Brazil Is the New America: How Brazil Offers Upward Mobility in a Collapsing World (47 page)

I would guess that many Americans and individuals who became wealthy in other advanced economies have gained experience that they could apply to building riches in Brazil.

One of the more successful adjustment strategies to the decline of British hegemony, to cite a less antique example than the fall of Rome, was simply getting out. Those who emigrated, in general, fared far better in realizing a share of higher economic growth in the countries where they resettled. The question is: Where would you go today? This is a question that has been complicated by history.

Notwithstanding improvements in transport technology over the twentieth century, it has grown a good deal more challenging to leave the fading hegemonic power than it was when the Royal Navy ruled the waves.

The U.S. government today—unlike the UK government then (and even now)—taxes citizens wherever in the world they choose to live. So long as you remain a citizen of the United States, you are exposed to U.S. tax liabilities anywhere on the planet.

Although it is not often noted, taxation by nationality is a form of financial repression designed to prevent you from escaping any deep crisis in the United States. In
This Time Is Different
, co-author Carmen Reinhart argues that there is a clear path of events during financial crises: governments first encourage credit expansion in turn leading to an increase in bad debt and panic. Then, governments nationalize the financial sector while revenues decrease, along with the economy across the board. In his May 24, 2010 blog, Martin Wolf comments on Reinhart's observations, asking: “What do governments do when it becomes expensive to borrow? They promise to mend their ways, of course. But, by now, it is often too late: nobody believes them. So they tell the central bank to buy their bonds, which starts a run on the currency. Pegged exchange rates collapse and floating exchange rates fall. Inflation becomes an imminent threat.”
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At that point, governments begin forcing the financial sector to hold their bonds, and financial repression sets in; these efforts ensure that
nobody
can easily move his or her money outside the jurisdiction of the government. That's why you want to get out sooner rather than later.

Historically, as Tainter tells us, in respect to the fall of Rome, where a complex society is experiencing decline, much less negative returns from complexity, the logical solution is not to make provision for the payment of confiscatory taxes; rather it is to move somewhere you may be able to escape them.

This, indeed, is what a growing number of native-born Americans have decided to do. Faced with financial repression at the hands of the Obama Administration, a silent migration has been underway in which Americans are fleeing the United States at a rate of 742 per hour.
Barron's
financial weekly is almost unique in having covered this important story. “The Great Escape” by Bob Adams, reports the astonishing statistic that 40 percent of young Americans between the ages of 18 and 24 are thinking of relocating outside the United States to seek economic opportunity. The IBOB-Zogby opinion survey firm found approximately five percent of Americans between age 25 and 34 are already planning to move.
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While this rush for the exits has apparently escaped the notice of the mainstream news media, it seems to have attracted President Obama's attention. He has decided to crack down with both administrative and legislative initiatives designed to make it more difficult for Americans to live abroad or even obtain passports for travel.

In the first instance, President Obama has sought to deprive Americans of their civil right to open bank accounts outside the United States. As a moment's reflection will confirm, it is practically impossible to live anywhere in the world at a decent standard of living without operating a bank account. In his rush to seal off the exits, Obama went for the jugular first seeking to prevent you from opening or maintaining a bank account outside the United States if you are an American. The Foreign Bank and Financial Account Report (FBAR) and Foreign Account Tax and Compliance Act (FACTA) impose onerous and costly regulatory mandates on foreign banks that have American customers. These heavy-handed regulations seem to have achieved their purpose in bullying most foreign banks and financial institutions into rejecting applications from, and closing accounts held, for United States citizens. Americans living abroad, and even those who have never lived in the United States, all reporting great difficulty in opening and maintaining bank accounts.
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President Obama's next line of attack in his drive to foreclose your potential lines of escape from the punishing tax hikes that lay in store was to make it more difficult to obtain a U.S. passport. Under President Obama, the application to attain a U.S. passport is to be complicated with an incredible array of niggling questions that even the most exacting citizen would be unlikely to complete in a “true and correct” fashion.

Among other things, you would be required to list your “mother's residence one year before your birth.” You would also be required to list your mother's place of employment at the time of your birth, as well as the dates of her employment, the name of her employer, and the employer's address. Good luck in assembling the information if your mother is dead.

But it gets more ridiculous. You also would be obliged to declare whether your mother received prenatal or postnatal medical care. If so, you would have to provide the name and address of the doctor who administered these procedures, along with the name of the hospital or other facility and the dates of your mother's appointments. You would also be requested to provide a description of “circumstances of your birth including the names (as well as address and phone number, if available) of persons present or in attendance at your birth.”
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The proposed form would also require you to list all of your residences inside and outside of the United States starting with your birth until the present as well as “all your current and former places of employment in the United States and abroad.” Equally, you'd be required to “list all schools that you attended inside and outside of the United States with the dates of school attendance.”

In addition, you would have to provide excruciating detail about your family, “living and deceased,” including the full name, place and date of birth, and date of citizenship for a whole array of your relatives.

Perhaps most astonishing of all is the proposal that would require you to specify details of your circumcision if you're a circumcised man. Mercifully, most of us cannot recall details of our circumcision, but that ignorance might provide President Obama's bureaucrats with the pretext they seem to be looking for to deny you a passport. In a step away from the rule of law and toward arbitrary, high-handed government, a passport application replete with demands for superfluous information in excruciating detail all but assures that your passport could be denied on grounds that you filed “an incomplete application.” Whether the “Passport Application From Hell” is proposed to take immediate effect in an election year, or perhaps delayed until later, it clearly betrays the Obama Administration's disposition to frustrate the ambitions of millions of Americans planning to relocate abroad.
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Not content to overload the passport application with a battery of pettifogging questions that would be impossible for the average person to answer, the Obama Administration has also sought
de jure
powers to cancel your passport, thus preventing your escape.

Apparently, with that in mind, the Obama Administration included a provision (section 40304): “revocation or denial of passport in case of certain unpaid taxes” in a highway bill. If this provision, which already passed the Senate by a vote of 74 to 22, sails through the House as well, you can add the United States to the list of countries like the former Soviet Union, North Korea, Cuba, and the former East Germany (all rightly called “police states”) that explicitly limited their citizens' right to travel. The bill would give the IRS the right to revoke your passport if they merely allege that you owe $50,000 or more in taxes (including interest and penalties that the IRS can multiply more or less at will).

If you want a good chuckle, try to imagine what Thomas Jefferson would have thought of these current events.

The obstacles to getting your money out, much less emigration from the United States, are far steeper than they were when Britain began to fade as the world's leading economy a century ago. Far from blocking UK citizens from leaving, the British authorities actually subsidized their passage in many cases. After World War I, discharged British soldiers were given assistance to emigrate as a veteran's benefit. Some 26,560 gained assisted passage to Canada, and almost 60,000 more steamed off to Australia and New Zealand, among other destinations. All told, the scheme to resettle decommissioned servicemen (and women) in overseas dominions accounted for 12 percent of the total number of British emigrants who settled in the Empire between 1919 and 1922.

The scheme for subsidized emigration assistance was widened significantly in 1922, when the British Parliament passed The Empire Settlement Act. This provided for training and financial assistance to emigrants.

The Act empowered the British secretary of state,

in association with the government of any part of His Majesty's Dominions, or with public authorities, or public or private organizations either in the United Kingdom or in any part of such Dominions, to formulate and co-operate in carrying out agreed schemes for affording joint assistance to suitable persons in the United Kingdom who intend to settle in any part of His Majesty's Overseas Dominions. An agreed scheme under this Act may be either (a) a development or land settlement scheme, or (b) a scheme for facilitating settlement in or migration to any part of His Majesty's Overseas Dominions by assistance with passages, initial allowances, training or otherwise.
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Part of the motivation for training emigrants as they left the UK was to counter criticism in Canada and Australia “about the number of ex-imperials who arrived physically unfit and unable to undertake employment of any kind,” as Stephen Constantine wrote in
Emigrants and Empire: British Settlement in the Dominions between the Wars.

Setting aside the option of subsidized relocation that hundreds of thousands of Britons enjoyed in moving to Australia, Canada, and New Zealand, many thousands of others took advantage of cultural and language similarities to migrate from the UK to the United States.

In some cases, trade unions in Britain helped to pay for members to emigrate to the United States. Union leaders thought that by reducing the number of workers available, they could increase wage rates of those still in the UK. Many of those receiving subsidized passage from unions had been blacklisted for militancy, and were therefore more comfortable moving outside the British Empire.

The English-speaking settlement countries were all attractive destinations where economic growth during the twentieth century significantly outpaced that in the UK. All told, nearly 1.5 million people left the UK. between 1919 and 1939 to settle in what were then known as the “white” settlement countries.

Today, the situation for an American or Canadian looking to migrate to a more promising venue is more complicated than it was when the leading candidates to enjoy rapid growth and future prosperity were the Anglo-Saxon settlement countries. All the countries that would now be candidates to realize substantially higher growth in the coming decades are less familiar to most North Americans than Australia, Canada, New Zealand, and the United States were to the British in the past century.

For reasons detailed throughout this book, I am convinced that Brazil will be the twenty-first century refuge for the American Dream. I believe that Brazil will be the United States of the twenty-first century, while the United States seems destined to become this century's Argentina.

Stefan Zweig suggested seven decades ago that Brazil is a country that should appeal to both the young and the old; to the young especially “because there is a future in this country . . . it is a good country for older people who've already seen much of this world and now long for quiet and privacy in a beautiful, peaceful landscape so that they can think about and evaluate their experience.”
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Beyond the many themes developed earlier in this book, there is yet another unorthodox market test of the most attractive destination if you seek to “outsource” yourself. As reported in “Brazil as an Outsourcing Destination,” “The Brazilian passport is the most expensive passport in the black market, as anyone can pass for a Brazilian. How this translates into the outsourcing arena: it makes the Brazilian culture a boundary-less one.”
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From previous chapters, we know Brazil has more arable land and fresh water than any other country. Brazil has the largest reserve of productive land still available in the world. The biggest producer of food in the world today, the United States, can't expand production because all the technology available to enhance production on existing acreage is already being employed by American farmers, and there are no new frontiers of arable land in the United States to exploit.

Likewise, in Europe, almost all useable land is already taken. India, Russia, and Canada, three other countries with large land areas, face climatic and geographic limitations to expanding farm production. China has 10 percent of all the agricultural area in the world, but also has to feed 20 percent of the human population. India, in spite of being the seventh-largest country on earth, is intensely crowded, with 328.59 persons per square kilometer—almost two and a half times the population density of China and 15 times that of Brazil.