White House Chronicle

News Analysis With a Sense of Humor

Big Challenges for Big Engineering

by 6 Comments

There is a back story to the oil spill catastrophe in the Gulf of Mexico. It is the revelation of the extraordinary failure and triumph of engineering. In a world of computers, materials sciences and nanotechnology, big engineering remains awesome but often overlooked.

Everything to do with the Gulf disaster is part of the big engineering story. Hugely sophisticated drilling platforms, drills and drill bits make it possible to drill at a mile under the sea, and to go on another 3 miles into the earth beneath the ocean floor. That is awesome. The fact that at depth these drills can then drive horizontal is awesome-plus.

The blowout preventer–the fail-safe device–is amazing. It stands five stories high and is as sophisticated as a space rocket. It is a stunning piece of engineering design, which the world only knows about because it failed to operate on April 20 when the Deepwater Horizon drilling rig exploded.

No one knows for sure why the blowout preventer failed. Feeble human hands may have been a factor; the best engineering is no better than its operators.

When it came to the Deepwater Horizon, the makings of failure were in place; not on the sea bed, but on the deck of the drilling rig. Fatigue, greed, hubris and divided responsibility all drove toward disaster. As in aviation, great industrial disasters are usually not isolated phenomena but the result of a sequence of failures and misjudgments.

The Gulf tragedy will be compounded if we turn away from big projects and big engineering because we fear failure.

In the 19th century, big engineering thrived. The British built the Indian railways. Cecil John Rhodes dreamed of building a railway from Cape Town to Cairo. The idea of a tunnel under the English Channel was considered (an abortive start was made in 1911), while the Suez and Panama canals were being dug.

Like the Romans in their day, the British were committed to big engineering in their colonies and possessions. Big engineering carried the enterprise forward, opened markets and, in the case of canals and railroads, carried troops to the battle.

The American railroads united the country and laid the groundwork for the greatest commercial expansion the world had yet seen.

Electricity brought forth more engineering creativity with power plants, dams, transmission lines, and finally nuclear power plants.

But big engineering took a drubbing in the 1960s: It was suddenly the problem, not the solution. We continued to fly in Boeing 747s, but we did not celebrate their engineering. We used more electricity and held our noses as we did so.

The miracles of engineering-based comfort and prosperity were to be eschewed. We indulged but fretted, like a smoker who knows he should not do it.

No longer did politicians urge the young into the exciting world of big engineering, whether it was civil, electrical or mechanical. Instead, they talked blandly about “math” and “science,” as though these were disciplines that could operate without engineering support.

“Technology” was in and engineering–big engineering, which built big things like dams, nuclear power plants, oil refineries and ships–was out, relegated to the category of “last resort.”

Incredibly, the tunnel between England and France was opened and the French pioneered high-speed trains. But America’s engineering schools played with their curricula, adding socially relevant courses and hybrids that include, and sometimes emphasize, ideas that are far from the world of leverage, logarithm and tensile strength. Engineering management and social impacts of engineering are among the new courses that have tainted the brawny world of big engineering.

Political correctness met engineering, and it has not been a happy marriage.

One would hope that the events in the Gulf would excite a new generation of engineering students to the romance of engineering, the thrill of creation and the duty of problem-solving. For engineering romantics like myself, a giant crane is nearly as wondrous as a cathedral.

There is unbelievable horror in what we have wrought in the Gulf. But also is wonder that we can build machines so remarkable that they can lift the lid off the underworld.

 

The ’60s Return

by Leave a Comment

The decade of the 1960s stood orthodoxy on its head. It was a time when alternative everything got a hearing. Expertise came into doubt; the phrase “some decisions are too important to be left to the experts” was heard everywhere.

The seer of the day was Ralph Nader. Government was only trusted as a regulator. So it regulated: the environment, the schools, the workplace, the airline industry, the communications industry, and new industries like nuclear power. Anything that had escaped regulation in the 1930s got swept up in new regulations. And those 1930s regulations for banks and utilities were applauded.

Well, this decade is beginning to emulate the anti-establishment passion of 50 years ago. In particular, a despised government is being asked to regulate.

Make no mistake, regulation is in the air. Even Republican free-marketeers are blaming a lack of regulatory oversight for the environmental disaster in the Gulf of Mexico and the collapse of mortgage finance giants Fannie Mae and Freddie Mac.

We are headed back to the future because some, though not all, of the underlying drivers of the 1960s are in place today,

The core of our crises today is as it was then: a sense of betrayal by our institutions. In banking, the environment and foreign policy, the left and the right feel they have been let down. They may be deeply divided on the degree of regulation that is needed, but the sense that key areas of our national life are broken is pervasive.

Besides the lost jobs, diminished 401(k) savings, recriminations over troop levels and tactics in two wars, and mounting national debt, there is now the catastrophic oil spill in the Gulf — a crowning failure, if you will. Taken together they wipe out confidence and bring opprobrium on big institutions.

Big is bad. Big is out. Big cannot be trusted. Big has no civic conscience, whether it is banks paying themselves too well in a time of shortage or oil companies failing to take care when punching holes in the ocean floor. Big screws up big time.

The collateral damage is that, like the 1960s, no one is going to believe the experts on almost anything. People are not going to believe that giant airliners are needed, nor that biotechnology is good for the food chain.

The 1960s brought on an age of studies which, like polling, have become a news staple. These studies pour out of universities, think tanks, government departments and consultancies. Mostly they serve the people who fund them, so they get a brief life in the 24-hour news cycle and then leave us confused.

Are mammograms good or bad? Is there too much heart surgery? Does television affect deductive reasoning? Is weight training better than aerobic exercise? Will red wine and oatmeal cookies keep you going for 100 years?

Despite the contradictions implicit in expertise, we were just getting used to taking experts seriously again. We believed that bankers were oh-so-clever that they deserved oh-so-much money for what they did. Now we know they were just oh-so-greedy.

We believed that Toyota made the best and safest range of cars in the world, and that those Japanese quality-assurance types had it all over everyone else. Ooops! Got that one wrong.

And we believed that the clever people in the government knew how to conquer Iraq and turn it into the democratic beacon for the region. Not quite.

The problem with this institutional failure is the damage it will do in the future. Who is going to believe that the next drug or vaccine is safe? We won’t believe the experts and their studies. Ditto new nuclear power plants (which I favor), bridges, roads, high-speed trains and innovative skyscrapers.

The late Sen. Daniel Patrick Moynihan, D-N.Y., lamented the decision-making freeze that prevented the creation of Westway, an elaborate and revolutionary highway and development project along Manhattan’s derelict Far West Side. In losing our faith in expertise, as we did in the 1960s, we lost our ability to take decisions.

Now it’s happening again. Thank you BP, AIG and Citibank. –For the Hearst-New York Times Syndicate

 

Gulf Spill Puts Energy Bill on Slippery Slope

by Leave a Comment

 

With energy, Senate Democrats find themselves between a rock and two hard places. Nonetheless, Sen. John Kerry, D-Mass., and Sen. Joe Lieberman, I-Conn., have introduced their climate and energy bill.

Its timing is awful. Its fate is uncertain. Yet its sponsors felt it had to be done now.

While the Gulf of Mexico is being damaged by a runaway well, spewing millions of gallons of oil-like bile from hell, any energy bill has the chance that it will be amended to become an anti-energy bill and will fail when hoped-for Republican support evaporates.

At present there is fairly wide industry support for the Kerry-Lieberman bill, particularly from the electric utility industry. Leaders of the industry and its affiliated groups, like the Nuclear Energy Institute, were in on the writing of the bill. Tom Kuhn, president of the Edison Electric Institute, and Jim Rogers, president of Duke Energy, stood shoulder to shoulder with Kerry and Lieberman when they announced their bill.

The three pressure sources driving the bill are:

•The November elections and the desire of endangered Democrats to show that they have done something about climate change and have tackled long-term energy problems.

•The Environmental Protection Agency plans to start regulating carbon dioxide as a pollutant next year, if Congress does not act.

•The environmental disaster in the Gulf, and its effect on public attitudes to energy development and energy companies.

The bill differs from the House bill, passed last June, which emphasized cap-and-trade to control carbon emissions; although both bills introduce carbon restriction by sector over time, and could be reconciled in a House-Senate conference committee, according to Chris Holly of The Energy Daily.

The carbon-reducing provisions in the Senate bill not only rely on pollution credits but also a wide range of incentives, including carbon capture, enhanced subsidies for nuclear and alternative energy.

The bill’s original intent was also to give a boost to offshore drilling, thus pleasing Republicans and the oil industry. But the Gulf disaster has changed that. The bill as introduced now contains language that will allow states to prohibit drilling off their shores—a potential killer of nearly all new leasing and exploration. And drilling is pushed 75 miles out to sea.

Just weeks ago, the bill looked as though it could pass the Senate with support from at least one Republican, Sen. Lindsey Graham of South Carolina, one of the original authors. But Graham withdrew when Senate Majority Leader Harry Reid, D-Nevada, said he would put immigration reform ahead of the energy bill.

While Sen. Mitch McConnell, R-Ky., the minority leader in the Senate, has come out against the bill, Graham still likes it but believes its chances of passage are slight. Kerry still believes Graham would vote with the bill, giving the Democrats that essential 60th vote, if the Democrats all stick together, which is unlikely with the bill’s nuclear and offshore leasing provisions.

A more likely result is that the bill will open old debates about big energy, like oil and nuclear, and pit it against alternative energy, mostly wind.

Comment on the bill has come slowly, as interest groups calculate the political alignment and realignment that the bill will bring about.

Offshore drilling gets more politically toxic as each day of failure to contain the situation in the Gulf passes. Nuclear gets more dubious as cost calculations rise. With or without legislation, the smart money is turning to natural gas for electrical generation and interstate trucking. At present, gas is cheap and plentiful.

There is a lot of money—$2 billion—in the bill for carbon-capture and sequestration, but this is ill-defined; and the idea of pumping millions and millions of tons of carbon dioxide into the earth remains a legal nightmare and a hard sell to some environmentalists. Clean coal, it seems, can never be pristine.

Here, then, is a bill for all seasons. Actually, more of a manifesto: an election manifesto. –For the Hearst-New York Times Syndicate

The Singular Threat of the New Monopolies

by 1 Comment

They’re not your grandfather’s monopolies. They’re not Standard Oil or Western Union or General Motors. But they’re monopolies, scads of them, nonetheless, restricting competition and thrusting their hands in your pockets.

In his new book, “Cornered: The New Monopoly, Capitalism and the Economics of Destruction,” Barry Lynn, a journalist and a senior fellow at the New America Foundation, lays out the case against the new monopolies and their role in stifling competition across the globe.

Where once monopoly watchers worried about steel, oil, electricity, primary goods and services, Lynn points out that the new monopolies are doing their thing — cutting competition, reducing choice and manipulating the market — in almost every business, affecting every aspect of our lives.

The old primary gang has become irrelevant as monopolies have sprung up in arenas where natural competition once reigned. The heavy hand of monopoly is dimming our choice.

Lynn cites the disturbing fact that 70 percent of the milk sold in New England is marketed by Dean Dairies; different labels on the bottles or cartons, same company. The same goes for bottled water; many labels, two principal suppliers: the Coca-Cola Company and Pepsico.

Book publishing is in the thrall of two retailers: Wal-Mart and Amazon. It was once as much an art as a business with dedicated publishers, nursing geniuses into print and history. Now unknown writers are at a great disadvantage as the publishers try to confine their lists to proven names.

Chain stores are another bedeviling monopoly. They destroy small businesses as they spread across the country. For every Target, Wal-Mart, Home Depot, CVS, McDonald’s and Starbucks, there are other entrepreneurial dreams dashed.

Bigness helps bigness. Big shopping center developers bring in big chains. Once, Lynn points out, every city proudly had its indigenous department store. Now it has chain stores.

Throughout the early part of the 20th century, antitrust law and practice looked at the impact of mergers and a reduction in competition. It fought against elephantine companies as being not in the public interest.

Enter Ronald Reagan and a philosophy that sought only to see the impact of mergers on consumer prices. Wal-Mart is the poster child for these arguments. So long as it appeared that consumers were getting a good deal, consolidation was not an anti-trust violation.

At first, according to Lynn, the new monopolies do reduce prices — until it is safe to raise them. Witness the banks.

Consumer prices also tell very little about the health of a society, its optimism and sense of possibility.

Chain stores bring dead-end service jobs. Monopolies are stifling possibility for millions and, incidentally, killing innovation.

Politicians, foundations, chambers of commerce and the free enterprise crowd all blow kisses at small business, but they get between the sheets with the monopolists. It’s cozy that way. –For the Hearst-New York Times Syndicate



 

The Virtue of the Unwanted

by 1 Comment

A young man drops over a fence in Arizona. He is so thin that his pants hang on the bones of his pelvis. His face is worn. He is scared.

He is a child of the oppression of poverty.

Now, uneducated and unskilled, he plans to make his way in a country where he is not wanted, and where he does not speak the language. Yet he hopes to get a life–even half a life–better than the one he left.

But the new streets of his life are not paved with gold. At any time, he can be arrested. He must live in the shadows.

He is an illegal immigrant.

Illegal, unwanted. It is an indelible stain, a sin that cannot be expiated.

He is a criminal. He is unworthy of medical treatment, social services, working or raising a family.

If he drives a car and works, he compounds his illegal status. If he marries and raises a family, his family can be sundered if a suspicious policeman demands identity papers from him.

All the days of his life here, he will be illegal. No statute of limitations will save him from his apartness from the mainstream. As a stateless person, he is an easy victim for exploitation by extortioners, crooked lawyers and exploitative employers.

Yet some illegal immigrants prosper in the shadows of society. They start businesses and accumulate cars, houses and successful children. A woman who runs a housecleaning service is putting her son through a prestigious university, where he is studying computer science. A man has a landscaping business with tractors, trucks and a large workforce.

These people left their native Mexico as desperate youths. Decades later, they are living the American dream in all but the paperwork.

They are vulnerable and they are frightened, as the debate has grown uglier and the law enforcement more draconian.

These are the Americans who never were and, under Arizona law, never can be. Their lives are written in invisible ink.

These are people who, in a different context, we admire: people of courage and self-determination. Through no fault of their own, they were born on the Mexico side of the Rio Grande. In an effort to improve their own lives, they have surrendered to a life apart, a life under threat. They are the exiles who cannot go home and may not be able to stay.

Yet America is under threat of conquest through immigration. There is no end in sight to those who would flood into our homeland from all of Latin America, and much of the rest of the world. But it is Mexico, in particular, that concerns us.

Guess what? We are lucky that our immigration threat is from that country and we can build a better border barrier.

Every successful, and semi-successful, country in the world has a problem with illegal immigrants. South Africa has about 3 million from Zimbabwe alone. Venezuela has millions from the rest of Latin America.

Western Europe is being swamped by North African illegal immigrants, who bring a very alien culture and an aggressive religion with them. They pour into Greece, Italy, Malta and the Canary Islands at a far faster rate than they can be handled. North Africans pose a much greater threat to Europe than do Latin Americans to the United States.

Illegal immigration is one of the great crises of the 21st century. But the real problem is language. The spread of a second language–assisted by broadcasters, motor vehicle departments, schools and greedy businesses–creates a parallel society in which people living in the shadows can function and assist the survival of other illegals.

A country grows within a country.

Dual-language countries are countries divided—think of Belgium and Canada. We resist illegal immigrants but make it easy for them not to assimilate.

This is folly. “One nation under English” might not be a bad slogan.

Earth Day: Why It Was a Quiet Party

by 1 Comment

Forty years ago on the first Earth Day, there was the smell of revolution in the air. Metaphorically millions said aloud and to themselves, “We have fouled our nest; now we must clean it.”

The issues seemed simpler back then. They are so complex today that the world is suffering from environmental shock.

It is not that the state of the environment is not precarious, but rather that the solutions are more elusive.

There are those who believe it can all be done with a hydrogen economy; and others who believe the wind and sun alone can do the job. There are those who can see a plastic-free future, if we would just tax the plastic. Yet others believe Nirvana is just a vegetarian meal away.

Forty years ago, we were still in the throes of the upheavals of the1960s; and the 1960s were the time of The Great Accusation. This accusation was leveled by an angry populace at all institutions, both public and private, that had betrayed the citizenry. The anger of the Tea Party movement today is nothing compared to the anger on the streets in those days; the days of the Vietnam War, civil rights, gender equality and the environment.

The premise under the demonstrations on the first Earth Day, April 22, 1970, was that the only reason the Earth was going to hell in a hand basket was that big companies polluted for profit and that government covered up for them.

It was a simple, powerful premise. The road ahead was clear: Make the polluters pay and all would be well.

It also was a time when the idea of climate change was hardly known, and those who talked about it did so as an arcane curiosity.

Clean air was an issue, but not to forestall global warming. Smog and later acid rain were the air issues.

Water was a huge preoccupation, which is why the Clean Water Act —initially vetoed by President Richard Nixon but then signed after huge protests — preceded the Clean Air Act.

The critical piece of legislation was The National Environmental Policy Act of 1969 which has become the bedrock of environmental law.

As time took its course, the simple premise of good guys vs. bad guys evolved into our guys vs. your guys, a wholly different equation. Virtue was less easy to establish back then as it is today.

The environmental movement found its strength not in the streets but in the law courts, testing, and expanding by precedent the scope of the new laws.
It also developed attachments to some technologies over others. It favored a European transport model with high gasoline taxes and a portfolio of electric- generating technologies that it called alternative.

But significantly, the environmental organizations en masse became technology partisans, signifying approval of the obscure (solar, wind, waves and hydrogen) over the practical (hydroelectric and nuclear).

Of the half-dozen or so really effective environmental groups, the National Resources Defense Council became the most successful litigator, dwarfing other groups like the Union of Concerned Scientists, the National Wildlife Federation, the Sierra Club and Greenpeace. Yet to their opponents they were a unified threat, skillful and intractable. For philosophy they had Amory Lovins (“The Path Not Taken”) and E.F. Schumacher (“Small Is Beautiful”).

Forty years on, the environmental debate is more complicated and there is less room for certainty. At some point, China and India are set to surpass the United States as the world’s largest polluter; governments promise to change the ways of their people, but not if it hurts.

Earth Day’s big birthday Thursday also was overshadowed by a natural disaster: Iceland’s volcano eruption. The economic impact was global in unexpected ways which showed, among other things, how hard it is to lay down absolutes about the environment. You can’t sue a volcano.

Who would have thought a volcano in Iceland would devastate the cut-flower industry in Kenya, and with severe consequences for that country’s economy? Who ever knew that a third of Europe’s cut flowers came from faraway Kenya on polluting aircraft?

Who needs flowers? Kenyans do. –For the Hearst-New York Times Syndicate

How Nora Ephron Has Made Me Feel Better about My Neck

by 2 Comments

The horror of my life was the shaving mirror in the morning.

Of course, it wasn’t the mirror but what I beheld there: Me. Actually, my neck.

Like millions of others, I suffer from neckophobia: the consternation that arises when your neck decides, quite on its own, that it’s old and has too much skin; and what are you going to do about it?

Well, there are dickeys, extra-snug shirt collars and turtlenecks.

There are thoughts of cosmetic surgery–tucks and lifts. But that’s expensive and risky and requires bravery.

But, no, my winter of discontent has been made glorious summer by a woman. One wonderful woman: Nora Ephron.

Nora is a genius: a gifted journalist, essayist, novelist, playwright, screenwriter and bon vivant. I don’t actually know about the latter, but she must be – she was once married to Carl Bernstein of Watergate fame. I did know Carl, we worked together at The Washington Post; and even before he was famous, he was into the good life.

Anyway, Nora has saved me from hating my neck by writing a book, “I Feel Bad About My Neck: And Other Thoughts.” Thank you, thank you!

The moment I heard about her book of essays, I felt so much better about my surfeit of skin. How could a great lady in Hollywood–or is it New York?–so help the self image of a stranger?

Actually I met Nora in 1963 at The New York Post, when she was 21 or so and already a star. She was wise too; assiduously, she avoided my attempts to talk to her.

Nora’s neck was lovely in those days. I can see it now, long and shapely.

I thought Nora might be fascinated by my young adventures in Africa and Europe. But she had moved in rarefied circles all the days of her life. Her parents had been wildly successful screenwriters. They even wrote a play about her when she was a teenager, “Take Her, She’s Mine.” Imagine that? You don’t need a resume; you just send a script or two tickets.

Nora’s secret–I hope she won’t mind if I call her by her first name, since necking is an intimate undertaking–is to turn adversity into art and art into money.

When Carl Bernstein–who I’ve always liked–turned out to be a very naughty husband, she wrote one of the funniest novels of the generation, “Heartburn.” It was a riot of a book in which she wrote that the husband, Mark, was “capable of having sex with a venetian blind.” In this volume, she indulged her passion for revenge with her passion for cooking—grilled husband with diablo sauce. If she is a comfort about my neck with her latest book, she was doubly so for betrayed wives with “Heartburn.”

In the movie “When Harry Met Sally,” Nora took revenge on all her lovers and husbands with the faked orgasm scene. That caused many a man to wonder at his prowess. More revenge against men and comfort for women. Her own cri de coeur: “In my sex fantasy nobody ever loves me for my mind.”

Well, Nora, I love you for your neck. It has so changed the way I feel about mine that I’m going to go on television wearing an open-neck shirt.

But recently, I’ve had this nightmarish thought: Suppose the exceptional Ms. Ephron goes under the knife and restores the long, smooth body part I beheld in New York in 1963?

She wouldn’t do that to me, would she? —For the Hearst-New York Times Syndicate

 

 


New Oil Discoveries Threaten Obama’s Energy Strategies

by 5 Comments

 

“When an irresistible force such as you

“Meets and old immovable object like me

“You can bet just as sure as you live

“Something’s got to give …”

— Johnny Mercer

When Johnny Mercer penned those words, he was speaking of love not politics, and not the politics of energy. But he could have been.

In energy, there are two great forces that collide: public policy and the market. Despite the love affair of recent decades with markets, neither is always right.

Consider the struggle between old energy –market-tested and with a mature infrastructure — and new, alternative energy.

Public policy, under Republicans and Democrats, has sought to discourage the nation’s ever-greater dependence on imported oil (about 60 percent). But the market has sung a siren song, tempting us to more oil consumption.

Back in the 1970s, when we imported only 30 percent of our oil, the country was frightened into making great efforts in research and development to find alternatives to oil. Most of those concentrated on oil substitution and new ways of making electricity. None of the new ideas penetrated the market in any serious way, with the possible exception of wind, and that took many years to gain general acceptance and to overcome institutional and technical issues.

The Big Enchilada, oil, proved to be recalcitrant. President Jimmy Carter wanted to make it from coal; a nascent ethanol industry was tentatively testing the forbearance of government in seeking tax breaks and subsidies.

The search for a way out began after the Arab oil embargo of 1973-74, and reached a zenith with the Iranian Revolution of 1979. Many well-intentioned programs were undertaken, concentrating primarily on coal — coal as a gas, coal as a fluid and the improved combustion of coal.

But it was then, as it is now, a wild time for new entrants. Dozens of projects were funded including magneto-hydrodynamics, in situ coal gasification, garbage to electricity, battery research, cryogenic transmission research and energy storage in fly wheels.

Some, if not a majority, of the projects were pure science fiction.

The energy establishment favored not so much the new as the duplicative. Its members leaned to coal, oil shale, more oil and gas leasing and more nuclear. The old Mobil Oil Company paid a whopping $212 million for a Colorado oil shale lease without regard to how it could be worked.

Across the Southwest, banks lent to every energy project that came through the door. Natural gas got short shrift because it was wrongly thought to be a depleted resource.

Then in the mid-1980s, Saudi Arabia opened its oil spigot all the way (10 million barrels a day) and the market annihilated expensive energy from new sources. With gasoline cheap again, SUVs hit the roads in giant numbers; a string of Southwest banks collapsed; and the energy debate turned not to changing consumption but to deregulation, facilitating profligate use across the board.

The market spoke and it shouted down concerns about national security or technological substitution. Public policy surrendered to the market. Despite fine speeches from secretaries of energy on the danger of exporting our security and our money, the market continued its advocacy of excess.

The George W. Bush administration identified our vulnerability in oil and identified a looming crisis in electricity. But it faltered when it came to government coercion of markets; for example, getting more nuclear plants built.

Bush himself fell for the temptations of ethanol from corn and the possibility of switch grass. Now these are under threat from new discoveries of oil off Brazil and far greater estimates of oil production from Iraq. In fact, Iraq is being touted as a rival to Saudi Arabia with Brazil right behind it.

The Obama administration is hell-bent on getting off old energy. It loves “alternatives” and it’s committed to doing something about global warming.

But in research, money does not equal results. While the Department of Energy is chock full of money for new energy research and development, cheap natural gas and new potential oil from unexpected quarters may do to Obama’s new energy hopes what it did to Carter’s: undermine and expose them to ridicule.

Public policy may again be pushed around by the irresistible force of the market, even if it is not serving the national interest.

 

If only Tax Credits Were Answer for Small Firms

by 1 Comment

The shutters are coming down at hundreds of thousands of small businesses, grossing between $1 million and $10 million. For them the question that hangs in the air, if not spoken, is: How much did we take today?

It’s the eternal question that haunts small business. Whether it is daily, weekly or monthly, the same brutal calculation has to be made: Was more money booked than committed?

Politicians, and certainly President Barack Obama, gathering from what he said in his State of the Union address, know that they need the support of myriad small businesses.

They need the husband and wife who drive an 18-wheeler across the country and the baker who rises at 4 a.m. to make doughnuts for city office workers. They need the suburban bicycle repair shop, the ethnic restaurant in the rundown strip mall and the Web design firm in a city loft.

These are real entrepreneurs who start businesses from dreams, not from textbooks in business schools.

Politicians know America needs the entrepreneurial class. But they are morbidly disinterested in the real needs of this class. They demonstrate this in their only answer to the question of helping small business people: tax credits. In the 33 years I operated a small publishing company, only one year were taxes close to being a problem.

The problems for small businesses, whether making gadgets for Wal-Mart, running a salon or operating a travel agency, are the same: Banks think you are a nuisance and are loath to lend you money, or even take the time to understand your business.

Banks’ lending criteria are created by MBAs in marble towers, far from the street below. That’s why so many businesses have been launched on credit cards with previously established credit. It’s risky and expensive, but it happens all the time.

Then, there’s the problem of providing health care for employees. It’s punitively expensive if you provide it, and you feel morally at fault if you don’t.

Corporations — all corporations — are inclined to seek monopoly. Therefore, they squeeze small companies, whether it’s Target pressuring the local toy shop or Borders putting the old neighborhood bookshop out of business. They close those lines of endeavor to countless people.

For every chain restaurant, count one family restaurant that didn’t open. The family-run hotels and motels that dotted U.S. highways are gone. Things of the past.

Congress’s normal response, and one given by the President, is to give tax breaks to small businesses. Most small businesses would be glad to do well enough to pay taxes.

Once, there were many small business people in Congress. Now, there are few. The last congressman I knew who knew something about small business was Rep. Chet Holifield, D-Calif. Powerful and hardworking, he chaired the House Government Operations Committee. He also operated a haberdashery in California. Are there many haberdashers left in the age of Banana Republic?

The Small Business Administration underwrites loans for small business, but it is a slow business. I knew a printer who qualified for assistance, but he was out of business by the time the agency agreed to help. Government is not nimble enough to help the person who can’t make payroll next Friday.

Obama should stop further complicating the tax code, which is a burden to small business. Instead, he should put together a brain trust on revitalizing small business. Forcing the banks to lend to small business is a good first step. The main problem for small business isn’t taxes, it’s credit.  –For the Hearst-New York Times Syndicate

By Their Parties, Ye Shall Know Them

by Leave a Comment

The trouble with Washington’s social scene is that it’s a horizontal city — and, try as one may, it’s hard to escape one’s assigned social stratum.

The lawyers know the lawyers; the journalists drink with the journalists; the lobbyists lobby the lobbyists (and the lobbyists-in-training, the Capitol Hill staffers).

By contrast, other cities are vertical. The most vertical city of all is New York. And Dublin is right behind it.

The test of horizontal versus vertical is in a city’s parties. If everyone at a party is either known to you or is in the same line of work — health care, information technology, law enforcement — you are living in a horizontal city; and you are trapped in a stratum that colors what you hear and ultimately think.

In a vertical city, a party is a wondrous place where you’ll learn things other than those things you think you know. A party that includes, say, an actor, a financier, a nurse, a tailor and a writer is a brew of delights.

In my experience, you’ll find such a party in New York above all other cities. However, there always seems to be an interesting mix at social gatherings in Ireland, and Dublin in particular. Generally, the Irish are so well read that they can talk to anyone about anything.

The legend goes that Washington parties are where things get done. If so, I’ve never been to those parties. I think in the days of Jack Kennedy, intimate, influential dinner parties — perhaps at the home of columnist Joe Alsop — were important.

Perle Mesta hosted parties that were as famous as they may have been influential (in Harry Truman’s day). Sally Quinn, wife of the storied Washington Post editor Ben Bradlee, has established herself as a Washington hostess with clout. And NPR’s Cokie Roberts is said to put on a great party.

But these are Washington parties for the like-minded and that’s the problem.

These days, I think the best party-giver in Washington is Gloria Dittus, a public relations phenomenon who recently sold her company but is still hosting parties at her Washington home. Just this week, she gave a grand bash for legendary White House reporter Helen Thomas and her new book, “Listen Up, Mr. President,” co-written with Craig Crawford.

Dittus knows how to throw a party.

First, she has a stunning home in the fashionable Kalorama section of Washington. But that’s just the beginning. She always has valet parking and coat-checking. And her parties are full bar and groaning board.

The party swirls from room to room in a natural flow. No bottlenecks at the bars.

Dittus knows who to invite across the social spectrum. Are great political deals cut at one of her parties? Maybe. But don’t blame her, or any hostess. Since bipartisanship has been replaced with the new Washington ethic of “my party right or wrong,” the deals are done intraparty in the depressing backrooms of Congress.

The other prevailing Washington value has reduced the party attendance: If you are in elected office, you’ll never be seen to take more than one glass of wine. Hardly worth dragging yourself across town for that.

Time was when at 6 p.m. the bottles came out all over Washington, and in the Capitol itself. Some of the best parties were impromptu ones in congressional offices. Nowadays, you have to settle for water; carbonated, if you’re lucky.

Then there’s the question of drinking and driving. Most of Washington’s denizens live in the suburbs and they have to drive. By contrast, parties thrive in New York and London, where there is more public transportation. But it should be noted that London parties tend to suffer from the same rigidities as Washington. Call it capital party syndrome.

Across the Atlantic, our democratic partners are still enjoying a drink. There are bars scattered all over the British Parliament, and two very busy bars in the much smaller Irish Parliament.

The principal virtue of partying is that it’s bipartisan. Until bipartisanship comes back, there is always the sainted Gloria Dittus. –For the Hearst-New York Times Syndicate