[from Porter Stansberry, November, 2010]
I never thought I'd cite Peggy Noonan in one of my reports. In my mind, she is a hack political writer, completely out of touch with what's happening in the real world – the world outside the Washington D.C. beltway. But recently... she wrote this in the Wall Street Journal:
The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes.
The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.
I've been writing about this risk – I call it the Atlas Shrugged risk – for months . . .
Most people don't understand how dangerous a narrow tax base is, especially when those few heavily taxed people have the means to exit. Right now, we're running deficits approaching $2 trillion annually. We can get away with this kind of fiscal behavior for a little while because we control the world's reserve currency (at least for now) and the world thinks of America as a law-and-order place, where people pay their taxes.
Unfortunately for our creditors, only about 1% of Americans pay around 40% of all income taxes. There are roughly 100 million U.S. households, which means about 1 million people are currently paying for about 40% of all the income tax receipts. That doesn't count the big contributions these folks make to the tax base as a whole – their corporate taxes, their sales taxes, the payroll taxes they pay on their employees, etc.
Now... what if this 1% – these million people – decided they don't need a big income anymore? Or what if they decided they'd rather live somewhere else... some place where the weather is always perfect... where a great bottle of wine costs $5... where a steak dinner (grass-fed beef, no hormones) costs $10?
Well, several of my friends went to Cafayate, Argentina, in 2005 looking for a place to build our version of Gault's Gulch. You couldn't find a more beautiful place: Cafayate sits in the middle of an enormous, high desert valley, about 7,000 feet up in the Andes mountains. It's high enough and close enough to the equator that the weather is essentially the same year round. And it's perfect – highs in the 80s, lows in the 40s each night. No humidity. My friends built a small luxury hotel overlooking a crystal blue pool. They planted a vineyard that stretches out beneath a vista of 15,000-foot mountains. (The climate and the dry, rocky soil are perfect for planting high-quality grapes and making super-premium wines.)
This is easily one of my favorite three or four places in the world. It is also a very, very safe place. It's a small community that's literally at the end of the road. Even a nuclear holocaust wouldn't change life around here very much.
As recently as 15 years ago, you wouldn't have found a single American here – it's just too far out. (It took me 23 hours of constant travel to get here yesterday, and that's the fastest I've made the trip.) But technology is allowing lots of folks to come here without losing touch with their businesses, investments, and families. And so the area's advantages – its incredible beauty, fantastic climate, friendly and educated people, etc. – have begun to outweigh the disadvantages of distance.
I've written about these efforts over the years. Most people thought the idea was crazy. But this fall, I gave a speech at the grand opening of La Estancia de Cafayate – where more than 150 lots have been sold, where a golf course has been built, and where a beautiful clubhouse now stands. I shared the podium with Doug Casey, Rick Rule, and Bill Bonner – the three most successful and influential businessmen I know well...
And 270 other people – nearly all Americans – will join us. I don't know if all 270 folks here are in the 1%... But it's a safe bet most of them are significant taxpayers. These are the wealthy folks Peggy Noonan is afraid will stop paying their taxes. And she's right. That's why many of them are here. They're looking for a place to escape, where the government will leave them alone... where they are safe... and where they are free.
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