. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
Since last September I have repeatedly been arguing against transfers of massive amounts of taxpayer money to those who created this problem, for reliance upon "the market" (with examples of where and how it has been working even during this crisis), against "trickle down," and for trickle up. (E.g., "There are three groups of people I care about in this mess -- none of which is made up of Wall Street or Main Street bankers. I am concerned about (a) depositors, (b) workers, and (c) homeowners." Nicholas Johnson, "Alternatives to 'The Plan,'" September 28, 2008.)
And speaking of "the marketplace," note the comment in this morning's New York Times about the 90% tax on bonuses that "Several banks are considering refusing to participate in government financial rescue programs if the bill passes, according to a person briefed on the banks’ plans." Carl Hulse and David M. Herszenhorn, "House Approves 90% Tax on Bonuses After Bailouts,"New York Times, March 20, 2009.
Secretary Paulson had passed along an earlier, comparable threat last fall.
There is no positive spin one can put upon those sentiments. (a) If the banks, if the market, will function with or without these bailouts, why are we giving them trillions of dollars of our money? (b) If their executives are so selfish, greedy and unpatriotic that, even though their incomes put them somewhere between the top 2% and top 1/100th of 1% of the nation's wage earners, they would rather see their bank go bankrupt than lose their precious bonus, why would we want to protect them from failure (so long as the depositors are protected by FDIC)?
Much as I continue to hope that Washington knows what it is doing and will eventually succeed and prove me wrong, I must confess to a little sense of vindication this morning [March 20].
Presumably the goal here is to reverse a downward spiral of reduced sales, leading to reduced manufacturing, leading to increased unemployment, leading to a repetition of this further deepening cycle, that has thrown business and consumers alike into a personally rational (even if group irrational) reassessment of their borrow and spend behavior. They want to reduce expenses and debt, use cash rather than credit, save rather than spend. Businesses cut costs by laying off workers; consumers by no longer running up debt, spending money they don't have to buy things they don't need.
As we've discovered with the auto industry, you can't revive an economy through a program of increased automobile sales by putting billions of dollars into the hands of auto executives -- especially those with a proven track record of inability to make cars people want to buy or otherwise run a corporation at a profit. The problem never was a shortage of GM cars coming off the assembly lines, or sitting in dealers' show rooms.
The problem was that there weren't all that many people who wanted to buy them in the best of times. And now, in what is fast becoming the worst of times, the problem is not a lack of opportunity for consumers to take on a hefty increase in their debt load to buy a new car. The problem is that laid off workers are not the only ones who are hunkering down, reapplying the Depression-era wisdom ("Use it up, wear it out, make it do, or do without"), and wisely deciding this is not the time to be taking on more debt.
And if it makes no sense to try to revive the auto economy by giving billions to auto executives, it makes even less sense to try to revive an entire economy by transferring trillions of taxpayer dollars to bankers. Here again, the problem is not that businesses and consumers don't have the opportunity to run up even more debt. The problem is that they have the wisdom not to want to do so, especially at this time.
"Trickle down" didn't work in the best of times, and certainly won't work now.
And I'm not even talking about fairness and equity, "government by campaign contribution," outlandish bonuses, or the near criminality and stupidity of putting these trillions of dollars into the hands of those who, like auto executives, have a demonstrated inability to run a corporation with ethics, common decency and common sense (not to mention long term survival and profit), executives who created the problem through their own greed.
No. Of course those are reasons enough not to be giving them our grandchildren's trillions of dollars. But my point for now is that even the world's best and most honorable bankers couldn't solve this problem with that much money. Trickle down doesn't work. In addition to common sense, intuition, and long history, we now have the lack of results from the most recent six months of trying.
The solution? I won't repeat everything laid out on this blog over the last six months (most of which are linked at the bottom of this entry), except to say that it involves trickle up not trickle down, a focus on the consumer, on 300 million Americans, not 300 thieves in suits, a massive and yet precisely targeted jobs program, mortgage relief for deserving homeowners, immediate health care for all during the downturn (while long term solutions are being crafted), and continued protection for bank depositors (not investors).
If that had been how we'd invested all those trillions given to bankers over the past few months I think we'd be well out of this mess by now.
Meanwhile, on top of everything discussed in this blog entry yesterday, below, there are now a couple of other, equally disgusting revelations.
(1) Apparently taxpayer protection language -- that AIG couldn't be paying millions in bonuses to the guys who created this problem while receiving billions of taxpayer dollars -- was once in Senate and House versions of a bill and then deleted under cover of darkness in conference as a result of Secretary Geithner's pressure on Senator Chris Dodd. Raymond Hernandez and Thomas Kaplan, "Connecticut Senator Draws Voters’ Ire for His Bonus Role,"New York Times, March 20, 2009 ("[AIG's] employees, political action committees and subsidiaries have made campaign contributions of nearly $300,000 to [Senator Chris] Dodd since 1989. . . . [Senator Dodd] finds himself a symbol of the political establishment’s coziness with tainted corporations and a target of populist wrath over their excesses. . . . That change [in the bill] exempted bonuses protected by contracts, like those at American International Group . . . that received billions in federal bailout money. Mr. Dodd said that his staff revised the bill at the urging of Treasury officials . . ..").
Edmund L. Andrews and Jackie Calmes, "Many in Government Knew Weeks Ago About A.I.G. Bonuses,"New York Times, March 20, 2009 ("Interviews with senior Federal Reserve and Treasury officials, as well as members of Congress, leave little doubt that the bonus program was a disaster hiding in plain sight. Mr. Geithner is not the only one who appears not to have understood the populist fury the bonuses would set off. Career staff officials at the Treasury, Fed and Federal Reserve Bank of New York exchanged e-mail messages about the A.I.G. bonus program as early as late February, according to a person familiar with the matter. A.I.G. itself revealed the bonus plan in regulatory filings last September.").
The rationale? The sanctity of contracts. You can't retroactively change an employment contract. Oh, really? Apparently that's a legal principle only applicable to thieves in suits. Auto workers' contracts, and those of millions of other workers across America, have already been changed, with more to come -- contracts regarding wages, health care benefits, and pension funds. It's just one more example of the stench that's accompanied this con game from the beginning.
(2) Apparently Treasury secretaries and other appointees are not the only folks who don't feel they need to pay taxes. A hefty proportion of the corporations receiving billions of taxpayer dollars aren't paying their taxes either.
"[T]he AP reported Thursday [March 19] that 13 firms receiving billions of dollars in federal bailout money owe a total of more than $220 million in unpaid federal taxes. Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece. . . . Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But the Treasury Department did not ask them to turn over their tax records . . .." "House OKs Hefty Tax on AIG Bonuses," PBS Online News Hour, March 19, 2009.
It turns out this is actually only a small part of a much larger problem: "Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released . . . by the Government Accountability Office, the investigative arm of Congress." Linley Browning, "Study Tallies Corporations Not Paying Income Tax,"New York Times, August 12, 2008.
There are some feigned expressions of outrage from Washington, that those who created the problems through personal enrichment are now enriching themselves further with taxpayer-funded multi-million-dollar bonuses, but little in the way of prosecutions, or efforts to get our money back. There are expressions that "we must re-examine and improve our regulatory model so that this never happens again." But we have had this conversation before; this is the happening that is "again;" and the problem is not entirely the model, it is also the people running it -- and few to none of them seem to be being prosecuted either.
Congress has a lot of explaining to do -- after we clean out the lot of them. I've documented before how those who make campaign contributions in the $100,000 to $1,000,000 range generally get something like a 1000-to-2000-to-one return on their "investment" -- for an investment it is, and one that pays much better returns than any on Wall Street. Nicholas Johnson, "Campaigns: You Pay $4 or $4000,"Des Moines Register, July 21, 1996, p. C2.
So it comes as no surprise to me to find out that the financial community has contributed some $5 billion to Congress over the past 10 years in campaign contributions and lobbying expenses. After all, members of Congress and senators are honorable people; they don't take $5 billion from someone and then give them a poke in the eye with a sharp stick -- not if they want another $5 billion over the next 10 years. They behave as they've been behaving; they give Wall Street its $5-to-10 trillion return on its $5 billion investment. See the report, Robert Weissman and James Donahue, "Sold Out: How Wall Street and Washington Betrayed America," Essential Information/Consumer Education Foundation, March 2009, linked from "$5 Billion in Political Contributions Bought Wall Street Freedom from Regulation, Restraint, Report Finds," March 4, 2009, Wall Street Watch.
Nicholas Johnson, "The Story of Stuff," March 16, 2009. And for more detail about what AIG and the bankers did and how they did it see the "Prologue" and "No More for AIG" in Nicholas Johnson, "Bankers as Arsonists," March 3, 2009 ("[Arsonists'] fires are not 'acts of God.' Nor is this economic calamity. Both are the clearly predictable result of reckless and irresponsible behavior by humans. The only difference is that those who deliberately set the woods on fire don't personally profit financially from their acts. These men and women did.").
But it didn't. If anything, yesterday just made it worse.
Of course the $160 million in extra pay for those who brought down AIG and the world's economy with it is outrageous -- as is the role of the past and present administrations in going along with it. So are the expensive corporate gatherings at spas and expensive resorts, the $50 million private jets for executives, and Bernie Madoff's jewelry and yachts.
But all of that day-long ranting and raving by members of congress yesterday is one big shell-and-pea game of diversion. Those AIG bonus payments are less than 1/10th of 1% of the $170 billion taxpayers are in hock to for AIG. That doesn't make the bonus payments any more justified, but it does kind of put them in perspective.
Meanwhile the President, understandably, wanting to get as far from Washington as possible went to California to get some positive vibes and re-creation from "the people," doing what he does best: campaigning at a town meeting. Helene Cooper, "President Takes Campaign for Budget to California,"New York Times, March 19, 2009.
He answered that part. Geithner may have frightened Obama enough to make him leave town, but not enough to reduce the President's professions of "confidence" in him.
The part of the question left unanswered; actually the first part?
What do you have to say about that $100,000 campaign contribution you got from AIG?
Yes, even the President is not free of the questions raised by the $5 billion the financial community contributed to public officials over the past 10 years. (See the "Government by Campaign Contribution" excerpt, above.)
And at another appearance yesterday he almost literally echoed the line quoted in that excerpt, that we should see to it that "this never happens again": "My goal is to make sure that we never put ourselves in this kind of position again." Mary Williams Walsh and David M. Herszenhorn, "AIG Seeking Return of Half of Its Bonuses,"New York Times, March 19, 2009.
Yeah, right; who can argue with that? But isn't it just another diversion? When we focus on future reforms, as when we focus on 1/10th of 1% of the problem, we aren't focusing on what's going on right now!
And what's going on right now is what AIG is doing with that $170 billion. To the extent AIG executives are not entertaining themselves at resorts, and enriching themselves with bonuses, they are essentially flowing through that $170 billion of ours to other members of that vast army of "thieves in suits."
And who might they be? Try Goldman Sachs -- yes, the same Goldman Sachs we've already financed with taxpayer money directly -- now getting our taxpayer money from us indirectly, by way of payments of our money we gave to AIG, to the tune of $8 billion.
And then the Fed, in another burst of great generosity, decided "Oh, what the hell, another day another trillion dollars" -- and I'm no more confident we'll ever find out where this trillion will go than the last, now uncounted, trillions of our money they've already given away. The resulting increases in the prices of gold and oil, and decline in the value of the dollar, gives you a clue as to how the world views this additional step toward inflation. Edmund L. Andrews, "Fed Plans to Inject Another $1 Trillion to Aid the Economy," New York Times, March 19, 2009.
No, I'm afraid yesterday didn't make me feel any better.
Nor will today, as Congress endeavors to redeem itself in our eyes for falling sway to to the $5 billion in campaign contributions and lobbying of the financial industry by passing a special extra tax of 90% on those bonuses. Even if it passes, and even if it's legal, it really is far, far too little too late. Carl Hulse and David M. Herszenhorn, "House Approves 90% Tax on Bonuses After Bailouts,"New York Times, March 20, 2009.
P.S. Congressman Barney Frank said yesterday he wanted to have the names of those who received bonuses, and how much each has returned to the government. AIG CEO Liddy expressed concern of mass assassinations by outraged members of the public were that to be done. Mary Williams Walsh and David M. Herszenhorn, "AIG Seeking Return of Half of Its Bonuses,"New York Times, March 19, 2009. If that proves to be a reasonable concern, rather than fail to reveal anything about this outrage, here's a modest suggestion.
Let's at least start with a list, released to the public and media, with the names redacted and replaced with numbers, along with the title/job description of the individual (or department -- enough to give some idea of what they were paid to do, as narrowly identified as possible without revealing their identity), along with what they did to earn the bonus or "retention" payment, their total salary, benefits, and other perks, the amount of the bonus, and how much has been returned.
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Related Blog Entries on Global Economy and Bailouts
* 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
"The Story of Stuff," the Alternative, Government by Campaign Contribution, and Population Control (brought to you by FromDC2Iowa.blogspot.com*)
Note: Since writing this, a reader posted a comment (see below) taking issue with the accuracy of "The Story of Stuff" video (embedded below). Indeed, "taking issue" is an understatement. He is "appalled" that I am "enthralled" by a video that is "beyond belief" and "so full of patent falsehoods" as to be little more than a "load of neo-Marxist garbage."
The comment was posted here on May 14. By coincidence, the very next evening Bill Moyers led one of his "Journal" segments with an excerpt from that very same "Story of Stuff" video, prior to his interview with the New York Times former science reporter, Daniel Goleman. The Web site for this segment, which contains a link to the entire "Story of Stuff," explains,
"Goleman's latest book is ECOLOGICAL INTELLIGENCE: HOW KNOWING THE HIDDEN IMPACTS OF WHAT WE BUY CAN CHANGE EVERYTHING. The book argues that new information technologies will create 'radical transparency,' allowing us to know the environmental, health, and social consequences of what we buy. As shoppers use point-of-purchase ecological comparisons to guide their purchases, market share will shift to support steady, incremental upgrades in how products are made — changing everything for the better."
The comment on this blog entry does not cite any specific "patent falsehood," nor would I research and respond with any confirming sources of data if it had. I'll leave that to those who, like Goleman, write books rather than blog entries, or research and produce nationally-distributed television programs, like Moyers.
Of course, everyone should make an effort to be as accurate as possible in what they put into a video, such as "The Story of Stuff" -- or the videos they embed in a blog entry, as I have done.
But there is a concept in defamation law that I think is applicable by analogy in this instance. It is referred to as "the sting of the charges." It goes to the question of the "truth" defense. For example, if the plaintiff alleges that he was defamed by the defendant's charge that the plaintiff embezzled "over $100,000 from the bank," because in fact he only embezzled $87,000, the plaintiff can still use the "truth" defense because the inaccuracy did not diminish the fact that "the sting of the charges" (embezzlement of a significant amount) was true.
What "The Story of Stuff" and Goleman and Moyers and perhaps hundreds of others with and without scientific credentials seem to be suggesting is that there are economic, ecological, and epidemiological externalities that flow from our consumer consumption. They take into account the extraction process that obtains the basic natural resources, the manufacturing process, transportation to our stores, and the ultimate disposal of the product and the packaging in which it comes. As the story of these consequences gets around, governmental and personal decisions can better take them into account -- for the benefit of ourselves and future generations.
Debates about details aside, it seems to me "the sting of the charges" is something to which we need pay attention.
-- N.J., May 16, 2009
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A week or so ago I posted a blog entry called, "Don't Buy Stuff," March 6, 2009. It addressed the values of paying cash, my experience doing so with automobiles, and it included the "Saturday Night Live" 2:28-minute sketch entitled "Don't Buy Stuff You Cannot Afford" ["Don't Buy Stuff: The sure-fire way to get out of debt," NBC Saturday Night Live, Season 31, Episode 12, aired February 4, 2006].
If you missed that blog entry you might want to go back and check it out, along with that "Saturday Night Live" sketch.
Meanwhile, today I'd like to continue the theme with a little more in-depth look at "The Story of Stuff."
The Story of Stuff
A week ago Tom Friedman asked, "What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: 'No more.'” Thomas L. Friedman, "The Inflection is Near?"New York Times, March 7, 2009 [hard copy version, March 8, 2009, p. WK12, New York edition]. The entire column is very much worth reading.
His is a profound and fundamental question being asked, and discussed, around the world today as the friends and beneficiaries of bankers and financiers, who are now running Washington, blindly continue on with their multi-trillion-dollar giveaway of our grandchildren's money in a failing effort to reconstruct the capitalist, consumer economy that enabled greed to fuel a drive off the cliff -- and will undoubtedly succeed in doing so again if we merely rebuild what we had before.
"The Story of Stuff" is a video narrated by Annie Leonard and made possible by the Tides Foundation, Funders Workgroup for Sustainable Production and Consumption, and Free Range Studios; see also http://www.storyofstuff.com/. My thanks to Trina L.C. Sonnenberg, TLC Promotions, Internet Marketing Maven, for bringing it to my attention.
The video is suitable for all ages -- and if you're a teacher of a subject as to which it would be relevant (whether K-12 or college) you might want to think about it as a discussion-starter for your class. Although it runs 21:19 I think you'll find it very much worth your time (as a summary of what would otherwise have taken you an entire semester in a classroom!) -- entertaining in its own way as well as educational. It contains occasional observations some might consider ideological -- causing you either to cheer or sneer depending on your orientation -- but they are few and far between and seemed to me mostly just factual.
India: The Alternative
NPR's "Morning Edition" had a segment this morning that provides one illustration of how another country is faring, and why, during this global economic collapse. "Why India's Economy Fares Better Than Others," NPR, Morning Edition, March 16, 2009 ("Steve Inskeep talks with Arvind Subramanian of the Peterson Institute for International Economics about how India [is] . . . significantly less affected than the U.S. and Europe").
It's as if the country's billion people had watched "The Story of Stuff" video and decided to begin practicing its clear implications.
India hasn't had a banking problem because it decided "government is the solution, not the problem," and nationalized all its banks long before our bankers became "thieves in suits."
It hasn't bought into the idea that global trade is good for everybody, and let its companies outsource, go offshore, and otherwise destroy jobs, as we have with NAFTA in the name of increased corporate profit. It only exports about 20% of its production -- comparied to some 40-50% in China -- so it doesn't feel as much hurt when global trade declines.
And why haven't its farmers been hurt economically? Because, for whatever reason, India has bought into the idea ecologists have long been urging upon us: eat locally grown foods. Not only is it a way of supporting the agricultural sector, it also radically cuts back on the economic, energy, and ecological consequences of transporting foods -- often into other agricultural areas, as we do in Iowa.
The result? While the U.S. economy is now going into "negative growth" India's economy, while declining, was 9% growth annually, is now 7%, and has 5% predicted for the future.
None of this is to say that all is wonderful in India -- I presume you've seen the movie "Slumdog Millionaire" -- but it does provide a specific example of what we, too, could do if we would really take the lessons of "The Story of Stuff" to heart.
Government by Campaign Contribution
There are some feigned expressions of outrage from Washington, that those who created the problems through personal enrichment are now enriching themselves further with taxpayer-funded multi-million-dollar bonuses, but little in the way of prosecutions, or efforts to get our money back. There are expressions that "we must re-examine and improve our regulatory model so that this never happens again." But we have had this conversation before; this is the happening that is "again;" and the problem is not entirely the model, it is also the people running it -- and few to none of them seem to be being prosecuted either.
Congress has a lot of explaining to do -- after we clean out the lot of them. I've documented before how those who make campaign contributions in the $100,000 to $1,000,000 range generally get something like a 1000-to-2000-to-one return on their "investment" -- for an investment it is, and one that pays much better returns than any on Wall Street. Nicholas Johnson, "Campaigns: You Pay $4 or $4000,"Des Moines Register, July 21, 1996, p. C2.
So it comes as no surprise to me to find out that the financial community has contributed some $5 billion to Congress over the past 10 years in campaign contributions and lobbying expenses. After all, members of Congress and senators are honorable people; they don't take $5 billion from someone and then give them a poke in the eye with a sharp stick -- not if they want another $5 billion over the next 10 years. They behave as they've been behaving; they give Wall Street its $5-to-10 trillion return on its $5 billion investment. See the report, Robert Weissman and James Donahue, "Sold Out: How Wall Street and Washington Betrayed America," Essential Information/Consumer Education Foundation, March 2009, linked from "$5 Billion in Political Contributions Bought Wall Street Freedom from Regulation, Restraint, Report Finds," March 4, 2009, Wall Street Watch.
And Population Control?
Of course, as my son, Sherman, is constantly reminding everyone -- most recently me, by email, this morning, "It's gotten to the point where I have a hard time listening to the environmentalists and smart growth advocates. Of course I agree with most of their ideas, but I just don't see how a person/group can rant and rave about the many ways in which humans are destroying the Earth yet not even mention population control as a primary part of any solution."
I'd say what he's pointing out is "the elephant in the living room" but for the pathos: one of the many consequences of largely uncontrolled population growth is its impact on endangered species, all wildlife in general, and elephants in particular.
More on "Stuff"
As far back as 1972 I was writing about this stuff, and my stuff, in a book that still enjoys a bit of a cult following, called Test Pattern for Living. It's available as a free download from my Web site, if you're interested.
My son, Gregory, has a more current version of the theme in his new book, Put Your Life on a Diet.
And let us never forget George Carlin, 1937-2008, and his insights about our "stuff." "George Carlin Talks About 'Stuff,'" George Carlin's classic standup routine about the importance in our lives of "stuff" from his appearance at Comic Relief in 1986, from YouTube:
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* 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
Today's blog entry is a reprint of an op ed column of mine in this morning's Gazette.
Don't Fear Fairness Doctrine Nicholas Johnson The Gazette March 13, 2009, p. A4 (brought to you by FromDC2Iowa.blogspot.com*)
For reasons difficult to fathom, some Republicans fear a born-again Fairness Doctrine.
For example, Richard Jacobson, willing to assert his opposition to “fairness,” writes in the March 1 Gazette that Fairness Doctrine advocates are “liberals” who “seek to stifle free speech.”
For the last 30 years, Washington’s Republicans — and Democrats — have been working the horses hard as they drove their buggy toward the mirage of the promised land of their dreams: “marketplace deregulation.” Now they’ve taken that buggy over the inevitable cliff, and the resulting global economic collapse is only one of the costly consequences.
Loss of common-sense media regulation is another.
Iowa’s Herbert Hoover, that great lefty radical, was the secretary of commerce who was asked by the radio industry to please regulate it. Out of Hoover’s “radio conferences” of the 1920s came the broadcasters’ recommendations, enacted as the Radio Act of 1927.
Broadcasters recognized they were being licensed to profit from public property, the airwaves, and that the privilege carried with it a public responsibility. From the beginning, an evolving Fairness Doctrine has been considered a central feature of that responsibility. For 30 years, its application was seldom if ever questioned by the public, broadcasters, FCC, courts or Congress.
When challenged in the Supreme Court in 1969, the court shocked broadcasters by unanimously upholding the doctrine’s constitutionality. (Lower courts subsequently ruled the Federal Communications Commission had the authority to repeal it. The FCC’s deregulation revolution swept away the Fairness Doctrine.)
Misunderstandings about the Fairness Doctrine abound.
There are many reasons it couldn’t have been used to censor, let alone cancel, Rush Limbaugh.
For starters, it didn’t apply to talk show hosts — or any other programmers. They’re not licensed by the FCC. It was only a requirement for overthe-air radio and TV stations’ overall programming.
It didn’t apply to cableonly channels, and certainly not newspapers.
It did not require “fairness.”
It did not require equal time — disparities of 10-to1 might be acceptable.
It did not give any individual a right to air time.
The FCC didn’t monitor programming for violations. It depended on citizen complaints. Few, if any, stations have ever lost a license or suffered serious sanction for a mere fairness violation.
All it forbid, in effect, was the private use of this licensed, community resource as an unrelieved mouthpiece of one-sided propaganda.
In fact, it would be virtually impossible for responsible journalists to violate the Fairness Doctrine. It simply required what they would do anyway: report on at least some “controversial issues of public importance” and, when doing so, present a sampling of views.
That would be required by editors of papers, and news directors of stations — and their owners. Why? It boosts audience numbers and advertising revenues.
The Fairness Doctrine: It’s not just a good idea, it ought to be the law — again. _______________ Nicholas Johnson is a former FCC Commissioner who now teaches at the University of Iowa College of Law.
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* 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
I have written enough, on a variety of subjects, over the years that it is no longer uncommon for me to Google a subject in the course of research and discover I've already written about it in a prior document I'd long since forgotten.
This morning I am indebted to Ed Stone for bringing to my attention a document I helped draft nine years ago that I wished I'd recalled, and included in my blog entry, yesterday. Ed Stone, "Revisit 2000 Long-Range Plan,"Iowa City Press-Citizen, March 10, 2009, p. A9.
One of my efforts as a member of our local school board (1998-2001) was to try to bring some rational analysis to the governance and policy making process of the board itself. (We ended up choosing, studying, and implementing the John Carver model. For more see, Nicholas Johnson, "Board Governance: Theory and Practice.")
As one of a number of consequences of that reconfiguration of Board-Superintendent relations, the Board addressed and ultimately approved the document to which Ed Stone refers -- a document it turns out he (but not I) found on my own Web site! (The Press-Citizen includes excerpts from the document in the hard copy edition, and a link to the entire document in the online edition.)
I have observed over my years in Washington and elsewhere that (a) when civil, intelligent, informed, and independent individuals get together (i.e., persons not representing clients, causes or ideologies), and freely explore, discuss and propose solutions to a public policy challenge, they often (not always, but often) end up coming to consensus, and that (b) when other, similarly constituted groups engage in a similar exercise they will, more often than not, come up with the same (or very similar) consensus as the first group..
So it is when one compares the contents of the "Long Range Planning Process and Parameters" document of 2000 with the objections raised to the Roosevelt demolition plan in 2009 by the small groups reporting to last Saturday's assembled citizens (including the concerns I reported in my blog entry yesterday).
Here is the entirety of the Board's impressively brief "Long Range Planning Process and Parameters" policy and governance document:
Long Range Planning Process and Parameters An ICCSD Board Document Approved April 11, 2000
Long range planning. We want to take advantage of this somewhat unique opportunity to begin an ongoing effort to envision many aspects of the ICCSD five to ten years out, not merely come up with “boundaries” and lines on a map. Many of these options or proposals will have implications for buildings, boundaries and programs; others will not.
Research. We want our decisions, and those of the Superintendent, to be research-based. By this we mean not only the best demographic projections and other District data available, but also the alternatives, experience and best practices reflected in the literature and Internet-published material.
Optimum school size. The Board expressly requests from the Superintendent a research-based report regarding the optimum range of elementary and secondary schools’ enrollment from the standpoint both of cost (schools that are too small) and educational and social values (schools that are too large).
Community communication and concerns. We want to make every effort to minimize unnecessary community concerns during the course of our deliberations and those of the Superintendent. We need the freedom to be able to consider the widest possible range of options while reassuring stakeholders that it is not our intent to implement any option without thorough discussion with the community. As always, the Board and Superintendent welcome public input and will develop a communications plan to ensure that end.
Timing. The Board is looking five to ten years into the future. It recognizes the difficulty of doing so with any precision. But it believes it is in the District’s interest to have such a plan, even if it needs to be revisited and revised every year. It will seek to minimize disruption on District families by notifying the community as far in advance as possible of impending changes. Such advance notice makes planning and transitions easier for everyone.
Board decision-making responsibility. The members of the Board have the ultimate, personal and political responsibility for developing the policy and parameters that will be used to guide the long range and boundary planning process. The Board seeks input from the community and administration, and envisions an ongoing, back-and-forth dialogue and regular revision. It expressly requests the Superintendent to inform the Board, as promptly as possible, if and when he believes a Board-established parameter is seriously flawed, impossible of attainment, or simply unwise. But the policies will be worked out by the Board. It will not merely approve a Superintendent’s recommendation. The decision regarding the determination of boundaries will be that of the Board.
Superintendent’s responsibility. The Superintendent is responsible for completing the long range and boundary planning process. While doing so he will provide the Board with such data and research as it may need for its deliberations. He will keep the Board informed of the progress of the long range and boundary planning process. He is expected to guide the process in accordance with all relevant Board policies and parameters. Prior to implementation he is expected to bring the final plan, including the implementation schedule, to the Board for its approval.
First option: Present Schools. An option that must be considered is the use of existing schools. Any and all other options may also be considered.
The first boundaries option as to which the Board requests input from the Superintendent involves full utilization of the District’s present buildings with no new buildings or major additions. The 2004 projections indicate that some of the east side elementary schools will then be at 40-60% of capacity. Many of the west side elementary schools will be nearer 100% of capacity. One (Wickham) will be at 153% of capacity. (Kirkwood will be at 111%, Coralville at 109%.) What would be the cost – in increased busing expenditures and increased student time on buses – of shifting students from west to east? The Board cannot declare in advance how much such cost is “too much.” But it believes its responsibility to property tax payers is such that, if the additional cost is not too much, such a solution is preferable to a multi-million-dollar construction program for new school buildings while existing buildings remain underutilized.
The Board encourages the Superintendent to examine the feasibility of options such as (but not limited to) magnet schools, middle schools, age-grouped schools (i.e., all-kindergarten or K-3 schools), year-round schools, increased job shadowing or independent research (to reduce high school crowding), to use existing facilities in the most cost effective manner.
Second option: New buildings, building remodeling and expansion. Another option is to remodel and expand the District's present schools. (Of course, some remodeling may be a part of long range planning even if not necessary to reduce overcrowding.) The Board requests from the Superintendent in this connection (in addition to the “optimum school size,” above) information regarding the capacity, present and projected enrollment of each school, along with information regarding the amount of available land for expansion. It will then consider a parameter that will produce the maximum benefit (in terms of reduced crowding, and optimum school size) at the least cost (in terms of quantity of construction, adverse impact on families, and lengthened bus rides).
New buildings. Only if the present buildings are inadequate – with or without remodeling and expansion – will the Board consider the option of building a new schools. “Inadequate” includes the conclusion that the use of present buildings will “cost too much” as defined above.
Closing schools. The Board’s preference is that all present schools continue in use – subject to being persuaded that such a preference makes no educational or economic sense.
Low income students’ distribution. The Board’s present intuition is that there are educational and social benefits from elementary school students’ exposure to a diversity of classmates. (As with any other intuitive beliefs of Board members the Board invites the presentation of research findings that either support or challenge its assumption.) At the present time, with a District average of 17% low income students, the proportion in each elementary school varies from 2% to nearly 50%. The Board expressly requests the Superintendent prepare for its consideration a number of alternative models reflecting the implications (economic costs, number of students bussed, time spent on buses) of a more equal distribution of students. Prior to knowing those costs the Board expresses no view as to its preferred range of the percent of low income students at each elementary school.
Occupancy as percent of capacity. The Board wants to maintain an equivalency of educational opportunity between buildings.
Impact on junior and senior high schools. The Board presumes that any boundaries or long range planning decisions will result in a roughly equal allocation of students among the two junior highs and two high schools. If this is not the result of its decisions it will want to revisit them.
Neighborhood schools. To the extent consistent with the Board's preferences and options, above, it would like to maintain the concept of neighborhood schools, keep attendance areas contiguous, keep families together, and limit students to one forced transfer during their elementary years. __________
[Of these 16 bold-headed paragraphs, the Press-Citizen hard copy edition excerpts paragraph numbers 1, 3, 8, 10, 12, and 16.]
Note how the governance model is working in this instance. These are clearly the Board's "planning process and parameters" -- not a Superintendent-drafted document rubber stamped by the Board. It is the Board that has done the very hard, analytical and creative work of thinking through and then establishing the policy, the goals, what John Carver calls "ends policies." At the same time the Board makes it expressly clear that it respects the Superintendent's professional expertise, and that it is willing to modify its approach when data and research suggest that modifications are required. Having made its very specific policy preferences and parameters expressly clear, it then leaves the implementation of them to the Administration (with a requirement of management information reporting against mileposts of progress and other updates from the Administration to the Board), free of Board members' micro-managing of the Superintendent's day-to-day decisions.
Ed Stone is writing about, and drawing upon this document regarding, allocation of students between our two conventional high schools (City and West; Tate serves the entire District).
But its relationship to the Roosevelt demolition proposal, and the reasons citizens have offered for opposing that proposal, is obvious.
Note that it is also a District-wide long range plan, not an effort to deal with a couple schools at a time.
As for process, see another op ed in this morning's Press-Citizen, Jim Throgmorton, "It's How the Light Gets In,"Iowa City Press-Citizen, March 10, 2009, p. A9. Here are some excerpts:
A couple of weeks ago, the Iowa City School Board had a public discussion of its Strategic Facilities Improvement Plan as part of a regular board meeting. It didn't go very well. Parents were angry and the board members appeared defensive. Tension filled the room. . . .
Gad, I thought, this is a no-brainer. The president of the board . . . could have greeted the audience with a genuine welcoming smile. Having solicited "feedback" from parents about the district's plan, . . . board members and staff could have taken no more than 10 or 15 minutes to welcome people, lay out the agenda for the night and indicate what they hoped to learn from the public during the hearing.
[They] could have displayed genuine pleasure that so many people had committed their own time and energy to read the plan, to come to the district's office on a cold February night, and to share their assessment of the plan with board members.
Instead of telling this very well-educated audience that they "misunderstand," board members could have acknowledged that one of the primary purposes of the hearing was to let people say how the facts should be weighed.
Once the hearing had ended, [they] could have thanked people for speaking and indicated how their views would be incorporated into the district's final plan.
In his lovely song, "Anthem," Leonard Cohen sings:
"Ring the bells, the bells That still can ring. Forget your perfect offering. There is a crack, a crack, in everything. That's how the light gets in."
There was a crack in the district's plan. Parents saw it and drew attention to it. Feedback like that should be welcomed and embraced. It's how the light gets in.
A functioning governance model, and long range planning that is truly of the Board (not mere rubber-stamping of Administration proposals), are essential. But, as Throgmorton emphasizes, the Board's process in community relations is also important. Indeed, the more inadequate its planning and proposals the more essential it becomes.
Hopefully, Board members are learning from their "demolition disaster," reason will ultimately rule, Roosevelt will be saved, diversity will be better balanced, and a reasoned, sense of boundaries' evolution within a District-wide long range plan will emerge. _______________
* 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
The School Board and Superintendent want to demolish Roosevelt Elementary. I disagree.
(Disclosure: Although I did not attend Roosevelt myself, and am neither a Roosevelt parent nor a "Myrtle Orchard Neighborhood" resident, I do live in the adjacent "Melrose Neighborhood," which also looks to Roosevelt as its "neighborhood school.")
From 1998 to 2001 I served as a member of the Iowa City Community School District School Board.
Since that time, while I have of course maintained an interest in K-12 education generally, in this country and beyond, and in our District in particular, I have mostly maintained a respectful silence with regard to the actions of my successors.
Having served on the Board I have some sympathy for those holding the job of which I once said, "well, it may not pay anything, but at least you get a lot of grief." It's not my desire to add to that grief.
But the District's recent decision (something between an "inclination" and what some insiders report as being "a done deal") to tear down Roosevelt Elementary School caused me to attend a public meeting last Saturday, March 7, and to publish this blog entry today. (Some of the Board's overall planning can be found in its Iowa City Community School District, "Strategic Facilities Improvement Plan," 96 pp., undated (a pdf file).)
One of the features of Saturday's gathering was small group meetings at which we were to list what we considered to be the "pros" and "cons" of the Roosevelt demolition. The group I was in noted the following (that is, this is not necessarily my personal list):
Pros: the proposal brought the community together to talk about K-12 education in general and socio-economic issues in particular (the disparity between schools regarding the percentages of "free-and-reduced lunch" (i.e., low income) students).
Cons:
Student safety and walking distance. Many Roosevelt students would need to walk farther and along more dangerous routes (e.g., busy street crossings) to reach a different school. They will be farther from downtown cultural events.
Parental participation. Parental participation in schools enhances their children's education -- some say it is the single most important factor. Parental participation is increased when parents, as well as students, can easily walk to school. This is especially true for many of the low income parents whose children attend Roosevelt, parents who may not even have cars. Increased distance will tend to further remove these parents from connection with their children's activities and education.
Insufficient system-wide planning, public participation, and diversity balance. Diversity balance requires redrawing all school boundaries throughout the District, not just those for two or three schools. (One obvious way to minimize the disruption this would cause, thereby making it more politically feasible, would be to announce the new boundary-drawing principles (and resulting boundaries as of now) -- but withhold their implementation for six or seven years, thereby removing any impact whatsoever on children now in school. For more on this approach, see my earlier writing on boundaries, linked at the bottom of this blog entry. Obviously, had this suggestion been followed when I was on the Board those boundaries, with more boundary flexibility for the Board and Administration, would now be in place.)
To plan a new school (Crossings), knowing that it will be 40% low income (the District average is 28%) seems contrary to the Board's professed goal of improving balance. The Board needs to plan for construction of new schools beyond five years. It needs to provide for more public participation on the front end of this planning.
Uneconomic. With new schools costing millions, to renovate Roosevelt for $900,000 is a cheap price to pay for a "new" school. The "substitute Roosevelt" at the "Crossings" location may be subject to the same kind of cost overruns suffered by the Van Allen school -- making renovation of Roosevelt an even better bargain. Especially given present economic conditions it seems wasteful in the extreme to choose this time to demolish a neighborhood school only to have to spend millions on another school to replace it. Moreover, the additional cost of the demolition itself is not inconsequential and will either be an added cost to the District, if it intends to use the property for some other purpose, or a reduction in the selling price of the property if it is sold to developers who must bear that cost.
Flexibility in renovation costs. The study of Roosevelt renovation costs identifies levels of priority in tasks. Shive Hattery, "Roosevelt Elementary School Assessment," February 13, 2008 (a pdf file). If only the highest priority renovations are made the costs could be even less than the $900,000 referred to above. Lower priority renovations could be done later, in better economic times, while still permitting the building to be used. On the other hand, if every possible change and improvement is made, and additions to the building are constructed, obviously the costs could range upward of $5 or 6 million. Thus, while there is tremendous flexibility in the potential costs of whatever might be done with Roosevelt, they will be by any measure far less than the cost of a new school.
Failure to consider wide range of options; e.g., possibility of Roosevelt-Horn linkage such as K-3 in one school and 4-6 in the other (as both schools are relatively close). The small group making this list felt that the Board had not done an adequate or creative job of considering all the options that would include the preservation of Roosevelt. At the present time low income students are bussed past Horn on their way to Roosevelt! The result is that Roosevelt has one of the highest percentages of low income students (54%) and Horn has one of the lowest (12%).(See, Iowa City Community School District, "Frequently Asked Questions #1; Proposed Strategic Facility Improvement Plan and Roosevelt/Weber/Horn/Kirkwood Recommendation," March 4, 2009, "8. What will be the socioeconomic and racial balance among the schools?") If the Board honestly wants to improve District diversity an obvious answer would be to bus those students to Horn, thereby improving the ratios at both schools.
Removal of family resource center. Roosevelt provides a Family Resource Center for a student population in need of one. It would be lost (or at least there is no clear plan for providing one) for these students following Roosevelt's demolition.
Transition problems. There would be a two-year delay getting benefits to current Roosevelt students.
Finally -- and I deliberately list it "finally" here, because while it involves values that indirectly impact on people of all ages currently a part of the "Roosevelt family," this concern of the Myrtle-Orchard Neighborhood residents in our small group is not "educational" in the narrow sense --
The adverse impact on the "Melrose-Orchard" and "Melrose" neighborhoods. There is reason to believe that if Roosevelt is abandoned by the ICCSD its nine-acre plot would be acquired by developers who would fill it with condos, apartment buildings, or stand-alone homes. This would be a double whammy for two Iowa City neighborhoods that are already fragile. (Melrose Neighborhood is subject to constant invasion by the University from the north.)
A "neighborhood" is in many ways defined by the existence of its "neighborhood school" (rather than the other way around). For a neighborhood to lose its neighborhood school is an enormous whammy to its identity. This is only made worse when developers are permitted to take over an open, green, distinctive location and structure and turn it into more of the same-old, same-old that has already caused a loss of the neighborhood's "character." (There is, for example, a nature trail through a wooded ravine on the Roosevelt property, a kind of park, used by neighborhood residents as well as Roosevelt children.)
__________
The above are points made by members of the small group I attended -- points I agree with for the most part, but were for the most part not my contributions.
There were many more points made by reporters for other groups that will, hopefully, soon be transcribed and available on the District's Web site.
To them I would add a couple more.
School size. It is somewhat bizarre that one of the arguments put forward by the Board for demolishing Roosevelt is its "small class size," given that smaller class (and school) size is universally heralded as a desirable goal even for high schools (a range of 600-800 students), let alone elementary schools (300 students). A part of the plan is to expand Horn Elementary -- necessitated in part because of the proposed demolition of Roosevelt. But that is simply the worst of all possible worlds -- losing the desirable school and class size of Roosevelt, while making worse the school size of Horn. (On the other hand, especially given the two empty classrooms at Horn, this is just another reason for dropping off some of the low income students at Horn rather than bussing them by Horn on their way to Roosevelt, see "Failure to consider wide range of options," above.)
Other schools, other neighborhoods. Roosevelt, built in the early 1930s, is certainly not Iowa City's oldest school. If it is to be demolished should we assume those other older schools, which also need remodeling, will be torn down as well? In that case, all the concerns about Roosevelt -- and the impact on its neighborhood/s -- will only be multiplied many times over. And, if they are not to be torn down, what is the rationale for choosing only Roosevelt? Is it possible that schools in more affluent neighborhoods, such as Lincoln, populated by influential parents, have been better maintained over the years than a school like Roosevelt, with its less affluent and influential parents?
Broken SILO promises. Promises were made by the School Board at the time of the District citizens' vote to increase their taxes to provide the District SILO funds for new schools. In addition to new school construction, the vote passed in large measure (one can safely assume) because of promises that the money would be used to refurbish and remodel the older neighborhood schools.
On February 2, 2007, an op ed column "by Iowa City School Board" appeared in the Press-Citizen explaining "How to Spend SILO Funds." It expressly stated:
The district estimates more than $147 million in priority infrastructure projects over the next 10 years. SILO funds would enable us to make improvements to our buildings that serve our students. There are inequities between buildings constructed in 2005 and those built in preceding decades (some dating to 1917). Those inequities include cost efficiency, handicapped accessibility, gyms and science labs, climate controls, air conditioning, air quality, lighting and overall learning environment. Repair, maintenance and accessibility needs have been deferred for many years because we have lacked the necessary funds. If the SILO sales tax is approved, the district will over time be able to improve the learning environments of our students. (emphasis supplied)
There was no mention of the demolition of Roosevelt -- or any other school for that matter -- indeed, quite the contrary. It is troubling that the Board would now fail to honor the representations, relied upon by voters, made by the Board in its effort to obtain the passage of the SILO referendum a mere two years ago.
Development. I hate to even mention this, and I'm certainly not asserting any wrongdoing, but it can't go without comment.
This plan hits a double for local developers.
The Cardinal Road/Crossing development (which, in my opinion, should have been retained by the City/County as greenbelt land in the first place) will receive an enormous economic boost by the sales force being able to tell potential home buyers that their children will be able to attend, within walking distance, one of Iowa City's newest, and most modern schools. That's worth a lot in an escalation in home prices, and presumably is one explanation for the developer's "generous" offer to make the land for the school available "free."
Moreover, the demolition of Roosevelt opens up for the same, or other, developers the opportunity to buy, develop and sell off one of the most prime pieces of land on the West side of town.
I'm not suggesting Roosevelt's demolition, and the new Camp Cardinal ("Crossings") school, are being proposed to enrich a developer -- let alone anything worse. But when public entities (in this case, a school board) are involved in creating millions of dollars of private profit (for, in this case, developers), while destroying a neighborhood school, dealing a heavy blow to two neighborhoods, and throwing the burden on the backs of the children and parents least able to represent themselves, it does deserve a very, very close look.
Economic downturn impact on Camp Cardinal development. Finally, it should be noted that the Camp Cardinal housing development was planned before the recent economic downturn. Home sales are never a slam dunk in the best of times. And these are not the best of times. Some consideration needs to be given to the possibility/probability that the "Crossings" school might end up finding itself to be a "neighborhood school" without a neighborhood.
* 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
A Multiple-Variable Analysis of Newspaper Delivery (brought to you by FromDC2Iowa.blogspot.com*)
What a treat to open my kitchen door at 4:30 this rainy Sunday morning and find two newspapers, neatly wrapped with their protective plastic covering, waiting side-by-side less than three feet from my door.
It's not every day that starts that way. And that's the subject of this morning's blog entry.
A convergence of forces have made these tough times for newspapers. Going public meant some initial infusions of cash, but also brought Wall Street's insistence on ever-increasing profits. The Internet generation's gone electronic; and even giving away free hard copy newspapers in college dorms hasn't reversed that trend -- nor has giving away the content with online editions helped their bottom line. Now even those students' newspaper-addicted parents are doing more newspaper reading on the Internet. Craig's List has taken much of the lucrative classified ad revenue. Newsprint and ink costs keep going up. And now general ad revenue is also down as the global economy collapses around every business. The Rocky Mountain News, once one of my favorites, is only the latest in a string of closing newspapers.
Meanwhile, as everyone struggles to find alternative business models for newspapers some are appearing. That was a part of the discussion six weeks ago in Nicholas Johnson, "Whither Newspapers," January 18, 2009.
This morning's commentary is much more modest. It involves the application of a proverb, with origins going back to the 14th Century, to the newspaper industry's woes:
For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.
And what is "the nail" in this analogy?
Newspaper delivery.
I read a number of newspapers with some regularity, but only four in hard copy, two of which are delivered to my home daily.
Permit me to preface what I am about to say with some qualifiers. (a) I used to deliver newspapers in the same neighborhood to which I have now returned to live in the old family house. It is a thankless job, and I have nothing but appreciation for those who are willing to provide this service for much less pay than reason and equity would dictate. (b) Home delivery of hard copy newspapers is not a business model in which I'd be willing to invest my money -- for some of the reasons I've set forth above, and more. (Some of the alternatives are discussed in the "Whither Newspapers?" blog entry, linked above.)
So I don't think newspapers should have to provide home delivery at all.
All I'm about to suggest is that, if they are going to provide that service then there are some fundamentals requiring a little more attention.
As I mentioned, I have home delivery of two newspapers (both of which will remain nameless), so I have two different approaches to newspaper home delivery to compare.
Here is a quick once-over of what seem to me the relevant elements of home delivery.
1. Does the paper come every day, or are there more than a statistically insignificant number of days when it doesn't arrive at all?
2. Is there a regular time at which it arrives?
3. Is there a consistent location where the paper can be found?
4. When there is a problem with delivery (say, there's no paper well past the promised delivery time) can the subscriber explain the situation to a human, or must s/he try to place the round pegs of concern into the square holes of a computerized system?
Here has been my experience:
1. One of the papers comes every day. The other has a significant number of days when it does not arrive at all.
2. One of the papers usually arrives by 3:30 in the morning. The other may come at any time, when it comes at all, normally between, say, 5:00 and 8:00 a.m.
3. One of the papers is almost always just outside the kitchen door. The other requires a daily scavenger hunt -- sometimes it's under a bush, sometimes out by the city street, sometimes in winter hidden in a snow drift, and occasionally by the kitchen door (as it was this morning).
4. The newspaper that rarely requires a call has a human to answer the phone. The newspaper that often needs to be called has a computer that explains humans can only be reached during "regular business hours" -- when those humans sometimes explain that newspapers can no longer be delivered that late in the day.
One variable is manageable by a subscriber.
If the paper always comes, and is in the same place when it does, but at various times, one can look in that place and quickly see it's either there or it's not. If it always comes, and at about the same time, but may be anywhere, the subscriber can go on the scavenger hunt at the same time every day, knowing the paper will ultimately be found somewhere on or near the property.
It's the multiple variables that create the problem. When one doesn't know whether it's going to be delivered at all or not, or what time it will be if it is, or where it is to be found on a given day, the only way to receive the paper is to undertake periodic searches of the entire property during the morning hours, never knowing if it has been delivered or not, or where it may have been left.
Like I say, I (a) really appreciated not having to search for a paper in the rain this morning, (b) have great appreciation for what delivery persons go through, and suspect much of the problem is that they're not being paid enough to be able to keep the job for long, (c) don't think newspapers should have to provide home delivery of hard copy papers at all, and (d) am not making a special appeal for the delivery of my paper. The disparity between these two newspapers' delivery practices has existed for years in spite of periodic suggestions to management; and it is highly unlikely it is limited to one neighborhood.
No, this "multiple-variable analysis of newspaper delivery" is simply provided as yet one more good will offering, without charge, to a newspaper industry that has played a major role in my life over decades in a variety of ways and that I would like to see survive.
It's merely a reminder that in 21st Century business, as well as 14th Century warfare, success often turns on attention to detail -- like the nails in horseshoes and the home delivery of newspapers. Maintaining profits by cutting back on basic services has seldom if ever been a sure road to corporate survival.
And I do hope you found this blog entry promptly and properly delivered to your computer this morning. _______________
* 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
The Sure-Fire Solution to Economic Pain (brought to you by FromDC2Iowa.blogspot.com* -- and Saturday Night Live, see below)
My Dad told the story of a Kansas farmer who was asked whether he believed in baptism. "Why of course I do," he said, "I've seen it done."
That's kind of how I am about credit. I've seen it done. And all about me I'm now watching the consequences of its having been done. And that's why I really don't believe in credit.
Mason Williams (the composer of "Classical Gas" and one-time head writer for the "Smothers Brothers Comedy Hour") once wrote the story of the automobiles in his life, which he called his "Auto-biography."
In a similar spirit here is how I would describe my own "Auto-biography" of Nicholas Johnson.
My first car was a 20-year-old Model A Ford I bought from a local farmer for $25.
I paid cash.
My second car required saving money for a year as a college student. It was a much fancier Model A, with four doors and a roof, and therefore cost $75.
I paid cash.
Over the years the cars got grander and more expensive. A two-door Chevy ($700), a Volvo ($600), and a couple others along the way.
I paid cash.
My current vehicle is a 1978 VW camper van, one of my most expensive ever at $2000.
But I still paid cash.
Is this because I'm wealthy? No; quite the opposite. When offered job choices I've never simply picked the one that paid the most. I've chosen the ones that would offer the most interesting new experience, the most fun, or the greatest opportunity for public service -- one of which was serving on the local school board, a job I once described as providing "no money, but at least you get a lot of grief."
(Don't get me wrong, this is not a "pitty poor me" blog entry. I've been blessed at every turn in a life that could not have been better: my parents, growing up in Iowa City, the University's schools, from the two-year-old group at the Iowa Child Welfare Station on through University High School, a top flight public university undergraduate and law school education when tuition was $50 and a couple part-time jobs plus managing an apartment house were enough to get you by (compared with today's near-$50 thousand at private colleges, with the accompanying student loan debt), the lucky accidents of the U.S. Court of Appeals and Supreme Court clerkships, and three presidential appointments, and being able to return in my later years to my home town, live in the house where I grew up (on which the mortgage has long since been paid -- if indeed it was not purchased for cash), and welcomed into the UI College of Law, a three-block walk from home, where I live with a former high school classmate who is, for me, the perfect wife -- in addition to our wonderful children, grandchildren and now great-grandchildren. No; all I am saying is that I have, by choice, purchased cars for which I could afford to pay cash, rather than paying interest to a bank on a newer, more expensive one.)
No; I've paid cash because, in attempting to control living costs, the elimination of interest payments always seemed to me to involve the greatest returns for the least effort -- with the least pain.
I don't confess this as a badge of honor. I'm fully aware most Americans will ridicule my choices and think me a fool.
I merely mention it to give you some insight as to why I might be questioning the behavior and choices of those who propelled us into this global economic collapse -- and who now propose that the way out of the pit we're in is to go back to making more credit available, to recreate the economic structure and behavior that got us into this mess.
Why should every small business, home and automobile be owned in largest measure by a bank's shareholders? And for what? So we can have our stuff a few months before we'd have it if we saved first and then paid cash? Rented a few more years before buying a home? Drove a little older car?
Why should one of our largest expenses -- as taxpayers as well as consumers -- be the transfer of our hard-earned dollars (in the form of interest payments) to bankers and investors who have contributed neither goods nor services to our economy? Banks were getting "bailouts" from the federal government -- that is, you and me as taxpayers -- long before they brought down our economy. Do you know what one of (if not the) largest expenses of the federal government is? That's right, interest payments from you and me to those wealthy enough to loan their money to our government -- some $412 billion in the FY2008 budget! Federal Budget Spending and the National Debt. I'd say that's a pretty nice income for what Senator Bob Dole once described as "indoor work with no heavy lifting."
And our payments to those folks are only going to increase as our government continues its present "solution," this glide path to economic hell: getting us out of a economic mess created by credit and debt by taking on more credit and debt.
[Credit: "Don't Buy Stuff: The sure-fire way to get out of debt," NBC Saturday Night Live, Season 31, Episode 12, aired February 4, 2006, available from hulu.com.]
I don't expect anyone to agree with me. But I think Saturday Night Live had it right: "The sure-fire way to get out of debt"? "Don't buy stuff you can't afford."
__________
Related Blog Entries on Global Economy and Bailouts
Nicholas Johnson, "Don't Buy Stuff," March 6, 2009
_______________
* 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
No More For AIG and the View from the "Frontline" (brought to you by FromDC2Iowa.blogspot.com*)
Prologue
I dreamed I was having a beer with Tim Geithner and Ben Bernanke. (I had to explain to them that we were fresh out of champagne.)
"So what do you think is the answer for AIG?" I asked.
"We think handing over billions of taxpayers' dollars to the company is the way to go," Geithner said. Bernanke nodded, while looking suspiciously at his glass of beer.
"Have you tried that?" I asked.
"Oh, yes." Bernanke smiled. "Three times. I think we're up to about $150 billion now, aren't we Tim?"
"Yeah, about that." Geithner took a sip and scowled.
"So how's that been working for you?" I asked.
They both looked down and said nothing.
"How's that been working for you?" I repeated.
"Not really all that well," Geithner finally replied in a near whisper. "They lost another $60 billion this last quarter, and the Dow just dropped below 7000."
"Oh, my." I paused. "So what are you going to do now?"
They both smiled and said, as if in chorus, "We thought we'd give them another $30 billion."
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What the hell is the Obama Administration and Fed thinking to give AIG another $30 billion of our (taxpayers') money?! When you find something that doesn't work, repeating it over and over in the hopes that it will is one definition of insanity. This means we've now underwritten a single company to the tune of what will soon be a quarter of a trillion dollars -- two and a half times the entire federal budget when I was in government!
AIG, this so-called "insurance company," just reported a $61 billion dollar loss during the last three months! That's nearly $1 billion every business day. Andrew Ross Sorkin and Mary Williams, Walsh, "A.I.G. Reports Loss of $61.7 Billion as U.S. Gives More Aid,"New York Times, March 3, 2009 ("the deal . . . presents more financial risks to taxpayers at a time when the public and Congress have been sharply questioning the wisdom of risking federal money to bail out private enterprises").
Stories like that always kind of make me wonder. If you were paying even a modicum of attention wouldn't you kind of notice after a day or two that there was $2 billion missing from the petty cash drawer?
These are the guys, you'll recall, who celebrated one of our early infusions of billions by heading off to a luxury resort to spend some of it.
And let's get straight why these losses are occurring.
Bankers, through greed or ignorance, were issuing mortgages they knew, or should have suspected, would not be paid ("sub-prime mortgages"). So long as they could mix them up, package them, call them a security, and sell them, the profit (and resulting bonus) was theirs and the risk of loss was someone else's.
Those holding these worthless ("toxic") securities wanted protection. So AIG issued insurance -- an agreement to make good on the mortgage/security if it turned out to be worthless because the debtor defaulted on this "credit" -- a "credit-default swap."
For more details on what AIG and the banks did to our economy see Joe Nocera, "Is AIG the Worst of Them All?"New York Times, February 27, 2009 ("the practices that led to its troubles . . . were shocking"); and "Propping Up a House of Cards,"New York Times, February 28, 2009 ("Donn Vickrey, who runs the independent research firm Gradient Analytics, predicts that A.I.G. is going to cost taxpayers at least $100 billion more . . . Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. . . . either a remarkable example of the power of rationalization, or they were lying to themselves, figuring that when the house of cards finally fell, somebody else would have to clean it up. That would be us, the taxpayers").
Normally insurance, whether home, auto, or life, is designed to spread the rare or occasional loss among a great many premium payers. Every homeowner has fire insurance, but very few have fires -- there's no "bubble" that suddenly bursts and causes all homes to burn, thereby bankrupting an insurance company suddenly called upon to pay full value for 40% or more of the homes it insured.
Moreover, regulated insurance companies are required to maintain "reserves" sufficient to pay off an unexpectedly large number of claims. (AIG's conventional insurance operations are still profitable.)
By contrast, when the real estate bubble bursts during an economic downturn it tends to burst nation wide. Providing "insurance" for mortgage defaults means the insurance company has assumed the risk that when the bubble bursts it will be responsible for the losses sweeping an entire industry, not just those of a handful of individual investors.
Not only is this not a normal -- or sensible -- risk for anything called an "insurance company," credit-default swaps are not regulated, and therefore do not require reserves -- creating the risk of a kind of double whammy of losses.
In short, the taxpayers are bailing out, assuming executives' and investors' losses, brought on from fraud, greed (or, at best, stupidity and ignorance). This includes the folks who sold the mortgages originally, who bundled them into securities, who bought and traded those securities, and who insured those investors -- all a pretty scummy lot who should have known better and were engaged in fraud-like behavior bordering on, and sometimes crossing over into, criminality.
They must be thought of, in moral terms, as the equivalent of the arsonists who cause major forest fires, with injury and death of the individuals caught in the fire and those brought out to fight it, property damage in the millions or billions of dollars, seriously disrupted lives, and a drain on taxpayers' resources.
Those fires are not "acts of God." Nor is this economic calamity. Both are the clearly predictable result of reckless and irresponsible behavior by humans. The only difference is that those who deliberately set the woods on fire don't personally profit financially from their acts. These men and women did. It's like crashing the power grid, causing Americans to freeze in the dark, or setting loose a computer virus that ultimately brings down the Internet and causes billions of dollars of losses
In short, the harm these corporate executives have done goes far beyond their own investors, employees and retirees. It goes beyond their customers. It has resulted in what may prove to have been the most serious body blow ever suffered by the American economy and the people whose welfare depends upon it. And we now know not only does the suffering go far beyond our shores and fall most heavily on those least able to withstand it, but it has become a threat to our national security far more serious than anything threatened by "terrorists" -- as the CIA must now brief the president each morning on the potential threats to our country, foreign and domestic, brought on by this sorry lot of bankers. See, Nicholas Johnson, "Terrorist Bankers," February 13, 2009.
So why has our government given them a single dime, let alone the trillions of dollars it has -- including what will soon reach $250 billion for one company alone, AIG?
It's the old "they're too big to fail" ruse. My response? Any company too big to fail is simply too big; the sooner it can be broken up into manageable-sized pieces the better.
These "toxic assets" have some value -- or would if the government would get out of the market, remove any possibility of a bailout, thereby forcing the holders, and potential buyers, to do the sorting through of what's in those securities, and put a price on them. Of course no one's going to buy them for their true value so long as the government can't make up its mind but may, in the end, buy them for much more than they're worth. These securities actual market value may be a lot less than what the holders paid for them. That's too bad. But that's the way their beloved "marketplace" is supposed to work.
No one ever promised them this system of privatized profits and socialized losses that these johnny-come-lately socialists now believe is their birthright.
One of the best television explanations of how we got into this mess, and how little the relevant government officials really knew about how to get us out, was prepared by PBS' "Frontline" in its show titled "Inside the Meltdown," February 17, 2009 (the link goes to a complete online video, transcript, timeline of the economic collapse, and other features).
If you think global economic collapse is of sufficient significance to warrant an hour of your time coming to understand the tension between the competing concerns over "moral hazard" and "systemic risk," and the meanings of "toxic assets," "bundled, securitized mortgages," and "credit-default swaps," I highly recommend the show. Not only is it a balanced effort to inform, it's also entertaining -- not in a "Daily Show" way, but because it is so well written, shot and edited into a classic "Frontline" presentation.
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Related Blog Entries on Global Economy and Bailouts
Nicholas Johnson, "Bankers as Arsonists," March 3, 2009
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* 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
