Saturday, August 28, 2010

The $100 Million Hawkeyes' Football Team

August 28, 2010, 11:00 a.m.

Hawks: "How Do I Love Thee? Let Me Count the Dollars"
-- with apologies to Elizabeth Barrett Browning
(bought to you by*)

The Iowa City/Coralville Area Convention and Visitors Bureau says the Hawkeyes' Football Team is about to bring $100 million to Johnson County this fall. Emily Schettler, "It's true: Hawkeyes are worth millions," Iowa City Press-Citizen, August 28, 2010 ("The University of Iowa's home football season brings more than $100 million into the Johnson County community . . .."). [The story is reproduced in full at the end of this blog entry.] For another, very similar story two days later, see Max Freund, "Football Season Brings Millions to Johnson County," The Daily Iowan, August 30, 2010.

Really? $100 million?

Now don't get me wrong. Clearly, the University of Iowa with its academic programs, professional colleges, research and entrepreneurial endeavors, UIHC (the largest employer in Eastern Iowa), and entertainment venues (including the athletic programs), is a major economic engine throughout the midwest, Iowa, Eastern Iowa and Johnson County generally, and Iowa City in particular.

But a precise dollar figure on the contribution from seven football games, especially a prediction based on a survey of 465 people during one weekend in 2009, has to be suspect.

Make no mistake, the University of Iowa's football program has a lot going for it. We have a good team, decades of great tradition, one of the nation's top coaches (collegiate or professional), sold-out crowds of loyal and generous fans, and an enviable cash-flow. Moreover, it doesn't hurt that the Hawkeyes don't have to compete for fans with an Iowa-based professional football team. And this should be another good year for Iowa.

But precisely $100 million?

I acknowledge that the Press-Citizen's story does not contain the details of the research methodology, those details are not otherwise known to me, and that some of the potential problems I see may have actually been taken into account by the researchers.

However, some of the concerns this study raises in my mind seem to me almost impossible of precise resolution -- problems of "but-for," "incremental increase," and "blend."

For those surveyed, the study examined expenditures for "food, transportation, entertainment and retail," as well as presumably hotel and restaurant costs. From the 465 persons surveyed (13 percent of whom did not attend the game, notwithstanding the fact the only folks surveyed were outside Kinnick, on the "Hawkeye Express" train to the stadium, or in hotel lobbies) it was projected that 51,000 persons came into Johnson County that weekend (5100 of whom were from out of state).

For starters, presumably the only sales that can fairly be attributed to football would be those above and beyond those that would have occurred without a football game. What is the average Iowa City/Coralville revenue for (a) all restaurants, (b) hotels/motels, (c) retail (and (d) gasoline, if you want) for all Friday-Saturday-Sunday weekends from September through November -- excluding the weekends when there are home football games? What is the average during weekends when there are football games? It is that difference, that "incremental increase," that is relevant. Otherwise you're counting revenue that would have gone to local businesses even without the games.

Second, how much of that incremental income would never have been earned "but for" the football game, and how much is merely "time-shifting"? Last time I checked, Coralridge Mall was doing about $100 million a year. Much of that retail business comes from folks who live in neighboring counties. If they're going to be shopping in Coralville regardless, and happen to do some of that shopping during a football weekend (with or without attending the game) they've contributed to increased retail income when there was a football game in town, that's true; but they have not contributed more income to merchants for the year in question than they would have contributed anyway without that coincidence. It's not "but-for" incremental income.

Similarly, local residents who regularly eat in restaurants from time to time may choose to go out to eat during a football weekend -- but then, having done so, become less likely to eat out again the following week, when they might otherwise have done so; another example of "time shifting."

The same thing goes for fans who have friends in Iowa City, or children attending the University, or hospital visits to make, who would be coming to Iowa City in any event, but time some of those visits with football weekends. For all I know, business meetings or conferences that would have been held in Iowa City at some time anyway may be scheduled to include a football game. The law school ties in football games with some of its Continuing Legal Education programs for lawyers.

Even if the expenditure is not mere time-shifting, and it meets the "but-for" test, in the sense that the game contributed to the attendance in Iowa City, there may have been other "but-for" factors as well -- without which the trip, attendance at the game, and expenditures, would not have occurred.

The advocates of "attractions" of various kinds -- the venue for a World's Fair, Olympics, Superbowl Game, or indoor rain forest in a corn field -- are notoriously overly optimistic in their predictions of economic value, often by as much as 30-fold beyond reality.

Bottom line? Clearly, the Hawkeye football season contributes to the Johnson County economy. If there were a way to define what we mean by "contribute to the economy," how much of that contribution is attributable to the game, and then to measure that contribution precisely, I have no doubt it would be in the millions of dollars. But there's not.

So, enjoy the home games coming up. Spend some money. But don't expect anybody to be counting it precisely.

Here's the story:

Emily Schettler, "It's true: Hawkeyes are worth millions," Iowa City Press-Citizen, August 28, 2010

The University of Iowa's home football season brings more than $100 million into the Johnson County community, according to a study released Friday by the Iowa City/Coralville Area Convention and Visitors Bureau.

The Visitors Bureau partnered with a UI graduate class to perform the study, which was conducted Nov. 6-7, 2009, when the Hawkeyes played Northwestern.

Josh Schamberger, president of the Iowa City/Coralville CVB, said the numbers are encouraging but not surprising.

"I honestly believe this isn't a surprise to area residents," Schamberger said. "Businesses, organizations, hoteliers, grocers, all of these retail operations very clearly know the economic impact of an Iowa football home season."

The study included data from 465 surveys distributed to randomly selected fans near Kinnick Stadium, riding the Hawkeye Express and in the lobby of five area hotels.

In addition to asking why people were visiting, whether they were staying overnight and how many people were in their party, the survey asked people to detail their expenditures on things like food, transportation, entertainment and retail.

The study found that the Northwestern game attracted more than 51,000 visitors to the county, of which about 10 percent came from out of state, while those who stayed overnight spent an average of $944 while they were here.

Thirteen percent of those who participated said they were not attending the game but were in town to tailgate or go shopping.

Rick Klatt, associate director of external affairs at UI, said the results provided data for what many in the community already assumed.

"We know that the seven home football weekends are incredibly important to our business community," Klatt said. "It just confirms what our intuition has always been. These are important events to this community. These events require literally hundreds of people to be involved to successfully stage them.

"It goes way beyond our coaching staff and student-athletes."

Schamberger said the Visitors Bureau is planning to survey fans on two game weekends this year: against Ball State on Sept. 25 and Ohio State on Nov. 20. He said the goal is to identify the economic impact of a conference game weekend versus a non-conference game weekend.

"This fall, I would expect the weekend that has the least economic impact, and we're still talking millions and millions of dollars, would be probably Ball State," Schamberger said.

He expects fans of conference teams, including Penn State, Ohio State and Wisconsin, to contribute considerably.

"(Big Ten) teams travel just as well as Iowa does to their stadiums," he said. "Those ticket blocks are automatically going to fill our hotels."

Schamberger said there's a likely connection between the team's success and its impact on the local economy.

"I wouldn't think there's probably any question that a successful football program has a direct correlation with the impact our community receives," Schamberger said.

Klatt agreed that excitement surrounding this year's team could boost the number of fans and the amount of money they spend in Iowa City even more.

"I think it's fair to say, given the excitement and anticipation for this football season, it's possible this number might grow," he said.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #

Thursday, August 26, 2010

First Things First: School Board Governance

August 26, 2010, 10:00 a.m.

Iowa City School Board Hires Governance Consultant
(bought to you by*)

The School Board (ICCSD) has announced it's going to bring in a consultant (a practice it regularly uses, most recently with drawing District boundaries and hiring a new Superintendent) to help it come up with some notion of "governance." Gregg Hennigan, "Iowa City school board may hire ‘governance’ consultant," The Gazette, August 20, 2010.

My hat's off to them, and our new Superintendent, Steve Murley, for displaying the leadership to undertake this always-ongoing "Job One," extraordinarily difficult and time consuming, but absolutely essential task.

I have written at length on this subject, during my service on the Board and since, and won't repeat all that here. However, recently a blog entry of mine from a year ago has been receiving a lot of hits. The viewership may have something do with the School Board's new effort. It was written about the Iowa City City Council's difficulties with their City Manager. "River City's Problem: Council-Manager Governance; The Necessity of Governance Theory and Practice," April 18, 2009. Here are its concluding paragraphs that someone may find relevant to the Board's current undertaking:
Most of us enter into our roles as members of corporate or non-profit boards, multi-member public bodies (such as school boards or regulatory commissions) with some notion of substance (such as "education" in the case of a school board or the Board of Regents, or a city government's functions in the case of a city council) but little to no thought about governance process.

It's something the group has to perceive as an individual and group benefit, something each member wants to do. Otherwise it won't work. Carver has walked away from what would otherwise have been very lucrative work sessions once it became obvious that there was not that kind of commitment on the part of every member of the group. (Speaking of which, there's no need to hire Carver; the school board went through the process all on its own, relying on the books.)

Thinking through what that process should be, understanding and implementing a "governance" model (there are others besides Carver's), are among the most difficult jobs a city council member will ever undertake -- and given their responsibilities that's saying a lot. It takes individual study, research, hours of analytical thought and hopefully writing, the kind that causes little drops of blood to form on your forehead and drop onto the keyboard, before you are even ready to begin the group's discussion, agreement, and drafting that can produce your own specific application of basic governance principles. Although the process can be facilitated by an outsider, the end product is not something that can be delegated to a consultant or to staff. It has to be done by each individual council member.

No wonder most city councils and boards of all kinds aren't enthusiastic about undertaking such a task.

But there's a word for those who do. They are called "successful."

And their city managers tend to stay on the job for more than 11 months.
Good luck, folks. I'll be watching with interest -- and hopefully, in the end, with admiration.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #

Sunday, August 22, 2010

Iraq: 'Mission Accomplished'? Hardly

August 22, 2010, 10:08 a.m.

Private Contractors and Public Credit Cards
(bought to you by*)

I know that even a successful war against Iraq will require a US occupation of undetermined length, at undetermined cost, with undetermined consequences. I know that an invasion of Iraq without a clear rationale and without strong international support will only fan the flames of the Middle East, and encourage the worst, rather than best, impulses of the Arab world, and strengthen the recruitment arm of Al Qaeda. I am not opposed to all wars. I'm opposed to dumb wars.
Who said that? A state senator in the Illinois legislature, eight short years ago. Barack Obama, "Remarks of Illinois State Senator Barack Obama Against Going to War With Iraq," October 2, 2002.

These were concerns shared by many Americans at the time, including some military leaders. I was among them; see, e.g., "Ten Questions for Bush Before War," The Daily Iowan, February 4, 2003, p. 6A; "War in Iraq: The Military Objections," International Law Talks, University of Iowa College of Law, February 27, 2003; Nicholas Johnson, "Between Iraq and a Hard Place," Iowa City Press-Citizen, August 17, 2002, p. 11A; "Military Industrial Media Complex; Why Did the Media Take Us to War?" March 19, 2008; and, more recently, "America Needs a War Tax; War on the Cheap is the Most Expensive," February 9, 2010; "Why Are We in Afghanistan . . . and how do we get out?" July 2, 2010.

Last week, now President Obama emailed his list, under the heading "Ending the War in Iraq," "Shortly after taking office, I put forward a plan to end the war in Iraq responsibly. Today, I'm pleased to report that . . . our combat mission will end this month . . . [a] milestone in the Iraq War . . .." ">Katelyn Sabochik, "The White House Blog: Ending the War in Iraq," Aug. 18, 2010.

Also last week, while fund raising in Ohio, he said “We are keeping the promise I made when I began my campaign for the presidency: by the end of this month, we will have removed 100,000 troops from Iraq, and our combat mission will be over in Iraq.” Peter Baker, "As Mission Shifts in Iraq, Risks Linger for Obama," New York Times, Aug. 22, 2010, p. A1.

As Baker explains, "The symbolism of the departing troops that played out on network television masked the more complex reality on the ground. Even as the last designated combat forces leave and the mission formally changes on Aug. 31 to a support role, 50,000 American 'advise and assist' troops will remain in the country for 16 months more, still in harm’s way and still armed for combat if necessary." Ibid.

He's right. Obama's wrong. This is not the end of our soldiers' "combat mission." It is only word play to say that 50,000 armed American military personnel are not "combat forces." They are embedded with Iraqi security forces, they have been trained to do battle, they are in a war zone rife with suicide bombers, rockets, IEDs, and the other weapons that have produced over 4000 dead and multiples more wounded American soldiers. They will have to, at a minimum, fire when fired upon and take other action in self-defense.

As Baker quotes the Center for Strategic and International Studies' military specialist, Anthony H. Cordesman, as saying, “The Iraq war is not over and it is not ‘won.’ In fact, it is at as critical a stage as at any time since 2003.”

The Iraq War will end up costing something more in the trillions of dollars than the millions or billions, once the long term care costs for veterans and other externalities are finally totaled up and included. And this, of course, says nothing about the opportunity costs -- what benefits those dollars could have produced if spent domestically (or even on international projects with greater return on the dollar).

Moreover, aside from the troops and their families, who have undergone great hardship and pain, this was a war without pain or sacrifice. After 9/11 President Bush suggested we all "go shopping." Instead of a war tax, the rich got tax breaks. "America Needs a War Tax; War on the Cheap is the Most Expensive," February 9, 2010. During WWII we sold ourselves "war bonds." This time we used our national credit card to pay for this war, and looked to the Chinese and others willing to buy the bonds that would enable us to make our monthly credit card payments. We've left it to our grandchildren to figure out what to do when those bonds come due. There was no Selective Service "draft" of our young sons and daughters. No one went to war who hadn't volunteered to do so. There was no need for the massive, anti-war student protests that accompanied the Viet Nam war. And the American mainstream media seemed more than willing to switch from the role of confrontational journalists to macho cheerleaders for war.

But there's been another major omission from most of the media's coverage of what the White House has called "Ending the War in Iraq."

Three years ago, the L.A. Times' T. Christian Miller wrote,
The number of U.S.-paid private contractors in Iraq now exceeds that of American combat troops, newly released figures show . . ..

More than 180,000 civilians . . . are working in Iraq under U.S. contracts, according to State and Defense department figures obtained by the Los Angeles Times. . . .

The total number of private contractors, far higher than previously reported, shows how heavily the Bush administration has relied on corporations to carry out the occupation of Iraq . . ..

"These numbers are big," said Peter Singer, a Brookings Institution scholar who has written on military contracting. "This is not the coalition of the willing. It's the coalition of the billing."
T. Christian Miller, "Contractors outnumber troops in Iraq; The figure, higher than reported earlier, doesn't include security firms. Critics say the issue is accountability," Los Angeles Times, July 4, 2007.

Yes, these are old numbers. (I could not, quickly, find more current data.) As the number of "combat troops" have declined presumably the number of contract civilians have as well. What seems certain, however, is that the numbers involved, and costs, of the military's outsourcing of war remain both significant, and far in excess of the percentages during World War II or Viet Nam. Whether it is still more than the number of troops is not decisive to that conclusion.

Miller continues,
But there are also signs that even those mounting numbers may not capture the full picture. Private security contractors, who are hired to protect government officials and buildings, were not fully counted in the survey, according to industry and government officials.

Continuing uncertainty over the numbers of armed contractors drew special criticism from military experts.

"We don't have control of all the coalition guns in Iraq. That's dangerous for our country," said William Nash, a retired Army general and reconstruction expert. The Pentagon "is hiring guns. You can rationalize it all you want, but that's obscene."

Although private companies have played a role in conflicts since the American Revolution, the U.S. has relied more on contractors in Iraq than in any other war, according to military experts.

Contractors perform functions including construction, security and weapons system maintenance. . . .

[C]ritics worry that troops and their missions could be jeopardized if contractors, functioning outside the military's command and control, refuse to make deliveries of vital supplies under fire.

At one point in 2004, for example, U.S. forces were put on food rations when drivers balked at taking supplies into a combat zone.

Adding an element of potential confusion, no single agency keeps track of the number or location of contractors. . . .

[T]he U.S. Central Command began a census last year of the number of contractors . . . [but U.S. military officials acknowledged that the census did not include other government agencies, including the U.S. Agency for International Development and the State Department. . . .

The companies with the largest number of employees are foreign firms in the Middle East that subcontract to KBR, the Houston-based oil services company, according to the Central Command database. KBR, once a subsidiary of Halliburton Co., provides logistics support to troops, the single largest contract in Iraq. . . .

Other large employers of Americans in Iraq include New York-based L-3 Communications, which holds a contract to provide translators to troops, and ITT Corp., a New York engineering and technology firm.

The most controversial contractors are those working for private security companies, including Blackwater, Triple Canopy and Erinys. . . .

[S]ome of the sharpest criticism [is] from military policy experts who say their jobs should be done by the military. On several occasions, heavily armed private contractors have engaged in firefights when attacked by Iraqi insurgents.

Others worry that the private security contractors lack accountability. Although scores of troops have been prosecuted for serious crimes, only a handful of private security contractors have faced legal charges. . . .

The Times identified 21 security companies in the Central Command database, deploying 10,800 men.

However, the Defense Department's Motsek, who monitors contractors, said the Pentagon estimated the total was 6,000.

Both figures are far below the private security industry's own estimate of about 30,000 private security contractors . . ..
A few months earlier, the Washington Post reported:
The survey [of] companies operating under U.S. government contracts, is significantly higher and wider in scope than the Pentagon's only previous estimate, which said there were 25,000 security contractors in the country.

It is also 10 times the estimated number of contractors that deployed during the Persian Gulf War in 1991, reflecting the Pentagon's growing post-Cold War reliance on contractors for such jobs as providing security, interrogating prisoners, cooking meals, fixing equipment and constructing bases that were once reserved for soldiers. . . .

Kellogg, Brown and Root, one of the largest contractors in Iraq, said . . . it has more than 50,000 employees and subcontractors working in Iraq, Afghanistan and Kuwait. . . .

The Pentagon's latest estimate "further demonstrates the need for Congress to finally engage in responsible, serious and aggressive oversight over the questionable and growing U.S. practice of private military contracting," said Rep. Janice D. Schakowsky (D-Ill.), who has been critical of the military's reliance on contractors. . . .

Central Command, which conducted the census, said [its] . . . figures do not include subcontractors, which could substantially grow the figure. . . .

[C]omplexities and questions [have bee]raised by the large numbers of civilians who have flooded into Iraq to work. With few industry standards, the military and contractors have sometimes lacked coordination, resulting in friendly fire incidents . . ..

"It takes a great deal of vigilance on the part of the military commander to ensure contractor compliance," said William L. Nash, a retired Army general and a senior fellow at the Council on Foreign Relations. "If you're trying to win hearts and minds and the contractor is driving 90 miles per hour through the streets and running over kids, that's not helping the image of the American army. The Iraqis aren't going to distinguish between a contractor and a soldier."
Renae Merle, "Census Counts 100,000 Contractors in Iraq; Civilian Number, Duties Are Issues," Washington Post, December 5, 2006.

Almost totally hidden from view by the White House, Congress, Pentagon, and mainstream media, has been the treatment the members of our very substantial mercenary army. T. Christian Miller, "Contractors in Iraq Are Hidden Casualties of War," Los Angeles Times, Oct. 6, 2010, available from Pro Publica. For links to many more related stories see Pro Publica's Web site for the series.
Nearly 1,600 civilian workers -- both Americans and foreign nationals -- have died in the two war zones. Thousands more have been injured. (More than 5,200 U.S. service members have been killed and 35,000 wounded.)

Many of the civilians have come home as military veterans in all but name, sometimes with lifelong disabilities but without the support network available to returning troops.

There are no veterans' halls for civilian workers, no Gold Star Wives, no military hospitals. Politicians pay little attention to their problems, and the military has not publicized their contributions.
"Mission Accomplished"? "Ending the War in Iraq? Hardly. And there is, in fact, still no end in sight -- let alone the prospect of any U.S. benefits from this "invasion of choice" in exchange for the cost in lives and treasure.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
# # #

Saturday, August 14, 2010

Goldman, Sachs and Shearer

August 14, 2010, 7:45 a.m.

Given the recent exceptional popularity of "Living Outside the Box; From Thoreau to Ferentz," August 9, 2010, if that's the blog entry you're looking for you can find it here.

Entertainment, Social Commentary and Public Policy
(bought to you by*)

Harry Shearer is one of those guys in Hollywood who has excelled at virtually every form of creative endeavor -- with the possible exception of re-painting the Sistine Chapel.

The fulsome coverage of his career in Wikipedia describes him as "an American actor, comedian, writer, voice artist, musician, author and radio host." That scarcely does his creative and prolific career justice, but it does give you a simplistic sense of its variety and reach. "Harry Shearer," And see his Web site.

Among other things, he is a sensitive observer, and critic, of the American scene. As such, he is a contributor to the hundreds of years of involvement of entertainment in general, and music in particular, in the cause of social commentary and "activism" -- which is just another word for "democracy." The Sixties -- both the 1860s and the 1960s have been such times, with the hidden messages in Spirituals, and less well-disguised approach of the "Smothers Brothers Comedy Hour" in the 1960s, John Stewart's "Daily Show" today, and Pete Seeger seemingly having been singing forever.

Another example, provided by Harry Shearer, and all too effectively hidden within his creative outpouring in my view, is a little song he wrote, recorded and released October 6, 2009, about the financial collapse in general and Goldman Sachs in particular. In it, he succeeds in explaining both what was going on, and the attitudes of those engaged in it -- which seem to me to bear at least some similarity to those exhibited in the ten year old movie "Boiler Room" (2000) and 1987 film "Wall Street" (from which the video clip, above, of the Gordon Gekko (Michael Douglas) "greed is good" speech is taken).

The song is not exactly today's news, "more's the pity," and that's a part of my concern. Goldman Sachs' role in the global financial collapse from which we have yet to emerge -- like the BP's pollution of the Gulf of Mexico -- are seen by the corporations involved, as well as the media, as a "public relations" challenge. The solution? (1) Produce and televise some slick commercials proclaiming your sincerity and sorrow, and perhaps pay to underwrite some CPB programming. (I once proposed the best way to fund public broadcasting would be for the Department of Justice Antitrust Division to file more law suits, because every time it filed one the corporate defendant inevitably got its face out there as a "good guy" by funding a PBS or NPR program.) (2) Just wait it out; ultimately the public (and their representatives) will forget about it, having shifted their focus to a more current crisis.

Music, humor, films, and other forms of entertainment can stand and fight that tendency. (I recently watched a "Boiler Room" DVD again.) And Harry Shearer's "Mr. Goldman and Mr. Sachs" lively tune and lyrics keep running through my mind long after I've forgotten exactly what it was the New York Times' stories and editorials detailed about the firm's abuses.

The song is available from, iTunes and Amazon for 99 cents, and I recommend you give it a listen.

Its energized beat and bouncy and irreverent delivery can't be communicated by the lyrics alone. But here they are anyway, to give you a sense of the message. [If Harry Shearer wants me to remove them from this blog entry I will, of course, do so. But with no advertising on my blog, I have nothing to gain by making them available, and anyone who was a potential purchaser of the song before should be more, rather than less, likely to be so now. And if you find, and can correct, any errors in my transcription please put them in a comment on this blog entry.]

So here it is, . . .

"Mr. Goldman and Mr. Sachs"
Harry Shearer

When Mr. Goldman met Mr. Sachs
Business ran on railroad tracks
The world was simpler, you can't forget
When Mr. Sachs and Goldman met

Said Mr. Goldman, "For years and years,
Our guys have got the most between the ears"
Said Mr. Sachs, "Let's unhook some reigns,
And find new ways to profit off our traders' brains"

Spinning gold out of flax,
Mr. Goldman and Mr. Sachs

Spinning gold out of flax,
Mr. Goldman and Mr. Sachs

"Up to the Clintons," says Sachs with glee,
"Our former chief now runs the Treasury"
Slapped Mr. Goldman to Mr. Sachs,
"Everything's OK, we can relax"

"We're blowing bubbles," Mr. Goldman crowed,
"We making money out of money owed"
"On Wall Street our names should be up on plaques,"
Bubbled Mr. Goldman to Mr. Sachs

Balls so big they stretched the slacks
Of Mr. Goldman and Mr. Sachs

Balls so big they stretched the slacks
Of Mr. Goldman and Mr. Sachs

"The century's turning," Mr. Sachs opined,
"Our new kind of trains boggle the mind"
Bragged Mr. Goldman with a toss of his head,
"One of our guys runs the New York Fed"

Noted Mr. Sachs as the market soared,
"We're totally wired in each department and board"
"We regulate ourselves, the wind's at our backs,"
Said the jolly Mr. Goldman to a blithe Mr. Sachs

Their regulators are really claques,
For Mr. Goldman and Mr. Sachs

Their regulators are really claques,
For Mr. Goldman and Mr. Sachs

Said Mr. Goldman to Mr. Sachs,
"This sly little system is showing some cracks"
Mr. Sachs to Mr. Goldman said,
"We got it covered, go back to bed"

The hustle’s urbane Mr. Sachs recalled,
"We may get a haircut, but we won't go bald"
"Any bailout move will be comfy and lax,"
Mr. Goldman was reassured by Mr. Sachs

"Bear Stearns went down," Mr. Sachs told his friend,
"And Lehman Brothers met a harsher end"
"Merrill Lynch was sold off by a fax,"
A dour Mr. Goldman told Mr. Sachs

"It's time," Mr. Goldman said, "to pull some rank"
So presto, said Mr. Sachs, "We'll become a bank"
"We'll be covered by the payers of tax,"
Exhaulted Mr. Goldman to Mr. Sachs

Mr. Sachs explained, "We're insured by AIG"
Mr. Goldman responded, "That's fine with me"
"Our risky bets will be paid off in full,"
Said Mr. Goldman, more than ever a raging bull

"Unemployment is rising," Mr. Goldman observes
But their partnership is still riding on nerves
"Profits in the billions, ignore the attacks,"
Says a flush Mr. Goldman to a flush Mr. Sachs

Spinning gold out of flax
Mr. Goldman and Mr. Sachs

Spinning gold out of flax
Mr. Goldman and Mr. Sachs

Spinning gold out of flax
Mr. Goldman and Mr. Sachs

Spinning gold out of flax
Mr. Goldman and Mr. Sachs

Spinning gold out of flax
Mr. Goldman and Mr. Sachs
And now to return to what some will consider the more mundane approach to economics policy, consider these excerpts -- and the column in its entirety: Froma Harrop, "Regulation Made Canada Fat and Happy,", August 12, 2010 (copyright by the Providence Journal and reprinted in numerous newspapers around the country):

Suppose the U.S. government had posted a budget surplus in 12 of the past 13 years. Suppose not a single major American financial institution had failed or needed a government bailout. Suppose the U.S. economy grew at an annual rate of 6.1 percent in the first quarter of this year, rather than at 2.7 percent.

Wouldn't that make you happy?

These cheering economic indicators happen to be reality in Canada. They did not come about because Canadians are more virtuous or they don't have subprime mortgages (they do) or they didn't keep interest rates very low (their rates were much like ours). What Canada had was a civic culture that wanted government to regulate financial activity.

What we have is an elite willing to risk everyone else's economic security to enable a few hotshots to win big at the casino of recklessness and fraud — while maintaining a variety of taxpayer backstops to reduce their risks. The joint never gets closed, also thanks to the large numbers of ordinary citizens trained to holler "socialism" every time the government tries to set a ground rule. A satanic belief in the rightness of free markets to punish the unsophisticated almost halted the creation of a Consumer Financial Protection Bureau. . . .

So how are Canadian businesses doing these days relative to ours? It's true that the Standard & Poor's index of 500 large U.S. companies has done pretty well this year. But the Toronto exchange's index of large-cap Canadian stocks did 27 percent better.

Periodic booms and busts don't have to be Americans' fate. Some people get very rich off them. But for ordinary folk, slow and steady wins the race. Support for letting government install some speed bumps to enhance their financial stability has left Canadians fat and happy. We could live the same way.
As we reflect upon Wall Street's role in our global economic collapse we have options: we can sing about it, laugh about it, cry about it, or read and write public policy analyses and essays. Unfortunately (to return to singing about it), as in "you can't win, you can't break even, and you can't get out of the game," Simon and Garfunkel clarified our situation in "Mrs. Robinson,"
Sitting on a sofa on a Sunday afternoon
Going to the candidates debate
Laugh about it, shout about it
When you've got to choose
Ev'ry way you look at it, you lose
"And that's," as Walter Cronkite used to say, "the way it is, Saturday morning, August 14, 2010" (unless, as Ms. Harrop informs us, you move to Canada). ["Walter Cronkite," ("Cronkite is well known for his departing catchphrase 'And that's the way it is,' followed by the date on which the appearance is aired.")]

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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Monday, August 09, 2010

Living Outside the Box

August 9, 2010, 4:45 p.m.

From Thoreau to Ferentz
(bought to you by*)

What do Henry David Thoreau and Kirk Ferentz have in common?

Well, I guess it's pretty clearly not their looks.

[Photo credit: "Henry David Thoreau,"] In case you're confused, the one on the left is Thoreau. Indeed, as Louisa May Alcott once said of Thoreau's beard, it "will most assuredly deflect amorous advances and preserve the man's virtue in perpetuity." Ibid.

The usually clean shaven Ferentz (on the right), by contrast, Alcott thought quite handsome. [Photo credit: Google Images and Getty Images.]

You may not celebrate this day, as I do, but August 9 is the anniversary of the publication of Henry David Thoreau's famous book, Walden, or Life in the Woods, 156 years ago this year, in 1854.

(To put 1854 in perspective, here's what a map of Iowa City looked like in 1854: [Photo credit: UI Iowa Digital Library.]

Henry David Thoreau headed off to live in the woods around Walden Pond in 1845. He only stayed there for two years, and then spent the next seven writing the book about the prior two.

Although he cut back on physical possessions during his two year experience, I noted that his small cabin, at 150 square feet, was actually a full 10 square feet larger than the "small house" once lived in by the one-time President of the International Small House Society, at 140 square feet (counting the upstairs bedroom).

While at Walden Pond Thoreau did a lot of thinking and writing, including the following insight:
"Our inventions are wont to be pretty toys, which distract our attention from serious things. They are but improved means to an unimproved end, an end which it was already but too easy to arrive at; as railroads lead to Boston or New York. We are in great haste to construct a magnetic telegraph from Maine to Texas; but Maine and Texas, it may be, have nothing important to communicate."
Henry David Thoreau, Walden, or Life in the Woods (1854), p. 34 (Hayes Barton Press).

Nor do the sender and receiver need to be separated by the distance between Maine and Texas to raise questions regarding whether "it may be [they] have nothing important to communicate." After all, a goodly portion of those 2.5 billion text messages Americans exchange every day are between junior high school students in the same school. See, USA Text Message Statistics.

[Photo credit: Smari, "Walden: A Year."] As The Atlantic's Alexis Madrigal has obverved, "In a country where so many gamely adopt the latest new gadget, we need our Thoreaus, not to stop the profusion of technology, but simply to remind us to use them well." Alexis Madrigal, "Thoreau's Walden Is 156 Years Old Today, but Relevant as Ever," The Atlantic, August 9, 2010.

So what is the bond between Thoreau and Ferentz?

It turns out that UI football coach Kirk Ferentz, master of the Big Ten universe, is a follower of Henry David Thoreau -- albeit, in all likelihood, unknowingly. He has as much enthusiasm for the panoply of laptops, netbooks, Kindles, Blackberries, iPhones, texting, iPods, email and tweets of our age as Thoreau had for the telegraph of his age.

Kirk Ferentz is proud not to own a BlackBerry. The Iowa football coach reads but doesn't write e-mails . . ..

"I do read texts," Ferentz said. "If you send me one, I'll read it and I'll call you back." . . .

"I don't like any of that stuff," Ferentz said. "It's not that I dislike it, I just don't have any interest in it, quite frankly. I don't want to get off on a commentary here, but everywhere I look, people have their BlackBerry, and I thoroughly enjoy being away from technology. I still enjoy talking to people and thinking and reading and things like that."

He means holding a book, not a Kindle. . . .

"Iowa has to do things like that just because of our recruiting disadvantages," Ferentz said. "This is just a different form of that as far as I'm concerned. We need to be on the forefront of having a good website and all that jazz. Young people are tuned into that. A nice sidecar to that is a lot of fans like that stuff, so it's good for fan interest, too. But I'm more focused on recruiting."

That's why it's imperative to have a diverse staff, Ferentz said.

"If [Defensive Coordinator] Norm [Parker] and I were in charge of that, we'd be last in the NCAA right now," he said. "You have to have some guys who are current thinkers and a lot of the guys on our staff (are on) Twitter and do all that stuff and that's good, I'm all for it." . . .

"But one of my personal goals still is never to own a BlackBerry, at least not until I retire. I don't want one when I'm coaching. I don't embrace that stuff, but I realize it's important, so I don't have my head in the sand, I don't think."
Andy Hamilton, "Low-tech approach works for Ferentz; Coach OK handing off those duties," Iowa City Press-Citizen, August 6, 2010.

As Henry David Thoreau used to say to his friend Ralph Waldo Emerson, when the two of them would lay back in their lawn chairs and look to the sky, "How about them hawks?"

You can bet if Thoreau and Ferentz were ever able to talk to each other, they'd have something "important to communicate" -- and it wouldn't have been electronically.

In short, Thoreau and Ferentz, both known for "thinking outside the box," also prefer "living outside the box" as well -- the box of Morse code keys, laptops, and other electronics devices that offer us the choice to crawl inside and live a virtual electronics life inside the boxes that hold their magic wires.

But I have a friend who takes it one step further. He wants to check out of the electronic world entirely. This is kind of odd, since he is one of the brightest, most creative, computer geeks I know. He's currently working in one of the most prestigious jobs for guys like that, and well paid for doing so.

Here's the story he sent me yesterday, in which his name has now been changed to "Joe" (not his real name) and the companies he refers to have been changed to "Company A," "Company B" and "Company C."
For years now I've tried to live with as little paper trail as possible. Today the down side of that came back to bite me in the backside.

I have a good job. It pays well and the work is rewarding. However, my employer is absolutely fanatical about credit histories. Every employee gets checked a couple of times a year. Today, one of the HR types came by my office to talk about some "unusual recent activity."

Wait, "recent activity"? How is this possible? I have no bank loans, I have no credit cards.

"I don't know," Frank said. "This wasn't there the last time we checked. Between then and now, your credit reports have gone all One Flew Over the Cuckoo's Nest."

What? How? I've checked my Company A report. It's a blank page. Literally, a blank page.

"Yeah. Company A and Company B both have you as a clean skin. Still have you as one, I mean."

So what's crazy?

"Company C has you … look, they explained it to me and I don't understand. Just call this guy and get it cleared, okay?"

I called . . . to find out what was going on.

Five years ago or so, someone with my name, about twice my age, who formerly lived in State X, and attended University Y, skipped out on a credit card while owing a small amount of money. More than $100, but not so much as to leave me gasping for air.

I explained to the fellow on the other end of the line, the card issuer — a bank I've never heard of before — that yes, I was named that, but everything else was wrong. I've never been to State X, I've never attended University Y, that's not my birthday, and I canceled my credit card in 1999 after paying off the balance.

"Wow. Uh — that's a problem, then, isn't it?"

Sure is. So how do we get all this bad data corrected?

"Well, we're going to talk to Company C, Company A and Company B. We'll look at information from all three. Company C is the one that gave us this information you say is all messed up. If Company A and Company B can give us correct information, then we'll assume it's messed up, we'll cancel this debt and get it off Company C's report."

I don't have any history with Company A or Company B. No records there. Blank page. Clean skin.

"How the hell did you do that?"

No credit cards, no bank loans, no debts, nothing, for seven years.

"WHY the hell did you do that?"

Because I don't like being a record in a giant database!

"So. You say Company C's information is all messed up..."


"... but you don't like being a record in a giant database."


"Which means we have no way to get independent confirmation that this record is wrong."


"Are you beginning to see the problem here?"

Ultimately, I decided to save my sanity and just pay the sum. Fine fine fine fine fine fine fine I'll do it just get this thing off Company C's records.

The fellow was courteous and pleasant. He said he'd call back in half an hour after checking to see if there was anything more he could do. I told him I'd have my checkbook ready when he called.

Half an hour later — "Joe?"

I have my checkbook ready.

"Yeah, there's… a problem."

Another one?

"Yes. Joe, this is really strange, but your account's been turned over to another agency for collection."

It — what — when?!

"In 2008."


"Yes, sir. You need to call them. They can help you."

Wait, wait — if they've been trying to collect for two years, why haven't I ever heard of them?!

"Because they think you live in Missouri."

Let this be a lesson to anyone who has given any thought to living as a clean skin. Having a totally pristine credit history is great, up until the time the database gets messed up.

The computer is always right.
George Orwell was an optimist. No matter how hard you scrub you can't have what "Joe" calls a "clean skin." You can be like President Lyndon Johnson and Coach Ferentz and handle all of your affairs over the phone. But somehow, somewhere, somebody repealed the Fourth Amendment and didn't tell anyone. They know who you are and where you are. As Simon and Garfunkel sang of "Mrs. Robinson," "We'd like to know a little bit about you for our files." But that was over 40 years ago (1967/68). Hard drive capacity has increased as the prices have decreased. That "little bit" has now become "we'd like to know virtually everything about you for our files." "Oh, never mind; I guess we already have it."

Looks like we have more to learn from Thoreau, Ferentz, and "Joe," than how to live on $28 a year (Thoreau), building football teams (Ferentz), and computer security ("Joe").

What they seem to be saying is that, before we forget entirely we need to more frequently experience how to, in Coach Ferentz' words, "still enjoy talking to people and thinking and reading and things like that." We need to remember how to "live outside the box."

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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Thursday, August 05, 2010

To Culver & Branstad: The ' I ' is for 'Infrastructure'

August 5, 2010, 10:00 a.m.

"Jobs" Focus is Misleading Economics and Politics
(bought to you by*)

Iowa's two candidates for Governor -- a former governor vs. the incumbent -- are engaged in a food fight over "jobs": their own, and those of the thousands of unemployed Iowans.

The economic analysis and rhetoric of both of them is misleading at best. As politics, it has been self-defeating for Governor Chet Culver, and has led to a despicable TV commercial from former Governor Terry Branstad.


Human societies have come a long way since the day we came down out of the trees and started chasing, and later growing, our food.

Today we live above a veritable house of cards. Each of those cards is a part of our "infrastructure."

They include roads and bridges, oil and natural gas pipelines, railroads and airports, municipal water and sewerage treatment plants, dams and locks, telephone and Internet networks, and the power grid -- among other things. Some are built and operated by governments, some by public utilities, and some by traditional profit-maximizing corporations.

We don't think much about the air we breath until we can't see through it, our eyes water, we start coughing, or we learn it is contributing to our parents' cancer and our children's asthma.

Similarly, it is seldom that the mass media, elected officials (or you and I) spend much time thinking, talking or writing about our nation's infrastructure until one of those cards collapses.

Remember when the I-35W bridge over the Mississippi River in Minneapolis collapsed? That was one of those cards. It got our attention -- briefly. [Photo credit: Minnesota Department of Transportation]

Bridges last a long time. They don't last forever. They need to be regularly inspected, repaired and replaced. (Three years ago yesterday, TRIP, a national transportation research group, reported that "26 percent of bridges are 'structurally deficient or functionally obsolete.'” John W. Schoen, "U.S. Highways Badly in Need of Repair; Thousands of Bridges Need Rebuilding, But Funding Hasn't Kept Up,", MSNBC, August 3, 2007.)

By now, everyone knows about the damage done to the Gulf of Mexico by BP's oil spill. What we may be less aware of are our dependence upon, and the risks associated with, the underground network of natural gas and oil pipelines that criss-cross our nation and are subject to leaks and explosions.

Only last week this happened near Battle Creek, Michigan. Eric D. Lawrence and Brent Snavely, "Fumes from oil leak creep over Battle Creek," Detroit Free Press, July 27, 2010 ("An estimated 840,000 gallons of oil leaked into a creek Monday that feeds into the [Kalamazoo] river").

Pipelines, like bridges, need to be regularly inspected, repaired and replaced. They too corrode, weaken, and leak. Like BP, Enbridge Energy Partners, the owner and operator of the pipeline, had been warned of the risk of oil leakage. The investigation isn't yet concluded, but it now looks like those warnings -- like those given BP -- were ignored.

"The company that owns the pipeline that leaked thousands of gallons of oil into the Kalamazoo River near here was notified twice this year of potential problems involving old pipe prone to rupturing and an inadequate system for monitoring internal corrosion -- one of a pipeline's biggest threats." Eric D. Lawrence, Christina Hall and Chris Christoff, "Michigan oil spill: Could this have been prevented? Firm notified of potential problems along pipeline," Detroit Free Press, July 29, 2010.

And let's not so quickly forget the 90-year-old Lake Delhi dam that finally gave way last week -- and the others that may soon follow. As the Register later editorialized, "Thirty-one Iowa dams have structural problems or other deficiencies. Nearly all are earthen structures that support small lakes or ponds and, if improvements aren't made, these dams could fail, too, according to state records. The Iowa Department of Natural Resources has classified six of them as 'high hazard,' which means failure may result in loss of life." Editorial, "Public Dollars If There is a Public Benefit," Des Moines Register, August 9, 2010.

There is virtually no end of examples of the infrastructure that is so central to our day-to-day lives, but can cause so much disaster when it goes terribly, terribly wrong. It's the infrastructure that most politicians and corporate CEOs don't want to even think about, let alone build, repair and replace.

What Governor Culver set out to do last year with his horribly misnamed endeavor was to focus attention on Iowa's share of our nation's infrastructure needs, identify the most critical (62% of which are flood-recovery-and-prevention-related), borrow about $857 million (to be paid back with state revenues from the gambling industry), match it with federal and private sources of some $610 million, and start with the shovel-ready projects -- now scheduled for all, and underway in most, of Iowa's 99 counties.

From almost any conceivable vantage point, this was an effort (approved by the Iowa legislature) deserving of statewide applause and commendation.

What Branstad needs to answer is, "What would you do with those fire stations, water treatment plants, libraries, bridges and flood-protection projects that Culver has funded?"

What are the options? You continue to let them rot -- like the bridge in Minneapolis, or the oil pipeline in Michigan -- or you build new and fix what's there. To pay for the projects you either raise taxes or you borrow the money. Given that Iowa is well up in the top 10 states for high credit ratings, and low obligations-per-citizen, borrowing made sense.

Would Branstad ignore all the needs, or just some? If the latter, which projects would he not fund? Would he have preferred to raise taxes rather than issue bonds? Or if he would find the money by cutting public services even further than they've already been cut, what programs would he eliminate and how much would that generate?

What Culver has done is responsible governing; something we should all be thankful for in this age of two dysfunctional major political parties. It may not be as politically appealing as talk about same-sex marriage, abortion, immigration, taxes, and guns, but it's one hell of a lot more important to the present and future of Iowa than any of those evening news sound bites and commercials.


Rather than public projects, we're more used to taxpayers' money being funneled to for-profit corporations in the form of tax breaks, subsidies, bailouts, government contracts, and other nefarious schemes -- all too often in exchange for campaign contributions. It's called "socialism for the rich, and free private enterprise for the poor," or "my profits are mine, my losses are the taxpayers.'" (My reaction: If no one else is willing to put sufficient money into a new project -- not the entrepreneur, his or her family and friends, venture capitalists, banks, pension funds and insurance companies -- it doesn't look to me like a very good investment for the public's money either. What's wrong with "the marketplace" working its will?)

In order to sell such giveaways of public money to the wealthy, they are usually described as "jobs programs."

(As I have often written here, you can't jump-start an economy, 80% driven by consumer spending, by giving money to CEOs. No business person in their right mind is going to hire more employees, to manufacture more products, when they can't sell the inventory they already have to unemployed former consumers. If you really want to pull out of recession you do what FDR did (during his first month in office): You make the government the employer of last resort and put all the unemployed on the federal payroll. They spend their paychecks, demand for consumer goods increases, the private sector starts hiring to make more of those goods, the federal payroll declines, and the recession is over. We are paying an enormous price as a nation for letting our ideological purity regarding "socialism" and thinking that "government is the problem" stand in the way of such an obvious path to prosperity for all.)

Thus, it is understandable why Culver, out of political habit, would call his infrastructure proposal "I-Jobs" -- a jobs program (although even he might have thought to exercise restraint with regard to his early boast that it would create 30,000 jobs).

So now he's in a food fight with Branstad over the numbers -- which range, in various estimates, from 4,000 to his original 30,000. This is a fight Culver cannot possibly win, and which he could have, and should have, avoided.

Here's Branstad's latest commercial.

Forget about the precise numbers. To suggest that you can spend $875 million of public money, plus $600 million in the matching funds it makes possible, on projects in 99 Iowa counties, without creating jobs, in addition to being a dishonorable political assertion is economic lunacy. Of course it has created jobs!

In a nationwide -- indeed a global -- economic recession there will be unemployment. It is, for the most part, unemployment no governor can do anything about. This time around, even the federal government (refusing to create a real federal jobs program) has been unable to do much about it.

To put precise numbers on how many jobs I-Jobs created is mostly smoke and mirrors. You can't get accurate data, and even if you could it's not clear what should be included.

Do you just count the guy running the heavy equipment on the highway construction project? Or do you include the folks manufacturing, transporting, stocking, and selling retail the work clothes he or she buys, or those who work in the supermarket and cafes where the workers get food?

Culver would have been better off never to have even mentioned jobs -- except perhaps as a closing almost after thought: "Oh, yes, and we hope this will all provide a few jobs for those who might otherwise be unemployed."

For more on the issue, see, e.g.:

Iowa Department of Management, Report to the Governor on the I-Jobs Program's Implementation Status, July 26, 2010.

Thomas Beaumont, "Branstad ad exaggerates job losses, economists say," Des Moines Register, August 3, 2010;

Editorial, "Iowa should not regret investing in its future," Des Moines Register, July 31, 2010

"Top five I-JOBS recipients account for 62 percent of the $705 million," Quad-City Times, July 30, 2010 (Johnson $154,668,799; Linn $113,039,675; Polk $101,549,786; Story $40,355,070; Black Hawk $27,983,896);

Editorial, "Value of I-JOBS is flood repair," Quad-City Times, July 31, 2010 ("Follow the money and Gov. Chet Culver’s touted I-JOBS program clearly should be called I-Flood. The top five counties benefiting from I-JOBS are those hit hardest by the 2008 flooding that, frankly, made even our 1993 record-setter look like a big drip. Those five counties won 62 percent of the $705.3 million allocated and borrowed for immediate infrastructure repair and better flood plain management.");

Rob Daniel, "Officials: I-JOBS program has created jobs," Iowa City Press-Citizen, August 3, 2010 ("According to the latest program report, the program has translated into more than $154 million in funding in Johnson County, including $5.76 million to Iowa City to build a new fire station and wastewater treatment plant and $27.1 million to Coralville for flood control along First Avenue.").


* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself.
-- Nicholas Johnson
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