Dana Blankenhorn

If the newspaper business is gonna drown put a hose in their mouth

Newspapers have reached the desperate stage of their death spiral, the point where they're looking for government bail-outs.

In the case of the financial industry there was a case to be made that letting AIG and Citigroup fail would cost more than propping them up. In the case of the auto industry there's a case to be made that we'll at least get the money back.

There is no such case to be made for newspapers.

What they're looking for is a "tweak" to the copyright laws that would bar linking to copyrighted material without consent.  What they're seeking is the destruction of the Internet.

The same argument holds for the idea that content should be exclusive to its source for 24 hours. If you can't link to it, content does not exist. I'm amazed people like Connie Schultz manage to breathe they're so stupid.  

The Internet is based on links. Content you can't Google does not exist. We have learned this before with the news industry when it tried to hide its content behind paid firewalls and registration systems. 

It didn't work.

The industry now knows it needs links. It just wants to extract monopoly rents  for them. Hey, I want a pony. 

Any Senator or Congressman who stands up for this nonsense needs to be slapped down, hard. Can you imagine the cost of this to schools, to libraries, to universities? Can you imagine the bureaucratic cost of tracking this free money? And I guarantee it will go only to a few politically-connected news barons, people like Rupert Murdoch and Carlos Slim. 

The Lies of the Peachtree Road Race

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Think of this as Volume 12, Number 27 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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One of the most interesting aspects of running the Peachtree Road Race is the politics.

Traditionally these are conservative politics. You have your preachers by the side of the road, one this year with a big sign reading "God Loves -- God Hates." You have your "pro-life" shirts. And this year I even saw one woman with an Obama hat.

But mainly it's anti-government stuff. "Government is taxing us to death," was the message of one onlooker in Buckhead. "Government or freedom" was the message of another.

These are assumptions deeply ingrained in Southern history. They have resonated since before the Civil War. They are the majority view throughout the region.

And they are wrong. Dead wrong.

The Economic Recovery Act

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Think of this as Volume 12, Number 26 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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The so-called "cap and trade" legislation being voted on today by the U.S. House has been horribly mis-labeled.

Its name should be The Economic Recovery Act.

While every action of this Administration and Congress up until now has aimed to stanch some type of bleeding or cauterize some economic wound, this bill is meant to define and launch a new economy that can grow and restore American leadership.

The bill is hardly perfect, but it's not meant to be at this point. It's meant to pass. It's meant to act as a marker against which a future Senate bill might be measured. The final policy will mix what the House passes, what the Senate passes, and how the Administration interprets the law in implementing it.

How America Must Lead

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Think of this as Volume 12, Number 25 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Last week I talked about why America will win the future.

Now I want to talk about how to do that, and our responsibility for making that happen. 

America will continue to lead because of the hard work we have all done in the last generation, not so much in Washington but in our lives and communities. 

All the many movements of the last generation -- the womens' movement, the gay rights movement, the civil rights movement, the fight for rights for the disabled and ethnic minorities, the environmental movement -- all of what I have called the AntiThesis to the Nixon Thesis, or the outright rejection of that thesis -- all have had an impact. 

All of them have taken us further down the road of progress than most other societies have even contemplated going, and what came to me most clearly during my recent trip was that elites elsewhere recognize that progress, and envy it.

What they have given our society is flexibility, mobility, an ability to adapt to change unparalleled in human history. The ruins of failed societies all around the world attest to this. Change is the hardest work a society can undertake. No society has succeeded at it like ours, and none has done more to unite people worldwide around the idea that change is both good and necessary.

The clearest proof is living in the White House right now. But we can't rest on that laurel. Here is what we must do:

1. Set high goals 
2. Learn what real leadership means 
3. Embrace the change process

  Let me take these one at a time:

Why America Will Win

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Think of this as Volume 12, Number 24 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Having just spent three weeks in China, Taiwan and Japan, I have gotten a new perspective on America's future prospects.

They are incredibly bright.

It's important to note that now, because business lobbyists and conservatives generally have launched a campaign to tell us the opposite. China and other low-wage countries are going to eat our lunch unless we tighten our belts and accept less (except, of course, for rich businessmen, who must have more "incentives" to "keep jobs here.")

It's nonsense. As serious as America's problems are, they are far less severe than those anywhere else. 

And we have more weapons with which to fight those problems than anyone else does.

China

Take China. When rich businessmen want to talk down America's prospects the best "ooga booga booga" they have is China. China has all our debt. China has low wages. China has us by the balls.

Bullshit. We have China by the balls.

The first stop on my recent journey was Chengdu, in Sichuan. It's the last stop west before you hit the Himalayas. With help (widely advertised) from people everywhere else in China, they are recovering from the earthquake. 

You know what the Chengdu middle class most wants to be? American. They take American names, they love American music. While our oldsters are supposedly doing Tai Chi in the morning, their retired are ballroom dancing every evening. When they want a beer their first choice is Budweiser. For coffee it's Starbucks. A big night out is Pizza Hut. They want to drive Buicks.

China today reminds me of nothing so much as America in the early 1960s. Those who have built the present economy are a lot like our Greatest Generation in outlook. The next generation, the "Little Emperors," are spoiled like my peers were as kids. They assume economic freedom (and responsibility), and their kids assume freedom of thought as their right.

China is also like Japan 20 years ago. The one-child policy means that the population is aging, fast. Fewer productive workers to support a growing population of retired. The government won't be able to push the Little Emperors about as they did the parents, because they need the kids to have active minds, to be innovative, to help China climb the development ladder and earn more to support the elderly. 

You can make a man work. You can't make him think. 

China also suffers more from pollution than we do. The 1.3 billion are packed into a fraction of the land mass. Vast areas of Tibet, Inner Mongolia and Xinjiang are, and will remain, nearly empty, without the water to nurture more people. Chengdu's air is like LA's was 30 years ago, already, a choking smog smothering the city. The water's still good because they're so close to the source. 

So you have demographic change, you have environmental degradation, you have a growing generation gap, and you have a political system that currently can't accommodate those demands. If we really are playing poker with China, we've got a much better hand. 

Oh, and that dollar problem? It's all theirs, not ours. Say they've got $2 trillion stashed in U.S. assets right now. Devalue by half (give the Yuan an honest value) and those assets are worth just $1 trillion. China has a bigger stake in a strong dollar than we do. They say that at some point, if you borrow enough from the bank, that you own the bank? We own China. 

Taiwan

If any place illustrates the strains and dangers facing China, it's Taiwan.

I found Taiwanese more into being Chinese than the Chinese. They protect ancient Chinese traditions and culture, even while embracing the modern world. They are far ahead of China in that respect. If China could model its evolution toward any place, it would be Taiwan. 

So China is taking advantage of the current recession to embrace Taiwan. Taiwan is becoming China's unofficial agent, representing its manufacturers to the West, helping them climb the development ladder and climb the value chain. In return China is buying Taiwan's goods and putting a new gloss on its own history.

While in Chengdu I saw how this plays out, in a mini-series about the Chinese revolution. Chiang kai-Shek and the Nationalists are not treated as scum in in this series. They are seen as honorable, as brave and resilient, as noble. It's as if the Confederates built a viable society in Cuba after our Civil War. Takes some of the romantic gloss off things, but it's no longer just good guys and bad guys. 

Why this change of heart? Because Taiwan has freedom and democracy and capitalism, education and talent, but it is not in anarchy, the spectre of which is why Chinese tolerate what we call authoritarianism. China can answer Taiwan's short term problems, and Taiwan can answer China's long term problems. 

But it will take time. More time, perhaps, than either country has.

Japan

I love Japan. I love the Japanese. Some of my best friends are Japanese.

But in terms of international competition, Japan is what's ahead of China. Best case scenario. And Japan isn't taking over anyone.

The last 20 years have humbled Japan. The 90s were an economically "lost decade" and just as the economy seemed to get back on track, this latest recession has hit hard. 

One result is that Japanese have become more insular. Where once they seemed like Englishmen, now they seem more French. If this is all there is make the most of it.

One of my Japanese friends explained the problem this way. Japanese society still can't handle the risks of individualism. The nail that sticks up gets pounded down. This limits the size of the underclass (although it exists), but it dramatically limits its upside. 

It's that upside risk that Japan most needs to take, but remains unwilling to take. If a kid has Asperger's or ADHD and grows up Japanese, they're not nurtured -- they're isolated. Great potential also carries the risk of failure, and a society that won't risk failure won't make great successes either.

There have been Japanese entrepreneurs, great Japanese artists, great Japanese innovators in every field. Just not enough. And there's no prospect that these numbers will grow. Because Japan is getting old, fast. Some 21% in the last census were over 65, and by the next census 25% will be. 

What happens most when a society ages is that it tends to look backward. Some of the most popular shows in Japan today are about history or nostalgia. 

America

After 18 days in China, Taiwan and Japan I headed home anxious to hear some English. 

I was in the backyard yesterday, checking out some vegetables growing near my back fence, and I opened my ears. To my left, a crew of Meixcans were chattering in Spanish, repairing my neighbor's drainage. In front of me another crew was chattering in Czech, framing up an addition to my house. 

"We're taking over," the Czech foreman laughed when I mentioned this. "But by the time you do you'll be us," I informed him, "so good luck to you."

Despite everything, America remains the most diverse nation on Earth, the most welcoming of newcomers, the most willing to accept risky behaviors and mindsets. As a result we're not aging like Japan or even China. We are still in many ways a young society, a society of risk takers.

This is why America will win the future. We have embraced freedom without falling into anarchy for over 200 years. We have fallen many times, but we have always gotten up. And we're getting up again, because my Czech home framers, as well as one of my Chengdu hosts, are all in the process of becoming Americans. 

You forget how exciting the idea of America is until you're away for a while. Then you see it. The risk-taking, the adaptability, the flexibility, the tolerance of difference. It was hard won, especially over the last 40 years. 

Many Americans, as nostalgic for their past as old Japanese, think we took a wrong turn in the late 1960s and things have been going downhill. That's just not true. We have been evolving, as individuals and a society, toward a more perfect union, with more room for growth and innovation than any other nation on Earth possesses.

We're what everyone wants to be, where everyone wants to be. America renews itself as no nation on Earth, and is still renewing itself. 

This will be the second American century. Count on it. 

General Grant's Tree

I had last been at Ueno over 20 years ago.

Time had made the memories hazy, but they came flooding back as my son and I approached.

What had been a shabby neighborhood of tiny lanes and small shops had become office towers. Another nearby section had remained to become a red light district.

The temple inside the park I had thought ancient turned out to have been rebuilt in 1958, after the American firebombing of Tokyo.

But I watched closely and finally understood the Buddhist way here. Wash your hands before entering, buy and light sticks of incense, stand in prayer before the altar as the smell surrounds you, and when your prayer is over stick the incense into the sand of a communal urn, with that of every other follower of the way.

In addition to the temple, Ueno Park has a lake, a zoo, and several important museums, along with many wide walks and small plots of land devoted to trees, flowers or grass, arranged with care. Acrobats from China and musicians from Peru vied for attention as workers and neighbors strolled through the morning calm.

There are many signposts with maps, some in Japanese, some in English, easily distinguished because they align the park differently. And my son, examining one English map, found something he thought exciting.

General Grant's memorial.

General Grant? U.S. Grant, the 18th President? Or some other Grant? I was curious, so I let him lead us through the unknown sidewalks, seeking out the Grant memorial.

We found a large statue of a general, astride a horse, but this was a Japanese, and behind it were tarps and people, so we moved on. We found other memorials to other men, and were turned around several times. We were quite exhausted when I read the map again.

The Grant memorial is right behind the statue of the general, between the general and the entrance to the zoo. My son went in one direction and I in another. (The inscription below the General reads "let us have peace.")

As you can see we finally found it. Along with one of the saddest stories I have ever found in Tokyo.

Mad Men

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Think of this as Volume 12, Number 22 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Many Americans are familiar with “Mad Men,” about Madison Avenue and life in the early 1960s.

Today's China reminds me a lot of that show.

My son and I just completed a week in Chengdu. It is a nice city, situated in a bowl on a plain that was also the home of one of the first Chinese Kingdoms .

But in most ways it is brand new.

Like the rest of China much of its modern history dates from 1979, when the country began opening up economically. The differences between then and now are stark. The old city is nearly destroyed – there are just litle bits here and there – and a city much like New York has taken its place along wide avenues placed by Chairman Mao. (A huge statue of him directs traffic in the center of town.)

“Mad Men” is a show in which everyone lies to themselves about their inner reality. Everything about the 1960s is just below the surface, waiting to explode. Chengdu is much the same. All the various revolutions of the 1960s are waiting to appear, they are just below the surface, yet the citizens are completely wrapped up in their external prosperity.

The Chengdu Boom

I have become a student of booms.

I grew up in the boom of New York's Long Island during the 1960s. I moved to the Houston boom of the 1970s, joined the PC boom of the 1980s, covered the Internet boom of the 1990s, and watched the housing bubble of this decade.

I know what booms look like.

Chengdu is a boom town. (To the right, an image of Brazilian soccer star Kaka hawking Chinese-made throat lozenges in Chengdu's Airport.)

Credit Where It Is Due

The passage of a credit card "bill of rights" has banks acting like what we liberals call WATB, Whiny Ass Tittie Babies. 

The final bill is not all it could be. But it's pretty good. Especially when you look at how the credit card economy works for the banks.

Every credit card purchase is a loan. But it's not a loan for which the bank pays out cash immediately, like  a car loan. Instead you get what you bought, and the money goes to the merchant after the transaction is settled, less a "discount" based on the merchant's past history.

The amount of the discount varies. With Discover it can be as low as 1.5%. With Visa it's usually 2.5%, although it jumps substantially in "card not present" transactions like Internet purchases. For AmEx transactions it usually starts at 5% and goes up from there. I'm barely counting the cost of processing the transaction because that comes to just a few pennies, although if your average sale price is very low (if you're a $1 store) those pennies add up fast.

For these reasons some merchants illegally limit credit card transactions to purchases of a certain size. At the same time some high-volume merchants, like fast food joints, allow small purchases and don't even make you sign for them. That is an innovative "product" of the industry, specifically for high volume merchants. All that really happens is that the card number is run against a "hot card list" in the store. Settlements are made overnight on a "batch" basis, the credit card computer calling up the store's terminals, uploading the day's transactions, downloading the new hot card list.

There's another way the bank gets back at merchants. Chargebacks. If you return the merchandise, or change your mind and cancel within a few days (a big risk for Internet merchants) the bank takes that money back. Oh, and the more chargebacks you have the higher the merchant's discount.

Because of this, a customer who pays their balance off each month makes a lot of money for the bank. Say you pay off a $1,000 balance on your card every month, within the grace period. That's $12,000 on which the bank has earned discount fees and transaction fees, from the merchants, for the year. If you're going to nothing but the best merchants, that's still $300 plus transaction fees, that was earned off your business. 

You're not a freeloader. Anything but. 

The War Against Oil is a War for the Economy

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Think of this as Volume 12, Number 20 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Want to get the economy out of the ditch? 

Make something. Make something new, something valuable, something real, something with a ready market. 

Despite what critics felt there was something real about the Internet, which defined the 1990s. The Internet accelerates the transfer of knowledge, and of any knowledge-based value store. It's the most powerful economic accelerant since the creation of the telegraph.

By contrast there was nothing ever real about the economic drivers of this decade, financial services and homes. Not that homes aren't real. But the value of a home has nothing to do with its cost or even its location. It is a measure of the economic value left out there to buy homes. A home sucks money, it only creates money for those who build, assuming someone buys. Thus homes became a natural sinkhole for the confederate money of this decade, soaking up as much as the banksters could create from thin air.

Now that the economy has stopped falling this question becomes vital. On what will we base the next boom? 

The answer is obvious. Energy.