Thursday Reads: MKULTRA, Offshore Tax Havens, Mitt Romney’s WH Lunch, and a Tom Ricks Update

Good Morning!!

The CIA keeps hoping that their cold war mind control programs (of which there were many back in the 1950s and 1960s), usually referred to by the umbrella term Project MKultra, will disappear down the memory hole; but occasionally it still rears its ugly head.

Yesterday was one of those occasions. The New York Times published an article by Pulitzer Prize-winning investigative journalist James Risen about a new lawsuit by Eric and Nils Olson that accuses the CIA of covering up the real causes of their father Frank Olson’s death.

First, a little background. Frank Olson was a scientist who worked at Ft. Dietrich in Maryland on top-secret research related to Project MKultra. From Wikipedia:

Frank Olson was a senior U.S. microbiologist at Fort Detrick in Frederick, Maryland.[1] He was recruited from the University of Wisconsin, where his departmental advisor was Ira Baldwin, the civilian scientist who, along with industrial partners like George W. Merck and the U.S. military, established the U.S. bioweapons program in 1943, a time when interest in applying modern technology to warfare was at an all-time high.

His specific research work at Fort Detrick’s Special Operations Division has never been revealed, but he was clearly involved in biological weapons research. He had been assigned as a contact with the CIA’s Technical Services Staff, run by Dr. Sidney Gottlieb and his deputy Robert Lashbruck regarding experiments with bioweapons, toxins, and mind control drugs. This was the MKNAOMI – MKULTRA program, previously known as Project Artichoke and earlier, Project Bluebird, and justified based on claimed Soviet efforts to create a “Manchurian Candidate.” In 1953, as Deputy Acting Head of Special Operations for the CIA, Olson associated with Dr. William Sargant, investigating the use of psychoactive drugs at Britain’s Biological Warfare Centre at Porton Down. Hence, he was privy to the innermost secrets of the CIA interrogation and biowarfare programs.

In 1953, Olson was dosed with LSD without his knowledge at a retreat with his coworkers. Not surprisingly, he freaked out and became “paranoid.” A week later, he tried to resign his position, but his superiors sent him to New York City to see a psychiatrist involved with the CIA’s research, Harold Abramson. That night Olson supposedly committed suicide by jumping out of his 10th floor hotel room. Robert Lashbrook was in the room at the time, but claimed to have no idea how it happened.

Olson’s family had no idea what he had been working on or the details of his “accident.” All this came out after Congress began investigating the CIA’s insane mind control programs in the 1970s.

According to the the Risen article,

Eric and Nils Olson…said they plan to file a lawsuit in United States District Court here on Wednesday accusing the C.I.A. of covering up the truth about Mr. Olson’s death in 1953, one of the most infamous cases in the agency’s history.

During the intelligence reforms in the 1970s, the government gave the Olson family a financial settlement after the C.I.A. was forced to acknowledge that Mr. Olson had been given the hallucinogenic drug nine days before his death. President Gerald R. Ford met with the Olson family at the White House and apologized.

At the time, the government said Mr. Olson had killed himself by jumping out of a hotel window in Manhattan. But the Olsons came to believe that he had been murdered to keep him from talking about disturbing C.I.A. operations that he had uncovered.

Mr. Olson’s sons said that their past efforts to persuade the agency to open its files and provide them with more information had failed, and that a court challenge is the only way to find out the truth.

“The evidence points to a murder, and not a drug-induced suicide,” said Eric Olson, Frank Olson’s older son, who has devoted much of his life to investigating his father’s death. When the government told his family that his father had committed suicide, “one set of lies was replaced with another set of lies,” he said.

The Olson brothers claim that

In 1953, Mr. Olson traveled to Europe and visited biological and chemical weapons research facilities. The Olson family lawsuit alleges that during that trip, Mr. Olson witnessed extreme interrogations, some resulting in deaths, in which the C.I.A. experimented with biological agents that he had helped develop. Intelligence officials became suspicious of him when he seemed to have misgivings about what he had seen, the lawsuit contends. Eric Olson said Frank Olson also appeared to have deep misgivings about the use of biological weapons that was alleged in the Korean War.

According to Risen, it was after Olson expressed his “misgivings” that he was dosed with LSD. The lawsuit was filed yesterday afternoon.

Of course the CIA has never stopped developing methods of torture and mind control, as we learned during the Bush administration when the Abu Ghraib story broke and we began learning about the torture methods that were used on suspected terrorists and the CIA black sites in torture-friendly countries around the world.

I doubt if anything will come of this lawsuit, but I’m happy that Olson’s story and MKultra are back in the news. Perhaps a few people will read about it and wake up to the terrible things our government has been doing for decades and continues to do today.

In other news, the UK Guardian in cooperation with BBC Panorama and the International Consortium of Investigative Journalists (ICIJ) are in the process of publishing their research on Great Britain’s network of offshore tax havens. From the Guardian: Offshore secrets revealed: the shadowy side of a booming industry.

The existence of an extraordinary global network of sham company directors, most of them British, can be revealed.
The UK government claims such abuses were stamped out long ago, but a worldwide joint investigation by the Guardian, the BBC’s Panorama and the Washington-based International Consortium of Investigative Journalists (ICIJ) has uncovered a booming offshore industry that leaves the way open for both tax avoidance and the concealment of assets.

More than 21,500 companies have been identified using this group of 28 so-called nominee directors. The nominees play a key role in keeping secret hundreds of thousands of commercial transactions. They do so by selling their names for use on official company documents, using addresses in obscure locations all over the world.

This is not illegal under UK law, and sometimes nominee directors have a legitimate role. But our evidence suggests this particular group of directors only pretend to control the companies they put their names to.

Another article reveals the real identities behind Britain’s secret property deals. Another article reveals how BBC Panorama filmed undercover in offshore tax havens.

Someone should tell Mitt Romney to turn off Fox News and read the Guardian for the next few days.

Speaking of Mitt Romney, he’ll be having lunch with President Obama at the White House today. The Boston Globe reports:

At some point late on Thursday morning, Mitt Romney will be driven to the steps of the White House. He will get out of the car, be escorted to a room adjacent to the Oval Office, and sit down for lunch.

But rather than arriving as an occupant, the one-time presidential hopeful will be a guest in someone else’s house.

In a meeting that has been weeks in the making, Romney will join President Obama for private lunch at the White House just 23 days after he lost the election. It will be the first time they have met since the election, and it follows several weeks in which Romney has started to contemplate life outside of politics.

I wonder if they’ll discuss the “gifts” that Romney claims Obama gave to the “47 percent” in order to get elected? I’m still waiting for mine.

At the Atlantic, Jen Doll writes about What Obama and Romney’s Lunch Might Look Like — or Should.

Mitt Romney and Barack Obama are having lunch! Mitt Romney and Barack Obama are having lunch! This is exciting to Americans because we just spent several mortifying days with our several mortifying relatives eating hopefully decent turkey, and now Romney is in our last-week’s shoes, sort of, as he prepares to sit across a table in a strange kind of tradition, breaking bread with a man he not so long ago vowed to defeat. So, yes, that’s slightly uncomfortable, perhaps. Kind of like the opening montage on Project Runway when those people who got kicked off in the first few episodes are all in your face saying how they’re number one and they’re going to win this whole thing, just watch.

This lunch will happen Thursday. Press is not allowed, which seems advisable. The lunch will be held at the White House (Obama’s home turf advantage) Private Dining Room (“next to the Oval Office in the West Wing”), and is the fulfillment of a promise Obama made on election night, as we reminded you earlier, that the president would meet with his former opponent. This is their first meetup since the election, or as the White House statement puts it, “It will be the first opportunity they have had to visit since the election.” Visit, of course, is the euphemism your grandmother uses.

This lunch, between a couple of men who didn’t seem terribly keen on each other just a few weeks ago, brings up a host of modern-day etiquette questions. Here, we do our best to answer them.

Read the rest at the link. It’s very funny.

The Tom Ricks vs. Fox News story continued into a third day. Ricks was invited to appear on MSNBC and said no. According to the WaPo’s Melissa Henneberger, Ricks’ Fox News putdown was

no mere partisan smackdown; it was more subversive than that, and even more bracing. Because as it turns out, Ricks doesn’t want to play on either the red or the blue team, and has no loftier view of Obama-cheering MSNBC than of Obama-jeering Fox.

When I talked to him Tuesday, he said yeah, actually, he had had some other TV invites, but we shouldn’t waste too much time clicking around looking for his next appearance: “MSNBC invited me, but I said, ‘You’re just like Fox, but not as good at it.’ They wrote back and said, ‘Thank you for your candor.’”

Henneberger asked Ricks if he had planned his Fox News smackdown ahead of time.

“It just kind of tumbled out,” he said, after “this fathead comes on and says the pressure is increasing on the White House; no, they’re backing off! Now their spokesman says I apologized; they’re just making stuff up.”

He told the young woman who pre-interviewed him that he felt the whole issue had been exploited for political reasons, “but my impression was she’s new to the game and thought that because I’m pro-military — and I do consider myself pro-military,” he’d naturally agree with the Foxified narrative.

After three years in the archives researching “The Generals,” Ricks said, “I’m blinking my eyes,” in the TV lights, and taken aback at how much a little truth-telling can set a guy apart around here.

Ricks was even more harsh in an interview with HuffPo yesterday.

Ricks hammered the point home when speaking with HuffPost Live’s Ahmed Shihab-Eldin. In response to Clemente’s statement indicating that Ricks “apologized” after the interview, “ignored the anchor’s question,” and doesn’t have “the strength of character to [apologize] publicly,” Ricks had one thing to say: “that’s horseshit.”

He recounted his hallway conversations once again, which included complimenting Fox News host Bret Baier on his weight loss and telling a Fox News staffer he was tired. “It was not an apology for what was said at all,” he added.

When asked about his decision to turn down an invitation to appear on MSNBC, Ricks said, “Fox really seems to sell outrage as its product, and MSNBC doesn’t as much. But they both seem to me to be running political campaigns almost more than they are running news networks. So I don’t particularly like either. That said, I’m not a fan of TV news generally. I think it’s a lousy place to get your information from.”

That’s all I have for you today. Now it’s your turn. What are you reading and blogging about?

Afternoon Open Thread: Romney’s Fetus Disposal Bonanza and Other Horrors

This is going to be a quickie, because I have to go out pretty soon. I just posted a lot of this in a comment on the morning thread, but I was thinking I should do it as a post in case anyone wants to investigate further on some of the Romney news that has broken over the past few days.

Vanity Fair has a new article on Romney’s finances that is a must read: Where the Money Lives.

It’s all about Romney’s secrecy about his fortune and his many offshore holdings. He may actually have much more money than we know, because most of it is hidden in tax havens around the world. I repeat: this is a must read!

Then there’s Romney’s engineering of Bain Capital’s $75 million investment in Stericycle, a corporation that disposes of medical waste, including aborted fetuses. Bain and Romney “cleaned up” on that one. David Corn had an investigative piece on it at Mother Jones yesterday, but Sam Stein actually reported on it in January. It went nowhere then, but now it could catch on. When will the corporate media start reporting on it?

Well, here’s something at MSNBC on why we shouldn’t believe Romney’s claims that he wasn’t involved with Bain when the deal happened. David Corn addresses this at Mother Jones also.

Romney has never really left Bain. He still gets most of his income from Bain investments. Are we supposed to believe he has no say in their activities? Give me a break! Jezebel has a post on Romney’s lies about his investment in fetus disposal.

Until I read that Vanity Fair piece and started googling, I didn’t realize that Tagg Romney’s investment firm, Solamere, was originally a subsidiary of Alan Stanford’s Stanford Capital. Stanford is now in jail for the huge ponzi scheme he ran there.

Mitt and Tagg both claim they haven’t been investigated for their involvement with Stanford’s ponzi scheme, but in fact they are still being investigated.

Finally, another of Mitt’s cronies got into trouble today. Robert Diamond was forced to resign from Barclays today and then called off a planned fundraiser for Romney in London. More on this from Bloomberg.

It’s a big day for embarrassing Romney news. The Obama campaign and the DNC need to get on this stuff stat!

We Interrupt your Regularly Scheduled Programming for a Bit of Deprogramming

Uncle Barrack sez: Time to feed the Corporate Kitty

It’s time for my regular rant on how bad income inequality is for an economy.  I know that John Boenher wants to transfer all the resources in the country to so-called job creators and that CEO Hacks are trying to turn the public school system into a drone production unit, but as usual, I’m going to interrupt the messaging with empirical evidence.  I’m just one of those people that doesn’t believe any one unless they back it up with honest numbers. This time, I’m going to direct you to a study by the International Monetary Fund (IMF).  Just in case you don’t already know, the IMF  is not exactly a bastion of comrades-in-arms.  They’ve been soundly criticized by developing nations for exporting American-style capitalism wherever they go to provide help to struggling nations.  So, with that in mind, here’s a briefing on the study titled “Warning! Inequality May be Hazardous to your Health”.

Their introduction is so meaty that I’m going to leave it nearly wholesale for you before I return to editing more things for a development journal.  Finding ways to raise every one’s boat is my thing,  just in case you never noticed.

Many of us have been struck by the huge increase in income inequality in the United States in the past thirty years. The rich have gotten much richer, while just about everyone else has had very modest income growth.

Some dismiss inequality and focus instead on overall growth—arguing, in effect, that a rising tide lifts all boats. But assume we have a thousand boats representing all the households in the United States, with boat length proportional to family income. In the late 1970s, the average boat was a 12 foot canoe and the biggest yacht was 250 feet long. Thirty years later, the average boat is a slightly roomier 15 footer, while the biggest yacht, at over 1100 feet, would dwarf the Titanic! When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss.

In fact, inequality matters. And it matters in all corners of the globe. You need look no further than the role it might have played in the historic transformation underway in the Middle East.

The increase in U.S. income inequality in recent decades is strikingly similar to the increase in the 1920s. In both cases there was a boom in the financial sector, poor people borrowed a lot, and it all ended in huge financial crises. Did the recent financial crisis result somehow from the increase in inequality?

Some time ago, we became interested in long periods of high growth (“growth spells”) and what keeps them going. The initial thought was that sometimes crises happen when a “growth spell” comes to an end, as perhaps occurred with Japan in the 1990s.

We approached the problem as a medical researcher might think of life expectancy, looking at age, weight, gender, smoking habits, etc. We do something similar, looking for what might bring long “growth spells” to an end by focusing on factors like political institutions, health and education, macroeconomic instability, debt, trade openness, and so on.

Somewhat to our surprise, income inequality stood out in our analysis as a key driver of the duration of “growth spells”.

We found that high “growth spells” were much more likely to end in countries with less equal income distributions. The effect is large. For example, we estimate that closing, say, half the inequality gap between Latin America and emerging Asia would more than double the expected duration of a “growth spell”. Inequality seemed to make a big difference almost no matter what other variables were in the model or exactly how we defined a “growth spell”. Inequality is of course not the only thing that matters but, from our analysis, it clearly belongs in the “pantheon” of well-established growth factors such as the quality of political institutions or trade openness.

While income distribution within a given country is pretty stable most of the time, it sometimes moves a lot. In addition to the United States in recent decades, we’ve also seen changes in China and many other countries. Brazil reduced inequality significantly from the early 1990s through a focused set of transfer programs that have become a model for many around the world. A reduction of the magnitude achieved by Brazil could—albeit with uncertainty about the precise effect—increase the expected length of a typical “growth spell” by about 50 percent.

The upshot? It is a big mistake to separate analyses of growth and income distribution. A rising tide is still critical to lifting all boats. The implication of our analysis is that helping to raise the lowest boats may actually help to keep the tide rising!

That basically says that no one’s boat will really rise as much as it could unless all boats rise.  Intuitively, this makes sense because if you think about it, businesses need customers.  Poor customers just don’t buy as much unless you provide them with good incomes.  Unless you want make government the primary customer in an economy or you’re deluded into thinking business investment will ever be the major agent in GDP, you realize that household consumers are the true center of any market economy. Denying them incomes denies every one of incomes.  Just providing monies to the top 1 or 2 percent who are now likely to take their spending and investment any where on the planet is just delusional.   Actually, if you want some really good reading on that, I suggest you pick up the book  Tax Havens: How Globalization Really Works (Cornell Studies in Money).

In Tax Havens, Ronen Palan, Richard Murphy, and Christian Chavagneux provide an up-to-date evaluation of the role and function of tax havens in the global financial system-their history, inner workings, impact, extent, and enforcement. They make clear that while, individually, tax havens may appear insignificant, together they have a major impact on the global economy. Holding up to $13 trillion of personal wealth—the equivalent of the annual U.S. Gross National Product—and serving as the legal home of two million corporate entities and half of all international lending banks, tax havens also skew the distribution of globalization’s costs and benefits to the detriment of developing economies.

The first comprehensive account of these entities, this book challenges much of the conventional wisdom about tax havens. The authors reveal that, rather than operating at the margins of the world economy, tax havens are integral to it. More than simple conduits for tax avoidance and evasion, tax havens actually belong to the broad world of finance, to the business of managing the monetary resources of individuals, organizations, and countries. They have become among the most powerful instruments of globalization, one of the principal causes of global financial instability, and one of the large political issues of our times.

There’s not really much difference between the Gadhaffi family and the Koch brothers when it comes to where the money goes from exploiting national resources.  It’s also really no surprise that when you observe the countries that have the highest per capita incomes in the world that you find the world’s tax havens in the top tiers.  (Norway and the US are the only countries in the top ten that aren’t tax havens.)  Giving money to the richest folks in your country–the behavior of so-called banana republics–is detrimental to the economic health of that country in many ways.  It’s just another way that financial institutions and financial innovation has gutted the productive capability of many a country.

The original IMF study–released on April 8, 2011–is here.   I would like to point to the policy implications and suggestions section which makes going to the original study imperative.  Think about this when you listen to US banana republic President Obama speak tomorrow on the marvels of the catfood commission’s report.  Notice there are other studies cited in the policy suggestions.

There is nonetheless surely policy scope to improve income distribution without undermining incentives—perhaps even improving them—and thereby contribute to lengthening the duration of growth spells.

  • Better targeting of subsidies can be a win-win proposition, as with the reallocation of fiscal resources towards subsidies of goods that are consumed mainly by the poor,which can free up capacity to finance public infrastructure investment while better protecting the poor (Coady et al., 2010).
  • Active labor market policies to foster job-richer recoveries (ILO, 2011) may help to make recoveries more sustainable, especially as rising unemployment appears to be associated with deteriorations in the income distribution (Heathcote, Perri, and Violante, 2010).
  • Equality of opportunity can make for both more equal and more efficient outcomes (World Bank, 2005). For example, effective investments in health and education—human capital—may be able to square the circle of promoting durable growth and equity while avoiding shorter-run disincentive effects (Gupta et al., 1999). Such investments could strengthen the labor force‘s capacity to cope with new technologies (which may have contributed to more inequality in a number of cases), and thereby not only reduce inequality but also help sustain growth. They could also help countries address possible adverse distributional consequences of globalization and reinforce its growth benefits.
  • Some countries have managed through pro-poor policies to markedly reduce income inequality. Brazil, for example, after its market-oriented reforms of 1994 implemented active propoor distributional policies, notably, social assistance spending, that were critical to substantial reductions in poverty (Ravallion, 2009).
  • Well-designed progressive taxation and adequate bargaining power for labor can also be important in promoting equity, though with due attention to the need to avoid dual labor markets that perpetuate divisions between insiders and outsiders.

Yes, I bolded the sections that are in absolute contradiction with current US political groupthink.  I guess Obama just really isn’t that into development policy or research in economics.  Read them and weep for what could be.  Meanwhile, turn on the TV and go right back to the villagers promoting the idea that trickle up economics makes all of us better off, if you dare.