by Dana Blankenhorn
  Volume VII, No. XXI

This Week's Clue: Forrest Gump Economics

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This Week's Clue: Forrest Gump Economics
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
Who Is Raed? Who Cares?
Microsoft Hasn't Changed
A Few Words On Jayson Blair
Clued-in, Clueless

Dana Recommends The Blankenhorn Effect offers a powerful, positive message for our time. Once you understand how Moore's Law impacts every part of your life, how powerful it is, and how irresistible a force it truly is, you will have the power to predict the future and know how to change it. Buy it today, and make 2003 a better year for yourself, your business, and your family.


For the Week of May 26, 2003

(Note: I know I'm going to lose some Republican readers permanently with this one. I can't help that. If you do choose to leave, thanks for giving us a read. -- db)

Stupid is as stupid does. This is the only description I can come up with of the American government's economic policy.

Government does impact the economy, no matter what its leaders say. A government's spending priorities, whether it balances its budget, and who or what it taxes all play a part in whether an economy will grow or suffer.

Since 2001 this government has treated the economy as a piggy bank for its friends, and economic growth as a zero-sum game (which it isn't). More damage has been done by this Bush in under 30 months than the first Bush did in 4 years. And Daddy Bush had by this time sewn the seeds of recovery, in the form of an agreement to freeze domestic spending in exchange for tax increases that, when extended by Bill Clinton, carried the economy to its greatest-ever boom. This one is just making things worse.

Between 1990 and 2000 America's share of the world's economic activity grew nearly 50%, from about 20% of the total to about 30%. This is why Bush Sr. needed a grand coalition in Gulf War I, while Bush Jr. needed no one to win Gulf War II. Economic dominance is the bedrock of American power, not military might. That dominance is slipping away.

Our technology industries are still flat on their back. For the first time in my 25-year journalism career, I'm making no money - none, zippo, nada - and it's not because I don't know what I'm doing. Everywhere I turn it's the same story. "No one is spending anything," as a PR man told me on the phone just now.

The 2001 tax cuts failed to stimulate. Cutting interest rates to 1.25% failed to stimulate anything but housing. (Without the housing boom there would be no growth at all.) There is no evidence that another round of tax cuts will stimulate anything more than more hoarding by the rich. The latest plan, to let the dollar fall, is just eating more seed corn. And actually raising taxes on foreign-based employees so their rich overseers can keep their tax breaks? That's just insane.

We are rapidly approaching a point where the only way out of the current pain will be more pain. Even Banana Republicans must repay their debts. As the dollar falls, so does demand for our debt. The price of that debt rises, interest rates rise, and any tax cut stimulus becomes water caught in your fingers.

Before we begin to turn the boat around we need to ask a more basic question. Should we have a progressive tax system? By lowering income taxes (paid by the rich) and raising sales taxes (paid by the poor), the Bush Administration has created a regressive tax system, transferring trillions to the idle heirs of the lucky few in its attempt to re-create the 19th century's English class system. (Why not cut to the chase and hand out titles - the publisher of "Black Enterprise" could really become the Duke of Earl (Graves). )

This is an obscenity. Do rich people really get less benefit from safe streets, from good schools, and from a secure nation than poor people? It's their markets, their employee base, and their own persons the government is protecting. All government spending benefits the wealthy, every dime of it, because it builds the physical capital, human capital, and security needed for business to grow and flourish. The idea that the downtrodden should pay more for this than the wealthy few was rejected a century ago, in the time of our great grandparents. But that debate is back again, and progressives must win it if America is not to become the 21st century's Argentina.

Next, we need to return to the discipline of Bush I. That means capping total spending at current levels, and offsetting any increases anywhere with cuts. In exchange tax rates will have to be adjusted up in order to reduce annual deficits. Fiscal discipline is absolutely required before the dollar turns into the Brazilian Real .

Next, get behind Moore's Law. We need to return to policies that embrace technological change. If we're to have tax breaks they should be reserved for high-tech products and systems that provide real economic bang for the public buck. We absolutely must launch the U.S. economy back up the value chain, letting lower value-add industries go overseas so we have markets in which to sell high-value exports. Real free trade demands that we allow foreign goods in, despite the pain suffered by domestic producers. The alternative is to watch countries like China leapfrog us - that's what happened to Argentina.

This requires turning out more engineers and more scientists from among the American-born. If we took the money we now spend identifying, training and supporting athletes (who really provide nothing more than entertainment) and turned it toward scientists and engineers (who really do provide value), that would be a start. That means more honors for good engineers, more financial support for university engineering, and a lot more emphasis on science and math all the way down to kindergarten.

It could take a decade to undo the damage done to this economy by George W. Bush and his Banana Republicans in a little over two years. We need a true opposition dedicated to growth, an overwhelming victory in the next election (meaning a mandate) and a complete U-turn. We're like a boat in a toilet that's circling the drain and confusing movement with something positive.

Think it's bad now? You don't know bad. In the early 1930s, when most women were outside the labor force, U.S. unemployment peaked at around 32% -- one family in three had no income. There was no such thing as welfare, or Social Security. If we don't turn around that's the future your children face. I guarantee it.


SSP (Shameless Self-Promotion)

I am no longer working at Mediapost . The work was great, I did it well, but I didn't like the bosses, and in the end the feeling was mutual.

The reviews for "The Blankenhorn Effect" are humbling. "Dana, it is GOOD," raves Pete duPont, lawyer, futurist and once a candidate for President. "This is some really powerful 'stuff.' I think you've got a winner," says Drew Kaplan of DAK Catalog fame. One result is I have begun working on a follow-up book, describing the future direction of technology, to be called "The World Of Always On." Buy "The Blankenhorn Effect" at Amazon.Com , or at least say nice things. You can use the ASIN number, 1553953673, and recommend it to readers of other, similar books. You can also save on shipping when you buy the book at Amazon, over the cost of buying it elsewhere.

If you can convince some more published reviewers to read "The Blankenhorn Effect" and recommend it to their readers, please send me a name and address. In exchange, you'll get the PDF version of my second book, The Blankenhorn Effect: Boom, Bust & Beyond. This is a collection of columns from, organized chronologically and by subject, with additional commentary from yours truly.

I have written recently for BtoB Boardroom and Mobile Radio Technology . You can follow the continuing story of "The Blankenhorn Effect" on my "Moore's Lore" blog . (Get my old ClickZ columns here

You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know . Remember: it's journalism that keeps the Clues coming...


Shameless Promotion

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Takes on the News

Who Is Raed? Who Cares?

Salam Pax may be the most famous blogger of 2003.

His Baghdad blog, "Where Is Raed," is blogrolled by 547 other blogs at last count, putting it #18 on the Blogstreet Top 100. (My own blog , by contrast, has 17 blogrolls, not that I'm complaining.) Take out the non-blog blogs (communities like Slashdot and Plastic, software outfits like Telejari) and the non-English blogs and Raed's in the Top 10.

Raed's posts are fascinating. He describes himself as gay, fat, English-accented, and a coward. Still, he survived the invasion, and his ranking rose as readers wondered whether he might become the Baghdad version of Anne Frank. Since the occupation began he has provided great glimpses inside the new reality, posting about crime, the return of communists and Iranian-influenced Shi'ism, the lack of utilities, and the growing anger of local people. It's a view that no one in America hears otherwise.

It was perhaps inevitable, but a campaign has now begun to discredit and destroy him . It began with a column by David Warren charging that Pax is a fraud, that he's really a Ba'athist relative of Saddam Hussein himself, and probably not even gay. (As though Saddam couldn't have any gay, cowardly cousins.) Warren called Pax part of an "anti-Western conspiracy" and I'm certain the Warbloggers are all over it.

It's the warbloggers, not Salam Pax, who represent real danger. The growing assumption of right-wing columnists that anyone or anything disagreeing with their worldview is dangerous and must be destroyed is insane. It is Stalinism. We have gone through periods like this before - the Red Scare, the McCarthy period, Jim Crow - and one lesson comes through it all. It is those who try to ban speech, not those who make unpopular speech, that are the true evil and the true threat. As it was then, so it is now. Your Clue is simple -- resist.


Microsoft Hasn't Changed

An International Herald Tribune story last week offered proof that, despite a six-year antitrust campaign against it, Microsoft has not changed at all.

The story by Thomas Fuller details a campaign of under-the-table discounts aimed at undercutting Linux and complaints by Big Green itself that it's perfectly entitled to keep the practice going.

"Sun does it," is the Microsoft charge, and maybe Sun does. But Sun can, because Sun is not a monopoly. Microsoft is a monopoly, and thus the rules governing it are different. Monopolies may not use discounts to chosen customers aimed at destroying rivals. Microsoft employees have also disguised their affiliation while attending Linux trade shows, spying on OEMs so higher-ups might intimidate them out of playing footsie with open source, which CEO Steve Ballmer has called a "cancer."

Want to know what's funny? It's not going to work. IBM is Linux, Sun is becoming Linux, Intel loves Linux, and Linux obeys Moore's Law in ways that Microsoft software simply cannot. Of course, this leads to the question of whether the anti-trust case should have been pursued at all. The answer is, of course. There is still no Linux desktop, no mass market Linux home server and very little Linux in the consumer market at all. This is not because Linux doesn't work, but because Microsoft has intimidated OEMs and continually broken the rules governing monopolies. Enforce those rules and progress will happen.


A Few Words On Jayson Blair

The main question I have about the Jayson Blair Affair is why in the world Blair wanted to be a journalist in the first place.

Too much is being made of his "mistakes." What he committed was simple plagiarism. He took work others had done - interviews mainly - and passed them off as his own. He didn't make up characters, as Janet Cooke did. He didn't tell lies to readers. The only lie he told was that he had done first-person research when in fact he had only cut-and-paste.

In many industries the skills of a Jayson Blair are a positive boon. Politics and business need people who can ingratiate themselves and maneuver through bureaucracies. Sales could use his winning ways. The law requires acting, copying precedent, and chutzpah.

The real crime was that Blair chose journalism. The question is why. The answer is that journalists have been turned into stars, journalism has been turned into a profession, and thus reporters are seen as powerful.

We are not powerful. We should not be powerful. We are tradesmen, entertainers, and craftspeople, nothing more. The best of us, like the best cooks, can give you a brief, pleasant experience. A Gary Smith , or the Times' own Rick Bragg , can make you cry, and become something really grand, a writer. Many of our best writers started as journalists, from Mark Twain to Jimmy Breslin.

Most journalists aren't Bragg or Smith, any more than most cooks are Emeril Lagasse or Mario Batali. We do it because we love it. We expect neither money nor fame.

The great shame about Jayson Blair, to me, is he never heard the wisdom of my first journalism lecture, from the late George Heitz. "If you're here to make money, we have a wonderful business school, go there." Or, as Tony Bove observed, "Always be careful of a business where the first word is submission."


Clued-in, Clueless

Clued-in is T-Mobile, which decided not to launch a cell phone based on Microsoft bloatware. The model for small devices should be IP, not MS-Windows.

Clueless is the DMCA and not the Judge who ruled that any copying of DVDs is illegal. The idea that software can be banned was settled by courts years ago, but the law can, should, and must be changed.


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