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Culture War Roundup for the week of September 11, 2023

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Inching closer to the eradication of financial privacy

FinCEN has new rules taking effect over the next year and a half that require basically all companies to disclose the "beneficial owners".

The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to FinCEN. Designed to protect U.S. national security and strengthen the integrity and transparency of the U.S. financial system, the rule will help to stop criminal actors, including oligarchs, kleptocrats, drug traffickers, human traffickers, and those who would use anonymous shell companies to hide their illicit proceeds.

I won't quote the whole thing but it's a short and easy read.

This statement is a bit disturbing:

FinCEN will engage in additional rulemakings to: (1) establish rules for who may access beneficial ownership information, for what purposes, and what safeguards will be required to ensure that the information is secured and protected [...]

This provides another avenue for rogue members of institutions to leak private information to hurt people they don't like. Depending on the rules that ultimately come out, this avenue could be very wide, especially since there is often discretion over when to enforce the rules.

My revulsion to these rules goes beyond the erosion of privacy, though. It should be possible to be a citizen of a place without exposing your entire life to the mercy of its government. You can't avoid being at its physical mercy when you're within its territory, but you can leave now and then. The way financial rules work in the U.S., you have to report and pay taxes on all finances, even work and investments in other countries. You also have to pay taxes on income that doesn't affect anybody else (income you haven't spent). With these new rules, you might have to pay a reputational tax when wealth you were keeping private gets exposed. I would much prefer citizenship or investment in a place to be like membership in a club - you're judged by your behavior at club events, not by your life outside it.

This provides another avenue for rogue members of institutions to leak private information to hurt people they don't like. Depending on the rules that ultimately come out, this avenue could be very wide, especially since there is often discretion over when to enforce the rules.

As usual, the motte assumes this will be used for the culture war. Realistically, it’s going to be used for dividing assets up in divorce and assessing child support. Maybe some other financial applications.

That is an interesting example of a slippery slope. Divorce has been legal in Christian countries for what? Around a hundred years? Longer in some places (America), a more recent development in others (Southern Ireland).

I think it came in on the basis that maybe 1% of marriages were wretchedly bad. Let them be dissolved and the sum of human happiness would rise, with no unexpected consequences to follow. But divorce became more common. Rich middle aged men took to trading in their middle aged wife that they had married when young, and starting a second family with a new, younger wife. That was understood as an abuse, and was tackled with alimony laws that were generous to the old wife. Those generous payments encouraged wives to divorce their boring middle-aged husbands, in the hope of a more exciting sex life, as an independently wealthy women. Divorce rates soared towards 50%. That in turn soured men on marriage. Men are reluctant to marry, and some countries (Canada?) have tackled this problem with marriages of adhesion (usually called common law marriages). Live too long with your girlfriend and bam, married.

Slipping further down the slippery slope, we are eradicating financial privacy to tackle the problem of men hiding their assets from ex-wives. Ponder how strange that would have seemed in the early days of divorce, when the idea was that the husband was perhaps an abusive drunk, probably unable to hold a job. Of course we want the woman to be able to escape and start a family with a hard working, good provider husband. Imagine if the early divorce law reforms had including the full range of legal changes. People who doubted that permitting divorce at all was wise, would have been confronted with the idea that the husband might be rich, and financial secrecy would have to go so that the ex-wife could be guaranteed her big share of the dosh. I think that people would never have started down the road of permitting divorce.

Rich middle aged men took to trading in their middle aged wife that they had married when young, and starting a second family with a new, younger wife

If we assume the role of a designer, or at least guide, of social norms, is there anything wrong with this specifically? Assume the children of the first marriage are already 18+, so it doesn't materially disadvantage the children so much. Society ends up with marginally more children, with marginally better genes (due to being rich).

Divorce rates soared towards 50%. That in turn soured men on marriage

I don't think this happened?

Slipping further down the slippery slope, we are eradicating financial privacy to tackle the problem of men hiding their assets from ex-wives

Financial privacy is being eradicated because it's universally useful the state, and large companies, to know your financial history. Useful both to the state, for taxation, incentive schemes, and enforcing the law. But also useful to you! You can pay taxes more efficiently, participate in government programs with less hassle, and e.g. get better terms on loans because the bank knows you better. I don't think men hiding their assets is a central reason for this.

I think that people would never have started down the road of permitting divorce.

If early Christian reformers had known that they were part of a long trend towards atheism, they might not have started down the road. Atheism is still correct though.

I think it came in on the basis that maybe 1% of marriages were wretchedly bad.

I wonder how much of that was also due to decreasing prevalence of disease death and maternal mortality. In 1820 a drunkard or shit tier husband might be convinced to shape up by the woman's male relatives, or by community pressure, or something like that. If he didn't, he might or might not meet an unfortunate accident or get sick, and healthy men got sick from disease a lot. Or the woman just died in childbirth. In 1920, disease and childbirth death weren't as common and so covert homicide was a bit more difficult. Also people were a little bit more atomized especially in large cities.

Well yeah, but I'm assuming that tax evasion cases already have access to this kind of information.

I've heard of South Dakota trusts spoken of in similar tones.

Do you have statistics how often motte is wrong on those assumptions? So far we have seen bank accounts closed, paypal and similar frozen and payment processors dropping people and businesses over culture war issues. The more financial regulation there is the easier it is to weaponise and unfortunately right now it seems my adversaries control the institutions.