Whatever Happened to our "Social Contract"?

Socially Responsible Retail Acquisition in Trenton NJ and
A Socially Responsible Business Consultant in a Boston Suburb

Just to make sure we don’t confuse our readers the purpose of this issue is to look for seeds of hope and reform in our own backyards.   Candide like, when the destruction of Lisbon was too horrible to contemplate, it helps to look inward - into one’s backyard.  Our Introduction comments on the global corporate state looking to understand the poitical and economic meaning of the gross over reach of the so called National Security State.  We then interview Eric Maywar who truly in our backyard is running a used bookstore/mini community center in Trenton, NJ and surveying local groups to ascertain what kinds of retail businesses peple who either live or work in Trenton would patronize. Then we also interview Terra Friedrichs in order to understand how she changed from a career in the telecom tech industry to recast herself as a socially respnsible business consultant. The key here happens to be an understanding  of "outcosting." where far too often businesses are encouraged to add to their bottom line by shifting costs from their balance sheets to the communties in which they operate.

On a very personal note I find it somewhat difficult to identify where “reality” really lives. For many it is definitely still in the center of the circles of power in Washington DC. To see this all one has to do is to read David Remnick’s long appraisal of Barack Obama in the January 27 New Yorker magazine. Remnick at one point was a Russian historian but then he became editor of the New Yorker magazine. Next he wrote a large monograph detailing Barack Obama’s rise to power. Now at the beginning of the sixth year of the President’s reign, he travels with him on the fund-raising trip to California describing what it is like to fly in Air Force One with POTUS. You won’t find any real criticism of the President by Remnick. Such, I suppose, is the price of access to the center of power in the late days of the American Empire.  

Just to make sure we don’t confuse our readers the purpose of this issue is to look for seeds of hope and reform in our own backyards.   Candide like, when the destruction of Lisbon was too horrible to contemplate, it helps to look inward - into one’s backyard.

But first it seems that, unless the legislative branch finds its backbone, a doubtful prospect but one that we can still hope, for the insults of the surveillance state are bound to continue. And before turning to the specific details of this issue we will point our readers to an essay by Alford McCoy an historian of the Philippines who teaches at the University of Wisconsin and who very astutely portrays the American investment in spying post 9/11 as having very little to do with terrorism and very much to do with the remarkable bargain it presents to the politicians of Washington and their global corporate allies and the bankers and Wall Street to continue the current form of what is now an American financial a imperialism kept in place by the governance of global capitalism that is located in an increasingly alien place called Washington DC.

As McCoy points out since our imperial overreach exceeds our grasp, the only way to get to the necessary information to control our economic adversaries is to steal it. He is horrified by what is happening and sees what the NSA is doing as just the modern version of spying that we have relied upon for the past century to get our way against an adversary. Something that joe six pack would not support, if he understood that the goal was to enable his employer to outsource his job, but that he would goalong with if it were being sold as we are protecting you from those nasty terrorists.  Here is the heart of what McCoy says:
“As the gap has grown between Washington’s global reach and its shrinking mailed fist, as it struggles to maintain 40% of world armaments (the 2012 figure) with only 23% of global gross economic output, the U.S. will need to find new ways to exercise its power far more economically. As the Cold War took off, a heavy-metal U.S. military — with 500 bases worldwide circa 1950 — was sustainable because the country controlled some 50% of the global gross product.”

“But as its share of world output falls — to an estimated 17% by 2016 — and its social welfare costs climb relentlessly from 4% of gross domestic product in 2010 to a projected 18% by 2050, cost-cutting becomes imperative if Washington is to survive as anything like the planet’s “sole superpower.” Compared to the $3 trillion cost of the U.S. invasion and occupation of Iraq, the NSA’s 2012 budget of just $11 billion for worldwide surveillance and cyberwarfare looks like cost saving the Pentagon can ill-afford to forego.”

McCoy’s argument is that plain economic espionage along with shredding all social welfare costs is the only way that our elite tech companies and military corporations can enjoy their privileges.  This is why they have a free hand to maintain their economic imperialism by forcing everyone to endure the global surveillance -- something that is one of the last things we have gotten very very good at.

Here are the beginning paragraphs of McCoy’s very lucid essay: “For more than six months, Edward Snowden’s revelations about the National Security Agency (NSA) have been pouring out from the Washington Post, the New York Times, the Guardian, Germany’s Der Spiegel, and Brazil’s O Globo, among other places.  Yet no one has pointed out the combination of factors that made the NSA’s expanding programs to monitor the world seem like such a slam-dunk development in Washington.  The answer is remarkably simple.  For an imperial power losing its economic grip on the planet and heading into more austere times, the NSA’s latest technological breakthroughs look like a bargain basement deal when it comes to projecting power and keeping subordinate allies in line — like, in fact, the steal of the century.  Even when disaster turned out to be attached to them, the NSA’s surveillance programs have come with such a discounted price tag that no Washington elite was going to reject them.”

“For well over a century, from the pacification of the Philippines in 1898 to trade negotiations with the European Union today, surveillance and its kissing cousins, scandal and scurrilous information, have been key weapons in Washington’s search for global dominion. Not surprisingly, in a post-9/11 bipartisan exercise of executive power, George W. Bush and Barack Obama have presided over building the NSA step by secret step into a digital panopticon designed to monitor the communications of every American and foreign leaders worldwide.”

“What exactly was the aim of such an unprecedented program of massive domestic and planetary spying, which clearly carried the risk of controversy at home and abroad? Here, an awareness of the more than century-long history of U.S. surveillance can guide us through the billions of bytes swept up by the NSA to the strategic significance of such a program for the planet’s last superpower. What the past reveals is a long-term relationship between American state surveillance and political scandal that helps illuminate the unacknowledged reason why the NSA monitors America’s closest allies.”

“Not only does such surveillance help gain intelligence advantageous to U.S. diplomacy, trade relations, and war-making, but it also scoops up intimate information that can provide leverage — akin to blackmail — in sensitive global dealings and negotiations of every sort. The NSA’s global panopticon thus fulfills an ancient dream of empire. With a few computer key strokes, the agency has solved the problem that has bedeviled world powers since at least the time of Caesar Augustus: how to control unruly local leaders, who are the foundation for imperial rule, by ferreting out crucial, often scurrilous, information to make them more malleable.”
A Cost-Savings Bonanza With a Downside

“Once upon a time, such surveillance was both expensive and labor intensive. Today, however, unlike the U.S. Army’s shoe-leather surveillance during World War I or the FBI’s break-ins and phone bugs in the Cold War years, the NSA can monitor the entire world and its leaders with only 100-plus probes into the Internet’s fiber optic cables.”

“This new technology is both omniscient and omnipresent beyond anything those lacking top-secret clearance could have imagined before the Edward Snowden revelations began.  Not only is it unimaginably pervasive, but NSA surveillance is also a particularly cost-effective strategy compared to just about any other form of global power projection. And better yet, it fulfills the greatest imperial dream of all: to be omniscient not just for a few islands, as in the Philippines a century ago, or a couple of countries, as in the Cold War era, but on a truly global scale.”

“In a time of increasing imperial austerity and exceptional technological capability, everything about the NSA’s surveillance told Washington to just “go for it.”  This cut-rate mechanism for both projecting force and preserving U.S. global power surely looked like a no-brainer, a must-have bargain for any American president in the twenty-first century — before new NSA documents started hitting front pages weekly, thanks to Snowden, and the whole world began returning the favor.”

“As the gap has grown between Washington’s global reach and its shrinking mailed fist, as it struggles to maintain 40% of world armaments (the 2012 figure) with only 23% of global gross economic output, the U.S. will need to find new ways to exercise its power far more economically. As the Cold War took off, a heavy-metal U.S. military — with 500 bases worldwide circa 1950 — was sustainable because the country controlled some 50% of the global gross product.”

“But as its share of world output falls — to an estimated 17% by 2016 — and its social welfare costs climb relentlessly from 4% of gross domestic product in 2010 to a projected 18% by 2050, cost-cutting becomes imperative if Washington is to survive as anything like the planet’s “sole superpower.” Compared to the $3 trillion cost of the U.S. invasion and occupation of Iraq, the NSA’s 2012 budget of just $11 billion for worldwide surveillance and cyberwarfare looks like cost saving the Pentagon can ill-afford to forego.”

“Yet this seeming “bargain” comes at what turns out to be an almost incalculable cost. The sheer scale of such surveillance leaves it open to countless points of penetration, whether by a handful of anti-war activists breaking into an FBI field office in Media, Pennsylvania, back in 1971 or Edward Snowden downloading NSA documents at a Hawaiian outpost in 2012.”

“Once these secret programs are exposed, it turns out that nobody really likes being under surveillance. Proud national leaders refuse to tolerate foreign powers observing them like rats in a maze. Ordinary citizens recoil at the idea of Big Brother watching their private lives like so many microbes on a slide.”

Here are pointers to evidence supporting  McCoy’s thesis of industrial espionage underlying the NSA Pantiopticon.  On January 26 2014 the Guardian writes: “The public broadcaster ARD TV quoted Snowden saying the NSA does not limit its espionage to issues of national security and citing the German engineering firm Siemens as one target. “If there's information at Siemens that's beneficial to US national interests – even if it doesn't have anything to do with national security – then they'll take that information nevertheless,” Snowden said, according to ARD, which recorded the interview in Russia, where Snowden has claimed asylum.”

And on January 14, 2014 the NY Times reported:  “While most of the software is inserted by gaining access to computer networks, the N.S.A. has increasingly made use of a secret technology that enables it to enter and alter data in computers even if they are not connected to the Internet, according to N.S.A. documents, computer experts and American officials.The technology, which the agency has used since at least 2008, relies on a covert channel of radio waves that can be transmitted from tiny circuit boards and USB cards inserted surreptitiously into the computers. In some cases, they are sent to a briefcase-size relay station that intelligence agencies can set up miles away from the target.”

We must hope that the economic and political aspects of our society that have become so badly broken may be gradually trending in the direction of finding fixes.  Still, we are at the mercy of a completely financialized economic system that exists to serve the One Percent while pretending to offer opportunity to the next seven or 8%.  This system has captured our “leadership”  while continuing to push forward the failed free-market economic system that sees “progress”  as new so-called free trade agreements like the Transpacific Partnership.   Anything to allow our globalized corporations to continue a predatory search for profits while sticking the rest of us with the bill.   Make obscene amounts of money but by all means keep it in offshore banks so you do not have to contribute to maintaining the infrastructure or to any semblance of a social contract that “saved” capitalism after the transformative presidency of Franklin Roosevelt.

We increasingly feel that, for those of us not in the 1%, the only positive economic direction to go in is the nurturing of local economy.  This issue highlights two such stories.  The first is that of Eric Maywar who has, in addition to a full-time regular job, chosen to operate in a used bookstore in downtown Trenton, the rapidly declining New Jersey state capital, the boundary of which is about 500 meters from where I now sit.  Eric’s store is an operation which attracted the interest and support of Edward Anthony Slater who for almost 2 years was the face, heart, and soul of Occupy Trenton. Someone whom I gradually got to know and who at the end of the summer took me downtown and introduced me to Eric.   As Edward Anthony said: “this man is actually trying to bring business development to Trenton by reaching out to a broad number of groups of people and finding out what kinds of businesses they would support.   While the days of an 18th-century salon are long gone, Eric sees his bookstore as a place for local gatherings that can nurture some sense of community building.

We also interviewed Terra Friedrichs from the Boston metropolitan area. Terra is a technology consultant and writer who became very active in Occupy Boston. She also got involved in a list discussion in late November on a business school practice called “out-costing” - where students in pursuit of corporate profits were taught and rewarded for figuring out how to transfer business expenses from the business balance sheet to that of the local communities in which the business operated. Terra’s story is how one intelligent woman reacted to the culmination of the past 30 years where it seems that somehow we have been taught to pursue materialistic wealth at the expense of sustainable local communities and infrastructure. All you need to remember is George Bush’s injunction to the nation after 9/11. We will not join in any shared sacrifice. We will outsource the resulting war. Put it on the national credit card just go out and go shopping.

Fortunately this is a practice that is being increasingly rejected. Pushed along one would hope by Edward Snowden’s Bodhisatva-like sacrifice of what would likely have been a very comfortable life as a private contractor for what used to be a trusted and honored role government service as a member of the national intelligence community but one which was enabled by George Bush and put on steroids by Barack Obama after 9/11 has gotten chillingly out of hand.  NSA Run amok will now join the other ongoing currents of our financialized society and our government, currents that have been captured and turned against the interests of the majority of the American people by what appear to be the resources of globalized financial capital.

- What This-OutCosting-Thing Means to Telecom

Out-costing can be seen in telecom and other utilities as executives try to abandon basic services and universal access in preference for profit, and the government sits idly by.  It seems to me that, with Barack Obama’s capitulation to the very forces which he pretended to run against, we are moving faster and faster down the path where a good outcome is getting harder to see.  Paul Budde,  a Dutchman transplanted to Australia for the past 25 years, runs a large telecommunications consulting and publications business described very well what he sees with a sense of sadness and frustration on our arch-econ mail list on January 17.

“IMHO opinion the market fundamentals in the USA are so wrong that any initiative to improve broadband access, fibre roll outs, infrastructure or competition innovation, etc. will either fail or have a minimal impact. After 15 years of municipality networks, they might have reached a 1% of total bb penetration, you can add Gigabit Sq and other initiatives to it and it is all the same. Google KC might be a success but add that to it and the 1% is not going to change that much. Add Austin to it and again little or no overall difference. None of these initiatives is going to make a serious impact,  if nothing would change, they all together might add up to 5% or so in another 15 years . Even if you add WISPs to it that situation doesn’t change all that much. It are all crumbs falling of the table of the incumbents.”
“It is totally up to the 3 or 4  large players to dictate what will happen in the country, the current NN judgement again underlines this. The incumbents  are fully and firmly in control of the political telecom agenda and under the current system they are the only ones that have the power to make any large scale impact on any of the telecoms developments in the country. Let’s say the FCC also had a win here it will however, take many years to test this and even longer to see any results coming from this that would have any serious impact on the overall competition and innovation situation of the American telecoms market. In the meantime the incumbents are laughing their heads off. This is exactly the way they  like to have it, the more complex the regulatory situation the better it is for them, they actively assist in creating that situation – they are true masters of deception and incredibly America (not the ListJ seems to be happy to be kept hostage by them.”
‘One of the most striking abnormalities is that there is no country in the world, other than the US , that classifies internet access as content, how dim is that,  yet that situation simply continues. As far as I know there is also no other country in the developed world, other  than the US , that by now doesn’t have a properly working DSL wholesale market. In Australia this has delivered 45 competitors and as long as there is such a level of competition NN will not be an issue (the US is the only country where it is a serious issue, simply because the enormous concentration of market power in the hands of a very few).”
“I have been on the List for 6 years and in all honesty on these issues we keep on running around in circles re-addressing and re-addressing all of the same issues be it from slightly different angles, time and time again. In all those years the only real progress in the market that counts for the end users, be it all very slowly,  has been coming from the 3-4 incumbents and nobody else. So progress is set to continue at their pace and whoever says what or does what (Obama, Congress, Courts, FCC, etc) is making not one  iota difference, a clear example a plutocracy.Customers can complain what they want and rank them as near criminals , the American system will protect the incumbents and not the customers. Unless there is the political will to change this , nothing will change and we will still be addressing these issues over and over again for many years to come. Muddling on as Jim and Bob are calling it.”
I realise I am painting a rather black and white picture and obviously it is all a bit more nuanced but the overall result is as I see it.

COOK Report: Paul, i certainly agree and am thinking about how to use your observation in the introduction summary of my next COOK Report. That features action at the local level. Two stories…terra and a man here who runs a used book store in trenton.  As POTUS showed this morning thew rest of the world seems to be on auto pilot.

I AM also FOCUSED ON ECUADOR  and it now looks that to be able to do my April 1 issue on Ecuadorian reforms.

I am reminded of what Roxanne  Googin said, it seems like at least 10 years ago, that if we don't fix our networks, the rest of the world will regard us as demented  (that's probably not the exact words she used)  and a nobody in their right mind would set up a new business here. They would go where national governments respected the rights of ordinary citizens rather than acted as captives of the 1%.
David Isenberg’s F2C meetings were good meetings, but by last year I had decided that there were many many other places I would rather go to a meeting than in Washington DC.  The situation seems to me to be really crazy.   Where in heaven's name does POTUS thinking his surveillance state performance is going to get him? Or the rest of us?   Does he care?   It really hurts to say so but I don't think he does.

Reminds me of an itemized post i saw about income tax rates with the Danes paying 55% and yet being a measured as the happiest people in the world.

I am thinking also of Gertjan van Stam the Dutchman who lives in Zimbabwe and about whom I made a comment yesterday that admittedly since it had nothing to do with network neutrality did not get much response. Like I think -- zero.   And I do realize that the contributions that keep me afloat come from folks here who if they can figure out what to do regarding the arcane goings-on at the FCC will be able to put money in their bank accounts and pay their bills including mine and act for which I must  express appreciation.

But again I wish Michael Gursten would speak out  about the other people on his list who actually run networks.  Gertjan told me in a private message that there are few such in Africa. Well I need to figure out how to rattle John Hawker’s chain.   It would be interesting to get him to talk to Gertjan  and get some sense of why things worked in Zimbabwe and apparently not in Ghana.  I have read some of Gertjan’s writings  which talk about African engineers as becoming somehow isolated from their own culture in the process of doing what is necessary to build a local Internet.   I find this fascinating when he also told me in response to my interest in trying to identify the existence of as many organizations as possible similar to his own.

I'm left with the impression that he said the organizations that I'm interested in from the global South are not terribly interested in identifying themselves to the rest of the world because they see nothing to be gained by that and instead apparently see only an invasion by a huge Western technology companies with expensive technology that is alien both to their culture and unsuited to their economic needs.  

I wonder if this doesn't have a lot to do with why the Chinese seem to have been far more successful in working in Africa than the rest of us.

Are there not many carts placed in front of many horses?  We go out and bring Internet connectivity to people who do not have it and somehow assume all their problems will be solved.   Is the more sane way to go out and live in foreign communities and cultures to see what we can learn from them and once we have some degree of understanding what day-to-day life is like, then we may have some ideas about how to introduce our technology in ways that will be warmly responded to.


Introduction and Executive Summary                p. 3
A Cost-Savings Bonanza With a Downside                    p.  5

Part one
Retail Acquisition in Trenton New Jersey            p. 10
Eric Maywar’s Community Outreach Plan
Editor’s Introduction                                p. 10
The Two Locations                                    p. 12
Our Personal Biases About All This                    p. 15
But this is a Business Attraction Plan                    p. 20
Where the Project is Headed                            p. 26
Comment from Sara Wedeman to which Erik Responds    p. 26
Erik’s Credo                                        p. 28

Part Two
Leadership for the Local Economy
Terra  Friedrichs on What  Really Matters                
Ethics and Socially Conscious Business Consulting        p. 31
How to Prevent “Outcosting”                        p. 32
Unrelenting Pressure Toward Profit and Growth
is just Killing us as a Society                        p. 34
The Terra Interview -- Sunday November 24            p. 41
Computers                                        p. 43
Activism                                            p. 44
Ethics and a Masters in Finance                        p. 47
Ways of Looking at Value                            p. 49
Community Action                                p. 53

Next Issue                                        p. 60