ABOLISH THE FEDERAL RESERVE

America has real enemies, the shadow government like the cabal who control our money and the bosses, vermin who have infested the highest echelons of power. In the wake of their murder of JFK, they understandably feared exposure. The biggest threat was coming from honest, idealistic, politically-engaged citizens, most of whom leaned toward the political left in general. 

ON JUNE 4 1963, President John F. Kennedy Signed Executive Order #11110, stripping the privately-owned Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately-owned Federal Reserve Bank would soon be out of business.

~ When President Kennedy signed this Order, it returned to the Treasury Department the Constitutional power to create and issue money without going through the privately- owned Federal Reserve Bank. United States Notes were then issued as an interest-free currency.

~ President Kennedy was assassinated on November 22 1963 and the United States Notes he had issued were immediately taken out of circulation.

SEE: http://www.silverbearcafe.com/private/JFK.html

[...] Why did President Lyndon Baines Johnson not continue President Kennedy’s Executive order? Was he afraid for his own life?

While the source of this information does not come from Mainstream media, it is believable and available elsewhere on the Net, I have also seen a list of the private US banks that own the Fed, perhaps the above names are the actual people behind it all.

Yet they may not be omnipotent, the Israeli press (Ynet) is opinioning that Israel should no longer assume the US will automatically come to its aid.

No wonder Europe and the US are so close!

“United States Notes” were issued as an interest-free and debt-free currency backed by silver reserves in the U.S. Treasury. We compared a “Federal Reserve Note” issued from the private central bank of the United States (the Federal Reserve Bank a/k/a Federal Reserve System), with a “United States Note” from the U.S. Treasury issued by President Kennedy’s Executive Order. They almost look alike, except one says “Federal Reserve Note” on the top while the other says “United States Note”. Also, the Federal Reserve Note has a green seal and serial number while the United States Note has a red seal and serial number.

Thought by many to be a government organization maintained to provide financial accountability in the event of a domestic depression, the actual business of the Fed is shrouded in secrecy. Many Americans will be shocked to discover that the principle business of the Fed is to print money from nothing, lend it to the U.S. government and charge interest on these loans. Who keeps the interest? Good question. Find out as the connective tissue between this and other top-secret international organizations is explored and exposed. 

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds. One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.

A more detailed GAO investigation into potential conflicts of interest at the Fed is due on Oct. 18, but Sanders said one thing already is abundantly clear. "The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street."

The supreme illicit fraud of central banking embodied in the Federal Reserve, acts as a private piggybank for favored cartel thieves. The liquidity of unlimited credit transfers to banksters, especially at zero interest, financed by unimaginable new Treasury Bonds, indebting the American public; is a crime committed by outlaws. The significance of the evidence for the extent of the crony financial manipulations, that the controllers of international capital use to maintain their power strangle hold on humanity, needs to be fully exposed. Only when the beleaguered and downtrodden become sufficiently indignant to usury incarceration, will heads start to roll.

“The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

Yes, you read that correct, 16 TRILLION DOLLARS. When originally disclosed, there was minimal outrage.

“The FOMC approved these swap line arrangements to help address challenges in the global market for interbank lending in U.S. dollars. Many foreign banks held U.S. dollar-denominated assets and faced challenges borrowing in dollars to fund these assets. In contrast to U.S. commercial banks, foreign banks did not hold significant U.S. dollar deposits, and as a result, dollar funding strains were particularly acute for many foreign banks. The Board of Governors of the Federal Reserve System (Federal Reserve Board) staff memos recommending that the FOMC approve swap lines noted that continuing strains in dollar funding markets abroad could further exacerbate strains in U.S. funding markets. For example, foreign banks facing difficulties borrowing against U.S. dollar assets may have faced increased pressure to sell these assets at a time of stress, potentially putting downward pressure on prices for these assets. The dollar swap lines allowed foreign central banks to make dollar loans to banks in their jurisdictions without being forced to draw down dollar holdings of foreign exchange reserves or to acquire dollars directly in the foreign exchange market. An FRBNY staff paper noted that the dollar reserves of many foreign central banks at the start of the crisis were smaller than the amounts they borrowed under the swap lines and that efforts by foreign central banks to buy dollars in the market could have crowded out private transactions, making it more difficult for foreign banks to obtain dollars. This paper further noted that the Federal Reserve System (the Federal Reserve Board and Reserve Banks collectively) was in a unique position to provide dollars needed by foreign central banks to provide lender-of-last-resort liquidity to banks in their jurisdictions. The increase in reserves was offset through sales of Treasury securities and increasing incentives for depository institutions to hold excess reserves at FRBNY.”

“Another mystery that I would like to see addressed is the trillions of dollars of “off balance sheet transactions” that are unaccounted for at the Federal Reserve. This was brought up once during a Congressional hearing, but nobody seemed to have any answers.”

The $9,000,000,000,000 MISSING From The Federal Reserve YouTube captures the absurdity of Congressional oversight. The financial community that created fractional reserve banking is in total control of the political election process. As long as there is no accountability and consequences for outright theft, the money magicians continue to operate their fraudulent scheme of deception as the cornerstone of international economic transactions.

The FED’s grip on the global moneychangers’ racket is based upon maintaining the U.S. Federal Reserve funny money, as the reserve currency for the planet. The value and worth of Treasury Bills and Bonds are on the path to have the value of Reichsbank marks. Recognize the enemy that is destroying the country and world economy

Here is a candidate for president.

"We don't need to waste more money on a Commission." Spend let's say $30,000,000 at the most on $16,000,000,000,000? I guess that is too much to investigate on! Let's pay ourselves to the Bankers, because they love us, the Federal Reserve is of course Government-owned, if you say anything else, you are a crazy Conspiracy Theorist that hates freedom and liberty... Herman Cain is exposed as an operative. “

HOW TO PROTECT OUR NATIONAL INTEREST

China’s Forced Technology Transfer Problem—And What to Do About It

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KICK OUT CHINESE NATIONALS STUDENTS HERE IN THE USA

Foreign students at UBC (above) and other universities pay sharply higher tuition fees than domestic students, which helps these institutions' bottom lines.Future historians reflecting on the current 





implosion in U.S.-China relations should include a section on the phenomenon of the large group of young Chinese who have been coming to study in North America since the turn of the century.


In 2018, more than 340,000 Chinese nationals were registered as active students in the United States while Canada hosted nearly 140,000.

These numbers are probably at the top of a near two-decade trend in history’s largest cross-border movement of one group of people to another country for the sole or main purpose of seeking an education. It took place after China accelerated its opening up to the West in the 1990s.


On paper, this should have produced a blockbuster win-win outcome for everyone. The U.S. (together with Canada) and China would have benefited from the increased cultural exchange and people-to-people interactions.

Chinese students would have learned the value of human rights and individual freedoms provided for in a western democracy to contrast their own experience living in a totalitarian regime.

Those who returned home would have brought some of their newly acquired liberal outlook and professional skills to help improve China’s political and economic conditions. A more open China would eventually become a freer and more prosperous possibly democratic nation state.

For the U.S., China would become a new major source of supply of students who also injected hard cash into many of its increasingly underfunded universities and their surrounding hard-pressed economies.

Upon graduation, the students would represent a new network of help for the U.S. to boost the exports of its products and services to the world’s most populous nation. Politically, the students and their new North American friends would have the role of peacemaker and informal ambassadors to smooth over the occasional rough patches in their countries’ bilateral relationship.

For the large part, the students have succeeded. Many excelled in North America’s institutions of learning. Some stayed on after graduation while others returned home, with most retaining enormous goodwill and fond memories of their time in the West.

Friendships and relationships were formed. All seemed to have worked out despite the occasional burst of bilateral tensions.

In short, this generation of North America-educated Chinese students and their friends in the U.S. and Canada were to have been a building block for strong cross-Pacific ties.

That thesis is now being incinerated as enormous cracks in the U.S.-China ties have burst open in the most dramatic manner. The bilateral foundation clearly was never that strong as resentment and suspicion had been building between the two sides for some time.

Last October, the Financial Times reported that U.S. president Donald Trump considered banning entry visas for Chinese students to stop them attending American universities. Senior Trump Administration officials openly speak of these students as spies sent by Beijing to steal American technology and undermine U.S. security.

All the rosy expectations about fostering people-to-people ties have evaporated in an instant.






The goodwill built from decades of U.S. universities and schools educating Chinese student has proved insufficient to stop the deterioration in bilateral ties. While the reported ban has not happened yet, the possibility now exists.



FBI director Christopher Wray has accused Chinese students in the United States of collecting information on behalf of their government.FBI
“Whole-of-society” threat

America’s sharply changed perception towards Chinese students began nearly two years ago when FBI director Christopher Wray described China as a “whole-of-society threat” with its alleged large group of “collectors” infiltrating American society, including institutions of learning, to gather intelligence and steal technology.

“I would just say that the use of non-traditional collectors—especially in the academic setting, whether it’s professors, scientists, students—we see in almost every field office that the FBI has around the country,” Wray said.

His accusation is the culimination of years of American complaints against China that the Trump presidency has been able to crystallize through its aggregation of many of the country’s top trade and economic hawks in its cabinet.

On campus, there have been growing complaints by local students and teachers about the Chinese in their midst. Here’s a list, whether justified or not:
Chinese students displace locals in the competition for limited space in the classroom;
There’s been a perceived decline in academic standards to accommodate students with poor English skills;
Chinese students tend to stick among themselves, and are unable or unwilling to integrate and participate in campus activities;
Some of the students are in the U.S. and Canada only to fulfill their parents’ wishes that they obtain a degree from an international university;
The students add to America’s growing wealth divide as many recent arrivals choose to live in luxury homes and drive expensive cars with no interest in interacting with local regular people;
The students are part of a bigger plan by middle-class and wealthy Chinese to migrate to North America to protect their wealth from the Chinese government;
The students are not committed to western liberal values as their focus is on improving their business and professional skills to earn a living.

The Chinese students have their own list of grievances:
The universities view them as cash machines to help fund their budget deficits and keep professors employed;
Many are from less-than-wealthy backgrounds, but are treated with disdain by locals who think they are all rich;
The universities do not provide enough support to help their adjustments to life in the U.S. and Canada, leaving many to suffer loneliness, alienation, and depression;
American and Canadian students have no interest in forming friendships, putting the responsibility to “integrate” solely on the Chinese who must struggle to overcome their language and cultural handicaps;
North American society generally is ignorant and lacking in curiosity about China, placing an additional and unreasonable burden on the newly arrived young Chinese to deal with prejudices and presumptions in their interactions.
North Americans believe they have little to learn from the Chinese, given their belief in the vast superiority of western culture over others. As such, cross-cultural “communication” tends to be one way, with the onus placed squarely on Chinese to learn about North American culture, history, and language.

Originally cast as a foundation stone for building cross-Pacific ties, Chinese students in North America are now at risk of being seen as potential fifth columnists at worst, and as knowledge parasites at best.

The alumni have not proved sufficiently influential to slow down, much less check, the deterioration in China’s ties with both the U.S. and Canada.

As the two countries mull steps to curb the entry of Chinese students into their universities, there have been few standout voices from among the large group of past beneficiaries to argue the case for the West to continue educating China’s young.

Have educated Chinese become a force for making the world a better place? How have they contributed to relations between China and the West? Have they tried to make China more open and liberal? Why should the West continue to train Chinese scientists and engineers who will end up serving Beijing’s totalitarian regime?

These are harsh one-sided questions, probably even unfair given the circumstances of the past decades. Yet increasingly, the responsibility lies with the Chinese themselves to argue their case.

If they cannot, or will not, it will affirm the suspicion that many are in North America mostly to improve their material well-being and nothing else.

Why should the West continue to train such a group of seemingly self-centred people unable or uninterested to defend the liberal order that has contributed to their and China’s rise over the past four decades?

Future historians will have to examine the moral case for the West to help educate China’s young, and whether this was a moment of missed opportunities in the shaping of the Chinese character.













The Trump administration’s trade confrontation with China is occurring on several fronts, none more crucial than the dispute over China’s alleged misappropriation of foreign technology. In a report issued March 22, 2018, the United States Trade Representative (USTR 2018) cited numerous instances of forced technology transfer and failure to protect US intellectual property from infringement or theft. Following this report, the administration announced plans to impose tariffs on up to $60 billion worth of Chinese exports to the United States and tighten the rules governing Chinese investment in the United States. China countered with tariff threats of its own, and President Trump then threatened more tariff actions against up to $150 billion worth of Chinese exports. At the time of this writing, the Trump administration has renewed threats to impose tariffs on tens of billions of dollars’ worth of Chinese goods, though negotiations continue. A broad range of experts and market observers agree that China has repeatedly forced foreign multinational corporations (MNCs) to transfer technology to indigenous firms as a condition for market access and that China has persistently failed to protect the intellectual property of foreign firms doing business in China.1 At the same time, stock markets, American industry, and farm sectors dependent on exports to China have been worried in recent weeks by the prospect of a US-China trade war. The Trump administration has repeatedly threatened a strategy of broad-based “retaliation” that will arguably cause US firms and workers more economic pain than the Chinese behavior the administration’s trade negotiators are seeking to change.2 The indiscriminate nature of its proposed tariffs—and the rhetoric that accompanies them—cedes the moral high ground to China and undermines the international and corporate support Trump needs to solve the real problem. Fortunately, there is a better way. Instead of indiscriminate tariffs, carefully targeted sanctions should be imposed on the Chinese entities directly involved in technology misappropriation.









Two issues need to be addressed to make such a strategy possible. First, the detailed data on forced technology transfers that are necessary for targeted sanctions have been hard to find because US multinationals have been reluctant—justifiably—to voluntarily disclose their complaints. Second, there are few important technical domains in which US firms retain a monopoly on technological leadership, and China has become quite adept at pitting different Western governments and firms against one another. Any policy intervention that only involves US firms could lock them out of Chinese markets and still allow forced technology transfers to happen through firms based in other advanced industrial nations. Therefore, any successful strategy will need to be multilateral, relying on joint action by the United States and its traditional European and Asian allies and trading partners. Fortunately, the governments of 1. See Shang-Jin Wei, “How to Avoid a U.S.-China Trade War,” Project Syndicate, March 23, 2018; David Dollar and Ryan Hass, “Trump Could Be on the Brink of Starting a Trade War with China,” Order from Chaos blog, Brookings Institution, August 9, 2017; Campbell and Ratner 2018; “America versus China: The Battle for Digital Supremacy,” Economist, March 17, 2018; and “Technopolitics: The Challenger,” Economist, March 17, 2018. 2. Lovely and Liang (2018) show that the retaliatory tariffs proposed by the Trump administration will hit multinational supply chains serving US firms and companies far harder than Chinese entities potentially benefitting from technology misappropriation. 2 3 PB 18-13 June 2018 these nations are increasingly resolved to respond to China’s technology misappropriation (Atkinson, Cory, and Ezell, 2017). This Policy Brief proposes a new structure, based on a current bill with bipartisan support in Congress, that can equip policymakers with the data they need, outlines existing policy tools they can use, and points to ways to engage Western allies in taking this more targeted approach.










NG HAN GUAN/AP PHOTO

China’s government uses foreign-ownership restrictions to pressure technology transfers from U.S. companies to Chinese entities, according to the U.S. Trade Representative. FORCED TECHNOLOGY TRANSFER: WAYS AND MEANS In many respects, the USTR report released in March breaks little new ground. Earlier studies undertaken by the US International Trade Commission (USITC 2011) and the bipartisan Commission on the Theft of American Intellectual Property (2013, 2017) had already noted the ways in which Chinese firms misappropriate foreign technology and had even made efforts to quantify the losses these practices impose on US owners of intellectual property (IP). These earlier studies indicated that annual losses could be measured in tens of billions—perhaps even hundreds of billions—of dollars. The wide-ranging estimates mostly reflect the value of American intellectual property believed to be stolen or infringed by Chinese entities, and an impressive body of evidence points to China’s significant weaknesses in enforcing intellectual property rights (IPR).3 However, inadequate IPR enforcement is only part of the problem. China has also adopted a set of policies deliber3. For evidence on the weaknesses of China’s IPR enforcement system, see McGregor (2010); Kennedy (2017); Branstetter, Conti, and Zhang (2018); and Rassenfosse and Raiteri (2016), among many other sources. Nicholas R. Lardy notes that Chinese payments for the use of foreign intellectual property have risen significantly since the early 2000s, and China now ranks fourth globally in terms of the dollar value of these aggregate payments. This is true, but it reflects, in part, China’s emergence as the world’s largest manufacturer and exporter of goods and the fact that China exports these goods to advanced industrial nations with strong patent systems and trade laws that allow for the impounding of patent-infringing goods at the border. These aggregate statistics do not disprove the existence of forced technology transfer or widespread IPR infringement within China itself. (Nicholas R. Lardy, “China: Forced Technology Transfer and Theft?” China Economic Watch blog, Peterson Institute for International Economics, April 20, 2018.) ately designed to force foreign multinationals to transfer strategically sensitive technologies to indigenous Chinese firms. These policies are a key component of China’s longstanding ambition to replace Western firms currently at the forefront of key technologies with Chinese national champions. In many cases, technology transfers are effectively required by China’s foreign direct investment (FDI) regime, which closes off important sectors of the economy to foreign firms unless they enter into joint ventures with Chinese entities they do not control.
































4 Examples of forced technology transfer abound in industries ranging from autos to information technology (IT). In the auto industry, foreign ownership restrictions (and high tariffs) force foreign firms to serve the booming Chinese auto market—now the world’s largest—through joint ventures in which they are prevented from holding a controlling interest. China’s well-publicized drive to become a leader in electric vehicles has resulted in complaints by European auto firms that they are being pressured to turn over sensitive technology, including proprietary software code, to joint venture partners who may later compete with them in China and elsewhere.5 China’s Internet censorship regime—known as the Great Firewall—effectively prevents US digital services companies from operating freely in the Chinese market, and the telecommunications services industry is generally closed to wholly foreign-owned enterprises.6 As the world of computing migrates to cloud-based services, the global IT industry is increasingly forced to access Chinese customers through a gauntlet of joint venture partners that may someday pose a competitive threat.7 Even in officially open sectors, foreign firms must obtain approval from relevant regulators in a process that lacks transparency and is subject to political influence—foreign firms can often be quietly pressured to transfer technology to local firms in order to obtain these necessary approvals.8 4. See Lardy (2014) and Gary Clyde Hufbauer and Zhiyao (Lucy) Lu, “Section 301: U.S. Investigates Allegations of Forced Technology Transfers to China,” East Asia Forum, October 3, 2017. 5. Charles Clover, “Foreign Carmakers on Edge Despite China Tech Transfer Assurances,” Financial Times, March 30, 2017. 6. These investment restrictions in telecommunications were negotiated as part of China’s accession to the WTO; they can be downloaded from the WTO website at https://www. wto.org/english/thewto_e/acc_e/completeacc_e.htm.






7. David Dollar and Ryan Hass, “Trump Could Be on the Brink of Starting a Trade War with China,” Order from Chaos blog, Brookings Institution, August 9, 2017. 8. Gary Clyde Hufbauer and Zhiyao (Lucy) Lu, “Section 301: U.S. Investigates Allegations of Forced Technology Transfers to China,” East Asia Forum, October 3, 2017. China has adopted policies deliberately designed to force foreign multinationals to transfer strategically sensitive technologies to indigenous Chinese firms. 2 3 PB 18-13 June 2018 State-owned enterprises (SOEs), prominent players in key sectors of the Chinese economy, often function as another mechanism through which foreign firms are forced to transfer technology in order to gain market access. A wellknown example occurred in the early 2000s, when China was building out its energy grid to meet booming demand, and General Electric (GE) sought to enter this important market. GE soon encountered the reality that power generation in China is dominated by SOEs, a position perpetuated by the regulatory structure of the industry. The top executives of these firms are effectively appointed by the Chinese Communist Party, as are all top executives of major Chinese SOEs, and their appointment is driven, in part, by the extent to which their management of their firms contributes to the Party’s objectives. If the Party wants to create an indigenous Chinese manufacturing industry capable of producing hightech products for energy plants, like advanced turbines, that can compete with GE and Siemens, then the head of a Chinese power company—sensitive to this objective—can insist that any supplier of turbines transfer valuable technology to indigenous Chinese suppliers, even if this condition raises prices for his own firm, reduces product availability and reliability, and limits the options for his customers. As the Chinese market is too big to ignore, GE and its multinational competitors all realize that the short-term costs of refusing to play by Chinese rules are quite high—since, if one firm refuses to play, another is likely to acquiesce.9 According to China’s critics, this dynamic is playing out in industry after industry, enabling SOEs to function as gatekeepers, determining which products and services will be incorporated into China’s energy, communications, transportation, and healthcare systems.10 China’s enormous size gives these SOEs real power, which is being exercised in service to Chinese government plans to replace the world’s leading companies with Chinese companies. In recent years, diverse industries manufacturing products ranging from wind turbines to medical devices have voiced their concerns 9. Kathryn Kranhold, “China’s Price for Market Entry: Give Us Your Technology, Too,” Wall Street Journal, February 26, 2004. 10. See Massie (2011); Robert D. Atkinson, testimony before the House Committee on Foreign Affairs, Subcommittee on Asia and the Pacific, hearing on “China’s Technological Rise, Challenges to U.S. Innovation and Security,” April 26, 2017; Kathryn Kranhold, “China’s Price for Market Entry: Give Us Your Technology, Too,” Wall Street Journal, February 26, 2004; Branstetter and Lardy (2008); “America versus China: The Battle for Digital Supremacy,” Economist, March 17, 2018; and “Technopolitics: The Challenger,” Economist, March 17, 2018. about forced technology transfer (European Chamber of Commerce in China 2017). THE GLOBAL WELFARE IMPLICATIONS OF FORCED TECHNOLOGY TRANSFER It has long been recognized that efficient international business practices require technology transfer across national and firm boundaries (Vernon 1966). If US multinationals were voluntarily transferring technology to Chinese entities over which they have no control, then any proposal to regulate or limit that transfer would deserve skepticism. As the previous section makes clear, however, some technology transfers taking place in China today are only “voluntary” in the sense that business with the fictional gangster of the Godfather movie series, Vito Corleone, was voluntary. China is effectively making offers multinationals cannot refuse. Whether or not firms “voluntarily” trade with parties that possess monopoly power on the supplier side or monopsony power on the demand side does not obviate the reality of economic harm. The forced technology transfer problem can be viewed as the outcome of a de facto cartel, organized by the Chinese party-state, in which Chinese purchasers collude to expropriate key technologies from a foreign supplier or group of suppliers. If a Chinese firm “licenses” an extremely valuable technology at a price that is a small fraction of its commercial value, and is able to do so by exercising monopsony power, its actions are conceptually quite close to intellectual property theft. To the extent that China’s forced technology transfer practices (or the expectation of intellectual property theft) deter multinationals from investing or operating there, they can harm both China and the broader global economy. A series of formal models (Lai 1998, Branstetter and Saggi 2011, Gustafsson and Segerstrom 2011) shows how fear of losing control of key technologies could prevent multinational corporations (MNCs) from shifting production to lower cost countries. This outcome prevents low-cost countries from fully realizing their comparative advantage in manufacturing established products; it also prevents advanced countries from fully realizing their comparative advantage in develTo the extent that China’s forced technology transfer practices deter multinationals from investing or operating there, they can harm both China and the broader global economy. 4 5 PB 18-13 June 2018 oping new goods. As a consequence, production costs are higher, efficiency is lower, and the rate of innovation in the global economy is slower than it would be in an equilibrium in which multinationals are able to retain control over their technology.11 When forced technology transfers enable Chinese firms to displace the Western enterprises that created the technology in the first place, the global economy can be harmed in a different way. The forced technology transfers described here amount to a subsidy of a less innovative domestic firm and a de facto tax on the foreign enterprise. If Chinese government intervention succeeds in tilting the playing field in favor of less innovative (but heavily subsidized) Chinese firms, and thereby limits the resources flowing to the world’s most innovative firms, then, in the long run, the rate of innovation can slow, and consumers around the world could suffer.12 Finally, China’s misappropriation of foreign technology violates World Trade Organization (WTO) principles and China’s obligations under its accession agreement to the WTO. The Trade-Related Investment Measures (TRIMs) Agreement, which is part of the WTO charter, forbids a signatory state from requiring technology transfers in return for market access. China also agreed in its WTO accession protocol that the procurement of its state-owned enterprises should be undertaken according to commercial concerns, not state industrial policy goals. As a signatory of the TradeRelated Aspects of Intellectual Property Rights (TRIPs) Agreement, China committed to protecting the intellectual property—patents, trademarks, copyrights, and trade secrets—of foreign firms operating in its territory, providing them the same degree of protection it provides to its own firms, and providing all inventors with a degree of protection that meets the WTO’s high minimum standard. Unfortunately, past efforts to resolve these issues through bilateral negotiations have failed to address the underlying problems, and the realities of the WTO dispute resolution process make it extremely difficult to sanction China’s behavior through WTO litigation. China’s requirements for technology transfer are not stipulated in law and are imposed instead through extralegal means; hence, few foreign firms are willing to make their complaints public. China’s patent statutes are in de jure compliance with WTO standards, 11. See Branstetter, Fisman, Foley, and Saggi (2011). 12. One of the most influential trade and growth papers of the early 1990s, coauthored by leading economic theorists Gene Grossman and Elhanan Helpman (1990), showed how this scenario could come to pass. Chinese innovative capability is growing (Wei, Xie, and Zhang 2017) but arguably still lags behind that of the industrial West (Kennedy 2017; Branstetter, Li, and Veloso 2015). although the de facto level of protection falls far short of what the law appears to promise. It has proven difficult for the United States to seek WTO remedies against TRIPs violations that are shortcomings of enforcement rather than statutory deficiencies. Nevertheless, rules that are routinely violated without sanction quickly cease to be rules. For all of these reasons, inaction is not an appropriate response to China’s current behavior. WHAT CAN THE UNITED STATES DO TO CHANGE CHINA’S BEHAVIOR? Efforts to change China’s behavior should be limited, well targeted, and multilateral. Any sanctions designed to limit forced technology transfer should be applied solely to firms and individuals who are responsible for pressuring foreign multinationals and who benefit from the transfer. This would raise the costs and limit the benefits of the behavior the West is seeking to constrain in a targeted fashion, without inviting the sort of broad-based trade retaliation that could generate far more harm than good. Unfortunately, multinationals are often extremely reluctant to publicly disclose the details that could enable such targeted sanctions, out of fear of retribution from China. This silence has served China’s interests for decades and severely constrained the ability of Western governments to undertake the kinds of targeted sanctions this Brief endorses. To overcome that problem, the Trump administration must create a monitoring mechanism that enables—and requires—multinationals to disclose when they are being subject to forced technology transfers. Fortunately, a bill currently advancing through Congress with bipartisan support may provide the foundation for building this kind of monitoring mechanism. CFIUS as an Instrument to Limit Forced Technology Transfers to China In 2017, Senator John Cornyn (R-TX) and Congressman Robert Pittenger (R-NC) introduced legislation designed to give the Committee on Foreign Investment in the United States (CFIUS) the power to limit or block outbound foreign direct investment and technology transactions.13 This proposal, originally known as the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2017, or H.R. 4311, was inspired, in part, by the concerns outlined earlier. 13. CFIUS is a cabinet level interagency committee charged with reviewing foreign merger and acquisition bids to acquire US companies, with the goal of determining whether any such acquisitions threaten national security. For an extensive review of CFIUS, its history, and administrative processes, see Jackson (2018). See also Moran (2009) and Moran and Oldenski (2013) for a critical review of CFIUS actions, especially with respect to China. 4 5 PB 18-13 June 2018 The original Cornyn-Pittenger proposal significantly broadened the range of transactions CFIUS could scrutinize and, through the president, block. CFIUS would be directed and authorized to examine nearly every inbound and outbound investment and technology transaction with “countries of special concern,” which are not named or defined in the draft legislation, that might allow important technologies to diffuse to these adversarial nations and undermine national security. The proposal also left the executive branch with broad discretion to define both countries of concern and critical technologies. That discretion could lead to significant economic harm if wielded by an injudicious chief executive. For instance, a president who sought to punish companies that shifted production abroad could, in principle, invoke the new powers of CFIUS under the original proposal to prevent such shifts indefinitely. At the time of this writing, the original proposal is being substantially amended in ways that could address some of these concerns, but it is not yet clear what will emerge from the legislative process.14 Instead of attempting to forecast the outcome of ongoing congressional debates, this Brief proposes a number of changes to the original architecture that could make it an effective instrument in combatting forced technology transfer. Improving the Cornyn-Pittenger Proposal First, CFIUS should not be given authority to review or block the outbound FDI of US multinationals, even when they involve countries of concern. The decision by a multinational to shift production or operations abroad through greenfield investment or acquisition may raise the risks of an accidental transfer or industrial espionage, but firms are in a better position than the government to judge these risks and balance them against potential returns.15 Instead, any potential expansion of CFIUS review of outbound transactions should focus solely on technology licensing or transfer of critical technologies to unaffiliated indigenous parties that can reasonably be viewed as operating under the influence of the governments of countries of special 14. In its review of the proposal, the Senate Banking Committee eliminated the review of outward FDI and joint venture deals from the draft legislation. 15. At the time of this writing, Washington-based sources suggest that President Trump may soon issue an executive order asserting broad authority to limit outbound FDI at his discretion. Congressional passage of a substantial revision of the Cornyn-Pittenger proposal, along the lines described in this Policy Brief, could serve the useful function of preempting such an executive order. concern.16 By exempting outbound FDI and technology transfers within MNCs from additional CFIUS scrutiny, the revised proposal would encourage China to allow US multinationals to retain formal ownership and control of their technology, while effectively penalizing China for forcing transfer to unaffiliated entities. Limiting the expanded jurisdiction of CFIUS in this manner would keep CFIUS close to its current structure and scale, retaining the current interagency balance within CFIUS that ensures security and economic concerns both receive appropriate weight. The proposed limitation has the added benefit of conforming closely to a review process China recently imposed on its own firms when transferring technology abroad; the US government would thus not be doing anything China is not already doing.17 On the other hand, by subjecting potentially forced technology transfer to the scrutiny of a government investigative process with subpoena power, multinationals that might otherwise be pressured into silence can now tell their Chinese interlocutors that they have no choice but to disclose their true circumstances, since silence or partial disclosures could be met with a subpoena. This could substantially alter the dynamic that has prevented the US government from obtaining the detailed data it needs for effective countermeasures.18 The expectation that exerting extralegal pressure on a 16. Broad-based, global licensing agreements into which Chinese parties enter on the same basis as other users of the technology around the world would be exempt from this additional scrutiny. On the other hand, technology transfer agreements in which US firms are transferring technology to indigenous Chinese entities under terms that are very different from what is observed in other markets would be of special interest to this proposed review process. 17. Lester Ross and Jennifer Zhao, “China Tightens Scrutiny Over the Transfer of Intellectual Property Rights to Foreign Parties,” WilmerHale blog post, April 5, 2018. 18. Multinationals rarely welcome the government’s use of subpoena power, but it would be impossible for the antitrust agencies or the Securities and Exchange Commission (SEC) to enforce US law without the information they can obtain through judicious exercise of this authority. The principal reason forced technology transfer persists is that the US government has never been able to obtain the detailed data necessary to combat it. If the US government remains unwilling to exercise subpoena power in this domain, then it will be forced to choose between acquiescence and a punishingly expensive trade war. CFIUS should not be given authority to review or block the outbound FDI of US multinationals, even when they involve countries of concern. 6 7 PB 18-13 June 2018 US firm to transfer technology might be disclosed to the US government could, in turn, have a disciplining effect on the use of this practice. Second, the current bill gives the US president dangerously broad discretion in identifying critical technologies capable of harming national security. Instead, a revised CFIUS statute should stipulate a process that engages the expertise of the National Academies of Sciences, Engineering, and Medicine and other federal science agencies in creating a narrow definition of critical technologies that could prudently restrain the scope of CFIUS reviews.19 The national security agencies involved in the CFIUS process are likely to use their influence (and technological expertise) to push for a relatively broad definition of critical technologies, encompassing dual use technologies with civilian and military applications. These political realities cut both ways. From the standpoint of a free trader seeking to limit the scope of government interference in mutually beneficial transactions, the definition of critical technologies likely to emerge from the interagency process may be too broad. From the standpoint of a critic of China’s current policy, worried that a review process predicated on threats to national security might miss Chinese efforts to misappropriate strategically important civilian technologies, the breadth of the definition on which the Pentagon and the intelligence agencies will likely insist may be about right. Third, any new CFIUS statute needs to spell out an interagency evaluation process and criteria by which nations are designated as countries of special concern. At the moment, the president appears to have wide discretion in deciding which nations fit into this category. The contradictory message sent by a chief executive proposing to block steel imports from defense treaty allies on the grounds that such imports threaten national security drives home the need for strong limits on future executive discretion. 19. Gary Clyde Hufbauer, “Revamping CFIUS—and Going Too Far,” Trade and Investment Watch blog, Peterson Institute for International Economics, December 1, 2017; and Gary Clyde Hufbauer, “CFIUS Reform: Examining the Essential Elements,” testimony before the Senate Committee on Banking, Housing, and Urban Affairs, January 18, 2018, available at https://piie.com/commentary/testimonies/cfiusreform-examining-essential-elements (accessed on June 7, 2018). 






Instead, any new CFIUS statute should mandate an extensive review involving intelligence agencies, the Department of Defense, and economic agencies, which documents that a country’s IP regime, investment regime, SOE purchases, and other institutional factors are insufficiently protective of US firms’ IP and trade secrets. The interagency review should be conducted exclusively by individuals possessing a permanent (not provisional) high-level security clearance, and the reviewing agencies should have subpoena power. The review must document a significant number of forced technology transfers (or instances of IP theft) where the economic value of appropriated technology is meaningfully large. This review process should also be conducted in concert with key defense treaty allies and free trade agreement partners, and some degree of international concurrence should be required by statute before a country can be designated as one of special concern.20 Lastly, when designated countries have measurably improved their practices, they should be deleted from the list of countries of concern, and the statute should allow countries to petition for reclassification after some period of time has elapsed since their designation. 



While CFIUS would, in principle, limit its legal authority to block technology transfer to cases that posed some threat to national security, the investigation into whether a country is of special concern would admit as evidence forced technology transfers that do not threaten national security. Such transfers would still constitute evidence of systematic underprotection of foreign technology and pervasive efforts to shift technology to indigenous parties. In addition to placing bounds on the dangerously wide executive discretion that exists in the original CornynPittenger bill, this comprehensive review process and clear criteria would create a strong incentive for China to change its system. If China relied on market-driven technology transfers to private firms, upheld by strong IP laws, then it could avoid or end designation as a country of special concern, and that would enhance its access to technology. China could still be subject to limitations imposed by export control laws, but better behavior would allow it to escape this extra CFIUS review. However, any reversion to a pattern of forced technology transfer or biased application of IP law could reopen CFIUS scrutiny. Fourth, in its review of a prospective transfer of a critical technology to an indigenous entity in a country of concern, the statute should require that CFIUS consider whether the 20. It seems reasonable that a well-constructed review process would designate only one or two countries as countries of concern. Other than China, and possibly Russia, it seems unlikely that any other nation is undertaking these actions of forced technology transfer on a scale that poses any meaningful threat to US national security or to the global regime of trade and investment in technology. Any new CFIUS statute needs to spell out an interagency evaluation process and criteria by which nations are designated as countries of special concern. 6 7 PB 18-13 June 2018 foreign entity can obtain the technology through third countries.21 If it can, then a CFIUS-ordered restriction cannot be imposed unless and until the third parties are also willing to limit transfer. This will limit the degree to which the new authority would place US multinationals under a competitive disadvantage relative to multinationals in Europe, Japan, South Korea, or Israel that operate outside of US jurisdiction. Fifth, US firms subject to CFIUS-ordered restrictions on outbound technology transfer should have the right to appeal the decision and, if dissatisfied, to challenge the government ruling in a legal proceeding.22 Grounds for appeal might include the following arguments: The technology in question is not truly military nor dual use in nature, the technology can be obtained through other sources not blocked by CFIUS, or the country of concern no longer meets the criteria for such designation. Commercial loss or inconvenience, per se, would not be a basis for appeal. This right of appeal would only apply to CFIUS-ordered restrictions on outbound technology transfer, not to restrictions on inward investment, which would continue to operate under current rules. Giving firms the right of appeal will impose useful discipline on the internal interagency deliberative process, and it will help limit the overuse of CFIUS in cases where a national security threat is limited or indirect. If a CFIUS ruling were overturned on appeal or by a court, but there were strong reasons to expect a meaningful threat to national security, then the government could invoke other legal grounds for preventing the transfer. Technology transfers that truly threaten national security could also be denied on the legal basis provided by export control laws, and the statute should allow evidence gathered in the CFIUS review process (including classified evidence gathered through intelligence) to be used in prosecution under export control laws. Other Policy Tools The Use of Complementary Targeted Sanctions Under IEEPA (1977). Any time CFIUS blocks a transaction, whether inbound or outbound, it prevents financial flows that could benefit US-based firms and individuals. Ideally, 21. Gary Clyde Hufbauer, “Revamping CFIUS—and Going Too Far,” Trade and Investment Watch blog, Peterson Institute for International Economics, December 1, 2017. 22. This would constitute a significant change in CFIUS structure, and the details of its full implementation might require a separate Policy Brief. One potential approach would be to designate the Federal Circuit Court of Appeals as the single appellate body, provide an expedited procedure for review, and place the burden on the complainant firm to show that the government decision was wrong. one would prefer policy countermeasures designed to punish Chinese behavior to have substantially more negative impact on the Chinese parties than on US firms and individuals. The International Emergency Economic Powers Act of 1977, or IEEPA, provides sweeping legal authority for the US president to order sanctions of firms, individuals, and countries. The IEEPA was the legal basis for the US sanctions recently imposed on the China-based telecommunications company ZTE, which quickly brought this major multinational to its knees. If the CFIUS-led interagency review proposed above designates China as a country of concern, then that designation could also serve as the basis for an executive order, as called for under the IEEPA, that would allow the broad powers of that statute to be utilized to deal with the economic threat posed by forced technology transfer. Once codified in the federal register, this executive order could authorize targeted sanctions on Chinese entities that benefit from forced technology transfer, the top executives of those Chinese entities, and the government officials involved in brokering the transfer. The comprehensive analysis proposed as a prerequisite for designating China as a country of concern would produce sufficiently detailed evidence of forced transfers to identify these beneficiary firms and other parties involved. The judicious use of subpoena power and the full involvement of US intelligence agencies in the review process would further ensure that outcome. Targeted sanctions could involve travel bans in the Western world for key Chinese individuals and their families, foreign asset freezes, and financial and trade penalties on the firms and products benefitting from forced technology transfer. America’s allies possess similar statutes (which provided the basis for their cooperation during the sanctions regime against Iran) and could participate in enforcing multilateral sanctions against entities that forced the transfer of US technology, and the United States could reciprocate and enforce sanctions on Chinese entities that benefit from the forced transfer of European, Japanese, South Korean, and Israeli technology. As the ongoing CFIUS review process described above identifies new cases of forced technology transfer or intellectual property theft, targeted sanctions of this type, using IEEPA authority, could also be employed (or threatened) as a complement to or a substitute for the restrictions imposed by CFIUS. Like the sanctions that could be imposed under CFIUS, these would not come without economic costs to the United States and its Western allies. However, the focus of these sanctions on specific Chinese entities currently pressuring Western firms to transfer technology or specific Chinese entities already benefitting from such transfers 8 9 PB 18-13 June 2018 would ensure that maximum pressure would be brought on the offending parties, with limited collateral damage to unrelated sectors. The targeted nature of the sanctions on China would invite similarly limited countersanctions (if any), from the Chinese, further minimizing the fallout from this dispute. One hopes that the existence of a well-targeted, credible sanction could significantly deter forced technology transfer, such that the sanctions rarely occur in the first place. As this Brief has argued, technology transfer motivated by mutual benefit rather than coercion would be in the best interests of China and its trading partners. Export Controls. The limited CFIUS reform supported here will not necessarily be sufficient to prevent all transfers of sensitive technology to adversarial nations. To limit that risk, the United States and its allies should also rely on existing export control laws, which already apply to technology transfers and outbound FDI as well as actual exports of sensitive goods.23 When the risks of leakage of technology to a potential adversary are present but unclear, existing statutes and executive orders grant the Bureau of Industry and Security (BIS) of the Department of Commerce broad authority to investigate activities involving dual use technology. BIS agents can subpoena documents, compel testimony, and suspend or postpone transactions that may carry with them a national security risk. If concerns intensify, then the federal government could expand the resources and staff made available to BIS to enforce existing laws. Section 337 Cases. The governments of the United States, Japan, South Korea, Israel, and Europe are right to pressure China to substantially upgrade its flawed legal regime for enforcing intellectual property rights—and such reform would be in the long-run best interest of China itself. However, it will almost certainly take years of determined effort by Chinese policymakers to bring China’s patent system into line with international best practices. Any American policy that imposes high tariffs in the absence of instant patent reform in China will simply drive the world’s two largest economies into a trade war. In the meantime, one legal tool that American firms can put to immediate use is Section 337 of the 1930 Tariff Act, which allows firms to call upon the US International Trade Commission to conduct an expedited investigation of the import of IP-infringing products into the US market. These investigations tend to be much faster—and often far less costly—than civil litigation in IP courts. At 23. California Congressman Ed Royce has introduced a bill that would strengthen export controls and give them a firmer legal basis. Representative Royce’s proposal, H.R. 5040, has a number of attractive features, but a full appraisal of that bill is beyond the scope of this Policy Brief. the same time, many of the legal tools available in patent infringement cases, such as discovery, are available, and can be applied even if the exporting firm is located outside the United States.24 Under existing law, an administrative law judge has the authority to order US customs to impound IP-infringing imports at the border. While this judgment can be overturned by civil courts, such appeals can take months to years. Section 337 cases therefore offer a useful tool for US firms facing competition with IP-infringing goods in their home market. Most of America’s top trading partners have similar provisions in their laws, so US multinational firms with significant business operations overseas can often protect their sales in overseas markets by using similar tools. A sizable increase in the International Trade Commission’s budget targeted to Section 337 cases could expand the agency’s administrative capacity to undertake these investigations and accelerate their speed. Unilateral Efforts to Strengthen US Technological Leadership in Key Domains. The US government could and should undertake a number of steps to reinforce its leadership in high technology sectors. American universities remain global leaders in the basic science underlying key domains like artificial intelligence (AI). Unfortunately, the Trump administration has pushed for deep cuts in government science budgets rather than increases—an unnecessary and self-imposed setback for a president bent on maintaining American greatness. The other critical ingredient for sustained technological leadership is access to talent. There is a worldwide shortage of individuals trained in AI and related disciplines. Foreignborn students at US universities constitute a large fraction of students pursuing advanced degrees in the sciences and engineering. If President Trump is serious about maintaining US technological leadership, then he should abandon anti-immigrant positions and instead embrace high-skilled immigration. Arora, Branstetter, and Drev (2013) show that US openness to immigration played a critical role in enabling Silicon Valley to respond to a software-biased shift in technological opportunity in IT—an opportunity Japan’s far more restrictive immigration regime effectively closed off to its IT firms. The current administration would do well to heed this lesson. 24. The absence of a discovery procedure in Chinese civil litigation makes the prosecution of patent infringement much more challenging in that legal context. 8 9 PB 18-13 June 2018 CONCLUSIONS At the core of the Trump administration’s dispute with China lies a real problem—China’s persistent misappropriation of foreign technology. This longstanding pattern of activity violates China’s WTO commitments, distorts international trade and investment, and undermines China’s own long-run ability to contribute to the advancement of the global technological frontier. The problem is serious enough that it merits action. Unfortunately, the policies put forward by the Trump administration are unlikely to change China’s behavior. By unilaterally threatening high tariffs on a wide range of products, the administration is already undermining the support of multinational corporations and US trading partners that the more comprehensive approach outlined here would require. These parties are now concluding—rationally—that the threatened tariffs REFERENCES Atkinson, Robert, Nigel Cory, and Stephen Ezell. 2017. Stopping China’s Mercantilism: A Doctrine of Constructive, Alliance-Backed Confrontation. Information Technology and Innovation Foundation Report (March). Washington: Information Technology and Innovation Foundation. Branstetter, Lee, Raffaele Conti, and Huiyan Zhang. 2018. Welcome to the Jungle: An Expedition into China’s Patent Thicket. CMU Working Paper. Pittsburgh, PA: Carnegie Mellon University. Branstetter, Lee, Ray Fisman, Fritz Foley, and Kamal Saggi. 2011. Does Intellectual Property Rights Reform Spur Industrial Development? Journal of International Economics 83, no. 1: 27–36. Branstetter, Lee, and Nicholas R. Lardy. 2008. China’s Embrace of Globalization. In China’s Great Economic Transformation, ed. Loren Brandt and Thomas G. Rawski. Cambridge: Cambridge University Press. Branstetter, Lee, Guangwei Li, and Francisco Veloso. 2015. The Rise of International Co-Invention. In The Changing Frontier: Rethinking Science and Innovation Policy, ed. A. Jaffe and B. Jones. National Bureau of Economic Research and University of Chicago Press. Branstetter, Lee, and Kamal Saggi. 2011. Intellectual Property Rights, Foreign Direct Investment, and Industrial Development. Economic Journal 121, no. 555: 1161–1191. Campbell, Kurt, and Ely Ratner. 2018. The China Reckoning: How Beijing Defied American Expectations. Foreign Affairs 97, no. 2: 60–70. Commission on the Theft of American Intellectual Property. 2013. The IP Commission Report. May. Washington: National Bureau of Asian Research. Commission on the Theft of American Intellectual Property. 2017. Update to the Commission Report: Reassessments of the Challenge and United States Policy. February. Washington: National Bureau of Asian Research. European Chamber of Commerce in China. 2017. China Manufacturing 2025: Putting Industrial Policy Ahead of Market Forces. Beijing. would be a cure worse than the disease they are meant to remedy. This Policy Brief outlines a better approach—one that is multilateral in its operation, limited in scope, and targeted at exactly the behavior the United States and its allies seek to change. This approach will produce the kind of detailed data whose absence has prevented effective countermeasures in the past. While the use of the new policy tools—and the more aggressive use of existing ones—proposed here will not be without economic costs, such costs will be limited by design. These tools stand a reasonable chance of changing the strategic calculus of Chinese entities, thereby limiting the misappropriation of foreign technology going forward. The administration’s current path will almost certainly result in failure—but there is still time for President Trump and his advisors to choose a more effective approach. Grossman, Gene, and Elhanan Helpman. 1990. Comparative Advantage and Long-Run Growth. American Economic Review 80: 796–815. Gustafsson, Peter, and Paul Segerstrom. 2011. North-South Trade with Multinational Firms and Increasing Product Variety. International Economic Review 52, no. 4: 1123–1155. Jackson, James. 2018. The Committee on Foreign Investment in the United States (CFIUS). Congressional Research Service Report RL33388. March. Washington: Congressional Research Service. Kennedy, Scott. 2017. The Fat Tech Dragon: Benchmarking China’s Innovation Drive. CSIS China Innovation Policy Series. Washington: Center for Strategic and International Studies. Lai, Edwin. 1998. International Intellectual Property Rights Protection and the Rate of Product Innovation. Journal of Development Economics 55, no. 1 (February): 133–53. Lardy, Nicholas R. 2014. Markets over Mao: The Rise of Private Business in China. Washington: Peterson Institute for International Economics. Lovely, Mary E., and Yang Liang. 2018. Trump Tariffs Primarily Hit Multinational Supply Chains, Harm US Technology Competitiveness. PIIE Policy Brief 18-12. Washington: Peterson Institute for International Economics. Massie, Joe. 2011. Digestion and Re-Innovation: A Lesson Learned from China’s High-Speed Rail Technology Transfer Agreements. American University Intellectual Property Brief (August 7). Washington: American University. McGregor, James. 2010. China’s Drive for ‘Indigenous Innovation’: A Web of Industrial Policies. Report of APCO Worldwide undertaken for the US Chamber of Commerce. Washington: APCO Worldwide. Moran, Theodore. H. 2009. Three Threats: An Analytical Framework for the CFIUS Process. Policy Analyses in International Economics 89. Washington: Peterson Institute for International Economics. Moran, Theodore H., and Lindsay Oldenski. 2013. Foreign Direct Investment in the United States: Benefits, Suspicions, and Risks with Special Attention to FDI from China. 

President Donald Trump meets with China’s President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.

Policy Analyses in International Economics 100. Washington: Peterson Institute for International Economics. 10 PB 18-13 June 2018 Rassenfosse, Gaetan, and Emilio Raiteri. 2016. Technology Protectionism and the Patent System: Strategic Technologies in China. Paper. Shapiro, Carl. 2001. Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting. In Innovation Policy and the Economy, Volume 1, ed. Adam Jaffe, Joshua Lerner, and Scott Stern. Cambridge, MA: MIT Press. USTR (United States Trade Representative). 2018. Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, under Section 301 of the Trade Act of 1974. Executive Office of the President of the United States. Washington. Wei, Shang-Jin, Zhuan Xie, and Xiaobo Zhang. 2017. From ‘Made in China’ to ‘Innovated in China’: Necessity, Prospect, and Challenges. Journal of Economic Perspectives 31 no. 1: 49–70. USITC (United States International Trade Commission). 2011. China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy. Investigation No. 332-519, USITC Publication No. 4226, May 2011. Washington. Vernon, Raymond. 1966. International Investment and International Trade in the Product Cycle. Quarterly Journal of Economics 80: 190–207.

The craziest conspiracy theories often turn out to be true;THE MYTHS OF 9/11

The craziest conspiracy theories often turn out to be true. 

Looking back, it seems doubtful that America ever recovered from the bad trip of the 1960s. Indeed, one has to wonder whether potential recovery wasn’t intentionally forestalled. The Kennedy assassinations, along with the killings of Martin Luther King, Malcolm X, Fred Hampton, and so many others, were a national nightmare. So was the pointless carnage in Vietnam. The protest movement that rose up against the nightmare, seeking to awaken the nation and return it to sanity, collapsed into the drug-fueled promiscuity and bloody chaos whose avatar was none other than Charles Manson. Now, on the occasion of the fiftieth anniversary of the Manson murders, we must wonder whether Manson was also an avatar another kind of CHAOS: the CIA’s ultra-secret, ultra-illegal domestic counterinsurgency program.

That notion isn’t entirely new. In 1993, while researching my first book, A Guide to Mysterious San Francisco, I heard rumors that Manson was a CIA mind control slave. But since this was just hearsay, unsupported by citable sources, I left it out of the book, and consigned it to the relatively short list of major conspiracy theories that might actually not be true.

That list keeps getting shorter. Tom O’Neill’s CHAOS: Charles Manson, the CIA, and the Secret History of the Sixties makes a convincing, thoroughly documented case that the official Vincent Bugliosi rendition of the Manson murders is as blatantly bogus as Bugliosi’s “Oswald acted alone” version of the JFK assassination. Though O’Neill doesn’t quite come right out and say so, his evidence suggests that CIA mind control maniac Louis Jolyon “Jolly” West and/or his acolytes brainwashed a psychopathic prisoner named Charles Manson, gave him a CIA get-out-of-jail-free card, set him up next door to Jolly’s safe house in the Haight-Ashbury hippie district of San Francisco, and taught him how to control human minds using drugs and hypnosis. The CIA’s Operation CHAOS, it may be plausibly surmised, first weaponized the Manson family for use against the Black Panthers, then finally turned Manson into the ultimate TV commercial against the antiwar counterculture. When Manson and one of his CIA handlers, Reeve Whitson, rearranged the Tate murders crime scene before anyone else got there, they were literally setting the stage for the upcoming theatrical production.

Tom O’Neill’s twenty years’ research definitively demonstrates that a massive cover-up of the truth about the Manson murders is no longer a hypothesis, it is established fact. Federal, state, and local law enforcement agencies, as well as the courts and big media, have been effectively corrupted and muzzled. But the truth, or at least enough of it for us to get the picture, is tucked away in the documents they forgot to shred. Though the most important Manson-related documents have either “mysteriously disappeared” from various archives or are being stubbornly withheld for undisclosed reasons, O’Neill—an obsessively persistent journalistic gumshoe—managed to get his hands on enough of them, and to find and interview enough witnesses, to turn the conventional picture of the Manson family upside-down and inside-out.

The whole story, in its multilayered complexity of detail and documentation, is beautifully told in O’Neill’s book. Like many authors with mainstream publishers, O’Neill generally refrains from speculating about the big picture; instead, he lays out the hard facts and invites the reader to connect the dots. So let’s accept his invitation and consider the the CIA’s Operation Manson in historical perspective.

Political Demonization and the Creation and Maintenance of Public Myth

The Manson op was an exercise in demonization. Manson, an ordinary psychologically-disturbed small-time criminal with psychopathic tendencies, became, under the expert tutelage of Jolly West & Co., an avatar of the demonic second only to Hitler in the mass mediated popular imagination. Manson’s long hair and scraggly beard became an icon of pure evil, as Hitler’s mustache had before, and as Bin Laden’s beard would later. In literally demonizing Manson, Jolly and The Company (wasn’t that a ‘60s Bay Area band? No, you’re thinking of Big Brother) figuratively demonized the antiwar counterculture that was giving the Establishment fits.

By demonizing Manson, the CIA “skunked” the antiwar counterculture’s message of “peace, love, freedom” by associating it with an image of violence, hatred, and extreme authoritarianism. After all, the people behind such operations know that the best way to discredit a message is to put it in the mouth of an unpleasant spokesperson. That’s why criticism of the world’s worst crime syndicate, the international bankster cartel, has come to be associated with Hitler’s evil mustache. In like fashion, resistance to Zionism and other Western assaults on the Islamic world has come to be associated with Bin Laden’s big black beard. These associations didn’t just happen by accident. They were engineered.

Philip Zelikow, effectively the sole author of that work of fiction known as the 9/11 Commission Report (which he completed in chapter outline before the Commission even convened) is a history professor and self-styled expert in “the creation and maintenance of public myths.” Zelikow defines public myths as “beliefs (1) thought to be true (although not necessarily known to be true with certainty), and (2) shared in common within the relevant political community.” The public myths he is most interested in are those that most powerfully shape political perception and behavior; the first example he gives is the myth of the dastardly Japanese surprise attack on Pearl Harbor, which transformed America from an isolationist republic to an interventionist empire.

Anyone who has studied the alternative literature on such events as Pearl Harbor, the Kennedy assassinations, and 9/11 knows that any overwhelmingly powerful mythic event that changes public perceptions and, in so doing, changes history, ought to be greeted with profound suspicion and subjected to the most painstaking scrutiny. As Philip Zelikow wrote in a 1998 Foreign Affairs article, a catastrophic terror attack on America, such as the destruction of the World Trade Center, would be a “transforming event,” a “watershed event in American history” that would, “like Pearl Harbor…divide our past and future into a before and after.” The “after” would feature “draconian measures, scaling back civil liberties, allowing wider surveillance of citizens, detention of suspects, and use of deadly force.” Zelikow’s 2001 false flag operation would achieve all that and more. It succeeded in demonizing opposition to Zionism and empire, and to tyranny in general, by associating resistance with the fearsome image of a scary looking guy sporting an easily-identifiable villain’s beard.

Indeed, bearded heavies like Bin Laden and Manson seem to come straight out of central casting. They remind us of neoconservative guru Leo Strauss’s advice to Machievellian operators: Make your operation like a B-grade Hollywood Western: slap a big white hat on the good guy and a big black hat on the bad guy. And if you don’t have a real enemy to play the villain’s role, invent one.

The official version of the Manson myth is told by its self-aggrandizing, profiteering hero, Vincent Bugliosi, the prosecutor who put the bad guy behind bars. In somewhat similar fashion, the official version of the 9/11 myth, ventriloquized by Zelikow, seems told by a sort of Greek chorus representing the heroic victims, the American people. But in both cases, the ostensibly heroic narrator is the real villain. In the case of 9/11, Zelikow must be suspected of involvement in writing the script for the 9/11 false flag operation itself, and then plagiarizing that script for his Report. And in the case of Bugliosi, it’s clear that he consciously crafted a big lie for the jury that he later adapted for his bestseller, committing numerous crimes, including subornation of perjury, in the process.

As for the villains, both Manson and Bin Laden were manufactured by the CIA. As O’Neill’s evidence suggests, Manson was Jolly West’s golem, taught by Jolly how to manufacture more golems…preferably 14-year-old female ones. Bin Laden, for his part, was created by the CIA and its Saudi assets as a front man for the CIA-Saudi war to expel the Russians from Afghanistan. Originally assigned the hero role for an audience of Muslims, Osama was later transferred to a different movie in which he played the villain for an audience of Americans.

Though the official Manson narrative demonizes hippies, O’Neill’s revisionist account shows that the worst decadence and depravity was located not at the corner of Haight and Ashbury, but in Hollywood and the entertainment industry; Los Angeles, as Faulkner famously said, is “the plastic asshole of the universe.” The movie and music business, O’Neill shows, was (and presumably remains) infested by gangsters, intelligence agency criminals, and an astonishing variety of perverted human vermin. (There is considerable overlap between those three categories.) The worst part is that these people, the scum of the earth, literally run the show. Real power and authority is invested not in elected officials and the courts, but in supermob gangsters and their intel agency partners in crime. The cops, courts, and media are terrified of such people, and basically do whatever they’re told.

The Manson murders and the JFK assassination, two nightmarish crimes, bookended “the 1960s”: that brief period from 1964 to 1969 that witnessed the meteoric rise and fall of youthful idealism, whose chief expressions were the civil rights and antiwar movements. Like 9/11, the JFK assassination divided time into a more innocent “before” of wholesome family sitcoms and a less innocent “after” of protests, violence, and social breakdown fueled by pills, especially of the psychedelic and birth control varieties. Between JFK and Manson, youthful idealism looked like it might win the day. After Manson, America entered a “whole new world” of extreme disillusionment.

The JFK and Manson murders aren’t just linked in the American mythic imagination; they also intersect by way of a certain already-mentioned CIA mind-control psychopath, Dr. Jolly West. O’Neill’s Chaos presents evidence that Jolly West brainwashed and rendered mad two key figures in the respective dramas, Charles Manson and Jack Rubenstein a.k.a. Ruby. We have already seen how West made a madman of Manson. As for Ruby, it seems he was very likely programmed to kill Lee Harvey Oswald, just as Sirhan Sirhan was later programmed to fire in the general direction of Robert Kennedy. And though there is no hard-and-fast documentation proving West mind-controlled Ruby, O’Neill does document West’s suspiciously quick and intense post-assassination interest in Ruby, which culminated in West getting a private audience with the gun-smuggling cop-bribing Mickey Cohen organization hit man. Prior to West’s closed-door no-witnesses one-on-one with Ruby, the latter had been perfectly sane, though puzzled about being accused of a crime he had no memory of committing. From the moment West stepped out the door of Ruby’s cell, Ruby was stark, raving nuts.

America has real enemies, people like Jolly West and his bosses, psychopathic vermin who have infested the highest echelons of power. In the wake of their murder of JFK, they understandably feared exposure. The biggest threat was coming from honest, idealistic, politically-engaged citizens, most of whom leaned toward the political left in general, and the civil rights and antiwar movements in particular. To neutralize that threat, they flooded the civil rights and antiwar communities with LSD and amphetamines (as well as Cointelpro and CHAOS agents provocateurs). After several years of this, they administered the coup de grace by immortalizing the iconic evil hippie, Charles Manson, in a mass mind-control operation that sounded the death knell of the 1960s and set the stage for the age of dystopian neoliberal authoritarianism that followed.

The takeaway is that our real enemies conceal themselves by fabricating ersatz enemies and elevating them to mythic, iconic status. Their controlled mainstream media summon us daily to engage in the obligatory Orwellian two minutes of hate. When will we wake up and learn to hate not the cartoon figure on the screen, but the psychopath behind the curtain?

THE MYTHS OF 9/11

Tears, contemplation and solemn moments as the world reflects on the horror of that brutal September morning

Busting 9/11 Myths: Nanothermite, Big Nukes and DEWs

On 9/11, Silverstein’s big bet paid off. An unpermitted, illegal, murderous controlled demolition destroyed the entire complex, including the three skyscrapers WTC-1, WTC-2, and WTC-7. Ludicrously, airline crashes and jet fuel (kerosene) were blamed, even though film unequivocally shows the buildings being blown to kingdom come.

Silverstein should have been right in the middle of that gigantic explosion. On every other day except 9/11, he breakfasted with his daughter in the Windows to the World restaurant. But on the morning of 9/11/2001 his wife reminded him of an appointment with the dermatologist.

“Lucky Larry” walked off with an insurance jackpot exceeding five billion dollars. He got it by successfully arguing that he had been victimized by two separate and unrelated terrorist attacks—namely, the two airplanes. (Shades of great crime film Double Indemnity.)

Silverstein actually confessed to participating in the controlled demolition of WTC-7, even though he would later argue that “terrorists” did it—and collect three quarters of a billion dollars on that building alone!

Will President Donald “elect me and you’ll find out who REALLY did 9/11” Trump go after Silverstein and his weekly phone buddy Netanyahu? Not likely. Trump loves Netanyahu, and his mobbed-up fixer lawyer Rudy “I knew the buildings were coming down but didn’t warn the firefighters” Giuliani is hardly likely to open up the 9/11 can of worms.