The Trouble With The Automobile

WASHINGTON – Recently, President Barack Obama has made orchestrated appearances at several US auto manufacturing plants. In each case he pointed out that, thanks to the costly sector bailout arranged by his administration in 2009, hundreds of thousands of jobs at GM and Chrysler have been saved. And to these we should add, says Obama, jobs at scores of auto parts suppliers, plus thousands of people employed by car dealers and by the whole economic universe sustained by the auto sector. So –says our President– thanks to US government inspired actions, domestic brand auto manufacturing survived. With the aid of tax payer money it had a chance to retool and reorganize and is hopefully getting ready to spring back as good as new. So, can we say that smart public policy saved iconic private sector car enterprises that had got themselves into terminal crisis? Well, yes and no.

Auto bail out: good public policy?

In the short term, the answer would be “yes”; if you are looking at the economic and especially political upside, (America votes for congressional elections in November), of salvaging a substantial chunk of American manufacturing and all the jobs that depend on it. In a recession ravaged economy, with millions of unemployed, every bit of shoring up helps, and the auto sector, especially in the Mid-West, is still a traditional anchor.

Not so good

But, if we are looking at the long term, this massive auto bail out may not be as inspired a policy as it may appear. Years from now, an economic and transportation strategy still predominantly and stubbornly focused on private cars will not appear that smart. The big auto bail out may be viewed in the future as just another case of a “sorcerer apprentice” government unwisely trying to be entrepreneur, pouring huge resources into ill fated industries. To put it differently, even assuming near term success in the government funded reorganization of General Motors and Chrysler, it is not so clear that auto industries should be and will be the backbone of healthy manufacturing ten, twenty years from now.

The future of the automobile: not so promising

And I am not talking about growing public backlash against pollution connected to car use. Of course, the systemic threat of global warming largely tied to the still unresolved issue of transitioning away from internal combustion engines that use gasoline or whatever other polluting fuel is a problem. Yet, I submit that even if we assumed a totally transformed auto industry, (let’s dream for a moment), ushering us into a new era of large scale production of affordable, zero emission electric cars running on electricity produced by renewable sources, this way magically eliminating the whole environmental dimension, I would still question the continuing value of the private automobile as the primary means for individual transportation in densely populated areas.

Congestion…

And the problem is massive, growing and intractable congestion, due to too many vehicles fighting for more and more crammed road surface. And congestion is not just a minor inconvenience that comes along with cars. Congestion levels are so high in large population centers that drivers are forced to crawl to most destinations at ridiculously low speed. Too many cars causing constant gridlock mean that the most basic value of the car, moving around fast, is essentially voided.

…..And its huge costs

The data is out there. Congestion, in America and elsewhere around the world has reached horrendous proportions in all large population centers. It means longer commuting time. It causes economic damage in terms of countless hours wasted every day by millions of drivers stuck in traffic, (not to mention rivers of gasoline burnt for no purpose). All these hours wasted affect economic productivity and quality of work performance by people stressed out by hours spent in traffic before getting to work. All this should amount to a fundamental reassessment as to the actual value of the car. Oddly enough, the car, a tool that is supposed to enhance quality of life, ends up diminishing it.

Congestion in emerging economies

Congestion has been an intractable factor already for decades in rich countries. And developing or middle income countries such as India, China, Indonesia, Vietnam, Brazil and others are catching up very fast. I have seen constant traffic jams and gridlock in Cairo, in Bangkok, in Paris, in Johannesburg, in Dhaka and in Beijing; but also in Maputo, Mozambique and in Lusaka, Zambia. All this indicates that, given the physical constraints of limited road surface and millions of motorist, (mostly only one per vehicle), competing for it, saturation point is quickly reached.

“Bus Rapid Transit” is an alternative to cars in cities

So, common sense would dictate that we have to devise alternative solutions, based on mass transit systems that can give people the same advantages of the car, minus the impediments of gridlock. And, among the many alternatives, Bus Rapid Transit, BRT, seems to be the most cost effective; with the advantage of having been implemented in many different cities. BRT systems have been tried, tinkered with and refined in many large cities around the world, starting decades ago following inspired actions of forward looking city planners in Curitiba, Brazil. (More on this below).

Myths about the car linger

But, while these alternatives are known and none of this is news, all of us, in the developed as well as in the developing world, are still psychological prisoners of a completely and demonstrably untrue idea whereby the car is still by far the best tool to get around. 

Perverse parameters: gridlock is a sign of affluence

Beyond this, almost perversely, many cars on the roads are still touted with pride by policy-makers as evidence of increased societal affluence. Thus, more cars indicate more wealth. Plenty of cars: well, this means that we, as a society, “really made it”. It does not seem that we can get to a point of “too many cars”. As cars are the most tangible proof of increased wealth, then total gridlock must be “the sign” of true prosperity. Talk about being confused about the nature of “real” progress: i.e. a process that would deliver tools that truly enhance the quality of life. What value is there in being stuck in constant gridlock?

Was it better when we were poorer?

A funny sequence of vignettes I recently saw in a modern art museum in Beijing illustrates this point.

 

Vignette 1: On one lane in a street hundreds of cyclists pedal away. But their eyes are fixated on the other lane in which a lone official car speeds away. Clearly there is an element of amazement mixed with envy in the expressions of the cyclists. The lone car and its passenger, probably a high ranking official, goes along very fast, while all the cyclists have to pedal to get to their destination.

 

Vignette 2: On one lane in a street hundreds of cars are stuck in infinite gridlock, inching forward in gigantic traffic. But all car drivers are fixated on the other lane in which a lone cyclist speeds away without any traffic impeding progress. They have the same expression of amazement and envy displayed by the people in the previous vignette.

OK, you get the drift: too much of what was supposed to be a good thing, in the end is not good at all. The car, supposedly the tangible sign and the symbol of new wealth for an emerging Chinese middle class, is actually making life worse. The lone bicyclist goes much faster than all the new cars stuck in traffic.

If there are diminishing returns with too many cars, then what?

So, the vignettes illustrate –convincingly– that there are diminishing returns to the ever expanding presence of the automobile. But this fact has not percolated into the realm of economic activities and innovative public policy. We are stuck in a past era in which different criteria were appropriate simply because cars were not that common and there was plenty of room for more. But today the rationale for focusing on the private car as the primary means to provide the benefit of personal mobility, especially in the context of large population centers, is no longer there. The continuing exaggerated weight of the auto sector in the general mix of a modern industrial society reflects outmoded thinking and a gigantic misallocation of resources –including the US, Washington-led, 2009 auto bail out.

The car in perspective

The car was a fine innovation when it was first introduced more than a century ago. For the first time in human history some people had the real chance to go places on their own, at unprecedented speed, using a mechanical contraption that became more and more affordable thanks to the assembly line and mass production. The car did away with horses and all that was necessary to keep them as the only motor force that mankind had known for millennia. (Railways had already provided solutions for long distance travel long before the car. But trains do not get you around in cities).

Good for a while

Historically, as cars became more affordable and their numbers on the road increased, we increased capacity of cities and roadways. We built highways that could accomodate more cars. But, overall, when we started reaching a saturation point, we could only make only marginal, less and less effective improvements: ranging from building more roads, adding more lanes to the existing ones, building large underground parking garages in cities and new shopping centers away from city centers, and so on. In many mature, large metropolitan areas this is it. There is no more room for more cars.

Lessons not learned

And yet, perversely, we continue doing pretty much the same thing — buying more cars– hoping that, somehow, congestion will be magically eliminated. In some large cities, such as London, local authorities tried to discourage the use of the private car by imposing a congestion charge to enter the central areas where traffic is worst. But this economic deterrent produced only moderate returns. And why is it that many prefer to pay extra and continue to drive? Because the alternatives are not that good. Yes, there is underground rail and there are buses in London. But the underground does not go everywhere; while buses move at the same speed of the surface traffic. And so we are still stuck in slow moving traffic.

Developing countries: also over reliant on cars

And apparently no lessons are learned from the experience of diminishing returns for the car in developed economies. In developing countries the story is unfortunately repeating itself. In now more affluent India or China as millions of people get better jobs, they immediately rush to buy a car. Soon enough too many cars create gigantic road congestion, (Beijing is a perfect illustration of this, and so is Indian high tech city Bangalore); thus doing away with the theoretical advantage of owning one’s own private means of transportation: speed of movement. 

Remedies

As for remedies, theoretically there are many. But the most popular ones come with staggering price tags. Of course, we know about underground metro rail systems. Several have been built all over the world. And this is good. The problem is that expanding or building from scratch these underground networks is horrendously expensive, given the huge cost of digging tunnels and underground stations. Thus new or significantly expanded underground rail systems that could provide a real alternative to the car for most people are inherently unaffordable in most instances.

Buses…

But, as mentioned above, there is a viable, affordable alternative in Bus Rapid Transit, BRT. Yes, I say “bus”. I know that in general the “bus” conveys the notion of unreliable service; of overcrowded, noisy, smoke belching, old vehicles; of people waiting and waiting at a stop in the rain, cold weather or suffocating heat, depending on where you are. And then, when the old bus finally arrives, there is the hesitant journey, proceeding slowly because the bus, beyond its many stops, is constrained by the speed of the rest of the traffic. So, how can the old bus be a good idea, a true innovative breakthrough?

…Provided that we have “bus only lanes”

Well, it can be truly innovative; but only if we stipulate that the bus is an advantageous alternative to the car only if it can use dedicated, “bus only lanes” with no cars or other vehicles slowing the flow of bus only traffic. If we can get to the creation of bus only lanes, at the same time building modern bus stations with the same features of metro stations for quickly boarding and changing buses, then we shall have the same advantages of underground systems in terms of speed and convenience; but at a substantially reduced cost, because you do not have to do the extremely expensive and time consuming underground digging. Buses travel on surface roads.

Why don’t we do it?

Well, if this is so simple, then why don’t we do it? Because there is still this fantastic psychological and truly emotional attachment to the car that makes it almost impossible for most people to think that it can be displaced in favor of public transportation. And this is the major obstacle for introducing BRT systems, as in most instances there is not enough space for both, dedicated bus lanes and private cars. If we go in favor of BRT, we have to ban or at least restrict cars. And this would be a tremendous change from all that we are accustomed to regarding mobility within large urban centers.

And so, gridolock notwthistanding, nobody dares to say that cars are the problem. There is fear of public backlash. It is assumed that people would idiosyncratically resist a ban or restrictions on cars, the only means of transportation they know and rely upon; while they will be suspicious of a public transportation alternative system that may not work as advertised and that may end up costing a lot more in terms of daily use.

Too many obstacles?

And here is the issue: psychological and ultimately political. Public administrators and civic leaders would have to stick their neck out and push forward something that most people would regard, at least at first glance, as crazy and unworkable. But, assuming the successful conversion of the public to this new way of getting around, how does all this work?

Bus Rapid Transit in reality

The bus system would work by creating a network of interconnected, dedicated bus lanes that would function just as the tracks work for metro rail, guaranteeing the unimpeded flow of buses at a consistently high speed. The buses would have user friendly, covered stops and stations that would allow easy and quick connections with other buses. These would function just like metro rail stations, allowing fast and easy transfers.

And there you have it. The same advantages of an underground metro system, minus the horrendous cost of digging the tunnels in which metro trains run. Conceptually this is simple. But is this unreachable utopia? Not really. While not main stream, BRT systems do exist. Decades of good records would indicate that this is a viable mass transit solution. Large cities have experimented with BRT and overtime have improved its functionality creating now models that can be replicated in different localities.

Successful implementation in Latin America and Australia, among others

Diverse large cities such as Curitiba, (population 1.6 million), capital of the state of Parana in Brazil, Bogota, (population 6.8 million), capital of Colombia and Brisbane, (population 1.8 million), in Queensland, on the east coast of Australia and the country’s third largest city, are good examples of the successful introduction of BRT systems. Through these bus systems people move around easily and comfortably at a reasonable cost.

Private cars still exist

Private cars still exist and they are used in these cities. But they are no longer the only default system for lack of alternatives. Indeed, data show that many people, while they still own their cars, use them far less. They prefer to go to work by bus, thus making their daily commute faster and far less stressful. Beyond that, fewer cars on the road mean less pollution and less money spent on gasoline –an added bonus.

Improved quality of life for city dwellers

Moreover, and perhaps most important, it is obvious that a user friendly public transportation system improved the overall quality of life for citizens. As moving around gets easier, it is also easier to access parks, public places, cultural and business centers and shopping. And this intangible impact that improves the way citizens experience city life is probably the most valuable positive change brought about by easy mobility. So, we know that BRT solutions that strongly reduce the multiple disadvantages of gridlock are out there. They are not utopias.

Can we get Americans on board this bus?

But, if this is indeed so, why is it that novelty hungry and efficiency obsessed Americans have not been in the forefront of this transportation revolution aimed at improving quality of life, something that we Americans always seek and appreciate? Why is it that we do not see delegations of US local authorities flocking to the municipalities around the world in which BRT systems have been successfully implemnted, in order to learn more? Who knows exactly why. 

A key reason is that America is the country in which the love affair with the automobile is so old and so deeply rooted that it is almost impossible to create the mental space for alternative thinking about mobility solutions, let alone alternative experimentation.  So, concrete evidence of successful bus based systems notwithstanding, there is little interest in them.

The powerful headwinds of the US auto and oil sectors

Of course, US public opinion has been shaped by powerful forces. For decades in America the auto and oil industries have had inordinate influence. The two combined have used their vast economic power to pay for lobbying aimed at safeguarding their vested interest in the endless perpetuation of transportation policies and systems founded on the private, gasoline fueled car. Their lobbying actions, resulting in direct and indirect subsidies to the oil sector, cars and road building, blended with the force of habit of people who never thought beyond owing a car, created an extremely powerful economic and political coalition favoring the status quo: in America there will be cars and nothing else. All this was and is still aided by a deeply entrenched popular culture that reinforces the enduring love affair with the automobile.

Cars forever?

As a consequence, most Americans honestly believe that the car is and will continue to be the only way to get around. And, as the conventional wisdom tells them that there are no alternatives, then millions of Americans are prepared to suffer in daily traffic, if this is the penalty to be paid for moving around in private vehicles.

The massive failure of the US auto makers in 2008 could have been an opportunity to pause and rethink the whole idea of the car as the default choice for getting around. But this was not done, because, in the midst of economic chaos, public officials in Washington did not think that they had the luxury to start a national conversation about the future of personal mobility strategies. In that chaotic period, public policy was all about containing the damage of economic meltdown. The decision to bail out Detroit was not made in the context of a careful rethinking of future personal mobility choices. The bail out was about salvaging jobs in a sinking industry, once upon a time a national icon. And so it was.

Will there ever be political space for fresh ideas?

But, by doing this, and by showing no interest in any new thinking on this subject more than one year after the emergency bail out, as illustrated by the President telling America how good the prospects are for US car manufacturers, the Obama administration is proving to be just as unimaginative and timid as all its predecessors. We are stuck in this vicious cycle whereby we still bet on cars because we do not even consider alternatives. The only reason why congestion is not getting much worse in this recession is because people do not have money and thus they buy fewer cars.

In the meantime, the citizens of Brisbane and Curitiba have the choice of moving around in convenient, affordable buses. And we thought that America was leading the world in user friendly innovation.

 




America: Open Doors to Foreign Innovators

WASHINGTON – There are two issues confronting America’s economic vitality. One is the disturbingly weak short term economic picture and how to improve it. The other –and indeed far bigger one– is doubts about US long term competitiveness.

Short term

The short term economic problem unfortunately gets to be intertwined, with the political need to force visible results in terms of new employment now, before the November mid-term congressional elections. So, the sluggish economy is both an economic and a political problem for the Obama administration and for the Democrats standing for re-election who have to support it.

The president’s party, no matter who is in power, usually loses seats in Congress after the mid-term elections. And the dominant issue causing voters to switch sides is usually the economy not doing as well as hoped/promised/expected. Voting against the president’s party two years after voting him into office is a way for the electorate to show buyer’s remorse. Of course, much of this happens because voters exaggerate the president’s ability to influence economic outcomes via public policy; and because those who get elected, and this includes Barack Obama, usually over promised and thus, two years later, are short on results.

Politics and economics blended

And this November, after two extremely difficult years managing the  Big Crisis, while trying to build foundations for new prosperity, the economy, while somewhat improved, looks a lot worse than what people expected and worse than what the administration promised. So, the only question is: how big a loss is it going to be for the Democrats? Will they lose the House? (Possibly). Or may be even the Senate? (Highly unlikely). Fearing the worst, the Democrats will calibrate their actions between now and November for immediate political effect, rather than long term economic soundness. And this usually means a lot of populism and not much substance.

Spin and counter spin

More broadly, the dictates of the political calendar and the unfolding electoral fight tend to pollute the debate and impede an intelligent conversation about what is really going on. The administration wants you, the voter, to believe that the glass is half full and getting fuller as we speak. The Republicans want you to believe the opposite. But, in this exercise in spin and counter spin, we miss a dispassionate evaluation of the patient.

We shall recover from the Big Crisis, but slowly

What is ailing America short term and long term? As for the short term, we could go on reciting once more the now canonic litany of what happened “to housing, sub prime mortgages, overleveraging by consumers, the banks”, and so on. But all this has already been beaten to a pulp and so let’s dispense with it. At some point, (although probably not soon enough to benefit the Democrats this November), we shall get out of the gigantic mess that unfolded in 2008-2009. Unemployment will go down some and the housing market will stabilize a bit. Nothing great, I am afraid, but better. 

Long term issues: loss of competitiveness

Regarding the long term, however, the prognosis is bad, as there is no indication whatsoever that there will be a truly dramatic take-off. The truly worrisome fact is that, because of other systemic problems, whose onset precedes the Big Crisis, we shall not spring back from the Big Crisis, eager and fighting. We shall come back, somehow; but fatigued and wary. And why so? Let me give a short answer that may not embrace the full gamut of relevant factors; but that is nonetheless central.

In simple words: it seems that we have lost our magic touch with rapid fire innovation and our legendary ability to bring it to market, thus constantly re-generating the economy. We are still innovation players, but we are no longer the only or at least biggest game in town. While it is true that, as part of a long term growth strategy, we have to fix our fiscal picture through a serious reform of an entitlement system that, if unchecked, will lead to ruin, this would take care of the public spending side. But what about the wealth generation side? How can we generate many new viable enterprises, innovation and new value?

Andy Grove’s alarm: we can no longer “scale up”

Legendary Intel corporation leader Andy Grove lamented in a recent essay in Bloomberg BusinessWeek that US high tech enterprises will lose whatever edge they still retain, as they are no longer capable of “making” here what they invent. Grove maintains that the ability to control the “scaling up” of production, after having proven the viability of a new product, is itself a critical part of the innovation continuum. Today, critical innovation may still take place in the US, says Grove; however, not just some but all of the “scaling up” now is done in China. And this is not just because of the basic economic advantages (cheap labor) that China has; but by default, as we have lost the industrial infrastructure that would give us the domestic scaling up option if we wanted to exercise it.

Grove believes that this is now irreversible and that this inability to make anything in high tech is a huge strategic disadvantage for America. The industries that do the scaling, he contends, gain “know how” and new skills in the process. In time, mastery of the scaling process will give them the increased knowledge and the tools to become the future innovators. Innovation –he concludes– will shift to the localities where the scaling up is already taking place. This will be the new innovation ecosystem –and it will not be in the USA.

Vivek Wadhwa: the real issue is nurturing small enterprises

Others disagree, maintaining that the real strategic asset of the US economy is still the army of small entrepreneurs who create the real, new jobs, thus constantly reviving, growing and positively transforming the economic landscape. If we want new growth and net job creation, maintains Vivek Wadhwa in an essay in response to Grove, also featured in Bloomberg Businessweek, then we should enable the many would-be entrepreneurs who are all too often blocked by lack of access to capital or their lack of practical understanding of how to properly start a business.

Make full use of university based research

He also argues that the supposedly state of the art pipeline between academic research and the market place is clogged and not as good as it could be. As a result, the vaunted American genius to rapidly bring innovation to market is far less significant then legend would make us believe. Much valuable research is lost. Good ideas hatched in the lab never get to see the light of day. But if we remove these blockages, says Wadhwa, if we create a workable pathway, then we shall see a renaissance of enterprise, along with job creation, pushed forward by the many who have the genius and the will to make new things happen.

Chris Farrell: get more foreigners here

Others like Chris Farrell, himself a Bloomberg Businessweek writer, look at the innovation picture from a different perspective: the unequalled American ability to draw into America talent from abroad. He notes that America is still an incredibly powerful magnet capable of attracting scientist and entrepreneurs from other countries. The data is indeed staggering. Consider this: half of the new Silicon Valley start ups are created by foreign born entrepreneurs, mostly Indian and Chinese. One quarter of all new US patents have gone to foreign born innovators. A huge chunk of the higher degrees in science and technology awarded by the most prestigious universities go to foreigners. And many of them end up staying in the US.

Impressive contribution to America coming from foreign innovators

And why so? Because, current shortness of breath notwithstanding, America still has an incredibly “enterprise friendly” ecosystem: a unique combination of Super Universities, National Laboratories, Venture Capital, depth and liquidity of broader capital markets, and a huge domestic market that is still the envy of the world. And this is why bright people come here. Farrell’s policy recommendation is very simple. Welcome all of them. Make it easier, for all who have the desire, to come and study here. After they complete their academic work, make it easy for them to stay here legally and set up shop.

In a word: let us use the built in advantage that we have got –an environment still quite favorable for innovators– and let’s make the most of it. We have spent decades to create MIT and Caltech and so on. Let’s make them the beacon, let’s use this native advantage in the same way as the Chinese use cheap labor and tax breaks to lure capital and to attract new business to their manufacturing facilities. The proven record is that foreign born innovators help America maintain its technological edge. They create businesses and employment. If so, the more, the merrier.

Why America can no longer produce its own native talent?

Farrell makes an excellent point. But his pragmatic recommendation implicitly accepts as a given the systemic failure of the US education system and American society in general to produce a sufficient number of native scientists and entrepreneurs. By recommending that we should get as many foreigners as we can get, so that they will feed the innovation and business creation pipeline, he sidesteps the painful question as to why Americans are now in many instances minorities within the student bodies of the premier US research universities.

Of course, the fact that we can attract foreign talent is a fantastic advantage that should be used for all it is worth. But we cannot ignore the baffling shortcoming of a US society and education system incapable of nurturing a new generation of talented researchers and innovators.

Do we need American born innovators?

Oddly enough, the need to favor American native talent in science was pointed out long ago by Hungarian born physicist Edward Teller who came to the US as an immigrant and later on became the father of the H Bomb:

 

“If we’re not going to make a determined effort for more education in hard science and engineering, then we better stop thinking of the United States as a leading nation in the world.”

Historically America blended well native and new comers talent

So, while an immensely talented and extremely valuable immigrant himself, Teller believed that America needed to breed its own. Was he right? To a large degree, yes. The magic of America is or at least has been in the ability to blend native talent and expertise with an almost constant stream of new intellectual ingredients brought in by various waves of new comers who came to America because of its openness and because of the real opportunity that it offered to foreigners. Edward Teller was one of them. And he was not the only one.

A long list of illustrious foreigners

The list is long; and here are only a few examples. Scotland born Andrew Carnegie, steel industry leader and later on creator of one of the most remarkable philanthropies in US history. Nikola Tesla, innovator in electrical power, coming from Serbia. And of course physicist Albert Einstein. And then Hans Bethe, Felix Bloch, Enrico Fermi and Emil Konopinski, himself US born; but son of Polish immigrants. Hard to think of the “Manhattan Project” that brought about the A bomb and the end of the war with Japan without them. And impossible to think of the US space program without German born Wernher von Braun brought to the US after WWII and described by some as “the greatest rocket scientist in history”.

And, if we get closer to our times, former Intel CEO Andy Grove, referred to above, an immigrant from Hungary. And what about the top leadership of Pepsico? CEO Indra Nooyi, born in India, Massimo d’Amore, CEO of Pepsico Americas, born in Italy. And then we have IT and then energy venture capitalist Vinod Khosla, from India. And this is just a tiny bit of what would be an incredibly long list of illustrious and not so illustrious names; (this second list woud include the Indians running hundreds of motels, the Koreans operating so many tidy, immaculate grocery shops, and so on. These people did not go to MIT. But they were attracted by the possibility of “making it” in America, through hard work and personal drive. They enrich America; and they should be welcome, just as we welcome IT scientists).  

Shall we rely on foreigners alone?

Sure enough, the very talented foreign scientists and innovators came to America, as opposed to Romania, because here in America there was a truly unique breeding ground, open to scientific innovation and its commercial applications. And yet, if we admit that America has lost (for good?) its internal regenerative ability, then future success in innovation is entirely in the hands of willing foreigners that will come here and provide the brains and the managerial talent that native born Americans can no longer supply. If this is so, then we are saying that the special “US blend” has to be, not just periodically reinvigorated, but actually created and nurtured primarily by foreign talent. This would be new. Will it work this way? We do not know. But you can bet that America would a lot different.

In the meantime, let’s make it easy for those who wish to come

Be that as it may, just like Chris Farrell in his piece, I am for open borders and support for the foreign scientists, innovators and entrepreneurs who still believe that there are unique opportunities for people like them to set up shop in America.

I would like to believe that their interest in coming here and doing things here encompasses more than the dream of big bucks. In America, unhindered creativity is possible because there is Freedom. While the connection between the two may have become somewhat dim for the US native population, many who come from countries in which free inquiry (not just in science) is either thwarted or made complicated by lack of vision or capital should appreciate the real value of what they can find here.

“Land of Enterprise”

As Edward Teller said long ago, we have to nourish our own. And this may be possible if the right education and economic policies are designed and implemented. And we should vigorously work on them.

But, in the meantime, by all means let’s use the appeal that America still has, as “The Country” that holds research and enterprise in high esteem. Let’s make this our brand: “America, The Land of Enterprise“. Let everybody know about this. And let everybody who aspires to new discoveries and new businesses come here and feel welcome.

Innovators are welcome

Long term, getting here the tens of thousands who at the moment may be contemplating this step of “Coming to America”, as the song says, may do more good to stimulate the regeneration of America’s fiber than pumping more tax payers dollars into this or that subsidized sector. If we need to make it a lot easier for those would-be entrepreneurs who wish to come but still hesitate, as they think about the complexities of getting to the US and then the challenge of navigating the still forbidding immigration processes, by all means let’s do so.

Ultimately, high quality human capital is the most fundamental strategic asset. Our ability to attract it here is our strength. And so let’s use this strength!

 

 




Counterinsurgency against a political clock

WASHINGTON – How are we doing in Afghanistan, now that General David Petraeus has taken over? Well, it depends on who is answering the question. The administration, of course, would like to present a bright picture, as evidence that its policies are working. However, a few days ago, Ambassador Richard Holbrooke, Special Envoy for Afghanistan and Pakistan, in testimony before the Senate Foreign Relations Committee, seemed to be in great difficulty explaining to skeptical senators, including many Democrats, what progress is being made in Afghanistan several months into the new policies that followed the major strategic readjustment ordered by president Barack Obama late last year.

US goals in Afghanistan

As we know, the new strategy called for a significant increase of US forces, (about 30,000 additional troops), along with additions coming from NATO allies, (this is ostensibly a NATO operation), and others. There would also be a redoubled, (“new and improved”?), comprehensive effort to bring about economic development, through more and (this time around) better aid programs. The idea was that a new two pronged (military and economic) vigorous counter insurgency effort would weaken the Taliban, strengthen the shaky Kabul government led by President Hamid Karzai, while winning over many Afghans still uncertain as to who would win the war and thus who they should support. The new strategy was accompanied by great confidence in eventual success. Indeed, it was indicated at the time that by July 2011 there would be a beginning of US withdrawal. In brief, this was the political message to a suspicious US public: “quickly in”; “victory”; and then quickly out”.

Support for the US?…

Anyway, one of the seemingly positive things that Holbrooke stated during his recent testimony is that several opinion polls, such as they are in the context of a primitive country, indicate that at most only 10 per cent of the Afghan population supports the Taliban. His implicit point is that the other 90 per cent are on our side; and this would be good news, showing that the balance has shifted in our favor. Well, not quite so, it seems.

…Not so great after all

A Reuters story (July 19, 2010) stated that:

“A recent poll found 75 percent of Afghans believed foreigners disrespect their religion and traditions, 74 percent believe working with foreign forces was wrong, 68 percent believed foreign forces did not protect them and 65 percent wanted the Taliban and its leader, Mullah Mohammad Omar, to join the government”. Given the overall messy conditions on the ground, I have no idea as to how reliable any poll taken in Afghanistan may be. But these numbers, even if inflated on the negative side, are truly worrisome. Holbrooke pointed out that only 10 per cent of the people are with the bad guys.

 

Whereas, the poll cited by Reuters would indicate that more than 70 per cent of the people believe that “we” are the bad guys, or at the very least that we are not be trusted. This does not imply, of course, that more than 70 per cent of the people are actively engaged in armed resistance against US forces; but it surely does not suggest support or confidence in what we are there to do. So much for progress, thus far, in “winning hearts and minds”.

The challenge before us

But there is lot more on the negative side. A The Wall Street Journal story (“Petraeus Sharpens Afghan Strategy“, July 22, 2010), reporting on some adjustments being made by General Davis Petraeus upon taking over as Commander in Afghanistan, commented that :

“[…]. An effective counterinsurgency strategy can take years, and it remains unclear whether Gen. Petraeus approach will work in Afghanistan, where volatile tribal politics, a lack of infrastructure and rudimentary local security forces pose significant challenges.”

 

The conditions in Afghanistan

Well, note the passing comment that this counterinsurgency operation in Afghanistan “can take years“, while the stated US goal is to start withdrawing at least some troops by July 2011. As for the “significant challenges” referred to in the article, they are a euphemism for “incredible obstacles“. Let’s see how the CIA World Factbook –this is our own US Government speaking– characterizes Afghanistan’s economy:

“[…..].Despite the progress of the past few years, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid, agriculture, and trade with neighboring countries. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Criminality, insecurity, weak governance, and the Afghan Government’s inability to extend rule of law to all parts of the country pose challenges to future economic growth. Afghanistan’s living standards are among the lowest in the world. [Emphasis added].While the international community remains committed to Afghanistan’s development, pledging over $57 billion at three donors’ conferences since 2002, the Government of Afghanistan will need to overcome a number of challenges, including low revenue collection, anemic job creation, high levels of corruption, weak government capacity, and poor public infrastructure
How poor is poor Afghanistan?

Got that? And bear in mind that, in the context of Afghanistan, one of the poorest countries on earth, “poor public infrastructure“, does not mean an insufficient number of 4 lane highways, it means that there is almost nothing there. Think of this: the installed electrical capacity of Afghanistan, a country with 29 million inhabitants, is smaller than the capacity installed in The Cayman Islands, a country with a population of 50,000. Yes, you got that right: 50,000 people in a high income, small Caribbean country have more electricity than 29 million Afghans.

Millions of illiterate children

And other data indicate the magnitude of any effort aimed at improving economic conditions, a key component of an effective counterinsurgency strategy, based on the idea that you will “win hearts and minds” by demonstrating how you can create positive change for the local population.

Afghanistan is bigger than France, with a population of about 29 million. Of these, 42% are children below the age of 14. Due to poverty, their future is grim. Life expectancy is 45 years. And the chances of making things better for all these children are slim. The overall literacy rate is about 28%, and for girls a miserable 12%. What future can there be for an illiterate girl in a poor country in which women, because of custom and religious belief, are treated as second class beings? And what can the US do to seriously improve literacy, while providing economic prospects to millions of poor children? Overall, little. And in the short time, very, very little.

Poverty, corruption, ethnic strife, terrorism…..

A per capita GDP of about $ 800 a year places Afghanistan towards the very bottom of world rankings: number 219 out of 227 listed. Add to this the internal divisions among at least 7 major ethnic groups and languages, a weak government, a flourishing narcotraffic (opium) that funds local criminals, war lords and the Taliban and you get the picture of the country that we are trying to modernize, and very fast at that, as we are fighting an insurgency which unfortunately causes the death of many civilians caught in the crossfires.

And yes, I almost forgot: rampant corruption. For instance, what do we make of the confirmed fact that billions of dollars leave the country every year? How can one possibly justify this exodus of capital from a poverty stricken nation that literally needs every penny that would come in? And it is in this environment that the Taliban-led insurgency has regained ground, proving to be an almost intractable pest.

And we want to defeat an insurgency –and we are in a real hurry to get it done fast– in this most intractable environment by sprinkling around some more troops and a few billions of dollars?

Well, Good Luck!

We cannot win

I am not suggesting here that our goal of denying sanctuary to Islamic radicals in Afghanistan is a lost cause. But I am suggesting that this strategic objective cannot be achieved in the way envisaged by the administration which is based on modernizing (at least to a significant degree) the country in order to inoculate it from terrorists.

The Obama “Afghanistan Plan” created an incredibly tall agenda and thus a huge challenge for itself. A challenge that cannot possibly be met with the resources so far allocated, even if we include more troops and more money for development.

And certainly US goals cannot be met within the official time horizons, whereby we start moving forces out by July 2011; thus  implying that about a year from now the US will be able to start handing over important responsibilities to supposedly capable Afghan entities, military and civilian. This scenario is highly unlikely. Nothing thus far indicates that the Afghan state will be capable to do much more a year from now. As the article quoted above says, counterinsurgency may take years. In fact I think that we are talking decades.

An alterative: rely on local power structures

The issue here is that we have chosen a counterinsurengy strategy to achieve counter terrorism objectives. In principle, it may look good to “clean up” Afghanistan and fix it so that it will be inoculated against the temptations of radicalism. In practice, this is a fantastic objective that cannot be reached.

Is there an alternative? I have said before and I repeat now that we may be able to achieve our basic counter terror objective of denying the Taliban and al Qaeda a safe heaven in Afghanistan by entering agreements with local war lords and the power structures, such as they are, that they embody. And this choice is not because we want to fragment Afghanistan into tribal or ethnic enclaves, or because we like the war lords. It is because building up, almost from scratch, a strong and credible central Afghan state is just too complicated, unless we assume decades and unlimited resources to do the job.

“No Taliban”

The agreement with the local chiefs would essentially say: “We support you. We give you money, arms, and resources. On one condition: No Taliban. No al Qaeda. If you break this agreement we will deal with you”. With US money, the local lords will strenghten their power, while hopefully providing a little better for their people. This would be the locally based anti-Taliban force –a force that, if we are straight with them, (“we shall support you, we shall give you arms”), would have a stake in resisting the insurgency. (Note that Gen. Petraeus is concocting something similar, taking the form of beefed up local militias. But it is a contradictory goal, in the context of the declared US strategy, to empower new local militias, while pursuing the parallel objective of building up the capability and reach of Kabul armed forces and police).

Messy but it might work

All this may not be tidy and orderly; but it may work. The advantage of this approach is that it would rely heavily on local resources, with indirect US support; while allowing the US to reduce its visible presence, itself a negative factor that strengthens anti-foreign feelings and thus the resistance.

Of course, this looks messy. And this would not fit the nice, canonic, much beloved “text book” nation-building paradigm predicated on: 1) fixing the Kabul government, 2) creating capacity for all the line ministries, 3) investing in the economy, 4) improving revenue collection, 5) reforming the judiciary, 6) ensuring free elections, 7) eradicating corruption, 8) providing health care, 9) creating schools, etc.

To do things “right” may require decades

The problem is that the tidy nation-building goals may require a generation or more of steady investments and a lot more fighting before we can see truly appreciable results: i.e. the modernization of a poor country now virtually in the Middle Ages. But, somehow the disconnect between lofty goals and the harsh reality on the ground is lost.

Agenda hostage to US politics

The net result is that we have unachievable policy goals to which we have to add that all this grand strategy has to be accomplished  within time constraints created by a restless US public opinion that wants “this thing” to end as soon as possible. And on top of that we have to add the additional constraints imposed on the operation by the US political calendar: “Win and show soldiers headed home before the 2012 presidential  elections“. Hence the incoherent message whereby we redouble our efforts now and at the same time announce that we shall start packing next year. This would be fine if our goals were reachable within such a short time. But they are not. Talk about squaring the circle.

Win before the elections

But in so doing, by defining goals that it cannot achieve, within time horizons that are almost laughable given the magnitude of the tasks, it seems to me that the Obama administration has painted itself in a corner. Its only way out would be by engaging in fact manipulation, by inflating results and “declaring victory” next year, essentially lying to America and to the world.

This way we cannot achieve the goals

My simple contention is that the Afghan policy goals as stated are unattainable within the time frame indicated and relying on the resources so far allocated. General David Petraeus may be a genius and the best we’ve got when it comes to counterinsurgency. But he does not have divine powers.

America: no more money for distant wars

And if the above were not enough, let’s consider this: The US Government is nearly broke. With mounting political pressures to cut public spending, the Afghanistan operation, rightly or wrongly, is beginning to look more and more like an extraordinary luxury that we can no longer afford –at least for the average voter who may not understand the possible long range ramifications of anarchy and what an eventual Islamic take over in Afghanistan may bring, including more attacks against the US homeland.

And this is why the administration created an arbitrary but politically savvy short time horizon for this campaign. Message to the wary voters: “Not to worry. We’ll be done in no time“. But, while clever, this is really a bad idea. Fighting a messy guerrilla war is bad enough. Fighting a war with the proviso that you have to win by a due date, because the country will not support it much longer is probably too much –even if you have David Petraeus in charge.

As for our Allies willingness to help us, beyond the inadequate levels provided so far, well this is another sorry chapter in this story which I’ll save for another time.

 




Economic Aid to Pakistan?

WASHINGTON – Secretary of State Hillary Clinton was in Pakistan just recently on a mission aimed at showing US political good will and steadfast support for the country’s economic development agenda. Building on top of an already substantial 5 year aid package totaling about 7.5 billion approved last year, Clinton announced an additional 500 million to be delivered to Pakistan. So, it seems that we have more money going to a deserving critical partner in a conflict where we need to succeed in order to defeat al Qaeda and recreate regional stability. Is this good news? Well, unfortunately much less than it may appear. 

Serious money?

First of all let’s place this multi-year aid package in context. Even in this world in which we have gotten accustomed to figures exceeding hundreds of billions or trillions to measure almost anything worth noticing, (Wall Street losses, General Motor and Citigroup bailout, federal stimulus package, TARP program, Fannie and Freddie, you name it), a foreign aid package totaling several billions, especially if aimed at a developing country in which American dollars should go much farther, seems respectable. It seems an amount large enough to foster credibility for US policies towards our embattled ally, Pakistan, facing a hardened insurgency in a large area right at the border with Afghanistan; along with ongoing fundamentalist violence across the rest of the country. But is this package really big enough to make a difference in Pakistan? It is sizable yes; but probably not that meaningful, given the reality of a very large and still poor nation.

Pakistan at a glance

Pakistan is a huge country, almost twice the size of California, with a population of about 177 million, and this is more than half the US population of about 300 million. In the words of the US Government (CIA World Fact Book):

 

“Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and low levels of foreign investment”.

Sure enough, the same document also points to progress in getting more people out of poverty in recent years. And yet the script continues by stressing the systemic constraints of an underdeveloped economy still largely dependent on low value textile exports. Furthermore, Pakistan is a young country in which 40% of the population is composed of children under 14, while half the population is illiterate, with 2 girls out of 3 having no access to schools.

The economy

If we look at the economy as a whole, Pakistan has a GDP of 168 billion, if measured according to official parity, or a higher one of 449 billion if we look at purchasing power parity. This national wealth, though, divided by the huge number of people, gives a paltry per capita GDP of 2,600 a year, placing Pakistan at number 170 out of 227 countries listed. Not rock bottom, but close. And, if one considers large income disparities, with great wealth in the hands of very few, the conditions of the poor are clearly a lot worse than this average would suggest.

Can this aid make a difference?

So, Pakistan is a country twice the size of California, with more than half the population of the US, with an under developed economy, widespread poverty, millions of children without schools and thus little hope for their own future economic advancement; all this compounded by lack of basic services, such as potable water. A recent study indicates that up to a third of the population, (this is more than 50 million people), lack access to safe drinking water. As a consequence, 630 children die, every day, from diarrhea. 

Corruption and bad governance

Last but not least, Pakistan has a traditionally clannish and elitist power structure, with a proven record of corruption and decision-making processes ruled by the imperatives of patronage as opposed to real public policy considerations. (A recent Google search for “Pakistan corruption” gave almost 6 million entries! Yes, almost 6 million, a popular subject, it seems). Corruption and bad governance is another serious impediment to development.

Add violence to the mix

In all this, let us not forget the primary reason for US involvement in Pakistan: the festering wound of violent fundamentalism that has made several areas, especially the North West of the country, almost completely impenetrable, while it has reduced overall security in other areas, including Islamabad, the capital city, often targeted by terrorist attacks.

Clearly, a perception of widespread insecurity in an embattled developing country engaged in a counter insurgency while fighting terror groups is of no help in an overall effort to encourage investments and new enterprise –largely the purpose of the US aid package.

US: not so good at delivering value through aid programs

Beyond all this, quite apart from these Pakistani internal problems, just to make things worse, we have to add that the US Government has a pretty bad record in successfully delivering value for money through aid packages. American foreign aid mechanisms are complicated, bureaucratic, process driven, risk averse and quite often inefficient. This is in part because it is objectively very difficult to design and implement good programs. But, aside from that, lack of effectiveness  is due to the low morale of an understaffed USAID (US Agency for International Development) bureaucracy, weakened by massive defections of skilled personnel over many years.

Widespread outsourcing

This lack of in house professional resources has made USAID almost totally dependent on contractors to implement programs. This outsourcing requires oversight. And so programs are top heavy on administrative mandates, monitoring and endless reporting. All this means that a huge chunk of the allocated aid programs budgets is used to pay for procedures and the fulfillment of established protocols, as opposed to implementation. In the end, after subtracting all administrative costs, contractors expenses and profits, not much money is left for actual aid delivery. It is true that Secretary Clinton has placed development programs very high on the list of US foreign policy priorities and thus better results are to be expected down the line. Still, while reform is welcome, it is altogether unlikely that any changes being worked on now will have a short term impact on increased aid effectiveness to Pakistan. 

Huge gap between needs and amounts of aid

If we take all this together –the amount of money versus the needs of an enormous, poor country, coupled with the systemic inefficiencies that have plagued the delivery mechanisms from the US side– it should be clear that these aid packages announcements, however well intentioned they may be and however significant the figures may appear, have mostly a political, feel good objective.

Aid is a way to reaffirm political support for the leadership in Islamabad. But, as far as concrete impact is concerned, not much there. And this means that there is also very little political benefit in terms of increased of US popularity among ordinary Pakistanis; most of them untouched by US aid programs.

Supporting Pakistan is a good objective, the tools are modest

It is perfectly understandable that the Obama administration is trying and will try anything within its powers to shore up, help, support, you name it, this technically democratic Pakistani government, (in principle at least a big step ahead compared to the previous military government).

But it is also clear that Pakistan needs are gigantic, the amount of money provided by US tax payers, relative to needs, altogether modest; while the effectiveness in delivering results not at all a sure thing, given still unresolved systemic problems in effectively delivering aid. In short: problems enormous; money inadequate; aid delivery mechanisms inefficient.

The US has become much poorer

And, if all this were not enough, US policy-makers will not be able to indefinitely dance around the basic fact that America is running out of money.  Indeed, this effort at showing good will towards Pakistan, a crucial ally in the uncertain conflict against fundamentalism, via foreign aid, is taking place in the middle of a US economic crisis that is likely to turn into an economic realignment of historic proportions from which America will emerge as a diminished and far less competitive power on the world scene.

Simply stated, there is no more money, while we have to deal with crushing levels of debt, public and private. Unless the US will be able to engineer a major, fundamental turnaround of its domestic economy, a turnaround that will recreate leadership in key high value sectors and, along with that, reestablish long term international competitivenss –a possible development, but not at all a sure thing– America has run out of gas.

Debt and more debt everywhere

The US is now and will be saddled for several years, (even if we choose to believe the more benign scenarios), with levels of debt that have put America in the same boat of impoverished European spendthrifts, (at least in terms of ratios of public debt to GDP). In the meantime, efforts notwithstanding, the US economic engine is sputtering, now moving forward yes; but not fast enough to generate the vast amounts of fresh new wealth that will be needed to get us on a path of new investments, new employment generation and eventually sustainable levels of debt.

The deficit debate: cut foreign operations

And public awareness of this huge debt issue has created alarm. A Recent TIME magazine poll indicates that the public is concerned with high levels of federal expenditures in the midst of all this debt. Americans want cuts. And where should we cut first? Yes, you guessed it: the war efforts in Iraq and Afghanistan, (55% want this), and the overall defense budget (46% in favor).

Only small minorities would advocate cuts in politically ultra-sensitive entitlement programs such as Social Security, Medicare or education, even though the real money is there. Polls may change, of course; they always do. But it is difficult to believe that a country with a stubborn almost 10 per cent unemployment, a country in which half of minority children do not graduate from high school and in which access to public universities is becoming more and more difficult will choose to cut social spending and start cheering expensive, protracted and uncertain foreign and security policies. Policies whose value to American security, (regardless of intrinsic merit), beyond a small circle of policy experts, is not at all well understood by the public at large. 

So, in the end, the 7.5 or 8 billion dollars for Pakistan, as problematic as this aid is in terms of achieving anything worthwhile with it, defies gravity. It is not supported by the national fiscal realities and it has little, if any, public opinion support.

Do not expect more of the same in the years to come.




Happy Fourth America

WASHINGTON – I run into an old acquaintance in the elevator. A few pleasantries are exchanged. And his farewell greeting is”: “Happy Fourth”. Appropriate, of course, as we are getting close to the Fourth of July. But I would like to think that something more meaningful is conveyed in what may otherwise appear as just ritualized wishes –something polite to say just because we are very close to Independence Day. Indeed, “Happy Fourth” may convey more.

Optimistic about The Fourth

If we want to be optimistic, celebrating the Fourth of July is an opportunity to reflect on what was meant, so long ago, at the beginning of a novel experiment aimed at creating sustainable institutions of self-government. Think of it: the first attempt at creating a republic in the modern era. And this effort was supported by uncharacteristic faith in enduring human wisdom, as success of self-government whose authority would rest on consent rather than force was largely predicated on the virtue of the citizens.

Indeed, The Declaration of Independence of July 1776 and the train of events that followed it represented the very first attempt in the modern era to give life, in a very practical way, to an elected government conceived as an instrument created to protect individual liberties. Such an idea up to that point had only been declared in books. Amazing that anyone really believed that this experiment based on the continuing ability to strike careful balances could come to life and then survive.

America is a Utopian Dream that came true

It may appear odd, but we have to come to an understanding that the creation of America was and is the wishing into reality of what could  only be a Utopian Dream –a Utopian Dream that, however, despite all odds survived the tests of real life application and overall became more real than unreal. Most Political Utopias either stayed just that, interesting dreams, perhaps, but only mental creations of imaginative individuals, or –much worse—they came to life as hellish manifestations of human perversion and madness.

Other Utopias not so good

The still cherished 1789 French Revolution was theoretically about justice, of course; but justice to be realized through the gruesome physical elimination of entire social classes. At some point the revolutionaries thought that the best way of achieving their noble goals was by creating “Terror”. In the end the whole thing collapsed, to be replaced by a new autocracy, with Napoleon Bonaparte as Emperor. (The French had to try several times, before giving life to a viable modern republic not too long ago). And the connection between the sacred duty to kill in the name of a beautiful idea has been the common thread of many Utopias, from Bolshevism to Nazism up to Pol Pot and the Khmer Rouge.

Do humans have enough wits to manage self-government?

The American Revolution was about obtaining freedom from foreign rule, of course; but this Revolution was meant as the necessary precondition so that a novel form of government, based on all those famous European writings on natural law and constitutionalism that all the leaders had studied and absorbed, could be created.

it was a Utopia in as much as the whole idea of self-government was premised on the assumed existence and self-perpetuation of a high degree of human maturity, reason, restraint and willingness to respect rules of fairness, coupled with the ability of always striking a reasonable balance between the rights of the majority and the need to prevent the majority from crushing the minority. How could one reasonably believe that such wisdom could exist?

“A Republic, if you can keep it” –Benjamin Franklin

In truth, at the time many argued that such a high level of maturity might be hard to achieve and, if achieved, difficult to keep. But  nonetheless they went ahead. Again, uncertainty about the success of the enterprise remained. Indeed, a few years after the Revolution, at the end of the Philadelphia Constitutional Convention of 1787, Benjamin Franklin famously replied to someone who asked him what was it that the Convention had accomplished: “A Republic, if you can keep it”.

And so Franklin tersely uttered that this New Republic, itself the child of the Revolution, was only a tentative accomplishment. It was there, but only as long as the citizens would have enough wits to understand its value and do what would be necessary overtime to keep it.

Major flaws in the design

And, of course, we do know that right at the beginning there were major flaws in the whole design. The obvious “original sin” at the very birth of America was the inability, at that time, to seriously deal with the glaring contradiction represented by professing the universal principle of human equality and the institution of slavery. And we know that it took almost a century and a bloody Civil War to legally rectify this sin; while it took another century to eliminate, at least formally, the segregation regime that in practice had the same effect as slavery.

Well, as imperfect as it is, the creature of the Utopian Founders is still much better than most other human concoctions in the sphere of government. Another Fourth of July gives us the opportunity to reflect on what is it that we have done and what needs change.

Education is a key ingredient

Let me offers my thoughts. The Founders, as children of the European philosophy of the Enlightenment, had great faith in the power of education both to lead men to achievement and to give them the intellectual tools to protect the very republican institutions that they were forging at the time.

Impossible, they believed, to have people who are both ignorant and free. Knowledge empowers people in a healthy way, they thought. It gives them tools to better understand all things, including the actions of government and the ability to act against nefarious behavior.

Education for the good of man and the good of the commonwealth

And, even though this was not explicitly stated as a “right”, it was obvious that for them the whole American experiment was predicated on the availability of education as the tool that enables the cultivation of the human spirit and the ability to improve our knowledge in all fields. There was for them a seamless continuity between greater knowledge of the physical world and the progressive refinement of human sensibilities and sensitivities.

It is not accidental that among the Founders we have Thomas Jefferson and Benjamin Franklin. The latter well known as inventor, publisher and entrepreneur; while Jefferson was a dilettante scientist and an eternally curious man who built a huge collection of books, later on bought by the government thus becoming a key component of the early Library of Congress. Not an accident that both men are tied to the creation of institutions of higher learning. Not an accident that Jefferson cited his role as founder of the University of Virginia as an important personal achievement, while he did not mention his years as President of the United States.

We lost the understanding that access of education for all is key

The Founders understood all this. But their message has been lost along the way. While America made great strides in expanding the reach of education in earlier times, (think of the innovation of land grant universities, think of the G.I. Bill that sent masses of veterans to university after WWII), overtime our education system, as a whole, has declined in both quality and quantity –especially its backbone: public secondary education.

“A Nation at Risk”?

This is a fact that has been described and substantiated in many authoritative studies. The landmark 1983 report, “A Nation at Risk: The Imperative for Educational Reform” issued by the National Commission on Excellence in Education”, drew attention; but then the focus shifted elsewhere. And yet, the report famously stated that: “If an unfriendly foreign power had attempted to impose on America the educational performance that exists today, we might well have viewed it as an act of war“. Well, interesting rhetoric notwithstanding, the Nation at Risk report came and went and, almost thirty years later, we have not made much progress. 

Some focus on education and the economy

When falling standards of education get attention this is only because some key business leaders, not without cause, point out the inevitable loss of economic competitiveness resulting from declining academic standards in America; while other countries have better results. The outcome, it is appropriately said, is that they will better than us at mastering complex technologies and processes, while we shall slowly fall behind. This is true.

Economic decline and more

But, while accurate, this ominous warning and prediction of economic decline does not really capture the full value of education as the Founders intended it –and as we should intend it. While education is certainly about intellectual skills and the advance of scientific knowledge so that people will innovate and engage in ever more complex economic activities resulting in higher profits, our lives are not just about economic pursuits. Sure enough, a successful economy is essential, for without riches very little else is possible. But riches alone do not satisfy all our needs.

The promise of a good education

And thus education should be about the broadening of the spirit and about the identification of those unique talents that provide substance and depth to that right of the “Pursuit of Happiness” indicated in the Declaration of Independence that we are about to celebrate once more. So education should provide skills but more importantly an avenue for self-discovery and for the growth of one’s own spirit. And, along this journey, the person will also discover the intrinsic value of liberty and of the republican institutions created to uphold it, while providing practical tools for managing the commonwealth affairs. 

This is a very tall order, no doubt, and this is why I call the whole exercise that started on the Fourth of July, 1776 an attempt to give life to Utopia. But, whatever the odds of lasting success, either we label the whole enterprise fanciful and abandon it, or we try and pursue the agenda set by the Founders as best we can.

American public education: not even the basics

Yet, before we get too lofty, and engage in arcane debates about the best tools for self-discovery, let’s review our landscape and acknowledge that, while we are failing to reach the aspired to depth of spiritual awareness, we cannot even do a decent job with the very basic stuff that should be expected as minimal education achievements in terms of literacy and other simple academic skills. Unfortunately, we have lost a lot of ground across the board in almost every sphere of public education.

No education, no “Opportunity”

This, in and as of itself, is a betrayal of the spirit of 1776 that implictly stipulated that for America to succeed, its citizens need to be educated. And the negative consequences of inadequate education are really great. Let’s consider why. America, quite clearly was conceived as an egalitarian society; but only in a formal way, in the sense that there would be no individuals enjoying special status because of the accident of their birth. No aristocracy in America. Yet America was not predicated on any economic egalitarianism. It was believed that people would progress in life as far as their talent would carry them. But, quite clearly –and this circles back to the need to foster education– the cultivation and refinement of talent requires training and learning.

“Opportunity” is the magic ingredient

And the cultivation of individual talent implies access to education and thus the existence of concrete, available “Opportunity” through schools. Indeed, meaningful, available “Opportunity” –intended here as access to the tools that allow meaningful self-expression through a variety of means– is the magic, secret ingredient of the American Dream. Indeed, for “America”, conceived as a healthy environment in which all is possible, to become a tangible, practical reality for most people, there has to be at least a minimal level of real opportunity for all, regardless of their individual circumstances at birth. Formal, legal equality without real opportunity is almost meaningless. If only the rich have access to quality education, then there is nothing different about America: just another country in which social class is the key to almost anything; just another country in which “birth is destiny”.

The great American stories of the “self-made man”, although probably inflated in terms of the impression created as to the actual numbers of common people who truly “made it”, are nonetheless real. And certainly upward social mobility has been more real in America than in countries in which birth, status, connections and political ties often prevail over individual talent and ingenuity.

Unfortunately in America for many “birth is destiny”

But in today’s America, just like in other traditional societies, there are barriers that cannot be overcome through hard work alone. Sadly enough, just like in more backward societies, we are confronted now, despite laws that prohibit discrimination, with a reality in which “birth is destiny”. Millions of young people, having no access to real education, are trapped into marginalization or poverty that they have no real means of escaping.

Failed public schools

Indeed, how can so many inner city kids have a real chance, unless meaningful, quality education is made available to them? Even those who want to, by virtue of their geographic locations that provide no real choices in terms of the schools they may be able to attend, are stuck with horribly insufficient public schools in which they learn almost nothing. Huge numbers do not graduate. Those who do graduate are often functionally illiterate or semi-illiterate and thus woefully under equipped to have a shot at higher education and all the opportunities that on average at least go along with college and post graduate degrees.

Charter schools to the rescue

Well, there are some glimmers of hope in this otherwise grim landscape. The growing phenomenon of “charter schools” shows once again American Ingenuity at work. Charter schools are privately conceived and manned schools aimed at providing substantive education to those who otherwwise would have no choice. Their relative success has encouraged local administrations to give them a chance. Parents are given the opportunity to send their kids there, regardless of location. So far, so good. But the fact is that the supply of good charter schools does not even remotely equal demand.

Charter schools and lotteries

Brilliant film maker Madeleine Sackler ably portrayed this reality in her acclaimed documentary “The Lottery”. This film documents the stories of New York families that want to send their kids to charter schools, recognizing that this can be the only chance to good education and thus a better life for these children. But all these families have to face the obstacle of a lottery, legally mandatory when there are just not enough places in charter schools to accommodate all children who wish to attend them. The documentary also shows bigotry on the part of those who oppose the expansion of charter school seen at least by some as a cultural threat to some kind of ethnic orthodoxy. (White people trying to open new charter schools like the “Harlem Success Academy” in predominantly Black Harlem are apparently not welcome).

Resisting change

But the worst part is that from the story narrated in the documentary it clearly emerges that the teachers unions are defenders of the failed system, as opposed to fighting the good fight for higher standards of education and truly professional teachers. They oppose charter schools as a threat to their union monopoly, even when it is obvious that the schools they want to preserve are failing institutions that provide little if any value to the children.

The chance to have a meaningful future is still a “lottery”

So, “The Lottery” shows us the real life travails caused by a failed public education system and the attempts at remedying these failures. But the very word used in the title –lottery—conveys how still unjust all this is. Given the scarcity of meaningful, coveted alternatives represented by a few charter schools, the future of many children is in the luck of the draw. For many of them their destiny and future station in life in some measure may be dictated by the outcome of the lottery. Those who cannot get into the charter schools are thrown back into the caldron of the failed public education.

In America we should do better

Sure enough, better to have some charter schools than none. But it is truly shameful that in this supposedly modern society, here in America we tolerate a tax payer funded public education system of such low quality that people had to come up with remedial alternatives aimed at filling huge gaps. it is quite obvious that in the many circumstances described in the documentary, “Opportunity” is denied. Opportunity is only partially restored via the good will of those behind good charter schools initiatives, But opportunity is nonetheless denied by the complete inadequacy of public educational institutions created –let us not forget– for the sole purpose of providing that basic shared cultural and knowledge common ground that all should have in order to be full participants in our society.

President Obama’s efforts and their limits

True enough, President Barack Obama has raised the profile of public education reform and many worthwhile initiatives have been launched by his administration through Arne Duncan, his thoughtful and well meaning Secretary of Education.

But we know that public education in America is still essentially a local government responsibility and thus much of the action has to take place at that level. Furthermore, the essentially negative role of teachers unions in impeding reform and in impeding the necessary goal of creating a truly accountable and highly qualified “army of teachers” is not part of the national conversation. If the teachers do not teach, or at least do not strive to reach higher standards, while their unions staunchly defend the status quo, the battle is already lost. The teachers unions are key constituencies of the Democratic Party. Will Obama have the courage to confront them? No clear sign of that, for the moment.

Not enough awareness about the failures of public education

Sure enough there are many responsibilities here, including chronic under funding of education and consequent low salaries for teachers that do not encourage good people to pursue teaching as a profession. Worse yet, an apathetic general public does not grasp the gravity of the situation, starting with parents who do not seem to fully appreciate the damage done to their children by failing public schools.

The parents portrayed in Madeleine Sackler documentary who hope and pray that their names will be called the day of a charter school lottery certainly understand all this. But, while this film helps us focus on this national failure, all this may not be enough to change the tone of the national conversation; while we cannot expect charter schools alone to magically remedy our nationwide systemic educational failure. Do the American elites, the pundits, the policy-makers get how bad all this is?

With real education in America we can restore opportunity

Again, as we celebrate the originality and the good intentions underpinning the American experiment, let us remember that there is no American uniqueness without real opportunity for all. And a good education is certainly the indispensable tool to provide avenues for opportunity to all children.

The Founding Fathers clearly recognized the value of education as a pillar of both viable republican institutions and as the engine of human and economic progress. Just as they did, we have to recognize that if we fail to have at least decent, if not excellent, schools, America as we would like to think of it may not last much longer, neither its free institutions nor its economic prowess.




Firing McChrystal Not Enough

WASHINGTON – The scandal caused by the openly dismissive and offensive language used by General Stanley McChrystal, US and NATO Commander in Afghanistan, and by his staff to characterize the upper echelons of the Obama administration is over. In a series of interviews with a Rolling Stone magazine reporter, amply documented in a long article, McChrystal and his staff described US national security leaders, starting with Vice President Joe Biden, as not so smart amateurs and worse. Mercifully, because of the immediate McChrystal forced resignation and the announcement that General David Petraeus, technically McChrystal boss as Central Command, (CENTCOM), Commander, will replace McChrystal, the White House put a quick end to this embarassment. Going forward, Petraeus looks good. He is well known and he enjoys a high degree of political bi-partisan support –something that should augur a quick confirmation process by the US Senate;  while his appointment to this difficult job should stabilize troop morale, as well as relations with the Afghans who know him well.

The strategy is still wrong

So, case closed? Can we safely conclude that, whatever the bizarre reasons for McChrystal egregious and unusual behavior, contrary to the most elementary norms stipulating that the US military works for the civilian leadership and not the other way around, with his removal there is no more reason to worry? Not really.

My contention is that, if McChrystal turned out to be the wrong Commander, the strategy for Afghanistan, crafted mostly by McChrystal himself, is still the wrong strategy. Both are bad. Replacing McChrystal was the right thing to do. In fact, there was no other way of dealing with this mess. McChrystal has been fired not on differences over policy but because of his open disdain for the most sacred of the rules that prescribe uniformed people to always recognize that, here in the United States of America, the president is the Commander in Chief and the military obeys. Sniping at the civilian leadership of the nation is not permissible. No exceptions. The prompt sacking of McChrystal reaffirms, with emphasis, this constitutional principle. But getting rid of him does not change much on the ground in Afghanistan. While announcing that David Petraeus will take over, President Obama reaffirmed the same strategy. And so we still have a problem.

Counterinsurgency may take decades

I wrote here, back in November, (“How To Win in Afghanistan“, November 15, 2009), that choosing a counterinsurgency strategy to defeat the Taliban and al Qaeda would not work simply because, even if are lucky, this would take years, may be decades, and huge budgets; right at the time in which we are facing a massive growth of our national debt, something that is bound to cause strong frictions beacuse of conflicting spending priorities. In other words my point was that we have neither the money nor the staying power to mount, sustain and successfully end a counterinsurgency half a world away. If anything, the fiscal picture has gotten worse since last November;  while there is less and less political support for this conflict.

Counter insurgency in a very hostile and very difficult terrain is a dirty and long drawn business. The objective of “winning hearts and minds” as a way to deny the Taliban and assorted radicals the support of the Afghan people is laudable in principle. In practice, in the incredibly challenging conditions of Afghanistan, this is almost unachievable, at least under the terms of this strategy. This strategy contemplates building from the ground up credible Afghan institutions, along with the delivery of substantial economic development assistance, so that people will be convinced that they have a stake in peace under competent civilian rule, as opposed to throwing their lot with the Taliban.

The country is inhospitable

Let’s repeat what should be well known. Afghanistan is an extremely poor and underdeveloped landlocked country with harsh terrain and deficient infrastructure. With a per capita income of $ 800 a year, Afghanistan is near the bottom of any scale, ranking 219 out of 227 countries, (CIA World Fact Book). The country never had a strong, credible central government. The society is fragmented along ethnic and tribal lines. Nowadays, the overwhelming majority of the population is under 25. So, to the mix of a country in semi-chaos, involved in almost constant violence for over thirty years, you have to add tens of thousands of young people with no education, no job and very few prospects, whose lot cannot be improved any time soon even if we stipulated that a heroic, superbly crafted, economic development effort would begin today.

Not a good starting point for stability and building trust in weak public institutions, with almost grotesque levels of corruption. (An Afghan politician speaking recently in Washington indicated that it is routine to be asked for bribes even by those who are in charge of accepting normal payments. If you do not pay them a bribe, they will not accept your payment and you will then be delinquent on your bills).

No great results, so far

For the moment, little progress on almost all key fronts relevant to the key objective of winning hearts and minds. Let’s review them: a) Training of the Afghan armed forces and police; b) Instilling confidence in the Kabul Government headed by President Hamid Karzai; c) Creating a US significant “civilian surge” that would give some teeth to the notion of a State Department/USAID led effort at rapidly developing this wretched country; d) Countering opium cultivation and trade which in turn fuels a huge illegal economy, War Lords, the Taliban and assorted friends and (allegedly) family members of Karzai himself.

On all these key fronts things are not going well, or at least they are a lot worse than anticipated when the administration agreed to the current (McChrystal designed) plan contemplating a significant troop surge with the hope, though, of starting a draw down as of July 2011 –which is to say only a year from now.

Reports indicate huge unresolved issues

Recent news stories indicate the over estimation of actual Afghan forces combat capabilities. Simply stated, the Afghans are far less prepared than previously thought, something that puts in question their ability to provide serious support to current operations, let alone successfully take over once we start drawing down. Overall, we are making only slow and inconclusive progress in a variety of military theatres. Violence is rampant. There is no area in which fighting intensified after the surge that can now be rated as totally secure for reconstruction and development to begin in earnest. So, building a new modern and democratic Afghanistan, while showing to the population that the Kabul government is a reliable partner remain distant goals.

According to reports, it is highly questionable that political elections for a new Afghan parliament can be held, as about 50 per cent all electoral districts to date are considered not safe enough for elections. Another major item is the bribes involved in contracting to Afghans of huge logistics operations aimed at keeping US forces in Afghanistan supplied. It turns out that it is impossible to supervise this business, while bribes are routinely paid by contractors and subcontractors to ensure safe passage of convoys. It could very well be that some of these US funds end up financing the Taliban. The opium business continues.

On top of this, after the allegations of major electoral fraud at the time of last year’s presidential elections, the Karzai government does not enjoy any meaningful legitimacy.

Insurgents have the upper hand

In all this, let us remember the ABC of military strategy. As Carl von Clausewitz taught long ago, in any conflict, the fighting is over not when we declare victory, (remember George W. Bush unfortunate speech about the end of major hostilities on the aircraft carrier?), but only when the losing party admits defeat. As banal as this may sound, for any war to end, someone has to say: “I lost. No more”.

In the case of conventional wars this generally happens. In the case of insurgencies, especially when the terrain gives guerrilla fighters an advantage, while at least some segments of the population support them, this admission of defeat may never come; and the conflict will go on and on. As this is the war we are fighting, we should be prepared for fighting protracted well into the future.

Achievable goals via a low profile

I stated before and I restate now that if indeed “sanctuary denial” to the Taliban and al Qaeda is, as it should be, our objective in Afghanistan, then there could be easier and more cost effective ways of achieving this valid strategic objective.

First of all, we should be willing to recognize that building a viable central government is a daunting and may be impossible challenge. Thus we should focus our objectives on something that is both doable and still worthwhile. We should deal as best we can with the local tribal leaders and War Lords. They have more authority and more control on what happens in their regions than any official from Kabul who is not supported either by political legitimacy or sufficient force. If the idea is to have Afghans regain confidence, then allow local Afghans to be in charge. Let’s help them.

US forces should take a very low profile. They cannot secure the country on their own. They are viewed as an invading force. Whatever the plan to help out the local population, young American soldiers, heavily armed, but mostly with little or no knowledge of the local languages and customs, are sore thumbs among villagers. It is a really hard sale for the Afghan population to believe that some boys and girls from Alabama or Kansas, dressed in odd, heavy uniforms, who do not speak their language and who are not Muslim can be trusted as reliable partners for the long haul. Empower the local leaders, allow them to consolidate their authority using their own methods. This may not be neat or pretty; but it is bound to be more effective than our complicated community building strategies along with our mind boggling rules of engagement.

The example of the 2001 invasion

Again, I go back to the CIA-led 2001 campaign in Afghanistan. Its stunning success, with relatively modest numbers of operatives and special forces on the ground, rested on the fact that prior to 9/11 the CIA had built fairly solid relations within Afghanistan. When it was decided to move in trying to defeat al Qaeda, those resources were mobilized. And the Americans who went in were in large numbers CIA operatives, that is civilians, usually wearing local clothes. Still foreigners, this is true. But not an invading army that to the local villagers may have looked like what a Martian invasion may look to us.

Well, the CIA-led operations, aided no doubt by many, many suitcases filled with cash, worked. The War Lords switched sides. The American military, called upon by the operatives on the ground, did a good job bombing Taliban positions, reinforcing the belief that the Americans were good for their word and reliable partners.

Deal with local leaders

Well, I am not suggesting that this is it. Clearly one needs more than a few CIA operatives to help organize and articulate something that will be sustainable. But I would submit that, as there is always a danger of waste, it is probably less wasteful and a lot more cost effective to build personal relationships at the local level, while giving money and some technical assistance to local tribal leaders, instead of funneling the same funds via disastrously incompetent contractors hired by USAID, as it has been done for years. While systems have been changed, along with the strategic overhaul decided by president Obama last fall, the record of achievement, and thus cost effectiveness, for the almost totality of all civilian programs directed by the US government prior to those changes was very bad.

The idea that the same system, even if overhauled and upgraded, may be able to deliver a lot more now, especially in the 50 per cent of the country that is quite unsafe, and thus unsuitable for running complex development projects manned mostly by civilians, is fanciful at best.

Here is a different plan

Here is an idea for president Obama. There is one man who really knows how to run this kind of semi-covert operation. And this man is George Tenet, the retired CIA Director. Tenet’s legacy is of course tainted by the Iraq weapons of mass destruction, WMD, fiasco, conveniently pinned entirely on him. He retired under a heavy cloud of incompetence. But, while I believe that he was treated unfairly regarding WMDs, his conduct of the early phases of the Afghanistan invasion using a light foot print was the right approach.

I wish General Petraeus all the best. Still, unless he decides to drastically modify the current heavy duty, “lots of US boots on the ground”, approach I do not believe that he can do much better than McChrystal –and certainly he will not be able to show major results by July 2011.




BP and the Mismanagement of Complex Systems

WASHINGTON – The story of the BP Gulf platform explosion and never-ending spill has been presented to the public as a clearcut, if tragic, case of corporate malfeasance. Here is the “official narrative”. BP, a major, accident prone, (due to lax internal standards), multinational oil corporation, trying to squeeze maximum profits from operations, did not spend adequately in creating a safe well for oil extraction in a very challenging deep water environment in the Gulf of Mexico.

Terrible accident

Because of this reckless behavior, a terrible accident occurred. In its aftermath, the company showed to be equally unprepared to deal with the consequences of its (criminal?) actions. Hence the 60 days plus oil gusher, and the almost incalculable environmental and economic damage to all the coastal states, (Louisiana, Alabama, Mississippi, Florida); and to tens of thousands of individuals and businesses caused by this environmental disaster, already ranked the worst in US history.

Blame the rascals

The media, the experts and the US government –we are told–have rightfully singled out BP as the only culprit. BP, constantly referred to by its old corporate name “British Petroleum”, (may be there is comfort in pointing out that the bad guy is a foreign firm) has been publicly vilified by the White House. Its leaders, starting with CEO Tony Hayward, have been paraded and humiliated in front of a variety of congressional committees as the villains in this story. Later on BP management has been compelled to publicly agree to massive payments, (at least $ 20 billion), using an unusual format, an independent body that will dole out the payments, that in other circumstances might have been challenged, as it has shaky legal justification.

BP gets the blame

So, the consensus, (as the wise people knew all along), is that BP, just like other oil companies, is a greedy scoundrel interested only in maximizing profits even when decisions to operate below reasonable safeguards create the preconditions for horrible accidents such as this one. After all, this is how oil companies behave; and why would you expect anything different? The solution? Restrict offshore drilling. Impose new, really tough regulations. Better yet: stop consuming oil and put the criminal oil companies out of business. Simple, no?

Assigning blame or identifying causes?

Well, not so simple, both regarding diagnosis and cure. The cure may be correct in the long term. But it is going to take a long time before we can get out of a hydrocarbon based economy. As for the diagnosis, no disagreement as to the obvious BP responsibility in all this. But I disagree with this simplistic narrative. Indeed, this oversimplification, by focusing entirely on assigning blame for the accident to BP, discourages a deeper examination of faulty systems and practices, at BP as well as within the US government agencies charged with oversight responsibilities of all oil operations that most likely created the environment that allowed a relaxed attitude about safety standards.

Dig deep to understand systemic failures

My point is that catastrophic failures and other less visible but equally damaging systemic failures, (such as, for instance, the now well documented, chronic under performance of the US public education system), originate in flawed institutional cultures, outmoded models and corresponding bad value systems. These are hard to pinpoint and deal with, because usually deterioration is a slow, incremental process that is not easily captured, unless we have a trained eye used to vigilance. And even if there were red flags, how does one deal with huge, malfunctioning systems, with the complexity of a cultural and psychological make up, with entrenched ways of doing things? There is no “How To Manual” for any of this.

Experience shows difficulties in fixing failure rooted in institutional cultures

Armies of seasoned management consultants, usually dealing with  shortcomings much narrower in scope at the corporate level, often have a really hard time in understanding and then correcting bad practices related to entrenched ways of doing things, and, more to the point, showing concrete results in “turning things around”, changing attitudes and systems. So, one can speculate that, as the challenge of making even larger changes in bigger institutions may be considered too big of an effort, the attitude is that we may as well not even try. But, by giving up, we also have to accept systemic under performance and bad outcomes as the new norm. And, if so, we may also have to accept the occasional mega-accident that is almost certainly the product of dysfunctional systems produced by dysfunctional cultures and values.

Identifying deep causes too difficult; vilification of the bad guys easy

Because of all this –difficulties in understanding dysfunctions, difficulties in devising corrective action– there is no clear consensus as to the need to investigate more deeply and then attack root causes. In the case of a major event, such as this mega accident in the Gulf, because of the public outcry, there is a frantic, irrepressible desire to quickly identify a culprit and to finger him as the scoundrel who should pay for the misdeeds. Once we are satisfied that we got “the bad guys” and that adequate penalties and restitution will follow, then the public feels vindicated. Case closed. Let’s move on to something else, without any need to go any deeper regarding root causes.

We do not engage in objective research aimed at understanding deep flaws

This narrow approach prevents a fuller and deeper examination of the dynamics that lead to bad performance or much worse. The truth is that the causes of sub par practices and performance leading to several huge disasters or just bad performance are manifold, usually layered over time, and therefore not easily pinned on this or that stupid, negligent or criminal decision-maker.

Indeed, we have to come to grips with the fact that problems occur not just because a single, (or a few), wrong decision, but because we allow the development and the implicit acceptance of bad standards and improper ways. And this is in part due to the sheer complexity of large multi-layered processes entrusted to a variety of different specialists, themselves often relying on ever more complex technologies. In this complexity where there is no one standard that fits all interlocked sectors, it is difficult to quickly identify bad practices. There is no one person or group that can competently understand all.

Easy to ignore slow deterioration of standards

For these reasons, sub par operations may creep up unnoticed and then they become established. But usually, when these practices make slow, incremental advances, we do not pay attention. Everybody discovers everything only when the spotlight is firmly trained on the bad guys, now under the microscope. For example, now that BP is under fire, all of a sudden we have countless news stories that tell us in detail how bad its safety record has been for years and –even worse—how all this was well documented.

Failure to report? Failure to take action?

Well, if this is indeed so, this becomes a fundamental issue that warrants serious scrutiny. If indeed government regulators supervising all these oil exploration and production activities knew about serious shortcomings within BP operations, why is it that nothing of real consequence was done to stop and correct such glaring bad behavior? Had action been taken, it is quite possible that this accident might have been prevented, as BP would have been forced to use really safe technology and standards in this as well as other operations. But somehow, as we have now the culprit before us, there is no serious appetite for a more comprehensive analysis aimed at understanding why the regulators failed.

We believe too much in our technologies

An additional blinder is our almost total trust in the value of our superior, high precision technological tools, so that we come to believe that we are capable of creating error free systems. Therefore, we create the fanciful myth that, as a norm, nothing bad should happen. If something does happen, it must be the fault of some negligent or wicked individual. But it is not quite so. We are so entranced with the notion that almost everything new is or should be “plug and play” that we fail to appreciate that almost nothing really is.

So, while it is essential to invest in and to encourage innovation, including in deep water oil drilling, we are having various reminders as to the inherent difficulties in any attempt to create management systems that can adequately oversee complexity that in large part rests on new technologies.

In the end good judgment still counts

In the end, although this may appear unsophisticated, much still rests on human judgment. And so “how” judgment is reached and its connection with value systems and institutional cultures within ever more complex systems should be the focus of much more intense reflection. Can we manage the complexity that we created as we keep pushing the envelope? This should be properly investigated, as the record, not just based on this extraordinary event, is not at all reassuring.

But we do little of this.

Superficial debates on what works and what does not

Instead, by and large we confine ourselves to sweeping, mostly ideological generalizations regarding the inherent superiority of reliance either on “private sector-led” or “government-led” solutions to almost anything. The underlying assumption held by both schools of thought, such as they are, being that systems that are inherently good will also be more effective and self-correcting; whereas systems that are inherently bad will also be plagued by dysfunction and poor performance.

This is usually how deeply the analysis of the inherent value of public or private systems goes. As it were, the prevailing opinion on whether the private sector or government are inherently good or dysfunctional, is largely determined by which one is pushed forward by the more fashionable ideological wind, as opposed to any real analysis.

Private sector systems not in fashion

And so, until not too long ago, the accepted wisdom in America, (and from America in many other parts of the world), was that the private sector had all the answers, while government was inherently cumbersome, inefficient, slow-moving and way too expensive. Then we had the epic financial debacle of 2008 – 2009 and that erased the private sector’s good image of competent stewardship. So, the private sector was not just incapable; but inherently prone to madness and excess; driven by greed and shortsightedness with a good dose of criminal intent, and bound to lead us all to ruin, unless we keep it on a very short leash. Hard for the private sector to re-emerge with a credible, clean image after this historic debacle.

Government is good, after all

But if the private sector failed, who will lead us? Well, after another major swing, the new consensus was that the much maligned government, finally led by competent people who believe in its inherent virtues, will take care of things. The policy wonks, the savvy technocrats will capably handle this mess and deliver us from evil.

The US presidential elections of 2008 were mostly about the resurrection, if not the triumph, of this idea of competent government; once treated by Ronald Reagan as a joke. (“We are with the Government. We are here to help”. Reagan used to tell this funny story to his audiences who broke in a roar of laughter. “Government” and “Help” could not possibly go together. Every sane person knows that).

The (brief) triumph of the technocrats

Do you remember when Barack Obama made campaign appearances talking about his courageous economic plans with at least 20 leading academic and policy geniuses lined up, right behind him, on the same stage? Well, this was a clever message. After the ruin caused by the bankers and the failures of General Motors and Chrysler, the calm army of technocrats standing behind the next president, all ready to go, conveyed, (at least on TV), an image of competent, poised determination. The message to the viewer was: “Rest assured. We know this stuff. We shall take care of things”.

Policy wonks stuck in the sand bar

But then, guess what? The policy wonks, while well-meaning, after all do not have “the magic touch”. And this is not because of lack of good ideas; but because of the inherent difficulty encountered in implementing vast changes, relying on not so good vast bureaucracies that are not up to speed. Government, it turns out, is slow; much slower than it would be desirable, and quite inefficient. Programs are enacted; but not implemented. Money is appropriated but not spent; or spent not entirely in the intended way or with the desired effect. Predictions about almost anything are usually wrong.

Resurgence of anti-government feelings?

But having noted all this, it is far too easy to conclude, along with the ideological opponents of this administration, that: “We should scrap everything. Wrong approach. There is no effective public policy solution to these issues”. Such blanket rejection is a sure way to avoid any serious analysis as to why certain things go wrong. But this ideological rejection is pretty much the extent of the constructive criticism offered by the Republican opposition in Congress. Their counter argument is of course to go back to the Holy Orthodoxy of low taxes and small government; and –honest– this approach will work like magic. If this is indeed the level of the debate, there is little hope of making progress in any attempt to improve the quality of systems.

BP would show that the private sector is still bad

In this ideologically tainted atmosphere, the BP debacle does not help the cause of the ideological proponents of private sector-led solutions to anything. Thanks to BP, the private sector these days is getting another huge black eye. According to the “Market Gospel” proponents, a huge mess like the one in the Gulf is what you expect of incompetent government. The private sector is another story. It runs things efficiently and smoothly.

Assigning total blame to BP avoids serious investigations

Whereas BP shows us that the private sector can be enormously incompetent. Still, from this to conclude that BP, (and by association, all the other oil companies), is essentially a criminal enterprise whose aim is to siphon off oil and gas and-who-the-hell-cares-about-consequences is a bit much. And yet this is the most convenient, crisp and short explanation for all.

BP: convenient scapegoat

In fact, convenient for the government that needs a clear political scapegoat; but also convenient for the defenders of the private sector orthodoxy who can explain away this disaster on the ground that it was an aberration caused by bums who should not have been in charge in the first place. This way, reassured that now we know all we need to know, we fail to undertake the more complex work of investigating the root causes of systemic failures which in this case involve, at different levels, both BP and the government.

Government responsibilities overlooked

Indeed, there are government responsibilities. But they have been completely overshadowed by the anger against BP. By leading the charge against the callous oil company, the US government cleverly managed to deflect any attention from its own egregious failures in the exercise of its statutory functions of oversight on the very activities of this oil company that eventually led to this disaster. Unfortunately, as all the focus is on BP, the public is not getting the full picture of all the key dynamics leading to this tragedy.

The US government clearly failed in its role of steward of the public interest. If BP went ahead with reckless plans, these very plans were vetted and approved by the Minerals Management Service, MMS, a branch of the Department of the Interior. MMS should function as the oversight government body created with the precise objective of making sure that safe procedures would be followed.

Why MMS did not fulfill its oversight mandate?

Why all the regulatory checks on BP failed? How is it possible in these days of mandatory disclosures, multiple reporting obligations, required vetting and authorizations, for a huge, high-profile multinational corporation operating all over the world to routinely engage in semi-criminal behavior without being caught and stopped? Again, now, with this immense disaster before our eyes, everybody is an expert at reading a long trail of damning evidence. But how about beforehand, especially if there was indeed so much available proof pointing to chronic malfeasance?

So, either the alleged BP reckless behavior is now conveniently exaggerated, or the various oversight and control systems in the US and around the world failed miserably in carrying out their statutory responsibilities. Either way, all this should warrant deeper investigation, so that we can find ways to correct aberrations.

We should investigate and analyze

Indeed, a deeper, truly comprehensive investigation would allow us to better understand the failures of oversight bodies, such as the MMS. But the fury against BP has shifted the spotlight away from the role of the US government in all this. We have essentially forgotten that, in principle at least, all of the activities of all oil companies involved in any type of exploration on the outer continental shelf, are supposed to be under the supervision of The Minerals Management System. And that is the Federal Government, otherwise known as the Obama administration.

The MMS website indicates that the MMS has a strong institutional presence in the affected Gulf of Mexico region: “The Gulf of Mexico Regional, GOMRD, Director [of MMS] is Lars Herbst.  Many disciplines are utilized to conduct the program.  Occupational categories include Petroleum Engineers, Geologists, Geophysicists, Inspectors, Physical Scientists, Technicians, Environmental Scientists, Oceanographers, Meteorologists, Marine Biologists, Economists, Mineral Leasing Specialists, Archaeologists, Paleontologists, Computer Specialists, Information Specialists, and Administrative Specialists, and a variety of clerical positions.  The GOMR currently has 542 employees on board.  The GOMR has District Offices located in Houma, Lafayette, Lake Charles, and New Orleans, Louisiana, and Lake Jackson, Texas“. So, MMS has jurisdiction and staff. Where were they?

MMS chief fired

As this accident quickly became political, at the end of May, the first political victim was indeed the incumbent head of MMS, Elizabeth Birnbaum, unceremoniously fired. Whether or not Ms. Birnbaum was directly culpable, MMS failed. It is true that the now controversial “long string design” for this particular BP oil well, (deemed by experts to be less safe than others), was reviewed and approved by MMS. If indeed that design was to be considered inadequate from a safety standpoint, then it was up to MMS to point that out and compel BP to adopt a better, more secure system –a judgment call that might have avoided this tragedy. But they did not do any of this, while they failed to act on other issues as well. And may be this is why the head of MMS has been thrown out.

Interior Secretary distances himself from MMS

And yet, in all this, it is almost bizarre that Birnbaum’s boss, Interior Secretary Ken Salazar, talked about the MMS, this agency under his supervision, as an alien body that he knew not much which apparently engaged in obscure practices that, as a minimum, would suggest improper ties with the oil industries that it is supposed to supervise. But, hey, he –Secretary Salazar– knew nothing about it. Was he supposed to? Of course he was; they work for him.

And so, here is the emerging picture. MMS, a critical piece of the puzzle, representing the crucial function of government control, inspection and supervision, failed in a stupendous way. But, somehow, the media gave cover to the Obama crew, stating that bad, unethical practices within the MMS started under president George W. Bush, who, as you all should remember, was a product of the Texas oil industry, and thus guilty of any sort of favoritism towards his friends.

MMS relaxed standards really George W. Bush’s fault?

May be so. But last time we checked Barack Obama has been President of the United States as of the end of January 2009. This accident occurred at the end of April of 2010. Whatever the alleged and real flaws of the disgraced former president George W. Bush, doesn’t this administration bear responsibility for the poor performance of its own MMS watchdog; a watchdog placed there, let’s not forget, to safeguard the public interest? Of course, it does.

But, somehow Obama has been given a pass by the generally sympathetic media. And this is wrong, because this omission of government failures –present as well as past administrations all included– creates a distortion, allowing everybody to concentrate their rage on the easy target, the big and fat (and conveniently foreign) oil company, without properly examining how the regulators, those who are paid to protect the public interest, completely failed in their primary mission.

Systemic failure not properly looked into

This gist of all this is that with the easy demonizing of BP, already convicted many times in the court of public opinion, we are not focusing on the relevant components of this problem which is “systemic failure in the management and oversight of a complex operation”.

The fixation is and will be on “Who did precisely what at what precise moment”; without full appreciation that the causes of systemic failure rest in habits and ways of doing things that tend to be created over time. Accidents of this magnitude are fortunately rare; but their genesis usually can be found in a series of smaller or bigger aberrations carried on over a long period of time.

Gulf clean up operations also sub par?

But we are not done with the “Gulf Spill” yet. There is more, concerning techniques used to manage the oil spill. A retired CEO of the Shell oil company, John Hofmeister, in several media appearances has forcefully said that the techniques used by BP and the US government to contain the impact of the spill are old and ineffective. He also indicated that the Jones Act, an old law of 1920 that forbids the use of non US flag ships in US waters, so far prevented the US Government from accepting many offers coming from a variety of countries, such as Belgium and the Netherlands, that do have vessels better equipped to vacuum oil from the sea surface.

Clean up efforts also sub par

Likewise, several media accounts indicate that local elected officials and ordinary citizens are not happy with the speed and effectiveness of actions now under the general direction of the US Coast Guard. So, while the focus is now on how much money will BP have to cough for restitution and compensation, we are still not using the best technologies to effectively mitigate the consequences of this spill.

Uninspiring picture

If this is indeed true, and this critique comes from a former industry leader as well the people affected, then we have another type of systemic failure that would point to lack of understanding and mastery of international best practices related to oil spills on the part of the US authorities officially in charge of the post spill operations, coupled with crippling and outmoded legislation that should be either suspended or repealed. We had a show of massive government failure in 2005, in the organization of the post hurricane Katrina relief operations. Now, while this is a different type of emergency, we still see a combination of bad planning and poor execution.

This is not an inspiring picture in a country supposedly built on solid foundations of reason, checks and balances and accountability; and certainly no indication of a healthy attitude aimed at understanding causes and remedy deep-seated problems, as opposed to shaming the guilty.

Systemic problems in the public sector, says OMB Director

On a different but related topic, on June 8, Peter Orszag, the Director of the Office of Management and Budget, OMB, the functional equivalent of a Minister of the Budget in the US government, gave an interesting speech at the Center for American Progress in Washington about effectiveness of public policy.

The juice of that presentation was that Government may have great ideas, but, if they are not properly implemented because of ineffective delivery systems, then there is little or no practical added value from the adoption of such policies.

US patents in three years

He proceeded to tell the audience that the US government as a whole is way behind the private sector in productivity. He cited as an example the inability to consolidate and streamline IT operations in various agencies. He also said that the US Patent Office, while it accepts filing done electronically, since it lacks proper IT systems, it then has to store filed forms manually. Yes, you got that: they print what they receive, and then store it manually. Average processing time: 3 years.

He also said that in 2006 the US government authorized a big project to produce computers to be used for the Census project now underway. Well, $ 600 million was spent on this with no results; and so the program was cancelled with no visible product, while “census workers out there today are still using pen and paper”.

Dysfunctions in the public agencies we increasingly rely upon

Now, all this is interesting. Mr. Orszag does not have “Line Ministry” responsibilities. He is the big picture guy who is supposed to put all the numbers related to public spending together so that there is policy and fiscal coherence. Fine.

But he was talking about the US government as some kind of bizarre specimen that he just run into, and not as the system that he and many others are running and on whose efficiency we all depend.

In truth, Orszag also talked about many administration initiatives aimed at improving this rather uninspiring picture; but they do not appear to be treated as matters of high urgency.

The problem

And here is the problem, magnified by the fact that this very administration of which Mr. Orszag is a senior representative was elected largely on the assumption that public institutions would be capable of rectifying the damage caused by the reckless private sector.

Therefore, fixing key components of public administration should be a high priority. Mr. Orszag told us about glaring inefficiencies. And it is good to begin by recognizing them. But how fast are we going to reach a higher level of performance? One thing is certain: not anytime soon.

Any quick fix…..?

True, in the cases that the OMB Director brought up in his speech there are no examples of dramatic errors that cost lives and environmental catastrophe. But it should be clear that embedded in all these dysfunctions there is the insidious, if hidden, damage caused by slowness, inefficiency, waste of resources, poorly used human capital, and bad allocation of money.

While Peter Orszag was performing a public service by pointing out these failures, it would be reassuring to learn that adequate resources are devoted to work on solutions. But we are not there. It seems that only crises require furious reaction. The malfunctions that set the stage for crises are largely ignored.

(In all this, it is of no great comfort that several days after delivering this speech, the news appeared that Peter Orszag is about to leave the Obama administration, the highest ranking member of the economic team to resign).

Apparently not……

OK, where am I going with all this? It is very simple. Government, just like an oil company, or a US Coast Guard managed oil spill mitigation operation, has become an ever more complex system that we do not know how to run well –and much has to do with its sheer magnitude and myriad of component parts, each with its own specialized technologies, its own quirks and its own “culture” and communication systems. But unfortunately we are unable to have a proper conversation about the malfunctions originated by complexity.

No honest debate about how to make large systems perform better

In part this is due to a political climate inauspicious for serious non partisan analysis. For a while at least, we accepted with almost blind faith, (except of course for the vocal ideological opponents), this idea that President Obama and his crew of supposedly competent, “with it” technocrats wisely maneuvering the levers of public policy were absolutely capable of rescuing us from the horrible damages caused by the insane leaders of a private sector that appeared to be a criminal enterprise.

They said they could do all

For a while at least, we were willing to believe that huge public policy rescue programs announced right after the November 2008 elections were going to not just extricate us from the financial catastrophe created by the evil Wall Street gang, but that this Wise Government had the smarts to address and fix all major problems:

  • education
  • health
  • employment
  • energy;and, last but not least
  • the systemic fiscal imbalances due to the cost of huge entitlement programs exacerbated by the growing numbers of senior citizens requiring more and more costly public services.

And they would do so competently, with an appropriate mix of near term fiscal stimulus, somehow magically blended with long term fiscal austerity. And this careful balance was supposed to convey to the markets that we needed to spend a lot now to revive the patient. But later, after normality would have been reestablished, we would deal with the systemic problems of growing public spending.

Record not so good

Well, while progress was achieved in many areas, most notably avoiding financial catastrophe and reconstituting some trust in the broader economy, practically nothing worked exactly as planned.

The vast short term fiscal stimulus was applied; but the actual scope of the recession was misdiagnosed, and the stimulus impact therefore much smaller than anticipated. The recession turned out to be worse and the rate of unemployment much higher. Thus a very, very slow jobless recovery.

Health care reform was passed with the promise of reduced costs down the line. Nothing so far indicates real cost savings. New initiatives are underway in education.

But the very nature of this sector does not allow us to see measurable near term results. Nothing much was done on energy. Nothing at all on immigration reform.

Domestic counter terrorism operations seem to be accident prone, with sloppiness in catching even amateur criminals with modest training.

In foreign policy, President Obama, declared that Afghanistan is a “war of necessity” and ratcheted up the war effort, with enormous military and fiscal consequences and trust in a strategy that in his intentions is magically supposed to do the trick before next summer when we shall start withdrawing troops. A fanciful target at best.

Bad reviews on Afghanistan go unnoticed

Indeed, on Afghanistan, another example of systemic failure. A recent report from the Special Inspector General for Afghanistan Reconstruction concluded that the metrics used to evaluate combat readiness of NATO-trained Afghan troops were wrong, thus vastly overstating Afghan capabilities.

The metrics used to create a rather optimistic capabilities assessment measured length of training and equipment provided; but failed to evaluate how all this works in actual combat operations.

Readiness exaggerated

This created an over optimistic picture of growing Afghan army capabilities, while the actual quality of training and thus combat effectiveness of many units remains modest.

The implications of this finding are immense and they clearly affect the key assumptions of a strategy largely based on our ability to turn very soon operations to a capable Afghan force, as we think about a draw down that should supposedly start in the summer of 2011.

Big news?

This report indicates that we cannot reliably turn much to an unprepared, not combat ready, Afghan military. This is big news. This is the stuff that should invite a comprehensive reappraisal of the whole strategy.

And yet, while such an exercise may very well be going on behind the scenes, this news item came and went, without any significant ripples or outcries. So, double damage here. A huge hole in the strategy is revealed indicating systemic failure in determining capabilities, and nobody thinks much of it.

Underperformance rampant in private and public institutions

All these examples indicate that the very government whose ability we want to rely upon to correct the crisis created by the private sector does not work so well either.

So, where do we go from here? Well, at the very least we should recognize that we do not really know how to manage complexity very well, be it in government or the private sector. It is quite obvious that the most technologically advanced nation in the world is not living up to its image of competent management.

Which model? 

If we agree on this, at the very least we should behave like adults and stop treating this as an ideological battle. There is no “Private sector-led only”, or “Government-led only “viable model. The future is not about “either, or”. We need both; and both clearly need fixing.

A better future rests on our improved ability to understand institutional cultures and how they may be improved upon in order to enhance clarity of purposes, priorities, positive feed back and responsibilities. The examples of the last few years show huge systemic failures of operations run by a variety of institutions, private and public, supposedly designed to deliver results while containing risk and avoiding failure.

As a minimum it would be good to acknowledge that we have a serious problem here.

We have to find better ways

While this picture is worrisome, we know that the United States has the intellectual capacity and the innovative drive to successfully address all of this. But first of all we should stop ideological fights between the “private sector-led” or “government-led” supposedly more efficient model and get to work realizing that systemic failures occur in both spheres, while they originate in a lack of proper understanding of institutional cultures, their difficult interactions with one another and the psychological make up of leaders and line officers in both Government and the private sector.

End the ideological fight: look for real root causes

This is where the real investigative and analytical work should be; and not in selling or debunking this or that supposedly superior model –an exercise whose only objective is to reinforce established biases, with the hope of winning an ideological fight, and with that the next election.

As the OMB Director correctly indicated, in the end the value of public policy is in its results. If our systems are flawed, you cannot expect good outcomes even from the most clever, innovative ideas.

And the same applies to whatever the private sector undertakes. If we want better results, it is time to study how people think and how they interact.




In Arcadia, Playing for South Africa’s Future

PRETORIA, South Africa – (Notes from October 2009). The other day I was walking from my Court Classique Hotel to a nearby little Spar supermarket. Only a short walk; however not without dangers. There is a standing warning not to walk there alone after dark, as crime is rampant in Pretoria; thus no need to take chances. Anyway, it was day time and I went. To get to the Spar supermarket I had to walk across nearby Arcadia Park.

Soccer in the park

It turns out that this was the time of day in which several soccer teams composed exclusively of black young people congregate there, taking advantage of the large, open and grassy terrain to play on. Walking back from the store, I strolled by one of these impromptu soccer matches.

Well, I am no expert. But I saw an impressive action. One young man, fit, very athletic (and good looking) had the ball. He raced across the field like a missile. An opponent was confronting him. But he retained control of the ball.  As he was racing towards the goal area which happened to be close to where I was standing, I clearly saw the expression of his eyes. I saw in him a genuine spark of keen intelligence and determination. He was running with the ball towards the goal area; then a faint, a stop, a double faint and dribbling and racing past all opponents, almost effortlessly. All this in a matter of a few seconds.

I was astounded by the energy, by the display of athletic elegance, by the supreme mastery of the game. Speed, intelligence, drive, intensity, focus. I saw all of that. And I was riveted in admiration. This is part of young South Africa. Only a small part; and it should be nurtured and helped. But how?

Sad looking workers

A different day, another venue near the hotel. We are in Arcadia, an old white area in Pretoria. So, as a legacy of apartheid, there are so many public amenities, including another big garden: Venning Park. And it is quite nice. Because of some recent rain, all is pretty: the grass and the flower beds. A few days ago, as I strolled through the big garden, there were many workers tending to the grounds.

There must have been more than 30, all wearing blue overalls. And I looked at them. Moving slowly, very slowly. Looking forlorn, sad, certainly uninterested in whatever their tasks might have been. Most of them doing basically nothing. One here slowly raking something. Another pulling some weeds. In essence, it was not just lack of a spark: this was a dispirited lot.

Most of them probably illiterate, speaking only their local language, and no English. Most likely temporary workers hired under some kind of “make work” public works program aimed at cutting down the staggering  “official” unemployment of about 25%. (The real unemployment is estimated to be well above 30% nationwide). But these are the black faces I see the most around here: sad, dispirited. And here we are, in Pretoria: this is one of the richest cities in South Africa and therefore in the whole of Africa.

South Africa’s future?

What will happen to the young man who displayed such athletic artistry in Arcadia Park? And why is it that the only great display of energy and talent I saw in this city was during an engaging soccer game?

Can these South African kids go to school? In theory, yes. In practice the system is in poor shape. And what do these kids learn? In what physical conditions are the schools? There was a story in the papers of one particular school in which all the windows are broken — all of them. And when winter comes, here in Gauteng Province, (starting in May, when it is Summer in the Northern Hemisphere), it gets really cold because of the altitude.

Well, if we have problems with our rather disorganized schools in Washington DC, imagine what is it like, not so much here in (relatively prosperous) Pretoria, but in the more remote and much, much poorer Provinces of South Africa: in rural Limpopo or Mpumalanga. Imagine those schools, (assuming they exist). Imagine the quality of the teachers. Imagine the conditions of the buildings. And here is where the seeds of South Africa’s future supposedly are planted and cared for.




Cooking Up Jobs Numbers at The White House

WASHINGTON – On June 4 President Barack Obama and Vice President Joe Biden went just outside of Washington, in Hyattsville, Maryland at the K. Neal International truck company to tell us the good news of yet another month of job increases in America. The President acknowledged that the majority of the 431,000 new jobs added in May are temporary workers hired by the Government to fulfill the once every 10 years national census data gathering. But he also said that all the other jobs created indicate that we are on an upward trend. The trajectory is good. “We are moving in the right direction”. The economy is healing. With new jobs families will have income, they will be able to spend more and thus boost the prospects of other businesses across America, etc. etc.

May jobs data good?

Watching this performance of the President with a viable, sturdy small business, representing America’s resilience, as an appropriate background, the average American could feel somewhat heartened. While the President was not bombastic, he certainly wanted to tell us that the jobs data is good and that it validates all his policies. Message: “America, we are still not out of the woods, but we are making progress; and my policies are working just as intended”. Well, not so, Mr. President.

Well, no; May jobs data bad

It turns out that the very same job data hailed by the president as comforting reassurance of an economy moving in the right direction caused one of the worst days on Wall Street this year. The Financial Times June 5 front page headline reads: “Markets Rocked as Jobs Data Disappoint”. Indeed, the good jobs numbers cited by the President as positive news have been interpreted by the markets as very bad news; so much so that the Dow Jones lost 323 points, closing below 10,000. Well, how’s this possible? The market reacting badly to good news?

Orwell-lite manipulation

The truth is that the census workers are not just “the majority” of new hires that caused the May jobs growth, as Obama indicated. They are 411,000, (the President somehow forgot to mention this), that is to say 90 per cent and thus virtually the totality of new jobs. Subtract the temporary census workers paid by the Government and we have a dismal net national increase of only 41,000 jobs. All sources quoted in the article referenced above indicated that the data is truly disappointing, showing a much slower pace of economic recovery than previously anticipated and a much tougher road ahead. Hence the stock market sell off.

Presidential spin no big deal?

So Obama misrepresented the facts related to new May employment data in a way that is pretty close to an outright lie. So what? Is this really a big deal? Can we blame a President for giving a positive spin to bad news that may otherwise create a negative mood? Isn’t the President supposed to use his office as a “bully pulpit” so that we are inspired instead of being depressed?

Defending one’s policies and manipulating data is not one and the same

My answer is that the President cannot do this. It is quite alright for Obama to point to possibilities and to identify his policy goals. But it is not alright to openly manipulate numbers to prove one’s point, in the process creating distortions that amount to falsehood. You cannot say that the sun shines at midnight. Sure enough, this bad May jobs data may turn up to be just a blip, a temporary set back. But the President loses credibility by not calling a spade a spade. This was a bad day for the economy. Instead of dancing around and saying that all the new jobs created, even discounting Government jobs, indicate that we are on a good course, when it is not so, Obama would have looked a lot better if he had recognized the data for what it is: bad. One month of bad jobs data by itself does not invalidate a policy; but the clever spinning that the President engaged in is deceitful and it ultimately undermines his personal credibility.

Obama did not change the old politics, in fact he practices them

More broadly, this very episode, while in itself not incredibly egregious, is bad enough and indicative of a far worse truth: nothing, absolutely nothing has changed in Washington after Obama came along as Savior in Chief. The really bad news is that this new breed of supposedly saintly policy-makers doggedly dodge, spin and deny, always concocting a version of events that furthers their political advantage, just as the old ones; this way slowly poisoning the atmosphere, because a constant diet of half truths, manipulation and distortion reinforces a cynical view of Government.

And this continuation on the part of Obama of the old distortion game is especially bad because Obama –surely we all remember– promised to us all that he would radically transform all this. No more spin. “I’ll tell you like it is. I’ll level with you. I will not lie. Because I am not afraid of the truth, Ill be able to build coalitions”. This is what candidate Barack Obama promised to us during the campaign of 2008.

Obama had promised a transformation that did not happen

Remember that Obama was supposed to be not yet another Democratic Party machine politician (a la Hillary Clinton), fighting with the usual weapons to regain a White House about to be vacated by a very unpopular George W. Bush. He was the total outsider. He was supposed to be the incarnation of a new way to do politics, away from stratagems and cleverness and all about substance and open coalition building, all solidly grounded on truth telling.

But it turns out that the biggest promise of this “New Era” is also the biggest disappointment. This New Man with no Washington experience, (and thus no Washington related baggage), was going to reconnect us with the intrinsically good spirit of America, making us whole again. And he did not. 

Obama was elected because he incarnated a new vision of politics

Of course, other Presidents at the beginning of their mandates promised to change the atmosphere, to “reach across the aisle”, to engage all people of good will, for the benefit of America, etc. etc. But in the case of Barack Obama and the enthusiastic, cyberspace connected, grass root adoring movement that poured an avalanche of money into his coffers during the campaign the “Age of Obama” was prophesized to be something like an Advent. “He knows”. “He will do things”.

Obama practices what he condemned

Well, he did not. Certainly it would be unfair to blame Obama alone for the increasingly vitriolic mood prevailing in Washington these days. The Republican Party is also greatly at fault. The opposition by and large proposes nothing that can resemble a real, constructive alternative. Saying “no” to everything may be expedient to get some more votes in the November mid-term elections. But this is not enough as it does not energize the country.

Still, President Obama provides an even worse example because, in practice, he is engaging in the very same manipulative tactics that he run against while a candidate. The little June 4 show is just indicative of a willingness to distort and rewrite bad news so that facts will appear different.

Washington insiders uninterested in niceties about truth telling

The Washington “inside the Beltway” crowd of lobbyists, power brokers, and consultants is far too jaded and cynical to even notice these, shall we say, creative interpretations of reality. For them a spinning White House is par for the course. Everybody does it. Lying is a serious matter only when it is under oath, before a Grand Jury or a Congressional Committee. This crowd smells blood only when someone within the inner circle of power may get indicted, and the closer to the President the better.

A steady flow of half truths undermines Government’s credibility

But instead I maintain that it is exactly this garden variety of everyday, “Orwell-lite”, manipulation, spin and half truths that undermines the credibility of office holders and eventually the prestige of institutions. People may not follow all the details of public policy; but at some level they know that they are being lied to and they do not like it. In many cases their frustration may remain inchoate, passively swallowed with resignation.

The “Tea Party Movement” as an expression of frustration

At times this discontent may flare up just like with the present “Tea Party Movement” phenomenon, born out of frustration with a Government that appears to take us along a dangerous course of debt and more and more interference in the lives of private citizens, all the time telling us that they know what they are doing.

This is not about Obama’s political future

Nobody knows what will happen with the Obama presidency. In American politics positive surprises, just as upsets, are routine. Likewise, “coming back from behind” stories are almost mandatory for all self-respecting politicians. Bill Clinton’s Democrats were routed by the Republicans in the mid-term elections of 1994; and then Clinton ended up sailing to re-election in 1996. So this is not about forecasting political fortunes.

America cannot work without confidence in the institutions

This is about re-creating in America an atmosphere of trust in the institutions that, according to repeated opinion polls, is now at historic lows. Simply stated: Americans do not believe in their Government anymore. This has to be reversed. And the healing process has to start with leveling with the public and telling the truth. So, Mr. President, go ahead and defend your approach and your economic policies in public debates. But do not point to fake evidence to support your positions. Do not cite distorted statistics to prove that things are working out well even when they are not. Do not hide behind manipulations. When the new jobs numbers are bad, level with America, and just say so.




Wellness Will Take Care of US Health Costs

WASHINGTON – The US health care delivery system, as currently structured, is so horrendously expensive that over time it will bankrupt the country.  On top of that, because of a lack of meaningful “upstream” efforts focusing on prevention and “wellness education” for the general public, this system, as expensive as it is, at best is capable of treating disease after its onset. So, a lot of money devoted to help people already in bad shape. And almost nothing to help prevent life style related diseases. 

US health care amounts to an extremely inefficient, incomprehensible, (at least for the average citizen), hodgepodge resulting from  lack of focus on prevention, perverse financial incentives for doctors to over prescribe unnecessary and, in some cases, evenharmful procedures, so that aggregate haelth costs are inflated; an unsustainable private insurance system; an equally unaffordable public care system, all nicely blended with progressively more and more unhealthy life styles mindlessly pursued by tens of millions of Americans who have not been taught that a combination of healthy nutrition, plus a modicum of physical exercise will yield in most cases better health and improved quality of life as a likely consequence.

Public policy: just mitigating the consequences of a bad system

 

Public policy tries to manage somehow this ill conceived system; but only timidly and without having laid out a clear strategy focused on “wellness” as the desired paradigm that could in turn be embraced by the larger population. The focus of the Obama administration in the long and divisive debate on health care reform was mostly on expanded access to health care, a worthy cause in a modern country in which millions of people do not have any form of health insurance. But the almost exclusive attention on availability, access and affordability of health care insurance  when a person becomes sick overshadowed the critical issue of what should be done to drastically diminish aggregate demand (and thus the national cost) for health care services. The really crucial focus on healthy life style, (this is real prevention), as a key factor that will drive down demand (and thus aggregate cost) for health care services is missing. It is intuitively obvious that millions of people who lead unhealthy lives will develop more complications and thus they will need more health care.

Cutting Cost? Wishful thinking

 

So far, government attention has been on trying to pursue two parallel but in my opinion mutually exclusive objectives: a) increasing health care coverage; and b) attempting to lower cost for the system overall. The first one may be on track. The second? Well….who knows. Too early to tell. We shall see how the recent health reform package will be implemented over a number of years. For the moment, the stated goal to begin a process that will constrain health care costs remains a worthy aspiration, entrusted, however, mostlyto experimentations, reviews, analysis of best practices, etc. Well….good luck with the idea of saving real money with this approach. 

Public health care spending: unsustainable

 

At a closely related level, no serious discussion about US fiscal policies and serious deficit reduction strategies can take place without mentioning the ballooning cost of the public portion of health care. As Lawrence Summers, Director of The National Economic Council at the White House, reminded a Washington audience just a few days ago, the public share of health care alone, (which is only one component of total national outlays), if left on its current spending trajectory, will keep growing so much that it will eventually gobble all federal revenue, leave nothing for other spending, and ultimately bankrupt the US.

Growing cost of health care considered inevitable

 

This is pretty serious stuff. And yet, whenever policy makers, including Summers, talk about overall health care costs they talk about them as a “given amount”, if anything inexorably poised towards unstoppable growth, impervious to any dynamic that may bring them down. In other words, policy makers say: “This is our current and projected cost for health care. This is the hard reality. We have a national agreement whereby government will bear a substantial part of this cost. Let’s see how we can manage to sustain this burden.” No serious investigation as to the factors that brought us here and whether or not they can be changed so that the upward spending curve will be modified.

No connection in public policy debates between life style and public health outcomes

 

Indeed, are these health care costs the equivalent of a law of physics, a natural phenomenon beyond our control? Not really. In fact, looking at the experience of other modern countries, we discover that there is something inherently wasteful with the system that we created to treat Americans. Strangely enough, in this country of science, innovation and legions of experts on diet, exercise, nutrition and any other possible fad about healthy living, it turns out that most people do not practice any of that. Most people live rather unhealthy lives. They eat on balance mostly bad food and too much of it; and they do not exercise. When these bad habits lead to disease they go to see a doctor. Just like the FBI gets into the scene only after a crime had been committed, so doctors come into the scene to fix what is broken. No robust system in place to prevent at least some common diseases related to life style and thus prevent and avoid costly treatments, medication and procedures.

We spend massively and get poor results

 

To put all this together, America as a nation spends stupendous amounts of money, now above 15 per cent of our GDP, to treat diseases that in large part are preventable –in as much as these are ailments that millions of Americans brought upon themselves as a consequence of a very unhealthy diet and lack of physical exercise.

As a consequence of this blending between high cost of health care and high demand for services by people who are in bad health and therefore need disproportionately “more”, we have this most remarkable American contrast of the highest health care bill in the world and at best mediocre health conditions for the general population.

Obesity epidemic

 

The explosion of obesity, with all its negative medical consequences for millions of Americans, including now an alarmingly high number of children, is only the most visible manifestation of this deterioration. So, the baffling issue is lots of money spent and mediocre results. Indeed, with all these fantastic sums of money and a huge percentage of national wealth spent on health, on average one third higher than what other rich countries spend, one would expect better outcomes. Not so. We have very little to show for the money devoted to health. 

US life expectancy is close to Albania and Portugal, hardly case studies in health care systems excellence. Sure enough, the US has some of the most advanced health care facilities in the world. Fine. But this means only that, if you are very rich, you can get the best of what medicine can offer. Yet, this says nothing of what is available, on average, for the average citizen. And again, if the average citizen does not nurture his/her health, medications and procedures whatever their cost can only get so far.

So we have an odd combination between a system geared to spending more rather than being attentive to the cost-effectiveness of care and people who need much more than their peers in other modern countries simply because they do almost nothing to prevent otherwise preventable diseases.

Medical care: the problem of “fee for service”

 

The incredibly high level of spending in the US is due to the perversion of having a system almost entirely based on incentives to providers to do “more” of everything, necessary or unnecessary, as it may be, unfortunately combined with a population that has a high demand for health services. A recent, detailed  AP story (“Overtreated: more medical care Is not always better”), indicates that: “Anywhere from one fifth to one third of the tests and treatments we get are estimated to be unnecessary”. Up to one third unnecessary? Can you imagine how many billions of dollars that is? Dr. Daniel Goodman, of the Dartmouth Institute for Health Policy, quoted in the same story, indicates that doctors may have good intentions. Yet:

“We also live in an environment where there are strong financial incentives to deliver certain types of care. We get well paid for doing procedures. We get paid relatively poorly for spending time with patients and helping them make choices”.

Got that? There are “incentives”. “We get well paid for doing procedures”. And many of them, it turns out are unnecessary of even harmful, (witness the exorbitant number of babies delivered by cesarean and the casual over prescription of antibiotics for almost anything). So, at least economically speaking, this set up has been paradise for all health care providers. As Dr. Goodman confirms, physicians get paid not for keeping you healthy but for fixing you when you are sick. And, in so doing, any  sickness, deliberately or just by force of habit, gets to be milked for whatever it can yield in terms of procedures, surgeries, hospital charges and prescription medications.

From this we get the horrible yet inescapable conclusion that most doctors, as the system is currently conceived, (even allowing for the presence of at least some ethical persons within the medical profession), have no economic interest whatsoever in promoting healthy living. In fact, the more unhealthy the personal habits of millions of Americans, the more prosperous their medical practice will get. Sick people need medical care; healthy people do not. And doctors are not rewarded for keeping people in good health. But, in the end, as noted above, this trend will end up eating most of our national resources. Thus it is unsustainable.

Doctors as salaried workers with no personal incentive to over prescribe?

 

We know that there are practices in the US in which physicians are salaried workers whose personal financial gain is not tied to the number or cost of procedures that they recommend and that patients, knowing no better, accept. But, if we look at the “fee for service” prevailing standard in conjunction with a progressively more unhealthy population due to extremely bad personal and dietary habits, then the picture becomes something like a grotesquely hellish workshop. America’s health system is a money making machine predicated on the inexhaustible supply of “patients” provided in large part care of the consequences of bad eating habits kindly encouraged by the major food companies and fast food chains that constantly promote tasty but long term unhealthy stuff goobled up in industrial quantities by unaware people. 

The “Western diet”

 

And let’s look at those habits. As Michael Pollan noted in his book “Food Rules, an Eater Manual”, we in the US have somehow perfected the worst possible model of unhealthy diet. The “Western Diet”, as Pollan calls it, consists primarily of highly processed foods, artificially enriched with sugar, other highly caloric sweeteners, fat and salt. Most of the food stuff Americans choose from when shopping at the supermarket or eating in any fast food franchise falls into this category of highly processed, highly caloric and not very nutritious items. Overtime, a diet made of predominantly processed food, consumed in large quantities because it is cheap and tasty, becomes a large factor in the onset of many otherwise totally preventable diseases: such as diabetes, certain types of cancer and circulatory problems, in turn causing heart attack and stroke, and many more.

American creative genius gave us junk food

 

Call it the outcome of our creative genius. Some people invented microchips, high performance jet engines, robots and internet applications. Others invented and refined alluring ways to feed us inexpensive sugar loaded sodas, bars, potato chips and other snacks consumed in industrial quantities by most people. The funny outcome is that, by inventing and successfully marketing a diet sold to the public on the basis that it consists mostly of cheap, easy to serve food, we have slowly poisoned ourselves. So, we have saved grocery money gorging on cheap snacks and fast food. In truth, purchasing better quality fresh food would cost more. But then, down the line, much more money is spent by the nation as a whole to treat chronic diet related diseases like diabetes that could have been prevented, with significant net gains for both the health of millions of Americans and the national pocket book.

We still need health care for normally occurring disease

This is not an attempt to oversimplify a complex health care picture. It is obvious that plain old “real” sickness does and will exist and that we have to do our best to meet the needs of those in need of health care. But surely there is a great deal that we should do to nurture healthy habits so that people will be on balance healthier. The difference between caring or not caring for our national wellness translates into a better or poorer quality of life for millions and literally hundreds of billions of dollars saved because millions will no longer need diabetes or high blood pressure treatment.

The medical consequences of bad diet

 

Again, according to the synthesis provided by Pollan at the beginning of his book on proper nutrition: “Virtually all of the obesity and type 2 diabetes, 80 per cent of the cardiovascular disease and more than a third of all cancers can be linked to this [Western] diet”. Based on his research, Pollan also indicates that, according to existing studies, while the damage caused by bad diet manifests itself in otherwise preventable disease, if and when people have the opportunity to go back to a healthy diet based on vegetables, fruits grains and protein, their chances to keep their health grow significantly. “In one analysis –says Pollan—a typical American population that departed even modestly from the Western diet (and lifestyle) could reduce its chances of getting coronary heart disease by 80 per cent, its chances of type 2 diabetes by 90 per cent and its chances of colon cancer by 70 per cent”.  These are huge percentages.

Nutrition, wellness and lower medical bills

 

Well, I do not know whether the data collected by Pollan and provided in his book is totally correct. But even if it is somewhat exaggerated, this correlation between bad diet and disease has been noted and documented before. It is obvious that nutrition and life style should be front and center in any serious discussion about the promotion of wellness. And it is almost intuitively obvious that well crafted wellness regimes should keep people on balance healthier. And from this follows that healthy people will need a lot less medical care, thus causing huge savings and the shrinking of our national medical bills.

Unable to fashion a national wellness strategy

 

And yet, while these facts and their connections are known: a) a bad system of incentives to doctors so that they will over prescribe; b) the disconnect between wellness promotion and health care; c)  the disconnect between healthy nutrition and wellness; somehow we have separate conversations for all these issues, as if they were discreet problems and not part of one important continuum which should be called: “Understanding the value of being healthy, the habits to be cultivated to stay healthy, and the role that should be played by all health care providers to foster wellness for all, as opposed to treat disease after its onset”.

Disjointed information: no clear picture provided

 

For example, a recent, quite prominent, story in the “Personal Journal” section of “The Wall Street Journal” featured the health problem of deteriorating arteries and what that means in terms of the onset of heart disease and a variety of other circulatory problems. And yet in this story that describes in some detail diagnostics, while providing all sorts of other medical information, there is only brief and passing mention of the most obvious cause of arterial deterioration, i.e. bad nutrition and the consequent increase of cholesterol deposits in the arteries. No clear message coming out of this article saying: “Well, this is the problem. Now, as of today, dear reader, you commit to change your diet and you will greatly improve the conditions of your arteries and your chances to live a longer and healthier life”. None of this. And this is just one example.

As in the article mentioned above, health care debates are mostly focused on issues related to health care delivery. Costs are examined separately, as they are deemed to be the stuff of health care economist and or/public policy specialists who have to figure how these costs fit into existing and future programs.

Nutrition information is mostly about being thin and beautiful not about being healthy

 

More broadly, there is no serious national debate about a better way to re-conceive the medical profession, its proper function and its just remuneration within a national “wellness program” aimed at preventing diseases, rather than just dealing with their consequences and costs. By the same token, nutrition, while a popular subject, is mostly featured in faddish diet discussions focusing on the fastest way to lose weight as an esthetic and not a wellness goal. Being fat is not chic. People in Hollywood are thin. But if you and millions of others do not care that much about being thin so that you can go to Hollywood; if you are not that keen to give up the pretzels and the beer in order to shed 20 or 30 pounds, and thus you have given up on the idea of looking like a movie celebrity, that is the end of that argument. Not much is being said about healthy food because it helps you stay healthy. And, yes, healthy food will also help you lose weight. But the key message should be that eating healthy stuff strengthens your health and not that weight loss should be pursued so that you can look beautiful.

Health care reform may be in place; but we are still unhealthy

 

And so, while the various dynamics –exponential growth of cost, “fee for service” incentives to over prescribe, bad diet and life style and their consequence on health—are known, somehow no one in a position of authority has bothered to put all this together under the banner of a positive “Wellness Strategy” for America.

President Obama takes pride in having signed into law his health care reform bill. But there is not much there about wellness. Until we get to the point of formulating and then, as a nation, embracing such a strategy, we shall continue to have half measure and timid steps, while people will lead unhealthy lives and medical costs will continue to rise. Not a very good prognosis.