The Choices Facing Community Colleges

America is in the middle of another news emergency, about crises that are genuinely important. But meanwhile, other aspects of public and private life grind on, and because they will matter so much in the long run, they deserve more attention than the permanent emergency-news culture usually allows for. Like many other entries in this series, today’s is an intentionally off-news item about some of these developments that will help determine the news of the future.

At the moment I have in mind two institutions that are rarely in the news but deserve to be featured in American discussions of prospects for a better economic and civic future.

One is, of course, America’s network of libraries, as Deb Fallows has discussed over the years. She wrote about them in the print magazine, in our book Our Towns, and in recent posts like this from Brownsville, Texas, and this from New York.

The other is the constellation of 1,000-plus public community colleges across the country. Three years ago in the magazine I made the case that a reliable sign of civic progress was whether a city took its community college seriously:

Not every city can have a research university. Any ambitious one can have a community college. 

Just about every world-historical trend is pushing the United States (and other countries) toward a less equal, more polarized existence: labor-replacing technology, globalized trade, self-segregated residential-housing patterns, the American practice of unequal district-based funding for public schools. 

Community colleges are the main exception, potentially offering a connection to high-wage technical jobs for people who might otherwise be left with no job or one at minimum wage …

In travels since then, Deb and I’ve seen more examples of community colleges acting as anchors for a city or region—for instance, with the “Communiversity” that has made such a difference in eastern Mississippi, or the innovative Institute for Advanced Learning and Research in Danville, Virginia. (This IALR in Danville is neither a normal research university nor a community college but approximates some functions of each, and works with nearby two- and four-year institutions.) And I’d argue that while every branch of American education is always “important,” from preschool and K–12 to the most intense research universities, community colleges really are the crucial institutions of this economic and political moment. That is because:

1. They’re local- or state-based, and thus far freer to experiment, adapt, and innovate than most federally run institutions are at this moment of paralyzed national politics.
2. They’re more and more the institutions that feel responsible for matching people who need opportunities with the fastest-growing opportunities of this era. (For instance, in much of the country there have been more openings than candidates for relatively high-wage “skilled trade” jobs: from welding and construction, to engine and robotics maintenance, to many aspects of the ever-expanding health-care industry. Many community colleges emphasize preparing graduates for jobs that are in demand right now, with skills that will also apply for whatever jobs emerge a decade from now.)
3. Because they’re often dispersed across a state, with branches in smaller cities and rural areas, many of them have taken a lead in devising regionwide and rurally focused development plans. Most everyone knows that America outside the big cities faces its own set of challenges, from attracting new residents to creating new economic strongholds to dealing with physical and mental-health problems. The people working hardest toward solutions, at least among those I’ve met, are disproportionately at community colleges. (...)

What Deb and I learned when talking with community-college leaders in Traverse City was about the choices that they are facing—as are other members of the loose confederation of educators who are doing so much to shape the economic and civic future of the country. Based on what we heard, I think this is the list of next big choices:

• In this era of increasing nationwide interest in “placemaking,” are community colleges positioned to take the lead as stewards of a community’s development? Or do they need to follow other local institutions? (Here is an example of a four-year university that has taken the local lead. We’ve seen examples elsewhere of community colleges playing that role—for instance, in central Oregon. )

• How does a successful college set the balance between training people in hopes that they’ll stay in the area and training them for success, wherever they might end up? Should the prospect of graduates moving away affect an institution’s investment in them?

• How does a successful college think about the balance between training for specific skills, and general adaptability? How does it balance between the jobs of today, and those of a decade or two from now? (The Communiversity, in Mississippi, is wrestling with just these questions, plus the one about graduates who might move away.)

• What’s the proper way to work with private companies in the area? Is it all positive? What are the pitfalls and guidelines?

• When does it make sense to take a regional, or even statewide, approach, as opposed to programs aimed at each college’s local area?

• When does it make sense to seek out collaborations with research universities or four-year colleges?

• How should the “culture” of community colleges evolve to reflect their newly central role in American opportunity? Is there an even bigger place for ceremonies, “pomp and circumstance,” and other ways to add external signs of prestige to this experience?

by James Fallows, The Atlantic |  Read more:

Image: James Fallows

Peter Keane

[ed. I saw Peter years and years ago when he was the opening act for, I believe, Greg Brown. This is still one of my favorite albums. See also: You Haunt My Dreams  and Tylersville Road (Peter Keane).]

Aaron Brent Harker, Honey Bear
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[ed. See also: Timber Corporations Can Keep Killing Bears, Judge Rules (Courthouse News). For scratching trees. In Washington state.]

Burning Down the House

David Wallace-Wells’s The Uninhabitable Earth expands on his 2017 article of the same name in New York, where he’s deputy editor. It quickly became that magazine’s most viewed article ever. Some accused Wallace-Wells of sensationalism for focusing on the most extreme possibilities of what may come if we keep spewing carbon compounds skyward (as suggested by his title and his ominous opening line, the answer “is, I promise, worse than you think”). Whatever the article’s lurid appeal, I felt at the time of its publication that its detractors were mainly evading the message by maligning the messenger. (...)

The preindustrial level of atmospheric carbon dioxide was 280 parts per million. We are now at 410 ppm. The last time that was the case, three million years ago, seas were about 80 feet higher. A rise of 2 degrees Celsius would be around 450 ppm, but, says Wallace-Wells, we’re currently headed beyond 500 ppm. The last time that happened on Earth, seas were 130 feet higher, he writes, envisioning an eastern seaboard moved miles inland, to Interstate 95. Forget Long Island, New York City, and nearly half of New Jersey. It’s unclear how long it takes for oceans to rise in accordance with CO2 concentrations, but you wouldn’t want to find out the hard way.

Unfortunately, we’re set to sail through 1.5 and 2 degree increases in the next few decades and keep going. We’re presently on course for a rise of somewhere between 3 and 4 degrees Celsius, possibly more—our current trajectory, the UN warns, could even reach an 8 degree increase by this century’s end. At that level, anyone still in the tropics “would not be able to move around outside without dying,” Wallace-Wells writes. (...)

Just before the 2016 elections, a respected biologist at an environmental NGO told me she actually considered voting for Trump. “The way I see it,” she said, “it’s either four more years on life support with Hillary, or letting this maniac tear the house down. Maybe then we can pick up the pieces and finally start rebuilding.” Like many other scientists Wallace-Wells cites, she has known for decades how bad things are, and seen how little the Clinton-Gore and Obama-Biden administrations did about it—even in consultation with Obama’s prescient science adviser, physicist John Holdren, who first wrote about rising atmospheric CO2 in 1969. For the politicians, it was always, foremost, about the economy.

Unfortunately, as Wallace-Wells notes:

The entire history of swift economic growth, which began somewhat suddenly in the eighteenth century, is not the result of innovation or trade or the dynamics of free trade, but simply our discovery of fossil fuels and all their raw power.

This is our daily denial, which now flies in our faces on hurricane winds, or drops as hot ashes from our immolated forests and homes: growth is how we measure economic health, and growth must be literally fueled. Other than nuclear energy, which has its own problems, no form of energy is so concentrated, and none so cheap or portable, as carbon. By exhuming hundreds of millions of years’ worth of buried organic matter and burning it in a couple of centuries, we built our dazzling modern civilization, not noticing that its wastes were amassing overhead. Now we’re finally paying attention, because hell is starting to rain down. (...)

He allows that through carbon-capture or geoengineering “or other now-unfathomable innovations, we may conjure new solutions,” but at best, he says, these will “bring the planet closer to a state we would today regard as merely grim, rather than apocalyptic.” Having read for years about geoengineering plans to reflect sunlight back into space by sending up planes to seed the stratosphere with sulfates, and to enhance the reflectivity of clouds by spraying salt to brighten them, and about machines that can suck carbon dioxide from the atmosphere, I know of some who might challenge that—but so far, none of these ideas has reached even a pilot level, let alone commercialization scale.

Current carbon-capture prototypes filter CO2 from a polluter’s exhaust so that it can be converted back into more carbon-based fuel. But this would require building enough machines to cleanse the entire atmosphere of emissions from every company and cookfire, and then burying all that captured CO2 so it can never escape—a huge and dubious undertaking. Likewise, a program to deflect solar radiation by spraying particles—as Mt. Pinatubo’s eruption did in 1991, slightly cooling the climate for two years before its dust settled back to Earth—would have to continue in perpetuity to work. Such a program would alter planetary rainfall patterns in unpredictable ways and do nothing to curb ocean acidification. Imagine getting all the world’s nations to agree to tinker with the atmosphere if it meant some of them might end up even drier than before. Several major environmental organizations that once opposed such schemes are now willing to discuss them (the goals of the Paris Agreement depend on yet-uninvented mass-scale technologies to remove atmospheric carbon), underscoring Wallace-Wells’s argument that the situation is dire indeed.

The Uninhabitable Earth makes only scant reference to the holocaust that climate change is wreaking on biodiversity. (One million species are now at risk of extinction, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services reported recently.) But Wallace-Wells’s impulse to focus on our own selfish stake in unfolding events probably makes sense—this future is real, and it’s ours. As desperate as we are to know what to do next, enlightening us about that isn’t his objective: getting our attention is. (...)

So how do we go on? That has been Bill McKibben’s abiding concern ever since the publication in 1989 of The End of Nature, a book so well known that people who’ve never read it regularly refer to it. Its premise is that since humans altered the entire atmosphere, which touches everything on Earth, there is no truly pristine nature left. His latest book, Falter—much like his 2010 book, Eaarth, but nearly a decade deeper into the maw—begins with a clear-eyed, detailed assessment of what we’re now up against. McKibben describes just how much trouble we’re in, yet his voice is so calm, his examples so fresh and unexpected (the book begins with a meditation on roofing, of all things), that you easily glide into his lucid, engaging contemplation of the potential end of human civilization. Later in Falter, when he describes just as equably what we must do to prevent it, you believe it’s still worth trying. (...)

In a chapter that begins “Oh, it could get very bad,” he discusses a study in the Bulletin of Mathematical Biology concluding that by 2100 the oceans may be too hot for phytoplankton to photosynthesize. (Another study I’ve seen, in Nature, suggests that since 1950 phytoplankton populations worldwide may have decreased by up to 40 percent, correlating to rising sea-surface temperatures.) Just as we fail to realize how much extra CO2 is in the air because it’s invisible, it’s hard to grasp how immense—and immensely bad—this news is. Tiny phytoplankton float in the ocean practically unnoticed, yet they constitute half the organic matter on Earth and provide, as McKibben notes, “two-thirds of the earth’s oxygen.” Their loss, he quotes the study’s author, “would likely result in the mass mortality of animals and humans.”

And that’s just the effects from heat. Absorption of CO2 has already made the ocean 30 percent more acidic, with pH expected to decline “well beyond what fish and other marine organisms can tolerate” by the end of this century, he writes, citing another paper. According to the Intergovernmental Panel on Climate Change, current acidification rates of seas and lakes already may be the highest in 300 million years.

McKibben shares some other harrowing examples of threatened fauna, from insects to lions, but although it’s been understood since Noah’s time that we need other species, readers best relate to our own, so like Wallace-Wells McKibben soon circles back to humans. Major cities like Cape Town and São Paulo (and several in India and China) have come within mere days of running out of water; it’s just a matter of time until one does. Outdoor work and maintenance will be halted more frequently as urban thermometers exceed 120 degrees Fahrenheit. Grain harvests will drop as temperatures rise. Insurance companies will go bankrupt after successive biblical storms destroy trillions of dollars of property. Refugees running everywhere. This won’t stop.

by Alan Weisman, NYRB |  Read more:

Image: Richard Misrach: Untitled, 2007

How Digital Advertising Works

Advertising campaigns used to be planned and managed by media buyers—usually 22-year-old, newly graduated communications majors. If that media buyer needed to help a car manufacturer reach men looking to buy a car, she might place an ad in Car and Driver, or in the automotive section of the newspaper. Advertising used to be something you could place, count, then see in the front cover spread of a magazine.

But this is not digital advertising today. Digital advertising is automated, data-driven, and opaque in its mechanics. That 22-year-old communications major has had to make way for data scientists, mathematicians, and computer programmers who, behind the scenes, use statistics, calculus, and linear algebra to optimize advertising campaigns, by micro-targeting users and constantly tweaking algorithms.

Does that car manufacturer still want to reach men looking to buy a car? A data scientist may tell them the optimal target is a 39-year-old man, carrying on an extramarital affair, who’s on the brink of divorce. They can model this hypothesis (and prove it works), and advertising companies like Google and Facebook can put that into execution, finding ways to home in and target those types of people online.

When you go to a website and load a page, in the milliseconds that it takes for that page to load, there are real-time auctions running in the background that determine which ads to load on your page. Almost all online ads are delivered in this way, where highly complex auction markets make their money by competing on who can better track users and invade their privacy more thoroughly.

The targeting begins the moment you as a reader visit any website. Typically, your IP address, your location, and the URL of the page you are on are swiped from your browser without your explicit knowledge, and shared with advertising companies that run these ad auctions. The goal, of course, is to build as specific a portrait about you as possible—by linking your device with your identity—and cookies are a common tool for doing so.

A “cookie” is a small text file that a site can install on your computer when you visit. The text file fingerprints your device with a unique identifier, or “cookie ID” (such as 12345qwert). If the website knows your real identity (for example, if you log on to the site with your real name), the company can link it to your cookie (here, 12345qwert) and begin to gain an advantage in determining which ads to load onto your page.

For example, if you’re on the hypothetical URL newspaper.com/how-to-fight-melanoma, this probably means you’re reading an article about melanoma. Companies might use that information to make a prediction about whether you or someone you love may have cancer. And they most certainly use that info to determine which ads to load onto your page.

The prices that any company is able to fetch for its ads depend on two crucial factors: the ability to identify who is loading the page, and the ability to then connect the user’s identity with more information about the user.

Imagine a person visits espn.com to read an article about the upcoming Super Bowl. Assume first he doesn’t log on to the site, and blocks his browser cookies, so maybe the website he is visiting can’t know who he really is. An advertiser can nonetheless bid on the opportunity to display an ad to this anonymous reader. Maybe the slot goes to a beer brand that wants to generally reach people who like football. Perhaps the going price is a $2 CPM (cost per thousand) and the ad gets sold at this price (meaning, this is the clearing auction price).

But you’re not usually anonymous when you’re online, even when you think you are. Again, advertising companies might know your identity because you log in, or because you are using a browser that allows tracking. Now it’s not simply an anonymous person loading a page about the Super Bowl, it’s “Michael Greenberg,” of Wichita, Kansas.

Now, companies can combine Michael’s identity with other commercially available datasets in real time. For example, they might stitch Michael’s identity with the fact that he makes $1 million-plus per year, which means that they can match Michael with an ad for a private jet service instead of a Bud Lite. The private jet ad might sell at a $200 CPM as opposed to the $2 CPM beer ad targeted to an anonymous user.

“The exact same ad, on the same website, at the same time, could be worth vastly different amounts to two different buyers depending on how much they know about the consumer being targeted,” explains Ari Paparo, now founder and CEO of advertising company Beeswax and a former Google exec. “User data is everything.”

Advertisers gain an even better advantage when they’re able to track what users do as they move from site to site, app to app, site to app, and vice versa, which is exactly how Facebook and Google operate (and exactly the type of information traditional publishers don’t have).

If a company that sells online ads can know what their readers are reading on other sites, then they can target the users based on that information when the user returns to their own site. For example, say Michael visits CNBC’s website in the mornings and reads about the markets, but visits The New York Times in the evenings and only reads the book review section. CNBC knows Michael is someone who follows the markets, and might monetize his view at a $30 CPM. The Times knows that Michael is someone who likes to read books so might only monetize Michael at a $10 CPM. If the Times can somehow find out that Michael is reading CNBC in the mornings, then when Michael visits the Times book section in the evening, the Times can target him as someone who follows the markets and monetize him at $30, too.

Would CNBC want to share with the Times what Michael reads on cnbc.com? Of course not. The two are competitors on the advertising side of the market. If CNBC is selling its audience of financial readers at a cost of $30, and the Times can copy CNBC’s readers and their reading patterns, then the Times could theoretically undercut CNBC and sell ads targeted to CNBC financial readers for, say, $20 instead of $30.

But publishers like the Times and CNBC have no choice but to share this information with Facebook and Google. How, might you ask, does Facebook currently get this data from news publishers that are also advertising competitors? Well, Facebook has a number of derivative products that flow from the social network, including “Like” buttons and log-in tools. Facebook licenses Like buttons to publishers so that their readers can “like” and then “share” news stories across the Facebook social network. But Facebook now conditions these licenses on the ability to track publishers’ readers, whether the readers click the Like buttons or not, and Facebook can now use publishers’ reader data to sell its own ads.

Google, which now tracks users on over 70 percent of the top one million sites, also uses its ability to track users across the internet to extract an advantage in advertising markets. Google tracks users via its analytics and ad-serving products, which Google consolidated and rebranded last summer as the Google Marketing Platform. Google was actually the first of the two companies to consolidate products under a rubric of privacy.

The implication of all this is that the money that Google and Facebook can make selling advertising goes well beyond what other ad sellers can demand in the market. The Big Tech duopoly can track billions of users across millions of sites and mobile apps, creating longitudinal profiles on users. News publishers simply cannot compete with that kind of an informational advantage.

But there is another thing going on in these markets that explains the duopoly in the advertising market. When most people think about Google and Facebook, they think the companies make so much money by selling ads on their own properties—Google search, Gmail, the Facebook social network, Instagram, and so on. This is partly true. Google and Facebook also run auctions through which publishers now sell their own advertising.

Unlike in finance, there are several auction markets where digital ads trade. Anyone can create one. But Google and Facebook make sure their own advertising inventory (YouTube, Facebook) can only be bought through their own, proprietary auctions. Google made almost $20 billion last year from selling other companies’ ads. This is why Google today is the largest seller of advertising, globally, period.

by Dina Srinivasan, American Prospect |  Read more:

Image: Mark Lennihan/AP Photo

Yuki Ogura, Ome Branch and Bowl n/d
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Tough Laws, Cultural Differences Give Hawaii A Low Rate Of Gun Violence

In response to mass shootings in El Paso, Texas and Dayton, Ohio that killed 31 people, Americans across the country are calling for stricter gun laws and turning their attention to states like Hawaii that appear less troubled by gun violence.

It does happen in Hawaii — just last week, a Honolulu police officer and a male suspect were shot near Pokai Bay. The last known mass shooting — known as the Xerox shootings — took place in 1999, leaving seven people dead.

But fewer people have died in Hawaii from gun violence in recent years than in any other state except Rhode Island.

In 2017, Hawaii had both the lowest number of gun deaths — 39 — and the lowest rate — 2.5 per 100,000 people, data from the federal Centers for Disease Control shows. Rhode Island beat Hawaii in 2016 and 2015.

That’s in comparison to the 3,513 gun deaths in Texas in 2017, or a rate of 12.4 per 100,000, the highest in the nation that year.

Hawaii’s strict gun laws have led some groups to sue.

“You can see how there’s this correlation,” said Laura Cutilletta, managing director of the Giffords Law Center To Prevent Gun Violence, an advocacy organization. Her organization’s analysis shows that stronger laws lead to lower gun death rates.

The center ranks Hawaii as having the seventh best gun laws out of the 50 states and a grade of A- on its scorecard, which the organization has been putting out since 2010. More than half of the states have an F.

“Hawaii is a strong state,” she said. Among other things, Hawaii requires gun dealers to get licenses and owners to register most firearms. The state regulates ammunition and restricts open carry, which prompted a federal lawsuit by local gun owners.

The Debate Over ‘Red Flag Laws’

Hawaii also put in place this year what’s known as a “red flag law,” or “extreme risk protection order,” which enables family members, medical professionals or others to prevent people from accessing guns when they appear to pose a threat.

Sixteen other states, including California, Connecticut and Florida, and Washington D.C., have passed similar laws.

State Sen. Karl Rhoads, who sponsored the Hawaii bill, said it’s meant to address the issue of people who buy their guns legally, but go through “some sort of breakdown.”

“It’s not foolproof,” Rhoads said, but it does stack the odds against a potential mass shooter.

But Harvey Gerwig, president of the Hawaii Rifle Association, said he finds these extreme risk protection orders problematic. His organization tried to defeat the bill.

“I understand with what’s been going on with all the crazy people shooting people that there’s a piqued interest in red flag laws,” he said. “But the fact is that most of these laws get abused.”

The law’s mechanism is very similar to how offenders in domestic violence incidents are barred by protective orders from accessing firearms.

A petitioner can file for a one-year protective order preventing someone from having a firearm. A hearing must be scheduled within 14 days. But in certain extreme cases, a petitioner can file for an order without notice to the respondent.

“We’re not against stopping somebody that is in fact dangerous to others,” Gerwig said. “The problem is that this law does not give any due process.” (...)

Gerwig said Hawaii’s cultural difference — the “Aloha spirit” — should be considered in accounting for the state’s low rate of gun deaths.

“Do we have a gun crime every now and then?” he said. “Yes we do. But we don’t have the level of violent crime that we’re seeing in large cities.”

Rhoads, the state senator who supports the extreme risk protection law, agreed that Hawaii benefits from a cultural difference.

“We don’t grab for a gun if we’re mad at somebody,” he said.

by Yoohyun Jung, Honolulu Civil Beat | Read more:
Image: Chris Eger/Guns.com via

Keith Haring (British, 1958-1990), The Fertility Suite: One Plate, 1983
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Dick Sargent
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U.S. Farmers Exasperated by Latest Trade War Moves: 'Another Nail in the Coffin'

Trade tensions between the U.S. and China are flaring once again, and American farmers continue to bear the brunt of the implications.

In response to President Trump recently announcing 10% tariffs on $300 billion in Chinese goods, China allowed the yuan to weaken and suspended purchases U.S. agricultural products.

“The Chinese market has a large capacity and the prospect of importing high-quality U.S. agricultural products is bright," state-owned media Xinhua said on Monday. "However, we hope the U.S. will conscientiously implement the consensus reached at the [G-20 summit in Osaka, Japan] between the heads of the two countries, and implement the commitments to create the necessary conditions for cooperation in the agricultural fields between the two countries.”

America farmers were dismayed by the developments.

“This is just another nail in the coffin,” Tyler Stafslien, a North Dakota-based soybean farmer, told Yahoo Finance. “To see this thing only seems to be getting worse rather than better is very concerning, and the American taxpayers may have to foot another round of funding if this keeps up — or we could see a ton of farmers’ loss throughout this nation.”

American Farm Bureau Federation President Zippy Duvall said that the pain extended across the country.

“China’s announcement that it will not buy any agricultural products from the United States is a body blow to thousands of farmers and ranchers who are already struggling to get by,” Duvall stated.

‘Tariff policies have been doing financial harm to farmers’

Although farmers have collectively been receiving billions in market facilitation payments from the USDA, Stafslien sees these payments as “band-aids.”

The Trump administration announced in July that it would be providing an additional $16 billion in aid to farmers affected by the trade war.

“It’s certainly proof that the administration recognizes their tariff policies have been doing financial harm to farmers and rural America,” Stafslien said. (...)

Back in May 2019, U.S soybean prices reached its lowest level in a decade, dipping below $8 a bushel for the first time since 2008. But for farmers to make some kind of profit, they have still sold their crops despite the record-low prices.

“At some point, you have to sell, because we need some cash flow and when you’re selling at a loss, it’s just an ugly situation to be in,” Ziesch said. “If the price of soybeans is low because of tariffs, there’s not much I can do about it at some point,” Stafslien said. “You have to have cash flow just like any business. You may be selling at a loss just to rob Peter to pay Paul.”

‘We had developed a market with China’

Over the last year, as a means to finding a new source for soybeans, China has turned to countries like Argentina and Brazil. This has left American soybean farmers in the dust, so to speak. The S&P Global reported that Argentine and Brazilian soybean exports are projected to increase over the next marketing year, while U.S. sales are expected to fall.

Stafslien expressed his frustration at the inability for the two countries to reach a deal, particularly with the Trump administration, and the lost markets. (...)

Bob Kuylen, a wheat farmer, expressed a similar sentiment, recently telling Yahoo Finance: “This trade thing is what’s brought on by the president, and it’s really frustrating because he took away all of our markets.”

“All these countries went to different countries to get their grain,” he added. “How are we going to get the relations back with them to buy our grain again and be our customers?”

by Adriana Belmonte, Yahoo News |  Read more:

Image:Joshua Lott, Reuters

[ed. $28 billion and counting. See also: 'Is this sustainable?’: Farmers say bailouts aren’t enough in Trump’s trade war (Yahoo News) and Trump Hints At Third Farm Bailout (ZeroHedge). But there's more! See also: Trump trade-war bailout flows to richest farmers; poor, black farmers left to struggle (Salon). Of course.]

Roy De Forest, Black Dog, 1973
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Venezuela Hyperinflation Hits 10 million Percent. 'Shock Therapy' Next?

Venezuela's crisis has been marked by corruption, hyperinflation, one of the world's highest homicide rates, food and medicine shortages and the largest exodus "in the recent history of Latin America," according to the U.N. Refugee Agency.

Its chances to recover may start with President Nicolas Maduro stepping down or being forcibly removed — either by the opposition or through foreign military intervention. But that would just be the first step to get the ruined economy on the road to recovery. A major course of economic shock therapy will be required.

Venezuela's hyperinflation rate increased from 9,02 percent to 10 million percent since 2018, according to the International Monetary Fund, though it is expected to decline to back below 1 million percent due to recent moves by the country's central bank, according to a recent IMF forecast.

But the economic situation remains dire: The IMF says the cumulative decline of the Venezuelan economy since 2013 will reach 65% this year — for 2019 the annual decline forecast has increased from 25% to 35%. The five-year contraction is one of the worst in the world over the past half century and one of the few that was not caused by armed conflicts or natural disasters, the IMF stated earlier this week.

Some experts believe that in order to regain control over Venezuela's monetary system and zero out hyperinflation, drastic decisions will need to be taken.

"Venezuelans who have been suffering all of this time are going to be faced with a very dramatic, very draconian policy aimed at bringing their monetary system under control," said Dr. Eduardo Gamarra, professor of politics and international relations at Florida International University.

Wasted oil riches

Shock therapy measures, based on recent economic history, can include ending price controls and government subsidies, instituting higher tax rates and lower government spending to reduce budget deficits, devaluing the currency to boost foreign investments and selling state-owned industries to the private sector.

Venezuela will have to transform its current scheme of restricting foreign investment in order to fund the restoration of the energy sector, as well as its infrastructure, including the country's roads and bridges and the power grid. [ed. emphasis added]

Shock therapy supports the implementation of drastic economic policies to combat hyperinflation, shortages, reduce the budget deficit — Venezuela's current budget deficit stands at –29.95% in relation to GDP — and transition from a state-controlled economy to a mixed one.

It was used in post-communist Poland and Russia, and in other countries like Chile and Bolivia, where it successfully ended hyperinflation.

by Valentina Sanchez, CNBC |  Read more:

Image: Getty

[ed. Whereby state assets get sold off to private interests, severe austerity measures imposed, crippling economic sanctions implemented, and voilà Venezuela is transformed into another client state of foreign capitalism (with widespread misery as an added bonus). Corporations are licking their chops. I wonder if Maduro is just biding his time to properly loot the treasury and find safe haven for himself and all 'his' money. That would be the normal game plan. See also: The Shock Doctrine (Naomi Klein). And: Trump’s Despicable Venezuela Embargo (The American Conservative)]

The Military-Industrial Jobs Scam

A Marilyn has once again seduced a president. This time, though, it’s not a movie star; it’s Marillyn Hewson, the head of Lockheed Martin, the nation’s top defense contractor and the largest weapons producer in the world. In the last month, Donald Trump and Hewson have seemed inseparable. They “saved” jobs at a helicopter plant. They took the stage together at a Lockheed subsidiary in Milwaukee. The president vetoed three bills that would have blocked the arms sales of Lockheed (and other companies) to Saudi Arabia. Recently, the president’s daughter Ivanka even toured a Lockheed space facility with Hewson.

On July 15th, the official White House Twitter account tweeted a video of the Lockheed CEO extolling the virtues of the company’s THAAD missile defense system, claiming that it “supports 25,000 American workers.” Not only was Hewson promoting her company’s product, but she was making her pitch — with the weapon in the background — on the White House lawn. Twitter immediately burst with outrage over the White House posting an ad for a private company, with some calling it “unethical” and “likely unlawful.”

None of this, however, was really out of the ordinary as the Trump administration has stopped at nothing to push the argument that job creation is justification enough for supporting weapons manufacturers to the hilt. Even before Donald Trump was sworn in as president, he was already insisting that military spending was a great jobs creator. He’s only doubled down on this assertion during his presidency. Recently, overriding congressional objections, he even declared a national “emergency” to force through part of an arms sale to Saudi Arabia that he had once claimedwould create more than a million jobs. While this claim has been thoroughly debunked, the most essential part of his argument — that more money flowing to defense contractors will create significant numbers of new jobs — is considered truth personified by many in the defense industry, especially Marillyn Hewson.

The facts tell a different story.

Lockheed Locks Down Taxpayer Dollars, While Cutting American Jobs

To test Trump’s and Hewson’s argument, we asked a simple question: When contractors receive more taxpayer money, do they generally create more jobs? To answer it, we analyzed the reports of major defense contractors filed annually with the U.S. Securities and Exchange Commission (SEC). Among other things, these reveal the total number of people employed by a firm and the salary of its chief executive officer. We then compared those figures to the federal tax dollars each company received, according to the Federal Procurement Data System, which measures the “dollars obligated,” or funds, the government awards company by company.

We focused on the top five Pentagon defense contractors, the very heartland of the military-industrial complex, for the years 2012 to 2018. As it happened, 2012 was a pivotal year because the Budget Control Act (BCA) first went into effect then, establishing caps on how much money could be spent by Congress and mandating cuts to defense spending through 2021. Those caps were never fully adhered to. Ultimately, in fact, the Pentagon will receive significantly more money in the BCA decade than in the prior one, a period when the American wars in Afghanistan and Iraq were at their heights.

In 2012, concerned that those caps on defense spending would cut into their bottom lines, the five top contractors went on the political offensive, making future jobs their weapon of choice. After the Budget Control Act passed, the Aerospace Industries Association — the leading trade group of the weapons-makers — warned that more than one million jobs would be at risk if Pentagon spending were cut significantly. To emphasize the point, Lockheed sent layoff notices to 123,000 employees just before the BCA was implemented and only days before the 2012 election. Those layoffs never actually happened, but the fear of lost jobs would prove real indeed and would last.

Consider it mission accomplished, since Pentagon spending was actually higher in 2018 than in 2012 and Lockheed received a sizeable chunk of that cash infusion. From 2012 to 2018, among government contractors, that company would, in fact, be the top recipient of taxpayer dollars every single year, those funds reaching their zenith in 2017, as it raked in more than $50.6 billion federal dollars. By contrast, in 2012, when Lockheed was threatening its employees with mass layoffs, the firm received nearly $37 billion.

So what did Lockheed do with those additional $13 billion taxpayer dollars? It would be reasonable to assume that it used some of that windfall (like those of previous years) to invest in growing its workforce. If you came to that conclusion, however, you would be sorely mistaken. From 2012 to 2018, overall employment at Lockheed actually fell from 120,000 to 105,000, according to the firm’s filings with the SEC and the company itself reported a slightly larger reduction of 16,350 jobs in the U.S. In other words, in the last six years Lockheed dramatically reduced its U.S. workforce, even as it hired more employees abroad and received more taxpayer dollars.

So where is all that additional taxpayer money actually going, if not job creation? At least part of the answer is contractor profits and soaring CEO salaries. In those six years, Lockheed’s stock price rose from $82 at the beginning of 2012 to $305 at the end of 2018, a nearly four-fold increase. In 2018, the company also reported a 9% ($590 million) rise in its profits, the best in the industry. And in those same years, the salary of its CEO increased by $1.4 million, again according to its SEC filings.

In short, since 2012 the number of taxpayer dollars going to Lockheed has expanded by billions, the value of its stock has nearly quadrupled, and its CEO’s salary went up 32%, even as it cut 14% of its American work force. Yet Lockheed continues to use job creation, as well as its employees’ present jobs, as political pawns to get yet more taxpayer money. The president himself has bought into the ruse in his race to funnel ever more money to the Pentagon and promote arms deals to countries like Saudi Arabia, even over the nearly unified objections of an otherwise incredibly divided Congress.

Lockheed Is the Norm, Not the Exception

Despite being this country’s and the world’s top weapons maker, Lockheed isn’t the exception but the norm. From 2012 to 2018, the unemployment rate in the U.S. plummeted from roughly 8% to 4%, with more than 13 million new jobs added to the economy. Yet, in those same years, three of the five top defense contractors slashed jobs. In 2018, the Pentagon committed approximately $118 billion in federal money to those firms, including Lockheed — nearly half of all the money it spent on contractors. This was almost $12 billion more than they had received in 2012. Yet, cumulatively, those companies lost jobs and now employ a total of 6,900 fewer employees than they did in 2012, according to their SEC filings.

In addition to the reductions at Lockheed, Boeing slashed 21,400 jobs and Raytheon cut 800 employees from its payroll. Only General Dynamics and Northrop Grumman added jobs — 13,400 and 16,900 employees, respectively — making that total figure look modestly better. However, even those “gains” can’t qualify as job creation in the normal sense, since they resulted almost entirely from the fact that each of those companies bought another Pentagon contractor and added its employees to its own payroll. CSRA, which General Dynamics acquired in 2018, had 18,500 employees before the merger, while Orbital ATK, which General Dynamics acquired last year, had 13,900 employees. Subtract these 32,400 jobs from the corporate totals and job losses at the firms become staggering.

by Nia Harris, Cassandra Stimpson, and Ben Freeman, Naked Capitalism |  Read more:

Image: via
[ed. See also: Congress Spending Surge is National Suicide (Ron Paul Institute)

Life is Tough

The word extremophile didn’t exist until the 1970s. It entered wide circulation only after 1979 when the US Navy’s submersible Alvin revealed ecosystems prospering in deep-ocean hydrothermal vents. The Alvin scientists discovered organisms living in superheated water and largely metabolising hydrogen sulphide, which until then had been thought toxic and incompatible with life. Interest in extremophiles has burgeoned in proportion as scientists have come to appreciate their abundance, as well as their novel physiology. There is a journal devoted to extremophiles, focusing on creatures that survive – even, thrive – in environments that are extremely hot, cold, highly acidic or alkaline, and so forth, circumstances that would be lethal for most living things.

Not surprisingly, extremophiles tend to be relatively simple creatures, notably invertebrates and especially bacteria and archaea, although there is no bright line distinguishing, say, arctic hares, which thrive in very cold habitats, from their rabbit relatives whose habitats are more temperate. But neither compares with those life forms whose existence excites the admiration and wonder of biologists. The concept itself is nonetheless anthropocentric, since denizens of, say, blisteringly hot hydrothermal vents would perish in our ‘moderate’ temperatures and pressures, which for them would doubtless be extreme. (...)

Purists don’t include tardigrades among extremophiles, since they don’t appear to be adapted to extreme environments per se – that is, like us, they do best in comparatively benign conditions, which, in the case of tardigrades includes the moist, temperate miniworld of forest moss and lichens.

Their probability of dying increases in proportion as they are exposed to highly challenging circumstances, so, unlike classic extremophiles, tardigrades are evidently adapted to what human beings, at least, consider moderate circumstances. However, they are extraordinary in their ability to survive when their environments become extreme. Not only that, but whereas typical extremophiles specialise in going about their lives along one axis of environmental extremity – extreme heat or cold, one or another heavy metal, and so forth – tardigrades can survive when things get dicey along many different and seemingly independent dimensions, simultaneously and come what may. You can boil them, freeze them, dry them, drown them, float them unprotected in space, expose them to radiation, even deprive them of nourishment – to which they respond by shrinking in size. These creatures, also known as water bears, are featured on appealing T-shirts with the slogan ‘Live Tiny, Die Never’ and in the delightful rap song that describes their indifference to extreme situations, entitled Water Bear Don’t Care.

Tardigrades might be the toughest creatures on Earth. You can put them in a laboratory freezer at -80 degrees Celsius, leave them for several years, then thaw them out, and just 20 minutes later they’ll be dancing about as though nothing had happened. They can even be cooled to just a few degrees above absolute zero, at which atoms virtually stop moving. Once thawed out, they move around just fine. (Admittedly, they aren’t speed demons; the word ‘tardigrade’ means ‘slow walker’.) Exposed to superheated steam – 140 degrees Celsius – they shrug it off and keep on living. Not only are tardigrades remarkably resistant to a wide range of what ecologists term environmental ‘insults’ (heat, cold, pressure, radiation, etc), they also have a special trick up their sleeves: when things get really challenging – especially if dry or cold – they convert into a spore-like form known as a ‘tun’. A tun can live, if you call their unique form of suspended animation ‘living’, for decades, possibly even centuries, and thereby survive pretty much anything that nature might throw at them. In this state, their metabolism slows to less than 0.01 per cent of normal. (...)

Given that tardigrades possess the kind of powers we otherwise associate with comic-book superheroes, it might seem that they are creatures out of science fiction, but maybe it’s the other way around. Liu Cixin’s novel The Three-Body Problem (2010), a Chinese blockbuster that broke all records for sci-fi literature in its home country, became the first book not originally published in English to win the coveted Hugo Award for best science-fiction novel in 2015. It describes extraterrestrials known as Trisolarans, whose planet is associated with three suns, the real-life interactions of which – as physicists and mathematicians understand – would generate chaotically unstable conditions.

Trisolarans, therefore, are unpredictably subjected to extreme environments depending on the temporary orientation of their planet relative to its chaotically interacting stars: sometimes lethally hot, other times cold, sometimes unbearably dry and bright, other times dark, and so forth. As a result, these imagined extremophiles have evolved the ability to desiccate themselves, rolling up like dried parchment, only to be reconstituted when conditions become more favourable.

I don’t know if Liu was aware of real-life, Earth-inhabiting tardigrades when he invented his fictional Trisolarans, but the convergence is striking. (In the interest of scientific open-mindedness, it should perhaps also be considered that maybe tardigrades are real Trisolarans, refugees from a planet that was chronically exposed to intense environmental perturbations. This would explain the puzzling fact that tardigrades appear hyper-adapted, able to survive extremes that greatly exceed what they experience here on Earth.)

by David P. Barash, Aeon |  Read more:
Image: Water bear (Paramacrobiotus craterlaki) in moss. Photo by Eye of Science/Science Photo Library
[ed. Plus, Tardigrades on the Moon! (Ars Technica).]

Hong Kong v. Beijing

It has been a hot summer in Hong Kong, in every sense. Massive protest rallies have rocked the city since June; on two occasions they have involved more than a million people – out of a total population of 7.4 million. The protests have taken on a weekly rhythm, as those of the gilets jaunes did in France earlier this year, stirring up every Saturday or Sunday, spreading into the outer reaches of the territory. The face-off between protesters and police has become more and more confrontational as the weeks have passed, and protest events have been planned for every weekend in August and on into September. After that, there will be elections for the district councils, and, next year, for the city’s Legislative Council. If there is to be a showdown between political forces – the protesters, the government of the Hong Kong Special Administrative Region (HKSAR), the central government’s liaison office in Hong Kong, and the party bosses in Beijing – what form will it take? Will it resemble the violent confrontation of Tiananmen in 1989, or will it be an electoral battle?

This summer’s protests were triggered by a government-sponsored bill to amend Hong Kong’s extradition law. But when I met some of the leading figures in Hong Kong’s pro-democracy movement in Taiwan at the end of May, they told me that the bill was just one of several urgent issues. None of them anticipated that a new, spectacular phase of Hong Kong’s struggle for democracy was about to unfold. (...)

The Umbrella Movement emerged during a dispute over arrangements for the election of Hong Kong’s chief executive. As far as Xi Jinping, who came to power in 2012, was concerned, this was unfinished business. People in Hong Kong didn’t realise at the time what Xi had in mind for them. They assumed the plan was still to honour the Basic Law, Hong Kong’s constitution, promulgated in 1990, according to which the ‘ultimate aim’ is that the CE will be elected by ‘universal suffrage’, ‘in the light of the actual situation’ in Hong Kong following a period of ‘gradual and orderly progress’. The same language is used about elections to the Legislative Council. In the annexes of the Basic Law concerning methods of election, the year 2007 is mentioned as a possible deadline for procedural changes, marking the end of the transitional phase following the handover of power from Britain to China.

The main political parties, pro-Beijing and pro-democracy, all agreed that universal suffrage should be used in the election of the CE in 2007 and the legislature in 2008, but this didn’t happen. Alarmed by a surge in political protests in 2003, the Standing Committee of the National People’s Congress (NPCSC), supposedly China’s supreme constitutional authority, issued an interpretation of the Basic Law which stipulated that Hong Kong would require Beijing’s approval before it attempted to amend the electoral system. Any proposed amendments must be approved by a two-thirds majority in the legislature. Subsequently, a conservative proposal put forward by the Hong Kong government was defeated in the legislature by pro-democracy members, who demanded the introduction of universal suffrage in 2007 – or, at least, a road map and timetable for achieving it.

No progress was made over the next few years, during which there were splits in the democratic camp. To allay public frustration, both Hu Jintao, China’s president at the time, and Donald Tsang, the CE, promised further reforms. An NPCSC decision reached at the end of 2007 explicitly stated that although there would be only minor modifications for the double election of 2012 – of both CE and legislature – ‘universal suffrage’ would come into force for the 2017 CE election, and would then be extended to the Legislative Council. Accepting this as the road map, the Democratic Party, Hong Kong’s largest political party, decided to negotiate with the Hong Kong government and Beijing over a proposal for reforms to the procedures for the 2012 elections.

But by this point new factors were affecting Hong Kong’s politics. The most significant was the rise of China, which made itself felt more forcefully after 2008, the year of the Beijing Olympics and the global financial crisis. In 2009, the sixtieth anniversary of the PRC, Chan Koonchung, a Hong Kong novelist and cultural critic living in Beijing, published a dystopian tale, The Fat Years, about a rising China under ironclad one-party rule. By 2012, Chan was arguing with pro-establishment Chinese intellectuals about their latest theory, according to which ‘one country, two systems’ wasn’t designed merely for Hong Kong but would bring about the wholesale rejuvenation of Chinese civilisation. This thinking connects Beijing’s rule to the concept of tianxia, or ‘all under heaven’, an idea drawn from classical Confucianism, in which the periphery subordinates itself to the authority of the sovereign centre, while the centre assumes responsibility for the periphery’s security and development. In that same year, Xi Jinping came to power. He was impatient with anyone who didn’t want to acknowledge the Communist Party’s absolute authority. The new thinking on Hong Kong, if subsequent developments are any indication, was readily espoused by Beijing. Meanwhile, in the summer of 2012, before Xi’s inauguration, Joshua Wong, a Hong Kong teenager, began a campaign against a proposed ‘moral and national education’ programme, and organised a rally attended by more than a hundred thousand people. The radical activism of Wong and his comrades announced the arrival of the younger generation as a formidable new force in Hong Kong’s politics.

As the dust settled after the 2012 elections, anxiety and frustration grew in Hong Kong over the lack of progress towards real democracy. Would Beijing renege on its promises again? Early in 2013, taking inspiration from the Occupy movement, Benny Tai Yui-ting, a law professor at the University of Hong Kong, floated the idea of ‘Occupy Central’ as a way to speed up democratisation. He was joined by Chan Kin-man, a sociology professor, and Reverend Chu Yiu-ming. Since 2005, pro-democracy activists had organised mock referendums to demonstrate that the Hong Kong public was ready for participatory politics. They believed that the ‘gradual and orderly progress’ towards universal suffrage was being delayed on the basis of the phrase in the Basic Law that said amendments would be made ‘in light of the actual situation’ in Hong Kong.

Occupy Central tried similar tactics in June 2014. In previous years, Beijing had attacked such efforts for their lack of credibility or – when the legislators collectively resigned in order to trigger an election – for wasting taxpayers’ money. In 2014, however, Beijing turned up the aggression. The State Council in Beijing issued a white paper explicitly stating that in China’s institutional design for Hong Kong the ‘two systems’ must be subordinated to the ‘one country’, and that the CE must both ‘love the country’ and ‘love Hong Kong’. The method of electing both the CE and the legislature must safeguard ‘the security and interest of the state’ against foreign interference. On the last day of August 2014, the NPCSC published its decision – known as the ‘8.31’ decision – on the election of the 2016 legislature and 2017 CE. Technically, Beijing agreed to allow ‘one person, one vote’ in the CE election. But in reality it had shifted the focus to the issue of who should be allowed to stand. There would be no more than two or three candidates, and the bar for nomination would be very high. Candidates would be chosen by a committee sure to be pro-Beijing and pro-business.

Both the white paper and the 8.31 decision were decisive in the emergence of the Umbrella Movement in late September 2014. Together, the two documents signified, first, that Beijing had once again broken its promise to bring universal suffrage to Hong Kong. Second, that by granting a narrowly defined ‘universal suffrage’ while imposing severe limits on the selection of candidates, Beijing was closing the door to further electoral reforms. And third, that Beijing had surreptitiously changed the criteria for evaluating the ‘actual situation’ in Hong Kong. By emphasising ‘one country’ over ‘two systems’, the two documents interpret Hong Kong’s ‘actual situation’ as a matter not of how ready Hong Kong’s people are to act as politically capable citizens, or how willing they are to participate in public life, but how ready they are to follow Beijing’s orders. From now on, there would be no rules or principles to follow, no process of argument or reason to rely on. Instead, there would be the game of trying to interpret the signs made by Beijing officials. This is the new understanding that is at the root of today’s protests. In 2014, however, many were not yet fully aware of this new normal.

The Umbrella Movement was started by students like Wong. The Occupy Central trio soon joined, and their 79-day action lasted until mid-December 2014, when police removed the last protesters one by one. The occupation cost the protesters dear. One of the leading organisations behind the movement, Hong Kong’s city-wide college student union, was plagued by disputes over tactics and strategy, and saw public support dwindle. Several student union branches withdrew their membership. Young ‘radicals’ started talking of the Umbrella Movement as a ‘failure’. This may be too harsh a verdict. In the face of pressure from Beijing, several new organisations emerged, led by young people advocating self-determination or outright independence for Hong Kong. These groups launched a campaign aimed at ‘reclaiming’ (guangfu) local places. Young people who’d been involved in the Umbrella Movement began to connect social welfare issues and disputes over development projects to overall political reform. (...)

Lessons have been learned from previous protests. The authorities always try to destroy a movement by identifying its leaders. The current protests have no leadership and are highly decentralised. Social media is the main vehicle of mass mobilisation. This time round, there have been no internal splits. Yet the solidarity is not rooted in political discipline: even when brothers climb a mountain together, each has to make his own effort. One action may be followed straightaway by another, or by a few days’ rest. Bruce Lee’s saying becomes a golden rule: ‘Water can flow or it can crush. Be water my friend.’

by Chaohua Wang, LRB | Read more:
[ed. See also: How the state runs business in China (The Guardian).]

The T-Mobile and Sprint Merger Is Blatantly Anticompetitive

There is no saving grace for the federal government approving what is on its face an illegal horizontal merger between T-Mobile and Sprint. The wireless market is already highly concentrated according to the Department of Justice’s own guidelines, and this merger only exacerbates the problem. Mergers that bring extreme levels of concentration are supposed to be blocked. No supposed benefit to consumers is actually waiting on this merger, including any and all claims about 5G. Here's what this merger really means: people will have fewer choices for wireless services, at higher prices, while innovation suffers.

It was not that long ago when the DOJ said that mergers that shrunk a highly concentrated market from four competitors into three competitors “significantly harmed” consumers per their own antitrust guidelines. What could possibly be different about this merger?

Ignoring Its Own Guidelines

To approve this deal, the DOJ had to ignore its own guidelines. The traditional scrutiny applied to these kind of mergers under the guidelines is to measure the market share of the relevant companies and combine them using a formula that indicates concentration levels in a market. That formula, called the Herfindahl-Hirschman Index (HHI), is calculated by squaring the market share percentages of each of the companies in a market and then adding them together. A complete monopoly has an HHI of 1002, or 10,000, while a highly competitive market can have a score close to 1.

For the U.S. wireless broadband market in 2018, the calculation looks like this:

AT&T (34.5)² + Verizon (34.6)² + T-Mobile (17.8)² + Sprint (13.1)² = 2875.86

This is considerably higher than 2500, the level at which the DOJ considers a market to be highly concentrated.

When two companies are merging, especially in already highly concentrated markets, the guidelines say that a merger that raises the total HHI by 100 to 200 points raises “significant competitive concerns,” and mergers that raise the index by more than 200 points “will be presumed to be likely to enhance market power.” The T-Mobile and Sprint merger blasts past the red zone and raises the market concentration numbers by 466 points nationally. By some estimates that number exceeds 1,000 points in some major metropolitan markets. This merger's anti-competitive warnings are effectively off the charts.

5G Hype Does Not Make an Illegal Merger Legal

The Sprint-T-Mobile merger has been the subject of a lot of 5G hype. EFF has called attention to the political leveraging of 5G before, and this merger is the perfect example of how it can be weaponized to blow holes in consumer protection laws. From the outset, Sprint and T-Mobile repeatedly over-represented, claiming the merger would bring 5G wireless services to all Americans. The companies’ argument is that Americans must accept fewer choices at higher prices if they want to see these new services. This is just untrue.

5G services can reach U.S. Internet users without the merger. The means of delivering those services is through government-regulated licenses. Those licenses can be modified with new policies to promote competition and access. In particular, instead of approving anti-competitive mergers, the government could simply change the terms of the licenses it gives companies for their use of spectrum, the radio frequencies used to transmit services.

Spectrum is not the scarce resource we are told it is, so long as there are effective rules for sharing it. We have government management of spectrum primarily to establish a logical structure for who can use the resource and how it can be used. Therefore, it is the government licensing of that resource that creates scarcity. When major wireless carriers are arguing that only a merger would allow them to deliver innovative new uses, they are arguing that scarcity of spectrum requires them to consolidate. This intentionally ignores the government's power to change the terms of their licenses, requiring competitors to share airwaves in order to enable 5G, without those competitors having to merge into a single company.

Innovation Will Suffer

At the end of the day, fewer wireless carriers means fewer risk-takers. And fewer risk-takers means less innovation.

The smartphone is ubiquitous in today’s wireless market, but it owes its success to a single carrier being willing to take a risk and try something different than its competitors. Prior to the iPhone, the wireless carriers dictated the design and functionality of cellular phones and were unwilling to push the envelope. Apple’s effort to build something very different than common handsets was originally rejected by Verizon because the carrier wanted more say over the design than Apple was willing to grant. Even the negotiations with AT&T Wireless (formerly Cingular) were contentious as they debated whether the phone would allow video streaming functionality, tethering, and video calling. But imagine if AT&T also rejected Apple’s idea? Apple would still have had other major national wireless carriers to pitch who might have a different set of values, and more willingness to try something risky to gain market share. That is the essence of how competition promotes innovation. The more entities there are competing with one another, the greater the possibility that one of those entities will try something different to win customers. (...)

Now it is up to the courts to decide if this merger can proceed. Ten state Attorneys General have sued to block this merger and they will make the case that what Sprint and T-Mobile are attempting is illegal. The difference this time is that unlike the last time the federal and state governments blocked a wireless telecom merger (the DoJ’s successful challenge to the proposed AT&T-TMobile merger in 2011), the DOJ and the FCC will be on the side of the monopolists in the courtroom.

But all is not lost. There is a burgeoning sense that many industries—not just Big Tech and telecoms (or even eyewear or professional wrestling)—have grown dangerously overconcentrated. America is losing patience with monopolistic conduct and lawmakers are waking up to public sentiment. Even though the DOJ and the FCC have changed sides in the fight against monopolistic mergers in the telecoms sector, there is a growing movement that is pushing back. This is just a skirmish in a bigger fight, and even if we lose it, the fight is just getting started.

by Ernesto Falcon, EFF |  Read more:

Image: via
[ed. After threats to break up Google, Amazon, Facebook, et al., here's what we get. Also: the "eyewear" example is the one that always bugs me. Luxottica has such an obscene monopoly on prescription eyewear and sunglasses (for decades) and... nothing.]

As Mortgage-Interest Deduction Vanishes, Housing Market Shrugs

The mortgage-interest deduction, a beloved tax break bound tightly to the American dream of homeownership, once seemed politically invincible. Then it nearly vanished in middle-class neighborhoods across the country, and it appears that hardly anyone noticed.

In places like Plainfield, a southwestern outpost in the area known locally as Chicagoland, the housing market is humming. The people selling and buying homes do not seem to care much that President Trump’s signature tax overhaul effectively, although indirectly, vaporized a longtime source of government support for homeowners and housing prices.

The 2017 law nearly doubled the standard deduction — to $24,000 for a couple filing jointly — on federal income taxes, giving millions of households an incentive to stop claiming itemized deductions.

As a result, far fewer families — and, in particular, far fewer middle-class families — are claiming the itemized deduction for mortgage interest. In 2018, about one in five taxpayers claimed the deduction, Internal Revenue Service statistics show. This year, that number fell to less than one in 10. For families earning less than $100,000, the decline was even more stark.

The benefit, as it remains, is largely for high earners, and more limited than it once was: The 2017 law capped the maximum value of new mortgage debt eligible for the deduction at $750,000, down from $1 million. There has been no audible public outcry, prompting some people in Washington to propose scrapping the tax break entirely. (...)

For decades, the mortgage-interest deduction has been alternately hailed as a linchpin of support for homeownership (by the real estate industry) and reviled as a symbol of tax policy gone awry (by economists). What pretty much everyone agreed on, though, was that it was politically untouchable.

Nearly 30 million tax filers wrote off a collective $273 billion in mortgage interest in 2018. Repealing the deduction, the conventional wisdom presumed, would effectively mean raising taxes on millions of middle-class families spread across every congressional district. And if anyone were tempted to try, an army of real estate brokers, home builders and developers — and their lobbyists — were ready to rush to the deduction’s defense.

Now, critics of the deduction feel emboldened.

“The rejoinder was always, ‘Oh, but you’d never be able to get rid of the mortgage-interest deduction,’ but I certainly wouldn’t say never now,” said William G. Gale, an economist at the Brookings Institution and a former adviser to President George H.W. Bush. “It used to be that this was a middle-class birthright or something like that, but it’s kind of hard to argue that when only 8 percent of households are taking the deduction.”

Mr. Gale, like most economists on the left and the right, has long argued that the mortgage-interest deduction violated every rule of good policymaking. It was regressive, benefiting wealthy families — who are more likely to own homes, and to have bigger mortgages — more than poorer ones. It distorted the housing market, encouraging Americans to buy the biggest home possible to take maximum advantage of the deduction. Studies repeatedly found that the deduction actually reduced ownership rates by helping to inflate home prices, making homes less affordable to first-time buyers.

by Jim Tankersley and Ben Casselman, NY Times | Read more:
Image: Alyssa Schukar

Cat Stevens

[ed. Eddie Vedder has a nice version, too.]

The Smiling Cinderella

It would be hard to find a player less likely to win the AIG Women's British Open than Hinako Shibuno. The 20-year-old from Japan is a rookie on the Japanese LPGA Tour, and when she teed it up at Woburn Golf Club, it was her first time playing a tournament outside of her home country. Before she arrived, Shibuno thought Woburn was a links course (it's a parkland course). No one considered her a potential winner, not even herself. She came into the week just hoping to make the cut.

But with a final-round 68 that ended with her holing a 20-foot birdie putt on the 18th, Shibuno became an unlikely major champion. She finished at 18-under-par 270, one shot ahead of Lizette Salas.

There was a hole early on that could have derailed this underdog story. Shibuno, who had made four bogeys in three rounds, four-putted the third hole of the final round to make double bogey. That might have set off a sequence of other mistakes, what one would expect of a young player who had never played in a major before, let alone been in contention. Instead, she birdied the next two holes. She faltered again with a bogey on the eighth hole, turned in one-over 37, then played the back nine in five-under 31. For the week, she played the back nine in 18 under.

What also might have unnerved Shibuno was that Jin Young Ko, No. 1 in the Rolex Rankings and coming off a win in the Evian Championship the week before, was lurking near the lead the entire final round. It didn't.

Meanwhile, Salas, paired in the same twosome as Ko, was having one of the greatest rounds of her career. She even had a five-foot birdie putt on the 18th hole that would then have forced Shibuno to make birdie to get into a playoff. But Salas' birdie attempt lipped out, and she had to settle for a closing 65 and a wait to see if her 17-under total might hold up.

No one would have been surprised had Shibuno not maintained her composure. But she continued to smile after every shot—her nickname on the JLPGA is Smiling Cinderella—and high-fived some of the many fans she gained this week as she walked between holes. Her routine never changed. She spends very little time over the ball, and her pace never changed through to the end.

The winning putt appeared to have too much speed. She lifted the putter and her left leg as the ball sped to the hole, hit the back of the cup and dropped. She had won the Women's British Open.

The win will change her life. She's now only the second Japanese golfer, male or female, to win a major, the first being Chako Higuchi, the 1977 KPMG Women's PGA champion. By winning the Women's British Open, Shibuno has the option to accept status on the LPGA, effective immediately. Or, she can choose to join the tour in the 2020 season. But for Smiling Cinderella, fortunate to have escaped any clocks striking midnight, she probably isn't thinking about all of that in the immediate aftermath of her unlikely victory, the stuff of fairytales. And with that back nine and the birdie putt win, the stuff of champions, too.

by Keely Levins, Golf Digest | Read more:
Image:Jan Kruger/WME IMG

[ed. Wow! Cinderella indeed. One of the best golf tournaments I've watched all year, and what an endearing young lady (and wonderful golfer).]