Thursday, March 31, 2011

Twin Cities: New Orleans and Detroit

What is it about this north-south line of demarcation that records such a common and desperate statistic? After Hurricane Katrina, the population in the greater New Orleans area declined an understandable 29%. Aside from folks who were just plain scared, there were a whole lot more whose homes and places of work underwent a “liquidity” crisis of unbridled proportions. There is still unrepaired damage in the Crescent City, more than half a decade since the rising waters from broken levees decimated the area.

What’s Detroit’s excuse? It ranks second among cities of 100,000 or more, according to the U.S. Census, to have contracted by 25% or more… the actual number of Detroit’s population shrinkage over the past decade. But Detroit’s plight was its unfortunate status as capital of the rust belt where two of its largest employers – General Motors and Chrysler, massive companies before their collapse – filed for protection under U.S. bankruptcy laws and reorganized into smaller entities with fewer product lines and a whole lot fewer employees… with those who did remain making less in pay and benefits. The remaining big competition, Ford, didn’t need bankruptcy to leverage its unions into lower pay and benefits; they just saw the writing on the wall. Suppliers were proportionately slammed.

By sheer numbers, the 237,500 people who deserted Detroit dwarfed the New Orleans departees by almost 100,000 (140,000 left that Delta city). 185,393 of these Detroit deserters were African-American; the whites left mostly in the 1960s. When I go to hockey games in Los Angeles – yes, I admit it; I am a Kings fan with season seats – and the Detroit Red Wings are in town, the stands are filled with Wings fans, all across the arena. You’d almost think we were in the Motor City with all those red and white Jerseys littering the stands. I would remark jokingly, “I guess no one really wants to live in Detroit anymore.” Except it’s not a joke; it’s reality. In nearby Pontiac, Michigan, the massive Silverdome football stadium, built 37 years ago for $55.7 million dollars, was sold in 2009 for chump change – $583,000 – because the annual maintenance costs were decimating the city treasury.

When my Web-master, Drew Gross, saw a listing for a four bedroom, three bath single family home in the Detroit area for $15,000, he got excited at the prospect of home ownership, a distant dream even in home-price-damaged Los Angeles. The online photographs looked pretty inviting, but a check on Google Earth revealed that it was the only structure standing in an otherwise rubble-infested block. The March 22nd New York Times tells us more: “Detroit’s population fell to 713,777 in 2010, the lowest since 1910, when it was 466,000. In a shift that was unthinkable 20 years ago, Detroit is now smaller than Austin, Tex., Charlotte, N.C., and Jacksonville, Fla.

“‘It’s a major city in free-fall,’ said L. Brooks Patterson, the county executive of neighboring Oakland County, which was also hit by the implosion of the automobile industry but whose population rose by almost 1 percent, thanks to an influx of black residents. ‘Detroit’s tax base is eroding, its citizens are fleeing and its school system is in the hands of a financial manager.’”

Back in 1970, Detroit had a population of 1.5 million, but today, it is a city of ugly, rubble-cracked over-grown weeds among abandoned buildings, from homes to larger commercial structures. The NY Times continues: “With more than 20 percent of the lots in the 139-square-mile city vacant, the mayor is in the midst of a program to demolish 10,000 empty residential buildings. But for many, the city already seems hollowed out… ‘You can just see the emptiness driving in,’ said Joel Dellario, a student at the College for Creative Studies. ‘I’ve been in and out of this city my whole life, and it’s just really apparent.’” Kind of makes you wonder… which city is next? Not the America you remember as a kid growing up? Yeah…

I’m Peter Dekom, and it saddens me deeply to see this part of America in such a state of desperation and disrepair.

The World’s Best Tax Law Firm

It’s getting near that time again, April 15th (actually 18th because of the weekend), when you have to file your 2010 federal income tax returns. For the self-employed, it’s a pretty detailed and burdensome effort, and even homeowners with complex deductions have it rough. Looking at the raw numbers can make you blanch, and suddenly all that Tea Party rhetoric is beginning to look really attractive… except making more dollars in an austerity-driven economy with lots of unresolved employment and home-value issues still lingering might not appeal to the majority of taxpayers anyway. Still, they have a point. And perhaps it would be terrific if we were allowed to employ some of the methods enjoyed by America’s biggest corporations, particularly those with large international operations, to avoid taxes… quite legally. Picture a universe where there is a point of no returns!

The techniques for avoiding taxes are legion. For example, if you are selling a high-margin product in the U.S. that was manufactured overseas, all you have to do is to insert an off-shore entity based in a tax haven with differing ownership between the entity overseas making the product and your U.S. affiliate. If you structure it right, the big mark-up, where the profits in that product are really made, takes place off-shore… and the tax haven structure sells that product to the U.S. entity at such a high price that only a small profit shows up on the books of the U.S. company.

Other methods are common, and large U.S. corporations employ legions of the best and the brightest, often former top Dept. of Treasury officials, folks who once worked as tax-code-writing experts for Congress and former partners at top tax law and accounting firms. General Electric’s John Samuels, whose department has been called the “world’s best tax law firm,” is just such an ex-Treasury official with just such a team of excellent experts. They not only maximize the tax values for their shareholders in using the tax laws effectively to find loopholes, they also routinely talk to those on Capitol Hill who actually write the laws.

The March 24th New York Times embellishes this standard major corporate practice: “While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

“In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back…Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.”

In this time of major deficits, these practices are no longer tolerable. Individual taxpayers cannot continue to be the disproportionate carriers of the burden that support the financial system that allows these multi-nationals to prosper. You can’t fault the companies; they’re in this world to maximize profits, and they are doing a damned good job of it. But you sure can fault Congress for constructing a regulatory and tax scheme that rewards the special interest elite and shifts that burden to individual taxpayers… all tax code changes made since the 1950s for the sole benefit of companies. And I do agree with that Tea/Tax Party faction that seeks an overhaul of our entire tax code; I just think it’s about restoring the balance between individual and major corporate taxpayer s… not reducing business taxes further. Telling the world that U.S. companies pay the highest taxes in the world – simply based on looking at the corporate tax rate and not what is actually paid – simply taxes my credibility.

I’m Peter Dekom, and fairness and balance appear to be hard to come by these days.

Tuesday, March 29, 2011

Ever Get the Feeling You’re Being Followed?

That lovely app you have on your cell phone… showing you where you are and maybe even offering a navigation system to help you find your way… may have a darker side. Oh, you can smile at the GPS functionality that allows you to know where you teenager might be at any given moment, or smile as you approach a store and get an instant coupon in that store than might save you a pile of money, or Google Latitude can let your friends know you are in the neighborhood… but exactly who knows where you are at any given moment… and may in fact create a permanent record to track your movements… information that can be used later, just in case… by someone… for some reason… that might not matter now… but might really matter then.

So to decrease the initial feeling of paranoia that may be coursing down your spine right now, let’s start by looking at how this little GPS capacity has been used in other countries. The March 26th New York Times takes this non-touristic visit to Germany for an example: “[As] German Green party [left-leaning] politician, Malte Spitz, recently learned, we are already continually being tracked whether we volunteer to be or not. Cellphone companies do not typically divulge how much information they collect, so Mr. Spitz went to court to find out exactly what his cellphone company, Deutsche Telekom, knew about his whereabouts.

The results were astounding. In a six-month period — from Aug 31, 2009, to Feb. 28, 2010, Deutsche Telekom had recorded and saved his longitude and latitude coordinates more than 35,000 times. It traced him from a train on the way to Erlangen at the start through to that last night, when he was home in Berlin.” Spitz had to jump major legal hurdles to get that information, since Germans still treasure their privacy big time, but the results were startling. Yet tracking is hardly new; for years, cell phone companies h ave used that tracking information to switch mobile customers from tower to tower – to maximize signal strength on a moving customer and determine billing charges – but where exactly is all that information stored… and who gets access to it?

For criminal enforcement, even before GPS functionality, the ability to triangulate locations based on movement patterns across cell phone transmitters has allowed the police to verify or challenge alibis based on whereabouts… but with GPS technology and intensive tracking records, it now can get down to which building you are in… and there are even ambient noise tracking systems that can deliver information within a building, even when you are out of satellite range, simply based on the ability to recognize pre-recorded white noise reference standards. Feeling safer… or just a little creeped out? Beware nasty criminals, philandering spouses and teenaged rapscallions… for we can find you!

So like really, what do phone companies in the U.S. actually do with that information? “In the United States, telecommunication companies do not have to report precisely what material they collect, said Kevin Bankston, a lawyer at the Electronic Frontier Foundation, who specializes in privacy. He added that based on court cases he could say that ‘they store more of it and it is becoming more precise.’… ‘Phones have become a necessary part of modern life,’ he said, objecting to the idea that ‘you have to hand over your personal privacy to be part of the 21st century.’

“In the United States, there are law enforcement and safety reasons for cellphone companies being encouraged to keep track of its customers. Both the F.B.I. and the Drug Enforcement Administration have used cellphone records to identify suspects and make arrests… If the information is valuable to law enforc ement, it could be lucrative for marketers. The major American cellphone providers declined to explain what exactly they collect and what they use it for.” NY Times. You know they use the data on an aggregated basis for market research, and if you really want to see what they can do contractually, read that “privacy policy” you “accept” when you sign up with a carrier. And if that information gets in the wrong hands… Do you care?

I’m Peter Dekom, and is that a mini-big brother you’re carrying in your pocket or purse or are you just happy to read my blogs?

Monday, March 28, 2011

Glow for It!

Catastrophes are often laced with millions of personal stories, untold side effects and society-changing trauma. That Japan has been forced through the two major nuclear traumas, two nuclear bombs dropped on her cities at the end of World War II and a meltdown in a power plant, the only nation on earth to have been so doubly-cursed, is a gigantic game-changer for Japan and for us all. But the little side-stories รข€“ the tainted vegetables and milk, the rescued grandmother and her grandson from a floating house, the radiation increase in Tokyo tap water, and now the potential radiation in mail emanating from Japan, reflect those aspects of this disaster that probably weren't in the government disaster planning manuals.

This little item was reported first by Honolulu's KITV (and on on March 16th and has been followed by our national media ever since: The U.S. Postal Service in Hawaii has begun checking mail arriving from Japan after mail in San Francisco and New York showed low levels of radiation, USPS officials said. "It's not like the Customs Border Patrol made a special case for checking out mail from Japan; they just reported their routinely acquired results: CBP routinely screens mail for radiation. There are fixed radiation monitors as well as portable units that can be used to screen mail and cargo on the tarmac." After all, we're always on the lookout for terrorists sending malevolent packages via "snail mail", and the U.S. does account for about 40% of the world's old-world "mail-by-paper."

While few of us actually receive mail or packages from Japan, the risks for those who do remain minimal: "Currently, there have been no items detected that would be deemed hazardous," according to a statement by the inspection service. "American citizens should feel comfortable with these security measures that ensure the safety and security of their mail." Washington Post, March 17th. But that's not the point; after all; it's how life permanently changes for the few and the many after such a startling and unexpected national trauma.

Not that the United States seems to be taking the events in northeastern Japan sufficiently seriously (at least not publicly): "The nuclear crisis is Japan, while severe, does not warrant any immediate changes in the U.S", a top U.S. nuclear official said [March 21st]...The Nuclear Regulatory Commission's executive director for operations, Bill Borchardt, said officials have "a high degree of confidence" that operations at the 104 nuclear reactors in 31 states are safe. He said inspectors at each of the plants have "redoubled efforts to guard against any safety breaches.", March 21st. Forget about those reactors, built for lower tolerances than the quakes they are like to face, sitting on our own coast at or near major fault lines.

But look at how changes have hit us because of traumatic events. Little things like waiting at the gate for the arrival of a flight carrying a loved one... gone. Getting on a plane by just showing your boarding pass, never having to remove your shoes or placing your larger electronics (today a laptop or tablet) in a separate container for screening... gone. Remember when X-rays were simply a medical tool? A scant ten years ago, who knew what TSA or Homeland Security would mean?

But are we really better off? Are we safer? Are we deploying cosmetic defensive techniques (even adding tens of thousands of new bureaucrats to do what other agencies should have already been doing?) and missing the bigger picture? Are we spending and planning in a sensible way, or one that seems politically expedient, but actually adds layers of bureaucracy (hey, budget-cutters?!) to disaster relief? Like failing to reinforce our reactors for real to meet the challenges that they will inevitably face (even if only once in a hundred years). Or not upgrading levees and dams before we have to spend billions to mop up a preventable mess. Maybe making ourselves targets "literally poking the bees nest" by rushing to deploy our military in what we believe is our "vision of what's good for the world" angering masses and constantly reminding the rest of the world that our extreme military might makes us scary, untrustworthy and appear somewhat as a bully, even when those same people and nations ask for our intervention.

Or are we a nation that has become so reactive, so unable to spend money or adopt policies on a sensible and proactive basis, that we have become incapable of doing the obvious until we learn the lesson the hard way? Indeed, it does seem as if our government has truly stopped being able to fulfill its obvious mandate; the system is severely broken.

I'm Peter Dekom, and I wonder exactly how you fix a system than seems incapable of doing the obvious and implementing common sense.

Sunday, March 27, 2011

We’re Number 50, We’re Number 50!

At least we’ve done better than Angola, an embattled West African country where the life expectancy – the worst on earth – is 39 (“dead” last out of 223 nations), but for those who still believe that Americans actually have the best “healthcare system to date” on earth, take a look at this “life expectancy” list (in order of rank) and tell me what’s missing: (estimates compiled in 2011)

Country (years)

1 Monaco 89.73

2 Macau 84.41

3 San Marino 83.01

4 Andorra 82.43

5 Japan 82.25

6 Guernsey 82.16

7 Singapore 82.14

8 Hong Kong 82.04

9 Australia 81.81

10 Italy 81.77

11 Canada 81.38

12 Jersey 81.38

13 France 81.19

14 Spain 81.17

15 Sweden 81.07

16 Switzerland 81.07

17 Israel 80.96

18 Iceland 80.90

19 Anguilla 80.87

20 Bermuda 80.71

21 Cayman Islands 80.68

22 Isle of Man 80.64

23 New Zealand 80.59

24 Liechtenstein 80.31

25 Norway 80.20

26 Ireland 80.19

27 Germany 80.07

28 Jordan 80.05

29 United Kingdom 80.05

30 Greece 79.92

31 St. Pierre & Miquelon 79.87

32 Austria 79.78

33 Faroe Islands 79.72

34 Malta 79.72

35 Netherlands 79.68

36 Luxembourg 79.61

37 Belgium 79.51

38 Virgin Islands 79.33

39 Finland 79.27

40 Turks & Caicos Islands 79.11

41 South Korea 79.05

42 Wallis & Futuna 78.98

43 Puerto Rico 78.92

44 European Union 78.82

45 Bosnia and Herzegovina 78.81

46 Saint Helena, Ascension, & Tristan da Cunha 78.76

47 Gibraltar 78.68

48 Denmark 78.63

49 Portugal 78.54

Yup, you don’t see the United States! We’re next with an average life expectancy of 78.37. The average for the entire world is 67.07 years. Think this list comes from a biased source? It might. It comes from the U.S. Central Intelligence Agency’s World Fact Book and measures life expectancy at birth.

I’m Peter Dekom, and don’t you just hate it when facts interfere with simple, self-serving slogans?