Cover of December 27, 2010 Issue

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December 27, 2010 Issue

The editors and Alexander Cockburn on WikiLeaks, Aaron Houston on the youth movement for marijuana legalization

Cover art by: Cover design by Stephen Kling/Avenging Angels

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Tax Cuts Forever?

Republicans have spent their postelection victory lap fearmongering over the deficit. But now they've insisted all Bush tax cuts be extended, at great price to the national debt...


Liza Featherstone on the class action gender discrimination suit against Wal-Mart; John Nichols on net neutrality



Exchange: ‘Hit Piece’ by a ‘Takedown Artist’

Brooklyn, N.Y. Beneath its facade of unassailable erudition, David Wallace-Wells's article on Lewis Hyde ["The Pirate's Prophet," Nov. 15] bears all the markings of that most unserious of critical genres: the hit piece that doesn't even bother to get its facts right. Wallace-Wells seems determined to portray Hyde—erroneously, sneeringly—as some starry-eyed Romantic, and he isn't above misrepresenting the evidence to achieve his ends. As the author of a profile of Hyde on whose reporting Wallace-Wells sometimes relies, I feel a duty to point out one particularly egregious misrepresentation. Wallace-Wells writes that Hyde's new book, Common as Air, "peddles an attractive but confected fantasy" about the pre-modern English agrarian commons. To support this claim, he cites "what the historian Jackson Lears has called Hyde's 'prelapsarian vision,' one that is 'common to some Marxists, most romantics and all Christian nationalists: Once upon a time, people lived in harmony with their world and one another; then they fell from grace—prodded by capitalism, scientific rationality or original sin.'" These remarks by Lears appeared in a 1983 Nation review of Hyde's landmark book The Gift; they follow Lears's summary of a chapter in it devoted to a history of usury. Lears's remarks read: "Summarized quickly, this view of history seems threadbare. It is a prelapsarian vision common to some Marxists, [etc.]... The nostalgia pervading this view makes it an easy target for the slings and arrows of historians, but Hyde sidesteps the volleys. He is well aware of the corruption and cruelty of medieval Christianity, the vicious anti-Semitism that sometimes powered the opposition to usury, the oppressive restraints of tribal community." Lears's point is precisely that The Gift does not join in this widespread "prelapsarian vision." Wallace-Wells is a takedown artist, but takedown is an exacting business, and honesty and accuracy are its prerequisites. DANIEL B. SMITH     Washington, D.C. It was dismaying to find Lewis Hyde lumped in with copyleft extremists in David Wallace-Wells's review of Common as Air. Hyde's discussion of the founders' debates about what rights in literary property the government should grant makes a refreshing change from contemporary "copyright wars" rhetoric imbued with a strain of cheap moralism in which Wallace-Wells participates. Hyde points out that the founders sought pragmatic policies that could encourage the making and circulation of culture, always bearing in mind the social costs of monopoly. Wallace-Wells appears commendably interested in keeping culture lively, underneath all that hectic flourishing of his liberal arts education. But while noting grudgingly that Hyde doesn't "denounce copyright writ broadly or...advocate for the abolition of intellectual property entirely," he charges that "these gestures are accommodationist rather than principled" and urges readers to explore fair use within copyright as an alternative to rejectionism. Hyde has done just that, as an active contributor to three projects to create codes of best practices in fair use that we run at American University (centerfor, for online video creators, media literacy teachers and poets (the last one is forthcoming). Fair use is only one of the structural features of copyright that constrain monopoly, including term limitation, the distinction between idea and expression, and users' rights to resell their purchases. If the framers' vision is to be realized, these must be reinvigorated, while recent disfiguring additions to the law, such as proliferating statutory damages, are reconsidered. Far from being a disguised call to abolish copyright, Common as Air is an ideological blueprint for returning this important body of law to its proper place. PATRICIA AUFDERHEIDE PETER JASZI     Cambridge, Mass. In Common as Air, Lewis Hyde makes just the sort of argument American society needs right now: an argument about the "mixing of private sovereignty and public service," about how to create "a social market, one constrained by moral concerns." With respect to intellectual property—and virtually every other kind—the balance between public and private has been badly skewed in recent decades, an imbalance driven largely by corporate propaganda and lobbying. With unshowy erudition and analytical scruple, Hyde sets this development in historical and philosophical perspective, at the same time acknowledging that "if there is no [intellectual property], there is no way to make money and thus...o incentive to produce," so that "legally bestowed exclusive rights" can "actually enrich the commons." Hyde's ingenuity and nuance were unfortunately lost on David Wallace-Wells, in whose view Hyde is a romantic-anarchist buccaneer, a giddy celebrant of cultural "piracy," advocating "the plundering of culture," eager to "deprive artists of their right to profit from their work" in order to "make that work available to others," determined to "obliterate ownership to preserve access." Blinded by a "fundamental antipathy to the market," Hyde ignores the need of "those working in the arts to secure their livelihood from that work" and forgets that "to support culture we must find ways to support those who make it." Hyde and his fellow "digital Maoists" even want artists to refuse "royalty payments and song-writing credits." None of this is true; Hyde says the opposite, clearly and often. Common as Air is as cogent and eloquent a meditation on the sorry state of cultural commerce in America as anyone could hope for. One might have expected uncomprehending jeers in Reason or Wired, but not in The Nation. GEORGE SCIALABBA     Wallace-Wells Replies New York City Daniel B. Smith is right to point out that Jackson Lears was admiring in his 1983 review of The Gift, and that Lears was careful to argue, in it, that Hyde was too nimble a thinker to succumb to the charms of a "prelapsarian vision," even if his worldview resembled it in its broad outlines. I disagree that Hyde avoided succumbing, but that context should certainly have been made clear, and I apologize for the mistake, both to Hyde and to Lears. I've been heartened to read the heated response to my review of Common as Air, in these letters and elsewhere, because I share with Hyde and many of his comrades a sense that the health and well-being of culture is under new threat in our shape-shifting marketplace. Hyde is not as naïvely utopian as some of the free culture champions—he acknowledges the legitimacy of pragmatic objections to a truly "free" regime of cultural ownership—but he shares with the most radical of them a problematic, collectivist ideal: a guiding belief that "art and ideas, unlike land or houses, belong by nature to a cultural commons, open to all" and that "if the monopoly privileges that we've granted to 'content providers' stand in the way of" the self-erasing participatory cultural regime he calls "true citizenship," "then the privileges should be called into question." But a campaign to defend culture should not begin from first principles that question the status of creative work as intellectual property, encourage artists and writers to provide their labor at no cost out of distaste for the market or undermine their ability to profit from that labor. If we truly believe in the value of artistic work, we must find ways to reward it, and sustain those engaged in it, rather than impoverishing culture in order to make it "free." Not all members of the free culture movement share all of these perverse impulses; as I wrote previously, the movement is a loose alliance that includes anarchistic hackers, bottom-line businessmen and entrepreneurs, and self-styled iconoclasts in music, writing and art, some of them more reckless in their advocacy than others. But their common cause, promoting cultural production and exchange outside the marketplace from which we draw our daily bread, amounts to little more than a quixotic resistance to those market forces arrayed against culture. This campaign does not constitute a true battle against those same forces so much as a principled capitulation to them. DAVID WALLACE-WELLS Read More



Questions for the Drug Czar

Sasha Abramsky recently spoke by phone with Gil Kerlikowske, director of the Office of National Drug Control Policy, about prospects for drug reform in America. You can also read the full transcript or listen to a podcast of the conversation. There is a lot of discussion about the spiraling cost of the drug war and a lot of evidence that attitudes on the issue are changing. Where is the American discourse on drugs heading? We have to help people understand there are very cost-effective, basic strategies that can be effective. We don't have to throw up our hands and say the war on drugs has failed and therefore we have to go for legalization. We should look at these other prevention and treatment issues. There's the president's budget request for additional funding for prevention: science-based, evidence-based practices, additional funds for treatment. Talking about addiction as a disease. Recognizing that treatment is a part of primary healthcare. How do you bring conservative critics along for this ride? Some conservative critics are already there. They recognize and will tell you that merely trying to make arrests, make seizures, trying to incarcerate, is not a particularly smart way of addressing the drug problem. Every state is looking at how to reduce their prison population, their criminal justice costs, and at the same time keep their communities safe. What programs do you think are particularly effective, and how can they become better integrated into the criminal justice system? Just like all bureaucracies, the criminal justice system can move slowly. But drug courts have proved effective—they started with one twenty-one years ago, and there're now about 2,500 around the country. Intensive supervision of people who have been arrested and are out on bond or on parole or probation. The Drug Market Initiative, being tested in [nearly thirty] cities, led by John Jay College, is worth looking at, although that is still to be evaluated. It's a pre-arrest diversion: rather than arrest someone and take them out of their neighborhood in the back seat of a police car, they are asked to come to a voluntary meeting where the prosecutor and the police show evidence and ask the person to make a choice about whether they'd like to get help. As you expand these programs, what is your measure of success? Reducing the number of deaths and the number of people who come into emergency rooms as a result of drugs is important. It's not only very high; it's very costly. And we've set some pretty ambitious goals over the next five years for decreasing the number of young people who engage in drug use. That'll be important. Then, of course, there are the other, more intangible things, because the drug issue is so intertwined with dropout rates from school, healthcare costs, and a prepared and educated workforce. Read More

The Wachovia Whistleblower

Martin Woods had become an expert at spotting dirty money swilling around the banking system by the time he discovered his own employer—one of America's leading banks—was helping to launder the profits of drug-dealing in Mexico. Woods, from Liverpool, England, had become—as he puts it—"Dick Whittington, heading south to London, seeking fame and fortune." He worked in law enforcement for eighteen years, first as an officer and detective with the London Metropolitan Police's drug squad and then as a fraud expert with the National Crime Squad, equivalent to the FBI. For the latter, he worked on the British end of the famous Bank of New York money-laundering scandal in the late 1990s. In 2005 he joined Wachovia Bank as a money laundering reporting officer. Woods filed his first serious alerts during the 2006 Lebanon war, following up reports that Wachovia accounts were being used by Hezbollah. To his surprise, he was reprimanded for his attempts to freeze the suspect accounts. Later that year, he identified "a number of suspicious transactions" relating to Mexican casas de cambio (currency exchanges). There were deposits of traveler's checks with sequential numbers for large amounts of money—more than any innocent person would need—with inadequate or no identity information on them, and what seemed to a trained eye to be dubious signatures. Woods issued a series of "suspicious activity reports" (SARs) urging the blockage of named parties and large series of sequentially numbered traveler's checks from Mexico. To his amazement, one senior US manager in the Miami office, at which Latin American business was centered, called the reports "defensive and undeserved." Woods, as he puts it, "came under pressure from the business to change to develop a better understanding of Mexico." He was told to stop asking questions and to cease blocking suspicious transactions. "I said, 'I don't need to read up on Mexico. My interests are drug trafficking and money laundering.'" As it turns out, his instincts were exactly right. On April 10, 2006, soldiers from the Mexican military found 128 cases packed with 5.7 tons of cocaine, valued at $100 million, aboard a jet that had just arrived in the port city of Ciudad del Carmen. A twenty-two-month investigation by agents from the DEA, the IRS and others further revealed that the smugglers had bought the plane with money they had laundered through Wachovia. Between 2004 and 2007, the investigation found, billions of dollars in wire transfers, traveler's checks and bulk cash shipments had been funneled through Mexican exchanges into Wachovia accounts. On March 12 of this year, in a case filed by US Attorneys in Miami, the Justice Department charged Wachovia with the largest violation of the Bank Secrecy Act in US history. Five days later Wells Fargo—which purchased Wachovia during the 2008 crash for $12.7 billion, with the help of $25 billion in US taxpayer money—agreed to pay federal authorities $160 million. The settlement included a $110 million forfeiture representing "proceeds of illegal narcotics sales" and a $50 million fine for failing to apply the necessary antilaundering strictures to the transfer of a staggering $378.4 billion from Mexican casas de cambio (the money laundered through Wachovia was used to ship twenty tons of cocaine). In the early months of the investigation, Woods made contact with DEA officials through the US Embassy in London, after which the Federal Reserve and Office of the Comptroller of Currency, as Woods puts it, "spent a lot of time examining the SARs." In July 2007—while Woods "continued to face confrontation with US business colleagues"—about ten of Wachovia's casa de cambio clients stopped sending traveler's checks to London. "It appeared obvious they had been tipped off, now that the feds were on Wachovia's trail"—a suspicion he reported formally to the bank in May 2008. Instead of launching its own investigation, Wachovia hung Woods out to dry. In August 2008 the bank invoked disciplinary proceedings: serving a discipline letter and scheduling a hearing for alleged professional misconduct. A stinging reprimand claimed that Woods's actions could expose the bank to "potential regulatory jeopardy" and even "large fines." After bouts of illness, psychiatric counseling and an appeal to the Financial Services Agency in London under whistleblower protection laws, in December 2008 Woods filed a suit for harassment and detrimental treatment. The bank settled in May 2009 with an undisclosed payment. Woods was further vindicated by Wachovia's admission of failure in Miami, and by John Dugan, then comptroller of the currency for the US Treasury Department. In a letter dated March 19, Dugan told Woods he was "writing to personally recognize and express my appreciation for the role that you played in the actions brought against Wachovia Bank.... Without the efforts of individuals like you, actions such as the ones taken against Wachovia would not be possible." Despite his vindication, Woods—who now runs a consultancy that counsels banks on the dangers of laundering criminal money—remains bitter about the settlement of the Wachovia case, which amounted to a tiny fraction of the $12.3 billion the bank raked in last year. "All the law enforcement people wanted to see this come to trial," he says. "But no one goes to jail. In fact, everyone involved has either been promoted or gone to a better job at other banks. What kind of message does this give to the cartels and launderers? What does the settlement do to fight the cartels? Nothing.... Where's the risk? There is none—there is only an upside." Wachovia, it seems, had made this calculation quickly. "As early as 2004," the bank admitted in court, it "understood the risk." The alarm had been initially raised in London—and Wachovia had done all it could not to heed the whistleblower. Read More

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