Reducing Taxes

As a businessman, you have an obligation to keep costs as low as you can while ensuring that you meet the needs of your customers, your employees and your shareholders. One of the costs of any business is taxes. Cisco Systems is an example of an organization that effectively keeps its taxes low by funneling business to its foreign operations. Bloomberg has an excellent article documenting how Cisco does it. It's quite complex but basically it uses sophisticated legal and accounting maneuvers to move money around its foreign operations until it eventually is parked in the country that requires the least taxes.

By moving profits overseas, Cisco does not have to pay U.S. taxes on this international business until, if ever, it moves the foreign profits back to the States. This technique has enabled Cisco to halve its U.S. tax bill for a fair number of years.

Now Cisco and others want to bring home these profits, but at a substantially lower tax rate than the normal 35% corporate rate; that rate is 5.25%. Their argument is that it will result in increased jobs here. However, the legislation they are trying to get passed does not mandate that the funds be spent on hiring people. In 2004 the companies were able to convince the government that they should be able to bring back foreign money at a lower tax rate. However, the money was not used to create jobs or invest in new processes; it was used to buy back their stock.

That Makes Six

Somalia is the sixth country to receive our 'protection' by means of drones. It joins Afghanistan, Iraq, Pakistan, Yemen and Libya in our campaign to rid the world of those who are actively plotting against us and will soon attack us unless we stop them by any means we deem okay, whether legal or not no matter what the cost in innocent life may be. I'm proud to be an American in the 21st century.

The theory in Somalia is that al-Shabab is now affiliated with that world-wide nemesis, al-Qaeda, and, of course, that means another 9/11 very soon unless we act today.

And the Deaths Go on

Thus far this month 14 American soldiers have been killed in Iraq. This is the highest number since June 2008 when 23 of our troops were killed. These are but some of the human costs of our continuing to stay in Iraq. How many of our soldiers have been wounded this month? What is the financial cost of June 2011?

Of course, our leaders can tell us the benefits that have been achieved for these costs.

Costs of War

Brown University has a very interesting project, the Costs of War project. It seeks "to outline a broad understanding of the domestic and international costs and consequences of those wars".

These are the findings of the project thus far (my emphasis):

•  While we know how many US soldiers have died in the wars (just over 6000), what is startling is what we don’t know about the levels of injury and illness in those who have returned from the wars.  New disability claims continue to pour into the VA, with 550,000 just through last fall.  Many deaths and injuries among US contractors have not been identified. 
• At least 137,000 civilians have died and more will die in Afghanistan, Iraq, and Pakistan as a result of the fighting at the hands of all parties to the conflict. 
• The armed conflict in Pakistan, which the U.S. helps the Pakistani military fight by funding, equipping and training them, has taken as many lives as the conflict in neighboring Afghanistan.
• Putting together the conservative numbers of war dead, in uniform and out, brings the total to 225,000.
• Millions of people have been displaced indefinitely and are living in grossly inadequate conditions.  The current number of war refugees and displaced persons -- 7,800,000 -- is equivalent to all of the people of Connecticut and Kentucky fleeing their homes.
• The wars have been accompanied by erosions in civil liberties at home and human rights violations abroad.
• The human and economic costs of these wars will continue for decades, some costs not peaking until mid-century. Many of the wars’ costs are invisible to Americans, buried in a variety of budgets, and so have not been counted or assessed.  For example, while most people think the Pentagon war appropriations are equivalent to the wars’ budgetary costs, the true numbers are twice that, and the full economic cost of the wars much larger yet. Conservatively estimated, the war bills already paid and obligated to be paid are $3.2 trillion in constant dollars. A more reasonable estimate puts the number at nearly $4 trillion.
• As with former US wars, the costs of paying for veterans’ care into the future will be a sizable portion of the full costs of the war.
• The ripple effects on the U.S. economy have also been significant, including job loss and interest rate increases, and those effects have been underappreciated.
• While it was promised that the US invasions would bring democracy to both countries, Afghanistan and Iraq, both continue to rank low in global rankings of political freedom, with warlords continuing to hold power in Afghanistan with US support, and Iraqi communities more segregated today than before by gender and ethnicity as a result of the war.
• Serious and compelling alternatives to war were scarcely considered in the aftermath of 9/11 or in the discussion about war against Iraq.  Some of those alternatives are still available to the U.S.

The project has divided the costs into three categories: human, economic and social and political. It also discusses benefits by trying to answer two questions:

1. Did the war bring democracy to Afghanistan and Iraq?
2. Did the wars liberate Afghan and Iraqi women?

The short answer is "No".

You really should go to the site to see just how costly and ineffective these wars have been.

Living Longer

Since I've moved to a Continuing Care Retirement Community (CCRC), I have become more aware of how long many people now live. My mother was considered old when she died at 71; I was working close to full time beyond this age. Just about all of the people I dine with are in their 80s, some in their 90s and a few 100 or older. Longer life expectancy is the norm in just about all advanced countries. However, this longer life expectancy is not de rigeur in the U.S. of A. 

A study by the Institute for Health Metrics and Evaluation concluded that in more than 80% of the counties in the states people's life expectancy was less than the ten countries with the highest life expectancy. One of the study's co-authors says, “Despite the fact that the US spends more per capita than any other nation on health, eight out of every 10 counties are not keeping pace in terms of health outcomes. That’s a staggering statistic.”

The difference is substantial. In many counties the life expectancy is 15 (to 50) years less than that of the top 10 countries. And the study authors believe that our poor performance is not due to the size of our country,racial factors or economics.The researchers suggest that the relatively low life expectancies in the US cannot be explained by the size of the nation, racial diversity, or economics. It is high rates of obesity, tobacco use, and other preventable risk factors for an early death that result in our dismal performance. Another quote from the authors, “It’s not the health care system that’s having the biggest impact on health; it’s the community.  The average person in the US spends one hour annually in a physician’s office unless they are really sick. So until we start moving our interventions out into the communities where people live, we are not going to get ahead of these problems.”

A sobering study.

How smart are vultures?

Germany has been trying to answer that question for a few years. They would like the vultures to help them find lost people of a certain type - dead people. 

Upon first hearing this, it seems to make sense. Does it not? Vultures feast on carrion, therefore they must have a capacity for locating such. They fly, so tough terrain would not stop them. Why not train them to locate missing dead people? Germany has been doing that for years. However, they have had no success.

Sabotage?

It sounds somewhat farfetched to me but there are reports that one of the Gaza Flotilla ships was damaged while in port. The word is that “hostile divers had destroyed the propeller house and cut the propeller shaft” of the vessel. Since the damage can be fixed within a day or two, was this primarily a warning?

We'll be hearing more and more about the flotilla over the next week or two.

Back From The Dead

She had severe chest pains early in the day and collapsed. She was declared dead. Apparently, it is a custom in parts of Russia to bury people rapidly. So, a funeral was held the same day. Lo and behold, the woman arose from the casket and proceeded to have a heart attack. This time it was fatal.

Really Tough Regulations For The Really Big Boys

Who would have thought that BofA, Citi and Chase would have to hold in capital as much as 9.5% of their "risk-based assets"? There is even a possibility that the rate held in capital could increase to 10.5%. Horrors! Yet that's what the Basel Committee has decreed. Of course, the banks don't have to have the 9.5% today, they can hold off until 2019. by which time most of the increased capital would be generated by profits. Unless of course we have a repeat of the Great Recession; in eight years that it quite likely.

He has stopped buying Apple products

'He' is Peter Certo, a young guy who has been an Apple devotee but no longer. Certo has stopped buying Apple largely for humanitarian reasons. I'm not a MAC guy so it was a surprise to me to get more than 25,000,000 hits on my Google query of 'Apple+Congo'.

Certo argues that Apple could buy a component (an ore known as columbite-tantalite) of its products from Australia but opts to buy it from the Congo as it is cheaper there. The problem is where Apple's money goes. Certo (and a lot of others) says it goes to rebel groups backed by Rwanda and Uganda. The miners see nothing of this revenue, which, essentially, goes towards killing people.

It gets worse. The products are assembled in China. However, the company doing the assembly, Foxconn, is not exactly a beacon of worker progress. New employees actually have to sign an agreement that they will not commit suicide; suicide has been a problem previously. Even with the agreements the company has placed suicide nets around the plant. Furthermore, the workers do not get paid overtime despite working 12 - 16 hours a day. Some of the workers are still kids.

And, of course, Apple, being a 21st century company, feels that it should not have to pay U.S. taxes on the $4 billion it has stashed overseas.

It does make you think.

What The Frack Is Going On?

Here is an interesting video explaining fracking, which is polluting many water sources. The video was made by students at NYU's Studio 20. It doesn't start out well, but picks up quickly.

It may seem unlikely but...

...I think Huntsman has a very good chance of being our next President. There is over a year to go. I doubt Obama will shift gears and start acting like a leader. The wars will continue and, likely, even expand in number. It's possible that the Tea Party will fade as the economy does not revive very much. Huntsman seems to be the only rational person left.

The current situation reminds me of 1980. A little known Governor, Jimmy Carter, beat both Ted Kennedy and Jerry Brown. It could happen again but I pray that a Huntsman administration will be better than the Carter administration. But could it be worse than the Obama administration under which we are suffering?

The Dark Side

Image via Wikipedia

I can't say that Hillary Clinton has gone over to the dark side; she may have already been there. But some recent comments are not something she'll be proud of when she writes her memoir.

From a June 23 press conference re the upcoming Gaza flotilla:

SECRETARY CLINTON: Well, we do not believe that the flotilla is a necessary or useful effort to try to assist the people of Gaza. Just this week, the Israeli Government approved a significant commitment to housing in Gaza. There will be construction materials entering Gaza and we think that it’s not helpful for there to be flotillas that try to provoke actions by entering into Israeli waters and creating a situation in which the Israelis have the right to defend themselves.

Of course, there are some Americans on board. I guess Hillary feels it's okay if they get hurt by the Israelis as did the Americans on last year's flotilla.

The Weaker Sex?

The answer may be 'male' if you take into account the ages at which the sexes have children.  More attention is being paid to older fathers and it looks like they are a lot more likely to father children with disabilities than a younger father with around 40 being the dividing age.

Here are some of the things that happen with older fathers:

• a man over 40 is almost six times as likely as a man under 30 to father an autistic child. 
• the likelihood of offspring with schizophrenia doubles when the father hits 40 and triple at age 50. 
• the incidence of bipolarity, epilepsy, prostate cancer, breast cancer and dwarfism also increases in children born to men approaching 40.
• some intelligence tests show lower results for the children of older fathers.

It seems that the difference between male and female reproductive systems results in the male system having more opportunities to create DNA. Sometimes this DNA is not created just right.

Thou Shalt Not Report

The departure of this year's flotilla to Gaza will be soon. Israel not only wants to stop the flotilla because "it is a threat" to Israel, but they want to minimize the publicity. Therefore, they have announced that any newsman on one of the boats in the flotilla runs the risk of being barred from Israel for ten years. Also, Israel may confiscate their media equipment.

Gutless Wonders

The news media told us of the questioning of our Libyan adventure by the Congress. So, there were two votes today about that adventure. Our Congressmen voted against the authorization of the use of our military in Libya, 295 - 123. But, when the pedal was pressed to the metal, they voted the continuation of the funding of our latest adventure, 238 - 180.

Reality vs. Perception?

Will Our Leaders Answer These Questions?

Brian Katulis and Caroline Wadhams ask some basic questions that seem to have stymied our leaders lo these many years:

What’s the way forward in Pakistan?
How grave are the threats posed by terror networks today in Afghanistan and Pakistan versus new threats in the Middle East and other parts of the world?
What is the political roadmap ahead in Afghanistan and the broader region?
What does a viable and sustainable economic strategy for Afghanistan look like?
What is the estimated cost to mission completion for the United States on Afghanistan?

Kind of basic stuff, don't you think? But do we have any idea what the answers from our leaders to these questions would be?

War Words Defined

Tom Englehardt defines the current meaning of what he calls war words, i.e., victory, enemy, covert war, permanent bases, withdrawal, drone war, corruption, war and national sovereignty. I especially liked his definition of the last one, national sovereignty:

Here's the twenty-first-century credo of the American war state.  Please memorize it:  The world is our oyster.  We shall not weep.  We may missile [bomb, assassinate, night raid, invade] whom we please, when we please, where we please.  This is to be called "American safety."

Those elsewhere, with a misplaced reverence for their own safety or security, or an overblown sense of pride and self-worth, who put themselves in harm's way -- watch out.   After all, in a phrase: Sovereignty R' Us.

Note: As we still live on a one-way imperial planet, don't try reversing any of the above, not even as a thought experiment.  Don’t imagine Iranian drones hunting terrorists over Southern California or Pakistani special operations forces launching night raids on small midwestern towns.  Not if you know what's good for you.

Mountaintop Mining and Birth Defects

Are they related? That's the question a recent study seems to answer. And the answer is yes.

The study looked at 1.9 million birth records in Kentucky, West Virginia, Tennessee and Virginia from 1996 to 2003 and then compared the number of reported birth defects in those states' counties with mountaintop removal against their counties with no coal mining and counties with only underground coal mines. The study's conclusion? "Rates for any anomaly were approximately 235 per 100,000 live births in the mountaintop mining area versus 144 per 100,000 live births in the non-mining area." And the defects were not all minor. They included "malformed hearts and genitalia, circulatory and respiratory ailments, cleft lip, spina bifida, club foot and diaphragmatic hernia."

I wish they had also compared mountaintop to underground mining.

It's a different world for me

Some people are so addicted to Facebook that they have to tell everybody their latest exploits, no matter what those exploits are. Take Jason Valdez for instance. Here he is posting messages while the police are trying to arrest him for drug violations. I guess Valdez did not want to be arrested so he took a hostage and proceeded to fend off the police for 16 hours. During this time he made six postings about his situation, including photos of himself and his hostage. This certainly seems strange to me. But so does the fact that he eventually ended the standoff by shooting himself in the chest.

It shouldn't surprise me but it does that Valdez is not the first person to let his Facebook universe know he is committing a crime. One idiot logged into Facebook while burglarizing a house and failed to log out; he was quickly captured. Others have been arrested because of their use of Facebook.

Okay, it's the 21st century and I should expect this. But i just find it bizarre. I wonder what other weird things are posted on this communication medium.

How long did it take to give our money to the big boys?

Citibank did not have to wait 9 months to get its money. Nor did AIG or Chase Manhattan or any of the other big banks. The Treasury was able to send the money to these companies pretty quickly. But it seems as though Tim's boys have trouble giving our money to small boys.

Congress approved appropriating $30 billion to the Small Business Lending Fund in September of last year. So far, Tim's boys have been unable to write a single check for small businesses under this act. That's because the regulators have not been able to ensure themselves that the small banks applying for the money will survive in our current economic climate. As Tim says, "We can't justify helping to keep them alive." It's not as though no one has applied for the money; 869 banks have.

I, for one, am pleased that Tim is such a good steward of our money.

The Flamenco Danced Well

Ain't We Got Fun?

That's the title of  a fairly popular song written in the early 1920s by Richard Whiting, Gus Kahn and Ray Egan. It's a song about income inequality in the boom years. Part of the lyrics that resonate with me:

There's nothing surer
The rich get rich and the poor get children
In the meantime, in between time
Ain't we got fun?

This is all by way of introducing you to a very informative article by Peter Whoriskey of the Washington Post. The article is entitled "With Executive Pay, Rich Pull Away From Rest Of America". It is based largely on a monumental study of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim. 

One finding of the study: "In 2008, the last year for which data are available, for example, the top 0.1 percent of earners took in more than 10 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent". The question is who is in this 10 percent. Surprisingly, perhaps, the answer is that the largest number of people in this category are not entertainers or sports figures; they are executives. And, not only the executives of Goldman Sachs etal. They come from a wide variety of industries. Ergo, it's the pay of these executives that bears a major responsibility for the rise in income inequality over the past 30 - 40 years. 

Since the 1970s, executive compensation has roughly quadrupled, while that of the Average Joe has basically stayed flat in real terms. The top .1% (that's one-tenth of one percent) of earners made 2.5% of the country's income. In 2008 they had boosted that to 10.4%. This type of income distribution is like that in a developing country rather than in a mature economy.

There is quite a difference in the executive compensation pre and post the 1970s. One reason is very likely the following quote from a former board member of a company highlighted in the article, “He (the CEO) believed the reward went to the shareholders, not to any one man. Today we get cults of personality around the CEO, but then there was not a cult of personality.”

Gee, it's only been a few years

I find it hard to imagine how the U.S. Conference of Mayors, a few Senators and Congressmen are actually complaining about the cost of our wars. Aren't we the richest nation in the world? Isn't it our responsibility to destroy evil? Don't these people know that these wars are making us safer? Why should we stop spending now when we are winning the wars? We can have "guns and butter". Smarten up, people. Only a few thousand young people from the U.S. have died and fewer than 100,000 have been wounded. It's all for the greater honor and glory of our beloved country, the land of the free, the home of the brave.

Commitments Not Met

It's been a little over  a year since I last commented on the sorry state of the Internet in the U.S. as compared to other countries. Things are not improving; we are still not ranked in the top 10 of countries using the Internet. A lot of the reason is the failure of the communications companies to live up to their commitments.

By last year the companies were to  have switched us from copper wiring to fiber optic cable which would provide at least 45mbps coming and going. Today Verizon and AT&T have done so for 7,000,000 of their 120,000,000 customers. And as for speed, how's our 5-6 mbps per second versus Hong Kong's 1,000? Despite the poor performance, AT&T is still installing copper wiring and Verizon has stopped deploying FIOS.

What is the FCC and other regulators doing about this? Nada.

"The findings are shocking"

So says Alex Rogers, the head of a scientific panel, the International Programme  on the State of the Ocean (IPSO, studying the state of the oceans of the world. They are shocking because the situation is much worse than the experts thought and things are moving much faster than projected. We're overfishing in polluted waters in an era of climate change.

Not a pleasant post on the first day of summer.

Sunday on the Brain

Yesterday, my brain received input about the brain from two sources: 60 Minutes and The Atlantic.

The 60 Minutes episode told me about brains that seem to have superhuman powers of recall. Leslie Stahl interviewed six people, each of whom is capable of recalling everything - and I mean everything - that has happened to them since their youth. I have trouble remembering what I watched on television last night. These people could tell you what they watched on April 13, 1983. Fantastic! But what effect does it have on their lives - I'd think a lot - or the lives of most of us - I'd say very little?

The Atantic article, "The Brain on Trial", was written by David Eagleman, a neuroscientist at Baylor. He argues that our legal system should consider the condition of the brain of those on trial. He believes that, if we did, we would find cases where someone is really fundamentally not responsible for the crime of which he is accused.

Eagleman bases his case primarily on situations where the brain has developed a tumor, has lost tissue in its frontal and temporal lobes or has been subjected to drugs which disrupt its balance. These situations are usually relieved when the tumor is removed or the drug replaced; there is nothing to be done for loss of tissue. He does have a point. I think as brain research moves along in the 21st century we will likely adopt his point of view.

How Bad Are Things With Fukushima?

More than three months after the tsunami, things are not getting much better both in terms of recovering from the disaster and getting true information from Tepco and the government. More and more it's looking like the BP fiasco of 2010. It seems that every week we learn about another problem. This week it's the water. They started to decontaminate it on Friday at 8am and stopped at 1pm supposedly because they needed a part.

The water has been a problem for a while. They are having problems cooling the reactors. Their spraying of water has led to radiation being emitted into the air. And, at some point, they will have to get rid of the radioactive sea water. The question is where.

One supposed expert, Arnold Gundersen, a former nuclear industry senior vice president, has called Fukishima "the biggest industrial catastrophe in the history of mankind." He goes on, "The fuels are now a molten blob at the bottom of the reactor. TEPCO announced they had a melt through. A melt down is when the fuel collapses to the bottom of the reactor, and a melt through means it has melted through some layers. That blob is incredibly radioactive, and now you have water on top of it. The water picks up enormous amounts of radiation, so you add more water and you are generating hundreds of thousands of tons of highly radioactive water."

Another Flotilla to Gaza

A little over a year ago we learned that Israel had attacked a flotilla bringing humanitarian supplies to Gaza. The attack resulted in a number of deaths of those in the flotilla. Now some Americans are boarding a vessel, "The Audacity of Hope", which will become part of another flotilla to Gaza. Ray McGovern has a lengthy article listing his reasons for joining the flotilla. He has joined for the typical humanitarian reasons but also he is protesting our just about total support of Israel no matter what they do. It is a very interesting article.

Making Aid Impossible #2

Here are some details of life in Gaza from the Gaza Ministry of Health. 

Basically, both Israel and the Ramallah government are killing Gazans by preventing the people from obtaining vital medical supplies. "We're missing painkillers and anesthetics, cancer and epilepsy drugs, antibiotics, infant formulas, medicines for dialysis, even rubber gloves," says Dr. Hassan Khalaf of the Ministry of Health. The Israeli blacklist keeps out such dangerous items as baby formulas, antibiotics, and MRI and X-Ray machines. And, the war on Gaza led to the bombing of half Gaza's hospitals, many clinics and the buildings where the Red Crescent stored medical supplies. The Ramallah government is also culpable in that they seem unable to send the necessary supplies to Gaza in a reasonable time frame.

Is There Hope?

Nick Gillespie and Matt Welch think there is when it comes to our political system, which is basically a duopoly, i.e., the two parties control the game now. The authors use examples of disintegrated duopolies of the non-government world - Kodak and Fujifilm, Anheuser Busch and Miller's, Netscape and IE, Colgate and Crest, the Lakers and the Celtics, the Beatles and the Stones - as their basic argument that ultimately the Democrats and Republicans will also recede into the woodwork.

Are they right? I hope so.

Eisenhower's Farewell

Excerpts from his speech, my emphases:

But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs, balance between the private and the public economy, balance between the cost and hoped for advantages, balance between the clearly necessary and the comfortably desirable, balance between our essential requirements as a nation and the duties imposed by the nation upon the individual, balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress. Lack of it eventually finds imbalance and frustration. The record of many decades stands as proof that our people and their Government have, in the main, understood these truths and have responded to them well, in the face of threat and stress.

A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction. Our military organization today bears little relation to that known of any of my predecessors in peacetime, or, indeed, by the fighting men of World War II or Korea.

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But we can no longer risk emergency improvisation of national defense. We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security alone more than the net income of all United States cooperations -- corporations.

Now this conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet, we must not fail to comprehend its grave implications. Our toil, resources, and livelihood are all involved. So is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Another factor in maintaining balance involves the element of time. As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow. 

During the long lane of the history yet to be written, America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be, instead, a proud confederation of mutual trust and respect. Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many fast frustrations -- past frustrations, cannot be abandoned for the certain agony of disarmament -- of the battlefield.

Disarmament, with mutual honor and confidence, is a continuing imperative. Together we must learn how to compose differences, not with arms, but with intellect and decent purpose. Because this need is so sharp and apparent, I confess that I lay down my official responsibilities in this field with a definite sense of disappointment. As one who has witnessed the horror and the lingering sadness of war, as one who knows that another war could utterly destroy this civilization which has been so slowly and painfully built over thousands of years, I wish I could say tonight that a lasting peace is in sight.

The Lake Woebegon Generation

Lake Woebegon where, in the words of Garrison Keillor, "all the women are strong, all the men are good looking, and all the children are above average." He meant it as a joke, but I think it has come to be the definition of America in the 21st century. We've seen it in parents hiring people to train their child to become a pro athlete. Other parents are so eager to have their kids end up on the right track that they spend a lot of money on the 'right' school; getting their kid into the right kindergarten requires the skills of a tutor for hire as does helping your kid get A's in high school. By and large we are willing to spend time and money on our kids to ensure that they are not 'average' and, in fact, they are above average. Of course, there is an assumption that if our kids are above average we must be. Or, if we have a lot of money, we must be above average in most things.

So, it should come as no surprise that a study of college freshmen finds them with an abundance of confidence. 60% of them think that they are above average intellectually. And why shouldn't they as 48% were A students in high school. Of course, some of these students also need to take remedial courses in college, at CUNY the 'some' were 75%. And on Monday New York state reported that only 37% of their high school graduates were ready for college, let alone being above average.

Fly me to the moon

Image via Wikipedia

I don't know about you, but I've found that traveling by airline is almost the worst way to travel. However, I travel  on commercial aircraft. You, if you are high up in the corporate pecking order, travel by private jet. There are differences in the two modes of travel. You can always get a non-stop flight; you control who flies with you. You probably get better food. And, you are not frisked by the TSA. So, it's not a bad deal flying by private jet.

The Wall Street Journal has an excellent expose about the corporate executives penchant for using the company plane, especially to get to the executive's vacation home(s). The corporate fleet is used more than 30% of the time to fly the boss to his retreat. Joe Tucci, the head of EMC, used the company's jet almost twice a week to fly home in the period 2007 - 2010. Clearly, it's highly unlikely that Mr. Tucci, himself, flew home that many times, but that's what EMC reported. 

Companies have to assign a cost to the personal use of the jet. The cost assigned by most companies differed from that calculated by the Journal. EMC said it cost $664,079 to shuttle Mr. Tucci home; the Journal calculated the cost as $3,100,000. Leucadia National's personal jet costs in 2009 were $30,000 by the company's calculations, $708,000 by the Journal. At least one company, Nabors, has offices at both vacation homes of their CEO; so, of course, the personal cost of the company's jet is low.

To make matters worse, the FAA does not make the filings of the personal use of these companies public. The Journal had to use FIFA to get the data.

Making Aid Impossible

A number of relief organizations working in Gaza have banded together as the Association of International Development Agencies. A recent report recounts some of their problems trying to do their jobs. These restrictions, which basically restrict access to the needy in Gaza and the West Bank, result in people who are extremely vulnerable get very, very little of the aid they need to live even their lives of desperation.

GW Redux

More and more we see Obama adopting the GW Bush strategies. Now, it's using lawyer's 'uncommon' reasoning to justify something Obama wants to do. The role of John Yoo has been assigned to Harold Koh. The issue is whether the War Powers Resolution, which restricts the President's war-making powers, has been violated by our actions in Libya.  Mr. Koh says no because “We are not saying the president can take the country into war on his own. We are not saying the War Powers Resolution is unconstitutional or should be scrapped, or that we can refuse to consult Congress. We are saying the limited nature of this particular mission is not the kind of ‘hostilities’ envisioned by the War Powers Resolution.” 

Brad Sherman and many other Congressmen disagree.  Sherman thinks we are seeing another example of the imperial presidency. A couple of trenchant comments from Mr. Sherman:

People have got to understand that America cannot play the role that it wants to play in foreign policy if it ignores its own constitution.

The second most important thing is that we bring democracy and the rule of law to Libya. The first most important thing is that we have democracy and the rule of law in the United States.  

It's FN Crazy

Why do we need troops in just about every major and many minor country in the world? We still have troops in Europe and Japan 66 years after WWII ended. We have had troops in Korea since 1953 when the armistice was signed. Now, DOD has begun upgrading our forces in Asia. GAO has major questions as to how well this upgrade is being managed. I have questions as to why we need any troops in Asia. But, for now, we'll only talk about the latest Pentagon boondoggle.

How many DOD people - soldiers and others - do you think we have in South Korea? Would you believe 56,000? And DOD wants to increase this number to 84,000. Plus, they want to increase the length of the assignment for the troops and bring their families over. Naturally, a little construction must be done, but DOD really has no idea how much this will cost. But, it must be done. DOD wants to more than double the number on Guam from 15,000 to 39,000; again, there is no real idea of the costs involved in this upgrade. They don't yet have numbers for Japan and Okinawa, but DOD knows upgrading is a smart thing to do.

This is just unbelievable.

Is it only New York?

New York has released figures estimating how many high school graduates are ready to go to college. The numbers are not very good: 37% are ready for college, based on their performance in the Regents exams. In the city itself the number was worse: 21%. In Rochester County a mere 6% were ready for college after four years of high school. African-American (13%) and Hispanic (15%) students scored a lot worse than white (51%) or Asian-American (56%) students. These numbers are confirmed by the recent results at CUNY.

One high school principal noted that the entering class at his high school has many freshmen entering without having the background they should have received in elementary school. And so it goes.

Do you think the situation in New York is an anomaly?

Don't call me on this cell phone

This has been around since 2000. Speculation is it's made in the old Yugoslavia.

Miracle-Gro Weed

Scott's Miracle-Gro is thinking about offering a version of its product tailored to those in the medical marijuana business. It's a growing business as more states allow medical marijuana. Interesting idea.

Progress in the 21st Century

Daniel Ellsberg of Pentagon papers fame feels that "ALL the crimes he (Nixon) committed against me -- which forced his resignation facing impeachment -- are now legal. That includes burglarizing my former psychoanalyst's office (for material to blackmail me into silence), warrantless wiretapping, using the CIA against an American citizen in the US, and authorizing a White House hit squad to 'incapacitate me totally' (on the steps of the Capitol on May 3, 1971)... But under George W. Bush and Barack Obama, with the PATRIOT Act, the FISA Amendment Act, and (for the hit squad) President Obama's executive orders. [T]hey have all become legal."

One thing hasn't changed: Vietnam is now spelled Afghanistan.

Building and Upgrading Infrastructure for Long-Term Development

Senators Kerry, Warner and Hutchinson have expanded the idea of a Federal Highway Bank put forward by Matthew Kahn and David Levinson I discussed back in March. The Federal Highway Bank would be initially funded by the federal government but would soon become self-financing. Kerry etal are using the basic idea but extending it to sewers, levees and airports.

It's a good idea. There is some bi-partisan support. But can they make it happen?

Are we running towards or away from a green world?

I was sent the following by an old friend, who, like me, is no longer young and can also remember the 1940s and 1950s in this country. There are many truths in this piece.

In the line at the store, the cashier told the older woman that she should bring her own grocery bag because plastic bags weren't good for the environment. The woman apologized to him and explained, "We didn't have the green thing back in my day. "The clerk responded, "That's our problem today. The former generation did not care enough to save our environment." He was right, that generation didn't have the green thing in its day. 

Back then, they returned their milk bottles, soda bottles and beer bottles to the store. The store sent them back to the plant to be washed and sterilized and refilled, so it could use the same bottles over and over. So they really were recycled. But they didn't have the green thing back in that customer's day. 

In her day, they walked up stairs, because they didn't have an escalator in every store and office building. They walked to the grocery store and didn't climb into a 300-horsepower machine every time they had to go two blocks. But she was right. They didn't have the green thing in her day. 

Back then, they washed the baby's diapers because they didn't have the throw-away kind. They dried clothes on a line, not in an energy gobbling machine burning up 220 volts - wind and solar power really did dry the clothes. Kids got hand-me-down clothes from their brothers or sisters, not always brand-new clothing. But that old lady is right; they didn't have the green thing back in her day. 

Back then, they had one TV, or radio, in the house - not a TV in every room. And the TV had a small screen the size of a handkerchief, not a screen the size of the state of Montana. In the kitchen, they blended and stirred by hand because they didn't have electric machines to do everything for you. When they packaged a fragile item to send in the mail, they used a wadded up old newspaper to cushion it, not Styrofoam or plastic bubble wrap. 

Back then, they didn't fire up an engine and burn gasoline just to cut the lawn. They used a push mower that ran on human power. They exercised by working so they didn't need to go to a health club to run on treadmills that operate on electricity. But she's right; they didn't have the green thing back then. 

They drank from a fountain when they were thirsty instead of using a cup or a plastic bottle every time they had a drink of water. They refilled their writing pens with ink instead of buying a new pen, and they replaced the razor blades in a razor instead of throwing away the whole razor just because the blade got dull. But they didn't have the green thing back then. 

Back then, people took the streetcar or a bus and kids rode their bikes to school or rode the school bus instead of turning their moms into a 24-hour taxi service. They had one electrical outlet in a room, not an entire bank of sockets to power a dozen appliances. And they didn't need a computerized gadget to receive a signal beamed from satellites 2,000 miles out in space in order to find the nearest pizza joint. 

But isn't it sad the current generation laments how wasteful the old folks were just because they didn't have the green thing back then?

Not Naming Names

Image via WikipediaHave you heard of the Public Company Accounting Oversight Board? The board is the result of Sarbanes-Oxley. It "is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports".

The board has found a number of adult failures since it began. However, it has not identified any of the companies involved in these failures. One might ask whether failure to name names "protect(s) the interests of investors". For example, KPMG allowed Motorola to book a sale in a quarter earlier than the sale had actually closed. Yes, a sale that closed on the first day of the fourth quarter appeared as a third quarter sale on Motorola's books with the approval of KPMG. This sale was not a trivial one; it accounted for 28% of Motorola's 3rd quarter. Counting it as a Q4 sale would have meant that Motorola missed its 3rd quarter numbers and, in this day of quarterly judgments, that would have been bad for Motorola.

Who Do You Believe?

Gareth Porter or David Petraeus? The question they are trying to answer is how many Taliban were captured in 2010. Porter thinks that the correct number is quite a bit lower - 80%, in fact - than Petraeus originally said. Petraeus did include everybody captured. 

The problem is that not everybody captured was a member of the Taliban; within a few days 80% of those captured were released because they were simple innocent civilians. Later more were released when their bona fides were not good enough to convince a military panel that those accused were Taliban. In a November 30 briefing it was admitted that "80 percent of the Afghans detained by the U.S. military during the entire year to that point had been released within two weeks".

World Justice Project

I'd never heard of this group before today, but it does appear to be a pretty serious group with more than good intentions. It has diverse boards, both honorary and working and a single goal: to strengthen the rule of law. It also looks like it has the money to get the job done. It has just issued a report evaluating the quality of the rule of law in 66 nations. Their conclusions are based on both a survey of the population and input from presumed experts on the quality of law in each country.

They evaluate a nation on the following factors, which are then divided into further measures of the rule of law:

• Limited government powers
• Absence of corruption
• Order and security
• Fundamental rights
• Open government
• Regulatory enforcement
• Access to civil justice
• Effective criminal justice
• Informal justice

Here's what they have to say about the U.S.:

The United States obtains high marks in most dimensions of the rule of law. The country stands out for its well-functioning system of checks and balances and for its good results in guaranteeing civil liberties among its people, including the rights of association, opinion and expression, religion, and petition. The civil justice system is independent and free of undue influence, but it remains inaccessible to disadvantaged groups (ranking 21st). Legal
assistance is expensive or unavailable (ranking 52nd), and the gap between rich and poor individuals in terms of both actual use of and satisfaction with the civil courts system remains significant (see box 4). In addition, there is a general perception that ethnic minorities and foreigners receive unequal treatment from the police and the courts.

Here is their ranking of the U.S. in relationship to the 66 countries evaluated on eight of the above nine factors:

• Limited government powers - 15
• Absence of corruption          - 17
• Order and security               - 13
• Fundamental rights              - 19
• Open government                - 13
• Regulatory enforcement       - 15
• Access to civil justice           - 21
• Effective criminal justice      - 20

Not exactly something to brag about.

Privacy Is Vanishing

Image via Wikipedia

The FBI will soon be issuing a new version of its Domestic Investigations and Operations Guide. And, once more, our freedoms will be cut back, but that of the FBI to look into our activities will be increased. A lot of the changes sound relatively technical but the upshot to me appears to be that you can be investigated on almost a whim and the fact that you are being investigated will be difficult to prove.

Fit for the Job?

The Chronicle of Higher Education has released a report showing that about a fourth of our state legislators lack a 4-year college education. I think this is good and, given the quality of the average state legislator, I wonder whether we'd have more productive and more representative (72% of the voters have also not completed a 4-year college education) state legislators if fewer of their members went to college.

I've never read the Chronicle but always thought that it was not part of the lobbyist culture. Now I'm not so sure given the reason for the study: "after hearing complaints from college administrators that they were losing state aid and scholarship money because legislators had never been to college themselves and did not understand higher education".

What is it with bus companies?

I've written about the numerous bus crashes that have occurred in the past few years. The people who drive and/or own buses seem to have some difficulties doing the obvious. Roger Haines is another of those people. He apparently owns Haines Tours, which, I gather, is a small company, as he also drives the bus. Times must be tough for his firm as, although he was able to sell all the seats on the bus, he also sold 'seats' in the luggage compartment.

Mr. Haines must have a thing about luggage compartments. Last year he was cited for having his drivers sleep in the luggage compartment.

What is going on with the NY Times?

The magazine solicits readers to provide medical diagnoses. Now, the paper is soliciting readers to analyze Palin's e-mails. Will they next ask readers to provide articles analyzing the state of this country?

Update: The Washington Post is going down the same road.

3 Mistakes

Simon Johnson does not think highly of Mr. Geithner. His latest article dissects Geithner's speech to the ABA, of which Johnson writes "his history is completely wrong; his logic is deeply flawed; and his interpretation of the Dodd-Frank reform does not mesh with the legal facts regarding how the failure of a global megabank could be handled".

Unbelievably, Mr. Geithner puts a lot of the blame for the Great Recession on countries that did little to regulate financial industries. How could Geithner possibly think that the U.S. was a strong regulator?

Mr. Geithner says, "Some argue that the U.S. financial system is too concentrated, which could promote systemic risks.  But the U.S. banking system today is less concentrated than that of any other major country.”  Why does this mean we will be immune when the next crisis hits?

Finally, Geithner thinks that, because of the requirements of Dodd-Frank, we'll be able to handle the failure of a global megabank. But Dodd-Frank does not include a mechanism that will handle the failure of a global megabank.

Become a Tutor in New York City...

...and you'll become rich. Some people in the city have paid $750 for their kid to sit through a 100-minute session with a tutor. Over the course of a year this could amount to $100,000 for some parents. This is in addition to the tuition of close to $40,000 paid to a private school, as this is the market for NYC's tutoring companies. This is all being done with the intention of getting one's child into the "right" college. What insanity!

Be Thankful You Don't Live In Japan

It's beginning to seem that the Japanese are as bad as us in digging out after a disaster as well as being willing to be honest and forthcoming with its citizens. Their handling of the Fukushima disaster reminds me of the way we handled the BP situation. Earlier this week we learned about the record levels of radiation. Now it looks like the evacuation zone will be expanded as contamination has increased outside the initial 30-mile evacuation zone.

The Fourth Front

We learn that the U.S. has resumed its air attacks in Yemen. So now we have four war fronts that we know about - Afghanistan, Iraq, Libya and Yemen. The aim in Yemen is to deter the branch of Al Qaeda that is involved with the uprising there. Supposedly, we have no troops there, but we have enough people there to have established a command post from which drones and fighter planes are being used to defeat the enemy.

We’re going crazy

If you measure craziness by the number of people who because of a mental disorder qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), then the number more than doubled from 1987 to 2007.  Some studies have shown that 46% of us meet the criteria for mental illness as defined by the American Psychiatric  Association. Why is that? Are we better able to detect mental illness? Most mental illness is now treated with drugs. But why has the number of sick people increased so dramatically if these drugs are working? These are questions Marcia Angell discusses in her latest NY Review article.

Angell attributes much of the problem to the theory that mental illness is caused by a chemical imbalance in the brain. She doesn’t think much of the theory. First of all, the early drugs that were used to treat mental illness, such as Thorazine or Miltown, were initially intended to treat infections; it was only by chance that they were found to be effective against some forms of mental illness. It was when they tried to discover why these drugs worked, that strange conclusions were drawn. “For example, because Thorazine was found to lower dopamine levels in the brain, it was postulated that psychoses like schizophrenia are caused by too much dopamine.”  A similar logic was used for antidepressants: because these drugs, e.g. Prozac, increased the levels of serotonin, depression was caused by too little serotonin. Even today, the theory remains just that; no proof has been forthcoming.

Did you know that the FDA approves drugs that have had two trials where the drug is more effective than a placebo?  There could be twenty trials that do not show such effectiveness. One analysis of the approval process for six antidepressants considered the 42 trials submitted to the FDA. Most were negative. Furthermore, the placebos in these trials were 82% as effective as the drug.

Another point Angell considers is the possibility of side effects slanting the trial. While these trials are double-blind” (neither doctor nor patient knows whether the patient is given the drug or a placebo), the patient may be able to make an educated guess as to which he has been given because of the side effects. Human nature being what it is the patient would be inclined to believe the drug has improved his condition. This whole question of placebos is an interesting one. An active placebo (one that has side effects) in some cases produces the same reaction as the drug.

Angell’s article is the first of two. I’ll let you know what she says next month.

Praying to Jesus Will Solve Our Problems

That's the belief of Rick Perry, the Governor of Texas. A couple of months ago he issued an official proclamation urging Texans to pray for rain to overcome a drought. Now, he has proclaimed August 6 as a "Day of Prayer and Fasting for our Nation to seek God's guidance." This is so important that he wants more than Texans involved. He has invited the other 49 governors to join his Christian prayer summit. 

Also, he doesn't believe that many of our problems are caused by us. Last year he announced that the BP oil spill as an act of God.

And this is another potential presidential candidate!

How Much an Hour?

In 2009 Haiti raised its minimum wage from 24 to 61 cents an hour. This increase was too much for Hanes and Levi Strauss, who employ about 25,000 Haitians. The companies were willing to go up to 31 cents an hour, but no higher. They were so upset at this incredibly high increase that they asked our State Department to intervene. The Haitian president was willing to concede a little, but the State Department felt that the new minimum “did not take economic reality into account” but was a populist measure aimed at appealing to “the unemployed and underpaid masses.”

Can you imagine yourself saying something like that? The proposed increase is truly chicken feed, yet our government - yours and mine - felt that the 'unemployed and underpaid masses'  should continue to starve.

Fukushima Refuses to Die

I haven't seen much about Fukushima recently, but it's not getting better. On Saturday the level of radiation at one reactor was at its highest level since the crisis began. They think the cause is 40,000 tons of radioactive water. It will take 370 tanks, each capable of holding 100 tons of water, to contain the water.

Obama is Romney in Disguise

Scarecrow over at Firedog Lake has hit the nail on the head. Obama is really a moderate Republican. Worse, in my opinion, he just won't fight the opposition in any meaningful way. The economy still sucks and is likely going to get worse. What are our leaders doing about it?

Back in 2009 I had hopes that Goolsbee would be aware of the need to restructure the economy. One more mistake in my life.

Diamond Gives Up

Who can blame Peter Diamond for withdrawing from the confirmation process to become a member of the Federal Reserve? He has been nominated three times but cannot be confirmed. I'm sure he's pissed about being rejected, but he does have some trenchant comments about our government leaders and us:

Concern about the (seemingly low) current risk of future inflation should not erase concern about the large costs of continuing high unemployment. Concern about the distant risk of a genuine inability to handle our national debt should not erase concern about the risk to the economy from too much short-run fiscal tightening.

To the public, the Washington debate is often about more versus less — in both spending and regulation. There is too little public awareness of the real consequences of some of these decisions. In reality, we need more spending on some programs and less spending on others, and we need more good regulations and fewer bad ones.

Analytical expertise is needed to accomplish this, to make government more effective and efficient. Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

Raising the Debt Ceiling

The Colbert Report
Tags: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

The World Is Full of Risk

Image via Wikipedia

But Homeland Security doesn't pay enough attention to risk. According to a couple of academics who seem to have strong credentials for their position, DHS "focuses all or almost all of its analyses on contemplation of the consequences of a terrorist attack while substantially, and surprisingly, ignoring the equally important probability-component of risk assessment as well as the key issue of risk reduction. Overall, it seems, security concerns that happen to rise to the top of the agenda are serviced without much in the way of full evaluation -- security trumps economics, as one insider puts it -- and such key issues as acceptable risk are rarely discussed while extravagant worst case scenario thinking dominates, and frequently savagely distorts, the discussion".  

We've spent a lot of money on homeland security; $580 billion on DHS alone since 2001. Who knows how much has been spent at the state and local levels and by private organizations? Is such spending a good investment? The authors don't think so, as it would take a heck of a lot of successful terrorists attacks to  justify the magnitude of the investment. We'd likely get a better return for our money by investing it in other areas.

Interestingly the National Academy of Sciences has just published a report on the risk analysis situation at DHS. Their conclusion: " DHS doesn't know what it is doing, having paid little effective attention to features of the risk problem that are fundamental".

It's only money.