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Simple Ways to Address Debt, Create Jobs, and Improve U.S. Financial Credibility

Jul 31, ’11 8:01 PM

When the debt ceiling discussions began, months ago, the country appeared to be split between two contrary opinions.  Most conservatives had become convinced that the U.S. was “broke,” and that only immediate and titanic cuts in spending could possibly save us.  Most liberals were convinced that “debt and deficit” problems were not real, and were simply a ploy for conservatives to cut spending.

Although there still seems to be widespread confusion about the issues at hand, it seems like the general public has learned a good deal in the runup to the Aug. 2nd deadline (if not as much as one would hope).  We’ve learned, for example, that sovereign debt ratings, not just our ability to borrow, are important — and at stake.  We’ve learned a good deal about the sources of our deficits and debt — even if we still disagree about how to handle them.

I find, in talking to liberals and conservatives on this issue, that certain simple — but effective — ideas can appeal to both sides, without being caught up in the “grand narratives” that characterize each side in our Congressional stalemate. One of them, the idea of tying job creation to overseas tax repatriation holidays, I discussed in a previous post (and will simply list here).  But there are others, and I would like to suggest that implementing even one or two would radically change the game, by changing the confidence level of citizens, companies, and the world in our ability to address our issues.

I would further suggest that our largest problem today is not a crisis of confidence about U.S. indebtedness.  Americans and the world at large lack confidence in the ability of Americans to govern their way out of the problem.  The global markets, and the bond market in particular, want U.S. sovereign debt to remain the risk-free benchmark, and despite occasional posturing, nobody is eager to displace the U.S. dollar as reserve currency, given the uncertainty and dislocation that would inevitably create, during a time of sluggish economic growth.

What we need to demonstrate is not, I would suggest, a complete solution to our deficit and debt problems, but a credible start and follow-through.  President Obama has been talking about “significant downpayments” on deficit reduction for precisely this reason.  It’s not a new idea.  It’s also the strategy of every consumer with significant debt — you can’t simply tell the credit card company you’re trying to make payments, you have to establish a track record of actually doing it.

There are reasons, of course, that the party “out of power” would try to block even simple, common-sensical ideas.  Winning the next election means not giving up points to the other side, if possible.  But I hope we’re close to the point where Americans start demanding progress and solutions — not the ultimatum-style “solutions” we’ve seen daily in the debt ceiling “negotiations,” but concrete steps.

Here are a few that seem to have bipartisan appeal, in my discussions with folks lately.

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A common sense idea about “tax holidays”

Jul 31, ’11 7:01 PM

We appear to be on the verge of a deal to raise the debt ceiling, and there seems to be a chance that it’ll contain some things that will horrify many working people and most Democrats.  One of these is a “tax repatriation holiday,” in which corporations who have profits “stashed” overseas, can bring those profits back into the U.S. tax free.

In the last few days, I’ve had conversations with conservatives, and I think there’s a compromise position that appeals to both sides, appeals to patriotism, but “gets something in exchange” for the tax holiday.  Which would be a good thing, because despite the rhetoric, we all know that American companies are not going to automatically turn around and use the profits to hire Americans.

The reason we know this is that they have plenty of profits onshore, and they haven’t used those profits to hire many people, either.  For a simple reason — the economy lacks sufficient demand to require new hiring.  This has been exhaustively covered elsewhere, so I won’t bore you by repeating the evidence.

So, if we want jobs in exchange for a tax repatriation holiday, here’s how we do it.

Under a program which automatically sunsets (say, 5 years, but that’s negotiable), American companies are allowed to repatriate profits tax-free, for each new job created in the United States.  In order to create incentives for full-time jobs, capable of supporting a wage earner and their family:

  1. For each new job created, a company would be allowed to repatriate a multiple (M) of the fully burdened cost of the employee.  ”Fully burdened” means wages and benefits — the total cost of having someone on staff.
  2. Each job would be eligible for the repatriation credit in each year the program existed, perhaps at a declining modifier.  This creates incentives to keep the jobs created, and not lay them off on Day 366.
  3. Attaching the credit to the fully burdened cost, rather than the salary alone, creates incentives for companies to create full-time jobs that carry benefits, which are essential to ensuring that jobs can support families.  Indeed, the better the benefits a company provides, the more profits it can repatriate.
  4. Also, using the fully burdened cost allows the plan to work easily in those industries with union contracts, since it does not specify anything about the structure of compensation.

There are obviously details that need to be worked out.  What is the multiplier?  How long does the program or credit last?  Should we simply keep a program like this in perpetuity as a means of allowing global trade to be “open” but still incentivize domestic job creation?  Should the repatriation by completely tax-free in year one, and at a steep discount off normal tax rates in future years?

The main outlines sound fair, and even patriotic.  And it’s a mix of liberal and conservative ideas.  From my initial discussions with folks, the idea seems to appeal to both sides, and sounds “fair” both to companies and to the country.

Kick it around a bit, share it with friends, and tell your Congressperson about it.

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Modernist Dinner, a post-mortem

Jul 25, ’11 5:40 AM

Last night, I made dinner for a group of friends, in lieu of my usual July party celebrating moving to the island.  The change in format was stimulated, primarily, by the publication of Nathan Myhrvold’s magnum opus, Modernist Cuisine.  I was an enthusiastic early adopter, preordering the book last winter, and Myhrvold and his team really delivered.  It’s a rich vein of modern culinary knowledge — the Escoffier of the early 21st century, without a doubt.  My friend (and superb chef) Madden Surbaugh described it as “a post-graduate degree” in the culinary arts, and he’s right.

My goal in planning this dinner was really to try techniques.  I had no preconceived notions about what I’d make, but I started making lists of recipes about two months ago, after Nicole and I went to Napa and did Three Nights of Keller, and later when Scott, Nicole, and I made the pilgrimage to Chicago for Alinea and Aviary.  My method in planning the dinner was suitably nerdy on several fronts:  I treated it like a research project, and had a lab notebook, and being a software guy, the lab notebook was in the form of a wiki.  I kept notes on recipes, techniques, ingredients, possible menus, and so on.  It was fun to see how things evolved.

I tried a number of dishes that never saw the light of day.  I was taken with a “shrimp terrine” dish by Ideas in Food, but since several guests were allergic to shrimp, I turned it into lobster.  But I was also taken with Chang’s ramen from Momofuku, and ended up trying to make lobster meat “noodles” by tossing lobster tail chunks with Old Bay and Activa RM, vacuum sealing, and rolling it into a flat sheet.  After an overnight chill, I cooked the sheets at 55C and chilled, before cutting into fettucine.  This worked fairly well, although the noodles were definitely fragile (I didn’t want to use enough Activa to ruin the flavor or texture).  The noodles, served in an english pea dashi (kombu, shittake, english pea pods, bonito flakes), absolutely sucked.  They had the texture and feel of bad imitation crab.  The moral of the story is don’t do this!.

I won’t bore everyone with the full list of failures, partial successes, or things that “worked” in a technical sense but simply yielded nothing terribly interesting.  I will say, do not bother coring out and stuffing asparagus spears.  It’s not worth it.  Unless you have asparagus with a serious obesity problem, you can’t get enough tasty stuffing inside before they split and explode for anybody to really notice.  It’s an interesting idea, and if it had worked out would have elicited that “wow, cool” surprise noise that every chef is hoping to hear from their diners….but it didn’t.

What works:  tapioca maltodextrin.  Make dry caramel.  Now.  Make parmesan nuggets, or bacon powder, or….hell, grab a tasty dairy or fat and spin it with TM and serve it in some interesting way.  I happened to have a sheet of apple cider sea-salt caramel that had gone all brittle because I’d prepped it too far in advance, so I needed a new presentation than what I’d originally planned, and I remembered that Grant Achatz had done a “dry caramel” powder, and it worked.  Boy, did it work.  It wasn’t what I’d planned, but it was a happy accident, and something I’ll be doing again, especially early in a meal with savory and smoky elements, like the dehydrated double-smoked (house-cured) bacon I paired it with.  Get some TM and start screwing around.  Seriously.

Also:  low-acyl gellan.  After some futzing with other gelification agents, I was wary.  I clearly need more practice with methocels, for example, before I’m ready to unleash something on unsuspecting diners.  But low-acyl gellan:  brilliant.  Sherry vinegar gel cubes to serve with oysters were a breeze.  Measure carefully but then, it just works.  It exhibits a first-order phase transition when the liquid cools below the magic temperature — one second it’s a liquid, the next, it’s a semi-brittle gel, boom.  Stable and still tasty after storage in the fridge, it’s forgiving and completely within reach of cooking at home.  Highly recommended.

What I hated:  working with transglutaminase.  I did the “Checkerboard Sushi” from Myhrvold.  Twice.  The first time, I destroyed way too much nice maguro and hamachi from Mutual Fish when the “slurry” got gloopy (which it does in about ten seconds), and I ended up with blobs between the fish slabs.  You have to work fast with Activa.  What they don’t tell you, is that “fast” means “superhumanly fast.”  The second time, I dusted the slabs through a tea strainer.  It didn’t bond nearly as well and the resulting slabs were fragile, but they looked great and tasted great, and that’s what counts.  It just limited me on presentation possibilites, where a full bond would have been more robust for draping or whatever.  But I hated working with the Activa.  I have a full bag of it, and will probably do it again, but it’s certainly not something I’ll whip out for my own pleasure and use in the kitchen.  Too much hassle and fuss.

Silica gel packets and a food dehydrator — wonderful tools.  A food dehydrator that isn’t circular and takes a rectangular tray would be even better. I sense one in my future.

And if you don’t have an iSi cream whipper, stop reading now and go to Amazon and buy one.  I used this dozens of times in the course of a couple of days, it’s perhaps the handiest tool I have for doing modernist dishes.

I’ll probably have more notes in the days to come, especially as I review my lab notes.  But get in the kitchen and play around!

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Paradise Terrestre, Five Years On…

Jul 14, ’11 5:55 AM

Somewhere among the notebooks of Gideon I once found a list of diseases as yet unclassified by medical science, and among these there occurred the word Islomania, which was described as a rare but by no means unknown affliction of spirit. There are people, as Gideon used to say, by way of explanation, who find islands somehow irresistible. The mere knowledge that they are on an island, a little world surrounded by the sea, fills them with an indescribable intoxication….But like all Gideon’s theories it was an ingenious one. I recall how it was debated by candlelight in the Villa Cleobolus until the moon went down on the debate, and Gideon’s contentions were muffed in his yawns; until Hoyle began to tap his spectacles upon his thumbnail of his left hand, which was his way of starting to say goodnight….Yet the word stuck; and though Hoyle refused its application to any but Aegean islands….we all of us, by tacit admission, knew ourselves to be ‘islomanes.’


 

Five years ago today, I steered an overfull Land Rover north in the early morning mist to catch the ferry in Anacortes and take possession of my house on San Juan Island.  My belongings would largely follow a month later, after small renovations and frenzied trips south to pack and prepare for the moving truck.  But the first weeks as an islander were magical.  The house was empty apart from evidence of construction and small enclaves of domesticity — a futon, a card table, and some deck furniture.  I virtually lived on the deck for weeks, in shorts, in warm weather that now seems a fond memory.

As I have written in years past on this day, my island home matures from innocent idyll to complex daily reality, and my fondness for it changes as well, acquiring both depth and sharp edges, as I negotiate a middle ground between deep involvement and the fondly remembered invisibility and anonymity of my first days.  Coming, as I do, from urban America, I find that in order to live in my woodsy enclave on the quiet, almost people-free, waters of Rocky Bay and the Waldron-Orcas-SJI confluence, I have signed up to live in a classic “small town,” for better or worse.

In my annual paean to island life, on the anniversary of my northward migration, I quote Lawrence Durrell’s book, “Reflections on a Marine Venus,” which I reread each year as this date approaches.  This year, I read it, but I find that I no longer associate it with my island home.  This is a sad thing, since my islomania continues unabated, and I fully agree with the sentiments Durrell expresses.

But the tone of Durrell’s islomania, expressed in the language of the early 20th century educated British expatriate, is no longer my tone.  Durrell speaks as a visitor, fundamentally.  He speaks as one coming from a foreign culture, enjoying his contact with the new and the different.  He speaks as one kind of islander, visiting another kind of islander.

As I sit here on the deck tonight, listening to the music playlist that accompanied my trip on the ferry and landing in Friday Harbor, and after re-reading the first pages of Durrell’s book — paragraphs that virtually defined my journey north — I find myself writing a very different “annual report” than usual.  I sat down thinking that I would give the usual “trip report.”

Instead, I find myself eulogizing, and drawing to a close, the words and metaphors which defined that journey.  The motivations and events which led me here are in the past.  I am deeply involved in my community, sometimes more than I have time for or would like.  But that involvement disallows the perspective of the expatriate, the viewpoint of one who loves a place, but will soon move onward.  Durrell’s words will continue to have deep meaning for me, but it’s time to retarget them outward, to places I hope to visit and enjoy.

For the island, five years on, is nothing more or less than….home.  With all of the pleasure, comfort, frustrations, and occasional pain that this denotes.  

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A belated Towel Day perspective

May 29, ’11 5:13 AM

This year, on Towel Day, I was busy, putting together a fundraising dinner for the UW Anthropology Department and the UW Student Farm.  So I didn’t really write anything, as I have in years past.  But not for lack of something to say.  I’m not sure what it is, exactly, about “Towel Day,” the semi-bogus holiday celebrated by fans of Douglas Adams each year, but it seems to bring out the “long view” in me, visions of civilizations rising and falling.  You’d think such thoughts would be triggered by someone more profound…by a rereading of Edward Gibbon or at least Barbara Tuchman, or even Carl Sagan reflecting on the immensity in which our parochial concerns are lost.

Nope.  Douglas Adams does it every time.  It’s the Golgafrinchans, at the end of Restaurant At the End of the Universe.

Because, of course, they’re us.  They’re our bumbling, over-specialized, incapable of making a living for themselves, useless skills aplenty, useful skills thin on the ground, selves.

And, as an archaeologist and social scientist, the Golgafrinchans always remind me of how fragile our civilization is.  I am a social scientist, and I read a good bit of contemporary social science, of course, but in my work I analyze phenomena at a much longer time scale.  I study societies and social groups as they come and go, are born by fission from some other group of people, flourish, perhaps give rise to social “offspring,” and eventually go extinct.  And what is more emblematic of social extinction than Adams’s portrayal of the Golgafrinchan Ark “B”, carrying the non-essential members of society off to form a new world….

The Golgafrinchans occupy a place in my personal “wax museum of humanity” right next to Danny Hillis’s Long Now Foundation, and their 10,000 year clock.  Although the 24 hour news cycle and the buzz of tweets and instant information would have you believe otherwise, it is over much longer time scales that we can evaluate the success, and equitability, and sustainability of the various ways we humans have, of being human.  Our battles might be fought in days or years or lifetimes, but it is only our descendants that can truly “keep score” and decide how well we did.

The Long Now clock is designed to transcend us as a civilization, and as one of the ways we can communicate some of what we’ve learned with our far-future descendants.  It is designed not to require folks to be close enough to us in time and culture that they can read our writings, or comprehend our ideas, but to draw upon principles that are presumably deeper — not necessarily built into the laws of physics, mind you — but comprehensible to beings who are descended from our kind of minds, our kind of bodies.

Combine the perspective of an anthropologist studying the slow coming and going of societies, and the perspective of a software and systems engineer, and I think you get a sub-genre of futurism and speculation:  what it takes to “recover” the good bits of a civilization, after a collapse or other disaster.  Or simply the slow erosion of deep time.

I think of this problem in algorithmic terms.  If you wanted to maximize the chances of being able to recreate us, down the road after we’ve lost our knowledge, lost this particular set of scientific/democratic values, what is the “minimal instruction set”?

In short, what is the “boot loader” for an open, democratic society  combining expressive freedom and respect for scientific discovery?

This is the closest I can come up with, and I do not claim that it’s a deterministic algorithm.  In other words, starting here, you are not guaranteed to replicate the aspects of our civilization we value.  It’s clearly stochastic, and there’s clearly a lot of noise.  Which means only that I’m giving an “initial condition” and transition probabilities for processes which are in the “basin of attraction” of the product we’re looking for, and that if you follow such rules, “more often than not,” you’d end up with something we’d recognize as an open society.  Assuming you either replicate the experiment a lot (i.e., send LOTS of Golgafrinchans to LOTS of uninhabited worlds), or wait for the experiment to repeat itself over and over (i.e., deep time).

But here’s the algorithm (and I don’t claim full originality here):

  1. Pay attention and observe patterns in the world around you, keeping an open mind.
  2. Bang the rocks together, so to speak, and make things.  Especially new things.
  3. Understand how competition and cooperation work, and why each is necessary.
  4. Study those who are different, with an open mind.
  5. Pass on what you learn, without too much prejudice.

Put this algorithm on an endless loop, and you have something approximating the progressive parts of the last several thousand years of Western Civilization.   Ignore a couple of key clauses, and you have a much wider array of outcomes.  Not all good, and some downright scary.   Do it just like this, and you might, if you’re lucky, end up with an open, tolerant, prosperous, enlightened democracy.

That’s it.  That’s what it takes.  The Golgafrinchans managed it, apparently…and so did we.  But it was a narrow victory, and the question is whether we can manage to keep it up…..

Happy Towel Day!

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Is the United States “Broke”? Reintroducing sanity to our budget discussions

Mar 7, ’11 12:40 AM

It’s fairly common these days to read or hear sometime talking about how bad the deficit is, but “the real situation is far, far worse.”  The discussion then turns from describing a 1.3 trillion dollar deficit and 14 trillion dollar debt, to numbers like 100 trillion worth of “unfunded liabilities.”   The usual point being, of course, that the United States is on the brink of catastrophic fiscal meltdown which — if not fixed by drastic reductions in spending and probably elimination of all pensions and safety nets — will lead to national bankruptcy, hyperinflation, and the specter of authoritarianism and other evils.

It’s a fairly compelling story, and it certainly has managed to scare the living s**t out of many Americans, leading to the rise of the Tea Party movement, attempts to destroy public sector unions, and radical budget cutting fever in Congress.

It’s also a carefully constructed story, which happens to succeed only by comparing apples to oranges.  In other words, while we do have lots of debt and unfunded liabilities, the picture is nowhere near as grim as is being suggested.  I intend to go through some simple numbers below which demonstrate that we can handle both our current deficits, and the larger issue of the social safety net, “within the system,” and that collapse is not inevitable.

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