Ivory Coast President Alassane Ouattara speaks on TV after his rival, Laurent Gbagbo, was captured on Monday. (AFP PHOTO / TCI / NEWSCOM)
What the world can do now for Ivory Coast and Ouattara
It took the United Nations and the French military five months to help the people of Ivory Coast finally capture Laurent Gbagbo – the loser of a November presidential election – in his residence on Monday. Now the winner of that election, Alassane Ouattara, needs all the outside help he can get to revive one of West Africa's most resource-rich economies and to heal a shattered democracy.
The UN and French role helped avert what might have been a major bloodbath in the main city, Abidjan, which was centerstage for a civil war between militias tied to the two men. Now, along with the African Union, the UN and French can play a constructive role to restore democracy, justice, and the economy.
Most sanctions imposed on the country need to be lifted soon, and more than 1 million displaced people must be helped back to their homes. Private militias need to be disarmed or integrated into the regular military. Foreign aid can help Mr. Ouattara gain credibility with former Gbagbo supporters and the largely Christian south. Power needs to be dispersed to the regions.
Most of all, the people of Ivory Coast must gain a sense of national identity, uniting both "settlers" who have lived in the country for decades and those indigenous to the land. That stronger civic identity might help prevent any future leader from corrupting the democratic system in order to stay in power, as Mr. Gbagbo did. Then, like so many other African countries, Ivory Coast will not need foreign intervention again.
Protesters chant slogans in Cairo on Sunday as they march following a reported attack by security forces in Tahrir Square on April 9. (Credit: Wissam Nassar/Xinhua/Photoshot/Newscom)
Democracy update from Egypt
Recently back from Cairo, Sherif Mansour talked with me last week about Egypt's democratic revolution. Mr. Mansour runs the Egypt program for Freedom House, the nonprofit watchdog group based in Washington that monitors freedom around the world.
On the state of the revolution so far: "The main idea is that people are still taking it to the street," and that makes him hopeful, said Mr. Mansour. On Friday, Egyptians poured into Tahrir Square in Cairo in the largest numbers since the ouster of former President Hosni Mubarak on Feb. 11. Tens of thousands gathered to demand that the interim ruling military council investigate Mr. Mubarak's wealth.
In apparent response, the prosecutor general of Egypt on Sunday announced that he had summoned Mubarak and his two sons for questioning on embezzlement allegations. The deposed president had just issued a televised statement, recorded on Saturday, denying that he had used his office to amass wealth.
Demonstrations are the only tool that citizens have to influence the government until parliamentary elections, which are scheduled for September. Egypt is in "a period of confusion," Mansour observed. "The military council caused it by being confused themselves," he explained. The council is perpetuating the confusion through reported military attacks on the protesters, people they are supposed to protect. At least one person was killed at the Friday demonstration.
On the protesters' efforts to organize for elections: "There is a great opening in the system," Mansour said. Egyptian pro-democracy groups are for the first time "able to organize public activities on their own." They are also realizing "they need to work together" to prepare for the parliamentary and presidential elections.
The groups support international monitors to observe the voting, and "there are some signs that the government wants this as well," said Mansour. But, he added, there's a "lack of knowledge about how this happens and what it entails." For instance, "they don't know they need to contact" international monitors; that the monitors require adequate advance notice to prepare; and that monitors must have a "a clear mandate" to do their job.
Meanwhile, American and European organizations are meeting various Egyptian political groups. Some travel bans are still preventing certain outsiders from traveling to Egypt. "It's not based on judicial review. There are just some security people putting down notes, not allowing these people" into the country.
On what the United States should do: The political parties and partners that Mansour met with believe the Pentagon should use its contacts and leverage with the Egyptian military to "open their horizon" to include the pro-democracy groups. They want the military council to talk with them and involve them in the transition agenda, Mansour said.
As for aid, Mansour expects "a lot of money pooled" from the European Union and Arab states, especially Saudi Arabia. "The US is a little behind in terms of funding flexibility," he said.
President Obama leaves the stage as he finishes a statement April 7 to the media after an meeting with Republican House Speaker John Boehner and Senate Democratic Leader Harry Reid. ((Credit: x99/ZUMA Press/Newscom))
Home-style budget crisis: Kitchen shutdown
After my wife and I finished our tax returns this week, we knew it was time to reform our home finances.
Here's how it went:
"I went to Bella's tea party last week," my wife said, "and boy, did that group convince me that we need to cut down our expenses!"
"Whatever happen to you bringing in more income with a second job?"
"Let's cut first, my friend, starting with your donations to NPR and those extra coins you give the homeless at the stoplight. Then maybe, only maybe, we can talk income!"
"Can't we have an adult conversation about this, and discuss cutting and income at the same time?"
"Don't get uppity political with me, chum, otherwise I'll shut down the kitchen!"
Our discussion went late into the night. Both of us had the kind of continuing resolution to somehow work this out, or at least appear to work it out. At times, though, each of us quietly pulled out a cellphone to check with friends and relatives to assure ourselves that we were in the right.
"I've decided," my wife finally stated, "that fundamental policy in this house must change. No more fees for the gym for you and only one night out a month with your friends."
"Wait, can't those cuts be only a stopgap measure until we tackle the big reforms, like you getting that job?"
It was getting late, and the threat of a kitchen-closing loomed – not to mention other unspeakable banishments and punishments. I was desperate.
"Maybe we should have our two families get together and have them settle this for us," I proposed. "Let our people guide us."
"That's it. Kitchen closed. Fend for yourself. Let's talk when you're good and hungry."
I didn't know what to do. I found a copy of our marriage vows, and read them again. Not much help there about finances. Finally, it struck me, the Big Idea.
"OK," I told her, "Let's do this: You don't need to get a second job and you can cut my expenses all you want. But from now on, I do all the cooking. The kitchen is mine."
"Sorry, the kitchen is not yours. I need it. The tea party group will be meeting here every week from now on."
So for now, I'm munching on power bars or eating at Mickey-Ds. And her tea party buddies have taken over our home.
Guess I'll go down to the Obama White House and get some advice.
People walk along the Tidal Basin, near the Washington Monument, as the cherry blossoms were in full bloom last year. The monument, memorials, and Smithsonian museums will all close if the government shuts down this weekend. ((Credit: Alexis C. Glenn/UPI/Newscom))
A government shutdown would rain on our parade
In the nation's capital, it's the best of times, and the worst of times.
Best, because this is the season when Washington dresses itself in pink. Delicate blossoms wave from the branches of cherry trees while plump ones release their perfume from tulip magnolias. The tourists are arriving, and that makes businesses happy.
But the visitors couldn't come at a worse time, due to the possible government shutdown. If Congress can't agree on a budget for the rest of this year by midnight on Friday, all the federal attractions here will close – from the National Zoo to the Jefferson and Lincoln memorials.
That throws a clunky wrench in the plans of many people, including my husband and myself. After about 10 years, we've finally succeeded in coaxing my husband's sister down from Boston for a weekend. We thought we might go to the annual cherry blossom parade on Saturday. But if the government shuts down, so will the parade.
The National Gallery of Art was next on the itinerary. It's got a terrific exhibit on French Impressionist Paul Gauguin, with a bit of notoriety thrown in because recently, a visitor attacked the painting of his two bare-breasted Tahitian women. The artwork was not harmed because it was covered with Plexiglass. Alas, we will be unable to mentally travel to the South Seas because the museum will be closed if there's a shutdown.
At some point, we thought we might stop for a picnic lunch at the gallery's sculpture garden, which will be locked if lawmakers can't agree on the budget. The park's tremendous fountain reminds me of Paris, and my favorite sculpture is of a giant typewriter eraser. It's an obsolete object, along with, it seems, compromise in Congress.
Perhaps our potentially upended weekend strikes some readers as a minor inconvenience. True, it won't matter much in the grand scheme of things. But a shutdown will affect hundreds of thousands of government workers and harm the economy in Washington and elsewhere. It would delay mailed tax refunds from the IRS, stop federal small business loans, and close national parks.
That hasn't swayed lawmakers so far. I wonder if any of them are expecting house guests this weekend?
Paul Ryan, Republican representative from Wisconsin, and chairman of the House Budget Committee. ((Credit: AFP - Nicholas Kamm - Newscom))
Paul Ryan's plan for entitlements: A profile in courage?
In 1956, then-Sen. John F. Kennedy released a book under his name entitled "Profiles in Courage," detailing the acts of eight senators in US history "whose devotion to principle lead them to unpopular courses," as he put it. The book was a big hit, winning him the Pulitzer Prize and launching Kennedy to the presidency.
Now some media and politicians are wondering if Rep. Paul Ryan, a Republican from Wisconsin, would be a "profile in courage" for his bold and detailed plan to reform Medicare and Medicaid. Or is his plan, released Tuesday, an act of political folly, like putting a bull's-eye on his back for daring to reform popular social programs?
Mr. Ryan is one of the few politicians that President Obama is said to both admire and fear for his intellect, and perhaps his courage. Mr. Obama himself, by running for the White House as a black man, is widely respected for his courage, even if his own intellect sometimes makes him appear professorial.
Ryan's courage may be seen simply in the context of the lack of courage within his own party. Republicans have long been afraid to be very specific about reform of the big social programs, especially Social Security. Even Ryan didn't include the retirement program in his reform plan, partly because it is still perceived as the "third rail" of politics and partly because it is in less dire need of financial reform than the two big health programs.
If his plan should be remembered for its courage, it is in saying that America's fiscal black hole is the most important issue facing the country, more important than any specific spending program. The deficit can't be taxed away or merely chipped away, but needs wholesale change, he is saying.
Like Martin Luther, Ryan has now had a "here I stand" moment, achieving a high profile, at least. It can make him either a forgotten martyr someday or perhaps lead to a chapter about him in a future "Profiles in Courage" book – perhaps written when another Kennedy runs for office.
Chinese artist Ai Weiwei poses in front of his 2009 installation in Munich made of 9,000 backpacks to remember the children killed in the 2008 Sichuan earthquake. (Credit: AFP/DDP/Joerg Koch /Newscom)
Ai Weiwei: China's famed artist – and dissident – needs his freedom
The Chinese artist Ai WeiWei is one of those unique figures in history who can straddle art and politics. When Mr. Ai was detained Sunday at Beijing’s airport, police took away the one quality that connects his two passions – his freedom.
Ai is the latest dissident in China recently detained or jailed for simply speaking out against the Communist Party. The fact that the country’s most famous artist – Ai helped design the bird’s-nest stadium for the 2008 Olympics – would suddenly disappear is a sign of just how much the party fears the Chinese people might follow the Arab spring and demand political freedom.
Ai is creative in both his political comments, usually transmitted via Twitter to 72,000 followers, and his art. When police set up cameras outside his studio, for instance, he not only mocked it smartly on his Internet postings, Ai also made sculptures that resembled the cameras.
When detained, Ai was on his way to live in Germany, hoping to find the freedom he needs to display his works. He was recently barred from exhibiting in Beijing, for instance, and his studio in Shanghai was bulldozed.
The best example of his ability to blend art and politics was when he campaigned against the official reaction to the Sichuan earthquake in 2008 – which was to suppress news about the deaths and the shoddy building codes. He led the effort to gather the names of school children who died in the quake. He then created a giant art work in Munich made up of children’s colorful backpacks. The worked spelled out the words of one mother whose child was killed: “She lived happily for seven years in this world.”
This latest crackdown on dissent in China could be a long one. The rest of the world must not only take notice, but it should demand the release of Ai and others like him whose cries for liberty are part of a global recognition that rights are universal – just as art is.
Former White House Press Secretary Jim Brady looks over at his wife, Sarah, after speaking about new legislation curbing gun violence during a press conference on Capitol Hill on March 30. Mr. Brady was shot by John Hinckley during his attempt to assassinate former US President Ronald Reagan in 1981. (Credit: Saul Loeb/AFP Photo/Newscom)
Thirty years after Reagan was shot, Jim and Sarah Brady courageously keep the pressure on for gun control
Remember the Bradys? Not the bunch, but the dedicated couple that has pushed gun control for decades.
Thirty years ago, Jim Brady was shot in the head as part of the assassination attempt on President Reagan by John Hinckley. At the time, Mr. Brady was the president's press secretary. This week, Brady – in a wheelchair – and his wife, Sarah, visited the Capitol and White House to again advocate for restrictions on guns.
One marvels that they have not yet given up. Through "tear-stained optimism," as Sarah Brady put it in a Washington Post oped, they believe it's still possible to better restrict access to guns for those who shouldn't have them, without trampling on the rights of the many law-abiding citizens who own or want to buy firearms.
I was particularly interested in the analogy that Mrs. Brady made between the fight for more sensible gun laws and the struggle for a woman's right to vote and for full citizenship for African Americans. "Isn't that a bit of a stretch?" I asked myself as I read her piece in the Post. But then I looked at it a second time, and I realized she was underscoring the need for political courage in the face of intimidation as the thread that binds these three subjects.
Courage is the single most important ingredient needed to enact new laws to reduce gun violence.
Lawmakers have cowered before the gun lobby ever since 1994, when Democrats took huge losses because the National Rifle Association singled out those who voted for the "Brady bill" (a background check for gun purchasers at federally licensed dealers) and a ban on assault-style weapons. The scare was reinforced in 2000, when the NRA targeted Al Gore, who lost his home state of Tennessee in his bid for the White House.
Reasonable steps to reduce gun violence will never be taken if Democrats, Republicans, and the president don't stand up to the NRA. They can steel themselves with this knowledge: Even though polls show the country split on the broad subject of gun control, when you ask Americans to consider individual restrictive measures, they support them.
For instance, 87 percent approve of criminal background checks for all gun purchases, even those at gun shows – which are not currently covered by federal law, but which should be. This was the finding of a 2008 poll done for a bipartisan coalition of mayors who support more restrictions on guns. Another large majority, 82 percent, support limiting the sale of military-style assault weapons, according to a 2007 University of Chicago poll. A 2011 poll for the bipartisan mayors group shows that 58 percent approve of a ban on the sale of high-capacity ammunition magazines (so does former Vice President Dick Cheney, by the way).
The Bradys spoke this week in favor of legislation to close the "gun show loophole," as well as for Democratic bills in the House and Senate to ban large-capacity gun magazines that can fire more than 10 rounds. After the assault-weapons ban expired in 2004, large-capacity clips were again sold, allowing, for instance, the January shooting in Tucson, Arizona that killed six and wounded 13 before the shooter had to pause to change clips.
Lawmakers and the president should also take courage in this: Endorsement by the NRA does not amount to an automatic win, nor does support for gun control legislation mean an automatic defeat. In 2008, voters still supported candidates who backed gun control, including Barack Obama. And in 2010, 27 Democrats in the House who were endorsed by the NRA lost their seats, while only two of the 101 Democrats who endorsed legislation to close the gun-show loophole lost. That's 99 who survived.
Particularly shameful is the stance of President Obama. He supported closing the gun-show loophole and restoring the assault-weapons ban in his 2008 campaign. Now he won't even back the baby-step effort in Congress to restrict large-capacity ammunition clips. In a March 13 oped in the Arizona Daily Star, the best he could do was to call for "a new discussion" between both sides on gun control, and to say that current laws need to be enforced.
NRA leader Wayne LaPierre rebuffed the president's invitation: "Why should I sit down with a group of people who have spent their life fighting the Second Amendment?" That's an obvious mischaracterization, especially since the Supreme Court has now settled the Second Amendment question.
Mr. LaPierre's refusal to talk is also a telltale sign of bullying. The thing about bullying, though, is that once you stand up to it, once you lose your fear, it loses its aura of perceived strength. To mention another historic analogy, just look at what's happening in the Middle East. People have had enough. Two dictators have fallen. Others are on shaky ground.
Every year, about 30,000 people in the United States are killed by gun violence. That's too many. Reasonable steps can be taken to bring that number down; to prevent criminals and others who shouldn't have guns from getting them; to keep military-style assault weapons off the streets.
Most Americans know this. But Washington has not yet caught on. It can't see very well from under the thumb of the NRA.
"Jim and I believe that the NRA's mythological power will be consigned to the ash bins of time," Sarah Brady wrote. Keep on believing, Bradys. Eventually, Washington will believe, too. But it will need courage to do so.
Cats that roam outdoors are public enemy No. 1 for songbirds. (Credit: Derner/Action Press /ZUMA Press/Newscom)
The inside story on cats – and songbirds
Everyone likes the idea of letting animals "run free" in their "natural habitat."
But house cats have been bred to be just that – lovable indoor companions to people. They came to America along with the early settlers. In the wild they're as much an invasive species as fire ants or cane toads (though a lot more fun to pet).
A study released earlier this month looked at gray catbirds nesting in three Washington DC suburbs. It found that, among predators, the common household cat, felis catus, is public enemy No. 1 for songbirds.
Our warm and furry friends were responsible for nearly half of the bird deaths observed. That's more than all other predators, such as hawks and snakes, put together. The study, conducted by researchers at Towson University in Maryland and the Smithsonian Institution, was published in the Journal of Ornithology.
All outdoor cats kill birds, whether they are feral strays hunting for a meal or well-fed pets let out for some fresh air. They kill birds whether they have been neutered or not. Even a declawed cat can kill birds.
Cats, the nation's most popular house pet at 60 million (a conservative estimate), kill about 500 million songbirds each year. That's perhaps 100 times as many as are killed by flying into electricity-generated wind turbines (less than 500,000), for example. It's also a lot of ruby-throated hummingbirds, chimney swifts, purple martins, northern orioles, scarlet tanagers, red-eyed vireos, and many other beautiful birds that may have survived the rigors of migration only to be killed in our backyards.
Many people hate to confine their cats inside. But the backyard isn't a great place for them, either. Feral cats, or even pet cats that just spend part of their time outdoors, generally live about half as long as those kept inside. The truth is that cats are usually quite happy doing their inside job – warming laps and adding a touch of class to any decor.
My wife and I made our stand on keeping cats inside many years ago. Talcum, our handsome powdery gray male, was run over by a car in front of our house. The young man who hit him as his car was rounding a curve in the road was brave enough and considerate enough to bring Talcum to our front door and explain what had happened.
Our next two cats, Thomas and Tessa, were also great companions and lived long and happy lives – strictly indoors.
Our lovable feline friends instinctively turn into predators when ushered outside. It's time to let Oreo, Misty, Patches, Ginger, and Tigger be real house cats – inside our homes.
Hundreds of thousands of people took to the streets of London last week to protest large budget cuts in Britain. In the face of high debt, Britain and America have taken sharply different policy courses. (l94/ZUMA Press/Newscom)
Global economic reality check: beyond doom and gloom, a quiet boom
Between rising debt levels in the West, political tumult in the Middle East, and rapidly growing economies in Asia, major corporations are anxious about global markets. To gain clarity, many turn to professional forecasters such as Robin Bew. He's the editorial director and chief economist for the prestigious Economist Intelligence Unit (a research and analysis service offered by The Economist Group, which also publishes the weekly magazine The Economist.) I spoke with him last week in Cambridge, Mass. The following are edited excerpts from our conversation.
On the state of the US economy:
We’re in a probably slightly better place than we thought we’d be 18 months ago. The jobs market is not anything as robust as we would like. The unemployment rate is much, much worse than you would generally hope it to be at this point in a recovery. But given the depth of the financial crisis and the scale of the policy response, actually growth is pretty good.
When we look out a bit further, there are clearly lots of things over here that worry us: the level of debt we see in America, and the unsustainability of the government’s finances particularly.
Our view, when you look out over a 5-to-10 year horizon, is that [the United States] is not going to feel quite the way it did over the previous couple of decades. People will be saving more, they’ll be spending less, government will be forced to be quite a bit more parsimonious. We need to get the deficit under control.
When we look at America, we say, "Pretty good policy response, dug the economy out of a hole," but there is a big hangover that needs to be dealt with, and dealing with that will hold growth back here for quite a long period.
On grading the Obama administration’s economic policies:
You have to dial it back a bit and think about what happened under Bush as well, because a lot of the serious, heavy lifting – the emergency response – was done under him. I’d say for both of them actually, I’d give them a “B.” The reality is you never have the counterfactual. You don’t know what America might have looked like if they hadn’t taken the action they did. But I have to say that most economists have a pretty good idea, and it doesn’t look very nice. The reality is, the fact that we can sit here and the economy is not in recession – it’s moving forward, jobs are now being created – that was not a done deal. That was not inevitable. It could have been a lot worse.
On Britain and America taking different approaches in the face of high debt:
The UK is enacting a very aggressive consolidation strategy –- but that’s just decent words for various spending cuts. One of the things that’s important to recognize is that in the UK, when you’re in power, you can do what you like – you have complete control. In America, it’s not like that. Obama is not a free agent. What actually happens here is determined in large part by Congress. That’s one important difference. Britain can do stuff that would be difficult to do here.
Britain has a lot less room for maneuver. Almost no country in the world has the room for maneuver that America does. And that forces other countries to behave differently. Portugal has no choice, because no one is going to lend to it right now, so they have to cut spending.
In the long run, the chickens will come home to roost. Ultimately, if America looks as if it’s never going to get its accounts in order, people will gradually move away [from buying US debt] and you’ll see other asset classes becoming more important.
Republicans are clear that there need to be cuts but pretty unrealistic about where they need to happen. And Democrats – well it’s actually quite unclear what they think. The things that they hold dear are really the only things that you’ve got left to cut. This is one thing that worries me about America over the longer term. There is no sense of a national debate going on around where these very inevitable spending cuts are going to have to fall.
There are always people in Congress that are level-headed and open to those strategic conversations, but there are not enough of them to make a difference. I wouldn’t like to think that it’s going to take a crisis to get a change, but unfortunately, I think often in America it does take a crisis to get a change.
On the need for budget adjustments:
It’s not really about the next 10 years, or this year’s budget, as much as having a long-term strategy that puts things under control.
In the UK, the thing that’s very important, is not that this year’s budget is going to be very harsh, it’s this idea that there’s a plan, and in 5 years time, it’s going to look very different in Britain. There’s a sense of direction and purpose, and that’s where we’re going to go. And that’s what’s lacking here.
On Chinese-style capitalism:
It’s misguided to think that economic management is their big advantage. I don’t think that’s the case.
China could be so much more than it is today if those [small, entrepreneurial] businesses were deemed to be by the government a legitimate part of the process. From an economic perspective, China could be a much more diverse, much more robust, and possibly much wealthier society if the government was willing to embrace those bits which are intrinsically more difficult to control. Of course a lot of government policy over there is about control. China has been very successful not because of the way the government operates, but actually despite the way the government operates.
China is portrayed as being a very centrally planned economy, but actually China is quite a decentralized economy. Regional government is extremely important. There’s a lot of cronyism. A lot of corruption is happening at the local level. And decisions are not made in the context of a kind of bigger economic strategy.
China’s central government has recognized that corruption gets in the way of success. What they are doing is making examples of people. But what they haven’t really managed to do is change the psychology – which is what they’re trying to do – at the local level.
The central government doesn’t have the degree of control over the way that economy runs that people in the rest of the world often think they do.
On whether the Chinese economy could collapse:
I think a meltdown scenario is unlikely. A slowdown – I think a slowdown is already happening to some extent.
On the global economy’s 'good news' stories that the media are missing:
The big story of our time – and this has been true for about a decade now – is this relative rise of the emerging markets and particularly Asia. Often, particularly in Western media, there is an acknowledgment that this provides an opportunity, but it’s broadly dealt with as a threat. The rise of Asia in particular is viewed as a very frightening thing. And a lot of policy – American policy, European policy – toward Asia is partly around trying to contain that threat.
But I think the good news story is this: Essentially what’s going on is that there’s a couple billion people who were basically not active in the global economy – and by that I also mean living pretty appalling lives – are moving into the broad economic mainstream. And you see this tremendous improvement in the lives and the welfare of huge numbers of people around the world. So if you look at what’s going on in China and what’s going on in India, you go back 15 years and you’ve got hundreds and hundreds and hundreds of millions of people eking out a living on the land, absolutely destitute who now have a standard of living which doesn’t look anything like the one we’d experience in the West but is infinitely greater than anything they’ve experienced before. And that’s a very uplifting story.
In the narrative around the threat that a rising Asia faces, those people who are being sucked into the world economy are doing two things. They’re entering factories and they’re making stuff and they’re selling it over here. There’s a real sense that that’s putting a lot of Americans out of work, or Europeans out of work. That’s causing a lot of angst. And you can completely understand that.
The other thing that it means, of course, is that there’s a couple billion consumers in the world who weren’t there before. And that provides the opportunity. So, the threat, if you like, is the fact that things that used to be done over here will now be done over there. But the opportunity is, there’s two billion people who weren’t buying anything before who are now trying to buy stuff. And that’s the thing that business is very focused on. But the political debate hasn’t really caught on to that.
Ten years ago, all of our clients in China were in China because they could get cheap labor and they were making stuff in China and all that stuff was being exported back to the States and Europe. Now, almost all our clients who are in China are there because they’re trying to sell stuff to the Chinese.
This tremendous improvement in the lot of people in countries who previously had a terrible existence actually goes hand in hand with this enormous opportunity for business around the world to prosper on the back of that. But that message tends to be drowned out by the other message, which is that China makes loads of stuff and it displaces jobs over here.
The cover slide of Mary Meeker's 460-page PowerPoint summary of America's financial condition. "With our demographics and our debts," she writes, "we’re on a collision course with the future. The good news: Although time is growing short, we still have the capacity to create positive outcomes." ((Credit: Kleiner Perkins))
If America were a corporation, would you invest in it?
Take a mental trip back to 1997. Silicon Valley's tech boom is in full swing. Yet a share of Apple is just $5. Gil Amelio is CEO. The company is on pace to lose $1 billion. Did you invest?
If you had, you'd be sitting on a pile of cash. Today, Apple's share price tops $330. It's one of the wealthiest companies in the world.
Now, imagine you're a shareholder debating whether to invest in "USA Inc." It's bleeding cash ($2 trillion last year). Its "board of directors" is divided over budget cuts and may have to shut down operations on April 8. Would you invest?
If you said "No," you'd have plenty of company; fears of America's economic collapse seem to be growing daily. But you also might be missing out on a great turnaround story – if USA Inc.'s leaders commit to a radical turnaround plan.
That's the heart of Mary Meeker's bold analysis of America's financial condition. She's a longtime Morgan Stanley tech-stock analyst who recently joined legendary venture capital firm Kleiner Perkins Caufield & Byers. By treating the country as a corporation (and citizens as shareholders) she has brought fresh thinking and new urgency to the nation's fiscal straits. If you have lots of time on your hands, you can leaf through her 460-page PowerPoint presentation here. If you don't, here is the salient point from her recent article in Bloomberg Businesweek:
The bottom line on USA Inc.? Cash flow and net worth are negative, profits are rare, and off-balance-sheet liabilities are enormous. The "company" has underinvested in productive capital, education, and technology – the very tools needed to compete in the global marketplace. Lenders have been patient so far, but the sky-high rates on the sovereign debt of Greece, Ireland, and Portugal suggest what might lie ahead for USA Inc. shareholders and our children.
By our rough estimate, USA Inc. has a net worth of negative $44 trillion. That comes to $143,000 per capita. Negative.
To be fair, the net worth calculation leaves out some assets, including, most importantly, the power to tax. Which simply means that the government can improve its own finances by worsening those of its citizen-shareholders.
It's true that, unlike a regular corporation, USA Inc. can print its own money. But Ms. Meeker suggests that's a source of false hope: "Even though USA Inc. can print money and raise taxes, USA Inc. cannot sustain its financial imbalance indefinitely – especially as the Baby Boomer generation nears retirement age."
Don't head to the hills just yet. As Meeker points out, "USA Inc. has serious financial challenges" but "its problems are fixable." The key? "If the American people embrace the need for bold action, their political leaders should find the courage to do what's right."
Perhaps the brightest news of all: USA Inc., Meeker says, is in better shape than Apple was in 1997. Ready to invest?
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