Consent of the Governed

The Washington Times (Washington, DC), September 23, 2004 | Go to article overview

Consent of the Governed


Byline: Richard W. Rahn, SPECIAL TO THE WASHINGTON TIMES

If I told you the world is becoming both more and less democratic at the same time, you might reply, "how can that be?" Follow along and you shall see.

Do you believe "Governments are instituted among Men, deriving their just Powers from the Consent of the Governed?" It is not just the overwhelming majority of Americans who believe in this statement from the Declaration of Independence, but as evidenced by the global rise in democracy, a majority of the world's population now subscribe to this statement.

According to Freedom House, 65 percent of the world's people now live in at least limited democracies, where they are free or partially free, and their laws and rules are established by consent of the governed. Yet, at the same time, international organizations have arisen, which increasingly establish rules and regulations not consented to by the governed.

Just in tax and financial regulation, the organizations include entities such as the United Nations, the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD), and the Financial Action Task Force (FATF). In addition, national governments, such as the U.S. government, and governmental federations, such as the European Union, increasingly assert they have tax and financial regulatory powers over individuals and institutions that are neither their citizens nor residents.

All these organizations have gone well beyond their original mandates and exercise or try to exercise powers over institutions or individuals who neither directly nor indirectly voted to be so regulated.

For example, the Financial Action Task Force is an organization of international bureaucrats funded by 33 countries, with the goal of fighting financial crime. That sounds all well and good. FATF has no direct power, but it can put countries on its sanctions list, which discourages major banks from correspondent banking relations with the offending countries, which can mean financial death to small countries. If all the FATF requirements were justified on a reasonable cost-benefit basis and did not interfere with basic civil liberties, there would be no basis for complaint.

But many of their requirements, such as the "know your customer rules" (also promulgated by the IMF and U.S. government agencies), do not meet cost-benefit and civil liberties' tests and actually drive many low-income people around the globe out of the banking system. This leads to both a less safe and less economically prosperous world.

The EU has developed a "Savings Directive," demanding non-EU countries either financially report information to, or collect taxes for, EU governments. …

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