Nevada, USA: The World’s New Offshore Tax Haven

Very wealthy people have reasons why they would be willing to pay people and countries for the ability to park some of their wealth in a place where nobody would know about it.  They could just be those avoiding paying taxes in their home country, or criminals who must hide their loot, or kleptocrats who are robbing their own country of its resources, or simply a spouse trying to protect his wealth from a potential divorce settlement.  There are a collection of nations, politicians, lawyers, accountants, thugs, and others who provide services to this community of the ultrawealthy.   It might be considered a plutonomy that lives under its own rules, separate from the world in which most of us live.  This is the picture Oliver Bullough presents in his revealing book Moneyland: The Inside Story of the Crooks and Kleptocrats Who Rule the World.  He provides this perspective on “Moneyland.”

“This is the place that I call Moneyland—Maltese passports, English libel, American privacy, Panamanian shell companies, Jersey trusts, Liechtenstein foundations, all added together to create a virtual space that is far greater than the sum of its parts.  The laws of Moneyland are whichever laws anywhere are most suited to those wealthy enough to afford them at any moment in time.  If a country somewhere changes the law to restrict Moneylanders in any way, they shift themselves or their assets to countries with more generous laws.  If a country passes a law that offers new possibilities for enrichment, then the assets shift likewise.”

“They move their money, their children, their assets and themselves wherever they wish, picking and choosing which country’s laws they wish to live by.  The result is that strict regulations and restrictions do not apply to them, but still constrain the rest of us.”

“This means Moneyland has neutered the core function of democracy—taxing citizens and using the proceeds for the common good—which in turn has disillusioned many people with the democratic experiment altogether.”

Much of this money has a corrupt origin.  The governments and people that benefit from it entering their country have the choice of rejecting it and modifying the laws that provide it legitimacy, or they can revel in the fees earned in servicing this wealth.  Too often it is the latter path that is taken.

“The world’s response to these developments has been entirely predictable…Time after time, countries have chased after the business they have lost offshore…thus making the onshore world ever more similar to the offshore piratical world…Taxes have fallen, regulations have relaxed, politicians have become friendlier, all in an effort to entice the restless money to settle in one jurisdiction rather than another.  The reason for this is simple.  Once one jurisdiction lets you do what you want, the business flows there and other jurisdictions have to rush to change, too.  It is the Moneyland ratchet, always loosening regulations for the benefit of those with money to move around, and never tightening them.”

In 2007, the US was presented with the opportunity to fight back against Swiss banks that were participating in a scheme to defraud it of income tax revenue.  Bradley Birkenfeld came forward as a whistleblower and revealed his activities as an employee of UBS, a large Swiss bank.  The Treasury Department estimated that it was losing $100 billion every year in tax revenue to schemes like those Birkenfeld described.  The Swiss had long claimed the secrecy of their banking operations were necessary to protect their wealthy clients from harm.  They seemed to justify everything on the basis of sheltering Jewish assets from Nazis almost a hundred years ago.  This time, however, the US had the will and the power to act.  In 2010, it passed the Foreign Account Tax Compliance Act (FATCA).

“Under FATCA, if foreign financial institutions declined to reveal the identity and assets of American clients, the government would impose a thirty percent tax on any investment income received from the United States.  It was a pretty compelling offer…Foreign banks could continue to help Americans break the law but, if they did so, they would be cut off from the US market, and under constant threat of a multibillion-dollar fine.”

The US requires citizens to file a tax return even if they are living and working in another country.  Therefore, simply moving offshore is no relief from the tax laws.  The sheer size of the US economy and the necessity of financial institutions to deal with dollar-based assets forced them to come to terms.  Once that happened, it was much easier for other countries to agree to similar terms with Moneyland participants.

“And where the Americans led, the rest of the world followed.  European countries agreed to swap information with each other; and the various British tax havens agreed to exchange data with the UK.  All these efforts culminated in 2014 with the Common Reporting Standard (CRS), under which countries agreed to automatically swap information about all the assets that each other’s residents hold in each other’s banks.”

This sounds like an example of great progress in eliminating illicit activities.  However, recall Bullough’s warning that when things change in Moneyland, the wealthy respond by finding more accommodating sites to deposit their money.  In this case, the more accommodating site would be the US itself.

The US solved its problem with FATCA, but it did not reciprocate in kind by joining CRS.  The Obama administration worried about this asymmetry, but any suggestion that data might be shared on US bank accountholders with other countries generated a furious response from bankers.  Bankers understand Moneyland and recognized the advantage of the post-CRS situation, and knew how much money they would lose if they had to disclose information.  Interestingly, the US banks resorted to the ancient claim that the Swiss had used successfully for many years: secrecy was required to protect account holders from crooks and terrorists.  Once again, big money won.

“Financial institutions from more than 100 countries have to share information on assets held by US citizens or residents, but US institutions don’t have to send anything back in return.  US institutions will be fully informed about what’s going on elsewhere in the world, but their counterparts in other countries will be completely blind as to what’s happening in the United States.”

“Some Florida Banks relied on foreign deposits for up to 90 percent of their capital, which meant almost none of the banks’ clients were paying tax on their interest at all.”

Bullough describes the financial chicanery a state will go to gain access to Moneyland funds using Nevada as an example.  The legal loophole of choice for Moneylanders seems to be trust laws.  A trust is an agreement between an individual with assets and a trustee (usually a lawyer or financial firm) as to how those assets will be handled.  It was assumed that trusts would have a finite duration and, after it closed, assets would be taxable.  For some reason, perhaps involving campaign contributions, the federal government did not impose a uniform time limit to a trust; rather, it left it up to states to set a limit.  To gain a competitive advantage, some states abolished any limit at all; Nevada seemed to be thumbing its nose at other states by setting its limit at 365 years.

“By 2003, at least $100 billion (and probably much, much more) had poured into states with these long-lasting so-called dynasty trusts, creating a powerful incentive for other states to change their laws to abolish their own limits.”

Nevada has gone to great lengths to make their trusts more desirable to the wealthy.

“Nevada is particularly proud of its asset protection ordinances, which mean that—providing two years have passed since you put your property in trust—your creditors have no way of getting hold of it…If a man owns a company, puts it in trust, then gets divorced, his ex-wife has no claim on those assets at all, and nor do his children.  And thanks to the generosity of Nevadan law, you can even be a beneficiary of your own trust, which means you’ve given your property away, so it can’t be taken away from you, and yet you retain all the benefits of owning it…There has not been a single case of a creditor ever managing to pierce a Nevada trust.”

Lax laws had generated a loophole that US residents could take advantage of; it would take the initiation of CRS to attract the vast amount of foreign money.  The trick would require making a trust and its assets a foreign trust in terms of US tax law, while at the same time making the trust American so it avoids any reporting to a foreign nation.  Bullough quotes Peter Cotorceanu on the process of establishing the “foreignness” of a trust.

“’The simplest way to do it, and there are lots of others, is just give one foreign person, one of a laundry list of powers: for example, give a foreign protector the right to remove and replace a trustee.  Bang, that’s a foreign trust,’ Cotorceanu said.  ‘It doesn’t matter that the trustee is in the US, that it’s governed by Nevada law, that all the assets are in the US, that the bank account is in the US.  If one power on the laundry list is held by a non-US person, that makes it a foreign trust for tax purposes’.”

“But there’s a better bit.  If it has a US trustee—such as Alliance Trust Company of Reno, Nevada, for example—then it is American for the purposes of the CRS, and thus immune to its provisions…which means a rich Chinese businessman, or a Russian, or whoever, can park their money here with no fear that information about it will drift back to its home countries authorities.”

“The trust is American under foreign law, and foreign under American law: it doesn’t exist anywhere.”

South Dakota plays the same game as Nevada, but while Nevada does not publish a tally of the assets held by its trust companies, South Dakota does.

“In 2006, before the UBS storm hit, the state’s trustees held an already impressive $32.8 billion—that’s around $42 million per head for every South Dakotan.  By 2015, that total had reached $175.1 billion; and then rose by almost a third in just the next twelve months.  In 2016, the state’s recorded total was $226 billion, which was $261 million for every resident of this prairie tax haven.”

This welcoming of foreign money into our system is not only unseemly, it is dangerous.  These people who come here with their assets are law breakers.  At best, they are tax dodgers; at worst, they are violent criminals who are willing to kill those who might endanger their funds, as the Russians have demonstrated.  They do not come to enjoy our freedoms, they come to take advantage of them.  And it is so easy for wealthy undesirables to buy their way into US residency.  A mere $500,000 investment can purchase a green card under the EB-5 visa program.

Let us finish by recalling Bullough’s earlier warning.

“…Moneyland has neutered the core function of democracy—taxing citizens and using the proceeds for the common good—which in turn has disillusioned many people with the democratic experiment altogether.”

Deadly Airborne Particulates: We Must Stop Burning Things

Those of us old enough to remember the smog and haze of the 1950s-1970s tend to believe that because the air looks so much cleaner, air pollution is much less a problem today.  As scientists have learned more about how our bodies respond to pollutants, they are concluding that air quality cannot be ensured by current regulations and more severe constraints must be imposed if significant numbers of fatal health problems are to be avoided.  Jonathan Mingle addressed the current state of knowledge in the New York Review of Books in an article titled Our Lethal Air.  Mingle reviewed three recent books on the subject as well as some of the machinations occurring in our federal establishment.

In 1970, the Environmental Protection Agency (EPA) was formed and the Clean Air Act was passed.  Gradually, scientists and regulators imposed constraints on the emission of pollutants and the skies became bluer and the air fresher.  Mingle provides this perspective.

“Gradually, overall levels of particulate matter, ozone, and other pollutants in the air began to decline. By the 1990s, many people in the US and other wealthy countries thought that sun-blotting soot and smog were hazards safely surmounted in the onward march of progress, concerns of a past era like polio or cholera.”

“It turns out the threat had simply become less visible. Nearly half a century after the Clean Air Act instituted the world’s most stringent emissions controls, the problem of air pollution is far from being solved in the US or anywhere else. Pollution has proved much more persistent, and exposure to it much more damaging, than anyone expected. Today, 91 percent of people worldwide live in areas where air pollution levels exceed the World Health Organization’s recommended limits.”

One of the landmark studies that clarified the issues was referred to as the Six Cities Study.  It was led by the Harvard epidemiologist Douglas Dockery.

“Starting in 1974, researchers followed over eight thousand people randomly selected from three more polluted and three less polluted US cities. They gathered information on height, weight, and health conditions via questionnaires and periodic interviews and tracked deaths over the years. When they analyzed the mountain of data, applying statistical methods to control for other variables, they found that adult residents of the dirtiest cities (e.g., Steubenville, Ohio) were dying two to three years earlier on average than those in the cleanest (e.g., Portage, Wisconsin). Among all the pollutants they studied, the relationship with premature death was most clear and pronounced for particulate matter less than 2.5 microns in diameter (PM2.5), a category that encompasses soot (black carbon), dust, sulphates and nitrates, and a wide range of other substances suspended in the air.”

These mortality results were published in 1993; they indicated that people living in cities with pollutants that met air quality standards were still dying in large numbers.  Tighter limits on PM2.5 concentrations were put in place in 1997 but the problem has not disappeared.  These small particulates are so dangerous because at the 2.5 micron (micrometer) size or less they can penetrate the body’s defenses and lodge in the lungs.  The smaller they are the easier it is to penetrate the lung itself and be transported to other organs where they can do damage.  And these small particles are being produced everywhere, both inside and outside our homes.  The exterior sources are well known; less familiar are the levels that can be reached in a home while cooking, particularly with gas.  The rule that anything that burns produces particulates holds in the kitchen as well as on the highway.  It is interesting to note that tobacco smoking produces particles below 2.5 microns in size, which may explain why smoking can produce so many different ways to die.

“Most of these fine particles are a byproduct of our civilizational dependence on burning stuff: coal, gasoline, diesel, wood, trash, you name it. These particles can get past the defenses of our upper airways to penetrate deep into our lungs and reach the alveoli, the tiny air-filled sacs where oxygen is exchanged for carbon dioxide. From there, they cross into the bloodstream and spread throughout the body. They can travel through the nose, up the olfactory nerve, and lodge themselves in the brain. They can form deposits on the lining of arteries, constricting blood vessels and raising the likelihood of blockages that lead to strokes and heart attacks. For decades, scientists have understood that they exacerbate respiratory illnesses like asthma and chronic obstructive pulmonary disease, but—as with tobacco smoking—the biological mechanisms have been elusive. It is now thought that much of the havoc PM2.5 wreaks is through systemic inflammation, caused by an overreaction by the immune system.”

“Scientists keep learning that there is no part of the body that these particles cannot reach, and no phase of life, from gestation to advanced age, they do not touch. Last year, researchers found inhaled soot particles in the placentas of five women who gave birth in London hospitals.”

“These studies have also yielded another bedrock finding: there is no safe level of exposure to fine particulate matter. Any amount of these tiny particles can harm you.”

Mingle states that we are in the throes of a “global health emergency” due to air pollution.

“Air pollution cuts short the lives of far more people in the US each year—estimates range from 107,500 to over 200,000—than do traffic accidents. Together, indoor and outdoor air pollution caused one in every nine deaths globally in 2016—far more than the number felled by malnutrition, alcohol use, or malaria.”

Whether or not one believes that the term “crisis” is appropriate in the US, clearly, up to 200,000 annual preventable deaths is something the EPA should be addressing.  Rather, the Trump administration seems determined to attack the science of air pollution in the same way it attacks the science of climate change.  Mingle devotes much of his article to this assault on our safety.

“…polluting industries simply do not accept any limit on how much waste they can pour into the air without a vicious fight. In 1952, the same year of London’s killer smog, the chemist Arie Haagen-Smit published his research solving the mystery of another infamous species of smog: the yellow-brown haze that regularly blanketed Los Angeles. The culprit was ozone, produced by hydrocarbons from cars and the region’s refineries reacting in the California sun. He was immediately attacked and ridiculed by the oil and automobile industries, and by scientists they funded. Haagen-Smit prevailed, but that battle created the playbook by which influential industry lobbies have sought to forestall pollution limits, and discredit the peer-reviewed science underpinning them, over the past half-century. When the EPA relaxed ozone standards in 1979 in response to relentless industry pressure, the American Petroleum Institute (API) thanked it by suing to overturn the entire standard, saying it was “far more stringent than medical evidence shows is necessary to protect public health.” After President Obama’s EPA proposed a modest tightening of the ozone standard in 2014, the API, along with other industry groups, sued again. Just last month, the D.C. Circuit issued its ruling, rejecting the API’s arguments. This pattern plays out over and over in these pollution tales.”

EPA regulations limiting pollution levels have saved many lives over the years, and studies have shown that the economy as a whole benefits as new techniques and new technologies are developed to combat pollution.  This entire process is now at risk because Trump has allowed lobbyists and industry insiders to gain control of it.

“Republicans in Congress have repeatedly introduced bills to limit the EPA’s use of studies that rely on subjects’ confidential medical and health data, in the name of ‘transparency.’ These ‘secret science’ bills had never gone anywhere until the disgraced former EPA administrator Scott Pruitt took the plan and refashioned it into a proposed new agency rule…intended to put many of the most important findings on air pollution’s effects out of bounds.”

In spite of the harm Trump’s takeover of the EPA will do, we really must stop burning things.  Cigarettes should be banned, and everything else should be electrified.  Any combustion should take place only in an environment where the particulates can be captured.

Global Warming: Carbon Dioxide and Nutrient Collapse

David Wallace-Wells is determined to relieve us of any delusions about the changes being wrought by human-created climate change.  He collects what are the known-knowns and the known unknowns and scares us with suggested unknown-unknowns in his book The Uninhabitable Earth: Life After Warming.  Complacency is no longer an option.  These are his opening words.

“It is worse, much worse than you think.  The slowness of climate change is a fairy tale, perhaps as pernicious as the one that says it isn’t happening at all, and comes to us bundled with several others in an anthology of comforting delusions: that global warming is an Arctic saga, unfolding remotely; that it is strictly a matter of sea level and coastlines, not an enveloping crisis sparing no place and leaving no life undeformed; that it is a crisis of the ‘natural’ world, not the human one; that those two are distinct, and that we live today somehow outside or beyond or at the very least defended against nature, not inescapably within and literally overwhelmed by it; that wealth can be a shield against the ravages of warming; that the burning of fossil fuels is the price of continued economic growth; that growth, and the technology it produces, will allow us to engineer our way out of environmental disaster; that there is any analogue to the scale or scope of this threat, in the long span of human history, that might give us confidence in staring it down.”

“None of this is true.”

What is true is that global warming is accompanied by so many changes and effects that we cannot possibly understand how they interact and provide feedback that drives further changes and effects.  Wallace-Wells puts it this way.

“THE ASSAULTS WILL NOT BE DISCRETE—This is another climate delusion.  Instead, they will produce a new kind of cascading violence, waterfalls and avalanches of devastation, the planet pummeled again and again, with increasing intensity and in ways that build on each other and undermine our ability to respond, uprooting much of the landscape we have taken for granted, for centuries…”

A litany of the horrors in store for us if we do not mend our ways is presented.  In so doing, Wallace-Wells points out some unknown-unknowns that have recently transitioned to known unknowns.  This is an effective way of supporting his claim that what will assault us will be a “cascade” of effects.

What is of interest here is the recently discovered fact that a rising level of carbon dioxide may be beneficial to bulk plant growth, but it can be deleterious to the production of the nutrients that humans need. Or, as Wallace-Wells put it:

“Everything is becoming more like junk food.”

Carbon dioxide is a plant nutrient.  Just as our bodies respond to a change in nutrient levels so do those of plants.  What higher carbon dioxide levels do, at least to some critical food sources, is increase the levels of carbohydrates produced at the expense of proteins, minerals, and vitamins.  Not only will our warming earth make the production of crops more difficult, the crops produced will be of less nutritious (“more like junk food”) for reasons we hadn’t anticipated.  Helena Bottemiller Evich provides a concise summary of how scientists, ever so slowly, became aware of this unknown-unknown in The great nutrient collapse. 

Evich tells the story of Irakli Loladze, a mathematician with an abiding interest in biology.  Loladze was introduced to a biological paradox as a graduate student in 1998.

“Zooplankton are microscopic animals that float in the world’s oceans and lakes, and for food they rely on algae, which are essentially tiny plants. Scientists found that they could make algae grow faster by shining more light onto them—increasing the food supply for the zooplankton, which should have flourished. But it didn’t work out that way. When the researchers shined more light on the algae, the algae grew faster, and the tiny animals had lots and lots to eat—but at a certain point they started struggling to survive. This was a paradox. More food should lead to more growth. How could more algae be a problem?”

“The biologists had an idea of what was going on: The increased light was making the algae grow faster, but they ended up containing fewer of the nutrients the zooplankton needed to thrive. By speeding up their growth, the researchers had essentially turned the algae into junk food. The zooplankton had plenty to eat, but their food was less nutritious, and so they were starving.”

Loladze knew that accelerated growth of algae could also be caused by increasing the level of carbon dioxide available.  Would the same effect be observed in that case?  If so, a similar effect would be occurring planet wide as levels of carbon dioxide continued to rise.  He discovered that there was very little data available to address this hypothesis, but what there was suggested that it was true.  However, the relevant scientific community had not even raised the concern.  It would fall on him, as a sideline to his main work, to push the issue.

What was known was that the nutritional quality of many of our crops had declined over the time between 1950 and 1999.  In 2004 a study of this data was published detailing this decline: Changes in USDA food composition data for 43 garden crops, 1950 to 1999.  It included this summary.

“As a group, the 43 foods show apparent, statistically reliable declines (R < 1) for 6 nutrients (protein, Ca, P, Fe, riboflavin [vitamin B2] and ascorbic acid [vitamin C]), but no statistically reliable changes for 7 other nutrients. Declines in the medians range from 6% for protein to 38% for riboflavin.”

These investigators assumed that these degradations could be explained by the agricultural market shifting to higher yield varieties of plants that produced fewer nutrients.  This conclusion could not rule out a role for carbon dioxide in the process, and Loladze kept pushing the issue, finally exciting the interest of other researchers.  One of the approaches was to examine the evolution of a wild plant that was unaffected by man-made decisions.

“Goldenrod, a wildflower many consider a weed, is extremely important to bees. It flowers late in the season, and its pollen provides an important source of protein for bees as they head into the harshness of winter. Since goldenrod is wild and humans haven’t bred it into new strains, it hasn’t changed over time as much as, say, corn or wheat. And the Smithsonian Institution also happens to have hundreds of samples of goldenrod, dating back to 1842, in its massive historical archive…”

“They found that the protein content of goldenrod pollen has declined by a third since the industrial revolution—and the change closely tracks with the rise in CO2.”

Carbon dioxide as a cause of nutrient collapse can now be studied more directly after researchers developed what is called the FACE technique.

“Researchers use a technique that essentially turns an entire field into a lab. The current gold standard for this type of research is called a FACE experiment (for “free-air carbon dioxide enrichment”), in which researchers create large open-air structures that blow CO2 onto the plants in a given area. Small sensors keep track of the CO2 levels. When too much CO2 escapes the perimeter, the contraption puffs more into the air to keep the levels stable. Scientists can then compare those plants directly to others growing in normal air nearby.”

If nutrient collapse was occurring because of rising CO2 levels, the most affected would be people possessing limited food security where malnutrition is a constant threat.  Many such people depend on rice as the main food source.  FACE studies were performed on rice varieties to determine what effect a CO2 level consistent with what might be reached in the next few decades would have on nutrition: Carbon dioxide (CO2) levels this century will alter the protein, micronutrients, and vitamin content of rice grains with potential health consequences for the poorest rice-dependent countries.

“As of 2013, approximately 600 million individuals, primarily in Southeast Asia [the countries of Bangladesh, Cambodia, Indonesia, Lao People’s Democratic Republic (PDR), Madagascar, Myanmar, and Vietnam], consume ≥50% of their per capita dietary energy and/or protein directly from rice…”

“When grown under field conditions at these anticipated [CO2] a significant reduction (an average of −10.3%) in protein relative to current [CO2] was observed for all rice cultivars…Similarly, significant reductions in iron (Fe) and zinc (Zn) were also observed (−8.0 and −5.1%, respectively) among all rice cultivars tested…”

These degradations will be on top of the loss of nutrients already caused at our current CO2 levels.  As usual, the wealthy produce climate change, and the poor will be the first to suffer the consequences.

Evich summarizes the results of studies beginning to emerge as these issues attain a higher priority and more data becomes available.

“Earlier this summer [2017], a group of researchers published the first studies attempting to estimate what these shifts could mean for the global population. Plants are a crucial source of protein for people in the developing world, and by 2050, they estimate, 150 million people could be put at risk of protein deficiency, particularly in countries like India and Bangladesh. Researchers found a loss of zinc, which is particularly essential for maternal and infant health, could put 138 million people at risk. They also estimated that more than 1 billion mothers and 354 million children live in countries where dietary iron is projected to drop significantly, which could exacerbate the already widespread public health problem of anemia.”

These conclusions result from an effect once deemed too small to be of interest.  Is this the extent of the effect, or are we considering the tip of an iceberg?  Remember the tale of the zooplankton; bad things can happen when one plays with nutrition levels.  And how many other unexamined effects and feedback loops will be excited as the climate warms and changes?

Let us recall Wallace-Wells’ initial warning.

“THE ASSAULTS WILL NOT BE DISCRETE—This is another climate delusion.  Instead, they will produce a new kind of cascading violence…”

Complacency is no longer an option.

America’s Two Nationalisms: The Final Battle?

The rise of nationalism and political parties promoting it has become an important and unsettling trend across the world.  Jill Lepore provides a concise history of nationalism and its relevance to history and politics in the United States in This America: The Case for the Nation.  Her intent is to make clear the battle that has always existed between two forms of nationalism in our country, and to encourage the liberal side to match the other with dedication and intensity.

Nationalism arose in Europe incorporating ideas driven by the French Revolution and the need for a political system that no longer required a monarch to function.

“Nationalism, when it emerged, was a product of the Enlightenment, and a species of liberalism.  To be a nationalist at the end of the eighteenth century meant to believe in a slew of revolutionary liberal ideas: that the peoples of the world are naturally divided into nations, that the most rational means of government is national self-rule, that nations are sovereign, and that nations guarantee the rights of citizens.”

“Politics became the operation of a new force, not the divine right of kings but the will of the nation.”

Coherent nations of similar peoples with similar backgrounds did not exist.  If this concept of nationhood was to succeed, those within the national boundaries had to be convinced that they were, in fact, a member of a meaningful body of citizens.

“…as nation-states emerged out of city-states and kingdoms and empires, they…incorporated all of the different people living in newly bounded territories, and the best way to do that was to invent a common history, telling tales about a shared past, tying together ribbons of facts and myths, as if everyone in the ‘English nation’ had the same ancestors, when in truth they were everything from Celts to Saxons.  Histories of nation-states are stories that hide the seams that stitch the nation to the state.”

The stories people in a nation tell about themselves determine their values and aspirations.  Historians play a critical role in creating narratives that inspire an affinity between inhabitants and a love of nation sufficient to generate a willingness to make sacrifices for the benefit of the state.  Popular histories need not be accurate, but they must be effective.

“’Historians are to nationalism what poppy growers…are to heroin addicts,’ as the English historian Eric Hobsbaum once darkly observed.  ‘We supply the essential raw material for the market’.”

Up to a certain point nationalism and patriotism had nearly the same meaning, but the twentieth century would see a perversion of nationalism from something healthy to something dark and dangerous.

“…it’s easy to confuse nationalism and patriotism, especially since they once meant more or less the same thing.  But in the early decades of the twentieth century, with the rise of fascism in Europe, nationalism had come to mean something different from patriotism, something fierce, something violent: less a love for your own country than a hatred of other countries and their people and a hatred of people within your own country who don’t belong to an ethnic, racial, or religious majority.”

“Patriotism is animated by love, nationalism by hatred.  To confuse the one for the other is to pretend that hate is love and fear is courage.”

Lepore tells us that historians were so repelled by what nationalism had become that after World War II they chose to stop writing stories that would encourage national cohesion and pride for fear of creating more violence and death.  However, people continued to need these stories and would accept them from people pushing an agenda if historians would not contribute. 

“Nations, to make sense of themselves, need some kind of agreed-upon past.  They can get it from scholars or they can get it from demagogues, but get it they will.”

“When serious historians abandon the study of the nation, when scholars stop trying to write a common history for a people, nationalism doesn’t die.  Instead, it eats liberalism.”

The world has seen a surge in the illiberal forms of nationalism that seem to be against people and things.  Each affected country has its unique issues.  The United States is not an exception.  In fact, as Lepore points, out it arrived at nationhood by a path fraught with hazards, some of which are contentious to this day.

The United States began as a confederation of states each of which contributed their own forms of nationalism to the political brew.  To get agreement on a federal constitution, a number of compromises had to be made.  These accommodations haunt the nation still.  The major issues were states rights versus federal control, and the acquiescence to slavery as a legal institution.

“The language of nationalism, when it surfaced in the United Stats in the 1830s, had less to do with feelings of national belonging than with the ongoing dispute between federal power and states rights.  To be a nationalist meant to advocate for the power of the federal government.”

“…stability rested on a compromise that allowed not only the continuation of slavery in the South, at a time when it was on the wane in the North, but also for the granting of disproportionate political power to slave states, in exchange for their willingness to stay in the Union.”

Intertwined with federal versus state issues were those associated with the slave versus nonslave states.  The nation was harboring two forms of nationalism, one striving to be liberal, the other resolutely illiberal.

“Liberalism is the belief that people are good and should be free, and that people erect governments in order to guarantee that freedom…Nations are collectives and liberalism concerns individuals; liberal nations are collections of individuals whose rights as citizens are guaranteed by the nation.  Liberal governments require a popular mandate to rule: liberal nations are self-governed.”

“’Ours is the government of the white man,’ South Carolina’s John C. Calhoun declared in 1848, arguing against admitting as citizens of the United States the people of Mexico, people he did not consider to be white…Calhoun’s was a race-based nationalism: the United States was to be a white nation.  This view was not confined to the South.  Oregon in 1857 adopted something close to a whites-only constitution: ‘no negro, Chinaman, or mulatto shall have the right of suffrage,’ it declared.  That same year, in Dred Scott v. Sandford, the U.S. Court ruled that no person of African descent could ever become a citizen of the United States, on the grounds that the framers of the Constitution had viewed Africans as ‘beings of an inferior order, and altogether unfit to associate with the white race, either in social or political relations; and so far inferior, that they had no rights which the white man was bound to respect’.”

Americans like to think of themselves as an exceptional people, one who set an example of liberty and justice for those of other nations who lacked those benefits; that was the liberal nationalism at work.  Unfortunately, liberty and justice only existed for white males for most of our history.  Americans were also exceptional in sending out the message that America’s experience with nonwhite peoples proved the superiority of whites, determined that colored peoples were incapable of governing themselves, and demonstrated that social and economic discrimination against nonwhite peoples was appropriate and effective; that was the illiberal nationalism at work.

“An American nationalism descended from these illiberal traditions endures, a scourge to the country and the world.”

The history of the United States has been dominated by the conflict between these two forms of nationalism.  From the founding of the nation until the Civil War, abolitionists and proponents of slavery battled incessantly over that institution.  When it looked as though the slave states might end up a permanent minority they decided to succeed from the nation.  After much death and destruction, the slave states were defeated.  Slaves were emancipated and slavery was no longer possible.  However, the culture of white dominance never disappeared.  Instead it found other ways to apply social and economic constraints on the former slaves.  This system of formal discrimination endured for another century before its legality was finally eliminated.  Was this a sign of progress, or was it merely a time of preparation for another battle?

The civil rights struggles of the 1960s eliminated explicit racial discrimination but did little to ameliorate implicit forms.  The period that followed was not so much a time of racial peace as a reforming of battle lines in preparation for the next conflict.  It was not by accident that advocates of liberal policies ended up centered in the Democratic Party and advocates of illiberal policies ended up migrating to the Republican Party.  The degree of political polarization appears frighteningly similar in both geography and intensity to that which prevailed in years before the Civil War.  The illiberal thrust today is not associated with slavery, although racism and white supremacy is endemic to the Republican Party.  Rather, it is the attempt to restrict the rights of women over the issue of abortion.  From this source we derive this observation.

“Prominent figures on the Christian right in the US ranging from religious magazines to authors to elected politicians have warned that the fight over abortion rights could lead to a new civil war.”

The compromises made in forming the nation continue to contribute to political polarization.  Demographic trends and the peculiarities of our Constitution suggest that the Democrats will have a growing advantage in controlling the House, and to a lesser extent the presidency, but the Republicans, although a distinct minority, will have the advantage in controlling the Senate, and thus the Supreme Court.  This is not likely to engender bipartisan cooperation.  Instead, deadlock on almost all issues seems inevitable.

Is there a gathering storm leading to some final conflict whose outcome will finally break this curse of the two nationalisms, or just another skirmish in a never-ending war?

Stay tuned…