Start-Ups and Stand-Downs

If there is an economic recovery, if we take out the wealth flowing merely to the top 5% of the money ladder, it is at best a sputtering effort. Too many low-end, low-paying jobs are filling the employment statistics, and hope has left the building for vast numbers of “average” Americans. Student loans are pulling too many young people out of spending to help grow the overall economy. Too many people have given up looking for work, falling out of the statistics entirely.

For those who believe that the United States is “out of the woods” comes this sobering news: “The U.S. economy shrank at an annualized pace of 0.7 percent in the first three months of the year, according to government data released Friday morning, a tumble for a recovering nation that until recently seemed poised for takeoff.

“The contraction, the country’s third in the aftermath of the Great Recession, provides a troubling picture of an economy that many figured would get a lift from cheap oil, rapid hiring and growing consumer confidence. Instead, consumers have proved cautious, and oil companies have frozen investment — all while a nasty winter caused havoc for transportation and construction and a strong dollar widened the trade deficit.

“The numbers released [May 29^th] were a revision of earlier figures that had shown GDP growing in the first quarter at 0.2 percent. Markets had since expected the downward revision, in large part because of recent data showing the trade deficit at a 6½-year high.” The Washington Post, May 29^th.

With a contracting middleclass, and numbers now swelling the lower economic rungs of that ladder, where are the other sparks of economic effort that tell us where we are? How about entrepreneurs and their start-ups? That’s the American way. How do numbers in that category reflect the economics of our nation?

The Ewing Marion Kauffman Foundation has been tracking U.S. start-up trends over the past decade, and there is definitely a link between the overall economy and the number/success of start-ups. The above contraction is bad news here as well, but it will take some time until we can track the actual results. We’re not just talking about those garage, high-tech social media ideas, but folks opening restaurants, creating little service jobs, taking craft-making hobbies to the marketplace, generally starting a business versus getting or holding a job. Some are just born entrepreneurs. Others have turned to starting a business because they cannot find a job.

The most recent Kauffman Index was released on May 28^th. The Foundation has noted that the rise and fall of start-ups is rather directly tied to the overall economy. In other words, new businesses tend to grow more when the economy is good than when it is sliding down. Today, we are seeing more start-ups, about 310 for every 100,000 adults are starting a new business every month these days. That’s up from 280 in 2014, but still below historical norms.

As for new business that actually employ other people, those numbers didn’t move the needle much either, going from 128.8 per 100,000 in 2014 to a slightly larger 130.6. Shaky numbers at best, but at least moving in the right direction.

It is equally interesting to note who those entrepreneurs are, as the Index summary states: “Most new entrepreneurs – 63.2 percent – were men. The 36.8 percent of females who became entrepreneurs in the 2015 Index is close to the two-decade low of 36.3 percent in the 2008 Kauffman Index. The rate of new entrepreneurs grew for all age groups except those aged 45 to 54, which experienced no change in the 2015 Index.

“All racial and ethnic groups – particularly Latinos – experienced increases in the rate of new entrepreneurs between the 2014 Index and the 2015 Index. The Latino share of all new entrepreneurs rose from 10.0 percent in 1996 to 22.1 percent in 2014. The Asian share also rose substantially during this period. The share of white entrepreneurs declined over the past 18 years, and the black share increased slightly. 

“A growing immigrant population and the high likelihood of immigrants becoming entrepreneurs contributed to a rising share of new immigrant entrepreneurs: 28.5 percent of all new entrepreneurs are immigrants in the 2015 Index, compared to 13.3 percent in the 1997 Index.

“Opportunity entrepreneurs, those who were not unemployed and not looking for a job before they started their new ventures, was 79.6 percent of the total number of new entrepreneurs. This number represented an increase over the 2014 Index, and was substantially higher than in the 2010 Index, when the number of opportunity entrepreneurs was at the lowest rate since the Kauffman Foundation began collecting this data in 1996.” As the United States has become a “majority of minorities” in race and ethnicity, it is not surprising to see the increases in immigrant, Asian and Latino new businesses.

The contraction of white entrepreneurs, however, is greater than the reduction of the percentage of whites as a function of the entire population, a disturbing trend. This can explain a growing chorus of dissatisfaction among traditional white voters, losing a grip (and hope?) on their own country, facing the challenge of global competition and a compete rewriting of the rules of the game. As they push against change, from Tea Party stalwarts to more radical groups opposed to anything but white Protestant values, bubbles of social disruption and violent reactions are much more common than we have seen in decades.

The one missing ingredient in all this is a notion of “we’re all in this together.” Instead, we have the blame game. Immigrants are bad. Gays are bad. Universal healthcare is bad. Government regulation is bad. Taxes are bad. Minorities need to yield in power to white traditional values. We’re seeing racially-motivated riots, entire cities filing bankruptcy, costs for basics skyrocketing, weather patterns adding further challenges to daily life and a notion that the American dream is no longer achievable for the next generations. And if we cannot figure out how to pull together as a unified nation, then we’re not that far away from no longer being one!

I’m Peter Dekom, and looking at the underlying trends in our nation should give us a reason to want to take care of each other… and if we don’t….

Minority Report

Over the years minorities have found upward mobility in public sector jobs. Irish cops and Indian-educated doctors. Government has often been the “blind-eye” employer, bucking racism, sexism and anti-ethnic/religious prejudice that often seeps into and even governs private sector expectations. African-Americans too have found massive numbers of career paths in government, from military leaders, judges and cabinet officers all the way to day-to-day police officers, soldiers, court clerks, mail carriers and bus drivers. For many, comfortable lives, educated children and a bite of the American dream have been the rewards along the way.

So what happens when government imposes a new austerity, one where government employment is contracting, even where soldiers are informed not to re-enlist? What happens to aspiring minorities with yet one more career path denied?

“For …  millions of … black families, working for the government has long provided a dependable pathway to the middle class and a measure of security harder to find in the private sector, particularly for those without college degrees.

“Roughly one in five black adults works for the government, teaching school, delivering mail, driving buses, processing criminal justice and managing large staffs. They are about 30 percent more likely to have a public sector job than non-Hispanic whites, and twice as likely as Hispanics.

“‘Compared to the private sector, the public sector has offered black and female workers better pay, job stability and more professional and managerial opportunities,’ said Jennifer Laird, a sociologist at the University of Washington who has been researching the subject.

“During the Great Recession, though, as tax revenues plunged, federal, state and local governments began shedding jobs. Even now, with the economy regaining strength, public sector employment has still not bounced back. An incomplete recovery is part of the reason, but a combination of strong anti-government and anti-tax sentiment in some places has kept down public payrolls. At the same time, attempts to curb collective bargaining, like those led by Wisconsin’s governor, Scott Walker, a likely Republican presidential candidate, have weakened public unions.” New York Times, May 24^th.

We are in fact seeing a significant reduction, from local and state to the federal level, of government jobs. “The Labor Department counts half a million fewer public sector jobs than before the start of the recession in 2007. That figure, however, understates just how much the government’s work force has shrunk, said Elise Gould, an economist at the Economic Policy Institute, a labor-oriented research organization in Washington. That is because it fails to account for the normal growth in the country’s population: Factor that in, she said, and there are 1.8 million fewer jobs in the public sector for people to fill… Because blacks hold a disproportionate share of the jobs, relative to their share of the population, the cutbacks naturally hit them harder.

“But black workers overall, women in particular, also lost their jobs at a higher rate than whites, Ms. Laird found. There was a ‘double disadvantage for black public sector workers,’ she said. ‘They are concentrated in a shrinking sector of the economy, and they are substantially more likely than other public sector workers to be without work.’” NY Times.

Indeed, when we were in the depths of the Great Recession, the numbers for women and African Americans were pretty nasty: “The disproportionate share of women and African Americans working in state and local government has translated into higher rates of job loss for both groups in these sectors. Between 2007 (before the recession) and 2011, state and local governments shed about 765,000 jobs. Women and African Americans comprised about 70 percent and 20 percent, respectively, of those losses. Conversely, Hispanic employment in state and local public-sector jobs increased during this period (although most of that increase likely occurred in the lowest-paid jobs).” Economic Policy Institute report, May 2, 2012.

So with government cutting back, what exactly are we doing to make up for the losses? The new jobs that have come on line since the “recovery” have not remotely replaced the jobs we’ve lost, public or private. Middleclass jobs have been replaced with working class employment. Jobs with real chances for advancement have slid back as jobs that offer only contract or part time employment replaced them. Educational requirements for menial work have driven out those with high school or less on their applications.

We have managed to leave taxes really low for the mythical “job creators” (who really haven’t create much in the way of meaningful employment notwithstanding their catchy label), but for most of us, it’s less money, lower expectations and a much tougher life than our worst fears would have projected. What we really haven’t done, for average white, black, or the ethnically diverse, is to take care of our own. I guess that’s what you get when you live in a plutocracy where money, not justice, fairness or democratic principles, governs.

I’m Peter Dekom, and I think what we are doing to ourselves very much resembles the infamous Chinese “death by a thousand cuts” torture.

Taxing Our Credibility and Our Legal System

Giant professional sports leagues have massive amounts of cash, generated from their management of lucrative television and merchandising deals, brand and rights licensing in general, often managing their own content-providing Websites, including OTT and mobile content packages. Most of these behemoths ripple with power and money, bask in the glow of the generally accepted (although recently challenged) exemption from U.S. antitrust laws, are aware that the necessity of “live” consumption of sports makes their value to advertisers incalculably high and are often imperious in their dealings with the rest of the world.

Until the NFL finally agreed to shed its “non-profit” status earlier this year, almost every such mega-league has maintained the tax exempt status enjoyed by officially “non-profit” trade organizations. They even have had a traditional excuse to manage their power to keep a level playing field among their competitive teams, the antitrust exemption (being challenged, at least in the world of consumers’ being required to buy whole packages of any particular league’s games) is part of the joy.

“The antitrust exemption dates back to a 1922 Supreme Court ruling, Federal Baseball Club of Baltimore v. National League, that dealt with a former competitor to the American and National Leagues. The high court's opinion held that baseball was ‘purely state affairs’ and not interstate commerce, even if players traveled, which was ‘not the essential thing.’ The Supreme Court got more opportunities to address the antitrust exemption in 1953, Toolson v. New York Yankees, and 1972, Flood v. Kuhn, which dealt with the restriction on player movement and compensation.” Hollywood Reporter, August 9, 2014. 

As the battle for the right to license Los Angeles Dodgers games illustrates, sports leagues are acutely aware with so much time-shifting of television viewing, often with the ability to edit out commercials, the fact that 98% of sports is watched live give sports a unique value to advertisers has made the value of sports franchises soar to heights no one could have envisioned a decade ago. All this has given sports leagues, amateur and professional, more power in the television/Web-based marketplace… and raw wealth.

Untaxed and exempt from laws that apply to everyone else, taxpayers have to wonder why most of these mega-wealthy organizations should not be the obvious “for-profit” institutions that they truly represent. They are getting away with financial murder, in my eyes.

But nothing, and I do mean nothing, reflects the massively arrogant, imperious and “we’re above the law” attitude that represents FIFA, the pernicious purveyors of platitudes and power at the top of the hubris pile… the soccer gods who control global competition and, most particularly, the coveted and globally mega-popular World Cup.

No one seemed to be able to stop a pattern of alleged corruption, whereby major competitive values, which telecasters would be accorded lucrative rights agreements and where other economically valuable FIFA rights would be allocated under the dubious cloud of probable bribery and corruption of key FIFA officials. With a purported $1.5 billion filling its coffers, and its seemingly unassailable leadership under long-term President (dictator?) Sepp Blatter (pictured above) impervious to challenge (numerous candidates have dropped out of the running for tomorrow’s election for president), FIFA seemed beyond the reach of any extrinsic power that could matter. Until a new American Attorney General, who had been investigating FIFA as a U.S. Attorney, entered the fray.

“The Justice Department unsealed a 47-count indictment early [May 27^th] charging 14 world soccer figures, including officials of FIFA, with racketeering, bribery, money laundering and fraud. Four of those accused, including two sports marketing companies, have already pleaded guilty and are likely to be cooperating.

“Among the ‘alleged schemes,’ said the Justice Department, were kickbacks to FIFA officials by executives and companies involved in soccer marketing and ‘bribes and kickbacks in connection’ with ‘the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.’ FIFA is the French abbreviation for the international Federation of Football Associations, the global governing body of soccer.

“Those charged, the Justice Department said, ‘include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.’

“‘Jeffrey Webb and Jack Warner — the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States — are among the soccer officials charged with racketeering and bribery offenses,’ the Justice Department said.” The Washington Post, May 27^th. Were Russia and Qatar selected as World Cup sites because of merit… or as alleged… out-and-out bribery? What was FIFA’s reaction? Shrug? The FIFA presidential election would be held as scheduled.

While Sepp Blatter was not named in any of the indictments, the Justice Department has not suggested that Mr. Blatter has been cleared of any wrongdoing. But how does the captain of the ship walk away unscathed? “‘A lot of people have asked me why Sepp Blatter wasn’t involved in this seemingly historic day, and the answer is, that’s how true power works,’ said Alexi Lalas, a soccer analyst and a former member of the United States men’s national team. ‘It’s called plausible deniability.’… For the moment anyway, Mr. Blatter, who is 79, does not seem to be treating this scandal any differently than any of the others that have unfolded on his watch…

“Asked about Mr. Blatter’s state of mind at a news conference in Zurich, FIFA’s director of communications, Walter De Gregorio, described him as ‘quite relaxed.’ He quickly clarified this characterization, noting that the president was not ‘dancing in his office.’… Several hours later, Mr. Blatter released his own statement in support of the U.S. and Swiss investigations into his organization. ‘Let me be clear,’ he said, ‘such misconduct has no place in football and we will ensure that those who engage in it are put out of the game.’ He did not appear at the news conference or make himself available for interviews.” New York Times, May 27^th. Will Blatter retain his presidency? We’ll tomorrow. Sports leagues have way too much power these days.

Although Russian President Vladimir Putin, one of the countries accused of bribing its way to being a World Cup venue, has his own opinion of this mess: “In a statement on the Kremlin web site, Putin compared Blatter to other victims of U.S. ‘persecution,’ the whistleblowers Edward Snowden and Julian Assange, calling the investigation ‘just one more brazen attempt to spread its jurisdiction to other states.” Fortune.com, May 28^th.

He noted most of the accusations involved non-U.S. people acting outside of the United States. You mean this highly-credible Vladimir Putin? “Vladimir was Putin on a show in Sochi [on a mid-May] weekend. The Russian president scored eight completely legit, not-at-all-staged, worthy goals against a host of professional hockey players, including former NHL stars Pavel Bure and Valeri Kamensky. Putin's team won 18-6.” SBNation.com, May 16^th.

In the end, the unsubtle spectacular growth in the value of sports and sport programming in a world seeking to grab on to consumers in the advertising space, often having multinational impact, merits a concerted effort of world governments to contain such seemingly uncontainable power and the dubious elements that accompanying these massive changes. FIFA is perhaps the most visible and biggest player in this space, but the questions beg governmental intervention at every level.    

I’m Peter Dekom, and when modern realities shift too much power way to fast to a narrow band of players, where taxpayers are sidetracked by imperious attitudes, this is a signal for governments everywhere to do their job and protect their citizen-consumers.

A Trillion Dollars Here, A Trillion Dollars There

No, this isn’t a blog about the money we lost pursuing the failed wars in Iraq and Afghanistan. This one is about the $2.1 trillion dollars of untaxed foreign earnings of U.S. companies that simply got away. The tax avoidance (vs. “evasion,” which is illegal) schemes are perfectly legal, and senior management of the relevant corporations have an obligation to their shareholders that supersedes any “tax loyalty” to any country to maximize profits and minimize taxes. They’re doing what is prudent and valuable, even if it hurts the country they live in. They may employ “inversions” (buying a smaller company in another, tax-friendly country, and moving the new entity’s headquarters to that overseas venue) or, most likely, a set of structures to move what would otherwise be U.S. taxable income overseas.

The keys involve multiple, interlocking companies located in tax-treaty friendly nations around the world, blend them with recognizing income in countries with embarrassingly low tax rates (sometimes, when the company is big enough, actually negotiated with that country), making sure that the profits never show up in any U.S. taxable entity. Those with an axe to grind will tell you that the United States has the highest corporate tax rate on earth. But given all the loopholes and “facilitating legislation,” the paper tax rate vs. the actual effective rate bear little or no relationship to each other.

“The 35 percent statutory U.S. corporate tax rate is the highest in the world. But according to a paper published [in 2013] by University of Southern California law professor Edward Kleinbard, many companies don't pay anywhere near that much due to the plethora of loopholes in the tax code… According to data from the General Accountability Office cited by Kleinbard, corporations on average paid 12.6 percent as of 2010… Other tax experts have made the same point as Kleinbard. A report by the advocacy group Citizens for Tax Justice noted that 111 of the 288 companies it examined paid zero or less in federal taxes in at least one year from 2008 and 2012.” CBS.com, August 19, 2014.

Apple is a classic case in point. With component manufacturing centered heavily overseas, with underlying patents and other proprietary intellectual property parked in tax-avoiding foreign affiliates, Apple has created a complex flow of corporate structures with one solid goal in mind: avoid taxes no matter where the income in generated. Even for U.S. sales, there is a huge deduction that Apple U.S. has to pay… er… through a series of structures… to… er… Apple overseas… with… er no employees or tax situs… to… er… a company in Ireland where income is recognized at what many believe is a negotiated 2% tax rate. That deduction? A royalty from Apple U.S. to the Irish company for the right to use the patents, etc. parked “over there.” Hence, the real money, the aggregation of patent royalties, is shifted from the U.S. to Ireland... and so is the tax liability.

But when shareholders in the U.S. began to demand dividends from the U.S., Apple realized that if it shifted the nine figures of revenues from Ireland to the U.S. to fund those dividends, it would have a huge tax bill. Solution? Borrow the funds you need to pay the dividends in the U.S. from U.S. lenders and deduct the interest from the otherwise minor tax bill you are paying in the United States! Leave those accumulated profits in Ireland! Use them only for overseas operations, and minimize the U.S. operations (keeping those jobs overseas!) accordingly. For America, this strategy is a win-win for Apple and a big, job and tax-revenue loss for the U.S.

We make it so easy for American companies to avoid taxes, and a GOP-dominated Congress is exceptionally unlikely to do anything that would make their campaign-supporting corporate interests pay what they really should. Even where such taxes are recognized as being payable someday, when revenues are repatriated to the U.S., that “someday” is anything but clear. “The problem is, accounting rules don’t require a company to record a deferred income tax liability on these profits, as long as it says it intends to reinvest earnings in the foreign jurisdiction where they were generated. So the money piles up, contributing mightily to reported corporate profits.

“Untaxed foreign earnings disclosed by companies in the Standard & Poor’s 500-stock index last year climbed to more than $2.1 trillion, according to Jack Ciesielski, president of R.G. Associates and editor of The Analyst’s Accounting Observer… Last year, Mr. Ciesielski said, 322 of these companies generated $182.4 billion offshore, an estimated 19 percent of their total net income.

“Companies provide few details on their reinvestment intentions, making it seem as if they are reaping the benefits of the rule without really following it. And the piles have grown so large — about $90 billion at Microsoft, for example — that claims of plans to reinvest this money overseas simply aren’t credible.

“‘If they don’t have concrete plans for the money, which they haven’t really shown us that they have, the deferred tax liability should be right there on the balance sheet — full stop,’ said Lee Sheppard, a contributing editor to Tax Notes, the definitive publication on national and global tax issues. ‘But companies don’t want to book the deferred tax liabilities because that would affect their share prices.’” New York Times, May 23^rd. In the end, our infrastructure will remain unrepaired and below what we need to function efficiently, our once-excellent educational system will continue to unravel for lack of funding and much-needed, job-stimulating government research is simply going away.

I’m Peter Dekom, and our tolerance for special treatment for the richest segments of society, our willingness to guarantee their special status well apart to the burdens imposes on the rest of us, will prove to be the most expensive and ignorant decisions we have ever made.

I Want to Be a Lawn

The US Drought Monitor tells us that 94% of California is in severe drought (or worse). On May 19^th, a Field Poll was released of Californians’ attitudes to water cutbacks. Folks who own homes with large lawns and pools faced off against farmers who watched shoulder shrugs from apartment renters. The state’s governor, Jerry Brown, and his Water Resources Control Board have ordered 25% reductions, hoping to prevent that fateful turning off the taps that afflicted Brazil’s largest city recently. 44% of Californians suggest that it would be extremely difficult if not impossible to implement those cutback mandates, but 47% believe they could conserve more.

With agriculture contributing about 2% to California’s GDP but consuming 80% of the water – much of it on water-guzzling crops like nut trees – 57% of those surveyed believed that farmers could change crops and otherwise have the capability to reduce water consumptions significantly. But 26% said it would be an untenable hardship for farmers to effect such changes.

The May 18^th Sacramento Bee provides this analysis (and an amusing anecdotal response): “Homeowners of all income levels appear sensitive to water pricing, with 70 percent saying it would be a somewhat or very serious problem if their water district raised their water bill by 15 percent or 25 percent, according to the poll.

“Bruce Evans, a poll respondent from California City in Kern County, said he has already strained to conserve water and that he cannot afford to do more… ‘I flush as seldom as possible, I shower every two or three days,’ the 65-year-old said. ‘I’m at the edge now.’... Evans, who said the state should negotiate with some other, wetter state to bring in water, is among the minority of Californians who disagree with Brown’s water reduction order… His opinion is partly for reasons related to conservation, he said, and partly because of the politician issuing the order… ‘I oppose Jerry Brown,’ he said, ‘in every way, shape or form.’”

Despite the fact that California has faced serious droughts before, though nothing remotely as threatening as the current and apparently long-term crisis, the state has failed to date to deal with archaic water laws that give strange controls and priorities to historical users of natural waterways and ground water, effectively exempting a whole panoply of senior users from the kinds of water restrictions we all know are necessary.

But recognizing that this system (a) will be restructured out of necessity and (b) there just isn’t enough water no matter how you slice it, key farmers and the Water Resources Control Board just reached an interim accord on local agricultural water usage:  “The agreement is the first of its kind in more than 30 years, and involves farmers in the delta of the Sacramento and San Joaquin rivers… Others in this category - known as senior rights holders - are irrigation districts, utilities with hydropower stations, and cities, including San Francisco.

“Thousands of the state's junior water rights holders - those whose claims to water usage date back only as far as 1914 - have already had their water use curtailed this year. Those are mostly farmers getting no federal irrigation deliveries… Under California's system, junior water rights holders have to stop taking water from rivers and streams so there is enough flow left to satisfy the demand of those with older claims.     

“About 350 farmers met on [May 20^th] to discuss an attempt to avoid deeper mandatory cuts to their water allowance. ‘That doesn't necessarily mean they'll all participate’ in the voluntary 25% reduction, said Michael George, the state's water master for the delta. But he said he believed many would…The farming industry has come under fire in recent weeks from residents who have been forced to turn off their sprinklers and time their showers under threat of heavy fines…The agreement gives the farmers until 1 June to present plans for how they will make the proposed cuts.” BBC.com, May 23^rd. If these voluntary measures do not work, the battle will move to the state assembly where these obsolete water policies will face modern realities.

California is America’s ‘global climate change’ canary in the coal mine. Just as flooding slams other communities far east of California, South Kansas and north Texas watch their groundwater disappear (as north Kansas floods!) without meaningful hope of replenishment, and heavy tropic storms threaten Florida and the Gulf Coast, the United States… the world for that matter… literally has to come to grips with monumental climate change that seems to have passed the tipping point for a return to the halcyon days of the past. Even slowing the acceleration of warming is not happening at a pace that remotely gives us solace for a comfortable future. But it does remind us that our planet is a living organism… capable of hateful responses to mankind’s arrogant abuse of its resources.

I’m Peter Dekom, and the excuses of those who wish to continue wasteful and harmful practices with this planet’s resources have just run out.

Light Bulb Science

So many of us believe that a light bulb will go off in a brilliant mind, and a new technology will change the world as of that moment. Does it happen? Almost never. Maybe a light bulb after a whole lot of effort, but “just like that?”… literally, almost never. Maybe in ancient days, with a wheel (which may have evolved from using logs to roll big stuff anyway) or fire, but in the modern world, scientific discovery is normally a long, slow process, following paths that become dead-ends, occasionally letting serendipity change the goal to a different discovery, turning back and doing it again. Creating a theory, seeking evidence, verifying the interpretation, and so-on and so-on. Time, effort and thought, sometimes over years, even a professional lifetime.

But in a world of instant response, instant gratification, and even instant solutions voted on by elected officials with a two-year term to get it right, the value of that sustained effort is no longer cherished. Think of the massive informational assault that defines the life experience of Millennials and the Z generation. A February 29, 2012 Pew Research Center report summarizes various views of the changes: “Hyperconnected. Always on. These terms have been invented to describe the environment created when people are linked continuously through tech devices to other humans and to global intelligence. Teens and young adults have been at the forefront of the rapid adoption of the mobile internet and the always-on lifestyle it has made possible…

“Morley Winograd, author of Millennial Momentum: How a New Generation is Remaking America, echoed the keyword-tagging idea. ‘Millennials are using packet-switching technology rather than hard-wired circuit switching to absorb information,’ he responded. ‘They take a quick glance at it and sort it and/or tag it for future reference if it might be of interest.’

“Cathy Cavanaugh, an associate professor of educational technology at the University of Florida, noted, ‘Throughout human history, human brains have elastically responded to changes in environments, society, and technology by ‘rewiring’ themselves. This is an evolutionary advantage and a way that human brains are suited to function.’” But can these rewired brains, living in an instant-solution society, engage in the tedious (often with no clear end in sight) efforts of sustained scientific research, and, even more importantly, will the “light bulb” society around them value such efforts enough to provide financial support to fund this needed longer-term, sustained research?

“Alvaro Retana, a distinguished technologist with Hewlett-Packard, expressed concerns about humans’ future ability to tackle complex challenges. ‘The short attention spans resulting from the quick interactions will be detrimental to focusing on the harder problems, and we will probably see a stagnation in many areas: technology, even social venues such as literature,’ he predicted. ‘The people who will strive and lead the charge will be the ones able to disconnect themselves to focus on specific problems.’

“[Perhaps deep thinking will become collaborative]. Marjory S. Blumenthal, associate provost at Georgetown University and former director of the Computer Science and Telecommunications Board of the National Academies, agreed. ‘Perhaps the issue is, how will deep thinking get done—including by whom—rather than will everyone be able to do deep thinking. In other words, division of labor may change.’” Pew Report.

We’ve even gone so far as to create a mythology on how great ideas of the past were instantaneous to fit our modern perceptions of light bulb science. Writing an Op-Ed for the New York Times (May 15^th), author-physicist Leonard Mlodinow provides an example from his own experience: “The other week I was working in my garage office when my 14-year-old daughter, Olivia, came in to tell me about Charles Darwin. Did I know that he discovered the theory of evolution after studying finches on the Galápagos Islands? I was steeped in what felt like the 37th draft of my new book, which is on the development of scientific ideas, and she was proud to contribute this tidbit of history that she had just learned in class.

“Sadly, like many stories of scientific discovery, that commonly recounted tale, repeated in her biology textbook, is not true… The popular history of science is full of such falsehoods. In the case of evolution, Darwin was a much better geologist than ornithologist, at least in his early years. And while he did notice differences among the birds (and tortoises) on the different islands, he didn’t think them important enough to make a careful analysis. His ideas on evolution did not come from the mythical Galápagos epiphany, but evolved through many years of hard work, long after he had returned from the voyage. (To get an idea of the effort involved in developing his theory, consider this: One byproduct of his research was a 684-page monograph on barnacles.)

“The myth of the finches obscures the qualities that were really responsible for Darwin’s success: the grit to formulate his theory and gather evidence for it; the creativity to seek signs of evolution in existing animals, rather than, as others did, in the fossil record; and the open-mindedness to drop his belief in creationism when the evidence against it piled up.”

The problem is that long-term efforts needed in complex scientific research – the kind of job-creating, economy-stimulating big picture efforts that change the world – need government or massive non-profit (usually academic) support. But our press for austerity in everything except military spending has ripped and torn away at government and academic programs that sustain such research, shifting the primary research and development efforts to private enterprise. Yet the private sector generally works on a three to five-year time line, does not support serendipity into tangential discoveries, and is very quick to pull the plug when targeted commercial results are not timely met. We are killing our future by not letting government invest in it, and an impatient constituency no longer seems to cherish paying to solve problems or funding pure research that require too much time. Catch-22. Our global competitors are watching and smacking their lips at our folly.

 I’m Peter Dekom; we have met the enemy, and he is us!

Public Universities and Sneaky Tuition Hikes

So you live in a state with one of the 147 public universities that teach well but also have a solid national reputation for research. They are the top of the public university food chain, and most have not just great reputations here in the United States but internationally as well. And if those national public universities are a bit too high up the academic ladder for you, perhaps you can avail yourself of the next tier of state universities where admission standards are somewhat more flexible (and even in-state tuition is less). You want your kids to take advantage of the lower tuition charged to in-state residents, and while that’s still pricey, it seems a whole lot less expensive than those chi chi private schools or even the public universities in nearby states where you don’t get that benefit.

But today the financial aid that’s available and even the number of open slots in the freshman class at those desirable schools are severely more limited than they were just a few years ago. If state legislatures continue to apply austerity to public university budgets, since raising the in-state tuition too much is often a hot political potato, what would happen if they effectively forced their state schools to accept fewer of their own low-tuition-in-state residents and replaced them with full-freight students from other states or the international marketplace? Effectively, they would be getting a whole lot more money from tuition even though a whole lot their own local students would be left out. And while no one seems to be talking about this practice, the reason such state institutions were created in the first place – preparing resident students for life – would be almost completely ignored.

Some states seem to care about their own. North Carolina, for example, limits the number of out-of-state students on their prestigious U.N.C. Chapel Hill campus to 18%. Other states… not so much. High population growth California, for example, apparently does not. “Not coincidentally, in-state enrollment [at U.N.C.-CH] has remained robust. In 2000, U.N.C. admitted 32 international students as undergraduates. At U.C.L.A., by comparison, the number was 43. Twelve years later, U.N.C.’s international freshman enrollment had risen slightly, to 48. U.C.L.A., by contrast, enrolled 1,046 international freshmen in a single year, almost 25 times more in little more than a decade. [U.C.L.A.’s International Student Center is pictured above.] The number of in-state slots at U.C.L.A. barely changed, even as the number of in-state applications surged…

“The pattern at elite national universities [reflects that] the majority of additional students were from other states. Instead of extending their traditional mission of providing an affordable, high-quality education to local residents, national universities focused on recruiting students from other states and nations, many of whom paid much higher tuition rates. As a result, the number of in-state spots relative to the college-going population as a whole declined significantly at national public universities.” Kevin Carey writing for the May 18^th New York Times. Those full-freight students also become generous donors after graduation. Second level colleges have more openings, but they are not at the best that such states have to offer.

We all know about how national universities with high profile sports programs (that generate lots of television cash and ticket sales) use recruiting to have the best athletes where they need them most, but there’s another kind of recruiting goin’ on. Take the Crimson Tide, for example. “The University of Alabama’s football program has an aggressive nationwide recruitment machine, and its coach, Nick Saban, has led the team to three national championships in the last decade. Less well known is the university’s equally ambitious recruitment program for nonathletes. With 30 full-time admissions officers across the country armed with millions of dollars in scholarships, the university has more than quadrupled its class of out-of-state students since 2000, to the point that they now represent the majority of all freshmen arriving in Tuscaloosa. Many if not most of the undergraduates bleeding Alabama crimson in Bryant-Denny Stadium on Saturday afternoons come from somewhere else.

“Alabama accomplished this in part by substantially expanding the total number of students it enrolls, including in-state students. Other public universities have made space for out-of-state students by allowing fewer in-state ones to attend. The University of California, Berkeley, enrolled 384 fewer in-state freshmen in 2012 compared with 2000, while out-of-state American students grew by more than 300 and the number of international students increased eightfold. This happened at the same time that in-state tuition and fees increased to $13,200 from $3,964. (Out-of-state and international students pay more than $36,000 per year.) Purdue University cut annual in-state slots for incoming freshmen by more than 500 students, the University of Illinois at Urbana-Champaign by more than 300, and Auburn and Michigan State by more than 200, with each enrolling hundreds of additional out-of-state and international students in their stead.” Carey. Ouch!!!!

With soaring student loans (and the path to discharging this sort of loan close to impossible), other forms of financial aid all-but-non-existent, with tuition increases even for in-state students flying way beyond the rise in inflation and now with a reduction in freshman slots for locals, it seems pretty clear that most state legislatures just do not have a problem betraying their own children in the name of keeping taxes low for their richest state residents. Hey, those job creators, who really don’t create jobs (but the words sound good), really need to keep their taxes low because… er… they… er write the biggest campaign contribution/SuperPac checks to elect those legislators. They have no problem paying for their own kids’ education, by the way, private public or international. But exactly what do we owe our own children? What’s the morality here? How do you think our future will suffer with such short-term (??) bandages?

I’m Peter Dekom, and I wonder how legislators can actually look at themselves in the mirror after voting against their own residents’ children!

Addictive Protein: Pork

The military industrial complex has not-so-subtly spread its subcontractor and key operational venues strategically around the United States, touching enough Congressional districts to lubricate military spending bills to their massive heights today. Local businesses have supported candidates with a “wink wink” that while they cannot get a direct agreement for support, everyone knows that on the relevant issues, the elected officials know what is expected. In the days of unbridled pork, House and Senate elected officials always knew that to get their “special district allocations,” they would have to let their fellow members also have their little “special district allocations.” You scratch my back… Earmarks, specialized tax breaks and exemptions from regulations, etc.

Well, as various pieces of legislation, like the big Sequester bill, reined in such pork-barrel understandings, elected officials – with their campaign coffers needing cash – have pushed and moved in the loophole arena on how to service their contributors’ wishes anyway. But there’s a new trade bill on the table, and Congressional experts are grinning, ear-to-ear. If Congress steps back, but allows businesses direct access to the U.S. Trade Commission, they just might be able to accomplish the same result.

“[N]ow, as part of the larger trade debate, Congress has found a way to bring them back without its fingerprints… A once fairly uncontroversial practice, lawmakers would introduce legislation on behalf of a local company to suspend tariffs on a specific, often obscure, product only available overseas. The result was hundreds of narrow bills, each intended to benefit one manufacturer’s bottom line.

“For example, Sen. Bob Casey (D-Pa.), who alone sponsored more than 100 of these bills in 2013, had one to lift the duty on ‘certain smooth nonwoven fiberglass sheets of a type primarily used as acoustical facing for ceiling panels’ on behalf of Armstrong World Industries  Inc.

“Casey’s massive haul for Pennsylvania businesses is due in part to the refusal by that state’s other senator, Republican Pat Toomey, to introduce any of the so-called ‘miscellaneous tariff bills’ or MTBs. Toomey, and many Republicans, contend that these carve-outs are no different than an earmark — a business coming hat-in-hand to a member of Congress asking for a break.

“‘Lawmakers served no purpose other than they churned through the proposals. They were there to be lobbied and to fundraise,’ Steve Ellis of the Taxpayers For Common Sense told the Loop. ‘They were sort of like a vestigial organ.’…

“So lawmakers have agreed to take themselves out of the equation and allow businesses to go directly to the U.S. International Trade Commission (ITC) with its requests. The change was passed by the Senate last week in a larger customs enforcement bill. Industry advocates hope getting rid of the ‘earmark perception problem’ will end the uncertainty that’s plagued the process for the last several years.

The last MTB bill passed in 2010 — shepherded through as a jobs bill — and expired at the end of 2012. In that time, there began a moratorium on earmarks… For the past two years, business advocates say, companies have paid taxes on imports they need and cannot get domestically. They’re hopeful that removing Congress from the process means they’ll get relief again from those extra payments.” The Washington Post, May 19^th. So by Congress’ pulling itself out of the equation, these companies might just get what they want in a strange reversal of strategy. It’s the perception problem Congress fears… not the earmarks that will probably slip through this new “process”! They're just clearing the path for businesses to get what they want.

I’m Peter Dekom, and in a plutocracy, it is necessary to allow the well-heeled the power to rule.

Nearing the Edge

Scarce resources, drought and demonizing zealots with a solid belief that God is on their side… with victories to prove it. Simplifying everything by denying that anyone who believes other than their mandate should be considered human. Nigeria’s Boko Haram engaged in mass rape of young girls captured from their schools… but those weren’t Muslim girls, so they weren’t considered human. Their Islamic State brethren slipped beneath a raging sandstorm (sheltered from U.S.-airstrikes) and seized Baghdad-close Ramadi as Iraqi troops repeated their past – fleeing as fast as they could, leaving weapons and supplies behind by the ton.

It’s a Christian-Sunni battleground in Nigeria, a Shiite-Sunni battleground in Iraq and Syria. When confronted by IS extremists who engage in unlimited atrocities and genocide as opposed to the clear Shiite forces of Iraq and Iran with an abysmal history of anti-Sunni cruelty, the majority of Sunnis trapped in IS-held lands prefer IS (who are at least claiming to be Sunnis) to their clearly-defined Shiite enemies (thank you for reawakening that animosity, America). They may not be happy about their forced choice, but then, to them, it’s down to a question of simple survival. And trust me, they are terrified of IS, deeply suspicious of Shiite forces that have made Iraq hell for them, but they don’t seem to have a place anywhere where they can live their normal lives with even a modicum of safety and comfort.

What this means for the region as a whole is a redefinition of political boundaries. Shiite-Iraq, heavily under Iran’s sphere of influence and control, is breaking off from its Kurdish residents in the north and its Sunni factions west and south. Baghdad and environs are the hot-zone dividing line, with pockets of both Sunnis and Shiites within their tattered boundaries. Shiite forces from Iraq and Iran are streaming back to recapture Ramadi, but the writing is on the wall for those stubbornly clinging to an American notion that Iraq, as configured when U.S. forces extracted, was a viable and sustainable country. Exceptionally unlikely.

As President Obama calls the fall of Ramadi a “set-back” in the effort to defeat IS, and while we were not allied with Syria to protect the history-rich city of Palmyra which also fell into IS hands, and as miserable as those in IS lands might be, there definitely seems to be a new Sunni state forming (maybe two) in the region. “Civil war broke out four years ago in Syria, providing an opening for groups such as ISIS to emerge and take on forces loyal to President Bashar al-Assad. With its latest offensive, ISIS controls more than half the country -- in parts of 10 of 14 provinces -- as well as ‘the vast majority of the gas and oil fields,’ the [Syrian Observatory for Human Rights] estimates.” CNN.com, May 21^st. American strategy is simply not working; the battle is not being won from the air. Syria is clearly falling apart, and Iraq’s unraveling appears to be on the horizon as well.

The question is when… and to many in the region, the answer is soon. What’s worse, from an American perspective, is that the Iraqi moderates are losing credibility by the second. Hardliners, demanding that the country accept new religious boundaries as a political reality, are prevailing. Iran is hunkering down for a long fight with the Sunni extremists, but it is at least is picking up, for all practical purposes, the vast tracks of oil-rich Shiite lands in eastern Iraq.

“[T]he defeat [in Ramadi] has given new momentum to [Iraq’s] Prime Minister Haider al-Abadi’s rivals within his own Shiite political bloc… At the urging of American officials who sought to sideline the militias, Mr. Abadi had, in effect, gambled that the combination of United States airstrikes and local Sunni tribal fighters would be able to drive Islamic State fighters out of the city as fighting intensified in recent weeks. The hope was that a victory in Ramadi could also serve as a push for a broader offensive to retake the Sunni heartland of Anbar Province.

“‘Abadi does not have a strong challenge from Iraq’s Sunnis or Iraqi Kurds,’ said Ahmed Ali, an Iraqi analyst in Washington with the Education for Peace in Iraq Center. ‘It’s from the Shia side.’… Mr. Abadi’s rivals within Iraq’s Shiite political bloc have been accusing him for months of doing too much to work with Sunnis rather than empowering the militias and fellow Shiites.” New York Times, May 18^th. Powerful militias and politicos with strong ties to Iran are attempting to formalize that Iraq is a Shiite nation and that Sunnis are the clear enemy.

The United States helped shove former Iraqi PM, Nuri Kamal al-Maliki, out the door in favor of al-Abadi, but al-Maliki is still a very big presence, pressing his pro-Iranian Shiite agenda. And al-Maliki’s allies are moving hard and fast against the moderates.  Al-Abadi “became prime minister last year with strong backing from the United States on the belief that he would be a more inclusive leader than his predecessor, Nuri Kamal al-Maliki, and would reach out to the country’s minority Sunni Arabs and Kurds. Mr. Abadi has done so, by pushing for the arming of local Sunni tribesmen and reaching a deal with the Kurds to share oil revenue.

“But at every turn he has been thwarted by powerful Shiite leaders with links to Iran, including Mr. Maliki. Now, the latest setback in Ramadi has given Mr. Abadi’s rivals even more ammunition… Some Shiite politicians, including Mr. Maliki, and powerful militia leaders linked to Iran, whose fighters are now preparing to fight in Anbar, have become increasingly critical of Mr. Abadi. Either they have spoken out themselves or news media outlets they control have taken aim at the prime minister through distorted coverage that has highlighted security failures in Anbar.” NY Times. The other shoe is in the air and dropping fast.

American Hawks (like newly-announced GOP candidate, Lindsey Graham) want to insert massive U.S. forces back into Iraq to crush IS and topple Syria’s Assad Shiite minority regime, but exactly who will rule those “liberated” territories in the exceptionally unlikely chance American troops prevail where they have consistently failed for a very, very long time? What’s the plan? How viable is such a vision in a world that now despises U.S. interference that seems to be a rather consistent blueprint for failure?

There is no doubt that IS is the enemy. Iran is not exactly a warm and cuddly potential ally. The Sunni bloc of Gulf states is clearly terrified of the situation. And the Israeli-Palestinian standoff, with increasing global support for Palestinian independence, is a complicating factor also with no clear solution in sight. So exactly what is the plan? It seems almost inevitable that a new Sunnis enclave-nation, born of ultra-violence and genocidal cruelty, is solidifying in Iraq and parts of Syria. Will IS maintain its hold on those lands or will moderation based on internecine struggles subdue that cruel occupying force?

The answers are not clear, but one harsh truth does seem rather apparent: the American vision of that region of the Middle East is definitely not happening. What we need to determine is how to keep our interests protected and our people safe in this new environment, a tall order by anyone’s standards.

I’m Peter Dekom, and the United States needs leadership that understands that our current expectations need to be replaced by a new pragmatism that can work.