August 7, 2004


  • August 7, 2004

    THE OVERVIEW


    In Blow to Bush, Only 32,000 Jobs Created in July


    By DAVID LEONHARDT





    Job growth ground nearly to a halt last month, the Labor Department reported yesterday, raising new concerns about the economy's strength and reshaping the political debate over its performance less than three months before election day.


    Employers added just 32,000 jobs in July, a small fraction of what forecasters had expected and far below the robust gains in employment earlier this year. The government also announced that job growth in May and June was less than initially estimated.


    "The economy is spinning its wheels again," said Richard Yamarone, chief economist at Argus Research in New York. "Corporate America is reluctant to hire anyone above the bare minimum."


    The unemployment rate fell slightly last month, to 5.5 percent, but it is based on a smaller survey than the job growth numbers, which are widely considered the more reliable gauge of employment. [Page C1.]


    The disappointing numbers are likely to rekindle fears that the relationship between economic growth and job creation has changed in important ways. With technology allowing companies to produce more goods without adding workers and some jobs moving to lower-wage countries, there are about a million fewer jobs today than there were in early 2001 even though the economy emerged from recession later that year and has been growing since then.


    For President Bush, the new evidence creates a nettlesome political situation, making it harder for him to cite strong job gains as proof that the tax cuts he championed at the start of his term were the best cure for the economy's problems.


    The weak increases of the last two months now mean that Mr. Bush is highly likely to stand for re-election with an employment level lower than it was on his Inauguration Day. That would be the first time that has happened since 1932, when the country was mired in the Depression and enduring far worse job losses than any it has experienced recently.


    Despite the disappointing job figures, White House officials said that the economy was continuing to grow and that the policies they had put in place would do a better job of fostering further growth than Democratic proposals.


    "We're not satisfied with today's payroll employment number,'' N. Gregory Mankiw, chairman of the president's Council of Economic Advisers, said. But he argued that the fall in the jobless rate and a recent decline in claims for unemployment insurance suggested that the job market could be healthier than yesterday's report made it seem.


    "The underlying economy, if you look at all the data put together, still looks like it's going in the right direction," Mr. Mankiw said.


    But Democrats countered that yesterday's report provided a compelling indictment of Mr. Bush's economic policies.


    "It's premature for George Bush to raise the banner of 'Mission Accomplished' above the economy," Representative Rahm Emanuel, Democrat of Illinois, said. "If you're in the middle class, the economy has not turned the corner."


    On Wall Street, stocks fell broadly after the release of the report, with the Standard & Poor's 500-stock index closing down more than 1 percent. The dollar dropped against the euro, and long-term interest rates declined as well. Despite the disappointing figures, most economists continue to expect the Federal Reserve to raise its benchmark short-term rate next week.


    The fallout from the hiring slump has spread to many employed workers in recent months, as pay raises have failed to keep up with inflation. Over the last 12 months, weekly pay for rank-and-file workers, who make up about four-fifths of the work force, has risen only 2.3 percent, while prices have increased more than 3 percent. But the best sign in yesterdays otherwise grim report may have been the earnings gain in July, erasing an outright decline in June. Average weekly pay for rank-and-file workers rose $3.25, to $529.09, in July.


    The economy's recent slowdown seems to stem largely from higher energy costs and the gradual disappearance of government stimulus as tax savings have been spent and the effect of lower interest rates has lost its punch. Recent increases in interest rates have caused mortgage refinancing to fall sharply, while higher oil prices have left businesses and households with less money to spend on other items.


    "The escalation in energy prices is being driven not by supply and demand but by fear and uncertainty" about events in the Middle East, said Richard J. DeKaser, chief economist at the National City Corporation, a bank based in Cleveland. "My own view is that oil prices are set for a fall, but I would have said that three months ago."


    The crimp in family budgets appeared to affect hiring last month, as retail employment fell for the first time since December, according to the Labor Department, which adjusts its statistics to smooth over normal seasonal changes. Banks, hotels, movie studios and phone companies all reduced their work forces, too. Government employment remained flat, as it essentially has for the last few months.


    For the first time this year, more industries cut jobs last month than added them, the government reported.


    Sectors that rely more on corporate investment than consumer spending helped make up for the losses. Manufacturers added 10,000 jobs, just the fifth positive month for the sector since the summer of 2000. Construction companies added jobs as well.


    In other positive signs, the average length of unemployment fell, as did the number of people saying they were working part-time because they could not find a full-time job.


    As part of its regular revisions, the Labor Department said that the economy added a total of 286,000 jobs in May and June, 61,000 fewer than reported earlier. Combined with the weak job growth for July, the revisions mean that the economy had 270,000 fewer jobs last month than forecasters had thought.


    Before the report was released, the general expectation among Wall Street analysts was that the economy had added about 240,000 in July, far more than the 32,000 the Labor Department found.


    The Fed next meets on Tuesday, and economists and investors predict that it will still raise its benchmark rate a quarter percentage point, to 1.5 percent. The Fed lowered the rate to an almost 50-year low last summer to help keep the economy from falling into a new downturn, and Alan Greenspan, the Fed chairman, has said he plans to lift the rate gradually over the coming year.


    The weak recent job growth raises the chances that the moves will come more slowly and sporadically than previously thought, analysts said.


    The contrast between last month's paltry job growth and the drop in the jobless rate raised new questions about the surveys that produce each number. The job-growth figures come from a poll of 400,000 places of employment with about 45 million workers. Private and government economists, including Mr. Greenspan, consider it the more accurate survey.


    In a separate report yesterday, the Labor Department described the survey as "a highly reliable gauge."


    But it is not perfect, economists add, and the household survey - which produces the unemployment rate after asking questions of 60,000 households - suggests that the labor market might be somewhat stronger than the business survey indicates.


    The Labor Department will release two more employment reports before the November election.


     


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  • August 7, 2004

    NEWS ANALYSIS: THE CAMPAIGN


    Low Numbers, New Problem


    By KATHARINE Q. SEELYE





    WASHINGTON, Aug. 6 - All week long, President Bush traveled the country, cheerfully telling audiences that ''we've turned the corner'' on the economy. But on Friday, in the face of the government's paltry new numbers on job growth, the president's new slogan suddenly sounded premature at best.


    Republicans had hoped the early indications this year that the economy was turning the corner would have allowed them to neutralize, or even turn to their advantage, the issue that John Kerry had once considered central to his White House bid. Instead, the new numbers, coming just three weeks before the G.O.P. convention, leave little doubt that the economy could still be a potent issue for the Democrats.


    Rather than address his vulnerability head-on Friday, Mr. Bush delivered an upbeat assessment of the economy, saying it was getting stronger and lauding the American entrepreneurial spirit. "There's more work to do to make this economy stronger,'' he said at a rally at a farm in Stratham, N.H. "We've been through a recession, we've been through corporate scandals, we've been through a terrorist attack. But we've overcome these obstacles, because our workers are great, because our farmers are really good at what they do. We've overcome these obstacles because the entrepreneurial spirit is strong.''


    This prompted cheers of "four more years.''


    At the same time, Senator Kerry seized on the numbers with relish. At a farm in Smithville, Mo., outside Kansas City, Mr. Kerry made fun of Mr. Bush, though not by name. "In the last few days you've heard people in positions of leadership on the other side saying America has turned the corner," he said. "Well, it must have been a U-turn, or else they're continually turning and they're going around in circles and ending up right back where they started from."


    The timing of the new economic numbers is particularly perilous for Mr. Bush because he is trying to build momentum in the run up to his convention. It is also the period in the presidential campaign when voters' perceptions begin to harden.


    After a sweep of encouraging economic news through the spring, the disappointing numbers in the last two months - capped by the ones on Friday - gives weight to the Democrats' argument that while the economy may not be terrible, things are not so well either. The next set of jobless numbers is to be issued Sept. 3, the day after Mr. Bush accepts his party's nomination. After that, the October numbers will be the last before the Nov. 2 election.


    That means the president has just two more chances for an improved outlook.


    Analysts said Friday's news would make it hard for the Bush campaign to change the subject from the economy.


    "The economy doesn't go away as a campaign issue," said Andrew Kohut, the director of the Pew Research Center for the People and the Press. "And with no sign of progress, it really puts the Republicans on the defensive."


    This could be particularly true in states like Ohio, Michigan and Missouri, which have lost the most jobs since Mr. Bush became president. They are also among the states where polls show the election to be neck and neck.


    Even before the latest numbers, polls showed that the public has more faith in Mr. Bush as commander in chief - and less faith in him to manage the economy - than in Senator Kerry. To that end, Mr. Bush on Friday, in a hint of how he is approaching the issue, went from playing down the numbers to quickly turning back to Topic A. The stream of e-mail messages from his campaign to reporters focused on terror, not the economy. Similarly, the subject of his radio address for Saturday was terror, not the economy.


    The campaigns dispute the effect that the jobs numbers will have on voters. David Winston, a Republican pollster, said the numbers were disappointing, but insisted that voters would not judge the president on them. "It's like if you have a baseball player like Barry Bonds and he goes 0 for 4 one day and you decide to trade him, as opposed to looking at the totality of his performance for the entire season,'' he said.


    Like the Bush campaign, Representative Tom Delay, the Texas Republican who is the House majority leader, lauded the dip in the unemployment rate. "These statistics show that our economy is moving in the right direction,'' he said in a statement, "but also that there is more work to be done.'' He has been seeking to make the Bush tax cuts permanent.


    But Tad Devine, a senior strategist for the Kerry campaign, said that voters' perceptions were solidifying and that any suggestion that they would wait until Election Day to assess Mr. Bush and the economy was "ludicrous."


    Mr. Devine said that voters did not want to hear Mr. Kerry denigrate Mr. Bush. Rather, he said, they want to hear how Mr. Kerry will make things better, which means the Kerry economic plan will come under new scrutiny.


    The Democratic plan to reverse what they called the anemic job growth also involves controlling health care costs and energy costs. Mr. Kerry would also refund the payroll taxes for companies that hire new employees, cut taxes for businesses that create jobs in the United States and eliminate tax breaks for American companies that move their jobs overseas. He also speaks frequently of restoring the fiscal discipline of the Clinton administration, and underscored the point by having Robert Rubin, Mr. Clinton's treasury secretary, who is well respected on Wall Street, sit next to his wife, Teresa Heinz Kerry, during his acceptance speech at the Democratic convention.


    "The American people are looking for solutions,'' Mr. Devine said. "What they want to hear is what Kerry and Edwards are going to do about jobs. That will be our focus, not the shortcomings of this administration.''


    But just in case the Kerry team dwells on what some Democrats are calling the jobless recovery, Mr. Devine added, "Of course, it will be referenced in the normal course of political dialogue, but it will not be our focus.''


    But the bad jobs news holds perils for the Democrats as well, largely under the category of the old political advice against celebrating misery.


    Mr. Kohut said that there were "a triumvirate" of issues important to voters this year - the economy, the war on terror and the war in Iraq. But the economy, he said, "is a persistent source of discontent," unlike the other two, which can ebb and flow depending on daily events. He said the numbers gave the Democrats the ability to keep hammering the idea that the president's policies were taking the country in the wrong direction.


    Even so, the president made clear that he would not be giving the Democrats any sound bites that showed him admitting to a faltering economy.


    Campaigning in New Hampshire, he said that his "well-timed tax cuts" had produced a strong economy despite various setbacks.


    He left it to others to discuss how the economy might be improved, but, again, without admitting a problem. Donald L. Evans, the commerce secretary, released a statement finding hope in the dip in unemployment, to 5.5 percent from 5.6 percent, and saying that "the American economy is moving in the right direction."


    Still, the Democrats were determine to emphasize the figures as an affirmation that Mr. Bush was taking the country in the wrong direction - and they have no plans to let up before November.


    After all, they said, if Mr. Bush continues on this track, he would be the first president since Herbert Hoover to experience a decline in jobs during his presidency, an issue they do not want lost.


     



    August 7, 2004

    Bad News on the Job Front







    There is no sugarcoating yesterday's employment report. The consensus forecast was for the American economy to add more than 200,000 new jobs in July. The actual number was 32,000. June's already weak report was revised downward, to 78,000 jobs from 112,000. Even May's hopeful numbers turned out to be less so, with 27,000 fewer jobs created than originally reported. The report's immediate impact will be to neutralize, if not undercut, President Bush's campaign boasts of a strong economic recovery.


    Mr. Bush runs the risk of being the first president since Herbert Hoover to preside over a net decline in the number of jobs. This may not be all his fault; he inherited a bursting bubble, after all, and there are limits to a president's ability to counter economic cycles. But Mr. Bush is always just as eager to have the buck stop at his desk to take credit for good economic news as he is to deny or spin bad news. Yesterday was no exception.


    Addressing a conference of minority journalists in Washington, President Bush was unwilling to acknowledge the implications of the jobs report. "Economic growth is strong and it's getting stronger,'' he said. Meanwhile, the White House economic team was peddling its tired line that the administration's tax cuts, which were costly without being effective as a stimulus for hiring, had helped bring about an 11th consecutive month of job growth.


    Left unsaid was that it was a sputtering, tepid month, just at the time when the recovery should be gathering steam. The disappointing numbers come on top of - and help explain - other recent signs of a slowdown, including an abrupt drop in economic growth, to a 3 percent annual rate in the second quarter from 4.5 percent in this year's first quarter. Consumer spending, the mainstay of the economy, fell 0.7 percent in June, its steepest drop since September 2001. Financial markets reacted bearishly to the latest news, with stock market indexes hitting new lows for the year yesterday, and the dollar weakening against other currencies.


    Even worse for the president, three years of tax cuts and war have left him with virtually no policy tools to counteract economic weakness in the near term. A direct fiscal stimulus is precluded by the staggering $445 billion deficit expected for the year. The White House tried to whitewash the release of that latest estimate last week by noting that the shortfall was lower than its initial (conveniently large) projection, instead of lamenting that it was higher than last year's deficit.


    The Federal Reserve Board is also unable to come to the rescue because it is rightly concerned about the danger of keeping short-term interest rates below the rate of inflation. Next week, Alan Greenspan and his colleagues are expected to continue on their course of gradually inching up rates, which have been at emergency-level lows. This may turn into a sequel of the 1992 tensions between the Fed chairman and a Bush White House that wants looser monetary policy on the eve of an election.


    Most economic forecasts have predicted a healthy economy in the second half of the year, and consumer surveys have been bullish, even as people have trimmed their spending. The trouble is, companies will have to start adding at least 200,000 new jobs a month to justify this optimism, especially now that the government's ability to apply a fiscal or monetary stimulus is so constrained. Those stubbornly high fuel prices show how external shocks can slam the brakes on the pace of this recovery.


    Voters deserve to have both presidential candidates address and debate solutions to some of the structural problems that are thwarting a stronger economic recovery, like our nation's dependence on foreign oil and the spiraling cost of health care. But like the rosy estimate of hundreds of thousands of new jobs for July, such a meaningful debate may be too much to count on.


     


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August 6, 2004


  • AUGUST 16, 2004

    COVER STORY










    Global Warming



     

    Consensus is growing among scientists, governments, and business that they must act fast to combat climate change. This has already sparked efforts to limit CO2 emissions. Many companies are now preparing for a carbon-constrained world


    The idea that the human species could alter something as huge and complex as the earth's climate was once the subject of an esoteric scientific debate. But now even attorneys general more used to battling corporate malfeasance are taking up the cause. On July 21, New York Attorney General Eliot Spitzer and lawyers from seven other states sued the nation's largest utility companies, demanding that they reduce emissions of the gases thought to be warming the earth. Warns Spitzer: "Global warming threatens our health, our economy, our natural resources, and our children's future. It is clear we must act."

    The maneuvers of eight mostly Democratic AGs could be seen as a political attack. But their suit is only one tiny trumpet note in a growing bipartisan call to arms. "The facts are there," says Senator John McCain (R-Ariz.). "We have to educate our fellow citizens about climate change and the danger it poses to the world." In January, the European Union will impose mandatory caps on carbon dioxide and other gases that act like a greenhouse over the earth, and will begin a market-based system for buying and selling the right to emit carbon. By the end of the year, Russia may ratify the Kyoto Protocol, which makes CO2 reductions mandatory among the 124 countries that have already accepted the accord. Some countries are leaping even further ahead. Britain has vowed to slash emissions by 60% by 2050. Climate change is a greater threat to the world than terrorism, argues Sir David King, chief science adviser to Prime Minister Tony Blair: "Delaying action for a decade, or even just years, is not a serious option."

    There are naysayers. The Bush Administration flatly rejects Kyoto and mandatory curbs, arguing that such steps will cripple the economy. Better to develop new low-carbon technologies to solve problems if and when they appear, says Energy Secretary Spencer Abraham. And a small group of scientists still argues there is no danger. "We know how much the planet is going to warm," says the Cato Institute's Patrick J. Michaels. "It is a small amount, and we can't do anything about it."

    But the growing consensus among scientists and governments is that we can -- and must -- do something. Researchers under the auspices of the National Academy of Sciences and the Intergovernmental Panel on Climate Change (IPCC) have pondered the evidence and concluded that the earth is warming, that humans are probably the cause, and that the threat is real enough to warrant an immediate response. "There is no dispute that the temperature will rise. It will," says Donald Kennedy, editor-in-chief of Science. "The disagreement is how much." Indeed, "there is a real potential for sudden and perhaps catastrophic change," says Eileen Claussen, president of the Pew Center on Global Climate Change: "The fact that we are uncertain may actually be a reason to act sooner rather than later."

    Plus, taking action brings a host of ancillary benefits. The main way to cut greenhouse-gas emissions is simply to burn less fossil fuel. Making cars and factories more energy-efficient and using alternative sources would make America less dependent on the Persian Gulf and sources of other imported oil. It would mean less pollution. And many companies that have cut emissions have discovered, often to their surprise, that it saves money and spurs development of innovative technologies. "It's impossible to find a company that has acted and has not found benefits," says Michael Northrop, co-creator of the Climate Group, a coalition of companies and governments set up to share such success stories.

    That's why there has been a rush to fill the leadership vacuum left by Washington. "States have stepped up to fill this policy void, as much out of economic self-interest as fear of devastating climate changes," says Kenneth A. Colburn, executive director of Northeast States for Coordinated Air Use Management. Warning of flooded coasts and crippled industries, Massachusetts unveiled a plan in May to cut emissions by 10% by 2020. In June, California proposed 30% cuts in car emissions by 2015. Many other states are weighing similar actions.

    Curbing Carbon
    Remarkably, business is far ahead of Congress and the White House. Some CEOs are already calling for once-unthinkable steps. "We accept that the science on global warming is overwhelming," says John W. Rowe, chairman and CEO of Exelon Corp. (EXC ) "There should be mandatory carbon constraints."

    Exelon, of course, would likely benefit as the nation's largest operator of commercial nuclear power plants. But many other companies also are planning for that future. American Electric Power Co. (AEP ) once fought the idea of combating climate change. But in the late 1990s, then-CEO E. Linn Draper Jr. pushed for a strategy shift at the No. 1 coal-burning utility -- preparing for limits instead of denying that global warming existed. It was a tough sell to management. Limits on carbon emissions threaten the whole idea of burning coal. But Draper prevailed. Why? "We felt it was inevitable that we were going to live in a carbon-constrained world," says Dale E. Heydlauff, AEP's senior vice-president for environmental affairs.

    Now, AEP is trying to accumulate credits for cutting CO2. It's investing in renewable energy projects in Chile, retrofitting school buildings in Bulgaria for greater efficiency, and exploring ways to burn coal more cleanly. Scores of other companies are also taking action -- and seeing big benefits. DuPont (DD ) has cut its greenhouse-gas emissions by 65% since 1990, saving hundreds of millions of dollars in the process. Alcoa Inc. (AA ) is aiming at a 25% cut by 2010. General Electric Co. (GE ) is anticipating growing markets for its wind power division and for more energy-efficient appliances. And General Motors Corp. (GM ) is spending millions to develop hydrogen-powered cars that don't emit CO2. A low-carbon economy "could really change our industry," says Fred Sciance, manager of GM's global climate issues team. As Exelon knows, the need for carbon-free power could even mean a boost for advanced nuclear reactors, which produce electricity without any greenhouse-gas emissions.

    Global warming could change other industries, too. Even if the world manages to make big cuts in emissions soon, the earth will still warm several more degrees in coming decades, most climate scientists believe. That could slash agricultural yields, raise sea levels, and bring more extreme weather.

    For businesses, this presents threats -- and opportunities. Insurers may face more floods, storms, and other disasters. Farmers must adjust crops to changing climates. Companies that pioneer low-emission cars, clean coal-burning technology, and hardier crop plants -- or find cheap ways to slash emissions -- will take over from those that can't move as fast. "There is no silver bullet," says Chris Mottershead, distinguished adviser at BP PLC (BP ): "There is a suite of technologies that are required, and we need to unleash the talent inside business" to develop them.

    Are we ready for this carbon-constrained, warming world? In some ways, yes. "There is a case to be made for cautious optimism, that we are making small steps," says BP's Mottershead.

    Indeed, there is surprising consensus about the policies needed to spur innovation and fight global warming. The basic idea: mandatory reductions or taxes on carbon emissions, combined with a worldwide emissions-trading program. Here's how it could work: Imagine that each company in a particular sector is required to cut emissions by 20%. The company could meet the target on its own by becoming more energy efficient or by switching from fossil fuels to alternatives. But it could also simply buy the needed reductions on the open market from others who have already cut emissions more than required, and who thus have excess emissions to sell. Under a sophisticated worldwide carbon-trading system, governments and companies could also get sellable credits for planting trees to soak up carbon or for investing in, say, energy efficient and low-carbon technologies in the developing world. As a result, there is a powerful incentive for everyone to find the lowest-cost and most effective cuts -- and to move to lower-carbon technologies.

    A key element is long-term predictability. If the world sets goals for the next 50 years, as Britain has done, and then implements the curbs or taxes needed to reach them, companies will figure out solutions. "Give us a date, tell us how much we need to cut, give us the flexibility to meet the goals, and we'll get it done," says Wayne H. Brunetti, CEO and chairman of Xcel Energy Inc. (XEL ), the nation's fourth-largest electricity and gas utility.

    The Challenge
    Such clear policy signals should bring major efficiency gains. Even 30% to 40% reductions in emissions by 2020 are possible, says Northrop. After that, he suggests, shifts to new energy technologies "can get the other 35% to 40% that we need to get to the low-carbon emission future."

    The good news is that the world sees the threat and has begun to respond. The bad news is the magnitude of the task. Rising CO2 levels in the atmosphere can't be slowed or reduced if only a few countries -- or even all the industrialized nations -- take action. The world must also figure out a way to permit growth in China, India, and other developing nations while lowering consumption of coal, gasoline, and other fossil fuels. "It's hard to think of a public policy issue that is harder than this one," says economist Jeffrey D. Sachs, director of Columbia University's Earth Institute.

    Developing countries are responsible for just over one-third of the world's greenhouse-gas emissions. But they emit less than one-fifth as much per person as do the industrialized nations. That will increase as their citizens buy more cars and consume more energy. By 2100, these countries will emit two or three times as much as the developed world, experts predict.

    The Bush Administration and Congress have seized upon this issue as one reason for rejecting the Kyoto Protocol, which doesn't include the developing world. But international negotiators are beginning to talk about a plan that would go beyond Kyoto. The first step: showing that the industrialized world is serious about leading the way. That's one of the motivations behind Britain's vow to slash emissions by 60%, for example. Britain knows it can't solve this global problem by itself. But committing to reducing CO2 "is the right thing to do," says British Energy Minister Stephen Timms. It will also keep the country from becoming dependent on foreign oil when its North Sea oil fields start to run dry in a few years.

    The next step is to help the developing world adopt new technologies. China and other nations could avoid the West's era of gas-guzzlers and dirty power plants by jumping to highly efficient clean coal plants and hybrid or advanced diesel cars. What's needed, experts say, are incentives to stimulate companies to make investments in advanced technology in developing countries. Once an international carbon-trading system is put in place, suggests Elliot Diringer, director of international strategies at the Pew Center on Global Climate Change, "we can reduce our own costs in the U.S. by allowing our companies to get the benefit of low-cost emissions abroad."

    Still, even if the developing world comes on board, staggering reductions in emissions are needed. Consider the math. For the past 450,000 years, the amount of carbon dioxide in the atmosphere has stayed below 290 parts per million (ppm). Now, we are spewing out more than 7 gigatons of carbon a year and large amounts of other greenhouse gases such as methane. As a result, the CO2 levels in the air have climbed past 370 ppm. With no action, those levels could jump to 800 to 1,000 ppm by the end of the century. "We are already in dire straits," warns Columbia University geophysicist Klaus S. Lackner.

    The Science
    Can serious consequences be prevented? The British government, many scientists, and some executives are urging an all-out effort to keep the earth from warming more than two degrees Celsius. "The consequences of changes above two degrees are so dreadful that we need to avoid it," says BP's Mottershead. To hit that target, scientists calculate that CO2 concentrations in the atmosphere must be kept from reaching 550 ppm -- twice the preindustrial level. Getting there may require cutting the world's per capita emissions in half by 2100.

    Of course, there is great uncertainty surrounding the science of global warming. No one can really know the size and consequences of climate change. "Without a doubt, it will be a very different world -- a much warmer world," says David S. Battisti, atmospheric scientist at the University of Washington. But how much warmer? Which regions will be better or worse off? Will there be more floods and droughts? There's even a chance of surprises beyond the scary predictions of some computer models. "What's worrisome are the unknown unknowns," says Daniel P. Schrag, director of the Laboratory for Geochemical Oceanography at Harvard University. "We are performing an experiment that hasn't been done in millions of years, and no one knows exactly what's going to happen."

    What scientists do know is that carbon dioxide and a number of other gases act like the roof of a greenhouse. Energy from the sun passes through easily. Some of the warmth that normally would be radiated back out to space is trapped, however, warming the planet. With no greenhouse gases at all in the atmosphere, we would freeze. The earth's average temperature would be a cold -17C, not the relatively balmy 14C it is today.

    But the atmosphere is fiendishly complicated. If an increase in greenhouse gases also makes the sky cloudier, the added clouds may cool the surface enough to offset warming from CO2. Tiny particles from pollution also exert warming or cooling effects, depending on where they are in the atmosphere. Naysayers argue that it's just too soon to tell if greenhouse gases will significantly change the climate.

    Yet the climate is changing. In the past 100 years, global temperatures are up 0.6 degrees Celsius. The past few decades are the warmest since people began keeping temperature records -- altering the face of the planet.

    For instance, the Qori Kalis glacier in Peru is shrinking at a rate of 200 meters per year, 40 times as fast as in 1978. It's just one of hundreds of glaciers that are vanishing. Ice is disappearing from the Arctic Ocean and Greenland. More than a hundred species of animals have been spotted moving to cooler regions, and spring starts sooner for more than 200 others. "It's increasingly clear that even the modest warming today is having large effects on ecosystems," says ecologist Christopher B. Field of the Carnegie Institution. "The most compelling impact is the 10% decreasing yield of corn in the Midwest per degree [of warming.]"

    More worrisome, scientists have learned from the past that seemingly small perturbations can cause the climate to swing rapidly and dramatically. Data from ice cores taken from Greenland and elsewhere reveal that parts of the planet cooled by 10 degrees Celsius in just a few decades about 12,700 years ago. Five thousand years ago, the Sahara region of Africa was transformed from a verdant lake-studded landscape like Minnesota's to barren desert in just a few hundred years. The initial push -- a change in the earth's orbit -- was small and very gradual, says geochemist Peter B. deMenocal of Columbia University's Lamont-Doherty Earth Observatory. "But the climate response was very abrupt -- like flipping a switch."

    The earth's history is full of such abrupt climate changes. Now many scientists fear that the current buildup of greenhouse gases could also flip a global switch. "To take a chance and say these abrupt changes won't occur in the future is sheer madness," says Wallace S. Broecker, earth scientist at Lamont-Doherty. "That's why it is absolutely foolhardy to let CO2 go up to 600 or 800 ppm."

    Indeed, Broecker has helped pinpoint one switch involving ocean currents that circulate heat and cold. If this so-called conveyor shuts down, the Gulf Stream stops bringing heat to Europe and the U.S. Northeast. This is not speculation. It has happened in the past, most recently 8,200 years ago.

    Can it happen again? Maybe. A recent Pentagon report tells of a "plausible...though not the most likely" scenario, in which the conveyor shuts off. "Such abrupt climate change...could potentially destabilize the geopolitical environment, leading to skirmishes, battles, and even war," it warns.

    There are already worrisome signs. The global conveyor is driven by cold, salty water in the Arctic, which sinks to the bottom and flows south. If the water isn't salty enough -- thus heavy enough -- to sink, the conveyor shuts down. Now, scientists are discovering that Arctic and North Atlantic waters are becoming fresher because of increased precipitation and melting. "Over the past four decades, the subpolar North Atlantic has become dramatically less salty, while the tropical oceans have become saltier," observed William B. Curry of the Woods Hole Oceanographic Institution in recent congressional testimony. "These salinity changes are unprecedented in the relatively short history of the science of oceanography."

    If the global switch does flip, an Ice Age won't descend upon Europe, scientists now believe. But that doesn't mean the consequences won't be severe. The sobering lesson from the past is that the climate is a temperamental beast. And now, with the atmosphere filling with greenhouse gases, "the future may have big surprises in store," says Harvard's Schrag.

    In some scenarios, the ice on Greenland eventually melts, causing sea levels to rise 18 feet. Melt just the West Antarctic ice sheet as well, and sea levels jump another 18 feet. Currently shrinking glaciers may mean threats to water supplies for farmers and cities. Meanwhile, higher temperatures can cut crop yields, inhibit rice germination, and devastate biologically vital ecosystems like coral reefs. A paper in the July 16 issue of Science suggests that increasing CO2 levels in the ocean could affect the growth of marine life, with consequences for the oceanic food chain.

    Prevent or Adapt?
    Perhaps the central debate in global warming now is not about the underlying science, but whether it's better -- and cheaper -- to take steps to prepare for or prevent climate change now, or to simply roll with the punches if and when it happens. Opponents of greenhouse-gas curbs say we should be able to adapt to a warmer world or even cool it back down. "I'm convinced there will be engineering schemes that will allow our children's children to have whatever climate they want," says Robert C. Balling Jr., a climatologist at Arizona State University and coauthor of The Satanic Gases, which argues that the worries are vastly overblown.

    Yes, human beings can adapt, advocates of immediate action retort. But why run even the small risk of catastrophic changes, when important steps can be taken at a modest cost now? A British government panel, for instance, concluded that the cost of its share of the task of limiting the level of CO2 to 550 ppm would be about 1% of Britain's gross domestic product.

    Compare that, says Sir David King, with the cost of a single flood breaking through the barrier in the Thames River -- some 30 billion pounds, or 2% of current GDP. "Common sense says that it's time to purchase some low-cost insurance now," says economist Paul R. Portney, president of Resources for the Future.

    The Business Response
    When CEOs contemplate global warming, they see something they dread: uncertainty. There's uncertainty about what regulations they will have to meet and about how much the climate will change -- and uncertainty itself poses challenges. Insurance giant Swiss Re sees a threat to its entire industry. The reason: Insurers know how to write policies for every conceivable hazard based on exhaustive study of the past. If floods typically occur in a city every 20 years or so, then it's a good bet the trend will continue into the future. Global warming throws all that historical data out the window.

    One of the predicted consequences of higher greenhouse-gas levels, for instance, is more variable weather. Even a heat wave like the one that gripped Britain in 1995 led to losses of 1.5 billion pounds, Swiss Re calculates. So an increase in droughts, floods, and other events "could be financially devastating," says Christopher Walker, a Swiss Re greenhouse-gas expert.

    That's why Swiss Re has been pressing companies to plan for possible effects of warming. Lenders may require beefed-up flood insurance before issuing mortgages. Chipmakers must find replacements for greenhouse-gas solvents. Utilities need to prepare grids to handle bigger loads and to boost power from renewable sources. Oil companies need to think about a future where cars use less gas -- or switch to hydrogen.

    Swiss Re says the word is getting out, but not fast enough. In a recent survey, "80% of CEOs said that climate change was a potential risk, but only 40% were doing something about it," says Walker. "That's not good to hear for insurers."

    Shareholders are also demanding that companies assess the risks of global warming and devise coping strategies. Moreover, multinationals have no choice but to plan for emissions cuts because of the coming EU carbon limits and possible restrictions on other greenhouse gases.

    Intel Corp. (INTC ), for example, is worried the EU could ban the use of perfluorocarbons (PCF), chemicals used in chipmaking that are potent greenhouse gases. "We are looking for substitutes but don't have any yet," says Intel's Stephen Harper. "We decided to craft a worldwide agreement to reduce PFC emissions 10% by 2010 -- upwards of a 90% reduction per chip. We wanted to show leadership and not have the EU regulate us."

    Utilities face the greatest threat since the bulk of the power they generate comes from climate-changing fossil fuels. That's why AEP, Cinergy Corp. (CIN ), and others are probing new technologies that would enable them to capture the carbon as coal is burned. That carbon could then be pumped deep into the ground to be stored for thousands of years. AEP has helped drill a test well in West Virginia to see if this sort of "carbon sequestration" is feasible and safe. And dozens of utilities are turning to alternative fuels, from wind to biomass. Florida Power & Light Co. now has 42 wind power facilities and has pushed energy efficiency, reducing emissions and eliminating the need to build 10 midsize power plants, according to Randall R. LaBauve, vice-president for environmental services. "We are seeing more companies committed to voluntary or even mandatory reductions," he says. Renewable energy, not counting hydropower, now produces only 2% of the nation's electricity. But some states -- along with Presidential candidate John Kerry -- are proposing that this be increased to as high as 20%.

    Who Will Lead?
    Even without mandates, scores of companies are taking concrete actions. "The science debate goes on, but we know enough to move now," explains AEP Chief Executive Michael G. Morris. It helps that thwarting global warming often brings cost savings and business benefits. Indeed, one goal of the newly formed Climate Group is to share tales of how climate strategies helped the bottom line. "The ones who have been at it for a while are finding they can do more than is asked for in Kyoto, and are achieving all kinds of benefits," says Northrop. BP, for instance, developed its own internal strategy for trading carbon emissions. That prompted a companywide search to find the lowest-cost reductions. Many of the measures were simple, such as identifying and plugging leaks. The overall result: a 10% reduction in emissions and a $650 million boost to the company in three years.

    Climate-savvy execs are hoping that when carbon limits are imposed, they'll get credit for actions already taken. But they're also anticipating big future opportunities. GE bought Enron Corp.'s wind business and a solar energy company in addition to doing research on hydrogen and lower-emission jet engines and locomotives. "We can help our customers meet the challenges they are going to face," says Stephen D. Ramsey, GE's environmental chief. In Arizona, startup Global Research Technologies LLC is developing systems that use solvents to grab CO2 out of the air and isolate it for disposal.

    Given this progress, many scientists wonder why the world -- and especially the U.S. -- isn't moving faster to reduce the chances that global warming will bring nasty surprises. The reason for the inaction is "not the science and not the economics," says G. Michael Purdy, director of Lamont-Doherty. "Rather it is the lack of public knowledge, the lack of leadership, and the lack of political will."

    The Bush Administration counters that taking steps is simply too costly. Imposing limits on the U.S. would throttle growth and put America at a competitive disadvantage around the world. "No nation will mortgage its growth and prosperity to cut greenhouse-gas emissions," says Energy Secretary Abraham. In any case, the White House is not ignoring the issue. It has called for voluntary reductions and it is funding research into new technologies. "If we are successful in developing carbon sequestration and cars that run on hydrogen fuel cells, that solves most of the problem with global warming," Abraham argues. "We may disagree on targets, but no one is going to reach any targets if we don't make these investments."

    But most experts believe that mandatory curbs are essential and that they can be implemented at reasonable cost. Indeed, as states jump in with their own patchwork of rules, execs are beginning to say that it may be time to push for uniform national limits. That's what happened in 1990 with pollution rules. Faced with the prospect of dozens of state regulations, companies helped push for federal Clean Air Act amendments that reduced sulfur dioxide emissions through a market-based trading system. The law was a huge success. "We reduced emissions ahead of schedule and at lower cost," says Xcel Energy CEO Brunetti. "It's a great example of what can be done."

    The same sort of trading scheme would bring similarly inexpensive greenhouse-gas reductions, many economists, politicians, and execs believe. The EU plan puts a cap on emissions for each country and allows emitters to buy and sell permits to release certain amounts of emissions. In the U.S., a market for trading carbon emissions -- the Chicago Climate Exchange -- already operates. And a bill to set up a cap-and-trade scheme, introduced by Senators John McCain and Joseph I. Lieberman (D-Conn.), is expected to win more votes than the 43 it garnered -- against the odds -- last year.

    These steps are just the beginning, though. Even drastic measures -- such as implementing revolutionary energy technologies or grabbing carbon from the air -- won't stop this great global experiment from being conducted. "We won't cure this problem," cautions Henry Jacoby, co-director of Massachusetts Institute of Technology's Joint Program on the Science & Policy of Global Change. "The hope is that we can lower the risk of some of the more possible damaging outcomes." Companies and nations have begun to respond, but there is a long way to go, and only two choices: Get serious about global warming -- or be prepared for the consequences.


    By John Carey, with Sarah R. Shapiro in New York


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  • August 6, 2004

    OP-ED COLUMNIST


    Failure of Leadership


    By BOB HERBERT





    Anthony Dixon and Adam Froehlich were best friends who grew up in the suburbs of southern New Jersey, not far from Philadelphia. They went to junior high school together. They wrestled on the same team at Overbrook High School in the town of Pine Hill. They enlisted in the Army together in 2002. And both died in Iraq, in roadside bombings just four months apart.


    Specialist Dixon was killed on Sunday in Samarra. Specialist Froehlich was killed in March near Baquba. They were 20 years old.


    No one has a clue how this madness will end. As G.I.'s continue to fight and die in Iraq, the national leaders who put them needlessly in harm's way are now flashing orange alert signals to convey that Al Qaeda - the enemy that should have been in our sights all along - is poised to strike us again.


    It's as if the government were following a script from the theater of the absurd. Instead of rallying our allies to a coordinated and relentless campaign against Al Qaeda after Sept. 11, we insulted the allies, gave them the back of our hand and arrogantly sent the bulk of our forces into the sand trap of Iraq.


    Now we're in a fix.


    The war in Iraq has intensified the hatred of America around the world and powerfully energized Al Qaeda-type insurgencies. At the same time, it has weakened our defenses by diverting the very resources we need - personnel, matériel and boatloads of cash - to meet the real terror threats.


    President Bush's re-election mantra is that he's the leader who can keep America safe. But that message was stepped on by the urgent, if not frantic, disclosures this week by top administration officials that another Al Qaeda attack on the United States might be imminent.


    A debate emerged almost immediately about whether the intelligence on which those disclosures were based was old or new, or a combination of both. Nevertheless, because of the growing sense of alarm, there was an expansion of the already ubiquitous armed, concrete-fortified sites in New York City and Washington.


    The pressure may be getting to Mr. Bush. He came up with a gem of a Freudian slip yesterday. At a signing ceremony for a $417 billion military spending bill, the president said: "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we."


    The nation seems paralyzed, unsure of what to do about Iraq or terrorism. The failure of leadership that led to the bonehead decision to invade Iraq remains painfully evident today. Nobody seems to know where we go from here.


    What Americans need more than anything else right now is some honest information about the critical situations we're facing.


    What's the military mission in Iraq? Can it be clearly defined? Is it achievable? At what cost and over what time frame? How many troops will be needed? How many casualties are we willing to accept? And how much suffering are we willing to endure here at home in terms of the domestic needs that are unmet?


    Neither Lyndon Johnson nor Richard Nixon was honest with the American people about Vietnam, and the result was a monumental tragedy. George W. Bush has not leveled with the nation about Iraq, and we are again trapped in a long, tragic nightmare.


    As for the so-called war on terror, there is no evidence yet that the administration has a viable plan for counteracting Al Qaeda and its America-hating allies, offshoots and imitators. Whether this week's clumsy sequence of press conferences, leaks and alerts was politically motivated or not, the threat to the U.S. is both real and grave. And it can't be thwarted with military power alone.


    Does the administration have any real sense of what motivates the nation's enemies? Does it understand the ways in which American policies are empowering its enemies? Does it grasp the crucial importance of international alliances and coordinated intelligence activity in fighting terror? And is it even beginning to think seriously about lessening our debilitating dependence on Middle Eastern oil?


    The United States is the greatest military and economic power in the history of the planet. But it lacks a unifying sense of national purpose at the moment, and seems uncertain, even timid, as the national security challenges continue to mount. That is what a failure of leadership can do to a great power.


     



    August 6, 2004

    OP-ED COLUMNIST


    What About Iraq?


    By PAUL KRUGMAN





    A funny thing happened after the United States transferred sovereignty over Iraq. On the ground, things didn't change, except for the worse.


    But as Matthew Yglesias of The American Prospect puts it, the cosmetic change in regime had the effect of "Afghanizing" the media coverage of Iraq.


    He's referring to the way news coverage of Afghanistan dropped off sharply after the initial military defeat of the Taliban. A nation we had gone to war to liberate and had promised to secure and rebuild - a promise largely broken - once again became a small, faraway country of which we knew nothing.


    Incredibly, the same thing happened to Iraq after June 28. Iraq stories moved to the inside pages of newspapers, and largely off TV screens. Many people got the impression that things had improved. Even journalists were taken in: a number of newspaper stories asserted that the rate of U.S. losses there fell after the handoff. (Actual figures: 42 American soldiers died in June, and 54 in July.)


    The trouble with this shift of attention is that if we don't have a clear picture of what's actually happening in Iraq, we can't have a serious discussion of the options that remain for making the best of a very bad situation.


    The military reality in Iraq is that there has been no letup in the insurgency, and large parts of the country seem to be effectively under the control of groups hostile to the U.S.-supported government.


    In the spring, American forces won an impressive military victory against the Shiite forces of Moktada al-Sadr. But this victory hasn't curbed the movement; Mr. Sadr's forces, according to many reports, are the de facto government of Sadr City, a Baghdad slum with 2.5 million people, and seem to have strengthened their position in Najaf and other cities.


    In Sunni areas, Falluja is enemy territory. Elsewhere in western Iraq, according to reports from Knight Ridder and The Los Angeles Times, U.S. forces have hunkered down, manning watch posts but not patrolling. In effect, this cedes control of the population to the insurgents. And everywhere, of course, the mortar attacks, bombings, kidnappings and assassinations go on.


    Despite a two-month truce between Mr. Sadr and the United States military, heavy fighting broke out yesterday in Najaf, where a U.S. helicopter was shot down. There was also sporadic violence in Sadr City - where, according to reporters, American planes appeared to drop bombs - and in Basra.


    Meanwhile, reconstruction has languished.


    This summer, like last summer, there are severe shortages of electricity. Sewage is tainting the water supply, and typhoid and hepatitis are on the rise. Unemployment remains sky-high. Needless to say, all this undermines any chance for the new Iraqi government to gain wide support.


    My point in describing all this bad news is not to be defeatist. It is to set some realistic context for the political debate.


    One thing is clear: calls to "stay the course" are fatuous. The course we're on leads downhill. American soldiers keep winning battles, but we're losing the war: our military is under severe strain; we're creating more terrorists than we're killing; our reputation, including our moral authority, is damaged each month this goes on.


    So am I saying we should cut and run? That's another loaded phrase. Nobody wants to see helicopters lifting the last Americans off the roofs of the Green Zone.


    But we need to move quickly to end our position as "an occupying power in a bitterly hostile land," the fate that none other than former President George H. W. Bush correctly warned could be the result of an invasion of Iraq. And that means turning real power over to Iraqis.


    Again and again since the early months after the fall of Baghdad - when Paul Bremer III canceled local elections in order to keep the seats warm for our favorite exiles - U.S. officials have passed up the chance to promote credible Iraqi leaders. And each time the remaining choices get worse.


    Yet we're still doing it. Ayad Allawi is, probably, something of a thug. Still, it's in our interests that he succeed.


    But when Mr. Allawi proposed an amnesty for insurgents - a move that was obviously calculated to show that he wasn't an American puppet - American officials, probably concerned about how it would look at home, stepped in to insist that insurgents who have killed Americans be excluded. Inevitably, this suggestion that American lives matter more than Iraqi lives led to an unraveling of the whole thing, so Mr. Allawi now looks like a puppet.


    Should we cut and run? No. But we should get realistic, and look in earnest for an exit.


     


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August 5, 2004


  • August 5, 2004

    GUEST COLUMNIST


    Criticism Starts at Home


    By HENRY LOUIS GATES Jr.





    Lagos, Nigeria


    Wole Soyinka's friends might be forgiven for devoting two weeks to mark his 70th birthday this summer. Mr. Soyinka - a Nobel laureate in literature as well as a political activist of prodigious energies - has earned a reputation as the conscience of Nigeria, and in a nation where the average life span is 52, turning 70 is achievement enough. In his case, though, it's nothing short of a miracle.


    When he was 33, he was imprisoned without trial for trying to broker a peace with Biafran secessionists, and spent 24 months in solitary confinement in a 4-by-8-foot cell, which he memorably described in a poem written on toilet paper with homemade ink and smuggled out of prison. He has been arrested at least nine times since then, most recently in May at a rally demanding the resignation of Nigeria's president, Olusegun Obasanjo, whose re-election is widely believed to have involved vote fraud.


    Mr. Soyinka has been in exile three times (I studied with him at Cambridge during one of those periods), and, he recalls, he has had a price on his head at least five times, most notoriously in 1997, when he was tried in absentia for treason and sentenced to death by the brutal military regime of Gen. Sani Abacha. But if the spirit of African democracy has a voice and a face, they belong to Wole Soyinka.


    In the mid-70's, while some black civil rights leaders, such as CORE's Roy Innis, refused to criticize Idi Amin's murderous rampages in Uganda out of some misbegotten sense of racial solidarity, Mr. Soyinka relentlessly campaigned for Mr. Amin's overthrow. When other blacks castigated him for "race betrayal," Mr. Soyinka replied that "criticism, like charity, starts at home."


    It also starts with broken dreams. Near the end of Lorraine Hansberry's 1959 play, "A Raisin in the Sun," a young woman challenges her African boyfriend's fond hopes for decolonization: "You think you can patch up the world. Cure the Great Sore of Colonialism with the 'penicillin of Independence.' " But what comes after? "What about all the crooks and thieves and just plain idiots who will come to power to steal and plunder the same as before, only now they will be black and do it in the name of the new independence?"


    A year later, Nigeria and 15 other countries declared their independence. Yet today, according to the nonprofit organization Freedom House, only about a fifth of sub-Saharan Africa would qualify as "free." Nor is democracy alone any guarantee of sound governance; Mr. Soyinka told me he likens South Africa's president, Thabo Mbeki, who spent years denying the realities of H.I.V./AIDS (even as the epidemic's toll exceeded the number of people shipped from Africa in the trans-Atlantic slave trade), to imams who fought a WHO campaign to eradicate polio: "I find his position virtually as illiterate as the position of Muslim fundamentalists here in Nigeria who say that they read somewhere in the Koran that polio immunization is anti-Islamic."


    Yet if Africa has become a geographic shorthand for poverty, disease and tyranny, it is also a place where, as Mr. Soyinka's example reminds us, a single voice of conscience can have an enormous reverberation.


    These days, Mr. Soyinka sees the greatest threat to peace and democracy in the spread of religious fundamentalism, and the proliferation of the "quasi state," which "sets its own laws and strikes at will," and would sentence the world "to life imprisonment behind the bars of fear." "The secular ideologue might be largely content with brooking no dissent, through the dictum I am right, you are wrong," he argued in a recent lecture, "but the ultimate ambition of the fanatic within the theocratic order is I am right, you are dead."


    For Mr. Soyinka, these issues are indeed close to home: not only have 12 states in northern Nigeria adopted Sharia, or traditional Islamic law, but Osama bin Laden has called Nigeria a nation in need of "liberation."


    In the face of this, Mr. Soyinka concludes, a choice must be made. "It's my duty to fight those who have chosen to belong to the party of death, those who say they receive their orders from God somewhere and believe they have a duty to set the world on fire to achieve their own salvation, whether they are in the warrens of Iraq, or in the White House," he said to me. "I prefer to be a card-carrying member of the party of life."


     


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August 3, 2004


  • SJSU president quits over health

    DECISION AFTER 2 WEEKS ON JOB LEAVES CAMPUS STUNNED, FACING NEW SEARCH

    Mercury News


    Just two weeks into his new job, San Jose State University's president stunned the campus by resigning abruptly, citing health problems that have not been disclosed.


    Monday's announcement of Paul Yu's departure leaves the 28,000-student campus without a permanent leader three weeks before the fall semester. And it means months of uncertainty for the school, which struggled for more than a year to find a suitable replacement for its popular former president, Robert Caret.


    ``I'm sitting here in disbelief,'' said Caret, who left San Jose to lead Towson University in Maryland. ``It makes it really difficult on the campus to be without permanent leadership for this long. I think Joe Crowley did an exceptional job as an interim and the campus was ready for Paul's leadership. It's sad to see it all fall apart.''


    Yu, 62, an immigrant from China who ran a small campus in the New York public university system, was hailed as the perfect combination of academic and visionary for the diverse San Jose State campus. He followed Joseph Crowley, who served as interim president from May 2003 until last month. During that time, a search committee recommended three finalists, but California State University trustees concluded that none was a good match. A second effort led to Yu.


    California State University Chancellor Charles Reed on Monday quickly named Don Kassing, a longtime campus administrator, as acting president, and said he would announce an interim president in ``the near future.'' The chancellor will appoint a new search committee to find candidates to replace Yu in the $237,000-a-year job.


    Reed said he flew to San Jose on Friday to meet with Yu and his wife, Ellen, after Yu said they needed to discuss a serious matter.


    ``All I can say is it's a serious health problem and Paul needs to get his health back,'' Reed said Monday. ``We need to do everything we can to help him out.''


    Yu was traveling to New York on Monday and could not be reached for comment. A spokesman for the State University of New York, where Yu was last employed as president of its Brockport campus, said Yu would return to the SUNY system as a tenured faculty member ``and his future will be determined in good course.''


    Kassing, 62, vice president for administration and finance for the past 11 years, said the university's management team would focus primarily on getting the campus ready for its Aug. 23 opening.


    ``There's just a very deep regret we lost him,'' Kassing said of Yu.


    Campus leaders said Monday that the university is in a good position to move ahead, even without Yu. Several initiatives launched by Crowley are proceeding, including a new charitable foundation.


    Yu's decision ``came out of the blue,'' Reed said. ``It's sad and I regret it, and Paul felt badly, too. But it's one of those things you have to deal with.''


    Reed said he could not discuss Yu's health but said, ``I think it's something that occurred in the last eight to 10 weeks and it didn't get any better.''


    Reed said he believes Yu's decision to return to SUNY had something to do with maintaining his health insurance, which was about to expire. Reed said Yu will be on leave for a semester from SUNY, giving him time to regain his health.


    Yu had hip replacement surgery before the end of the school year at Brockport.


    Reed and CSU trustees said they chose Yu over another good candidate, Richard S. Jarvis, former chancellor of the Oregon University System, because Yu's vision for how to move the university forward gave him the edge. At Brockport, Yu won praise for raising academic standards and leading major planning and fundraising efforts.


    Yu, whose official start date was July 15, had shown every sign he intended to stay.


    He had unpacked the boxes in his office, moved into a condominium across from campus with his wife and helped his mother settle into her own apartment. He had met with the campus vice presidents, the provost and the Academic Senate leaders.


    Yu even made it to the Silicon Valley Manufacturing Group's annual barbecue, a prime meet-and-greet event featuring dozens of top valley executives and elected officials. At one point during the reception, San Jose State alumnus Carl Guardino noticed Yu sitting by himself away from the festivities.


    ``I thought perhaps he was just shy, so I offered introductions to more people,'' said Guardino, the group's president. Yu said he was resting for a few minutes and mentioned something about having had surgery, Guardino recalled.


    As news of Yu's resignation spread across the leafy campus Monday, faculty members and students expressed shock at his brief tenure -- and concern over his health.


    An aviation student who attempted to hand-deliver a letter to Yu on Monday morning learned of the resignation when he arrived at the president's office.


    ``I was shocked,'' Kenneth Pierce said. ``We had the perfect candidate. The alumni were very thrilled to have an Asian-American. To have that gone sets us all back.''


    The chairman of the history department, George Vasquez, said he was sorry to see Yu go.


    ``He seemed different than what we've had before,'' Vasquez said. ``This guy was much more of an academician. He said he was going to do everything he could to raise academic standards. That's what we need around here.''


    Annette Nellen, chairwoman of the Academic Senate, which works closely with the president, said Yu's departure was disappointing.


    ``It's always a concern when you don't have a president, and I think there will be a little bit of uncertainty,'' Nellen said, but, ``I think people realize we did pretty well for the last year without a permanent president.''


    Not everyone was surprised by the news.


    Pam Stacks, interim associate vice president for graduate studies and research, recalled that during Yu's campus visit as a candidate, he seemed fatigued by the end of the day. And when he arrived last month, she said, his schedule was tightly controlled, and some of his appointments were postponed.


    ``We were very fortunate someone with his intellect and capacity has given it a go,'' Stacks said.


    Crowley called Yu's departure ``sad.''


    ``Unfortunately, what's happened has happened,'' said Crowley, who stepped down last month. ``But the campus is strong enough to weather this problem. I'm confident about the future of the university, both short term and long.''


     


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    Posted on Tue, Aug. 03, 2004



    What succession planning?

    SILICON VALLEY FIRMS ARE OFTEN UNPREPARED TO REPLACE THEIR CEO

    Mercury News

    Apple Computer avoided a management crisis after Steve Jobs' successful cancer surgery, but the incident should jolt other tech firms that are highly reliant on high-profile CEOs, experts say.


    The Cupertino computer maker isn't the only Silicon Valley company lacking an obvious successor in case its top boss were suddenly out of the picture. To the chagrin of management experts, many of the valley's top technology companies, including Oracle, Hewlett-Packard and Cisco, appear to be perilously dependent on their iconic CEOs.


    Silicon Valley's business culture is partly to blame: It traditionally has worshiped its visionary company founders and charismatic leaders. Tech companies' rapid product cycles add to a short-term mentality. And executives working on cutting-edge technologies are loath to embrace stodgy management structures.


    Silicon Valley's top brass ``have a high propensity for being monarchs,'' said Jeffrey Sonnenfeld, associate dean at the Yale School of Management.


    ``Silicon Valley is less prepared for almost everything related to management than other parts of the country,'' said Jeffrey Pfeffer, the Thomas D. Dee II professor of organizational behavior at Stanford Business School.


    Ideally, when a company faces a potential crisis like Jobs' recent scare with a treatable form of pancreatic cancer -- which the Apple chief revealed late Sunday -- there should be a successor already in place, experts say.


    Instead, for every valley company like Intel that makes ``succession planning'' a top priority, there are others lacking a clear No. 2. That's especially true in a place like Silicon Valley, where the top boss sometimes becomes a celebrity.


    ``McDonald's has Ronald McDonald. Jack in the Box has Jack. Technology companies have their CEOs,'' said Rob Enderle, an analyst with Enderle Group in San Jose.


    Among tech executives, agreed Sonnenfeld, ``there is a heightened concern for their own immortality.''


    `Just-in-time' hiring


    Often, too, companies are just too busy staying ahead of rapid-fire changes in their business to spend time putting long-term leadership plans in place. ``The typical company in the valley practices `just-in-time' hiring, and this carries over to succession planning,'' said Pfeffer.


    But valley companies would do well to learn from companies that have exceptional succession planning, experts say. Intel of Santa Clara is widely praised for having its CEO Craig Barrett work alongside his predecessor, Andy Grove, for years before taking the reins, and now for grooming Chief Operating Officer Paul Otellini to take Barrett's place when he retires next year.


    Intel spokeswoman Gail Dundas said shareholders and the board will make the final decision on Otellini as CEO. But leadership planning, she added, ``is a constant process'' at the Santa Clara company.


    Of course, at some valley companies long-term CEO planning sometimes falls apart.


    Take struggling server company Sun Microsystems. For years, CEO Scott McNealy, 49, relied on Ed Zander as his No. 2. But Zander eventually moved on to head Motorola. For a time afterward, McNealy had 13 executives reporting directly to him. In May, McNealy appointed software chief Jonathan Schwartz as Sun's president and chief operating officer, setting up the 38-year-old as his potential successor. Sun declined to comment on succession plans.


    At Hewlett-Packard, Chairman and CEO Carly Fiorina has no obvious successor in place -- a break from HP's past -- experts said.


    After HP bought Compaq in 2002, Compaq chief Michael Capellas served as HP's No. 2 executive. But he left in October 2002, to head Worldcom, now MCI. Fiorina didn't replace him with a new president, saying the existing structure suited the company at the time. Now, four major division chiefs who report to her are potential successors.


    HP said its board and management ``develops and reviews succession plans'' to ensure an array of qualified candidates.


    No obvious successor


    Cisco doesn't have an obvious successor to its über-salesman CEO John Chambers, but some analysts don't see that as too problematic. ``Each of the business units has a very strong leader there, any one of which could step into the role,'' said Enderle. ``But it would probably be wise to know which one.''


    Cisco did not return calls for comment.


    Larry Ellison, the charismatic founder and CEO of Oracle, has also run through his share of second-in-commands, analysts note. Now, ``it's not apparent what would happen if Larry left,'' said Enderle. Oracle has two co-presidents.


    In an e-mail statement, Oracle's chairman Jeff Henley said the company's board ``periodically reviews Oracle's succession planning as a regular part of our contingency planning.''


    Management experts say Silicon Valley boards of directors are becoming more professional in the wake of stricter rules for corporate governance. ``Any board has to be aware that on any given day the CEO could get hit by a bus or something could happen,'' said Joe Griesedieck, vice chairman of the Korn/Ferry executive search firm.







     


     


  • August 3, 2004

    OP-ED COLUMNIST


    Reading the Script


    By PAUL KRUGMAN





    A message to my fellow journalists: check out media watch sites like campaigndesk.org, mediamatters.org and dailyhowler.com. It's good to see ourselves as others see us. I've been finding The Daily Howler's concept of a media "script," a story line that shapes coverage, often in the teeth of the evidence, particularly helpful in understanding cable news.


    For example, last summer, when growth briefly broke into a gallop, cable news decided that the economy was booming. The gallop soon slowed to a trot, and then to a walk. But judging from the mail I recently got after writing about the slowing economy, the script never changed; many readers angrily insisted that my numbers disagreed with everything they had seen on TV.


    If you really want to see cable news scripts in action, look at the coverage of the Democratic convention.


    Commercial broadcast TV covered only one hour a night. We'll see whether the Republicans get equal treatment. C-Span, on the other hand, provided comprehensive, commentary-free coverage. But many people watched the convention on cable news channels - and what they saw was shaped by a script portraying Democrats as angry Bush-haters who disdain the military.


    If that sounds like a script written by the Republicans, it is. As the movie "Outfoxed" makes clear, Fox News is for all practical purposes a G.O.P. propaganda agency. A now-famous poll showed that Fox viewers were more likely than those who get their news elsewhere to believe that evidence of Saddam-Qaeda links has been found, that W.M.D. had been located and that most of the world supported the Iraq war.


    CNN used to be different, but Campaign Desk, which is run by The Columbia Journalism Review, concluded after reviewing convention coverage that CNN "has stooped to slavish imitation of Fox's most dubious ploys and policies." Seconds after John Kerry's speech, CNN gave Ed Gillespie, the Republican Party's chairman, the opportunity to bash the candidate. Will Terry McAuliffe be given the same opportunity right after President Bush speaks?


    Commentators worked hard to spin scenes that didn't fit the script. Some simply saw what they wanted to see. On Fox, Michael Barone asserted that conventioneers cheered when Mr. Kerry criticized President Bush but were silent when he called for military strength. Check out the video clips at Media Matters; there was tumultuous cheering when Mr. Kerry talked about a strong America.


    Another technique, pervasive on both Fox and CNN, was to echo Republican claims of an "extreme makeover" - the assertion that what viewers were seeing wasn't the true face of the party. (Apparently all those admirals, generals and decorated veterans were ringers.)


    It will probably be easier to make a comparable case in New York, where the Republicans are expected to feature an array of moderate, pro-choice speakers and keep Rick Santorum and Tom DeLay under wraps. But in Boston, it took creativity to portray the delegates as being out of the mainstream. For example, Bill Schneider at CNN claimed that according to a New York Times/CBS News poll, 75 percent of the delegates favor "abortion on demand" - which exaggerated the poll's real finding, which is that 75 percent opposed stricter limits than we now have.


    But the real power of a script is the way it can retroactively change the story about what happened.


    On Thursday night, Mr. Kerry's speech was a palpable hit. A focus group organized by Frank Luntz, the Republican pollster, found it impressive and persuasive. Even pro-Bush commentators conceded, at first, that it had gone over well.


    But a terrorism alert is already blotting out memories of last week. Although there is now a long history of alerts with remarkably convenient political timing, and Tom Ridge politicized the announcement by using the occasion to praise "the president's leadership in the war against terror," this one may be based on real information. Regardless, it gives the usual suspects a breathing space; once calm returns, don't be surprised if some of those same commentators begin describing the ineffective speech they expected (and hoped) to see, not the one they actually saw.


    Luckily, in this age of the Internet it's possible to bypass the filter. At c-span.org, you can find transcripts and videos of all the speeches. I'd urge everyone to watch Mr. Kerry and others for yourself, and make your own judgment.


     


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August 2, 2004


  • August 2, 2004

    OP-ED COLUMNIST


    All the Pretty Words


    By BOB HERBERT





    They were able to sustain the eloquence for most of the week, which had to be a surprise. Bill Clinton told us that "strength and wisdom are not opposing values." Barack Obama called America "a magical place." John Kerry said, "The high road may be harder, but it leads to a better place."


    There was no shortage of pretty words and promises at the Democratic National Convention in Boston last week. But there's a big difference between the rigidly crafted reality at the heart of a political campaign and the reality of the rest of the world.


    "Practical politics," said Henry Adams, "consists in ignoring facts."


    The facts facing the United States as George W. Bush and John Kerry joust for the presidency are too grim to be honestly discussed on the stump. No one wants to tell cheering potential voters that the nation has sunk so deep into a hole that it will take decades to extricate it. So the candidates are trying to outdo one another in expressions of sunny optimism.


    President Bush and Dick Cheney deride "the same old pessimism" of the Democrats. Mr. Kerry counters by saying to the president, "Let's be optimists, not just opponents."


    The voters deserve better in an era of overwhelming problems. Consider Iraq. Neither the president nor Mr. Kerry knows what to do about this terrible misadventure that has cost more than 900 American and thousands of innocent Iraqi lives. The war is draining the U.S. Treasury and has made the Middle East more, not less, unstable. Dreams of democracy taking root in the garden of Baghdad and then spreading like the flowers of spring throughout the Middle East have given way to the awful reality of bombings, kidnappings and beheadings.


    You won't hear straight talk about this all-important matter from either camp. And you can forget the chatter about an exit strategy for American troops. There isn't one.


    Or consider Afghanistan. Not long ago American officials were claiming a decisive victory and the Bush administration was trumpeting the liberation of Afghan women from the clutches of the Taliban. But the proclamations of success were premature. Osama bin Laden and the Taliban leader Mullah Muhammad Omar are nowhere to be found. Warlords and insurgents are in control of much of the country and the growth industry is the opium trade. The extraordinarily courageous group Doctors Without Borders is packing its bags and withdrawing from Afghanistan after 24 years because five of its staff members were murdered and the government will not bring the killers to justice. On Friday the U.S. government warned American citizens against traveling to Afghanistan because of the danger of being kidnapped or killed.


    Some victory.


    Employment here in America is another topic on which the presidential candidates will not tell the voters the cold, hard truth. There are not nearly enough jobs available for the millions upon millions of unemployed and underemployed Americans who want and desperately need gainful employment. The population in need of jobs is expanding daily and no one has a viable plan for accommodating it. Families are being squeezed like Florida oranges as good jobs with good benefits - health insurance, paid vacations and retirement security - are going the way of the afternoon newspaper and baseball double-headers.


    These are incredibly difficult issues and an honest search for solutions can only come from a sustained effort by the broadest array of America's brightest and wisest men and women. What the U.S. really needs is leadership that could marshal that effort.


    Unfortunately, we've become a society addicted to the fantasy of a quick fix. We want our solutions encompassed in a sound bite. We want our leaders to manipulate reality to our liking.


    So there was President Bush in a hard-hit industrial region of Ohio over the weekend telling voters, "The economy is strong and it's getting stronger." And the Kerry-Edwards team is assuring one and all that "help is on the way."


    The voters may deserve better, but there's a real question about whether they want better. It may well be that candidates can't tell voters the truth and still win. If that's so, then democracy American-style may be a lot more dysfunctional than even the last four years has indicated.


     


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    August 2, 2004

    OP-ED CONTRIBUTOR


    What Would Machiavelli Do?


    By ROBERT WRIGHT





    John Kerry, tough-talking war hero, cut an impressive figure at last week's convention, maybe impressive enough to threaten the Republicans' time-honored dominance of the manliness issue - that is, national security. But you can already hear the Republican reply taking shape: O.K., you've shown us your muscles, but where's the beef? What exactly is your strategy for the war on terrorism?


    It's a tricky question. National security challenges rarely lend themselves to the programmatic laundry lists that are tossed at domestic problems, and global terrorism may be the most complex national security challenge ever. That's why the few specifics Mr. Kerry did offer on the terrorism front were underwhelming (he's against closing fire stations, for example). Still, there is a way for Mr. Kerry and John Edwards to frame an antiterrorism strategy that, though not programmatic, would be genuinely illuminating and politically powerful, cutting to the core of President Bush's greatest national security failure. And they may be closer to this formula than they realize, for it fits naturally into the rhetorical framework the Democrats built at their convention.


    Mr. Kerry rightly stressed how thoroughly Mr. Bush has lowered the world's opinion of the United States. In elaborating, he said that America can't fight a war on terrorism without allies. That's true, but it doesn't by itself underscore the penchant for complex thought that Mr. Kerry attributed to himself in his acceptance speech. Even Mr. Bush now seems to realize that antagonizing allies is a bad idea. In fact, since the dawn of recorded history, just about everyone has recognized this.


    What is new, and uniquely challenging, about the war on terrorism is that hatred of America well beyond the bounds of its alliance now imperils national security. Fervent anti-Americanism among Muslims is the wellspring of terrorism, regardless of whether they live in countries whose governments cooperate with us. Yet this is a part of world opinion Mr. Kerry didn't talk about.


    His reticence is understandable. Fretting about Muslim opinion sounds a little like worrying that your enemy may not like you (even though, of course, the Muslims you're worrying about are the ones who haven't signed on with the enemy but may be leaning that way). So when Democrats talk about Muslim hatred, they're just begging to be called wimps by all those right-wing bloggers who have Machiavelli's dictum - better to be feared than loved - tattooed across their chests.


    But, however steep the rhetorical challenge posed by the fact that real men don't need love, the Democrats have already gone a ways toward meeting it, and they've done so on the strength of a single word: respect. As anyone who tuned into the convention for more than a few minutes is probably aware, the Democrats want an America that is "respected in the world." And even if Mr. Kerry's concrete elaborations on this theme were about the importance of allies, respect is the perfect entrée to the issue of Muslim hatred - a way to confront Machiavelli's dichotomy without winding up on the girlie-man side of it.


    We don't need to be loved in the Muslim world, but we need to be respected. And even real men want respect. After all, strength can command respect. In fact, instilling fear can help instill respect. It's just that fear isn't enough. (This could be the epitaph of Mr. Bush's foreign policy: Apparently fear wasn't enough.)


    For a nation to be thoroughly respected, the perception of its strength needs to be matched by a perception of its goodness. It helps to be thought of as just, generous, conscientious, mindful of the opinion of others, even a little humble. In lots of little ways, Mr. Bush has given the world the impression that we're not these things.


    Mr. Kerry touched on some of this, noting that global leadership means inspiring more than fear. But he didn't carry the respect theme explicitly into the context of Muslim opinion.


    Doing so wouldn't by itself amount to a strategy for the war on terrorism. But it would add a new dimension to the Democrats' emerging critique of the president's foreign policy - and a potent one. The plummeting regard for America in Muslim nations like Indonesia over the last few years is a well-documented fact. If voters can see the link between this and the security of their children - see that for every million Muslims who hate America, one will be willing to fly an airplane into a shopping mall - then President Bush will have a lot of explaining to do. And existing criticisms of his policies will acquire new force. (Given how unpopular the Iraq war was known to be in the Muslim world, wasn't the lack of postwar planning beyond inexcusable?)


    The Kerry-Edwards ticket might also profit from the fact that much of this Muslim antipathy seems to be focused on President Bush personally. (His unfavorability ratings in Morocco and Jordan are 90 percent and 96 percent, respectively.) Changing administrations - "rebranding" America - could help give us a fresh start.


    Thoroughly addressing the issue of Muslim hatred would pose some risks. Mr. Kerry would have to stress that he's willing to antagonize Muslims - or anyone else - when essential American principles or obligations are involved. And even that assurance wouldn't wholly buffer him from right-wing flak.


    But the very difficulty of taking on this issue is part of its virtue. Mr. Kerry's biggest manhood problem has nothing to do with Vietnam or the war on terrorism. Rather, it's the sense that he never attacks an issue unflinchingly - that he waffles on the tough ones, that his only constancy lies in the wordiness of his bromides. Maybe what he needs is to take a sensitive, complicated problem, lay down a core conviction, and stick with it through thick and thin.


    By the way, Machiavelli might approve. Though he favored fear over love, he said that being feared and loved is the best situation of all. And failing that, a leader at least "ought to inspire fear in such a way that, if he does not win love, he avoids hatred." If George W. Bush is too macho for Machiavelli, then surely John Kerry can make the case that Mr. Bush is too macho for America.



    Robert Wright, a senior fellow at the New America Foundation, is the author of "Nonzero: The Logic of Human Destiny."


     


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August 1, 2004


  • August 1, 2004

    GUEST COLUMNIST


    Breaking the Silence


    By HENRY LOUIS GATES JR.





    "Go into any inner-city neighborhood," Barack Obama said in his keynote address to the Democratic National Convention, "and folks will tell you that government alone can't teach kids to learn. They know that parents have to parent, that children can't achieve unless we raise their expectations and eradicate the slander that says a black youth with a book is acting white." In a speech filled with rousing applause lines, it was a line that many black Democratic delegates found especially galvanizing. Not just because they agreed, but because it was a home truth they'd seldom heard a politician say out loud.


    Why has it been so difficult for black leaders to say such things in public, without being pilloried for "blaming the victim"? Why the huge flap over Bill Cosby's insistence that black teenagers do their homework, stay in school, master standard English and stop having babies? Any black person who frequents a barbershop or beauty parlor in the inner city knows that Mr. Cosby was only echoing sentiments widely shared in the black community.


    "If our people studied calculus like we studied basketball," my father, age 91, once remarked as we drove past a packed inner-city basketball court at midnight, "we'd be running M.I.T." When my brother and I were growing up in the 50's, our parents convinced us that the "blackest" thing that we could be was a doctor or a lawyer. We admired Hank Aaron and Willie Mays, but our real heroes were people like Thurgood Marshall, Dr. Benjamin Mays and Mary McLeod Bethune.


    Yet in too many black neighborhoods today, academic achievement has actually come to be stigmatized. "We are just not the same people anymore," says the mayor of Memphis, Dr. Willie W. Herenton. "We are worse off than we were before Brown v. Board," says Dr. James Comer, a child psychiatrist at Yale. "And a large part of the reason for this is that we have abandoned our own black traditional core values, values that sustained us through slavery and Jim Crow segregation."


    Making it, as Mr. Obama told me, "requires diligent effort and deferred gratification. Everybody sitting around their kitchen table knows that."


    "Americans suffer from anti-intellectualism, starting in the White House," Mr. Obama went on. "Our people can least afford to be anti-intellectual." Too many of our children have come to believe that it's easier to become a black professional athlete than a doctor or lawyer. Reality check: according to the 2000 census, there were more than 31,000 black physicians and surgeons, 33,000 black lawyers and 5,000 black dentists. Guess how many black athletes are playing professional basketball, football and baseball combined. About 1,400. In fact, there are more board-certified black cardiologists than there are black professional basketball players. "We talk about leaving no child behind," says Dena Wallerson, a sociologist at Connecticut College. "The reality is that we are allowing our own children to be left behind." Nearly a third of black children are born into poverty. The question is: why?


    Scholars such as my Harvard colleague William Julius Wilson say that the causes of black poverty are both structural and behavioral. Think of structural causes as "the devil made me do it," and behavioral causes as "the devil is in me." Structural causes are faceless systemic forces, like the disappearance of jobs. Behavioral causes are self-destructive life choices and personal habits. To break the conspiracy of silence, we have to address both of these factors.


    "A lot of us," Mr. Obama argues, "hesitate to discuss these things in public because we think that if we do so it lets the larger society off the hook. We're stuck in an either/or mentality - that the problem is either societal or it's cultural."


    It's important to talk about life chances - about the constricted set of opportunities that poverty brings. But to treat black people as if they're helpless rag dolls swept up and buffeted by vast social trends - as if they had no say in the shaping of their lives - is a supreme act of condescension. Only 50 percent of all black children graduate from high school; an estimated 64 percent of black teenage girls will become pregnant. (Black children raised by female "householders" are five times as likely to live in poverty as those raised by married couples.) Are white racists forcing black teenagers to drop out of school or to have babies?


    Mr. Cosby got a lot of flak for complaining about children who couldn't speak standard English. Yet it isn't a derogation of the black vernacular - a marvelously rich and inventive tongue - to point out that there's a language of the marketplace, too, and learning to speak that language has generally been a precondition for economic success, whoever you are. When we let black youth become monolingual, we've limited their imaginative and economic possibilities.


    These issues can be ticklish, no question, but they're badly served by silence or squeamishness. Mr. Obama showed how to get the balance right. We've got to create as many opportunities as we can for the worst-off - and "make sure that every child in America has a decent shot at life." But values matter, too. We can't talk about the choices people have without talking about the choices people make.



    Henry Louis Gates Jr. will be a guest columnist for the Op-Ed page this week. Thomas L. Friedman is on leave until October, writing a book.


     


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    August 1, 2004

    Poor Countries, Rich Resources







    The World Bank has helped finance exploitation of oil, gas, coal and other minerals in the developing world, mainly through its private sector lending arm, even though this has rarely advanced the institution's mission of reducing poverty. Indeed, it often makes poverty worse.


    Three years ago, the bank's president, James Wolfensohn, commissioned a panel of experts to investigate how the bank should deal with these extractive industries. The panel concluded that the bank should stop financing oil projects completely by 2008 and should immediately begin a policy of supporting oil or gas extraction or mining only in countries with a well-established rule of law and effective regulation to ensure projects are well run.


    The bank's management has already rejected these conclusions, instead promising it will take these issues more seriously when making such investments. The bank's board, which will make its final decision this week, is likely to echo that position. But the management response smacks of business as usual. While it would be unwise for the bank to use the word never, it should embrace most of the review's recommendations for ensuring that its projects help the poor.


    Saying never to oil financing is counterproductive, though it is understandable that some people should urge that out of anger and frustration. It has become clear that plenty of poorly governed nations, including Nigeria, Angola, Ecuador and Venezuela, would probably have been better off had they never discovered oil or other valuable minerals. The discovery of these resources usually foments corruption, prevents the development of a diversified economy, props up dictators and fuels wars.


    But simply pretending those resources were never discovered is no development strategy. The challenge for the World Bank is to figure out how to help nations in the developing world take advantage of their natural riches, while making sure the poor benefit from them.


    Chad, one of the world's poorest nations, exemplifies why the World Bank's presence is desirable in some cases, even absent ironclad rule-of-law guarantees. As a partner in the development of oil fields there, the bank has forced Chad's dictator to accept a plan in which revenues are held in escrow abroad and will be directly spent on health, education and road programs. A revenue oversight committee of citizens is monitoring the process.


    The early indications do not suggest all this will be accomplished easily. The president spent part of the signing bonus on arms and the revenue oversight committee will include his brother-in-law as one of its members. But at least the plan is a step in the direction of giving the people of Chad a chance to benefit from their natural resources. In other places, like Equatorial Guinea, oil revenues go straight into the dictator's pockets. Countries like Chad have so few opportunities to develop that it seems prudent to leave open the possibility of bank involvement in some cases.



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    August 1, 2004

    THE GREAT DIVIDE


    Amid China's Boom, No Helping Hand for Young Qingming


    By JOSEPH KAHN and JIM YARDLEY





    PUJIA, China — His dying debt was $80. Had he been among China's urban elite, Zheng Qingming would have spent more on a trendy cellphone. But he was one of the hundreds of millions of peasants far removed from the country's new wealth. His public high school tuition alone consumed most of his family's income for a year.


    He wanted to attend college. But to do so meant taking the annual college entrance examination. On the humid morning of June 4, three days before the exam, Qingming's teacher repeated a common refrain: he had to pay his last $80 in fees or he would not be allowed to take the test. Qingming stood before his classmates, his shame overtaken by anger.


    "I do not have the money," he said slowly, according to several teachers who described the events that morning. But his teacher — and the system — would not budge.


    A few hours later, Qingming, 18 years old, stepped in front of an approaching locomotive. The train, like China's roaring economy, was an express.


    If his gruesome death was shocking, the life of this peasant boy in the rolling hills of northern Sichuan Province is repeated a millionfold across the Chinese countryside. Peasants like Qingming were once the core constituency of the Communist Party. Now, they are being left behind in the money-centered, cutthroat society that has replaced socialist China.


    China has the world's fastest-growing economy but is one of its most unequal societies. The benefits of growth have been bestowed mainly on urban residents and government and party officials. In the past five years, the income divide between the urban rich and the rural poor has widened so sharply that some studies now compare China's social cleavage unfavorably with Africa's poorest nations.


    For the Communist leaders whose main claim to legitimacy is creating prosperity, the skewed distribution of wealth has already begun to alienate the country's 750 million peasants, historically a bellwether of stability.


    The countryside simmers with unrest. Farmers flock to the cities to find work. The poor demand social, economic and political benefits that the Communist Party has been reluctant to deliver.


    To its credit, the Chinese government invigorated the economy and lifted hundreds of millions of people out of abject poverty over the past quarter century. Few would argue that Chinese lived better when officials still adhered to a rigid idea of socialist equality.


    But in recent years, officials have devoted the nation's wealth to building urban manufacturing and financial centers, often ignoring peasants. Farmers cannot own the land they work and are often left with nothing when the government seizes their fields for factories or malls. Many cannot afford basic services, like high school.


    This year, the number of destitute poor, which China classifies as those earning less than $75 a year, increased for the first time in 25 years. The government estimates that the number of people in this lowest stratum grew by 800,000, to 85 million people, even as the economy grew by a robust 9 percent.


    No modern country has become prosperous without allowing some people to get rich first. The problem for China is not just that the urban elite now drive BMW's, while many farmers are lucky to eat meat once a week. The problem is that the gap has widened partly because the government enforces a two-class system, denying peasants the medical, pension and welfare benefits that many urban residents have, while often even denying them the right to become urban residents.


    Even in a country that ruthlessly punishes dissent, some three million people took part in protests last year, police data show. Most were farmers, laid-off workers and victims of official corruption, who blocked roads, swarmed government offices, even immolated themselves in Tiananmen Square in Beijing to demand social justice.


    India, the world's other developing giant, has a less pronounced gap between urban and rural living standards, and an open political system. In May, India's governing party lost an election largely because the strong economic growth did not trickle down fast enough to the rural masses.


    "This government has recognized the problem of lopsided development," Chen Xiwen, the top rural policy coordinator for China's prime minister, Wen Jiabao, said in a recent interview. "Yet India does show that if this problem cannot be managed rationally, it could become a danger" for the Communist Party, he said.


    Mr. Wen and Hu Jintao, the president and Communist Party chief, have promoted a new "scientific development" plan, emphasizing social fairness in addition to fast economic growth. Mr. Wen also ordered officials to reduce taxes on farmers.


    But for now the party's strongest reaction to reports of rural discontent is to suppress them. A muckraking exposé on illegal taxation and police abuses in the countryside was banned this spring, just after it became a best seller.


    A seven-page official report on the death of Zheng Qingming, prompted by questions submitted to the Sichuan authorities by The New York Times, concluded that the school did everything possible to help his poverty-stricken family. It denied that the school had insisted he pay his tuition. It said insanity led to his death.


    "The investigation team thinks that the school's handling of Zheng's death was objective, just, voluntary and humanitarian," the report concluded.


    Yet relatives, classmates and several teachers gave a starkly different account. They said the school hounded Qingming to pay his debt. Several friends said he behaved erratically in his final weeks, but they said financial worries and family pressure weighed most heavily.


    For in an era when peasants have long since lost their "iron rice bowl," the state's guarantee of a livelihood, Qingming wanted to attend college not only as a matter of pride, but also because he needed to provide for his relatives.


    "Qingming had the talent to go to college, but he did not have the money," said Deng Jun, a classmate and close friend. "He could not bear being left behind."


    A Village Defines Poverty


    Sichuan's hill country, north of the metropolis of Chongqing, is as picturesque as it is poor. The landscape is lush and green from spring rains, but summer brings a stifling heat that shrouds the region, "China's oven," in a halo of steamy mist.


    The Zheng family village, Sanceng, is nestled into a mountainside, accessible by a dirt trail that climbs through terraced rice paddies. The rumble of a waterfall drowns the occasional roar of trucks passing below. Making a phone call requires a sweaty 20-minute hike to a dusty roadside store.


    The house the Zhengs share with several other families has electricity but little else. It is a sprawling barnlike structure built of adobe and wood more than a century ago. Food is cooked on open wood fires. At lunch smoke chokes the interior and leaves doors and windows stained with black ash.


    Zheng Qingming grew up here by chance. He was born a second child to parents who could not afford the fine they faced under the one-child policy if they wanted to rear him. Just after birth he was secreted into the care of his mother's brother and sister-in-law, who are both mentally retarded.


    His foster parents were often mute and disoriented, and the burden of raising him fell on his maternal grandparents. He was given the family name of his grandfather, Zheng Zili, who raised the boy to be the healthy son he never had.


    "I carried him on my back every day in the fields," Mr. Zheng recalled in his thick hill-country accent. "That child grew so fast. I started with one box of milk powder a week, but soon that didn't last three days."


    The family grows corn and rice, and raises a dozen chickens and ducks on a half-acre of land. They produce enough food to eat but little extra to sell, a problem when Qingming reached school age and needed to pay tuition.


    The elder Mr. Zheng had few ways of making money. He had little schooling and could not read. But even at 74, his strapping forearms and muscular hands look as if they belong on a weightlifter, or a convict doing hard labor. He found work chopping stones into pebbles to make roads.


    "Every cent that came in went right out to pay his school fees," Mr. Zheng said. "As you can see," he added, waving his hand around his earthen home, "there wasn't enough for anything else."


    Qingming proved a worthy investment. His high-school admission test score qualified him to attend the area's top school, in Dazhou.


    But his grandfather worried that money and class put that out of reach. He had once seen schoolchildren in Dazhou wearing sporty windbreakers and sneakers, not the padded blue Mao jackets and sandals many peasants wear. He said he feared city youngsters would look down on his grandson. Moreover, the basic tuition at the local high school, in Pujia, was half as much.


    If Qingming resented missing the chance to attend an elite school, he did not tell his closest friends. "He knew the reality of his family's situation," said Deng Jun.


    In school in Pujia, Qingming excelled in biology, and dreamed of becoming a doctor. He also loved literature. He filled his scrapbook with clipped essays and wrote his own ditties. One he repeated so often that his grandfather recites it from memory:


    Do not toady to those above.
    Do not flatter the rich.
    Do not cheat the poor.
    Make way for a new generation.


    As he entered his senior year, with marks that put him in the top tier of his class, he and his grandfather imagined that Qingming might go to college.


    The Rutted Road Out


    For most rural Chinese teenagers, college is a distant hope. Compulsory education ends after ninth grade, and most youths then hop a train or bus to the swelling cities to eke out a living at a low-wage factory or construction site.


    More than 100 million people leave the farm each year, and they send back $45 billion to their relatives. Without this money, many villages would wither and die.


    Even so, migrants are an underclass. They do not have residency rights in cities. They cannot easily send their children to school there. They are often abused by employers.


    College offers a brighter path to legal residency, a white-collar job that pays a steady salary and provides a safety net for the whole family.


    The challenge for a rural youth like Qingming is getting there. Only 15 percent of college-age youth get any tertiary education, and most are urban.


    Top colleges cater to the elite and favor children in their home cities, often requiring rural students to outperform urban counterparts on national tests.


    Even in the days of Mao Zedong's radical egalitarian ideology, workers in cities lived better, enjoying cradle-to-grave benefits provided by factory or government work units. Farmers had a semblance of collective welfare when they lived in communes, though standards were lower.


    Today, the gap has grown. Nearly all urban residents get health insurance through their companies or the government. Cities have bigger budgets and better schools with lower tuition. The government mandates this because it worries that urban residents could more easily organize and rebel if they lost their economic security.


    The countryside is another story. Deng Xiaoping dismantled inefficient communes a quarter century ago in favor of land contracts, raising rural output. But the government gutted services as well. Rural governments get almost no support from wealthier areas. They tax local farmers and impose endless fees to finance schools, hospitals, road building, even the police.


    A new study by Li Shi, a leading Chinese sociologist, concludes that China's urban-rural gap grows to extreme levels — higher than any other nation's — when urban housing, education, welfare and health care benefits are considered along with income.


    Qingming and his family would have had a hard enough time overcoming these obstacles. But this year the pressure became greater for a simple reason: money.


    No Money? No School


    Pujia Senior Middle School, the formal name of Qingming's high school, is a grimy building where students pay enormous fees to get a government education.


    By Western standards, the long list of fees — tuition, dormitory rooms, textbooks, computer access — may seem a pittance, about $290 a year. But that is more than the $253 average per-capita income for farmers in Sichuan in 2002. A comparable ratio in the United States would have public schools charging each student about $43,000 a year.


    Even so, Zheng Zili had kept his grandson up-to-date on school payments until winter of his senior year, when he was hit by what might seem like a perfect storm of financial problems, except that they were perfectly ordinary.


    His boss at a government road project stopped paying him. Mr. Zheng was given I.O.U.'s, totaling $200. He made trips to the county construction bureau to demand payment. Officials alternately blamed middlemen and superiors. Nobody got paid.


    Then Mr. Zheng's wife, who is 78, took ill with lung disease. Like most peasants, they have no medical insurance. The hospital demanded $250 for treatment and drugs. The family savings were exhausted.


    As Qingming entered the final half of his senior year, his family was behind on school payments, and the strain began to show. Qingming's teacher, Zhang Xudu, often scolded him in front of the class for not having paid his tuition, classmates said. The teacher said, "Anyone who hasn't paid his fees must do so immediately." Everyone knew he meant Qingming.


    Qingming returned home several times to request money, and the family raised what it could. His grandfather wrote to a distant relative on the coast who mailed 500 yuan, or $60. Qingming still owed $80 to the school.


    The teacher, Mr. Zhang, did not return repeated phone calls seeking comment. But the official investigation of Qingming's case said the teacher had not pressed the young student to pay his debts.


    Qingming, friends said, had always been frugal. But his economizing in his senior year set him apart. He spent 40 cents each meal for vegetables and rice at the school cafeteria. Many others spent double that and ate pork, chicken, soybean curd or eggs.


    "Qingming ate meat just once a week," one classmate recalled. "He went home and his grandmother killed a chicken."


    His academic promise was confirmed when he tested into the most elite class at the school. But with the college entrance exam looming and his tuition payment still unresolved, Qingming's friends and classmates say, the pressure got to him.


    A student who shared his dorm room said Qingming had nightmares, moaning about school fees and his teacher. He began having disciplinary problems. He picked fights with classmates. He once inexplicably stormed out of class during a lecture.


    On May 6, Mr. Zhang told Qingming to join him on a trip. They went by motorcycle to Sanceng to meet Mr. Zheng, the grandfather. As Mr. Zheng recounted, the teacher told him his grandson had been misbehaving so badly he suspected the boy might have "mental problems."


    Qingming, who was standing by his grandfather's side as the teacher spoke, shot back, "You're the one who has mental problems," Mr. Zheng said. Qingming then dashed out of the house and returned to school on his own.


    A few days later, Mr. Zheng tried to smooth things over. He collected 50 eggs from his chickens and hitched a ride to Pujia. He sold the eggs, earning $6. Then he invited the teacher to dinner. The $6 bought several meat dishes and two bottles of beer. "Officials expect favors," Mr. Zheng said.


    He said he urged Mr. Zhang that day to agree to waive the school fees, pleading poverty. The grandfather said the teacher "gave me the impression" that the request would be considered, but he never received a formal reply.


    The End of a Promising Life


    The matter came to a climax on June 4, three days before the college entrance exam, teachers and classmates said.


    Mr. Zhang called Qingming to his desk. As classmates listened, Mr. Zhang insisted, again, that Qingming must pay his $80 debt. Otherwise, the school would withhold his license to take the exam, effectively ending his hopes of attending college.


    Qingming said flatly that he had no money. One classmate stood up and volunteered to sell blood to help Qingming.


    "I don't care if you sell a life," Mr. Zhang responded, according to teachers who looked into the incident later. "He pays the fees or he doesn't take the test."


    Qingming exploded. He kicked an umbrella across the room, then picked it up and threw it out the window, the teachers said. He then fled the building.


    Later that day, Qingming was spotted at a railroad depot. He was wandering on the tracks, barefoot. According to a police report, a railway officer asked him what he was doing. Qingming said he worked for Interpol, then scurried away.


    Just after 9:30 that night, he came back and stood his ground. The train that crushed him was No. 1006, the Chongqing-to-Beijing express. His jacket, containing one arm and his identification card, was found 30 yards from his body.


    The Bureaucrats Close the Books


    Qingming's death sent shock waves through the school. Teachers said school officials were obsessed with fending off outside inquiries.


    When the police first notified the school, officials initially denied Qingming was a student there, said one teacher involved in the discussions. The reason cited was that Qingming had failed to pay his tuition, and so was not a registered student in the school's care.


    A few days after the incident, school officials traveled to Sanceng to visit the family. Zheng Zili was not there that day. But the officials found Qingming's uncle, his mentally handicapped foster father. They offered him 18,000 yuan, or $2,150, to sign a document that absolved the school of culpability. The uncle signed the paper and took the money.


    Officials have issued two reports on the death: one an internal document the school sent to higher authorities in June, the other prompted by questions from The Times in July. They both maintain that the school never pressed Qingming to pay his dues. They also say the school reduced his tuition because of his family's poverty. But they differ significantly on the details of when and how much the school reduced his fees.


    Officials also said they found no evidence that Qingming and Mr. Zhang had had a confrontation on June 4, the day of his death. But in an account of Qingming's death in a state-owned newspaper, the West China City Daily, Mr. Zhang was quoted as saying he had last spoken to Qingming on June 4 and had told him that he must pay his fees.


    Teachers said that even if Mr. Zhang had wanted to help, he might have had few options. They said the school's headmaster, Yang Fangfu, held teachers responsible for their students' tuition and used the college exam as leverage to collect debts. The year before, they said, Mr. Yang deducted $75 from the salary of one teacher after two of his students, citing poverty, did not pay their tuition.


    The official investigation confirmed that Mr. Yang made teachers accountable for tuition and that he docked the pay of a teacher for this reason. But it said Mr. Yang did not link school fees to the college exam.


    Ultimately, the authorities insist, Qingming died accidentally because he "lost his mind"; he did not intend to commit suicide. Several students said their teacher had arranged individual meetings with them after Qingming's death to remind them of his erratic behavior and to impress upon them that they should emphasize this if outsiders asked about the case.


    Mr. Zheng, the grandfather, dismissed the official explanations of what happened. He said the school never reduced his grandson's tuition. He said Qingming was upset, not insane. He is suing the school for having caused Qingming's death.


    All he has left now to remember the grandson he once carried on his back is a stack of workbooks — trigonometry, politics, history. Mr. Zheng does not recognize enough Chinese characters to read them. But he keeps the books as memorials.


    One is Qingming's scrapbook. Near the end, Qingming pasted in a magazine article about a retarded farm girl. She was raped, then abandoned by her relatives for the shame she inflicted on them. In the margins of the text, Qingming scribbled his thoughts: "We must extend our helping hand to any innocent underdog. Only by so doing can that person find a footing in society."



    Joseph Kahn reported from Pujia for this article, and Jim Yardley from other parts of rural China.


     


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July 31, 2004

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    "I'm very worried about the budget situation.  You know, government bonds are not a way to finance spending -- they are a way to postpone tax increases -- only when you postpone those tax increases, you have to pay interest as well.  So I think that the magnitude of the deficits we are running -- both now and, even more, the deficits that are prospective -- are a serious mistake for our country.  Republicans and Democrats may have different views on spending priorities, they may have different views on tax priorities, but they ought to be able to agree that borrowing on this scale is a serious mistake for America; it's a serious mistake for the burden it's placing on your students, Mr. Dwyer, when they grow up and are going to have to pay the interest on all of this debt.  It's a serious mistake because of the challenge we're going to be facing in the next decade or two, funding your retirement and my retirement; it's a serious mistake because much of that borrowing is being held abroad by foreigners, and, one wonders how long the world's greatest power should be the world's greatest borrower.  So, yes, I've got very serious concerns about our fiscal policy....Without regard for political parties or partisanship, I would hope that we could see that budget deficit come down before too terribly long."


    Lawrence H. Summers
    Harvard University
    July 13, 2004


     


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    Alan S. Blinder is the Gordon S. Rentschler Memorial Professor of Economics at Princeton University.  He was previously vice-chairman of the Federal Reserve's Board of Governors, and before that was a member of President Clinton's Council of Economic Advisers.  Below, an excerpt from a December 4, 2003 interview with Professor Blinder in his Princeton office:


     



    "In talking about deficits it's very important to keep the long-run, short-run distinction in mind -- and this of course gets completely lost in the public discussion -- hopefully students 'get it' and then they grow up to be grown ups and they'll still remember . . . It's when you look at what's coming.  We have set in motion -- these things are 'built-in,' the word that is used is 'structural' -- the tax cuts, the spending base, is going to be higher, forever, that is to say, until Congress un-does it.  In addition to that, the magic year 2010 is not so far in the future.  So, what's the year 2010?  That's the year that the 1940s birth cohort, the vanguard of the post-war baby boom turns 65 and becomes eligible for medicare, becomes eligible for full retirement benefits under Social Security, and, that continues . . . That post-war baby boom is 17-years long -- it gets bigger as it marches through -- so, what that means is, in the year 2020, and 2025, and 2030, there's going to be hugely greater demands on Social Security and Medicare than there are now, even if there is no change in the law . . . So, we know that whatever surplus or deficit we take into the year 2010 is going to deteriorate badly in the decade that follows -- we know that -- no matter who is president, no matter what is done, the only question is in the details, it has to . . . So that, to me, was the main reason why it would have been nice to go into that period with, say, a surplus of 3% of GDP instead of a deficit of 4 or 5% of GDP which is what it looks like we're doing now.  I think that was a crying shame -- it was a great opportunity which fell in our lap -- and we fumbled it . . . and we've created a long-run problem that we're going to regret having done."


    Alan S. Blinder
    Princeton University
    December 4, 2003


     


     


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