The classic definition of gotcha journalism usually refers to an interview style where the interviewer tries to trap the interviewee into saying something that would be damaging to themselves or their cause.  It has been around since the early 80s and became firmly rooted into our political and popular culture since then.

With the rise of the Internet, journalists, bloggers and citizens have taken gotcha journalism to new levels.  The barrier to entry is much lower:  instead of having to secure an interview with someone in order to trap the interviewee, the new breed of gotcha journalism uses the Internet to sift through all of the statements that a person has made in their entire life to try to paint them in a bad light.

Now, bloggers go through politicians’ every public statement for any misspeak or inaccuracy and then try to crucify them.  It started with John Kerry being labeled a “flip-flopper,” moved to George Bush‘s butchering of the English language and more recently, led President Obama’s Green Energy Czar to quit because of statements he made almost ten years ago.  When President Obama misspoke on the campaign trail, saying that he had visited all 57 states, right wing bloggers tried to make it seem like Obama was stupid.  When Sarah Palin burst onto the national scene, left wing bloggers and some in the media sifted through her previous public statements to search for any inaccuracy.

It seems like 75% of the news stories I read about each day have to do with some politician getting raked over the coals for some statement he just made that is different from a statement he made a long time ago.  Many times, the person leveling the charge is a fellow politician, along with the media and the blogosphere.

My generation is the first generation to be online from an early age.  We first interacted with email, then instant messaging, then social networks and now blogs.  We created (and are still creating) vast amounts of data about ourselves, much of which is stored online.  We have archived AIM conversations from when we were in 6th grade,  digital pictures from high school and college that are online and we all have our dumb Facebook wall posts that we made throughout our college years.

Many of us have blogs on wordpress or blogger and many more have microblogging accounts on services like Twitter where we make observations and pithy comments about our daily lives.  I know I’ve changed alot since I was in 6th grade and I assume I will change almost as much between now and the end of the 2010s.  During the next decade, as people in my generation get older and become leaders in business, politics and culture, will we still be subjected to gotcha journalism like our public figures are today?

One argument is that since everyone has all of this content online, we will become desensitized to people’s dumb or incorrect statements from when they were young.  Everyone has pictures of themselves on Facebook that they wished never made it online.  Everyone is going to have a poorly thought out wall post that could be taken out of context, or a pithy remark on Twitter that does not stand the test of time.  Anyone who blogs about anything interesting will be majorly wrong about something.  Will millennials become bored by the new gotcha journalism because everyone has something online that could make them look bad?

On the other hand, millennials may just make gotcha journalism even worse than it is today.  Since everyone has created gigabytes of online content, bloggers and the media will have an easier time digging up dirt on anyone who enters the public eye.  Imagine being able to see the new candidate for Governor at a boozy college party or getting a transcript of his AIM conversations with his best friend or girlfriend from high school.  The media, bloggers and most of all, the citizens will eat this stuff up.  Ratings will go up and everyone will be happy, execpt for the public feature.

I hope that my generation helps start the shift away from gotcha journalism.  I can’t imagine being shocked by the vast majority of the dirt that someone would dig up about a public figure online.  I hope that millennials are willing to allow people to change their opinion and not be called a flip-flopper.  I hope we will cut public figures some slack when their college photos get published to the major blogs and their old blog posts come back to haunt them.  I’m not optimistic, but I am hopeful.  If not, we will have some really boring politicians, business leaders and public figures!

Do you think millenials will help stop gotcha journalism or do you think the problem will get worse?

                          

Infidel – Ayaan Hirsi Ali.  Infidel is one of the most powerful books I have ever read.  It is about Ali’s path from Somalia to the United States, with time spent living in Kenya, Saudi Arabia, Ethiopia, Germany and the Netherlands in between.  Without giving away too much of the book, Ali was born into the Somali clan system and was raised as a devout, conservative Muslim.  She faced incredible hardship during her life including living multiple war zones, abusive parents, female circumcision, forced marriage, an internal struggle with her religious beliefs, death threats and so much more.  Her story is so incredible that if it were written for Hollywood, you would think it was fake.

A little background.  When the Dutch filmmaker Theo Van Gogh was butchered by an Islamic extremist in broad daylight in the Netherlands, the terrorist stabbed a 5 page note to Van Gogh’s chest.  The note was addressed to Ali and included a fatwa, or holy order, calling on Muslims to kill her.  The books tells Ali’s life story that lead to this horrific conclusion.

While reading the book, I found myself questioning how anyone could believe in cultural relativism, especially if they read Ali’s story.  I see cultural relativism as a continuum.  On one end is the people who say “our values are right, other values are wrong.” The other end is people who say “all cultures are equal, we must respect their practices, as their values are as good as ours.” I’ve gone back and forth along the cultural relativism continuum for a long time now, but after reading Ali’s book, I am falling much farther toward the first end of the spectrum.  I think that my reading of cultural relativism is now something like this: I can understand why people have the values that they do in different countries, but I believe that there are universal human rights and truths that everyone should adhere to.  For example, I can understand how someone born in the rural, tribal hinterlands of Somalia could believe that female circumcision is the right thing to do, but I don’t believe it’s wrong to try to stop the practice.

I’m probably not doing a good job of explaining myself here, but I believe that Infidel is one of the most interesting books of the 21st century and potentially one of the most important.  I highly recommend Infidel.

Three Cups of Tea – Greg Mortenson and David Oliver Relin.  After reading Infidel, I dove right into Three Cups of Tea.  I had never heard this story, but after reading the book, came away inspired.  Three Cups of Tea is about Greg Mortenson’s quest to build schools and improve the quality of life for children, especially girls, in rural Pakistan and Afghanistan.

In 1993, Mortenson, an American, failed at summiting K2, arguably the world’s most difficult mountain to climb.  Mortenson got lost climbing back down to civilization and wandered into Korphe, a tiny mountain village in Northern Pakistan.  He was sick, tired and lost, yet the impoverished Muslim villagers nursed him back to health and gave him amazing hospitality.  After living with the villagers for about seven weeks, Mortenson was able to go back home ot the United States.  But before he left, he agreed to return and build the villagers a school to educate their kids, especially their girls.

Fast forward to 2009, Mortenson has built over 130 schools and countless clean water projects, women’s centers and self improvement facilities in rural Pakistan and Afghanistan.  His schools have educated over 55,000 children in an area where America is not all that well liked.  Mortenson has succeeded in helping these children by sheer personal grit, determination and amazing perseverance.  He has spent years in Pakistan and Afghanistan, braving some of the most dangerous places in the world, in order to help children get an education.  He believes that books, not bombs, will make the world a safer place in the future.

Mortenson is now one of my personal heroes because he has done so much good, without any official mandate.  Mortenson is a charity entrepreneur.  He has gone into an area that had a huge need and filled it as best as he could.  I truly believe that Mortenson deserves a Nobel Peace Prize and believe he will get one within my lifetime.  If you want to be inspired and read about one of the most amazing people on this Earth, read Three Cups of Tea.  I can’t recommend a book any more highly.

SPOILERS: After reading Infidel and Three Cups of Tea back to back, I really wanted to hear what Ali and Mortenson would think about each other.  By the end of Infidel, Ali believes that Islam needs to have a reformation because many of the core tenants of Islam advocate violence, oppression of women and a “backward” outlook toward the word.  She does not seem to believe that there are moderate Muslims, only religious Muslims and secularized Muslims.  The does not seem to believe in the concept of the “silent majority.” These ideas are completely understandable if you lived in her shoes and lived the life that she did.  They may even be completely correct, but I am not so sure.

Mortenson’s story seems to prove otherwise and provides signs of hope.  Although he is kidnapped by the Taliban and threatened by some religious Mullahs, the vast majority of people he meets are devout Muslims that are good people.  They are clearly not secular and are very religious, but do not have any problem with an infidel like Mortenson.  In fact, many of them are willing to put their life on the line to protect him.  Additionally, these rural Pakistani and Afghani Muslims are willing to educate their girls and the girls are willing to learn.  Mortenson’s example of how education can help people break free of poverty is incredibly powerful and I think Ali would agree that what he is doing is amazingly important.  I would love to be a fly on the wall if the two of them would ever have a candid conversation.

Soccernomics – Simon Kuper and & Stefan Szymanski.  Soccernomics is nowhere near as heavy as the previous two books, but is still very interesting.  Kuper is the author of Soccer Against the World, another book I read this summer, and is back at it again.  Soccernomics is the Moneyball of soccer.  The authors try to bring statistical analysis to the pitch, just like Michael Lewis did in Moneyball.  The authors tackle why England always seems to fail at major tournaments, which countries overachieve and underachieve and who will be successful in the future.

My favorite part of the book is the section about Olympic Lyon, currently one of the most successful clubs in Europe.  Just like Moneyball, the authors show why Lyon can be such a good club with limited resources.  Lyon goes against conventional wisdom and is incredibly active in the transfer market.  They have a stable front office and only buy players who are between 20 and 22 and are among the top 2-3 players in their country or are Brazilian.  Once the players sign with Lyon, the club spares no expense to help the players adjust to living in Lyon and French culture.  I found it amazing that other clubs, even the richest in the world (Chelsea, Man U, Real Madrid etc) don’t do this.  They simply sign the player and hope he is able to adjust.  Third, Lyon sell players as soon as they show any sign of deterioration and never try to sign center forwards, as they are the most over valued players in the transfer market.  If you liked Moneyball or like European soccer, Soccernomics is the book for you.

Note: If you are interested in donating to Greg Mortenson’s charity to build schools in Central Asia, check out the Three Cups of Tea website.

                          

In my travels I have come across pubs in London that have been around since 1666, churches in Paris built in 1207 and have seen pyramids in Egypt built in 500 BC. It makes you realize how young America is. It also makes you realize how rich in culture America is because it is truly a mix of nationalities from all over the world.

I think every American should Google their last name and find out a little bit about why their ancestors immigrated to the US. Even if its just to understand the origins of the name and historically understand what was going on in the world at that time. Then go out to those places and see where your family comes from. It will make you respect your great great grandparents more and will make you prouder to be an American. Visiting Berlin and Krakow truly made me saw the struggles my parents faced growing up in post WWII Poland and then it made me understand why they fled communism. Plus, you will add to the very low number of Americans out there traveling.

Another issue I wanted to bring up.  American backpackers!! Where are you? I have been traveling for a while and the number of Canadians, Australians and British people I meet far outnumber the Americans I meet. And in Australia? I can’t tell you how many Americans I did run into who have told me, you are the only American I have met traveling. Americans do travel yes, but just not to the same degree as other countries. WHY? We have much more people that Canada, the UK, or Australia.

Is it really because we are such a big country that when we want to travel we can just go to Florida or Colorado? That we really do not need to leave the country to vacation? Is it money? Perhaps, but there are people who can afford Hummers so there are people who can afford to travel. Non-American backpackers claim its America’s size that keeps Americans in its borders. I do not agree with this. I think it is time. Few Americans have the time to travel. And I think it is a shame. What is eating up all of Americans time? Is it work? School? To do lists? I don’t know, I could attempt to blame it on corporate America, but I know that wouldn’t be fair, or entirely true. This is a topic I have thought about a lot and will return later too.  It needs much more contemplation.

Only 20 percent of Americans even have a passport.  A shame.  Truly a shame.

—

After reading Beata’s email, I decided to include my response here.

So why don’t more Americans take time to travel?  I’ve seen it time and time again on my trips to Europe.  There are tons of Europeans and Australians and even a fair amount of Brazilians and Chinese.  I’ve seen about the same number of Canadians as Americans, yet Canada is about 10% the size population wise as America.

I don’t think it is size.  I think there are many factors.  First, work and vacation time.  Americans get the least amount of paid and unpaid vacation of any developed country.  Most companies start new employees with 2-3 days of vacation for the first year, whereas Europeans get at least a month.  Americans are putting in ever longer hours to keep up with the Jones’.  This leads into my next point.

Materialism.  There is a huge percentage of Americans who would rather have things than experiences.  They would rather spend their money on a big screen tv, a new Hummer or a house with an extra bathroom.  It seems to me that many people in the rest of the world would rather spend their discretionary income on experiences, rather than things.  Many Americans think in terms of things, rather than experiences.

Third, the bastardization of American exceptionalism.  I think that there is a decent sized chunk of the US population that thinks “America is the best, why should I go anywhere else.”  Whereas previous generations thought that America was great but still respected and wanted to experience the rest of the world, it seems that currently some think the rest of the world isn’t worthy of our time and energy.  This change is sad.  It’s the same phenomenon as when people made fun of John Kerry for speaking French when he ran for President.

                          

Startup friendly cities need to have a high density of smart people.  Potential founders of startups need other smart people who could be potential partners, contractors or employees.  Most cities that have a high density of smart people happen to be cities with large universities that attract a huge supply of smart people each year.  It helps that these cities have universities because it’s even better to have young smart people, rather than simply smart people.  Young people can afford to take bigger risks and are more willing to work longer hours for little or no pay than older people who may already have families, mortgages or other obligations.

Another helpful characteristic is low cost of living.  If founders can live cheaply and find cheap office space, it makes it much easier for a startup to get off the ground.  Additionally, having a low cost of living allows startups to stretch their investment dollars much further.  Employees, rent and just about everything else is cheaper.  I talked to one Madison-based founder who has successfully sold one company and is on his second startup who believes that Madison’s low cost of living is one of the most important reasons why his company succeeded and his competitors did not.

Access to affordable office space in a business incubator is another key characteristic of startup friendly cities.  Business incubators are an important asset for startups, especially if they are affordable.  Unfortunately, many incubators I’ve seen end up charging close to market rates.  Incubators are an important step for startups because they are usually the first move from working out of the founder’s bedroom.  They also provide camaraderie, connections and bring startups out of isolation because the rest of the people in your office are also running startups.  It’s much better for a startup to move into an affordable business incubator with other startups, rather than move into an affordable office space next to a lawyer, construction contracting company and a non-profit.

It is extremely important for startups to interact in a community of other startups. Having other entrepreneurs around, especially entrepreneurs who have been successful in the past, is important because founders can ask for advice when they have problems.  A mentor program like MERLIN Mentors is very important because it matches up experienced people who have been successful before with inexperienced startup founders.  These mentor programs not only build a community of startups, but they provide specific feedback to startups and help them overcome challenges that they might not if they were left on their own.

Another important aspect of an entrepreneur community is free networking events like the High Tech Happy Hour and Capital Entrepreneurs. Events like the High Tech Happy Hour bring smart people together who are not necessarily focused on entrepreneurship and startups, but are fertile ground for finding employees.  Local, free entrepreneurship groups like Capital Entrepreneurs offer founders of startups a place to meet others who are doing what they are doing.  It also creates a community and gives founders of startups some semblance of co-workers.  Starting a startup can be lonely if you do not get out and interact with others who are facing the same challenges and dilemmas that you are.

These free networking events provide a way for experienced entrepreneurs to mingle with people who are just getting started.  Experienced entrepreneurs set an example and show everyone in the city that starting a company is viable.  They can also provide advice, but simply having experienced, successful entrepreneurs in your city makes your city startup friendly.  Cities like Boston, San Francisco and Seattle have these networks.  Others like Madison and Boulder are just getting started, but are on the right track.

These experienced entrepreneurs can introduce inexperienced founders to professional service providers like lawyers and accountants who are willing to help entrepreneurs.  It also helps if your city cultivates a network of experienced, flexible professional service providers.  These service providers should be willing to take equity, give discounts or defer payments into the future for startups that they think are going to be successful.  It is extremely helpful if startups can still get top notch professional services, without breaking the bank during the company’s research stage.

These professional service providers can help startups gain access to capital that they need to fund their business.  Ideally, a startup friendly city will have VCs, angels and other rich people who are interested in investing in startups, but not all cities must have all three.  A strong network of professional service providers who work with entrepreneurs can make introductions to rich people who are willing to invest.  Some startup friendly cities can be heavy on angel and rich individuals, but light on VCs.  Another way cities can help entrepreneurs is by advocating for small business loans and other alternative ways of funding.

Startup friendly cities generally have support programs in place for entrepreneurs.  They tend to have low taxes.  It is much easier to start a startup in a city that does not have 10% sales tax, like the city of Chicago.  The state of Wisconsin provides a 25% tax credit to angel investors who invest in certified Wisconsin startups.  Wisconsin also offers low interest loans that are forgiven if the startup fails.  Both of these programs help entrepreneurs succeed.  Other states have implemented programs that fund early stage startups.

Finally, many people who start statups generally like living in cities.  They like walking to work and living in tolerant environments.  They like to be able to meet in coffee shops, go to interesting restaurants and enjoy life with their peers.  It’s best to have good weather.  Low crime and good schools are also helpful.  Overall, creating a city with high quality of life keeps the three most important ingredients, experienced entrepreneurs, rich people and smart, young people, in one place.

Cities can begin to implement policies that help foster entrepreneurship.  Cities can start by creating a business incubator for startups that offers offices (with windows) at 50% discounts.  They can start to create mentor programs like MERLIN and create entrepreneur networking groups like Capital Entrepreneurs.  Service providers can start offering discounts or equity for service deals.  Once one service provider has success offering this deal, it quickly becomes the industry standard.  I’m not advocating that government do all of this.  People who want to see their cities become more friendly to startups have to do some of the work themselves.

Government does have a place.  It can offer incentives for startups to move to their cities.  It can lower taxes or offer government programs that provide easier access to capital.  It could create a new business incubator and it could help create a community of entrepreneurs by publicizing entrepreneur success stories or the local startup community.  Government could help make cities more startup friendly simply by being more friendly to startups themselves.

Characteristics of Startup Friendly Cities

Figure out if your city is startup friendly.  Rate your city on a scale of 0-2 for each characteristic and score total the score at the end.  0 means that your city does not do it at all, 2 means your city does is very well.

1. Access to capital
2. High concentration of smart people
3. Low cost of living
4. High concentration of rich people
5. Network of experienced entrepreneurs
6. Mentor programs
7. Low cost startup incubator
8. Low taxes
9. Governemnt support
10. Flexible professional service providors
11. Free networking events
12. High quality of life
13. Tolerant, vibrant, walkable cities
14. Large universities
15. Culture of entrepreneurship
16. Educated workforce
17. Good weather
18. High concentration of science and technology workers
19. Direct national flights
20. Entrepreneurship advocacy groups

I would say Madison, WI gets a score of 23/40.  Milwaukee gets a 13/40.  San Francisco gets 36/40.

How startup friendly is your city?  Do you agree with my list?  Do you have any characteristics to add?

                          

SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance – Steven Levitt and Steven Dubner.  SuperFreakonomics is a great follow up to the Stevens’ first effort, Freakonomics.  If you enjoyed Freakonomics, you will love SuperFreakonomics.  They tackle all sorts of problems with data, which you hardly ever see in most other walks of life.  Ever since I read Freakonomics, I’ve been fascinated with the way they look at problems and issues and I’ve been reading the Freakonomics blog in the New York Times daily.  In SuperFreakonomics, Levitt and Dubner tackle emergency room safety, the efficacy of child car seats, prostitution and most controversially, global warming.  They also present some amazing history about this history of vaccines, car seats and health care in their trademarked, data driven, but still humorous style.

I won’t ruin any more of the book for you, but there has been a huge outcry from the global warming establishment about SuperFreakonomics’ take on global warming.  Dubner and Levitt say that global warming has become a “new relgion complete with dogma and good and evil.”  They have been proven right because they were immediately criticized by the global warming establishment when the book was released.  I liked the way they tried to bring reason and science back to the global warming debate and move it away from political, religious debates that it has become, but was suprised that they advocated so hard for geo-engineering.

Levitt and Dubner (and I) love to point out that most of our problems come from unintended consequences of well meaning policy decision.  Many times, these unintended consequences could have been predicted ahead of time, but weren’t looked at for a variety of reasons.  They advocate geo-engineering the planet, but don’t take any time to talk about the potential unintended consequences.  There may not be many (but I doubt it), but I was expecting them to address the issue at least a little bit.  That said, SuperFreakonomics is entertaining, informative and well worth reading.

Absurdistan – Gary Shteyngart.  Not many books can make me laugh out loud.  I was on a flight to NYC, reading Absurdistan and trying not to laugh out loud and failed fairly miserably.  Absurdistan is the fictional story about a young, Jewish, fat, son of an oligarch, Russian immigrant to New York City and his trials and tribulations going between Russia, the US and Absurdistan, a fictional country located near Iran.  I read it on the advice of of someone who likes many of the same books I’ve read and wasn’t disappointed.

Shtyngart’s writing is really fun.  He mixes in hip hop references with geopolitical feelings musings that would only occur to a Russian who moved to the US.  One of my favorite parts is about how people in the 3rd world applaud whenever a pilot safely lands a plan “as if it were some kind of miracle”, whereas in the West, people complain about being late and rush to get off.  The section on a Holocaust Museum in Absurdistan is brilliant writing and worth reading on its own.  The books is a scathing critique of just about everything from Russian politics, American foreign policy, fat people and corporations.  While a little slow in places, each chapter has at least a gem worth finding.  I recommend reading this book if you like history, politics, different cultures and good writing.  As a bonus, after reading Absurdistan, Oscar Wao and The White Tiger, I now know how to say a certain part of the male anatomy in Russia, The Dominican Republic and India.

                          

Back in April, I questioned whether the US Dollar is America’s Achilles Heel.  Each day, I am more and more convinced that it is.  Back when leaders like Chavez were the only ones questioning dollar hegemony, most of the rest of the would could safely ignore his statements as the ramblings of a dictator blinded by anti-Americanism.  Most people did.  When developing countries complained about the devaluation of the dollar, people could brush the complaints off as jealousy.  When Russia started rumbling about moving away from the US dollar, some people started to take notice, but were not concerned, as they viewed Russian statements as posturing to reassert itself on the global stage.

Finally, when China’s central bank head made statements that he was not happy with the huge increase of the money supply, people began to take notice, but were still not convinced that there was a problem.  Next, China signed currency swaps with countries like Argentina, Brazil, Thailand and others that allowed businesses to do deals in Yuan, rather than relying on the US dollar.  This was a clear shot across the bow at US dollar hegemony.  China has also stopped buying longer term US securities, prefering short term notes that they can roll over more quickly, while stockpiling raw materials, rare earth metals and precious metals.

Yesterday, the world had to take notice when the Middle East oil states held secret meetings with China, Russia, Brazil, France, Japan and others to discuss selling oil against a basket of currencies and gold, rather than US dollars.  The US was left on the sidelines.  Pretty much everyone is denying that these meetings took place, but where there is smoke, there is fire.  It is the logical progression for the rest of the world.

They cannot attack the US militarily and win, so they have to attack the US’s biggest asset and its biggest weakness: the reserve status of the dollar.   It is America’s soft underbelly.  I don’t believe that these countries are moving away from the dollar because they do not like the US or want to see the US fail.  They are moving away from the dollar because they are scared.  They are scared that the US will continue to print huge amounts of money to inflate away its massive $90T+ unfunded liabilities (yes, T=trillion) and national debt, making their dollar denominated securities go down in value.  I have seen people say that America’s unfunded liabilities between the debt, medicare and social security is over $120T, or about 10 years of GDP.  You can see their fear in skyrocketing gold, which hit a record high of $1,045 per ounce today.  The oil producing nations are tired of pumping their tangible, natural resources in exchange for dollars that are not backed by anything.  They are simply looking out for themselves.

Taken together, these country’s actions are a frontal assault.  They are saying “enough is enough.”  They do not want to accept our paper, which is backed by nothing, in exchange for their manufactured goods or natural resources.   Unless the US takes decisive action to stop the erosion of the dollar, I fear that the US will lose its biggest competitive advantage: the reserve status of the dollar.  If this happens, our standard of living is fated to go down.

                          

For example, Pollan talks about how throughout American history, there have been “blessed” and “evil” nutrients.  In the 1800s, protein was evil and John Harvey Kellogg led the charge against this scorage, leading many Americans to give up their traditional eggs, bacon, sausage and pancakes for boxed cereal, with the blessed carbohydrates.  Later, it was fat, leading to the creation of margarine and transfat to replace real butter and animal fat.  The Atkins phenomenon brought protein back because carbs were supposedly bad.  There have been many other examples of this throughout American history, but these are the easiest ones to see.  Each of these movements were started by people with good intentions who wanted to make Americans healthier.  At best, they did not work.  At worst, they made things worse.

The margarine and other plant fats that scientists created ended up being worse than the fats that they were replacing.  Pollan claimed that this switch led to hundreds of thousands of premature deaths from heart disease and other preventable diseases.  These deaths were an unintended consequence of food scientists and the government’s good intentions to help American live healthier lives.

Pollan’s talk led me to start thinking about other unintended consequences and how many people miss their impact in everyday life. I found some relating to our food, including some potential ones relating to Pollan’s “eater’s manifesto.”  Subsidizing the corn and soybean market after the USSR’s wheat crop failed in order to ensure that we never went hungry led to monocultures and a crash in farm prices, which led to fewer family farms.  It has led to America’s overproduction of cheap corn, which made high fructose corn syrup the cheapest and easiest sweetener to work with, leading to cheaper manufactured food and fatter, less healthy Americans.  Cheap subsidized corn and soybeans make it tough for farmers in Africa to compete and pull themselves out of poverty.  Now I don’t believe that each of these are straight cause and effect relationships, but its clear that these unintended consequences of trying to make sure that America’s food supply is secure have continued to ripple across the world since the 1970s.

Pollan’s manifesto advocates that we eat food, not too much, mostly plants and move away from packaged, processed “food like substances.”  This is a good goal, but he also advocates moving away from monoculture and large industrial farms.  The thinking is that we we have healthier plants, animals and humans if we diversify our food supply and stop growing huge amounts of corn and soybeans for use in just about everything.  Pollan believes that these types of changes could help solve global warming, the healthcare crisis and  potentially the current economic crisis.  It is clearly a noble goal, but what about the unintended consequences?

If farmers move away from high yielding monocultures, might we be at a larger risk of famine in the future as populations rise?  Could we lose jobs in the current food industry?  Could lower yields lead to higher food costs, much like how increased demand for corn based ethanol raised food prices worldwide, with most of the increased hurting the world’s poor?  Are there some other unintended consequences that Pollan’s way of thinking might bring about, much like the other big changes to our food supply brought to America’s dinner tables?

Personally, I think it is worth experimenting with Pollan’s ideas because I’m not sure we can do much worse than we are doing now, but it would be foolish to simply accept them and begin to implement them immediately.  I don’t believe that Pollan is calling for this, but I have not seen much research into the potential unintended consequences of his ideas. It reminds me a story I just came across the other day about tuna fishing.

In the early 1990s, groups like Greenpeace were outraged that tuna fishing companies were killing hundreds of dolphins with each catch.  Here’s how tuna fishing works

The main way that tuna is caught is through purse seines in the Eastern Tropical Pacific. Basically, after a large group of tuna is located, a miles-across purse seine net is closed around them via a group of small boats associated with a large factory ship.  It’s an effective way to catch large amounts of fish for not a lot of money.

This technique is pretty standard- the main variation lies in how the large group of tuna is located. There are basically three ways to do this.

1) Get lucky and happen to stumble across a large group of tuna visible from the surface in the middle of an enormous ocean. Obviously, this isn’t terribly practical.

2) Attract tuna using floating objects.  Stay tuned, we’ll come back to #2.

3) Follow dolphins, because dolphins in the Eastern Tropical Pacific are often associated with large schools of tuna. Dolphins are easy to follow because, unlike tuna, they have to come up for air.

For a long time, #3 was the most common way of catching tuna. The problem with this method was that by definition, dolphins are right there- and they get caught in the net as well. Despite the honest effort of many sailors to free dolphins (there is a long maritime tradition of respecting dolphins), by some estimates, around 500,000 dolphins a year were killed as a result of bycatch.

Sounds terrible, right?  500,000 dolphins EACH YEAR were killed as a result of this tuna fishing.  Groups like Greenpeace and others marshaled public support and got the rules changed, making dolphin following illegal.  People could not fish for tuna by following dolphins to big groups of tuna.  So what happened?

Tuna fishing fleets rapidly switched over to method #2, attracting tuna using floating objects.  If you put a log in the middle of the ocean, within hours it will be surrounded by fish. It may have something to do with the fact that many open ocean fish can go their entire lives without encountering a hard surface.

The floating objects now used by tuna fishing fleets are quite high tech- they have sonar and video cameras that allow the flagship to detect how many fish are near that object. Once there are enough, the purse seine comes and scoops them all up- and the floating object is redeployed.

The big problem with this method is that floating objects don’t only attract tuna. EVERYTHING is attracted to floating objects, including sea turtles, sharks, seabirds, billfish, and, yes, dolphins!

Well-intentioned groups like Greenpeace and others tried to help the dolphins by making fishing for tuna by using dolphins illegal, but the unintended consequences of their actions have created “The Ecological Disaster that is Dolphin Safe Tuna.” Here are some stats comparing the bycatch of both methods of fishing.  First, the floating log method, then the old, dolphin method:

Ten thousand sets of purse seine nets around immature tuna swimming under logs and other debris will cause the deaths of 25 dolphins; 130 million small tunas; 513,870 mahi mahi; 139,580 sharks; 118,660 wahoo; 30,050 rainbow runners; 12,680 other small fish; 6540 billfish; 2980 yellowtail; 200 other large fish; 1020 sea turtles; and 50 triggerfish.

By trying to help dolphins, groups like Greenpeace caused one of the worst marine ecological disasters of all time. Few other fisheries are as bad for groups like sharks and sea turtles as the purse seine fishery, and none are as large in scale.

“Ten thousand sets of purse seine nets around mature yellowfin swimming in association with dolphins, will cause the deaths of 4000 dolphins (0.04 percent of a population that replenishes itself at the rate of two to six percent per year); 70,000 small tunas; 100 mahi mahi; 3 other small fish; 520 billfish; 30 other large fish; and 100 sea turtles. No sharks, no wahoo, no rainbow runners, no yellowtail, and no triggerfish and dramatic reductions in all other species but dolphins.”

In other words… the only species that “dolphin safe” tuna is good for is dolphins!  The bycatch rate for EVERY OTHER species is lower when fishing dolphin-associated tuna vs. floating object associated tuna! The reason for this is obvious- floating objects attract everything nearby, while dolphins following tuna doesn’t attract any other species.

If you work out the math on this, you find that 1 dolphin saved costs 382 mahi-mahi, 188 wahoo, 82 yellowtail and other large fish, 27 sharks, and almost 1,200 small fish.

“Dolphin Safe Tuna” is one of the most egregious examples of unintended consequences that I have heard about in a long time.  I wonder if we may repeat similar mistakes with global warming (now called climate change), health care, taxes, the bank bailouts and our monsterous national debt.  We should at least try to look at the potential downsides and unintended consequences of our larger decision in all aspects of our lives – political, business and personal – so that we do not make another mistake like margarine or dolphin safe tuna.

                          

This modest community-based nonprofit is one of six neighborhood partners in the experimental Opportunity NYC program, which pays poor people — mostly single moms — for a broad range of health, education, and work-related activities, everything from taking their kids to the dentist to getting a new job to attending parent-teacher conferences.

Since its September 2007 launch, the New York initiative has paid $10 million to 2,400 families living at or beneath 130 percent of the poverty line — about $22,000 for a family of three. The typical participating family earned just under $3,000 during Opportunity NYC’s first year.

I’ve been interested in nudges, small behavioral changes that can create big changes in society, since I read Nudge by Richard Thaler and Cass Sunstein.  I love learning about these nudges, whether its ways to increase the tips that tour guides receive or ways to help students retain more information over summer vacation, so this program caught my attention.  I think its an interesting experiment that could be very successful with enough testing.  Currently, the program has spent over $25mm on 2,400 families, which doesn’t seem like that great of a return.  I’d like to see the program focus on 2-3 of the most important tasks that people were being paid to do and expand the program to more people.  If they could show that going to parent teacher conferences, taking your kid to the doctor for a checkup and cooking a healthy home cooked meal once per week had the most impact, the program could invest in the tasks that had the highest benefit with the lowest cost, all the while helping more people.

Some anti-poverty workers are not a fan of the this program.  One worker said thinks the program is almost offensive:

Opportunity NYC borders on offensive — the idea that a person can be bribed into doing better in school or being a better parent,” says Mark Winston Griffith, executive director of the Drum Major Institute for Public Policy in New York City. “It sort of suggests that poverty is a lifestyle choice, that somehow if we’re just given a nudge, that we can choose not to be in this condition, or choose for our children to do better in school, or choose as parents to provide better child care. It comes out of the idea that poor people are almost sort of culturally and inherently dysfunctional. Not because of structural circumstances but because of their own personal failings.”

David Jones, the President of the Community Service Society in NYC, is not a fan because he thinks the project it too small to combat the huge problem that is poverty in NYC.

“In New York City, almost 50 percent of African American men are not currently employed. We have nearly 200,000 young people who are neither working nor in school,” he says. “Those numbers can’t be addressed with incremental incentive programs. Not because the ideas are bad but because the scale of the problems is huge.”

While I understand where both of these critics are coming from, I can’t agree with their thinking.  We know that the current anti-poverty programs are not working very well, so we might as well try something new.  Just because a problem is huge does not mean that a small solution can’t be successful.  In the startup world, many small solutions have solved huge problems, even when the founders were simply trying to change a small part of the big problem.  If the program doesn’t work, then end the program, but if it does work to make people’s lives better, then by all means continue it.  I’d love to see more innovation and entrepreneurial thinking in the charity space.  I think there is probably room for a great deal of innovation and improvement.

                          

Amsterdam is an amazing city that gets a crazy reputation in the United States because of its portrayal in movies and popular culture.  While there are areas that are about as crazy as it gets, the vast majority of Amsterdam is a laid back, historic, beautiful city.  In fact, if you did not know the red light district was there and did not wander into its few square blocks, you would never suspect anything.

We spent four days in Amsterdam, wandering around the canals, looking at old buildings and people watching.  We stayed about two blocks from the Rijksmuseum and the Van Gogh Museum in a quiet neighborhood on the southwestern side of the city.  We talked with the desk clerk about what we should see and do in Amsterdam and he gave us a bunch of places to go.  Like most Dutch people, he spoke perfect English.  Unlike America where John Kerry was mocked for being able to speak French, most Europeans highly value being able to speak foreign languages.  The hotel clerk could speak Dutch, German, English, Spanish, Italian, Portuguese, French and a little Arabic and he thought it was no big deal.  In the US, his mastery of languages would be extremely rare, but in the Netherlands, its not that rare: many Dutch citizens speak more than three languages.

I love to cook and eat good food, so one of my favorite parts about traveling is eating great local food.  The Netherlands does not have much traditional food to speak of, but has a long history of immigration and foreign food.  Indonesia was a Dutch colony and when it declared independence, the Netherlands allowed hundreds of thousands of Indonesians to immigrate.  One of the best benefits, at least for tourists, is amazing Indonesian food.

A traditional Indonesian meal called Rijjsttafel, or rice table, is the best way to experience this interesting cuisine.  A rice table consists of between 12 and 30 small portions of different Indonesian specialties.  Indonesian cuisine has lots of coconut milk, peanuts and curry used in a myriad of different ways.  My favorite dishes were beef satay with peanut sauce, a spicy hard-boiled then fried egg, Indonesian chicken soup and coconut milk chicken.  We went to two different places and both were really good, but the second place we went was simply amazing.  It was the rated as one of the top Indonesian restaurants in Amsterdam and we could tell.  We ate early and were the only people in the restaurant, so we were able to ask the owner/waiter lots of questions.  We could tell he loved talking to people who liked to cook and after a few questions, he stopped by and told us all about each dish and how to prepare them.  The food was great, but the owner explaining all of the dishes to us made the experience even more memorable.

The Netherlands is a biking country and Amsterdam has more bikes than people, but that has not stopped some from gaining weight.  The Dutch weight problem is no where near American proportions, but it is a growing problem that many have started to pay attention to.  The Dutch also have been revamping their health care system, much like the US is trying to do at the moment.  There is a newer story about how well the system is working that I saw on BBC World News while I was in London, but all I can find is an older Wall Street Journal article explaining the system.  Here is how it works:

Starting in 2006, the Netherlands has required all adults to buy their own health insurance, or pay a penalty. And insurers must offer policy to all comers, no matter how sick or old they are, WSJ’s Gautam Naik reports.

The government subsidizes policies for adults who can’t afford to pay premiums and makes “risk-equalization” payments to insurers that cover the elderly and those with some chronic conditions such as diabetes.

According to the BBC, this plan led to more competition and lower rates for Dutch citizens.  Insurance companies have to compete out in the open and have come up with many interesting ways of attracting customers.  Most companies now have gyms that are included in the health insurance plan.  Customers get swipe cards to use each time they go and work out and receive discounts based on how much exercise they are doing.  Saving money is powerful motivator for people to go to the gym and it would be interesting to see how it would work in the US.  Instead of trying to pass a massive health care bill like congress is trying to do now, it would be interesting to see a more open debate with more time to check out other options.  I will save my health care thoughts for another post, but I think the Dutch solution is a very innovative model for America to at least consider before implementing more changes.  Traveling usually helps showcase different perspectives on problems in the United States and this trip to Amsterdam was no different.  I am thankful that I was able to spend time in Amsterdam.  It is definitely one of my favorite places I have ever been.

                          

To borrow from Bill Clinton’s first presidential campaign, Its the Leverage, Stupid!  Consumers borrowed huge amounts of money to live lavish lifestyles or to just keep up with the monthly bills.  The consumer savings rate peaked in the 1970s around 15%, but declined consistantly during the 80s and 90s.  It even went negative in 2007, right before the financial crisis.  This meant that consumers were, on average, spending more than they made.  Consumers resorted to using their homes as ATMs, borrowing vast amounts of money to keep the party going.  Clearly it was not sustainable.

Banks and non-bank banks stoked the flames and let the party rage on.  Banks offered mortgages to people who shouldn’t have had them, manufactured huge bets on CDOs and made billions moving money around.  After the government removed many of the leverage regulations, banks continued to go wild.  Other companies and hedge funds joined the fray, borrowing billions of dollars  for leveraged buyouts that left balance sheets riddled with debt.

When the economy started to slow down and the stock market fell out of bed, companies and consumers who were strapped with debt and little savings faced the brunt of the downturn.  Companies began to deleverage, cuting costs and jobs to be able to stay in business.  US consumers, scared by huge declines in net worth stemming from the stock market collapse and the real estate downturn, started to save, bringing the savings rate up to around 7%.  

The US government, which had started to run larger deficits during the Bush years, stepped in to fill the void.  The Bush administration pushed the first bailouts through and the Obama administration passed even more bailouts and a huge stimulus package.  The $740bn+ stimulus package pushed much of the spending two to three years down the road, funding tons of pork-laden projects that are probably unnecessary and have nothing to do with stimulus.  These programs saddle the government with even more debt at a time when the rest of the world is concerned about the value of the dollar.  The government should have advocated for $200-300b of immediate spending, or better yet, returned money to the people so that they could pay down their own debts.  Instead, we have record amounts of debt and even more leverage, not even taking into consideration the unfunded liabilities of Medicare and Social Security that will require even more leverage.

Now, as the stock market and the economy as a whole are showing signs of getting worse, there are calls for a second stimulus.  I fear that Congress will pass another massive bill, but most of the money won’t be spent fast enough and there will be even more waste.  I’m worried that many of the projects will be useless and ineffective at turning the economy around.

The only way to fix the problem and get through the bear market is to deleverage.  We need to squeeze the leverage out of the system, stop the insanity and go back to more rational debt levels.  With another round of mortgage resets set to take place late this summer, we are likely to have many more foreclosures in the next year.  Instead of spending money on projects in the future, the government should have made it easy for mortgage holders to renegotiate their mortgages in exchange for the bank having the rights to some of the upside of the house when the market turns.  This type of solution removes debt (leverage) from the consumers and bad debt (leverage) from the financial institution and saves consumers money right away, with a lower mortgage payment.  The government will have to spend a little more money, but it would be rational, compared to the huge stimulus package and bail outs that we have seen so far.

The government should be helping (forcing) companies to convert debt to equity in institutions that have bad balance sheets.  Instead of bailing out investors and companies who made bad decisions, the government should be converting debt to equity to shore up balance sheets and make the companies deleverage.

I think we are on the verge of another downturn in the stock market and rising unemployment.  The press seems to think (or hope) that the worst is behind us.  Most people are turing bullish and many Americans have come back into the market.  I fear that we face a repeat of the stock market’s performance during the Great Depression, where there was a prolonged bear market rally and then a second crash that wiped out more market value than the initial crash.

China and the rest of the world are already starting to pick at the reserve status of the dollar.  If the US keeps leveraging and then decides to inflate away the problem, the US dollar may lose its reserve status.  The government must make sure they do not make the crisis worse than it is.  Its not a Republican or Democrat issue. Its an American issue.  I am not confident that the government will make the right decisions.  With GoldmanSachs alums holding many key government jobs, I fear that they will do what they know best: continue to leverage and try to pick up the pieces later.  If you want to go farther, read Matt Taibi’s blog and latest piece in Rolling Stone.

I hope I am wrong, but I don’t see the US coming out of this without lots more pain.  What do you think?