Most wars do not turn out the way the people who started them intended. Setting aside the hot military wars, look at the consequences of the “war on drugs” and the “war on money laundering and tax evasion.” The global war on money laundering and tax evasion has failed in the three decades since it began in earnest, and it is now on its way to undermining the rule of law around the world, the legitimate role of financial institutions, and the right of sovereign governments to determine their own tax policies.

Banks avoid potential government fines by dumping customers, whose source or use of their money is too difficult to figure out. International money-laundering expert, Burke Files, reported to me from Mombasa last week that in central Africa “more and more money is leaving the banking system to seek alternative remittances. The money is now out of the system and being shipped in bulk currency, and the remitters are being forced to pay about 9 percent - from what was 3 percent to 4 percent.” The Financial Stability Board based in Basel, Switzerland, released a damning report last week on the decline in corresponding banking as a result of excess money-laundering regulations.

The first federal laws on money laundering and international prohibitions were passed three decades ago, with the excuses that the law enforcement authorities needed them to fight the drug war and other assorted criminality, even though money laundering is almost impossible to tightly define - being a crime of intent rather than action.

In 1998, the Organization for Economic Cooperation and Development (OECD) - which has been captured by the global big-government, high-tax lobby - published a report titled “Harmful Tax Competition,” which was widely and rightly ridiculed because it ignored the fact that competition is good, including tax competition. Other things being equal, both individuals and businesses tend to move from high-tax places to lower-tax places around the globe as a rational response to bloated and oppressive government.

The statist bureaucrats at the OECD and their big-government masters were undeterred in their fight for higher taxes on others (despite their own tax-free salaries). They claimed that they were only trying to make sure that money from Americans and others was not being hidden in foreign banks to evade taxes.

The non-American banks then agreed to implement withholding on payments to Americans and others so that the governments would get their tax money. Now the international political class is demanding that they determine where and how much a company should be taxed.