Life’s two certainties (being sold out by the Swiss may be one of them)
As yesterday’s New York Times reports. Lost in the universal focus on the credit crisis, we have seen a somewhat troubling change taking place in Switzerland’s longtime bank secrecy laws.
Switzerland’s tax authorities, under pressure from a growing United States investigation into the Swiss bank giant UBS, are expected to hand over confidential data on wealthy American clients of UBS to the Justice Department, two people briefed on the matter said Tuesday.
The move would represent a significant shift in Switzerland’s banking secrecy laws, whose tradition dates to the Middle Ages.
Swiss neutrality (which is irritable to some) and stability has enabled its banking sector to become a source of prosperity for the nation. Reasonable exceptions to their secrecy laws for actual criminal activity should be allowed, but forcing banks to share private information on its clients merely for ’suspicion’ of tax evasion (something often disputable due to folks scrounging through the complicated tax code to reduce liability) seems quite dangerous. Especially since Swiss tax law has a different view of tax evasion than the U.S.
Swiss law makes disclosure of client data or names a crime unless the Swiss authorities think that the client has committed a serious crime, like money laundering or tax fraud. Unlike in the United States, Switzerland does not consider tax evasion to be a crime, though both countries have largely similar definitions of tax fraud.
And the Swiss are capitulating! In direct contradiction to their own legal view of tax evasion. Even though some may argue that this is moot because the U.S. does not consider a financial transaction as something beholden to privacy rights, the Swiss do–and besides, the U.S. view is wrong. A person’s financial records should be considered as sacred as their medical records.
Every citizen should maintain a healthy distrust of its government, after all, we have seen federal bureaucracies used to abuse the rights of citizens in many ways by many different regimes. If the government has the power to search through someone’s private financial dealings in another country solely on suspicion, where does our right to privacy stand? In terms of what constitutes law-breaking in one country as opposed to another, can the U.S. impose its view of a crime on another sovereign nation? Here, the U.S. Justice Department wants to see foreign bank records of thousands for the suspicion of committing an act NOT considered a crime in the country in which those records are held (I know, it happens).
Under pressure in recent months from the Justice Department, Switzerland’s justice ministry, taxing authority and banking regulator have adopted the view that some American clients of UBS may have committed tax fraud.
Note what this says, “Under pressure…[from the DOJ],” Swiss officials “have adopted the view…” that sees, contrary to their own law, these folks as criminals–because the DOJ ’suspects’ that they are.
So where does this lead? If the DOJ can pressure a foreign authority into ignoring its own legal views, where does this leave the U.S. on other issues, namely environmental and other laws that seek to usurp national sovereignty (there are a few)? What’s worse, under U.S. tax law, a U.S. citizen can still be taxed on income he earns outside of its borders and cannot renounce his citizenship solely to avoid taxes (how they’d find out who knows)–which is in my opinion just wrong–leaving you with the IRS and DOJ chasing down every red cent of your money they feel entitled to. Add to that some of the invasive banking provisions of the PATRIOT Act, and you have further intrusion into people’s lives and business by a government that knows no boundary. This is not a “pro-rich” or pro-tax cheat view, but a pro-civil rights and sovereignty view.
-GH
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A Bill of Rights to enshrine Net Neutrality?
After changing its mind about throttling Bittorrent traffic last month, Comcast has pulled a 180° on network neutrality. Last week, Comcast announced plans to publish a consumers’ “bill of rights and responsibilities,” detailing what subscribers should expect from their ISP and laying out network management best practices.
Naturally, the “Save the Internet” crowd isn’t satisfied with Comcast’s declaration. Being protocol-agnostic wasn’t enough for them, and neither is a consumer bill of rights. Customers will only be safe from evil ISPs, they say, with aggressive neutrality mandates like Rep. Markey’s proposed legislation.
On one hand, Comcast’s declaration is good news for Bittorrent users, and illustrates the responsiveness of market forces. And as a Comcast subscriber, I’m all for non-discriminatory networks. (Though I seed torrents quite rarely, it’s nice to know the option exists.)
But declaring a consumer “Bill of Rights” is a risky approach. Comcast is ceding key ground to interventionists by implicitly admitting that consumers have some inherent right to unfiltered, unmanaged networks. They don’t—despite what lawmakers like Byron Dorgan have suggested.
Essentially, Comcast is saying “If we have to be neutral, then so should all the other guys. Otherwise, they’re violating consumer rights.”
Yet some ISPs are making just the opposite argument, identifying the benefits of curbing bandwidth-intensive applications. In comments filed last week, Bell Canada contended that throttling is in the public interest, explaining that 95% of subscribers suffer on account of file sharing. GigaOM posted a story yesterday that lends further credence to claims that peer-to-peer traffic is a major culprit of network congestion.
Perhaps we shall see a competing bill of rights—one holding that customers have the right to affordable broadband access free from file sharing-induced slowdowns.
As bandwidth demand continues to grow, ISPs must make tough choices. Between price increases, bandwidth caps, and protocol discrimination, it is far from clear what’s best for the average user. If AT&T’s prediction is correct that in three years time, 20 typical households will consume as much bandwidth as the entire Internet does today, then carriers will need to invest billions upgrading both the backbone and last-mile. Discouraging investment through regulation poses a far greater threat to the Internet’s future than hypothetical neutrality violations.
If neutrality truly is as virtuous as its proponents suggest (and I suspect it is) then it will ultimately triumph on its own merits, without the need for government intervention. Still, exclusionary, proprietary networks may yet play an invaluable role in propelling connectivity, despite closed systems’ shortcomings. Who knows what will work out best in the long run? Market experimentation is the only way to find out.
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