WikiLeaks, Amazon, Paypal, and Mastercard

by Jacob G. Hornberger
Dec. 08, 2010

While supporters of WikiLeaks are criticizing Amazon, Paypal, Mastercard, and other companies who are distancing themselves from WikiLeaks, we should at least consider why such companies might be doing so. When it comes to the U.S. government, everyone knows that we’re not dealing with pikers. This is a tough, ruthless, vicious gang of statist politicians and bureaucrats who will stop at nothing to inflict harm on those who buck it. This is especially true with businessmen, who are particularly vulnerable under the highly regulated and taxed statist society in which we live. The fact that the federal government has been wounded by WikiLeaks’ leaks only makes it that much more dangerous.

Consider Joseph Nacchio and Mark Cuban, both of whom bucked the feds and who have paid a high price for doing so.

Recall the illegal NSA spying scheme engaged in by the Bush administration after 9/11 — the one involving private telecommunications companies and the NSA. When federal officials approached the telecoms seeking private and confidential information about their customers, all but one of them agreed to play ball with the feds, notwithstanding the fact that the scheme was clearly illegal and unethical. After all, the government had no search warrants and the companies had promised their customers confidentiality.

What should the companies have done? They should have refused to violate the law and they should have lived up to their contractual promises to protect the privacy of their customers. Instead, perhaps fearing governmental retaliation or perhaps wishing to curry favor with the government or perhaps operating under some sort of misguided sense of patriotism, most of the companies buckled under federal pressure. Falling for the government’s representations that the information was needed to protect “national security” (the magic term for keeping federal wrongdoing secret), most of the telecoms decided to play ball with the feds, broke the law, and sold their customers down the river.

Not so with Joseph Nacchio, CEO of Qwest Communications, who should go down in history as one of the most courageous heroes of our time. Unlike the CEOs of the other telecoms, he refused to buckle. He refused to sell out his customers. He refused to break the law. He said no to the feds. (See my 2007 article “The War on Telephone Privacy.”)

What happened to Nacchio? Did the feds punish him for making that choice? Of course not! This is a free society. Don’t you know that? Nacchio had every right in the world to refuse to engage in that illegal, unethical scheme concocted by the feds.

Just coincidentally though, after he refused to play ball with the feds Nacchio was indicted for violating silly economic regulations known as insider-trading laws. Oh, of course it didn’t have anything to do with his refusal to play ball with the feds. It was all because he just happened to have violated those silly economic regulations at the time that he was refusing to play ball with the feds. And of course, they got him. Convicted of 19 counts of insider trading, he was sentenced to six years in federal prison, where he currently resides.

Now, sure, statists would say, “Well, the law is the law, and he shouldn’t have broken the insider-trading law.” But statists miss the point, or maybe not. The real purpose of a regulated society is to ensure that a Sword of Damocles is always hanging over people in the business community. In that way, they are able to be kept in line. If they refuse to play ball with the government, officials can go after them for any number of regulatory or tax violations any time they want, while, at the same time, claiming that it has nothing to do with their refusal to play ball.

Every businessman, especially those who run big companies, knows that at any given time he can be found in violation of some regulatory or tax law. Why do you think there are millions of economic regulations? Why do you think the income tax code is so complicated? It’s that way because then they’re able to go after businessmen whenever they want to.

The rationale for the statist society was best summed up by Dr. Floyd Ferris, the slimy bureaucrat from the State Science Institute, who said to Hank Rearden in Atlas Shrugged:

“Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against — then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it. You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted — and you create a nation of law-breakers — and then you cash in on guilt. Now that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.”

Consider Mark Cuban, the billionaire owner of the Dallas Mavericks. He hacked the feds off by publicly questioning the government’s official version of 9/11. So, did they punish him for that? Oh no, of course not! Don’t you know that we have freedom of speech in this country? Instead, they went after him in a civil suit alleging insider trading violations. Yes, the same type of stupid economic regulation that they used to go after Joe Nacchio.

I suppose it’s only fair to point out that the U.S. government isn’t the only government that uses tax and regulatory provisions to go after businessmen who don’t play ball with the government. The Russian government, under Vladimir Putin and Dmitry Medvedev, does it too.

None of this, of course, is to defend Amazon, Paypal, Mastercard, and or the other companies that are distancing themselves from Wikileaks. It’s just a way to put their conduct into context.
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Jacob Hornberger is founder and president of The Future of Freedom Foundation. Visit his blog.