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From Freedom To Fascism: A Critique!



I’ve just watched

a documentary by Aaron Russo.


What to make of it. What fascinates me is how people are using both traditionally left AND traditionally right wing arguments to turn what are basically free market ideas of liberal democracy into an Aunt Sally or whipping boy for the anti-globalization movement.


I have to admit I do wonder if I am using the correct word in describing this movie being as part of the anti-globalization movement – as alluded to above there are themes of anti-capitalism and government totalitarianism in the film, but for me it is the synthesis of these ideas into a major theme about world government and the control of that government by the “Bankers” which are overarching themes – hence I do not think that saying this is an anti-globalization movie is too far from the truth.


The film starts off with an attack on the right of Federal Government of the United States to levy income tax. The main players in this debate are right wing American libertarians who distrust governments and who wish to push a political agenda of decreased government influence. These people want to get rid of government provided health care seeing it as a way for governments to ration Health Services; they do not want government to oversee the quality of education; see welfare and social services as government imposed wealth distribution; and most especially they wish to restrict the way the government taxes its citizens.


A good half of the film is spent building up a distorted and simplified view of the legislation concerning the vires of Federal Income tax. The film states that the 16th amendment did not create any new powers of taxation, and this is then used to thump through a series of claims that there is no authority for the IRS to issue its tax codes and enforce them.


The film uses some early rulings of the Supreme Court to claim that lower court rulings in favour of the tax system are invalid, but this ignores legislative changes and other later rulings of the Supreme Court which now have precedence.


The film omits to mention that the 16th amendment removed the requirement that indirect taxes had to be apportioned. It was this issue that had previously stopped the creation of an income tax system; the constitution already allowed for indirect taxes (no additional powers were required in this respect for an income tax), but how these indirect taxes were apportioned had previously made earlier Supreme Courts reject the right of Congress to introduce an income tax system. After the 16th amendment the Supreme Court has basically refused to accept cases claiming income taxes are unconstitutional.


The film seems to not understand this issue; it is only when the Supreme Court Justices view that a lower court is incorrectly ruling that they take on a case and accept an appeal of a lower court ruling. For all the complaints of the “We the People” lobby, the silence of the Supreme Court in respect of income tax is a sign that lower courts are acting within Supreme Court guidelines and that this is not a controversial area of law.


The film is also surprisingly silent about the 1955 Supreme Court ruling in the “Commissioner v. Glenshaw Glass Co.” Case and the later “Central Illinois Public Service Co. v. United States” ruling in 1978. These directly dealt with the powers of the Federal Government to tax wages and income. The film makes much play of quoting 18th and 19th century jurists over wages being an exchange and not an income. This is all well and good, but the world has changed and in the 1950s and 70s the Court ruled on the current set up of the US Federal Tax system to tax both income and wages and found it to be valid.


What is interesting in this is that in these cases the Justices discussed the legislative intent of the laws. This goes beyond questioning what the lawmakers actually wrote in a particular statute and asks why they were writing it. This could go to the heart of the movies misconception; there may be no direct sentence in law relating to creating an income tax (I have no idea I’m no expert!), but for all the supposed lack of some vital words, in the Supreme Court it is uncontroversial that the legislators were intending to create a Federal Income tax system, and this has been found to be constitutional. Unless new legislation is passed changing this, or the constitution is altered the “We are the People” lobby is going to be unsuccessful in getting the Supreme Court to change its mind.


The film then concentrates upon the tiny number of cases where juries have ignored the guidance and summing up of the Judge and acquitted people defying the IRS. Great play is made of this, but the simple fact is this: when somebody is acquitted of a crime it does not make the crime legal.


The film makes an issue out of the refusal of the IRS to play along with the lobby groups and the various petitions and class actions taken against the Federal authorities; ignoring the fact that the Courts have consistently agreed the IRS has legal vires.


This refusal of the Courts to take these cases is played up and made out to be in some way sinister and at this point the film opens up into a more general theme of liberty.


The film now links together a series of technological, financial and political changes into a campaign by sinister bankers to rule the world. Great play is made of RFID technology. Part of this is laughable; an earnest woman describes how by using RFID the banks will be able to track when you take money out of a bank machine, and Wal-Mart will be able to track you using this money to buy its goods … guess what; they can already do this: if bank machines didn’t identify who was removing the money from them they would not work very well! Cheques and credit cards also give the banks this power and now make up by far the majority of transactions. RFID will not significantly change this, or produce a revolution in financial affairs.


I find it fascinating how new technology is regularly linked to the number of the beast. In the 1960s and 70s it was the bar code; with its three 6s. We were all going to be tattooed and made to scan ourselves when ever we wanted to buy some soup or get on a bus. Nowadays this technology is ubiquitous; if you were so minded you could make everyone scan themselves and all their belongings when they are getting on a train or a plane; THEY could demand you swipe before going into a bank etc etc. Now similar fears are being raised about RFID.


There is no doubt that it would be technically possible to link up every single RFID reader into a single data base and so when you walked into the bank it would record that you were carrying some soup just bought in Wal-Mart. What use this would be to the bank is left unclear; currently the bank already has a record of all your card purchases at Wal-Mart, will it help it to find that you are bringing these purchases with you to cash a cheque?


The film clearly worries about this and links it into the consumer society paid for via consumer debt. All the T.V.s and video players and meals out paid for by credit are clearly an evil fostered upon us by those sinister banks to control us. Because we decide to use credit to even out the discrepancies between our cash requirements and our cash supply we are being enslaved.


And this enslavement is part of a global plot to create world domination. Here the movie decides to throw in a few bugbears of the globalization movement: the WTO, the IMF and the Bank of International Settlements with the movie claiming that these organizations are out to create world domination and strip countries of their democratic rights.


It isn’t really explained how this is linked to consumer credit apart from via the fact that the Federal Reserve system is “owned” by private banks. Which is portrayed as a major evil and conspiracy.


As ever this is a vast and distorting simplification. Unlike Canada, the UK or New Zealand the US Federal Reserve requires all banks operating in any of the 12 central bank regions to deposit a defined proportion of their deposits with the relevant Federal Reserve bank. These deposits are not interest bearing, but are used to pro-rate the “ownership” of the bank and so the depositing bank becomes an “owner” of the Federal Reserve. The movie doesn’t explain this, but makes out that there it is some sort of conspiracy as it is unclear at any given moment to outsiders exactly who “owns” the Federal Reserve.


The fact that when anyone makes a deposit at any American bank it changes the “ownership” of the Federal Reserve isn’t explained, nor is the fact that ownership has few advantages: by law the Federal Reserve does not make a profit, its shares cannot be traded, or offered as security. The reason banks join and deposit their reserves with the Bank is because they cannot trade in the United States otherwise. The private ownership of the Federal Reserve in no way stops the ability of the Fed to print money and control the money supply, but if you watched this movie you’d think it did.


We are now nearing the end of the film, and here the terror of world domination in all its dread is alluded to: Free trade, and open borders are made out to be plots against us. The plucky Europeans threw out the world government ideas of the EU constitution, but Canada, the US and Mexico are going to overthrow US democracy by cooperating on security and trade agreements.


A late interpolation of an almost tearful Lou Dobbs is used to give right wing cred to this left wing fear.


I have no idea what to make of this. The only part of the film that genuinely worried me concerned the powers provided under the Patriot Act and its kin. The full powers of this act have only been used against about 500 people, but the risks in providing them and the risks of their misuse seem to me unacceptable. They allow vast powers to hold people and restrict their liberty.


Those that asked for this power say they will use it lightly and only in exceptional circumstances; almost nobody really trusts them to do this. Only time will tell.


On the other terrors and fears the film uncovers I see them as unrealistic and overblown and often distorted. Towards the end I was literally amazed when the film maker suddenly threw in a demand for a return to the gold standard. He seemed to be wanting to claim that one of the most successful invention the world has known, fiat money, is some evil monstrosity and to protect us from it we have to link our currencies to what Keynes called a barbarous relic as early as 1944. Mr Russo clearly knows nothing of Keynes or even the Triffin paradox which showed in the 60s and 70s that a gold standard cannot function if the US has a sustained budget deficit; exactly what it has at the moment.


I don’t pretend the world is perfect; the world’s financial and trade systems have serious failures and distortions in them, but when Mr Russo puts up a graph showing how the purchasing power of a dollar has reduced in the 60 years since the end of World War II I cannot help laughing. These 60 years have been some of the most hopeful and economically successful the world has known; especially for Americans. There have been no major world slumps like in the 1930s and growth rates and inflation have been under control for the majority of the period. The 1970s and early 80s are seen by some as the end of the world; I can only assume these people have little sense of what poverty was like in earlier times.


The economic success that Russo ignores is especially true since the late 1980s when the world trade system grew extensively with the opening up of East and South East Asia to world trade. This has brought huge increases in wealth to the poorest people in the world. In 1980 China on a per person basis was poorer than Africa; its embrace of world trade has brought about an absolute transformation


Mr Russo plays on the fears the increasing competition Globalization brings and links them into his anti-tax agenda. He’s a convicted tax evader: he has a direct personal reason for accepting the ideas of the anti-income tax lobby. But he knows few people are going to watch a 2 hour movie on such a narrow issue. So what does he do? He deliberately attempts to link his movie into the general concerns about globalization that exists in the west today.


I don’t think his movie stands up to scrutiny. The image it creates of a world system controlled by evil bankers does not correspond to how the world’s financial and trade system actually works. The image does fit into the common stereotype of the world peddled by anti-globalization activists and the concerns they raise resonate strongly with those disempowered by the changes in the world economy.


What is sad is that the world is massively benefiting from Globalization, but there is a very real risk that concerns about the increased competition it brings to western societies will create protectionism.


These western societies are the best equipped and have the most flexible economies to be able to manage globalization; and they benefit hugely from the massive new markets being created as a result of this process. But perversely that could end if fears are used by politicians to encourage economic nationalism and protectionism.


All I can assume is that Mr Russo does not know or understand how nationalism and protectionism in the late 1920s and 30s destroyed the world’s trade system creating a huge economic slump which helped foster the very fascism Mr Russo claims is now engulfing the world.


I believe that by breaking down barriers, allowing ideas to move freely and by allowing people and companies to invest their money as they see fit economies will flourish and fascism and its ilk will be kept at bay. Mr Russo wishes to remove one of the main ways governments gain funds; he supports people who wish to remove the social security safety nets which allow people to take risks and deal with the problems of flexible employment and job market failures.


Mr Russo wishes to restrict world trade and shackle the world’s financial systems. These types of policies directly created fascism in the 1930s. It is via breaking them down we have the freedoms we currently have.


Our freedoms our under threat, but if we followed Mr Russo’s prescriptions I firmly believe it would make a return to fascism more not less likely. Rather than attempting to explain the complex and difficult issues facing a globalized world where people face more competition and the dangers of extremists using the system for evil, Mr Russo sticks to simplicities and well worn clichés.


I learnt far more in my reading to refute his arguments than from watching this documentary. It was over long, repetitive, over blown and set up false Aunt Sallies for Mr Russo to dramatically knock down.


I am not surprised that this movie is available for download on the internet. I doubt if any major distributor will see it as worthy of distribution or as a money maker.


The movie is a tirade and panders to simplicities. I would ask for people to research the issues Russo raises and think about the implications of doing what he advocates. He warns that we are moving from Freedom to Fascism. If politicians carry out his desires I firmly believe this will be so.


Don’t be fooled, this movie is dross and should be treated as such.


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