Running from Fundamentals

When you read about ancient mega-societies – Rome, Incas, the Chinese Ming dynasty, Persians, Ottomans – you think about their glory… and then their downfall. Often these great civilizations, lasting two to four centuries on average, began a period of serious decay, eventually falling to military defeat or internal fractionalization… before dropping into history. Even the famed British Empire, of which we were once part, could no longer make the claim that “the sun never sets on the British Empire” after Hong Kong was ceded to China in 1984. England is still around, but she is hardly the superpower of even a century ago and is facing worse economic problems than we are right now.

So ever ask yourself, “when is it our turn?” We’re touting the 21^st century as the Time of Asia, particularly China with a touch of India, but where is the United States in all this? Are the social safety nets that we, and our Western brethren, created for society’s betterment of our standards of living unaffordable drains on our economies, destined to drag us down into that period of historical decay that seems almost unavoidable? Or can we wage “wars for national security” without so decimating our economic ability to survive that we effectively kill ourselves in an effort to preserve what we believe we have. How long can you cut educational programs before you destroy your future?

Look at the simple signs. A massive trade imbalance tells us we consume more than we produce. A massive budget deficit tells us we live beyond our means, and someday we will have to pay the piper… is that day coming soon? China has trillions of U.S. dollars in reserve, is luring research scientists back to the mainland, just as we have a huge negative bank account with a falling dollar value. The fact that the U.S. dollar is fighting to be a bigger part of that “special drawing right” currency intended to replace the dollar as the global currency reserve tells us that the global community no longer has faith in the stability of the U.S. economy. That the U.S. political and economic structure clearly favors special interests over the general welfare of her people, such that virtually everyone seems out only for themselves these days, regardless of the impact on everyone else tells us we are in a desperate free-for-all fighting for limited resources.

Factions each want to govern everybody else’s behavior in conformity with their needs to political choices – freedom’s become just another word for nothin’ left to lose. Wall Street wants to be unregulated to create new “profit-making” bubbles (they make money only when an economy is moving, up or down), with government support if something goes wrong. As the President tries to reign them in with restrictions on banks’ investment rights (especially against their own clients’ positions), watch the special interests administer a full-court lobbying press, particularly now that the Supreme Court has removed the restriction on their campaign actitivies. Many religious groups each seek that their view of the universe becomes the law for everyone else, whether they accept the underlying faith or not. The First Amendment needs to be repealed, if you follow their dictates. Farmers want subsidies, the NFL wants a blanket antitrust exemption, oil companies want special depreciation rules, Nebraska doesn’t want to pay its fair share of Medicaid, and each little bit adds up to…. Well, we aren’t really that concerned with the “us” in U.S. anymore… only how we individually are impacted by the rules of state.

And Americans are scared… even if we don’t look at the bigger questions. At least at a gut level, we see the writing on the wall. Little things – like the fall in December retail sales – tell me how scared we really are: “From supermarkets to department stores, sales fell 0.3 percent from November, a decline that economists attributed to a persistent reluctance by Americans to open their wallets. Analysts, encouraged by signs that consumers were regaining confidence and the labor market was improving, had expected sales to rise 0.5 percent.” January 14^th New York Times. Unemployment number stabilized for a while… and have begun to slide back up again. How many of those who lost their jobs in this mess will actually return to their former industries in remotely comparable jobs? Little things, like California’s jobless rate rising from 12.3% to 12.4%... “little” unless it was your job… or higher weekly applications nationally for unemployment benefits.

The collapsed economy has dominated the headlines for the last year and a half, and we are all looking for signs of a recovery. But has this economic malaise simply accelerated and then masked a much bigger reality? Is this reality a time of transition, of the ebbing of America as a viable political entity? Are we in that kind of decay that ends political structures and relegates them to the trash heap of discarded history books? And if these signs are so completely obvious, why aren’t they the basis for a rallying cry for good Americans to do incredible acts to sustain a great nation?! Or are we willing to slide into footnotes and chapter headings in some academic PhD thesis about the “decline and fall” of the United States of America?

I’m Peter Dekom, and I approve this message.

Politicians and Tea Leaves

Can’t have a tea party without tea leaves, and by all accounts, the Democrats read them horribly wrong. 18% of the Massachusetts voters who just elected a Republican senator voted for Obama in the Presidential election. The heartland has spoken, and Republicans are jubilant; the independents who defected have returned to the conservative fold… or have they? Exactly what are the voters saying? That Democrats are bad and Republicans are good… or is it a deeper message that lies in wait for the unwary of both parties. Somehow, the Republicans, who are the bastions of deregulation and lower taxes for the rich, have pushed Obama and the Democrats into a corner in which the latter are being blamed for big spending to resuscitate a truly arrogant and ungrateful Wall Street seemingly without doing anything visible for the average American.

Fed Chairman Ben Bernanke is losing his solid Democratic constituency – “Sens. Barbara Boxer (D-Calif.) and Russell Feingold (D-Wis.) said [January 22^nd] that they would vote against Bernanke, following the lead of Sen. Byron L. Dorgan (D-N.D.) a day earlier. Many senators who had been viewed by Senate leaders as safe votes for Bernanke said they were undecided.” (1/22 Washington Post) While he is credited for a reasonable response to the financial crisis, Bernanke’s not having seen it coming and having looked the other way as Wall Street pigs gorged on the overleveraged bubble that made them rich might become fatal to his bid to extend his Fed chairmanship beyond the January 31^st expiration date.

Where 40% of the unemployed have been out of a job for over six months, where the true unemployment rate (which count part-timers and those who have given up looking) is closer to 17%, where there are six people applying for every job that comes up, where seniors have lost their savings and homeowners their home values, where small businesses are failing in droves topped only by the number of good people facing foreclosure, where a horse-traded-into-oblivion healthcare reform plan lets insurance and pharmaceutical companies have their way while folks are watching the possibility of costs continuing to rise and benefits falling even as Nebraska wants to avoid paying their fair share of Medicaid costs and where individual Wall Street bonuses for oh-so-many exceed the lifetime earnings of most Americans… what exactly do you think America wants?

Religious groups are toasting over the death of liberal social issues… or at least they think that’s what the tea parties were all about. Fiscal conservatives are toasting that the days of profligate spending on social programs are over, that all attempts to tax and regulate big business must now fall by the wayside… but Americans seem to be saying that they want their economy saved first, and everything else can wait… and if you are spending billions… no trillions… and the only winners are the fat cats, it’s time to replace the party that made that happen.

As big business celebrates the Supreme Court decision that they think will allow them to buy business-friendly candidates into office so that the rich get richer… doesn’t anybody really understand what this is all about? Americans are seeing massive new spending proposals, rich winners who got bailed out and an economy that everyone keeps saying is out of the recession but is clearly still a depression for a huge number of unemployed and underemployed Americans… the rest of America is just plain scared that they will be next. We do not believe the recession is over! We do not believe that the recovery is beginning! We do not believe much of anything you are telling us, and people who say otherwise and are not taking steps we can understand will help the average American – Republican or Democrat – are going to be pushed out of office! This isn’t against healthcare reform, it’s about priorities and ending the rein of special interests over all of us!

The President’s State of the Union message on Wednesday will try and convince America that it would have been much worse for the average American had the stimulus programs not passed, that a new and second stimulus program is essential and that, as he said, “I just want to have some rules in place so when these [Wall Street] guys make dumb decisions, you don't end up having to foot the bill.” He’ll make a populist appeal for a downsized healthcare plan, but “populism” is the name of his new game. His most recent proposal for bank reform would prohibit banks from owning hedge funds and private equity funds that might engage in high-risk trades that could endanger the health of the nation's banks or run counter to the best interests of the banks’ customers. The message sent stocks plunging to their greatest drop in ten months with Wall Streeters muttering how such regulatory efforts would prevent restoration of the credit markets for small businesses and consumers. But now it’s people against the evil banks, so maybe that will sell.

It is amazing how many times this phrase is repeated, but it is even more amazing how many times politicians seem to forget their priorities. IT’S THE ECONOMY, STUPID!

I’m Peter Dekom, and there is a forest among these trees somewhere.

The President’s Big Mistake

The semaphore of favoring special interests over the lives of most Americans has been President Obama’s weak link among those who supported his presidential campaign but feel he has failed them ever since. The signs are everywhere. We have a massive deficit, but the only clear winners are the big Wall Street financial institutions, to whom we have provided zero interest loans and emergency capital on their balance sheets. The healthcare plan stinks from special interest accommodations. The big pharmaceutical companies promised huge price reductions for the new health reform legislation and promptly raised prices so that they could reduce them back to where they were.

Nebraska Democrat Ben Nelson traded his vote in favor of the Senate version of the healthcare plan provided that his state were exempted from its share of Medicaid contributions for a decade, placing that burden on US taxpayers. He promptly became the poster-child for everything wrong with the Democratic leadership, and with the help of such destructive antics, helped place a Republican Senator in Massachusetts ; Nebraska doesn’t even benefit from his failed and profoundly selfish act now that the Senate version of the bill is dead! The loopholes in all versions of the proposed healthcare legislation clearly favor the insurance giants, just as they could have generated 30 million new customers, with very few incentives to contain costs.

The January 21^st Washington Post: “The number of newly-laid off workers seeking jobless benefits unexpectedly rose last week, as the job market recovers at a slow and uneven pace. The Labor Department said Thursday that initial claims for unemployment insurance rose by 36,000 to a seasonally adjusted 482,000. Wall Street economists had expected a small drop.” Unemployment isn’t budging, and the alternative measurement of folks looking for full-time work but only getting occasional or part-time jobs or those who have simply given up looking increases the jobless number by almost 70%. With six people looking for every job available, the forecast looks bleak.

Foreclosures are still rolling through the market, and housing prices have taken another plunge in the last few months, consumers are not spending, and there is virtually no lending for smaller and mid-sized businesses, contrary to what the President promised would happen when he took care of the big boys… financial institutions that used the money to support their own internal trading accounts instead. Defense contractors are licking their lips, but our war in Afghanistan is only supporting a hopelessly corrupt and ineffective regime; lost American lives and an even bigger budget deficit are our only reward.

The underlying message appears to be clear: if you can’t support the little guy – the average American in need – as a Democrat, but are incurring a massive deficit anyway, we might as well support a Republican, who may not help us that much, but at least they won’t keeping raising the deficit for programs that haven’t reached most of us. Americans have forgotten the profligate ways of the Bush administration, have seen the horse-trading and internal bickering that has made the Democrats look weak and corrupt, and simply are getting tired of a system that selectively benefits a few (usually those at who have the money to get politicians elected) but inflicts the burden of those benefits on everyone.

The Washington Post summarizes President Obama’s realization of this massive failure: “Obama said the relentless pursuit of his domestic policies -- and a failure to adequately explain their virtues -- had left Americans with a ‘feeling of remoteness and detachment’ from the flurry of government actions in Washington …. ‘We were so busy just getting stuff done and dealing with the immediate crises that were in front of us that I think we lost some of that sense of speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values,’ he told ABC's George Stephanopoulos.”

The independents that tilted the scales to elect Obama in the first place seem to have moved into the other camp. Ignoring the heartland – the middle class – can be fatal. The results of an AT&T/Yahoo poll taken on the 21^st seem to say it all:

Q. The president's progress with the battered economy has been both praised and criticized. How well are his efforts measuring up with you?

Extremely well. We are undoubtedly moving in the right direction.	37%
Fairly well. There's still a long way to go.	1%
Not well at all. His plans are hurting more than helping.	62%
Not sure/No opinion.	0%

Horse-trading for stupid and selfish concessions (pork of the most unacceptable kind) and supporting a few at the expense of many cost the Democrats Massachusetts … that and the kind of hubris that takes winning the election for granted. Mid-term elections are rapidly approaching, and politicians from both sides of the aisle should take a really good look at a sure way to lose an election: giving special interests the winning hand at the expense of the rest of us… and even if those special interests are busy funding election bids before anyone else contributes… sooner or later, a politician will pay for that money with a crushing loss of power and a very short tenure as an elected representative. You’ve heard the wake-up call – and Republicans should read the message as equally applicable to them – but is it too late to make a difference? All this as the United States Supreme Court has just ruled that it is unconstitutional for Congress to enact legislation to forbid corporations and labor unions to fund ads for and against candidates.

I’m Peter Dekom, and why do I get this feeling that our politicians don’t even know how to change?

Unbalanced Billing

Even as the healthcare reform legislation is hitting new and perhaps fatal roadblocks (the election of a Republican to fill the Senate seat vacated by Ted Kennedy ended the Democrats’ “filibuster-proof”60 seat majority), there are some issues that seem to have been resolved in insurance company’s best interests under any iteration of the proposed act. In recent blogs, I’ve already noted how the pharmaceutical industry protected itself against serious competition and price cuts by making sure that Americans cannot legally import safe prescription drugs from Europe or Canada at much lower prices. Today, I’d like to address one particular issue, one that factors into a very large number of “medical bankruptcies” – where critical care decimates the bank accounts of those facing an emergency – even for people who have health insurance.

The issue is known as “‘balance billing,’ which occurs when doctors, hospitals or medical labs bill their patients the difference between what they charge and what insurers pay for their services. It comes into play when patients use providers who aren't part of their insurers’ networks and thus haven't agreed to prearranged payment rates.” The January 18^th Washington Post.

The practice might be justifiable in situations where a patient voluntarily steps “out-of-plan” to access a particular doctor for whatever reason, but it is much more difficult to justify where an extreme or very rare medical condition necessitates a specialist who is not “in plan” or, even worse, where “out-of-plan” care was administered without the patient’s knowledge or consent – what might happen after an accident or heart attack where an unconscious patient is simply taken to the emergency room of a hospital that is not “in plan” and perhaps even admitted to the hospital and operated upon without ever having made a conscious choice. Often, folks who opt for out-of-plan care can at least negotiate with the outside physician or hospital for a better rate; unconscious patients obvioulsy do not have that option.

The former case – access to a specialist – is a very sticky issue because some choice is being exercised by the patient (or the patient’s guardian). But in circumstances where effective treatment is truly available only out-of-plan, but there are doctors that are generally available in that medical practice specialty in plan, insurance companies most often require in plan treatment. In the latter case – involuntary care – it is difficult to see any justification for making the patient pay the higher rate.

How do the current House and Senate versions of the reform proposals deal with the issue? “Congressional aides say there's no need to limit the practice, because the pending legislation would require insurers to have enough specialists to ensure patients could get care within their insurers' networks. Both bills cap out-of-pocket costs for patients seeing in-network providers, and the House version recognizes the financial threat from out-of-network costs by counting a portion of out-of-network costs toward the cap.” Great theory, but hardly the real world. Take for example a medical practitioner who may have had a rare occasion to treat a particular ailment who is in plan, but the truly specialist with substantial and effective experience in the field who is not a part of that plan. Technically, the insurance company may have an argument that they have that base covered, but how would you feel if your life or the life of a family member hung in the balance? Some states (e.g., Maryland, which set its own rates, Colorado, etc.) have reacted by banning the balance billing practice for emergency care. But this is most certainly not a generally accepted rule, and the practice regarding specialists is far more complex.

The above Washington Post provides an example of a newborn whose defective heart carried a very low survival rate, but where an out-of-plan surgeon (with no true comparable counterpart in plan) had had a great deal of success with that particular defect. The insurance carrier, Anthem Blue Cross and Blue Cross in Virginia, only agreed to pay what their internal rate for that kind of surgery would have been (i.e., they approved the out-of-plan surgery, but only at their rate – although there was confusion as to whether or not this was adequately explained to the policy-holders), and denied the rest, a very significant sum of $85,000 for two related surgeries. The Post: “Company spokesman Scott Golden defended Anthem's decisions. ‘To keep health care costs from rising faster than they already are, we cannot pay doctors who refuse to participate in our network amounts far greater than that paid to doctors who have agreed to provide services to our members for a reasonable fee,’ he said in a written response to a reporter's questions. ‘Doing so would only encourage doctors to drop out of our networks and balance bill all members.’”

In the end, we still have the most expensive medical care on earth, with costs rising beyond our aggregate ability to pay. There are serious issues that still need to be addressed, and whether healthcare reform succeeds in the current Congress or not, sooner or later, this country is going to have to face the reality of a healthcare system that the nation can no longer afford to pay for… assuming that event has not already occurred.

I’m Peter Dekom, and I am deeply concerned.

Savoring Yet Another Victory – al Qaeda & the Crotch Bomber

If there is a “Terrorist’s Hall of Fame” somewhere on this planet – probably in the Tribal Districts of Pakistan if you want a nice safe place to have one – it would feature the “heroes and martyrs” section including the dozen of rabble-rousing clerics, the piles of suicide bombers who have shredded innocent lives with an angry-yet-lust-for-“paradise” explosion for Allah, the hijackers, shoe bomber, crotch bomber and that perennial favorite, Osama bin Laden. Under Islam, those living normal pious lives in keeping with the requirements of the faith will be piled into a giant waiting room upon death to await that distant judgment day when they may ascend into heaven. Those who sacrificed their lives for their religion get the “fast pass” without waiting.

Doesn’t seem fair somehow, and clearly, fanatics have used this “loophole” as a gigantic recruitment tool to garner long lists of young men and women waiting for their “fast pass” to heaven… and their suicide bomber death. Despite this expectation being decried by moderate Muslim clerics all over the globe, the thought of martyrdom and instant paradise just cannot be shaken from the psyche of some many young gullibles, otherwise living shallow and often hopeless lives. They are greeted as heroes by parents and the public. They see the honoring parades, the posters of glory and are seduced by this viciously-conjured practice of unqualified clerics promising instant paradise in heaven.

These gullibles have decimated the Western way of life, costing the United States and its allies trillions of dollars in wars that have sapped the strength and spirit of these great nations. Wars that we have not won, that continue in one unsatisfying way or another, while “hot spots” continue to emerge all over the world, most recently in war-torn Yemen, where yet another al Qaeda training facility has produced an astounding success… without even bringing down the Christmas day flight to Detroit. Our budgets have been strained to the breaking point by the military and diplomatic costs imposed to ward off the evil of Islamists terrorists. We live in fear and cannot get on a jet flight without the most somber reminder that traveling is the favorite target of those hell-bent on destroying us.

The effectiveness of these al Qaeda (and their cronies’) efforts is staggering; we may have stopped an number of individual incidents from shattering the lives of innocents, but sooner or later, we know there will be a big hit; our lives have been profoundly disrupted, American soldiers sacrificed into the gaping mouth of “defensive” military action, our privacy compromised, traveling by passenger jet is miserable and profoundly time-consuming (remember, time = money!), we have massive new federal bureaucracies with undereducated bottom-end-job-seekers peering into our luggage, now looking at the naked figures of our bodies and sometimes even patting us down, our communications tapped and our taxes sucked up by all of the above. We can’t even go to sporting events without going through a metal detector and a purse search!

A shoe bomber killed our ability to take most liquids and gels on board aircraft. The crotch bomber has limited us to one piece of carry-on (while most of the airlines continue to charge us for checked baggage!), made us sit in our seat for the last hour of flight (with no access to our carry-on) and has travelers (read: tourists or terrorists?) from certain countries face pat-downs (which may be seriously violative of their religious beliefs) and personal baggage inspection. It will take more bureaucrats, bottom-level government officers, scanning equipment and vastly more money (while deterring revenue-producing tourist dollars) to implement this additional layer of intrusion. And jet travel has a new time-delay added to the already incessant waits at the airport.

In the world of budgeting for the future, in business and in government, a 1% increase generally doesn’t stir anyone’s ire. A percent here and there, a little at a time, and one hardly notices that what may, in any given instant, seem like a pittance; over time, an aggregation of “pittances” can produce billions and billions of dollars of valueless costs that drain our economy, haven’t seemed to work anyway, sapped our strength, hammered our spirit, and forever changed the way we live.

Remember when you could greet an arriving passenger at the gate… surprises and hugs along the way? Are we really any safer? And just think, if someone really wanted to smuggle weapons of mass destruction into this country, how hard could that be? Look at the tons and tons of illegal drugs that make their way into the U.S. every month! Could al Qaeda operatives have ever fathomed a success like the one they have enjoyed at our expense over the years since 9/11/01?! How much more could they have hurt us than we have hurt ourselves? Are we proud of the “victory of profound disruption” we have handed them on a silver platter? And exactly when is enough… enough?!

The January 13^th Sphere.com puts our commitment to “security” this way: “On Dec. 19, 2009, President Obama authorized a military budget plan for a record $663 billion to defend the United States, the highest since World War II -- higher, adjusted for inflation, even than during the Korean and Vietnam wars… Six days later, al-Qaeda struck with an attack on a Detroit-bound airliner that very nearly succeeded in killing 278 passengers on board the Northwest Airlines Airbus 300. Less than a week later, al-Qaeda attacked in Afghanistan, where the United States is building up a force of nearly 100,000 troops at a monthly cost of $3.6 billion. This time it was a suicide bomber who evaded U.S. intelligence nets and killed seven Americans and a Jordanian at a remote CIA base.

“Everywhere, it seems, Uncle Sam is struggling to regain its footing -- despite its vast spending on security… Counting outlays for the military, homeland defense, airport security, nuclear weapons, and other facets of defense, the United States will spend well over $700 billion for security this year, more than the rest of the world combined… But thanks to a cunning and innovative enemy, a defense budget encrusted with ‘we've always done it this way’ convention, and strategic choices attuned to the last century, the United States seems to be merely treading water in what senior officials acknowledge will be a long and difficult war.” Are we remotely getting our money’s worth; are we truly any “safer”?

Maybe these words from Washington Post columnist Fareed Zakaria (January 11^th) might tell you how far we have conformed to al Qaeda’s plans: “The purpose of terrorism is to provoke an overreaction. Its real aim is not to kill the hundreds of people directly targeted but to sow fear in the rest of the population. Terrorism is an unusual military tactic in that it depends on the response of the onlookers. If we are not terrorized, then the attack didn't work. Alas, this one worked very well.” I, for one, deeply resent having my way of life so deeply altered – clearly and intentionally – by these “terrorists” with their perverted sensibilities… and I am beginning to think I’d rather live with the risks than let these butt-heads gloat in the victory they seem to be savoring.

I’m Peter Dekom, and I know that this just can’t go on like this for much more.

Made In China

For many older Americans, the term “Made in Japan” once signaled shoddy and cheap merchandise; the thought of a quality Japanese car would have been ludicrous half a century ago (the huge Japanese car export business really did not begin until the 1960s). Today, quality surveys generally put Japanese electronics (e.g., Sony, Sharp, JVC, Toshiba, etc.) at the top of the heap, and Japanese cars have generated a solid reputation that makes them coveted, often at the expense of American-made vehicles. When Korea entered the market, folks chuckled at the shoddy LG or Samsung electronics, and titters followed Hyundai cars wherever they went. Not anymore!

We keep hearing that the 21^st century is the time for China resurgence, but for most of us, the Chinese manufacturing machine, which keeps the shelves of Wal*Mart filled with inexpensive goods, is simply the servicing arm of foreign invention; China is the ultimate subcontracting manufacturer to the world. Cheap labor. Cheap manufacturing. Cheap indigenous natural resources. Little originality. Think again! Here comes China like a roaring freight train, pockets filled with cash (and massive foreign currency reserves, particularly U.S. dollars), ready to invest in research, development and invention as the Western world struggles to find a path to recovery.

While the U.S. still outspends China on research and development (we spend 2.7% of our GDP, while China is still at a lower 1.5%), China has one of the highest numbers in the developing world, and remember that that 1.5% is applied against a total GDP that will soon replace that of the United States as the largest on earth. China is accelerating research and fighting to bring its “best and brightest” scientists and engineers – those who left China to be schooled in the West and were captured by American universities and corporations – back to the motherland.

The January 7^th New York Times provides this chilling example of exactly how far China is willing to go to buy back this talent pool: “Scientists in the United States were not overly surprised in 2008 when the prestigious Howard Hughes Medical Institute in Maryland awarded a $10 million research grant to a Princeton University molecular biologist, Shi Yigong… Dr. Shi’s cell studies had already opened a new line of research into cancer treatment. At Princeton, his laboratory occupied an entire floor and had a $2 million annual budget. … The surprise — shock, actually — came a few months later, when Dr. Shi, a naturalized American citizen and 18-year resident of the United States, announced that he was leaving for good to pursue science in China. He declined the grant, resigned from Princeton’s faculty and became the dean of life sciences at Ts inghua University in Beijing.”

As the number of technology patents filed in the U.S. is falling, so are such applications rising in China. “Chinese scientists are also under more pressure to compete with those abroad, and in the past decade they quadrupled the number of scientific papers they published a year. Their 2007 total was second only to that of the United States. About 5,000 Chinese scientists are engaged in the emerging field of nanotechnology alone… A 2008 study by the Georgia Institute of Technology concluded that within the next decade or two, China would pass the United States in its ability to transform its research and development into products and services that can be marketed to the world.” The Times.

As the endowments of private colleges and universities were slammed in the market fall of 2008 and as states slash and burn their higher education budgets to reflect the harsh economic realities of the recent meltdown (and despite pledges from the federal government, we are truly spending less money on education at virtually every level in this country), we are cutting research and making it vastly more difficult for students to get the advanced degrees we, as a nation, need to remain competitive. We had relied very heavily on importing motivated students with strong financial support from their countries of origin into the highest reaches of academia to fill a technology vacuum in this country – American-born students disproportionately avoided advanced degrees in science, engineering and math – but those countries are luring these top-flight professionals back just as we tighten our immigration and travel restrictions to make it vastly more difficult for such student to study and remain here.

Do we cheer as China hacks into Google, censors blogs without discrimination and generally discourages free access to the Web creating de facto competitive brakes on their own progress? Do we have to rely on their missteps to sustain our waning competitive edge? Can’t we rely on our own efforts, our own inherent spirit, our once strong educational standards and work ethic instead of hoping for the weakness of others?

It never ceases to amaze me how, when we absolutely know we need better educated and skilled people to implement a sustainable economy – we write about it all the time – we’d rather spend that money on prisons and wars we cannot win than on our own children. We have lots of excuses, mostly in the name of “security” and “safety,” but in the end that national identity we are trying so hard to preserve may eventually not be worth preserving as the rest of the world marginalizes our value-added and leaves us behind… a strong wall, protecting a once-great nation that nobody really wants anymore. This cannot be the legacy we leave the next generations. Education has to be the single most important value this nation can espouse!

I’m Peter Dekom, and I approve this message.

The Wrong Half of the Island

Current news reports of the destruction and havoc in the area around Haiti’s capital city, Port-au-Price, will undoubtedly continue in great detail for some time, but it also helps to know about the source of the poverty and hopelessness that makes rebuilding extraordinarily difficult. Haiti and the Dominican Republic share the same island – Hispaniola – but their economies bear little resemblance to each other.

Island history didn’t start out that way. There were five indigenous tribes when Columbus’ ships ranged into the region in 1492, but soon Spanish conquerors viciously wrested control of the island (the “gateway to the Caribbean”) from the locals, and mined gold from the hills, filling their galleons with New World riches. Local Native Americans who refused to work in the mines were pressed into an even more horrible form of slavery, and the diseases brought by the Spaniards decimated what was left of these indigenous tribes.

By the early 1500s, the Spaniards were importing large numbers of slaves from Africa to work the mines and till the fields on this island. Some of the surviving Indians intermarried with escaped African slaves, and strange new racial combinations blossomed. Children of white settlers and African slaves increased the racial mix. But the island certainly was born under a dark sky.

Most of us think of Hispaniola as a pirate haven; the western part of the island did in fact become home to a number of pirates, the majority in this area being ethnically French (think: Jean Lafitte). From the mid-1600s until well into the 1700s, this was truly pirate country, with most of the population disavowing any allegiance to Spain.

Needless to say, the Spaniards were none too happy with this division of loyalties, but in 1697, the French and the Spanish agreed (the Treaty of Ryswick) to split the island in half, a reality which continues culturally and linguistically to divide that island to the present day. The French succeeded to the western half, then known as Saint-Domingue which is present day Haiti, and the Spaniards accepted the eastern part, which is today the Dominican Republic (although the exact borders were set during the American occupation many years later).

In terms of both wealth and cruelty, western Hispaniola was in its golden era: “By about 1790, Saint-Domingue had… quickly became the richest French colony in the New World due to the immense profits from the sugar, coffee and indigo industries. This outcome was made possible by the labor and knowledge of thousands of enslaved Africans who brought to the island skills and technology for indigo production. The French-enacted Code Noir (Black Code), prepared by Jean-Baptiste Colbert and ratified by Louis XIV, established rigid rules on slave treatment and permissible freedom. Saint-Domingue has been described as one of the most brutally efficient slave colonies; one-third of newly imported Africans died within a few years.” Wikipedia.

Inspired by the French Revolution, the slaves began an open revolt against French rule in 1791. Weaving through a series of complex alliances – and the young United States played both sides of the street – made even more difficult by a war between England and France… Haiti settled into relative stability and autonomy until Napoleon Bonaparte decided to send 20,000 troops to retake the island. The war escalated from there. After years of brutal fighting and having lost 50,000 soldiers and 18 generals to war and the decimation of yellow fever, Napoleon let go of the island. The toll among the locals was even worse, an estimated 100,000 blacks and 24,000 (out of 40,000) of the white colonists perished. But Haiti achieved independence in 1804 and was the first country in the New World to abolish slavery.

The French efforts to retake control did not die with independence. “In July 1825, King Charles X of France sent a fleet of fourteen vessels and thousands of troops to reconquer the island. Under pressure, [the Haitian President] agreed to a treaty by which France formally recognized the independence of the nation in exchange for a payment of 150 million francs (the sum was reduced in 1838 to 90 million francs) – an indemnity for profits lost from the slave trade.” Wikipedia. The U.S. supported this killing financial burden imposed on this tiny island as a message to its own slaves against the thought of rebelling. Our hands were most dirty.

Foreign governments frequently sent troops supporting differing factions on the island; the local Haitian banks were often looted by these intruders who created reasons why they or their nationals were entitled to payments by the local government. Political instability was the rule – in its 200 year history, Haiti has experienced 32 coups, the most recent in 2004! By 1915, Haiti was occupied by the United States, which ruled this nation until 1934, an occupation that only served to sap the strength of a nation rapidly running out of resources that had been plundered over the centuries by the European powers. Wikipedia: “Scholars agree that Haiti was in much better shape after the occupation than before, but some accuse the US of establishing a ‘shaky’ foundation that left the country with a doomed financial structure. This was due to a 1922 $40 million loan owed to the US as well as the country's national treasury and to the Banque Nationale owned by a New York bank. The result was a financial system that siphoned the country's wealth to offshore creditors instead of reinvesting it in the country’s economy.”

From 1957 until 1986, Haiti was governed under the brutal and exploitative dictatorships of “Papa Doc” Duvalier and his son, known as “Baby Doc.” Educated professionals fled the country; infrastructure was virtually completely neglected as Haiti was government primarily for the economic benefit of the Duvaliers. What little economic value that had remained in Haiti prior to 1957 was gone by the time the Duvalier regime ended. Baby Doc found exile in France as protests mounted. In 1987 a Constitution was instituted, but a bloody confrontation killed the first election. Suspicious of outsiders by this time, Haitian law forbade the ownership of land by foreigners, a practice that likewise discouraged much-needed foreign investment in this now profoundly impoverished nation.

The U.S. mounted a massive food aid program to Haiti in the 1980s, but the result was to make farming in Haiti uneconomic; local farmers gave up trying to complete with free food. Farms languished and were abandoned, eroded in the bad weather, and eventually, most of the farmland was no longer able to support agriculture (even before the big quake, Haiti imported 80% of its food). When the food aid from the United States began to ebb, Haitians were forced to buy food, increasing in cost as the Haitian consumers were losing buying power in the international market.

Forests were cut down for the wood, to make charcoal and build ramshackle slums in the hills above Port-au-Prince. Building codes are virtually non-existent, and because the western side of Hispaniola faces the area where hurricanes come from, Haiti’s side of the island has been virtually stripped by the rage of these storms, which have increased in intensity as global climate changes has impacted the region. An HIV epidemic added another inconceivable burden to this nation, now stripped of resources and what little dignity it had left.

The United States has had, at best, a mixed relationship with Haiti, most recently exercising its political influence in the 2004 coup. Haitians have always been suspicious that their political strings are in fact being pulled from Washington, D.C. In some significant part, we in the United States contributed to their state of extreme poverty – the worst in the Western Hemisphere – as you can see from our checkered involvement over time. As this struggling nation now faces the tremendous economic cost of this series of devastating earthquakes, America has a major moral reason why we really need to help these people restore vitality and a livelihood that has been dead for decades. The big quake was a horrible reminder of the scope and breadth of our obligation.

I’m Peter Dekom, and I thought you might want to know why things are so bad in Haiti.

The Most Underreported Story

Time Magazine, in its annual “Person of the Year” issue (December 28, 2009 – January 4, 2010) called the increased re-segregation of American public primary and secondary schools the most underreported story of 2009 (page 29): “According to a January report from UCLA’s Civil Rights Project, African-American and Latino schoolchildren are more segregated than they have been since the time of Martin Luther King Jr.’s death, in 1968. In the 2006-7 school year, nearly 40% attended schools – many of them subpar ‘dropout factories’ – where students of color made up to 90% to 100% of the student body.”

In an era of extreme budgetary shortfalls and harsh economic realities for school budgets, can we even afford to address this anomaly in the current economy? If the issue were presented a bit differently, can we afford the long-term social costs (more use of the criminal justice system, more consumption of safety net social services and compensation plans, more costs to businesses and citizens for the cost of increased criminal activity) associated with failed primary and secondary education… would the answer be the same? We’re talking trillions of dollars here! We’re not even applying the pre-Brown vs. Board of Education (the big 1954 desegregation case in the US Supreme Court) “separate but equal” standard to our inner city schools.

Sociologists blame “white flight” – the move of white families to the suburbs. This phenomenon is not unique to the United States. In a July 29, 2009 article, the Guardian wrote about a similar problem in the UK: “[An Institute of Community Cohesion] study, which focused on 13 local areas including Bolton, Sunderland, Oldham, Hounslow and Bristol, concluded: ‘Many of the schools and colleges in the areas we have studied are segregated to a greater or lesser extent and the evidence available to us at a local level suggested that this was generally worsening over recent years... This reflects in part residential segregation, but it also reflects parental choice, despite the fact that most people we spoke to in focus groups wanted their children to have a mixed education. Parental choice tended to push people to what they saw as the safe option, where children with similar backgrounds went.’” Sounds British, doesn’t it?

But the issue remains; if we subject students to “dropout factories” (and public high schools in the top ten US cities have an aggregate drop-out rate of over 50%!), we are going to be paying vastly more money for the rest of those students’ lives for all the reasons listed above. There are practices that are local “separation of the races choices” that are disturbing. Take this note in the May 21^, 2009 New York Times: “Racially segregated proms have been held in Montgomery County [Georgia] — where about two-thirds of the population is white — almost every year since its schools were integrated in 1971. Such proms are, by many accounts, longstanding traditions in towns across the rural South, though in recent years a number of communities have successfully pushed for change. When the actor Morgan Freeman offered to pay for last year’s first-of-its-kind integrated prom at Charleston High School in Mississippi, his home state, the idea was quickly embraced by students — and rejected by a group of white parents, who held a competing ‘private’ prom.”

The South still has its stubborn pockets of racial segregationist holdouts, but the problem is actually worse in the North. “[As a report from the Civil Rights Project at the University of California notes:] Indeed, Brown [vs Board of Education] made a huge difference in the South -- from 1970 to 2004, black students in the South were actually less segregated than those in any other region as the result of vigorous enforcement by the federal government in the late l960s and strong requirements from the Supreme Court through the early l970s. The highest rates of total segregation actually come today in Northern cities like Chicago and Detroit, according to the report.” January 22, 2009, SouthernStudies.org

We have an African-American President, an economy in shambles, and we are supporting an educational system that not only fails to make us competitive with the rising standards in the rest of the world, it will saddle us with incalculable hard dollar social costs because of its failures. Why are we wasting so much money on failure and to create future economic hardship for us all?

I’m Peter Dekom, and I approve this message.

Sobbing on Wall Street

The sight of senior Wall Street CEOs testifying in Washington, D.C. on January 13^th in perfectly tailored $5-10,000 suits, barely able to hide their “I won while you lost” smirks on their faces was almost too much to bear. They feigned humble pie, acknowledged that reform is necessary and that they “done bad.” We know not all the bankers in America are bad; we know that not all the employees at these financial institutions contributed to our economic collapse, but it’s kind of like living in a country that declared war and lost… the citizens of the losing nation are going to pay. The difference in this instance is that the Wall Street players just don’t think they will have to make up for the losses they caused if they just play their cards right creating some short-term cosmetics along the way… and if push comes to shove and they get socked with a new excess profits tax, they’ll find one way or another to pass that cost on to you.

One of my favorite financial writers, Robert Teitelman with theDeal.com, penned a terrific piece on January 14^th directed at the banking community, which noted, in part: “In short, you're a pariah, at least for now. By any measure, you make a lot of money, even if you have two jumbo mortgages and three private school tuitions. Again: No one out there cares about your personal problems. Yes, critics may miss the fact that public opprobrium, whether rational or not, is a form of moral hazard -- at least for this generation of Wall Streeters. The critics will deny this, of course, because Wall Streeters are assumed to be, to a man, so rich that criticism and extra taxes bounce off them. But let's face it: An awful lot of self-identity went into those big checks. It's the rare individual who does not, over time, begin to believe they're worth $20 million a year and be intoxicated by the power and trappings.

“But it's a democracy, and you can't escape the crowd. Public opinion is like a market shift: Suddenly the great mass of folks requires a scapegoat. And majority rules. You may think individually, but you're judged by those who have no clue about what you do (or don't do). And Wall Street has been thoughtlessly creating this image for itself over many decades, particularly since the '80s. You may have acted with modesty and rectitude. You may have created value and dealt with clients honestly. But not every one of your colleagues did, and sleaziness is contagious. Many flaunted their wealth. Others cut corners, some fraudulently. Even worse, many thousands were drawn to finance lacking skill, judgment or much in the way of interest and still got to ride on the bandwagon. When the average compensation at Goldman, Sachs & Co. (NYSE:GS) is $770,000 you have to imagine a pay bubble exists. The average deserves that?

“The truth is ‘Wall Street’ has become more about individual ‘eat what you can kill’ and less about the collective over the past 30 years. This is hard to deny. There is far more speculation, far greater conflicts and far less a sense that the client, or the firm or the public, comes first. (Sure, that's a much larger problem than just Wall Street, but no one cares about that right now either.) Wall Street remains the necessary driver of American capitalism. But it has long ceased to try to explain what it does that's beneficial and necessary, perhaps because the gap between image and reality has widened, perhaps through sheer arrogance. It has not only failed to invest in the bank of public opinion over the past four decades, it has steadily withdrawn funds and is now operating at a serious deficit. It's your right to feel personally aggrieved, even victimized. But the crowd doesn't care, and right now the crowd is calling the shots.”

The reality is that the solution may lie, not just in some temporary tax on “excess profits” or stellar bonuses, but in the nexus of regulation. First, by repealing various statutes over the years that separated commercial banking from investment and merchant banking (read: we let the lending and savings industry merge with structures focused on risk-taking), we let these giants merge and grow such that a single company’s failure can have a devastating impact on the economy as a whole. We cannot be distracted into believing that just taxing compensation will make it “all better,” not even at the $90 billion tax number we are reading in the press.

Peter Cohan, writing for the January 15^th DailyFinance.com, pits the bonus package against the damage Wall Street banks created and presents this more shocking perspective: “Wall Street is on track to pay itself near-record bonuses for its 2009 performance. The Associated Press reports that the six biggest banks will reap a $150 billion 2009 bonus bonanza, a mere 8.5% less than what they received in the record year of 2007. Do you think you have the right to protest? Of course you do. But it won't get you too far because you lack the cash for your protests to make a difference.

“It's worth remembering that Wall Street got those record 2007 bonuses in early 2008, after the recession sparked by the financial crisis had begun. As I've posted, that crisis was caused mostly by Wall Street's overextension of securitization and leverage. And the costs of that crisis have been astounding: $30 trillion in 2008 global stock market losses, record foreclosures of 2.8 million home in 2009, 27 million Americans underemployed, 10%+ unemployment, 2009 worker wages down the most in 20 years, and a government bailout that could hit $23.7 trillion.” We really need to reduce the risk that this ever happens again… ever!

Regulation has to take two forms in my opinion: 1. Literally creating transparency and responsibility in all forms of economic activity that can have a reach beyond the instant companies and transactions at issue. Hedge funds, private equity, the derivative market and credit rating services are all in dire need of such oversight, even as Wall Street fights against this trend. and 2. Just as the government did with AT&T years ago, the financial institutions that have merged and grown to be uncontrollable behemoths need to be broken back up into smaller and independent component parts. AT&T’s original break-up has spawned dozens of new companies, in competition with each other, creating new technologies and new jobs along the way. Yes, there does come a time when big, particularly when “big” was not due just to growth but more to mergers and acquisitions, is truly bad.

I’m Peter Dekom, and yes, size does matter!

We Really, Really Hate Our Jobs

With employers pretty much being able to increase workloads and cut costs, almost at will, it’s no wonder that Americans dislike their jobs at the highest level in over two decades. All the bosses have to do is point at the incredibly high unemployment rate and the contraction in consumer spending. Insert the cracking sound of a whip. Not that being an employer is particularly fun these days, where customers’ spending habits are possibly creating a generation of economically-threatened misers. Insert the sound of hitting bottom.

45% of Americans expressed job satisfaction in a recent poll; the rest… well…. According to the January 5^th CBS2.com, “That was the lowest level ever recorded by the Conference Board research group in more than 22 years of studying the issue. In 2008, 49 percent of those surveyed reported satisfaction with their jobs… The drop in workers’ happiness can be partly blamed on the worst recession since the 1930s, which made it difficult for some people to find challenging and suitable jobs. But worker dissatisfaction has been on the rise for more than two decades.”

The source of dissatisfaction, according to the pollsters, varied from boring work, a failure of pay scales to keep up with inflation, soaring medical costs and falling benefits to a decline in job security and the loss of the notion of teamwork, where everyone is out for themselves and holding onto what they have. I suspect the feeling of being trapped, with few if any alternatives available, may add a psychological discomfort even for those who are not even interested in switching jobs. The fact that there are six people looking for every job opening is a very sobering thought.

Times have changed significantly. “One clue that may explain workers’ growing dissatisfaction: Only 51 percent now find their jobs interesting - another low in the survey's 22 years. In 1987, nearly 70 percent said they were interested in their work.” CBS2.com Wow! And we now face competition from skilled and qualified workers in other countries whose wage and benefit packages represent a fraction of what is still accorded to their American counterparts. To make matters worse, the highest level of unhappiness (64%) resides with the youngest workers (under 25), who will be around the longest to face this foreign competition. Exactly how competitive and quality-oriented are unhappy workers?

If things are bad for the employed, the situation borders on the intolerable for the unemployed of this country. The December 14^th New York Times reports the results of a NY Times/CBS poll taken of several hundred unemployed workers: with half reporting mental anguish (depression or anxiety), “Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work… causing major life changes, mental health issues and trouble maintaining even basic necessities… Roughly half of the respondents described the recession as a hardship that had caused fundamental changes in their lives. Generally, those who have been out of work longer reported experiencing more acute financial and emotional effects…

“With unemployment driving foreclosures nationwide, a quarter of those polled said they had either lost their home or been threatened with foreclosure or eviction for not paying their mortgage or rent. About a quarter… have received food stamps. More than half said they had cut back on both luxuries and necessities in their spending. Seven in 10 rated their family’s financial situation as fairly bad or very bad… But the impact on their lives was not limited to the difficulty in paying bills. Almost half said unemployment had led to more conflicts or arguments with family members and friends; 55 percent have suffered from insomnia.”

We’re getting used to living with less… unless we are working for a Wall Street Pig-Firm… and the scars of this economic meltdown – even when these horrific days are well behind us – will still be visible as these latest “depression babies” take their place in history… trying to convince future generations, who may not experience such an economic collapse, that markets fall, unemployment rises, and you have to prepare for the rainy day… hell, the worse downpour for the longest time you can imagine. We are survivors; we create, build and grow… It’s not over, it’s not forever, but we do need to find a whole lot of new paths and new ways of walking and talking.

I’m Peter Dekom, and I approve this message.