Since writing The International Man in 1976, I've had
quite a bit to say about internationalizing yourself. The book's subtitle was Making
the Most of Your Personal Freedom and Financial Opportunity Around the World;
but in going over past editions of our newsletters, I find that most of what
I've written in recent years has been about the financial aspects of
expatriation. Now seems a good time to confront the rest of the subject head
on – the reasons to very seriously consider leaving your home country, and to
do so now, not next year.
The International Man is long out of print, of course, and
only available through used bookstores and finders (including amazon.com).
While I'm obviously biased, it's actually still an excellent read, although
the world is a different place and I've learned a few things since 1976. The
book was directed to Americans, but found a fairly broad international market
– becoming, among other things, the biggest-selling book in the history of
Rhodesia. That, in and of itself, provides a bit of an object lesson in how
things can change, I think.
When I first went to Rhodesia in 1978, war was still raging, but I was
able to find an entrepreneurial local publisher, Gordon Graham. At the time,
there were still about 250,000 people of European extraction among the
6-million population. And it was clear most of them were eyeing the exits and
wondering where to go.
Most of the whites were native Africans, born to families that had been in
the country for generations, and they felt they had just as much right to be
there as the blacks. But when it comes to such things, it's not a question of
rights but of political power. Today there might be 5,000 whites still
hanging on. But making what they called "the chicken run" 30 years
ago was definitely the smart course. However, few of them had a "bolt
hole" elsewhere. In any event, my book flew off the shelves, as people
desperately scrambled for alternatives.
The problem – your problem – is that any country can turn into a 1970s
Rhodesia. Or a Russia in the '20s, Germany in the '30s, China in the '40s,
Cuba in the '50s, the Congo in the '60s, Vietnam in the '70s, Afghanistan in
the '80s, Bosnia in the '90s. These are just examples off the top of my head.
Only a fool tries to survive by acting like a vegetable, staying rooted to
one place, when the political and economic climate changes for the worse.
When the going gets tough, the mentally tough go elsewhere. The way your
forefathers once did – at least, if you live in an immigrant-built country
like the US, Canada, Australia, New Zealand, or Argentina.
I don't know exactly when I became interested in exploring other lands.
Maybe it began with reading Uncle Scrooge comics when I was a kid in the
‘50s. Uncle Scrooge (who is a fantastic character and one of the great heroes
of American literature) was always taking Donald Duck and his three nephews
off to an exotic clime for a high-adventure treasure hunt. Maybe it was when
I wanted to be a paleontologist and read about Roy Chapman Andrews (a model
for Indiana Jones) rooting for fossils in Mongolia. Or when I decided I'd
like archaeology better and read about Heinrich Schliemann discovering Troy.
But a couple of specific things really set the bit in my teeth.
One was when I was in Milan, looking to buy a Ferrari. The seller was a
guy I remember well, Viviano Corradini, who was actually an American. I asked
him why he was living in Italy. "You see this?" he said, as he
veered the car way into the opposite lane and back again a couple of times,
then slammed on the brakes, then accelerated – a wild little ride. "You
can't do this in the States. They'll throw you in jail. Here, you can do
anything you want!" He was right. After I bought the car we realized I
didn't have any plates, so he reached up into a closet and found some old New
Jersey plates. "Here. Use these." I did, no problem, for the next
six months, all over Europe. It gave me some practical reality about not
being controlled by other people's arbitrary rules.
Another was in Switzerland, when I was hanging around for about a month
with an ex-Foreign Legionnaire named Ron Schneeberger. He was planning to rob
the national bank of Haiti, figuring that Papa Doc had about $50 million in
negotiables sequestered there. That was a lot of money in those days. Ron
reasoned, quite correctly, that if you robbed the corner liquor store, you'd
get $50 and likely get killed. If you robbed an ordinary bank, you might get
$5,000. But if you hit a government… who was going to pursue you?
Of course the world in general – and absolutely, positively Europe – is a
bit more tightly wrapped now. And I don't endorse the idea of reckless
driving. Or of robbing national banks – at least not without the cover of
being an executive with Goldman Sachs…
But the point is that, at different times, there are places that are good
for doing certain things. And places where it is bad to be. Who wouldn't have
preferred to be in the USA, rather than the USSR, from 1920 to 1990? Ireland
was a dismal, depressing place for decades after WW2; then in the ‘90s it
blossomed. Africa was a very safe, prosperous, and enjoyable place before
about 1960, when it started to degenerate into a giant hellhole.
About every country on the planet has had its good times and its bad
times; that's one reason the original Baron Rothschild sent his sons to
several different ones. Some countries, like Russia, have been living at Hard
Times Central since day one; others, like the US, have had good times for a
long time.
A wise man, at least in my view, doesn't allow himself to be limited by an
accident of birth.
It's most unfortunate (for them, anyway) that most people have a peasant
mentality. They're idiotically indoctrinated into thinking that their country
is the best place in the world, simply because that's where they were born.
It makes sense in a way; their ancestors rarely ventured more than a day's
walk from the village where they were born. After all, there were stories of
dragons and demons over the hill. Things haven't changed much, except people
have exchanged the mud hut for a McMansion. But they've retained that
medieval serf worldview. And the CNN and BBC newscasts on their widescreens
only reinforce the notion that things are dangerous outside their borders;
they're probably even more scared than their primitive ancestors. Assuming
they watch anything beside sitcoms and sports.
It's certainly possible to be happy living your whole life in the place
you were born and grew up. But unless you were born a member of the lucky
sperm club, it's almost always suboptimal, and sometimes it can be
disastrous. I suspect now is one of those unhappy times.
We're of the opinion that the world at large, and the US in particular, is
heading into some seriously turbulent times. The diminution of personal and
financial freedom looks like a hyperbolic curve, at first with an almost
unnoticeable slope, then one that gets steeper and steeper, at an
accelerating rate. I think an excellent case can be made that the current
crisis is an inflexion point, beyond which it goes vertical. As one of
Obama's closest counselors (and he's a very scary guy) has said, "One
can't let a good crisis go to waste."
A crisis (and this will be a very real one) always draws exhortations from
the authorities to "unite" and "pull together" – which
usually boils down to following orders and turning in those who don't. People
will want, and will get, "strong leadership." This does not bode
well for libertarians, classical liberals, and free thinkers, in general.
As the crisis deepens, it's likely to be dangerous for someone who doesn't
agree with groupthink. Things are likely to be much mellower if you're living
somewhere they consider you a tourist, than to stay on your home turf where
questions will be asked if you don't join the hooting and panting chimpanzees
that will surround you. You can absolutely plan on unwelcome social pressure
in the years to come, especially as the wars expand.
Coincidental with this is going to be the near destruction of the US
dollar; I just don't see any realistic way around that eventuality at this
point. The consequences of that are going to be disastrous, but it's possible
to insulate yourself from many of them. The biggest problem, and also the one
most people just don't see, is political. There is almost no way you can
effectively insulate yourself if a government, and society as a whole, goes
crazy.
You might argue that really tough times in the US are a long shot; the US
is "different" from other countries. It's certainly true the US has
been particularly blessed for most of its existence, because it actually was
different. The problem is that what made the US different from every other
country – a Constitution that expressly limited the powers of the state, and
an explicit acceptance of property rights and the free market – has
evanesced. It's why I refer to it as the US, which is just another country,
rather than America, which was a unique and excellent concept.
In any event, I suggest you at least consider the possibility of
transplanting yourself, or at least start by transplanting some assets. Don't
look at it as a negative thing. The world is your oyster. Make the most of
it. This is directed not only at Americans, but at everybody, everywhere. It
just seems a little more urgent for Americans, as well as for Europeans, at
this point.
In many ways the world seemed to turn over a new leaf in the '80s. Not
just with the election of Reagan and Thatcher, but with the appearance of
many more like them, almost everywhere. Whether it's the "hundredth
monkey" hypothesis, or whether there really is such a thing as the
"spirit of the century," the majority of people tend to hold
similar views at the same time. It's strange. From about 1980-2000, all over
the world, tax rates went down, regulation was relaxed, markets were freed
up. The Soviet Union collapsed, apartheid in South Africa nonviolently
disappeared, New Zealand fired two-thirds of its government employees, China
liberalized. Even the constipated continents of Europe and South America
loosened up. It looked like freedom was in the ascendant. But it couldn't
last.
Now, certainly since September 11, 2001, the tenor of the world has
changed again – radically. And the negative new trend has been supercharged
by the financial crisis that began to unfold in 2007. Now practically
everywhere, much higher taxes, onerous new regulations, border controls, and
capital controls (to prevent the make-believe crime of money laundering),
among other things, are the new order. It seems as if the clock has been
turned back to the 1930s, but much worse, in that governments are much more
powerful. And I fear a redux of the 1940s is in store. The whole world acted
pretty much the same in the '30s and '40s as well, you'll recall.
One thing I think you can plan on is foreign exchange controls. A
government turns to FX controls during a currency crisis, to prevent its
citizens from swapping the local currency for something foreign –
transactions that would further weaken the local currency. FX controls, in
effect, force people to stay with a sinking ship. But they are politically
popular, for a number of reasons. They allow the government to "do
something" during a crisis. They appeal to the average yahoo, partly
because he doesn't travel abroad and tends to question the patriotism of
those who do. Only the rich (especially the "unpatriotic" ones)
have assets out of the country, and it's now time to eat the rich.
We're heading into a currency crisis for the record books, and I think you
can plan your life around some type of FX controls. If you don't get
significant assets out of your home country now, you may soon find it costly
and very difficult to do so. Already, very few foreign banks and brokerage
firms will take accounts from US persons. But although there are reporting
requirements, there's currently no law against Americans having overseas
accounts, and no laws against foreign banks and brokerage firms accepting
American business. Many institutions find that it's simply not worth the
aggravation and worry to deal with Americans.
At a bare minimum, you should have a meaningful amount of gold in a
foreign safe deposit box. In addition, you should own some foreign property,
preferably in a location where you would enjoy spending some time. These
things are currently not reportable, and it would be impractical for the
government to get you to repatriate that capital.
The ideal scenario, of course, is to have your main residence in one
country, your assets in another, your business in a third, and your
citizenship in a fourth. That isn't practical for most. But you can certainly
get assets abroad. And you may want to consider acquiring a second
citizenship, which can considerably expand your options. The
International Man has a lot on this topic. It's not necessary, and often
not even desirable, to establish official residency in the country where
you'd like to spend time, because that risks getting stuck in its tax system.
It's usually smarter just to leave every 90 days to renew your tourist visa
and not spend more than six months per year in any one country. That way
you'll be treated as a valued tourist, who should be courted, rather than as
a citizen, who can be milked like a cow.
Once you do acquire another passport, the next question is whether you
should renounce your US citizenship, which could give you huge tax and
regulatory benefits. As everyone knows, the US is one of the few countries in
the world that taxes its citizens regardless of where they may live –
although it must be said that other governments seem to be moving in this direction.
The problem with renouncing your US citizenship is that the US assesses
what amounts to an exit tax on Americans who do so.
Since 2004, any high-net-worth individual who renounces his citizenship is
automatically assumed to have done so for tax reasons. And any individual
deemed to have expatriated for tax reasons is deemed to have sold all his
assets at fair market value on his last day as a US citizen. And, if the
expatriate spends more than 120 days per year in the US, he can be taxed on
his worldwide income and potentially is subject to estate tax.
In the near future, however, even that option may not be feasible. So
let's plan ahead…
I wrote The International Man as a guide for those who
were looking for a place that could offer more of what they want. I can't
rewrite the book in this short report. But it's worth making a few
observations about the world in general, then about some areas and countries
in particular.
First, there may not actually be any one "best" place, simply
because you're dealing with the human animal, who's subject to all manner of
fears, hysteria, vices, and assorted aberrations. I don't know where Shangri-La
is located. Therefore, you want some degree of diversification, so you always
have a "Plan B" available.
Second, there are roughly 225 distinct political entities around the
world, and there are likely to be more as time goes on. There are advantages
to places that are unstable, poor, repressed, and backward, just as there are
disadvantages to places that are stable, rich, free, and advanced. A lot
depends on who you are and what you want to do. Try to keep an open mind.
Third, I don't think there's any doubt that the West – meaning North
America, Europe, Australia/New Zealand, and Japan – is in relative decline.
Meanwhile, places like China, India, and Vietnam are on the way up.
The reasons are simple. In the developing world, a worker earns between 1/5
and 1/30 what his counterpart does in the West. But he's just as smart, might
be even better educated, is likely to work twice as hard, and has less of an
attitude of entitlement. It may be true (but less and less) that the
developing country has less infrastructure. But now a number of them have
telecoms, roads, airports, and such that are among the world's newest and
best, while many of those in the West are falling apart. At the same time,
the general level of taxes and regulation tends to be much lower in
developing countries; that's a big reason why they're developing. Part of the
better social ambiance is reflected in people being free of debt; they may
not make much, but they save something like 10% to 20% of what they do make.
So, instead of a mountain of debt that must be paid off, there's a growing
pool of savings to be invested.
The days of automatically having the odds tilted in your favor simply
because you were born an American are coming to an end. By the end of this
century, wages will be more or less normalized the world over. Americans also
have had a huge advantage in speaking English, the world's most commonly
spoken language, its lingua franca, and the language of science, business,
aviation, entertainment, and other fields. But that advantage is also
diminishing, as almost every educated person now has English as a second
language. Most Americans have only English.
Negatives? Many of these places have large bureaucracies, as a legacy from
buying into various strains of socialism imported from Europe. There may not
be much regulation (of the type we have in the West), but there are still
plenty of forms that need to be processed and approved. In order to make
things happen, bribes must be paid. I've discussed the ethical implications
of paying bribes in the past, but suffice it to say that as developing
countries become freer and wealthier, bribery and general corruption will
likely diminish. At the same time, as the US becomes less free and wealthy,
bribery and general corruption will greatly increase.
I think it's incumbent upon any self-directed free man to go where he can
most fully realize himself. But where that is depends on who he is. And
sometimes happenstance plays a part. I'm reminded of one of my favorite
scenes in Casablanca. Claude Rains, as Renault the police inspector,
asks Bogart:
"Rick, how'd a guy like you ever wind up in Casablanca?"
"I came for the water."
"But there's no water in Casablanca – this place is a desert…"
"Yeah, I was misinformed."
Doug Casey is chairman of Casey Research and a highly sought-after speaker
on investments and the economy. At 2 p.m. EDT on Tuesday, April 30, you can
hear him discuss how to legally move your assets abroad in a special web
event, titled Internationalize Your Assets. Joining him will
be Euro Pacific Capital Chief Global Strategist and CEO Peter Schiff;
GoldSilver.com founder and owner Michael Maloney; World Money Analyst
Editor Kevin Brekke; and Casey Research Managing Director David Galland.
Get the
details and register here.
