Laws made by tyrants are obeyed only out of fear, and that is no legitimate reason for obedience.
The small state of Iceland, almost a city state, overcame the financial crisis of 2008 because it took the opposite course to that of the United States: they allowed the over-extended banks to fail. These banks had indulged in similar conduct to their US counterparts but, probably because the state did not have similar resources, or the same commitment to corrupt capitalism, the banks were allowed to fail. In their case, the recovery has been spectacular. By design or happenstance, they allowed the free enterprise system to do its work.
Now it transpires that their economy is robust and their system of law, legitimate. The most public manifestation of the law is the police. In Reykjavik, a city of some 350 000 persons, the police go unarmed and carry a smile; in the US, a giant state of about 320 million, the militarised police force bear an arsenal, and carry a scowl.
An anecdotal illustration of the difference comes from an Islandic policeman: “We jailed or kicked out corrupt politicians and bankers, so we don’t have to enforce laws made by tyrants.”
In the US much of the law is made by tyrants under the control of corporatist structures that have now ensured that many lawmakers have, apparently, no free will. This authority will shortly be secured by a measure, once before defeated, but again resurrected in the form of the benignly titled Trade Promotion Authority. The ostensible purpose of the bill before Congress is to empower the president to “fast track” the conclusion of multilateral trade treaties to ensure the competitive position of the US. The beneficiaries of the treaties will, of course, be the multinational corporations that are, even now, calling the tune.
The eventual purpose of this measure is the subjugation of every individual citizen to the ultimate authority of the several global corporations, each a monopoly, or part of a mercantilist cartel, whose commercial interests are entirely inimical to those of the republic envisaged Benjamin Franklin. In this way it is intended to accomplish the objective promoted by Zbigniew Brzezinski, of a world society of elites, in command of the rest.
If this ambition is thought to be an overreach, even for an empire like the US, it would be well to recall the speed with which the world followed in the adoption of US style financial oppression, banking disclosures, “money laundering” financial constraints (that affected money launderers and honest civilians alike), restraints on freedom of movement as well as asset forfeiture. And now, FATCA (Foreign Account Tax Compliance Act), intended to serve US financial interests exclusively, administered by banks and governments around the world in servile obedience to the hegemon.
In May 2015 five banks, individually each one of the largest worldwide, pleaded guilty to various frauds involving the benchmark London Inter-Bank Offered Rate (Libor), committed over several years and involving a systematic pillaging of every individual and enterprise on Earth. Their collective fine was $10 billion; a mere fraction of the fraudulent gains extracted over the years. The individual criminal punishment for their part in the greatest fraud in history, if it should occur at all, will almost certainly be derisory. Whatever it is, it will not touch any of the chief executives.
It is recorded that banks involved in negotiating the various pleas, have simultaneously negotiated exemptions that would allow them to continue with their business, as usual. Waivers have already been granted to JP Morgan Chase and others by the Securities and Exchange Commission, to allow them to continue with their “usual securities business”. In the case of JP Morgan the bank has already recorded how it intends to proceed.
In a letter to its foreign currency customers it said: “As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests as well as JP Morgan’s own interests, JP Morgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JP Morgan…” It is hard to envisage a more comprehensive practical definition of a conflict of interest and the fact that this is expressed in an explanatory note to its customers, which might normally be expected to contain at least a hint of contrition, is positive proof of this institution’s sense of invulnerability. This is aggravated by the certain knowledge that this deliberate insertion into the note was intended to be used in future, if it should become necessary, as a tacit disclaimer by the bank’s customers.
Another part of the disclaimer specifically records that JP Morgan is not obliged, when taking a customer’s order, to disclose that a conflict of the kind described, may occur.
Why it should be thought that a disclaimer was even necessary is difficult to grasp. Everyone knows that the investment banks trade for their own account and that they do this alongside and even (perhaps especially) before the counterparty transaction. The variations of this procedure have, depending upon the method of execution, two well-known descriptors: front-running, and painting the tape; the second, a term of art that originated at the time of John Law and his Mississippi Company and, more recently, with the carpetbaggers of Wall Street.
These remain the banks’ favoured methods for acquiring easy money. They also explain how they make their colossal profits; profits that enable them to pay enormous fines and to have a sufficient balance for astronomical bonuses, share buy-backs, dividend payments, contributions to campaign funds, and an army of lobbyists who write many of the laws to which the citizens are subjected.
These are perhaps some of the things that the congenial Icelandic policeman had in mind when he made the unfavourable reference to the United States.
It is striking that the morality lesson has been taught, in this case, by a mini- or even, a micro-state; the type of state that, in many of its essentials, has a close resemblance to the city states of today and those of the later middle-ages. These states, sometimes called merchant republics, were commercially driven polities that enjoyed relative political and personal freedom and encouraged significant academic and cultural advancement. In Italy, where many had arisen after the collapse of Rome, they purposely discarded the burden of empire. These were a manifestation of an early republican phenomenon, having repudiated the various forms of monarchy and feudalism that blighted much of early Europe.
In the modern world the small state has two conspicuous advantages over the behemoth. The influence of the political and financial classes is not as insidious or pervasive, and when corruption occurs it is more evident to all, and therefore more readily contained.
There is a post-modern feudalism in the countries of the West that now threatens the continued existence of the middle class who, in an unequal contest, have become the victims of the proverbial 1%, who have put themselves in control of the world’s wealth. Soon the 1% will also be in control of the growing underclass, if Zbigniew Brzezinski, an adviser to President Barak Obama, should have his way.
If the world is to avoid the threatening prospect of a mercantilist empire that will spread its authority around the planet from its epicentre on Wall Street, the effective countervailing force may not be an equivalent giant, but a multitude of Lilliputians thriving, according to the principles of Adam Smith, on freedom and prosperity. Such a multitude will not easily succumb to the authority of an autocratic commercial elite. The giant one can only be successful when there are at least two competing for, essentially, the same prize.
History has taught that feudalism becomes impossible to impose when it is the one against the many. But only when the many are committed to the values that freedom demands.
Author: Rex van Schalkwyk is a former judge of the Supreme Court of South Africa and author of numerous articles and three books. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.