How I Accidentally Joined the Vast Right-Wing Conspiracy : (And Found Inner Peace)
by Harry Stein


Conservatives aren't born--they evolve. And for Wall Street Journal ethics columnist Harry Stein--once vilified in The Village Voice as "a well-known asshole"--that evolution began with the birth of his daughter. But Stein's memoir on transforming from bleeding-heart liberal to someone who gets junk mail from Patrick Buchanan isn't a sappy tale of fatherhood; it's a witty, intelligent account of how one man began to think for himself. "I remember when I was called a fascist for the first time," Stein writes about a dinner conversation in which he sided with Dan Quayle over the Murphy Brown/single-motherhood controversy. While alienating his left-leaning friends, Stein takes to task The New York Times, AIDS hysteria, men-hating feminists, and Bill Clinton, just to mention a few bastions of liberalism that contributed to his social makeover.

Contrary to another conservative stereotype, Stein manages to keep a sense of humor throughout the book, writing in a conversational, amused style. His quips and lists read more like naughty office e-mail than diatribes from an angry right-winger: No. 3 in the 12 Ways to Tell If You've Joined the Right-Wing Conspiracy: "You sit all the way through Dead Man Walking and at the end you STILL want the guy to be executed." Longtime conservatives and converts like Stein will find themselves nodding their heads in agreement. Others will simply get a good laugh.

February 5, 2001

In defense of Marc Rich
by Stephen Slivinski

Of the numerous pardons granted by President Clinton in his excruciatingly long final week in office, none seem to have generated as much bellyaching as the pardon of Marc Rich. Everyone expected the Susan McDougall pardon; everyone was nonplused by the Roger Clinton pardon. Others were clearly an attempt to pander to the bureaucrat-as-crook contingent of the Democratic Party (Henry Cisneros and Dan Rostenkowsi). Even the numerous pardons of non-violent "drug offenders" were non-controversial (which, if nobody seems to mind their leaving jail, makes you wonder why we're still putting them there in the first place). But Marc Rich . . . egad, say Republicans on the Hill, how can this crook get off so easy? It's enough to spur a congressional hearing! (Which, incidentally, will begin on February 7.)

I'll admit I was not at all familiar with the Marc Rich case until the pardon. While I was disappointed that Michael Milken didn't receive one, I wasn't losing nearly as much sleep as the anti-Rich crowd was. Why are so many people up in arms over this? Did he torture puppies or something?

As it turns out, Marc Rich was accused of the following series of "offenses": oil "profiteering", tax evasion on these "illegal profits," and unlawfully trading with Iran during the hostage crisis. Yet everything Rich is guilty of is not a crime in the traditional sense, because he violated the rights of nobody. Rich's actions simply offended the sensibilities of government economic planners and flew in the face of their wrong-headed policy and, therefore, he must suffer at the hands of overzealous prosecutors and probing IRS agents.

Let's take a look at the chain of events. In 1973, the OPEC embargo sent crude oil prices through the roof, so the federal government, in typical government fashion, came up with the worst possible solution: it imposed price caps on every oil producer in the United States in an attempt to control the price spikes. Marc Rich and numerous other crude resellers were able to get around the price caps (which didn't apply to resellers) and make lots of money as a result of a policy that destroyed the profits of -- and discouraged increased production by -- larger, more-efficient oil wells. Incidentally, oil reselling was not a fringe business. In response to the price caps, the number of oil resellers in the U.S. grew from 12 before the oil crisis began to 500 in 1978.

On top of that, Mr. Rich was also guilty of defying the trade embargo against Iran during the hostage crisis. (Rich claimed his company was based in Switzerland and wasn't subject to the trade rules of the U.S.) In either case, he was doing his customers and his stockholders a great service by trading with other companies and citizens in a sovereign nation. The only problem was that it happened to be a nation and a group of citizens that the U.S. government declared we shouldn't like. Bear in mind, it was not Mr. Rich that imposed the price caps or the trade embargo: it was the federal government. He was merely responding to a very bad policy that was causing more harm than good. He was also bringing to market a greater amount of oil at competitive prices. If it was not for Marc Rich and the nation-wide network of oil resellers, the United States energy crisis could have been much worse than it was.

In light of all this, it seems that America should have been thanking Marc Rich. Instead, his activity was labeled "illegal profiteering" by the government merely because he made his money in a way the government didn't approve. This implies, of course, that the government can and should decide what profits are legal and which are not.

Add to that the disgust of the IRS when they found out they couldn't get their hands on these illegal profits, because . . . well, because the IRS can't tax so-called illegal profits. So the government decided to change the rules a bit. Not only did they decide to accuse Marc Rich of making illegal profits, but they also claimed he owed taxes on the money he wasn't supposed to have in the first place. The best of both worlds for our stern Uncle Sam.

Never mind that Marc Rich pleaded guilty to a total of 87 counts stemming from these transactions (including tax evasion on the aforementioned "illegal profits") and paid a $150 million settlement, $813,000 in fines and court costs, and agreed to forgo $30 billion in income-tax deductions on the settlement payments. Altogether, it was a loss of about $181 million on activity that would have been completely legal had it not been conducted in the mid-1970s when the federal government was trying to manage a segment of the economy Soviet-style.

Rich didn't return to the U.S. after renouncing his citizenship in 1983 to live in Switzerland where his company was based, from where he could not be extradited, and where those illegal profits accumulated far outside the reach of U.S. revenue goons. His lawyers knew he could be arrested the minute he stepped onto American soil. The U.S. Justice Department continually tried to trick him into jail by leaving Switzerland, but to no avail. With the pardon, it is likely Rich will be able to return to the U.S. once again.

The congressional investigation of the Rich pardon will likely revolve around the procedures of presidential pardons and the seeming improprieties of the gifts that Rich and his wife delivered to Mrs. Clinton in the waning days of our long national nightmare known as the Clinton Presidency. But absolutely nobody will question the legitimacy of the government to act as it did in the 1970s, and as it continues to act today, arbitrarily imposing trade sanctions and violating free markets. That is a far more awful affront to humanity than any of the "crimes" of which Marc Rich was accused.

Stephen Slivinski is an economist and writer living in Alexandria, Virginia.