The Heart of Darkness (Unregulated) Traders

As mentioned earlier I have taken the term “Heart of Darkness” from Joseph Conrad’s book about exploitative trade and the human condition. Both imperial London and darkest Africa and the heart of a rogue trader were all portrayed as utterly lawless and as Kurt the trader looks into his souls as he dies he cries “the horror, the horror”. The most lawless aspects of trade are still “the horror” and are in a sense “the throne of Satan”. Stubbornly ineradicable they seem to ally with each other in strange and convoluted configurations. The drugs trade is closely tied in with the arms trade with drugs for arms swaps being commonplace. And drug traders and the sex trade have long been in symbiosis with prostitutes being paid with heroin or cocaine. The slave trade and the sex trade are linked in obvious ways and the illegal wildlife trade uses routes pioneered by drug traffickers.

To this we need to add illegal immigration, smuggling of refugees, piracy, the trade in stolen artwork, the trade in illegal cultural artifacts and the trade in illegal foods such as those from protected species or rhinoceros horn aphrodisiacs. Add to this the trade in counterfeit money and documents and the illegal copying of CD’s and software and brand-name goods and the lawless areas of trade are vast. If currency trading is considered as a lawless area of trade, which I think it should be, then over 95% of international trade by volume is totally unregulated and outside government control. That is a very substantial “heart” for darkness to have. Perhaps only a few hundred thousand people or even less, are major players in these trades, but they dominate the world’s finances.

Some may argue that it is unfair to label world trade by the activity of these sectors. If these sectors were only say 5% of world trade that would be a fair comment. However they are 95% of world trade by volume and that is quite a difference. Billions of dollars worth of drugs and firearms are traded each day. In Australia marijuana is said to be the third largest value cash crop after wheat and sugar. The sex trade accounts for up to 50% of all Internet traffic. The child sex industry is such a money spinner in Asia that the International Labor Organization has estimated that in Thailand alone, it is worth between 14 and 16 percent of the country's GDP. The Council of Europe estimates the United States child pornography market alone is worth around $3 billion a year.  The value of counterfeit goods such as pirate CD’s and software could be as high as $200 billion dollars. But by far the largest area of unregulated trade is currency trading.

With currency trading we have reached a point where money is a commodity in its own right and no longer represents the value of goods or services. Currency trading is buying and selling money. As such it is exchanging money for money and produces nothing. No-one is taught a lesson in a school, no-one gets a single ballpoint pen or a matchstick from it. There is no product and there is no service. It is just buying euros and selling Australian dollars. Nothing is improved, serviced or gained. This massive market, without any substantial product, is the largest market of all. Some estimates have currency trading runs at 1.5 trillion dollars a day world-wide. That is seven times the size of the Strike Fighter contract mentioned earlier and ten times the size of the annual GDP of the poorest 43 nations – and it is a DAILY figure and it is completely unregulated.

Currency trading is no longer just taking your dollars at the airport and turning them into yen or deutschmarks. It is an investment activity where the future value of a currency is speculated on. A currency trader takes a “position” in market with a deposit that varies in size between 1% and 10% of the amount. This creates leverage so that a person with 1 million dollars in hand can bid for a contract worth between 10 million and 100 million dollars. This contract involves a future payment, perhaps that in six months time she will buy 20 million dollars worth of euro at 89 cents USD. Her  million dollar deposit secures this “contract” for 20 million.  If she holds onto that contract then in six months time the 19 million dollar balance will be due and she will get her euros. However generally well before then the contract is then sold to someone else who thinks 89c is a good price for the euro. The balance is generally not paid by the original purchaser.  This buying and selling of contracts to buy money is very lucrative because profits are made on large sums of money that are trade in but not really paid for or owned. The one million deposit secures a 20 million contract which is then on-sold at say 0.5% margin on the 20 million,  which translates to 10% on the original one million which is all the money the trader really put at risk. Apparently profits of 1% per day are fairly normal. That is over 400% per year return on investment. So many major institutions such as banks and finance companies are into currency trading, hence the huge volume of the “hedge funds” as they are called. (However this highly unregulated market is like a swimming pool full of sharks and some investors can “lose and arm and a leg” very quickly.)

Currency trading is not a benign activity - it is high risk. On top of this it has high social impact and nations as large as the United Kingdom have felt its impact. It was responsible for the Asian currency crisis of 1997-8 and has caused untold economic woes for smaller nations. Even nations with good stable economies such as Australia can have trouble getting fair value for their currency versus the US dollar. Currency trading is weighted in favor of the US because that is the currency that the main traders hold their own money in. They are hardly likely to devalue their own money.

The less than benign results of unregulated trade are not limited to massive multinationals. CNBC this morning showed a segment on tin mining in Indonesia where one of the world’s major tin producers (Timah) had lost 90% of its profits to illegal tin miners panning in and around its leases. The illegal miners of course did not pay tax or royalties and thus could sell their tin at a discounted price. The mining company had been forced to close 164 of its mines and could shut down completely by the end of the year. The locals argued that it was their traditional land and that the company was predatory in its practices. The local government, benefiting from provincial autonomy, was turning a blind eye. At the time of writing Timah is considering merging with a major nickel producer.

This “revenge of the underdogs” is not confined to tin mining but also embraces the software and music piracy industry, and the imitation of brand name goods by counterfeiters. These illegal traders do not pay taxes or royalties or support programmers or design the products they counterfeit. They also do not have to develop marketing and promotional strategies for their goods, as this is done by the firms that they so slavishly copy! Operating in secrecy and under harsh conditions they churn out cheap goods that sell in stalls all over Asia and seriously undermine the profits of major forms. Yet many who buy such goods do so out of deep dislike for what they perceive to be exploitative pricing and predatory practices of the foreign multi-nationals. Thus, as in the case of the tin-mining company the perception of one kind of predatory trade results in a an equally predatory counter-measure. Or as Isaac Newton found, “Every action results in an equal and opposite reaction”.

The socially deleterious effects of the drug trade, sex trade and other areas of unregulated trade are so obvious as to hardly need any comment. These are violent, lawless but highly lucrative areas of human activity. They are so massive that they have caused changes in the banking sector with many smaller nations openly offering confidential bank accounts to launder the huge volumes of money from crime or to “protect assets” from creditors, wives and governments wanting some tax money. High standards of encryption plus electronic funds transfer between jurisdictions, plus numerous nations becoming tax havens plus banks and trusts set up for “asset protection” make money laundering and tax evasion incredibly easy. Using the Internet, within half a day a reasonably wealthy person can set up a corporation in the Bahamas, and an anonymous bank account with an obliging bank such as St. George’s Trust and then move all their money out of the reach of their national government – without leaving their office! If this bank has Cirrus access then the money in the Bahamas can be withdrawn from a local ATM in the country of residence in their local currency! Thus they have all the convenience of an ATM account plus the advantages of zero taxation. Now if I know this, then the wealthy and the criminals and the rogue traders do as well. Very few people are going to keep their money in a local bank where it is accessible to the taxman when it is this childishly simple to completely evade tax.

The implications of rogue trade for the tax base of nation-states is staggering. The vast bulk of tax is collected from those people that the government can coerce into paying it and this does not include drug traffickers or the very rich, who now use income protection schemes. Apparently around 85% of income tax in Australia is paid by individuals - on PAYE (pay-as-you earn) tax taken straight from wages. About another ten percent is paid by the self-employed small to medium sized businesses. Less than five percent of income tax collected comes from the wealthy, from large corporations or from multi-national corporations. Australia’s richest man, the billionaire Kerry Packer paid just $30 in income tax one year and the Tax Office lost the case attempting to get more from him! This large-scale evasion of income tax is why many governments have introduced the regressive “GST/VAT” on goods and services so that at least some revenue can be generated. Another frequently touted proposal is a transactions tax on each financial transaction.

A rather interesting but controversial book called the Sovereign Individual by the eccentric but often accurate Lord Rees-Moggs, a former editor of the Financial Times, predicts the total collapse of income tax and of national governments in the near future. According to Rees-Moggs wealthy individuals will be able to choose where to live and which state to pay taxes to so that countries will be in the market for the tax dollars of the very wealthy and be subject to their whims and their demands for security. These elite will be the “sovereign individuals” and will live like princes. When this happens there will be a substantial shift in power away from the nation states to trans-national individuals and corporations. In effect the rule of law, which is held by nation states, will not apply to these people and they will be unaccountable and law-less.

The nation-state is becoming increasingly difficult to defend from predatory individuals and rogue traders. Nick Leeson, a single rogue trader operating from Singapore sunk Barings Bank and much of the funds of the Queen of England. Currency traders demolished the financial fortunes of Thailand,  Korea, Indonesia and Malaysia. Nations cannot defend their currencies, their major financial institutions or even the fortunes of their monarchs. The big stick, that nations are supposed to be able to wield in their defense, is getting less and less effective and more and more expensive. A few terrorists armed with $20 worth of box cutters have provoked a military response that the US congress has allocated at least $40 billion to. This makes the cost of weapons of national defense two billion times the cost of the weapons of attacking the nation. When the cost of responding to terror is a million or a billion times the cost of inflicting the damage then the nation state is vulnerable indeed. The USA is also contemplating a missile defense shield to counter missiles that in all probability will never be launched, at least not by North Korea. This is an incredibly expensive response to a quite unlikely threat. In my own country of Australia the “people smuggling” of Afghan refugees in seriously leaky boats is causing a protracted and very expensive crisis involving the defense of our borders.  In the Philippines there are over 90 private armies and four main terrorist groups and innumerable kidnapping gangs. The state is quite simply unable to impose law and order.  Many nation states cannot tax their wealthy citizens or catch their most dangerous criminals or enforce their borders; also trade agreements are stopping national governments from being able to police their fisheries or stop plunder by multi-national firms. Even the most hallowed institutions of the most powerful nations can be easily destroyed and governments of smaller nations are toppled by the actions of foreign intelligence agencies that make a mockery of national sovereignty.  If it becomes obvious that national governments cannot effectively protect their citizens, tax the wealthy, defend their currencies or impose law and order then they will be perceived as seriously weakened institutions.

I am not proclaiming the demise of the nation-state just yet. Many nations such as Israel, Japan, the UK and China have long national histories and traditions and deep psychic roots in their national identity and it is unlikely that they will vanish overnight or at all. The more likely scenario is a blurring of boundaries so that national borders are less like fences or castle walls keeping invaders out and more like membranes containing a living cell letting the “nutrients” in and deciding who or what to link to. To press the analogy a bit further these living national cells could be integrated into a larger regional grouping or “organ” that becomes part of the global “body” of humanity.

In Europe, since Maastricht, and since the independence of Scotland, the disintegration of Yugoslavia and the advent of the Euro we are seeing just that. Europe is becoming a jig-saw puzzle of nations with very permeable boundaries held together in a large regional grouping that has a common currency, which allows it to participate strongly in the global economy. This trend seems to also be apparent in the North American Free Trade Agreement and the recently announced and massive China & South-East Asia Free Trade Agreement and the freedom of travel and commerce between certain Muslim nations.

 I am no futurist and I have no idea what the world will look like in the long term. However it is quite obvious that the nation-state is a weakening idea and that nationalism has been partially replaced (or perhaps augmented) by the strengthening ideas of regionalism and globalism. As nations have weakened and become virtually indefensible both physically and intellectually, trade has increased and so interestingly, has the power of the major monotheistic religions. Christianity, Judaism and Islam have all been greatly strengthened globally over the last 50 years. If current trends continue I think we are headed for a stand-off between increasingly powerful and lawless traders and the dominant world religions.

Just how vulnerable governments can be to crooked businessmen can be seen from the Nigerian Letter Scam. The Australian Institute of Criminology media release of July 1999 warns of the risks of the Nigerian scam: and states that it has taken some billions of dollars and seventy-two lives of people seeking to recover their money. I first became aware of it when I received an email asking me if I would mind receiving $45 million in fraudulently obtained Nigerian oil funds and laundering them through my bank account as a “trusted and confidential businessman”. Of course I immediately sent the email to the Australian federal police and received a standardized reply. Apparently it is an extremely common scam. Businessmen who respond are asked to send $50,000 to “release the oil funds” and of course they never see their $50,000 again! Those who have gone to Nigeria to try and get back their money are killed. This scam has been going on for years, and is known by all governments, including that of Nigeria. So a multi-billion dollar scam that involves seventy-two murders can run for years with the by-now wealthy perpetrators not being brought to justice.

Of course, as Christians we know they will be brought to final justice on Judgment Day, but until then the world is almost completely powerless to touch the 95+% of international trade that lies outside the reach of the law. Facts like these lead many to question some of the basic theological assumptions that we evangelicals live by. Raised in the West, during a period of relative prosperity, peace and justice we assume a reasonably just and lawful world where people get what they deserve. The prosperity and untouchability of the heart of darkness traders seems to mock this. The huge costs of bringing the Mafia to justice in Italy or the drug lords to justice in Colombia or Osama Bin Laden to justice in Afghanistan seem to almost flaunt the power of Heaven. Why are these people so hard to capture if God is against them? Why do they prosper at all? When so many honest Christian people poor? Why are some Christians even starving - including many Christians in Africa and Asia? Why are the wicked are so rich? Why cannot God bless His own? Here are some of the answers as they occur to me:

1.       God does not resort to bribery in order to get us to follow Him. If every Christian became rich after conversion then people would soon all become Christians. However this would result in God being followed by the purely materialistic, by people who loved him as sycophants and phonies, by those who just wanted the presents and not the giver. This is not his way. He tests our love with trials, sufferings and apparent contradictions to get us to truly trust and love Him. Many of the apparent contradictions involve the issue of prosperity.

2.       The New Testament makes it quite clear that the whole world lies under the dominion of  “powers and principalities in the heavenly realms” and the apostle John goes so far as to say “the whole world lies under the power of the evil one” (1 John 5:18,19). Jesus did not deny Satan’s power to give him the kingdoms of this world and all their glory; He just denied that Satan was worth worshipping in order to gain them (Matthew 4:8-10, Luke 4:5-8). The power of Satan means that certain areas are heavily protected by evil powers and are thus very difficult, unusually difficult, to dislodge. There are cases where the intercession of the church against crime has resulted in major breakthroughs, as the protection of Satan over these areas has been broken.

3.       Prosperity gained outside of Christ, in all its forms, is often brief and illusory. There are various types of this  “prosperity”. There is the very temporary prosperity of a bank robber who momentarily has a million dollars until murdered by associates or caught by the police. There is the fear-filled prosperity of the embezzler becoming rich but dreading capture. There is the prosperity of the selfish materialist who in middle-age feels empty and meaningless. There is the euphoric but often brief prosperity of the lottery winner. (Five years later most (I think 85%) are worse off financially.) There is the prosperity of the wheeler and dealer who makes millions for a while then loses it as pride in his or her judgment leads to a series of foolish moves. And there is the prosperity of the very wealthy, surrounded by lawyers and trusts, guarded by security firms, quietly filled with fear and dread. In contrast the prosperity of Abraham or Solomon or Job was a prosperity of peace, integrity and blessedness.

4.       Our perceptions of what is fair and unfair are frequently self-centered or impatient. Waiting 70 years for Babylon to be punished or four generations for the Amorites to be dealt with is not our style. We want God to grant instant and visible justice that prospers us mightily and puts all the wicked in jail tomorrow. If this happened there would be little room for the development of faith. We need to trust God even when He is operating outside our time frame or not at our convenience.

5.       Some Christians are poor because they do not act wisely with regard to their finances. God blesses them, and they do not build on the blessing, discipline their spending or acquire the ability to make wealth. Many others are poor because the countries they live in are corrupt and unjust or exploited by the unjust elements of world trade.

6.       Others, in Christian service, consciously take a course of action they know will mean they will have less materially in order to gain a greater heavenly reward.

7.        Many who prosper materially are like the parable of the rich fool who lost his soul. (Matthew 16:26 NKJV)  "For what profit is it to a man if he gains the whole world, and loses his own soul? Or what will a man give in exchange for his soul?”

8.       Unjustly gained wealth will be a terrible burden and a fiery punishment on judgment day. So we should not envy the wicked but rather wait patiently for the coming of the Lord when they will be judged.
(James 5:1-8 NKJV)  Come now, you rich, weep and howl for your miseries that are coming upon you! {2} Your riches are corrupted, and your garments are moth-eaten. {3} Your gold and silver are corroded, and their corrosion will be a witness against you and will eat your flesh like fire. You have heaped up treasure in the last days. {4} Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord of Sabaoth. {5} You have lived on the earth in pleasure and luxury; you have fattened your hearts as in a day of slaughter. {6} You have condemned, you have murdered the just; he does not resist you. {7} Therefore be patient, brethren, until the coming of the Lord. See how the farmer waits for the precious fruit of the earth, waiting patiently for it until it receives the early and latter rain. {8} You also be patient. Establish your hearts, for the coming of the Lord is at hand.

9.        A certain amount of judgment has been delegated to kings and governments (Romans 13) and some of them are not functioning properly so justice is not seen in the land.
(Ecclesiastes 3:16-17 NASB)  Furthermore, I have seen under the sun that in the place of justice there is wickedness, and in the place of righteousness there is wickedness. {17} I said to myself, "God will judge both the righteous man and the wicked man," for a time for every matter and for every deed is there.

10.   Judgment is an action not a reaction. God does not react instantly or mechanically to wickedness because that would make wickedness able to control His responses and God will not be controlled by anyone. God sets appointed times and seasons for the judgment of wicked people, systems and nations. He is in control, He sets their boundaries and limitations and He brings them to account. This time until judgment is His patience toward them in the hope that they would repent (Romans 2:4) like Nineveh did at the preaching of Jonah (Jonah 3:1-10). Below we find some fascinating references to iniquity having to be completed or a set time having to pass before God brings judgment:

(Psalms 75:2 NASB)  "When I select an appointed time, It is I who judge with equity.

(Genesis 15:16 NASB)  "Then in the fourth generation they shall return here, for the iniquity of the Amorite is not yet complete."

 (Jeremiah 25:12 NASB)  'Then it will be when seventy years are completed I will punish the king of Babylon and that nation,' declares the LORD, 'for their iniquity, and …make it an everlasting desolation.

(Daniel 7:22 NASB)  until the Ancient of Days came, and judgment was passed in favor of the saints of the Highest One, and the time arrived when the saints took possession of the kingdom.

(Revelation 11:18 NASB)  "And the nations were enraged, and Thy wrath came, and the time came for the dead to be judged, and the time to give their reward to Thy bond-servants the prophets and to the saints and to those who fear Thy name, the small and the great, and to destroy those who destroy the earth."

Justice will be done. The heart of darkness traders will face God and He will deal with them and decide in favor of the saints. God will eventually  “destroy those who destroy the earth” (Revelation 11:18).  Given this, and given the time frame that God works in it is a matter of faith for us to believe that all will be put right. At the moment it seems that God might be letting wickedness reach some sort of a climax before it will be finally and completely be judged.

Meanwhile we need to examine how economic injustice, which is much more palpable in the Two-Thirds World, is contributing to the process known as “radicalization” and the production of terrorists and other extremists.

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