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Selling Entitlement Reform

squareforceone — Thu, 25 Aug 2011 23:13:38 +0000

By Hannah Thoreson

This post originally appeared in Western Free Press on Aug. 2, 2011

Most of the discussion about the debt ceiling bills working their way through Congress has been focused purely on the numbers. Little of the debate has centered around what it appears that voters may care more about, which is where the cuts will be made.

Entitlement reform is considered the holy grail of conservative politics, just as its converse, universal health care, is the ultimate goal of the progressive left. Those in the GOP pushing ideas like the Ryan Budget would do well to show an understanding of the problems individuals other than the Treasury Secretary are presently facing. This does not mean that the cause of entitlement reform should be abandoned; rather, instead of being explained exclusively in terms of government spending, conservatives should go on the offensive and explain how regular people could benefit from changes.

Liberals are giddy and licking their lips over the prospect of a bluer Congressional map as budgetary realities put a squeeze on social spending. Conservatives should explain that having the government provide for citizens’ retirements can be unjust and lead to lost opportunities.

Lower-income workers, say, those working for an hourly wage with meager benefits, often remain employed for years, sometimes even decades, longer than their civil servant or white-collar professional counterparts. They continue to lose part of their paycheck to payroll taxes for Social Security while their peers retire and begin collecting the benefits funded by those still working. How would you feel if you were doing hard, backbreaking work to fund your well-off cousin’s cross-country RV trip? It’s likely a question the political class does not want to think about and finds uncomfortable, but the answer may be worth pursuing. For lower-income workers that may never be able to retire and collect benefits, these programs and the taxes to support them likely seem unfair.

A similar line of reasoning has given the GOP an 11% advantage among 18-29 year old white voters heading into the 2012 election season. Democrats hoping for an easy repeat of 2008 with this demographic will be surprised to learn that students across the country have begun to learn the facts about the national debt, and who will eventually be footing the bill. Fiscal conservatives such as Governor Mitch Daniels and Rep. Paul Ryan are viewed with enthusiasm by young Americans looking to avoid becoming indentured servants to government debt. Students for Solvency recently released a dramatic ad showing a baby being thrown over a cliff representing the national debt. Young Americans are very open to arguments about curbing the growth of spending on entitlement programs for the simple reason that it is in their rational self interest to do so. The key is proving the same thing to enough of the electorate to gain political support for reform.

The programs can also appear hurtful to those who can or would otherwise be able to invest their own money. There are a lot of people who could have become stock market millionaires investing their own funds. Many others would simply live more comfortably in retirement had they put the money in their own 401(k) accounts. These people should be highly sympathetic to arguments relating the opportunities they are missing out on.

So it’s clear that there are good reasons for individuals to take an interest in serious entitlement reform. However, the GOP may struggle to gain the political traction needed to implement the reforms absent real examples of how the public stands to benefit from the changes. The economy is still looking pretty grim to most Americans; asking future retirees to give up seemingly guaranteed benefits in exchange for nothing certain is going to be a hard sell. Turning a deaf ear to this reality only plays into the worst stereotypes the left has about conservatives. The only way to convince Americans that curbing the growth of entitlement spending is necessary is to prove to them that it is in their best interest as individuals, rich and poor, young and old.

Links:

Pew Research Center polling data: http://people-press.org/2011/07/22/gop-makes-big-gains-among-white-voters/

Gov. Perry and the $10,000 Degree: Why College Students Should Support Rick Perry

squareforceone — Thu, 25 Aug 2011 22:35:39 +0000

By Hannah Thoreson

Rick Perry is the only candidate running for President in 2012 that has asked his state’s university system to search for a way to produce a $10,000 degree. He has also introduced a series of reforms known as the “7 Solutions” in an effort to push tuition prices down, and thereby increase access. Most of the reforms center around pursuing changes in the way university system handles money and data in a way that would make the schools operate more like businesses.

The 7 Solutions can be found at http://texashighered.com/7-solutions. My personal favorite is #6, which turns the subsidy for higher education into a voucher that can be used at any in-state university. The benefits of this are numerous. The most obvious is that, if lower-income families can see how much funding is available for their children to attend school, they will opt to do that instead of assuming it is out of reach for them. Proponents also claim that, “Student-directed scholarships change the incentives for universities from lobbying the legislature to favor one institution over another to competing for students as the way to increase revenue”. Adding a competitive element to higher education, even for those who can’t afford to spend very much of their own money on it, will enhance quality and make institutions more responsive to the educational needs of everyone. The reform also forces individuals to be more accountable for their own choices, as the subsidies would end after four years of college. As with everywhere else, many students in Texas take longer than the standard four years to complete a degree. This comes at a great cost to taxpayers when funding is in no way linked to the individual students.

Not everyone has been happy about the proposed reforms. There was mass outcry from academics throughout Texas when it was discovered that spreadsheets existed tracking how many students were instructed for the cost of their salary minus any outside research funds received. However, the continued push for accountability and cost control at universities in Texas proves that Governor Perry has the guts to try and reform institutions to conform to a more conservative sensibility. It must be noted the similarity between the education voucher system and what any serious effort at entitlement reform at the federal level would likely create, as students would be made aware well in advance how much money will be in their education “account” upon high school graduation. If any of the current 2012 Presidential candidates could be a serious advocate for fiscal responsibility, it’s Rick Perry. Students should take a serious look at the Governor from Texas if they are interested in quality, accessible education.

The FDIC is a Faith-based Depositors’ Insurance Company

squareforceone — Sun, 10 Jul 2011 23:34:16 +0000

Fund has -0.02% of insured reserves on hand

Originally published in Western Free Press

In the PBS nature documentary of our financial system, the forest fire of 2008 was quickly put out by agents of the federal government after cries of help from the endangered Bear Stearns. Now, spring has come again to Yellowstone. The camera pans across lush, green foliage backlit by the sun shining in a clear blue sky. There have been bumps in the road, sure, but the recovery is imminent, as evidenced by still shots of rabbits, squirrels, and youthfully energetic Chevy Volts frolicking in the grass to the pastoral theme from

Except, despite every attempt by the media to cast this as a typical economic recession functioning on a time frame as cyclical as the seasons, the reality is that bailing out the financial system did not allow nature to run its course. Reality is missing the part of the movie where the fire incinerates the dead wood and overcrowded subprime mortgage underbrush to make room for new growth.

One very good example of an institution that should have gone up in flames during the crisis is the FDIC. The FDIC — aren’t they just the people who insure deposits up to $125,000, or something like that? What’s the big deal?

The point of the Federal Deposit Insurance Corporation is to do just that, provide insurance for bank deposits. The rationale for its creation as part of FDR’s New Deal was to prevent bank runs by guaranteeing deposits up to $2,500. Thanks to the disastrous Dodd-Frank Act, that figure has now permanently ballooned to a minimum of exactly 100 times what it originally was — $250,000. There is one very basic problem with the insurance being provided by this government-run company: right now, it doesn’t actually exist.

The FDIC’s Deposit Insurance Fund has run a negative balance for several years on end as a result of the financial crisis. Without borrowing additional funds from the U.S. Treasury, it would seem as if the company cannot provide for any of its potential liabilities with cash reserves. This presents an obvious immediate problem as the U.S. approaches the so-called “debt-default date”: if a bank fails, the FDIC may not be able to access the capital needed to meet its legal obligations and provide stability to the financial system. A total of 44 banks have failed so far in 2011, and the FDIC classifies nearly 900 banks as “problem institutions”. It is not entirely impossible that the FDIC could find itself in a serious crisis as the August 2nd deadline draws nearer.

The federal government is currently attempting to operate solely on immediately-collected revenue, a situation which would seem to leave very little flexibility for backing up deposits at failed banks with “the full faith and credit of the United States Government”. Ultimately, that is the purpose of FDR’s government-owned bank insurance corporation, vested with the power to take over institutions it deems unstable: to ensure forevermore that banking and government remain one and inseparable. As long as the government can borrow money, every bank is “too big to fail” under the blatantly socialist New Deal-era programs.

There are multiple problems with this.

The first is that no private company could ever claim to be an insurance agency if they did not have the funds to meet with the claims that their clients were bringing in. As with all government trust funds, the FDIC’s revenue goes into the U.S. Treasury’s general fund to pay for wars, Social Security, infrastructure repairs, and other things wholly unrelated to the goal of providing insurance on bank deposits. Its expenses are met with money borrowed from that same fund. With no direct link between the FDIC’s assessments and the benefits it can guarantee at any given time, its fees would then seem to be little more than an arbitrary tax ultimately paid by banking customers and investors. The FDIC is less a government-owned insurance company and more a faith-based one. There is literally no way it can independently operate with -0.02% reserve capacity, yet apparently the public is supposed to have blind trust in its ability to keep our savings secure.

Secondly, it is because of interventions like the FDIC that the federal government is rapidly becoming overleveraged. The oft-repeated description of state-run enterprise as a system that “privatizes the profits and socializes the losses” fully applies here, as the FDIC exposes taxpayers to all risk experienced by the financial system, without giving taxpayers a share of the Goldman Sachs holiday bonus. Had the fire of the 2008 financial crisis been allowed to reduce institutions that misallocated resources to dust and ashes on the forest floor, it seems unlikely that this relationship would have remained intact. Instead, then, as now, taxpayers and the U.S. Treasury remain on the hook for every mistake made by the banking industry.

Now, as the August 2 deadline for a deal over the debt ceiling draws nearer, the sparks may fly toward the FDIC once again. Congress should not shy away from asking the difficult questions about how much risk taxpayers are being exposed to through the FDIC’s theoretically infinite power to bail out or take over failed banks. Long-term policy changes should also be explored, such as closing the FDIC entirely to force banks to clean up their lending portfolios. Overall the federal government must seek to extricate itself from its tightly-entwined relationship with the world of finance to end the need for costly bailouts.

Debt Envy

squareforceone — Sun, 10 Jul 2011 23:30:15 +0000

While Greece Gets A Second Mortgage, America Lusts After Its Dining Room

Originally Published in Western Free Press

Competition is a good thing in the private sector. It serves to allocate resources to the best product at the lowest possible price. In the public sector, competitiveness often appears to be defined as the willingness to take or borrow those resources and apply them towards government projects. As long as that is the case, the United States government should avoid becoming competitive with its allies and adversaries.

For sectors of the U.S. economy where the government is the largest customer, there aren’t “prices” determined by supply and demand from consumers; there are spending benchmarks set by Congress, and often the argument is made that these figures should be higher to compete with what other countries are doing. With health and education spending, the argument seems to be that if a European social democracy has us beat by some metric, more government money is a necessary “investment”. For defense spending, every dollar spent by a potential adversary is believed to lead to a proportional increase in their strength. However, these economic hypotheses, long taken as fact by politicians, pundits, professors, and voters of all ideological leanings, appear to be false when the details are taken into consideration.

Let’s look first at health care spending. The claim is often made that the U.S. should not only give the government a bigger role in the health care system, but that it should give the government the only role in the health care system. Gosh, why can’t we just be more like those cultured people in Europe? Well, we can be, and thanks to Obamacare we probably will be. The U.K. has a federal debt totaling 77% of GDP, and France is sitting at 84%. The U.S. currently comes in well behind those figures with a 58% ratio, but apparently we want to add a #1 IN DEBT foam finger to the collection.

And why not? Greece currently has a government debt equivalent to very nearly one-and-a-half times its entire economy, and now other countries want to lend it even more money that it can’t feasibly pay back. At Moral Hazard’s Used Car Lot, profligacy is a virtue that shall be rewarded with no-money-down financing options and specially low interest rates! It would be convenient to believe that our creditors would be so kind in the event of a default or other crisis, but that seems unlikely.

The arguments for increased spending to maintain military competitiveness are slightly different. When a country with a repressive government and command economy amps up defense spending, nuclear bombs are thought to proliferate via mitosis. The paratroopers are landing on the roof tomorrow, and America must respond by spending billions of dollars on new aircraft and tanks! However, it can easily be proven that there is no direct correlation between defense spending and national strength.

Many people are aware that the Soviet Union met its end by spending lavishly on weapons programs and an unending war in Afghanistan while its actual economy collapsed. The grim details have mostly been forgotten. The “Evil Empire” was so broke by 1991 that it had to borrow money to import grain to feed its people. However, so much capital had been diverted to non-productive state-owned enterprises or the military, that the only way the Soviet Union could provide the IMF with collateral on its additional debt was to transfer the G-7 nations 100 tons of solid gold from the national treasury. North Korea, still a commonly-cited national security threat, is faced with a similar liquidity crisis of such severity that the Czech Republic reports that it has attempted to pay its debts that amount to approximately 100% of GDP with ginseng. Clearly, high military budgets do not in and of themselves provide proof as to the long-term viability of a country. This result should be seen both as evidence that many of our strategists’ fears are likely unwarranted and as a warning in response to the ongoing U.S. military presence throughout the Middle East.

Americans seem to consistently agree that relatively low taxes, a strong private sector, and minimal government debt will lead to prosperity and strength. But as policy tourists, we come back with snapshots of single-payer health care, high speed rail, and military spectacle asking ourselves, “Why can’t we be more like them?”.

Perhaps the question should be, “Why are we doing what they’re doing?”

Thoughts on 2012 GOP Primary

squareforceone — Mon, 20 Jun 2011 22:53:06 +0000

Since Mitch Daniels declined a run for President in 2012, I have been asked numerous times who I would support now that he is no longer an option. There is a big problem with this question: it assumes that I was involved in the effort to Draft Daniels out of some sense of partisan duty, and that, should some circumstance have eliminated Governor Daniels from the competition, I would go forward in an orderly fashion backing the eventual victor in the Fiscal Conservative Conference bracket of the GOP primary tournament. While that may have been convenient for some, the reality is that a President has to be more than just a concoction of poll-tested, PAC-approved policy statements given presence by a great head of hair and a winning smile. Governing is a lot different from legislating, and the dangers of viewing presidential candidates strictly in terms of their platforms cannot be underestimated.

I liked Mitch Daniels because his career had been consistently focused on the issues a potential campaign would have likely centered around. He seemed like an honest man that was truly focused on bringing forward constructive, conservative reforms in Indiana. He was a true public servant who never took a job solely to use it as a springboard to a more prestigious post. These are intangible assets of character that no amount of fundraising, media attention, attractiveness, or strategy can make up for if they are not present in a candidate.

Those who are wondering why voters find the current field lacking should consider that.

If I’m a normal, politically uninvolved person that just wants to cast a ballot to do the best thing for their country, why would I look at the candidates the GOP currently has to choose from and feel confident that power is going to people who will do the right thing?

Neither the aptly-nicknamed Multiple-Choice Mitt nor Former Governor Ambassador Jon Huntsman Jr. seem to have any opinions of their own. Jon Huntsman Jr. even says it is “tough to define” what his religion is. Now, there’s plenty of time for soul-searching in your youth, but by the time you’re old enough to run for President, I don’t think it’s unreasonable to expect you to have answers for these questions. Mormonism is a perfectly respectable religion, but last time I checked it and most other systems of morality preferred honesty to weasel words.

Gov. Tim Pawlenty somehow manages to be both honest and unprincipled. By this I mean, he’s always refreshingly open about what his positions are and what his mistakes have been, but that there doesn’t seem to have been any sort of ideological framework guiding his decision-making process. Think of him like an earnest, overeager puppy dog bounding with energy, enthusiastic to chase after the carbon tax frisbee in one election cycle before returning it to get the pro-growth football the next time around. It’s not exactly an inspiring record.

Sarah Palin and Michele Bachmann both have worked as hard as possible to leverage whatever pitifully blown out of proportion influence they have to try and get even more of it. From Palin’s misguided endorsements for crooks in the 2010 Senate primaries to Bachmann’s distasteful personal response to the State of the Union address, the constant attention seeking makes them both seem desperate and trivial instead of stable and relevant. Jon Huntsman’s ambitions are also not endearing. He ran for governor, abandoned the job when it became clear he could step up to ambassador, and then quit that too when it looked like he might have a shot at the Presidency! If elected, I fully expect Jon Huntsman to resign from office to become captain of the International Space Station.

Herman Cain’s disturbing comments about Muslims make him a non-starter for somebody who counts several friends among their population. Newt Gingrich’s personal life has been a soap opera of infidelity and the policy positions he has taken over the course of his career span a spectrum beyond red and blue which would appear to include the infrared and ultraviolet ranges. Rick Santorum is about as delusional as your 27-year-old friend from high school that’s still talking about breaking into the music industry.

That leaves us with Ron Paul, who I admire and voted for in 2008, but will never be elected President for a number of reasons that will not be rehashed here.

The question has become, for me and many others: will a candidate with some of the positive character traits I admired in Mitch Daniels come forward and seek the nomination?

I am hoping that Governor Rick Perry of Texas, sworn 10th Amendment defender and 2nd Amendment enthusiast, fits the bill. Only the scrutiny of a national campaign will reveal to the public for sure, but I suspect that he could be the right candidate to come forward as a principled conservative reformer and “true believer” in our great capitalist system. It’s telling that 48% of private sector jobs created in the past two years are in Texas, a state that Rick Perry has governed for over ten years. And who better to lead the charge against the entitlement state in 2012 than a governor who rejected federal funds for unemployment assistance? Rick Perry is the most well-situated to run against Obamacare and in favor of serious entitlement reform for the very simple reason that he has actually governed as a federalist and fiscal conservative. At the very least, it seems like Gov. Perry should run to explain how sticking to the ideals the GOP wins campaigns on — minimal tax and regulatory burdens for businesses, limited government — can lead economies to prosper, even when those economies were inherited from George W. Bush.

STUDENTS FOR DANIELS: Debt Vigilantes vs. the Thieves of Prosperity

squareforceone — Fri, 22 Apr 2011 22:04:34 +0000

Time is running out for Governor Mitch Daniels to make his decision about running for President of the United States. Most people haven’t been paying all too much attention, as celebrities like Donald Trump and Rebecca Black have been at the forefront of the news lately. Yet, the Student Initiative to Draft Daniels has continued, despite so far having primarily garnered attention from those gloomy places where serious journalism goes to cry about the state of the world. CNN and National Review have both covered our quest for justice.

And it is a quest for justice: the national debt represents a serious injustice being committed against the young people who never voted for the politicians whose careers benefited from excess government spending. I like to think of the past five years in terms of diverging exponentials: our foresight is down into the nanoseconds, while our debt runs out to over 14 trillion dollars! It is simply not sustainable for the government to continue spending over two million dollars per minute; eventually the lights will go down, and either economic crisis or our creditors will come in and break up the entitlement-driven debt party. Our parents and grandparents are wonderful individuals, but as a collective they have voted themselves benefits without raising the money to pay for it from their own tax dollars. This isn’t our fault!

Students for Daniels is that obnoxious guy in the back of the room yelling “BOO!!! THIS SONG SUCKS!” while everyone else just ups the volume of their conversations to try and drown out the unwanted soundtrack. We are the debt vigilantes asking Washington for a change of tune before it is too late, doing whatever it takes to spread the message about fiscal responsibility being the ethical course of action. Our generation is being saddled not only with an insurmountable debt and the possibility of default, but a weakened economy as a result of the poor policies feeding it. In 2010, the government took over a billion dollars out of the economy every day and sent it to mostly-foreign banking institutions as interest payments on the debt . Students for Daniels believes that these thieves of prosperity must be stopped, so even though nobody has asked us to step in and fight the bad guys, we will ambush our potential candidate on the side of the road with protest signs and drop TV ads on Iowa anyway. It’s just that important. The GOP must nominate a candidate that has a proven track record of fiscal responsibility to show a real contrast with what the Obama Administration has done in 2012, and Mitch Daniels would be an excellent choice.

Governor Daniels has said that he owes our group an answer. That’s great, because every American worker owes a $90,000 share of the federal debt, and we think he is the hero that can take our cause from activism to dinner table conversation. When the GOP primary begins in earnest, expect conversation to shift from appetizers like the President’s birth certificate to the real food for thought: discussion of the responsibilities of government and acceptable levels of taxation will move from blogs and brief segments on cable TV to primetime. In this interview, there will be no softball questions. We have faith that Mitch Daniels would be capable of suffering having his feet held to the fire on difficult subjects like healthcare and entitlement spending, now it’s up to him to put on the Teflon and step in.

The Government Should Stop Throwing Money at My Problems

squareforceone — Wed, 30 Mar 2011 01:32:59 +0000

By Hannah Thoreson

Originally Published on statebrief.com on 2/28/2011

The scene is Friday night in a college apartment. I’m scrambling to finish one of those online multiple guess assignments, inconveniently due at 11:59 pm. In stumble a couple of mildly inebriated students, who debate how to best spend the remainder of the night. One of them suggests that they play a board game, and a box containing that rainy day staple, LIFE, is dusted off.

“I remember when I was a kid, you went to college in this game and it meant you got the $100,000 salary card, the best house, and a career as a rockstar. Now it means you start off 50 or 60 thousand dollars in debt with no job,” somebody grumbles.

Unfortunately, it seems that most of my classmates begin their studies with the expectation of the first set of LIFE outcomes that will result from attending college, but end with the second set. This year, for the first time, the value of the nation’s student loan debts exceeds the amount of outstanding credit card debt. And as surely as the sun rises in the east and sets in the west, the little plastic bandwagon is filling up with pink and blue pegs and lurching ominously towards the “They Should Do Something (collect one LIFE tile!)” space. However, if the Obama Administration has its way, as in many other instances, ‘they’ will do the wrong thing.

The government should stop blindly infusing money into the higher ed system. It is causing unintended consequences of a severity that cannot be underestimated.

In the short term, every time the government raises the federal Pell grant allowance or the amount of federal loan money that a given student is eligible for, it has the obvious effect of pumping more money into the system. Ladies and gentlemen, I didn’t even take Econ 101 and I can explain what’s coming next a lot more accurately than most people either can or care to admit: when you increase the supply of money in any given economic system, prices also increase. This is called “inflation”.

Conventional wisdom says that the cost of a university education has risen faster than the overall rate of inflation. But has it really? I suspect that if you look at the higher education market as a closed system, the cost of a degree has only risen to meet with the absurd amount of capital that has flooded into the system from the government and private lending institutions over the past 20 years. So as much as I would like to submit to the traditional intramural sport of whining or maybe even taking to the streets in an effort to get the government to donate more of your tax dollars towards my quest for a college degree, instead I am going to say it once and for all: the government should stop throwing money at my problems.

The government has created a vicious cycle in which more grant and loan money is pumped into the system and educational institutions raise prices in response. This only increases the demand for posters featuring politicians with Hitler moustaches and calls for the government to add more funds to the system again.

What’s worse is that I suspect the rising costs and rising debts are also creating a long-term problem that no one has really considered yet. If today’s college students graduate with student loan burdens that require them to shell out all of what should be their discretionary income to pay off their debts, we are squandering future gains in productivity and entrepreneurship. Throwing money into an endless black hole of interest payments on intellectual capital a person has already obtained accomplishes nothing and does not put money back into the economy of the future. People who are carrying around tens of thousands of dollars in student loan debt will be unwilling to take the risks involved in starting businesses. The government’s effort to subsidize the production of college graduates is actually hurting our long term ability to create jobs for graduates!

The government must immediately stop feeding more money into the higher education system. It is causing the problem people are demanding that they “solve”, as well as threatening to impair future economic growth. The solution is obvious: starve the beast. Force the universities to live within their means instead of constantly asking the government for more money and raising tuition. Since that probably won’t actually happen, I advise anybody reading this who is currently in college to take the maximum number of allowable credits per semester. The more time we spend on the Lose-a-Turn side of the board, the more of both our individual and collective future prosperity is being squandered in the name of printing ourselves up degrees.

Time Management is Key for Successful Autocrats

squareforceone — Wed, 30 Mar 2011 01:04:26 +0000

Vladimir V. Putin

Originally published on Facebook – 10/7/2010

Vladimir Putin writes for Forbes magazine

As a very successful individual, I am frequently asked by students, young professionals, and aspiring dictators what traits I have cultivated to become one of the world’s great pariahs of autocracy. What I tell these people is always the same. “Two words: time management.”

Indeed, even established tyrants sometimes are burdened by a failure to prioritize. Fidel Castro and Hugo Chavez are both notorious for having given speeches in excess of seven hours. That’s one full “lazy American workday”. While I’m sure their respective peoples gained some degree of enlightenment on the principles of Marxism and the fight for social justice, those are hours that those Presidentes de vida could have better spent finding ways to nationalize industries owned by their shell companies headquartered out of the Cayman Islands.

But perhaps the most vacillatory despot out there is Muammar al-Gadaffi. For every hour he spends violently, financially, or even verbally outraging the West, it seems like he spends an entire year toiling away in inanity trying to improve his country’s infrastructure or indulging his eccentric hobbies. It’s an uneven track record that tells me that he is unsure whether or not he is ready to fully embrace his revolution and become a truly totalitarian ruler. I’ve tried talking to him about maybe getting something going with the oil industry or starting some kind of narco-terror group just to keep his name out there, but no dice.

Instead he’s done all sorts of crazy things over the past couple of years. Jet skis, aviator sunglasses, and circus tents are all fine and good, but autocracies are about one thing: power. It might have been sort of cool to hobnob with those guys from the Bush Administration a couple of years ago, but that image was not well-received by his megalomaniac peers. And it was just downright embarrassing when he insisted on testifying before the United Nations. It’s commonly known that the UN is full of pathetic little countries like Cambodia. I’m on top of my game, and the only reason I would ever care about Cambodia would be if I thought I could drill for oil there and launder the money into my wife’s Swiss bank account. While Colonel Gadaffi has no doubt led a very pleasant life as Libya’s de facto leader, fewer distractions and more discipline (and underground bunkers!) would make his country one that even I would be proud of.

But I digress: this column isn’t intended to be a critique of the efforts of those whose days have already passed. Instead, I would like to give advice to future generations of autocratically-minded leaders – certainly a worthy cause, if I do say so myself; for what is the use in spending a life first pursuing power at all costs, and then micromanaging the affairs of a country if I can’t threaten those goons at the Tax Department into letting me gift my incomprehensible wealth to somebody just like me before I die?

Spend time planning and organizing. As a dictator, this should be something that you greatly enjoy, but there are a few subtle nuances that a novice tyrant might not be aware of. For example, once you get good enough at planning for your own people, you can start to engage in prognostication regarding the affairs of other countries. The government of your country will only change in the case of the very unfortunate happening, but democracies are different. If you can figure out who they’re going to elect and what they will want from you far in advance, it will be far easier to procrastinate holding legitimate negotiations on their treaties, make excuses for ignoring their demands, refuse to cooperate with people who want to hold you accountable, or even arrest random citizens from their country if need be when the time comes.
Set goals. Realism is important here. For example, I sometimes have a hard time trying to decide if I want science to prioritize putting zoo animals in space, developing different kinds laser-beam weapons, or helping underprivileged regimes in third-world countries build nuclear reactors. You can’t do everything, so you have to make choices, decide where to put your resources, and focus on that. Coming up with benchmarks that have reasonable deadlines attached to them can be important for keeping track of your progress on a big project as well.
Prioritize. Again, this is where some other leaders have fallen short. Having power is really fun, but you have to keep in mind that every hour you spend ranting about the decline of American capitalism is an hour you could spend thinking about how to most strategically position tanks along the border of a smaller neighboring country.
Delegate. Have your sycophants do the most unappealing items on your agenda, but first make sure that they are at each others’ throats enough to compete and do what you want them to at an acceptable level of competence. Fire one of your advisers just often enough to keep people on their toes.
Use a To-Do List. A successful autocrat never misses a chance to justify the deaths of their own citizens, foreign spies, and political enemies in front of the global community. Keep a planner and don’t forget to go to the big summits and use your power to filibuster everyone else’s agendas while you continue to centralize power and build your wealth.
Be flexible. You have to allow time for interruptions and distractions. Referring to a previous example, we hit the deadline for fueling Bushehr without any “interruptions”, but right now we are having technological difficulties. However, the global community has so grossly underestimated our ability to finish this project, that even if it takes us an extra couple of months to work out the bugs, they’ll still be surprised when my buddy Ahmadinejad is kicking back with the good ol’ boys at the nuclear club!
Know when you’re at your peak. I consider myself a morning person, but usually I catch a second wind late at night. An effective dictator will use the middle of the night to catch up on threats they didn’t have time to make during the workday.
Conquer procrastination. Hold yourself to masochistically rigid standards for self-discipline, and soon procrastination will be one of your autonomous regions.
Learn to say “no”. When you single-handedly rule over the world’s largest country, the demands on your time and attention are going to be constant. If you can’t justify or be bothered to refuse a particular supplicant, refer them to an intimidating subordinate to be scared away.
Reward yourself. It’s easy to lose sight of what is really important when you have a heavy workload of really difficult and frustrating problems to deal with, but you will work towards meeting your goals faster if there is an incentive to do that. I promise myself an extra day of bear hunting for every 100 million dollars I make. For smaller achievements, sometimes I will promise myself dessert with my lunch or time to go get coffee with my favorite internal spy.

Follow these tips and you’re sure to be well on the path to unlimited wealth and power. But that’s enough from me, I have to go try and convince some trade representatives from a third world country that a pile of old missiles are worth mineral rights on their sacred land until 2100. Dos Vidanya, comrades!

Russia Kills the Lawyers First, Asks No Questions Later

squareforceone — Thu, 07 Jan 2010 08:01:17 +0000

This is the story of a plot so complicated, it took a lawyer to unravel. And when he finally did, he was killed.

The lawyer, Sergei Magnitsky, worked out of Moscow for an American firm, and discovered that one of his clients, Hermitage Capital Management, was defrauded 230 million dollars.

It all started in 2007 when 50 police officers from the Moscow Interior Ministry raided both the offices of the law firm and the fund, claiming to be working on a tax investigation. The officers confiscated documents related to all of the fund’s investment companies, in gross violation of the search warrant that they actually possessed.

However, my suspicion is that such seizures aren’t entirely out of the ordinary in Russia, and so nobody was alarmed when this happened. Nobody was confused until later that year when the investment firm received a telephone call inquiring about a court judgment that had fallen against one of the fund’s Russian companies, that had, to the recollection of those legitimately involved, never been to court.

Mr. Magnitsky looked into the situation and found out that some of the Russian companies that Hermitage was invested in had been sued by fake companies using forged and backdated contracts, documents whose creation would have only been possible with the seizures from the raids on their offices. The Hermitage fund’s companies were represented by dummy lawyers that weren’t hired by the firm, and they plead guilty to all of the charges levied against them in court. This is where the fraud occurred; the liabilities from the forged contracts amounted to millions upon millions of dollars, and the judgment was the the companies owed that money to their clients.

Going beyond even that, the companies were effectively stolen by a murderer, who re-registered the companies under the name of one of his own. This was done so that the companies, now run by thieves, could turn around and claim that the illegitimate court judgments had wiped out their profits, and ask for their tax money on the now-nonexistent profits to be returned.

The Russian tax authorities granted this request. A “refund” of $230,000,000 for overpaid taxes – indeed, the largest of its kind in Russian history – was wired to the stolen company.

If this all sounds like the most elaborate and disturbing way of conducting a heist, just wait. It gets worse.

Before the money had even been “refunded” to the stolen company, Mr. Magnitsky had, on the behalf of Hermitage Capital Management, already filed numerous and lengthy complaints detailing the frauds with three different Russian law enforcement agencies. The agencies proceeded to pass those filings back to the police officers named in the complaints as a substitute for conducting investigations. The police officers retaliated by starting criminal cases against various employees of the fund.

Mr. Magnitsky sent different government offices over 50 requests for information regarding the stolen companies, and managed to piece together what had happened. The corruption was blatant, and stunning in its magnitude and reach within the Russian government. He felt compelled to do something, so he prepared a detailed complaint about the stolen tax money and filed it with seven different Russian government agencies.

The Interior Ministry officers implicated in the complaints opened criminal cases targeting all of the lawyers representing Hermitage. The pressure was intense, and six of the seven lawyers fled Russia. Magnitsky remained, because he was sure that he hadn’t really done anything illegal. He naively believed that innocence alone would be enough to win a case in the Russian justice system.

It wasn’t. After testifying against powerful, but corrupt officials in court, he was arrested on a phony charge and spent the short remainder of his life being moved through a set of progressively worse prisons before finally dying of illness caused by conditions tantamount to torture. The cell that Magnitsky was kept in lacked glass in the windowpanes, enabling the frigid weather to do its worst. There was no toilet, only an overflowing hole in the floor. Nobody ever held a gun to his head, yet his ability to survive was slowly chipped away at by a system that denied him the good health he had been in when he had arrived.

Like the convoluted way Hermitage’s adversaries had gone about their fiscal crimes, the murder of Sergei Magnitsky is similarly troubling; not only because of the evil inherent in the deed, but also because of how utterly legal the method was.

Rather than sending a hit man to his house with a gun, Mr. Magnitsky’s tormentors had him locked away in a cell. Not one in somebody’s basement, but one in a federal prison run by a national government that operates with all of the airs of legitimacy that bureaucracies the world over do, but which happened to be run by crooks. Smart crooks, who used the powers vested within the papers they pushed around to silence the one man who tried to get in the way of their undue windfall.

Instead of defending the lives and property of its citizens from wrongdoing and holding those who perpetuate misdeeds accountable, the Russian government has instead done the exact opposite: it has let itself become a tool for those with criminal intentions. In this case, it was used to move a massive amount of money from one bank account to another, and kill the man who tried to expose it all. To anybody who had hoped for reforms, transparency, and reduced corruption from the Russian government in the 21st century, those hopes were dead before the first decade of it ran out.

Sergei Magnitsky died on November 16, 2009. R.I.P.

- sf1

For the much-longer piece that inspired this post, click here

Another article I referred to while writing this – on WSJ.com