Tuesday, April 29, 2014

How We Do Love Spending Money for Incarceration

You know from so many sources, including my blogs, that the United States, with only 5% of the world’s population, incarcerates a quarter of the earth’s convicts. 2.9% of the entire American adult population is under some form of criminal judicial supervision (incarceration, on probation or parole). Half of those in the criminal justice system are there for drug related crimes (and half again of those for dealing or possession). But imprisoning folks is not cheap. It costs California an average of $47,102/year to incarcerate one prisoner (according to the State’s Legislative Analyst). The federal system spends a lot less - $21K/year for minimum security prisoners, and $33K/year for maximum security. Most states are somewhere in between.
But our prisons are overflowing, often creating inhumane conditions based on overcrowding. California is under federal judicial supervision to reduce overcrowding, but there is a whole lot more demand for prison capacity than currently exists… almost everywhere in the country. The federal system is severely overtaxed as well, but “In Nebraska, for example, prisons were at 155 percent of capacity at the end of March. And in California, courts have ordered the state to reduce the inmate population to 137.5 percent of designed capacity, or 112,164 inmates in the 34 facilities, by February 2016.” AOL.com, April 24th.
There is no parole in the federal system, and other than time off for good behavior (which can knock 15% off the total time served), sentences are simply carried out. “Tough on crime” and “three strikes” laws have generated more people with more jail time than at any other time in our nation’s history. The problem is that we cannot afford it anymore, so something has to give. In addition to revisiting sentencing laws, the Department of Justice is also addressing how to reduce the existing federal prison population through a modification in clemency standards.
“On [April 23rd], the Justice Department unveiled a revamped clemency process directed at low-level felons imprisoned for at least 10 years who have clean records while in custody. The effort is part of a broader administration push to scale back the use of harsh penalties in some drug prosecutions and to address sentencing disparities arising from the 1980s crack cocaine epidemic that yielded disproportionately tough punishment for black drug offenders.
“‘These older, stringent punishments that are out of line with sentences imposed under today's laws erode people's confidence in our criminal justice system,’ Deputy Attorney General James Cole said, laying out new criteria that will be used to evaluate clemency petitions for possible recommendation for the president's approval…
“‘These defendants were properly held accountable for their criminal conduct. However, some of them, simply because of the operation of sentencing laws on the books at the time, received substantial sentences that are disproportionate to what they would receive today,’ Cole said.
“Officials say they don't know how many of the tens of thousands of drug-related convicts would be eligible for early release, but an ideal candidate would meet six criteria - including no history of violence, no ties to criminal organizations or gangs and a clean prison record. He must also have already served 10 years or more of his sentence and be likely to have received a substantially shorter offense if convicted of the same offense today.” AOL.com. Before we picture hordes of prisoners getting released, realize that the above criteria are pretty narrow and just will not apply to the vast majority of federal prisoners. It’s a baby step in the right direction. What are states doing to release “safe” prisoners… where they do have the benefit of parole?
The variances between states is amazing. West Virginia releases 48% of inmates who are up for parole. Ohio? That’s a whole ‘nuther ball game. Recently, less than 1%. When Ohio’s parole board released a prisoner who then went on to murder a 13-year-old girl, well, a local lawyer noted that from then on, the odds of getting paroled in Ohio was only slightly more likely than winning the lotto. But states cannot afford keeping prisoners in bulk either. Is there a solution, someone or some system to take the blame?
Yup, by reason of a set of competing analytics and software programs, like ORAS, COMPAS, LSIU-R and LS/CMI, have been applied to reduce parolee recidivism by 15%, a truly significant statistic. What’s more, they can point out areas where a prisoner might need additional focus to qualify based on those statistics.
This “risk assessment” software is based on relevant data like “the prisoner’s age at first arrest, education, his behaviour in prison, his friends’ criminal records, the results of psychometric tests and even the sobriety of his mother while he was in the womb. The software estimates the probability an inmate will relapse by comparing his profile with many others.” The Economist, April 19th (page 29). Whatever the system, we really need to be finding ways to undo our wasteful and profligate incarceration spending excesses.
I’m Peter Dekom, and Americans are great at waging wars, getting tough on crimes and then moaning about federal deficits.

Monday, April 28, 2014

Little Jobs, Big People

The direct unemployment rate sits at 6.7%, which the Department of Labor calls the U3 measurement. But there’s another measurement, U6 (the “alternative measurement”), which also includes part-timers looking for full-time and those who want work, but have just given up. That number sits at 12.8%. Looking that the statistics within these categories is very interesting, if not a little sad:
Employed/Unemployed: There are two components to the civilian labor force — 145.7 million people are employed and 10.5 million are not. The ratio of unemployed to the CNP is the headline unemployment rate, which is known to the Bureau of Labor Statistics as the U3 unemployment rate. [U6 adds the next two categories to come up with that alternative measurement]
Employed Part-Time for Economic Reasons: Within the civilian labor force, the Bureau of Labor Statistics notes those working less than 40 hours a week who would like to work full-time. That stands at 7.4 million, or 4.7 percent of the labor force.
Marginal Workers: There are 2.2 million people, or 1.4 percent, who are not counted in the civilian labor force because they have not been looking for work for one reason or another but may in the near future. This includes 700,000 ‘discouraged workers’ who are not out looking for a job but would like to have one, plus 1.5 million people who have chosen to go to school or stay at home but could be available for work, if needed. Marginal workers are not included in the civilian labor force. MintNewsPress.com, April 22nd.
We’ve lost a bunch of older workers, now sucking down minimalist Social Security checks while too many other workers – not old enough to qualify for those “old guy” checks, hanging on, waiting for a change in our job demand picture. Unemployment insurance has expired for an estimated 2 million people as Congress seems to think it’s okay for them to continue to twist in the wind. An extension of such benefits does not appear to be likely anytime soon.
We’ve recently visited the “banana republic” statistics that define America today. A thin sliver of mega-rich owning the cream of our wealth, a vast horde (60%) at the bottom who own virtually nothing, a contracting middle class, 95% of income gains since 2009 going to the top 1% of earners, 400 of the richest Americans owning as much as the entire bottom half of our income strata combined, etc.
The playing field is tilted, and the slant is getting worse. What’s worse, stupid mythology has been leading Americans on with false hope. Like that corrosive notion, long, long, long since disproven and discredited by the economic community, of “job creators” of mega-rich who were supposed to “trickle down” opportunities to the rest of us. The drops never came. And if the current trend in job replacement is any indication, the potential for a whole lot of Americans is pretty bleak.
“[Job] losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million.
“With 10.5 million Americans still looking for work — the unemployment rate is 6.7 percent — employers feel no pressure to raise wages for those who are working. As a result, the average household’s take-home pay has declined through the recession and the recovery to $51,017 in 2012 from $55,627 in 2007, after adjusting for inflation
“With joblessness high and job gains concentrated in low-wage industries, hundreds of thousands of Americans have accepted positions that pay less than they used to make, in some cases, sliding out of the middle class and into the ranks of the working poor… The National Employment Law Project study found that there were about a million fewer jobs in middle-wage industries — including parts of the health care system, loan servicing and real estate — than there were when the recession hit.
“Economists worry that even a stronger recovery might not bring back jobs in traditionally middle-class occupations eroded by mechanization and offshoring. The American work force might become yet more ‘polarized,’ with positions easier to find at the high and low ends than in the middle.” New York Times, April 28th.
So if those folks are going to be stuck in low-paying jobs with little or no chance for advancement, given the erosions of unions in the private sector, there has been a press at least to pay folks at the bottom a bit more: “The swelling of the low-wage work force has led to a push for policies to raise the living standards of the poor, including through job training, expansion of health care coverage and a higher minimum wage.
“President Obama has supported a Democratic proposal to lift the federal minimum wage to $10.10 an hour from its current level of $7.25… ‘Nobody who works full-time should ever have to live in poverty, Mr. Obama [said on April 26th] in his weekly address. ‘That’s why nearly three in four Americans support raising the minimum wage.’… Raising it to $10.10 would ‘lift wages for nearly 28 million Americans across the country,’ he said. ‘We’re not just talking about young people on their first job. The average minimum-wage worker is 35 years old. They work hard, often in physically demanding jobs.’” NY Times. But if you think Congress is likely to follow this quest, pigs will be flying! The only, minimal, progress here has been in a few states and municipalities.
We have also made getting a higher education increasingly unaffordable to an increasing number of families, adding one more downward pressure on that American middle class. From 70.1% in 2009, “[of] the nearly 3.0 million youth age 16 to 24 who graduated from high school between January and October 2013, about 2.0 million (65.9 percent) were enrolled in college in October.” Bureau of Labor Statistics, April 22nd. The high school dropout rate in large inner cities continues unabated.

In the end, America has too much to lose with a shrinking middle class and growing economic polarization, issues that are unfortunately and effectively redefining who we are. This radical shift in the make-up of our nation, found nowhere else in the democratic developed world, may ultimately cause a great nation to unravel and fall apart. The tea leaves are pretty clear with this mix… time to throw that tea out and brew a cup that preserves what best for all of us.
I’m Peter Dekom, and not fighting for what best for most of us results in an economic system that probably is unsustainable, one that cannot be good for the continuation of the greatest nation on earth.

Sunday, April 27, 2014

Who’s Disputin’ that Vladimir Putin is the New Rasputin?

Grigori Yefimovich Rasputin, a peasant who rose to become a mystical, religious, spiritual and hence political advisor to Tsar Nicholas and Tsarina Feodorovna, is often viewed as an evil genius who helped undermine the Russian monarchy in the eyes of the Russian people. Though he was murdered in 1916, a year before the Russian Revolution, his scraggly bearded image (above) and his willingness to use biblical knowledge to implement his power have lingered throughout the ages as the epitome of Russian scheming and dangerous political intrigue. Though he probably had less of an influence than most surmise, no one would ever suggest that his presence in the Russian Court was anything but manipulative and evil.
Manipulation of the truth and behind the scenes scheming seem to have become hallmarks of Russian leadership over the years, a factor which does not seem to have changed in the modern era. Denying that Russian operatives were functioning in Crimea, fomenting unrest, and then admitting the obvious after that region had been annexed by Russia, Russian President Vladimir Putin also declared that the entire Internet was created and controlled by America’s C.I.A. Despite the tumble of the rouble in the currency markets and that the continued erosion of average buying power for the average Russians continues abated, Putin’s militaristic expansionism – his stated desire to reassemble (in one form or another) the Soviet bloc – has been wildly popular with his own people.
Putin is his own advisor. He needs no Rasputin to direct his actions. But to Americans and others in the West, the underlying willingness to manipulate and mislead, to exaggerate and twist events to devious interpretation, seem to be the Russian way. Putin is likely to continue to take steps to erode political stability in his neighboring states, once a part of the Soviet Union, literally forcing these weakened states back into the Russian orbit. He feels compelled to move them away from his fear of N.A.T.O. encroachment (replete with military alliances, missile installations and hostile forces) in what he believes is Russia’s absolute right to influence and control his region, the C.I.S. countries of today and perhaps some of his former Eastern bloc satellite nations. Putin sees himself as a champion of traditional national conservatism fighting a battle against the liberal West.
Putin has massed his troops on the eastern border with Ukraine, where pro-Russian separatists have taken Western “observers” as hostages, telling the world that a state of war now exists between them and Ukraine. Putin might be able to delay a presidential election in Ukraine, further weakening a country which he has pushed to the brink of a civil war. Perhaps he will invade, perhaps he will just continue to pull the legs out from under this already-shaky regime, but he is reveling in the unwillingness of the West to do anything that remotely troubles him, even though it will be increasingly difficult for Russia to participate in the global economy.
But as the West seeks to find some mechanism to contain this destabilizing force, applying sanctions to Russian oligarchs in the hopes that they will moderate Russian efforts through their influence with the President, their efforts have been incredibly unsuccessful. Riding high with his own people, Vladimir Putin appears to be completely in control, and so far his constituents are willing to ignore their economic malaise in this rise from a litany of what they perceived to have been Western humiliations of their great nation. Is there a middle path, short of the kind of World War III scenario that Western leaders are unwilling to embrace (not to mention Europe’s own “humiliating” dependence on Russian oil and gas)?
Putin is rich… really rich, reputed to be one of if not the richest man on earth. His wealth does not appear to be centered in Russia, and rumors of massive deposits of wealth in secret tax havens have been the stuff of rumors – and perhaps some serious tracking by the C.I.A. (did they use the Internet?) – for the past 15 years. Is this his Achilles Heel?
Now, as the Obama administration prepares to announce another round of sanctions as early as Monday targeting Russians it considers part of Mr. Putin’s financial circle, it is sending a not-very-subtle message that it thinks it knows where the Russian leader has his money, and that he could ultimately be targeted directly or indirectly.
“‘It’s something that could be done that would send a very clear signal of taking the gloves off and not just dance around it,’ said Juan C. Zarate, a White House counterterrorism adviser to President George W. Bush who helped pioneer the government’s modern financial campaign techniques to choke off terrorist money… So far, the American government has not imposed sanctions on Mr. Putin himself, and officials said they would not in the short term, reasoning that personally targeting a head of state would amount to a ‘nuclear’ escalation, as several put it.
“But officials said they hoped to get Mr. Putin’s attention by targeting figures close to him like Mr. Timchenko, and other business magnates like Yuri V. Kovalchuk, Vladimir I. Yakunin and Arkady and Boris Rotenberg… Among those likely to be on [the U.S. government’s] list, officials said, are Igor Sechin, president of the Rosneft state oil company, and Aleksei Miller, head of the Gazprom state energy giant.” New York Times, April 27th.
How did this happen? Why didn’t the West see the obvious pattern in Putin’s rather consistent anti-Western statements, his crass defiance and support of the Syria’s murderous Assad regime, his claims to the Arctic region (planting a platinum Russian flag claiming the North Pole) and the slow addiction of Europe to his nation’s abundant fossil fuels? Is Putin stoppable without war? What do you think is the most effective approach we can take… or do we just let him have his way?
I’m Peter Dekom, and these vicious cycles of political excess always seem to arise after sustained periods of economic hardship.

Saturday, April 26, 2014

The Issue that Just Won’t Go Away

With unfunded state and local government pensions and retirement medical benefits still hovering around the $2.7 trillion mark, our local politicians deal with this monster in the yard sporadically and generally ineffectively. In better times, politicians seeking governmental union campaign support and votes from large bureaucracies – amazingly from both sides of the aisle – rewarded uniformed services (e.g., police, fire, etc.) with early retirement at high rates and other state and local civil service workers with substantial benefits after fewer years than many in the private sector.
What’s worse, with many retiring in their 50s and taking up a second career, they are reaping benefits long before the rest of the world that has to wait until 65 or older to retire. While the federal government just “prints money” to fund its pension obligations, state and local governments simply owe the money, often allocating money necessary to fund current operating costs to run cities, schools and basic services instead to fund past services through retirement benefits. And most of these plans were created in a different era with profoundly different economic realities.
Defined benefit plans (where you get a fixed dollar amount per month, often with cost of living escalators) are virtually gone from the most-non-unionized private sector, replaced fairly uniformly with a defined contribution plan (one that simply releases what has been accruing in that retirement account). While defined contribution is creeping into the public sector, most government retirement plans are a function of the retiree’s earnings in the last key-earning years.
But as a wave of high-profile municipal bankruptcies (filed under Chapter 9 of federal bankruptcy law) – from Detroit to San Bernardino – has swept through too many cities, a conflict has risen between state laws, which often do not release municipalities from their pension obligations regardless of any change in their fiscal status under any law, and federal requirements that seem to subordinate state and local mandates to the preemptive power of federal statutes. “The problem is that it remains unclear whether… federal bankruptcy law trumps state pension laws. A federal judge hearing the Detroit bankruptcy case ruled, for instance, that federal laws took precedence in that case, so the benefits of city workers in Detroit could be reduced in defiance of state law.” New York Times, April 20th. 
But that ruling has fallen on deaf ears in the battle between California’s state pension administration giant, Calpers (which controls about $280 billion in California pension money), and bankrupt San Bernardino. In 2012, San Bernardino stopped funding its pension obligations. Calpers wants San Berdu to pay up, while the city is pushing back under federal bankruptcy law, saying that money is subject to determination under federal and not state law.
Detroit’s government pensioners side-stepped that judicial intervention by working out an agreement: According to new court filings from the city late [on April 25th], the tentative agreements included smaller-than-expected cuts to retirees’ pensions. Municipal retirees could expect cuts to their pension checks of 4.5 percent, although those who took part in the annuity savings fund, which city officials now say distributed overly generous interest earnings in past years, would be required to repay portions. But such cuts, even for those who took part in the annuity savings fund, would be capped at 20 percent, the court filings say.” New York Times, April 25th. But would San Bernardino follow the same path… or bring the issue of federal preemption up the appellate ladder?
“At issue is the $17 million in back payments and penalties that San Bernardino failed to make between declaring bankruptcy in August 2012 and resuming payments in July. Calpers has maintained that it is owed in full. But now in bankruptcy negotiations, the city is hoping to pay only a fraction of that, arguing that the city’s creditors must all share in the bankruptcy pain. The amount may be small, given the system’s assets, but if San Bernardino gets a reduction, the precedent could be huge, opening the door to other struggling municipalities using bankruptcy law to justify delaying or withholding payments to the pension system.” NY Times. California law mandates the payments; federal law seems to subject such absolutes to its jurisdiction once formal bankruptcy is filed.
It seems likely that California will work this out, because the last result Calpers wants to risk is a high court ruling that federal bankruptcy preempts local law. But think of this matter as the canary in the coal mine, reminding us all that local governments owe a whole lot more than they can pay over the coming years in pension benefits… and sooner or later, those chickens are coming home to roost. We need a ground-up examination of those obligations, both to insure that there will be substantial funding (perhaps not enough to cover 100% of the obligations) to cover retirees who worked hard to earn those benefits and to guarantee that states and local governments have enough money to cover current operations at necessary and expected levels.
I’m Peter Dekom, and eventually the can we are kicking down this pension road will slam hard against the wall.

Thursday, April 24, 2014

Funding Public Universities – Legislative Discretion

Assume for a moment that that a local state college allows its students and faculty to stage a play on college facilities about a family facing the struggles of a gay older son who presses for his family’s approval of his upcoming marriage to a gay partner. Slowly, after hearing a litany of arguments in support of tradition from each member of his family, he backs off his plans. He comes to realize that his family’s passionate commitment is correct, that marriage is appropriately relegated to the millennia-old social and religious tradition of a union between a man and a woman. Outraged at this performance, the Democratically-controlled legislature – specifically citing the play and arguing that the college should be required to reflect the liberal culture of the state – votes to cut the budget of that college $52,000 to discourage such aberrations from state policies. Okay with you?
Try an even lesser parallel in real life. “More than 750 people packed into a city auditorium [in Charleston, South Carolina in mid-April] for a sold-out production of ‘Fun Home,’ a musical by a New York-based troupe about a woman coming to terms with her closeted gay father’s suicide. The crowd rose in a standing ovation before the show even began… The emotional reaction was part of a worsening political battle between South Carolina’s public universities and conservative Republican lawmakers, who argue that campus culture should reflect the socially conservative views of the state.
“The state’s House of Representatives recently voted to cut $52,000 in funding for the College of Charleston [pictured above] as punishment for assigning students to read ‘Fun Home, the graphic novel that formed the basis for the play. House lawmakers endorsed a similar budget cut for the University of South Carolina Upstate in Spartanburg for using a different book with gay themes in its reading program… Republican lawmakers also helped pave the way for the appointment of a controversial GOP state official as the College of Charleston’s next president, sparking campus protests.” Washington Post, April 22nd.
Interesting question: if funding state educational programs is a discretionary act with state legislatures, why must they spend money on programs they clearly do not support? Does the First Amendment require a different result? Can a court order a state to spend money anyway? Would this imbue the courts with the ability to authorized budgetary expenses? Could the legislature, for example, save money for its majority of voters by denying African-Americans a college education, and cutting the budgets by the costs of servicing this minority? We’ve seen affirmative action require affirmative results (although the Supreme Court just ruled that voters can remove an affirmative action mandate in state universities), prison overcrowding be reduced, and generally to require states to spend money to end discrimination.
Does it matter that this occurs at a college/university level vs. primary and secondary public education? Are younger children less able to deal with social controversy than college students? Teaching creationism seems to violate the separation of church and state requirement of the First Amendment, but many state legislatures and school districts continue to insist that evolution is simply a theory that should be taught side-by-side with “intelligent design.” Why, they ask, are we required to fund teachings that we are so profoundly against, philosophies that we believe are harmful to our youth and the very foundations of our state and local traditions? Aren’t legislators elected precisely because their opinions reflect those of the majority of voters that elected them?
A subtle legislature could have disguised its punishment, but then it would not have generated the desired political capital that tying the cut to the liberal challenge to social conservatism. Is it the linkage, if clearly established, the offensive part? Is this exercise of legislative discretion consistent with the majority of local voters even offensive to the American system of democracy? If you were a judge, presented with a challenge to this $52,000 cut, how would you rule… and how would you justify your ruling.
I’m Peter Dekom, and some very big questions arise in a democracy where majority rule always comes within a constitutional protection of minority rights.

Wednesday, April 23, 2014

Irate Pirates

For the older readers, harken back to the mid-1980s when mobile phones (hardly “smart”) looked like walkie-talkies and you were billed one minute minimum per dial-out or reception, even a re-dial for frequently dropped signals! Anybody remember their first phone bills? A hundred bucks? A couple of hundred? A thousand? A couple of thousand? In 1984-5? Wow! People without expense accounts were tossing those puppies… until some smart person decided to market “plans” with lots of minutes for a fixed monthly fee. When the phone companies listed to consumers, they started making even more gobs and gobs of money.
That “listening to consumers” part is how you can tell the purveyors of creative content (music companies, television networks and program suppliers and Hollywood Studios) from the rest of American business. Hollywood looks to Washington to save their cherished business models – copyright laws to protect what they create – not really comfortable figuring out how to cater to consumers. Folks tell me that the infamous Napster service decimated their music business model by making file-sharing too easy (and today BitTorrent services blow Napster-capacity all to hell). Few remember that Napster offered the “record industry” an economic model that eliminated 90% of “piracy,” but the record moguls responded that unless it got to 100%, Napster could suck eggs and die (which it did; the moguls did too).
What really tanked the music business is greedy record executives who stopped selling singles to force people to buy vastly more expensive albums to get a single tune they wanted. When “singles” were suddenly available in MP3 and comparable formats – even though the only place you could really get new singles “out there” were in “pirated” online “acquisitions” – the consuming public pretty much voted albums out.
Business plans at the big labels were totally predicated on album sales… and they were damned if they were going to let consumers change that. They prosecuted children, they mounted huge “stealing is bad” campaigns, the responded by attacking the very consumers they needed to court to restore economic sanity to their efforts. Wow! That’s good marketing, eh? Oh, those big record companies’ plans sank faster than the Titanic.
And whoever came up with the idea of telling teenagers what they had to do, expecting complete compliance? OMG! Rebellious teenagers hunkered down… they had their cadre of mega-tech-nerds ready to trump the system… and boy did they. Two complete generations of tech experts built hacking capacity, transmission capacity and virtually unstoppable file-sharing capacity, spreading their knowledge to anyone who cared. Usually not for money, but for the sheer joy of accomplishment and playing the system. Now accessing content from the Web is “normal.”
The music business as we knew it died, and the digital replacement, from iTunes downloading power to streaming systems like Spotify and Pandora, added incremental revenues, but the gravy train was shut down and the tracks sold for scrap. Today, according to Go-Gulf.com, 95% of downloaded music and over 35% of downloaded film is illegal, with 70% of online users seeing nothing wrong in downloading available content regardless of whether or not they pay for it. Go-Gulf estimates that the average iPod carries $800 of illegally downloaded music.
Why are the numbers better for the film industry? Well, for one bandwidth for a good download of a film is considerably more than required for music (but bandwidth is getting better by the day!), and with the exception of very young children (parents generally don’t steal as an example for their kids, anyway), who watches a film over and over again? And there is on one additional and huge difference: most people who love movies still prefer the big screen in their neighborhood theater.
The film industry has moved their production output to the kinds of product that does particularly well in that environment (comedies benefit from laughing audiences, we like to be scared in groups and huge special effects look best on a huge screen). Small, seriously-themed productions increasingly work less effectively on the big screen but are dominating the ratings in television. The film studios are still looking to prosecute where they can and those silly trailers in movie theaters are “popcorn buying moments.”
There’s no question that the artists who create mass-appeal film, television, music, etc. are special. Their gifts amuse, entertain, and give us short respites from the stresses and tensions of our everyday existence. They deserve to be paid, encouraged to create and cherished for their excellence. Unfortunately, too many artists have entrusted their gifts to commercial entities who know more how to alienate consumers than embrace and listen to them.
On the other hand, companies like Netflix and Hulu (the latter being studio-owned) have provided low cost (or ad-supported) and legal alternative access to film and television content, with startlingly great results. Major networks have learned to create parallel access to new television content in online delivery. Binge viewing has opened new doors to commercial television values. For those who have “cut the cord” (see my recent Television Wars blog), this is the new “television” model.
Remember that little thang about consumers wanting singles but record labels forcing albums? Didn’t work, did it… the second alternative of access to singles only occurred, the dam burst. Seeing that pattern again? That you have to pay for hundreds of basic channels (and can pay for more premium choices) when you order cable… but the average family only watches 17? Hmmm? A perfect storm? History about to repeat itself?
One more thing. How about those who create powerful new television content but insist that consumers only have access to those programs through some expensive and limited access system (like premium cable… which doesn’t work if you do not have cable) provided by a proprietary service? “The latest episode of [HBO’s] Game of Thrones has broken the record for the most people sharing a file simultaneously via BitTorrent. More than 193,000 people shared a single copy [April 14th] evening, and roughly 1.5 million people downloaded the episode during the first day…
“From all over the world people virtually gathered around the various pirated copies of the show, breaking the record for the largest BitTorrent swarm ever in the process… A few hours after the second episode came online the Demonii tracker reported that 193,418 people where sharing one single torrent. 145,594 had a complete copy of the episode and continued to upload, while 47,824 were still downloading the file.
“These are unprecedented numbers – never before have 193,418 people shared a single file simultaneously. The previous record was set last year, when the season finale of Game of Thrones had 171,572 people sharing on a single tracker.” TorrentFreak.com, April 15th.
Does HBO get it yet? Not exactly. Aside from its HBO Go – its parallel streaming service available to its premium Pay TV subscriber base – this cable giant generally holds off on making its content available in the digital after-market for about three years. To that end, on April 23rd, HBO announced an output agreement with online Amazon, as a subscription video-on-demand (SVOD) provider for many of its titles, all subject to that approximate three year holdback: [The deal] marks the first time HBO programming has been licensed to an online-only subscription streaming service — and it’s a big win for Amazon in its rivalry with Netflix, the SVOD category leader. All the programming covered under the licensing deal with Amazon will remain on all HBO platforms, including HBO Go.” Variety.com, April 23rd.
Does this arrangement with Amazon this provide sufficient alternative access to satisfy consumer demand outside of the HBO subscriber universe? With a three year holdback? That’s an easy answer. No!
What are the answers? How can you stem the tide of unauthorized downloads? First, you are not going to eliminate all theft. Second, you cannot create compelling content with a single expensive path to access without accelerating illegal downloads. Third, consumers like convenience, predictability (quality and monthly cost), they generally do not like pay-per-use (unless the sums are small) and rather have general access for a flat monthly payment, they still like special venues that enhance the consumption experience (big screen experience with an audience). Listen to them. Cherish them… and remember, when you use a word like “pirate,” you have prejudged a very large segment of an entire generation as criminals. Our kids, our friends and our future!
I’m Peter Dekom, and content purveyors need to listen to their consumers and provide the alternatives they demand or risk further erosion of their longer-term values.

Tuesday, April 22, 2014

Vacation, Retirement Pay, Sick Days and Insurance

Four benefits an increasing number of Americans will never see again. They may be “contract workers” or “independent contractors” – paid to accomplish a particular temporary task – “temps” or “part-timers” or “independent workers.” Their presence in the marketplace allows employers to staff up during peak times, to explore possible new business vectors or to replace workers on vacation or on leave. And sometimes that temporary work without benefits drags on for years. With private sector unions at their weakest level in recent history, no one seems to care about this growing legion of rootless laborers without a discernible future, many highly skilled and very-well educated.
They can be let go on a whim, engaged for limited time periods with or without the possibility of renewal, and almost always with limited or no opportunity for a permanent position. You’re the “employer”? They don’t need any benefits. No retirement, no vacation pay accruals, no medical coverage except what they can buy for themselves in the marketplace (and boy are they grateful for the Affordable Care Act)… and when they go, there is no severance, no extended benefits… nothing. What’s not to love?
There are lots of specialized companies who can assemble entire crews of experts for just about any level on contract work, some entities who have lists of accountants, secretaries, engineers, information technology experts, technology change-overs, setting up new systems, etc., etc. It is part of what may actually be a massive restructuring of how too many Americans will be “employed” in the new future. For those who have lost permanent work, this new unpredictable universe, where the specialized outsource contractor company sucks up a big chunk of the paycheck (usually from the “employing” company) for the privilege of booking the work, is often the best they can do.
“In March, the temp industry added 28,500 jobs, and about 2.8 million workers are employed currently in temporary or contract positions, according to the Bureau of Labor Statistics. This is a little more than 2 percent of the workforce, a peak last reached in April 2000, said Steve Berchem, chief operating officer of the American Staffing Association, an industry trade group… ‘We argued when the recovery began that there would be a structural shift,’ he said. ‘We were hearing that from members who were hearing that from their clients, (that) they were more likely to use temp and contract workers.’
“‘There are a lot of perverse incentives for employers to use temps,’ said Erin Hatton, an assistant professor of sociology at the State University of New York, Buffalo, and author of ‘The Temp Economy: From Kelly Girls to Permatemps in Postwar America.’ For one thing, it’s cheaper. Using temporary labor lets companies avoid the cost of providing benefits like health insurance, workers’ comp, paid sick leave and the like… ‘It allows them to increase or reduce their workforce more easily, and in an uncertain environment, that can be very valuable to the firm,’ Houseman said…
“It’s all part of a broader shift to an everyone-for-themselves workforce, labor economists say. Business services firm MBO Partners says there were 17.7 million independent workers last year, up 10 percent from 2011.
Berchem called this shift in the labor market a ‘win-win’ for companies as well as workers. ‘We’ve seen an increase in workers preferring flexibility,’ he said. ‘Family is a big priority for temporary and contract employees and they prefer the flexibility such work allows.’” NBCNews.com, April 20th. Too bad that “flexibility” doesn’t provide enough money to live in a decent place, educate those folks’ kids and maybe save for retirement someday. Maybe those workers really don’t want that kind of “flexibility.” Sounds more like a “lose-lose.”
And let’s face it, temp workers are definitely second class citizens. “‘When you’re just a contractor at a company … your ID badge is a different color. People treat you differently. They say they don’t, but they just do,’ [said one 54-year-old engineer forced into the temp world.]
“More alarming to economists, long-term temps also miss out on the opportunity to develop a nest egg for a comfortable retirement… ‘It’s almost entirely the burden of the individual,’ said Kevin Cahill, a labor economist with the Sloan Center on Aging & Work at Boston College.
The potential hit to Social Security benefits is two-fold, he said. Since Social Security benefits are based on your earnings over your work history, both low-paying temp work or a gap in employment — a combination many of today’s ‘permatemps’ face — can drag down a worker’s future payments… These workers also may not have access to a corporate 401(k) plan. Even if they do, they might not be paid enough to be able to put any away for retirement. There’s certainly no employer match.
“‘Folks who turn to temporary employment because full-time employment is lacking have been hit extra hard. They’ve lost time to accumulate savings and could very well bleed down their savings during their job search.’… This is what happened to [one such worker], who said he used his 401(k) funds to stay afloat during his unemployment. ‘I figure I’m going to be working way beyond 65 or 67 or whatever it is these days,’ he said. ‘I just know it’s going to be really hard.’
“This has broad effects, Hatton warned, not just on the legions of temp workers today, but on the next generation. Their tenuous employment situation can make it harder for them to send their children to college, she said. ‘The effects ripple out.’” NBCNews.com. When you think about the overall polarization of wealth in this country and the severe and unending contraction of our middle class, you really have to ask yourself how long Americans are really willing to live in a country with all these new rules that hurt them and make the rich get richer?
I’m Peter Dekom, and the saddest part of this phenomenon is how few people even care that this is the new vision for the future of America.