Health care costs in the U.S. have been rising so steadily for so long that containment barely seems possible. Even optimists don’t dream of cutting the price tag. As its official name — the Patient Protection and Affordable Care Act — suggests, Obamacare aims for affordability, not radical reduction.But at a time when we’re all […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
Picture the scene. It’s 2020. You’re at the checkout in a convenience store with a carton of milk. But you’ve got no cash and you’ve left your cards at home. No problem. You scan your right index finger; the green light flashes. Purchase approved and you leave. Easy.Is this a realistic vision of the future, […]
After a week of reckoning about the American oil and gas boom… I’ve got to get something off my chest.I can’t stand it when a coworker takes credit for something I did.Whether it’s a special report I wrote or just a little investing trick I found on my own — if someone takes it and […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
What if I told you that the march of human progress could be traced in a direct line from the Epicureans of Ancient Greece… through the 18th Century’s cure for smallpox… to where Steve Jobs and Bill Gates found inspiration as scrappy teenagers… to the flying car of tomorrow?Stay with me and I’ll show you […]
Real progress happens through real people, ideas, and innovations. Not by legislation argued and debated in Congress. Right now, one of the most influential technologies is changing the way people do business. And reinventing the future in the process.
Innovation can change the world… if the world lets it. Unfortunately, society’s gatekeepers make it a point to constrain, regulate, and control these ideas. But their power is limited, and the power of innovation is too great. Unfortunately for regulators, there are some technologies they can’t control.
What’s the #1 reason a start-up fails?It runs out of money!And why would it run out of money?Because nobody wants the product it’s selling!For early-stage investors, this presents a bit of a conundrum:If a product doesn’t exist yet, how do you figure out if there’s demand for it?And how do you figure it out before […]
A cushy job in Hawaii that pays six figures. A beautiful girlfriend/boyfriend. Job security and professional experience that gives you plenty of future opportunities. Would you throw that all away to do what you think is right? Last year, one government contractor did just that. And now you see the world the government tried to hide from you.
Every time Bitcoin crashes, it winds up at a price greater than it’s previous high. Yet the experts still call it a currency fad that will fade away. But a little over a year since it really took up, the digital currency is still going strong, and is once again seeing its price rise. But is there another reason why people are buying Bitcoins.
According to some estimates, one man - whose name you're probably not familiar with - has saved over a billion lives. Who is he? And how has he influenced the current crop of innovators? Josh Grasmick explains...
Edward Snowden’s one year visa in Russia expires at the end of next month. With only a few weeks left before he finds himself without a safe country to live in, he sat down to give an exclusive interview. Here are the most important things he wants you to remember from his recent sacrifice.
Biotech breakthroughs and other transformative innovations are a few of the brightly shining spots in the U.S. economy. In fact, Paul Mampilly believes this is the golden age of biotech investing, and that you can earn massive returns while investing in companies with drugs that benefit all of humanity. Read on for his latest example...
Harold Hamm isn’t your typical entrepreneur. His life’s story shows you success in America doesn’t always depend on a fat checkbook
Obama recently claimed this was the “Decade of the Brain”. But it not the first time the government made that promise. The last time they did it, they wasted millions of your tax dollars. Now they’re back for round two. But this time, their failure could mean more than squandered money. It could mean making Alzheimer’s even worse for those who suffer from it.
Does owning a gun mean you’re guilty until proven innocent? Considering what happened to one man from Florida, that might be the case. But there’s more to this story than just a case of police overreach. Police departments across the nation could be implementing a new technology that puts the burden of innocence squarely on your shoulders.
American ingenuity. It’s the stuff of lore and legend, and it’s what drives the global economy. We literally bank on the next disruptive entrepreneur — and innovative new technology — to completely redefine or create new industries. It’s what America does really well, our goose that continues to lay golden eggs.And yet, maybe not.The truth […]
When Michael Lewis’ new book Flash Boys came out, the author caused a stir while making the media rounds to promote it. “The stock market is rigged,” he told 60 Minutes flatly. His comments set off a firestorm of debate as to whether sharp techies and their fast computers are screwing small investors.As titillating as […]
Last November, when the Environment Protection Agency (EPA) proposed moderating years of escalating mandates by reducing the amount of ethanol that must be mixed into gasoline, a top ethanol lobbyist seemed perplexed. “We’re all just sort of scratching our heads here today and wondering why this administration is telling us to burn less of a […]
Why Is U.S. Health Care So Much More Expensive?After years of research and many conversations with health policy experts, I see three key culprits of expensive health care in the U.S.In no particular order, they are the third-party payer system (i.e., employer-provided health care), malpractice suits, and administrative support costs/paperwork.The unintended consequence of institutionalized employer-provided […]
At the recently concluded Winter Olympics in Sochi, Russian security officials used state of the art facial recognition software to identify potential terrorists. Today, Byron King takes a closer look at this sophisticated new technology and what it means for the future of national security. Read on...
Back in the 1980s, John Nestor became infamous for single-handedly causing massive traffic jams on the Capital Beltway. But in his professional life, he created a completely different kind of traffic jam... one that may have contributed to the deaths of thousands of innocent people. Juan Enriquez has the full story. Read on...
Entrepreneurs innovate. Bureaucrats regulate. It’s the eternal struggle that exists in our modern economy/government. The people in power try to make the playing field as even and fair as possible. While innovators buck the rules and push the world toward a better tomorrow.
Technological progress moves the world forward. It finds ways to do things better, for less money, while using fewer resources. And if you ask any politician, they’ll tell you that’s the way to grow the economy and get America back on track. But if that progress threatens one of the government’s sacred programs, then that’s a different story. One that results in a crackdown on progress, and protection of the status quo.
BitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, the firm paid a fine of $1.9 billion. Authorities made no arrests, and HSBC still turned a $13.5 billion profit that year.
Rolling Stone’s Matt Taibbi detailed the crimes HSBC helped fund, including “tens of thousands of murders” and laundering money for Al Qaeda and Hezbollah. By contrast, Silk Road users have only been shown to have bought and sold drugs. (The six murders-for-hire commissioned by alleged former Silk Road head Ross Ulbricht were never carried out.) In fact, by moving transactions online, Silk Road likely decreased the violence associated with the drug trade.
Again, no individual associated with HSBC paid any money or spent a day in jail. Shrem is currently in custody. Why is there such a disparity? Clearly the size, scope, violence or effect of the crime can’t justify the discrepancy in response. The Justice Department explained it by saying that HSBC is, in essence, Too Big to Jail.
“Had the U.S. authorities decided to press criminal charges,” said Assistant Attorney General Lanny Breuer during the announcement of the HSBC settlement. “HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”
What are the moral and practical underpinnings of a law whose punishments are harshest for those who violate it least? The Justice Department is here admitting that the costs of fairly enforcing the money laundering laws as written — potentially shaking up a major bank — outweigh the benefits.
Charlie Shrem founded BitInstant, a service that let users quickly buy into Bitcoin, in his family’s garage with $10,000 of their money while still in college. He became a founding member of the Bitcoin Foundation and served as vice chairman of the board — a position he’s since stepped down from. But his startup was plagued by regulatory troubles from the start, fueled by a lack of clear regulation pertaining to Bitcoin. In a trailer for the Bitcoin documentary “The Rise and Rise of Bitcoin,” Shrem claims to spend “thousands of dollars on lawyers every day just to make sure that I’m not gonna go to jail.”
While Shrem operated in regulatory uncertainty, and didn’t know the charges against him on the day he was arrested, HSBC received 30 different formal warnings in just one brief stretch between 2005 and 2006. Even then, HSBC was openly flouting the rules. The bankers knew, for instance, that they were funneling money for people such as one of 20 early financiers of Al Qaeda, a member of what Osama bin Laden himself apparently called the “Golden Chain,” according to Taibbi. Another customer was powerful Syrian businessman Rami Makhlouf, a close confidant of the Assad family.
Some, including Taibbi, have called for equal jail time for all offenders. There is no doubt that the Justice Department is overstating the lasting, worldwide effect of justly applying money laundering laws. However, the drawbacks to enforcing laws against what’s estimated to make up a third of all transactions are very real. In this reality, it’s legitimate to ask whether laws against money laundering should be applied to anyone.
Money laundering is, simply, the process of concealing sources of money. While the standard image of money laundering involves murders, Mexican narco-gangs, and Al Qaeda, in reality there are many reasons that normal people would want to keep their transactions anonymous — which is a big reason why Bitcoin gained popularity with libertarians in the first place.
As J. Orlin Grabbe wrote, “Anyone who has studied the evolution of money-laundering statutes in the U.S. and elsewhere will realize that the ‘crime’ of money laundering boils down to a single, basic prohibited act: Doing something and not telling the government about it.” Criminalizing this means that by default government has the right to know the source of all of every citizen’s money. In some jurisdictions, money laundering can be just using financial systems or services that do not identify or track sources or destinations.
Writing in American Banker, Bitcoin advocate Jon Matonis explains that “from President Roosevelt’s 1933 seizure of personal gold to the Nazi confiscation of Jewish wealth to the recent deposit theft at Cyprus banks, asset plundering by governments has a long and colorful tradition. Protecting wealth from oppressive regimes continues to this day.”
In that piece, Matonis calls money laundering the thoughtcrime of finance, a sentiment that’s gained traction in libertarian circles. Hiding or failing to report where money comes from is, in and of itself, a victimless crime. The theory is that everyone owes it to the government to make enforcing laws against violent crime easier. But that’s not really accurate, as most of the laundered money is used in other crimes whose violence stems from their being illegal, such as gambling and the drug trade.
This reporting to the government comes at a significant cost, both in terms of resources and privacy.
The Economist has estimated the annual costs of anti-money laundering efforts in Europe and North America to be in the billions. Even its most legitimate function, trying to keep people from financing terror, has been deemed a costly failure by the magazine. Curiously enough, the Economist concedes that efforts to reduce identity theft and credit card fraud are most effective at combating money laundering.
Perhaps this cost could be justified if the information gathered through the reporting requirements was used to cut off funds to terrorists. But as the HSBC case shows, that’s not the case. After getting notice after notice about failing to properly report on its customers, HSBC simply hired former call center employees to “investigate” cases of money laundering to unsavory characters. And when one employee actually did, he was fired.
Besides costing billions, efforts to stamp out money laundering also erode privacy. Ensuring every transaction is above board forces banks to be cops through so-called “know your customer” laws. These laws essentially conscript private businesses “into agents of the surveillance state,”according to the American Civil Liberties Union. Bitcoin offers an interesting counterpoint: Even if accounts may be anonymous, transactions are all public, which is a level of transparency not seen in the fiat currency system.
So why does alleged Bitcoin laundering deserve jail time? On a pure cost-to-benefit basis, perhaps it makes sense to jail Shrem while giving HSBC executives a slap-on-the-wrist fine. Revoking the bank’s license would rock the entire financial system, while Shrem’s enterprise was already on hold at the time of his arrest.
However, laws which result in jail time for minor infractions while the worst offenders walk free deserve their own cost/benefit analysis. If money laundering laws are worth their cost to companies, to the government, and to privacy, surely they are worth applying fairly and evenly. If not, perhaps its time to rethink whether they make sense at all.
– Cathy Reisenwitz
This article originally appeared here on Vice.com.
Cathy Reisenwitz is an editor at Young Voices and a D.C.-based writer and political commentator. She is editor-in-chief of Sex and the State, and her writing has appeared in Forbes, the Chicago Tribune, Reason magazine, Talking Points Memo, The Washington Examiner, and the Daily Caller.