Monday, June 30, 2008

Chinese Discovered America 70 Years Before Columbus?

''The evidence is massive,'' said Gavin Menzies of his theory. ''I've got it coming out of my eyes!'' His voice was filled with excitement, just as you'd expect from someone propounding one of the most revolutionary ideas in the history of history. A retired navy man with white hair, Menzies still has a hint of red in the eyebrows that frame his ocean-blue eyes. Dressed in a handsome sports jacket and tie, he cheerfully invited me into his stately Georgian house in the Canonbury section of London. What he had to say, his publicists had warned me in breathless e-mail messages, would make ''every history book in print obsolete.''

Menzies' book, ''1421,'' boldly asserts that the Chinese discovered America 70 years before Columbus. Riding the tube out to his house, I saw ''1421'' promoted on the billboards at the station stops, alongside Eminem's new album and J. Lo's latest movie. The London papers have feverishly debated Menzies' radical thesis since its publication in November; his book will finally arrive here in the New World later this week, accompanied by a huge publicity campaign from its American publisher, William Morrow.

''My wife, Marcella, and I were in Beijing for our 25th anniversary, in 1990, and we went to the Great Wall,'' he said, explaining the origins of his discovery. ''I asked when the section we visited was completed, and the guide said 1421. Later we went to the Forbidden City and learned it was completed in 1421.'' Menzies quickly discovered that a great deal of Chinese history gathered itself up in 1421, and he resolved to write a book. But the focus of his book changed as he learned more, especially after looking into the life of the eunuch admiral Zheng He. Zheng was also known as Sin Bao, and his seven major sea expeditions became legendary, even in the West, as the voyages of Sinbad the Sailor.

''Zheng set sail in 1421,'' Menzies said. ''The famed Treasure Fleet junks were five times larger than Columbus's caravels. Each held a thousand men. Two years later, in 1423, seven ships returned. Then, in a decision that would change all of history, the Ming emperor ordered all the ships dismantled. He pensioned off the sailors. And he burned all the records.''

Traditional historians would agree with Menzies that in 1423 China abruptly abandoned exploration and turned inward after the Treasure Fleet returned from sailing no farther west than Kenya. But Menzies, a self-taught historian publishing his first book at age 65, says that he has found evidence proving that the Chinese didn't turn around after Kenya -- but rather rounded the Horn of Africa and discovered the New World.

At a time when big books must declare an end of something or a theory of everything, Menzies has accomplished both. His thesis upends the entire Western age of discovery, from Columbus to Cook, and shifts the achievements and adventure from Europe to Asia. Figures like da Gama and Pizarro are written off as war criminals and replaced with a peaceful Chinese trading mission that supposedly charted all seven continents (even the North Pole). As to America, Menzies says that he has found proof that the Chinese thoroughly explored the East Coast from what is now Florida to Rhode Island. On the West Coast, he argues, they sailed into San Francisco Bay -- humiliatingly running aground upriver near Sacramento. Another Chinese fleet checked out the center of the continent, especially Missouri, and at some point lost another ship in Kansas.

''It's either Wichita or Kansas City; I can't remember which,'' he said, pouring me some coffee.

Menzies is a charming man. He can zestily tick off one piece of suggestive data after another -- reports of Asian jade found in Aztec tombs, allegations of Chinese ideograms found on pre-Columbian pottery. He makes history sound like pure fun. This high-spiritedness, which infuses every page of ''1421,'' makes his book a seductive read.

All this helps account for his manuscript's success with publishers. He received an advance of more than $800,000 from Bantam, his British publisher. Foreign rights were promptly sold to 20 countries. His global book tour will take him to Oxford and Cambridge in England, Yale and Harvard in America and the top universities in Shanghai and Beijing. It's the kind of itinerary any established scholar would envy.

Yet despite Menzies' powers of persuasion, his scholarly methods will not satisfy everyone. Sitting at his dining-room table, Menzies explained that he had found San Francisco Bay on a 1507 map -- that is, decades before historians believe it was first reached by Westerners. Menzies owns a large replica of this map, which was drawn by Martin Waldseemüller, a German cartographer. It's a map I know very well, partly because of its fame as the first map featuring the word ''America.'' Only bare chunks of Florida, a few Caribbean islands, Venezuela and Brazil are visible on the map, because that was all that had been charted. On the Western shore, Waldseemüller just colored in some nice blue, bulbous mountains, like the ones a 10-year-old might draw. The mountains are mere place holders, no more literal than the fat-cheeked cherub named Zephir seen puffing along the coast. Menzies pointed at these cartoon mountains and said, ''You can see San Francisco here.''

I looked at the smooth curved line of the mountains' edge. To my eyes, there was nothing that remotely signified San Francisco. He smiled. I smiled. I wanted to say something, but he spoke before I could. ''Here's Los Angeles,'' he said, pointing at another part of the cartoon. There was something about his jolly audacity that was appealing. I felt that I should just listen to what else he had to say. Besides, it seemed rude to point out that along the length of those supposed mountains near pre-Columbian Frisco, Waldseemüller had written, in bold type, ''Terra Incognita.''

Sipping his coffee, Menzies said that although Waldseemüller had not seen America's West Coast with his own eyes, he had clearly benefited from seeing a Chinese ''master chart of the world.'' Nobody has ever seen this chart; Menzies just presumes that it existed. How did it come to Europe? Menzies has surmised the answer: it was carried by a 15th-century Italian traveler named Niccolò da Conti. He converted to Islam in order to move among the Arab merchants; arriving in Calcutta, he witnessed the arrival of Zheng's Treasure Fleet. (This is not disputed by scholars.) Menzies told me that da Conti must have hitched a globe-trotting ride, arriving in China in 1423. The next year, he argued, da Conti returned to Venice and had to sell his master chart to Dom Pedro, the king of Portugal's brother, to buy a pardon for converting to Islam. By the time Columbus sailed, Menzies said, he had surely seen copies of this map -- and used it to guide his first voyage.

''When he landed, Columbus was said to have made a great mistake, saying that he had encountered Chinese people,'' Menzies said. ''I think he did encounter Chinese people!''

For Menzies, connecting history's dots is easy. Other scholars aren't so sure. ''He's put five gallons in a half-pint pot,'' said a chuckling Felipe Fernández-Armesto, an Oxford professor and author of ''Millennium: A History of the Last Thousand Years,'' an acclaimed history text. ''What he doesn't understand is that maps at that time were as much acts of the imagination as cartography.'' Renaissance maps, Fernández-Armesto explained, were not meant to be read as A.A.A. printouts. Fernández-Armesto's disdain for Menzies is beyond rebuttal: ''It's not really worth my time. What's really interesting about it is that the book's taken off. It's like some Elvis fad!''

Fernández-Armesto was stunned at the book's P.R. blitz in Europe. Menzies appeared on every major TV program. His books were placed in every bookstore window. Menzies' media strategy in America this month will try to duplicate the same surge of enthusiasm and debate. ''I still don't understand how it happened,'' Fernández-Armesto said.

On a brisk, sunny morning, I met Menzies once again at his home, and we took a long constitutional into Canonbury's market area for several book signings. He explained that he had originally placed the book with a small academic press, but as his theory changed and grew, he eventually placed it with a mass publisher who understood the marketing challenge ahead.

''Our big problem was going to be British professors of history,'' he said conspiratorially, ''who would be completely brassed off at a novice upsetting the apple cart. We worried we'd be taken to pieces.'' Speaking with an unusual fondness for book strategy and financing, Menzies explained how in ''Phase 1,'' his publisher presold foreign rights. ''That would cushion a disaster if we published in England and got egg on our face.'' Phase 2 was timing British publication to ''the end of October, when booksellers send out their Christmas catalogs.'' Having presold it to the bookstores, Menzies said, ''the critics can come in and give it a snotty review, but the booksellers aren't going to pulp them. They're committed.''

Later that morning, back at his table, Menzies could sense my skepticism. ''How many books would you guess have been written about the Chinese discovery of the Americas?'' he said. Before I could answer, he bolted from the room and quickly returned. ''More than 6,000!'' He presented me with a bibliography published by two American academics, John Sorenson and Martin Raish, listing thousands of publications plumbing the kind of evidence Menzies specializes in -- reports of sunken junks, findings of Chinese cannons. The bibliography Menzies showed me is often used to support something called ''diffusion theory.'' Briefly put, this is an umbrella idea encompassing various alternative theories of America's discovery. Columbus (and Zheng He and Leif Ericsson) had a lot more competitors than most people think: Prince Madoc of Wales, the Zeni brothers of Venice, Jo-o Vaz Corte Real of Portugal, Poland's Jan of Kolno. The fact is, crossing the Atlantic was probably not as big a deal as Columbus-centric historians described it. Diffusionists may not be able to pinpoint who beat Columbus to the punch -- but they're sure someone did. And they may well be right. But if you scrutinize the evidence of any of these specific claims, they melt away. Which is why these theorists like to emphasize quantity over quality.

''The evidence grows by leaps and bounds every day,'' Menzies told me at his table. ''Come, you must come see this.''

We went to the third floor of his house, where he invited me to read through shelves of printed e-mail messages alerting him to findings of sunken ships and pre-Columbian shards of Chinese pottery. The sunken junks, especially, seemed to be multiplying like medieval chunks of the True Cross. According to Menzies, Chinese junks clog the harbors of every port town in the world. His original fleet estimate of 100 boats will be emended in future editions.

''New evidence suggests it was closer to 800 ships, making the population of the fleet bigger than all but one city in Europe,'' he said confidently. Many of those ships were lost, but others stayed behind, he said, establishing ''settlements in San Francisco and Vancouver Island.'' He paused. ''The entire country of Peru was a Chinese settlement.''

Trying to navigate a safe course through Menzies' evidence made Odysseus's voyage past Scylla and Charybdis seem like a breeze. I tried to follow one piece of evidence - the California junk - to its source.

''It was up the Sacramento River,'' Menzies said. A ship nearly the length of a modern aircraft carrier heading up a river? I've only skippered a Sunfish, and even I know that would be foolhardy. Menzies said there had been reports of finding medieval Chinese armor at the site. Great, but it turned out that the armor was found more than 20 years ago, lent out to a local high school and then lost.

I pressed on to the discovery of a pre-Columbian Chinese corpse in Mexico. ''Yes, yes, found at Teotihuacán.'' Who found it? ''The body was found by a Professor Niven.'' Could I contact him? ''He found it in 1911.'' A century ago? ''Oh, yes, but it's very exciting. Our real drive is to confirm it.'' Where's the body? ''It appears to be split up.'' Split up? ''We believe part is in Switzerland and part of it is in Sweden,'' he confessed. ''I've told my assistants, Track down the body and get DNA on it!''

On it went. The Kansas evidence was another presumed junk. The East Coast evidence turned out to be the squishiest of all. The Chinese astronomical tower and the Chinese writing, it seems, are the Newport Tower in Rhode Island and the Dighton Rock in Massachusetts. As an amateur historian of amateur historians, I have to say that the tower and the rock are two of the greatest Rorschach monuments in American history. At one time or another people have claimed the Newport Tower to be an Indian lookout, a Viking outpost, an Irish oratory. The Dighton Rock is covered in indecipherable scratches that are apparently of human origin, and you would be hard pressed to find a culture that hasn't claimed these petroglyphs as its own.

By connecting with the tower and the rock, Menzies has hooked into a great historical tradition: the obsessed amateur. Traditional historians try to ignore them, these gadflies who claim to know better than the experts. But it's not so easy. You can laugh aside the various Jans of Kolno, but one of these theories is occasionally correct. In the mid-20th century, traditionalists mocked the ideas of an obsessed Norwegian lawyer named Helge Ingstad. He was convinced that the Viking sagas about discovering ''Vinland'' were based on truth. A self-taught historian like Menzies, he traveled at his own expense to the eastern shore of Canada hoping to find evidence of landfall. Same methodology as Menzies', essentially.

One day in 1961, Ingstad found the ruins of a Viking settlement in L'Anse aux Meadows in Newfoundland. A crackpot theory suddenly became authentic history. Ingstad received numerous honorary degrees; when he died, he was hailed as a great archaeologist.

Amateurism is derided by professionals because it is so often wrong, but think of what paleontology or astronomy (or jazz or the Constitution) would be without them. It's quite possible that the Chinese came to the Americas in 1421. It's also likely that a mission devoted largely to trade would easily be forgotten in a few years. Exchanging textiles for pepper isn't quite as memorable as, say, an army on horseback armed with cannons eager to rape and kill.

Given the gossamer strength of Menzies' evidence, however, it is unlikely that history departments will soon be dressing him in Ingstad's garlands. But that hasn't stopped him from trying. While I was in London, Menzies received a speaking invitation from the Oxford Student Union.

Standing in a hall lined with flaking editions of Chaucer and Hobbes, Menzies gave his talk. ''Massive evidence, simply overwhelming,'' he said, prancing amid the massive overwhelmingness of it all. He reprised his stories of junks and jades. He talked of peculiar ''bowel afflictions among the Indians once thought to be unique to the Chinese.'' Then there is the matter of the Chinese chickens in South America. Menzies cited his own experience for knowing well ''how the morning call of the Asiatic hen's 'kik-kiri-kee' was markedly different from the 'cock-a-doodle-doo' of their European counterparts.'' Menzies suggested that somewhere in South America, the crew of the Treasure Fleet dropped off some of Admiral Zheng's chickens -- scoring another historical milestone with the first delivery of Chinese takeout.

After Menzies' talk, a man in a fine suit, presumably a scholar, raised his hand. I anticipated a rough question. But the gentleman, a pickled Oxford hanger-on (the kind who haunts every university town), asked: ''How do you talk without notes and without pause? It must mean you are right.'' Even the few skeptical questions from students became occasions to pick through more middens of evidence. At one point, Menzies claimed that more than 100 Peruvian villages in an area called Ancash have names linguistically linked to medieval China. ''They speak Chinese still,'' Menzies said, ''but cannot understand each other's patois.'' Verification is pending.

''Torrents of information are pouring in,'' Menzies later told me, explaining why he has hired ''a permanent team of people who can translate medieval Spanish, Portuguese and Chinese.'' A television series ''is coming out next year, and the Web sites are up and running.'' For a fee, interested readers can subscribe and gain access to Menzies' latest ''confidential'' postings of fresh evidence. The plan is to keep the book constantly updated; his assistants, Menzies promised, will be creating new editions of the book ''long after I'm dead.''

Last month, as part of his book tour, Menzies traveled to China. According to The Times of London, when he arrived in Nanjing, he was ''pinned down in the corridor of a Chinese conference hotel'' by admirers. Many Chinese academics were skeptical of Menzies' claims. But among the popular journalists and the pickled hangers-on in the big university towns, Menzies is a rock star.

A Chinese admiral now plans to build a replica of a Treasure Fleet junk, the way Spain built modern versions of Columbus's caravels 10 years ago, and sail it around the world. ''I have heard about this, and I am so excited about it,'' Menzies said in the cab back to London, marveling at the coincidences that will fuel sales of future editions. This year, China may launch its first manned spaceship, and in 2008 Beijing will be the host of the Olympics. The global markets are rejoicing in China's awakening, as it returns to center stage for the first time since Emperor Zhu Di dismantled the Treasure Fleet. China is coming out, and at the costume ball of pop history her most handsome escort is Cmdr. Gavin Menzies, late of Her Majesty's Royal Navy.

[Via NY Times]

The Food Chain: Hoarding Nations Drive Food Costs Ever Higher

BANGKOK — At least 29 countries have sharply curbed food exports in recent months, to ensure that their own people have enough to eat, at affordable prices.

When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries, including Pakistan and Bolivia, have capped or halted wheat exports. More than a dozen have limited corn exports. Kazakhstan has restricted exports of sunflower seeds.

The restrictions are making it harder for impoverished importing countries to afford the food they need. The export limits are forcing some of the most vulnerable people, those who rely on relief agencies, to go hungry.

“It’s obvious that these export restrictions fuel the fire of price increases,” said Pascal Lamy, the director general of the World Trade Organization.

And by increasing perceptions of shortages, the restrictions have led to hoarding around the world, by farmers, traders and consumers.

“People are in a panic, so they are buying more and more — at least, those who have money are buying,” said Conching Vasquez, a 56-year-old rice vendor who sat one recent morning among piles of rice at her large stall in Los Baños, in the Philippines, the world’s largest rice importer. Her customers buy 8,000 pounds of rice a day, up from 5,500 pounds a year ago.

The new restrictions are just an acute symptom of a chronic condition. Since 1980, even as trade in services and in manufactured goods has tripled, adjusting for inflation, trade in food has barely increased. Instead, for decades, food has been a convoluted tangle of restrictive rules, in the form of tariffs, quotas and subsidies.

Now, with Australia’s farm sector crippled by drought and Argentina suffering a series of strikes and other disruptions, the world is increasingly dependent on a handful of countries like Thailand, Brazil, Canada and the United States that are still exporting large quantities of food.

On a recent morning here in Bangkok, sweaty and heavily tattooed dock workers took turns grabbing 120-pound sacks of rice from a conveyor belt and carrying them on their heads to cranes that whisked the sacks deep into the hold of a freighter bound for the Philippines. Most of the one million tons of rice that leaves the dock here each year follows the same spine-crushing routine.

“I’ve been here 28 years,” said the assistant port manager, Suchart Wuthiwaropas. “This is the busiest ever.”

Powerful lobbies in affluent countries across the northern hemisphere, from Japan to Western Europe to the United States, have long protected farmers in ways factory workers in Detroit could only dream of.

The Japanese protect their rice industry by making it nearly impossible for imported rice to compete. The European Union severely limits beef and poultry imports, and Poland goes further, barring soybean imports as well.

Negotiators have been working for years to free trade in farm goods, but today’s crisis actually makes that more difficult for them. Food protests in places like Haiti and Indonesia that rely heavily on imported food have convinced many nations that it is more important than ever that they grow, and keep, the food their citizens need.

“Every country must first ensure its own food security,” said Kamal Nath, the minister of commerce and industry in India, which has barred exports of vegetable oils and all but the most expensive grades of rice.

But as the United States trade representative, Susan C. Schwab, noted in a telephone interview, “One country’s act to promote food security is another country’s food insecurity.”

International relief groups are trying to help people who can no longer afford food at today’s higher prices, but it is not easy. “We’re having trouble buying the stocks we need for emergency operations,” said Josette Sheeran, executive director of the World Food Program in Rome.

Restrictions have delayed efforts to ramp up feeding programs in Somalia and Afghanistan. The food program had long purchased grain from Pakistani traders or national stocks. When Pakistan imposed a ban on most wheat exports this spring, the food program was forced to find a new supplier, creating months-long delays.

“We had to slow down the scale-up of our operation as a result of having to redesign our supply lines,” said Ramiro Lopes da Silva, director of transport and procurement. “That means on the ground there were beneficiaries that went without rations or went without full rations for a portion of time. In the case of Afghanistan, some didn’t get into the program.”

The current dispute over food exports highlights choices that nations have confronted for centuries.

One relates directly to trade: Is it best to specialize in whatever food grows best in a country’s soil, and trade it for all other food needs — or even, perhaps, specialize in services or manufacturing, and trade those for food?

Or is it best to seek self-sufficiency in every type of food that will, weather permitting, grow within a country’s borders?

The usual answer from economists, and the United States’ position for decades, is that the world benefits most if every country specializes in growing (or servicing or making) what it can most efficiently, and trading for the rest.

Rainfall and other limits make it prohibitively difficult for some countries to grow all their own food. “If Egypt had to be self-sufficient in food, there would be no water left in the Nile,” Mr. Lamy said in a telephone interview.

“If every country in the world decided it wanted to produce its own food for consumption,” Ms. Schwab said, “there would be less food in the world, and more people would be hungry.”

But relying on food imports becomes much dicier if other countries are prepared to shut off the tap.

An obscure rule of the World Trade Organization requires members to notify the agency when they restrict food exports. But there are no penalties for ignoring the rule, and not one of the countries that has imposed restrictions in the past year has complied, according to the W.T.O.

Japan and Switzerland are leading a group of food-importing nations so alarmed by restrictions that they are seeking an international agreement preventing countries from unilaterally limiting food exports. The agreement would be part of the current, already-rocky Doha round of trade talks, named for the city in Qatar where negotiations began.

But the proposal ran into a procedural snag right off: food export restrictions are such a new issue that they are only tangentially mentioned as part of the Doha round agenda, which is not easily modified.

In some of the nations concerned about shortages now, past policies have discouraged farming. From Indonesia to West Africa to the Caribbean and Central America, poor countries have frequently cut farm assistance programs and lowered tariffs to balance budgets and avoid charging high prices to urban consumers. But they have found that their farmers cannot compete with imports from rich countries — imports that are heavily subsidized.

As a result, steps that could have taken place decades ago, resulting in more food for the world today, were abandoned. These included changes like irrigation schemes and new crop varieties.

“The subsidies given by developed countries to their farmers have led to lack of investment in agriculture in developing countries” in Africa and elsewhere, Mr. Nath said.

To make matters worse, the World Bank and the International Monetary Fund frequently pressured poor countries in the 1980s and 1990s to lower tariffs and to cut farm support programs, mostly to reduce budget deficits.

Indeed, the World Bank concluded in 2006 that not enough attention had been paid to the negative effects of its policy prescriptions on farmers in developing countries.

The current export restrictions, which mainly help urban consumers in poor countries, are the latest blow to farmers in the developing world.

Arfa Tantaway Mohamed, who grows rice on three-quarters of an acre outside the bustling town of Aga in northern Egypt, is frustrated at Egypt’s export ban, which is suppressing rice prices.

“For sure it has a negative impact,” said Mr. Mohamed, 50, as he smoked a Cleopatra brand cigarette during a break from working his fields, while 18 members of his extended family labored nearby.

Some countries reject the notion that restricting exports has pushed up prices on the world market, and point instead to higher prices for fertilizer, diesel and other farm expenses. India takes that position, but so does Thailand, in defending sharp markups in prices set by its Rice Exporters Association.

“The main cause of rising rice prices is the rising cost of rice planting,” said Surapong Suebwonglee, the finance minister of Thailand, the world’s largest rice exporter.

India and other countries, as well as some nonprofit groups, are quick to point out that economic arguments — that countries specialize in the production of whatever they can make most efficiently — are unconvincing, as long as rich countries heavily subsidize their farmers.

In fact, negotiators have a rough framework for a possible compromise on agriculture in the Doha round talks, including deep cuts in farm subsidies.

One possible compromise not being discussed in the Doha round may be for countries to continue relying on trade for most food imports, but hold bigger reserves in case of crises. World rice reserves, for example, have plunged to 9 weeks’ worth of consumption, from 19 as recently as 2001.

But United Nations officials are wary.

“I would not object to building up reserves,” said Supachai Panitchpakdi, the secretary general of the United Nations Conference on Trade and Development. “But like foreign exchange reserves, some countries go to huge extremes.”

[Via NY Times]

Ancient Olympiads Were More Like the Modern PGA Golf Circuit

The modern Olympic ideals differ dramatically from the way the games were actually played in ancient Greece, says a University of Maryland classicist who has heavily researched the Olympic past. The ancient games featured professionals with a “winning is everything” philosophy.

“Ancient Olympiads were more like the modern PGA golf circuit than the amateur ideal advanced for most of the 20th century,” says Hugh Ming Lee, a professor of classics at the University of Maryland. “The Greeks and Romans awarded honors to the most accomplished athletes and paid them for their efforts. These professionals traveled a competitive circuit. The Vince Lombardi notion of winning is much closer to the original Olympic spirit.”

Ancient athletes resorted to various “potions” to gain a competitive edge. “The dung of a wild boar was honored for the powers it conferred on charioteers,” Lee points out. “Even the emperor Nero tried it.”

Modern-day ‘Ultimate Fighting’ resembles the Greek’s pankration, where almost everything short of eye-gouging and biting was permitted. “If it weren’t for the nudity, the ancient games would have played well on modern TV,” Lee says.

The ancient Greeks played the games under a flag of truce to give athletes safe passage. The games offered a respite from war, according to Lee. The athletes ran the final race of the Olympiad in armor, perhaps to acknowledge the coming end of the truce.

[Via Science Daily]

Sunday, June 29, 2008

10 Ways to Avoid Password Headaches

“Treat your password like your toothbrush. Don’t let anybody else use it, and get a new one every six months.” (Clifford Stoll)

Passwords are the scourge of the digital age. Again and again, we are tortured by a multitude of passwords that force us to rack our brains for cryptic words like ch14zdo.

Get used to it, say computer professionals. You have a lot to be paranoid about. Password-based attacks are steadily on the rise. The threat of large-scale computer crime is very real, and stealing passwords is one of the easiest ways for a criminal to launch an attack.

So if you’re succumbing to password overload, follow these simple tips. They’ll help you protect and remember passwords without demanding a whole lot of mental might.

1. Personal password algorithm.

Create a formula for devising all your passwords. Pick significant dates and wrap them into acronyms that symbolize the event.

An example for picking a password for work might be choosing your fist day on the job. By taking the month, event, year, and day of the week you might end up with 11fdw05tue as a password. The 11 stands for the month of the year, November; fdw is short for “first day of work”; 05 represents the year; and tue means Tuesday.

2. Password pitfalls.

Avoid the obvious. Passwords such as someone’s surname, your birth date, or a word from the dictionary may be easy to remember, but they’re also very easy to break.

A computer is only as secure as its password, so don’t be lazy. Hackers have tools that can crack a 6-character password in less than fifteen minutes.

Each password should combine both uppercase and lowercase characters, and include a digit or two. Finally, your password should be at least six characters long, although the most secure passwords are thirteen or more.

3. Don’t be redundant.

Another popular mistake is using the same password for different purposes. If you use the same password for logging on to AIM, using the office network, and accessing your email account, one security breach leaves your entire password-protected life vulnerable.

4. For your eyes only.

You wouldn’t leave your driver’s license on the front steps to your home, or post your Social Security number at the corner store. So, why would you keep your passwords in easy view?

Password-covered Post-it notes litter office monitors everywhere. And even more hide underneath keyboards. Typically, as soon the network administrator changes the password, the yellow stickies get updated. This is a computer network manager’s nightmare. If you must use a cheat sheet, keep it where others can’t see it, like in your wallet or purse.

5. Buried treasure.

You can “bury” your cheat sheet even deeper. Try keeping passwords in address books, encoded as bogus phone numbers or names. If your work password is dava3231, list a fictitious work pal as Dave Avery 555-3231, or write your boss’s address down as 3231 Dave Ave.

6. Reading between the words.

Another thing to try is selecting a cryptic password by choosing a series drawn from the first letters of the words in a line from a poem or song. For example, “To be or not to be, that is the question…” yields tbontbtitq.

7. Rate your privacy needs.

Accept it, some applications and websites are about as important to password-protect as your trash. There is a big difference between someone surfing a website under your account name and someone sending your boss hate mails using your email account.

Rate the level of security for specific programs and websites. Then create a sliding security scale for the passwords you want.

8. By all means, safeguard your password.

At first, it may be difficult to remember your password. Did you substitute an “i” with a “1″ or did you use a “1″ to represent “L?” To help remember the password, use it immediately. Then log in and out several times the first day. Just don’t change it on a Friday or right before leaving for vacation. You could write it out several times on a piece of paper. This helps record it in your mind. Just be sure to shred the paper when done.

9. Avoid bizarre character combinations.

While character combinations such as dkFe*#21 might be hard to guess, they are also difficult to remember. I know these passwords are less susceptible to brute-force attacks, but such activity is already combated in other ways, such as limits on incorrect logon attempts.

10. Don’t change the password too frequently.

People are more likely to forget a password they will only use for a short period of time. And it’s not really necessary to change your passwords every week. A good average is 90 to 120 days, and I’m sure you can deal with this.

[Via Ririan Project]

Christianity Is Flourishing in China

BEIJING -- The Rev. Jin Mingri peered out from the pulpit and delivered an unusual appeal: "Please leave," the 39-year-old pastor urged his followers, who were packed, standing-room-only on a Sunday afternoon, into a converted office space in China's capital. "We don't have enough seats for the others who want to come, so please, only stay for one service a day."

A choir in hot-pink robes stood to his left, beside a guitarist and a drum set bristling with cymbals. Children in a modern playroom beside the sanctuary punctuated the service with squeals and tantrums. It was a busy day at a church that, on paper, does not exist.

Christianity -- repressed, marginalized and, in many cases, illegal in China for more than half a century -- is sweeping the country, swamping churches and posing a sensitive challenge to the officially atheist ruling Communist Party.

By some estimates, Christian churches in China, most of them underground, have roughly 70 million members, about as many as the party itself. A growing number of those Christians are in fact party members.

Christianity is thriving in part because it offers a moral framework to citizens adrift in an age of Wild West capitalism that has not only exacted a heavy toll in corruption and pollution but also harmed the global image of products labeled "Made in China."

Some Chinese Christians say their faith is actually a boon for the party, because it shores up the economic foundation that is central to sustaining communist rule.

"With economic development, morality and ethics in China are degenerating quickly," prayer leader Zhang Wei told the crowd at Jin's church as worshipers bowed their heads. "Holy Father, please save the Chinese people's soul."

At the same time, Christianity is driving citizens to be more politically assertive, emboldening them to push for more freedoms and testing the party's willingness to adapt. For decades, most of China's Christians worshiped in secret churches, known as "house churches," that shunned attention for fear of arrest on charges such as "disturbing public order."

But in a sign of Christianity's growing prominence, in scores of interviews for a joint project of the Tribune and PBS' "Frontline/World," clerical leaders and worshipers from coastal boomtowns to inland villages publicly detailed their religious lives for the first time.

They voiced the belief that the time has come to proclaim their place in Chinese society as the world focuses on China and its hosting of the 2008 Olympics in August.

"We have nothing to hide," said Jin, a former Communist Party member who broke away from the state church last year to found his Zion Church.

Jin embodies a historic change: After centuries of foreign efforts to implant Christianity in China, the growing popularity of the religion is being led not by missionaries but by evangelical citizens at home. Where Christianity once was confined largely to poor villages, it's now spreading into urban centers, often with tacit approval from the regime.

It reaches into the most influential corners of Chinese life: Intellectuals disillusioned by the 1989 crackdown on dissidents at Tiananmen Square are placing their loyalty in faith, not politics; tycoons fed up with corruption are seeking an ethical code; and party members are daring to argue that their religion does not put them at odds with the government.

The boundaries of what is legal and what is not are constantly shifting. A new church or Sunday school, for instance, might be permissible one day and taboo the next, because local officials have broad latitude to interpret laws on religious gatherings.

Overall, though, the government is allowing churches to be more open and active than ever, signaling a new tolerance of faith in public life. President Hu Jintao even held an unprecedented Politburo "study session" on religion last year, in which he told China's 25 most powerful leaders that "the knowledge and strength of religious people must be mustered to build a prosperous society."

This rise, driven by evangelical Protestants, reflects a wider spiritual awakening in China. As communism fades into today's free-market reality, many Chinese describe a "crisis of faith" and seek solace from mystical Taoist sects, Bahai temples and Christian megachurches.

Today, the government counts 21 million Catholics and Protestants -- a 50% increase in less than 10 years -- though the underground population is far larger. The World Christian Database's estimate of 70 million Christians amounts to 5% of the population, second only to Buddhists.

At a time when Christianity in Western Europe is dwindling, China's believers are redrawing the world's religious map with a growing community that already exceeds all the Christians in Italy.

And increasing Christian clout in China has the potential to alter relations with the United States and other nations.

But much about the future of faith in China is uncertain, shaped most vividly in bold new evangelical churches such as Zion, where a soft-spoken preacher and his fervent flock do not yet know just how far the Communist Party is prepared to let them grow.

"We think that Christianity is good for Beijing, good for China," Jin said. "But it may take some time before our intention is understood, trusted, even respected by the authorities. We even have to consider the price we may have to pay."

[Via LA Times]

Saturday, June 28, 2008

Fully Recyclable, the Bike Made out of Cardboard

Sheffield - A student of industrial design has made a working £15 bicycle out of industrial-strength cardboard. Phil Bridge, 21, of Sheffield Hallam University, said the bike was strong enough for a rider weighing up to 12 stones and would not go soft in the rain, although it has a life expectancy of only about six months.

The bike is made almost entirely from recyclable and recycled materials, using mechanical parts that can be reused. Mr Bridge said: “The lightweight quality of the cardboard, combined with its low cost, means it’s possible to create a bargain bike that’s also less susceptible to thieves.”

[Via Times Online]

Espresso Book Machine

Blackwell bookshop announced yesterday that it is to install an "Espresso Book Machine" that will allow customers to print out a novel in just seven minutes.

The self-service machine, which will eventually be installed in 50 stores across the country, offers a choice of around one million titles. The fully-bound books are printed to library quality, including a front cover.

A more sophisticated version of the machine is smaller and prints books in just three minutes. The older version has already been installed in 11 sites worldwide and Blackwell hopes to eventually have the faster machine in its stores.

Britain's book industry has hailed the machine's arrival as potentially revolutionary. It means high street bookshops can offer a range of books that will compete for the first time with online stores such as Amazon.

Blackwell is leasing the book-making machine from its American owner, On Demand Books, according to The Bookseller. Vince Gunn, chief executive of Blackwell, described the technology as "trailblazing". "From a retailer's point of view, this is a fantastic opportunity," he said. "When I first read about the Espresso Book Machine, I was very keen to see it in action. I was really pleased with its performance when I saw it last year."

He said the machine was meant to enhance the choice in a book store, but that they would still retain a vast amount of titles on their shelves. "I'm a real advocate of books and I think they are here to stay. I don't think the book is dead but this is a great invention that will give more choice to readers," he said.

Alison Flood, news editor of The Bookseller, said: "Imagine going into a book store and getting an obscure title while you wait. It could be a way for street chains to compete with the range that is offered online. The novelty for readers will also be exciting and it could be a great thing for the high street."

On Demand has been in talks with other British retailers about stocking the Espresso. Blackwell is the first chain in Europe to place an order for the machine and the largest commercial retailer in the world to do so.

[Via Independent]

Friday, June 27, 2008

Newspapers Run Ads About Fake Airline Derrie-Air

Derrie-Air has been exposed. Readers of The Philadelphia Inquirer and Philadelphia Daily News opened their papers Friday to see ads for a new airline called Derrie-Air, which purportedly charges passengers by the pound.

But the new carrier will never get off the ground. It's a one-day advertising campaign about a fake airline by Philadelphia Media Holdings, the papers' owner, and Gyro ad agency.

In light blue banners throughout the papers — as well as on their Web site, — Derrie-Air cheerily trumpets its policy: The more you weigh, the more you pay. The ads direct readers to the Web site

Philadelphia Media Holdings spokesman Jay Devine said the goal is to "demonstrate the power of our brands in generating awareness and generating traffic for our advertisers, and put a smile on people's faces."

The company will track traffic to the Derrie-Air site. Devine said there's already buzz about the campaign on online blogs.

Visitors to the airline site learn that Derrie-Air is the world's only carbon-neutral luxury airline, and it justifies its fare policy by saying that it takes more fuel to move heavier objects. The carrier pledges to plant trees to offset every pound of carbon its planes release into the atmosphere.

Derrie-Air's sample rates range from $1.40 per pound to fly from Philadelphia to Chicago to $2.25 per pound to fly from Philadelphia to Los Angeles.

Those who scroll to the bottom of the home page find out the truth behind Derrie-Air.

A disclaimer labels the ad campaign "fictitious" and says it is designed "to test the results of advertising in our print and online products and to stimulate discussion on a timely environmental topic of interest to all citizens."

"In other words," it says, "smile, we're pulling your leg."

[Via Yahoo News]

Dr Pepper in Possession of Coke

The Soft-Drinks Industry is reeling with the news that high profile CEO Dr Pepper has been found in possession of Coke. Pepper was stopped for speeding on Highway 121 in Plano Texas, but what started as a routine traffic stop quickly escalated after officers shined their flashlights into his car and saw clear evidence of Coke-usage.

According to a Plano Police report, "after the officers engaged in a search of the vehicle, a partially concealed case full of Coke was discovered in the trunk".

It's not yet known if there was enough Coke to establish that Dr Pepper was intending to supply others or if it was simply a personal stash. However if a sufficient quantity is established to prove that Dr Pepper is a Coke dealer on the side, there are likely to be serious ramifications.

Industry insiders speculated that Dr Pepper, who recently got in trouble with the environmental movement over the amount of carbon dioxide released by his products, may not survive this second setback.

With the Rev Al Sharpton at his side, the usually effervescent Pepper was in somber mood at a Sunday news conference. Ashen-faced, he admitted to "secretly taking Coke on a daily basis" adding somberly "Some mornings I just need some Coke to get going. I think people will understand".

[Via Satire and Comment]

Apples and Pears

Eating an apple a day might keep the doctor away, but it could also be the reason why your figure is going pear-shaped. Scientists have discovered that fructose, the kind of sugar found in fruit, causes weight to build up disproportionately around the stomach, rather than being spread around the body.

There are significant implications to all of this: is the Government's five-a-day campaign, with its insistence on filling our diets with smoothies and juices, actually a cause of the obesity crisis?

Will compensation be demanded by brewers, whose trade has been damaged by the link between their product and "beer bellies"? Will these, in turn, be re-labelled "berry bellies"?

And which school will be first to teach its children to rhyme "spare tyre" and "papaya"? All food for thought - as well, of course, as a neat excuse to stick to the booze.

[Via Telegraph]

Thursday, June 26, 2008

How Rich Peoeple Spend Their Time

People invariably believe that money can make them happy -- and rich people usually do report being happier than poor people do. But if this is the case, shouldn't wealthy people spend a lot more time doing enjoyable things than poor people?

Nobel Prize-winning behavioral economist Daniel Kahneman has found, however, that being wealthy is often a powerful predictor that people spend less time doing pleasurable things, and more time doing compulsory things and feeling stressed.

People who make less than $20,000 a year, for example, told Kahneman and his colleagues that they spend more than a third of their time in passive leisure -- watching television, for example. Those making more than $100,000 spent less than one-fifth of their time in this way -- putting their legs up and relaxing. Rich people spent much more time commuting and engaging in activities that were required as opposed to optional. The richest people spent nearly twice as much time as the poorest people in leisure activities that were active, structured and often stressful -- shopping, child care and exercise.

Kahneman and his colleagues argued that many people mistakenly allocate enormous amounts of their time and psychological focus to getting rich because of a mental illusion: When they think about what it would mean to be wealthy, they think about how enjoyable it would be to watch a flat-screen TV set, play lots of sports or get a lot of pampering -- our stereotypical beliefs of how the rich spend their time.

"In reality," Kahneman and his colleagues wrote in a paper they published in the journal Science, "they should think of spending a lot more time working and commuting and a lot less time engaged in passive leisure."

[Via Washington Post]

Is War Good For the Economy?

The idea that warfare helps the economy is a prime example of Bizarro logic, which has pervaded our collective consciousness since the 9/11 terrorist attacks, ideological fallout from the explosion of national hysteria that followed. In Bizarro World, as we all know, the laws of nature and logic are inverted, so that up is down, freedom is slavery, and ignorance is strength. In the post-9/11 era, as I have often pointed out, we have finally arrived in a world where two plus two can and indeed often does equal five – if it suits the purposes of the War Party to deem it so.

Somewhere, George Orwell isn't smiling. He'd no doubt be appalled, and a little nonplused, by the accuracy of his speculations in Nineteen Eighty-Four. In the novel, you'll recall, the deliberate impoverishment of the ordinary "proles" and the Outer Party types was a matter of INGSOC policy, a theme underscored by the general shabbiness of Orwell's dystopia, what with the constant shortages and the way thing always seemed to be literally and physically falling apart. Particularly striking is the Orwellian presentiment that the world of the future is bound to be poorer and, simultaneously, engaged in constant warfare.

This prediction seemed, for quite a while, to be one of the few he got wrong. Yet Orwell, it turns out, was right; it's just that the productive power of capitalism in the U.S. was so great that it coasted along for a long time on sheer momentum. Our accumulated wealth reflected the dynamism of an earlier era. This upward spiral of productivity and wealth-generation really crested during the 1950s, a period of unprecedented prosperity and cultural optimism, and the early 1960s – before the Vietnam war and the inflationary policies that financed it ate away at the heart of American prosperity, the necessary prelude to the "stagflation" of the Carter years.

Wars are expensive propositions, especially the sort of all-embracing, the-sky's-the-limit, multi-generational conflict envisioned by the War Party's editorial board commandos. Our $3 trillion war, as Nobel-prize-winning economist Joseph Stiglitz and Linda Bilmes have dubbed it, is an albatross hung round the neck of the American giant, whose great neck is bowing under its weight. The unipolar moment the neocons once exulted in will go down in the official record as the briefest incident in human history, albeit not the noblest.

This hasn't always been immediately obvious. The false prosperity induced by the speeding up of the printing presses over at the Federal Reserve led to what Alan Greenspan once called "irrational exuberance," a delusion created by the very easy money policies he carried out as head of the Fed. No sooner had certain Beltway sages declared that the age of permanent abundance was upon us – and that this rendered the struggle against the Welfare-Warfare State irrelevant – than their economic cornucopia of limitless wealth went empty. As banks are bailed out while ordinary Americans are turned out into the streets, the manic hubris of Fukuyama's historical "endism" and prophecies of universal prosperity via "globalization" stand revealed in all their silliness.

Mania is invariably followed by a massive downward plunge into despair, in economic terms, a deep recession, if not something far worse. So what has stopped the forward motion of America's dash over history's finish line?

As Ron Paul has tirelessly explained, it is the cost of our expanding overseas empire that is driving us into bankruptcy. We have, as the Old Right seer Garet Garrett put it, an empire of a unique type, one in which "everything goes out and nothing comes in." The costs of this are ordinarily hidden from sight, as Ron Paul explains, by governmental sleight-of-hand:

"As the war in Iraq surges forward, and the administration ponders military action against Iran, it's important to ask ourselves an overlooked question: Can we really afford it? If every American taxpayer had to submit an extra five or ten thousand dollars to the IRS this April to pay for the war, I'm quite certain it would end very quickly. The problem is that government finances war by borrowing and printing money, rather than presenting a bill directly in the form of higher taxes. When the costs are obscured, the question of whether any war is worth it becomes distorted."

Yet there comes a time when the obscuring mists are cleared and the costs of our foreign policy of perpetual war become readily apparent, and surely that time is approaching. Indeed, it may have already passed. Garrett dubbed ours' "the empire of the Bottomless Purse," yet we are just about scratching bottom about now. It remains for Paul and the movement he generated to point out how all of this is paid for. As Paul puts it:

"Congress and the Federal Reserve Bank have a cozy, unspoken arrangement that makes war easier to finance. Congress has an insatiable appetite for new spending, but raising taxes is politically unpopular. The Federal Reserve, however, is happy to accommodate deficit spending by creating new money through the Treasury Department. In exchange, Congress leaves the Fed alone to operate free of pesky oversight and free of political scrutiny. Monetary policy is utterly ignored in Washington, even though the Federal Reserve system is a creation of Congress.

"The result of this arrangement is inflation. And inflation finances war."

When our rulers decide to go to war, they simply step on the gas and flood the engines of inflated expectations, fueled by bank credit expansion. The results are the decline of the dollar and the current economic crisis, which might be compared to a hangover that follows an extended binge. Americans are suffering a double-hangover in the sense that they're still recovering from the post-Cold War triumphalism that envisioned a unipolar, Washington-centered world.

The idea that the defense of the country requires an overseas empire that surpasses the British imperium at its zenith is a typical neocon fantasy, one that is proving far more costly than advertised. Yet some are raking it in while others are foreclosed. Remember how the sale of oil was supposed to pay for the Iraq war? A consortium of U.S. and European oil companies have since homesteaded the oil revenues Paul Wolfowitz assured us would be reimbursed to the American taxpayers. It's funny how that works.

War, as the liberal intellectual Randolph Bourne famously explained, is the health of the state. That is, it benefits state officials and their dependents, clients, and assorted sycophants at the expense of the rest of us. Many are impoverished by our policies, but a few are enriched. The beneficiaries are the growing administrative, corporate, and military bureaucracies that oversee our ever expanding global presence, in effect a colonial class. This class pursues and secures its economic and social interests by means of directly influencing government policy, operating as an organized force on behalf of the policy of imperialism, so far with remarkable success.

When John McCain sneered at Mitt Romney's business experience as lacking in honor and the spirit of self-sacrifice, he was expressing the "noble" and highly stagy sentiments of this rising class. Forget the free market fervor of the Reagan era, when entrepreneurs were valorized. The new Republican hero is the swaggering caesar.

Is the Iraq war good for the economy?

Well, whose economy? Who benefits from this war, and who loses? Once the American people realize that they're among this war's biggest losers – aside from the Iraqi people, and perhaps the Iranians, too – they'll turn on the beneficiaries with a vengeance. As their savings are eaten up by inflation, and the equity they labored to preserve and increase evaporates into thin air, ordinary Americans are likely to be quite interested in the question: who's responsible?

As the Federal Reserve pumps more funny money into circulation, in a desperate and vain attempt to postpone the crisis of the Warfare State, the single biggest winners are the banks, the most government-protected industry of all, who are the first to be bailed out of any crisis. Oh, perhaps a few will be allowed to go under, but the big ones will be too big to fall, like Bear Stearns. The economic elite will golden parachute its way out of the crisis.

The main beneficiaries of the present system – what Murray Rothbard, the late libertarian theorist and polemicist, called the Welfare-Warfare State – are the new plutocrats. Think of what Ayn Rand referred to as "the aristocracy of pull," the principal villains of her famous novel Atlas Shrugged, i.e., corrupt businessmen who succeeded on account of their political connections rather than their entrepreneurial skill.

Today's aristocracy of pull is the militarized sector of the economy, which is completely dependent on government contracts. Their political Praetorian Guard is represented in Washington by both parties, and, what's more, their partisans dominate think-tanks of the ostensible Left as well as the Right.

The task of those who oppose the new colonialism, which masquerades as global altruism of one sort or another, is to unmask the real motives and connections of a self-interested colonial class, which, in spite of its claim to the mantle of honor and duty to country, is supremely successful at promoting its own interests over and above those of the nation.


Wednesday, June 25, 2008

Old Keynesian Dogs, Old Fiscal Tricks

We are about to be thrown back into the tender mercies of Keynesian economists. In the current setting, this will push the economy lower rather than higher.

The main Keynesian solutions to a faltering economy are federal budget deficits and monetary inflation. This two-part program assumes unemployment at 25% and annual deflation at 10%: the Great Depression in America.

Problem: it's not 1936 any more.

Two recent articles reminded me that the intelligentsia of the United States is like Louis XVIII, the king of France in the post-Napoleonic restoration: he had forgotten nothing and had learned nothing.

What the intelligentsia learned from the popularizers of Keynesian economics after 1936 they have not forgotten. They have learned nothing new.


The heart of John Maynard Keynes' analysis in 1936 was the idea of a permanent free market equilibrium with high unemployment. For some reason, which he never explained coherently, sellers refuse to lower their prices when faced with buyers who refuse to buy at yesterday's pre-Depression prices. This is especially true of workers who refuse to cut their wage demands.

Keynesianism is based on two fundamental ideas: (1) sellers do not learn that something is better than nothing, and therefore will not lower their selling prices; (2) economists do not learn that government spending that is financed by debt is accomplished in one of only two ways: (a) money lent by savers, which could have been lent to businesses or consumers; (b) money lent by a central bank, which lowers the purchasing power of the currency unit. This is a philosophy of something for nothing.

We are told by economists that there are no free lunches. But, except for Austrian economists, all economists really do believe in something for nothing. They debate with each other about which "something" can be obtained for nothing – "nothing" always being a piece of legislation.

Non-Austrian economists believe that a gun, when held by a salaried government official and pointed at a citizen to extract his wealth, can sometimes produce economic growth, whereas a gun held by a thief and pointed at a citizen to extract his wealth always produces economic loss. The first produces something for nothing, whereas the second produces nothing for something. What is the difference? This: the person holding the gun.


Early in Franklin Roosevelt's first term, Keynes met with Roosevelt. We know the date: May 28, 1934. Roosevelt's Secretary of Labor, Frances Perkins, noted in her published recollections that Keynes came out of the meeting and commented on the President's lack of economic literacy. Later, when speaking with Roosevelt, she noted that he said he thought Keynes must be a mathematician, rather than a political economist.

Both men had the other pegged exactly. Roosevelt knew no economics, and Keynes had earned a bachelor's degree in math. He had no degree in economics. He got his job at Cambridge University in 1909 because his father, a Cambridge economist, put up half the money to hire his son.

Because the meeting was in 1934, and because Keynes had not yet come up with Keynesianism – he was still working on it – I do not think the meeting was important for the future of the American economy. Keynes justified in theory in 1936 what every Western government had been doing for several years: printing money, raising taxes, running deficits, and regulating the economy.

The New Deal did not end the Great Depression in the United States. World War II did. The war allowed governments to increase deficit spending, inflate tremendously, impose price controls, draft young men and put them to work killing each other (which reduced the labor pool), and hire women to work in munitions factories at below-market wages, using patriotism to persuade them to enter the labor force. Patriotism was used as a way to persuade men and women to work at what would have been below-market wages in 1938. Then inflation and rationing reduced real wages even more.

Economics teaches this: "When the price falls, more is demanded." This is true of the price of labor. Keynes knew this in 1936, and wrote specifically that the reduced real wage rates produced by monetary inflation would fool workers into going back to work. But it took worldwide deception – wartime wages – to achieve this on a scale sufficient to end unemployment.

None of this is taught in any textbook – not in economics, not in history. To teach it would alert students to the economics of war, which centralizes the power of the State. This is the thesis of economist Robert Higgs in Crisis and Leviathan. This book's thesis and data never get into college textbooks.

With this as background, let me summarize the first of two documents.


In the May 15 issue of Time Magazine, there is an article by Justin Fox. I had never heard of Mr. Fox. His biography on Time's site says he has a B.A. in international relations. He therefore writes for the business section. He has recently published a book, The Myth of the Rational Market. You get the general idea.

Time was started in 1923 by Henry Luce (Skull & Bones, Council on Foreign Relations). It has long been a popular outlet for the American Establishment. In fact, Time is the news magazine written by the American Establishment in order to shape the thinking of the voters on the Big Picture.

Mr. Fox's enemy is what he perceives as Reaganism.

Economic eras don't last forever, though, and there are signs that the current slowdown is a harbinger of something bigger: an end to America's 25-year love affair with tax cuts and deregulation. A lot of the cracks that have emerged during that time, because of global economic shifts or our own neglect, have become impossible to ignore – stagnant incomes, a federal budget gone way out of balance, soaring energy prices, a once-in-a-lifetime housing crash and growing financial risks in retirement and from health care.
He says there has been growing inequality of wealth. He offers no statistics to indicate that inequality has increased from the income distribution of 1940, let alone 1900. Those who identify inequality as a significant economic or moral liability that calls for radical policy changes by government never do offer such statistics. There is a reason for this. The ratio of wealth by income class has barely changed, in the United States or in Western Europe, in a hundred years.
The evidence for a significant increase in American inequality since 1980 is based on tax evidence. But this evidence does not consider money in tax-deferred retirement funds. So, it is questionable.

In any case, the critics offer no evidence that their reforms will eliminate inequality. It does no good to provide a cure until a problem is diagnosed. Why is income more unequal today – if it is – than it was in 1980? Second, was 1980 significantly different from 1940 or 1900? Where is the evidence? Next, where is the explanation? Only after we have both should we – meaning policy-makers – begin suggesting solutions.

So what should be done about income disparity? In an April Gallup poll, 68% of respondents said wealth "should be more evenly distributed" in the U.S. – the highest percentage saying so since Gallup started asking the question in 1984. A smaller majority, 51%, agreed that "heavy taxes on the rich" were needed.
Surprise! Surprise! Voters with less wealth want the government to stick a gun in the belly of anyone with more wealth, telling him to fork it over. Of course, voters do not want the government to send people with guns to stick in their bellies, on behalf of people even poorer, who are far more numerous.
The politics of envy is the politics of this commandment: "Thou shalt not steal, except by majority vote." It is the politics of two wolves and a sheep voting on what to have for dinner. It is alive and well all over the world.

The author then launches an unsubstantiated attack on Reagan's cuts of the top brackets: from 70% to 28%. No mention is made of Kennedy's cuts from 91% to 70%. The economy boomed in both cases.

Then there is the energy crisis. What is needed? Not more production. We need more taxes and more subsidies by federal government.

What makes doing the right thing on energy difficult is that it would almost inevitably involve raising costs now, with higher taxes on oil, increased subsidies for other energy sources or higher energy-efficiency standards for vehicles and homes – or all three. Economists tend to prefer the first of these approaches because taxes on gas, oil or fossil fuels in general tamp demand and allow the market – rather than members of Congress – to sift out the best alternatives.
Here is the good news, he says: the candidates' stand on global warming.
Interesting, though, to fight global warming, Clinton, McCain and Obama are all in favor of a carbon-cap-and-trade regimen, which would raise the price of fossil fuels just as surely as a direct tax would. Almost in spite of ourselves, we may end up with a semi-rational long-term energy policy. It won't make gas cheaper anytime soon – or perhaps ever – but in the long run, it could strengthen the country's economic prospects.
Next, how should government solve the housing crisis? Simple: repeal the tax deduction for mortgage interest payments. That will do it! Yes, sir, there is nothing like a huge tax on everyone's after-tax income to stimulate robust growth in the housing market. (Too bad it won't happen – voters being used to the deduction.)
Several countries have dropped the mortgage-interest deduction in recent years, with no noticeably adverse effects, but there's no indication that any of our presidential candidates are contemplating such a move.
Then there is universal health care. No problem here, either!
But there's real hope on this front. It is possible to conceive of a system that brings the 47 million uninsured into the fold, improves medical outcomes and costs less than what we've got now. It's possible to conceive of because many other wealthy countries already have such systems. Figuring out exactly how to make universal health care work in the U.S. is a matter better left to its own lengthy magazine article. But if you're looking for big economic change from the next Administration, this is the form it's most likely to take.
This article appeared in the premier Establishment outlet for the American intelligentsia.

My conclusion: get ready for a big dose of the politics of envy.


There are not many American politicians further to the Left economically than Dennis Kucinich. In a recent interview, his economic advisor, Michael Hudson, provided a detailed and accurate assessment of the problems facing the Federal Reserve System. Then he offered solutions.

You will not like the solutions.

The interviewer knew what questions to ask. The questions centered around the solvency of America's largest banks. The FED is letting them swap bad debt for Treasury debt. Half of the FED's reserves have been swapped for this supposedly AAA-rated paper since last December. This cannot go on much longer.

Problem: this program merely buys time. How will the banks unload this bad paper on suckers? The supply of suckers has dried up.

The Fed's idea was merely to buy enough time for the banks to sell their junk mortgages to the proverbial "greater fool." But foreign investors no longer are playing this role, nor are domestic U.S. pension funds. So the most likely result will be for the Fed simply to roll over its loans – as if the problem can be cured by yet more time.
The problem is bad real estate loans. There is nothing the Treasury can do to solve this problem. The game is over.
The financial sector has been living in the short run for quite a while now, and I suspect that a lot of money managers are planning to get out or be fired now that the game is over. And it really is over. The Treasury's attempt to reflate the real estate market has not worked, and it can't work. Mortgage arrears, defaults and foreclosures are rising, and much property has become unsaleable except at distress prices that leave homeowners with negative equity.
Hence, the title of the article: "The Game Is Over. There Won't Be a Rebound."
The dollar is likely to fall. The problem begins with the international trade system.

When Europe and Asia receive excess dollars, these are turned over to their central banks, which have little alternative but to recycle these back to the United States by buying U.S. Treasury bonds. Foreign governments – and their taxpayers – are thus financing the domestic U.S. federal budget deficit, which itself stems largely from the war in Iraq that most foreign voters oppose.
This is exactly the problem. The United States has pressured oil-exporting nations in the Middle East to demand payment in dollars and then cycle these dollars back through American multinational banks.
For over 30 years they have been pressured to recycle their oil earnings into the U.S. stock market and loans to U.S. financial institutions. They have taken large losses on these investments (such as last year's money to bail out Citibank), and are trying to recoup them via the oil market.
Conclusion: ". . . unless they are willing to make a structural break and change the world monetary system radically, they will remain powerless to avoid giving the United States a free ride – including a free ride for its military spending and war in the Near East."
But the fact is, a refusal by central banks to buy T-bills is exactly such a structural break in the world monetary system. He thinks this is now happening. So do I. So, I see no way to remain optimistic about the future value of the dollar.

Regional banks will go under, he says. The FED and the government will oversee mergers.

False reporting also will help financial institutions avoid the appearance of insolvency. They will seek more and more government guarantees, ostensibly to help middle-class depositors but actually favoring the big speculators who are their major clients.
I add: this is already taking place. That is what the FED's swaps of Treasury debt for private mortgage-backed assets is all about.
Then what should Obama do? Tax and spend.

As president, he will have to do what FDR did, and challenge the financial oligarchy with new government regulatory agencies staffed with real regulators, not deregulators as under the Bush-Clinton-Bush regime. . . .
Most of all, he will have to make the tax system back progressive again if the domestic market is to recover. He should remove the tax-deductibility of interest payments, and do what the original 1913 income tax did: tax capital gains at normal income rates rather than subsidizing speculation. . . .

Wait a minute! This is what Mr. Fox recommends in his article in Time.
What about Social Security and Medicare? Simple: exempt every family that makes under $60,000 a year and tax all income for everyone else – no cut-off at $105,000.

There is no deduction from gross income for donations under Social Security. This is just what the centralizers need! This will be Europe's tax system.

He says this will take power away from the American oligarchy. "Unless he does this, what used to be a democracy will be turned into an oligarchy."

Yet Time ran a cover story on just this sort of tax reform. And Time has been the popular news magazine for the oligarchy since its creation in 1923.


We are heading into a great reversal. We are going to see rising taxes and a falling stock market. Housing is unlikely to rebound next year.

The economic goal today is to keep what you have in the face of a revived welfare state. The days of wine and roses are going to be rolled back next year and beyond.

[Via Lew Rockwell]

Meet the Antipreneurs

Bill Goldsmith has always been a maverick. As a radio disc jockey and program director in the 1970s and '80s, he loved creating his own mixes of modern rock and introducing listeners to cutting-edge musicians. But in the '90s, as large corporations bought up the stations he worked for, Goldsmith began to feel increasingly choked by the demands of commercial radio. Programming was becoming too formulaic; he was given less leeway. Working in radio just wasn't fun anymore.

In 2000, with the rise of the Internet and streaming media, Goldsmith had an idea: Why not start his own station, one that would buck the constraints of corporate radio with innovative programming and no ads? Today,, which broadcasts an eclectic mix of modern, classic, and alternative rock, is commercial-free. It's supported entirely by donations from its listeners, 15,000 of whom are logged onto the site at any given time. Goldsmith's company, based in Paradise, Calif., has three employees and about $1 million in annual revenues. Rebecca Goldsmith, Bill's wife, is the CFO and new music reviewer. Says Bill: "I hate advertising. There is this kind of organic sense of community that develops here that could not happen if this radio station's sole reason for existence was to increase shareholder value for a large corporation."

Meet the antipreneurs. Goldsmith is one of perhaps a few thousand business owners who have won both notice and profits by being overtly or covertly anti-big business and anti-advertising. Antipreneurs frequently choose each other as suppliers because they share similar philosophies. Their marketing strategy is targeted toward consumers who have grown cynical about buying products and services from larger companies, whose methods they deem irresponsible. "Cynical consumers perceive that most of the marketplace is bad, lacking in integrity, or not trustworthy, except for a few [often small or local] companies," says Amanda Helm, a professor of marketing at the University of Wisconsin-Whitewater. "But once they find a company they can trust, they are very motivated to stick with [it]."

Antipreneurs are quick to differentiate their efforts to reform capitalism from social entrepreneurs' attempts to harness business for philanthropic ends. "What appeals to people about us is that this is a positive vision of how the marketplace can and should work," says Adam Neiman, president and CEO of No Sweat Apparel, a five- employee, $1 million Boston company that sells clothes produced in union factories. Neiman says the company's mission is to improve conditions for workers in the garment industry, in part by paying them a living wage and ensuring that they have union representation.

Antipreneurs walk a fine ideological line: They are pro-business and want their companies to grow, but they're against big business. They engage in global commerce while disdaining the machinations of globalization. They profit from the free market, but they criticize it, too.

So how do they get away with it? They wear their contrarian politics on their sleeves and seek customers who do the same. Often those are the so-called dark greens and very dark greens, who marketing experts say are borderline obsessed with environmental issues and feel the need to preach about their lifestyle. In addition, some 37% of people age 18 to 30 prefer to use brands that are socially conscious, with more than three-quarters of that group citing fair labor practices and two-thirds listing environmental factors as chief concerns, according to New York youth marketing company Alloy Media & Marketing (ALOY). Alloy says the youth market has nearly $200 billion in buying power.

Antipreneurs attempt to reach their potential customers without traditional advertising. What advertising they do is likely to be ironic, in-your-face, or highly political. In all cases, it reinforces the importance of buying from small companies that produce with sustainability in mind and use ethical labor practices. One consequence of this highly charged political stance is that antipreneurs face the wrath of passionate customers if they underdeliver or merely appear to.

Although some credit The New York Times media columnist Rob Walker with coining the term "antipreneur," Vancouver-based Kalle Lasn gives the movement much of its ideological weight. Lasn is co-founder of the magazine Adbusters, which analyzes the effects and pervasiveness of advertising by large corporations. He advocates "culture jamming," which he describes as the interruption of unconscious consumer behavior that favors buying over producing. One of culture jamming's techniques is the deconstruction of large companies' ad campaigns to expose what antipreneurs believe is their hypocrisy.

Lasn doesn't stop with advertising. "If you want to change the world, you have to change capitalism into a more grassroots phenomenon, and that means pulling down the megacorporations," he says, speaking with hints of his native Estonian. In the past decade, he says, "A whole new wave of small business is really strutting its stuff in a powerful way around the world, and it includes everything from ethical principles in running business to fair trade to a large and growing movement of people who just want to buy local." Lasn says this movement is gaining strength as people become exasperated with what he calls the traditional "complaint-based" politics of the left—whining lots and doing little. Antipreneurs, he says, actually make a difference by promoting products that have a low impact on the environment or are fairly produced.

Lasn is himself an antipreneur. In 2003 he took on sneaker manufacturer Nike (NKE) and its labor practices in Asia by launching Blackspot Shoes. One shoe is even called the "Unswoosher," a deliberate swipe at the Nike logo. Blackspot's logo is, naturally, a large white spot. "This is in the spirit of playful resistance that culture jamming is all about," Lasn says. "Why not befuddle a few people and force them, through cognitive dissonance, to figure out the contradiction? It's good for them."

Marketing experts see things a bit differently. "No logo is still a logo, and one your social-cultural tribe will recognize," says Michal Strahilevitz, a professor of marketing at Golden Gate University in San Francisco. "It has the same effect of the Nike Swoosh, but it is the logo of a different tribe." This also explains why apparel is such fertile territory for antipreneurs: Antipreneurs appeal to consumers who want to buy products with a kind of reverse conspicuous consumption in mind. "It works better if it is publicly consumed, as that way others know you are an ethical consumer," she says. "You get points for being seen."

To date, Lasn's 13-person company has sold about 30,000 pairs of the $100 shoes, which are made in a union factory in Portugal. Lasn advertises only in his own magazine, although he says he's planning to run an MTV (VIA) spot with the tagline "Rethink Capitalism" within the next year or so.

Lasn has certainly made an impact on other antipreneurs, such as David Wampler, founder and sole proprietor of Simple Living Network in Trout Lake, Wash. The Web company, with $200,000 in annual revenues, is an online bazaar of products and services—information on green living, T-shirts, CDs—offered by small, anticorporate businesses. "I found inspiration in [Lasn's] work and appreciate the approach he is taking and the message he is trying to deliver," Wampler says. His goal is not to get rich so much as to run a business that supports an "outwardly simple and inwardly rich" life. Wampler says he has "purposely chosen to operate as a for-profit corporation in order to model sustainable small business practices."

Antipreneurs do pay careful attention to how their products are presented. Moo Shoes, a $1.2 million New York vegan shoe store with five employees, has made its shop a community hub for information about the vegan lifestyle and about animal cruelty. This spring, Moo Shoes hosted Best Friends Animal Sanctuary, a national agency for stray and abused pets. Best Friends set up pens and cages in the store with about 20 homeless dogs and cats. Customers learned about the agency and the strays, and two cats were placed in city homes. "We care about animals, and getting animals homes is important to us, though not directly related to the shoes," says Moo Shoes co-founder Sara Kubersky.

The store sells footwear that is produced by a tiny universe of manufacturers that use vegan materials and adhere to fair labor practices. Moo Shoes also manufactures its own vegan shoes, called Novaca (Spanish for "no cow"), in Portugal. The company does do some advertising, primarily in publications such as VegNews and Vegetarian Times. One ad depicts a lone cow sitting near a barn saying "Save My Skin: Buying leather directly supports factory farms and slaughterhouses, where, every year, millions of animals are killed for their skins. Think. Before you buy."

Of course, antipreneurs aren't the only ones to have figured out that appearing not to advertise, or running nontraditional ads, can be just as effective as more conventional campaigns. Big companies have caught on, too. "The hot trend within promotions is to try to create an impression that your product is more countercultural," says the University of Wisconsin's Helm. Nissan ran billboards painted by graffiti artist JCDecaux to launch its new Qashqai mini-sport-utility vehicle last winter. Nissan (NSANY) and Blackspot, says Samantha Skey, executive vice-president of strategic marketing at Alloy, "are going after the same customer."

Here, antipreneurs have an inherent advantage. "When you have a smaller company committed to a certain type of social responsibility [from its] inception, one that is really and truly founded on building business around sustainability or fair labor, that [philosophy] is inherent in the DNA of the company," says Skey. "Consumers pick up on it."

Or as Erica Kubersky, co-founder of Moo Shoes, says: "Consumers know more these days than they used to. If you are not doing this from personal conviction, you will never convey the same message."

The other approach, taken by No Sweat Apparel, is to do no advertising. Like Goldsmith, Neiman, president and CEO of the eight-year-old company, depends on word of mouth to spread the gospel of his goods. Using ads to sell a product "really puts a huge amount of pressure on wages," says Neiman, estimating that advertising would add about 20% to his costs. He says his workers in the seven union factories that supply him, located in places as far-flung as Argentina, South Africa, and the West Bank, all get paid a living wage.

No Sweat makes the most of its logo, which features the World War II icon Rosie the Riveter. The brand has a following among the indie music crowd, so Neiman gives emerging bands a banner with Rosie tricked out as a punk rocker, complete with piercings, metal bracelets, and tattoos. The bands often display the banner at concerts. "We call her the dominatrix of labor," says Neiman, with a laugh. "What we are doing is a little tongue-in-cheek, trying to provoke a reaction."

still, since image is crucial to their ability to sell, these companies must deliver on their message in ways other businesses may not have to. In 2006, another union was trying to take over the already-unionized factory Neiman used in Indonesia. This union eventually audited Neiman's factory, and Lasn posted some unflattering details from the audit on Adbusters' Web site this April. It didn't help that Neiman and Lasn were making similar shoes. But the audit wasn't news to Neiman, who says he posted the same details on his own company's Web site before Lasn got involved. "We got blindsided by a segment of the anti-sweatshop community that objects to market-based solutions altogether," he says. In the end, he had to sever ties with the factory he'd been using.

No matter how countercultural he might sound, Neiman still wants to grow his business, like most other entrepreneurs. "This model is scalable," he says. "We can source from as many union shops as are out there, and we can keep growing and expanding rapidly." Sara Kubersky wants to open Moo Shoes stores in San Francisco and Washington, D.C., in the next two to three years. "It would be great to have one in every city," she says. Goldsmith doesn't think his noncommercial ethos means he's sacrificing revenue—quite the contrary. "I firmly believe we are making more money with our anti-advertising stance than we would if we solicited as much advertising as possible," he says. He wouldn't mind if grew to four to five times its current size. As long as he can set the playlist, and the priorities, himself.

[Via Business Week]

Tuesday, June 24, 2008

Bay Area Home Prices Continue Steep Fall

SAN FRANCISCO - Regional home prices continued to fall at an accelerating pace in April, establishing yet another record low, according to a closely watched real estate market analysis.

The price of a typical single-family home in the San Francisco area plunged 22.1 percent compared with a year earlier, according to the S&P/Case-Shiller Home Price index. The study, published by New York credit rating agency Standard & Poor's, defines the region as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties.

The 10-City Composite index, tracking major U.S. markets, decreased 16.3 percent, also the largest decline in more than 20 years of data. Among the 20 regions tracked by S&P/Case-Shiller, 13 posted record annual lows and, for the first time at least in this market cycle, all stood in negative territory. Las Vegas and Miami were the worst off, down 26.8 percent and 26.7 percent, respectively.

Bay Area home prices declined 20.2 percent year-over-year in March, 17.2 percent in February and 13.2 percent in January. April prices were off 2.2 percent from the prior month.

The indexes show the overall price trend in specific metropolitan areas. Many of the cities or neighborhoods within these regions performed better or worse. Areas like San Francisco and much of the Peninsula have held up relatively well, for instance, but the net figure has been dragged down by steep drops in outlying areas like eastern Contra Costa County.

Many real estate experts consider the S&P/Case-Shiller indexes and others like them more accurate gauges of real estate trends than the median price approach used by other groups. Because they track the value only of homes that have traded hands at least twice, the indexes chart the actual increase or decrease in specific homes.

Median surveys compare prices for homes sold in one month to an entirely different set sold in the next, meaning they can be artificially distorted when a higher proportion of homes sell in the lower- or higher-priced tier in a given period.

[Via SF Gate]

Your House Is Worth Less? Good

The last time we had this feeling of financial vertigo was when the Internet bubble popped seven years ago. But this is much worse: the value of our homes is collapsing. For generations, rising home prices have been central to our general sense of well-being.

So why is the real estate collapse a good thing? First, because the collapse of any financial bubble can be interpreted as a morality play: greed gets its comeuppance. Subprime mortgages play the role that used to be played by junk bonds. They represent easy money--too easy, in retrospect. Borrowed money, if it gets out of hand, puts economic history on speed: everything rises faster, then collapses harder. Foolish lenders become the enablers of foolish borrowers. In the 1990s, people came to believe that stock prices would rise forever. They learned differently. And now we are learning differently about real estate as well. Whenever the price people will pay today depends on the belief that other people will pay even more tomorrow, you've got a bubble. It takes only a slight letdown in those expectations to send the whole delightful, self-feeding process into reverse.

The end of the housing bubble is good for practical reasons as well. Real estate--land and buildings--is fundamentally different from most other things people invest in. Unlike a factory (or a company full of factories), a house does not produce anything. Sure, it's a place to live, and that has value. But that value--as measured by what the property would rent for--hasn't been going up anything like the 20% or 30% or 40% a year that some houses have appreciated recently. If the price of, say, onions goes up 40%, more onions will soon flood the market. The extra money people pay will go to the production of onions. This happens in the housing market only to a tiny extent. Most houses that change hands each year were built long ago. When they are sold for a higher price, the money goes into the pockets of the previous owners.

We all count this money when we tot up our net worth. If you don't want to sell your house, you can borrow against its rising value. Nowhere is the real estate insanity of recent years more vividly on display than in the market for second mortgages. Lenders hawk them like patent medicines in the 19th century, as a cure for all your ills.

And even if you don't take out a second mortgage, you can still fantasize about what the house is worth. Fantasies of real estate prices have long been a staple of middle-class conversation. These days you can go to the Web and get a specific number.

All these rising house values added trillions to our sense of national wealth, but it is an illusion. If everybody, or even a fraction of everybody, tried to cash in on this rising value, prices would collapse, and the value would disappear. (By contrast, there aren't millions of onion owners counting on the value of their onions to keep going up year after year.) Economists predicted for years that something like this would happen as the boomer generation aged. Nobody believed them.

Since most families own their homes, the country is happier when real estate prices are going up. But it is healthier when prices are going down. Look at it this way: in the housing market, people fall into three categories. Some, mostly young folks, are trying to buy their first home. Some, at various stages of midlife, own a home but will trade up someday, or at least think about it. And some, mostly older, are trying to sell and downsize. Who is served by soaring house prices? Not the first group: rising prices make it hard for those people to get into the game. Not the second group: what it will have to pay for a bigger house is probably increasing faster than what it can get for the current one.

The only clear beneficiaries of rising house prices are those, generally older, who want to sell their home and buy a smaller one or none at all. These people, on average, have benefited the most from the spectacular rise of real estate prices over their entire adult lives. If they have to forgo part of that windfall, it is no tragedy.

If they borrowed against a value for their house that turns out to be fictitious and spent the money on ephemeral things like vacations, as the commercials urge them to do, that was foolish--in some cases, maybe even tragically foolish. People want the government to do something, and presidential candidates are beavering away at plans. But any plan that would prevent home prices from declining would be foolishness squared. Genuine tragedy deserves sympathy and help, even if it is the result of your own foolishness. But when we do not even guarantee basic health care, it would be nuts to think about making protection against real estate losses part of the social safety net.

[Via Time]

Monday, June 23, 2008

Medical Care's State of Denial

Doctors are supposed to prescribe tests and treatments that are medically necessary for their patients. Health insurers are expected to cover that care, while keeping inappropriate expenses in check.

But what happens when that process breaks down and sick patients are left to fight for medical care?

Each year, thousands of Californians find themselves at odds with their health insurers over whether they, as patients, should get the treatment their doctors prescribed.

Peter Isgro of Santa Cruz is among them. His insurer, Anthem Blue Cross, stopped paying for certain chemotherapy drugs after his cancer progressed, a decision that has been upheld in two appeals.

Isgro said he feels like the insurance company is second-guessing his doctor. "If your doctor wants to give you something and they can deny it, that's wrong," he said.

Anthem Blue Cross said it follows strict protocols, relying on medical evidence in determining what is necessary and appropriate to cover.

"Even in a dire situation, it is ethically appropriate to withhold treatment if it's not effective," said Dr. Michael Belman, medical director of Anthem Blue Cross, who was not speaking specifically about Isgro's case. Belman said doctors do not always recommend the best treatments, and cost is never a primary consideration.

Consumer advocates, however, see the situation differently.

Health insurers "are going back to the old strategies of the '90s, when they interrupted care on the front end by denying or delaying treatment offered by a doctor," said Jerry Flanagan, health advocate for Consumer Watchdog, a Santa Monica group. According to him, insurers hope patients will give up or settle for less, either way saving them money, a contention the companies dispute.

Patients now have a number of resources to turn to if they believe they received an unfair denial. Last year, the state's HMO Help Center received nearly 90,000 calls from consumers asking for help in resolving their health plan woes.

About 7,000 Californians have taken advantage of third-party medical reviews since 2001, when the state Department of Managed Health Care started offering them. Last year, the department resolved 1,716 independent medical review, or IMR, cases.

The Department of Insurance, which regulates a smaller number of plans, received 35,280 complaints and resolved 262 IMRs in 2007.

About 40 percent of all IMR decisions are settled in favor of the patient, according to the Department of Managed Health Care.

The majority of treatment disputes address whether the proposed therapy is "medically necessary" or if it is considered to be "experimental" or "investigational." Even treatments approved by the U.S. Food and Drug Administration can be deemed experimental if they are typically used in a different fashion or there is simply not enough evidence to support the use.

Physicians often feel caught in the middle.

"Do I stop treating them while the insurer determines they have eligibility? Even if they get authorization, they say that doesn't guarantee payment," said Dr. Michael Sherman, an oncologist who has offices in Walnut Creek and San Ramon. Sherman said he is forced to provide unreimbursed treatments to patients in those situations.

Dr. Alan Sokolow, chief medical officer for Blue Shield of California, said insurers try to strike a balance.

"We think that is our job - to help patients and providers apply the benefit package the patient has, the dollars they put for insurance coverage and health care, in the most appropriate and effective way," he said, adding that patients should appeal if they disagree.

When appeals don't work, patients can sue their health plan. But that can be a difficult proposition, given that it can be tough to get a lawyer to take such a case, and most plans require their members to agree to binding arbitration.

In the end, patients usually want to get the treatment rather than endure a lengthy legal process.

Joanna Smith, a patient advocate who runs Healthcare Liaison Inc. in Berkeley, said persistence and doing research to back up the case give patients a better chance of success.

"I always say to people appeal, appeal, appeal," she said. "And then appeal again."

Case studies: Three Northern California patients' struggles with insurance carriers.

Karen Vinci

In December 2006, when Karen Vinci's bile-duct cancer recurred, she was told surgery wasn't an option because of the location of the tumor.

Instead, a group of doctors at UCSF recommended what they considered the Alamo woman's only option: five weeks of external-beam radiation followed by noninvasive radiosurgery that used a robotic device called CyberKnife, which attacks the tumor with high doses of targeted radiation.

Vinci's insurer, Blue Shield, approved all the treatments she needed in preparation for the therapy, including the implantation of gold seeds in the tumor. But about two weeks into the radiation treatments in March 2007, Blue Shield reneged on the rest of the radiation as well her CyberKnife procedures.

So Vinci's husband pulled out a checkbook and paid UCSF $10,000 of the $60,000 treatment to make sure his wife's care was not delayed or canceled.

"I had no choice. It was either die or give them money," said Vinci, 57.

Blue Shield had labeled the treatment, which received FDA approval in 2001 for treatment of nonoperable tumors in all parts of the body, "experimental." CyberKnife's manufacturer, Accuray Inc., said the federal government's Medicare program covers the treatment, which has been used on more than 40,000 patients.

Vinci, with the help of her husband and a patient advocate at UCSF, immediately filed a grievance to have a doctor within the insurance company review her case. After that was denied, Vinci went to the insurer's second-level appeal, a three-party panel, which sided with the company.

When Vinci requested an expedited independent medical review of her case through the Department of Managed Health Care, she got the answer she wanted. The state's reviewers overturned Blue Shield's decision, and the hospital promptly refunded the Vincis' money.

Vinci, who is now cancer-free, still does not understand the denial, especially because the treatment was expected to give her a full recovery.

"It was just devastating to know that money was an issue when it comes to your life," she said.

Richard Reynolds

Richard Reynolds' health insurer, Blue Shield of California, paid for virtually everything - surgery, chemotherapy, radiation and medication - after the Berkeley man was diagnosed last year with a rare form of cancer.

When his tumor failed to show on a standard CT scan, his doctors recommended a more sensitive and expensive imaging technique called a PET scan. But his medical group and insurer, having denied an earlier PET scan request, again balked, labeling the tool "experimental" or "investigational" for his diagnosis.

Reynolds managed to get the scan covered when his surgeon appealed directly to high-ranking Blue Shield executives. But a follow-up scan requested several months later was still denied.

Fearing a delay in care, Reynolds shelled out $2,200 in March for the scan at a private PET imaging center. CT scans cost about half the price of PET scans.

Reynolds was mystified by Blue Shield's position. "They've paid for all kinds of specialists. They've put out hundreds and thousands of dollars. But with this one thing - the PET scan - they've drawn this bizarre line in the sand," said Reynolds, 64, communications director at Mother Jones magazine.

His doctor recently submitted a fourth request for an upcoming PET scan, which also was denied.

Reynolds, whose appeals were initially denied through Blue Shield's internal grievance process, submitted a request for an independent medical review through the state Department of Managed Health Care. But when a reporter told Blue Shield officials about the issue - even without identifying the patient or his diagnosis - they tracked down Reynolds' case and resolved the problem.

Blue Shield's medical director, Dr. Alan Sokolow, said his company should have covered the test, but found itself in the difficult terrain of trying to apply standardized protocols to a rare condition.

"We try very hard to be consistent and be fair and correct in our decision making. But this is why we have an appeal process," he said. "Sometimes, we don't always make the correct decision."

Peter Isgro

When antiques store owner Peter Isgro was diagnosed with late-stage colon cancer, he was told he had just months to live. That was more than two years ago.

For those two additional years, the 61-year-old Santa Cruz resident credits a different oncologist who put him on an intense chemotherapy regimen - a multidrug concoction of older and cutting-edge therapies that costs about $10,000 every other week.

It was a treatment that gave Isgro the ability to continue working four days a week, allowed him to travel to Europe and kept him alive.

But after scans showed his tumors were growing, his insurer, Anthem Blue Cross, discontinued coverage of the more expensive drugs in his chemotherapy regimen. Since their use was stopped in early May, Isgro's disease, according to his oncologist, has "exploded."

"Clearly, we were keeping a lid on it. It was progressing very slowly and, when we stopped the drugs, it progressed very quickly," said Dr. James Cohen of Los Gatos, adding that all of the drugs he had been combining are approved by the U.S. Food and Drug Administration for colon cancer.

Cohen said no amount or combination of medication would cure Isgro. Rather, he hoped to give him a better quality of life as well as more time.

Two appeals to the state Department of Managed Health Care have gone in favor of the insurer. In the most recent decision, issued June 12, two of the three reviewers concluded that the requested therapy would not be more beneficial than the standard, less expensive treatment the insurance company approved.

Isgro believes his insurer simply doesn't want to spend any more money to keep him alive. And he's angry.

"If my name was Kennedy, do you think they'd try to deny me?" he said, referring to Sen. Edward Kennedy, who recently underwent surgery for brain cancer.

Isgro, who has found an attorney to represent him at no cost, is considering his options. He recently resumed the more expensive treatments with the help of his sister, who paid more than $4,000 out of pocket. He also is contacting the pharmaceutical companies that make his drugs to see if they will help pay for his therapy.

"What good does it do to have any kind of national health care plan or state health care plan if your doctor, your primary doctor, does not have the right to prescribe the medications he feels are best for you?" he said. "That's not health care."

What to do if you are denied medical care
If your health insurance carrier is refusing to approve treatment recommended by your doctor, you have a number of options. First, contact your health plan. You probably will have to go through the plan's internal grievance process first. If time is of the essence, ask for an expedited review through the state.

Tips to help you get the care you need:

- Review your health plan policy. Many are available online.

- Make sure your doctor is aware of your problem. Sometimes the initial denial comes from the medical group, which is charged with managing costs. In any case, your doctor's support is important.

- Request the reason for the denial in writing. Take detailed notes of all conversations, including the date and time of the call and the name of the person you speak with. Save copies of all paperwork, and keep these records in chronological order.

- Act soon. If you wait longer than six months, you could lose the right to file a complaint, ask for an independent medical review (also called an IMR), or take other action against your health plan such as arbitration or a lawsuit. An IMR decision is binding on the health plan, but not the patient.

[Via SF Gate ]