Treasure Islands - Nicholas Shaxson [68]
When president John F. Kennedy launched his “Alliance for Progress” with Latin America in 1961—“a vast cooperative effort, unparalleled in magnitude and nobility of purpose,” as he put it—he said he hoped to coax Latin Americans into repatriating all the money they had stashed in U.S. banks in order to reinvest it at home. Latin American leaders quickly pointed out that this would not happen unless the United States amended its tax laws, which promoted secret banking. Substantial pockets of secretly held foreign wealth already existed, not just on Wall Street but elsewhere too: in Texas, for example, but also most especially in the Southern District of Florida.
Just as Latin Americans used the United States as a home for tax evasion, immigrant communities in the United States, and especially first-generation Americans, were major U.S. tax evaders. “For various cultural reasons they didn’t trust anyone—so they put it offshore,” said Mike Flowers, a former U.S. Senate staffer. In addition to the first-generation Latin Americans who live across the nation, Flowers described the large concentrations of first-generation Iranians and Russians in California, “New Asians” on the West Coast, Jewish communities in various locations, and so on. “They tend to come clean after they have kids and have been here a while,” he continued. “They get settled and then they think, ‘Oh my God, I have all this offshore money and what do I do now? If I get caught, I’m screwed.’”
In an article entitled “Miami, the Capital of Latin America,”6 Time magazine hinted at the city’s in-between, financialized, quasi-offshore status: Miami was “Latin America’s Wall Street . . . a hemispheric crossroads for trade, travel and communications in the 21st century—a sort of Hong Kong of the Americas.” From the 1950s and 1960s, Florida became a pivot for the French Connection heroin route, for Kuomintang drugs flowing into the United States via Hong Kong (which Lansky laundered through Florida real estate), for Latin American flight money, and for Colombian drug money, often routed via the Bahamas, Panama, and the Netherlands Antilles.7
Jack Blum, then a Senate investigator, remembers sitting on his veranda in Miami in those days and listening to the gunfire.
“This place was nuts,” he said. “The stories in the Miami Herald were so fantastic, you’d say, ‘Why hasn’t any national editor picked up on this?’” The reason, he found, was that the editors simply didn’t believe them. Blum tells of one small aircraft coming in from Colombia via the Bahamas, then getting chased by U.S. helicopters. The pilot tried to escape by flying just under a commercial jetliner, then bailing out just before landing, after first hauling overboard the cocaine with the plane on autopilot.
“The first bag goes through the roof of a house—and nobody complains,” Blum said.8 “The second whacks the steeple off the South Miami Baptist church. The third bag falls into a community swimming pool and soaks the audience of a meeting of Crime Stoppers. The plane went down in the Everglades. The last bags probably got dragged off by alligators. He got busted.
“That happened. That happened.”
By the 1980s, two-fifths of the money on deposit in Miami banks was reckoned to have originated overseas, particularly in Latin America. After 1976, the Florida region became the only one of the Federal Reserve’s regions to show persistent (and huge) cash surpluses.9 “Half the property in Miami is owned by offshore shell companies, and the largest yachts on the Intracoastal Waterway are registered offshore,” said Blum. “Miami is the facility of choice for Latinex–heads of state, generals, and former friends of the CIA.”
Washington did not push hard on transparency: It might frighten foreign capital owners, leading to large net outflows,