Jan 232016
 

FBI CHILD PORN SCANDAL

by Bob Podolsky

Introduction

A breaking scandal reported by USA TODAY reveals that the FBI ran a “dark web” child pornography website for 2 weeks last year, after taking over the server that hosted it from its original felonious owner. The ostensible purpose of this was to entrap the site’s users in order to charge them with possession of illegal downloaded content.

Child pornography is a highly charged emotional subject; so one can reasonably expect that the public reaction to this revelation will be the object of a great deal of irrational hyperbole promoted by the mainstream media and exploited by everyone with a political axe to grind.

Accordingly, it is important to acquire a dispassionate fact-based understanding of the issue, in the interest of minimizing unethical responses to the revelations of the USA TODAY (USAT) article. Hence this article.

Common Assumptions

Opinions concerning the USAT article and its implications will vary widely because its readers have widely varying assumptions about how the world works. The assumptions listed below illustrate this point, because some of them are true, some are not, and some are sometimes true and sometimes not.

  1. The making of child pornography invariably involves the sexual interaction of a child with an adult.

  2. Sexual interaction of an adult with a child may be physically damaging to the child.

  3. Sexual interaction of an adult with a child is emotionally damaging to the child.

  4. The child may or may not know, at the time, that what the adult is doing with them is emotionally damaging.

  5. The producers and directors of child pornography are “evil-doers”.

  6. The camera operators involved are “evil-doers”.

  7. Those who process the pornographic imagery are “evil-doers”.

  8. The adult porn actors are “evil-doers”.

  9. The parents of the children involved are “evil-doers”.

  10. Those who watch or observe such imagery are “evil-doers”.

  11. Those who distribute the imagery by various means are “evil- doers”.

  12. The children who are victims of child pornographers are further damaged whenever their images are observed.

  13. It is a proper role of government to identify, find, capture, and punish everyone involved in the child pornography industry.

  14. Laws against the production and distribution of child pornography protect the child victims by discouraging the public from buying the pornographic products.

  15. Punishing the customers of child porn reduces the number of customers.

  16. Reducing the number of customers, in turn, reduces the number of children being abused and exploited.

  17. Running a child porn website to ensnare child porn buyers and viewers is a legitimate strategy for protecting child porn victims from those who exploit them.

Child pornography is certainly a symptom of a serious societal problem, because the victims are seriously damaged…AND if one blindly accepts the above assumptions, the damage can be greatly amplified. In order to get to the bottom of the matter, we need to understand the ethical criteria for what constitutes an “evil-doer” and for the allocation of responsibility to those acting.

The Ethics of Responsibility

After thousands of years of philosophical discussion and debate, the most rationally and scientifically defensible definition of an ethical act is:

An act is ethical if it increases creativity, awareness, love, and/or objective truth for at least one person, including the person acting, without limiting or diminishing any of these resources for anyone.

Rationally we know that the responsibility for an act, be it unethical or not, is divided among all the people who took part in the causal chain of events leading up to the act. However, the one most responsible is the one who had the chronologically last opportunity to prevent the act from occurring. For this reason, despite “legal” opinions to the contrary, the hired assassin is more culpable than the individual who hired him (or her).

In the chain of events leading up to the production of a child porno photograph or video, it is the adult who engages the child sexually that is ultimately most responsible for the harm done to the child victim. The parents who fail to protect their child from such exploitation are arguably the next most responsible. Others involved in the child porn production are also acting unethically, though their participation in support of the crime is less unethical than the actual perpetrators – the adult actor who has sex with the child and the parent who fails to prevent the abuse. These two participants are those from whom the child actually needs protection.

The Objective View: Identifying the Hype

The above definition of an ethical act has a number of logical consequences that yield a dozen important principles that are very useful in applying the ethics to everyday decision-making. Chief among these is the principle that unethical means can never achieve ethical ends. Recognizing that this is so leads to the conclusion that Assumption #17 Running a child porn website to ensnare child porn buyers and viewers is a legitimate strategy for protecting child porn victims from those who exploit them, is FALSE. Therefore, assuming that selling child pornography is unethical, an ethical agency would never resort to doing so…for any reason.

Assumptions 14 through 16 are also false. We know this because they justify the prohibition of child porn, and we know from long experience that prohibition doesn’t diminish the demand for an illegal product, nor its availability. Alcohol, gambling, prostitution and drugs come to mind as obvious examples of prohibition failure.

Assumption 13, It is a proper role of government to identify, find, capture, and punish everyone involved in the child pornography industry. is also FALSE, because punishment of wrongdoers has proven totally ineffectual in curbing crime – especially when the crime is a form of prohibition violation. As an extreme example, consider the fact that drugs are widely available in prisons…where those convicted of selling drugs outside of prisons are routinely sent.

Consider the fact that every crime, as defined in law dictionaries, has a victim – someone who has been physically harmed or whose property rights have been violated. For this reason, Assumptions 10, 11, and 12 are also FALSE. The only victims of child pornography are the children, who are unaffected by strangers seeing their pictures. As much revulsion as most of us feel imagining an adult masturbating in front of a video screen depicting children being molested, the fact remains that the child sex actor shown on the screen is not aware of the event and is not harmed by it. Nor is it a proper function of government to protect us from such revulsion.

Assumptions 1 through 9 are also true, however the first four are qualitatively different than the next 5. The first four serve to simply define the crime that takes place in the production of child pornography…which is ultimately where the crime occurs. Assumptions 5 through 7 indicate the responsibility of the producers of the pornography; but 8 and 9 correctly identify the real culprits – the adult actors and the permissive or absent parents.

Conclusions

Back in the 60’s, in the Vietnam war era, Buffy Sainte-Marie wrote and performed a beautiful song called the the “Universal Soldier”, in which she aptly pointed out that the crime of war could not exist without the willingness of men (most of them practically children themselves) to travel half-way around the world to shoot strangers who had never wronged them.

Today the trigger-pulling soldiers, the bomb-dropping bombardiers, and the rocket-launching drone pilots bear the ultimate responsibility for the international murders we call war.

In similar fashion, it is the child-molesting porno-film actors and the victims’ parents, who abdicate their parental duties, who bear the lion’s share of responsibility for the harm done to children who are thus sexually exploited. While the porn producers and distributors bear some of the responsibility for the harm done to the child victims, the producers don’t usually molest the children personally, and the product distributor issues are just another form of prohibition. And we all know how well ‘The Drug War’ – “works”.

For the creation of an ethical society, free of such evils, it is necessary for a dramatic change to occur in human culture…a change that paves the way for our institutions to make consistently ethical decisions. Fortunately, the knowledge of how this will be accomplished already exists, and more and more people are catching on. For details read Ethics Law and Government and Ethical Organizational Development.

Jun 032014
 

Income Tax is Not Necessary to Fund Government

Devvy Kidd
Originally published and copyrighted in June 2001
Updated 01/25/2012

Also available on audio for free; click here.
Download to a CD or IPod and help get the truth to family and friends

Can this statement possibly be true? In order to answer this question, Americans must first understand what is the source of the money that funds the government and where it goes. Contrary to the sound bites issued by the two mainstream political parties, the reality of how the system actually works will not only open your eyes, but hopefully stimulate the American people to demand that the thievery underway come to an end.

Where do your “income” tax dollars go?

The best place to look for an answer to this question would be a government report, so let’s take just one at random:

President’s Private Sector Survey On Cost Control
A Report to The President (Reagan)

January 15, 1984. Available from the Congressional Research Service.
The excerpt below can be found on page 12.

  • “Importantly, any meaningful increases in taxes from personal income would have to come from lower and middle income families, as 90% of all personal taxable income is generated below the taxable income level of $35,000.
  • Further, there isn’t much more that can be extracted from high income brackets. If the
    Government took 100% of all taxable income beyond the $75,000 tax bracket not already taxed, it would get only $17 billion, and this confiscation, which would destroy productive enterprise, would only be sufficient to run the Government for several days.
  • Resistance to additional income taxes would be even more widespread if people were aware that:
  • With two-thirds of everyone’s personal income taxes wasted or not collected, 100% of what is collected is absorbed solely by interest on the Federal Government contributions to transfer payments.
  • In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their government.”

So what we have is a central bank issuing worthless paper “money” that controls our economy, our lives and our future. This private banking cartel was unconstitutionally granted this power by a devious, scheming group of senators back in 1913. In essence what they did was place the American people into indentured servitude by forcing The People to pay usury on worthless fiat currency (paper money created out of nothing), not to fund the government, but to enrich the bankers and fund wars in which America should never be involved. This system exists not to fund the government, but to allow the U.S. Congress carte blanche power to continue funding unconstitutional agencies and programs by providing them with a bottomless source of worthless ink.

The National Debt and the Deficit

These two little bookkeeping items are not the same thing. Few Americans actually know the difference, but the difference is quite important. We continually hear members of Congress, president after president, and political pundits call for “reduction in the debt.” But what does that really mean? Here’s how it works in the most simplified way to fit into this document:

Let’s say that for 2002, Congress and the President decide they want $1.7 trillion dollars to fund this bloated pig called our government. We know that 100% of all personal “income” taxes extorted by the IRS goes to the “Federal” Reserve Banking System and does not fund a single function of the government. So, let’s take the people’s blood and sweat off the table.

What other revenues does the government collect? Corporate taxes, social security taxes, constitutional revenues such as excise taxes on cigarettes, alcohol, tobacco, firearms, tires, etc., tariffs on trade, military hardware sales, and some minor categories. Let’s say that those revenues will total $900 billion dollars. The politicians want $1.7 trillion to spend on their favorite welfare programs, wars and foreign welfare, but have a short fall of $800 billion dollars. This is called the deficit and the deficit, created by the spending of Congress, creates the “national debt.”

How? Because the politicians are $800 billion dollars short, they simply call up Al Greenspan and borrow your children’s and grand babies’ futures. The “Federal” Reserve Banks don’t loan anything of value to Congress. They aren’t banks; they’re really an overpaid, powerful, private accounting service. When that $800 billion dollars worth of ink is transferred to the Treasury, it gets piled on top of the existing “national debt.”

This is how the magical money machine works. Congress overspends. It borrows from this accounting firm called the “Fed” and then turns around and tells you to pay for these crimes against the people. In other words, Congress basically pays the bills with social security and borrowed ink from the “Fed.” Pretty slick scam, wouldn’t you say?

The people of America are also responsible to a large degree for this out-of-control spending. Americans have been bred to a welfare dependent mentality. Special interest groups who have no interest in the U.S. Constitution, demand that billions of dollars be spent on their pet interests. Billions upon billions of dollars have been unconstitutionally thrown to foreign governments, some days our friend, a week later our enemies. They are only our friend as long as the U.S. throws money at their corrupt governments.

Billions of dollars have unconstitutionally been spent on grants to colleges and universities, which in turn sell their research to the highest bidder, paid for by the sweat off the back of the little guy out in America. No, they don’t return any back to the little guy who funded these studies and research programs.

As long as the American people themselves condone continued unconstitutional spending by Congress, the longer they will violate their oath of office, and continue to fund unconstitutional expenditures, placing your children and grand babies in a state of unpayable, massive debt.

Unless The People demand an end to this insanity, our economy eventually will collapse under the weight of this massive, unpayable debt, no matter how much ink the “Fed” transfers into the coffers of the U.S. Treasury. The pain of withdrawal from unlawful government hand-outs will be far less now than it will be down the road.

America became the greatest, debt free nation on earth by a resourceful, independent, self reliant people. Sadly, today we have a large percentage of our population who can’t get through the day without a government memo telling them how, step-by-step, with a redistribution of average, ordinary Americans assets into the hands of the unproductive. A very sad commentary to what made our nation great and prosperous.

But I heard the debt is being paid down?

What you heard and reality are two separate issues altogether. The politicians must continue to fool the American people lest they catch on to this chicanery. Let’s have a look at the numbers so you can see that any utterance that the national debt has been paid down X billions of dollars, is nothing more than bombastic gas, passed from one administration to the next and the latest recycled Congress.

In the chart below, an R next to the amount indicates a Republican President; a D is for a Democrat in the Oval Office. The Democrats had control of Congress from 1954, until the illusion billed as the “Republican Revolution” in 1994. Both houses of Congress were Republican controlled until after the 2000 “election”, but this ended when in May 2001 James Jeffords ‘fessed up to his real political agenda.

Current Congressionally created debt:

01/23/2012
12/31/2011
06/30/2011
12/31/2010
06/30/2010
12/31/2009
08/30/2009
04/16/2009
10/30/2008
11/01/2007
09/29/2006
09/30/2005
09/30/2004
09/30/2003
09/30/2002
09/28/2001
08/08/2001
04/30/2001
02/28/2001
01/31/2001
12/29/2000
09/29/2000
09/30/1999
09/30/1998
09/30/1997
09/30/1996
09/29/1995
09/30/1994
09/30/1993
09/30/1992
09/30/1991
09/28/1990
09/29/1989
09/30/1988
09/30/1987
$15,236,245,309,869.69 (D)
$15,222,940,045,451.09 (D)
$14,343,087,640,008.40 (D)
$14,025,215,218,708.52 (D)
$13,203,473,753,968.10 (D)
$12,311,349,677,512.03 (D)
$11,909,829,003,511.75 (D)
$11,183,899,252,728.00 (D)
$10,530,893,033,778.21 (R)
$9,080,228,573,291.65 (R)
$8,506,973,899,215.23 (R)
$7,932,709,661,723.50 (R)
$7,379,052,696,330.32 (R)
$6,783,231,062,743.62 (R)
$6,228,235,965,597.16 (R)
$5,807,463,412,200.06 (R)
$5,720,324,946,092.23 (R)
$5,661,347,798,002.65 (R)
$5,735,859,380,573.98 (R)
$5,716,070,587,057.36 (R)
$5,662,216,013,697.37 (D)
$5,674,178,209,886.86 (D)
$5,656,270,901,615.43 (D)
$5,526,193,008,897.62 (D)
$5,413,146,011,397.34 (D)
$5,224,810,939,135.73 (D)
$4,973,982,900,709.39 (D)
$4,692,749,910,013.32 (D)
$4,411,488,883,139.38 (D)
$4,064,620,655,521.66 (R)
$3,665,303,351,697.03 (R)
$3,233,313,451,777.25 (R)
$2,857,430,960,187.32 (R)
$2,602,337,712,041.16 (R)
$2,350,276,890,953.00 (R)

The statistics above were obtained from the Bureau of The Public Debt’s web site:
http://www.treasurydirect.gov/NP/NPGateway
As you can see, it doesn’t matter which party is in office, there is no surplus and the debt cannot be paid down, it can only grow exponentially as long as Congress and the President have the central bank at their fingertips.

A “balanced budget” is nothing more than good political rhetoric, but in reality, it’s a pipe dream strictly for public consumption. How can you balance your budget if you have no money to spend and are trillions of dollars in the hole? You can’t. It’s just another well crafted illusion to keep the masses pacified.

You can fool some of the people some of the time, but the American people have awakened to this monumental theft and are demanding the only real solution that can be implemented: Abolishing the central bank, and a return to a constitutional monetary system with no income tax.

No “Fed,” no need for a direct tax

Without the central bank siphoning off the wealth of our nation, there would be no need for a personal income tax.

President Andrew Jackson booted out the central bank; his speech can be read here:

http://alpha.furman.edu/~benson/docs/ajveto.htm

This battle fought by Jackson was a huge deal back then and he refused to back down. Jackson was the last honest president with the guts to stand up to the international bankers who are literally stealing US blind.

“The greatest party battle of Jackson’s presidency centered around the Second Bank of the United States, a private corporation but virtually a Government-sponsored monopoly. When Jackson appeared hostile toward it, the Bank threw its power against him.

“Clay and Webster, who had acted as attorneys for the Bank, led the fight for its recharter in Congress. “The bank,” Jackson told Martin Van Buren, “is trying to kill me, but I will kill it!” Jackson, in vetoing the recharter bill, charged the Bank with undue economic privilege.

“His views won approval from the American electorate; in 1832 he polled more than 56 percent of the popular vote and almost five times as many electoral votes as Clay.”

Please note that the words “a private corporation but virtually a Government sponsored monoploy” comes directly from the White House’s web site. What a huge admission!

On line, you can also read Congressman Louis McFadden’s indictment on the Federal Reserve Corporation. It is a very concise explanation of how the international banking cartel has been sacking this country’s wealth since 1913.

Don’t be fooled by this chant around the country for a flat tax, a consumption tax, sales tax or any other kind of personal income tax. There is absolutely no authority in the U.S. Constitution to implement any of these forms of taxation without apportionment. It is for this reason and this reason alone, that when it became apparent that the 16th Amendment was not going to be ratified by the states, fraud was committed and it was simply “proclaimed” ratified by then Secretary of State Philander Knox.

We don’t need any direct taxation and these popular mantras are just new lies to replace old lies. Any one of these forms of taxation will still feed the cancer: the central bank. Any one of these forms of taxation is just another way to fleece the American people to enrich the pockets of the international banking cartel. Please consider the words of Congressman Ron Paul:

    “Strictly speaking, it probably is not necessary for the federal government to tax anyone directly; it could simply print the money it needs. However, that would be too bold a stroke, for it would then be obvious to all what kind of counterfeiting operation the government is running. The present system combining taxation and inflation is akin to watering the milk: too much water and the people catch on.”

Please don’t fall for these alternative taxing SCHEMES. The banking cartel doesn’t care what form it is they fleece your hard earned dollars (flat tax, fair tax, sales tax, etc.) – just as long as they continue to steal from us:

Beware alternative taxing schemes
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=43242

Make IRS check payable to stockholders of private Fed
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=43820

Today is April 15 … again
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=44036

What we need to do is take away the magical money machine called the “Fed,” which will force Congress to live within its means and fund only those activities specifically enumerated by the supreme law of the land in Art. 1, § 8 of the U.S. Constitution:

Lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States, but all Duties, Imposts and Excises shall be uniform throughout the United States, borrow Money on the credit of the United States, regulate commerce (trade), naturalization, bankruptcy laws, coin money, regulate the value thereof, and of foreign Coin, fix the Standard of Weights and Measures, punishment regarding counterfeiting the Securities and current Coin of the United States, establish Post Offices and post Roads, Promote [Editorial note: “promote” does not mean fund] the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries, constitute Tribunals inferior to the supreme Court, define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations; declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water, Raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years, provide and maintain a Navy, make Rules for the Government and Regulation of the land and naval Forces; provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions, provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress, Exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings, make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof. **

There is absolutely no authority for the federal government to legislate in areas of the environment, education, the NEA, the FDA and many others. It may surprise you to find out that agencies such as FDA, DEA and the EPA all derive their jurisdiction from international treaties. When the powers that be wish to circumvent the U.S. Constitution, they do it either through an executive order or international treaties. We strongly encourage you to investigate this issue thoroughly.

Prior to the Federal Department of Education, America had the finest schools in the world. Since this disastrous and unconstitutional grab for power, we can all see that a quadrillion dollars a year will not fix our schools, and they continue to decline faster than the feds or states can shovel money into them. Even if a direct tax were necessary, only by keeping it at its lowest possible percentage would it ever benefit this nation:


“The point now emphasized is that the evil effects of high surtaxes fall not upon the individual whose income is seized and taken, but ultimately almost entirely upon the mass of the people who are thereby deprived of the benefits which would result from the free flow of commercial transactions and the use of the additional capital which would be available for productive enterprise.
“Freedom of business transactions essential.

“The revenues to be obtained by the Government from this class of taxes depends upon transactions in trade and commerce which bring about income available for payment of taxes. It is highly desirable, in the interest of the production of revenue, that the volume of business transactions giving rise to gain shall be as great as possible, and to this end it is essential that the natural laws of trade and commerce and the free flow of business shall not be interfered with or prevented.


The excerpt below is from pgs 19-20, Annual Report of the Secretary of the Treasury on the State of Finances for 1921:


“But the direct effect of these very high taxes is to hinder and prevent business transactions which would otherwise take place. A man may have property which he has held for years and which has greatly increased in value, and he would like to sell it, but if he does a large part of the gain would have to be paid out in taxes. He would rather keep the property than sell it, pay the tax, and invest what is left in something else. At the same time the party desiring to buy this property, if he obtained it, would improve it with buildings.

What is the result? The transaction does not take place, and the community loses the advantage which would come in the stimulation that would arise from the transactions resulting from the buyer’s improvement of the property, and it also loses the advantage of the seller’s putting his money into some other form of investment, which in turn would give rise to business transactions. The same thing on a much greater scale is true in manufacturing and mercantile lines. Men have built up enterprises to the point where they are highly successful. They would like to take their profit and turn the business over to younger men to carry on.

These transactions are highly desirable not only for the parties but for the community, yet they are absolutely stopped, because if made the seller would have to pay in one year a tax on a gain which has been the result of perhaps the better part of a lifetime of effort. And in all such cases the Government gets no tax, whereas if the rates were reasonable the transactions would take place and the Government’s revenues would benefit accordingly.

The free interchange of property in business transactions is essential to the normal prosperity of the country, and each such transaction has a direct tendency to bring about others of like character with the result of increasing the amount of gain or income available for taxation; but when the tax is so high as to act as a deterrent against usual and desirable business transactions, and the volume of such transactions is thereby lessened, the inevitable result is for the tax to become less and less productive.

It is for these reasons that, particularly in the higher brackets, a lower tax rate will produce more revenue in the long run than excessive rates. So long as the high rate stands in the way of accomplishing bargains and sales, the Government receives no tax; but at a lower rate the transactions proceed and the Government shares in the profits.” (End of excerpt.)


Today Americans are being fleeced to the tune of approximately 52% of every dollar going for local, state and federal taxes. The day is rapidly approaching when making even $1,000 per hour will not be enough to survive. How much longer are the people of this nation going to put up with this state of affairs? We say enough is enough!

A Pioneer on the withholding issue

Vivien Kellems was a woman before her time who knew the grand theft taking place against the working man’s paycheck. [For more information on Ms. Kellems, see: http://www.vivienkellems.org/]. The following excerpt from pages 41-46 of her book, Toil, Taxes and Trouble, published in 1952 is legally right on point:

    “Since a capitation means a tax of the same amount for every person, this provision makes doubly sure that all federal taxes must be at the same uniform rate for everybody. This limitation that direct taxes be levied by the Federal Government must be in proportion to a census and apportioned among the States in accordance with numbers, is the only provision in the Constitution that is stated twice.

    “The only reason that our Constitution required a census to be taken every ten years was to count the people to determine how many Representatives should go to Congress, and how direct taxes should be levied. I wonder how many Americans thought of this in 1950 when those little busybodies came knocking on their doors, asking ten thousand impudent, silly questions which were none of their, or Washington’s, business.

    “There is absolutely no power granted in the Constitution which enables a top-heavy bureaucracy of empty-headed simpletons, and worse, to invade the privacy of the American people in such a monstrous manner.
This census is just a preview of what is really in store for us if they actually take over, which they most certainly will do unless we uproot and vote them out.

    “The census was to count the people – that was all. The number of people determined the number of Representatives in Congress and the apportionment of direct taxes among the states.

    “For a long time I asked myself, ‘Why were Representatives and direct taxes linked together and apportioned among the States in accordance with population?’ It was understandable that Representatives should be chosen in accordance with numbers but why should taxes be apportioned the same way? And then one day, out of the blue, it came to me crystal clear. All at once I understood the plan to safeguard the future freedom of the nation, conceived and executed by those scholarly men.

    “I read again: ‘Representatives and direct taxes shall be included within this Union, according to their respective numbers…’ ‘No capitation, or other direct tax shall be laid, unless in proportion to the Census of Enumeration hereinbefore directed to be taken.’ And in those two sentences our forefathers bound fast the hands of Congress and secured the liberty and freedom of the American people. How? By making it utterly impossible to levy an income tax.

    “An income tax is certainly a direct tax, probably the most direct tax of all since it cannot be shifted but must be paid by the person receiving the income. By specifying that direct taxes must be levied in accordance with the number of people, not upon what they produced, as in the days of ancient Egypt, an income tax was simply out of the question. It cannot be levied upon a man but must be levied upon what he receives.

    “Our forefathers designed and incorporated in the Constitution a new system of government. It was built upon a revolutionary idea; the conviction that the government belonged to the people and existed only by their consent. Its genius lay in the careful system of checks and balances among the three departments, the Legislative, the Executive, and the Judicial. And it went further and maintained a balance between the powers of the individual States and the Federal Government. In addition it carefully reserved to the States and to the people all rights and powers not specifically delegated, or prohibited to the Federal Government and further stated that because certain rights were enumerated in the Constitution it did not mean that others not mentioned were still not the property of the people.

    “However everything in the Constitution was arrived at by compromise. The interests and concerns of the thirteen states varied widely and each delegate was sent to Philadelphia to protect the commerce, industry and agriculture of his particular state. It required months of patient discussion, argument and forbearance to finally produce the finished document, which when completed, comprised a system of government to protect the people in the rights and liberties set down in flaming words in the Declaration of Independence. It is a wonderful document, the best system of government ever devised for human beings, but it could have varied in some respects and still have worked satisfactorily……

    “The supreme achievement of the combined brains of all those men were written into those two sentences and the freedom and liberty of the American people were secured in them. For in those two sentences the right of the free man to own something was made inviolate. This was his distinguishing mark, the only criterion of freedom in all the world, the right of the common man to retain for himself the fruit of his labor.

Now this is how it worked. Every man was given a vote with which he could vote for his Representative. Originally only Representatives were elected, Senators were appointed by the State Legislatures and it’s too bad we changed that provision.”

(Editorial Note: We didn’t. Like the 16th Amendment, the 17th Amendment is a fraud–it was never ratified by the states. Therefore, we have not had a lawfully seated senate since 1913.)

    “That Representative having to stand for election every two years was close to the people and responsive to their wishes. That is why he was given the power to tax; all bills of revenue arise in the House. And that is why he must come home every two years and give an accounting to the people.

    “But his power to levy direct taxes was limited by an ironbound restriction: that tax must be apportioned among the States in accordance with the population. Since all taxes were to be at a uniform rate, Congress simply could not penalize one section of the country, or one group of citizens for the unfair advantage of another.

    “When Congress levied a tax, everybody had to pay and at the same rate. The amount would vary with the wealth of an area, as it does today with the different values of real estate, but the rate was the same for all and the tax was distributed among the States according to population.

    “The men who wrote our Constitution did not found a democracy. They feared the so-called ‘Democrats’ of their day as much as we fear the Communists today. They did not believe in mob rule, or government by the unintelligent, irresponsible mass. They founded a republic and they made certain that the right to vote should be curbed and controlled by the necessity of paying taxes. Scheming politicians could not take taxes from a helpless minority and buy themselves back into office with the votes of the tax exempt majority. When a Representative voted a tax, he voted to tax everybody because the tax was based upon numbers, not upon dollars.

    “This was the most brilliant plan ever conceived for guaranteeing the freedom of a nation. It protected every person in his right to private property, rich and poor alike, and under this protection we built the richest, most powerful nation on earth. We achieved and maintained for the majority of our people a standard of living undreamed of before, the hope and the envy of the whole world.

    “And we accomplished something even more important: we developed a vigorous, self-reliant, self- respecting race of people. An American citizen would have been ashamed to ask for a handout from his Government. The Government belonged to him, he did not belong to the government.

    “And then what happened? We chucked our carefully safeguarded right to own something out the window, and we passed the income tax amendment. Gone was our apportionment among the States in accordance with population, and also gone was our principle of uniformity. Income ‘from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration’ could be taxed and without limit. And when we passed this income tax amendment the slow, distilled poison of tax slavery dripped into our veins. We sowed the seeds of our national decay which is rapidly coming to maturity before our eyes today. The heritage of freedom so carefully insured for us by our forefathers is gone; it has been taxed away.” (End of excerpt.)

The “General Welfare” Clause of the Constitution

The majority of unconstitutional spending is justified by the “general welfare” clause of the constitution. Shawn O’Connor of the Free Enterprise Society summed up this misconception in one of his speeches, paraphrased below:

“Discussion of the general welfare clause of the Constitution by the courts relies upon the Federalist Papers. This term simply means: Taxation was to protect the individuals’ life, liberty and ownership of private property. One can go to Art. 1, Sec. 8, Clause 1 of the constitution and read the general welfare clause. Then one can do some history research and see what the Anti-Federalists had to say about this clause:

“That this clause conveys absolute power to the central government. Patrick Henry was very vocal in his opposition to putting this kind of language into the constitution. Madison, however, assured Henry and others that all the general welfare clause represented was a preliminary introduction prior to the enumerating the specific powers the delegates were about to grant to this new federal government and that the general welfare clause granted no new power to the government whatsoever. It was simply an introductory statement.

The Anti-Federalists still weren’t satisfied. Hamilton and Madison came back to re-state that if the general welfare clause conveyed absolute power to the government, why would they go on to list the specific powers they were going to grant the government? That wouldn’t make any sense at all if they were going to give absolute power to this government. It was finally conceded by all at the convention that the general welfare clause conveyed absolutely no power to the government.” [End of comment.]

The general welfare clause of the constitution has been misused for personal gain by special interest groups to enrich the pockets of the banking cartel, by politicians hoping to “get that vote,” and an all out push to turn America into a socialist country, beginning with the “New Deal” implemented by FDR and supported by a weak Congress. Lyndon Johnson took the quest to turn America into a socialist nation to new and grotesque heights.

How would you fund the government without any direct taxation?

The powers that be know it’s just a matter of time before the truth reaches enough Americans about the voluntary income tax system. Already trial balloons are being floated to once again fool the people into some form of alternative tax in order to feed the central bank.

America functioned very well without an income tax throughout the history of this Republic. The answer to the question of funding without a direct tax is found is Article 1, Section 9 of the Constitution since 1787. It provides for Congress to pass a legislative bill for tax money to be paid by each state in proportion to its population.

Proper, constitutional funding will allow large amounts of money to fund a limited form of Republican government. To continue on the path of this massive and unconstitutional spending will bring a final and total collapse of the economy. Make no mistake about it.

Has your government been truthful?

Do you know why the “withholding tax” system was put into place? Let me provide you with just one shocking example of how things work behind the scenes:


Declassified (Confidential Committee Print)
Withholding Tax Hearing Before A Subcommittee of The Committee on Finance,
United States Senate, 77th Congress, Second Session on:
Data Relative to Withholding Provisions of the 1942 Revenue Act, August 21 and 22, 1942
(Printed for the use of the Committee on Finance)
United States Government Printing Office, Washington 1942
SUMMARY/Contents Statement of:
Friedman, Milton, Division of Tax Research, Treasury Department
Hardy, Charles O., of Brookings Institution
Jacobstein, Meyer, of Brookings Institution
Paul, Randolph E., Treasury Department

Overview

Because the war effort resulted in increased production and employment, which caused a sudden large influx of money into circulation, the Federal Government and Federal Reserve System had to find a method of “mopping up excess purchasing power” thereby control inflation and obtain immediate funds for the Treasury. Several plans were put forth before the House, Ways & Means Committee and the Senate Committee on Finance to accomplish this purpose.

The following points were made by the Senators and those testifying before the committee:

1. The overall purpose was to obtain immediate money for the war effort, to control inflation and to get the income tax on a current basis instead of being one year behind.

2. To accomplish this goal, it was recognized that a scheme was needed to reach the largest number of people.

3. That the scheme, regardless of whether it was a “coupon,” “stamp” or “withholding of income tax at source,” would constitute a “forced loan” to the Federal Government and it would apply to taxpayers and nontaxpayers alike, with exceptions.

4. Where an individual had money withheld and ultimately no tax liability, the individual would file an income tax return and that income tax return would constitute an automatic claim for refund.

5. The proposed plan was an emergency war time measure.

Hearing Experts, Beginning Page 99

Statement of Meyer Jacobstein of Brookings Institution

“It is obvious that it is necessary to mop up the excess purchasing power of the community, not only because of it’s effect on the price situation but because the Treasury needs the money and needs it quickly.*

Obviously the Treasury can collect from the consumers as the purchases are made and the Treasury has the use of those funds long before it would obtain them by the income-tax method.

Now, there are many ways, of course, of mopping up this surplus purchasing power…Now, there is the withholding tax at the source based on payrolls.”

Senator Clark: “Doctor, what this plan is, it is essentially a compulsory savings plan based on sales tax methods, is it not?”

Mr. Jacobstein: “I should say that is a fair description of it, yes. It is the use of a sales tax method without being a tax.”

Senator Clark: “So far as the impact on the public is concerned, it is precisely the same as a sales tax, except you give the money back sometimes.”

Mr. Jacobstein: “That is right. That is a very fair statement, I think. Senator Danaher used the word “self-assessment.” If I buy a dollar necktie I pay $1.10 under his plan. A withholding tax is usually withheld at the source. Here you withhold it not at the manufacturer’s end but at the retailer’s end. You are using the retailer instead of the manufacturer to siphon off several billion dollars, depending on the rate of the assessment of a tax.

It may be that several systems can be used. Any one of them might be very useful to the Treasury in accomplishing this purpose. But…for siphoning off purchasing power into the Treasury from day to day, or week to week, or month to month; and it has that advantage.

Now, there is an aspect to this question which was not brought out in the original memorandum which would make the scheme perhaps a little more palatable if certain deductions were made by any method, either by the withholding tax method or direct sales tax method or by Senator Danaher’s proposal….”

Statement of Charles O. Hardy of the Brookings Institution

Mr. Hardy: “First…mainly for the purpose of providing an exemption from the tax or forced loan, either one. Now, as has been stated a moment ago, this is a forced loan. It should be pointed out, I think, that you can do the same thing with the mechanics of any other tax, that is, under the income tax you can give out bonds or coupons redeemable in bonds instead of giving receipts for the income tax. You can do that, as far as I can see, with any tax, for the whole schedule of taxes.

I would like to say…that we have to bring about a readjustment of consumption in the country to the amount of consumers goods and services that we can spare the resources to produce under war conditions. First, we have got to devote our productive energies to the war.

Or, you can use the mechanism of the sales tax, as far as I can see, by mopping up the increased purchasing power that is created by the rising amount they receive in their paychecks. On the other hand, if the money is stored up, whether it is in the form of these stamps or in the form where people haven’t spent it because they have had no way to spend it, in either case if it is too large a proportion you are going to have the problem, whenever you do turn it loose, that you have now in the other case, namely of having a lot more purchasing power than you have goods and services to make it good with.

That is the answer, I think, to the question that might be raised as to why not carry this principle through and apply it to income tax, corporation tax, and everything else. Obviously, this has the advantage that this definitely sews up the purchasing power in such a way that it cannot be released until we discover the proper way to release it.

I think it has a great advantage over the deficient spending program. This program just postpones the problem of administration, in deciding how much purchasing power is available to release and to what extent it will create the old wartime inflation over again.”

Senator Danaher: “Let me ask you this question: Considering the withholding tax, simply the treasury withholds it currently and applies the proceeds against the tax due in a given year…”

Mr. Hardy: “The deduction from salaries and interest, and so on, at the source?”

Senator Danaher: “Yes.”

Mr. Hardy: “Yes.”

Senator Danaher: “That is a currently applied method of withholding so much of the consumer purchasing power as is represented by the tax collected or withheld.”

Mr. Hardy: “That is right.”

Senator Danaher: “And the applied as against the tax due.”

Mr. Hardy: “Yes. The withholding tax provision has the effect of withholding purchasing power at the time the income is realized rather than a year hence through the income tax structure.”

Senator Danaher: “And if it were in effect for 1 year it would apply only 1 year?”

Mr. Hardy: “I assume so.”

Senator Danaher: “Yes. Whereas this proposal is a continuing thing.”

Mr. Hardy: “It seems to me the essential difference is that the withholding tax plan applies at the point of receipt of income, and this applies at the point of expenditure of income.”

Senator Danaher: “Of course, you withhold not only from taxpayers but nontaxpayers.”

Mr. Hardy: “Yes. Some people that I talked to about this plan, Federal Reserve people, have been rather favorable to the idea.”

Mr. Jacobstein: “Don’t you want to add that Mr. Selko pointed out that such difficulties as are encountered in the States are, partially at least, overcome when you have a uniform Federal tax? Where you have a uniform tax all over the country by one administration, the Federal Government, it is easier to administer than a sum total of 48 states. Now that was Mr. Selko’s conclusion.”

Statement of Milton Friedman, Division of Tax Research, Treasury Department

Senator Danaher: “I have only one other thought on that point. In the event of withholding from the owner of stock and no taxes due ultimately, where does he get his refund?”

Mr. Friedman: “You thinking of a corporation or an individual?”

Senator Danaher: “I am talking about an individual.”

Mr. Friedman: “An individual will file an income tax return, and that income tax return will constitute an automatic claim for refund.” End of document excerpts.

What bald faced lies. “Mop up purchasing power”? Fleecing Americans dry is a more accurate way to describe this terrible injustice against US. How about letting Americans decide to save the fruits of their labor? No, the government wants it all.

* Art. 1, Sec. 8 of the U.S. Constitution gives Congress the power to issue money, not the private fed: “To coin money, regulate the value thereof,” Cut out the middle man (“Fed”) and the Treasury wouldn’t “need the money.” What a con game.

T. Coleman Andrews. Mr. Andrews (a Democrat) was Commissioner for the first 33 months of the Eisenhower Administration, stated the following in an article for U.S. News & Report, May 25, 1956:

“….We’re confiscating property now….That’s socialism. It’s written into the Communist Manifesto. Maybe we ought to see that every person who gets a tax return receives a copy of the Communist Manifesto with it so he can see what’s happening to him.”

Beardsley Ruml, Chairman of the Federal Reserve Bank of New York stated in one of his speeches in 1946:
“The second principal purpose of federal taxes is to attain more equality of wealth and of income than would result from economic forces working alone. The taxes which are effective for this purpose are the progressive individual income tax, the progressive estate tax, and the gift tax. What these taxes should be depends on public policy with respect to the distribution of wealth and of income.

It is important, here, to note that the estate and gift taxes have little or no significance, as tax measures, for stabilizing the value of the dollar. Their purpose is the social purpose of preventing what otherwise would be high concentration of wealth and income at a few points, as a result of investment and reinvestment of income not expended in meeting day-to-day consumption requirements. These taxes should be defended and attacked it terms of their effects on the character of American life, not as revenue measures.
Taxes on corporation profits have three principal consequences — all of them bad.”

Does the average man or woman in America know this?

What do we mean when we say that the IRS is not a government agency? Read this quote
from an U.S. attorney submitted in court documents in a tax case up in Idaho:

Betty Richardson, United States Attorney, Box 32, Boise, Idaho 83707. Civil No. 93-405-E-EJL, United States’ Answer and Claim re: Diversified Metal Products, Inc., Plaintiff v. T-Bow Company Trust, Internal Revenue Service and Steve Morgan, Defendants, page 4, paragraph #4:
“Denies (the U.S. government) that the Internal Revenue Service is an agency of the United States government …”

If the IRS is not an agency of the federal government, just what is it? In a nutshell, the income tax is international in scope and not incumbent upon domestic Americans. That is a provable fact. The IRS for more than 80 years has been misapplying the IRCode against unsuspecting Americans and back up their unlawful activities with brute force. This must stop.

What can you do?

The federal government must generate revenues to operate what our Founding Fathers created: A limited form of Republican government. State constitutions are all guaranteed a limited form of Republican government. America is not a democracy. We believe America is a nation of laws, not lies. We can’t have it both ways for political expediency or to please any and every special interest group that bribes politicians at all levels with the politically correct “PAC money.”

Sometimes it’s difficult to be the messenger of news that people would rather not hear.

However, Americans can no longer remain in their comfort zones because the message isn’t what they want to hear. If your house is on fire, you don’t sit and continue to watch the television set, you call the fire department. America: Our house is on fire and it is the obligation of every American to safeguard the liberties and freedoms given to us by those who paid the ultimate price. Please join the growing numbers of millions who are ready to take back our country and stop the assault on our rights.

Nov 022013
 

The Secret Government: The Constitution in Crisis

By Bill Moyers
This is the full length 90 min. version of Bill Moyer’s 1987 scathing critique of the criminal subterfuge carried out by the Executive Branch of the United States Government.
Host Bill Moyers exposes the inner workings of the secret government. Though originally broadcast in 1987, it is even more relevant today. Interviews with respected, top military, intelligence, and government insiders reveal both the history and secret objectives. Where is Bill Moyers Now?

Sep 182013
 

The Constitution and the 3 Organic Laws

Introduction to the new Constitutional Law and welcome to the revised Basic Course in Law and Government

It is my pleasure, as Founder of the Organic Laws Institute, to present this short introduction to Constitutional Law as viewed
through the prism of the other three Organic Laws of the United States of America, the Declaration of Independence of July 4, 1776, the Articles of Confederation of November 15, 1777 and the Northwest Ordinance of July 13, 1787.  This introduction has been especially written for the student new to the concept of the strict separation of written law from unwritten law for a more accurate study of law and government.

I can begin this introduction, appropriately, with the devious Preamble to the Constitution of September 17, 1787, the unofficial beginning of the last of the four Organic Laws, because I started my basic research into the much easier to understand transition of the federal courts in territories as those territories were admitted into the Confederacy, the United States of America, under the authority of the Articles of Confederation.  That research established that none of the federal courts have been ordained and established as judicial courts-they were merely legislated into existence. That research was easy compared to unraveling the Preamble:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The court research was easily confirmed by the way the Constitution of September 17, 1787 treated the alleged highest officer of the alleged highest federal court-the Chief Justice. The only duty imposed on the Article I, Section 3, Clause 6 Chief Justice is stated as follows: “When the President of the United States is tried, the Chief Justice shall preside.”  Clause 7 of Section 3 of the first Article then makes it clear that Impeachment is a non-judicial proceeding resulting only in removal from office. It was now apparent to me that the Constitution was not what everyone believes it to be. Almost every natural born American believes he or she to be a Citizen of the United States and a member of the posterity of “We the People of the United States,” and that conclusion is exactly the misconception Gouverneur Morris was after when he wrote the Preamble. Gouverneur Morris is widely credited with writing other parts of the Constitution of September 17, 1787; he is one of only five men to sign both the Articles of Confederation and the Constitution. Gouverneur Morris knew both documents so well he managed to write one sentence that has fooled billions.

The language in the Preamble is some of the most duplicitous ever written yet every word has some truth in it.  The phrase, “We the People of the United States” in the Preamble to the Constitution of September 17, 1787, is never properly interpreted to mean the free inhabitants of the United States of America, who have become Citizens of one of the two kinds of States of United States of America. The accuracy of that interpretation is proven by asking, where do the people in the nine Article VII Conventions come from? Here’s how to make the constitutional connection between, “We the People of the United States…do ordain and establish this Constitution for the United States of America” to the People meeting for “The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same.”  “We the People of the United States” and the “Conventions of nine States” are the same “People”.  Free inhabitants had given up their freedom to become Citizens of the United States, just so they could vote in favor of State ratification of the Constitution of September 17, 1787, Taking on the mantle of citizenship may not have been much of a burden in 1787, but it has grown to be quite a hardship today.

Article IV of the Articles of Confederation secures to the free inhabitants of the several States of the United States of America the right to live free of government without any loss of the privileges and immunities of State citizenship:

The better to secure and perpetuate mutual friendship and intercourse among the people of the different states in this union, the free inhabitants of each of these states, paupers, vagabonds and fugitives from Justice excepted, shall be entitled to all privileges and immunities of free citizens in the several states; and the people of each state shall have free ingress and regress to and from any other state, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions and restrictions as the inhabitants thereof respectively, provided that such restriction shall not extend so far as to prevent the removal of property imported into any state, to any other state of which the Owner is an inhabitant; provided also that no imposition, duties or restriction shall be laid by any state, on the property of the united states, or either of them.

When a free inhabitant becomes a Citizen of one of the two Unions that free inhabitant suffers a net loss in freedom, which is worse if the non-perpetual Union is picked.  The original stated purpose and intent of the Constitution of September 17, 1787 was to make revisions to the Articles of Confederation of November 15, 1777, which would make the administration of the Northwest Territory more efficient.  This was, of course, a subterfuge to hide a government power grab led by George Washington and supported by both the States and the federal government. Both the federal and State governments were becoming painfully aware that unless uprisings such as Shays Rebellion were ended permanently and soon every State and local government would be in danger of collapse.  In the end the Articles of Confederation were revised by the misrepresentation that the Constitution created a “more perfect Union” that Union was first created as a not so perfect temporary one by the Northwest Ordinance of July 13, 1787.

Now, practically every American believes himself or herself to be among “We the People of the United States,” the “more perfect Union,” without realizing that by being one of the “People of the United States” much freedom is lost.  Because of the complexity written law, hardly anyone knows the Articles of Confederation have not been replaced or repealed.  The perpetual Union of States of the United States of America bound to Article IV of the Articles of Confederation is dormant not dead.  My Organic Law Institute can help you awaken the sleeping giant, the United States of America. President George W. Bush was briefed “the Constitution is just a piece of paper.”  The Organic Law Institute will provide you with the legal education, so you can prove that and much more.

Dr. Eduardo M. Rivera

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Jun 132013
 

Building America’s secret surveillance state

By James Bamford

Wed Jun 12, 2013 3:05pm EDT

(Reuters) – “God we trust,” goes an old National Security Agency joke. “All others we monitor.

First, the Guardian reported details on a domestic telephone dragnet in which Verizon was forced to give the NSA details about all domestic, and even local, telephone calls. Then the Guardian and the Washington Post revealed another massive NSA surveillance program, called Prism, that required the country’s major Internet companies to secretly pass along data including email, photos, videos, chat services, file transfers, stored data, log-ins and video conferencing.

While the Obama administration and Senate intelligence committee members defend the spying as crucial in its fight against terrorism, this is only the latest chapter in nearly a century of pressure on telecommunications companies to secretly cooperate with NSA and its predecessors. But as stunning technology advances allow more and more personal information to pass across those links, the dangers of the United States turning into a secret surveillance state increase exponentially.

The NSA was so flooded with billions of dollars from post-September 11, 2001 budget increases that it went on a building spree and also expanded its eavesdropping capabilities enormously. Secret rooms were built in giant telecom facilities, such as AT&T’s 10-story “switch” in San Francisco. There, mirror copies of incoming data and telephone cables are routed into rooms filled with special hardware and software to filter out email and phone calls for transmission to NSA for analysis.

New spy satellites were launched and new listening posts were built – such as the recently opened operations center near Augusta, Ga. Designed to hold more than 4,000 earphone-clad eavesdroppers, it is the largest electronic spy base in the world.

Meanwhile, at Oak Ridge National Laboratory in Tennessee, where top-secret work was done on the atomic bomb during World War II, the NSA is secretly building the world’s fastest and most powerful computer. Designed to run at exaflop speed, executing a million trillion operations per second, it will be able to sift through enormous quantities of data – for example, all the phone numbers dialed in the United States every day.

Today the NSA is the world’s largest spy organization, encompassing tens of thousands of employees and occupying a city-size headquarters complex on Fort Meade in Maryland. But in 1920, its earliest predecessor, known as the Black Chamber, fit into a slim townhouse on Manhattan’s East 37th Street.

World War One had recently ended, along with official censorship, and the Radio Communication Act of 1912 was again in effect. This legislation guaranteed the secrecy of electronic communications and meted out harsh penalties for any telegraph company employee who divulged the contents of a message. To the Black Chamber, however, the bill represented a large obstacle to be overcome—illegally, if necessary.

So the Black Chamber chief, Herbert O. Yardley, and his boss in Washington, General Marlborough Churchill, head of the Military Intelligence Division, paid a visit to 195 Broadway in downtown Manhattan, headquarters of Western Union. This was the nation’s largest telegram company – the email of that day.

The two government officials took the elevator to the 24th floor for a secret meeting with Western Union’s president, Newcomb Carlton. Their object was to convince him to grant them secret access to the private communications zapping through his company’s wires.

It was easier achieved than Yardley had ever imagined. “After the men had put all our cards on the table,” Yardley later described, “President Carlton seemed anxious to do everything he could for us.'”

Time and again over the decades, this pattern has been repeated. The NSA, or a predecessor, secretly entered into agreements with the country’s major telecommunications companies and illegally gained access to Americans’ private communications.

In a much-cited story, the influential Republican statesman, Henry L. Stimson, was described as deeply offended by the very notion of snooping into people’s private communications. As the new secretary of state in 1929, Stimson shut down the Black Chamber with the now immortal phrase, “Gentlemen do not read each other’s mail.”

But when President Franklin D. Roosevelt later appointed Stimson secretary of war during World War Two, Stimson changed his mind. He wanted to eavesdrop on every possible communication, especially on the Germans and Japanese.

Once the guns of World War Two began falling silent, however, the communications privacy laws again took effect. Thus, Brigadier General W. Preston Corderman, the chief of the Signals Intelligence Service – another pre-NSA iteration — faced the same dilemma Yardley confronted after World War One: a lack of access to the cables flowing into, out of and through the country.

So, once again, deals were made with the major telegraph companies – the Internet providers of the day – to grant the SIS (and later the NSA) secret access to their communications.

Codenamed “Operation Shamrock,” agents would arrive at the back door at each telecom headquarters in New York around midnight; pick up all that days telegraph traffic, and bring it to an office masquerading as a television tape processing company. There they would use a machine to duplicate all the computer tapes containing the telegrams, and, hours later, return the original tapes to the company.

The secret agreement lasted for 30 years. It only ended in 1975, when the nation was shocked by a series of stunning intelligence revelations uncovered by a congressional investigation led by Senator Frank Church.

The illegality and vast breadth of this one operation stunned both the left and the right, Republicans as well as Democrats. The parties came together to create a new law to make sure nothing like it could ever happen again. Known as the Foreign Intelligence Surveillance Act, the legislation created a secret court, the Foreign Intelligence Surveillance Court, to ensure that the NSA only eavesdropped on Americans when there was probable cause to suspect they were involved in serious national security crimes — such as espionage or terrorism.

For more than a quarter-century, the NSA obeyed this law. The intelligence agency turned its giant ears outward — away from the everyday lives of Americans. But that all changed soon after September 11, 2001, when the Bush administration began its warrantless wiretapping program.

Once again, an NSA director sought the secret cooperation of the nation’s telecom industry to gain access to its communications channels and links. Again, the companies agreed — despite violating the laws and the privacy of their tens of millions of customers. Eventually, when the operation was discovered, a number of groups brought suit against the companies, Congress passed legislation granting them immunity.

Thus, for roughly 100 years, whenever the government knocked on the telecommunications industry’s door and asked them to break the law and turn over millions upon millions of private communications, the telecoms complied. Why not, since they knew that nothing would ever happen to them if they broke the law.

Now, as a result of these new revelations, it appears that the NSA has again gone to Verizon and other telephone companies, as well as many of the giant Internet companies, and obtained secret access to millions, if not billions, of private communications. There are still many questions as to what, if any, legal justification was used.

But unlike with Yardley and the Black Chamber, the dangers today of secret cooperation between the telecom and Internet industry and the NSA are incomparable. Because of technology back then, the only data the government was able to obtain were telegrams — which few average people sent or received.

Today, however, access to someone’s telephone records and Internet activity can provide an incredibly intimate window on their life.

Phone data reveals whom they call, where they call, how often they call someone, where they are calling from and how long they speak to each person. Internet data provides e-mail content, Google searches, pictures, and personal and financial details.

We now live in an era when access to someone’s email account and web searches can paint a more detailed picture of their life then most personal diaries. Secret agreements between intelligence agencies and communications companies should not be allowed in a democracy. There is too much at risk.

In a dusty corner of Utah, NSA is now completing construction of a mammoth new building, a one-million-square foot data warehouse for storing the billions of communications it is intercepting. If the century-old custom of secret back-room deals between NSA and the telecoms is permitted to continue, all of us may digitally end up there.

Contrary to what Simpson may have asserted, gentlemen (and women) do read each other’s mail — at least if they work for the National Security Agency.

And in the future, given NSA’s unrestrained push into advanced technologies, the agency may also be able to read your thoughts as well as your mail.

(James Bamford is a Reuters columnist but his opinions are his own.)

(James Bamford writes frequently on intelligence and produces documentaries for PBS. His latest book is “The Shadow Factory: The Ultra-Secret NSA from 9/11 to the Eavesdropping on America.”)

May 242013
 

Colorado House votes Unanimously to Nullify Unconstitutional Federal Hemp Farming Ban

By on May 6, 2013 in Uncategorized

DENVER, Col. (May 6, 2013) – The Colorado state house today voted to approve SB13-241, a bill that would legalize the farming and production of “industrial hemp” within the state.  If signed into law, the bill would effectively nullify the unconstitutional federal ban on hemp production in Colorado.  The House voted unanimously on a slightly amended version of a bill already approved by the State Senate, 34-1.  The legislation will now go back to the Senate, which is widely expected to send the legislation to Governor Hickenlooper for a signature.

The federal government has no constitutional authority to ban the production of this industrial plant, but has persisted in preventing its domestic production.  The result?  Products with hemp that are readily available at your local grocery store must be imported from another country – resulting in higher costs for you and fewer farming jobs in America.  The United States is currently the world’s #1 importer of hemp, which is used in food products, clothing, oil and much more.  The top exporters are China and Canada.

The United States is the only developed nation that fails to cultivate industrial hemp as an economic crop, according to the Congressional Resource Service.  Recent congressional research indicates that the hemp market consists of over 25,000 various products. The same research found that America imports over $400 million worth of hemp from other countries.  At this time of economic difficulty, 13-241 would not only expand freedom and support the Constitution, it would also be a great jobs bill.

With the passage of Amendment 64, which legalized small amounts of marijuana for adults, hemp was removed from the state’s controlled substances list, though a provision of the initiative states that that hemp cultivation is contingent on legislative action – this bill would be that required action necessary to legalize hemp and authorize the state to begin distributing hemp licenses.Under the proposal farmers would have the option of applying for a 10-acre plot in order to study the viability of various hemp varieties, or they could apply for a larger, full-scale hemp farm – one that wouldn’t be limited by the number of plants, but rather by the THC content in said plants.

HEMP OVERVIEW AND USE

Industrial hemp is not marijuana, but an industrial agricultural product used for a wide variety of purposes, including the manufacture of cordage of varying tensile strength, durable clothing and nutritional products. During World War II, the United States military relied heavily on hemp products, which resulted in the famous campaign and government-produced film, “Hemp for Victory!

Even though soil, climate and agricultural capabilities could make the United States a massive producer of industrial hemp, today no hemp is grown for public sale, use and consumption within the United States. China is the world’s greatest producer and the United States is the #1 importer of hemp and hemp products in the world.

Since the enactment of the unconstitutional federal controlled-substances act in 1970, the Drug Enforcement Agency has prevented the production of hemp within the United States. Many hemp supporters feel that the DEA has been used as an “attack dog” of sorts to prevent competition with major industries where American-grown hemp products would create serious market competition: Cotton, Paper/Lumber, Oil, and others.

The Many Uses of Hemp

Environmental and Economic Benefits of Hemp

Hemp for Victory – Entire Film – US Government asks farmers to grow it

May 222013
 

The Floating Dollar as a Threat to Property Rights

February 2011

Seth Lipsky
Founding Editor
New York Sun

Seth Lipsky is the founding editor of the New York Sun. A graduate of Harvard College, he served in the U.S. Army in Vietnam as a combat correspondent for Pacific Stars and Stripes. A former senior editor and member of the editorial board of The Wall Street Journal, he has also served as editorial page editor of The Wall Street Journal/Europe, managing editor of The Asian Wall Street Journal, and assistant editor of Far Eastern Economic Review. In 2009, he published The Citizen’s Constitution: An Annotated Guide.

The following is adapted from a speech delivered on February 16, 2011, at a Hillsdale College National Leadership Seminar in Phoenix, Arizona.

TO BEGIN, consider one of the most important measures of property, the kilogram. It’s a measure of mass or, for non-scientific purposes, weight. According to the papers last week, a global scramble is under way to define this most basic unit after it was discovered that the standard kilogram—a cylinder of platinum and iridium that is maintained by the International Bureau of Weights and Measures—has been losing mass.

You may think that this is impossible. Of all the elements, iridium is the most resistant to corrosion, and the cylinder is kept in a facility at Sevres, France, where it is under three glass domes accessible by three separate keys. The cylinder itself is more than 130 years old and is what the New York Times calls the “only remaining international standard in the metric system that is still a man-made object.” The new urgency to redefine the kilogram comes from the fact that its changing mass “defeats,” as the Times put it, “its only purpose: constancy.”

The question I invite you to consider for a moment is what would happen if we just let the kilogram float? This is a question that was posed in an editorial last week in the New York Sun. After all, the editorial said, we let the dollar float. The creation of dollars, and the status of the dollar as legal tender, is a matter of fiat. Its value is adjusted by the mandarins at the Federal Reserve, depending on variables they only sometimes share with the rest of the world. This would have floored the Framers of our Constitution, who granted Congress the power to coin money and regulate its value in the same sentence in which they gave it the power to fix the standard of weights and measures—like, say, the aforementioned kilogram.

Now, the record is clear in respect of how America’s founders viewed money. Many of them went into the Second United States Congress, where they established the value of the dollar at 371 ¼ grains of pure silver. The law through which they did that, the Coinage Act of 1792, noted that the amount of silver they were regulating for the dollar was the same as in a coin then in widespread use, known as the Spanish milled dollar. The law said a dollar could also be the free-market equivalent in gold. The Founders did not expect the value of the dollar to be changed any more than the persons who locked away that kilogram of platinum and iridium expected the cylinder to start losing mass. In fact, in this same 1792 law, they established the death penalty for debasing the dollar.

Today, members of the Federal Reserve Board don’t worry about how many grains of silver or gold are behind the dollar. They couldn’t care less. And this is what I believe is the most worrisome threat to property rights today. When the value of a dollar plunges at a dizzying rate—at one point in recent months it collapsed to less than 1/1,400 of an ounce of gold—Fed Chairman Ben Bernanke goes up to Capitol Hill and declares merely that he is “puzzled.” No “new urgency” to redefine the dollar for him. The fact is that we’ve long since ceased to define the dollar, and it can float not only against other currencies but even against 371 ¼ grains of pure silver.

So, the New York Sun asked, why not float the kilogram? After all, when you go into the grocery to buy a pound of hamburger, why should you worry about how much hamburger you get—so long as it’s a pound’s worth? A pound is supposed to be .45359237 of a kilogram. But if Congress can permit Mr. Bernanke to use his judgment in deciding what a dollar is worth, why shouldn’t he—or some other Ph.D. from M.I.T.—be able to decide from day to day what a kilogram is worth?

No doubt some will cavil that the fact that the dollar floats makes it all the more reason for the kilogram to be constant. But what’s so special about the kilogram? If the fiat dollar floats, one has no idea what it will be worth when it comes time to spend it. If the kilogram also floats, it will simply be twice as hard to figure out what something we’re buying will be worth. So what if, when we unwrap our hamburger, the missus has to throw a little more sawdust in the meatloaf?

Or let us consider a compromise. Let’s go to a fiat kilogram—that is, permit the kilogram to float—but apply the new urgency to fixing the dollar at a specified number of grains of gold. To those who say it would be ridiculous to fix the dollar but let the butcher hand you whatever amount of hamburger he wants when you ask for a kilogram, I say, what’s the difference as to whether it’s the measure of money or of weight that floats?

For that matter, one could go all the way and fix the value of both the kilogram and the dollar but float the value of time. You say you want to be paid $100 an hour. That’s fine by your boss. But he—or Chairman Bernanke—gets to decide how many minutes in the hour. Or how long the minute is. You know you’ll get a kilogram of meat for the price a kilogram of meat costs. But you won’t know how long you have to work to earn the money.

There was obviously a satirical element to that Sun editorial. But it’s not satirical to say that we are in a dangerous situation in our country in respect of the dollar, and that property rights are very much bound up in the question of money. After all, consider that kilogram. It is a cylinder. And it’s a cylinder the size of, say, a golf ball. The amount of mass that it is believed to have lost is measured in a few atoms, and yet the institution where they maintain standards is in a complete tizzy about it. The implications are said to be enormous.

The dollar, by contrast, has collapsed from 1/35 of an ounce of gold to less than 1/1,300 of an ounce of gold. If the kilogram had collapsed on that order of magnitude, there would be left only a small shard of that handsome grayish cylinder under the three glass domes at Sevres, France.

I understand that this is not where the property rights discussion is usually focused. It usually centers around the takings clause of the Constitution—the clause at the center of the landmark case that erupted when condemnation proceedings were launched against the homes in New London, Connecticut, of a woman named Susette Kelo and her neighbors. Under the Fifth Amendment, the government is prohibited from taking private property for public use without just compensation. That is a bedrock principle of American constitutionalism. What was special about Susette Kelo is that her property was taken for private use. It was coveted by a private, non-profit development corporation for private, for-profit use near a big pharmaceutical development that the town reckoned would benefit the public.

Mrs. Kelo and her neighbors went all the way to the Supreme Court to try to keep their homes. She lost the case, Kelo v. New London, albeit by a five to four vote. On the one hand, it was a terrible defeat for the principle of property rights. On the other hand, the decision was so alarming that states have begun changing their own laws to strengthen protections against the kind of raid on private property that Mrs. Kelo suffered. At least 43 states have already passed such laws. Rarely has the loser in a Supreme Court case established so great a legacy as Mrs. Kelo, whose case is one of the most important warnings we have had in my generation of the vigilance that is going to be required in respect of the right to property enshrined in the Fifth Amendment.

Which brings me to the question of how the law can be used to illuminate the problem of the floating dollar. What I consider the most astonishing legal question in the country came into the news in 2008, when Judith Kaye, the chief judge of the highest court in the state of New York, the Court of Appeals, filed a lawsuit in an inferior court, asking it to order the state legislature and the governor to give her a raise.

My first reaction, and that of my colleagues at the Sun, was to consider this something of a joke. Yet the more we began to look at the case, the more it threw into sharp relief the issue of the right to the property that comes to us in the form of a salary or is held by us in the form of savings. The judges on New York’s Court of Appeals, after all, hadn’t had a raise in more than a decade, and they were having an ever harder time making their salaries cover rising costs. In that they are just like the rest of us.

But it turns out that under the Constitution, judges are not quite like the rest of us—and in a way that lies at the heart of the American Revolution. Indeed, in the Declaration of Independence, one of the reasons our Founders listed for breaking with England was that King George III had “made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.” So they wrote into the Constitution not only that judges would have life tenure (with good behavior), but also that the pay of a judge would not be diminished during his term in office. This principle that one can never lower the pay of a judge is also in many state constitutions.

So if in, say, the year 2000 a judge was paid in dollars that were worth 1/265 of an ounce of gold, and if today that same judge is being paid with dollars worth less than 1/1,300 of an ounce of gold, has the judge’s pay been diminished?

The more I’ve thought about it, the more I have been nagged by the thought that judges’ pay could be the device with which to attack the legal tender law I have come to regard as the greatest threat to property in America. This is the law establishing that paper money in America must be accepted in payment of debts, public and private. The Founders themselves hated paper money. Washington, whose picture is on the one dollar bill, warned that paper money would inevitably “ruin commerce, oppress the honest, and open the door to every species of fraud and injustice”; Jefferson, whose picture is on the two dollar bill, called its abuses inevitable; as did Madison, whose picture is on the $5,000 bill. Paper money, he said, was “unconstitutional, for it affects the rights of property as much as taking away equal value in land.”

I’m not so sure that the existence of paper money is the problem. The problem is the requirement that a one dollar paper note be accepted in lieu of 371 ¼ grains of silver. Certainly when the greenback was introduced—as it was by President Lincoln—it was for a cause, the Union, that was worth enormous risks. The Treasury Secretary who helped him put through the greenback as a war measure, Salmon Chase, became, in 1864, the sixth Chief Justice of the United States; and when the concept of legal tender finally came up for consideration, Chase ruled against the greenback. President Grant, however, eventually got two new justices on the court, and legal tender was established in a series of rulings—one involving the purchase of some sheep, the other of some bales of cotton, and another some land—known as the Legal Tender Cases.

A few months ago, I called Bernard Nussbaum, who was representing Judge Kaye, and asked him why she didn’t challenge legal tender head on. He told me he feared the Legal Tender Cases couldn’t be overturned. It was too heavy a lift. So instead he fought the case on separation of powers grounds. It seems that the New York legislature had said it would not give the judges of New York a raise until the legislators got a raise. The judges sprang on this as a transgression of separation of powers—and, no surprise, when they heard their own case, they ruled against the legislature. A few weeks ago, the legislature decided to delegate to an independent commission the job of deciding judges’ pay.

By my lights, this delegation to an unelected body, even if the legislature could overrule it, was an unsatisfactory outcome. But it turns out that the judges of New York are not the only jurists who are furious about the diminishment of their pay. A group of federal judges is also in court, fighting over their salaries. In the case of the federal judges, Congress had some time ago enacted a law that gave them an automatic pay increase designed to keep up with the Consumer Price Index. But then, as deficits got out of control and Congress’s own salary lagged, Congress suspended the automatic pay increase.

At that point, a coalition of federal judges went into court. Their aim is limited: to force Congress to reinstate the automatic pay adjustment. To understand the scale of what one is talking about, consider the pay of but one of the plaintiffs, Judge Silberman. I don’t know his exact salary. But at the time he was assigned to the District of Columbia Circuit of the United States Court of Appeals, the salary of a federal appeals judge—$83,200—was worth 258 ounces of gold. Since then, the value of the pay of a judge of one of the Appeals circuits—$184,500—has been diminished to 139 ounces of gold.

At this very hour, the judges’ petition in their pay case is before the United States Supreme Court. And while I believe the justices have been wronged by Congress, I hope they lose on the question of whether a suspension in the automatic pay adjustment is unconstitutional. That should get them angry enough to come back and look legal tender in the face. They could force Congress to pay them in the gold or silver equivalent of a federal judge’s salary at the time they were appointed to the bench. It would move judges closer to the kinds of salaries the lawyers before them are receiving.

And people would start to ask: If judges deserve honest money, why shouldn’t the rest of us?

To those who suggest that such a scenario is far-fetched, one can say, no more far-fetched than the notion that the post-Civil War monetary system could be erected on Supreme Court decisions in a pair of disputes over payment for a flock of sheep and some bales of cotton. Or that centuries of law on abortion could be overturned in a fell swoop by a Supreme Court ruling in the case of a woman who later changed her mind. Could the court cast aside precedent to decide such a sweeping issue as legal tender? It certainly didn’t hesitate—nor should it have—in demolishing the notion that racially separate schools could be equal. With everyone from the United Nations to Communist China today calling for the abandonment of the dollar as a reserve currency, is it so hard to imagine that the Supreme Court might revisit the Legal Tender Cases?

It may be that the judges will lose their pay case, just as Susette Kelo lost her house, or that they will win a partial victory and the Supreme Court will shy away from confronting legal tender. But we know from Mrs. Kelo’s case that this needn’t be the end of things. People began to see the logic and think about property rights, and now at least 43 states have passed laws to make it harder for state and local jurisdictions to use the power of eminent domain to seize private land for someone else’s private use.

Could such a thing happen with money? Well, there is a part of the Constitution called Article I, Section 10. It is the section that lists the things that states can never do. And one of these prohibited activities is making legal tender out of something other than gold or silver coin. So what is happening now is that a growing number of states, watching the sickening plunge in the value of federal money, are starting to explore how they can set up monetary systems based on gold or silver coins. The most recent effort was launched in Virginia, where there is a bill before the General Assembly to set up a joint committee to study the question. There have been early stirrings—just stirrings—in the legislatures of several other states.

Could the entry of the states into the monetary role be a reaction to a failure at the federal level, the way the states reacted to the failure of the Supreme Court to enforce Susette Kelo’s Fifth Amendment rights? It would be inaccurate to make too much of these efforts. But it would be shortsighted to make too little of them. Strange things can happen. It is even possible that one can take a cylinder of platinum and iridium, lock it away in a room under three glass domes, secure it with three separate keys, and come back in a few years to discover that part of it has disappeared. And the New York Times will write an editorial about the value of constancy.


Copyright © 2011 Hillsdale College. The opinions expressed in Imprimis are not necessarily the views of Hillsdale College. Permission to reprint in whole or in part is hereby granted, provided the following credit line is used: “Reprinted by permission from Imprimis, a publication of Hillsdale College.” SUBSCRIPTION FREE UPON REQUEST. ISSN 0277-8432. Imprimis trademark registered in U.S. Patent and Trade Office #1563325.

May 212013
 

Gerald Celente: Its all BULLSHIT

Celente is a outspoken critic of US policy on every front: financial, political, its militant imperialism and spying all over the planet.

Gerald Celente – Trends In The News – “Leading Into Disaster” – (5/14/13)

“Barack Obama’s “American” values, The Associated Press reports that the Obama Administration seized phone records… & “war time sex slaves were necessary” says Japanese mayor! NO OUTRAGE?!”

May 132013
 

U.S. Government vs. DEFCAD: You Can’t Fix Stupid

| May 12th, 2013

There’s nothing quite so funny as the sight of the authoritarian functionaries of a dying order trying to suppress a revolution they don’t understand — and failing miserably.

The State Department’s attempt to censor 3-D printable gun files from DEFCAD is the latest — and one of the most gut-bustingly hilarious — attempts by the Lords of Scarcity to wrap their minds around the revolution of Abundance that threatens their power. Less than a day after DEFCAD was forced to remove them, the files appeared on The Pirate Bay and Mega. The latter is especially funny; Kim Dotcom is probably laughing himself silly over it.

Anyone who’s ever heard of the Streisand Effect could have told you this would happen. Attempting to suppress information on the Internet just draws more attention to the original information — which remains readily available — as well as embarrassing the would-be suppressor as the attempt at suppression becomes a story in its own right. I lost count of the number of people yesterday who said they’d never heard of Cody Wilson or 3-D printable guns until the story of the State Department’s action came out, but intended to go to TPB and check it out. Thanks to the U.S. government’s inadvertent promotional efforts, probably a hundred or a thousand times more people know where to get Cody Wilson’s printable gun files than did before.

But the clowns who congratulated themselves a couple days ago over shutting down those printable gun files aren’t exactly the sort of people you’d expect to have heard of the Streisand Effect — obviously. They’re the straight men in this piece, just performing for our amusement. They’re like the Society Matron who walks into the dining hall in a Three Stooges short and demands “What is the meaning of this?!!” To them the Internet is just a big Series of Tubes, and all they have to do is shut off a valve somewhere to control the flow of information. Only the Internet doesn’t work that way. In the memorable phrasing of John Gilmore, it treats censorship as damage and routes around it.

Remember Joe Biden’s quip about “theft” of “intellectual property” being no different from a “smash-and-grab at Macy’s”? The U.S. government’s approach to DEFCAD illustrates the same fundamental misconception. It treats infinitely replicable digital information as if it were a finite, excludable good existing in one physical location, that one can exert physical control or possession over just like a shoe or a chair.

Their legal rationale — export control legislation — displays the same conceptual failure. They couldn’t quite grasp that the “goods” that DEFCAD was “exporting” arrived in their destination ports around the world the second the files were uploaded to the website.

A digital file can be replicated infinitely at near-zero marginal cost; the same pattern of information can exist in an unlimited number of places simultaneously. A digital file can be replicated infinitely at near-zero marginal cost; the same pattern of information can exist in an unlimited number of places simultaneously. See? I just did that with the copy-and-paste function of my browser. Try doing that with jewelry from Macy’s. You can’t “steal” a digital song or movie — the act of replication doesn’t affect the copies already in others’ possession, but only increases the number of copies in the world. That’s why copying is not theft. Likewise, you can’t deny the world access to information by removing the copy from one website.

Watching these people try to use scarcity-age conceptual tools to combat abundance is like watching Napoleon try to defeat Heinz Guderian or Erwin Rommel with hub-to-hub artillery and massed infantry in line-and-column formations. They lack the conceptual tools to understand, let alone fight, the new society they’re attempting to prevent the birth of.

This is why the government’s attempts to impose artificial scarcity fail every time, no matter how many times they change the name — ACTA, CISPA, etc. — and try again. You can’t fix stupid.

So to you Lords of Scarcity — represented this time around by your flunkies in the U.S. Departments of State and “Defense,” I have a message: You have no authority that we are bound to respect.

May 132013
 

Does Innovation Require the Patent Office?

·

Two years ago, I spoke to a gentlemen who had started and sold four companies. He was currently working on a new project that sounded very promising (for all I know, he has already sold that one too). We had just heard a talk in which the speaker told people that the whole key to business success in our time is patent ownership. Without it, no business can really succeed.

So I asked this gentleman what he thought of the talk. His response was quick (I paraphrase here):

“I’ve never once bothered with patents. They are expensive and pointless. They produce no revenue on their own. They sell no product or service. And they harm development by hemming in a company on a preset track. I need to be able to customize offerings and change what we do day to day. Patents bias a company toward old solutions even when they don’t work anymore.”

That’s an interesting perspective. And it raises the question: How much do patents have to do with innovation in the real world?

As much as we hear about patents, we might suppose there is some sort of direct link between them and the innovations we enjoy in our lives. Someone invents something and shows the plan to a bureaucrat. The exclusive license is issued, and away we go.

Economic historians have usually assumed a direct link between patents and innovation, basing much of their chronicle of history on records at the Patent Office. Much of what we think we know — that Eli Whitney invented the cotton gin, that the Wright Brothers were first in flight, that Thomas Edison holds the record for inventions because he has the most patents — comes from these records.

But is it true? Most patent holders assume so. They cling to them as a source of life and defend them against all encroachment. Some businesses build up their war chests with patents as purely defensive measures. The more you own, the more you can intimidate your competitors to stay out of your territory.

So how important are patents in generating innovation? The answer is not much, according to four economists from the Technical University of Lisbon. They are circulating their research on a platform sponsored by the St. Louis Federal Reserve. They looked at the best innovations between 1977-2004, as listed by the R&D awards in the journal Research and Development. They matched 3,000 innovations against patent records to establish the relationship.

Their findings are remarkable: Nine in 10 of the innovations were never patented. They were just created and marketed, and changed the world. In other words, it’s the market, not the bureaucracy, that innovates. The authors grant that there might have been downstream versions of the same innovations that were patented. But that fact actually doesn’t change the implications of the study, namely that there is no relationship between the existence of the Patent Office and direction and pace of innovation.

As you dig through their citations, you find other nuggets of information. It turns out that other researchers have found the same thing in early parts of the 20th century and even all the way back to the middle of the 19th. The results keep coming up the same way: There are patents and there are innovations, but they have little or nothing to do with each other.

These results are a classic case of the huge chasm between pop science and real science. In the pop version, people imagine that they will dream up some idea, file a patent, and then bring it into production and become a billionaire. The reality on the ground is that 90% of patents go completely unused. They are suitable for hanging, but not much else.

The patents that are actually in play in this world are used as weapons by big shots to hurt their competitors. They don’t cause business to succeed; it’s the reverse. The bigger the business, the more it is in the market for patents to help the big business hold its place in the market. They prompt lawsuits that go on for years that are eventually settled with an exchange of cash. Meanwhile, rather than actually fueling the innovative process, they put it on hold. So long as a patent is in existence, other innovations are legally bound not to do what they do best.

The software industry is an excellent case in point. In the 1970s and 1980s, patents were rare to nonexistent. Companies made money by making stuff and selling it, just as free enterprise would suggest. Then, the industry grew. People like Steve Jobs who once touted that talent for stealing the ideas of others began threatening other companies with lawsuits. Young programmers today know for a fact that if they ever come up with anything that threatens a big player, the small company is going to be hammered.

Two parallel streams of innovative software strategies have been running over the last 10 years: 1) highly protected and 2) patentless open source. Apple and Microsoft represent the patented style. Google is much more inclined to the open model. Companies like WordPress reveal their code to the world and make money in other ways. A good test case comes from the big smartphone war between Apple’s iOS, on the one hand, and Google’s Android operating system on the other.

The consensus today is that Android is winning hands down in terms of new users. The open-source system is roaring ahead with more than half the smartphone market already and a growing percentage of the tablet market. In terms of moneymaking, the app economy of the iOS is actually doing much better. But consider that it had a huge start, whereas the Android came much later. My own impression from dealing with both is that Android is moving ahead in every area fast.

We need to rethink our assumptions about the role of patents and innovations. If they have nothing to do with each other, and if patents actually dramatically slow down the pace of development, why not get rid of them altogether? That’s exactly what many of the old liberals of the 19th century pushed, and it the case is further bolstered by Stephan Kinsella’s Against Intellectual Property.

Government planning never works. Laissez Faire isn’t perfect, but it provides the best chance for innovations to appear and thrive and for prosperity to result. The lesson for anyone with a business idea: Run with it and don’t wait on a bureaucracy.

Sincerely,
Jeffrey Tucker