Aircastle Ltd. is not a household name, but if you’ve flown on South African Airways, KLM, or any of more than 80 other airlines, you’ve probably traveled on an airplane that the Stamford, Conn.-based company owns and manages.
The company´s business model is based on buying, selling and leasing aircraft worldwide. Its corporate structure minimizes the payment of taxes by using a complex arrangement of subsidiaries, all managed from Connecticut, Ireland or Singapore.
These arrangements, recently highlighted in the #MauritiusLeaks investigation by the International Consortium of Investigative Journalists (ICIJ), are legal. But they have allowed the company to pay minimal taxes, including no corporate taxes in the United States on income from their aircraft leases.
Aircastle, of course, isn’t alone among large American companies in lowering their taxes through creative accounting. Such well-known giants as Amazon and Apple do so as well..
But the recent revelations on Aircastle’s use of the tiny Republic of Mauritius, a nation of four islands in the Indian Ocean, as a tax haven provide a helpful window into how such tax dodges can use offshore companies set up primarily for that purpose. Getting to zero with tax avoidance became even easier with the Republican tax cuts in 2017, but Aircastle was already well on the way to that objective.
For example, when Aircastle decided to do business in South Africa in 2010, as the ICIJ and Quartz Africa revealed in July 2019, it turned to a Bermuda-based law firm to help it set up six subsidiaries in Mauritius: Thunderbird 1 Leasing Ltd. along with five other companies named Thunderbird 2 through 6. As was Aircastle’s common practice, each company was to own a specific aircraft. South African Airways made their lease payments to the subsidiaries in Mauritius, each of which was owned in turn by an Aircastle subsidiary in Bermuda or Delaware.
Since South Africa and Mauritius have a tax treaty allowing this, Aircastle paid Mauritius at the low Mauritius rates on the income from the leases ($772,735 a month for the first A300-200 leased by South African Airways from Thunderbird 1 beginning in 2011). From 2011 through 2014, according to documents leaked to ICIJ, Thunderbird 1 paid a total of $382,600 in Mauritius taxes, a 1.59 percent tax rate on $24 million in operating profits.
Aircastle paid no taxes on these profits either in South Africa or in the United States.
According to ICIJ, “Had Aircastle’s Thunderbird 1 company alone reported the profits it made in Mauritius over four years in the U.S., it could have paid more than $5 million. Those taxes would just about cover the State of Connecticut’s current budget for domestic violence shelters.”
Including other Thunderbird companies as well, Quartz calculated, Aircastle paid $1.5 million in Mauritius taxes on profits of $53 million, at an effective rate of 2.87 percent — thus avoiding $14.8 million in taxes it would have owed if taxes had been paid to South Africa. This is equivalent to more than half the annual social-housing budget of Johannesburg.
Aircastle did not respond to queries from ICIJ or Quartz, and data for a more comprehensive analysis of its tax strategy were therefore not available. However, since the company is registered on the New York Stock Exchange and also traded on NASDAQ, its reports to the Securities and Exchange Commission (SEC) are public. Its annual report to investors for 2018, for example, incorporates the 10-K report to the SEC.
There we learn that Aircastle Ltd. is actually incorporated in Bermuda and thus pays no U.S. corporate income tax, except on the management services supplied by its U.S. subsidiary to the aircraft-owning companies. Bermuda has no corporate income tax. Thus the company notes in its 10-K report, under the heading “risks related to taxation”:
“If Aircastle were treated as engaged in a trade or business in the United States, it would be subject to U.S. federal income taxation on a net income basis, which would adversely affect our business and result in decreased cash available for distribution to our shareholders.”
Given the lack of transparency in corporate reporting, it is hard to tell how Aircastle’s strategies compare to those used by other companies. The Institute on Taxation and Economic Policy (ITEP) reported in April, based on 10-Ks submitted to the SEC, that 60 of the Fortune 500 had zero or negative federal income tax payments in 2018. But more detailed analysis or estimates of tax revenue lost, in the United States and other countries, require much more data than almost all such reports provide.
The fundamental step needed to make accountability feasible is public country-by-country reporting, whereby corporations would be required to provide for investors and the public a breakdown by country of revenues, profits, employees and taxes paid for every country in which they do business. Governments, investors, and even some businesses are increasingly accepting the need for such reports.
According to an April 2019 report from the U.S.-based Financial Accountability and Corporate Transparency (FACT) Coalition, however, the trend is in the right direction. “The evidence suggests we are quickly reaching a turning point,” said Christian Freymeyer, researcher and author of the report. “Investors see the value, policymakers see the benefits, and businesses see the inevitability of greater transparency. It’s only a matter of time before tax transparency is accepted and expected of financial disclosure.’’
Freymeyer´s analysis may well err on the side of optimism, given the continued opposition from those with vested interests in tax avoidance. But it is certainly true that the argument is now finding new supporters far beyond the circle of tax-justice activists who have been the leaders in demanding these reforms.
William Minter is the editor of AfricaFocus Bulletin.
Books like The Economists’ Hour: False Prophets, Free Markets and the Fracture of Society (Little Brown, 2019), by Binyamin Appelbaum, of The New York Times, don’t come along very often. Tyler Cowen, the peripatetic George Mason University professor, says he read the whole thing in one sitting. It took me three days, but the impulse was the same. I picked it up every chance I got. When I had finished, I read its 90 pages of endnotes one after another, as if it were a second book, only slightly less interesting than the first.
Why? Well, Appelbaum is a careful reporter, a graceful writer, and a first-rate story-teller. He joined The Times’s Washington bureau in 2010 from The Washington Post, and, before that, The Boston Globe, and the Charlotte Observer, to cover monetary policy in the aftermath of the financial crisis. In the book he covers a much broader spectrum of policy developments. He did a good deal of first hand reporting, ingested a huge amount of secondary literature, and did some archival work himself. Mainly, though, I was impressed by his skill as a listener. He possesses a special gift for capsule biography.
Of necessity, the storyteller gets the upper hand. Appelbaum writes:
In the four decades between 1969 and 2008, a period I call ‘‘the Economists’ Hour,” borrowing the phrase from the historian Thomas McCraw, economists played a leading role in curbing taxation and public spending, deregulating large sectors of the economy, and clearing the way for globalization. Economists persuaded President Nixon to end military conscription. Economists persuaded the federal judiciary largely to abandon the enforcement of the antitrust laws. Economists even persuaded the government to assign a dollar value to human life – around $10 million in 2019 – to determine whether regulations were worthwhile.
Such a “biography” of a “trust-in-markets” revolution needs a central character, and Appelbaum chose his well. His subject is Milton Friedman, who concentrated on research in the first half of his career and became a public intellectual in the second half. In Capitalism and Freedom, which appeared in 1962, Friedman advocated most of the nostrums that were adopted in one degree or another in the coming decades: floating exchange rates instead of fixed one, an all-volunteer army instead of one based on conscription, draconian tax reductions, charter schools, industrial deregulation, shareholder hegemony in public corporations, and one measure that didn’t eventuate – a guaranteed annual income for all citizens, replacing the Social Security retirement system.
In fact all this was a counterrevolution, Appelbaum knows it, and says as much at several points in his story. But he was born in 1978. He wasn’t there during the four decades that ended in 1969: the New Deal; the Keynesian revolution; the economists’ triumph as architects of World War II logistics; the Marshall Plan; the “new economics” of the Sixties; and the record-breaking post-war boom of the industrial democracies.
This rise of the “modern mixed economy” after 1933 was viewed at the time as an alternative to the top-down government control that characterized Soviet and Chinese communism. It had plenty of dynamism, but retained enough of the communitarian ethos of wartime (such as fixed exchange rates under the Bretton Woods Agreement) as to seem, by the late 1960s, more than a little confining. Appelbaum knows all this because he has read widely; he even cites Tony Judt, the leading historian of the postwar decades, in an endnote. But, like many others, he gives short shrift to the period before his own.
Instead, he starts with something we all know, the Vietnam War. A brilliant first chapter traces the evolution of a plan for an all-volunteer army from a chance dinner-party conversation between economic professor Martin Anderson and a law partner of Richard Nixon, through its gradual adoption by Nixon 1968 presidential campaign, and its design by University of Rochester economist Walter Oi, to its eventual adoption under the guidance of economist George Shultz, then director of the Office of Management and Budget. A little extra time to end the war had been purchased. The basic inequity of conscription had been solved. A market for soldiering had been established. But, writes Appelbaum, “War, once an abnormal act of national purpose, has become a regular line of work.”
Appelbaum then works his way through chapters on inflation, taxation, antitrust enforcement, deregulation, cost-benefit analysis, exchange-rate regimes, globalization, and banking. any one of which could warrant an entire book. These are successively less satisfying. He is forced to take shortcuts: Robert Mundell wasn’t a baby-faced hero; antitrust enforcement isn’t dead; the story of Venezuela is as interesting as the very different one of Chile. But such are his skills as a storyteller that, by the time he introduces Albert Hirschman, author of Exit, Voice, and Loyalty, in the book’s final pages, Appelbaum’s central point has become indelibly clear: “[T]he defining feature of a market is the freedom to walk away.”
Appelbaum writes, “Friedman chose to see the role of individual initiative rather than the context of public support. He celebrated drivers and took roads for granted.” That’s very apt, as far as it goes. And in the end even he gets a sensitive hearing: “Friedman had as large a hand in the  crisis as any man, but it is a mark of the complexity of his legacy that he also left effective instructions for limiting the damage.”
The problem is that plenty of economists have continued to celebrate roads during the last 40 years – as well as government-sponsored retirement systems, health insurance, unemployment insurance, capital budgets, trade agreements, counter-cyclical spending, environmental protection, and, in general, social and cultural entrepreneurship.
For a more balanced view of the stance of the economics profession towards society, you might read The Vital Few: The Entrepreneur and American Economic Progress (1986), by economist Jonathan Hughes. It is a highly readable history, couched in much the style Appelbaum has written. Hughes, of course, published his account in the halcyon period before the costs of late-stage globalization became apparent. The Economists’ Hour is a useful guide to those costs. Applebaum writes:
In the pursuit of efficiency, policy makers subsumed the interests of Americans as producers to the interests of Americans as consumers, trading well-paid jobs for low-cost electronics. This, in turn, weakened the fabric of society and the viability of local governance. Communities mitigate the consequences of local job losses; one reason mass layoffs are so painful is that the community, too, often is destroyed. The loss exceeds the sum of its parts.
It wasn’t obvious what would happen when Apple chose to manufacture its smartphones in China; or when IBM sold its laptop business to Lenovo. It was, however, clear enough to corporate executives and their government counterparts what would happen if they didn’t: Chinese companies would inevitably enter the product market themselves and catch up, albeit more slowly than otherwise would have been the case. American policy-makers have been caught flat-footed by the alacrity with which Chinese industry has grown toward the frontiers, and Appelbaum makes much of the ability of Asian nations to carefully manage their economies. But it’s much easier to know what to do when you are following a leader than when you are trying to stay ahead.
What comes after the Economists’ Hour? Appelbaum is clearly focused on inequality, and the extent to which money has gained power beyond its proper sphere. He is 41, and this is his first book. (He is now serving on The Times’s editorial board). It is a sensational debut. Here’s hoping The Times gets him back on the beat, preferably writing the Economic Scene column that Leonard Silk made famous in the ‘70s and ‘80s. Meanwhile, read his book, as a down payment on the next 30 years.
. . xxx
New on the Economic Principals bookshelf:
Transaction Man: The Rise of the Deal and the Decline of the American Dream, by Nicholas Lemann (Farrar, Straus)
Free Enterprise: An American History, by Lawrence Glickman (Yale)
Rethinking the Theory of Money. Credit, and Macroeconomics: A New Statement for the Twenty-First Century, by John Smithin (Lexington Books)
Crying the News: A History of America’s Newsboys, by Vincent DiGirolamo (Oxford)
David Warsh, an economic historian and veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this column first ran.
From Robert Whitcomb’s “Digital Diary,’’ in GoLocal24.com
September song: Many college freshmen (or is it freshpersons or first-year students?) are understandably nervous about rooming with people they never knew before. But there’s much to be said for many colleges’ policy of not letting them choose dorm roommates their first year. Rather, these schools diversify dorm and room assignments to encourage students to get to know people with very different backgrounds. They strive to mix it up. The idea is to promote American higher education’s democratic mission of expanding students’ understanding of the wider society. Without the mixing policy, most rich preppy kids might mostly just choose to room with rich preppy kids, jocks with jocks, people of the same ethnicity with people who look like them, and so on, at least in the first year.
The dorm-diversification approach seems to work pretty well, with polls showing that college students appreciate learning about the experiences and perspectives of people who perhaps have had lives beyond their imaginations. Many choose to stay roommates of those whom their colleges had initially chosen for them. The research firm Skyfactor found in a 2015-2016 school-year survey of 20,000 students at 15 institutions that more than half were content with the first-year roommates the college had assigned them and only 10 percent asked for a roommate replacement that year.
Economist Bruce Sacerdote wrote last year: “Natural instincts do not always benefit us in the long run….As human beings we naturally gravitate towards our comfort zone and find peers who look a lot like ourselves.’’ But we get stronger if we’re put into situations where we connect with people and ideas that we’re not used to.
To read the Skyfactor survey, please hit this link.
To read Mr. Sacerdote’s study, please hit this link.
My own college roommate experience was fairly varied – for that less “diverse’’ time. I roomed one year with a “Latin lover’’ (from Venezuela) who “sexiled’’ me as he spent many nights with girlfriends in our room, forcing me to seek other accommodations. Others included two future physicians, one whose father was an AT&T executive, the other whose father was quartermaster general of the Marines. Then there was the plainspoken fellow from a small New Hampshire town, another from a small Illinois town and a Norwegian (in my fraternity, where I lived during my junior year). I learned something from all of them, though the only one I’ve kept in fairly frequent contact is one of the physicians, now a cancer surgeon in New York about to retire.
I am grateful that none of my roommates were heavy drinkers, well not after freshman year. They learned.
From Kaiser Health News
As voters fume about the high cost of health care, politicians have been targeting two well-deserved villains: pharmaceutical companies, whose prices have risen more than inflation, and insurers, who pay their executives millions in salaries while raising premiums and deductibles.
Although the Democratic presidential candidates have devoted copious airtime to debating health care, many of the country’s leading health policy experts have wondered why they have given a total pass to arguably a primary culprit behind runaway medical inflation: America’s hospitals.
Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than the gross domestic product, inflation and wage growth. Spending on hospitals represents 44% of personal expenses for the privately insured, according to the Rand Corp.
A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42% from 2007 to 2014 for inpatient care and 25% for outpatient care, compared with 18% and 6% for physicians.
So why have politicians on both the left and right let hospitals off scot-free? Because a web of ties binds politicians to the health care system.
Every senator, virtually every congressman and every mayor of every large city has a powerful hospital system in his or her district. And those hospitals are as politically untouchable as soybean growers in Iowa or oil producers in Texas.
As hospitals and hospital systems have consolidated, they have become the biggest employers in numerous cities and states. They have replaced manufacturing as the hometown industry in a number of Rust Belt cities, including Cleveland and Pittsburgh.
Can Kamala Harris ignore the requests of Sutter Health, Kaiser Permanente, UCLA or any of the big health- care systems in California? Can Elizabeth Warren ignore the needs of Partners HealthCare, Boston’s behemoth? (Bernie Sanders may be somewhat different on this front because Vermont doesn’t have any nationally ranked hospitals.
Beyond that, hospitals are often beloved by constituents. It’s easy to get voters riled up about a drugmaker in Silicon Valley or an insurer in Hartford. It’s much riskier to try to direct their venom at the place where their children were born, that employed their parents as nurses, doctors and orderlies, that sponsored local Little League teams, that was associated with their Catholic Church.
And, of course, there’s election money. Hospital trade groups, medical centers and their employees are major political donors, contributing to whichever party holds power — and often to the out-of-power party as well. In 2018, PACs associated with the Greater New York Hospital Association, and individuals linked to it, gave $4.5 million to the Democrats’ Senate Majority PAC and $1 million to their House Majority PAC. Its chief lobbyist personally gave nearly a quarter of a million dollars to dozens of campaigns last year.
Sen. Sanders has called on his competitors for the Democratic nomination to follow his lead and reject contributions from pharma and insurance. Can any candidate do the same for hospitals? The campaign committees of all 10 candidates participating in the upcoming Democratic debate have plentiful donations linked to the hospital and health care industry, according to Open Secrets.
But the symbiosis between hospitals and politicians operates most insidiously in the subtle fueling of each other’s interests. Zack Cooper, a health economist at Yale, and his colleagues looked at this life cycle of influence by analyzing how members of Congress voted for a Medicare provision that allowed hospitals to apply to have their government payments increased. Hospitals in districts of members who voted “yea” got more money than hospitals whose representatives voted “nay,” to the collective tune of $100 million. They used that money to hire more staff and increase payroll. They also spent millions lobbying to extend the program.
Members who voted yea, in turn, received a 25% increase in total campaign contributions and a 65% increase in contributions from individuals working in the health care industry in their home states. It was a win-win for both sides.
To defend their high prices, medical centers assert that they couldn’t afford to operate on Medicare payments, which are generally lower than what private insurers pay. But the argument isn’t convincing.
The cost of a hospital stay in the United States averaged $5,220 a day in 2015 — and could be as high as over $17,000, compared with $765 in Australia. In a Rand study published earlier this year, researchers calculated that hospitals treating patients with private health insurance were paid, overall, 2.4 times the Medicare rates in 2017, and nearly three times the rate for outpatient care. If the plans had paid according to Medicare’s formula, their spending would be reduced by over half.
Most economists think hospitals could do just fine with far less than they get today from private insurance.
While on paper many hospitals operate on the thinnest of margins, that is in part a choice, resulting from extravagance.
It would be unseemly for these nonprofit medical centers to make barrels of money. So when their operations generate huge surpluses — as many big medical centers do — they plow the money back into the system. They build another cancer clinic, increase CEO pay, buy the newest scanner (whether it is needed or not) or install spas and Zen gardens.
Some rural hospitals are genuinely struggling. But many American hospitals have been spending capital “like water,” said Kevin Schulman a physician-economist at Stanford. The high cost of hospitals today, he said, is often a function of the cost of new infrastructure or poor management decisions. “Medicare is supposed to pay the cost of an efficient hospital,” he said. “If they’ve made bad decisions, why should we keep paying for that?”
If hospitals were paid less via regulation or genuine competition, they would look different, and they’d make different purchasing decisions about technology. But would that matter to medical results? Compared with their European counterparts, some American hospitals resemble seven-star hotels. And yet, on average, the United States doesn’t have better outcomes than other wealthy nations. By some measures — such as life expectancy and infant mortality — it scores worse than average.
As attorney general in California, Kamala Harris in 2012 initiated an antitrust investigation into hospitals’ high charges. But as a senator and presidential candidate, she has been largely silent on the issue — as have all the other candidates.
As Uwe Reinhardt, the revered Princeton health economist who died in 2017, told me, “If you want to save money, you have to pay less.” That means taking on hospital pricing.
So fine, go after drugmakers and insurers. And, for good measure, attack the device makers who profit from huge markups, and the pharmacy benefit managers — the middlemen who negotiate drug prices down for insurers, then keep the difference for themselves.
But with Congress returning to Washington in the coming days and a new Democratic debate less than two weeks away, our elected officials need to address the elephant in the room and tell us how they plan to rein in hospital excesses.
Elisabeth Rosenthal: email@example.com, @rosenthalhealth
Elizabeth Rosenthal is a reporter at Kaiser Health News.
It is coming as surely as cars changed the way we live, as airplanes revolutionized transportation and as the cellphone has conquered all.
It is the smart city of the future.
While it will look much like today’s cities, it will in fact be a digital construct; a place where sensors, interactivity and hyper-electronic speeds replace what will come to be seen as today’s leisurely pace of city operation and communication.
Imagine a place where police cruisers know the location of gunshots before anyone has called 911. Or, as Morgan O’Brien, chief executive officer of Anterix, a creator of private telephone networks for utilities, says, “By using broadband private networks, utilities can know a transmission wire has snapped before it hits the ground.”
Electric utilities, sometimes seen as wedded to the old ways of generation and distribution, have already laid the groundwork for cities’ electronic refurbishment. The first wave of the future, the smart meter, is in more than 60 percent of homes, and deployment continues apace.
The home smart meter does much more than simply record electricity use and ready a bill. It generates data on the local demand and flow patterns in the neighborhood. The smart meter has become vital in helping people save money when electricity prices are low (such as the middle of the night in many jurisdictions), but also helping to integrate the diverse new sources of generation from solar farms, solar panels on rooftops and wind turbines. Keeping tabs on this intermittent generation requires very smart electronics.
“Interconnectivity is the future,” says Clinton Vince, chairman of the U.S. energy practice and co-chairman of the global energy sector at Dentons, the world’s largest law firm. Basically, he points out, electric utilities must be very nimble to deal with the new microgrids and with individual generators using rooftop solar. The same applies to wind turbines, where the flow of electricity can be cut off instantly with a wind drop and other sources have to pick up seamlessly.
Chris Peoples, founding and managing partner of the Baltimore-based innovation strategy firm PP&A, says all this hyperactivity in the smart city will be recorded and preserved by blockchain, the ledger system of the 21st century.
To come are electric vehicles and autonomous ridesharing — so important that the big tech companies Cisco, Google, Uber and Amazon have invested in smart cities technologies, and have high hopes for growth there.
The smart city will want an even more reliable electric supply than we have today. Rapid response has been the modus operandi of electric companies down through the decades. Outages are handled with speed and big outages, such as after hurricanes, are dealt with by mobilizing restoration crews from unaffected areas.
But that may not be enough with greater reliance on electricity for things like autonomous vehicles and electric-powered delivery drones. These will have self-sufficiency through their batteries, but they also will need to have control systems that can operate in a blackout.
Anterix, for example, will provide secure broadband communications to utilities, enabling them to communicate when all other systems have failed.
There are two existential threats to the electric grid and, therefore, to the electricity-hungry smart city. One is cyberattack by enemies known and unknown. The other is a magnetic pulse, generated by an act of God in the form of solar flares, or an act of evil in the form of a nuclear weapon detonated overhead. Either way, the grid must be hardened, as far as science allows, against such eventualities
I would submit that this amounts to a brave new world. But I would implore the designers to remember people also want simple things of their cities, like walkability and mobility.
If you get walkability you get livability and, yes, lovability. Think Paris, San Antonio and San Francisco. Get smart, smart city designers.
On Twitter: @llewellynking2
Llewellyn King is executive producer and host of White House Chronicle, on PBS. He’s based in Rhode Island and Washington.
Donald Trump discusses immigration as if the benefits of residence in the U.S. are a pie. When immigrants get more, the people who were already here get less.
In general, that’s not true. When immigrants come here, they don’t just take some jobs (often low-wage jobs U.S. citizens don’t want), they also create new jobs. They need housing, transportation, food, and clothes, and they buy all of those things, creating more jobs for other people in this country.
However, in one way, Trump is turning his viewpoint into a self-fulfilling prophecy: He’s using our finite government funds to pay for incarcerating immigrants in detention facilities, which means he’s shifting that money away from other uses that could benefit the American people.
In that sense, it’s not immigrants who are taking from us. It’s Trump
For example, disaster relief. Trump’s using over $100 million in federal disaster aid money to pay for detention centers for immigrants — even as hurricane season gets underway
Does that worry him? Apparently not.
When asked about Hurricane Dorian, which was then a category 5 storm nearing the Atlantic coast, Trump actually said: “I’m not sure I’ve ever even heard of a category 5.” He said the same thing last year about Hurricane Michael. And the same thing again the year before, about Hurricane Irma
Hurricanes, wildfires, and other natural disasters are threats that definitely harm Americans. Historically, we as a nation take care of one another by appropriating some of our tax dollars for federal disaster relief
Nobody plans to be the victim of a natural disaster, and we can’t predict which communities will be hit by them. We can prepare for them as a nation so that when they happen, we are as ready as we can be, and we have the resources to deal with the aftermath
While we can’t control whether or not we get hit by hurricanes or tornadoes, we can control whether we invest in being prepared — or whether we waste that money instead on locking up immigrants in taxpayer-funded detention facilities.
We don’t need to do that.
When we take money from disaster relief and use it to imprison people who pose no safety threat to the American people, we are also harming the victims of natural disasters who need aid they won’t receive=
By moving money within the Department of Homeland Security from other areas (the Coast Guard, FEMA, etc.) to pay for beds in detention centers for people who have crossed the border illegally but represent no safety threat to this country, the Trump administration could leave America open to other types of threats instead.
Rather than spending tax dollars needed for actual threats to national security on detaining immigrants, we need comprehensive and humane immigration reform that keeps families together. Then we can use our money on what we actually need, like disaster relief.
OtherWords columnist Jill Richardson is a sociologist.
Even though no member of “the squad” – Democrat congressional Representatives Ilhan Omar of Minnesota, Alexandria Ocasio-Cortez of New York, Rashida Tlaib of Michigan and Ayanna Pressley of Massachusetts – is participating in the national Democrat presidential primary debate now underway, the drift of Democratic politics post primary has been set by them and, of course, Vermont socialist Bernie Sanders. Primaries bring out political extremists who, along with a 24-7 media, set the party narrative.
Before primaries became common in both parties, candidate selection was made by party bosses in smoke-filled back rooms, and eccentrics in the parties were allowed their 15 minutes of fame during national conventions. Party bosses disappeared long ago; more likely, they have gone underground. And national conventions are now regarded as prime-time political shows, essential for generating campaign funding and spreading political gospels through sympathetic media outlets. Over the years, party conventions have lost their sharks’ teeth.
If we are asked today who determines which presidents or governors will represent their parties in general elections -- who, in other words, are the real political bosses? – we are told the people rule through a democratic election process, a laudable goal but a laughable exaggeration. In both primaries and general elections, voters simply affirm choices made by other now shadowy figures operating behind sometimes opaque political veils.
When the sturm und drang of the primaries have abated, selected representatives of both parties, national and state, tend to drift once again towards normalcy, in popular parlance “the center.” We have developed a political language to describe this gyrating pendular motion. In primaries, political contestants are said to be appealing to “their base.” Democrats these days appeal to progressives, and Republicans appeal to conservatives, the devil take the hindmost. In general elections, convention nominees twist themselves into pretzel shapes to appeal to the “center” of the party, which today is in motion.
What happens when the center moves right or left? Mass hypocrisy and confusion ensues. The only political “sin” recognized the world over by media adepts is hypocrisy, usually punishable by a caustic few paragraphs in a quickly forgotten editorial. It used to be thought that hypocrisy is “the compliment vice pays to virtue.” Hypocrites of old doffed their hats to virtue – of course one should always tell the truth and shame the devil, but sometimes the greater good of the party requires one to explore a heavily nuanced path – in the very act of committing the only sin recognized by a diminishing media luxuriating in the pockets of some favored interest or arcane ideology.
“Trust nothing in politics,” said Otto von Bismarck, “until it has been officially denied.” That is a useful maxim for journalists to follow, but following it requires a politically imprudent break with “transactional journalism” as understood by Sheryl Attkisson, let go from her job at CBS because her employers had become the willing servants of ambitious politicians.
So then, the modern journalist is working within a system in which a now unfamiliar evil, the much misunderstood party boss, has been replaced by shadowy political elements: super PACs, Ivy League-educated political consultants, former “objective” reporters and commentators employed by powerful incumbents, bloggers of every stripe and hue, furious twitterers, masked Trotskyites, deep-pocketed billionaire short-traders whose personal fortunes prosper in the chaos and darkness they create in order to make their billions, ivy league professors who relish the destruction of their own universities, not to mention the foundational ideas that have sustained the good old USA through the Revolutionary war, the Civil War, World Wars I and II, a newly hatched progressive Democrat Party, eupeptic conservative Republicans and what Julian Benda used to call “La Trahison des Clercs,” the treason of the intellectuals.
There are lots of twists and turns in the political maze, more than a hatful of cogs and spinning wheels. Many of the Wizard-of-Oz-like backstage political shakers and movers mentioned above have learned how to manipulate the party system, primaries, the campaign-finance system, and even conventions. Political parties, especially in one-party hegemonic states, have sloughed off traditional functions such as the generating and dispersing of campaign funds, now performed by candidates themselves. Political parties are much weaker than they were when bosses ruled the roost. The most recent gubernatorial contest in Connecticut featured two millionaires, neither of whom have had deep roots in politics. Incumbents are able to generate massive campaign funding; their competitors, forced to rely on tax supplied funding, not so much. This is one of the many reasons incumbents, safely locked into gerrymandered districts, are, in the absence of term limits, so difficult to dislodge.
Don Pesci is a columnist based in Vernon, Conn.
From Robert Whitcomb’s “Digital Diary,’’ in GoLocal24.com
Will this happen in some of Providence’s new residential towers? Joe Walsh of The Boston Guardian (where I serve as unpaid president) reports that “downtown neighborhoods only added about 1,100 owner-occupied condos in the last 15 years, even as the total number of condos grew by nearly 6,000.’’ Much of this strange change can be explained by foreign buyers seeking a safe place to own real estate, as investments and/or as places to move to. Prosperous American cities such as Boston, San Francisco and New York are particularly attractive to rich people from nations that lack a rigorous rule of law that protects property rights. Consider Russia and China.
Owning a fancy condo in a rich U.S. city looks like a safe way to store wealth.
Consider that in at least one new Boston luxury building, Millennium Tower, three out of four units have owners who don’t claim owner-occupancy tax exemptions! That suggests why some of these buildings look remarkably dark at night. Some nearby store and restaurant owners complain that the near-empty buildings mean far fewer customers than you’d expect from proximity to such huge buildings.
You could see something like this happening in parts of downtown Providence and the East Side, particularly with rich parents of students at Brown seeking pied-a-terres. Jason Fane’s proposed 46-story Hope Point Tower, if the next recession doesn’t kill it, might lure a lot of these people.
This is from The New England Council (newenglandcouncil.com)
“New England Council member Takeda will host Selections from DISORDER: The Rare Disease Film Festival at Biotech Week Boston on Thursday, Sept. 12 from 4- 8 pm at Takeda’s ASPIRE Auditorium, in Cambridge.
“Presented in partnership with Biotech Week Boston and festival co-founders Bo Bigelow and Dan DeFabio, this inspiring event will showcase a curated lineup of films addressing the challenges and struggles patients and their families living with a rare disease face on a day-to-day basis. The selected films aim to build connections between the biopharma community, patient advocacy groups, patients, and those who are passionate about finding cures for rare diseases, which may ultimately lead to new paths for research.
“The evening will also feature a Fireside Chat with patients, caregivers, researchers, and industry partners who will discuss the community of hope that unites them and how to work together to propel cures.
Tickets for the event may be purchased here. Tickets grant attendees full access to the fireside chat, films, and reception.
For more information on Selections from DISORDER: The Rare Disease Film Festival at Biotech Week Boston, please visit the Web site here.
From Robert Whitcomb’s “Digital Diary,’’ in GoLocal24.com
I’m not sure what a recent study by WalletHub seeming to rank Rhode Island 49th state in the country (with West Virginia 50th) in hard work means. (GoLocal ran a story on this on Aug. 26.) Does this mostly reflect the Ocean State’s aging population, its too slow transition from the old mill culture or its ancient and well-known negativity and surliness (see Facebook’s usual Tea Party-style comments below this column) or most likely a mix of them and many other factors, despite Rhode Island’s many beauties.
The survey includes as work time annual volunteer hours for charities, etc.\
On that, I’ve long noticed close up the state’s low level of participation in nonprofit civic organizations and in charitable giving (in a state ranked around 19th in per-capita income). I have served on several nonprofit boards over the years in Rhode Island and on several elsewhere. (I’ve lived and/or worked in Massachusetts, Connecticut, New Hampshire, New York, Pennsylvania, Delaware and France, and seen more volunteerism there than here.) Given the state’s compactness, dense population and all-around intimacy, this dearth of volunteerism in Rhode Island has always surprised me.
Comparative surveys are fun to read but there’s often less to them than meets the eye. I noted that very rich Massachusetts was ranked lazy, at 38th, and very rich Connecticut, even lazier, at 44th. Greater Boston and much of Connecticut are known for their work ethic – an ethic that has helped make them rich. North Dakota, heavy into oil and gas production and agribusiness was ranked the most hard-working.
To read the WalletHub study, please hit this link.
From The New England Journal of Higher Education, a service of The New England Board of Higher Education (nebhe.org)
“It’s time, as the phrase goes, to ‘take control of the narrative,’ or at least tell our story better than we have been doing—to convey how hard most faculty work, how modestly most are paid, how little job security they enjoy, and, most broadly, that higher education remains an indispensable public good in a democratic society.”
Andrew Delbanco is a professor of American Studies at Columbia University, author of several books, including 2012’s College: What It Was, Is, and Should Be, and president of the Teagle Foundation. His latest book, The War Before the War: Fugitive Slaves and the Struggle for America’s Soul from the Revolution to the Civil War, will come out in paperback in November. In the following Q&A, NEJHE Executive Editor John O. Harney asks Delbanco about the state of higher education and intellectual life today.
Harney: Among your many honors, Time Magazine several years ago called you “America’s Best Social Critic.” Are “social critic” and other kinds of “public intellectual” occupations missing from what we urge today’s college students to include among their aspirations?
Delbanco: I’ve been very lucky to be able to make a living by doing what I love—teaching, writing, speaking on issues that matter to me. I’m afraid that opportunities for all of the above are shrinking as academia, publishing and journalism are all going through severe economic turbulence. Still, there will always be young people determined to follow their passions. We need their voices more than ever, so let us hope they will find ways to be heard—in both traditional venues and through new media.
Harney: You’ve said the college classroom is a “rehearsal space” for democracy. Colleges should allow you to walk in with one point of view and walk out with another. How best to enhance that quality in an age of political correctness and backlashes against it?
Delbanco: I believe more than ever that under the guidance of sensitive teachers who know how to combine intellectual rigor with open inquiry, the classroom is more likely than social media or a public rally to foster civil discourse about charged issues. My guess is that relatively few classrooms fit the description promulgated by those who think academia is rife with intolerance and “political correctness.” The method practiced by good teachers since the beginning of time still works: Show passion for the material you are teaching and respect for the students to whom you are teaching it, and good things will follow—including civil debate about controversial questions to which there are no easy answers.
Harney: Teagle has supported NEBHE’s work to develop affordable options for community college students to attend an independent institution, develop and promote liberal arts transfer opportunities at independent colleges for community college graduates, and increase the number of community college transfer students who earn a bachelor’s degree at an independent institution. How does this fit with your worldview?
Delbanco: America’s community colleges are immensely important institutions. They are gateways for millions of first-generation, minority and “nontraditional” (that is, older students seeking marketable skills in a rapidly changing economy), who represent the future of our country. Yet community colleges are woefully underfunded, and often underappreciated by people for whom college means the pastoral residential campus offering amenities of which most community college students can only dream. Community colleges serve many constituencies who bring many different aspirations to their studies. Students who come out of community college with an associate degree are well-served by these institutions, as are others who attend not necessarily to obtain a degree but in order to gain a specific skill or perhaps a certificate signifying completion of a course or program. Still others hope to move on to a four-year institution to earn a bachelor’s degree. We owe it to them to support, encourage and help them realize their hopes by building bridges from two-year public to four-year private institutions. This will require improved advising, clearly articulated pathways, more rational portability of credits and generally better coordination among institutions with different structures and cultures. The Teagle Foundation wants to support these efforts, which are gaining momentum not only in New England but throughout the nation—in part because independent colleges, especially those that are less selective, are seeking new pipelines to fill seats in their classrooms.
Harney: What do you see as the future of collaboration between public and independent higher education institutions?
Delbanco: The future must include the kind of cooperation I just spoke about between two-year publics and four-year privates. But that is only one dimension of this question. For example, research universities (both private and public) must do a better job of preparing graduate students for teaching careers in public open-access institutions as well as in independent liberal arts colleges. We are in the midst of a full-fledged crisis of employment for Ph.D.’s, especially in the humanities, who are often unprepared for, and even unaware of, opportunities outside the kind of research universities that have trained them. In general, colleges and universities also must become more responsive to the needs of their local communities. I often find myself saying that there is really no such thing as a private college or university—in the sense that all institutions benefit from public subsidies in the form of tax exemption, tax-deductible donations and other forms of philanthropic support, as well as federal support for research and tuition-paying students. In short, taxpayers have a right to expect that the local college or university—whether public or “private”—will find ways to serve them as well as their own students, by engaging constructively with the public schools, for example. In this respect, community colleges are among the leaders of the higher education sector, while some of the best-endowed private universities are among the laggards.
Harney: You talked a bit about what used to be a cross subsidy from students who could afford college to those who couldn’t. Is that a reasonable system?
Delbanco: Well, I’ve suggested that the discounting system used by some institutions—those with “need-based” financial aid programs—might be thought of as a dash of socialism mixed into our capitalist system. By this I mean that differential pricing determined by the ability of families to pay is an outlier in a consumer society that generally sets prices by calculating what price the market will bear. Of course this analogy does not mean that discount pricing is always motivated by a “Robin Hood” impulse to take from the relatively rich in order to give to the relatively poor. For most private institutions, even those that are relatively well-endowed, discounting is necessary not only for reasons of equity or for the educational value of enrolling a class with some socioeconomic diversity, but also for the practical imperative of recruiting enough students who bring at least some tuition dollars with them. This complex system—where for one reason or another, the “sticker” price exceeds what many students actually pay—is under increasing stress and seems likely at some point to give way to something different. But I doubt that we will see fundamental change until and unless the federal government takes a larger role in financing higher education. Perhaps the current talk of universal “free” college—in some respects a regressive idea because it would increase subsidies without means-testing the beneficiaries—marks the start of a more serious discussion.
Harney: Public disinvestment is often viewed as a chief reason for rising college prices. Why is it so hard to argue for higher education funding?
Delbanco: Another complex question. Part of the answer is that the growing disparity between public resources and public obligations has squeezed the ability of state governments to maintain the subsidies on which public higher education depends (the left would cite such factors as the tax revolt that began in California in the 1970s and the privatization of services previously regarded as a public responsibility; the right would cite putatively excessive benefits granted to unionized public workers and the rising cost of Medicaid). But the distribution of resources is also partly a function of who makes the better arguments—and there is no doubt that public confidence in higher education has declined (even though competition has never been as fierce as it is now to gain admission to the most prestigious institutions). Unfortunately, we live in an age of sound-bites and platitudes disseminated by talk-show hosts and spread on social media—so while there are certainly ways in which higher education should strive to educate students better at lower cost, it’s hard to combat the perception that we are a wasteful, inefficient “industry” with little accountability. Much of this is a grotesque distortion. But overpaid presidents and coaches, admissions bribery scandals and stories of dissolute students don’t help. It’s time, as the phrase goes, to “take control of the narrative,” or at least tell our story better than we have been doing—to convey how hard most faculty work, how modestly most are paid, how little job security they enjoy, and, most broadly, that higher education remains an indispensable public good in a democratic society.
Harney: You’ve quoted Melville’s claim that a whale ship was his Yale and Harvard. What’s the application of that today?
Delbanco: Despite all our challenges, I still believe that college can be a place where students widen their horizons, learn to appreciate the wonder of the natural world and the complexity of the social world, and grow into a sense of human interconnectedness. Those are among the things that Melville learned by going to sea and opening himself to experiences he had never dreamt of on land.
Harney: You’ve mentioned the importance of “diversity.” How does the momentum toward online distance learning accommodate that?
Delbanco: I’m a “distance learning” skeptic—by which I don’t mean that there is no value in the efficient and economical delivery of information to students who cannot be personally present in a traditional classroom or who have reached a certain level of learning proficiency so they can make good use of online resources. But I worry that the new digital technologies may become another force for stratification: i.e., poor kids will be led toward the “virtual” classroom while rich kids will get the real deal. Of course it’s not that simple—and we should continue to experiment with new pedagogies and test their effectiveness, equity and potential value for cost control. But for now the evidence seems to suggest that the most vulnerable students, sometimes described as “unconfident learners,” need all the personal human attention they can get.
Video from Lydia Whitcomb