Wednesday, April 23, 2008

Expatriation.....A Closer Look

Why 400,000 Americans Are Saying "So Long" to the U.S. Part I

A New York Times book reviewer writes this week: "At a time when the Cassandras of finance are looking like realists, there is no gloomier prophet than Kevin Phillips. The author of 13 previous books including at least one classic, The Emerging Republican Majority (1969), Mr. Phillips sees a perfect economic storm coming. The final pages of his bleak new book, Bad Money, tell of an "unprecedented" number of Americans planning to leave the country or thinking about it. Readers of Bad Money may come away with a similar impulse to flee."The fact Americans are fleeing is hardly news to our members and readers. For the decade since our founding, we at The Sovereign Society have noted sadly that each year upwards of 400,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. Admittedly, that number pales against the millions clamoring to get into the U.S., legally and otherwise.But there's a huge difference in the economic status of these two groups.Those seeking admissions (or just crossing our borders) are, by and large, poverty stricken individuals. They're desperately trying to better their lot with a new life in the promised land. They'll settle for low paying jobs, welfare, free education for their kids and U.S. taxpayer subsidized housing and health care.But a large part of the 400,000 member exodus is made up of wealthy people seeking to escape the growing tax and regulatory tyranny the U.S. government aims right at them. And it is this gusher of fleeing rich people who take with them U.S. wealth -- and the U.S. tax base. These are the very people who pay for the all those programs the new immigrants covet.Two years ago next month I referred readers to what was then Kevin Phillips' latest book, American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century. In it he put together an amazing array of historical, religious, economic and political data to argue that the U.S. was about to join its imperial predecessors on the downhill slide - Rome, Spain, the Netherlands and Britain.But what was particularly prescient of Phillips in his 2006 book was one of the two major reasons he saw for America's decline. The first was the decline in industrial and manufacturing base. The second was an increase in "financialization" of all sorts of intangible financial services that replaced tangible production. This astute observation was made well before shocked Americans and the world were to learn about the sub-prime mortgage crisis and before scores of billions of dollars worth of bank and financial losses -- due in large part to the phony "financialization" Phillips warned against. As Phillips showed, a lot of these modern "financial services" consist of little more than creating new forms of debt, then pushing all those debt papers around while collecting fees for doing nothing really productive.Tune in tomorrow, and I'll give you my take on what Phillips refers to in his latest book - what some have called "one of the slowest moving train wrecks" in history. Plus, I'll tell you how to avoid this mess altogether...

No comments: