The Latest from the New America Foundation

MEDIA AVAILABILITY: Michael Lind to Speak on New Book About American Economic History

Fri, 25 May 2012 18:18:08 +0000

May 25, 2012

Land of Promise: An Economic History of the United States, the new book by Michael Lind, has garnered acclaim since its publication last month and was featured on the cover of the New York Times Sunday Book Review this weekend.

Lind, the policy director of the Economic Growth Program at New America and a cofounder of the organization, writes a sweeping and original work of economic history, recounting the epic story of America's rise to become the world's dominant economy. The lessons of history Lind draws upon - including America's legacy of innovation and the role of the government in the economy - offer insight into American economic growth and where the country can go from here.

New York Times Washington Bureau Chief David Leonhardt, winner of the Pulitzer Prize for writing on the economy, calls Land of Promise "an ambitious economic history of the United States." Leonhardt adds that the book is "rich with details, more than a few of them surprising, and its subject is central to what is arguably the single most important question facing the country today: How can our economy grow more quickly, more sustainably and more equitably than it has been growing, both to maintain the United States' position as the world's pre-eminent power and to improve the lives of its citizens?"

For more, see Michael Lind's interview with The Browser and his segment with Leonard Lopate at WNYC. For media appearances, contact Joanna Pinsker at HarperCollins, at Joanna.Pinsker@HarperCollins.com.

Michael Lind

Debate Club: The U.S. Must Attract and Retain Global Talent to Stay Competitive

Fri, 25 May 2012 17:00:02 +0000

May 25, 2012

Tamar Jacoby

May 25, 2012

There aren't many issues in politics that are so obvious they shouldn't need debating. But attracting and retaining skilled knowledge workers is surely one of them. It's like motherhood and apple pie—a total no-brainer.

Economists, left, right, and center, agree: In today's globalized, technology-driven world, innovation is the key to economic success, and human talent is the key to superior innovation. This is true in high-tech fields like computing and cybersecurity, but also in humbler, seemingly traditional realms like banking and manufacturing. Innovation is what makes a product competitive. It's what puts a company ahead of its rivals. It's what creates jobs, both in existing firms and start-ups. And no country in the world produces enough innovators—that's why we're all competing to attract them.

Study after study has quantified the boost. One recent report from the American Enterprise Institute and the Partnership for a New American Economy found that 100 foreign-born workers with STEM degrees create an average 262 additional jobs for native-born workers. Another study, of the technology businesses started in Silicon Valley in the dot-com era, found that Chinese and Indian engineers managed nearly a quarter of the total. Still other research found that foreign innovators and entrepreneurs were behind a quarter of the engineering and technology companies launched across the United States from 1995 to 2005.

The only thing that's inexplicable is why the United States isn't using every possible tool to attract and retain more global talent. We ought to be making it easier for science and math students to study here. Skilled workers doing needed jobs should have no trouble getting temporary visas. When those temporary visas run out, successful innovators and entrepreneurs should be allowed to stay permanently. We ought to be doing everything possible to streamline bureaucracy and increase quotas—to help people feel wanted and welcome and make it easy for them to choose America.

Goodness knows, our competitors are doing this. Most of the countries in Europe have overhauled their high-skilled visa programs in recent years. Canada and Australia have long been more welcoming. Even places like Chile and Singapore are catching up. More ominous still, as conditions in China and India improve, increasing numbers of STEM students from both countries are returning home with advanced degrees from U.S. universities—taking skills learned at American taxpayers' expense to advance and enrich our competitors.

Why can't we get this right? It comes up every year in Congress, but no laws are passed. Lawmakers need to hear from voters who think it matters. This isn't about immigrants—it's about America.

Why Eduardo Saverin Has Company in Singapore

Fri, 25 May 2012 15:02:15 +0000

May 24, 2012

Parag Khanna

Ayesha Khanna

May 24, 2012

It’s a cliché that the Pacific Ocean is displacing the Atlantic, that China will replace America at the top of the world’s hierarchy of power, and the East will surpass the West. The cliché is also wrong. The multipolar world we are entering will have no single winner, and the three-pillared West of the European Union, North America, and Latin America remains a triangular zone of peace and foundation of global stability.

But a world of continued Western power is not a world of Western dominance. Areas once considered the West’s eminent domain such as the Middle East and Africa are now looking East for investment and exports, and new models of growth, development, and governance. It would not hurt for the West to do the same.

It can start by looking at Singapore, to which the two of us are relocating shortly.

Few Americans even knew that Facebook co-founder Eduardo Saverin lived in Singapore until it was revealed this month that he had given up his U.S. passport and had become a citizen of the Asian city-state. Saverin has been pilloried by critics who accuse him of dropping American citizenship in order to avoid paying tens of millions in U.S. taxes after Facebook’s initial public offering. New York Senator Charles Schumer has proposed legislation that would bar former citizens like Saverin from reentering the U.S. if they are deemed to have renounced citizenship in order to avoid taxes. “This is a great American success story,” Schumer said, “gone horribly wrong.”

Nothing could be further from the truth. Saverin and expatriates like him are practicing a perfectly rational arbitrage in a world of diverse systems and growing opportunity. Rather than question the loyalty of such global citizens, Congress should examine what their choices tell us about how Americans can succeed in the knowledge economy of the future.

Migration is about opportunity, not loyalty. For the past generation, Eastern talent has been educated in the West and stayed, rising to the top of professions from medicine to academia, and founding more than 40 percent of Silicon Valley startups. But now many of those immigrants are going home, lured by Asia’s economic growth, infrastructure spending, and improved governance. A report released Tuesday by the Partnership for a New American Economy cites the grave challenge to the U.S. economy from the aggressive efforts of Asian nations—particularly China—to lure back their expatriate students and graduates in the U.S. You don’t even have to be Asian to find work in the continent’s shiny new corporate parks and research labs. China is launching a new scheme to recruit the best and brightest talent from all races and nations on permanent visas. Call it a “red card.”

American expatriates represent just 1 percent of its population, far less than other developed societies. Geography is one significant reason. Americans have gotten used to believing they sit in the center of the world, but in fact the U.S. is the last major nation to complete the day (Brazil’s east coast is an hour ahead of New York). It is parochial, not to mention impractical, to believe that the rest of the world will wait for American instructions as it goes about its day. Instead, more and more traders and investors are moving to California so they can speak to Asian clients and partners at more reasonable hours.

To live in the future, you have to move to it. Singapore is not just a city-state; it is perhaps the world’s leading “info-state.” In the 20th century we spoke of garrison states and even market states, but in this age where geotechnology is the key driver of geoeconomics and geopolitics, it is the info-state that will have the upper hand. Info-states harness in knowledge and technology what they lack in size or military muscle. They thrive by providing not just security, but also connectedness to rapidly advancing markets and technologies.

This is why leading corporations have also been relocating to Singapore, including most recently the commodities trading giant Trafigura, which decided to move its main trading center from Switzerland.

Like Switzerland in the heart of Europe, Singapore is geopolitically nimble and diplomatically neutral. It thrives as Asia prospers, and even benefits from turbulence as investors and talent seek a safe haven. As it nears the 50th anniversary of its founding, Singapore has become the unofficial capital of Asia.

There are important things the West can learn from Asia. Leading Western companies such as General Electric, IBM, Cisco Systems, and others have been heavily involved in constructing Asia’s “smart” cities. Lower-cost private universities are flourishing across Asia while U.S. dropout rates are soaring. Enrollment in private Chinese universities has grown 25 percent since 2001, and more than 1 percent of Malaysia’s gross domestic product now comes from higher education. Education, social stability, and sustainable consumption: These values are now as universally important as democracy.

Singapore and other Asian finance and tech centers pay deep homage to Silicon Valley and work hard to emulate it. We would be wise to do the same. The country’s outgoing ambassador in Washington, Chan Heng Chee, is a political scientist who has traveled across America relentlessly in recent years, pointing out all the ways Singapore not only practices democratic elections (the ruling People’s Action Party of Lee Kuan Yew suffered sharp setbacks a year ago), but constantly consults citizens through district-level outreach and technology to calibrate its policies. America could use a lot more such real-time governance. Technology allows it, and citizens should demand it.

Singapore is entering its next 50 years as one of the few unmitigated success stories of the postcolonial world. It sits at the heart of the Indo-Japanese-Australian triangle, a strategic zone that is a world unto itself, the most populous and diverse region in the world. We are rapidly moving into a future where West needs East as much as the reverse.

Financing College Success

Fri, 25 May 2012 14:24:57 +0000

Innovations to Promote Readiness, Access, and Completion

Event Venue:

New America DC

While student debt dominates the current headlines, the financial road to college success is built long before debt piles up. It turns out that the financial lives of pre-secondary students significantly impacts college readiness, access, affordability, and degree completion. In the process of gearing up for college and earning a degree, there is a role for savings, loans, public benefits, and financial aid. Since children can perceive college as financially out of reach as early as the 5th grade, the work of increasing post-secondary achievement and meeting our national college completion goals must begin well before they reach the Bursar’s office.

A number of innovative programs are underway to break down barriers to college, get students thinking about higher education from a young age, and meet students's financial needs during their college career. These include efforts to offer savings accounts in primary school, connect them with public benefits and services, and provide access to responsible loans and financial aid. Federal policy efforts should be exploring ways to leverage this work.

What steps can schools, colleges, policymakers, and communities take to support the academic achievement of lower-income students? What policy interventions can build expectations for college success? What tools are or should be available to help students manage their financial lives?

Please join us and a distinguished panel of experts as we investigate these questions and more.

Location:

New America Foundation

1899 L Street NW Suite 400

Washington, DC 20036

See map: Google Maps

Participants List:

Featured Speakers
Willie Elliott III
Assistant Professor, School of Social Work
University of Kansas

Kevin Carey
Policy Director
Education Sector

Evelyn Ganzglass
Director, Workforce Development
Center for Law and Social Policy

Reid Cramer
Director, Asset Building Program
New America Foundation

Event Time and Date:

Thursday, May 31, 2012 - 3:00pm - 4:30pm

Calendar

The Sidebar: Two Global Conferences

Thu, 24 May 2012 21:17:03 +0000

The implications of two global summits, the NATO Conference in Chicago and the Iranian nuclear talks in Baghdad are explored this week as Jennifer Rowland and Tom Kutsch join host Elizabeth Weingarten.

Audio Attachment:

The Sidebar: Two Global Conferences

Tracking Progress Toward Financial Access

Thu, 24 May 2012 18:00:02 +0000

What the latest data from Kenya can tell us about the future of global financial inclusion

Event Venue:

New America DC

Kenya’s financial market has caught the world’s attention. The rise of mobile money in Kenya has become the interest of financial inclusion experts, the excitement of mobile network operators, and an opportunity for financial institutions to rethink their products and services. However, the data behind this transformation and the impact on financial inclusion efforts are often much less examined and understood.

On May 22nd, presenters from New America Foundation, the World Bank and Mix Market showcased the latest financial inclusion data from Kenya — collected, wrangled, and visualized — and examined what they tell us about the future of global financial inclusion efforts. All presentations are available in the toolbar on the right.

The event also launched the report "Savings for the Poor In Kenya" and a Kenya Financial Inclusion Data Page both products of the Savings for the Poor Innovation and Knowledge Network (SPINNAKER).

For those on Twitter looking for a recap, the event was live tweeted by @GlobalAssetsNAF using the hashtag #KenyaData2012.

Location:

See map: Google Maps

Agenda:

3:30 PM — The Role of Data in Understanding a Financial Inclusion Archetype

Welcome and Introduction
Jamie Zimmerman @GlobalAssetsNAF
Director, Global Assets Project
New America Foundation

Context of Kenya Financial Inclusion Landscape
Billy Jack
Associate Professor, Department of Economics
Georgetown University

3:50 PM — Project Showcase

Showcase 1: Global Findex
Leora Klapper @WorldBank
Lead Economist, Development Research Group
World Bank

Showcase 2: SPINNAKER Kenya financial sector data
Eric Tyler @Erict19
Program Associate, Global Assets Project
New America Foundation

Showcase 3: MIX Market Kenya map of financial inclusion
Scott Gaul @Mix_Market
Director of Analysis
Microfinance Information Exchange

4:20 PM — Panel Discussion

Panelists
Scott Gaul
Director of Analysis
Microfinance Information Exchange

Billy Jack
Associate Professor, Department of Economics
Georgetown University

Leora Klapper
Lead Economist, Development Research Group
World Bank

Eric Tyler
Program Associate, Global Assets Project
New America Foundation

Moderator
Mireya Almazán @GatesFoundation
Program Officer, Financial Services for the Poor
Bill & Melinda Gates Foundation

Closing Remarks
Jamie Zimmerman
Director, Global Assets Project
New America Foundation

Event Time and Date:

Tuesday, May 22, 2012 - 3:30pm - 5:00pm

Calendar

Attachments:

Eric Tyler - SPINNAKER Presentation

Billy Jack Presentation

MIX Presentation

Leora Klapper-Global Findex Presentation

New America's Delisle Proposes Alternative Solution in Student Loan Debate

Thu, 24 May 2012 17:50:20 +0000

Would cut interest rates for nearly all borrowers, requires no new funding

May 24, 2012

The U.S. Senate plans to vote today on two proposals to maintain the 3.4 percent interest rate on some student loans for one year. Majority Leader Harry Reid (D-Nev.) says the bills will not pass because Republicans and Democrats cannot agree on how to pay for the $6 billion needed to extend the rate.

This impasse is unnecessary, says Jason Delisle, director of the Federal Education Budget Project at the New America Foundation, who has detailed a proposal whereby Congress could cut interest rates and debt burdens for nearly all federal student loan borrowers without requiring new funding or revenue.

In a series of posts on the Ed Money Watch blog, Delisle shows that linking fixed student loan interest rates to the rates on 10-year U.S. Treasury notes would allow undergraduates to leave school with less debt than even a permanent extension of the 3.4 percent interest rate. And it requires no new funding. The plan more than pays for itself, according to the Congressional Budget Office, reducing the budget deficit by $52 billion over 10 years.

To read more about the proposal, click here. For more on the budget implications of the proposal, click here.

To schedule an interview with Jason Delisle, please contact Clara Hogan.

Jason Delisle

Leaving Facebookistan

Thu, 24 May 2012 17:35:45 +0000

May 24, 2012

Steve Coll

May 24, 2012

I established a Facebook account in 2008. My motivation was ignoble: I wanted to distribute my journalism more widely. I have acquired since then just over four thousand “friends”—in Afghanistan, Pakistan, India, the Middle East, and of course, closer to home. I have discovered the appeal of Facebook’s community—for example, the extraordinary emotional support that swells in virtual space when people come together online around a friend’s illness or life celebrations.

Through its bedrock appeals to friendship, community, public identity, and activism—and its commercial exploitation of these values—Facebook is an unprecedented synthesis of corporate and public spaces. The corporation’s social contract with users is ambitious, yet neither its governance system nor its young ruler seem trustworthy. Then came this month’s initial public offering of stock—a chaotic and revealing event—which promises to put the whole enterprise under even greater pressure.

There are many reasons to be skeptical about Facebook’s I.P.O., which raised $16 billion for the company. For investors, as my colleague John Cassidy has pointed out, the company’s founders and early investors are likely to do better with this much-hyped event than individual investors. The offering itself was as visible a disaster as a lead underwriting bank (in this case, Morgan Stanley) has turned in for some time: Facebook shares have fallen by more than ten per cent; there were trading screwups by Nasdaq; and lawsuits and regulatory investigations into whether Morgan and Facebook properly shared information with investors have already started.

This launch-pad explosion is also one more reason to be wary of what my colleague James Surowiecki has analyzed: Facebook’s two-tiered corporate-governance system, which ensures that founder Mark Zuckerberg retains firm control, and can’t be easily challenged by dissident shareholders, even if he steers badly off course, as highly self-confident men in their late twenties sometimes do.

Those are reasons for investors to be doubtful; at least as worrying is what the I.P.O.-palooza signals about Facebook’s sovereignty over citizens, here and abroad. Facebook has become a public square of global importance. By the end of the summer, it may have more than a billion users, or about fifteen per cent of the world’s population. Some of these people are restive and see Facebook as a substitute public space for speech and dissent that their own authoritarian regimes don’t provide. Facebook users have already helped to foment revolution in some places (Egypt and Tunisia) and are still trying, at great cost, to overthrow one of the Middle East’s most brutal regimes.

Within the United States, Facebook is a venue for all sorts of issue and political campaigns. And yet, on the site, as a practical matter, what speech is permitted or banned is determined largely by Facebook’s terms of service. The terms function as a corporate constitution binding users to the provider’s conception of what speech is acceptable. My colleague at the New America Foundation, Rebecca MacKinnnon, in her recent book “Consent of the Networked,” calls this realm “Facebookistan.” Once Facebook users sign on and accept the terms of service, their postings are subordinate to the corporation’s rules, for as long as they choose to stay. In a place like Syria, the Facebook rules users encounter are much more permissive than local laws; in the United States, that is not so clear.

You might expect dense legalese, but the terms’ language is clear and soaring, echoing the tones of constitutional documents. Some of the declaratory sentences lay out the commitments by Facebook’s royal “We.” Others describe the obligations of the subject “You.” The terms are organized into sections, like articles. One entitled “Safety” seems to self-consciously echo the Ten Commandments: “You will not bully, intimidate, or harass any user…. You will not post content that: is hateful, threatening or pornographic; incites violence; or contains nudity or graphic or gratuitous violence.” And there is this hint of Facebook’s expansive authority: “You will not encourage or facilitate any violations of this Statement.”

The terms obfuscate Facebook’s business strategies in such simple language that the deception—the sense of what is being left out—is almost poetic: “Sometimes we get data from our advertising partners, customers, and other third parties that helps us (or them) deliver ads, understand online activity, and generally make Facebook better.”

Facebook has made jarring mistakes as its leaders have learned what it means to run a profit-motivated political and public forum. In 2009, for example, the corporation exposed Iranian dissidents to danger by unilaterally changing privacy rules that allowed the Iranian authorities to see the identities of activists’ online friends. The error was corrected quickly, but in general, Facebook has encouraged its users to accept greater and greater losses of privacy. Zuckerberg believes the world will be better off if it adopts “radical transparency,” as the journalist David Kirkpatrick put it in his book, “The Facebook Effect.”

Zuckerberg’s business model requires the trust and loyalty of his users so that he can make money from their participation, yet he must simultaneously stretch that trust by driving the site to maximize profits, including by selling users’ personal information. The I.P.O. last week will exacerbate this tension: Facebook’s huge valuation now puts pressure on the company’s strategists to increase its revenue-per-user. That means more ads, more data mining, and more creative thinking about new ways to commercialize the personal, cultural, political, and even revolutionary activity of users.

There is something vaguely dystopian about oppressed peoples in Syria or Iran seeking dignity and liberation inside a corporate sovereign that is, for its part, creating great wealth for its founders and asserting control over its users.

Facebook is hardly the only corporation managing these sorts of dilemmas—Google is a target of investigations seeking greater information about how it manages customer information it collects, about which it has sometimes been opaque, and it too has broken trust with users. Facebook points out that it has been responsive to revolts and protests from within. Zuckerberg proudly told Kirkpatrick that he revelled in the ways Facebook’s users had forced him to become more democratic: “History tells us that systems are most fairly governed when there is an open and transparent dialogue between the people who make decisions and those who are affected by them. We believe history will one day show that this principle holds true for companies as well.”

That is a laudable conception. Yet for now, at least, Facebook concedes to its users only when it judges that it is in the corporation’s interest to do so; what user votes and consultations there may be are purely advisory. As MacKinnon observes, this system suggests the political control strategies of the Chinese Communist Party: periodic campaigns of state-managed openness and managed local democracy.

While talking to varied audiences recently about my new book (warning: marketing ahead), “Private Empire: ExxonMobil and American Power,” I have been reminded how uneasy Americans from of all ideological orientations are about corporate power and sovereignty these days. They believe in capitalism and market efficiencies, to be sure, but they fear heavily concentrated private power, especially where it encroaches on their economic and personal choices. They ask, “What should we do?”

Perhaps it starts with exercising citizenship. I have decided to exercise mine—in Facebookistan, that is. This seems the right time to leave such a crowded and volatile public square.

It takes a while to find it, but if you are a Facebook user, there is a small settings button entitled “deactivate account.” If you click, Facebook displays the faces of people “who will miss you.” If you are determined nonetheless to depart, and scroll further down, you are required to choose a “reason for leaving” before you are permitted to go. Unfortunately, “inadequate citizen rule” or “doubts about corporate governance” are not among the choices. From the available list, I went with “I don’t feel safe on Facebook.”

Farewell, Facebook friends. May you enjoy everywhere the full rights of free citizens.

White Out

Thu, 24 May 2012 16:50:35 +0000

May 24, 2012

Majority of births now minorities—brace yourself for the loss of nothing.

Gregory Rodriguez

May 24, 2012

Here we go again. The Census Bureau has released yet one more milestone data point that supposedly reveals the profundity of America’s ongoing demographic change. This time, it’s news that, as The New York Times put it last week, “Whites account for less than half of births in the U.S.”

It’s one of those front-page headlines that give you pause. You know it means something significant—why else would it be on the front page?!—but you can’t quite put your finger on it.

Don’t buy into the hype and all the overwrought commentary (of which there was plenty on cable TV following the demographic “breaking news”) on this supposed milestone. The Census Bureau’s drumbeat of racial change is nothing but empty, invidious data that says more about the uselessness of our current racial categories than it does about any transformation of American society.

For one, reports that “whites” account for less than half of births in the U.S. are not accurate. Since almost half of American Latinos identify themselves as white racially, you can rest assured that, strictly speaking, “white” babies are still securely in the majority of delivery room miracles. Sure, the body of the story specifies that what they’re talking about is “non-Hispanic whites”—a term no one but bureaucrats and wonks use—but the headline says it all. Real white babies or traditionally white babies or the babies we’ve come to consider white are lagging behind in the race to be born.

In the U.S., we’ve traditionally understood biology as being the fundamental difference between “ethnicity” and “race.” Race is seen as genetically predetermined and therefore unchangeable, while ethnicity—which encompasses language, religion, and culture—can change over time and place.

The Census makes clear that black, white, American Indian, Asian, and Native Hawaiian are racial categories, while Hispanic is an ethnic one. The term non-Hispanic white then, or “white Hispanic” for that matter (think George Zimmerman), combines the racial and the ethnic indicators. It is a jerry-rigged term with no clear objective meaning or predictive value.

Official government usage notwithstanding, whiteness is in the eye of the beholder. Last week, a political journalist friend of mine wondered aloud whether Mitt Romney was “too white” to be elected president. Last month, a flight attendant whose parents were born in Sicily told me she didn’t consider herself white because of her olive complexion. The first instance of whiteness here refers to the candidate’s behavior and mannerisms that might derive from a particular ethnic background; what my friend really meant was Yankee. The second instance was referring solely to skin color.

Plenty of other traits can confer whiteness on a person—class, economic, educational, or social status to name a few. Five years ago, I followed two friends of mine deep into the heart of the Mississippi Delta where they were studying the construction of whiteness, the process by which a variety of ethnic subgroups forged an uneasy and hierarchical alliance called “white people.” One remarkable interview with a retired sheriff in Sunflower County taught me more than any demographer, social scientist, or race theorist ever had.

After a winding chat about subtle class and ethnic distinctions among whites in the Delta, we decided to ask the sheriff where a variety of local groups stood in relation to whiteness.

“Are Lebanese white people?” we began.

“Yes,” he said, “although they’re real dark.”

“How about Italian Catholics; are they white?”

“Sure.”

“And Jews?”

“Yes.”

“What about the Chinese?”

“Yes,” he said, “they go to the white schools.”

“And Mexicans?”

“They’re becoming more white. More of them are getting an education.”

“Then what’s a white person?” we asked.

After some confusion over the meaning of the question, he concluded that it was probably anybody “who isn’t black.”

So, if whiteness is more a negative indicator than anything else, it makes sense that for most people the process of becoming white has also been one of negation.

Throughout history, new immigrants to these shores were obliged to fit themselves on one side or the other of the black or non-black (white) racial divide. Not surprisingly, most chose to identify themselves with the side that had full rights. In books such as How the Irish Became White, scholars have traced the path that immigrant subgroups took to become considered part of the “white race.”

It’s a poignant and peculiarly American journey.

That’s because the status of whiteness—and the protection it conferred—came with a significant cost. Over time, most distinct subgroups gradually lost their distinctiveness. Their members traded specific ethnic labels—Italian, Dutch, Swedish, French—for the generic racial label of “white.” They exchanged identities that told us something about their unique family histories for an elastic racial category that mostly tells us what they are not.

A decade or so ago, I had an epiphany while skulking around Milwaukee’s once German, now African American, West Side. In few places are the mechanics of becoming white so clear. Milwaukee had an ethnic German majority from 1860 until roughly the middle of the 20th century. This demographic clustering created an ecosystem of newspapers, bakeries, churches, and social groups that nurtured the city’s ethnic distinctiveness. (Even the city’s 1895 City Hall, built in German Renaissance Revival style, resembles Hamburg’s Rathaus.) But in the early and mid-20th century, as greater numbers of blacks moved north in search of industrial jobs, ethnic Germans began to move to the surrounding suburbs, thereby moving beyond the radius of the social organizations and businesses that had nurtured their Germanness several generations after the actual immigrant experience. That’s when they became white.

Not only did this jump into whiteness deprive post-ethnics of all sorts of traditional comforts and ethnic-based networks of affection and meaning, it also stripped them of ethnic identity itself, something that had long served as a source of cohesion and rootedness in the larger, peripatetic society.

In her 1990 book, Ethnic Options, Harvard political scientist Mary Waters argues that being American doesn’t give people that sense of belonging to one large family, “the way that being French does for people in France. In America, rather than conjuring up an image of nationhood to meet this desire, ethnic images are called forth.”

It therefore stands to reason that moving beyond ethnicity into whiteness can lead to a greater sense of individual isolation and loneliness. In her fieldwork, Waters found that many post-ethnic whites often long for the sense of “specialness” and intimacy that being “none of the above” can’t provide. That longing prompts many to grasp for new ways to connect. In 1972, historian and journalist Thomas C. Wheeler warned that, stripped of embracing ethnic identities, Americans reel off “endlessly on fads” and in “search of life-styles.”

More recently, however, the emptiness of whiteness is not only eroding the social contract but also encouraging people to embrace the abstract certainties of rigid ideologies. Like newly minted atheists who search for all-encompassing worldviews to replace the religions they’ve left behind, atomized post-ethnics substitute political causes for the bakery and social clubs their grandparents once enjoyed.

Recent headlines on infant demographics contained more than a hint of alarmism. Implicit in the story was the belief that changes in the racial makeup of the country would pose a challenge to the nation’s values, identity, and heritage. But race in America has always said more about what people are not than what they are. On some level, whiteness can only be understood as an anti-heritage, a privileged enclave whose price of entry has been checking one’s past at the gate. The end of whiteness as a majority category doesn’t mean the country is relinquishing something. Quite the contrary, we will literally be losing nothing.

Savings for the Poor in Kenya

Wed, 23 May 2012 20:01:04 +0000

May 23, 2012

Anjana Ravi

Eric Tyler

Through informant interviews, secondary research, and data collection at all levels of Kenya’s financial market including with financial institutions, researchers, mobile network operators, and government regulators, this study examines the changing savings landscape in Kenya and highlights innovations in product development, approaches, regulations, and technologies.Looking at recently collected savings data as well as new ways to visualize and interpret existing data, the report argues the following:

Demand for savings services has helped transform the bottom of the pyramid into a competitive market space open to a wide range of new and dynamic players.
Kenya has established itself as a global technology pioneer through innovations with mobile money and agent banking that are further reaching the poor.
Kenya’s commitment to fostering and opening up financial data is paving the way not only for Africa, but is proving to be a role-model for United States and other developed countries.

Overall, the evolution of Kenya’s economy continues to be shaped by various barriers to the formal financial system. They conclude that demand and supply-side data are at the heart of identifying and addressing the issues around these barriers and are fundamental to creating a comprehensive strategy for financial inclusion and overall economic growth. As Kenya moves to become a middle-income country in the near future, savings for the poor are on path to emerge as a central pillar of the country’s poverty reduction strategy.

This report was made possible by support from the Bill & Melinda Gates Foundation. It is the second exploratory savings landscape country study conducted by the Savings for the Poor Innovation and Knowledge Network (SPINNAKER). The goal of the study was to not only capture the range of savings products for the poor and identify opportunities for further innovative development, but also to help develop data gathering instruments and approaches and identify gaps for future research. In summary, the research objectives of the study were the following:

To explore the landscape of savings products for the poor in Kenya, including mobile money’s impact and the response of formal financial institutions to its emergence.
To bring out insights on product innovation and development in order to examine what features make a savings product accessible and useful to the poor.
To identify gaps for future research on savings product demand, usage, and evaluation.

To provide a comprehensive examination of the Kenya savings landscape, the study surveyed 104 products across 20 financial institutions and conducted key informant interviews with three stakeholder groups: 1) practitioners, 2) regulatory bodies, and 3) networks.

Please click here for the full report.

In addition, data from the study is available on an interactive data page located here.

Attachments:

Savings for the Poor in Kenya

Obama’s Plan to Announce Afghanistan Withdrawal at NATO Summit Is Shrewd Politics

Wed, 23 May 2012 19:52:10 +0000

May 21, 2012

At the NATO summit this week the president will announce the pullout of U.S. troops from Afghanistan by next summer. He will be conceding defeat—but by doing it now instead of the start of his term, he suffers no political damage.

Peter Beinart

May 21, 2012

There’s a feel-good myth that governs much American punditry: that good policy and good politics go hand in hand. Often, sadly, it’s not true. Take President Obama and Afghanistan: On no other major issue has Obama been so cynical. And on no other issue has his cynicism proved so politically shrewd.

This week in Chicago, Obama will announce the withdrawal of U.S. combat troops from Afghanistan by next summer. He will, in effect, be conceding defeat: the Taliban remains strong; the Hamid Karzai government looks inept and corrupt; the country appears headed for civil war. Al Qaeda may be weaker than it was three years ago, but not because of America’s wildly expensive counterinsurgency effort, which has proved a massive bust.

Historically, Democrats who “lose countries”—think Harry Truman “losing” China or Jimmy Carter “losing Iran”—have paid a huge political price. Yet Obama is “losing” Afghanistan without paying any price at all. Mitt Romney is virtually mute on the issue. He can’t attack Obama for having surrendered, because even most Republicans are sick of the Afghan war. Moreover, Americans actually trust Obama on national security, a remarkable accomplishment for a liberal Democrat with no military background. According to a recent poll by George Washington University and Politico, Obama leads Romney on foreign policy by 13 points.

How did Obama pull off this political equivalent of a triple axel? Part of the answer, of course, is that he killed Osama bin Laden, thus satiating the primal hunger that led America into the Hindu Kush in the first place. But that happened only last May. Even before Obama killed Osama, a majority of Americans already approved of his foreign policy, according to a February 2011 Los Angeles Times poll. The other reason Obama has navigated the politics of Afghanistan so successfully is that back in 2009 he sent 30,000 more troops there. He’s benefiting, in other words, from having done the wrong thing.

In the 2008 presidential campaign, Obama had pledged to focus on the “good war” that George W. Bush neglected because of his obsession with Iraq. When he entered the White House, the leadership of the U.S. military was waiting with an answer: an open-ended, blank-check counterinsurgency strategy that resembled the “surge” they had pursued, with ostensible success, in Iraq.

Obama looked at the price tag and the situation on the ground—which was far worse than the Bush administration had let on—and balked. But the military brass, led by the hero of Iraq, Gen. David Petraeus, moved aggressively to box Obama in. According to Bob Woodward’s book Obama’s Wars, Obama mused wistfully about sending a mere 10,000 new trainers to Afghanistan before ditching the idea after being reminded that doing so might prompt Defense Secretary Robert Gates to resign. Similarly, in David Sanger’s new book, Confront and Conceal—excerpted in this Sunday’s New York Times—an Obama adviser comments, “I think he hated the idea [of the surge] from the beginning ... The military was ‘all in,’ as they say, and Obama wasn’t.”

Obama whittled down the military’s request to 30,000 troops and insisted that the U.S. begin withdrawing them after 18 months. But in policy terms, the compromise made no sense. If, as Obama rightly suspected, the situation in Afghanistan was so hopeless that a multiyear, multibillion-dollar surge could not stabilize Karzai’s government, it was even nuttier to believe the U.S. could do so in a mere 18 months. The Obama administration said it was lowering America’s goal: seeking not to defeat the Taliban, but merely to soften them up for the negotiations that would produce a political settlement. Left unexplained was why the Taliban would cut a deal with the Karzai government when it could simply wait out the surge.

As policy, Obama’s surge was a mess. But politically, it worked wonders. Had Obama opposed any surge back in 2009, when the public—and the GOP—had far more stomach for war than they do now, the political consequences might have been brutal. Petraeus could have publicly objected—or even resigned—thus giving congressional Republicans their latter-day Douglas MacArthur, a heroic general denied his shot at victory by a pusillanimous president. Even if the military brass had kept quiet, Obama would have begun his administration by essentially admitting defeat in a war to which he had spent the entire campaign committing himself. Fox News would have had a field day.

Instead, Obama kicked the can down the road, delaying the public admission of defeat until now, by which point America’s failure is so obvious that barely anyone bothers to object. Essentially, he played rope-a-dope, giving Petraeus & Co. the chance to prove what one suspects Obama already believed: that counterinsurgency in Afghanistan had no chance.

Finally, a Democrat who knows how to play the politics of national security and win. But political victories can carry a human price. According to iCasualties, more than 1,300 Americans have died in Afghanistan since Obama took office, more than twice the number that died under George W. Bush. And since it is highly unlikely that Afghanistan’s future will be significantly different because America withdrew its combat troops in 2013 instead of 2009, one can reasonably ask: what did the United States accomplish during those four years that can possibly justify their deaths? It’s disturbing that Barack Obama doesn’t have a good answer to that question. It’s even more disturbing that politically, he doesn’t need one.

Detropia: Film Screening and Conversation

Tue, 22 May 2012 17:19:08 +0000

Event Venue:

New America NYC

Introducing New America NYC's Social Cinema series, a monthly screening series featuring social-issue documentaries followed by lively dialogue and debate.

Detroit's story has encapsulated the iconic narrative of America over the last century — the Great Migration of African Americans escaping Jim Crow; the rise of manufacturing and the middle class; the love affair with automobiles; the flowering of the American dream; and now . . . the collapse of the economy and the fading American mythos.

Join us for a screening of the award-winning feature documentary "Detropia," which tells the story of this Midwestern city teetering on the brink of dissolution, followed by a discussion with directors Heidi Ewing and Rachel Grady.

FEATURING

HEIDI EWING

Director, "Detropia"
Cofounder, LOKI FILMS
Nominated for an Academy Award, best documentary feature, for "Jesus Camp"

RACHEL GRADY

Director, "Detropia"
Cofounder, LOKI FILMS
Nominated for an Academy Award, best documentary feature, for "Jesus Camp"

RENIQUA ALLEN

Freelance writer on race and social justice
Bernard L. Schwartz Fellow, New America Foundation

Location:

New America NYC

199 Lafayette Street Suite 3B

New York City, NY 10012

See map: Google Maps

Event Time and Date:

Wednesday, June 6, 2012 - 6:30pm - 8:15pm

Calendar

Solving the Interest Rate Quandary: Two Feasible Proposals

Tue, 22 May 2012 14:15:25 +0000

May 22, 2012

Jason Delisle

May 22, 2012

The interest rate on federal student loans has never garnered this much public attention. The president has been talking up his proposed one-year extension of the 3.4 percent interest rate on newly-issued Subsidized Stafford loans since his 2012 State of the Union address, and with bills to extend the 3.4 percent rate pending in Congress, every major newspaper has covered the issue. Regardless of whether Congress adopts a one-year extension of the lower interest rate, policymakers still need to rethink how interest rates on federal student loans are set. The current rates are arbitrary, inflexible, and inequitable.

But before discussing those shortcomings and ways to address them, reformers must understand what federal student loans are not. They are not profitable for the government, nor are they a bad deal for borrowers, even at the pending 6.8 percent interest rate.

According to the Congressional Budget Office (CBO), of all the government’s loan programs the federal student loan program is the most subsidized and the most expensive. In most years, taxpayers will spend more subsidizing student loans ($12 billion) than they will subsidizing all of the home mortgages backed by Fannie Mae and Freddie Mac ($5 billion) and the Federal Housing Administration ($3.5 billion) combined, which effectively encompasses all newly-issued mortgages. As a result of these subsidies, the interest rates on federal student loans are far better than the interest rates private banks would offer to similar borrowers.

Much of the impetus for reforming student loan interest rates is driven by the belief that the government is charging interest rates that are unfairly high and thereby profiting off of borrowers. That misunderstanding abounds mainly because federal law prohibits government agencies from using calculations that demonstrate the true cost in official estimates and requires that they instead use a method that the nonpartisan CBO says “[does] not provide a full accounting of what federal credit programs actually cost the government.”

Since the CBO (along with financial economists) has rebuffed the claim that the government “profits” from student loans, proposals to lower interest rates based on the profitability argument are unlikely to resonate with policymakers, and therefore should not factor into the debate on reforming the interest rate. Instead, discussions should focus on the arbitrary, inflexible, and inequitable rates in place now.

Congress set the current fixed rates (6.8 percent for Stafford loans and 7.9 percent for PLUS loans) in law in 2002 based on projections of what the average variable interest rates would be in the future. Congress also literally wrote those exact figures into federal law—they aren’t pegged to a market benchmark—so the rates apply to loans issued every year no matter where the market and economic forces push interest rates.

Similarly, the loans are inequitable in that they provide very different levels of subsidies to borrowers depending on when they borrow. The subsidy on loans issued at the 6.8 percent interest rate in 2007 when the economy was booming and interest rates were relatively high was much larger than the subsidy provided to students who take out loans at 6.8 percent in today’s low-interest rate, slow-growth economy. Put another way, the subsidy a borrower receives on a loan is a function of how low the interest rate they pay is compared to what a private lender would charge to make the exact same loan. If market interest rates are high and the federal government charges 6.8 percent, the borrower receives a larger subsidy than when market interest rates drop and the government continues to issue loans at 6.8 percent.

According to the CBO and an analysis published by the National Bureau of Economic Research, the average subsidy that the government provided on a typical loan made in the 2006-07 academic year through the direct loan program was worth almost twice as much ($20 for every $100 borrowed) as the subsidy borrowers receive on the same loans made today ($11 for every $100 borrowed).

There are a number of ways Congress could set interest rates on student loans that address the flaws in the current system. But there is no free lunch. Every option will force policymakers to make trade-offs. Below are two proposals that would address the shortcomings in the current system while minimizing the tradeoffs and costs involved.

    Market-Based Fixed Rate

    Under this proposal, Congress would peg fixed interest rates on all newly-issued federal student loans—Subsidized and Unsubsidized Stafford, Graduate and Parent PLUS—to long-term U.S. Treasury borrowing rates, plus a markup set high enough to partially offset the costs associated with defaults, collections, delinquencies, deferments, forgiveness, etc., but low enough to still provide borrowers with a subsidy compared to market rates. Interest rates would still be fixed for the life of the loan, but the rate would change each year loans are offered based on market rates for 10-year Treasury notes, plus a markup of 3.0 percentage points.

    That formula would make the rate 4.9 percent for loans issued this fall, a big drop from the current 6.8 percent rates. What’s more, that rate would be available to all undergraduate and graduate borrowers, unlike the proposal pending in Congress to provide lower rates only to some undergraduates. Of course, next year the rate could be higher or lower depending on what happens to interest rates in the market. In a cost estimate for this proposal, the CBO assumes rates will eventually be higher than 6.8 percent for loans issued in the future. This would allow for deficit reduction (i.e., cost savings) as those higher rates would lower costs for the government. The agency estimates the proposal would reduce costs compared to the current 6.8 percent rate by $52 billion over 10 years.

    Of course, this proposal has a tradeoff—if the economy improves and long-term interest rates rise, rates on newly-issued student loans would rise with them. With interest rates based on existing market conditions, borrowers should theoretically get the same subsidy regardless of when they borrow. That is, the proposal would not provide students that borrow when interest rates are high with a larger subsidy than students who borrow in a year when interest rates are low. The subsidy would be consistent every year for every borrower.
    Variable Rate with Option to Lock in a Fixed Rate

    This proposal would set a variable rate for all newly-issued federal education loans that adjusts annually based on short-term U.S. Treasury securities, plus a markup to partially offset costs. However, it would not set a cap on how high rates could rise. Instead, borrowers would be given a one-time option to lock in a fixed rate at a premium above the current variable rate. Congress should set a premium that reflects the cost that fixed rate loans impose on taxpayers in the form of interest rate risk. For example, lawmakers could set the premium at the difference between the interest rates on 1-year and 20-year Treasury securities today, which is one measure of what lenders charge to provide fixed rates for long periods of time. That premium would be about 2.5 percentage points. Under this scenario, if the variable rate is 4 percent, borrowers could lock in a fixed rate at 6.5 percent. The fixed-rate lets borrowers choose certainty in their financial obligations, but it does not come at the high cost to taxpayers that a cap on variable rates would entail.

    This is similar to the policy in place in the 1990s and early 2000s, except during that time borrowers could lock in the current variable rate as a fixed rate (without a premium charge) only through the consolidation program. That provision proved extremely costly and provided many borrowers with huge windfall subsidies as they secured 20- and 30-year loans at rates below 3 percent after they left school. It had the opposite effect for borrowers who used consolidation as their only option to extend repayment in the late 1990s and were forced to lock in rates above 8 percent. In response, this proposal would not make electing a fixed rate a mandatory part of consolidation, though the option would be available on all loan types.

    This option presents the potential for significant budgetary costs compared to current policy. However, those costs would be mitigated because it is likely that most borrowers would choose to lock in a fixed rate. Indeed, if borrowers lock in fixed rates similar to those offered under current law, the additional costs of the policy would be minimal because the government would not have to incur the costs associated with lower interest rates. Even so, borrowers would be better off than they are under the current policy because they would be able to choose between fixed and variable rates.

    But more choices pose their own set of problems. As the government provides more choices and options for borrowers, it’s more likely that borrowers will be confused or make poorly-informed decisions. Some borrowers would inevitably believe that the government gave them a raw deal if they chose to lock in a fixed interest rate at the peak of an interest rate cycle only to watch rates fall in later years.

    While some might argue that this proposal should include an option for borrowers to refinance at lower fixed rates (when the market allows for such rates) even after locking in the fixed rate, similar to a home mortgage, this would be an extremely costly provision. It would put the government in a no-win situation with respect to interest rate risk that taxpayers must finance. Though borrowers could pay a fee to refinance the loan at a lower rate, mitigating the cost to the government of providing the option, the fee would likely have to be so high that the option would provide no real benefit to borrowers.

Many readers may wonder why I have not proposed a third option that caps variable rates at the existing 6.8 percent fixed rate. As many know, such an approach would represent a return to the policy of the 1990s and early 2000s whereby newly-issued federal loans carried variable rates that adjusted annually based on short-term U.S. Treasury securities, plus a markup to partially offset costs. While that policy included a cap on the variable a rate of 8.25 percent, some today favor an even lower cap of 6.8 percent, the current fixed rate.

This proposal is excluded from the list above because it would cost approximately $200 billion over the next 10 years, according to preliminary estimates that the CBO has provided to congressional staff. The proposal is costly because it allows borrowers to enjoy low variable rates when market rates are low while guaranteeing that borrowers will never pay more than the current 6.8 percent fixed rate when interest rates increase. In other words, it shelters borrowers from the financial tradeoffs that they would normally face when they choose between fixed and variable interest rates on loans in the private market. Variable rates may be low at first, but can easily increase under the right market conditions. Fixed rates might be higher on average, but they provide certainty. The variable-rate-with-a-cap proposal does not, however, make that fundamental tradeoff disappear. It just shifts the cost entirely onto taxpayers.

To put the $200 billion price tag in perspective, Congress is currently having trouble funding a one-year extension of the 3.4 percent student loan interest rate, which would only cost $6 billion over 10 years. Even more compelling, Congress could fund an $8,000 maximum Pell Grant (up from $5,550 today) for the next 10 years if it allocated an additional $200 billion to the program over that time period.

Even though a variable rate policy that caps rates at 6.8 percent is far too costly to be politically viable in Congress, the other two proposals illustrate that policymakers can make meaningful improvements on interest rates for minimal cost, or no cost at all. Students and aid advocates alike would be wise to take advantage of the fact that interest rate reform is fresh in the minds of lawmakers and rally around some version of a more economically feasible proposal.

PATCON

Mon, 21 May 2012 21:18:02 +0000

The FBI’s Secret War Against the ‘Patriot’ Movement, and How Infiltration Tactics Relate to Radicalizing Influences

May 21, 2012

J.M. Berger

Since September 11, 2001, more than 300 U.S. residents have been prosecuted for crimes related to homegrown terrorism. About half were targeted by law enforcement using infiltration techniques – confidential informants, undercover operations, or, in some cases, both.[i]

The use of infiltration has grown increasingly controversial, particularly within the American Muslim community, where many view these techniques as bordering on entrapment (regardless of the legal definition). In the worst light, informants and undercover officers are seen as agents provocateurs – government employees who are instructed to provoke people into illegal acts so that they can be prosecuted.

A 2011 Pew survey found that 52 percent of all American Muslims feel anti-terrorism policies in the United States single out Muslims for surveillance and monitoring. That number jumped to 71 percent among native-born American Muslims. Forty-four percent of the general public agreed with the assessment.[ii]

That survey was taken before a series of investigative reports by the Associated Press on the New York Police Department’s anti-terrorism unit confirmed some of the community’s worst fears. The AP series, starting in August 2011, revealed that the NYPD has engaged in widespread surveillance of Muslim communities in New York, often without evidence of illegal activity and often without producing actionable results.[iii]

But questions about when and how to use infiltration techniques are not new and are not limited to Muslim communities in the post-9/11 era. Whether it’s an undercover agent buying supplies for an al Qaeda sympathizer,[iv] an FBI handler getting inappropriately close to a mob informant,[v] or informants collecting evidence even as hackers compromise a private company’s data,[vi] infiltration inherently involves unique risks along with its potential rewards.

Informants and undercover agents are essential tools for law enforcement officials, whether they are investigating terrorism, organized crime, corporate wrongdoing, computer hacking, or fraud. Infiltration methods have a proven track record as far as their legality and their investigative merits in the vast majority of cases. But methods that fall within legal bounds are not necessarily without negative consequences. Violent extremism presents a particularly devilish problem set in this respect.

Law enforcement has an obvious stake in trying to determine whether nonviolent people who espouse extremist beliefs or engage in violent rhetoric might become violent. Now more than ever, the government is focused on preventing potential extremists from becoming violent. But infiltration techniques can have a dramatic effect on how targeted communities view efforts to counter and prevent violent extremism by raising questions about the government’s intent and integrity. Aggressive infiltrations can even reinforce extremist narratives that claim the government targets communities because of their fundamental identities rather than in pursuit of illegal activities. The ripple effects of perceived overreach can also make it more difficult for otherwise friendly community partners to encourage cooperation with law enforcement.

Studying the secondary effects of infiltration in current situations verges on the impossible for several reasons. The current activities of undercover agents and informants are closely guarded secrets, for obvious reasons. When infiltrators are exposed in the course of an arrest and prosecution, descriptions of their activities are carefully controlled by prosecutors and carefully spun by defense attorneys, resulting in a distorted picture. Members of a targeted community may be reluctant to frankly discuss their attitudes toward these activities for fear of being targeted themselves. And finally, the secondary effects of infiltration can play out over years or even decades, rendering any short-term picture incomplete.

Legacy cases, while still subject to many of the same pressures, offer an improved window on the details of specific infiltrations and on the medium- and long-term effects on targeted communities. In the case of closed investigations, it is also possible to make a better evaluation of overt successes, such as arrests, prosecutions, and the prevention of violence and other planned activities.

From 1991 to 1993, the FBI conducted an ambitious infiltration program code-named PATCON, short for Patriot Conspiracy. “Patriot” is an umbrella label for a loosely defined movement of antigovernment, racist, anti-Semitic, and/or Christian extremists. The PATCON program is documented in extraordinary detail in thousands of pages of FBI records obtained through the Freedom of Information Act. Interviews with people involved on both sides of the infiltration supplement this information.

PATCON consisted primarily of three FBI undercover agents posing as members of a fictional extremist group called the Veterans Aryan Movement. Three Patriot groups were the primary targets of PATCON – Civilian Materiel Assistance, the Texas Light Infantry, and the American Pistol and Rifle Association. PATCON agents roved the country for more than two years collecting intelligence on these and other Patriot organizations and on dozens of individuals, investigating leads on plots from the planned murder of federal agents to armed raids on nuclear power plants to a new American Revolution.

Despite spending hundreds of thousands of dollars and logging uncounted man-hours, PATCON and related investigations produced negligible results in terms of serious criminal convictions. Instead, PATCON became an intelligence tool, predicated on a series of suspected crimes, most of which were discussed but never committed.

Because it was not directly tied to a prosecution, the existence of PATCON was not formally disclosed until 2007, when references to the program appeared in documents released through Freedom of Information Act requests about the targeted groups. But the Patriot movement was keenly aware it had been infiltrated. Several people involved with targeted groups asserted in interviews after the fact that they were aware that at least one undercover agent involved with PATCON was a “fed.” Whether or not that’s true, the movement was actively worried about infiltration, and justifiably so. One group targeted by PATCON was described by the FBI as “extremely sensitive to investigative pressure.”[vii] Another group deliberately discussed “exotic” threats in order “to provoke the FBI into overreacting and to surface informants.”[viii]

The paranoia that resulted from the awareness of infiltration led to some members being expelled or ostracized on the often-incorrect suspicion that they were informants. Patriot gatherings were at times disrupted and even canceled over concerns about infiltration by federal investigators. One former informant interviewed for this report said he believed the FBI was just fine with that outcome but added that such mind games often reinforced the radical beliefs of those being monitored.

“I think they played a lot of people against each other,” he said. “The guys hated them more and more for it. They thought Big Brother was moving in on them.”

In addition to the murky complexities of the observer effect – in which the act of observing something causes changes in the subject of observation – the PATCON investigation highlights several critical issues surrounding the use of infiltration.

To read the rest of this policy paper, please click here.

[i]http://homegrown.newamerica.net/

[ii]Muslim Americans: No signs of growth in alienation or support for extremism, Pew Research Center, August 2011, http://www.people-press.org/files/legacy-pdf/Muslim-American-Report.pdf

[iii]A list of stories and related documents published by the Associated Press can be found at http://ap.org/nypd/

[iv]Abby Goodnough, “Man Is Held in a Plan to Bomb Washington,” New York Times, September 28, 2011, http://www.nytimes.com/2011/09/29/us/massachusetts-man-accused-of-plotting-to-bomb-washington.html

[v]Shelley Murphy, “’Whitey’ Bulger’s ex-girlfriend testifies at Connolly trial,” Boston Globe, October 16, 2008, http://www.boston.com/news/local/breaking_news/2008/10/whitey_bulgers.html

[vi]Paul Wagenseil, “FBI may have known in advance of Stratfor hack,” MSNBC.com, March 7, 2012, http://www.msnbc.msn.com/id/46658033/ns/technology_and_science-security/#.T1yuzjGrK-Q

[vii]FBI communication, San Antonio to HQ, June 16, 1992

[viii]FBI communication, Birmingham to HQ, March 5, 1993

Attachments:

PATCON (31 pp.)

Osama bin Laden and al-Qaeda: Lessons from the Abbottabad Documents

Mon, 21 May 2012 18:58:49 +0000

Event Venue:

New America DC

The Navy SEAL team that ended Osama bin Laden's life last May also grabbed a massive collection of digital and physical material from his hideout in Abbottabad, Pakistan. Seventeen of the documents the SEALs swept up that night were released earlier this month by the Combating Terrorism Center at West Point, which also produced a detailed report analyzing and contextualizing the writings by al-Qaeda's most important leader and several of his top lieutenants. The New America Foundation is proud to host the lead author of that report, Letters from Abbottabad: Bin Ladin Sidelined?, for a discussion of the Abbottabad documents and what they tell us about the past and future of al-Qaeda.

Location:

New America Foundation

1899 L Street NW Suite 400

Washington, DC 20036

See map: Google Maps

Participants List:

Featured Speaker
Nelly Lahoud
Associate Professor at the Department of Social Sciences, U.S. Military Academy at West Point
Senior Associate, Combating Terrorism Center at West Point.

Moderator
Brian Fishman
Counterterrorism Research Fellow
New America Foundation

Event Time and Date:

Tuesday, May 29, 2012 - 12:15pm - 1:45pm

Calendar

The Politics of Inequality

Mon, 21 May 2012 17:16:45 +0000

Event Venue:

New America DC

Inequality has been a long-standard feature of American society, but financial catastrophe and a sluggish recovery raised its profile. Occupy Wall Street protesters and others have argued that public policies contributed to rising inequality of income and wealth. Given the claims and evidence that inequality brought on the Great Recession, continues to undermine a more fair and equitable economy, and threatens our democracy, the debate over the extent of inequality and what to do about it is likely to assume a central role in the unfolding presidential campaign.

Veteran reporters Timothy Noah and David Corn have recently published books that grapple with the policy and politics of this moment. Noah examines the rise of inequality in The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It. Corn’s Showdown: The Inside Story of How Obama Fought Back Against Boehner, Cantor and the Tea Party examines how the White House navigated the politics of inequality in negotiating with Congressional Republicans.

Please join us and the authors for a discussion of the politics and policies of inequality.

Location:

New America Foundation

1899 L Street NW Suite 400

Washington, DC 20036

See map: Google Maps

Participants List:

Featured Speakers
Timothy Noah
Senior Editor, The New Republic
Author, The Great Divergence: America's Growing Inequality Crisis and What We Can Do about It

David Corn
Washington Bureau Chief, Mother Jones
Author, Showdown: The Inside Story of How Obama Fought Back Against Boehner, Cantor, and the Tea Party

Moderator
Reid Cramer
Director, Asset Building Program
New America Foundation

Event Time and Date:

Wednesday, May 30, 2012 - 12:15pm - 1:30pm

Calendar

NEW REPORT: Kenya an Innovator in Reducing Poverty

Mon, 21 May 2012 15:00:49 +0000

Should Serve as a Model for Better Financial Inclusion

May 21, 2012

Kenya has reduced poverty dramatically in the past few years thanks in part to the country's largest banks helping its poorest citizens save money - making it a model not only for other developing countries, but for America, too, according to new data from the New America Foundation's Global Assets Project.

While American banks tend not to focus on recruiting poor citizens to sign up for savings accounts - largely because the bottom of the pyramid isn't considered lucrative or competitive - the new report shows how Kenya's biggest banks are targeting poor Kenyans through innovative technologies to help them save for the future.

The full report can be viewed here. Interactive data from the report, "Savings for the Poor in Kenya," will be presented at a public event at the New America Foundation on Tuesday, May 22 at 3:30-5 p.m. To find further information and to RSVP, please go here.

About the New America Foundation
New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.

Eric Tyler

Anjana Ravi

The Partner

Mon, 21 May 2012 13:42:35 +0000

May 21, 2012

Meet Mitt Romney's most trusted adviser.

Noam Scheiber

May 21, 2012

Any taxonomy of first friends includes a few familiar types. There’s the amiable glad-hander destined for the outer Cabinet, like George W. Bush crony Don Evans. There’s the scheming, scandal-prone loyalist, like the Clinton hanger-on Harry Thomason, of Travelgate infamy. And then there’s the discreet consigliere who serves alternatively as fixer, sounding board, chief surrogate, and all-around defender of the faith.

Personal friends with such outsize influence are actually quite rare in presidential politics. Within recent administrations, only Valerie Jarrett really fits the profile. But, as it happens, Jarrett won’t be the only Valerie Jarrett–figure advising a presidential candidate this year. Mitt Romney has his own longtime-pal-cum-alter-ego, a 56-year-old ex-Bain Capital partner named Bob White.

White, who is trim with graying brown hair, was one of Romney’s original hires when launching the private-equity firm back in the 1980s. He has been at Romney’s side in every major endeavor he’s undertaken since, from the Olympics to the campaign trail. Over the course of Romney’s career, White has served as debate prepper, personnel vetter, designated gut-checker, in-house historian, and diplomatic envoy. It was White who found Romney a campaign manager for his run for governor, White who headed his transition to the Massachusetts statehouse, White who has chaired his campaigns for president.

Since the start of the Republican primaries, White has served as the chief advice-broker within the campaign. “Are we a family that has internal squabbles? Absolutely,” says Ron Kaufman, a top Romney adviser. “One reason it works is Bob. People go to Bob all the time and say, ‘You’ve got to tell Mitt this.’ ... Knowing how to do it, when to do it, is his huge talent.” White has also weighed in personally at key moments. When pressure built on Romney to release his tax returns, White helped persuade the candidate to take his time, arguing, as another adviser puts it, that “you never release something that’s five hundred pages long or more till you understand it.” And he has helped formulate retorts to attacks on Romney’s wealth. When Newt Gingrich badgered Romney for investing in Fannie Mae and Freddie Mac, White observed that Romney didn’t own stock in the disgraced mortgage giants; his blind trust owned bonds through a mutual fund—a less direct investment than Gingrich’s own Fannie and Freddie holdings. Romney made the point in a Florida debate to devastating effect.

White’s status in Romneyworld is all the more remarkable given that the former Massachusetts governor is often described as essentially friendless—the one contemporary pol who is even more of a loner than Barack Obama himself. But Romney’s affection for White is such that he refers to him simply as “TQ”—short for “The Quail,” an old Bain nickname. (The “bobwhite” is a species of quail, the joke being that there is nothing remotely skittish or meek about the actual Bob White.) Which, in the end, is what makes White such an intriguing figure. For a politician often viewed as maddeningly opaque—whose persona even the most charitable observers concede has shifted over time—there may be nothing so revealing as his choice of trusty wingman.

PERHAPS THE EASIEST WAY to explain the attraction of the consigliere-pal is that he or she brings qualities the aspiring pol lacks. Obama was a nobody in Chicago when he met Jarrett, a consummate insider with deep ties to the city’s establishment. Romney, by contrast, has pedigree to spare. In White—who was the first in his family to attend college—Romney befriended the self-made success he sometimes romanticizes on the campaign trail.

Whereas Romney often appears stiff and reserved and struggles to make small talk, White, a former college hockey player, is preternaturally comfortable in his own skin. As Peter Flaherty, a senior campaign adviser, puts it, “He is just as at ease whether he’s talking with the person selling him a doughnut at Dunkin’ Donuts or the person selling him Dunkin’ Donuts.” (In 2006, Bain Capital actually acquired a share of the company.)

This quality has been paying dividends for Romney since he and White were colleagues at Bain. In 1991, Bain & Company, the corporate parent of Bain Capital, was drowning in red ink and enlisted Romney to save it. Romney realized the only way to ward off bankruptcy was to ask anyone with a claim on the parent company to make do with less: bankers, suppliers, even Bain’s founding partners, who had run up $200 million in debt so they could cash out their stakes. White was the lieutenant Romney dispatched to sweet-talk the holdouts. “They’d say, ‘Bill Bain is more at fault than I am. He should have to give more.’ Or someone would say, ‘My founding stake came later, I’m less at fault,’” recalls one person involved. “Bob’s the guy ... who said, ‘We’re going to talk about this till we get it done.’” In the end, White persuaded the company’s bankers to roll over their loans, its suppliers to take discounts, and the founders to return half the $200 million they’d awarded themselves.

White’s skills transferred easily to the political arena. Several days after Romney entered the race for governor in 2002, White paid a visit to Jim Rappaport, a Massachusetts businessman running for the state’s number-two job. Rappaport was the favorite to win the lieutenant governor nomination and Romney had told him he’d stay out of the primary. But White and Mike Murphy, the candidate’s chief consultant, decided that a ticket of two wealthy suits was a sure loser. White’s delegation informed Rappaport they were backing Kerry Healey, a failed legislative candidate who had just become party chairwoman. “I thought we were going to get nunchucked—there were people yelling at us,” says Ben Coes, the Romney campaign manager who was present for the encounter. “But Bob’s the kind of guy who could be urinating on your shoes while talking to you, and you’d thank him afterward.” (For the record, White’s charms were partially lost on Rappaport, who says his “Thank you” was more along the lines of “Just get the bleep out of my office.” But he did support Romney in the fall.)

White has also countered Romney’s natural tendency toward caution. When Bill Bain first tapped him to run Bain Capital in the 1980s, Romney passed, worrying that failure would blot his sterling CV and cost him financially. According to biographers Michael Kranish and Scott Helman, he only accepted once Bain offered to give him his old job back if the venture folded, along with any raises he would have accrued and a cover story to protect his reputation.

But, as a politician, Romney has sometimes taken audacious risks—like the decision to tackle health care reform as governor. More often than not, it’s White who has bucked up his resolve. Just over a month out from Election Day in 2002, Romney’s top aides convened at his Belmont home to hash out their debate strategy. The consensus was that the format had not been kind to Romney in the past, and so there was concern about drawing attention to it. But Romney’s press aide, Eric Fehrnstrom, proposed doubling down: asking NBC poohbah Tim Russert to moderate a debate the week before Election Day. The benefit was “getting a national figure ... who was more likely to ask [Romney’s Democratic opponent Shannon O’Brien] the tough questions that the local papers were unlikely to ask her,” recalls Brian Shortsleeve, a deputy campaign manager at the time.

Initially there was skepticism. But White liked the idea and persuaded Romney that the reward was worth the risk. “Bob and Eric Fehrnstrom are the guys who made that happen,” says Shortsleeve. It worked. Russert put O’Brien on the defensive over taxes, the death penalty, and abortion. Romney’s poll numbers surged after the debate.

AS A CANDIDATE in 2008, Barack Obama spoke often about bringing once-in-a-generation change, but it was hard to know how serious he was. In retrospect, though, there was one foolproof indication that he’d swing for the fences: Valerie Jarrett. Within Obamaland, Jarrett’s role was making sure Obama fulfilled his historical destiny. “Valerie considers herself the protector of Barack’s immortal soul,” says Jim Cauley, Obama’s Senate campaign manager. “She thinks she has to protect him from political hacks like Rahm [Emanuel] and [David] Axelrod. ... Valerie has a thing about him not selling out.” That his closest friend and adviser saw him in quasi-messianic terms suggested Obama probably did, too.

What does Romney’s top campaign buddy tell us about him? At first blush, it would seem to be that, for all his flirtations with culture-war conservatism, border-policing maximalism, and supply-side economics, he remains a corporate technocrat at heart. “[Bob’s] main role ... is trying to get the best people, trying to drive actions and decisions, versus a specific ideological bent,” says Coes. One of Romney’s signature initiatives as governor was what he called the “Business Resource Team,” the mandate of which was to coordinate among the roughly 20 state agencies and industry groups with influence over the economy. “We got them to work together so that if a business wanted to expand, it’s easier, they get a faster response,” says Ranch Kimball, Romney’s former economic development czar. “The governor believed in it. Bob did, too.”

But just because White and Romney don’t have an ideology doesn’t mean they lack a worldview. In fact, they have a distinct worldview. To them, business and finance aren’t just amoral, but forces for good. They believe achievement in the corporate world is virtuous, not merely lucrative.

No surprise, then, that ever since Romney entered politics, White has been the most consistent voice on behalf of embracing his record at Bain. White touted it to reporters during Romney’s first run for office in 1994 and was central to the calculations that credit Romney for helping to create tens of thousands of jobs there. During this presidential run, when opponents have attacked Romney as a predatory capitalist, White has been a leading internal advocate of Romney’s response: “I’m not going to apologize for being successful.” “People tried hard in the primary, as the president is now, to make Bain a negative issue,” says Kaufman. “But, because of Bob’s extensive knowledge, etcetera, it made it easier for us to make it a positive.”

Of course, just because “success” served Romney well in a Republican primary doesn’t mean it will work in the general election, when voters may look skeptically at a record of corporate buyouts. And the campaign understands this. “It’s going to need to evolve for the general,” concedes another Romney adviser. Still, the evolution will have limits. Though Romney’s record reveals flashes of compassion, as president he is unlikely to brood about income inequality or any of capitalism’s hard edges. If one can extrapolate from Bob White, Romney believes such disparities and dislocation are the flip side of a vibrant economy—that capitalism works remarkably well the way it is.

It's Time to Tax Happiness

Mon, 21 May 2012 13:39:35 +0000

May 21, 2012

Charles Kenny

May 21, 2012

As the presidential campaign kicks off, both Mitt Romney and Barack Obama are looking for popular ways to reduce a still-ballooning deficit. However sensible, proposing deep cuts in Medicare or defense spending has little political appeal. Raising the income tax rate—at least on anyone earning less than a million a year—appears equally unpalatable. There is, however, at least one revenue-generating tool that’s simple, fair, and very efficient, at least in theory: a tax on happiness.

Remember the famous (if elusive) “Laffer curve,” which suggests that if you raise income taxes, people won’t work as hard, so tax revenues will fall as a result? The idea of optimal tax policy is to find taxes that don’t put people off earning money. Traditional theory has a solution to this problem: Tax people based on their innate abilities to earn money, rather than on what they actually earn, which is based on some combination of ability and effort. If you tax people on the basis of productive characteristics they can’t change, you won’t reduce their incentive to work.

In recent years, economists have devised novel policy prescriptions using this theory of taxation. In a paper that he co-authored, “The Optimal Taxation of Height,” Gregory Mankiw, a Harvard economist who is former Chairman of the Council of Economic Advisors and current adviser to candidate Romney, argued (PDF) that we that should tax tall people. This is on the grounds that the tall earn more, at least in part because they are loftier. Other things being equal, an individual who is six feet tall can expect to earn $5,525 more per year than someone who merely reaches five feet, five inches. Presumably they earn more, Mankiw suggests, because the height-advantaged are innately more productive. As a result, according to theory, a tall person making $50,000 should pay about $4,500 more in taxes than a short person making the same income.

Ludicrous, right? Well, ludicrous only because it’s an insufficiently robust application of the theory. The people you ought to be taxing are not the people who need extra leg room, but those who are smiling all the time. They are born happy, and it makes them rich.

There are all sorts of reasons to conclude that people who report themselves happy earn more as a result. A recent review in the Psychological Bulletin found that happy job-seekers are more likely to find employment and that happy employees go on to be considerably more satisfied with their jobs, which means they’re also less likely to call in sick or quit. In turn, that’s probably why economist Andrew Oswald from Warwick University estimates that happy workers are 12 percent more productive. Brookings Institution researcher Carol Graham found that Russians who reported themselves happier in 1995 went on to earn much more in 2000 than people who were unhappy at the start of the study.

Most researchers have assumed that lucre brings laughter, rather than the other way around. But the evidence suggests that the power of happiness to increase incomes is greater than the impact of money on contentment. A recent study by Ada Ferrer-i-Carbonell and Paul Frijters of Holland’s Tinbergen Institute followed 7,000 Germans over time and looked at changes in both their reported happiness and income levels. The results suggested that it would take an 8,000-fold increase in income to raise the average person’s reported happiness by just one point on a 10-point scale.

So is smiling more the secret to success? It doesn’t hurt. The sad fact is, however, that most variation in happiness within countries at a given time is hard-wired. In other words, you are born happy—or not. Based on studies of twins, professors David Lykken and Auke Tellegen of the University of Minnesota conclude that 80 percent of the differences in happiness-poll answers offered by respondents is due to permanent features of personal character.

All of which brings us back to optimal tax policy. People are born happy, which makes them more productive. Theoretically, then, it makes sense to tax that happiness. The higher you are on a 10-point scale, from depths of despair at zero to ecstasy at 10, the more you pay. Don’t worry that paying higher taxes will make happy people miserable: Not only is the link from income to happiness very weak in general, but people who say they are happy also care less about money. A study by Martin Binder at the Max Planck Institute followed a group of British respondents over time and found that the higher people score on the happiness scale, the less important income is to their happiness. A happy tax could transfer money from those who get the least joy out of it to those who get the most.

Cynics and policy Luddites might carp that, if you tax people on their answers to happiness questionnaires, everyone will pretend to be unhappy. Beyond the fact that happy people see themselves as more trustworthy (surely they wouldn’t stoop so low), there are more reliable ways to measure happiness. People who say they are happy smile more and have higher levels of dopamine and lower levels of the adrenal hormone cortisol in their bloodstream. A random blood test could determine if people are telling the truth about their contentment. Think of it as the happy-tax version of an IRS audit—and surely less painful.

An additional potential benefit of a happiness tax is that if governments want to increase revenues, a simple approach would be to make people happier. The disappointment here is that just as the government has proven pretty bad at lifting income-growth rates, we aren’t too clear on how to raise average reported happiness, either. Lykken and Tellegen (of the twin studies) estimate that less than 3 percent of the variation across people in happiness scores is explained by a raft of factors, from education, income, and marital status to religious commitment. So it’s hard to know what policy levers would work to significantly increase happiness scores. The role for government in certain of these areas might be controversial. Even if religious observance is associated with happiness, for example, strict constructionists and judicial activists alike might chafe at the idea of a legal requirement to attend church on Sunday.

A further practical problem: While the happy tax should be Mankiw-approved (at least in theory), it may face opposition from less-principled Republicans. That’s because the right isn’t just richer on average; its happier, too. A 2008 Pew poll reported that fully 37 percent of Republicans were very happy, compared to only 25 percent of Democrats. It also happens that, as Joseph Fried reports in his book on the differences between supporters of the two major parties, Democrats are also three-quarters of an inch shorter, suggesting that Mankiw’s proposal could also be in trouble with Republicans, even if he ends up sitting in the Old Executive Office building next to the White House. Whether you tax size, smiles, or salaries, it’s likely the Grand Old Party will oppose it.

Professor Mankiw was not entirely serious in his proposal. He used his paper on taxing height to make a point about weaknesses in the economic theory around optimal taxation. A happiness tax might suffer from those same weaknesses. But for aficionados of benefit-cost analyses and other true believers in maximizing the utility of the greatest number through government policy, the happiness tax should be a slam dunk.

Has Obama Given Up On One America?

Mon, 21 May 2012 12:37:27 +0000

May 21, 2012

A federalist approach to gay marriage may be fashionable. It’s also sad.

Andrés Martinez

May 21, 2012

The debate over gay marriage pits two visions of America against each other, and I worry that the least enlightened one, bolstered by President Obama, is carrying the day.

I am not talking about the issue of whether marriage should be limited to heterosexual couples, mind you, but about the timeless question of whether we are to be one cohesive nation whose citizens enjoy the same “privileges and immunities” throughout—or whether, by contrast, we are to be a patchwork of states and communities whose residents’ individual rights vary according to their local community’s prevailing “standards.”

Earlier this month, the president told ABC News that he is personally in favor of gay marriage but wants the issue resolved by states. That’s deeply unsatisfying. It’s illogical for the nation’s first African-American president, a former Harvard Law Review editor and constitutional law professor at the University of Chicago, to say that the right of gays to marry whomever they want is a clear matter of equality and due process but then leave it up to the states to go their own ways. Good luck with that, if you’re a same-sex couple wanting to get married in Alabama.

President Obama was quick to say in his interview that the definition of marriage (like the issue of slavery in the first decades of our nation, I might add) has historically been a state prerogative. Never mind that in 1967 the Supreme Court struck down Virginia’s ban on interracial marriage, holding that the ban violated the Equal Protection and Due Process clauses of the Fourteenth Amendment. Writing for a unanimous majority, Chief Justice Earl Warren wrote, “Marriage is one of the basic civil rights of man, fundamental to our very existence and survival.” The Constitution, Warren added, required that “the freedom of choice to marry not be restricted by invidious discriminations.” In other words: Buzz off, states.

Both competing visions of social cohesion—the national one and the communitarian one—have long co-existed in tension (“tension” being a polite euphemism to cover a brutal civil war as well). Our Founding Fathers subscribed to the belief that being an American transcended one’s narrower state identity while still bequeathing us a nation in which some states outlawed slavery and others allowed it to flourish.

The Civil War’s outcome, enshrined in the Thirteenth, Fourteenth, and Fifteenth Amendments of the Constitution, appeared to have settled the matter for good. We would no longer remain what the Chinese in a far different context have recently called “one country, two systems.” Liberty, freedom, equality, and the pursuit of happiness were now going to mean the same thing in Alabama as they did in Vermont.

The South’s states’ rights mantra proved more resilient than anticipated, however, and it took a concerted effort by liberals, leveraging the power of the Supreme Court and the Congress, to restore a sense that we are one nation, undivided, whose citizens should enjoy the same rights and protections, regardless of state boundaries.

The Warren Court’s jurisprudence was the highest expression of national cohesion, and it was echoed at the time by the muscular nationalism of Lyndon Johnson’s Great Society. “There is no issue of states’ rights or national rights,” President Johnson declared in a stirring televised pitch for his Voting Rights Act on the heels of violence in Selma, Alabama, in March of 1965. “There is only the struggle for human rights.”

Included in the speech was a nationalistic sentiment that encapsulated the era’s progressive quest to forge one America. “This is one nation,” Johnson said. “What happens in Selma and Cincinnati is a matter of legitimate concern to every American.”

Today, such a declaration rings more hollow. President Obama’s hesitation to call for a national push to enforce equality for gays—his instinct that this is a matter best left to the states—is considered sensible and wise by plenty of leading progressive thinkers and activists. States’ rights have gone bipartisan.

Today’s revitalized, bipartisan federalism is fueled by two factors. The first is the political “sorting out” of the last few decades. The nation is increasingly split into red and blue states whose politics and cultures overlap less and less. Americans self-segregate into left and right communities, consuming only one or the other’s media and entertainment, careful to filter out “the other.” Liberal Republicans and conservative Democrats are endangered species. Blue states, red states; you know who you are.

As more and more Americans live surrounded by like-minded neighbors, the urge wanes to care about the prevailing norms in a community halfway across the country. If someplace else wants to round up immigrants to deport, ban gays from getting married, or allow residents to carry concealed weapons, what’s it to us? By the same token, if we want to welcome illegal immigrants, allow gays to marry, or ban guns, what’s it to them?

California is at the forefront of progressive federalism. Throughout the Bush years, California was regularly doing battle with Washington to forge its own separate path on any number of issues, from consumer protection laws to medical marijuana and environmental regulations.

That’s why an expanding range of issues, including educational standards and immigration policy, is now seen through the same prism that long defined obscenity: that of community standards. Forget about Cincinnati. Why should people living in West Hollywood concern themselves about the rights of people in Selma, or vice versa? Isn’t that a fool’s errand, whose best-case scenario will be an embrace of the lowest common denominator? Better to live and let live.

The second cause for the rise of a progressive federalism is the widespread exhaustion and unease with the role of the judiciary in enforcing constitutional rights and national standards. It’s now fashionable in liberal circles to believe that Roe v. Wade may have backfired by provoking, galvanizing and strengthening the far right for a generation to come—unnecessarily so, the theory goes, given that state legislatures were working their way, if at different speeds, towards legalizing abortion across the country. Even Ruth Bader Ginsburg, the liberal justice, has made this claim. Recently, Eric J. Segall, a law professor at Georgia State University, applied this argument to the 1954 Brown v. Board of Education decision ordering the desegregation of schools; Segall claimed that, because the Court was too far ahead of society, the decision backfired politically. So it’s not surprising that many leading gay rights activists share a preference for legislative triumphs over courtroom wins.

To my read, though, the constitutional rights of individuals should never be compromised by political expediency or convenience or by polling of majorities to see if they are ready to stomach the protection of another’s rights. Courts don’t, and shouldn’t, have the option of avoiding judicial review because it’s politically messy.

Besides, counterfactual history is more art than science. Who knows how less polarized the abortion issue would be had the courts stayed out of it and the struggle been confined to the political arena? And, I would add, who cares? Progressive federalism may be in fashion, but it’s a sad historical retreat. The American constitutional system is built on a non-negotiable belief that there are certain inalienable rights we possess as individuals and citizens that the state, or the prejudices of a majority, cannot wrest away from us.

Fortunately, those pesky courts are unlikely to allow this “let’s let each state decide for itself” stalemate to last indefinitely. The infamous Defense of Marriage Act (an example of conservatives tactically ditching their states’ rights fervor to advance their social agenda through Congress) is under assault in the courts, and California’s own Proposition 8 banning gay marriage has been struck down by the Ninth Circuit Appeals Court (on admittedly narrow grounds that don’t seem to apply to states that never have allowed gay marriage).

President Obama has been commended, and rightly so, for “evolving” in his thinking on whether gays should be able to commit to loved ones in marriage. Now, hopefully, he will evolve in his thinking about whether he wants to preside over one country, or two.

Comments Proposing Conditions on DISH Network Spectrum License Grant

Fri, 18 May 2012 16:32:29 +0000

WT Docket No. 12-70, ET Docket No. 10-142, WT Docket No. 04-356

Author(s):

Michael Calabrese

Sarah Morris

May 18, 2012

The undersigned Public Interest Organizations (New America Foundation, Public Knowledge and Consumers Union) welcome the Commission’s effort to reallocate fallow Mobile Satellite Spectrum for more fully flexible licensing in a manner that holds the potential to promote wireless industry competition, innovation and consumer welfare. Commenters have in the past supported the substantively equivalent ATC waiver that the International Bureau granted to LightSquared Subsidiary LLC because of the compelling public interest conditions associated with the waiver and with the initial license transfer to SkyTerra (LightSquared’s predecessor in interest). Similarly, public interest commenters support the Commission’s proposal to bypass competitive bidding and to make an equitable grant of new, flexible AWS-4 licenses to the incumbent 2 GHz MSS licensee, but only if the conditions attached to the grant recaptures for the public a substantial share of the multi-billion dollar value of the grant with obligations and safeguards that are equivalent to the public interest benefits that were attached to the similarly-situated L Band licensee.

The value of the proposed AWS-4 license grant and the risk that the spectrum could be “flipped” or leased out in a manner that would lessen rather than promote wireless industry competition and innovation are both so great that the Public Interest Organizations believe that conditions in addition to meaningful buildout requirements are appropriate to avoid unjust enrichment and to ensure that the public resource is actually used to promote competition, innovation and more affordable mobile broadband for the public. Specifically, the Commission should make its assignment of AWS-4 licenses subject to the following public interest conditions:

First, for the duration of the initial license period, the AWS-4 licensee must make up to 50 percent of its capacity available in each Economic Area for open wholesale leasing, or for roaming by other carriers, on a non-discriminatory basis at fair and reasonable rates. Since the Commission is withholding this spectrum from competitive bidding, and because it has revoked the ATC rights of the L Band Licensee (LightSquared), there is a compelling public interest in promoting both competition among wireless providers and innovation in the adjacent markets for wireless devices, applications and services by making the S Band’s future LTE capacity available on fair and equitable terms.

Second, whether or not the AWS-4 licensee is required to make up to 50 percent of its capacity available for wholesale leasing and roaming, the Commission should require that the licensee seek Commission approval before making more than 25 percent of the licensee’s data traffic capacity within any Economic Area available to any single carrier, or to any other entity, regardless of whether that capacity is accessed on a wholesale basis, roaming basis, under a spectrum manager lease arrangement, or as part of a network sharing agreement.

Third, any buildout requirements should be augmented by a “use it or share it” license condition that would permit other parties to make use of unused AWS-4 spectrum on a localized basis until such time as the licensee actually deploys service. The frequency bands covered by the new AWS-4 licenses should be registered in the TV Bands Database and available for non-interfering use by devices and/or systems that are multi-band, equipped with GPS, capable of periodically checking the database, and on notice that they will be denied permission to continue using the S Band frequencies in a local area once the licensee notifies the Commission and a TV Bands Database operator of the geographic areas where actual service will commence.

Fourth, the Commission should impose unjust enrichment penalties on sale of the AWS-4 licenses to either of the two largest mobile carriers. This condition would prevent DISH from unjustly realizing a windfall if it transfers or assigns the spectrum to one of the two largest CMRS and wireless data carriers within a specified number of years. This condition is particularly salient if the Commission decides not to attach the wholesale access and 25 percent approval requirements outlined in conditions one and two above. Precedents and models for mitigating unjust enrichment currently exist within the Commission’s rules. The unjust enrichment rules governing the benefits reserved for designated entity licensees (DEs) are a particularly appropriate and workable model for a condition ensuring that the S Band licensee does not use its enormous public subsidy to harm the public by worsening the competitive landscape of an industry that is already consolidating and threatening to become an effective duopoly.

The full comments are available on the FCC's comments page or for download as a PDF.

Press release from Public Knowledge regarding the submitted comments.

Russian Roulette

Fri, 18 May 2012 16:29:42 +0000

Corruption, Revenue, and the post-Soviet Precedent for State Failure in Afghanistan

May 18, 2012

Brian Fishman

The strategic partnership agreement between the United States and Afghanistan that was signed by Presidents Barack Obama and Hamid Karzai on May 1, 2012 did not address several critical questions, the most important of which is whether, and to what degree, the international community will continue to fund the Afghan government after 2014. Addressing the Afghan government’s budget needs is to be a major focus of the upcoming Chicago summit. As well it should be: the greatest threat to Afghanistan’s stability in the years after 2014 is not the Taliban, but fracturing among the patronage networks that currently collaborate within the Afghan government. If the Afghan government is to remain cohesive after 2014, international assistance should be structured to bolster its internal coherence, not just sustain the Afghan National Security Forces’ (ANSF) ability to counter the Taliban.

A decade before the United States began its campaign to purge the Taliban and establish a sustainable Afghan government hostile to al-Qaeda, the Soviet Union was watching the government it helped build in Afghanistan crumble into civil war. Despite valid criticisms of the Soviet Union’s brutal counterinsurgency tactics and the mythology surrounding the U.S.-backed Afghan mujahidin, virtually all studies of the Soviet experience in Afghanistan conclude that, “it was not on the battlefield where Soviet strategy failed but in their efforts to influence Afghan social dynamics and to address crucial economic sustainability issues.”^{^[i]} The Soviet–backed Democratic Republic of Afghanistan (DRA) collapsed when the Soviet Union stopped providing financial assistance that could be distributed to and stolen by the various warlord-led patronage networks working with the DRA in the wake of the Soviet withdrawal. Despite many differences between Soviet and the NATO-led International Security Assistance Force (ISAF) counterinsurgency techniques, the current Government of the Islamic Republic of Afghanistan (GIRoA) is weak in many of the same ways as its DRA predecessor. Most importantly, both governments are fundamentally reliant on foreign aid in order to maintain tenuous agreements between patronage networks. When the aid to the DRA disappeared, the government collapsed; in lieu of a major, and long-term, international commitment to Afghanistan’s budget, a similar break-up is likely in the years after 2014.

The dependence on foreign aid to sustain political accommodation constitutes a “corruption paradox” in Afghanistan: the misappropriation of international assistance lubricates the implicit political covenant holding the current Afghan government’s coalition together, but it also advances the failure of that Afghan government in the long-run by preventing the state from developing a viable revenue structure. ISAF Commander General John Allen alluded to that problem during his March 20, 2012 testimony to the House Armed Services Committee, explaining that efforts to counter Afghan corruption at the border, inland customs depots, and airports were necessary to allow the government to, “…recoup substantial amounts of revenue to Afghan government coffers.”^{^[ii]} The United States has reportedly agreed upon a plan to sponsor the ANSF that would require $4.1 billion per year. But that amount represents only a fraction of the Afghan public expenditures necessary to sustain the government and encourage it to develop self-sufficiency.^{^[iii]} Moreover, the focus on the ANSF is designed to counter outside threats to the Afghan state and does not adequately deal with the danger of internal fractures. A simple cost estimate for the entirety of the American strategy in Afghanistan after 2014 suggests it will cost between $13 billion and $25.5 billion annually. Although some of those costs are likely to be shared with allies, U.S. taxpayers will be responsible for funding the vast majority.

If the international community had enforced close controls over aid distribution during the past decade—meaning spending less money more wisely—the Afghan state might have developed more effective revenue mechanisms. But that debate is academic today: the international community did not spend wisely and the Afghan government does not have reliable revenue mechanisms. In the medium- to long-run, fiscal unsustainability and aid dependence is a recipe for state failure and civil war in Afghanistan. That, rather than the Taliban, is the most important threat to the Afghan state, particularly because political consensus favoring assistance to Afghanistan in donor countries is likely to crack when most troops come home in 2014. As they do, domestic pressure in donor countries, including the United States, to reduce the amount of aid to Afghanistan will increase. Aid is likely to fall. In this scenario, the Afghan government, still unable to generate sufficient revenue independently, will not be able to support governance measures outside of the security forces; warlords will have less incentive to tolerate power sharing and the authority of Kabul. Afghanistan will likely return to civil war.

That conclusion is essentially independent of any judgment about the strength of the Taliban, the effectiveness of the Afghan National Security Forces relative to its enemies, or the wisdom of various local security programs, such as the Afghan Local Police. Debates about these issues play an overly large role in policy discourse about Afghanistan. For all of the talk about population-centric counterinsurgency, American strategic discourse has always been enemy-centric. But the Afghan government’s center of gravity is the political coalition among its constituent patronage networks—and the largest threats to that coalition are the longstanding animosities between those networks. Those animosities have been suppressed in the face of ISAF’s troops-backed political pressure and the prospect of co-opting foreign aid pouring into Afghanistan. Those stabilizing pressures will shift dramatically after 2014, which means that NATO’s primary focus should not be on securing a peace agreement between the government and the Taliban after 2014, but designing a strategy for a sustainable agreement between the patronage network leaders inside the Afghan government.

To read the rest of this policy paper click here.

[i]Anton Minkov and Gregory Smolnyec, “Economic Development in Afghanistan During the Soviet Experience in Afghanistan,” Centre for Operational Research and Analysis, August 2007

[ii]John Allen Testimony to House Armed Services Committee March 20, 2012

[iii]Greg Jaffe “U.S., Allies, and Afghan Government Ready Plan for End of Combat Operations in 2014” The Washington Post April 18, 2012

Attachments:

Russian Roulette (12 pp.)

The Sidebar: France's New President and Egypt's Democratic Transition

Fri, 18 May 2012 00:42:19 +0000

On this week's episode of The Sidebar podcast (available below) Leila Hilal discusses Egypt's first ever presidential debate and the emerging democratic process in the Middle East. Jeff Vanke talks about France's new president and the future of the Eurozone. Elizabeth Weingarten hosts.

Also, Leila Hilal spoke with us on camera to preview Egypt's upcoming elections:

Audio Attachment:

The Sidebar: France's new president and Egypt's democratic transition.

An Open Letter to the ITU for Civil Society Involvement in WCIT

Thu, 17 May 2012 20:44:52 +0000

May 17, 2012

To Secretary-General Dr. Hamadoun Touré, the Council Working Group to Prepare for the WCIT-12, and ITU Member States:

The undersigned human rights advocates, academics, freedom of expression groups, and civil society organizations write to express our desire to participate in the preparatory process undertaken for the World Conference on International Telecommunications (WCIT). The current preparatory process lacks the transparency, openness of process, and inclusiveness of all relevant stakeholders that are imperative under commitments made at the World Summit on Information Society (WSIS). We ask that the Secretary-General, the Council Working Group, and Member States work to resolve these process deficiencies in several concrete ways.

The continued success of the information society depends on the full, equal, and meaningful participation of civil society stakeholders (along side the private sector, the academic and technical community, and governments) in the management of information and communications technology, including both technical and public policy issues. Indeed, WSIS outcome documents recognize the need for a multi-stakeholder approach in technical management and policy decision-making for ICTs. The Tunis Agenda for the Information Society urges international organizations “to ensure that all stakeholders, particularly from developing countries, have the opportunity to participate in policy decision-making … and to promote and facilitate such participation.” And such participation depends on transparency and openness of process at every stage of substantive and procedural dialogue.

Yet there has been scant participation by civil society in the Council Working Group’s preparatory process for the WCIT so far, even as media reports indicate that some Member States have proposed amending the International Telecommunication Regulations to address issues that could impact the exercise of human rights in the digital age, including freedom of expression, access to information, and privacy rights. Under the current process, civil society participation is severely limited by restrictions on sharing of preparatory documents, high barriers for ITU membership (including cost), and lack of mechanisms for remote participation in preparatory meetings.

As an important step towards fulfilling WSIS commitments for building a more inclusive information society, the undersigned request that the Secretary-General, the Council Working Group, and Member States:

Remove restrictions on the sharing of WCIT documents and release all preparatory materials, including the Council Working Group’s final report, consolidated reports from all preparatory activity, and proposed revisions to the International Telecommunication Regulations;
Open the preparatory process to meaningful participation by civil society in its own right and without cost at Council Working Group meetings and the WCIT itself, providing formal speaking opportunities and according civil society views an equal weight as those of other stakeholders. Facilitate remote participation to the extent possible; and
For Member States, open public processes at the national level to solicit input on proposed amendments to the International Telecommunication Regulations from all relevant stakeholders, including civil society, and release individual proposals for public debate.

We welcome Secretary-General Touré’s commitment to creating a more inclusive information society and ensuring equitable access to ICT around the world. Collectively and individually, the undersigned human rights advocates, academics, freedom of expression groups, and civil society organizations work to fulfill this vision through a range of national and global institutions and we call for the same opportunity to engage at the WCIT, consistent with WSIS commitments. We urge you to ensure the outcomes of the WCIT and its preparatory process truly represent the common interests of all who have a stake in the future of our information society.

Sincerely,

Access

Article 19

Association for Progressive Communications (APC)

Eduardo Bertoni, Centro de Estudios en Libertad de Expresión y Acceso a la

Información (CELE), Universidad de Palermo, Argentina

Bytes for All, Pakistan

Canadian Internet Policy & Public Interest Clinic (CIPPIC)

Center for Democracy & Technology

Center for Technology and Society (CTS/FGV), Brazil

Centre for Internet & Society (CIS), India

Consumers International

Digitale Gesellschaft e.V.

Egyptian Initiative for Personal Rights

Electronic Frontier Foundation

European Digital Rights

Freedom House

Global Partners & Associates

Global Voices Advocacy

Human Rights in China

Human Rights Watch

Internet Democracy Project, India

Internet Governance Project (IGP)

Kictanet, Kenya

Rebecca MacKinnon

MobileActive Corp

New America Foundation’s Open Technology Institute

ONG Derechos Digitales, Chile

Open Rights Group

Panoptykon Foundation, Poland

Public Knowledge

Reporters sans frontières / Reporters Without Borders

World Press Freedom Committee

What Economists Get Wrong About Science and Technology

Thu, 17 May 2012 20:12:25 +0000

May 17, 2012

Trying to quantify research's effects on the economy always fails.

Konstantin Kakaes

May 17, 2012

Robert Solow, winner of the 1987 Nobel Memorial Prize in Economic Sciences, is famous for, in the recent words of a high-ranking State Department official, “showing that technological innovation was responsible for over 80 percent of economic growth in the United States between 1909 and 1949.” Or as Frank Lichtenberg of Columbia University’s business school has written, “In his seminal 1956 paper, Robert Solow showed that technical progress is necessary for there to be sustained growth in output per hour worked.”

Typically, technical or technological progress isn’t explicitly defined by those invoking Solow, but people take it to mean new gadgets.

However, Solow meant something much broader. On the first page of “Technical Change and the Aggregate Production Function,” the second of his two major papers, he wrote: “I am using the phrase ‘technical change’ as a shorthand expression for any kind of shift in the production function. Thus slowdowns, speedups, improvements in the education of the labor force, and all sorts of things will appear as ‘technical change.’ ” But his willfully inclusive definition tends to be forgotten.

Solow was constructing a simple mathematical model of how economic growth takes place. On one side was output. On the other side was capital and labor. Classical economists going back to Adam Smith and David Ricardo had defined the “production function”—how much stuff you got out of the economy—in terms of capital and labor (as well as land). Solow’s point was that other factors besides capital, labor, and land were important. But he knew his limitations: He wasn’t clear on what those factors were. This is why he defined “technical change” as any kind of shift (the italics are his) in the production function. He wasn’t proving that technology was important, as economists in recent years have taken to saying he did. All Solow was saying is that the sources of economic growth are poorly understood.

The cautionary tale of Solow is emblematic of how economists get science and technology wrong. One economist creates a highly idealized mathematical model. The model’s creator is, as Solow was, honest about its limitations. But it quickly gets passed through the mill and acquires authority by means of citation. A few years after Solow’s paper came out, Kenneth Arrow, another Nobel Prize winner, would write that Solow proved the “overwhelming importance [of technological change in economic growth] relative to capital formation.” It’s a sort of idea laundering: Solow said that we don’t know where growth in economic output comes from and, for want of a better alternative, termed that missing information “technical change.” But his admission of ignorance morphed into a supposed proof that new technologies drive economic growth.

It would take a thick head indeed to believe that new technologies aren’t valuable to the economy. But determining how they are important, and how important they are, gets thorny. That’s because we don’t have access to a counterfactual world in which a given technology was never developed. Even if you buy the methodology behind, say, a McKinsey study of 13 large economies that says the Internet contributed “7 percent of growth from 1995 to 2009 and 11 percent from 2004 to 2009,” that doesn’t mean that in the absence of the Internet, the world’s economy would have grown by 7 percent or 11 percent less. We don’t, and can’t, know what the world’s economy would have looked like had packet-switched data networks not evolved as they did in the last 20 years. (And if the Internet hadn’t emerged as it did in the final few years of the last century, we probably wouldn’t have experienced the dotcom boom-and-bust cycle, which then changes the entire trajectory of the global economy over the last decade and a half.)

To take another example of just how rudimentary economists’ understanding of the importance of technology to the economy is, look at a best-selling book that came out last year, The Great Stagnation, by prominent economist Tyler Cowen. The central argument of The Great Stagnation is that technological progress is slowing down, which will hurt economic growth.

But what is Cowen’s proxy for “technological progress”? He relies almost exclusively on a paper published in Technological Forecasting and Social Change by Jonathan Huebner, a physicist at the Naval Air Warfare Center. Huebner’s paper, “A Possible Declining Trend for Worldwide Innovation” relied on a simple methodology. He scanned a book called The History of Science and Technology: A Browser's Guide to the Great Discoveries, Inventions, and the People Who Made Them From the Dawn of Time to Today. It lists more than 7,000 “discoveries” by the year in which they were made. Huebner divided the number of discoveries made each decade since 1455 by the population of the world in that decade and made a graph. He then concluded that “worldwide innovation” might be declining.

So Cowen’s book—the “the most debated nonfiction book so far this year,” David Brooks wrote a month after it came out—ends up being based on a cursory tallying of discoveries from a high school-level reference book. But one “discovery” is not interchangeable with another. How do you compare the introduction of bifocal eyeglasses to the “invention of the Earth Simulator, a Japanese supercomputer” or Gutenberg’s moveable type to the polymerase chain reaction (all real examples from the book)? If you’re Huebner, or Cowen citing him, you say each counts as “one discovery.”

In his Nobel acceptance speech , Solow warned against such oversimplifciation, lamenting that economists are “trying too hard, pushing too far, asking ever more refined questions of limited data, over-fitting our models and over-interpreting the results.” But then he conceded that such overinterpretation is “probably inevitable and not especially to be regretted.”

He is right about the likely inevitability of this push. But his complacency (“not especially to be regretted”) comes from a comfortable lectern in Sweden. I can’t quantify for you the damage that such overzealousness causes without falling into the very trap I’m pointing out. It’s reasonable to ask the questions economists ask. But when they claim to have measured things that they haven’t—the importance of technology to the economy, the “rate of technological change,” or the bang per federal research buck—and policymakers believe them, it leads to bad policy.

Take the case of STAR METRICS, an effort by the Obama administration to “document the outcomes of science investments to the public”. STAR METRICS uses things like counting patents or how often a scientific paper has been cited to measure “the impact of federal science investment on scientific knowledge.” It’s easy to measure how many times a scientific paper has been cited. But make this of major bureaucratic importance, and you’ll get researchers citing things for the sake of citing them.

The notion that something is unquantifiable is alien to the mindset of the modern economist. Tell them it’s not quantifiable, and they will hear that it has not been quantified yet. This mistake matters, because economists and their business-school colleagues are very influential in the formulation of public policy. If economists rather than biologists decide what is good biology through supposedly quantitative, objective evaluations, you get worse biology. If economists decide what makes good physics, or good chemistry, you get worse physics, and worse chemistry. If you believe, as I do, that scientific progress, broadly speaking, is good for society, then making economists the arbiters of what is and isn’t useful ends up hurting everybody.

The greatest irony is that economists are ultimately no different from any other academics. Their argument for saying that we should give more money to study the economics of science is pretty much: “Trust us, what we’re doing is useful.” This is precisely the same argument with which they ding the physicists and biologists.

So really, what we need is to study the economics of the economics of science. Of course to know just how useful this is, we’ll need an economics of the economics of the economics of science. Where does it end?