"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
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Kevin Madigan revisits a theme that is anathema to many on the Right but deserves serious consideration:
As Pope Francis recently remarked, reflecting this relatively new attitude of tolerance and pluralism, “Each individual must be free, alone or in association with others, to seek the truth, and to openly express his or her religious convictions, free from intimidation.” It has been said, and not without reason, that the church changed more from 1960-2000 than in the previous millennium. Yet even today, outside Western Europe and the U.S., predominantly Christian states—Russia and Uganda, for instance—have notoriously repressive laws.
All of this is to say that traditionalist Islamic states and Muslims have not, historically speaking, had a monopoly on authoritarianism, violence against apostates, the wholesale rejection of religious pluralism, and the manipulation of religion to realize political agendas. But in the same sad set of facts lies some good news: The startling changes experienced by Western churches over the past several centuries suggest that similar changes might occur within the world of Islam.
Madigan’s piece is worth reading in full.
Bernard Lewis pointed out that the fascist authoritarianism we take for granted in today’s Arab world is itself a European import. Who’s to say that the direction of future political changes there must be negative.
One strong takeaway from this analysis is that the West should support Muslim moderates and modernisers. We don’t do that consistently, which may be an indirect cause of the Middle East’s current dire condition.
Still, many thought that globalization made war between the great powers impossible. In 1909, the British journalist Norman Angell wrote an internationally best-selling book, “The Great Illusion,” that argued that financial interdependence and the great growth in credit made war self-defeating, since it would result in financial ruin for both victor and vanquished.
Angell was dead wrong. (Oddly, it didn’t prevent him from winning the 1933 Nobel Peace Prize.) Extensive trade and financial relations did not stop Germany from declaring war on both Britain and Russia, its two largest trading partners, in 1914.
(Last Wednesday was chosen by NASA as a Day of Remembrance for the astronauts lost in the 1967 Apollo fire, the 1986 Challenger explosion, and the 2003 crash of the shuttle Columbia. The occasion reminded me of my 2003 post which appears below, with the links fixed.)
What does a space shuttle disaster have to do with the current troubling situation in the teaching of the humanities? Strange as it may seem, I believe that there is a connection.
Most observers believe that the Columbia disaster was caused, to a substantial degree, by the unwillingness of key individuals to speak up forcefully enough about their safety concerns. This is often phrased as a “culture issue” or a “climate issue”–but, however you phrase it, it seems that a significant number of people didn’t raise their concerns–or at least didn’t raise them forcefully enough–because of worries about the implications for their own careers. (This also seems to have been a key factor in the earlier Challenger disaster.)
And in today’s university humanities departments, there are many senior professors who understand that much of what is now being taught is nonsense, and who are heartsick about the “posturing and lies.” But, as Erin O’Connor says: “…an older generation of “dinosaurs” looks on, seeing it all, and saying nothing. They do this to minimize the open displays of contempt for their traditional ways that they have learned to expect as their due.”
Now, here is an interesting point. There are very few people in American who have more job security than a civil servant or a university tenured professor. But this security seems to have little payoff when it’s time to speak up about something important and truly controversial. Perhaps jobs that offer high security tend to attract people who are not risk-takers. Or perhaps concerns about being liked by one’s peers trump job-security issues per se. In any event, it does not seem that systems with a high degree of employee protection really yield the expected benefits in terms of outspoken employee behavior.
I’m sure there are some NASA employees who had and have the courage to speak out, just as I am sure that such courage exists among some senior professors of the humanities. But it seems that such people are too few in number, at both institutions, to make a real difference.
No set of organizational policies, however well-designed, can substitute for human character. It takes many virtues, including the virtue of courage, to make an organization perform effectively. That’s true whether the organization is a university, a corporation, or a government agency.
Posted by Trent Telenko on 30th January 2015 (All posts by Trent Telenko)
One of the more frustrating things in dealing with General Douglas MacArthur’s World war 2 fighting style was how many ‘will of the wisp’ intelligence, logistical and special forces operations he created and that were buried in post-WW2 classified files in many military services of several nations, located on several different continents. Often times, when you go looking for one of these outfits, something completely different turns up. Such was the case with MacArthur’s High Tech Radar Commandos, Field Units 12 and 14 of Section 22, General Headquarters, South West Pacific Area.
The trail of MacArthur’s Australian Military Force (AMF) Radar Commandos started with the following record from the Fold3 government record digitization service —
“In PT operations, on the 28/29, Alamo Scouts were put ashore on Fuga
Island and natives gave intelligence material abandoned by the
Japanese on Amboengi Idland, in the Little Paternoster Group when they
crossed to the Celebes in native canoes, on 18 July.”
And then a little later on the same page it also stated:
Balikpapan boats landed Australian scouts on Amboengi
Ialand, Little Paternoster Group, site of a reported
radar station. A radio tower was strafed end radio sets
So, the Alamo Scout report above resulted in a Balikpapan based American PT-boat (or boats?} arriving at the reported Radar site the next day which Australian scouts photographed, damaged and then called down an 7th Fleet patrol plane air strike on to make sure nothing was salvageable afterwards?
It turns out that first passage from the 7th Fleet War Diary was badly written, splicing two different special forces operations together. As I soon discovered when I checked with the Alamo Scout Historical Foundation.
Places such as Amboengi are in the Little Paternoster Islands (today’s Balabalagan Islands, Indonesia.) are off the southeast curve of Borneo. None of the Alamo Scouts operated in Borneo. Fuga Island was off the northern shore of Luzon where the Alamo Scouts had their last big hostage rescue mission of the war. In July 1945 the Alamo Scouts rescued the President of the Bank of the Philippines and his extended family held hostage there. The banker was a personal friend of General MacArthur.
Ratel (Radar intelligence) No. 5, May 8, 1945 radar coverage map of the Dutch East Indies made with intelligence provided by General MacArthur’s Section 22 Radar ‘Boffins’.
So there my trail went cold. If not the Alamo Scouts, Who are these guys?
The Australian Military Forces (AMF) special forces contingent doing island reconnaissance was large, not well documented by American military records, perhaps not at all, and they operated widely across the South Pacific. They were often deployed using Catalina PBY flying boats, submarines or even by canoe, distances permitting. Having no access to Australian Archives to figure this out, I dropped it.
Posted by Trent Telenko on 29th January 2015 (All posts by Trent Telenko)
When I wrote “The Ukraine Crisis — Some Background and Thoughts” back in February 28, 2014. I expected the Russian – Ukraine War in the Donbass to be headline news in the American media. It turned out…not so much. The NFL Patriot’s deflated footballs and bad mega-blizzard forecasts for the North East United States, among other headlines, seem far more important to the America’s media mandarin’s quest for advertising dollars.
Part of this lack of coverage is laziness. American broadcast networks and cable news services just don’t cover foreign news much, as it is a lot of work for low ratings. And when it comes to things that reflect poorly on Pres. Obama, other than Fox News, they are all “UK Guardian reporting on the Labour Party” regards Obama Administration foreign policy failures. Which the war in the Ukraine definitely is. Meanwhile the Russophile “fanbois” are spam-commenting on the Mil-blogs and military-themed forums I follow to the point they are useless. I had given up hope of finding anything useful on the fighting there.
Then I ran into the following video from a defense industry guy who is tracking the Donbass fighting…and then I snorted up my coffee…_Violently_.
This Ukrainian propaganda video showed not only the fighting, but Ukraine’s Viking Revival spawned by the fighting in the Donbass.
“100 BIYTSIV.” (100 Warriors) – New Ukrainian Propaganda Clip
(Lyrics Nehrebetskiy, Score Telezin, sung by Donchenko)
This is a classic piece of war music in many ways reminiscent of WW2, and the video clip is designed to produce that martial effect. It is being propagated by the Right Sector militia via their Youtube portal. The video is a huge viral phenomena in Ukrainian social media, reflected by the fact that the Ukrainian Ministry of Defense placed it on their Facebook page despite very poor relations with the Right Sector.
This emerging Ukrainian nationalist cultural revival has huge tactical, operational, and strategic military, plus grand strategic political, implications for the 21st Century. Implications I intend to explore in posts here on Chicago Boyz.
If the song sounds familiar when you play the video — it’s why I breathed coffee — it should be. The tune of this song is based on SSgt Barry Sadler’s “The Ballad of the Green Berets” —
Posted by Lexington Green on 29th January 2015 (All posts by Lexington Green)
The battle of ideas is a long war. Where would education reform be if Milton Friedman hadn’t started fighting for school choice back in 1955, just because everyone thought he was nuts? Where would we be if Ronald Coase had given up on his idea to auction off radio spectrum, when he was asked in 1959 by the FCC commissioner if his proposal was a joke? Where would we be if Friedrich Hayek and a few other free-market advocates hadn’t met in Switzerland to launch the Mont Pelerin Society in 1947 in order to fight for freedom at a time when all seemed lost?
The fight can only be won by engaging in the battle of ideas now. It cannot be won by those who compromise from the get-go just to stay in power.
Here’s a LinkedIn post from a young woman who doesn’t like the way certain companies are specifying “degree from a top-tier university required” in certain of their job postings. I think she makes some good points.
From the standpoint of the individual company or other organization, absolutely requiring a degree from a “top-tier university” (whatever the individual’s other experience and capabilities) reduces the size of the talent pool and quite likely increases costs without commensurate benefit. From the standpoint of the overall society, this practice wastes human resources and creates damaging inhibitors to social mobility. (And in most cases, “top-tier university” is defined based only on the perception of that university’s “brand”…very few HR organizations or hiring managers conduct serious research on the actual quality of different universities from an educational perspective…and the perceived quality may be years or even decades out of date.)
I think we as a society have delegated far too much influence to the admissions officers of various Ivy League universities, and also to whoever constructs the metrics for the US News & World Report college ratings. When discussing “inequality” and declining social mobility..and less-than-stellar economic growth…the role of credentialism in all these things needs to be seriously considered.
Posted by Michael Kennedy on 28th January 2015 (All posts by Michael Kennedy)
The Pelosi Congress extended unemployment benefits in 2009 to a maximum of 53 weeks. This has been renewed until the new Republican Congress after 2010, unable to get Obama to negotiate, allowed the extra benefits to lapse.
Federal unemployment benefits that continue for 26 weeks after a person uses up the 26 weeks of state unemployment benefits ended Saturday, so now some 1.3 million people won’t be getting their $1,166 (on average) monthly check. By June, another 1.9 million will be cut off.
Many in the federal government are talking about the need to extend benefits. President Obama labelled it an “urgent economic priority” and called a couple of senators to pressure them to bring the matter up when the Senate reconvenes next week, and is urging Congress to extend the benefits for another three months. Senate Majority Leader Harry Reid has promised a vote no later than January 7 for the three month extension. Gene Sperling, the head of Obama’s National Economic Council, lamented the end of the federal aid…
Just looking at the economy’s overall size, you wouldn’t think that the last year was much different from any of the others since the recession. The U.S. economy grew at about the same rate in 2014 as it did in the previous four years — less than 2.4 percent, according to the Federal Reserve’s most recent projection. Yet last year was different. People started going back to work. The percentage of Americans working, more or less stuck in a ditch since 2009, increased from 58.6 percent in December 2013 to 59.2 percent last month. Employers added an average of 246,000 positions a month, about 3 million jobs overall.
What happened ?
Economists will debate what happened, but one of the more controversial theories is that Congress’s decision not to extend federal unemployment benefits at the end of 2013 encouraged those out of work to settle for more poorly paid jobs, giving firms a better reason to expand and hire new workers. That’s the conclusion of a new working paper from the National Bureau of Economic Research. The authors, Marcus Hagedorn of the University of Oslo, Iourii Manovskii of the University of Pennsylvania and Stockholm University’s Kurt Mitman concluded that the reduction in benefits created 1.8 million jobs last year — more than half of the total.
This is an interesting result which contradicts much prior research indicating that shortening benefit duration had little impact on employment growth (e.g. here, here, here, and here). It is worth testing this result with an alternative data series. HMM use the Current Population Survey for the state level data and the Local Area Unemployment Statistics (LAUS) for the county level data. These series are both problematic for this sort of analysis.
Oh yes, other interpretations can be found. The leader of this new (1999) Democrat think tank is a leftist economist with a reliable view for the Washington Post to cite. His credits include: “He writes a weekly column for the Guardian Unlimited (UK), the Huffington Post, TruthOut, and his blog, Beat the Press, features commentary on economic reporting. His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.”
Assuming that the pre-2014 trends would have continued among the two groups, the authors find that “the cut in unemployment benefit duration led to a 2% increase in aggregate employment, accounting for nearly all of the remarkable employment growth in the U.S. in 2014.” They then confirm these results with a second experiment that compares adjacent counties in different states whose economies are otherwise equal except for their unemployment benefits.
Notably, job growth improved most in states and counties that offered the most generous benefits before Congress took away the punch bowl. This suggests that the extra jobless benefits reduced the incentives for businesses to create jobs and for jobless workers to fill the vacancies.
Of course, Obama is now bragging about the new job growth.
Mr. Obama is now taking credit for 2014’s job gains that his policies inhibited, much as he is for the boom in oil and gas drilling that his Administration resisted. Thus comes the opportunity for a late-term “Seinfeld” economic epiphany. Imagine the possibilities if the President realized that everything he thought about economics is wrong.
Matt is talking about the newly elected reform-minded Republicans in Springfield, Illinois.
They are currently a minority within a minority. That is a start. It’s a beachhead.
It took decades to wreck Illinois. It will take a long time to turn it around. There is no quick fix.
There is a danger that people elected with great aspirations will get coopted, lose their way, forget what they wanted to do when they got involved in politics.
So, to our political leaders: Ask yourself why you ran for office. Know your own values and principles. State them. Lead with them. Apply your principles at every decision point. Knowing exactly who you are and who you represent will allow you to lead with a clear vision and strong voice on any issue.
To be elected as a reform politician at this critical time cannot be about a cozy job, or even an assuredly steady job.
It is — it must be — about changing our state and our country for the better.
It is about confronting serious opposition to make that happen. That opposition offers the allure of various “carrots”, and wields the threat of various “sticks”, to try to compel assent to the current, supposedly “normal” state of affairs. We need leaders who disdain the carrots, don’t flinch from the sticks, and who do not forget why they sought and won office.
Our politicians need an internal compass, as Matt calls for here.
And they need external accountability, as Matt also calls for in this article.
Also, when they do the right thing, they need approbation and encouragement.
We can all help, especially with the latter.
This is a protracted struggle. Be prepared for the long slog.
So, the wailing, the sobbing, the gnashing of teeth from the so-called intellectual and cultural elite over the runaway box-office success of American Sniper is pure music to my ears … all the more so since I started calling for this kind of movie to be made … oh, in the early days of the Daily Brief, back when it was still called Sgt. Stryker. It didn’t take the WWII-era studios to get cracking and crank out all kinds of inspirational military flicks within a year of Pearl Harbor, the disaster in the Philippines and the fall of Wake Island. Of course, those were full-service movie studios, accustomed to cranking out movie-theater fodder on an assembly-line basis. There was, IIRC one attempted TV series, set in an Army unit in Iraq, which was basically recycled Vietnam War-era military memes, and died after a couple of episodes, drowned in a sea of derision from more recent veterans, especially after an episode which featured an enlisted soldier smoking dope. On deployment. In a combat zone. The producers of the show had obviously never heard of Operation Golden Flow. Or maybe they had, and assumed it was something porn-ish. Read the rest of this entry »
Posted by Lexington Green on 25th January 2015 (All posts by Lexington Green)
There was much discussion and speculation regarding the recent synod on the family, including a media-driven suggestion that the Catholic Church was going to change long-standing rules pertaining to sexual morality.
The Church’s diminishing appeal to men is a crisis which few have been willing to speak about bluntly. Cardinal Burke (pictured above) is an exception, as this piece shows.
“Sadly, the Church has not effectively reacted to these destructive cultural forces; instead the Church has become too influenced by radical feminism and has largely ignored the serious needs of men.”
The truth will set you free.
Pope Francis, in one of his controversy-provoking interviews, mentioned that one of his favorite spiritual writers is Fr. Louis Lallemant. I found on the Internet, and read, The Spiritual Doctrine of Father Louis Lallement, which is indeed an excellent book. Recommended.
He was the entrepeneur who came up with the bright idea to bring fine cooking and peerless customer service to the rowdy far West, and do so on a grand scale … and as a sidebar to that feat, also supplied thousands of wives to settlers in an otherwise female-deficient part of the country. He was a Scots-English immigrant from Liverpool named Fred Harvey. He arrived in New York at the age of 17, early in the 1850s. He took up employment washing pots and dishes at a popular restaurant of the day, and within a short time had worked up the kitchen ranks to waiter and then line cook. He only remained there for a year and a half – but in those months he had learned the restaurant business very, very well. He gravitated west, but only as far as St. Louis, where he managed a retail store, married and survived a bout of yellow fever. The restaurant business called to him, though. On the eve of the Civil War, he and a business partner opened a café. Which was successful, right up until the minute that his business partner, whose sympathies were with the Confederacy, took all the profits from the café and went South. Read the rest of this entry »
…was made 100 years ago, on January 25, 1915. (Well, actually, that was the first official transcontinental phone call; the line had actually been completed and tested by July of 1914, but the big PR event was timed to coincide with something called the Panama-Pacific exposition.) Alexander Graham Bell was in New York City and repeated his famous request “Mr Watson, come here, I want you” into the phone, Mr Watson then being in San Francisco.
Long-distance calls from the East Coast had previously reached only as far as Denver; it was the use of vacuum-tube amplifiers to boost weak signals that made possible true transcontinental calling.
Here’s the NYT story that marked the occasion. Note that the price announced for NYC-SF calling was $20.75 for the first three minutes and $6.75 for each minute thereafter. According to the CPI inflation calculator, these numbers equate to $486.38 and $158.21 in today’s money.
Lewis Shepherd, formerly of the DIA and IC and recently of Microsoft, has an outstanding post on Microsoft’s exciting ambient/holographic computing interface HoloLens. What I saw in the videos is stunning and I then ran them by an extremely tough, tech savvy and jaded audience – my students – their jaws dropped. It’s that impressive.
In my seven happy years at Microsoft before leaving a couple of months ago, I was never happier than when I was involved in a cool “secret project.”
Last year my team and I contributed for many months on a revolutionary secret project – Holographic Computing – which was revealed today at Microsoft headquarters. I’ve been blogging for years about a variety of research efforts which additively culminated in today’s announcements: HoloLens, HoloStudio for 3D holographic building, and a series of apps (e.g. HoloSkype, HoloMinecraft) for this new platform on Windows 10.
For my readers in government, or who care about the government they pay for, PAY CLOSE ATTENTION.
It’s real. I’ve worn it, used it, designed 3D models with it, explored the real surface of Mars, played and laughed and marveled with it. This isn’t Einstein’s “spooky action at a distance.” Everything in this video works today:
These new inventions represent a major new step-change in the technology industry. That’s not hyperbole. The approach offers the best benefit of any technology:empowering people simply through complexity, and by extension a way to deliver new & unexpected capabilities to meet government requirements.
Holographic computing, in all the forms it will take, is comparable to the Personal Computingrevolution of the 1980s (which democratized computing), the Web revolution of the ’90s (which universalized computing), and the Mobility revolution of the past eight years, which is still uprooting the world from its foundation.
One important point I care deeply about: Government missed each of those three revolutions. By and large, government agencies at all levels were late or slow (or glacial) to recognize and adopt those revolutionary capabilities. That miss was understandable in the developing world and yet indefensible in the United States, particularly at the federal level.
I worked at the Pentagon in the summer of 1985, having left my own state-of-the-art PC at home in Stanford, but my assigned “analytical tool” was a typewriter. In the early 2000s, I worked at an intelligence agency trying to fight a war against global terror networks when most analysts weren’t allowed to use the World Wide Web at work. Even today, government agencies are lagging well behind in deploying modern smartphones and tablets for their yearning-to-be-mobile workforce.
This laggard behavior must change. Government can’t afford (for the sake of the citizens it serves) to fall behind again, and understanding how to adapt with the holographic revolution is a great place to start, for local, national, and transnational agencies.
I remarked to Shepherd that the technology reminded me of the novels by Daniel Suarez, DAEMON and FREEDOM. Indeed, I can see HoloLens allowing a single operator to control swarms of intelligent armed drones and robots over a vast theater or in close-quarter tactical combat as easily as it would permit someone to manage a construction site, remotely assist in a major surgery, design a new automobile or play 3D Minecraft.
So, OK, my employer made me burn off some vacation days before the end of the fiscal year, in the form of a cap on the number of PTO hours that can be carried over from FY14 into FY15, which boundary has shifted by 3 months due to our recent change of ownership. Much lower down, my management intimated that due to certain software-release and testing milestone dates, no significant block of time off in February or March would be approved. But thanks to an unrelated M&A a few years back (a spectacularly problematic one, destined to be a business-school case study for decades to come), we now get the MLK holiday off. I decided to take the whole week and head southwest in search of sunlight. After a swing through New Mexico, I am spending a few days at Crow’s Nest, a 10-minute hike from the 6+ acres I own near Bloys Camp. It’s my first visit in four years.
Mitre Peak (1887m/6190’) as seen from my lot
This is what I would write if somebody made me enter one of those hoary MLK essay contests that middle- or high-school students get sucked into. The entries that I’ve read over the years have seemed pretty unimaginative, but it’s hardly realistic to expect much historical perspective from a teenager. The tone I’m aiming for here is, of course, originality combined with some mildly discomfiting assertions, while avoiding stereotypical politics. The structure is a simple three-parter: past, present, and (near) future.
He points out, for example, how normal construction in archaic forms such as “Wend, went and wended” have become “Go, went, gone.”
The child makes an error he or she may not understand that “Goed” is not a used form for past tense, whereas “Wend” is an archaic form whose past tense has been substituted. The child is using language rules but they don’t account for irregular verbs. He continues with this thought in The Language Instinct, which came later. Here he makes explicit that this is how the mind works. One review on Amazon makes the point:
For the educated layperson, this book is the most fascinating and engaging introduction to linguistics I have come across. I know some college students who had received xeroxed handouts of one chapter from this book, and these were students who were just bored of reading handouts week after week… but after reading just a few paragraphs from The Language Instinct, they were hooked, fascinated, and really wanted to read the whole book (and did). I wish I had come across such a book years ago…
Now, this is interesting but Pinker has gotten into politics inadvertently by emphasizing the role of genetics in language and behavior. I read The Blank Slate when it came out ten years ago and loved it.
I heard this song on the radio a couple of days ago and googled it…it was written by Robert Emmet Dunlap and covered by several singers, including Tim O’Brien and the group at the link above, whose version I think is especially fine.
In a previous post I discussed the high probability of there being some sort of major fiscal calamity in Illinois in the next two years. Here I propose how to solve the issues in the state. I realize that the chance of any or all of these solutions to be put into place is near zero without unthinkable changes, but in fact they are all obvious and will likely be part of the ultimate solution.
Consolidate Governmental Entities – Illinois has over 8400 governmental entities, the highest in the USA. These entities need to be drastically curtailed and likely should number in the hundreds, and each should have professional management, strict caps on borrowing capabilities, and an inability to sign up for long term unfunded obligations (pensions, retiree health, etc…) without stringent oversight.
Eliminate Pensions and Defined Benefit Plans and Move to Defined Contribution Plans – Illinois’s pension and benefits woes are myriad and well documented and extend through every city and county due to firefighters and policemen and governmental workers. Regardless of the one time pain, strikes, protests, and society-shaking impacts of these moves, these unfunded obligations are an impossible burden on the state and it must move to a 401k-like plan (similar to what Nebraska did)
Reduce State and Local Employee Compensation Pay by 25% or More – The government faces a simple choice between paying its employees what they think they deserve (ever more) and the government’s obligation to provide services to its citizens at a price that does not drive excessive taxation. This deal is broken and a large part of the burden will have to rest on governmental employees. If they do not like this solution they will be free to find employment in the private sector where it is unlikely that they will be able to match the same package of benefits and compensation. We will know that the model is in balance when the turnover rate of government is equal to that of the private sector.
Outsource 33% or More of Governmental Jobs – There are large opportunities for efficiencies in the governmental sector, through use of the Internet, changes in processes, and injection of competition into areas traditionally done by the government. Even within areas that are generally governmental functions (like the police), a significant portion of the functions such as administration could be done by third-party or online vendors.
Reform Purchasing By Use of Modern Techniques and Focus on Outcomes Not Political Concerns – Our procurement systems in Illinois are riddled with favoritism, opaque decision methods, and a focus on aiding politically connected firms. In addition, payment of vendors is very slow which rules out many smaller and less capitalized vendors. We need to focus on market based outcomes (quality of service, cost reduction, speed to market), and reward vendors with consistent and timely payments rather than focusing on political connections and long term relationships which favor a few incumbents.
Jim Clifton, who is Chairman & CEO of Gallup, presents data showing that creation of new businesses has fallen considerably over a long-term trend running from 1977 to the present, and that for the last several years, the number of firms created has actually fallen below the number of firms closing.
The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.
Read the whole thing.
These numbers and trends seem somewhat counterintuitive to me. I see a lot of startups looking for angel funding, and quite a few of them getting it. There is a lot of public interest in entrepreneurship, as evidenced by the success of TV programs such as “Shark Tank”, and even universities are attempting to capitalize on the interest in entrepreneurship by offering courses and programs on the topic.
I suspect that much of the decline in business creation is among people who don’t have a lot of formal education–many of them immigrants–and who in former years would have started businesses but are now inhibited by inability to navigate the dense thicket of regulations and pay the substantial costs involved in doing so. OTOH, I also suspect that quite a few of these people have actually created businesses, in fields such as home maintenance or home day-care, and are doing so off-the-books in ways that don’t get counted in the formal statistics.
Among those who do have college degrees–and especially among those who have spent six, eight, or more years in college classrooms–student loan debt, much of it incurred on behalf of degrees having little or no economic or serious intellectual value, surely also acts as an inhibitor to business creation.
The fact that the State of Illinois has dire fiscal problems is well documented. If you just type in headlines like “Illinois is broke” into your web browser and you can spend hours reading. One of the best is Illinois Policy.org which brings together articles from various news sources into a coherent theme. We have a new governor, Bruce Rauner, who is wealthy and thus unlikely to be entangled in corruption, who is pledging to take on this giant mess, which is a cause for optimism.
The issues, however, are much larger. It isn’t just the state of Illinois which is in deep crisis – we have an interconnected set of entities all of which are on the verge of facing fiscal woes, who in turn can tip other entities off the fiscal cliff. The city of Chicago also has very significant financial problems, mostly from pensions as well, which it has been papering over for many years with debt and by allowing its unfunded pension issue to get ever larger. Cook County, too, which is one of the largest governmental counties and entities of its nature in the USA, is also facing dire challenges.
Once you get beyond the state, the city of Chicago, and Cook County, you encounter myriad minefields from our plethora of governmental units. Illinois has more governmental entities than any other state, 8400, as you can see from this article. Most of them have various taxing powers, debt they’ve raised, and liabilities like pensions and health care for workers that are not funded. Look near O’Hare, where the (tiny) city of Rosemont has funded huge shopping malls, convention centers, and even a casino by floating debt. In the end this debt is substantially backed by the state whether that guarantee is implicit or explicit; a city of a few thousand residents can’t normally fund this sort of largess.
But the challenges are much deeper than this. These entities, much of which are overseen on a local level, invite vast opportunities for institutional corruption. We saw this on Metra, where the scandals caused the prior president to commit suicide (by standing in the way of a train, no less) and cast a light on the squalid pay-for-play decisionmaking process of a typical entity in our state.
The situation has become so bad that even in a time of record low interest rates, when there are many buyers of debt with any sort of return, that Illinois and the city of Chicago often cannot take advantage of municipally funded debt (which carries a lower interest rate because individuals are not subject to Federal taxes on the interest) because this debt has to be used for capital purposes and can’t just be used to pay day-to-day bills. Thus they are forced to issue “taxable” debt, and pay a higher interest rate. Many of the issues are essentially “scoop and toss” where we just take the entire principal and interest of expiring debt, refinance the whole thing, and just throw it out into the future, growing ever more indebted.