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Digging in vs. Moving Out
Dec. 30, 2010
The nomad drifts. He goes with the flow. The sharper ones go before the flow shifts course. In contrast is the pioneer. The pioneer is a pilgrim. He moves out in order to dig in. He has a final destination. The mindsets are different.
Go or stay? Jimmy Durante set forth the problem two generations ago.
Simon Black reproduces a column he wrote almost a year ago. It is on the idea of multiple flags, meaning multiple citizenship. It is posted here:
I think he is fundamentally wrong.
As the protracted effects of government stupidity become more apparent, one such trend that I see emerging this year is the rise of the sovereign individual --- the rebirth of the multiple flags approach.
I've talked about this before and I wanted to start off the year with a quick primer since it is a recurring theme of this letter. To be more specific, I absolutely implore you to plant multiple flags as part of your New Year resolutions.
The idea, originally conceived by international finance guru Harry Schultz, suggests diversifying different aspects of your identity across multiple 'flags,' or geographic jurisdictions.
As an example, Schultz coined the term 'three-flags' in the 1960s, suggesting that an individual should have citizenship in one country, residence in another, and businesses in another.
Later authors expanded on this idea by adding other 'flags,' including places to bank, places to 'play,' places to house electronic assets, etc.
Many writers today talk about 'five flags' or 'six flags,' but frankly I don't see a limit on the number of things we can diversify geographically: email, citizenship, residence, banking, brokerages, gold/silver deposits, business registration, e-commerce, customer base, phone/fax, postal mail, etc.
So what's the point? Why should you do this?
Diversifying geographically increases your freedom, your privacy, your sovereignty, and potentially reduces your tax burden. It protects you against bank failures, market changes, litigation, divorce, overzealous governments, and "NGC's" (non-government criminals).
Perhaps even more importantly, planting multiple flags expands your existing contact base and opens a lot of doors to new opportunities.
Think of it like a life insurance policy --- even if the worst never happens, it gives you great peace of mind and in many cases can rank as a significant asset.
While everyone recognizes these benefits of life insurance, no one actually expects to die anytime soon… so they put shopping for a policy on the back burner, sometimes until it's too late.
In this case, the time to start diversifying internationally and planting multiple flags is now… before it's too late --- before currency controls are imposed, before tax codes change, before the last remaining foreign banks close their doors to foreigners.
I could cite you examples all day long, but I will list just a few hypothetical cases --
He lists the usual suspects: lawsuits, government regulations.
He sees life as tool-based, not people-based.
Technology makes it incredibly easy to diversify, and I see more and more people waking up to that reality each day. It takes only moments to set up an offshore email account, a few minutes to lease a private vault, and just a couple of hours to set up a company in Singapore.
The possibilities are truly endless, you just need to find the right tools and the right flags that work for you. Yes, even if you are a US citizen who is taxed on worldwide income, there are still several options available to live a multiple flags lifestyle.
This outlook is not shared by most people. It never has been. A few men may dream about it, but women don't. They know better.
This outlook is the outlook of the drifter -- a high-income drifter, but a drifter nonetheless.
Life is more than contractual. It is covenantal. It begins with binding laws and relationships in the family.
Multi-flag people rarely have strong family connections. They do not talk about their wives. We do not hear about their children. Do they even have children? We do not hear about their grandchildren.
You do not hear about their local connections: friends, associates, churches.
Bill Bonner is an exception, but he is a rare case. And, just for the record, he is back in the USA, at least for a time.
We do not hear about their dreams for the world beyond their deaths. We do not hear about the legacy they expect to leave behind, and how their heirs will build on their legacies.
We do not hear about turning the tide away from the march into tyranny.
We do not hear about the wives -- or mistresses -- left behind, the children left behind, and the legacy left behind.
Here is what we hear about:
1. How to get out safely
2. How to evade responsibility for the future
3. How to reduce your tax burden by moving
4. How to escape American lawyers
We do not hear about digging in. We do not hear about planting trees that will be enjoyed by people three generations from today.
Here is what we hear about:
Above all, we do not hear about the pioneer spirit. Pioneers move out to dig in elsewhere. New cultures are built by pioneers.
Becoming a pioneer takes courage. It also takes a vision of the future. It takes patience to build something permanent in a new place.
It means learning the customs of a new place. It means making new contacts, establishing new relationships, establishing new covenants. It means becoming dependent on different people.
We do not have autonomy. We occasionally can choose which people and institutions we will commit to. We switch allegiances. The weaker these allegiances, the cheaper it is to move.
The cost of the move is broken relationships. The multi-flag people have few allegiances. This is why they can move out. They are not dug in.
Emigrants move to foreign lands, but usually close to previous emigrants from their region. They join a community.
A few European Jews got out in 1933. They were wise. But they got out because a monster had gained control, and he planned to extend that control. He broke covenant with them and all of Europe. So, they left. The moved out to dig in elsewhere. They did not move out to become rootless. This kind of event is rare in history. It is the departure of future victims in the face of revolution.
There is no revolution in the United States. The Tea Party is not a revolution. It points to a restoration, not a tearing down.
Government bankruptcy is an economic revolution based on political conservatism: more of the same. More debt produces bankruptcy: a revolution in economics. We can prepare for that. It will give us opportunities to rebuild locally.
There will be ample opportunities to rebuild locally. Dig in.