September 11, 2004


  • September 11, 2004

    On Guard, America







    As regressive milestones go, few are as frightful in this new era of homeland security as the decision by Congress and the Bush administration to allow the expiration of the 10-year-old law protecting the public from assault rifles and other rapid-fire battlefield weapons. The law - a far from perfect but demonstrably effective restraint on high-tech gunslingers - expires on Monday with not a whimper from the White House.


    When George Bush was a candidate four years ago and under campaign pressure from moderates, he announced that he did support the renewal of this highly popular law. It turned out that he was shooting rhetorical blanks; his support depended on the renewal's ever getting through Congress in the first place. As president, Mr. Bush has never once demanded that his G.O.P. leaders cease playing first responder to the demands of the gun lobby and take the initiative on this public safety issue.


    A decade's experience with the assault weapons ban showed clearly that the only people who were inconvenienced were the criminals, the gun lobbyists and the least responsible gun dealers. Certainly the Second Amendment rights of responsible hunters were never crimped. Anyone taking to the woods next week with a freshly unfettered AK-47 or Uzi, or a TEC-9 assault pistol, will only make mincemeat of the game and a mockery of sportsmanship.


    Bill Clinton, Jimmy Carter and Gerald Ford pleaded with President Bush to do more than give passive lip support to the ban, just as most major law enforcement agencies told him the law was a vital check on gun mayhem across the nation. But rather than protecting the law, the administration invested its single-party control of government on behalf of the National Rifle Association, not the public. Instead of trying to control assault weapons, Republican Congressional leaders tried to outlaw legitimate damage suits by gun victims against irresponsible manufacturers and dealers.


    Now the greedier gun dealers are preparing to profit on the law's expiration as if it signaled the arrival of Beaujolais nouveau. The Bush administration has allowed the right to bear arms to degenerate back to the right to brandish battlefield weapons on the home front.


     


    ---------------------------------------------------------------


    ---------------------------------------------------------------


     



    September 11, 2004

    OP-ED COLUMNIST


    Ruling Class War


    By DAVID BROOKS





    There are two sorts of people in the information-age elite, spreadsheet people and paragraph people. Spreadsheet people work with numbers, wear loafers and support Republicans. Paragraph people work with prose, don't shine their shoes as often as they should and back Democrats.


    C.E.O.'s are classic spreadsheet people. According to a sample gathered by PoliticalMoneyLine in July, the number of C.E.O.'s donating funds to Bush's campaign is five times the number donating to Kerry's.


    Professors, on the other hand, are classic paragraph people and lean Democratic. Eleven academics gave to the Kerry campaign for every 1 who gave to Bush's. Actors like paragraphs, too, albeit short ones. Almost 18 actors gave to Kerry for every 1 who gave to Bush. For self-described authors, the ratio was about 36 to 1. Among journalists, there were 93 Kerry donors for every Bush donor. For librarians, who must like Faulknerian, sprawling paragraphs, the ratio of Kerry to Bush donations was a whopping 223 to 1.


    Laura Bush has a lot of work to do in shoring up her base.


    Data from the Center for Responsive Politics allows us to probe the emerging class alignments, but the pattern is the same. Number people and word people are moving apart.


    Accountants, whose relationship with numbers verges on the erotic, are now heavily Republican. Back in the early 1990's, accountants gave mostly to Democrats, but now they give twice as much to the party of Lincoln. Similarly, in the early 1990's, bankers gave equally to the two parties. Now they give mostly to Republicans, though one notices that employees at big banks, like Citigroup and Bank of America, are more likely to give to Democrats.


    But lawyers - people who didn't realize that they wanted to be novelists until their student loan burdens were already too heavy - are shifting the other way. This year, lawyers gave about $81 million to Democrats and about $31 million to Republicans.


    Media types are Democratic, of course, but one is dismayed to learn that two-thirds of employee donations at Rupert Murdoch's News Corporation went to Democrats. Whatever happened to company loyalty?


    If you look at the big Kerry donors, you realize that the days of the starving intellectual are over. University of California employees make up the single biggest block of Kerry donors and Harvard employees are second, topping folks from Goldman Sachs and others in the supposedly sell-out/big-money professions.


    Academics have had such an impact on the Democratic donor base because there is less intellectual diversity in academia than in any other profession. All but 1 percent of the campaign donations made by employees of William & Mary College went to Democrats. In the Harvard crowd, Democrats got 96 percent of the dollars. At M.I.T., it was 94 percent. Yale is a beacon of freethinking by comparison; 8 percent of its employee donations went to Republicans.


    It should be noted there are some professions that span the spreadsheet-people/paragraph-people divide. For example, lobbyists give equally to both parties. (Could it possibly be that lobbyists don't have principles?) And casino people split their giving, with employees at Harrah's giving mostly to Democrats and employees at MGM Mirage giving mostly to Republicans.


    Why have the class alignments shaken out as they have? There are a couple of theories. First there is the intellectual affiliation theory. Numerate people take comfort in the false clarity that numbers imply, and so also admire Bush's speaking style. Paragraph people, meanwhile, relate to the postmodern, post-Cartesian, deconstructionist, co-directional ambiguity of Kerry's Iraq policy.


    I subscribe, however, to the mondo-neo-Marxist theory of information-age class conflict. According to this view, people who majored in liberal arts subjects like English and history naturally loathe people who majored in econ, business and the other "hard" fields. This loathing turns political in adult life and explains just about everything you need to know about political conflict today.


    It should be added that not everybody fits predictably into the political camp indicated by a profession. I myself am thinking of founding the Class Traitors Association, made up of conservative writers, liberal accountants and other people so filled with self-loathing that they ally politically with social and cultural rivals.


    Class traitors of the word, Unite! You have nothing to lose but your friends - and a world to gain!




    --------------------------------------------------------------------


    --------------------------------------------------------------------


     


     

September 10, 2004


  • September 10, 2004

    The Long Shadow of War







    Each time President Bush has run for public office, he has had to weather critics' charges that he received silver-spoon treatment during the Vietnam War as a politician's son who gained coveted admission to the Texas Air National Guard while other young Americans were drafted into combat. The charges are back once more, this time with some telling new details in the form of private memos attributed to Mr. Bush's squadron commander of three decades ago.


    The memos describe pressure from above to "sugarcoat" the Bush record after the commander had ordered the young pilot grounded for failure to comply with Guard obligations. And the memos also claimed that Mr. Bush "made no attempt" to meet larger performance obligations before heading off to a new unit based in Alabama, where he helped run a political campaign.


    The memos, whose authenticity is being challenged, were disclosed on the CBS News program "60 Minutes" along with an interview with Ben Barnes, a Democrat and former lieutenant governor of Texas who repeated claims of having helped Mr. Bush and other favored individuals jump ahead of hundreds on the Guard waiting list in response to pressure from influential Texans.


    The reporting touched off a series of salvos between Republicans, who repeatedly pointed out that Mr. Bush had eventually received an honorable discharge, and Democrats, who are still angry about the ads attacking John Kerry's wartime service record on Swift boats.


    The one thing becoming clear in this furious dispute is how much has changed since Vietnam. Everyone knows that military Reserve and Guard units did indeed provide sanctuary from the draft back then for many fortunate Americans, however they managed entry. But today, under the military's increasingly hard-pressed readiness, these units have become mainline combat conduits to the Iraq war. Far from escaping the front lines, men and women from supposedly part-time, home-front outfits are figuring all too sadly in the Iraq toll of 1,000 American deaths and counting.


    This year's voters might keep this lethal turnabout in mind as rival campaigns would have them wallow entirely in the past. And as President Bush faces another bout of retrospective Vietnam politicking, we hope he keeps relevant lessons from his own military service at hand while fulfilling his obligations as commander in chief of today's embattled soldiers.


     


    ------------------------------------------------------------


    ------------------------------------------------------------


     



    September 10, 2004

    OP-ED COLUMNIST


    How Many Deaths Will It Take?


    By BOB HERBERT





    It was Vietnam all over again - the heartbreaking head shots captioned with good old American names:


    Jose Casanova, Donald J. Cline Jr., Sheldon R. Hawk Eagle, Alyssa R. Peterson.


    Eventually there'll be a fine memorial to honor the young Americans whose lives were sacrificed for no good reason in Iraq. Yesterday, under the headline "The Roster of the Dead," The New York Times ran photos of the first thousand or so who were killed.


    They were sent off by a president who ran and hid when he was a young man and his country was at war. They fought bravely and died honorably. But as in Vietnam, no amount of valor or heroism can conceal the fact that they were sent off under false pretenses to fight a war that is unwinnable.


    How many thousands more will have to die before we acknowledge that President Bush's obsession with Iraq and Saddam Hussein has been a catastrophe for the United States?


    Joshua T. Byers, Matthew G. Milczark, Harvey E. Parkerson 3rd, Ivory L. Phipps.


    Fewer and fewer Americans believe the war in Iraq is worth the human treasure we are losing and the staggering amounts of money it is costing. But no one can find a way out of this tragic mess, which is why that dreaded word from the Vietnam era - quagmire - has been resurrected. Most Washington insiders agree with Senator John McCain, who said he believes the U.S. will be involved militarily in Iraq for 10 or 20 more years.


    To what end? You can wave goodbye to the naïve idea that democracy would take root in Iraq and then spread like the flowers of spring throughout the Middle East. That was never going to happen. So what are we there for, other than to establish a permanent military stronghold in the region and control the flow of Iraqi oil?


    The insurgency in Iraq will never end as long as the U.S. is occupying the country. And our Iraqi "allies" will never fight their Iraqi brethren with the kind of intensity the U.S. would like, any more than the South Vietnamese would fight their fellow Vietnamese with the fury and effectiveness demanded by the hawks in the Johnson administration.


    The Iraqi insurgents - whether one agrees with them or not - believe they are fighting for their homeland, their religion and their families. The Americans are not at all clear what they're fighting for. Saddam is gone. There were no weapons of mass destruction. The link between Saddam and the atrocities of Sept. 11 was always specious and has been proven so.


    At some point, as in Vietnam, the American public will balk at the continued carnage, and this tragic misadventure will become politically unsustainable. Meanwhile, the death toll mounts.


    Elia P. Fontecchio, Raheen Tyson Heighter, Sharon T. Swartworth, Ruben Valdez Jr.


    One of the reasons the American effort in Iraq is unsustainable is that the American people know very little about the Iraqi people and their culture, and in most cases couldn't care less. The war in Iraq was sold as a response to Sept. 11. As it slowly dawns on a majority of Americans that the link was bogus, and that there is no benefit to the U.S. from this war, only endless grief, the political support will all but vanish.


    (This could take awhile. In a poll done for Newsweek magazine this week, 42 percent of the respondents continue to believe that Saddam Hussein was directly involved in the Sept. 11 attacks.)


    We've put our troops in Iraq in an impossible situation. If you are not permitted to win a war, eventually you will lose it. In Vietnam, for a variety of reasons, the U.S. never waged total war, although the enemy did. After several years and more than 58,000 deaths, we quit.


    We won't - and shouldn't - wage total war in Iraq, either. But to the insurgents, the Americans epitomize evil. We're the crazed foreigners who invaded their country and killed innocent Iraqi civilians, including women and children, by the thousands. We call that collateral damage. They call it murder. For them, this is total war.


    President Bush never prepared the nation for the prolonged violence of this war. He still hasn't spoken candidly about it. If he has an idea for hauling us out of this quagmire, he hasn't bothered to reveal it.


    The troops who are fighting and dying deserve better.


     


    ---------------------------------------------------------------


    ---------------------------------------------------------------


     



    September 10, 2004

    OP-ED COLUMNIST


    The Dishonesty Thing


    By PAUL KRUGMAN





    It's the dishonesty, stupid. The real issue in the National Guard story isn't what George W. Bush did three decades ago. It's the recent pattern of lies: his assertions that he fulfilled his obligations when he obviously didn't, the White House's repeated claims that it had released all of the relevant documents when it hadn't.


    It's the same pattern of dishonesty, this time involving personal matters that the public can easily understand, that some of us have long seen on policy issues, from global warming to the war in Iraq. On budget matters, which is where I came in, serious analysts now take administration dishonesty for granted.


    It wasn't always that way. Three years ago, those of us who accused the administration of cooking the budget books were ourselves accused, by moderates as well as by Bush loyalists, of being "shrill." These days the coalition of the shrill has widened to include almost every independent budget expert.


    For example, back in February the Center on Budget and Policy Priorities accused the Bush administration of, in effect, playing three-card monte with budget forecasts. It pointed out that the administration's deficit forecast was far above those of independent analysts, and suggested that this exaggeration was deliberate.


    "Overstating the 2004 deficit," the center wrote, "could allow the president to announce significant 'progress' on the deficit in late October - shortly before Election Day - when the Treasury Department announces the final figures."


    Was this a wild accusation from a liberal think tank? No, it's conventional wisdom among experts. Two months ago Stanley Collender, a respected nonpartisan analyst, warned: "At some point over the next few weeks, the Office of Management and Budget will release the administration's midsession budget review and try to convince everyone the federal deficit is falling. Don't believe them."


    He went on to echo the center's analysis. The administration's standard procedure, he said, is to initially issue an unrealistically high deficit forecast, which is "politically motivated or just plain bad." Then, when the actual number comes in below the forecast, officials declare that the deficit is falling, even though it's higher than the previous year's deficit.


    Goldman Sachs says the same. Last month one of its analysts wrote that "the Office of Management and Budget has perfected the art of underpromising and overperforming in terms of its near-term budget deficit forecasts. This creates the impression that the deficit is narrowing when, in fact, it will be up sharply."


    In other words, many reputable analysts think that the Bush administration routinely fakes even its short-term budget forecasts for the purposes of political spin. And the fakery in its long-term forecasts is much worse.


    The administration claims to have a plan to cut the deficit in half over the next five years. But even Bruce Bartlett, a longtime tax-cut advocate, points out that "projections showing deficits falling assume that Bush's tax cuts expire on schedule." But Mr. Bush wants those tax cuts made permanent. That is, the administration has a "plan" to reduce the deficit that depends on Congress's not passing its own legislation.


    Sounding definitely shrill, Mr. Bartlett says that "anyone who thinks we can overcome our fiscal mess without higher taxes is in denial." Far from backing down on his tax cuts, however, Mr. Bush is proposing to push the budget much deeper into the red with privatization programs that purport to offer something for nothing.


    As Newsweek's Allan Sloan writes, "The president didn't exactly burden us with details about paying for all this. It's great marketing: show your audience the goodies but not the price tag. It's like going to the supermarket, picking out your stuff and taking it home without stopping at the checkout line to pay. The bill? That will come later."


    Longtime readers will remember that that's exactly what I said, shrilly, about Mr. Bush's proposals during the 2000 campaign. Once again, he's running on the claim that 2 - 1 = 4.


    So what's the real plan? Some not usually shrill people think that Mr. Bush will simply refuse to face reality until it comes crashing in: Paul Volcker, the former Federal Reserve chairman, says there's a 75 percent chance of a financial crisis in the next five years.


    Nobody knows what Mr. Bush would really do about taxes and spending in a second term. What we do know is that on this, as on many matters, he won't tell the truth.


     


    -------------------------------------------------------


    -------------------------------------------------------


     

September 6, 2004


  • September 6, 2004

    OP-ED COLUMNIST


    An Economy That Turns American Values Upside Down


    By BOB HERBERT





    The Labor Department reported last week that 144,000 payroll jobs were created in August. Let's put that in perspective.


    The number was below market forecasts. It was also below the number of jobs needed to accommodate the growth in the employment-aged population. In short, this was not good news. It's only by the diminished job-creation standards that have prevailed since the last recession that any positive spin could be put on last month's performance.


    As the Economic Policy Institute tells us, in a book-length report it is releasing today: "The United States has been tracking employment statistics since 1939, and never in history has it taken this long to regain the jobs lost over a downturn."


    In "The State of Working America 2004/2005," the institute shows in tremendous detail how those lost jobs and other disappointing aspects of the recovery are taking a severe economic toll on working families.


    According to the institute:


    "After almost three years of recovery, our job market is still too weak to broadly distribute the benefits of the growing economy. Unemployment is essentially unchanged, job growth has stalled, and real wages have started to fall behind inflation. Today's picture is a stark contrast to the full employment period before the recession, when the tight labor market ensured that the benefits of growth were broadly shared.


    "Prolonged weakness in the labor market has left the nation with over a million fewer jobs than when the recession began. This is a worse position, in terms of recouping lost jobs, than any business cycle since the 1930's."


    What is happening is nothing less than a deterioration in the standard of living in the United States. Despite the statistical growth in the economy, the continued slack in the labor market has resulted in declining real wages for anxious American workers and a marked deterioration in job quality.


    From 2000 through 2003 the median household income fell by $1,500 (in 2003 dollars) - a significant 3.4 percent decrease. That information becomes startling when you consider that during the same period there was a strong 12 percent increase in productivity among U.S. workers. Economists will tell you that productivity increases go hand-in-hand with increases in the standard of living. But not this time. Here we have a 3.4 percent loss in real income juxtaposed with a big jump in productivity.


    "So the economic pie is growing gangbusters and the typical household is falling behind," said Jared Bernstein, the institute's senior economist and a co-author of the new book.


    This is the part of the story that spotlights the unfairness at the heart of the current economic setup in the U.S. While workers have been remarkably productive in recent years, they have not participated in the benefits of their own increased productivity. That doesn't sound very much like the American way.


    According to the institute, "Between 1947 and 1973 productivity and real median family income both grew 104 percent, a golden age of growth for both variables." That parallel relationship began to break down in the 1970's, but it is only recently that it fell apart altogether, leaving us with the following evidence of unrestrained inequity:


    "In the 2000-03 period income shifted extremely rapidly and extensively from labor compensation to capital income (profits and interest)," so that the "benefits of faster productivity growth" went overwhelmingly to capital.


    American workers are in an increasingly defensive position. In a tight labor market, when jobs are plentiful, workers have leverage and can demand increased wages and benefits. But today's workers have lost power in many different ways - through the slack labor market, government policies that favor corporate interests, the weakening of unions, the growth of lower-paying service industries, global trade, capital mobility, the declining real value of the minimum wage, immigration and so on.


    The end result of all this is a portrait of American families struggling just to hang on, rather than to get ahead. The benefits of productivity gains and economic growth are flowing to profits, not worker compensation. The fat cats are getting fatter, while workers, at least for the time being, are watching the curtain come down on the heralded American dream.




    -----------------------------------------------------------------------


    -----------------------------------------------------------------------


     



    September 6, 2004

    OP-ED CONTRIBUTOR


    Workers of the World, Relax


    By ALAIN DE BOTTON





    London — The most remarkable feature of the modern workplace has nothing to do with computers, automation or globalization. Rather, it lies in the Western world's widely held belief that our work should make us happy.


    All societies throughout history have had work right at their center; but ours - particularly America's - is the first to suggest that it could be something other than a punishment or penance. Ours is the first to imply that a sane human being would want to work even if he wasn't under financial pressure to do so. We are unique, too, in allowing our choice of work to define who we are, so that the central question we ask of new acquaintances is not where they come from or who their parents are but, rather, what it is they do - as though only this could effectively reveal what gives a human life its distinctive timbre.


    It wasn't always like this. Greco-Roman civilization tended to view work as a chore best left to slaves. For both Plato and Aristotle, fulfillment could be reached only when one had the command of a private income and could escape day-to-day obligations and freely devote oneself to the contemplation of ethical and moral questions. The entrepreneur and merchant may have had a nice villa and a heaping larder, but they played no role in the antique vision of the good life.


    Early Christianity took a similarly bleak view of labor, adding the even darker thought that man was condemned to toil in order to make up for the sin of Adam. Working conditions, however abusive, could not be improved. Work wasn't accidentally miserable - it was one of the planks upon which earthly suffering was irrevocably founded. St. Augustine reminded slaves to obey their masters and accept their pain as part of what he termed, in "The City of God," the "wretchedness of man's condition."


    The first signs of the modern, more cheerful attitude toward work can be detected in the city-states of Italy during the Renaissance, and in particular, in the biographies of the artists of the time. In descriptions of the lives of men like Michelangelo and Leonardo, we find some now familiar-sounding ideas about what our labors could ideally mean for us: a path to authenticity and glory. Rather than a burden and punishment, artistic work could allow us to rise above our ordinary limitations. We could express our talents on a page or on a canvas in a way we never could in our everyday lives. Of course, this new vision applied only to a creative elite (no one yet thought to tell a servant that work could develop his true self: that was a claim waiting for modern management theory), but it proved to be the model for all successive definitions of happiness earned through work.


    It was not until the late 18th century that the model was extended beyond the artistic realm. In the writings of bourgeois thinkers like Benjamin Franklin, Diderot and Rousseau, we see work recategorized not only as a means to earn money, but also as a way to become more fully ourselves. It is worth noting that this reconciliation of necessity and happiness exactly mirrored the contemporary re-evaluation of marriage: just as marriage was rethought as an institution that could deliver both practical benefits and sexual and emotional fulfillment (a handy conjunction once thought impossible by aristocrats, who saw a need for a mistress and a wife), so too work was now alleged to be capable of delivering both the money necessary for survival and the stimulation and self-expression that had once been seen as the exclusive preserve of the leisured.


    Simultaneously, people began to experience a new kind of pride in their work, in large part because the way that jobs were handed out took on a semblance of justice. In his autobiography, Thomas Jefferson explained that his proudest achievement had been to create a meritocratic United States, where "a new aristocracy of virtue and talent" replaced the old aristocracy of unfair privilege and, in many cases, brute stupidity. Meritocracy endowed jobs with a new, quasi-moral quality. Now that prestigious and well-paid posts seemed to be available on the basis of actual intelligence and ability, your job title could perhaps say something directly meaningful about you.


    Over the 19th century, many Christian thinkers, especially in the United States, changed their views of money accordingly. American Protestant denominations suggested that God required his followers to lead a life that was successful both temporally and spiritually. Fortunes in this world were evidence that one deserved a good place in the next - an attitude reflected in the Rev. Thomas P. Hunt's 1836 bestseller "The Book of Wealth: In Which It Is Proved From the Bible That It Is the Duty of Every Man to Become Rich." John D. Rockefeller was not shy to say that it was the Lord who had made him rich, while William Lawrence, the Episcopal bishop of Massachusetts, writing in 1892, argued, "We, like the Psalmist, occasionally see the wicked prosper, but only occasionally,'' adding, "Godliness is in league with riches."


    As meritocracy came of age, demeaning jobs came to seem not merely regrettable, but, just like their more exciting counterparts, also deserved. No wonder people started asking each other what they did - and listening very carefully to the answers.






    Though all this may seem like progress, in truth, modern attitudes toward work have unwittingly caused us problems. Today, claims are made on behalf of almost all kinds of work that are patently out of sync with what reality can provide. Yes, a few jobs are certainly fulfilling, but the majority are not and never can be. We would therefore be wise to listen to some of the pessimistic voices of the pre-modern period, if only to stop torturing ourselves for not being as happy in our work as we were told we could be.


    William James once made an acute point about the relationship between happiness and expectation. He argued that satisfaction with ourselves does not require us to succeed in every endeavor. We are not always humiliated by failing; we are humiliated only if we first invest our pride and sense of worth in a given achievement, and then do not reach it. Our goals determine what we will interpret as a triumph and what must count as a failure: "With no attempt there can be no failure; with no failure no humiliation." So our self-esteem in this world is determined by the ratio of our actualities to our supposed potentialities. Thus:




    Self-esteem
    =
    Success/Pretensions



    If happiness at work is now so hard to earn, perhaps it is because our pretensions have so substantially outstripped reality. We expect every job to deliver some of the satisfaction available to Sigmund Freud or Franklin Roosevelt. Perhaps we should be reading Marx instead. Of course, Marx was a poor historian and wrong in all his prescriptions for a better world, but he was rather acute at diagnosing why work is so often miserable. In this respect, he drew on Immanuel Kant, who wrote in his "Groundwork of the Metaphysics of Morals" that behaving morally toward other people required that one respect them "for themselves" instead of using them as a "means" for one's enrichment or glory. Thus Marx, famously accused the bourgeoisie, and its new science, economics, of practicing "immorality" on a grand scale: "Political economy knows the worker only as a working animal - as a beast reduced to strictest bodily needs." The wages paid to employees were, said Marx, just "like the oil which is applied to wheels to keep them turning,'' adding, "The true purpose of work is no longer man, but money."


    Marx may have been erratically idealizing the pre-industrial past and unduly castigating the bourgeoisie, but he ably captured the inescapable degree of conflict between employer and employee. Every commercial organization will try to gather raw materials, labor and machinery at the lowest possible price to combine them into a product that can be sold at the highest possible price.


    And yet, troublingly, there is one difference between "labor" and other elements that conventional economics does not have a means to represent, or give weight to, but which is nevertheless unavoidably present: labor feels pain and pleasure. When production lines grow prohibitively expensive, they may be switched off and will not cry at the seeming injustice of their fate. A business can move from using coal to natural gas without the neglected energy source walking off a cliff.


    But labor has a habit of meeting attempts to reduce its price or presence with emotion. It sobs in toilet stalls, it gets drunk to ease its fears of under-achievement, and it may choose death over redundancy.


    These emotional responses point us to two, perhaps conflicting, imperatives coexisting in the workplace: an economic imperative that dictates that the primary task of business is to realize a profit, and a human imperative that leads employees to hunger for financial security, respect, tenure and even, on a good day, fun. Though the two imperatives may for long periods coexist without apparent friction, all wage-dependent workers live under an awareness that should there ever have to be a serious choice between the two, it is the economic one that must always prevail. These pressures are no less absent from the lives of the self-employed - whether they own the corner laundry or the town real-estate brokerage - for in their cases, the economy as a whole (local, national and global) acts as the employer.


    Struggles between labor and capital may no longer, in the developed world at least, be as bare-knuckled as in Marx's day. Yet, despite advances in working conditions and employee protections, workers remain in essence tools in a process in which their own happiness or economic well-being is necessarily incidental. Whatever camaraderie may build up between employer and employed, whatever goodwill workers may display and however many years they may have devoted to a task, they must live with the knowledge and attendant anxiety that their status is not guaranteed - that it remains dependent on their own performance and the economic well-being of their organizations; that they are hence a means to profit, and never ends in themselves.


    This is all sad, but not half as sad as it can be if we blind ourselves to the reality and raise our expectations of our work to extreme levels. A firm belief in the necessary misery of life was for centuries one of mankind's most important assets, a bulwark against bitterness, a defense against dashed hopes. Now it has been cruelly undermined by the expectations incubated by the modern worldview.


    Now perhaps, as many of us return from summer vacations, we can temper their sadness by remembering that work is often more bearable when we don't, in addition to money, expect it always to deliver happiness.



    Alain de Botton is the author of "How Proust Can Change Your Life" and "Status Anxiety."


     


    ----------------------------------------------------------------------------------


    ----------------------------------------------------------------------------------


     


     

September 5, 2004


  • September 5, 2004

    ECONOMIC VIEW


    The Next Shock: Not Oil, but Debt


    By DANIEL GROSS





    WITH oil prices hovering above $40 a barrel, experts have calmed frayed nerves by noting that today's services-driven American economy is much less addicted to the black stuff than yesterday's industrial economy. From 1973 to 2003, after all, the amount of oil and gas needed to create a dollar of gross domestic product fell by half. Structural changes in the economy have let the nation absorb the recent shock of rising crude.


    That's the good news. The bad news is that other recent structural changes in the economy - the federal government's shift from surpluses to huge deficits, the national predilection for consumption over saving and housing prices that climb faster than incomes - have increased the country's reliance on another kind of fuel: credit.


    As a result, the American economic ship, which has weathered the recent run-up in crude oil prices, may be more vulnerable to sudden surges in the price of money. If the rate on 30-year fixed mortgages were to rise from 5.4 percent today to 7.5 percent next February, homeowners could get walloped.


    "Rather go to bed supperless than rise in debt," Benjamin Franklin wrote in Poor Richard's Almanac. Well, in recent years, American consumers, businesses and governments have been hitting the sack with their stomachs bloated and their charge cards maxed out. From 1988 to 2000, the ratio of nonfinancial debt to gross domestic product held steady at about 1.8 to 1. But recently, consumer, business and government credit has bulged like the belly of a contestant at a hot-dog eating contest at Coney Island.


    From the beginning of 2001 to the end of 2003, the economy added $1.317 trillion in gross domestic product and $4.2 trillion in debt.


    That means that each new dollar of economic output was accompanied by $3.19 in new debt. So now, for the first time, the debt-to-G.D.P. ratio stands at more than two to one.


    Throw in financial credit - the debt that investment banks and others use to finance trading activities and the like - and total debt has more than doubled since 1994. The mere existence of huge debt needn't be a source of panic. You and I may view debt as an economic input - we borrow so we can spend and invest, and hence, as politicians like to say, "grow the economy." Academic economists view it more as a byproduct. Debt is created when people, governments and companies spend money, trade and produce.


    VIEWED that way, the sharp rise in credit in recent years isn't surprising or even, in and of itself, alarming. "When interest rates are low, you'd expect people to pile on more debt per G.D.P. because it's cheap,'' said J. Bradford DeLong, an economist at the University of California at Berkeley.


    What's more, as anyone who has ever used a mortgage calculator knows, lower debt-service costs can make higher levels of debt seem eminently manageable. Here is a gigantic example:


    In 1997, when the total national debt stood at $5.4 trillion, Washington paid $356 billion in interest. In 2003, when the national debt grew to $6.8 trillion, Uncle Sam's interest bill fell to $318 billion. The environment of ultralow interest rates engineered by Alan Greenspan, the Federal Reserve chairman, thus sharply muted the impact of Washington's fiscal recklessness.


    But the economy's apparent reliance on credit to fuel everything from home buying to the military budget is troublesome. If incomes and revenues fail to rise, stressed consumers may have a tough time keeping up with payments. "It's been much more a matter of households borrowing than businesses," said Benjamin M. Friedman, a Harvard economist. "You have to hope that people are going to be able to service the obligations they've taken on."


    An economy hooked on debt also is vulnerable to the seemingly inevitable rise in interest rates. And in a period when prudence would seem to dictate locking in rates, Americans have rushed to assume greater interest-rate risk. Borrowers - especially homebuyers - haven't reacted to recent increases by borrowing less.


    In the first quarter of 2004, debt rose at an annual clip of 8.6 percent, more than double the growth rate of the economy. No, we've kept the interest bill down by swapping fixed-rate for adjustable-rate financing. The Mortgage Bankers Association reported that adjustable-rate mortgages constituted 35 percent of new mortgages in the second quarter this year, up from 27 percent in the fourth quarter of 2003.


    Consumers, whose maxed-out credit cards generally bear floating interest rates, and the federal government, which skews its borrowing to short-term instruments, have essentially done the same thing. So if interest rates rise, we'll all have to spend more dollars on debt service, leaving fewer dollars for more productive uses - like buying 90-inch flat-screen TV's. If money becomes more expensive, we may have to downshift our spending and consumption, like drivers trading in expensive Hummers for gas-sipping imports. And that may shrink the economy.


    HIGHER collective leverage, in turn, means that we're more susceptible to external shocks. "The bigger the debt, the smaller the margin for error,'' said Austan D. Goolsbee, a University of Chicago economist. Companies with no debt can weather several lean quarters; companies with piles of debt often find that a single bad quarter spells disaster.


    The same holds for consumers. All kinds of wild cards that are scary even in placid times - another spike in gas prices, a rupture of the housing bubble, fresh job losses, a period of sustained inflation - become nightmares during times of greater leverage. So as we go to bed with our suppers and our home-equity lines of credit, Professor Goolsbee says: "I think we should be a little nervous."



    ------------------------------------------------------------------


    ------------------------------------------------------------------


     


  • September 5, 2004

    SICK OF WORK


    Always on the Job, Employees Pay With Health


    By JOHN SCHWARTZ





    American workers are stressed out, and in an unforgiving economy, they are becoming more so every day.


    Sixty-two percent say their workload has increased over the last six months; 53 percent say work leaves them "overtired and overwhelmed."


    Even at home, in the soccer bleachers or at the Labor Day picnic, workers are never really off the clock, bound to BlackBerries, cellphones and laptops. Add iffy job security, rising health care costs, ailing pension plans and the fear that a financial setback could put mortgage payments out of reach, and the office has become, for many, an echo chamber of angst.


    It is enough to make workers sick - and it does.


    Decades of research have linked stress to everything from heart attacks and stroke to diabetes and a weakened immune system. Now, however, researchers are connecting the dots, finding that the growing stress and uncertainty of the office have a measurable impact on workers' health and, by extension, on companies' bottom lines.


    Workplace stress costs the nation more than $300 billion each year in health care, missed work and the stress-reduction industry that has grown up to soothe workers and keep production high, according to estimates by the American Institute of Stress in New York. And workers who report that they are stressed, said Steven L. Sauter, chief of the Organizational Science and Human Factors Branch of the National Institute for Occupational Safety and Health, incur health care costs that are 46 percent higher, or an average of $600 more per person, than other employees.


    "The costs are significant," Dr. Sauter said, adding, "Those are just the costs to the organization, and not the burden to individuals and to society."


    American workers are not the only ones grappling with escalating stress and ever greater job demands. European companies are changing once-generous vacation policies, and stress-related illnesses cost England 13 million working days each year, one British health official said.


    "It's an issue everywhere you go in the world," said Dr. Guy Standing, the lead author of "Economic Security for a Better World," a new report from the International Labor Office, an agency of the United Nations.


    White-collar workers are particularly at risk, Dr. Standing said, because "we tend to take our work home."


    Most stress-related health problems are a far cry from the phenomenon known in Japan as karoshi, or "death from overwork." But downsizing, rapid business expansion, outsourcing - trends that some have credited with increasing the nation's economic health - translate into increases in sick days, hospitalization, the risk of heart attack and a host of other stress-related problems, researchers find.


    The changing workplace, said Hugo Westerlund, a researcher at the National Institute for Psychosocial Medicine in Stockholm, "does pose a threat to people's health."


    Growth of the Untraditional Job


    The days when an employer said "if you do your job, you'll have a job" are long gone.


    The traditional career, progressing step by step through the corridors of one or two institutions, "is finished," said Dr. Richard Sennett, a sociologist at New York University. He has calculated that a young American today with at least two years of college can expect to change jobs at least 11 times before retirement.


    Business has moved away from traditional employment, now an almost quaint concept described in a recent RAND Corporation study as "full-time jobs of indefinite duration at a facility owned or rented by the employer."


    Instead, that study found, one in every four workers in the United States is "in some nontraditional employment relationship," including part-time work and self-employment. Four out of 10 Americans now work "mostly at nonstandard time," according to figures cited by Harriet Presser of the University of Maryland. The odd hours include evenings, nights, rotating shifts and weekends to meet the demands of global supply chains and customers in every time zone.


    These jobs require an increasing amount of time as well. Workers in the United States already put in more than 1,800 hours on the job a year: 350 hours more than the Germans and slightly more than the Japanese, according to the International Labor Office.


    Nonwork hours have also been increasingly invaded by technologies that act like a virtual leash.


    "The distinction between work and nonwork time is getting fuzzier all the time," said Donald I. Tepas, professor emeritus of industrial psychology at the University of Connecticut, who has studied the health and safety effects of overwork and sleeplessness.


    One result is an office culture where too much work is not enough.


    And while some workers thrive in the changing workplace, others find their workplaces ruled by what one expert, Joanne B. Ciulla of the University of Richmond, calls "the work ethic of fear."


    More than 30 percent of workers say they are "always" or "often" under stress at work, according to the National Opinion Research Center at the University of Chicago, and a quarter of those surveyed in 2002 said there often were not enough co-workers to get the job done.


    Other surveys show no end in sight. In a new report, Kronos Inc., a human resources firm, found that 62 percent of American workers said that their job activities and responsibilities had increased over the past six months and that they had not used all of their allotted vacation time in the past year. And 60 percent of those surveyed said they did not expect any respite from increased working hours in the next six months.


    Little wonder, then, that Dr. Richard A. Chaifetz, chief executive of ComPsych, the largest provider of employee assistance programs, said "the stress levels today are clearly higher than they were a few years ago."


    The strain of working in an uncertain economic world weighed heavily on Sergey Shevchuk, a former programmer for financial services companies. He said he was caught in an emotional vise while the companies tried to weather the post-2000 stock slump by purging the ranks and looking toward cheaper labor through outsourcing.


    "I was depressed and getting easily sick very often," he recalled. "I was coming home empty."


    Mr. Shevchuk has since left the world of programming, where his work could bring $135,000 a year, and started Distinct Construction Service, a home contracting business in Fairlawn, N.J.


    Diane Knorr, a former dot-com executive, said she believed that the stress of her job contributed to persistent stomach pain and sleeplessness. At first, she said, the feeling of being on call at all hours was exciting.


    "The first time I got a call way after hours from a senior manager, I remember being really flattered" and thinking, "Wow! I'm really getting up there now."


    But gradually, her work and family life became a blur with hours that were hard to scale back.


    "If I leave at 5 and everyone else leaves at 6:30, I might look like the one who is not pulling his weight," she said.


    In college, Ms. Knorr set a goal of making a six-figure salary by the time she was 49. She reached it at 35, and "nothing happened; no balloons dropped," she said. "That's when I really became aware of that hollow feeling."


    A doctor suggested that she begin taking an antidepressant for the stomach pain, "which struck me as bizarre," she said.


    The doctor described it as a treatment to increase the amount of serotonin in the digestive tract, but Ms. Knorr said she now realized he might have been giving her a subtle message about her own level of anxiety and depression. She eventually quit her job, and used her savings to start a nonprofit group, Wonder Inc., which provides mentors and activities for foster children.


    Work can be seductive, said Dr. Arlie Hochschild, a sociologist at the University of California, Berkeley. One in five of the people she interviewed in the course of research for her book "The Time Bind" said the rewards of work could actually become stronger than the comforts of home, so "home became work, and work became home."


    Dr. Hochschild warns of "the splintered self," a state of constant distraction, doing one thing and expecting another.


    "It's not just time" that is lost, she said, "it's basically attention: what we give to one another."


    Stress Equals Illness


    Researchers are beginning to document the toll that the changing nature of work takes on health. The National Institute for Occupational Safety and Health, which has studied the links for decades, began a major initiative two years ago to study "the changing organization of work" and has worked with the American Psychological Association to build up the field of occupational health psychology at a dozen academic institutions nationwide.


    Downsizing, studies find, is associated with poorer health, whether workers are fired or survive the downsizing and continue in their jobs.


    Pioneering studies in Scandinavia, where centralized health care allows researchers access to vast databases of medical conditions and treatment, also have shown a strong link between downsizing and illness. A study by Finnish researchers published in February in the British Medical Journal, for example, found the risk of dying from a heart attack doubled among permanent employees after a major round of downsizing, with the risk growing to five times normal after four years.


    Two other studies, led by Dr. Westerlund, the Swedish researcher, suggest that other forms of strain in the workplace can also affect health. An analysis of medical records for 24,036 Swedish workers from 1991 to 1996 found that in workplaces that underwent large-scale expansions, the workers were 7 percent more likely to take sick leave of 90 days or more and 9 percent more likely to enter a hospital for some reason.


    Health risks rose if the expansion, defined in the study as more than 18 percent annual job growth, continued year after year, he said. Employees in companies experiencing moderate growth, on the other hand, were slightly less likely to take extended leave, perhaps because the growth rate was more manageable.


    One explanation for why expansion might lead to poor health, Dr. Westerlund said, is that it often involves tumult: in some cases, offices expand when the parent company centralizes operations or merges offices through downsizing.


    In another study, Dr. Westerlund and colleagues gave a series of medical tests to 3,904 white-collar employees working in stable businesses and workers in other companies in various states of stressful transition, including reorganization, downsizing and outsourcing, in some cases because the companies were threatened by the difficulties of competing in a global marketplace.


    The workers in organizations that were in transition had higher-than-average levels of cholesterol, high blood pressure and other biochemical markers of heart disease risk, the researchers found.


    "All forms of structural insecurity or instability may pose risks for the health of the employees," Dr. Westerlund and his colleagues wrote, "although the mechanisms may vary."


    One result of this uncertainty, experts say, is that employees are increasingly turning to medication like antidepressants and anti-anxiety drugs to help them cope with the added pressures.


    "Medication has, for some people, become a coping mechanism to help them feel better so they can perform better," Dr. Chaifetz of ComPsych said.


    Some researchers are trying to tease out the types of stress that are most detrimental to workers. In a large study conducted in the 1990's, Dr. David M. Almeida, a developmental psychologist and associate professor of human development and family studies at Penn State, interviewed 1,500 people, asking about their "daily hassles" and "chronic stressors" at work and at home over a period of eight days.


    Different types of stress produced different reactions, Dr. Almeida found. Tension with co-workers and overbearing bosses was more likely to lead to psychological and physical health symptoms, he said, while deadline pressure could actually "make you feel masterful."


    Central to understanding how much stress the workers experienced, he said, was whether they felt in control. Citing research by Robert A. Karasek of the University of Massachusetts and colleagues, he said workers who felt that they had a measure of control over their environment were far less likely to find work stressful than those who felt utterly at the mercy of a capricious boss, a child's illness or a lurching economy.


    That combination effect is well known to psychiatrists like Jeffrey P. Kahn, president of WorkPsych Associates, a consulting firm in New York. "Stress at home plus stress at work doesn't equal two units" of stress, he said. "It equals five."


    Dr. Almeida is now starting a second round of surveys, with an additional biological dimension: the interviews about daily stress levels will be augmented with a twice-a-day self-administered test for levels of a stress hormone, cortisol.


    The physiological changes associated with stress are part of a complex system that once saved the lives of human ancestors, warning them of danger, said Dr. Bruce S. McEwen, director of the neuroendocrinology laboratory at Rockefeller University. The quick flood of hormones like adrenaline and cortisol pump up the body for fight or flight.


    "We wouldn't do very well without our stress hormones," he said.


    But human physiology, Dr. McEwen said, was not intended to handle the chronic stress that is an inescapable accompaniment of modern life. The wear and tear of long hours, ringing phones, uncertain working conditions and family demands lead to what he calls "allostatic load," a stress switch stuck in the half-on position. The result: fatigue, frustration, anger and burnout.


    Dr. McEwen and other stress researchers have linked persistent stress to a variety of conditions, including obesity, impaired memory, suppressed immune function and hardening of the arteries.


    What is more, chronic stress contributes to behavior that makes it harder to recover, he said. For example, sleep deprivation may increase hunger, causing a stressed-out worker to seek comfort in a midnight bowl of pasta or a nightcap, which can lead to further weight gain or cardiovascular troubles.


    Researchers are also finding links between stress and disease at the molecular level. At Ohio State University, for example, Dr. Ronald Glaser, a viral immunologist, and his wife, Dr. Janice Kiecolt-Glaser, a psychologist, are reaching across disciplines to understand how stress causes illness.


    Working with other researchers at Ohio State, they have studied the immune response of people who live with an enormous burden of stress: people who care for a spouse who is suffering from Alzheimer's disease, and who are, on average, 70 years old. The immune systems of the caregivers are clearly compromised, they found.


    "What we know about stress is that it's probably even worse than we thought," Dr. Kiecolt-Glaser said.


    Their most recent work focuses on cytokines, molecules produced by white blood cells, and in particular interleukin 6, which plays a beneficial role in cell communication. Like cortisol and adrenaline, interleukin 6 can damage the body in large and persistent doses, slowing the return to normal after stressful events. It has been linked to conditions that include arthritis, cardiovascular disease, delayed healing and cancer, Dr. Glaser said.


    The immune systems of the highly stressed subjects, Dr. Glaser said, "had the levels of Il-6 that we saw in the controls that were 90 years old," which suggests that their experiences "seemed to be aging the immune system" drastically.


    These results might be especially important for older workers.


    "If you're 50 years old and you hate your job, you're going to be stressed; that probably translates into immune changes," he said.


    Stressful working conditions can have more indirect effects, worsening illnesses that are already present.


    Libbi Lepow, who lives in Kensington, Calif., worked at a dot-com that epitomized the 24/7 lifestyle. Her days, she said, were dominated by "action junkies," who she said lived on adrenaline.


    "There has to be a crisis, or these folks feel that they aren't doing anything," she said.


    Before long, Ms. Lepow said she was gaining weight and getting by on junk food and soda.


    By March 2001, the combination of stress, lack of sleep and poor nutrition apparently contributed to a flare-up of multiple sclerosis, a condition that she had lived with at a low level for years.


    The company, she said, was "very kind to me," and allowed her to continue working from home, but work continued to affect her.


    "I never took a nap without the two phones in the room," she said, and people called constantly. "It was still exhausting," she said. She resigned in June 2002 and now lives on disability.


    The Benefits of Slowing Down


    Recognizing workplace stress might be as simple as counting the broken pencils on a desk, but doing something about it is harder.


    "We cannot stop change," Dr. Westerlund said, although it may be possible to "help the people cope with the environment."


    The advice that most experts offer is deceptively simple: Dr. McEwen, for example, recommends getting enough sleep, avoiding cigarettes and alcohol, eating sensibly and exercising.


    Emotional support can also make a difference, Dr. Kiecolt-Glaser said.


    By "overworking, not spending time with family and friends, you're limiting the things that are most likely to do you good," she said.


    Career consultants tell clients to examine the degree to which they themselves are the ones cracking the whip.


    "Consider the possibility that you are colluding in your own demise," said Rayona Sharpnack, founder of the Institute for Women's Leadership in Redwood City, Calif. "Suffering," she said, "is optional."


    Ms. Lepow, whose work stress contributed to her disability, calls her illness "a kind of gift," because without it, she said, "I could have lived my whole life without stopping."


    She recalled striding across her deck to her home office without ever taking in the view.


    "It took something like this disease to make me stop and slow down," she said.


     


    ----------------------------------------------------------------


    ----------------------------------------------------------------


     


     

September 3, 2004





  • Business Week Online

    SEPTEMBER 13, 2004

    COVER STORY









    Can This Man Save Labor?


    Andy Stern wants to radically retool the U.S. labor movement. But first he must win over some powerful union leaders


    The symbolism couldn't have been more stark: The son trying to overthrow the father. Seventy-year-old AFL-CIO President John J. Sweeney had come to San Francisco in June to give a pep talk to 3,000 members of the Service Employees International Union (SEIU), a union of public-sector, health-care, and janitorial workers he had run before becoming labor's chief honcho in 1995. But instead of a rousing homecoming reception, his successor and former protégé, 53-year-old SEIU President Andrew L. Stern, let rip a razor-sharp swipe at Sweeney's largely failed struggle to rejuvenate the labor movement over the past nine years.

    Stern's message: Labor remains in a death spiral, and its house needs a top-to-bottom overhaul if it's ever going to revive. The AFL-CIO, he charged, has become an antiquated structure that "divides workers' strength." When the SEIU's own policies and traditions hindered its expansion, Stern reminded his audience, he swept them aside. Barring drastic action, he told his delegates, the 1.6-million-member SEIU should break away and start a new federation. Change "is so long overdue that we either transform the AFL-CIO -- or build something stronger," he proclaimed.

    In the clubby world of organized labor, these harsh public words were an open declaration of war -- one that has been roiling the nation's labor leaders ever since. It comes after several years of increasingly vocal criticism by Stern and four fellow union leaders who have been agitating for a fundamental revamping of labor. The five men, including the heads of the carpenters, the laborers, and the needletrades and hotel-workers' unions, which merged this summer, formed the New Unity Partnership (NUP) in 2003 to showcase what they want to do.

    Now NUP, led by Stern, is accelerating its campaign, hoping to shake up the entire 16 million-member labor movement. The goal: to get unions growing again in an economy in which their membership has fallen to just 13% of the workforce. Stern, who leads by far the largest and fastest-growing U.S. union, is aiming high, planning to force the federation to confront its malaise with constitutional changes when the AFL-CIO meets next July for its quadrennial convention. He and fellow NUPsters haven't worked out the details, but they have been hashing out the broad themes for a year. The central idea is to slash the AFL-CIO's 60 unions to 15 or 20 powerful mega-unions -- and get those to focus on building what they call membership density, or share of the labor market, in specific industries, thereby giving unions more clout to lift wages.

    Capturing the leadership is also in the plan: John W. Wilhelm, former hotel-workers president and NUPster, is likely to run against Sweeney, who's up for reelection next year. But the group faces a tough battle. Some labor leaders say they see Stern as power-hungry and arrogant, and he has made enemies by poaching public-sector workers claimed by Gerald W. McEntee, president of the 1.4-million-member American Federation of State, County, and Municipal Employees (AFSCME). In a sign of how hard-fought the contest could be, United Brotherhood of Carpenters President Douglas J. McCarron, who quit the AFL-CIO in disgust over Sweeney's policies in 2001, swallowed his pride and told the federation chief on Aug. 24 that he would rejoin the AFL-CIO. That would allow him to cast his 520,000-member vote for Wilhelm next summer.

    Right now the entire labor movement is obsessed with putting a Democrat back in the White House. But come Nov. 3, Stern and his NUP pals say they'll refocus on reversing labor's decline. "What we're doing in the labor movement isn't working. There has to be dramatic change," says Wilhelm, who's now No.2 in the merged needletrades and hotel union, called UNITE/HERE. "After the [November] elections we're going to have a full and vigorous debate about what to do."

    Nothing less than a deep sense of desperation about the fate of organized labor drives Stern & Co. The forces of globalization that began pounding labor's manufacturing strongholds in the late 1970s have intensified in recent years as offshore production has exploded. Membership has slid steadily in service industries, too. In everything from retailing to health care to office work, deregulation, heightened competition, and cheap immigrant labor have forced employers into a ceaseless struggle to keep down costs, including wages and benefits.

    The so-called Wal-Martization of the economy has fueled the trend: Many companies feel pressure to seek out the lowest costs, even if it means paying skimpy wages. American paychecks have slid again after the gains of the 1990s, more employees are losing company-paid health coverage, and worker anxiety has been heightened by the shift of white-collar jobs overseas. "If you understand that employers are subject to global pressures and have to keep profits up, it may well cause employees to say, 'You know, it's not in my interest to vote in a union,"' says Charles I. Cohen, a management-side labor attorney at Morgan, Lewis & Bockius LLP.

    STIFF RESISTANCE 
    Heightened corporate power has checked union growth, too. Unionization elections are typically so lopsided today that most unions have all but given up on them. Most employers pull out the stops when labor organizers appear, using everything from mandatory antiunion meetings to staged videos showing alleged union thugs beating workers, backed by streams of leaflets and letters to workers' homes. While most of these tactics are legal, companies also illegally fire union supporters in 25% of all elections, according to studies of federal data by Cornell University labor researcher Kate Bronfenbrenner. That's triple the percentage of the 1960s. So companies are often able to turn employees against a union, even though a rising number of Americans have said in national polls over the past two decades that they would join one.

    Most employers disagree with that assessment. They see unions as more suited to an industrial age, with often-rigid work rules and little to offer in a high-tech, knowledge-based economy. Certainly, unions' ability to protect pay and benefits has diminished drastically, as seen in the huge pension losses for unionized workers in steel and airlines. "I don't believe that secret-ballot union elections have been corrupted by management. The problem is that unions have lost their relevance to the American workplace," says Andrew M. Kramer, a labor law partner at Jones Day who represents large employers such as General Motors Corp (GM ).

    Still, Stern's drive to kick-start labor comes from watching the SEIU and a few other unions succeed in becoming relevant to workers despite all the obstacles. Some observers see him as trying to play the role of labor giant John L. Lewis, who helped create the Congress of Industrial Organizations in the 1930s when the craft-oriented American Federation of Labor he belonged to seemed incapable of aiding low-skilled factory workers. Lewis fanned out hundreds of organizers from the then-powerful mineworkers union, which he headed for 40 years, to help form unions in autos, steel, and telecommunications -- largely because he felt that his group couldn't survive on its own.

    Stern has been taking analogous steps, laying the groundwork for a parallel, CIO-style federation should the campaign to transform the AFL-CIO fail to take hold. The SEIU recently ponied up $1 million to help the United Food & Commercial Workers tackle Wal-Mart Stores Inc. He's building separate political muscle, shelling out an astonishing $65 million to elect John Kerry and make the political atmosphere more receptive to a labor comeback. Stern helped found the Democratic Party's most successful 527 political committee, America Coming Together, which is headed by former AFL-CIO Political Director Steve Rosenthal (a close personal friend with whom he has shared a New Jersey beach house for 25 years).

    The SEIU also set up a political network aimed at nonunion Americans called PurpleOcean.org, modeled after a similar effort the AFL-CIO launched last year. Stern told his convention: "We know that even if we build strength in our industries, no one union, including SEIU, can succeed as an isolated island of strength in a nonunion sea. As the largest union, it is our job to help rebuild U.S. labor's strength."

    An ambitious, impatient man with the lean frame of a regular runner, Stern has turned the SEIU into a whirlwind of activity that he thinks others could emulate -- if they're willing to change how they operate. The SEIU nearly doubled in size, to 1.1 million, during Sweeney's tenure there, in part due to Stern's role as recruitment chief (a job Sweeney tapped him for in friendlier days). Then Stern took the reins and cracked the whip even harder. At the SEIU's 2000 convention, he persuaded delegates to set a specific recruitment spending target for all locals: 20% of their budgets, totaling $80 million. And he got them to come up with $50 million more for an organizing fund.

    Meanwhile, Stern funneled half of the international union's $100 million annual spending into membership growth. Overall, the SEIU and its locals devote some $180 million a year to expansion, says SEIU Executive Vice-President Tom Woodruff. That's nearly twice the AFL-CIO's entire annual budget.

    It has worked -- which is one reason even labor leaders Stern rubs the wrong way still pay him heed. While most unions are shedding members, the SEIU will hit 1.8 million by the end of the year, with only about 100,000 of the growth coming from mergers with smaller unions, says Woodruff. No other union comes close to matching such a record. Stern also has succeeded with low-skilled minorities and immigrants in high-growth occupations such as janitors and hospital aides. Their unionization is a sharp departure from the white males who historically comprised the rank and file of industrial unions.

    A CLEAN SWEEP 
    Much of Stern's vision for labor is honed from his own experience battling employers. Consider the case of janitors. The union long had strongholds in major cities such as New York, where its 50,000 office-building janitors earn up to $18.57 an hour, plus benefits. But across the Hudson River in New Jersey, some 10,000 nonunion janitors make little more than the $5.15-an-hour minimum wage -- even though they're the same largely immigrant workers cleaning similar offices.

    Four years ago, as part of a nationwide janitors' campaign, the SEIU set out to sign up the New Jersey workers. The union only had about 1,000 janitors in the Newark area and had done little to keep pace as corporate flight from Manhattan led to a boom of new offices in northern New Jersey. Stern knew he couldn't run a typical recruitment drive, one janitorial contracting company at a time: In this fragmented industry, any that agreed to higher pay would be quickly undercut by nonunion rivals.

    So SEIU tackled whole markets at once. In 11 New Jersey counties, it told contractors that they wouldn't have to lift pay until the SEIU got 55% of those in their area to go along. The union then mounted strikes and rallies by would-be members and took other actions to try to force contractors to go along.

    The first 55% trigger point was reached in 2001, and the union contracts took effect. By the end of this year, the SEIU will represent about 70% of northern New Jersey janitors, whose pay now ranges up to $11.75 an hour, plus benefits. While that's still far short of the Manhattan wage, the SEIU is realistic enough to know that lower-priced New Jersey can't support the same pay. Nonetheless, unionization "has been beneficial to the industry because we're not undercutting each other, turnover is down, and workers are more dedicated and loyal," says Mark Blackburn, marketing vice-president at CSI International Inc., a privately held custodial-services company based in Red Bank, N.J., that employs 2,000 janitors in a dozen states and is the SEIU's largest New Jersey contractor.

    The janitor campaign is helping low-wage immigrants reach the mainstream. Rita Cortes, who came to the U.S. from Honduras 17 years ago, had been cleaning New Jersey offices for the minimum wage since 1988. When the SEIU contract kicked in three years ago, she jumped immediately from $5.15 an hour to $8, plus some benefits. Today, Cortes, 54, earns $9.75 as a nighttime office cleaner in Secaucus and will go to $10.75 in October. "Now my husband and I can eat better, and I get three weeks' vacation a year, which I never had before," says Cortes.

    To Stern and his NUP colleagues, the lesson is elementary: Unions can't lift workers into the middle class unless they control a significant chunk of the labor market, either geographically or by industry. Hence their focus on membership density. It's not enough, they say, to simply increase their absolute numbers. Unions must think strategically, targeting whole areas and industries and coordinating their efforts against market forces that drive companies to undercut each other.

    Few labor leaders disagree in principle, but only a handful have taken any such action. Many bristle at the notion that the AFL-CIO would force them to recruit in specific industries, as Stern and the others are suggesting. But last year, in a white paper called United We Win, Stern laid out labor's uncoordinated and overlapping structure and showed how multiple unions represent workers in the same industry. He found that there are 8 unions with a significant presence in nondurable goods such as clothing, 9 in heavy manufacturing such as autos, 13 representing government workers, and 15 each in construction and transportation. If Stern had his way, there would be one or two giant unions in each industry sector.

    Clearly, in an economy dominated by corporate giants, Stern and his NUP colleagues argue, unions must gain scale, too. Today the smallest two-thirds of the AFL-CIO's 60 unions average less than 60,000 members apiece -- not nearly enough to wield market clout in most cases. Conversely, when SEIU merged the New Jersey janitors' local into the larger, richer New York union, it could suddenly afford to commit 50 organizers and $5 million a year to recruitment.

    That local also illustrates the way many union recruitment successes occur nowadays. Rather than use a formal unionization election supervised by the federal government, the SEIU got a majority of each building's workers to sign union authorization cards -- a process known as card check. The goal is to circumvent management's power to influence an election.

    A growing number of unions -- including the Communications Workers of America (CWA), the United Auto Workers, and to some degree the SEIU -- have turned to card checks in recent years. There's no official count, but unions enlist about 150,000 to 200,000 new members a year through card checks today, vs. just 70,000 through federal elections, according to the AFL-CIO. This is why the federation has launched a major drive for federal legislation requiring employers to recognize unions through card checks. (Currently employers can do so if they wish but don't have to.)

    LEADERSHIP STYLE 
    The irony of Stern's frontal attack on the AFL-CIO is that Sweeney has been hitting many of the same notes ever since he took over. He came to office after frustrated labor leaders gave up on predecessor Lane Kirkland, whom they thought was moving too slowly against labor's long decline. Sweeney won a hotly contested election against Kirkland's No. 2, Thomas R. Donahue, and swept to power insisting that unions devote at least 30% of their resources to new-member recruitment.

    Despite their clash, Stern and Sweeney differ more in leadership style than in substance. Sweeney is an unruffled, soft-spoken man given to consensus rather than rhetoric. But his low-key cajoling has done nothing to stem labor's membership slide, which has plunged by two percentage points under his tenure -- the same rate of decline that occurred under Kirkland.

    Stern, by contrast, has an intense, driven personality that propelled him into leadership roles at an early age. The son of middle-class parents in suburban West Orange, N.J., he got an Ivy League education at the University of Pennsylvania, where he gravitated toward the student movement. He joined the SEIU at 21 as a state social worker and soon became head of the local. By 29, he had vaulted onto the international union's Executive Board, the youngest person to have made it there.

    His zeal for left-leaning social causes dovetailed with the traditions of the SEIU. As a young SEIU official in the early 1980s, Stern joined other activists in the union to force through controversial resolutions opposing U.S. military intervention in Latin America. More recently he threw his union's weight behind Howard Dean's Presidential campaign, switching to the more mainstream Kerry only after Dean flamed out. He also has cultivated close relations with a wide range of social leaders. (His wife, Jane Perkins, from whom he is getting a divorce, headed the environmental network Friends of the Earth in the 1990s.)

    Throughout, Stern honed his organizing skills and strategic thinking. In 1995 he directed Sweeney's effort to win the AFL-CIO presidency (thus clearing the way for his own succession). The team he put together to corral votes that year outmaneuvered the more staid Donahue forces, coordinating its efforts with bright yellow T-shirts sporting the Sweeney slogan and using radio headphones that let Stern's crew keep in constant contact as they counted noses on the convention floor.

    Still, it will take a masterful hand to sell his message to the AFL-CIO's 54-member Executive Council. Already, Stern's outspokenness has riled a number of union presidents who perceive him as self-serving. Critics argue -- with some validity -- that much of his recruitment success has come among easy-to-organize public-sector workers in home health aid and child care -- not among the tough-as-nails private-sector employers that unions must prevail against to grow again. Twice in recent months at federation meetings, labor leaders such as International Association of Machinists President R. Thomas Buffenbarger blasted Stern for his attacks on the AFL-CIO.

    BAD BLOOD 
    In response, Stern agreed not to speak out again until after the November Presidential elections. Although he discussed his ideas freely with BusinessWeek earlier this year, Stern refused even to be photographed for this article, apparently worried that a story focused on him would further inflame colleagues.

    But the bad blood lingers. Buffenbarger says he's so ticked off at Stern's high-handedness that he may quit the AFL-CIO himself. Edward J. McElroy, the new head of the American Federation of Teachers, says he will listen but remains highly skeptical.

    Meanwhile, Sweeney is maneuvering for a counterattack. He told an August AFL-CIO powwow that he would set up a process to discuss the NUP's ideas come November. Sweeney also will put forth his own platform, insiders say, incorporating many of those ideas. (Sweeney declined to comment.) "There's going to be a showdown on all this next summer," predicts Joseph T. Hansen, president of the 1.4 million-member food-workers union, who says he is sympathetic to Stern's goals but has some reservations.

    There's also the question of succession. When NUP emerged last year, Sweeney quickly announced he would run again, surprising many who had expected him to retire. Even some backers aren't sure he really will stand again, although insiders and AFL-CIO public affairs chief Denise Mitchell insist that he will.

    Sweeney's retirement would open the door for 55-year-old AFL-CIO Secretary-Treasurer Richard L. Trumka, a fiery former mineworkers union president who has been underutilized by Sweeney's team but retains strong support among industrial unions. One possible compromise: a unity ticket with Wilhelm and Trumka, who have been friends for years.

    The tangled politics in this close-knit group -- Stern's wife has worked recently as a top Sweeney aide on environmental issues -- makes any leadership battle unpredictable. CWA President Morton Bahr, an elder statesman of the federation, opposed Sweeney in 1995, figuring a power struggle was bad for labor, even though he agreed with Sweeney's goals. He feels the same today and says he stands behind the incumbent but agrees that NUP raises urgent questions. "I'll listen to what they propose, but I'm not ready to tear down the institution in order to remake it," he says.

    If Stern and his NUP pals can't persuade enough union leaders that labor's near-extinction requires drastic action, the last resort may be to form a new labor movement à la John L. Lewis. Right now, the threat is mostly a way to provoke a sense of crisis. And so far it seems to be working: America's unions are poised for an internal debate more wide-ranging than any they have had in decades. Although it's still early, one possible outcome is a more militant, pumped-up labor movement. If that happens, employers could feel renewed pressure to share with workers more of the gains from the economy's healthy productivity growth. Either way, the U.S. labor movement is in for some turbulent times.


    By Aaron Bernstein


    -----------------------------------------------------


    -----------------------------------------------------


     


     

August 29, 2004


  • August 29, 2004

    How to Reinvent the G.O.P.


    By DAVID BROOKS





    I. A Long Way From Philadelphia


    I really wouldn't be surprised if you can't remember a thing about the 2000 Republican convention in Philadelphia. I was there, and I'm paid to pay close attention to these things, and I have only the gauziest recollections. According to my notes, it opened with a Hispanic girl singing the national anthem. Then there was a video of a black Baptist minister preaching from the pulpit of his church, and there was a Mexican dancer with a big sombrero. Chaka Khan sang a rousing finale. I remember joking that with all the whites in the audience and all the minority performers onstage, the whole thing looked like a Utah Jazz basketball game.


    This was a party trying to shake off the harsh aura of Gingrichism. The daddy party was trying to show it had a mommy side too. Laura Bush delivered her speech in front of a bank of school desks, with charming, immobile kids arrayed behind her, and announced that her husband would strengthen Head Start. Colin Powell praised George W. Bush for making education the centerpiece of his campaign. Bush came on and saluted Mary Jo Copeland, whose ministry, Sharing and Caring Hands, serves meals to the homeless.


    In his acceptance speech, Bush noted that his father's generation had been called upon to fight epic battles against great foes. That, he said, was the ''generation of Americans who stormed beaches, liberated concentration camps and delivered us from evil.'' But we, he continued, are living in a time of blessing. So instead of fighting wars, we're called to perform ''small, unnumbered acts of caring and courage and self-denial.'' The emphasis was on the word ''small.'' This was a convention about intimate connections, local associations, tender emotions and domestic concerns. ''Sometimes, we are called to do great things,'' Bush later said. ''But as a saint of our times has said, every day we are called to do small things with great love.''


    The 2004 convention is taking place in New York, only 80 miles away from the last one, but in a different universe. All Americans have been forced to pass through the portal marked by Sept. 11. As you look out at the delegates to this year's G.O.P. gathering, remember that these folks have fallen down a chute, and they have no idea where it lets out. When they nominated George Bush in 2000, they had no idea that Mr. Small Acts of Compassion was going to be transformed into Mr. Epic War Against Evil. They had no idea they were nominating a guy who was going to embark on a generational challenge to transform the Middle East. They had no idea they were nominating a guy who would create a huge new cabinet department for homeland security, who would not try to cut even a single government agency, who would be the first president in a generation to create a new entitlement program, the prescription drug benefit, projected to cost $534 billion over the next 10 years. They had no idea that a Republican-led government would spend federal dollars with an alacrity that Clinton never dreamed of, would create large deficits, would significantly increase the federal role in education, would increase farm subsidies, would pass campaign-finance reform and would temporarily impose tariffs on steel.


    The Republicans who gather in New York this week love George Bush. They admire the stalwart way he has fought the war on terror. They understand why, post-Sept. 11, he has governed the way he has. But they are a little shellshocked by the unexpected transformation that has come over their party, and they do not know how it is going to turn out.


    Democrats may imagine that the G.O.P. is an amalgam of fat cats and conservative ideologues, but things feel different inside Republican circles. Inside there are, beneath the cheering and the resolve, waves of anxiety, uncertainty and disagreement. You hang around Republicans, and you begin to hear all sorts of discordant things. Jesse Helms recently remarked he wouldn't have voted for the tax cut if he'd known how bad the deficit would become. Three of the senior right-wing columnists -- George F. Will, Robert Novak and William F. Buckley Jr. -- have come out, in their different ways, against the war in Iraq. I had lunch recently with a senior Republican official who said his party had succumbed; it was ''defeatist'' about reducing the size of government. As Will himself has observed, under President Bush, American conservatism is undergoing an identity crisis.


    There used to be a spirit of solidarity binding all the embattled members of the conservative movement. But with conservatism ascendant, that spirit has eroded. Should Bush lose, it will be like a pack of wolves that suddenly turns on itself. The civil war over the future of the party will be ruthless and bloody. The foreign-policy realists will battle the democracy-promoting Reaganites. The immigrant-bashing nativists will battle the free marketeers. The tax-cutting growth wing will battle the fiscally prudent deficit hawks. The social conservatives will war with the social moderates, the biotech skeptics with the biotech enthusiasts, the K Street corporatists with the tariff-loving populists, the civil libertarians with the security-minded Ashcroftians. In short, the Republican Party is unstable.


    Whether the Republicans win or lose in November, the party of 2008 is not going to look like the party of 2004, any more than the party of 2004 looks like the party of 2000. Parties change radically, even while remaining true to some essential nature. The Republican Party is in the midst of that kind of change; the transition is nowhere near complete.

    II.The Death of Small-Government Conservatism


    Two big forces are driving the change. The first, obviously, is the war on Islamic extremism. As the historian Bruce Catton once observed: ''A singular fact about modern war is that it takes charge. Once begun it has to be carried to its conclusion, and carrying it there sets in motion events that may be beyond men's control. Doing what has to be done to win, men perform acts that alter the very soil in which society's roots are nourished.''


    The second and more pervasive change is the death of socialism. Everybody can see how the collapse of the socialist dream has transformed left-wing parties like the British Labor Party. But, as David Frum observes, the death of socialism has transformed the Republican Party just as much as it has transformed the parties of the left.


    For most of the 20th century, the conservative movement and the Republican Party were built to combat the inexorable spread of big government. Faced with that great threat, Republicans became Jeffersonian. If the left was going to embrace larger welfare states, the Republicans were going to become enthusiastic decentralizers, suspicious of concentrated power, the foes of big government. Anti-government sentiment was the glue that held the different factions of the American right together. And in that great cause the G.O.P. -- from Coolidge to Goldwater to Reagan -- was successful. Conservatives and libertarians defeated socialism, intellectually and then practically.


    Socialism has stopped its march. Now almost every leading politician accepts that government should not interfere with the basic mechanisms of the market system. On the other hand, almost every leading official acknowledges that we should have as much of a welfare state as we can afford. Now the debate over the role of the state takes place within much narrower parameters.


    The federal government has consumed roughly the same proportion of national wealth for three decades. The Clinton administration tried to increase significantly the size of government with its health care plan and was thrown back. Newt Gingrich tried to reduce significantly the size of government, and he, too, was thrown back. We will still argue about budgets, about new government programs and new tax cuts, but the size-of-government debate will not be the organizing conflict of the 21st century, the way it was for the 20th. Just as socialism will no longer be the guiding goal for the left, reducing the size of government cannot be the governing philosophy for the next generation of conservatives, as the Republican Party is only now beginning to understand.


    If you want to put a death date on the tombstone of small-government Republicanism, it would be Nov. 14, 1995. That was the day the new G.O.P. majority shut down the government. Gingrich, Dick Armey and others came to power with a list of hundreds of government programs and agencies they wanted to eliminate, including the Departments of Commerce, Energy and Education. They led what Grover Norquist called the Leave Us Alone coalition, the alliance of all those different Americans who wanted government to get out of their lives. Gingrich vowed to show the world ''how to end programs, not just create them.'' Republicans welcomed a showdown over the size of government because they were convinced that the public would be on their side. Faxes came over the machines vowing, ''No Compromise.'' Senator Phil Gramm celebrated the shutdown. ''Have you really noticed a difference?'' he reportedly asked.


    The public did notice, as it turned out, and they didn't like it. Within a few years the Republicans were backtracking so furiously they were proposing to spend more money on the Department of Education than the Clinton administration thought to ask for.

    III. Muddling Toward a Governing Philosophy


    So now we have two sorts of Republicans. The first group is made up of people who still mouth the words about reducing the size of government but don't even pretend to live according to their creed. These Republicans, mostly in Congress, go home to their states and districts and rail against Washington and big government. Then when they get back to Capitol Hill they behave like members of any majority party. They try to use their control over the federal purse to buy votes. They embrace appropriations and champion pork with an enthusiasm that makes your eyes pop.


    For them, the old anti-statist governing philosophy exists in the airy-fairy realm of ideals. When it actually comes time to make some decisions about priorities and spending, they have no governing philosophy and hence no discipline. The money just splurges out. ''The current version of the Republican Party is engaged in an outrageous spending binge, and they're being steadied and encouraged by Democrats,'' John McCain observed recently.


    The money is appropriated in increments large and small -- a $180 billion corporate tax bill one week, a steady stream of pork projects all the rest. In 1994, there were 4,126 ''earmarks'' -- special spending provisions -- attached to the 13 annual appropriations bills. In 2004, there were around 14,000. Real federal spending on the Departments of Education, Commerce and Health and Human Services has roughly doubled since the Republicans took control of the House in 1994. This is a governing majority without shape, coherence or discipline.


    The second group of Republicans is at least trying to come up with a governing philosophy that applies to the times. It understands the paradox that if you don't have a positive vision of government, you won't be able to limit the growth of government. If you can't offer people a vision of what government should do, you won't be able to persuade them about the things it shouldn't do. If the Republican Party is going to evolve into a principled majority party, members of this group are going to have to build a governing philosophy based on this insight.


    To his credit, George Bush falls into this latter category. By the time he began his campaign for president in 1999, Bush understood that the simple government-is-the-problem philosophy of the older Republicans was obsolete. During that campaign, Bush criticized what he called the ''destructive mind-set: the idea that if government would only get out of our way, all our problems would be solved. An approach with no higher goal, no nobler purpose, than 'Leave us alone.' '' Instead, Bush argued, ''government must be carefully limited but strong and active.''


    In another speech, Bush noted, ''Too often, my party has confused the need for limited government with a disdain for government itself.'' He continued: ''Our founders rejected cynicism and cultivated a noble love of country. That love is undermined by sprawling, arrogant, aimless government. It is restored by focused and effective and energetic government.''


    Compassionate conservatism was his attempt to come up with a new governing philosophy, a set of beliefs to guide Republicans as they tried to figure out what to do with power. Unfortunately, compassionate conservatism turned out to be a pretty thin tissue, and it was incinerated by the events of Sept. 11.


    Since then, the Bush administration, while focusing on the war on terror, has been muddling toward a more appropriate governing philosophy. As Daniel Casse observed recently in Commentary magazine, ''It is impossible to ignore the ways in which the sometimes surprising and unorthodox politics [Bush] has been advancing, albeit unevenly, have created a new type of conservative agenda.''


    On domestic policy, Casse writes, the Bush administration has agreed to greater federal spending in exchange for the seeds of market reform -- a big prescription drug benefit in exchange for the hint of a new approach to Medicare that emphasizes choice and accountability. This is not traditional big government, nor is it small government. It is strong government, Casse writes, which provides services while giving individuals choice about how they want them delivered.


    This sort of conservatism measures its success not by how big or small government is but by the habits it encourages in its citizens. Does it encourage dependence or self-reliance? Does it sap individual initiative or give it new forums to exert itself? As Jonathan Rauch wrote in The National Journal: ''Conservatives have been obsessed with reducing the supply of government when instead they should reduce the demand for it; and the way to do that is by repudiating the Washington-knows-best legacy of the New Deal. Republicans will empower people, and the people will empower Republicans.''


    Bush himself seems to agree. On July 21 he noted that while ''government should never try to control or dominate the lives of our citizens,'' nonetheless, ''government can and should help citizens gain the tools to make their own choices.''


    This is not yet a governing philosophy. It is not yet a new identity for American conservatism. It is not yet an updated conservative agenda. But it is a glimmer of these things. It is the first glimpse of the sort of Republican Party we could see when the convention rolls around again in 2008.


    Nobody knows who the nominee will be that year. It could be Bill Frist, Chuck Hagel, Rudy Giuliani, Gov. Bill Owens of Colorado or somebody else -- maybe even Arnold Schwarzenegger. But if the party is going to offer a positive, authoritative vision for the post-9/11 world, which is a world of conflict and anxiety, then it is going to have to develop a strong-government philosophy consistent with Republican principles. It will have to embrace a progressive conservative agenda more ambitious and fully developed than anything the Bush administration has so far articulated.


    A candidate who does that would not need to launch an insurgency campaign against the Republican establishment, the way Goldwater did in 1964 or the way Reagan did in 1976. The fact is the Republican Party no longer has a coherent establishment left to inveigh against. Instead, a progressive conservative candidate would have to play a more constructive role. He would have to lay out a vision that would rebuild the bonds among free-market conservatives, who dream of liberty; social conservatives, who dream of decency; middle-class suburbanites, who dream of opportunity; and foreign-policy hawks, who dream of security and democracy. He would have to revive and update the governing philosophy that did bind these groups, and did offer such hope, in the early days of the G.O.P. Long before it was the party of Tom DeLay, the G.O.P. was a strong government/progressive conservative party. It was the party of Lincoln, and thus of Hamilton. Today, in other words, the Republican Party doesn't need another revolution. It just needs a revival. It needs to learn from the ideas that shaped the party when it was born.

    IV. What Would Hamilton Do?


    Today we have one political tradition, now housed in the Democratic Party, which believes in using government in the name of equality and social justice. We have another tradition, recently housed in the Republican Party, which believes, or says it believes, in restricting the size of government in the name of freedom and personal responsibility. But through much of American history there has always been a third tradition, now dormant, which believes in limited but energetic government in the name of social mobility and national union.


    This third tradition was founded by Alexander Hamilton, embraced by Henry Clay and the Whig Party, taken up by Abraham Lincoln and the early Republican Party and brought into the 20th century by Theodore Roosevelt. It withered during the great 20th-century debate over the size of government (its philosophy was confusedly crossways to this debate), but it is this tradition the Republicans must embrace if they are to become the majority party for the next few decades.


    This progressive conservative tradition is built on an admiration for a certain sort of individual: the young, ambitious striver, who works hard, makes something of himself, creates opportunities for others and then goes on to advance America's unique mission in the world. Alexander Hamilton was the first embodiment and definer of this creed. Hamilton came from nothing and spent his political career trying to create a world in which as many people as possible could replicate his amazing success.


    Hamilton looked around after independence and saw a country destined to become the greatest empire of the earth (as he put it) but burdened with institutions that retarded social mobility and stifled development. The American economy was still mainly an agricultural economy, which trapped talented young people on the farm, where they could not cultivate the full range of their talents. Then there were the aristocratic families like Thomas Jefferson's, which exercised stranglehold control over the country's economic life.


    Hamilton sought to smash all that, to liberate and stir Americans to exploit the full range of their capacities. As he wrote in his ''Report on Manufactures,'' ''To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients, by which the wealth of a nation may be promoted. . . . Every new scene, which is opened to the busy nature of man to rouse and exert itself, is the addition of a new energy to the general stock of effort.'' Hamilton believed that people had inside them vast wells of untapped resources, and that it was the job of government to open up opportunities, to arouse, stimulate and cultivate an energetic populace so citizens could compete with one another.


    First Hamilton had to break up the vested interests that encrusted American life. He did this, in part, by nationalizing the Revolutionary War debt. This, he said, would fuse the many insular local economies into one dynamic national economy. It would also lead to thriving credit markets. It would shift power away from the local landowners to commercial traders, who would move capital around looking for investment opportunities. Hamilton also created the Bank of the United States, to finance investments. He organized what we would now call federal scientific research.


    He believed, in other words, in using government to enhance market dynamism by fostering more equitable competition. He believed government could usefully promote social revolutions, in his case the move from an agricultural to a commercial economy. In short, he rejected the formula, assumed too often today, that you can be for government or for the market, but not for both.


    For his part, Hamilton saw entrepreneurial freedom, limited but energetic federal power and national greatness as qualities that were inextricably linked. It was always the cause of America, or rather, the cause America represents -- universal freedom -- that was uppermost in his mind. Hamiltonianism was about spurring individual initiative, but it was also about gathering the fruits of that energy in the cause of national greatness.


    After Hamilton's death, the Hamiltonian spirit was carried on by the Whig Party. Self-conscious Hamiltonians like Henry Clay and Daniel Webster sought to apply Hamiltonian principles to their own day. Abraham Lincoln came of age in the Whig Party, inherited Hamiltonian understandings of economics and the nation and infused the Republican Party, founded in the 1850's, with those ideas and causes. Lincoln's program was based on a conception of man as laborer and climber. As the historian Gabor S. Boritt has written, ''Lincoln probably talked more about economics, to use the term in a broad sense, than any other issue, slavery included.'' Lincoln's first fully published speech was about banking. His first political pamphlet was about how to encourage national banks. His first address at a national forum was on how to stimulate economic growth. Even during the Civil War, Lincoln predicted, ''Finance will rule the country for the next 50 years.''


    That was not a dour warning. In true Hamiltonian fashion, Lincoln embraced banking and finance capitalism because he saw bank credit as a new source of energy for American society. Around him, most of his countrymen opposed the spread of banks as the symbols and gestation centers for this new economic system, commercial-industrial capitalism, which threatened to upend old pastoral ways of living. But Lincoln spent much of his time as a state legislator supporting an Illinois bank, a local version of Hamilton's national bank.


    Like Hamilton, Lincoln rose from obscurity to greatness; like Hamilton, he dreaded the thudding repetition of farm life; and like Hamilton he was obsessed with self-transformation and social mobility. Lincoln embraced the idea that each of us has a mission to work hard and get ahead. ''I hold the value of life is to improve one's condition,'' he declared in 1861.


    His second great cause as a young politician was canal-building. Like Hamilton, he was an ardent champion of ''internal improvements'' and lobbied vigorously for a canal to be built to improve the navigability of the Sangamon River, because he thought it would replace the torpid, pastoral economy of his region with a humming, churning new economy, which would lure immigrants and create economic opportunity.


    Like Hamilton, Lincoln was indifferent to his own wealth. Rather, he wanted economic development because it meant more fluidity, more competition, more opportunity. For him, the market was admirable because it cultivated a certain sort of upward-climbing individual.


    This free-labor ideology was a contract. Individuals would be held responsible for their own behavior. But government would do what it could to open up opportunities, so that people would have second and third and fourth chances to succeed. During Lincoln's presidency, this government philosophy produced a raft of legislation: the creation of a single currency, the Homestead Act, the Morrill Land Grant College Act, the railroad legislation and so on. All of these initiatives were designed to stimulate, energize and unify the nation. The Homestead Act placed land in the hands of families. The Land Grant College Act promoted the spread of practical knowledge. These Republicans were not trying to care for the downtrodden or shelter them. They were trying to open fields of enterprise.


    They acted even though they were skeptical about federal power. They knew about cultures of dependency and how they could grow; they worried that public or private charity, even for basic supplies like food, would corrode habits of self-reliance. They were just as suspicious of government bureaucracy as today's Republicans are. But still they acted.


    They acted because no social transformation is without its dark side. Industrialism was wreaking havoc on some communities, even as it improved others. It was dislocating thousands. The early Republicans sought to open up new lands and new opportunities so those on the losing end of the Industrial Revolution would have new places to succeed.


    The next great figure in this tradition was Theodore Roosevelt. He, too, believed in the marriage of individual economic opportunity with political and cultural union. He believed in the character-building force of competition, its ability to produce individuals who possessed the vigorous virtues he lauded in his 1905 inaugural address: ''energy, self-reliance and individual initiative.''


    Roosevelt, too, believed that government must sometimes play an active role to give everybody a fair shot in the race of life. ''The true function of the state, as it interferes with social life,'' he wrote, ''should be to make the chances of competition more even, not to abolish them.'' In his day, corporate corruption was as big a threat to free competition as socialist revolution, and Roosevelt detested both. As he observed,''Every new social relation begets a new type of wrongdoing -- of sin, to use an old-fashioned word -- and many years always elapse before society is able to turn this sin into a crime which can be effectively punished by law.''


    Roosevelt was an ardent champion of reform, believing that a corrupt and ineffective government would breed cynicism and despondency. He believed in aggressive policies to preserve national cohesion; to strengthen the bonds nourished by our culture and national environment. He believed in America's unique mission in world history. As he argued in his famous Strenuous Life speech at a Hamilton Club in 1899, ''We cannot sit huddled within our borders and avow ourselves merely an assemblage of well-to-do hucksters who care nothing for what happens beyond.'' He increased the number of American battleships from 9 to 25 and more than doubled the number of sailors, so the U.S. could project power around the world. He was an ardent nationalist.


    Of course Hamilton, Lincoln and Roosevelt were complicated individuals whose careers contained diverse and sometimes conflicting strands. But they do belong in one tradition, a tradition newly appropriate for life today.

    V. A New Conservative Platform


    If we turn to the future, it's easy to see some of the tasks that strong-government conservatism will champion.


    The War on Islamic extremism. The first great agenda item has been thrust upon us. This has been miscast as a war on terror, but terror is just the means our enemies use. In reality, we're fighting a war against a specific brand of Islamic extremism, a loose federation of ideologues who seek to dominate the Middle East and return it to the days of the caliphate.


    We are in the beginning of this war, where we were against Bolshevism around 1905 or Fascism in the early 1930's, with enemies that will continue to gain strength, thanks to the demographic bulge in the Middle East producing tens of millions of young men, politically and economically stagnant societies ensuring these young men have nothing positive to do and an indoctrination system designed to turn them into soldiers for the cause. This fight will organize our politics for a generation, as the Cold War did.


    The first task is to build a new set of strong federal and multinational institutions to defeat this foe. Obviously the intelligence community needs to be reorganized. The military needs to be bulked up, and public diplomacy needs to be rethought. Somebody has to develop a counterideological message that is more than just: ''We're Americans. We're really decent people. We're nice to Muslims.''


    We need to strengthen nation-states. The great menace of the 20th century was overbearing and tyrannical governments. The great menace of the 21st century will be failed governments, because those are the places where our enemies will be able to harbor and thrive, where violence can nurture and grow, where life is nasty, brutish and short.


    We are going to have to construct a multilateral nation-building apparatus so that each time a nation-building moment comes along, we don't have to patch one together ad hoc. In the 1990's we thought free markets were the first things new nations needed to thrive and grow. Now we know that law and order is the first thing they need. We are going to have to construct new institutions to help nations develop rule of law within their boundaries, for if that is not accomplished, all the economic development in the world will not help.


    Entitlement reform. At home, the most obvious and daunting problem is runaway entitlement spending. Right now, Medicare, Medicaid and Social Security consume 8 percent of U.S. G.D.P. By 2040 these programs will consume 17 percent. In other words, these programs will swallow a sixth of the national wealth, requiring massive tax hikes to support them. That's simply unsupportable if we are to maintain a vibrant, growing economy.


    Just as bad, entitlements will devour the federal budget. It will become impossible to create new programs to deal with new problems. The government will become a giant, immobile entitlement machine. The U.S. will follow Europe down the route of welfare-state stagnation, with growing burdens, aging populations, limited growth and horrendous choices.


    The solution is clear: push back the retirement age, reduce benefits for upper-income people, redesign the welfare state so that individuals have control over their own benefits packages. That means designing programs that allow people to have their own health insurance, which they can carry from job to job; to control their own unemployment insurance and tailor their retraining efforts to suit their own talents; to invest part of their own pension money and benefit from higher returns, so they have greater incentives to save on their own. It means reforming the health care system so competition works as it does in every other sphere -- to improve value, spur innovation and reduce costs. Our current welfare state produces either no competition or warped and ineffective competition.


    Social mobility. America remains a remarkably mobile society, but at the bottom ends of the education and income scales, we're seeing an ever-larger group of people unable to rise and succeed. Over the past two decades there has been a sharp rise in the number of people who define themselves to pollsters as ''have-nots.'' Though poverty has declined since 1988, the number of blacks who call themselves ''have-nots'' has risen to 48 percent from 24 percent. The number of whites who use that phrase to describe themselves has risen to 28 percent from 17 percent. These perceptions have been rising steadily over the Bush, Clinton and Bush presidencies.


    When people call themselves ''have-nots,'' they are not only commenting on their current economic status. They are also commenting on their prospects. They are saying that they do not see any plausible way they are going to make it and thrive in this society. This is poisonous. It is doubly poisonous because African-Americans feel this way in such high numbers. In other words, not only is there a perceived lack of opportunity, but this perception also rubs raw at the central wound that runs through our entire history: racial inequality.


    Worst of all, this is not just perception. People without skills really do have limited prospects in the world. There really is a huge achievement gap. By high-school graduation, the average Hispanic or African-American student is roughly four years behind the typical white or Asian student, and this gap has been getting worse over the past 15 years, despite $100 billion in Title I money spent to reduce it. The results are obvious and horrific. According to one study, 44 percent of urban African-American men without a high-school degree are idle all year round. Lacking jobs, they lack prospects. This is an affront to our identity as the land of opportunity, a menace to the Lincolnian vision of a hypermobile society and ruinous to our social fabric.


    Conservatives know that any solution begins with culture. Successful families raise successful people. They raise children who lead stimulated, rich and reinforced lives, who are not plopped in front of the TV, who are not starved of discipline and affection. They raise people instilled with bourgeois values -- industry, responsibility, loyalty and decency. They are more likely to understand that they are responsible for their own choices, not victims of social forces. Most of all, they are more likely to have the sort of soft skills -- the ability to control your emotions, to greet a new person and make a good impression, to have confidence in your ability to succeed -- that are absolutely essential in the marketplace.


    Progressive conservatives understand that while culture matters most, government can alter culture. It has done it in bad ways, and it can do it in good ways. Government agencies are now trying to design programs to encourage and strengthen marriage. Early- childhood intervention programs were not a conservative idea, but they work, and any decent party will embrace them.


    Wage subsidies, originally a Republican idea, would also strengthen families. The welfare reform movement has lifted people off welfare and into jobs, but it has not lifted them out of poverty in sufficient numbers. If we're to encourage work, then we must be sure that work is rewarded. The earned income tax credit does that. Other wage- subsidy ideas have been proposed, for example a simplified family credit that would replace the E.I.T.C., the child tax credit and other tax credits and exemptions to provide working families with one, simple benefit.


    Then there are the schools. For most of the 20th century, Republicans reacted with horror at the thought of a significant federal role in education. ''Local control'' was the mantra. That's over. More and more conservatives understand that local control means local monopolies and local mediocrity. Most Republicans, happily or not, have embraced a significant federal role in education -- to smash the education monopolies, enforce consequences for schools that don't meet achievement standards and free individual schools and principals to find the best ways to succeed.


    We've had wave after wave of education reforms over the past two decades. Each one of them gets sucked into the bog of the system. We have given principals faux responsibility for their schools. We have laid down faux standards for achievements. We have given a few parents faux choice. It's time to shake up fundamentally the self-serving network of bureaucracies and unions. Charter schools, in which school leaders can actually control their own enterprises, can still make a difference, despite the problems many are having in getting started (and despite the premature attacks that have recently been leveled against them). There should be a federal Homestead Act for charters, providing them with start-up capital for new buildings and equipment. Vouchers can make a difference, especially in areas where schools are demonstrably failing.


    Certification rules need to be revamped so a wider variety of Americans can teach. Compensation shouldn't be based primarily on seniority but on performance. Innovators should get bonuses, as in any other field. Principals should not be drawn exclusively from the ranks of teachers but also from the ranks of business, the military and other fields. The federal government needs to insist, through national tests like the current national assessment exams, that all American students graduate with a basic knowledge of American history and institutions, simply as a matter of good citizenship.


    Restore the integrity of our institutions. Not long ago, there was a clear distinction between conservatives and Republicans. Conservatives believed in principles; Republicans sold out. Conservatives admired capitalism but understood that businesspeople fundamentally did not like competition and would much rather use their lobbying power to induce government to protect them from competition, to confer unfair advantages, to offer them subsidies and to issue regulations that blocked future competitors.


    Over the past few years the distinction between conservative and Republican has eroded. Under Tom DeLay, the conservative movement has fused with the K Street brigades. There are now few ideological checks on the corporate community's desire to use government to stifle competition. Now it is conservatives who often embrace special tax breaks, special subsidies, special regulatory sinecures. This is a cancer on modern conservatism, and most every conservative in his or her heart knows it.


    People in the strong-government tradition do not believe in active government for the sake of active government, but for the sake of competition. Some future president needs to go through the budget and rake out the tens of billions of dollars of corporate subsidies. They can be reduced only all at once, in a great sweep that overwhelms the parochial lobbying campaigns that groups will mount on behalf of each one. They can be reduced only as part of a larger tax-reform effort that will simplify the code, flatten rates and clean out the morass of credits, deductions, phaseouts, differential taxation arrangements, double-taxation provisions, alternative-minimum-tax fiascoes and growth-inhibiting distortions.


    Everybody understands that our budget and tax systems have become dishonorable, favoring the well connected, neglecting everybody else, breeding cynicism and sapping national morale. These systems will never be pure and pork-free. But every few years somebody has to come in and clean out the encrustations that inevitably develop.


    The energy revolution. Our current energy supplies are economically unsustainable and politically dangerous. For conservatives, the first task is to move the debate beyond its politically ruinous confines. Republicans currently stand for production, the cultivation of existing technologies and a sometimes callous disregard for the environment. Democrats stand for conservation, the cultivation of environmentally sensitive but unrealistic technologies and a sometimes callous disregard for economic growth.


    In halting and inconsistent ways, the Bush administration is trying to crash through all this. It vows to pursue ''transformational technologies.'' The administration has proposed spending $1.7 billion to develop hydrogen-powered fuel cells. Dozens of other ideas are floating around: reviving nuclear energy, fusion, new coal extraction techniques and so on. But these proposals are too modest, out of proportion to the problems that confront us. This is a perfect sphere for limited but energetic government, for a government that stimulates innovation but does not succumb to the lure of industrial policy making, of picking one technology over another and thus, for political reasons, shutting off avenues of innovation.


    National service. American society is now rife with forces that encourage people to think about their own success, to cultivate their own gardens, to segment themselves off into their own cultural cliques. There should be at least one moment in life when people are encouraged to serve a cause larger than self-interest, fuse their own efforts with those from other regions and other walks of life and cultivate a spirit of citizenship.


    For the sake of character development and national union, national service should be a rite of passage for young Americans. Senators Evan Bayh and John McCain have proposed one plan. Young volunteers would go through a boot camp experience, taking them out of the rhythms of their lives, forcing them to endure a fiber-testing ordeal along with people unlike themselves. They could either join an expanded AmeriCorps or serve for 18 months in the military, helping out with noncombat duties.


    As William F. Buckley, Jr. once wrote: ''Materialistic democracy beckons every man to make himself a king; republican citizenship incites every man to be a knight. National service, like gravity, is something we could accustom ourselves to, and grow to love.''


    By using government in limited but energetic ways, conservatives could establish credibility that would enable them to reduce the size of government where it is useless or worse -- export subsidies, agricultural subsidies and the like. Then they could use that credibility to reduce the increases in entitlement spending -- the giant set of programs that crowd out everything else.


    More than that, conservatives have it in their power to refashion the political landscape. American politics is now polarized, evenly divided and stagnant. It has become like World War I. Each party is down in its trench, lobbing the same old arguments, relying on the same old coalitions. Neither party is able to gain a lasting advantage. Neither party is able to accomplish much that it is proud of.


    Trench warfare finally ended because somebody invented the tank. It is time for one party or another to invent the tank, some new governing philosophy that will broaden its coalition and transform the partisan divide. For Republicans, the progressive conservative governing philosophy is the tank. It is the approach to politics best suited to the emerging suburban civilization, best suited to life during a war on Islamic extremism. It is the way Republicans can build a governing majority and leave a positive mark on the nation and its destiny.




    David Brooks is a Times columnist. His latest book is ''On Paradise Drive: How We Live Now (and Always Have) in the Future Tense.''


     


    ---------------------------------------------------------------------------------------


    ---------------------------------------------------------------------------------------


     


     

August 28, 2004


  • August 28, 2004

    Economic Reality Bites







    If anyone required further evidence that President Bush's fiscal policies have not worked the way he says they have, this week's report from the Census Bureau provided it. In brief, from 2001 through 2003, poverty increased, income stagnated and the ranks of the uninsured grew, while the United States spent some $400 billion on tax cuts, which mainly benefited wealthy families. The Bush administration seemed intent on minimizing the political impact of the report, releasing the data on Thursday, instead of the usual date in late September, to get it done before the convention. But the numbers spoke for themselves. Since Mr. Bush came to power, 4.3 million people have fallen below the poverty line, set at $18,660 for a family of four in 2003, bringing the total number of people living in poverty in 2003 to 35.9 million, or 12.5 percent of the American population.


    The poor will always suffer most from recession and job losses. But one sure way to stem the slide into poverty is by bolstering state programs that directly benefit the poor, like job training, health care and child care. The administration devoted only 3 percent of its stimulus spending to aid for state governments. Congress and the administration have also done nothing to enhance the Temporary Assistance for Needy Families program. As a result, while the number of children living in poverty increased by 11 percent over the past three years, the number of children receiving welfare declined by 10 percent over the same period. Adding to the gloom, median family income - $44,853 in 2000 - fell by $1,535 during the administration's first three years, while the number of Americans without health insurance, according to the Census Bureau, grew by 5.2 million, to 45 million in 2003. The president and Congress have largely ignored this problem, while leaving little room to address it later by ballooning the deficit with tax cuts.


    A Bush campaign official suggested that the census report was misleading because it did not reflect the economic growth of the past 11 months. In fact, the report covers all of 2003. And in three of the seven months of 2004 for which data is available, job growth has not been strong enough to even keep up with population growth. Moreover, a Commerce Department report released yesterday showed that economic momentum slowed in the spring, with the economy expanding at a rate of only 2.8 percent, the slowest advance in more than a year, versus 3.0 percent as originally reported. The downward revision reflects June's record trade deficit of $55.8 billion.


    It remains to be seen whether this week's bad economic news turns out to be bad political news for Mr. Bush. But for tens of millions of Americans, it is already old news.


     


    ----------------------------------------------------------


    ----------------------------------------------------------


     



    OP-ED COLUMNIST


    America's Failing Health


    By PAUL KRUGMAN





    Working Americans have two great concerns: the growing difficulty of getting health insurance, and the continuing difficulty they have in finding jobs. These concerns may have a common cause: soaring insurance premiums.


    In most advanced countries, the government provides everyone with health insurance. In America, however, the government offers insurance only if you're elderly (Medicare) or poor (Medicaid). Otherwise, you're expected to get private health insurance, usually through your job. But insurance premiums are exploding, and the system of employment-linked insurance is falling apart.


    Some employers have dropped their health plans. Others have maintained benefits for current workers, but are finding ways to avoid paying benefits to new hires - for example, by using temporary workers. And some businesses, while continuing to provide health benefits, are refusing to hire more workers.


    In other words, rising health care costs aren't just causing a rapid rise in the ranks of the uninsured (confirmed by yesterday's Census Bureau report); they're also, because of their link to employment, a major reason why this economic recovery has generated fewer jobs than any previous economic expansion.


    Clearly, health care reform is an urgent social and economic issue. But who has the right answer?


    The 2004 Economic Report of the President told us what George Bush's economists think, though we're unlikely to hear anything as blunt at next week's convention. According to the report, health costs are too high because people have too much insurance and purchase too much medical care. What we need, then, are policies, like tax-advantaged health savings accounts tied to plans with high deductibles, that induce people to pay more of their medical expenses out of pocket. (Cynics would say that this is just a rationale for yet another tax shelter for the wealthy, but the economists who wrote the report are probably sincere.)


    John Kerry's economic advisers have a very different analysis: they believe that health costs are too high because private insurance companies have excessive overhead, mainly because they are trying to avoid covering high-risk patients. What we need, according to this view, is for the government to assume more of the risk, for example by picking up catastrophic health costs, thereby reducing the incentive for socially wasteful spending, and making employment-based insurance easier to get.


    A smart economist can come up with theoretical justifications for either argument. The evidence suggests, however, that the Kerry position is much closer to the truth.


    The fact is that the mainly private U.S. health care system spends far more than the mainly public health care systems of other advanced countries, but gets worse results. In 2001, we spent $4,887 on health care per capita, compared with $2,792 in Canada and $2,561 in France. Yet the U.S. does worse than either country by any measure of health care success you care to name - life expectancy, infant mortality, whatever. (At its best, U.S. health care is the best in the world. But the ranks of Americans who can't afford the best, and may have no insurance at all, are large and growing.)


    And the U.S. system does have very high overhead: private insurers and H.M.O.'s spend much more on administrative expenses, as opposed to actual medical treatment, than public agencies at home or abroad.


    Does this mean that the American way is wrong, and that we should switch to a Canadian-style single-payer system? Well, yes. Put it this way: in Canada, respectable business executives are ardent defenders of "socialized medicine." Two years ago the Conference Board of Canada - a who's who of the nation's corporate elite - issued a report urging fellow Canadians to bear in mind not just the "symbolic value" of universal health care, but its "economic contribution to the competitiveness of Canadian businesses."


    My health-economist friends say that it's unrealistic to call for a single-payer system here: the interest groups are too powerful, and the antigovernment propaganda of the right has become too well established in public opinion. All that we can hope for right now is a modest step in the right direction, like the one Mr. Kerry is proposing. I bow to their political wisdom. But let's not ignore the growing evidence that our dysfunctional medical system is bad not just for our health, but for our economy.


     


    ---------------------------------------------------------------------------------


    ---------------------------------------------------------------------------------


     

August 25, 2004














  •  


    Area schools often a draw for many home buyers

    By Jean Newton
    It's back to school time for students whose parents may have purchased their homes specifically because of the schools in the area. Although it is not the top reason why buyers choose a home, a good school district is high on the list of reasons to buy.

    According to a profile of home buyers and sellers from the National Association of Realtors, the factors influencing neighborhood choice when buying a home include: neighborhood, 62 percent; close to jobs/schools, 32 percent; close to friends/family, 32 percent; schools, 17 percent; and shopping centers, 14 percent.

    Realtor Brian Kessler of Intero Real Estate Services in Los Gatos believes schools and school-district boundaries play a huge role in the decision to buy a particular home.

    "A top-rated school district can add approximately 10 to 15 percent to the value of a property. As a Realtor, it is amazing how often this topic comes up during the home-buying process. Buyers are insistent upon a particular school district, often more so than they are concerned about the actual home," Kessler said.

    Some of Kessler's clients have even been willing to make significant sacrifices in property amenities to compensate for a highly regarded school district. Buyers with no children are also concerned about school districts, said Kessler, because they understand that it will make a significant difference when it comes time for resale.

    Additionally, Kessler found that clients are likely to discuss the topic of private schools versus public schools. "Quite often the client will decide that they would rather put their dollars into a mortgage than into private-school tuition," Kessler said.

    Dennis Byron of Byron and Associates in Los Gatos also thinks schools play an important role in the value of a home. He works with many clients who are relocating from other areas and are interested in knowing all about the schools in a particular area.

    "Schools are the reason that you pay a premium in areas like Los Gatos and Saratoga. Good schools will add a minimum of 10 percent. I deal with a lot of people that come from overseas. These people are informed about the school districts before they come over. Many have already set up interviews with the schools and asked me to find them homes in a particular area in that district so they can attend a targeted school," Byron said.

    For those who are relocating here and don't know about the districts, Byron recommends they get on the Internet and visit www.greatschools.net. "This website is designed to inform them about schools' rankings and other information. I will also give them a copy of the McCormack's Guides, which also gives the latest school rankings," Byron said.

    When it comes to schools in the Los Gatos and Saratoga areas, Realtor John Leslie of Alain Pinel Realtors says he strongly believes the value of homes is definitely influenced by the school district.

    "The demand to be in the Los Gatos School District causes the home prices to be higher than those in the Campbell Union District. Home sales—particularly under $1 million—historically show about a 10 percent difference. This goes back to the mid-1980s. Today, with the prices so high for homes, the percentage is much higher when one looks at homes over $1 million," Leslie said.

    He believes one of the reasons for the continued added value is that Los Gatos school districts have maintained their high standards.

    "The special assessments that residents have repeatedly passed to keep teachers and classes that were slated to be lost demonstrate the importance of the district to residents. Los Gatos and Saratoga High both are being updated by funds from measures that passed in recent elections. Fisher Middle School, also, is nearly finished after funds were approved to have it totally remodeled," Leslie said.

    Leslie also says there is a misperception that the Los Gatos homes located in the Campbell Union School District are not as in demand.

    "This is not the case. The demand for homes with a Los Gatos address is always in demand. The fact that prices keep rising reflects this situation. Buyers get more square footage for the price, a large selection of homes and neighborhoods in the Campbell Union School District and the Los Gatos ZIP codes," Leslie said. "The pride of ownership is just as great for their homes and their schools. The fact that Los Gatos historically ended up with two school districts within its boundaries has not diminished that Los Gatos is a very affluent town and has great schools."

    Realtor Chuck Lane of Coldwell Banker recommends buyers take a look at test scores and visit individual schools. He provides information and resources for those interested in knowing more about schools in the community.

    "For some clients the school district is extremely important even if there are no children involved. If it is a single-family residence, then you also need to consider resale. It can affect the value by as much as $100,000," Lane said.

    In addition to www.greatschools.net as a source for comparing school districts, Realtor Dante Drummond of Coldwell Banker recommends going to individual school websites for more localized information.

    "Most city school districts have their own websites with mission statements and information about their district schools or links to their district-school websites. A caution: School scores can sometimes be misleading, as in the case when there may be special programs for multilingual or disabled children in highly successful schools."

    When it comes to real estate, it pays to do some homework to find out which schools and districts will not only fit the requirements of families and children, but also will stand the test of time when it comes to adding value to a home.


     


    ----------------------------------------------------


    ----------------------------------------------------


     


     

August 22, 2004


  • August 22, 2004

    In Mr. Bush's Neighborhood, a Peculiar Intersection


    By LANDON THOMAS Jr.





    THE relationship between President Bush and Wall Street has always been a tangled one, layered with paradox and outright contradiction.


    On the stump, the president can come across as a prairie populist, describing investment-banking practices as "fancy footwork" and calling the stock market boom of the 1990's feckless, "pie in the sky" investing.


    Yet, as the grandson and nephew of patrician East Coast bankers - on his mother's side as well as his father's - President Bush has raised millions of dollars from Wall Street to finance his brief career as an oil wildcatter and his two presidential campaigns. And his fiscal policies, which include sweeping cuts in dividend and capital gains taxes, could be the most pro-Wall Street since Ronald Reagan began cutting taxes in 1981.


    Still, for the most part, President Bush has kept bankers at arm's length in his administration. In fact, he is the first Republican president since Dwight D. Eisenhower to not appoint a Treasury secretary from Wall Street, though there is speculation that this may change if he is re-elected.


    If President Bush seems conflicted about Wall Street, the feeling may be mutual. Although the Republican National Convention, to be held next week in New York, has been financed in part by large sums of Wall Street money, the debate over the president's policies is full-throated, drawing in some of the financial industry's biggest names.


    The president's supporters argue that his tax-cutting policies have stabilized uncertain markets, freeing capital for new investments and setting the stage for the next bull market. They see him as a man of rectitude and conviction, a fellow businessman imbued with boardroom gravitas who understands the value of a corporate America largely unfettered by taxes and regulation. More important, they view him as a wartime president, deserving of their support.


    "I liked his response to terrorism," said John J. Mack, the former co-chief executive of the Credit Suisse Group and a prominent fund-raiser who has met with Mr. Bush several times. "He is not a flip-flopper, and it is clear that he will make the tough decisions."


    Conversely, the president's detractors on Wall Street argue that his tax cuts are elitist and have resulted in ballooning deficits that could lead to the next stock market crash. They see his attempt to distance himself from the Street as part of his persona and say that his tax policies, though personally enriching for them, are irresponsible in the long run.


    PRESIDENT BUSH has put a lot of money in my pocket but I think his policies are a disaster," said Steven Rattner, the founding partner of the Quadrangle Group, a private equity boutique, and an adviser to Senator John Kerry, Mr. Bush's Democratic opponent.


    Even some Wall Street Republicans who say they expect to vote for President Bush voice concerns about the deficit as well as the fairness of a tax cut that makes rich people even richer. "My own feeling about the dividend tax cut is that I would not have done it," said Kenneth G. Langone, an enthusiastic Republican and co-founder of Home Depot who owns more than $700 million of the company's stock and runs his own investment bank. "It has meant millions to me, but I would have felt better if you dedicate it to deficit reduction."


    Whatever their views on his policies, few financial executives expect President Bush to reach out to Wall Street when he addresses the party faithful at the convention next week.


    From a political perspective, it is easy to see why Mr. Bush has kept his distance. Just months after he took office in 2001, the Nasdaq market collapsed and he began to tilt away from Wall Street. That was a direct contrast to the approach of President Bill Clinton, who took every opportunity to celebrate a stock market that was soaring during much of his time in office.


    Mr. Bush's original economic counselors, Paul H. O'Neill, as Treasury secretary, and Lawrence B. Lindsey, as chief economic adviser, were also Wall Street skeptics who saw bond traders as whimsical and the markets as frothy. These views, historians say, informed the president's own mistrust of Wall Street leaders. Mr. O'Neill was a former chief executive of Alcoa; Mr. Lindsey was a conservative economist.


    "I think the president has a love-hate relationship with the Eastern establishment and that includes the money part of it," said Kevin Phillips, author of "American Dynasty," a critical account of the Bush family's business and financial ties. "He doesn't like the Wall Street stereotypes who are the gray flannel Eastern types. He didn't like them at Andover, and he didn't like them at Yale."


    While Mr. Clinton made many a foray to Wall Street, once speaking from inside the New York Stock Exchange, Mr. Bush has been an infrequent visitor to Lower Manhattan. Like all presidents, he has met in private with financial executives, but his only official appearance - not including his visits to the World Trade Center ruins - was a less-than-successful attempt in July 2002 to bolster the market's morale in the face of a wave of corporate scandals.


    In speeches over the years, President Bush has taken pains to link the stock market malaise to recession, the shriveling of tax revenue and the growth of the deficit. And he has done so in a way that suggests that the market boom, under Mr. Clinton and his Treasury secretary, Robert E. Rubin, was irresponsible, driven by Internet and technology stocks that eschewed dividends.


    "I would call that the pie-in-the-sky economic period,'' Mr. Bush said last year as he presented his dividend tax cuts as a way to restore probity to corporate America. "You know, 'Bet on us. Even though we don't have any cash, we've still got an interesting tale to tell, you know, the new economy.' "


    While he now criticizes this "bet on us" business mentality, President Bush's own first business venture, exploring for oil in the late 1970's, was also highly speculative in nature, paid little in dividends and lost money for its investors - much like the Internet stocks that tumbled as he took office.


    And his disdain for what he has called the "fancy footwork" of investment bankers comes despite the fact that his grandfather, Prescott S. Bush, was a senior partner at Brown Brothers Harriman, perhaps the most exclusive of Wall Street's old-line investment houses.


    Indeed, the president's family tree mirrors Wall Street's evolution over the past century. His great-grandfather, George Herbert Walker, founded his own investment bank, G. H. Walker & Company, in 1900; several mergers later, in 1978, it was acquired by Merrill Lynch. An uncle on his mother's side, Scott Pierce, was a former president of E. F. Hutton, a brokerage firm that was acquired in 1987 by Shearson Lehman (now part of Citigroup); his uncle Jonathan J. Bush ran a small money management operation that was later sold to Riggs Bank; and a second cousin, George Herbert Walker IV, is a managing director at Goldman Sachs. Mr. Bush's younger brother, Marvin, manages a series of hedge funds in suburban Virginia.


    When Mr. Bush was at Yale in the 1960's, the family history weighed heavily on him. "He wanted to be rich," said Douglas Hannah, a friend of the president's, as recounted in "First Son," by Bill Minutaglio. "He wanted to possibly be a stockbroker because his great-uncle and uncle were stockbrokers."


    But like his father, who spurned an offer to work at Brown Brothers, Mr. Bush turned his back on Wall Street; he chose instead to seek his fortune in the oil fields of Texas in the late 1970's. "Both George Sr. and the president had the same hands-off, stay-away attitude with regard to Wall Street," said Mr. Pierce, the president's uncle. "He is a Texan; that is where his ties are."


    His Texas roots notwithstanding, Mr. Bush tapped into his Wall Street network to finance his venture as an oil speculator. His uncle Jonathan led the way, raising money from financial and corporate sources. When it failed to strike oil, the company, called Arbusto, fell on hard times, and the initial investors lost most of their stakes when oil prices plunged before it was merged into another company in 1984.


    Mr. Bush would have no further need for Wall Street advice, and as he started his run for national office, his economic team was largely devoid of bankers.


    IN selecting his cabinet after winning the 2000 election, he reached deep into his father's administration to build his foreign policy team, but selected no one from that administration for a prominent economic post. Part of that was calculated politics: his father had been pilloried by conservatives for raising taxes, and any official close to that volte-face was immediately tainted in the eyes of the supply-side sympathizers close to the new president.


    But there may have also been a deeper reason: despite the Bush family's historical ties to Wall Street, the first President Bush was unable to lure a heavy financial hitter as Treasury secretary, like Mr. Rubin, who once ran Goldman Sachs; William E. Simon Sr., the prominent Salomon Brothers banker who served in the Nixon and Ford administrations; and Donald T. Regan, the former chief executive of Merrill Lynch who held the post under President Reagan.


    The Treasury secretary in that first Bush administration was Nicholas F. Brady, who also served in that post for the last few months of the Reagan administration. He was an old friend of the president's who had a respectable career at Dillon Read but lacked the clout of many previous Wall Street executives.


    Mr. Brady, now chairman of Darby Overseas Investors, an investment company, concedes that he has had no interaction with the current administration, but says he does not think that a banking pedigree is a prerequisite for being effective in the Treasury post. "I don't think that Wall Street qualifications are needed. Look at George Shultz," he said, referring to Mr. Nixon's third Treasury secretary. "What is needed more is a relationship with the president."


    But the second President Bush was unable to cultivate any meaningful relationship with the Wall Street executives presented as potential candidates for his cabinet. Then again, not having a Wall Street executive in the Treasury might have made political sense at the time.


    As a former oil industry executive, Mr. Bush had a crisp, keep-it-simple management style more in tune with the manners of conservative corporate chief executives than with the brasher, less risk-averse approach cultivated by Wall Street leaders.


    But now, given the emphasis that Mr. Bush has placed upon his capital gains and dividend tax cuts as a tonic for the markets, some people wonder whether he may reach out to a Wall Street executive for Treasury secretary in a second term.


    With the stock markets still shaky and investors worried about the growing budget deficit and a possible surge in interest rates, the president may need an authoritative voice to make the case that, in the long run, none of this is likely to result in a stock market crash.


    "Traditionally the better Treasury secretaries have come from Wall Street, dating back to Alexander Hamilton," said Bruce Bartlett, a deputy assistant secretary for economic policy under the first President Bush. "It's good to have someone to calm fears. Rubin was good at it, and sometimes corporate guys just don't get it."


    While the current Treasury secretary, John W. Snow, a former steel executive, has been a loyal soldier, he is seen by traders as being a fairly inconspicuous figure on Wall Street. But there is one senior Wall Street executive in the Bush administration: Stephen Friedman, who together with Mr. Rubin ran Goldman Sachs in the early 1990's. He is now director of the National Economic Council, the post that Mr. Rubin occupied before ascending to the Treasury.


    WHEREAS Mr. Rubin made his name as a trader, Mr. Friedman rose through the ranks at Goldman as an investment banker. Well regarded on Wall Street, he has not often been seen publicly since joining the administration in late 2002. And he may not have any intention or desire to follow Mr. Rubin into the cabinet.


    There is no indication so far that Mr. Snow's job is in jeopardy, but there is frequent turnover in a cabinet in a second administration. So is there anyone on Wall Street who has the right combination of charisma, scandal-free reputation and ability to calm volatile markets to handle the job?


    The Wall Street rumor mill has churned out some names, like Henry M. Paulson Jr., the chief executive of Goldman Sachs, and E. Stanley O'Neal, Merrill Lynch's chief executive - both whom have raised large sums for the president this year.


    While Mr. Paulson may have the political background - he served briefly in the Nixon administration - people who know him say he has his hands full running Goldman Sachs. Mr. O'Neal, for his part, has raised more than $500,000 for the campaign, but he has been chief executive of Merrill for less than two years and has maintained a low public profile on the Street.


    Then there is Mr. Mack, who was forced out at Credit Suisse close to two months ago. He is an acquaintance of Vice President Dick Cheney, who played a crucial role in selecting the last two Treasury secretaries.


    Mr. Mack would not comment on such speculation. All the same, he is willing to do his bit for the campaign - whether raising money or engaging in some retail politics. "If things get too quiet here, I may call down there," he said. "The race is too close to call, but I think he will win."


     


    --------------------------------


    --------------------------------



    August 22, 2004

    EDITORIAL OBSERVER


    Walden at 150: What Would Thoreau Think of the 24-Hour News Cycle?


    By ADAM COHEN





    In his time at Walden Pond, Henry David Thoreau periodically returned to Concord, Mass., and when he did, the village seemed to him like a "great news room." After days alone, he found himself surrounded by gossip on all sides, from the idle talk of his neighbors to the frivolous reports in the newspapers. Thoreau was not immune to the appeal of gossip, which he saw as "really as refreshing in its way as the rustle of leaves and the peeping of frogs." But he worried that society was being dulled by its fascination with trivial events. "Hardly a man takes a half-hour's nap after dinner," Thoreau lamented, "but when he wakes he holds up his head and asks, 'What's the news?' "


    "Walden" is, to use one of Thoreau's favorite images, a bottomless pond. Readers can always dive into it again, and find something new. Thoreau's lyrical account of his two years, two months, and two days living in a simple shack by a pond was published 150 years ago this month, yet it speaks directly to the information age. Buried in its accounts of planting bean fields and staring out at the night sky is some remarkably prescient media criticism. Thoreau could not have imagined television news shows endlessly yammering about Scott Peterson and Michael Jackson, or newsstands jammed with accounts of celebrity breakups. But he had a dead-on sense of how they could undermine the human spirit and lead the nation astray.


    Thoreau was born in Concord on July 12, 1817. This fortuitous combination of place and time put him at the center of one of America's greatest intellectual moments. He became friends with Emerson and Nathaniel Hawthorne, and wrote for the pathbreaking transcendentalist journal The Dial. Even before moving to his cabin, Thoreau was known as a loner and a contrarian, but he was capable of warm human interactions. He forged a lifelong, if complicated, friendship with Emerson, who once declared that "Henry is - with difficulty - sweet."


    "Walden" is an unusual work, more a digression-filled letter from a friend than a sustained philosophical argument. Still, Thoreau had some important principles to lay down. He wrote it for the mass of Americans who, he believed, "lead lives of quiet desperation," sleeping through life, and missing the most important things going on around them. His intent, he declared in the epigraph, was to crow like a rooster in the morning "to wake my neighbors up."


    Much of "Walden" is Thoreau's account of how he stripped life down to its essentials. For a book about returning to the garden, however, it is oddly preoccupied with Thoreau's thoughts about communications. The third chapter, "Reading," is his extended complaint that Americans are not reading the best books. It includes a scathing attack on the Hollywood of the day, cheap novels that offered up "the nine thousandth tale about Zebulon and Sophronia, and how they loved as none had ever loved before."


    But it is Thoreau's views on news that have the most contemporary feel. He believed that sensationalist newspaper articles - the mid-19th century equivalent of local television news - were a distraction. "If we read of one man robbed, or murdered, or killed by accident, or one house burned we never need read of another," he writes. "If you are acquainted with the principle, what do you care for a myriad instances and applications?"


    Thoreau was by no means opposed to news consumption, but he believed society should focus intently on the news that mattered. A few days before John Brown was hanged for leading his antislavery insurrection in Harpers Ferry, Va., Thoreau wrote in his journal that he had been "absorbed of late in Captain Brown's fate" and that it surprised him to see other people "going about their affairs indifferent." He believed in the importance of information not merely to improve the mind, but as a guide to action. He disavowed organized reform movements. "If I knew for a certainty that a man was coming to my house with the conscious design of doing me good," he wrote in "Walden," "I should run for my life." But he was, in fact, not only keeping up with the great moral causes of his day; he was fighting for them.


    He crusaded for John Brown and helped lead slaves to freedom on the underground railroad. In "Civil Disobedience," he tells the well-known story of being thrown in jail for refusing, in protest of slavery and the war against Mexico, to pay his poll tax.


    Thoreau would be disturbed by today's endless flood of celebrity bulletins and made-for-cable-TV courtroom face-offs not because he thought gossip was inherently wrong, but because of what it was distracting America from. He missed the opportunity to deplore the fact that people who can rattle off the details of the voting in "American Idol" know little about the presidential campaign, and that the Laci Peterson killing gets more attention than North Korea's nuclear program. But he anticipated, long before the 24-hour news cycle and cellphones, that in modern America the problem might well be not too little access to information, but too much. "We are in great haste to construct a magnetic telegraph from Maine to Texas," he writes in "Walden," "but Maine and Texas, it may be, have nothing important to communicate."


     


    -----------------------------------------------


    -----------------------------------------------