If criminal law is supposed to be set for the long haul and (except during national emergencies like pending elections) preceded by a reasonably intelligent debate, what constitutes terrorism in general and an act of “terrorist financing” in particular depends not just on any particular action or on a combination of public mood (suitable manipulated) and political hypocrisy. It also depends on which group(s) a government arbitrarily designates as terrorist – which might be all that differentiates a particular act of “terrorist financing” from a routine charitable transfer. That decision, in turn, can be the result of governments cultivating short-term favour with ethnopolitical lobbies or conceding during negotiations over things like trade deals a tacit agreement to take sides in another country’s internal disputes. Take, for example, my own brief career as an almost-financier of terrorism. Some years ago friends pointed out that I was foolish to continue research in subjects like gunrunning without having a will. So I decided to leave money for reconstruction and welfare work in and around Sheba’a, my grandfather’s town in southern Lebanon, a region that had suffered for decades from repeated acts of Israeli brigandage. More specifically I wanted to make a bequest to something called, if I recall correctly, al-Wa’ad (“the promise” in Arabic), the organization best able to do effective work in the region, rebuilding hospitals and schools, caring for the poor and displaced, and clearing the US-supplied cluster bombs that Israel had generously seeded onto the area’s agricultural land.

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However, al-Wa’ad works the area in tandem with Hizbu a¯ llah, and, before I could make the bequest, the Canadian government capitulated to the Israel lobby to put Hizbu a¯ llah on its terror list. (European countries, while recently bowing to US and Israeli pressure regarding Hizbu a¯ llah’s armed wing, have so far refused to tar al-Wa’ad with the same brush.) So I had to make the bequest to another organization, squeaky clean in the eyes of the law, but much more poorly placed to get the money to those who genuinely needed it, and much more prone, so insiders informed me, to having money slated for welfare and reconstruction siphoned off for the welfare of its senior officers and the reconstruction of their fancy Beirut apartments. 5 Faith-Based Initiatives What is perhaps most remarkable about the follow-the-money fad is that country after country has launched a veritable revolution in its financial reporting and law-enforcement methods without any credible means to determine if it actually works. To be sure, sometimes it does seem to catch suspicious individuals, even if their identity turns out to be a surprise. That is the moral (immoral? amoral?) of the story behind the epic fall of Eliot Spitzer, the crimebusting New York attorney general turned state governor. Federal agents reckon that he paid over $80,000 to prostitutes during his terms in both offices. When the (selective) crimefighter tried to transfer money to a company fronting for his hookers, he divided up the transactions into less than $10,000 lumps to avoid having his name placed on a currency transaction report, even though for nearly twenty years “structuring” (i.e., breaking a sum down into amounts below the reporting threshold) had been a criminal act in and of itself. So far, so good. The real problem began when he tried to get his name taken off a subsequent wire transfer of the funds to the front company. The bank refused and filed a suspicious activity report. That brought the I RS Criminal Investigation Division into action, allegedly out of fear that Spitzer was victim of an extortion attempt or an identity theft. It later concluded that the payments might have involved political corruption and referred the matter to the F B I . Just by chance(!) a sometime Republican Party strategist turned Libertarian Party stalwart with a reputation as a political brawler ratted to the F BI that Spitzer had

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also patronized high-priced call-girls in Florida, even providing the colour of the socks he wore in the act.11 The blogosphere was alive with conjecture that Spitzer had been set up by Wall Street banksters – who were more likely fellow users of the upscale facilities. His defenders said his offenses were against his family, not the public, and “If Spitzer broke any laws, they were bad laws, laws that should never have existed.”12 True, they were bad laws, but that is irrelevant. The reality is that Spitzer, like Rudolph Giuliani and others before him, tailored his crimefighting to his political ambitions, including in Spitzer’s case a show of cracking down on other men who frequented prostitutes.13 This might be seen as the mark not of a criminal but, to put it politely, of someone whose personal political ambitions trumped his concern with social morality or justice. Even more important, Spitzer, who obviously knew the ins-and-outs of the anti-money-laundering regime, didn’t seem to take its reporting regulations seriously, perhaps figuring he could just pull rank if a problem emerged. But for the politically inspired leak, the whole business might well have been covered up. The real issue is not the occasional mediagenic catch but whether the system can make a dent at the macro level. Ask a Justice or police official how they know the strategy is working to “combat crime,” and the answer is that they are seizing more criminal assets. (In the Spitzer case, seizing the “proceeds of crime” would have left the hookers on the hook.) Leave aside the fact that the police seize assets overwhelming on the basis of civil, not criminal, procedures, something that logically means anything they grab has never been proven to be criminally generated. The real issue is that without also knowing how quickly criminals are amassing assets, a simple increase in seizures is meaningless as a measure of impact. More importantly, perhaps, the supposed point of the exercise is not just to grab a stock of illicit wealth, the result (maybe) of past crimes, but to reduce the current flow of criminal income relative to the legal economy: wealth and income have only a fuzzy relationship to each other. Since no one has a clue (or ever will) about how large the underground economy is, what percentage of it is criminal, what the rate of saving out of criminal income is, how much of that is laundered, and how much of the laundered money gets reinvested in the legal economy, the proceeds of crime strategy remains just another faith-based initiative. The challenge is even greater with terrorist financing. Suppose an increase in financial scrutiny is followed by a reduction in terrorist

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attacks. On what basis can it be safely concluded that the second follows logically, as distinct from just chronologically, from the first? The reduction could well be because those who might have plotted some action ran out of ideological fervor or fresh bodies, the second certainly in shorter supply than the essential money. Or maybe the bad guys simply realized that the world situation had so changed as to make such actions counterproductive or unnecessary. Although that would seem to be a reassuring development, the reality is that the legacy not of terrorist actions but of the countermeasures taken in the name of preventing their repetition will haunt us for a long time.14 c o l l at e r a l d a m a g e o r i n t e n d e d c o n s e q u e n c e ?

Considerably more dangerous than a snowstorm of financial-reporting forms is the way that far more information than was suspected by the public at large until the Edward Snowden affair exploded has for years been collected through a burgeoning espionage apparatus operated at various “nodes” by cops, spooks, treasury departments, and, not least, private business institutions scrutinizing their clients to see who can be primped for a further plucking.15 Not only has the population at large been so intimidated by the purported threat of Crime and Terror to acquiesce in ever lower standards of legal protection from misuse of their personal information, real or counterfeit, but the barriers between economic and political information, and from various sources (private and public, civil and military, commercial and social) have been largely obliterated. What Snowden did was not just to tell people an out-of-control security-industrial complex existed, something about which warnings had abounded for years, but to inform them that in some of their most intimate moments they were just as naked to that complex’s scrutiny as those unfortunates who still have to board US airplanes. In the past if spooks in the US wanted to look at any of many millions of CTRs and SARs sent in by 25,000 different financial institutions (all over-reporting, to try to protect themselves from fines or reputational damage) they had to apply on a case-by-case basis. But the Obama Administration gave all the USA’s intelligence agencies full access to the database currently in the hands of regulatory agencies.16 Then came the Cyber Intelligence Sharing and Protection Act, requiring ISPs to hand over all confidential records and communications data to the US National Security Agency, the FBI, and Homeland

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Security – a move that does not really pump new information through an already overflowing pipeline so much as legalize what is there, so permitting it to be used in “legal” investigations and proceedings – not that, in these days of “extraordinary renditions,” black prisons, and drone justice, the concept has very much meaning. Meanwhile that National Security Agency has set up the Utah Data Center to intercept, decipher, and store at will virtually any communication in the world passing via satellite or underwater cable.17 That includes worldwide data on all manner of financial transfers, including routine credit card transactions, to which US and allied police forces now have access. But that also means that the main function of all those irritating forms the anti-money-laundering bureaucracy has imposed is no longer to yield information to which the authorities have easier access elsewhere, but to give cops and prosecutors something else to load on a rap sheet. Of course there is a pressing reason why officials need all this information: it is essential, the police and intelligence agencies insist repeatedly, to help spot and track “terrorist networks and crime syndicates.” For success in that endeavour, though, tougher laws are also required. As a result, terrorism in particular keeps getting more and more broadly defined, with, in the US, states getting into the act, too. As a result anti-terror laws are now useable against peaceful demonstrations, against acts of civil disobedience, and even against trespassing on corporate property to photograph the condition of animals bound for the slaughterhouse. During the Taksim Square demonstrations in Istanbul, the spirit of the times was caught beautifully by Turkey’s minister of European Union: “From now on,” that holder of one of the world’s most dead-end jobs declared, “the state will unfortunately have to consider everyone who remains there [in Taksim Square] as a supporter of a terror organization.”18 Concurrently the combined legacy of the Crime and Terror Wars has encouraged a merger of police and military functions.19 The earlier Drug War militarization of police forces – special riot squads, heavier body armour, and more lethal weaponry – was rationalized by the allegedly growing violence of drug gangs, even though the causation might well have been in reverse. (One reason given in preThatcher days for not arming the British police with anything but billyclubs was because, if they carried guns, it might set off an arms race with criminal elements.) Today cop gear can include armoured vehicles, domestic drone aircraft, and mobile X-ray vans, another

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big step (along with Robocop-type headsets that use infrared light to see through buildings) toward nullifying any need for search warrants.20 The more toys for the boys, the greater the incentive to fill out their ranks. A decade after 9/11, New York’s Mayor Bloomberg boasted that his 34,000 uniformed officers constituted not simply the biggest police force in the world with its $3.6 billion budget and, in collaboration with the Department of Defense and CI A, its globespanning branches and offices, but, the mayor insisted, pointing proudly to the NY P D ’s fleet of six submarine drones and portable radar than can see under clothing, it was also the world’s seventhlargest army.21 Nor is New York alone.22 Chicago beat it by a year during its preparations for a protest demo against an upcoming N AT O meeting, in deploying a long-range acoustic device. Supposedly meant to assure that police can broadcast over the noise of a mob (AKA placard-waving peace demonstrators), this device can emit sound at a volume sufficiently painful to the human ear to pretty much guarantee dispersal, with the possibility of permanent hearing loss.23 Even before that the US Department of Homeland Security arranged delivery of up to 450 million rounds – an order since revised, it seems, to 1.6 billion – of a new “high performance bullet.” According to the manufacturer, A T K Corporation, this bullet, because of its “specially designed hollow-point tip won’t plug while passing through a variety of barriers.” As a result it offers “consistent expansion and optimum penetration for terminal performance.” Perhaps the department needed the special ammo before its newly retrofitted MazzPro MR A P mine-resistant vehicles with customized gun ports could be safely deployed on the streets.24 In a twisted mirror image, armed forces, too, have sometimes tried “nonlethal” devices for “crowd control” – like microwaves first put to work in Afghanistan in 2007 under the euphemism “active denial system.”25 Later they were marketed as a method of assuring “pain without injury.” Once the military began to lose interest – perhaps it found the advertising slogan too effete – the developer, Raytheon Corporation, devised a portable version to peddle to police and prisons under the trade name Silent Guardian. The beauty of it is that it is completely invisible, and people hit by it have no idea what has happened – especially since the weapon leaves no evident physical wound.26

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This merging of police and military functions also showed up dramatically in the security arrangements for the 2012 Olympics. The Royal Navy docked H MS Ocean, its largest ship, in London, while 13,500 soldiers stood by to reinforce the police, themselves equipped with US-made long-range acoustic devices. Even more impressively, the Ministry of Defense invoked the spirit of the Battle of Britain to guard against any threat from al-Q¯a’idah dive bombers, advising citizens in some parts of the capital that they would be fully protected by high-velocity missile systems mounted on their rooftops. When skeptics queried the logic of shooting down unidentified targets over the cramped capital, lest they rain down fuel or unexploded weapons onto the population below, they were obviously missing the point. As the editor of Jane’s Defense Weekly explained, the highly publicized preparations would send a message to any wannabe airborne jihadi that, “Well, O.K. I’m not going to try and fly a bomb in the centre of London in a light aircraft.”27 All this might have incurred the ire of a Thatcherized business community upset at the intrusion of government into areas best served by private enterprise. However, most measures for securing the Olympics against the Islamic threat were actually left to a firm whose previous experience involved protecting businesses in the Jewish settlements and providing security equipment for Israeli military checkpoints in Occupied Palestine.28 Fortunately the security preparations did their job: the games proceeded safely on schedule with the usual litany of doping, game fixing, incompetent refereeing, sloppy timekeeping, and corrupt judging.29 Anyone who thinks things are already bad in the US or UK or much of the so-called developed world in terms of combined political and financial espionage ought to take careful note of a recent development in Nigeria. There MasterCard and the Nigerian Identity Management Commission announced a partnership to distribute to every Nigerian citizen a new card with thirteen applications, including MasterCard’s prepaid payment technology; this, as part of the government’s plan to combat the black market by eliminating all cash payments, the ultimate demonetization strategy. That, incidentally, puts the population at the mercy of a financial conglomerate whose data pool is available to police and military forces effectively around the world, provided they belong to the camp of the political angels. It also enables a state at war with a substantial part of its own population to not just track but immobilize its citizens by freezing

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their spending at the push of a button. The purpose, says MasterCard, is to share the Nigerian federal government’s “commitment to economic growth and create a more financially inclusive economy.”30 Even in peace-and-justice-loving Canada – or so the facile pre-­ Stephen Harper stereotype used to claim – new recording devices installed in airports and border crossing points now secretly tap conversations by travellers or workers. This was necessary, insisted the government, to combat organized crime and smuggling conspiracies. To any skeptics, it could cite a report by the Royal Canadian Mounted Police that “at least 58 crime groups” were active in the major airports. The fact that, despite such pinpoint intelligence, none have actually been broken is no doubt because the cops are so badly hampered by unreasonable restrictions on their powers and resources.31 Nor will Canadian police be left out on the Terror front. In April 2013, just a few days after the Boston Marathon bombing, Canadian police, supported by CSIS, the FBI, and the US Department of Homeland Security, swept down to sweep up an “al-Qaeda cell” – one person each from Montreal and Toronto making it a transnational conspiracy if ever one existed. From a base in Iran, that well known incubator of Sunni-fanatic plots against Judeo-Christian Civilization, the plotters had planned to blow up train tracks and derail a passenger train, not that passengers on Canada’s increasingly disgraceful national railway system would have noticed much of a delay. Of course the police admitted that their Operation Smooth had turned up no sign of Usama’s billions. But it was enough for Foreign Minister John Baird to remind everyone of his smart work in closing the Iranian embassy in Ottawa on the grounds that Iran was “the most significant threat to global peace and security in the world today.”32 That the highly publicized arrests occurred just when the Canadian Parliament was about to debate an anti-terror bill that would authorize preventive detention and US-style “investigative” hearings with normal rules of evidence superseded was, no doubt, purely coincidental.33 Faced with the evidence of a national-security apparatus run amok, “liberal” critics, after the usual public handwringing, will simply bow to the inevitable. What is the alternative, they will plead timorously, given how dangerous a world riddled with violent drug dealers and Islamic terrorists has become? Perhaps it is time that Western countries, and some Easterly ones as well, learn that the drug plague they claim to face is not a conspiracy

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by billionaire narco-barons with oily complexions whose menacing black mustaches twitch with delight as the gold bars get stacked higher and higher. Instead it is the result of homegrown entrepreneurs, most just scraping by, responding to a spoiled or lost (or perhaps both) generation for whom the best therapy would be lives free from commercial addiction on one side and chronic economic insecurity on the other. As to the purportedly even more awesome menace of international terrorism, maybe Western leaders ought to follow the sound advice that the late Usama bin L aden advanced to the US and, by ¯ inference, to the West at large? “Pack your bags and go home.” That, I suspect, would do considerably more to protect their citizens from harm than increased high-tech surveillance, tighter physical-security measures, and harsher laws against so-called terrorist-financing.

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Notes

preamble

1 See Stephen Robb, “The Comedy Master Turned Martyr,” BBC News, 3 August 2006. 2 See, for example, Dana Priest and William Arkin, “A Hidden World, Growing beyond Control,” Washington Post, 19 July 2010 – three years before the Snowden affair broke. 3 Published by McGill-Queen’s University Press in Montreal and Cornell University Press in Ithaca, New York, in 2002 and 2004. 4 Crime rates, admittedly an awkward concept given the problems of creating appropriate aggregates, have been dropping sharply in Western countries, including the US, UK, and Canada, for three decades. On the U K drop, for example, see Alan Travis “Fall in U K Crime Rate Baffles Experts,” Guardian, 24 January 2013. In some areas of the U K the drop was as much as 22 percent in spite of severe cutbacks to police budgets (Chris Greenwood, “Crime Plummets by as much as 22% ...” MailOnline, 25 April 2013). On terror attacks, again a concept that needs critical scrutiny, compare Hillary Clinton’s repeated assertions about the ever-larger threat to the National Counterterrorism Center’s annual report for 2011 summarized in Dan Murphy, “Can We Declare the War on Terrorism Over?” Christian Science Monitor, 7 June 2012. 5 Satanic Purses, originally commissioned by Cornell University Press, then dropped as too hot to handle, was published by McGill-Queen’s University Press in Montreal in 2006. 6 Jeffrey Breinholt, “Being Wrong about the Big Issues,” International Assessment and Strategy Center, 6 April 2007

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Notes to pages 5–9

7 This subject is extensively treated in R.T. Naylor, Crass Struggle: Greed, Glitz, and Gluttony in a Wanna-Have World, Montreal, McGill-Queen’s University Press, 2011. 8 See, for example, Peter Andreas, Smuggler Nation: How Illicit Trade Made America (Oxford: Oxford University Press, 2013) – unlike its predecessors this book does not just retell glorified stories about pirates and rumrunners but demonstrates how illicit commercial activity is hardwired into American economic DN A. 9 Nassim Taleb in Antifragile: Things That Gain from Disorder (New York: Random House 2012, 227) notes that in the nineteenth and early twentieth centuries the two main sources of invention were the hobbyist and the rector. Clergymen left ten times as many recorded traces of inventiveness for posterity as did scientists, businesses, or even professional inventors. 10 For an overview of how far and fast that has occurred, see Bill Quigley, “13 Ways the Government Tracks You,” Counterpunch, 11 April 2012. 11 Parliamentary Assembly, Council of Europe “The Underground Economy: A Threat to Democracy, Development and the Rule of the Law,” Resolution 1847 (2011), assembly.coe.int/ASP/Doc/XrefViewHTML. asp?FileID=18056&Language=EN. 12 I confess to taking the idea seriously in my earlier years working this field. See, for example, R.T. Naylor, “From Underworld to Underground: Enterprise Crime, Informal Sector Business and the Public Policy Response,” Crime, Law & Social Change 24, no. 2, 1996. 13 See Steven Higgs, “A Call to Arms for Class War,” Counterpunch, 11–13 May 2012. 14 Deborah Tedford, “Supreme Court Rips Up Campaign Finance Laws,” National Public Radio, 21 January 2010. See also Jim Hightower, “The Plutocrats Who Bankrolled the G OP Primaries – and What They Want in Return,” Hightower Lowdown, June 2012. 15 On the ideological-theological roots and why the project was always doomed to fail, though not without a huge human cost, see John Gray, Black Mass: How Religion Led the World Into Crisis (New York: Random House, 2007). 16 Not to be missed in this regard is Steve Keen’s Debunking Economics: The Naked Emperor of the Social Sciences (London: Zed Books, 2004). There is now a second edition that updates the critique by extending it to macro theory and that dissects the tragic absurdity of modern financial theory as well. What Keen demonstrates is how the core of economic theory is nonsense in its own terms. 17 For a fascinating rereading of the authors of classical political economy in both its theoretical and practical aspects, see Michael Perelman, The

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Notes to pages 9–11

231

Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (Durham: Duke University Press, 2000). 18 See especially Karl Polanyi’s classic The Great Transformation: The Political and Economic Origins of Our Time (New York: Farrar and Rinehart, 1944). 19 Commenting on such a program by the Thatcher regime in Britain in the late twentieth century, political philosopher John Gray calls it “the unavoidable result of attempting to reinvent the free market with the highly invasive state” (Black Mass: How Religion Led the World Into Crisis, Toronto: Random House, 77). 20 See, for example, Jeff Madrick, “The Entitlement Crisis That Isn’t,” Harpers, November 2012, and Michael Hudson, “America’s Deceptive 2012 Fiscal Cliff,” Michael-Hudson.com, 28 December 2012. 21 The chapter began to take shape with a project undertaken by the criminal statistics branch of the Canadian Justice Ministry to find some alternative to existing categories. That evolved into “Towards a General Theory of Profit-Driven Crime” British Journal of Criminology 43, 2003. An analysis of the (greatly exaggerated) propensity for economically motivated crimes to be associated with violence was developed further in “Violence and Illegal Economic Activity: A Deconstruction,” Crime, Law & Social Change 52, no. 4, March 2009. The chapter took one something like its current form in a recent three-volume compendium, Jacqueline Helfgott (ed.), Criminal Psychology (Westport, CT: Praeger Publishers, 2013). However, a number of other comparisons have been added and some major cuts in the theoretical sections implemented. 22 The term “snarl word” is borrowed from John Michael Greer as defined in his “The Nature of Empire,” Archdruid Report, 15 February 2012. 23 See, for example, Sarah Grieco, “Invisible Children Co-Founder Detained: S D P D ,” nbc News, 17 March 2012. 24 For one of the more outrageous examples from the drug war, see R.T. Naylor, Hot Money and the Politics of Debt 3rd ed. (Montreal: McGillQueen’s University Press, Montreal: 2004, 408–11). 25 Naylor, Satanic Purses, op. cit., deals extensively with this case among other appalling results of the Terror War. See also the update in John Pilger, “The Political Trial of a Caring Man and the End of Justice in America,” New Statesman, 8 November 2012. 26 For an excellent dissection of the flaws of the American judicial system by an insider with no axe to grind, in fact he sees the core of the problem in the system having gone overboard on defendants’ rights leading to exactly the opposite result, see William Pizzi, Trials without Truth (New York: New York University Press, 1999). It would be fascinating to see him

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Notes to pages 11–14

update the work to take account of regressive changes in some of the other legal systems that he held up in that book as potential models for US reform. 27 On this see R.T. Naylor, “Violence and Illegal Economic Activity: A Deconstruction,” Proceedings of a Conference on Illegal Market Violence Sponsored by the Guggenheim Foundation, Crime, Law & Social Change 52, no. 4, March 2009. 28 Cited Year_in_Review/Events-of-1984/John-DeLorean-Trial/1231182597 2512–9/ UPI.com. 29 “A T F Uses Fake Drugs, Big Bucks to Snare Suspects,” USA Today, 28 June 2013. 30 Regina Nuzzo, “Brain Scans Predict Which Criminals Are More Likely to Reoffend,” Nature, 25 March 2013. 31 United States v. Vernon Watts Supreme Court of the United States 117 S. Ct. 633 (1997). See also Pizzi Trials 217–8. 32 My own interviews and those of my students with loan shark “victims” and (some but not all) police officers indicated that violence at least in Canada was rare. One person with a gambling addiction who used to forge cheques to try to keep his loans up to date told me that his loan shark finally made a debt-consolidation loan on the pledge that my informant would seek professional help to break his addiction. Loan sharks rely on return business and reputation to keep their trade flourishing, and the business operates through personal connections that, unlike the “market,” moderates behaviour. In my own research in the 1980s, when loan sharking had not yet been overwhelmingly displaced by “consumer finance,” the only instance of violence I found involved a loan shark locking a client in arrears in the trunk of his car . Yet Montreal had lots of other forms of criminal violence. Obviously there were exceptions in the loan-sharking business, and those were used to portray the business as a whole. 33 Actually not so legal in the formal sense but in the sense of not raising any serious challenge from regulators or prosecutors. See, for example, Lunn Stuart Parramore, “The Vicious New Bank Shakedown That Could Seriously Ruin Your Life,” AlterNet, 12 May 2013. 34 The capital flight and offshore finance portion of this research started with Hot Money in 1986; the anti-money laundering drive was dissected in, among other places, Wages of Crime, op. cit, chapters 4 and 6; and terrorist finance was examined in Satanic Purses, op. cit. 35 For some recent examples of this hypocritical folly, see Remarks by Under­ secretary David Cohen at the SIFMA Anti-Money Laundering & Financial Crimes Conference, US Department of the Treasury, 29 February 2012.

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36 Since Hot Money, op. cit., there has been much more work on offshore finance and related matters. See especially Nicholas Shaxson, Treasure Islands: Tax Havens and the Men Who Stole the World (London: Random House, 2011). 37 See, for example, veteran observer of US electronic intelligence James Bamford, “The NSA Is Building the Country’s Biggest Spy Center (Watch What You Say),” Wired, 15 March 2012, www.wired.com/threatlevel/, and Tom Englehart, “Data Mining You: How the Intelligence Community is Creating a New American World,” Tom Dispatch, 3 April 2012. Among the several books dealing with this phenomenon are Tim Shorrock, Spies for Hire: The Secret World of Intelligence Outsourcing (New York: Simon & Schuster, 2008), and Dan Priest and William Arkin, Top Secret America: The Rise of the New American Security State (New York: Little Brown, 2011). 38 Add to that, in the case of children, gastroenteric disease, the consequence of water decontamination equipment being among the terrortools the Israeli blockade has denied the territory since 2006. No doubt the real purpose of the ban is to further the Israeli objective of making Gaza, with its already drastically shrinking supply of badly polluted water, uninhabitable, uprooting the Palestinian population there for a final and fatal time. “Gaza Water too Contaminated to Drink, Say Charities,” BBC News Middle East, 13 June 2012; “Water Crisis Will Make Gaza Strip ‘Unlivable,’” Guardian, 31 August 2012. Notice how the New York Times managed to steer the debate on Israel’s food embargo by claiming the issue was a “dispute” (“Document on Calorie Figures in Gaza Blockade Stirs Dispute,” New York Times, 17 October 2012). Parenthetically, ask whether the New York Times will ever run pictures of the recent discovery of a mass grave with the skeletal remains of dozens of Palestinians murdered by the Israeli military during the 1948 ethnic cleansing campaign, alongside familiar ones from concentration camps in Europe taken only a few years before that event (“Mass Palestinian Grave Found in Tel Aviv: Skeletal Remains of Dozens of Palestinians Killed by Israelis during 1948 Have Been Found in a Mass Grave in Tel Aviv,” Al Jazeera, 1 June 2013). 39 An earlier version of this chapter was originally published under the same title in Crime, Law & Social Change 45, no. 2, August 2006. 40 See the photos in “Who Shot Gaddaffi?” Daily Mail, 9 April 2012. 41 Strictly speaking, the Qur’a¯ n bans hiraba¯ h, which can be translated as either “piracy” or “unlawful war,” and in more recent times has been extended to cover highway robbery (different from theft with no violence),

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rape, and what is now called “terrorism.” See en.wikipedia.org/wiki/ Hirabah and Dr David Crane, “Hirabah versus Jihad,” www.irfi.org/ articles/articles_301_350/hirabah_versus_jihad.htm. 42 R.T. Naylor, Patriots & Profiteers: Economic Warfare, Embargo Busting and State-Sponsored Crime. Originally published by Toronto: McClelland & Stewart, 1999, 15–16, then by Northeastern University Press under the title Economic Warfare in 2001, more recently in a new edition by McGill-Queen’s University Press, 2008, under the original title. 43 There is a depressing survey of the US cases in en.wikipedia.org/wiki/ Catholic_sex_abuse_cases, along with links to similar surveys covering Canada, Ireland, Belgium, Norway, Austria, and Australian. 44 An earlier version of this chapter was written as part of a tribute to Alan Block and published in Frank Bovenkerk (ed.), The Serious Organized Crime Community (Kluwer: Leiden, 2007). 45 See, for example, the case of Kevin Iraniha, an American-born Muslim, who was questioned by the FBI , asked if he had plans to bomb a Jewish center, reacted that he didn’t even know where any such institution was, and then found himself on a no-fly list – he was told that as an American, unlike his also banned father, he had the right to enter the US, but he had to drive. Apparently the plan was to cultivate him as an informant, and placing him on the no-fly list was punishment for his lack of cooperation (Shirin Sadegh, “US Citizen Put on No-Fly List to Pressure Him into Becoming F BI Informant,” Huffington Post, 7 June 2012). 46 On the contrived “war on terror,” see Trevor Aaronson, The Terror Factory: Inside the fbi’s Manufactured War on Terrorism (Brooklyn: Ig Publishing, 2003). For the Hutaree indictment, see United States District Court, Eastern District of Michigan, Southern Division United States of America vs. David Brian Stone et. al. Case:2:10–cr-20123 Filed 03–23– 2010; James Kelleher, “Hutaree Militia Walk from Jail after Charges Dismissed,” Reuters, 29 March 2012. 47 An earlier version of this was published as “How Wars on Terror Should Be Fought” in Counterpunch, 3 April 2007. 48 Horacio Silva, “Radical Chic,” New York Times, 23 September, 2001. 49 “Germany’s Greens Become a Party of the Rich,” Der Spiegel, 11 September 2013. 50 This seems to have penetrated to the “realists” among establishment security analysts. See Scott Stewart, “Greek’s Radical Left: The Dangers of the Disaffected and the Unemployed,” Stratfor, 14 March 2013.

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chapter one

1 This chapter is a major expansion of “Marlboro Men,” London Review of Books 29, no. 6, 22 March 2007. 2 Of many tracts on how this emergent Crimintern is causing the breakdown of the international trade and financial order, Illicit: How Smugglers, Traffickers, and Copycats Are Hijacking the Global Economy (London: William Heinneman, 2006), by Moisés Naím, the former editor of the USA’s Foreign Policy journal brings together most of the myths to misinform debate on these matters. The same author took the themes a step ­further in “Mafia States: Organized Crime Takes Office,” Foreign Affairs, May/June 2012. For a dissection of that argument see Peter Andreas, “Measuring the Mafia-State Menace,” Foreign Affairs, JulyAugust 2012. For a more recent book making the same sorts of arguments as Illicit, see Hitha Prabhakar, Black Market Billions: How Organized Retail Crime Funds Global Terrorists (New Jersey: FT Press, 2012). For a critique of earlier hyperbolic claims of this nature see Naylor, Wages, chapter 1, “Mafias, Myths, and Markets.” 3 Check, for example, en.wikipedia.org/wiki/Node. 4 Although this is not totally unprecedented, “since the 1990s … illicit trade networks have taken on a distinctive form” (Naím, Illicit, 4 et passim). 5 Caroline Henshaw, “Fake Goods Rival Drug Profits for Asia’s Criminals,” Wall Street Journal, 16 April 2013. The estimate came from the United Nations Office on Drugs and Crime, probably concerned that it hasn’t hit the headlines big time since its “world drug trade valued at $500 billion” heyday nearly two decades ago. 6 Naím, Illicit, 7, 8. 7 The prescriptions are laid out in Naím, Illicit, chapter 12. 8 Naím, Illicit, 11. 9 It is difficult to be certain because trade data from the nineteenth and early twentieth centuries are lousy. Not until 1924 did any country have a proper balance of payments accounting done – specifically by Chicago economist Jacob Viner in Canada’s Balance of International Indebtedness 1900–1913 (Cambridge: Harvard University Press, 1924). 10 See the excellent work of Bryan Ward-Perkins, The Fall of Rome: And the End of Civilization (Oxford: Oxford University Press, 2006). On the early search for energy (in the form of wood), see John Perlin, A Forest Journey: The Story of Wood and Civilization (New York: Norton, 2005).

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11 Well worth a careful read in this regard is Jean Gimbel, The Medieval Machine: The Industrial Revolution of the Middle Ages (London: Penguin, 1976). 12 The concept of a Colombian Exchange was initiated in the 1970s by environmental historian Alfred Crosby in Ecological Imperialism (Cambridge: Cambridge University Press, 1986) and extended greatly by Charles Mann in his recent volumes entitled 1491 and 1493. There is an immense amount of other work, too, by historians, archaeologists, biologists, and anthropologists of which proponents of contemporary globalization slogans remain remarkably innocent. 13 See Vaclav Smil, Energy in World History (Boulder, C O: Westview, 1994, 60, 232 et passim.). 14 As David Macaray points out in “China Is No Paper Tiger,” Counterpunch, 5 February 2013, every year Chinese labs clone so many eucalyptus sprigs to be planted on hundreds of thousands of acres that China can now produce in three weeks in twenty giant state-of-the-art paper mills as much as Wisconsin, the leading US paper-making state, does in a year. 15 See for example the White House’s “Strategy to Mitigate Theft of US Trade Secrets,” reprinted in Wall Street Journal, 20 February 2013. 16 Even remaining American exports of manufactured goods hide a crucial weakness – their import content can be as high as 80 percent, making the US more a re-export than an export economy. See Henry C.K. Liu, “Gold Keeps Rising as Other Commodities Fall,” Asia Times, 24 November 2010. 17 Patti Waldmeir, “China’s Dead Pigs Crisis Spreads to Ducks,” Financial Times, 25 March 2013. 18 On this, see in particular Tom Standage, The Victorian Internet (London, 1997). 19 See Bill Quigley, “13 Ways the Government Tracks You,” Counterpunch, 11 April 2012. 20 See Naylor, Wages of Crime, chapter 1, “Mafias, Myths and Markets.” 21 Take, for example, Mexico’s drug trade. After the authorities smashed the big boys, the result was not the end of the drug trade but the splintering of suppliers into sixty to eighty “cartels,” making the job of keeping them under control even more difficult than before. “Mexico Says some 80 Drug Cartels Are at Work in the Country …” Associated Press, 18 December 2012. 22 See Phillip Curtain, Cross-Cultural Trade in World History (Cambridge, 1984), and Joel Kotkin, Tribes: How Race, Religion and Identity Determine Success in the New Global Economy (New York, 1992). A former Singapore minister of Information summed it up well: “China has

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never been a civilization with a tradition of the rule of the law above the rule of men. It’s always been the rule of men, idealistically moral men, above the rule of the law” (Far Eastern Economic Review, 2 December 1993). Apart from the minister’s self-serving suggestion that those who make the rules (or condition public thinking about them) are generally “idealistically moral,” this statement pinpoints a key difference between Chinese and Western ways of thinking about commerce, and about crime. 23 An early history is in Evert Clark and Nicholas Horrock, Contrabandista (New York, Praeger: 1973). 24 See Phil Shepherd, “Transnational Corporations and the Denationalization of the Latin American Cigarette Industry” in Alice Teichova et al. (eds), Historical Studies in International Corporate Business, (Cambridge: Cambridge University Press, 1986) and “Transnational Corporations and the International Cigarette Industry” in Robert Newfarmer (ed.), Profits, Progress and Poverty (Notre Dame: University of Notre Dame Press, 1989). 25 An old but still useful general work is Jonathan Fenby, Piracy and the Public (London, 1983). 26 See Michele Boldrin and David Levine’s disemboweling of US intellectual property law in Against Intellectual Monopoly (Cambridge: Cambridge University Press, 2008). 27 On the Watt’s legal manoeuvring, see Boludrin and Levine, Against Intellectual Monopoly, introduction – their sources can be largely checked online with older accounts. There was also a genuine Industrial Revolution based on wind and water power centuries before – see Jean Gimbel, The Medieval Machine: The Industrial Revolution of the Middle Ages (New York: Penguin, 1976). However that development lacked two things – fossil fuel and a conviction by participants that growth was possible forever, probably the only truly revolutionary things (i.e., energy source and attitude) during the so-called Industrial Revolution of the late eighteenth and early nineteenth centuries. 28 See especially Vaclav Smil, Creating the Twentieth Century (Oxford: Oxford University Press, 2005). 29 For a good critique of the orthodox theory of productivity based on magical models that work with no resource or energy inputs or waste output, see Charles Hall and Kent Klitgaard, Energy and The Wealth of Nations: Understanding the Biophysical Economy (New York: Springer, 2012, 116–17). 30 I thank Peter Andreas for reminding me of this. See his “Gangster’s Paradise: The Untold History of the United States and International Crime,” Foreign Affairs, March/April 2013.

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Notes to pages 38–40

31 This process is described in detail in R.T. Naylor, The History of Canadian Business Volume II (reprinted Montreal: McGill-Queen’s University Press, 2004). 32 In Italy, for example, the highest court made clear the distinction between exact reproductions designed to defraud companies and their clients and knock-off replicas for the knowledgeable massmarket. In a precedent setting case it ruled that there was no offense in selling fakes provided no one was in real danger of being fooled, that is to say, if the price was well below the originals and the imitation obvious enough to be easily identifiable as such (Deutsche Press-Argentur, 4 March 2000). 33 Forbes, 28 December 1998. 34 New York Times, 23 June 2002; United States Senate, Committee of the Judiciary, Anticounterfeiting Consumer Protection Act 1995, 28 November 1995. 35 One of the most absurd depictions is by Roslyn Mazer, “From T-Shirts to Terrorism: That Fake Nike Swoosh May be Helping to Fund Bin Laden’s Network,” Washington Post, 30 September 2011. This one appeared within a couple weeks of the 9/11 tragedy: it recycled several years of previously unsubstantiated rumours to arrive at the dramatic conclusion: “The staggering economic losses to America’s copyright and trademark industries – alarming unto themselves – now are compounded by the opportunistic trafficking in I P products to finance terrorism and other organized criminal endeavors.” 36 See “Economy Vulnerable al-Qaeda Target,” Omega Letter, 4 November 2004, a Christian fundamentalist “intelligence” bulletin. “America’s main vulnerability is its economy. The terrorists are well aware of it, and have zeroed in on it as its [sic] main target.” The same kind of sentiments were expressed by Stratfor, the neocon fundamentalist “intelligence” service in “US – Economic Impact,” 11 September 2002. 37 Much of this section is summarized from Naylor, Satanic Purses, 252–7. 38 Cheney called for Americans to “stick their thumb in the eye of the terrorists and …not let what’s happened here in any way throw off their normal level of activity.” To be fair to Cheney, other political leaders expressed similar market patriotism (Washington Post, 23 September 2001). And on Wall Street with the stock market dipping, people were asked to show their patriotism by buying more shares (Aaron Task, thestreet.com, 9 September 2002). 39 The Interpol allegations were, naturally enough, seconded by US Customs with similar agendas to advance. See Kathleen Millar, Office of Public Affairs, “Financing Terror: Profits from Counterfeit Goods Pay for Attacks,” US Customs Today, November 2002.

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40 Ronald Noble, Secretary General of Interpol, “The Links between Intellectual Property Crime and Terrorist Financing,” Testimony before United States Congress, House of Representatives Committee on International Relations, 16 July 2003. 41 The incident was reported in the now unfortunately defunct Far Eastern Economic Review, 18 June 1992. 42 See the remarkably named Insight on the News, 30 October 2003. 43 Time, 2 August 2004. 44 “California Gets Face Scanners to Spy on Everyone at Once,” Russia Today, 21 November 2012; Andrew Roberts, “Bionic Mannequins Spy on Shoppers to Boost Luxury Sales,” Bloomberg News, 20 November 2012. For a more skeptical look at the post-911 biometrics boom, see Noah Schachtman and Robert Beckhuser, “11 Body Parts Defense Researchers Will Use to Track You,” Danger Room – Wired, 25 January 2013. 45 See, for example, David Barstow “Vast Mexico Bribery Case Hushed Up by Wal-Mart after Top-Level Struggle,” New York Times, 21 April 2012. 46 Anyway the payment to the ex-judge seemed only fair – he had also offered to tell the truth on behalf of the plaintiffs if they paid him enough; and it was only when his reasonable offer was refused that he turned to the other side. So whose fault is that? (Amazon Defense Coalition, “Chevron Paying at Least $326,000 Bribe to Ecuadorian Judge for False Testimony,” CSR Press Release, 28 January 2013.) 47 “Indian Officials Told They Can Steal a Little, but ‘don’t be a bandit,’” Guardian, 10 August 2012. 48 The statues were gracefully covered up during the election campaign that she lost. “‘Dalit queen’ Mayawati Statues Covered Up ahead of Elections,” Daily Telegraph, 9 January 2012. 49 See, for example, the excellent overview of the Mali situation by Bruce Whitehouse, “What Went Wrong in Mali?” London Review of Books 34, no. 16, 30 August 2012. 50 A good example is the quarter-century scramble for the Marcos family treasure trove in the Philippines by a commission of enquiry that became a device for stripping people connected politically with the old regime of assets even if legally acquired; it was itself shaken by a bribery scandal involving its former chairperson. Rhea Sandique-Carlos, “Hunt for Marcos Riches Winds Down; Philippines to Confront Whether Commission to Recover ‘Ill-Gotten’ Gains Has Done All That It Can,” Wall Street Journal, 7 March 2013. 51 For the US, efforts to do so date back to the late nineteenth century with the emergence of the “muckrakers.” See, for example, Gustavus Myers,

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Notes to pages 44–8

History of the Great American Fortunes (New York, 1907). His successor volume, History of Canadian Wealth (New York, 1914) is much less well known, including in Canada, whose carefully cultivated self-image of a kinder, cleaner America are therein grievously undermined. On this, see also R.T. Naylor, History of Canadian Business 1867–1914, revised ed. Montreal: McGill-Queen’s University Press, 2006. 52 Much material on the corrupt interface between military industries and governments, usually with the conniving of intelligence agencies, can be found in R.T. Naylor, Patriots & Profiteers: Economic Warfare, Sanctions Busting and State-Sponsored Crime 2nd Ed. (Montreal: McGill-Queen’s University Press, 2008). 53 A good overview is by Winslow Wheeler. “How the F-35 Doubled in Price.” Counterpunch. 10 July 2012. 54 See, for example, R.T. Naylor, “Corruption in the Modern Arms Business: Lessons from the Pentagon Scandals,” in Arvind Jain (ed.), The Economics of Corruption (Kluwer: Amsterdam 1998). 55 “U K Arms Chief Caught in Secret Deal with Saudis,” Press TV 3, 16 February 2013. 56 Melanie Newman and Oliver Wright, “Cameron’s Fundraiser Caught in £6,000 Corporate Deal for House of Lords Dinner,” The Independent, 19 June 2012. 57 Geoffrey Wheatcroft, “So, You Want to Be a Lord …” Slate, 22 March 2006. 58 John Cassidy, “Obama’s Bad Pick: A Former Lobbyist at the FC C ,” The New Yorker, 2 May 2013; Steve Horn, “Obama’s Big Keystone X L Scandal” Counterpunch, 17 July 2013. 59 The same sources, no doubt, that permitted Moisés Naím to state that “The United States attacked Iraq because it feared that Saddam Hussein had acquired weapons of mass destruction” (Illicit, 5). 60 A senior official of the U N ’s World Programme against Money-Laundering told me that he spent several days at I M F headquarters trying, without success, to get someone to explain to him the basis of the calculation only to find that it was an on-the-spot invention. 61 Naím, Illicit, 137. 62 I have been collecting examples of use of the magic 10 percent for several years. 63 Outsourcing has led to endless laments over lost “good jobs” as if working in most factories can ever be pleasant. The real loss is not “good jobs” but decent pay and benefits even from the same jobs as before, so that most people who lost them, but were lucky enough to find new employment, do

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so with lower wages, less (if any) job security, and benefits stripped to the bare bone – that itself becomes more a wishbone than a spinal column. This “good versus bad jobs” typology mars an otherwise excellent Barbara Garson article “Abracadabra: You’re a Part-Timer: How Corporate America Used the Great Recession to Turn Good Jobs into Bad Ones,” TomDispatch.com, 20 August 2013. 64 See I A C C International AntiCounterfeiting Coalition, “The Negative Consequences of International Intellectual Proeprty Theft,” January 2005. 65 There is a good critique by Dean Baker: “The US-EU Free Trade Pact and T P P Are about Securing Regulatory Gains for Major Corporate Interests,” Aljazeera, 29 April 2013. 66 en.wikipedia.org/wiki/Abraham_Pineo_Gesner. chapter two

1 Early versions of this chapter appeared as “The Underground Economy: A Ruse by Any Other Name,” Challenge: The Magazine of Economic Affairs 48, no. 6, 2005, and “The Rise and Fall of the Underground Economy,” Brown Journal of World Affairs 11, no. 5, winter-spring 2005. 2 The crisis generated an enormous amount of (more or less) critical literature. Among the most readable is Nouriel Roubini and Stephen Mihn, Crisis Economics: A Crash Course in the Future of Finance (New York: Penguin, 2011). But probably the best short account of the actual mechanics and their larger context is Les Leopold’s The Looting of America (Vermont: Chelsea Green Publishing, 2009). 3 If that seems a far-fetched analogy, see Wolf Richter, “When Flight Safety Gets Outsourced to China,” Naked Capitalism, 10 May 2013. 4 For an early collection of work, see Vito Tanzi (ed.), The Underground Economy in the United States and Abroad (Lexington: Lexington Books, 1982). See also Wolf Gaerner and Alois Wenig (eds), The Economics of the Shadow Economy (Berlin, New York & Tokyo, 1985), and Edgar Feige (ed.), The Underground Economies: Tax Evasion and Information Distortion (Cambridge: Cambridge University Press, 1989). 5 See, for example, the critique by Dean Baker, “Debt, Toll Roads and Patents,” www.truth-out.org, 6 February 2012. 6 For second thoughts as a result of such abuses, see Vito Tanzi, “Use and Abuse of Estimates of the Underground Economy,” in the symposium on the underground economy in Economic Journal 109, no. 456, June 1999. 7 The difference is that G N P guesstimates total value of final product by citizens of a country at home or abroad during a fiscal year;

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Notes to pages 54–7

GD P guesstimates the total value of final product produced by citizens and foreigners in a given country during a fiscal year. The first tells roughly how well citizens or others domiciled in a particular country are supposedly doing (a huge leap of faith if ever there was one); the second is supposedly a better measure of how strong (an ever greater shot in the dark) the country’s economy is. 8 Another factor could have been fear the general closure of the retail financial system as a result of the chaos and uncertainty. See, for example, Kerin Hope, “Nerves Bring Swift Switch to Cash Economy,” Financial Times, 18 March 2013. Today, too, a fear of the security-intelligence complex tracing transactions could also be a factor. 9 See Edward Jay Epstein, Agency of Fear: Opiates and Political Power in America (originally published by Putnam in New York in 1977, it was reissued slightly revised and updated by Verso in 1990). For a critical look at the later Drug War and the phony numbers on which it was based, see Robert MacCoun and Peter Reuter, Drug War Heresies (Cambridge: Cambridge University Press, 2001). 10 These issues are dealt with at length in Naylor, Wages of Crime, chapter 1, “Mafias, Myths and Markets.” 11 By 1982 it had risen to $114 billion. See Peter Kilborn, “World Trade Figures Don’t Add Up, Frustrating Governments, Analysts,” International Herald Tribune, 2 August 1983. See also “The World-Wide Black Economy,” Financial Times, 20 August 1983. 12 See “Working Party Offers Recommendations to Cut Global Current Account Discrepancy,” IMF Survey, 9 March 1987. 13 See, for example, Rolf Mirus et al., “Canada’s Underground Economy Revisited: Update and Critique,” Canadian Public Policy 20, no. 3, 1994. As usual Canadian academics were slow to climb on the bandwagon and made up for it with enthusiasm in beating the drum, even though most of the audience had by that time grown skeptical or simply left in disgust. See also Don Drummond et al. “The Underground Economy: Moving the Myth Closer to Reality,” Canadian Business Economics, summer 1994. The subtitle of this paper would be better served by inverting the two nouns. 14 That would be even more true today if the “hedonic adjustment” – the implicit assumption that useless bells and whistles added at the whim of producers to con purchasers or, more likely, economists into thinking the things are “worth” more – were scrapped. On the implications, see Haring and Douglas, Economists and the Powerful, 34–5. 15 See, for example, Victor Anderson, Alternative Economic Indicators (New York: Routledge, 1991). Since then there has been a very large body

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of work examining alternatives to GNP as measures of wellbeing. Its impact on governments or the economics profession has to date been rather minor. 16 Perhaps the finest single statement of the flaws is in Herman Daly, Beyond Growth: The Economics of Sustainable Development (Boston: Beacon Press, 1976). An updated summary of his key points can be found in Herman Daly, “Eight Fallacies about Growth,” Center for the Advancement of the Steady State Economy, 5 August 2012. 17 Daly, Beyond, 42 et passim. 18 For a close look at some of the alternatives, see Richard England, “Alternatives to Gross Domestic Product: A Critical Survey,” and Robert Costanza et al., “Green National Accounting: Goals and Methods” in Cutler Cleveland et al., The Economics of Nature and the Nature of Economics (Northampton, M A: Edward Elgar, 2001). 19 Haring and Douglas, Economists and the Powerful, 28–30. 20 Arvind Subramanian, “Is China Already Number One? New GDP Estimates,” East Asia Forum, 3 February 2011. 21 There were others, too, including efforts to use electricity consumption by industry as an index of real, rather than reported, production activity, once again turning a simple indicator with multiple explanations into a (dubious) basis for quantification. For a survey, see Friederich Schneider and Dominik Enste, “Shadow Economies: Size, Causes and Consequences,” The Journal of Economic Literature 38, no. 1, 2000, and “Hiding in the Shadows: The Growth of the Underground Economy,” International Monetary Fund Economic Issues, March 2002. 22 This was done once in the US – and the politicians went ballistic. In other countries it is generally seen as too invasive and too expensive in relation to usable results. See Jonathan Feinstein, “Approaches for Estimating Noncompliance: Examples from Federal Taxation in the United States,” Economic Journal 109, no. 456, June 1999. Since tax inspectors go after the potentially largest, any extrapolation may be biased in an upward direction. As to the net result, no one can say. 23 Kathy Marks, “Sex Scandal Threatens Gillard’s Fragile Government,” The Independent, 24 August 2011. 24 Details of Eliot Spitzer’s money trail are in chapter 9. 25 See the critique by Richard Porter and Amanda Bayer, “Monetary Perspectives on Underground Activity in the United States” in Edgar Feige (ed.), Underground Economies: Tax Evasion and Information Distortion (Cambridge, 1989). 26 For a critical survey of some of the techniques popular today see Friedrich Schneider and Dominik Enste, “Shadow Economics around the World – Size,

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Notes to pages 61–7

Causes, and Consequences,” CES ifo Working Paper, no. 196, September 1999. See also by the same authors “Hiding in the Shadows: The Growth of the Underground Economy,” International Monetary Fund Economic Issues, no. 30, March 2002. A Google search under “Measuring the Underground Economy” yielded a modest 1,690,000 hits. 27 Wall Street Journal, 15 April 1986. 28 This point was made forcefully by Henry Lui, “The Supply-Side Tax Con,” AsiaWeek, 15 December 2009. 29 For a striking critique of modern mainstream tax theory (with its claims that the huge “deadweight loss” and “inefficiencies” from current tax regimes are, if anything, underestimated) see Charles Manski’s excellent “Removing Deadweight Loss from Economic Discourse on Income Taxation and Public Spending,” Vox, 18 August 2013. 30 On the more modern forces creating this “precariat” on an international basis, see Guy Standing, “Job Security Is a Thing of the Past – so Millions Need a Better Welfare System,” The Guardian, 21 May 2013. 31 David Kocieniewski, “Companies Push for Tax Break on Foreign Cash,” New York Times, 18 June 2011. 32 See Ruth Benn (ed.), War Tax Resistance, 4th ed. (Philadelphia: New Society Publishers, 1992). On some of the radical right tax resistors, see Daniel Levitas, The Terrorist Next Door: The Militia Movement and the Radical Right (New York: St Martin’s Press, 2002). 33 For an examination of these trends and their political consequences, see Kevin Philips, Wealth and Democracy: A Political History of the American Rich (New York: Broadway Books, 2002). 34 Heather Stewart, “£13tn: Hoard Hidden from Taxman by Global Elite,” The Observer, 21 June 2012; “Super-Rich Hold Up to $32 Trillion in Offshore Havens: Report,” Reuters 22 July 2012. 35 See, for example, John Hawks, For a Good Cause? – How Charitable Institutions Become Powerful Economic Bullies (Secaucus, NJ : Birch Lane Press, 1997). 36 Richard McGregor, “Obama Hits Out at ‘Inexcusable’ IR S Actions,” Financial Times, 15 May 2013. 37 Even if total underground income were significant, since the incomes of the great majority of participants are small, concerted enforcement efforts are unlikely to yield enough revenue to justify the cost; and reductions in tax rates would have no significant effect. 38 There is an excellent treatment of these gimmicks, and their consequences, in David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System (New York: Penguin, 2003).

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39 The most prominent exponent of this view for developing countries was Peru’s Hernando de Soto. See his The Other Path: The Invisible Revolution in the Third World (New York: Harper & Row, 1989). 40 An excellent introduction to how those few countries who in more recent times resisted the “free market” seduction ended up faring far better economically and socially, see Ha-Joon Chang, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (New York: Bloomsbury Press, 2008). See, too, Michael Hudson, Trade, Debt and Development (London: Pluto Press, 1991). 41 I thank Pierre Tremblay for introducing me many years ago to the criminological history of major European cities. For a view of these conditions in American urban areas, specifically New York, San Francisco, and New Orleans, see Herbert Ashbury’s classics – Gangs of New York, The Barbary Coast, and The French Quarter – while avoiding the Hollywood version of the first. 42 On this see in particular Mike Davis, Planet of Slums (Pluto: New York and London, 2006). 43 See the excellent critique by Sheldon Anis and Jeffrey Franks, “The Idea, Ideology and Economics of the Informal Sector,” Grassroots Development 3, no. 1, 1989. See also Grace Clark (ed.), Traders versus the State: Anthropological Approaches to Unofficial Economies (Boulder, CO: 1988). 44 There is a fascinating account in Robert Klitgaard, Tropical Gangsters: One Man’s Experience with Development and Decadence in Deepest Africa (New York: Basic Books, 1990). 45 Parliamentary Assembly, Council of Europe, “The Underground Economy: A Threat to Democracy, Development and the Rule of the Law,” Resolution 1847 (2011), assembly.coe.int/ASP/Doc/XrefViewHTML. asp?FileID=18056&Language=EN. 46 “Cut! Cut! Cut!” The Independent, 22 March 2012. 47 Daniel Boffey “Recession Is a Good Time to Boost Profits, Says Cameron Aide,” The Observer, 11 May 2013. 48 Raphael Minder, “Spaniards Go Underground to Fight Slump,” New York Times, 16 May 2112. The USA’s newspaper of record went on to observe: “The downside is that fewer workers are being taxed, even as many also collect unemployment and social assistance benefits.” It didn’t find worthy of mention the “fewer” business tycoons being taxed even as many also collect huge business subsidies and public contracts. Interestingly while the “liberal” New York Times got everything wrong, the right-wing Wall Street Journal did get the sequence right. See Matt Moffett and Ilan Brat, “For Spain’s Jobless, Time Equals Money,” Wall Street Journal, 26 August 2012.

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Notes to pages 72–3

49 On the other hand, maybe that explains why a later leap in Spain’s official unemployment rate to 26 percent was enough to spark a major rally in Spanish paper on international bond markets – the world’s megafinanciers were simply applauding the underground recovery of Spain’s economy (“Spain ‘Disconnect’ as Bonds Rally and Jobless Rate Surges,” CNBC , 24 January 2013). 50 Compare the New York Times’ trivia to the comments of the blogger Don Quijones in “Black Market or Bust: The Stark Choice Facing Many of Spain’s Self-Employed,” Testosterone Pit, 25 May 2013. That provides a stark example of why so many now eschew mainstream newspapers and get their “news” from the blogosphere. True, the blogosphere contains far more than its share of neurotics and self-promoters peddling hysteria and nonsense, but at least it’s free. The same quality of “information” from the mainstream press costs real money. 51 See R.T. Naylor, Hot Money and the Politics of Debt, 3rd Ed. (Montreal: McGill Queens University Press, 2004, chapters 21 and 22). In summer 2012 the new right-wing coalition in Greece announced perhaps the largest (relative to the size of the economy) privatization wave to appease creditors since the Pinochet coup in Chile in 1973. 52 “Loisirs – L’émir du Qatar achète six îles grecques,” Le Monde, 5 March 2013. 53 Kerin Hope and Peter Spiegel, “Eurozone Eyes Holding Company to Manage Greek €20bn Real Estate Sell-Off,” Financial Times, 28 August 2013. 54 On the use of phony numbers, see Peter Andreas and Kathy Greenhill (eds), Sex, Drugs and Body Counts (Ithaca: Cornell University Press, 2011, esp. chapters 1, 2, and 11). 55 On the emergence of the prison-industrial complex in the US, something that has recently made inroads in Canada, too, see Steven Donziger (ed.), Report of the National Criminal Justice Commission ( New York: HarperCollins 1996, chapter 3), and Joel Dyer, The Perpetual Prisoner Machine: How America Profits from Crime (Boulder C O: Westview, 2000, chapter 9). On recent developments in the privatization of the US detention industry, covering not just prisons but holding operations for illegal immigrants etc., see Suevon Lee, “By the Numbers: The U.S.’s Growing For-Profit Detention Industry,” ProPublica: Journalism in the Public Interest, 20 June 2012. 56 See, for example, Helen Warrell, “Public Policy: Are We Safer Now?” Financial Times, 17 July 2013.

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57 For a dissection of the manipulation of the numbers for both unemployment and inflation rates, see John Williams, Shadow Government Statistics, www.shadowstats.com/. 58 Richard Alleyne, “Factory Prisons Will Allow Inmates to Support Families on the Outside,” Daily Telegraph, 26 June 2012. 59 Phil Smith, “Assessing the Size of the Underground Economy: The Statistics Canada Approach,” Canadian Economic Observer, May 1994. 60 “Study Exaggerates Australia’s Black Economy” Australian Government, The Treasury, press release, 26 July 2003. The Australian minister of the Revenue also pointed out that: “The reality is that no effective measure of the black economy exists anywhere in the world.” 61 See Jim Thomas, “Quantifying the Black Economy: ‘Measurement without Theory’ yet Again,” Economic Journal 109, no. 456, June 1999. 62 See, for example, Robert Neuwirth, “The Shadow Superpower,” Foreign Policy, 28 October 2011; Marco Rabinowitz, “Rise of the Shadow Econ­ omy: Second Largest Economy in the World,” Forbes, 7 November 2011. For an attempt to resurrect an old measuring technique abandoned as useless in the 1970s, see Emile Colombo, Luisanna Onnis, and Patrizio Tirelli “The Shadow Side of Financial Crises,” Universty of Milano-Bicocca, February 2012, /www.pubchoicesoc.org/papers_2012/Colombo_Onnis_ Tirelli.pdf. 63 This is beautifully captured in Nessim Nicholas Taleb’s The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007), a book unlikely to appear on reading lists of economics departments in any of the “top ten” institutions, or any business school worried about its reputation. chapter three

1 On the deterioration of the US justice system, see Paul Craig Roberts and Lawrence M. Stratton, The Tyranny of Good Intentions (New York: Three Rivers Press, 2008). Note, too, the antics of the former police chief of Chicago, who for twenty years systematically tortured suspects, mainly blacks, to extract false confessions, sending about 200 men to prison for crimes they did not commit. Mark Guarino, “Chicago Mayor Rahm Emanuel Apologizes for Two Decades of Police Torture,” Christian Science Monitor, 12 September 2013. On the Canadian process, see “Ethics of Plea Bargains Questioned,” www.thecanadianencyclopedia.com/articles/ macleans/ethics-of-plea-bargains-questioned. I want to thank Mike Levi and Nikos Passas for comments on this chapter.

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Notes to pages 79–83

2 Surah Ali-’Imran 3:130–1 and Surah al-Baqarah 2:275 3 See Michael Hudson, The Lost Tradition of Biblical Debt Cancellations (1993), michael-hudson.com/wp-content/uploads/2010/03/HudsonLost Tradition.pdf. 4 Alfred Nobel in his will created five prizes – for science, mathematics, medicine, literature, and peace, but not for economics, something that ought to have been neatly excluded by the stipulation in that will that prizes be awarded to “those who … have conferred the greatest benefit on mankind” (www.nobelprize.org/alfred_nobel/will/). The fake economics “Nobel Prize,” created by the Swedish central bank nearly a century later, is properly called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Whoever thought that up was smart enough to figure that reporters, being lazy or in a hurry, and their editors anxious to save space, would find the most attention-grabbing shortened form of the name (see Yasha Levine, “There Is No Nobel Prize in Economics,” AlterNet, 12 October 2012). Members of the Nobel family have in fact objected to the link between the two, and some feel they were conned into permitting a parallel process that seemed to legitimize the prize (see Jorge Buzagola, “The Nobel Family Dissociates Itself from the Economics Prize,” Real-World Economics Review Blog, 22 October 2010). 5 In fact the organizational complexity of even the more serious profitdriven crimes is usually greatly exaggerated in comparison to legitimate business activities. And the popular analogy of profit-driven crimes with business firm activities hides much more than it reveals. See Mike Levi and R.T. Naylor, “Organised Crime, the Organization of Crime and the Organization of Business,” Office of Science and Technology, Department of Trade & Industry, Government of the UK , 2000. 6 Anna Villechenon, “Rogue trading: des garde-fous peu efficaces face à l’absence de régulation,” Le Monde, 30 January 2012. Jérome Kerviel similarly was accused by the Société Générale of being the sole cause of a €5 billion loss in a few weeks. He insisted he was just being used as a scapegoat to cover up decisions made by the bank senior staff. Taking the contrary view was a former currency and trader at a big London bank who anonymously informed The Guardian (1 August 2013) that, “In the end the bank is like a shell. You need a place to trade from, this is how we saw our bank. Sometimes an entire team can be poached and go from one bank to another. There’s no loyalty either way. And the top at your bank has no idea what’s going on, how could they? Why would anyone tell them what’s going on?”

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7 Mike Levi has argued that instead of “crime” the appropriate term ought to be “crimes,” focusing attention on what makes them different (in character, effect, and impact) instead of forcing a contrived unity. 8 Annie Sutherland, “$20 Million in Maple Syrup Stolen in Quebec Recovered in NB,” The Gazette (Montreal), 3 October 2012. 9 For a critical view of the creation of market-based offenses in the early part of this century, see, among others, Mark Thornton, The Economics of Prohibition (Salt Lake City: University of Utah Press, 1991). 10 One positive development is the decision of India’s Ministry of Environ­ ment and Forests to advise (not order) state governments to ban dolphinariums and other commercial establishments from capturing and confining whales and dolphins – they are now defined as “non-human persons” with the right to life and liberty (www.dw.de/dolphins-gain-unprecedentedprotection-in-india/a-16834519). 11 Perhaps the conflict between commercial banks loan sharks can be simply resolved if loan sharks relabel themselves as payday loan companies, move offshore, then work with the “legitimate” banks to plunder the accounts of unfortunate clients. See Jessica Silver-Greenbert, “Major Banks Aid Behind the Scenes in Payday Loans Banned by States,” New York Times, 22 February 2013. 12 Les Leopold, “Are Too-Big-to-Fail banks Organized Criminal Conspira­ cies?...” Alternet, 27 February 2013. 13 David Enrich, “Former Trader Is Charged in U K Libor Probe,” Wall Street Journal, 18 June 2013. 14 A con that may be failing. A 2012 CN BC survey revealed that nearly half of Americans polled thought the market was rigged in favor of insiders (video.cnbc.com/gallery/?video=3000095100). 15 To the extent “organized crime” groups really exist, generally they are not economic but political in nature, forming a kind of underground government to adjudicate disputes and allocate property rights. Once the rules are set, individual members can operate alone or in partnership with others who may or not be members of the group. See Naylor, Wages of Crime, chapter 2, “Mafias, Myths, and Markets.” The pioneering work disputing the usual stereotypes is Peter Reuter’s Disorganized Crime: The Economics of the Visible Hand (Boston: MIT Press, 1983). His conclusions on bookmakers and loan sharks has been replicated since by analysts in other fields. For instance Desroches found the same patterns among incarcerated drug dealers in Ontario. Van Duyne confirmed these patterns with his analysis of the results of proceeds-of-crime actions in the Netherlands.

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Notes to pages 88–91

Of course, most of this work has been on the retail level – one would expect market power and relative size to rise further downstream. 16 Once Forbes publicized a figure of $3 billion for the late Pablo Escobar, alleged capo de tutti capi of the mythical Medellin Cartel, his family complained of repeated ransom kidnappings (Michael Noer, “Pablo Escobar’s Son: Forbes Is Lying,” Forbes, 15 November 2011). That did not deter the magazine from repeating that kind of fabrication with the purported head of Mexico’s so-called Sinaloa Cartel, although its boss was only credited with a simple billion, just enough to make it to the honour roll. See “Joaquin Guzman Loera: Net Worth $1 B as of March 2012,” www.forbes. com/profile/joaquin-guzman-loera. 17 For an excellent dissection of the commercial reality of modern business, see Barry C. Lynn, End of the Line: The Rise and Coming Fall of the Global Corporation (New York: Doubleday, 2005). 18 This debate over corporate crime started with Edwin Sutherland, White Collar Crime (New York: Holt, Rinehart and Winston, 194). It was considerably elaborated in Christopher Stone, Where the Law Ends: The Social Control of Corporate Behavior (New York: Harper & Row, 1975). It picked up steam in Marshall Clinard and Peter Yeager, Corporate Crime (New York: Free Press, 1980). It probably reached its intellectual peak with John Braithwaite Corporate Crime in the Pharmaceutical Industry (London: Routledge, 1984). Although there has been much literature since, the battle lines were essentially set – between legalists who saw the corporation as unable to commit crimes separate from those of its executives and those who argued for a distinct and collective corporate responsibility. On the notion of a corporate mens rea and the various permutations and combinations suggested, see Russell Mokhiber, Corporate Crime and Violence (San Francisco: Sierra Club, 1988, 23–4). 19 John Gapper, “Lunch with the FT: Conrad Black,” Financial Times, 9 November 2012. 20 On these issues one of the best treatments is in Michael Woodiwiss, Organized Crime and American Power (Toronto: University of Toronto Press, 2001). See also the excellent survey by Lawrence Friedman, Crime and Punishment in American History (New York: Basic Books, 1993). There seems now a glimmering growing awareness of that fact. A recent decision by the Ontario Court of Appeals legalized the establishment of brothels so that prostitutes could work together under one roof, hire drivers, and deploy security guards, just like any ordinary business, thus rolling back a century or more of legal repression that had greatly increased the risks of the trade. Kirk Makin, “Ontario’s Top Court Legalizes Brothels,

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Pimping in Bid to Protect Prostitutes,” Globe and Mail, 26 March 2012. That, however, is only a necessary, not a sufficient condition for removing the exploitative character of much of the lower-price sex trade. See, for example, “Unprotected: How Legalizing Prostitution Has Failed,” Der Spiegel OnLine International, 30 May 2013. 21 Jospeh Rhee and Mark Schone, “How Anwar Awlaki Got Away,” a b c News, 30 November 2009. After the US murdered his father, it droned the Imam’s (also American-born) sixteen-year-old son. 22 Harry Anslinger, head of the Federal Bureau of Narcotics, and a former deputy director of the agency in charge of enforcing the alcohol ban, later insisted that the presumed epidemic of booze and drugs was the work of “the Grand Council of the Mafia, with its plan for an international cartel that controlled every phase of criminal activity.” See Harry Anslinger and Will Oursler, The Murderers: The Story of the Narcotics Gangs (New York, 1962). He claimed that by the 1930s “the Mafia” had taken over from the Chinese the business of supplying America with opiates. 23 I personally had the privilege of a long conversation with a bright-eyed zealot advocating just this cause during a meeting in Washington on drug control measures in 1989. 24 See the review of their operations in Joshua Holland, “Report: Low-Crime Tax Keeps For-Profit Prisons Profitable,” billmoyers.com, 20 September 2013. 25 On these issues, see Naylor: Wages of Crime, chapter 6, “Washout: Follow the Money Methods in Crime Control Policy”; “Licensed to Loot? A Critique of the Follow-the-Money Approach to Crime Control,” Social Justice 28, no. 3, 2001; “Criminal Profits, Terror Dollars & Nonsense,” Crime & Justice International, October 2007; and “The International AntiMoney Laundering Regime: A Flawed Policy In Search of an Imaginary Purpose” in Georgios Antonopoulus (ed.), Essays in Comparative Inter­ national Criminology in Honor of Petrus Van Duyne (Leiden, 2011). For a reminder that this is not all just ancient history, see Sarah Stillman, “Taken,” The New Yorker, 12 August 2013. See also the stinging indictment in Paul Craig Robert’s Tyranny of Good Intentions, 107–32. For one of the more outrageous incidents involving a turned drug dealer getting a cut of forfeitures, see Naylor, Hot Money, 3rd ed., 408–11. chapter four

1 The major ideas in this chapter were first tested in “Promises and Pitfalls in International Efforts to Control Money Laundering, Tax Evasion and the Financing of Terror,” a presentation to a Seminar on Money

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Notes to pages 98–104

Laundering, Tax Evasion and Regulation held at the Transnational Institute, Amsterdam, 10 June 2007. They were developed further in “The International Anti-Money Laundering Regime: A Flawed Policy In Search of an Imaginary Purpose,” in Georgios Antonopoulus (ed.), Essays in Comparative International Criminology in Honor of Petrus Van Duyne (2011). I thank participants in that seminar and editors of the Petrus Van Duyne collection for their helpful criticisms. 2 For a critique of the US model and its internationalization, see R.T. Naylor. Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy revised ed. (Ithaca, NY : Cornell University Press, and Montreal: McGill-Queen’s University Press, 2004, chapter 6), and Mike Levi and Peter Reuter, “Money Laundering,” Crime and Justice 34, 2006. For a recent dissection of the logical and methodological weaknesses of the Canadian regime, see Margaret Beare and Stephen Schneider, Money Laundering in Canada: Chasing Dirty and Dangerous Dollars (Toronto: University of Toronto Press, 2007). 3 Cited in V. Mallet, and M. Peel, “Bigger Role Mooted for Financial Investigations: Terrorist Funds,” Financial Times, 29 September 2001. For an example of how bureaucracies expand their bailiwick almost at random as a justification for both their existence and their growth, see Financial Transactions and Reports Analysis Centre of Canada, “Money Laundering and Terrorist Activity Financing Watch,” April-June 2010, www.fintrac-canafe.gc.ca/publications/watch-regard/2011-01-eng.asp. 4 Some of this is detailed in R.T. Naylor, “Criminal Profits, Terror Dollars & Nonsense,” Crime & Justice International, October 2007. 5 For a critique of the follow-the-money approach to “terrorist financing,” see R.T. Naylor, Satanic Purses: Money, Myth, and Misinformation in the War on Terror (Montreal: McGill-Queen’s University Press, 2006). 6 On the impossibility of “proving” that an A ML strategy can “work,” see Naylor, Wages of Crime. chapter 6. 7 On Latin American experience with capital flight during the 1980s crisis, see Naylor, Hot Money, part 7. 8 An excellent summary is in Ellen Brown, “Fleecing Pensioners to Save the Banks,” Counterpunch, 6 August 2013. 9 There is a good overview by Yves Smith, “The Decline and Fall of Detroit,” Naked Capitalism, 23 July 2013. 10 “Belle Isle Commonwealth Proposal Would Convert Detroit Park into Private City-State,” Huffington Post, 6 August 2013. This had uncomfortable echoes of schemes floating around in the 1970s and 1980s. On the instant-country mania, see Naylor, Hot Money, chapter 2, and Wages of

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Notes to pages 106–14

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Crime, chapter 4. On Detroit’s pending liquidation, see Stephen Foley et al., “Detroit Looks at Grim Economics of Garage Sale,” Financial Times, 28 July 2013. 11 For details on how capital flight historically worked, see Naylor, Hot Money, part 1. 12 It is tempting to add another category, of state funds going underground to avoid sanctions. But the motivations here are more complex, and the legalities much more confused. Most likely, but not inevitably, they are like preceeds, originating in legal activity, but then behave like capital flight. On the other side, the earnings of persons negotiating commercial deals with states under sanction may behave more like a mix of criminal profits and flight capital. On this, see Naylor, Patriots & Profiteers. 13 Even so, the pressure continues. See for example, claims in the far-right Wall Street Journal that, as a result of the so-called tax crackdown, the number of people renouncing their US citizenship is “soaring.” “U.S. Expats Balk at Tax Law: American Citizen Renunciations Are Soaring,” Wall Street Journal, 12 August 2013. 14 See Alexander Cockburn “Drugs and Repression from Obama to Cuomo” Counterpunch 9–10 June, 2012. 15 The most appalling single example of an anti-Muslim legal pogrom is the Holy Land Foundation case. For an up-to-date summary, see Stephen Downs and Kathy Manley, “Why All Americans Should Care about the Holy Land Foundation Case,” Washington Report on Middle East Affairs, January-February 2013. More generally, see Glenn Greenwald, “New York’s Top Court Highlights the Meaninglessness and Menace of the Term ‘Terrorism,’” The Guardian, 17 December 2012. On the mosques, see “New York Police Reportedly Designates Mosques as Terrorism Organizations,” Associated Press, 29 August 2013. 16 See Financial Transactions and Reports Analysis Centre of Canada December 2010, “Tax Evasion as a Designated Offence,” www.fintrac. gc.ca/publications/presentations/pre-ped/2011–01–20–eng.asp. The report explains: “This means that, in the context of money laundering, it is just like drug trafficking, fraud and almost every other serious offence.” 17 See chapter 2 of this volume for more detail. 18 Apart from the recent scandal in the US over supposed targeting of rightwing NGO fronts , there is plenty of evidence of IR S abuses in David Burnham’s A Law unto Itself: The IRS and the Abuse of Power (New York, 1991) and John Andrew’s Power to Destroy: The Political Use of the I R S from Kennedy to Nixon (New York, 2002). I was reminded of these books by Karl Grossman’s “Decades of Political Tyranny at the IR S,”

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Notes to pages 118–22

Counterpunch, 16 May 2013. Despite recent complaints of the US political right, throughout history most organizations and individuals targeted for tax-harassment were of quite different political leanings. 19 For details see Naylor, Satanic Purses, esp. chapters 9, 10, 13, 14, 15, and 16. 20 This is outlined in Naylor, Wages of Crime, chapter 2 ,“The Insurgent Economy: Black Market Operations of Guerrilla Groups.” chapter five

1 The comparison was taken to its logical conclusion in Joseph Wheelan, Jefferson’s War: America’s First War on Terror 1801–1805 (New York, 2003). 2 Laurence Schmeckebier and Francis Eble, The Bureau of Internal Revenue: Its History, Activities and Organization (Baltimore, 1923). 3. 3 Leonard Levy, Jefferson & Civil Liberties (Cambridge, MA : 1963) 97, 102, 110–11. This book caused near apoplexy among Jefferson devotees. Read, with a sinking heart, the author’s preface to the paperback edition to appreciate the degree to which sycophancy and hero-worship prevails among certain historians. 4 There is an examination of the legal basis of revolution as a legitimate tool for political change in Colonel Charles Dunlap, USA F, “Revolt of the Masses: Armed Civilians and the Insurrectionary Theory of the Second Amendment,” Tennessee Law Review 62, 1995. But see Nicole Saidi, “Did Jefferson Really Say That? Why Bogus Quotations Matter in Gun Debate” CNN , 11 January 2013. 5 There are many works (apart from that of Wheelan cited above) on the way political leaders, especially Thomas Jefferson, manipulated the threat from the Barbary privateers to promote the first American Navy. For example,. Donald Barr Chidsey, The Wars in Barbary (New York, 1971); Michael Kitzen, Tripoli and the United States at War (Jefferson, NC : 1993); Glenn Tucker, Dawn Like Thunder (New York, 1963). Some of these books have the air of patriotic tales for American boys; some are riddled with anti-Muslim and anti-Arab stereotypes. The fairest account seems to be by Robert Allison, The Crescent Obscured: The United States and the Muslim World 1776–1815 (Oxford, 1995). For a brief treatment of the Libyan point of view, see Ronald Bruce St John, Libya and the United States: Two Centuries of Strife (Philadelphia, 2002). 6 See, for example, Mukhtar Ali Isani, “Cotton Mather and the Orient,” The New England Quarterly 43, no. 1 (March, 1970) 51–3. 7 See especially John B, Wolf, The Barbary Coast: Algeria Under the Turks, 1580–1830 (New York: W.W. Norton, 1979), 154–8.

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Notes to pages 122–6

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8 N.A.M. Rodger, The Command of the Sea: A Naval History of Britain, 1649–1815 (New York, 2005), 9, 21–2. On the European corsairs and pirates, see, among others, Donald MacIntyre, The Privateers (London, 1975), and C.M. Senior, A Nation of Pirates (London, 1976). 9 Wheelan in Barbary, chapter 2, is actually better than most others on the background. More typical is Kitzen (Tripoli, 2 et passim), who dismisses earlier Christian atrocities against Muslims and presents the Spanish as freeing their conquered country from the Moorish invaders. In fact the Visigoths unseated by the Muslims had been invaders hated by the indigenous people who quickly intermarried with the Berber and Arab newcomers, and a later generation of “Spanish” conquerors had little historically to do with the area. 10 Wolf, Barbary, chapter 7, is an excellent overview of conditions and procedures in Algiers, the largest and most active of the corsair entities. 11 While the conventional story can be found in many sources, including Stephen Clissold, The Barbary Slaves (Totowa, NJ : 1977), see especially Daniel Vitkus (ed.), Piracy, Slavery and Redemption: Barbary Captivity, Narratives from Early Modern England (New York, 2001). The introduction by Nabil Matar is particularly valuable. There is an excellent survey of the literature of the period and the myths it retailed by Kenneth Parker, “Reading ‘Barbary’ in Early Modern England, 1550–1685,” in Matthew Birchwood and Matthew Dimmock (eds), Cultural Encounters between East and West: 1453–1699, (Newcastle-upon-Tyne, 2004), chapter 5, 77–97. 12 Matar in Vitus (ed.), Piracy 2, 5, 13. 13 For a thorough analysis of slavery in Islamic history and law, see the entry for ‘Abd in the Encyclopedia of Islam 1, 24–40. See also Qur’a¯ n 2: 177, 4:36, 9:60, 24:33, 47:4. 14 For a fascinating dissection of the role of myth in the European attitudes, and how almost precisely the opposite of the conventional belief was actually true, see Godfrey Fisher, Barbary Legend: War, Trade and Piracy in North Africa 1415–1830 (Oxford, 1957). 15 Marat, “Introduction” op. cit. 24–7; Wolf, Barbary, 155. 16 John Judis, The Folly of Empire (New York, 2004), 14–15, 23. 17 Cited in Washington Post, 15 October 2001. 18 This had also been true of England and other parts of Europe in earlier centuries, but experience had modified it. However, once France, Spain, and Italy began to carve up North Africa, the stereotypes switched back to the negative again (Fisher, Legend, 3–4). 19 Wheelan, Jefferson, 35; Allison, Crescent, 133ff.

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Notes to pages 127–31

20 Gary E. Wilson, “American Hostages in Moslem Nations, 1784–1796: The Public Response,” Journal of the Early Republic 2, no. 2 (summer 1982), 134–6; Allison, Crescent, 67–8 et passim. 21 See in particular Jack Shaheen, Reel Bad Arabs (New York, 2006). 22 Fisher, Legend, 3–13. 23 Allison, Crescent, 111–15. 24 N.A.M. Rodger, The Command of the Sea: A Naval History of Britain, 1649–1815 (New York, 2005), 21–2; Wolf, Barbary, 172. 25 Fisher, Legend, 13; Rodger, Command, 9–22. 26 Wolf, Barbary, 312. 27 Alisson, Crescent, 157. 28 There is an excellent reminder of this in the late Kevin Phillips’s admirable Wealth and Democracy, 3–15. 29 Patriotic American historians tell it differently – Europe was unable to stop the piratical scourge and the USA, as so often in the future, had to ride (or, in this case, sail) to the rescue (e.g., Kitzen, Tripoli, ix). 30 Kitzen, Tripoli, 17. Madison was aware that, if, as was widely suspected, the privateers were operating “upon the instigation of Britain,” tribute would not work; but that, in such a case, the natural course was to negotiate with or confront Britain. 31 Wheelan, Jefferson, 43, 47. 32 Washington Post, 15 October 2001, citing the work of military historian Glenn Voelz, who asks the significant, if rhetorical, question: “What’s changed in 200 years between Jefferson’s administration and Bush’s administration?” It is not clear that he would be happy with the answer given above. 33 Although there had been before and have been since some questions raised about Jefferson’s commitment to all the things with which the conventional wisdom now credits him, probably the sharpest critique was articulated more than forty years ago by Levy in Jefferson & Civil Liberties. 34 Allison, Crescent, 3. 35 For an official chronology, see Department of the Navy – Naval Historical Center “Historical Overview of the Federalist Navy, 1787–1801,” Naval History Bibliographies, no. 4, Washington, DC . 36 These divisions are discussed, in a rigid and not very convincing way, in Craig Symonds, Navalists and Antinavalists: The Naval Policy Debate in the United States, 1785–1821 (Newark, 1980). 37 To Jefferson the Navy was also a means to “arm the Federal head with the safest of all the instruments of coercion over their delinquent members” (i.e., over American states with uppity ideas). Tucker (Barbary Wars, 57)

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quotes Jefferson’s phrase but leaves out the words “over their delinquent members.” 38 Kitzen, Tripoli, 11. 39 Tucker, Barbary Wars, 60. 40 Wheelan, Jefferson, 59, 109. 41 Symonds, Navalists, 31. 42 Stanley Elkins and Eric McKitrick, The Age of Federalism (New York, 1993), 645. 43 Elkins, Federalism, 538. 44 Thomas Jefferson was among those who opposed the measures. However, his beef seems not with the principles involved so much the fact that they were federal rather than state initiatives. (Levy, Jefferson, 56.) 45 David Cole, Enemy Aliens: Double Standards and Constitutional Freedoms in the War on Terrorism, (New York, 2003), 91. 46 For a history of the clause and the controversy, see Rob Boston, “Joel Barlow and the Treaty with Tripoli,” Church & State 50, no. 6, June 1997. On the political structures and their changes, see C. R. Pennel, Piracy and Diplomacy in Seventeenth Century North Africa (London, 1989). 47 Wheelan, Jefferson, 92. 48 Fisher, Legend, 3–4. 49 See the account of events in St John, Libya, 20–5. It is remarkably different in implication from that given by patriotic American historians. 50 There is a strikingly different interpretation of these events, portrayed as a swashbuckling US victory against a “treacherous” but “formidable” foe in www.en.wikipedia.org/wiki/Stephen_Decatur#Second_Barbary_War. 51 St John, Libya, 26. 52 Yet Wheelan (Jefferson, 368) manages to reach the astounding conclusion that “Jefferson and his fighting sailors and Marines had freed America and Europe from the Terror.” 53 A mishmash of “tribal” leaders and local militias followed up by asserting the quasi-indepedence of the Barqa region, including Dernah, and to start “illegally” exporting oil via foreign trading companies.“Libya Losing Control of Oil Fields to Jihadist Groups,” www.al-monitor.com/pulse/ security/2013/08/libya-loses-control-oil-fields-east-emirate.html. As usual in these incidents oil or other strategic assets were prizes of war, not causes, a confusion rampant in what passes for “analysis” among today’s chattering-class lefties. 54 See Richard Leiby, “Terrorists by Another Name: The Barbary Pirates,” Washington Post, 15 October 2001.

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Notes to pages 137–40 chapter six

1 The term “black-collar crimes” is borrowed from Michael Newton, Black Collar Crimes: An Encylopedia of False Prophets and Unholy Orders, published by the late and much lamented Loompanics (Port Townsend, WA : 1998). 2 casablancapa.blogspot.ca/2008/09/this-just-in-obama-endorses-casablanca_ 24.html. 3 Richard Bulliet has made an argument for a rather different construct in The Case for Islamo-Christian Civilization (New York: Colombia University Press, 2004). 4 David Usborne, “Pentagon Instructor Urged Total War with Islam,” The Independent, 12 May 2012. 5 929 by the most recent account. See collegestats.org/colleges/Christian. 6 An outstanding work on the complexities in and confusions over “fundamentalism” today is Gabriel Almond, R. Scott Appleby, and Emmanual Sivan, Strong Religion: The Rise of Fundamentalisms around the World (Chicago: University of Chicago Press, 2003). The threefold distinction noted in the text below is simpler than those authors would use but seems to be in the same spirit. 7 I thank Dan O’Meara for correcting some of my earlier misunderstandings on these points. 8 On Bryan and the US labour movement, see Julie Greene, “The Making of Labor’s Democracy: William Jennings Bryan, the American Federation of Labor, and Progressive Era Politics,” Nebraska History 77, 1996. 9 For a major reappraisal of the historical myths that unfortunately still prevail, see Gabriel Kolko, The Triumph of Conservatism (New York, 1962). There is an interesting re-reappraisal by Kolko, “The New Deal Illusion,” in Counterpunch, 29 August 2012. 10 The outstanding work on this is Jeff Sharlet The Family: The Secret Fundamentalism at the Heart of American Power New York (Harper, 2008). See also “The Fellowship (Christian Organization),” en.wikipedia. org/wiki/The_Fellowship_%28Christian_organization%29. Not to be confused with The Family International (www.thefamilyinternational.org/) or the rock group once headed by Prince ( en.wikipedia.org/wiki/ The_Family_%28band%29). 11 Andrew Sparrow, “Churches Accuse Ministers of Perpetuating Myths about Poverty,” The Guardian, 31 March 2013. The coalition included the Baptist Union, the Methodist Church, the United Reformed Church, and the Church of Scotland. Not surprisingly, the Church of England was

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absent – although a group of forty-three bishops had already attacked the government. The new de facto “pope” of the Church of England, formerly an oil company executive in Nigeria, said nothing. Probably he had other things, like campaigning against abortion on demand, on his mind at the time. (Michael Goldfarb, “With New Archbishop, Church of England Exercises Political Power on Welfare Reform,” www.globalpost.com, 23 March 2013.) 12 Needless to say, no one planning the operations will bother to read Amin Maalouf’s The Crusades Through Arab Eyes (London: Al Saqi Books, 1984). 13 An interesting take on this is in Norbert Haring and Niall Douglas, Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards (London and New York: Anthem Press, 2012). 14 See Jason Leopold, “Military Evangelism Deeper, Wider than First Thought,” TruthOut Report, 21 December 2007; “We’re Dealing with a Christian Taliban,” IPS , 7 September 2007; “US Military Accused of Harboring Fundamentalism,” Agence France Presse, 13 February 2008; and the interview of Jeff Sharlet, “Christian Fundamentalists Taking Over the US Military,” Democracy Now, 6 April 2009. 15 Kelley Vlahos, “A Biblical Threat to National Security,” Antiwar.com, 19 June 2012. See also “Broadman & Holman Publishers Announces a New Bible Translation,” Baptist Press, 7 May 1999, and Chris Rodda, “The Lies You’ll Probably Be Hearing about MR FF and the Military Bibles,” Alternet, 15 June 2012. 16 Thus says The Lord of hosts, “I will punish what Amalek did to Israel in opposing them on the way, when they came up out of Egypt. Now go and smite Amalek, and utterly destroy all that they have; do not spare them, but kill both man and woman, infant and suckling.” 17 In fact, Falwell was right – “Thou Shalt Not Kill” is a mistranslation from the Hebrew original. Thanks to Mark Marshall for this point. Most major religions draw a distinction between murder, which is universally condemned, and sanctioned violence – although some scriptures can also be interpreted as banning all forms of violence, even in self-defense. 18 They look “to the past for inspiration not for a blueprint” (Almond et Al,. Strong Religion, 10). 19 Andrew Buncombe “Flushed Out: The Buddhist Monks Caught Playing Poker,” The Independent, 12 May 2012. 20 See Mark Beliles and Stephen McDowell, America’s Providential History (Charlottesville, VA: Providence Foundation, 2004). An except is available in Harper’s Magazine, February 2005, www.harpers.org/ archive/2005/02/0080385.

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21 See the excellent piece by Gordon Bigelow. “Let There Be Markets: The Evangelical Roots of Economics,” Harper’s Magazine, May 2005. 22 The process probably began with the Republican Party reaching out to fundamentalist Christians, for example in 1964, when the Barry Goldwater presidential campaign recruited a then-obscure Baptist televangelist named Jerry Falwell to lure social conservatives, especially in the South, away from the Democratic Party. Michelle Goldberg, Kingdom Coming: The Rise of Christian Nationalism (New York: Norton, 2006). 23 Evan Ramstad and Stephen Miller, “Unification Church Founder Rev. Moon Dies,” Wall Street Journal, 2 September 2012. 24 There is an enormous critical literature about the Moonies, most marred by being written by ex-acolytes with obvious axes to grind. For a wellresearched early work, see Jean-Francois Boyer, L’Empire Moon (Paris: Éditions la Découverte, 1986). 25 Goldberg, Kingdom, 119. 26 Properly speaking an evangelical refers to someone who sets out on a program of widespread conversion and/or the people who are so converted. Since the term refers to an earthly program of spreading the word rather than a fundamental (!) difference in theological beliefs, evangelicals can exist in any Christian denomination, left, right, or middle of the road. 27 Leah McClaren, “The TomKat Split: Is Hollywood Getting a Divorce from Scientology?” Globe and Mail, 7 July 2012. 28 Chris Hedges, American Fascists: The Christian Right and the War on America (New York: Free Press, 2006), 32. 29 Contrast this to amillennialists, who believe that the return of Jesus and the establishment of the Kingdom of God is a spiritual phenomenon and that it is necessary to keep a distinction between the spiritual realm and the political one. That is the view of most mainstream churches, Protestant and Catholic alike, but they are declining in influence relative to the literalists. For a vituperative post-millenarian attack on the pre-millenarian view, see Dwight Wilson, Armageddon Now! The Premillenarian Response to Russia and Israel Since 1917 (Tyler, TX: Institute for Christian Economics, 1991), including Gary North’s foreword. 30 Scofield’s story is told in, among other places, Joseph Canfield’s The Incredible Scofield and His Book (Vallecito, C A : 1988). The foreword tells of the struggles to get it published and the strident reaction in Dispen­ sationalist circles. There is little point trying to locate this work in major repositories such as the Library of Congress, the New York Public Library, or even the British Library.

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31 Scofield also claimed later to have earned medals that were never issued; and when he was sworn in as district attorney for Kansas, he took an oath that he had never borne arms against the US (Canfield, Scofield, 48). 32 See the 1971 edition at www.biblestudytools.com/commentaries/scofieldreference-notes/. 33 Canfield, Scofield, chapter 30. 34 Luckily it is now possible to get a double whopper – Scofield and Holman bibles packaged together to combine the Scofield “reference notes” with a biblical text written in user-friendly language. See www.amazon.com/ The-Scofield%C2%AE-Study-Bible-HCSB/dp/0195278909. 35 Many translations now floating about depart from this rule. But they almost always take care to call themselves “interpretations” or something similar. Such an insistence on keeping the word intact, in this instance in Latin, was also long the practice of the Catholic Church, one of the factors precipitating the Reformation. 36 The Left Behind novels are the bestselling fiction in the US and have sold 60 million copies worldwide (New York Times, 17 July 2004). 37 One of the earlier books noting the strength of the emerging dispensationalist-Zionist alliance was by Grace Halsell, Prophesy and Politics: Militant Evangelists on the Road to Nuclear War (London, 1986). 38 There is an excellent summary of this history by Rev. Donald Wagner, “‘Bible and Sword’ US Christian Zionists Discover Israel,” in Beirut Star, 9 October 2003. 39 “The Arabic realm is today’s Islamic realm. Islam came from Christianity and has deviated from the religious tradition. They are the Cain-type world religion, the Barabbas-type religion. If you do not accept the Koran, you are put to death. Do you understand? In the democratic world, Christianity is the internal, spiritual standard. In the Communist world, Islam can stand in the internal position. Therefore, Islam and Christianity are historical enemies, and also democracy and Communism are historical enemies. Which country is like Barabbas? It is the Islamic countries, holding in one hand the Koran and in the other the sword. That is not the essence of real faith. They are fundamentally wrong if seen from original religious teachings. Islam definitely became the internal and external side of communism” www.unification.net/wu1/wu1–5–1.htm. 40 One of the earlier, but still excellent, overviews of the process is by Ian Lustick, For the Land and the Lord: Jewish Fundamentalism in Israel (New York, 1988). 41 Almond et al., Strong Religion, 23, 41, 63–7.

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Notes to pages 156–62

42 As post-millenarians, Reconstructionists sometimes sneer at the obsession of their pre-millenarian rivals with the coming Rapture, insisting that because the timing of the second coming of Christ cannot be predicted, real Christians put their energies into returning contemporary societies, especially the US, to their Biblical roots. However, post-millenarians share with pre-millenarians the location where Jesus will make his appearance when that great event does occur, contrary to the blasphemies of Muslims, who deny the divinity of Christ. As Chalcedon, the main voice of contemporary Reconstructionism, observes: “it is only in returning to the God of the Bible that we will be able to meet the challenge of Islam.” See Don Walker, “The Challenge of Islam,” chalcedon.edu/research/articles/thechallenge-of-islam/. 43 This is well explained by Chris Berlet, “What Is Dominionism? Palin, the Christian Right & Theocracy,” 5 September 2008, www.theocracywatch.org. 44 Sharlet, Family, 191. 45 For a good survey of principles: en.wikipedia.org/wiki/ Theonomy#Christian_Reconstructionism. 46 See, for example, Frederick Clarkson, “Theocratic Dominionism Gains Influence,” Political Research Associates, March/June 1994, www. publiceye.org/magazine/v08n1/chrisre1.html, and www.religioustolerance.org/reconstr.htm. The ironic thing is that there also exists a Jewish Reconstructionism that takes the opposite view, as in the slogan “The past has a vote but not a veto” (www.jewishvirtuallibrary.org/jsource/ Judaism/reconstruction.html). 47 Gary North, “The Covenantal Wealth of Nations,” Biblical Economics Today 21, no. 2, February/March 1999. 48 On the contrast, see Eric Williams, Capitalism and Slavery (Chapel Hill: University of North Carolina Press, 1944). 49 By contrast, the Southern Baptist Convention seems to have been inspired by the Taliban victory in Afghanistan into adopting, two years later, a resolution to reinforce traditional gender roles (Almond et. al., Strong Religion, 29). 50 Sharlet, Family, 195–6. 51 See John W. Robbins, “Money, Freedom and the Bible,” The Trinity Foundation, November-December 1989. 52 Gary North, “The Zero Interest Charitable Loan,” Biblical Economics Today 20, no. 3, April-May 1998. 53 The classic account of this process in the early years by Gustavus Myers, History of the Great American Fortunes (New York: New American Library, 1907, 1936).

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54 See the diagnosis of the consequences by Kevin Phillips, American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush (New York, 2003) 55 R.T. Naylor, Crass Struggle: Greed, Glitz, and Gluttony in a Wanna-Have World (Montreal: McGill-Queen’s University Press, 2011), chapter 5. 56 See William G Hoskins, The Age of Plunder: King Henry’s England, 1500– 1567 (London: Longman, 1976). 57 See Naylor, Hot Money, chapter 5. 58 Tom Kington, “Mother Superior Accused of Forging Italian Millionaire’s Will,” Guardian, 17 June 2012. 59 The author was in Afghanistan during that period and witnessed first hand some of the antics of the hash smugglers, though none who identified themselves as members of the Brotherhood. At the time Afghan merchants would mould hash into the soles of sandals, pump up a spare tire with powdered hash, or custom-manufacture leather luggage with flattened hash bricks inside. Afghan Customs could be squared away with a little cash or valuable goods. 60 The path breaking account was by Mary Jo Worth, “The Story of the Acid Profiteers,” Village Voice, 22 August 1974. This was followed by several books, especially Stewart Tendler and David May, The Brotherhood of Eternal Love (New York: Panther Books, 1984), and Martin Lee and Bruce Shlain, Acid Dreams: The Complete Social History of LSD , the CIA , the Sixties, and Beyond (New York, 1994). More recently there is a revisionist work by Nick Schou, entitled Orange Sunshine: The Brotherhood of Eternal Love and Its Quest to Spread Peace, Love and Acid to the World (New York: St Martin’s Press, 2010) that, while excellent in many respects, ignores the financial side as well as the alleged C IA connections, things where it would have been valuable to bring a more contemporary critical perspective to bear upon. 61 Brentin Mock, “Nation of Yahweh Mourns Loss of Leader, Shows Signs of New Life,” Southern Poverty Law Center Intelligence Report, fall 2007, no. 127. 62 See “African-American Anti-Semitism,” www.adl.org/poisoning_web/ black_bigots.asp. 63 A hair-raising account of what happened to the sect once its founder died is in John Hubner and Lindsay Gruson, “Dial Om for Murder,” Rolling Stone, 9 April 1987 and elaborated upon in John Hubner’s Monkey on a Stick (New York, 1990). 64 See Kevin Phillips, American Theocracy (New York: Viking, 2006), for an experienced view of the overt links of religion, neoliberalism, inherited

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Notes to pages 168–70

wealth, and US politics. See also Sharlet, Family, for a history of the more hidden links. There is also a large literature that, while containing some useful insights, also tends to take simple conspiracy notions too seriously. See, for example, Michelle Goldberg, Kingdom Coming: The Rise of Christian Nationalism (New York: Norton, 2006), and Chris Hedges, American Fascists: The Christian Right and the War on America (New York: Free Press, 2006). 65 See “An Overview of Religious Financial Fraud: the $34 Billion Scandal,” Christian Headlines Blog, 8 January 2011; Todd M. Johnson, David B. Barrett, and Peter F. Crossing, “Status of Global Mission, 2010, in Context of 20th and 21st Centuries,” International Bulletin of Missionary Research 35, no. 1, January 2011, 29. 66 See, for one example (among many), “Muslim Mob – Roadblock to Church,” by Jan Bish, “Middle East Analyst” for the rejuvenated Jim Bakker Show (jimbakkershow.com/blog/2012/10/31/muslim-mob-roadblock-tochurch/). Tammy Faye died in 2007. An early analysis of the scandal is in Larry Martz, Ministry of Greed (New York: Weidenfeld & Nicolson, 1988). On the original indictment, see “ptl’s Jim Bakker Indicted for Bilking His Followers: His Top Aide also Cited on 24 Counts,” Los Angeles Times, 5 October 1988. 67 See en.wikipedia.org/wiki/List_of_scandals_involving_evangelical_ Christians for a partial list of mainly America “evangelical Christian” scandals. 68 That phrase, repeated frequently by Parsley’s critics, always seems to be sourced back to James Beddington, “An Empire of Souls,” Columbus Review, May 1993. For it, along with much more see www.columbuslibrary. org/cmlcnix/searchresults.cfm?sort=&afterdate=&beforedate=&searchlist =PARSLEY%2C%20ROD%20%28PASTOR%20OF%20WORLD%20 HARVEST%20CHURCH%29&searchindex=S&pub=ALL. Perhaps Paisley’s attitude toward money can be more simply summarized by the title to one of his early books – God’s Answer to Insufficient Funds. For a more general overview, see Sarah Posner “With God on His Side,” The American Prospect, 23 October 2005. 69 “Liberal Preachers Trying to Silence Him, Pastor Says.” The Colombus Dispatch, 21 January 2006; “Blackwell Met with Ministers More Often than I R S Complaint Alleged,” Associated Press, 12 March 2006. 70 David Corn, “McCain’s Spiritual Guide: Destroy Islam,” Mother Jones, 12 March 2008. When John McCain heard that another of his theological sponsors, Rev. John Hagee, recorded a sermon saying that Hitler had been part of God’s plan to chase the Jews into Palestine, not only did he quickly

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repudiate the pastor, but the New York Times published a strongly denunciatory article about Hagee (see Neela Banerjee and Michael Luo, “McCain Cuts Ties to Pastor Whose Talks Drew Fire,” New York Times, 23 May 2008). Is it possible no one told the Times about Parsley’s highly public anti-Muslim diatribes? 71 More specifically, Obama supposedly sent a member of the church to make the bid for silence. Edward Klein, “The ‘Bribe’ to Silence Wright,” New York Post, 12 May 2012, a good story whose credibility can only be diminished by the fact that it appeared in the New York Post, part of the Rupert Murdoch empire. 72 For a rare exposé, see Analisa Nazreno, “Critics Say John Hagee’s compensation Is too High,” San Antonio Express-News, 20 June 2003, a rather limp title for an article that mercilessly dissects Hagee’s finances. See also Sarah Posner, “John Hagee’s Controversial Gospel,” The American Prospect, 12 March 2008. Hagee’s assurances to his donors of an impressive theologically guaranteed return stated on his website at www.jhm.org/ Donations/Opportunities: “The Kingdom of God has the greatest investment opportunities known to man. You invest and are guaranteed a 30-60-100 fold return. You are guaranteed the return in this life and in the life to come.” (At that latter point, of course, hiring a forensic accountant or a civilaction lawyer becomes a bit more difficult.) Re: the jazz band, Hagee himself plays a mean alto saxophone; see www.youtube.com/watch?v=IiCtgTiadhA. On his B’nai Brith award, see Christians United for Israel, www.cufi.org/site/ PageServer? pagename=about_executive_board_hagee. 73 Stephanie Simon, “Humbled Haggard Climbs Back in Pulpit,” Wall Street Journal, 24 July 2010. Probably his management philosophy is captured in the title of one of his books: Dog Training, Fly Fishing, and Sharing Christ in the 21st Century. The ad blurb on Amazon reads: “Ted Haggard presents a successful and tested model for a small group ministry here that can be implemented by a church of any size. By enabling members to embrace and capitalize on their own unique abilities, the diverse groups create an environment where people meet mentors that can disciple and guide them. This need-and interest based approach redefines the model for powerful church growth.” 74 Ted Haggard, “Islam: The Truth about Islam,” www.patrobertson.com/ Features/ted_haggard.asp, 22 November 2002. See for details of the scandal www.christianitytoday.com/ct/topics/h/ted-haggard and en.wikipedia. org/wiki/Ted_Haggard. 75 See, for example, the N BC-CBC expose at www.youtube.com/watch?v= tVG1x-rh6FE&feature=related and www.youtube.com/watch?v=BLB0

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Notes to pages 173–6

UTO7–Xc&feature=related. This 2002 N BC investigation, challenged by Hinn, was folllowed up by the network two years later; see www.nbcnews.com/id/7090144. 76 Mark Wroldstad, “Exclusive: Ministry Says Questions about Finance, Structure Are Routine,” Dallas Morning News, 6 July 2005. Claims by a watchdog group, Trinity Foundation, based on documents from trash bins at his office that his annual earnings hit $1,325,000 were countered by Ministry lawyers asserting that the documents were fake or stolen (two rather different things in terms of their legal implications). See “I R S Investigates Benny Hinn,” TheLedger.com, 16 July 2005. 77 See, for example, www.youtube.com/watch?v=Rt0BlEECY9Y; Michael Blum, “Thrill-Seeking American Tourists Take Aim at West Bank Firing Range,” Agence France Press, 20 July 2012. 78 One theory holds that the huge donation Adelson made to Romney during the last US presidential election may have prompted the Obama Administration to launch an investigation of Adelson’s Macau-based operations. See Kyle Roerink, “GOP Billionaire Probed for Illicit Ties with Chinese Officials, Gangsters,” The National Memo, 6 July 2012; Alexandra Berzon and Kate O’Keeffe, “Sands China Deals Scrutinized,” Wall Street Journal, 9 August 2012; Edward Wong et al., “Casino Mogul, GOP Donor Sheldon Adelson’s Man in China Is Focus of Probe,” New York Times, 13 August 2012. 79 Christian Science Monitor, 7 July 2004; Wall Street Journal, 26 May 2004. 80 Akiva Eldar, “American Jews Are Giving Up on Israel,” Haaretz, 12 November 2012. 81 See the excellent overview by Stephen Zunes, “US Christian Right’s Grip on Middle East Policy,” Asia Times, 8 July 2004. 82 The characterizations of, among many others, Jerry Falwell, Franklin Graham (son of Billy), and Pat Robertson (Philips, Dynasty, 230). 83 Of course, there are still some denominations in the US who disagree. For example, the Bethel Church of God insists that: “The true Israel today is spiritual Israel; it is not physical Israel. God’s Church does not join in the wars that occupy this world. It is a spiritual entity not attached to the ways of this world” (www.bethelcog.org/com06.htm). But their political influence is obviously much less than those who take the other view. 84 “There’s evil people in the world,” the chairman declared in a CNN interview. “Drones aren’t evil, people are evil. We are a force of good and we are using those drones to carry out the policy of righteousness and goodness.”

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85 On the US decision to “discipline” misbehaving soldiers by a letter of reprimand, see Dion Nissenbaum, “US to Discipline Nine Soldiers in Afghan Incidents,” Wall Street Journal, 26 August 2012. 86 “US Marine Demoted for Urinating on Corpses,” Al Jazeera, 8 August 2013. chapter seven

1 The introduction to this chapter summarizes some of the themes of Naylor, Satanic Purses. 2 Some of the reasons are diagnosed in Karen Armstrong’s Holy War: The Crusades and Their Impact on Today’s World (New York, 1988). 3 Paul Robinson, “The Good News about Terrorism,” The Spectator, 4 February 2005. 4 The irrepressible Steven Emerson claimed that in 1992 he had attended a meeting of an “alphabet soup of Middle East terrorist groups” at the Oklahoma Convention Center in 1992 “where I actually could have envisioned that I was in Beirut.” Thanks to Jane Hunter for these quotes. 5 These issues are addressed in Dan Morgan, Merchants of Grain (New York, 1979) and in Maren, Road to Hell, 189–95. See also Christopher Barrett and Daniel Maxwell, “PL480 Food Aid: We Can Do Better,” Choices: The Magazine of Food, Farm and Resource Issues, 3rd quarter 2004. 6 An excellent overview is by Eric Schlosser, Fast Food Nation: The Dark Side of the All-American Meal (Boston, 2001). 7 One of the better works examining this, despite its apocalyptic subtitle and rather simplistic economic determinism, is Joel Dyer, Harvest of Rage: Why Oklahoma City Is Only the Beginning (Boulder, C O: 1997). Another book that contains useful information is Daniel Levitas, The Terrorist Next Door: The Militia Movement and the Radical Right (New York, 2002). Its main concern is the “anti-Semitic” aspects of the ideology while it pays scant attention to the anti-Catholic, anti-black, anti-immigrant, etc. attitudes of the Radical Rural Right. 8 See Allen Trelease, White Terror: The Ku Klux Klan Conspiracy and Southern Reconstruction (New York, 1971). There was a second K K K born in the early twentieth century, from which the current organization is descended – apart from the name and the ideology, it has no real organizational connection to the original. (See Kenneth Jackson, The Ku Klux Klan in the City 1915–1930 (New York, 1967), and Charles Alexander, The Ku Klux Klan in the Southwest (University of Kentucky Press, 1965).

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Notes to pages 185–90

9 For general treatments, see James Coates, Armed and Dangerous: The Rise of the Survivalist Right (New York: Hill & Wang, 1987); Phillip Finch, God, Guts and Guns (New York, 1983); and James Cocoran, Bitter Harvest: Gordon Kahl and the Posse Comitatus (New York, 1990). 10 Finch, God, Guts and Guns, 105; New York Times, 12 March 1984. 11 Time, 28 February 1984; The Economist, 13 October 1984, 2 November 1985; Cocoran, Bitter Harvest, 25. Gordon Kahl, a Posse stalwart, even claimed that income taxes formed one of the ten principles of the Communist Manifesto. He was later martyred in a gunfight with IRS agents who would have been startled to find that they were secretly working for the KGB. 12 The Economist, 13 October 1984, 2 November 1985; Cocoran, Bitter Harvest, 25. 13 Levitas, Terrorist Next Door, 205, 221. 14 Bismark Tribune, 21 May 1989; National Law Journal, 16 July 1995; Mark Pitcavage, “Every Man a King: The Rise and Fall of the Montana Freemen,” Patriot Profile, no. 3, 6 May 1996. 15 The champion, a woman who called herself the “lien queen,” was alleged, along with her disciplines, to have issued $800 million “worth” before being sentenced to 200 years (National Law Journal, 16 July 1995). 16 Mark Pitcavage, “Every Man a King: The Rise and Fall of the Montana Freemen,” Patriot Profile, no. 3, 6 May 1996. 17 Bismark Tribune, 21 May 1989. 18 James Coates, Armed and Dangerous: The Rise of the Survivalist Right (New York, Hill & Wang, 1987), 73; New York Times, 12 April 1982, 27 December 1984; Dyer, Harvest, 246–7. On the Sons of Liberty and the Order, see the Wikipedia entry on Robert Mathews, en.wikipedia.org/wiki/ Robert_Jay_Mathews. 19 See, for example, Richard Serrano One of Ours: Timothy McVeigh and the Oklahoma City Bombing (New York, 1998). 20 A critical examination of the Waco tragedy in its legal and political context is by David Kopel and Paul Blackman, No More Wacos (New York, 1997). 21 There is a interesting contrast between the accounts of Ruby Ridge in Kopel and Blackman’s Wacos, 32–9, in which the target, Randy Weaver, is depicted as a loner entrapped by the feds, then smeared by government propaganda as a violent racist, and Levitas’s Terrorist, 301–4, in which the government line is taken at face value, with even an apologia for the FB I blowing off the head of Weaver’s wife while she held their nine-month-old infant. Both books have agendas, but the Kopel and Blackman account

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rings truer. On the attempts to make Weaver an informant, see also Roberts, Tyranny, 134. 22 This is the argument of Bonar Menninger, a ballistics expert, in Mortal Error: The Shot That Killed JFK (New York, 1992). However, even if its central thesis is correct, it does nothing to lift the clouds that surround Lee Harvey Oswald’s background, intent, and associations. See especially Edward Jay Epstein’s Legend: The Secret World of Lee Harvey Oswald (New York, 1978). 23 Seymour Hersh, The Dark Side of Camelot, 439, 449. 24 See the views of Kenneth Timmerman in Insight on the News (sic), 19 April 2003. Timmerman was the doyen of the get-Saddam brigade in the US. See also Wall Street Journal, 5 September 2002. 25 Kelly and Wearne, Tainting Evidence, chapter 6, casts doubt on the evidence used to convict (and execute) McVeigh. Perhaps, but McVeigh showed no reluctance to take the credit. 26 For example, Levitas (Terrorist Next Door, 201) claims: “Most people who considered themselves [apparently he had access to their inner thoughts] members of the Posse never filled out a membership card, signed a county charter, or sent in dues – they simply attended tax-protest meetings or participated in one of hundreds of ‘Constitutionalist’ or ‘Patriotic’ groups that were scattered across the country. [No guilt by association here!] By the early 1980s, right-wing tax protest had become practically synonymous [says who?] with Posse Comitatus.” On the next page he manages to inflate the “threat” by orders of magnitude. “The FBI estimated only a few thousand Posse members, but more than one hundred thousand people read Sassy’s book, and three to four times that number were regular readers of Spotlight.” The Sassy book was a rather silly rightist rant advocating, among other things, funny money schemes; and Spotlight specializes in convoluted conspiracy theories that probably even many of its readers have trouble taking seriously. It is also worth wondering if Levitas made any effort to net out of the Spotlight readership numbers all the people paid by the government or by various tax-exempt foundations like the B’Nai Brith to monitor the marginal right for violations of various canons of political correctness. 27 For details, see law.justia.com/cases/federal/appellate-courts/F2/951/1172/ 257743/. 28 Cocoran, Bitter Harvest, 163; Iver Peterson, “Bullions in Raids Must Be Returned,” New York Times, 12 April 1985; “The Nation,” Los Angeles Times, 18 October 1987; law.justia.com/cases/federal/appellate-courts/ F2/951/1172/257743/.

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Notes to pages 194–201

29 Even though federal law-enforcement did not claim some grand interlinked conspiracy, others with different agendas certainly did. Thus the absurd depiction of various right-wing groups “with links to Bill Gale,” with, of course, the nature of the “links” carefully undefined and unspecified. (Levitas, Terrorist Next Door, 263.) 30 The Center for Strategic and International Studies examined Saudis heading for Iraq to fight the US and discovered that almost all were radicalized by the US invasion (Reuters, “Iraq Invasion Radicalized Saudi Fighters: Report,” ABC News, 19 April 2005). 31 “C B S 11 Investigates Poison Gas Plot,” Viacom Internet Services Inc., 26 November 2003. Details of the contraband haul are from Kris Axtman, “The Terror Threat at Home, Often Overlooked,” Christian Science Monitor, 29 December 2003. chapter eight

1 Eric Kierans, Remembering (Toronto, 2001), 181, and personal communication from the late Eric Kierans. 2 For an excellent backgrounder, written with the crisis very fresh in mind, see Ron Haggart and Aubrey Golden, Rumours of War (Toronto, 1971). For a thorough and credible history of the events leading up to the crisis, see Louis Fournier, FLQ : The Anatomy of an Underground Movement (Toronto, 1984). The latest addition to the literature is by William Tetley, a former Quebec cabinet minister and long-time professor of law who was a participant from the government side in the events: The October Crisis, 1970: An Insider’s View (Montreal: McGill-Queen’s University Press, 2006). 3 The most widely read of the “radical” Quebec political literature of the time either invoked a monolithic Anglophone conspiracy hypothesis to explain Quebec’s apparent misfortunes (as in Léandre Bergeron’s Petit manuel d’histoire du Québec) or drew absurd analogies between the situation of American blacks and Canada’s francophones (as in Pierre Vallière’s Les nègres blancs d’Amérique). 4 For details on fundraising techniques used by insurgent groups, see R.T. Naylor, Wages of Crime: Black Markets, Illegal Finance, and the Under­ world Economy (Ithaca and Montreal, 2002, 2004) chapter 2, “Black Market Operations of Guerrilla Groups.” 5 See Kierans, Remembering, 181. Kierans, an independent-minded insider in both federal and Quebec politics, took a radically different and fundamentally skeptical view (after the fact) than William Tetley (cited in footnote 2) about the necessity and rationale for federal actions.

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Notes to pages 203–15

271

6 See in addition to the works cited above, Dennis Smith, Bleeding Hearts, Bleeding Country (Edmonton, 1971), 47–52. 7 Fournier, FLQ , 171–2, 250. 8 Michael McLoughlin, Last Stop, Paris: The Assassination of Mario Bachand and the Death of the FLQ (Toronto: Penguin, 1998), 38; Fournier, FLQ , 20, 38, 50, 57. 9 Francis Simard, Talking It Out: The October Crisis from Inside (Montreal, 1982), 98, 102. 10 Francis Simard later explained of his grouplet: “We robbed banks, we tried to create and structure an organization.” But …“I didn’t even know what a stick of dynamite looks like … We never planted bombs” (Simard, Talking, 121). 11 Simard, Talking, 124–8, 153–4. 12 Haggart and Golden, Rumours, 35. 13 Globe and Mail, 12 August 2005. 14 This is the thesis advanced in Michael McLoughlin, Last Stop, Paris: The Assassination of Mario Bachand and the Death of the FLQ (Toronto, 1998). 15 For a sensible review of the results of the election see Marc-Olivier Bherer, “Au Québec, un electorat divisé en trois blocs de force presque égale,” Le Monde, 5 September 2012. chapter nine

1 By March 2013 the guesstimates rose as high as $1.2 quadrillion in notional value as banks neatly obviated any (mainly public-relations) impact the US Dodd-Frank restrictions might have had (Yves Smith, “World Derivatives Market Estimated as Big as $1.2 Quadrillion Notional…” Naked Capitalism, 26 March 2013). 2 See the claim in the New York Times that, based on some “newly discovered” letters, the late Usama bin L aden and his cohorts decided to try to off¯ set their weakness resulting from powerful American blows by “rebranding” (Robert Mackey, “Qaeda Leadership Considered Rebranding,” Blogging the News with Robert Mackay, 3 May 2012). Perhaps there were indeed “newly discovered” letters – the question remains, who planted them? Here the cui bono test might be appropriate even though it is usually overly simplistic. 3 For example, after the spring 2013 attack on an off-duty soldier in Woolwich, British security agencies declared at least one suspected assailant had “ties to” al-Q¯a’idah (John F. Burns, “British Officials Knew Suspect in Soldier’s Death Had Ties to Al Qaeda,” New York Times, 26 May 2013).

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272

Notes to pages 215–22

4 www.inspiremagazine.org.uk. 5 For a good summary see Alain Vicky,“Nigeria’s Homegrown Monster,” Le Monde Diplomatique, April 2012. 6 On the tangled politics, see, Pepe Escobar, “Burn, burn – Africa’s Afghanistan,” Asia Times, 19 January 2013; Seumas Milne, “Mali: The Fastest Blowback Yet in This Disastrous ‘War on Terror,’” Guardian, 24 January 2013; “The Causes of the Uprising in Northern Mali,” ThinkAfricaPress, 27 January 2013; and Stephen Smith, “In Search of Monsters,” London Review of Books 35, no., 3 February 2013. For an account of the mess created by US interventions in North and West Africa, see Nick Turse, “Blowback Central,” TomDispatch.com, 18 June 2013. 7 If further evidence of that alliance is needed to silence skeptics, surely it came in Nigeria in 2012, when “al-Qaeda” kidnapped a German engineer – who was killed in a “rescue mission” – as part of its plot to take over subSahara’s greatest oil producer and bring the Western economy crashing (further?) to its knees. See “Al Qaeda Tied to Nigeria Death,” Wall Street Journal, 31 May 2012. 8 On the Kabul Bank fraud, see Dilip Hiro, “How Operation Enduring Freedom Mutated into Operation Enduring Corruption,” TomDispatch, 2 April 2013. 9 The criminologists present were, apart from yours truly, York University’s Margaret Beare, then head of the Nathanson Centre on Organized Crime and Corruption, and the late Jean-Paul Brodeur of the Université de Montréal, who, at one point when police proposed that any felony, even sodomy, be the grounds for seizing the offender’s assets, could not resist bursting out: “There is good legislation and there is bad legislation. But this is ridiculous legislation.” 10 www.edmontonpolice.ca/CommunityPolicing/OrganizedCrime/Gangs/ OrganizedCrimeLegislation.aspx. www.parl.gc.ca/About/Parliament/ LegislativeSummaries/bills_ls.asp?lang=E&ls=c14&Parl=40&Ses=2&sour ce=library_prb. With crime rates plummeting, the Harper regime’s Justice minister declared “Where there’s money to be made from these acts, you can bet organized crime groups will be involved” (“Organized Crime Law Changes Unveiled,” CBC News, 4 August 2010). 11 For a profile of lobbyist and operative Roger Stone, see en.wikipedia.org/ wiki/Roger_Stone. 12 There is a good summary in en.wikipedia.org/wiki/Eliot_Spitzer. See the comment by Martha Nussbaum, “Trading on America’s Puritanical Streak,” Atlanta Journal-Constitution, 14 March 2008. 13 On Giuliani’s self-promoting antics, see Roberts, Tyranny 90–1, 92–4,137,138.

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Notes to pages 223–5

273

14 Even a few who built their careers on cheerleading this development are beginning to get nervous. See, for example, Fareed Zakaria, “US Has Made War on Terror a War without End,” CNN , 6 May 2012. 15 For a quick summary of the progress of official espionage on its own citizens in the US, see David Price, “A Social History of Espionage,” Counterpunch, 9–11 August 2013. 16 “US to Let Spy Agencies Scour Americans’ Finances,” Reuters, 13 March 2013. 17 James Bamford, “The N S A Is Building the Country’s Biggest Spy Center (Watch What You Say),” Wired, 15 March 2013. Bamford is the author of several earlier books warning, without the population or mass media taking much note, about the galloping intrusion on privacy by official espionage on its own citizens. 18 “Police to Consider Protesters in Istanbul’s Taksim Square Terror Organization Members: Minister,” (Hurriyet Daily News, 16 June 2013). When that didn’t seem to have the desired effect, Prime Minister Erdogan himself claimed that ongoing demonstrations were intended to sabotage peace talks with Kurdish seperatists and ordered his intelligence agencies to probe demonstrators for “foreign links” (“Taksim Demos Target Kurdish Process, Turkish PM Says,” Hurriyet Daily News, 21 June 2013; “Turkey’s Intelligence Service Begins Probe into ‘Foreign Links’ of Gezi Park Protests,” Hurriyet Daily News, 22 June 2013). 19 American Civil Liberties Union, ACLU Launches Nationwide Investigation into Police Use of Military Technology & Tactics, 6 March 2013. 20 “The ‘Robocop’ Headset That Lets Police See Through Walls …” Mail on Sunday, 19 February 2013. 21 Tana Ganeva and Laura Gottesdiener, “Nine Terrifying Facts about America’s Biggest Police Force,” Salon, 28 September 2012. 22 In fact it has been an accelerating phenomenon across the US and, by imitation, many other places since 9/11. See Stephan Salisbury, “How to Fund an American Police State,” Tomgram, 4 March 2012. 23 Adam Gabbatt, “Chicago Police Bulk Up with $1m in Riot Gear …” Guardian, 11 May 2012. 24 Eloise Lee, “The Department of Homeland Security Is Buying 450 Million New Bullets,” Wall Street Journal, 28 March 2012; “Homeland Security Aims to Buy 1.6b Rounds of Ammo,” Denver Post, 15 February 2013; “Tactical HS T,” le.atk.com/general/federalproducts/pistol/tacticalhst.aspx. 25 An early critical examination is Kelly Hearn, “Rumsfeld’s Ray Gun,” AlterNet, 19 August 2005. For a revival of the military hype, see Jill Reilly,

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274

Notes to pages 225–7

“US Military Unveil Latest Weapons – a Ray Beam That Makes the Enemy Feel ‘Quite Hot,’” Daily Mail, 11 March 2012. 26 Not that Afghanistan was being neglected. It became the site of an experimental program to collect from potentially millions of citizens biometric data that the government could encode on ID cards, then allow its use by the US military and by the mercenary forces slated to replace it. See Noah Schactman, “Army Reveals Afghan Biometric I D Plan,” Wired, 24 September 2010; “Police Could Soon Get Their Hands on the US Military’s ‘Pain Ray,’” Smithsonian.com, 14 May 2013. The media outcry caused a prison in California to cancel a test. For how long, though, remains to be seen. 27 Sarah Lyall, “A New Amenity May Show Up on Some London Roofs for the Olympics: Missiles,” New York Times, 12 May 2012. 28 Donald McIntyre, “Firm in Charge of Olympic Security Polices Israeli Settlements Too,” The Independent, 8 June 2012. 29 Justin Peters, “Doping, Match-Fixing, Clock Mismanagement: A Guide to the Scandals of the London Games,” Slate, 2 August 2012. 30 Patrick McGroarty and Drew Hinshaw, “MasterCard to Issue ID and Payment Cards in Nigeria,” Wall Street Journal, 8 May 2013; Timothy Guzman, “The Cashless Society Arrives in Africa,” Global Research, 16 May 2013. 31 Ian Macleod, “Ottawa Airport Wired with Microphones as Border Services Prepares to Record Travellers’ Conversations,” Ottawa Citizen, 15 June 2012). Orders were also issued from Ottawa for its spooks, border officers, and cops to act on information extracted by torture (Jim Bronskill, “RCM P, CBS A Get Green Light from Feds to Use Information Extracted through Torture,” Canadian Press, 26 August 2012. 32 Isabeau Doucet, “Two Arrested in Canada over Alleged Passenger Train Terrorist Plot,” Guardian, 23 April 2013. 33 “Canada Train ‘al-Qaeda Plot’ Suspects Challenge Case,” BBC News, 23 April 2013. The police openly admitted there was no immediate or present danger of the plot actually being carried out.

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Index

Adams, John, 119 Adoboli, Kweku, 79 Afghanistan, 24, 47, 152, 177, 178, 179, 215, 218; and Kabul Bank scandal, 218; US invasion of, 47 Alaska, 57; and Exxon Valdez oil spill, 57 al-Awakli, Anwar, 91–2 Al-Gama’a al-Islamiyya (Egypt), 185 Algeria, 123, 198, 202, 216 Algiers, 121, 127, 135; dey of, 128; slave market in, 122, 126; US treaty with, 133; at war with United States (1785), 130. See also Barbary States Alien Act (US), 132 al-Q¯a’idah, 25, 39, 40, 47, 48, 179– 80, 203, 215–16, 226; in Afghanistan, 215; in Canada, 227; and counterfeiting of consumer goods, 39–41, 215; exaggeration of threat posed by, 215–16; in Iraq, 215; in the Maghreb, 215–16; myths concerning, 179; organization of, 179–80, 215–16; in Somalia, 216; in Yemen, 216

25980_Naylor.indb 275

al-Wa’ad, 220–1 American Job Creations Act (US), 64 anti-Communist propaganda (US), 141, 151; and Red Scare purges, 141 Anti-Counterfeiting Trade Agreement, 35 anti-money-laundering (aml) regime, 15, 23, 98, 99–117, 222, 224; and creation of moneylaundering as a crime, 99, 109– 10; effectiveness of, 100, 101–4, 109, 115, 116; facilitating confiscation of “proceeds of crime,” 99, 104, 106–9, 111; and financial-reporting requirements, 99, 100, 109; objectives of, 106–10; and “tipsters,” 99, 112, 113 Argentina, 21, 55; underground economy in, 55 Armageddon: Christian belief in, 140, 148, 151–2, 155, 161 Armée révolutionnaire du Québec, 203; and death of firearms store manager, 203 Armenia, 32, 156

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276 Index

Aryan Republican Army, 188–9 Assaad regime (Syria), 149 Atta, Mohammed, 181 Australia, 40, 60, 74; underground economy in, 74 Baird, John, 227 Bakker, Jim, 168–9, 172 Bakker, Tammy Faye, 168, 169 Balfour, Lord, 150 Banco Ambrosiano, 19 Bank for International Settlements, 214 Bank of England, 86 banking system, 15, 54, 64, 77, 99–100, 102, 109, 167, 182, 213–14; and bailouts, 74; and Bankruptcy Reform Act (US), 102; and banks as loan sharks, 13, 77, 85, 108; and insider trading, 86; and libor scandal, 86; and money-laundering, 99–100, 103; regulation of, 99–100 Bankruptcy Reform Act (US), 102 “Barbary pirates,” 120–2, 134–5; political agenda of, 126–7; US invoking fear of, 120–2, 129–32 Barbary States, 121, 122, 126, 127, 128, 131, 133; and attacks on US vessels after War of Independence, 44, 128–9; deys of, 126–7; and slavery, 124. See also Algiers; Morocco; Tripoli; Tunis Barlow, Joel, 133 Beatles, 165 ben Yahweh, Yahweh, 164 Bhutto, Benazir, 46 Bill of Attainder (US), 129, 130

25980_Naylor.indb 276

bin L¯aden, Usama, 39, 40, 95, 112, 113–14, 178–9, 189, 191, 195, 215, 216, 228; and counterfeiting consumer goods, 39, 114; and drug trade, 95; resources of exaggerated, 179, 216, 227; role of exaggerated, 179; and trading in “conflict diamonds,” 39, 114, 215 Black, Conrad, 89–90 Black Hebrews, 164 Black Panthers, 21 Blackstone, William, 150–1 Blair, Tony, 45 Bloomberg, Michael, 225 B’nai Brith, 165, 171 Boston Marathon bombing (2013), 227 Branch Davidians, 189; and belief in Armageddon, 189; and drug trafficking, 190; and opposition to taxation, 189; and raid on compound in Waco, Texas (1993), 190, 193; weapons held by, 189–90 Brazil: underground economy in, 55 Britain (England), 10, 26, 30, 36–7, 41, 44, 47, 118–19, 126, 127, 134, 144, 150, 179, 217, 218, 224; Christian Zionism in, 150; churches in, 140; and opium trafficking, 28, 33; prisons in, 73; and protectionist tariff policy, 26, 36–7; and security for 2012 Olympics, 226; taxation in, 71–2 Brotherhood of Eternal Love, 164, 165; and drug trafficking, 164 Bruce, Lenny, 3 Bryan, William Jennings, 139–40

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Index 277

Bureau of Alcohol, Tobacco, and Firearms (batf), 183, 189, 190 Bush, George H.W., 143, 144 Bush, George W., 129, 144, 150, 171, 215; Bush Administration, 130, 135, 144; and War on Terror, 130, 135 Canada, 21, 37, 47, 66, 93, 139, 219–20, 227; airport surveillance in, 227; al-Q¯a’idah in, 227; antiterror bill in, 227; distribution of wealth in, 161; justice system in, 76, 96, 110; organized crime law in, 219–20; patent laws in, 37; police and military in, 198, 199, 202, 203, 207; terrorist threats in, 197–208; underground economy in, 55, 73–4 Canadian Bill of Rights, 206 Canadian Security Intelligence Service, 207, 227; and harassment of Muslims, post 9/11, 207 capital flight (flight capital), 13, 14, 15, 19, 95, 100, 101–3, 104, 105, 106, 109, 211; amounts of money involved in, 105; to Asia, 102; in Detroit, Michigan, 102– 3; economic motives for, 104; to Mexico, 102 Capone, Al, 93 Carrier’s Case (England), 81 Casablanca, 137 Castro, Fidel, 173 Chaplin, Charlie, 91 Cheney, Dick, 39 Chevaliers de l’indépendance, 203 China, 27–9, 30, 32–3, 34, 35, 38–9, 59, 73; and counterfeit consumer goods, 28, 39;

25980_Naylor.indb 277

industrial innovation in, 28; and opium trafficking, 33, 34; and organized crime (Triads), 38–9; and quanxi, 33 Christian Broadcasting Corporation, 156, 168 Christian Identity, 185, 196 Christian Patriots, 188 Christian Right, 17–9, 140–52, 145–6, 155–60; in Africa, 151; and hostility to Islam, 155, 156, 169, 170, 171, 172, 176–7; in Latin America, 151; rise of in US, 180–1 Christian Right, beliefs of: Armageddon, 140, 148, 151–2, 155, 161, 185; charity and education as Church responsibilities, 156–7, 159; Old Testament taking precedence over New, 141–3; “the Rapture,” 148; recreation of Israel, 150, 154, 185, 193; tithing, 159, 170, 171; United States as a divine construct, 144, 151, 176 Christian Right, branches of: Dispensationalism, 147–50, 154; faith-healing, 166, 172–3; fundamentalists, 141, 144, 145, 146, 151, 156, 157, 161, 163, 166, 174, 184; Orthodox, 185; Pentecostals, 146, 147, 156, 157, 161, 166, 169, 175; post-millennials, 147, 155–60; pre-millennials, 147–50, 155–60, 168, 171; Prosperity Theology, 144–5, 146, 160, 162, 166–8, 169–72; Reconstructionism, 155–60 Christian Right, political positions of: alliance with Republican

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278 Index

Party (US), 161–2, 170, 171; anti-Communist, 151; and coalition, 144, 145–6, 147; on Israel, 18, 147, 171, 174–6; support for military budget, 142; support for US invasion of Iraq (2003), 176 Christian Zionism, 150–5, 173–4, 175–6; in Britain, 150; support of US Congress for, 150. See also Zionism Church of Scientology, 146–7, 166, 167; civil damage suits against, 146; tax-exempt status of, 146 churches: and competition for resources, 163; financial resources of, 162–4, 217; and fraud, 19, 167–8, 217; and tax evasion, 167, 168–9, 170, 217; tax-exempt status of, 18–19, 151, 162–3, 164, 167, 169; and theft and embezzlement, 217; tithing, 159, 170, 171 cia, 84, 139, 225; opposition of to Theology of Liberation, 139 Cleaver, Eldridge, 21 Clinton, Bill, 172; Clinton Administration, 130; and War on Terror, 130 Cohen-Bendit, Daniel, 22 Colombia, 21, 47 commercial crime, 79, 84–5, 88; and damage to environment, 84; and fraud, 84; and insider trading, 86–7 Comité de libération nationale, 203 Common Title Bond and Trust, 188 Conservative Party (Canada), 142; policies of, 142 conspiracy theories, 190–1, 192; and the Front de libération du

25980_Naylor.indb 278

Québec (flq), 199; and the Kennedy assassination (1963), 190; and 9/11 terrorist attacks, 191, 199; and Oklahoma City bombing (1995), 195; and strength of the Radical Rural Right, 192 Constitutional Convention (US, 1787), 120 Cooperative Commonwealth Federation (Canada), 140 Cornerstone Church, 170 corporate crime, 80, 88–9, 107, 111; endowing corporations with rights of persons, 80, 89; responsibility for, 89 corporations, 8, 9, 25, 41, 45, 48, 62–4; and “corporate crime,” 80, 86, 88–9, 107, 111; and deregulation, 7, 9, 49; endowed with rights of people, 8, 80, 89; tax breaks for, 54 corruption, 41–6; in arms industry, 43–5; in developing countries, 69–70; and Foreign Corrupt Practices Act (US), 41; in government-business relations, 45; for political ends, 42–3; in regulatory agencies, 45–6; in the US, 41, 43–4, 45–6, 47 Council of Europe, 7 counterfeiting: of consumer goods, 5, 6, 25, 28, 35, 38–41, 47–8, 114, 215; of currency, 187, 188, 191, 192, 215; terrorist involvement in, 39–41 Covenant, the Sword, and the Arm of the Lord, The, 187–8, 193 crime, 76–97; broad definition of, 80–1; commercial, 79, 84–5, 88,

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Index 279

96; computer-assisted, 79; corporate, 80, 88–90; economic, 79; evolving interpretations of, 76–8; intellectual property, 37–40; market-based, 82–3, 87, 88, 96–7; merging of criminal and fiscal enforcement, 110–12, 113; motivations for, 5, 10–11, 12, 212–13, 216–19; organized, 79, 83, 87–8; predatory, 81–2, 85, 87, 88, 96; prosecution of, 5, 10–12, 47, 76–8, 80, 86–7, 91, 183–4, 220, 224; public discourse about, 78–80; rates dropping, 73; telemarketing fraud, 79; types and definitions of, 76–97; white-collar, 79. See also commercial crime; corporate crime; market-based crime; organized crime Crime War, 4, 11, 20, 119; and merging of police and military functions, 224 criminal proceeds. See proceeds of crime criminal profits, 10, 13–14, 15; and capital flight, 13, 14; different roots and routes of, 14; and drug money, 13, 14, 23, 97, 98, 99, 105; exaggeration of, 14, 23, 97; and offshore havens, 13; relative to legal economy, 222; and tax evasion, 13 criminal violence: exaggeration of, 11, 97 Cross, James, 198, 205–6, 207; kidnapping of, 198, 205–6, 207 Cruise, Tom, 147 Crusades, 122, 135; and Islamophobia, 135

25980_Naylor.indb 279

Cuba, 198, 201, 202, 207 Cyber Intelligence Sharing and Protection Act (US), 223–4 Cyprus, 54 Dan, Father Pierre, 126 Dar es Salaam (Tanzania): bombing of American embassy in (1998), 178, 180 Darby, John Nelson, 147 DeLorean, John Z., 12 deregulation: financial, 14–15, 50, 102 Dhafir, Rafil, 11 Dispensationalism, 147–50, 154, 175; and Armageddon, 148, 151–2; and “the Rapture,” 148, 151, 175–6 Drapeau, Jean, 206 Drug Enforcement Administration (US), 211 drug trade, 25, 28, 33, 34, 73, 107, 111; effect of police raids on, 107; and the Medellin Cartel, 33; and opium trafficking, 77, 92; organization of, 87–8 Drug War, 11, 73, 87; exaggeration of money involved in, 211–12, 217, 227–8; exaggeration of violence in, 224; fear of invoked for political ends, 54–5, 95–6, 105; and militarization of police forces, 224–5; and organized crime, 87–8, 95; and pharmaceutical companies, 94 East India Company, 28, 33 Eaton, William, 133, 134 Ecuador: corruption in, 41 Edison, Thomas, 36

2014-03-18 12:47:22

280 Index

Egypt, 24, 150, 151, 185; Egyptian Spring (2011), 185 Eisenhower, Dwight, 43, 158 Embargo Act (US), 120 Emergency Measures Act (Canada), 206 Enemy Alien Act (US), 132 environment, 28, 29, 31, 48; victim of “commercial crimes,” 84 Escobar, Pablo, 112, 211, 215; exaggerated wealth of, 211 Ethiopia, 175 European Central Bank, 9, 102 Falwell, Jerry, 143, 145, 147, 156, 161, 168; and Liberty University, 145 Family Farm Preservation, 188 Farmers’ Liberation Army, 188 fbi, 12, 20, 48, 91, 187, 190, 192– 3, 196, 223, 227 Federal Reserve (US), 86, 160, 186 Financial Action Task Force (US), 98, 214 financial intelligence (espionage), 3–4, 11, 23, 40, 113–14, 209, 223–4, 226; rationalization for, 4, 6, 14–15; and right to privacy, 209, 223–4 Fink, Lord, 45 Fisher, Irving, 83 flight capital. See capital flight follow-the-money strategy: faithbased initiatives, 210, 221–2; features of, 210–23; flat-earth syndrome, 210, 213–14; fuzzy logic, 210, 212–13; mission creep, 210, 214–21; moral panic, 210–12 Forbes magazine, 47, 88

25980_Naylor.indb 280

Ford, Henry, 93 Foreign Corrupt Practices Act (US), 41 France, 21, 22, 120, 126, 127, 132, 134, 135, 150; urban radical groups in, 200 free market, 8–10, 18, 31, 33, 36, 37, 48, 51, 67; and the Law of Comparative Advantage, 36 Free-Market Revolution, 8 Friedman, Milton, 78; Free to Choose, 78 Front de libération des travailleurs du Québec, 204 Front de libération du Québec, 22, 197–208, 216; component groups of, 203–4, 205; demands and manifesto of, 198, 204; end of, 207, 208; exaggeration of membership and resources of, 202–3; exaggeration of organization of, 203–5; and federal invocation of the War Measures Act, 198, 199, 202, 203; financing of, 22, 197, 202, 205; genesis of, 200; and kidnapping of James Cross, 198, 204, 205–6; and kidnapping and murder of Pierre Laporte, 198–9, 204, 205, 206; strategies/tactics of, 204, 205; uncoordinated objectives of, 205 Front républicain pour l’indépendance, 203 Gemayel, Amin, 46 Germany, 21, 22, 26, 150; Free Democrats, 22; Green Party, 22; taxation in, 61; underground economy in, 55; urban radical groups in, 200

2014-03-18 12:47:22



Index 281

Gesner, Abraham, 49 Giuliani, Rudolph, 222 globalization, 5–6, 24, 26–31, 37–8, 45; importance of communication and transportation technology to, 29, 30–1; importance of oil to, 30 Goldman Sachs, 100 Graham, Billy, 21, 141, 158 Greece, 72–3, 103; and sale of Belle Isle, 72, 103 Green Peril. See Islam Gross Domestic Product (gdp), 53, 56–9; growing share of services in, 63; as measure of economic well-being, 56–8 Guantánamo concentration camp, 4, 196 Gulf of Mexico, 57; BP oil spill in, 57 Gulf War I (1990–91), 143, 195; and “Highway of Death,” 143; as motive for Oklahoma City bombing, 195 Gush Emunim (Bloc of the Faithful), 154 Hagee, John, 166, 170–1, 172, 175 Haggard, Ted, 141, 171–2 Hamilton, Alexander, 37; Report on Manufactures, 37 Hare Krishna, 165 Harper, Stephen, 11, 227; Harper government, 11 hawala (underground banking system), 104, 114, 178, 218; in Afghanistan, 218 Helmsley, Leona, 89 Henry, Patrick, 130 Henry VIII, 162, 166

25980_Naylor.indb 281

Herzl, Theodore, 150 Hinn, Benny, 172–3; This Is Your Day, 173 Hizbu a¯ llah, 175, 221 Holman Bible, 142 Homeland Security, Department of (US), 223–4, 225, 227 House Homeland Security Committee (US), 176 Hubbard, L. Ron, 146, 166 Hugo, Victor, 58 “humanitarian interventions,” 14, 133, 136, 143 Hussein, Saddam, 16, 143, 180, 195 Hutaree Militia (Michigan), 21 illegal immigrants: association of with crime and violence, 91; trade in, 34 imf. See International Monetary Fund India, 32, 33; corruption in, 42; underground economy in, 55 intellectual property rights, 5, 35–6, 37–8, 48–9, 78; and biopiracy, 38; in the US, 34–6, 37–9, 47–9, 78; violations of, 4–6, 7, 34–5, 40, 47, 78, 215 intelligence establishment, 3, 25, 30, 95, 116, 151, 154, 163, 179, 207, 209, 223–4; impact of Drug War on, 95; spending on, 61 Internal Revenue Service (US) (irs), 61, 167, 170, 183, 186, 187, 188; Criminal Investigation Division, 221 International Anti-Counterfeiting Coalition (iacc), 47 International Criminal Court, 116

2014-03-18 12:47:22

282 Index

International Monetary Fund (imf), 9, 26, 41, 46, 102, 208 Interpol, 39–40 Iran, 24, 30, 171, 227; Iran-Iraq war, 30 Iraq, 11, 24, 30, 105, 116, 150, 175, 179, 191, 195, 215; AngloAmerican invasion of (2003), 16, 77, 130, 132, 176; Fallujah, 137; Iran-Iraq war, 30; murder of civilians in, 177, 195. See also Gulf War I Ireland, 21, 121, 139 irs. See Internal Revenue Service (US) Islam, 141, 149; and al-Haram ash Sharif, 150, 154, 175; perceived as enemy of Christianity, 137, 152, 169, 170, 171, 172, 176–7; perceived as threat to the West (Green Peril), 7, 11, 17, 91–2, 95, 105, 113–17, 125, 138, 141, 179, 191, 214–16, 218, 226, 227 Islamic Jihad, 25 Islamic law, 16, 77, 123, 124, 126, 138; forbidding slavery, 124, 126 Islamists: fundamentalist, 138, 184; radical political, 138, 184, 185, 186, 188, 196, 208; traditionalist, 138 Israel, 15, 18, 147, 150–5, 174–6, 218, 220; and assault on Gaza (2012), 174; creation of, 151, 153; influence of US Jews on, 155; and 1967 war, 153, 173, 174; and settlements in Occupied Palestine, 15, 18, 173– 4, 175, 226; support of Christian Right for, 147, 150,

25980_Naylor.indb 282

171, 174–6; and Zionism, 150– 5, 174, 175–6 Italy, 21, 121, 127, 134, 139; urban radical groups in, 200 Japan, 44; and bombing of Hiroshima and Nagasaki, 80, 137, 195; and Fukushima nuclear disaster, 31 Jay, John, 129 Jefferson, Thomas, 120, 129–31, 133, 135, 183; and loyalty oaths, 129–30 Jordan, 150, 202 Judaism, 152–3; fundamentalist, 152–3; and Jewish terrorist groups, 154; Messianic, 152, 153, 154–5, 189; and objection to political Zionism, 152; Orthodox, 153; in the US, 153–4 Justice Department (US), 4 Kerry, John, 100 Kook, Avraham, 154 Koresh, David, 189–90 Ku Klux Klan, 183–4, 194 Kuwait, 143 Laporte, Pierre, 198, 199, 204, 207; kidnapping and murder of, 198, 199, 205, 206 Lebanon, 46, 150, 175, 186, 216; Palestinian refugee camps in, 216; Sheba’a, 220 Left Behind, 149 Lenin, Vladimir, 50 Liberal Party (Canada), 200 Libertarian Party (US), 221 libertarians, 182–3; and tax evasion, 182–3

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Index 283

libor scandal, 86 Libya, 15–7, 24, 133, 134, 179, 209; and aircraft bombing over Lockerbie (1988), 16; US actions in, 134, 136 Life Science Bible Church, 186; and tax fraud, 186 Lincoln, Abraham, 43 Lloyd George, David, 150 Madison, James, 128 Madoff, Bernie, 166 Mafia: myths concerning, 32, 107, 179 Maharishi Mahesh Yogi, 165 Mali, 24, 216; and Ansar Dine rebels, 216; and Tuareg rebels, 216 Malta, 122; slave market in, 122, 127, 131 Mann Act (US), 91–2; used to prosecute Mormon polygamists, 91; used to prosecute “underage” sex offences, 91 Manning, Bradley, 177 Marchais, Georges, 22 Marchand, Jean, 199, 202 market-based crime, 82; and civil asset forfeiture, 96–7; organized nature of, 88; proceeds of, 96–7 Marx, Karl, 63, 153, 206; Capital, 206 Marxism, 21, 22, 153, 198 MasterCard, 226–7 McCain, John, 170 McCarthy, Joseph, 141 McVeigh, Timothy, 181, 189, 190, 194–5, 214; background of, 194; and Oklahoma City bombing (1995), 194–6; and opposition to taxes, 194

25980_Naylor.indb 283

Medellin Cartel, 211 Mexico, 28, 93; corruption in, 41, 46; underground economy in, 55 Midwest (US): economy of, 181–3; and federal agricultural policies, 181–3; and rise of rural insurgent groups, 182–3; social conditions in, 183 military-industrial complex, 43, 44, 95, 150; impact of Drug War on, 95; justification for, 16 Militia Movement, 193–4, 196; and religious fundamentalism, 193; and support for Israel, 193 Miracle Crusade, 172 money-laundering, 98–117, 211, 222; criminalizing of, 211; of drug money, 14. See also antimoney-laundering regime Montana Freemen, 188, 192; and counterfeiting, 188, 192 Montreal, 21, 22, 197, 198, 206, 208, 227; and municipal election (1970), 206 Montreal Stock Exchange, bombing of (1968), 200 Moon, Sun Myung, 145–6, 152, 171; and tax evasion, 145; The Way of Unification, 152; and World Peace conferences, 146 Morgan, J.P., 150 Morocco, 34, 121, 123, 128, 133. See also Barbary States Murdoch, Rupert, 25, 124 Nairobi (Kenya): bombing of American embassy in (1998), 178, 180 Nation of Yahweh, 164–5; and Temple of Love, 164

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284 Index

National Association of Evangelicals, 171, 172 National Commodity and Barter Association, 192 National Freedom Movement (Freemen), 188 National Security Agency (US), 109, 223, 224 nato, 14, 16, 116, 209, 225 Naturalization Act (US), 132 neoliberal economics, 18, 19, 31, 43, 58, 96 Ness, Eliot, 92 Newcomen, Thomas, 35 New Democratic Party (Canada), 139 New Life Church, 171 New York Times, 72, 114, 165 Nichols, Terry, 191 Nigeria, 216, 226–7; and Boko Haram movement, 216; Nigerian Identity Management Commission card, 226–7 Night of the Living Dead, 54 9/11, 25, 39, 98, 180, 181; civilian victims of, 15; and myth, misinformation, disinformation, 179; as pretext to bring in tax–cut package, 135; resulting in War on (Islamic) Terror, 129, 135; and subsequent fear of Muslims, 98, 109; US response to, 132, 178–9, 208 Nixon, Richard, 8 nonprofits and ngos, 26, 54, 65–6, 170–1; impact of Drug War on, 95 North, Gary, 156, 159 North American Freedom Council, 188 nypd: militarization of, 225

25980_Naylor.indb 284

Obama, Barack, 45, 92, 129, 137, 174; and financial intelligence, 223; Obama Administration, 223 oil industry, 29–30, 57, 107, 136, 158, 183 Oil Town usa, 158 Oklahoma City bombing (1995), 105, 180–1, 191, 194–6, 214; motives for, 194–5 Opus Dei, 140 organized crime, 6, 24, 32, 38–9, 79, 83, 87–8, 107, 219, 227; harsher punishments attached to, 87; and Italian-led “syndicates,” 92–3 Oslo: bombing of office building (2011), 105 Oswald, Lee Harvey, 190 Ottoman Empire, 121, 126, 127, 133 outsourcing, 54, 63–4, 73; to Asia, 161 Pakistan, 46, 113; underground economy in, 55 Palestine, 150, 151, 153; occupation of, 18, 154, 173–4, 175, 226 Parsley, Rod, 169–70, 172 Parti Québécois, 200; portrayed as a front for flq, 201; and provincial election 1970, 201; and provincial election 1976, 207–8; separatist agenda of, 200 Partisans de l’indépendance du Québec, 203 Patriot Act (US), 92, 132, 197, 218 Pentagon (US), 17, 26, 54, 134, 139, 142, 165, 176, 216; africom, 216; budget of, 13, 54, 217 Philippines, 21, 191

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Index 285

“Poem on the Future Glory of the United States of America,” 125 police and law enforcement, 3, 12, 20, 33, 38, 40, 77, 79, 82, 85, 105, 164, 192, 206, 207, 219– 20, 224; and commercial crime, 79, 85; corruption in, 69, 90, 92; and illegal entrapment, 11–12; invoking fear of Drug War to justify bigger budget, 54–5, 73, 95; militarization of, 3, 23, 94, 195, 224–6; new technology for, 24, 26, 31, 40; and proceeds of crime (criminal proceeds), 95, 96–7, 99, 107, 112, 192, 213, 217, 222; role of in terrorist plots, 20–1; and War Measures Act (Canada), 198, 199, 203, 206 Portugal, 126, 127, 128, 129 Posse Comitatus, 184–7, 188, 192, 193; beliefs of, 184–5, 186; and “Christian Common Law” courts, 185; and Christian Identity, 185; and counterfeiting, 187, 188; and money-laundering, 192; and opposition to Federal Reserve, 186, 187; and opposition to taxation, 186–7, 192; organization of, 184; resources of, 192; and survivalism, 185 Powell, Lewis, 8; “Attack on the American Free Enterprise System,” 8 prison-industrial complex, 96, 142, 213; in Canada, 11; impact of drug war on, 96; in the United States, 11 proceeds of crime (criminal proceeds), 99, 101, 103, 104, 106–9,

25980_Naylor.indb 285

209, 212, 214, 217, 222; and aml regime, 99, 101, 104, 106– 9, 111; economic motives for, 104; funds involved in, 105–6; profits, distinguished from proceeds, 209; seizure of, 99, 107–9, 209, 212, 217, 222; tracking of, 218, 221, 224 Prohibition (US), 82–4, 87, 92–4; and birth of “organized crime,” 83; and bootlegging, 87, 93; consequences of, 92–3; justifications for, 83–4; reasons for repeal of, 93–4; and violence, 93 Prosperity Theology, 19, 144–5, 146, 160, 162, 166–8, 169–72; and free-market economy as a divine tool, 166 prostitution. See sex trade protectionist policies: as response to illegal trade, 26, 34, 36 ptl (Praise the Lord) Corporation, 168; financial success of, 168; and Heritage usa theme park, 168 Public Order Act (Canada), 206 Qad¯ahfi, Muammar, 16, 136 Qatar, Emir of, 72, 103 Quebec, 21, 198, 216; crime in, 219; maple syrup heist in, 81; nationalism in, 200; and provincial election of 1970, 201; and provincial election of 1976, 207–8 Quebec separatist movement, 199, 200, 206–8; and bombing of Montreal Stock Exchange (1968), 200; and death of manager of firearms store, 203; and

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286 Index

death of night watchman at army recruiting post (1963), 200, 203; providing pretext for assertion of federal authority, 206; tactics of, 200–1; violent fringe of, 200–1, 206–7. See also Parti Québécois Radical Rural Right (rrr), 183, 184, 185, 186, 188, 191–4, 196; and alternative legal institutions, 185; and Christian Identity, 185; exaggeration of violence caused by, 193; and opposition to abortion, 183; and opposition to central government control, 183, 184; and opposition to gun control, 183; and opposition to Jews, 185, 186; organization of, 188, 192; racist philosophy in, 183; resources of, 192–9; and survivalists, 185, 187–8; strategies/tactics of, 188–9 Rand, Ayn, 10 Rassemblement pour l’indépendance nationale, 203 Raytheon Corporation, 226; Silent Guardian, 226 rcmp. See Royal Canadian Mounted Police Reagan, Ronald, 151; and Drug War, 96; Reagan Administration, 61 Reconstructionism (“Dominionism”), 155–60; beliefs of, 157–8, 159–60; and theonomy, 157 religious universities and colleges (US), 138, 144, 169; anti-Muslim rhetoric in, 138 Republican Party (US), 21, 130, 135, 142, 144, 158, 161–2,

25980_Naylor.indb 286

181–2, 221; and alliance with Christian Right, 142, 161–2; right wing of, 181–2 Réseau de résistance, 203; Armée de libération du Québec (alq) (military wing), 203; and bombing of Canadian Army recruiting centre (1963), 203 Robertson, Pat, 141, 144, 147, 156, 161, 168 Rockefeller, John D., 150 Romney, Mitt, 174 Roosevelt, Franklin, 140, 181 Royal Canadian Mounted Police (rcmp), 199, 202, 227; Security and Intelligence branch, 207 Rubin, Jerry, 21–2 Ruby Ridge: siege at (1992), 190 Rushdoony, Rousas John, 156 Salinas, Raul, 46 Satanic Purses: Money, Myth, and Misinformation in the War on Terror, 4 Saudi Arabia, 30, 44, 114, 149, 178, 195; corruption in, 44 Scofield, Cyrus, 147–8, 149, 154; Scofield Reference Bible, 148 Scribner, Charles, 150 Sedition Act (US), 132 Serbia, 116; bombing of vegetable market in Nis (1999), 14 Seventh-Day Adventists, 189; Branch Davidians, 189; Davidian Seventh-Day Adventists, 189 sex trade: and association with violence against women, 91; prostitution, 82, 221–2 Shays, Daniel, 119 Silent Brotherhood, 188, 189

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Index 287

Simard, Francis, 204 slavery to Barbary pirates, 120–2, 124–5; and conversion to Islam, 121, 123–4; living conditions, 122–4; retaliation for, 122, 127, 131; role of Church in redeeming prisoners from, 120–1; role played by Redemptionist religious orders, 121, 122, 124, 126 smuggling/illegal trade, 24–6, 51; of consumer products, 25, 35, 39–41, 47–8; and corruption, 25–6, 32, 41–6; and drugs, 25, 28, 33, 34; exaggeration of, 31; and intellectual-property violations, 34–6, 37–40, 46–50; and money-laundering, 26, 46–7; organizational model for, 24–5, 32–4; reasons for increase in, 24; and tobacco, 33–4 Snowden, Edward, 3, 223 Social Gospel movement (US), 140 Somalia, 116, 216, 218 Southern Baptist Convention, 142 South Korea, 40, 143, 146; Buddhists in, 143 Soviet Union, 30, 58, 77–8, 181, 182, 202; and anti-Communist propaganda, 141; and crimes of “exploitation” and “speculation,” 77–8 Spain, 21, 121, 123, 125, 126, 127 129, 134; and anti-Muslim pogroms, 122; and Reconquista, 122; unemployment rate in, 72 Spanish-American War: providing impetus for creation of US navy, 44 Spitzer, Eliot, 60, 221–2 Sudan, 114, 116

25980_Naylor.indb 287

Sun Life Assurance: move to Toronto fanning fears of separatism, 201 Supreme Court (US), 8, 140 Sureté du Québec, 198, 199; and anti-terrorist force, 203 survivalists, 185, 187–8, 193 Switzerland, 66, 211 Syria, 24, 149, 150, 151, 179, 209 Taiwan: underground economy in, 55 Taliban, 158 tax evasion, 13, 14, 15, 51, 61–7, 100, 103, 104, 105, 106, 109, 112, 113, 211; amounts of money involved in, 105; and decline in enforcement, 62, 63, 66–7; in developing countries, 69–70; fabricating deductions, 67; and outsourcing, 63–4; as predicate offence for moneylaundering charges, 110–12; and shifts in compliance, 62, 65–6; and subcontracting to non-union shops, 62–3; and tax havens, 65, 103, 106; and “tax revolts,” 65; and “transfer pricing,” 64; using nonprofit sector, 65–6 tax havens, 25, 54, 61, 65, 95, 103 tax system, 52, 61–7, 68; and personal tax collection, 64–5; and use of the nonprofit sector, 54, 65–6 Terror War, 4, 11, 15, 17, 20, 53, 91–2, 95, 118–36, 197, 214, 224–5; civilian victims of, 15; and exaggeration of threat, 11, 228; fear of, invoked for political ends, 16, 118, 129–33, 135; and

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288 Index

increasingly broad definitions of terrorism, 224; and merging of police and military functions, 224–5, 226; roots of in Crime War, 11; stereotypes in, 214, 218; and “terrorist” designation, 219; and theopolitical basis for fear of Muslims, 125; and US first War on Terror (18th century), 118–36 terrorist events of 11 September 2001. See 9/11 terrorist financing (terror dollars), 13–14, 15, 98, 100, 103–5, 106, 109, 112, 113, 114–16, 117, 209, 216–19, 220–1, 222–3; and anti-hawala hysteria, 104, 114; exaggeration of, 112, 113, 117, 179, 215, 227; fear of, post-9/11, 178, 179, 191, 210; pattern of, 114–16; as “preceeds,” 217 Thatcher, Margaret, 10 Theology of Liberation, 139, 151 tobacco industry, 33–4; Virginia Cartel, 33–4 Trans Pacific Partnership Agreement (tpp), 48, 101 Transcendental Meditation, 165; financial success of, 165; and tax exemptions, 165 Tripoli, 121, 133; Dernah, 134; dey of, 133, 134, 136; and Tripoli Treaty, 133. See also Barabary States Trudeau, Pierre, 197–8, 199, 200, 206; and invocation of War Measures Act, 198; and opposition to Quebec nationalism, 200, 206 Tunis, 121, 122; US treaties with, 133. See also Barbary States

25980_Naylor.indb 288

Tunisia, 69 Turkey, 125, 127, 128, 150, 156; and demonstrations in Taksim Square (Istanbul), 224 Turner Diaries, 194, 196 Tuscany, Duke of, 122 underground economy, 7–8, 9, 50–75, 211, 212, 222; cash payments in, 60, 226; criminal component of, 53–4, 70, 73, 74; economic threat posed by, 51–2, 54, 55; growth of in developing countries, 67–70; methods for measuring, 59–61; as propaganda weapon, 52–3; purported size and growth of, 7, 51, 52–3, 59–61, 67, 73–5; reflected in tax revenues, 51, 54, 59–60; relation of to Gross Domestic Product, 53, 56, 60–1, 67; relation of to overground economies, 71; structure of, 70–1; and unemployment numbers, 55–6; used to justify economic and budget policy, 7, 52–3, 54, 71–2, 73, 75 Unification Church, 145 Union des Banques Suisses, 79 United States, churches in, 139–40, 167; Amish, 145; and belief in US as divinely inspired entity, 151, 176; Christian fundamentalist, 141, 145, 146, 151, 156, 157, 161, 163, 166, 174; financial reporting requirements for, 167; political affiliations of, 139, 142, 161–2, 171; tax-exempt status of, 18–19, 146, 151, 162–3, 164, 165, 167, 169, 186. See also Christian Right

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Index 289

United States, domestic policy of: and Prohibition, 82–4, 87, 92–4; and persecution of Muslims, 11, 21, 91–2, 109, 125, 218; and prosecution of sex trade, 90–1; and vice wars, 112–13 United States, domestic terrorism in, 19–20, 179, 201; and Boston Marathon bombing (2013), 227; and Oklahoma City bombing (1995), 105, 180–1, 191, 194–6, 214; and radical factions, 21–2; and raid on Branch Davidian compound (1993), 190, 193 United States, economy of, 28–9, 161; and distribution of wealth, 65, 160–1; and immigration, 161; measured with gdp, 58–9; and north-south shift, 161; and outsourcing, 161; and stagnant working-class incomes, 28–9, 161; and taxation, 56, 61, 64, 65, 119–20, 135; underground, 55 United States, foreign policy of: and Gulf War I, 143, 195; and IranIraq War, 30; and Israel lobby, 17, 142, 174–7, 215, 221; and mission to spread civilization, 125; relations with France (18th century), 131–2; and war with Tripoli (18th century), 133–5 United States, judicial system in, 11, 76–7, 80, 110–12; antimoney–laundering regime in, 98–100, 110–12; and anti-Muslim bias, 11, 12, 21; and falling crime rates, 96; and illegal entrapment, 11–12; and merging of criminal and fiscal law enforcement, 110–12

25980_Naylor.indb 289

United States military, 29, 44; and anti-Muslim rhetoric and actions, 137–8, 176–7; and Christian indoctrination, 142; justification for creation of, 119–36 United States response to 9/11, 178–9, 196, 208, 214, 225; and myth, misinformation, disinformation, 179 United Tax Action Patriots, 188 Uruguay, 21, 201 USA Today, 12 ussr. See Soviet Union US Treasury, 9, 113, 208, 211; antiterrorism role of, 113; Fincen, 211 Utah Data Center, 224 Valor Christian College, 169 Vatican, 139; opposition of to Theology of Liberation, 139 Vatican Bank, 19, 163; and abetting tax evasion, 19, 163; and capital flight, 19, 163; and money-laundering, 19, 163 von Hayek, Friedrich, 156, 159; The Road to Serfdom, 156 Wages of Crime: Black Markets, Illegal Finance, and the Underworld Economy, 4 Wal-Mart, 41 Wall Street Journal, 25; “Fake Goods Rival Drug Profits for Asia’s Criminals,” 25 War Measures Act (Canada), 198, 199, 202, 203, 206; powers accorded government under, 199; used to assert federal authority in Quebec, 206

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290 Index

War of Independence (US), 118–19 Washington, George, 43, 119, 128, 129, 131; Washington Administration, 131 Watt, James, 35 We the People, 188 Weathermen, 21 William Volker Fund, 156 Winnipeg General Strike (1919), 198 World Bank, 41, 69, 102, 218 World Harvest Church, 169 World Healing Center, 173 World Trade Center bombing (1993), 191, 214 World Trade Organization (wto), 33, 35, 158

25980_Naylor.indb 290

Wright, Jeremiah, 170 Yemen, 24, 91, 179, 216 Yippies, 21 Young, Lord, 72 Yousef, Ramzi, 191 Zambia, 47 Zedong, Mao, 202 Zionism: political, 150–5, 176, 186; and conflict with Orthodox Haredim, 153; Jewish fundamentalist objection to, 152; and Jewish terrorist groups, 154. See also Christian Zionism

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