Black Hat Society

In today’s enlightened computer culture, most know that passwords need to be secret and not something someone can easily guess, like the word “password” spelled with a zero instead of the letter ‘o.’ That’s good. But what about your router. Oh, didn’t even know you had a router, eh? That little box that makes the wireless in you house work, or supplies the internet via ethernet cable ... yeah that little box.

Did you know it has a password? Is it “secret”? Or is the userid “admin” and the password “password”? Oh, what does that matter?

From a recent article in IEEE Spectrum Magazine.

Researchers at AppSec Consulting Inc., in San Jose, Calif., reported new vulnerabilities at the annual Black Hat computer security conference, which took place from 21–26 July in Las Vegas. To be sure, compromises to routers, switches, printers, and other frequently networked hardware have been discussed at Black Hat as far back as 2006.

But the associated attacks were hard to pull off back then, so the problem was never addressed. This year, though, the AppSec team demonstrated their exploit using a popular type of Linksys router. As reported by Information Week, after getting a computer user to go to a malicious website, the site pushed a JavaScript app instructing the Web browser to relay information about all locally-connected devices—including the router. A brute force attack—or in too many cases, an educated guess—can easily yield the router's login information and thus access privileges that let the attacker install malicious firmware.

"We're replacing an operating system on a network device and taking complete control of it," AppSec presenter Phil Purviance, an information security specialist, told Information Week. The exploit, which could easily go undetected,

“could be used to install custom firmware, allowing an attacker to surreptitiously monitor everything that passed through the device, for example by instructing the router to send all data to an attacker-controlled website.”

The Black Hat conferences annually supply a rich vein of revelations about just how vulnerable computers and related devices are to the machinations of people intent on doing dastardly things. Fortunately, despite the suggestive name, the presenters conduct their hacks with the aim of revealing vulnerabilities before they can be exploited for nefarious purposes.

Another of this year's hacks looked at the new cellphones that allow users to share photos and other data by tapping the devices together. They're cool and convenient, but the near-field communication that allows this swapping of data — including credit card information for making online payments — may leave handsets open to outside attacks. In a session called “Don’t Stand So Close to Me: An Analysis of the NFC Attack Surface,” researchers from Accuvant Labs reported that there are technologies capable of letting someone access another person’s phone to view stored images, videos, and documents, open Web pages in the phone’s browser, or turn the handset into a zombie that allows them to send text messages and make phone calls using the victim’s calling and data plan.

And a researcher at Universidad Autonoma de Madrid delivered a talk debunking the notion that the binary code used in biometrics databases to represent scanned iris images do not contain enough information to allow the original iris image to be reconstructed. Javier Galbally, whose research focus is on synthetic generation of biometric traits, came up with a probabilistic approach to reconstituting the images from binary templates. Subsequent experiments showed that although they wouldn’t fool a human biometrics expert, the reconstructed images may be good enough to fake out an iris recognition system.

Now, I hope I haven’t ruined your day. Go back to you regular Facebook viewing, photo sharing, and bank account logon day, and don’t worry about security. After all, what could go wrong ... go wrong ... go wrong ...

Security starts with good passwords ... on all your devices. Don’t use the same password for any of your really serious connections like the bank, credit union, broker, or Facebook :-) And for those who have already posted the name of their first elementary school, where they were born, mother’s maiden name, name of their first pet, or anything else that is easy to find in this internet age, think how easy it would be for someone to have your password reset by just knowing the answers to these “security” questions.

My recommendation ... make up bogus answers for these security questions. And don’t log onto your bank account while on public wi-fi at Starbucks. That guy in the corner that looks so serious, he’s monitoring your internet connection via wi-fi.

Public wi-fi, blue tooth, router security, near field radio. Ain't modern science wonderful? Now, go have a nice day.

Is the iPhone a serious photographic tool for … say … photojournalism?

Let me answer that very succinctly: YES. But you are a photojournalist due to the quality of your photos and the story they tell. You aren’t a photojournalist just because you can use Photoshop. Can’t figure out Photoshop? Well then there’s Instagram or Hipstamatic. (Love that Apple App store.)

I’m not sure how I should respond to Instagram or Hipstamatic or the other dozens of digital photo modifiers out there. They take photographs and add structured elements to make them “arty.” Of course, real art is not taking a picture and converting it to black and white, or putting it in a nice frame, of softening the glow, or whatever those other effects do.

I had to laugh when I read that Nikon and Canon both ship cameras with a tube of Vaseline to rub on the lens in case your computer crashes and you can’t use Instagram. Now I’m a big believer in the best camera is the one in your hand and the latest versions of iPhone and other smart phones have really excellent cameras.

My complaint is with the artsy-fartsy digital effects that people without an artistic bone in their bodies try to “fix up” their pictures. Now we hear about Hipstamatic providing special templates for “photojournalists.” Photojournalists = good. Special templates to make photojournalist pictures = a crock.

To quote some real photojournalists from an article in the British Journal of Photography.

Especially, adds Ben Khelifa, since the world of photojournalism is changing. "Our industry is exploding, in a good way," he tells BJP. "Our practices are changing — we're going faster, we're dealing with new economics and new tools. Everything is changing, and I think it's great because it allows us to renew ourselves. Applications such as Hipstamatic and Instagram are making a lot of money right now, and I think it's great when they decide to give something back to photographers. It just goes to show that photojournalism is still important, even for companies that specialise in new technologies."

However, at the heart of the Hipstamatic Foundation of Photojournalism lies the app itself, which continues to cause acrimonious arguments within the photojournalism industry. "As long as you don't have control over the image, I don't believe it has any value," says Jean-François Leroy, the director of the Visa pour l'image photojournalism festival. "No one can pretend that the photographer retains control over his images when using Hipstamatic. I find that this type of application tends to standardise photography — you're not shooting your image, you're shooting a Ben Lowy image," he says, referring to the digital filter Hipstamatic plans to release for photojournalists in the coming months. The GoodPak, as Hipstamatic calls it, was developed with Lowy's input. BJP understands that the Pak was finalised three weeks ago, after undergoing months of tests.

Magnum photographer Christopher Anderson, on the other hand, doesn't have anything against photographers using the app, yet, as a photojournalist, he believes the resulting images are visually bad. "Garish is the word I would use," he tells BJP in an email interview. "I think they are also oddly nostalgic. But that said, I don't have any ethical problem with them. For the purists out there, I would remind them how their own dogmas alter reality – the use of black and white being the most notable of hypocritical dogmas. Unless the photographer is truly and thoroughly colour-blind, this is a pretty drastic alteration of reality. I don't see how making your skies purple with an app is any less ethical — albeit in worse taste, perhaps."

But, adds Anderson, there's another side that remains unexplored. "It occurred to me that my mother and sister, and everybody on Facebook, is showing their world to each other using these apps. That 'look' is not at all exotic to them. So when a 'professional' photojournalist such as Kuwayama or Michael Christopher Brown use an iPhone and app in a conflict zone, perhaps it actually helps communicate what is going on in, say, Afghanistan to people in the suburbs because it looks like the way they show each other their world."

In the article, Hipstamatic CEO Lucas Allen Buick says that "The idea behind it is to create an educational platform, where professionals will be able to give some of their time to educate up-and-coming photographers on how to go into Libya, for example, and not get shot."

"Stories have always been a large part of what Hipstamatic is about. We have an opportunity to let photographers do the stories they want to tell and we will be giving out grants to these photographers, so they don't have to find publishers to finance their work."

So, to be a photojournalist you really need two things. 1) to be in a place of conflict such as Libya or Afghanistan, and 2) to take your pictures in black and white … or mauve with a frame showing the 35mm film number?

Hog wash. There is art and there is “not art.” It is more difficult to apply an objective standard for defining art by identifying what is not art. For example, I strenuously object to the concept that art is anything its creator wants it to be, but many hold fast to this belief. It is my opinion that a framed sheet of notebook paper is not art just because a “creator” states that it is—how we view the sheet of notebook paper is also a consideration.

In a critique as a college student, a classmate generated fifteen minutes of conversation concerning the nature of art by hanging a calendar upside down. The artist knew he could capture the imagination of the class with his pseudo-intellectual ramblings.

The same rules didn’t apply a week later when I proudly presented a Woolworth’s “spring clearance” window sign with car wax applied to it. My creation was repulsive and my declaration that it was as much art as the calendar hung upside down was rejected. I was ridiculed by my peers as I defiantly contended they proved my point for me: my assertion as its creator that my car-waxed sign was art was insufficient because no one else accepted it as art.

I still think I won that argument … all evidence to the contrary aside. Therefore, ipso-facto, quod erat demonstrandum. Hipstamatic is not art.

In response, Ben Khalifa, said, "What's really annoying is that all these debates about the aesthetics and whether it's a good idea to use Hipstamatic don't make sense. The story is at the heart of photojournalism, and if a photographer believes he can tell a better story by using Hipstamatic, that's his choice. Hipstamatic, like a Leica camera or anything else, is just a tool and nothing else."

Well sir, I reply to you, in the words of Roseanne Roseannadanna, “Never mind.”

People and Poverty, Homeless and Hunger

Picture by Thomas Hawk

I’ve had this on my mind for some time now, and something I read today written by a dear friend sort of crystalized it in my mind. Naturally, my first thought is to write about it. (Actually, my first thought is to do something. I’m just being flippant. I will describe what I do.)

A recent local newspaper headline: “City’s 2012 Numbers Up 39%.” That is the homeless population; Longmont’s homeless population grew 39 percent year to year in the most recent count.

The Metro Denver Homeless Initiative released city data last week showing that 883 homeless spent January 23, the date of the census count, in Longmont. That is compared to 636 the previous year. The annual point-in-time surveys are held in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson County. The county-wide data was released a few months back and showed the total homeless count for our county (Boulder) at 1,970 which is an 11 percent increase. In fact, the city of Boulder has seen a decline in homeless, and now Longmont has a larger population of people on the street than our bigger neighbor at the other end of the diagonal highway.

I was involved in the count this year. I’m a former statistical analyst with IBM, and my input and review was requested. I did not design the survey, but I was involved in its review and verification. I was very glad to see that the methodology was the same as in 2011. That is important because if you keep changing the measurement tool, then the results are not consistent. For the last several years, the Metro Denver Homeless Initiative changed the counting process every year. This time they kept it constant, much to my approval.

Some statistical results: in Longmont, 75 percent of respondents were adults between 25 and 64 years old. About 59 percent were white and 33 percent were Latino. More than half reported they had been homeless for more than a month but less than a year. About half had received some money from working in the last month, and 59 percent received some government benefits.

Sixty-eight percent reported either staying temporarily with friends and family or living in transitional housing. Only about 4 percent had spent the night sleeping in the streets. (Remember, this is January.) A lost job or unable to find work is still the top reason people listed for their homelessness, followed by high cost of housing.

Sadly the number of homeless children is way up from previous years. There was some good news in the chronically homeless population declined 1 percent and about 20 percent reported being homeless for less than a year. Last year, that number was 29 percent.

According to the U.S. Census Bureau, overall, 16% of Longmont residents live in poverty. Contrast that with the very high average salaries in this high technology driven city and the high number of college degrees, even Ph. D.’s, in this city compared to most of the rest of the nation. (Thirty-seven percent of Longmonters have a Bachelor's degree or higher compared with the national average of 27%.) Things are good for most in our fair town, but it is a short jump from working to poverty to homelessness when the economy declines.

When my long-term friend (no one wants to say “old”) wrote today about the tragedy in Aurora – the shooting, she said she saw a quote on a poster:

"I looked around and wondered why somebody didn't do something ... Then I realized I AM THAT SOMEBODY!" – Author Unknown

In other words, “don’t just stand there – do something.” This means YOU!

One of the great delights I’ve enjoyed in retirement is the extra time to do something. I’ve gotten involved in several worthy causes. Every Thursday (when I’m in town) I drive a large truck picking up donations for Habitat’s Restore. It is hard and hot work, but I love to drive and meet people, and I get that feeling I’m helping out. The exercise is good too, and I enjoy the people I meet. More than taking donations for a worthy cause, we are often helping older people and people of limited means clear out their homes and dispose of things they don’t need any more. We also haul away a lot of junk and trash … not exactly our mission, but it helps too.

I also work with a homeless outreach, and we provide meals and clothing every day of the week. We are also there to provide transportation to shelters in the winter and to drop-in centers for laundry, showers, phone calls, computers, and just some time watching TV. I’m always floored by the graciousness and gratitude of those we help.

Every night at 7:00 PM we’re at the Justice Center giving out free meals … no questions (other than some demographics) asked. The meals are prepared by a group we call the “Soup Angels.” Sixty sack meals every night – soup in the winter – sandwiches in the summer. That, plus water and clothing. Recently there has been quite an increase in the need. In the past we’ve given out 40 or so meals and then taken food to a local motel, the Wal-mart parking lot, and to others who call with requests, and finally delivering the last of the remaining meals to a local hotel. I don’t know if it is the nice summer weather or a real change in the number of hungry, but the demand for food is way up. A week ago on Monday, we gave out every single meal at the first stop. We went back to our main center and stocked up on what we call “non perishable meals.” That’s tuna or Vienna sausages with crackers and granola bars.

When we stopped at the local motel where many people down and out stay – some with government vouchers – a little girl asked for a meal. She was about 8 years old and playing in the playground. I asked her where she lived and she indicated a nearby house trailer. I asked why she needed the meal and she said she had people staying at their house and there wasn’t enough food. We don’t usually ask so many questions, but we also have to verify the need. So I gave her a meal. Later the motel manager told me her story was not true. She had conned me.

I don’t really care, and that’s why we don’t usually ask questions. It is not our goal to judge, just fill a need. What is the harm of giving food to those that don’t really need it? But, later that night, we got a call from a local church. They had a homeless man there, and he had slept through the seven o’clock time, and now he was awake and hungry. We were all out of food at that point, and that little girl’s trick had literally taken the food out of this man’s mouth.

It is a complex problem. We try not to judge, but just provide a resource. During the day there are both government and charity organizations open for the homeless to use. After five PM, we’re it. We are the evening resource, and we get calls from the local police dispatch and many other organizations.

The following Sunday I was on the street again and this time I was approached by a well-known client of mine while handing out food. I’ll call him “J.” He’s a big guy, about 6 foot 3 and in his late twenties or early thirties. He asked if he could have a second meal since he was very hungry. I couldn’t give it to him for the same reason I questioned the little girl. However, I always carry some McDonalds coupons. I won’t give people on the street money since I don’t know what they will do with money, but I will give them food. I can’t give him the coupons in front of everyone else. That wouldn’t be fair, but I know he’s a big guy, and I would hate for him to be hungry. He headed up the stairs from the Justice Center parking lot, and that gave me a chance to follow him and give him the coupons in private. Twenty dollars at McDonalds can go a long ways if you are careful. He was very gracious and we hugged. After all, SOMEBODY had to do something.

I know an organization that gives out food at Thanksgiving. I think they also provide a meal at Christmas. That’s wonderful. Every little bit helps. But there are 365 days in a year, and people are not just hungry at Thanksgiving and Christmas. Think about that next time you sit down to a big meal at home or a restaurant. Think how close we all are to hunger. Let the power go out or the roads be blocked and the grocery store shelves would be empty in a day or two. We’ve moved a long way away from the source of our food, and many are not prepared for emergencies.

There is a long list of the causes of homelessness and some are due to lack of personal responsibility. Plus, giving help can sometimes become enabling. There are tough decisions to be made. The goal of the organization that I work with on the street is not to be judges or even worry if we are enabling some behavior such as alcoholism or drug use. Even a drunk or a person who is high needs to eat and have a place to sleep. Those other organizations work on getting people the proper care, both medical and psychological, counseling, rehab, etc., as well as work and other needs. We just don’t want anyone dying on the streets because SOMEBODY didn’t do something.

That wise and caring friend of mine summed it up in four short phrases from the inspirational video she linked:

Live Simply
Speak Kindly
Care Deeply
Love Generously

I could not have said it better myself. And you know I’d use a lot more words. Come to think of it, I did! You are SOMEBODY … please do something.

Why I’m an Apple Fan (Boy)

Whenever I see Steve Balmer, I think, “what an idiot.” He looks the part; he acts the part; then he opens his mouth and removes all doubt. He IS an idiot. Why Microsoft keeps him as CEO in light of the poor financial performance and stock price stagnation is far beyond me. He has no vision. He is such a dork.

When asked about Apple, he always makes these ridiculous comments about how they only have 5% … or 10% … or 15% of the market. (Note how it is growing.) This is the fool that thought the iPhone “… has no hope of gaining a true foothold in the cellphone marketplace.” This from the head of the corporation that has had half a dozen failed attempts to produce a competitive smart phone. And I won’t even get into a discussion of the Zune vs. the iPod.

As one of my favorite Saturday Night Live skits used to respond, “Steve, you ignorant slut.” It’s a simple matter of price. Windows boxes are much cheaper than Apple boxes, sometimes by as much as a factor of X2 or even more. Also, the wide range of Windows computers, especially in a business environment, has spawned a larger base of programs written for the most common operating system of all time. There are a few programs only available on Windows that I covet. And … yes … I have on occasion purchased a Windows computer due to its lower cost.

Plus, I don’t always like the way Apple does things. I’m working on a short article “The Ten Things I Like Better About Windows.” There are a few. For example, an overreliance on drag and drop when I would rather use keyboard commands. There is no “Cut” command in the Apple Finder system for moving files. I also like many of the Windows computer’s keyboards better than Apple. I’m not blind to the things that are better on a Windows computer.

But today, I would like to talk about that price difference. In some ways the higher cost of an Apple computer is an advantage like driving a Mercedes or a Lexis. Isn’t it nice to have shiny toys? I love opening my svelte Air at the coffee shop as I look down my nose at those people who just can’t seem to afford the luxurious creation I possess. Those poor hoi palloi that can’t afford the luxury of a fine crafted motorcar or computer. Makes me sad.

But then ostentatiousness is against my religion. I’m a devout cheapskate. So why does a penny pincher like me own so many Apple computers and other devices?

The Spanish have a phrase, “Lo barato cuesta caro.” That is, “the cheap turns out expensive.” At IBM Printing Systems we had a concept called the “total cost of printing.” That was the total cost to put the dots on the paper. It included the cost of the printer and supplies and consumables and time to print and repair downtime and all the other business costs of ownership. For example, a typical ink jet printer is cheaper than a comparable laser printer to purchase. But the cost of the ink cartridges quickly raises the cost of printing much higher than if you invest more initially in a cheaper to operate laser printer.

When I look at the total cost of ownership of Windows computers and the Windows operating system, it ultimately costs more than Apple. I was reminded of that today when I upgraded my office computer to the latest version of OS X called Mountain Lion. It cost me $20 to upgrade … and that is a one-time cost. I can use that same upgrade on every one of my Apple computers from my Mac Mini to my Air to my Mac Pro. For $20, all Mac computers in my home and business are upgraded.

Have you priced a Windows upgrade? I upgraded two Vista computers to Windows 7 and it cost me over $100. I also bought two new versions of Windows 7 for a couple of my Macs, and that cost is nearly $300. (I dual boot a couple of my computers to run Quicken on the Bootcamp Windows disk. Remember, I said that some programs are only available on Windows. Although there is a Quicken for Mac, it stinks!)

Just check any year’s edition of PC Magazine where readers rate their computers for reliability and other factors. Mac is not only always on top, but by a large margin. My wife's laptop -- an HP -- is posting a message every time it boots that the harddisk diagnostics report an eminent failure. And a BIOS update on one of my large HP servers ended up damaging the PROM and I had to replace the entire motherboard. I remember when HP made high quality products. But not any more. In fact, my current view of the Windows PC market is that I recommend either Lenovo or ASUS. Both HP and Dell are not producing quality products these days.

So, yes, Apple costs more, quality can be like that. I know Apple has a higher profit margin than any other Windows computer, and some Windows computers are real bargains. But, ultimately, lo barato cuesta caro. The reliability and lower cost of maintenance and operations actually makes the Apple products bargains. I'm using a three year old iPhone with original battery and it still works like new. I had to replace the battery in my previous smartphone, a Palm Trio, after only a couple of years. Sure, it was easy to replace since it was removable ... unlike the Apple design. But who cares if you can't replace the battery in your iPhone if it will last for two or three years. Most buy new phones every two years to get the latest and greatest.

Don't get me wrong. I think Microsoft is a very competent company, and I use MS Office (although it is overpriced and there are cheaper alternatives … but then again that’s the point of this article). Plus, I can get MS Office for the Mac. I think they do make good hardware. Their keyboards and especially their mice are good products. I’m no gamer, but I hear that Xbox is a very good box. Combine the Xbox with the truly revolutionary Kinect and you can see what these folks in Redmond can do. And I think they may have some good ideas with their new Surface. Maybe (yet again) copying Apple and Apple’s complete hardware / software manufacturing and integration will prove to be a success for MS. Time will tell if Surface is another Xbox or just another Zune.

So, enough justification for my bigotry … Apple rules … just ask Chuck Lincoln. (Oh, and buy some of their stock. Success in the marketplace is reflected in stock prices. Check MS’s stock prices over the last twelve years. Your honor, I rest my case.)

Taxes

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The Bush tax cuts of 2001 and 2003 lowered the marginal income tax rates for all citizens of the US. Marginal means the amount you pay on each “segment” or “bracket” of your income. On the very lowest segment of income, an amount that depends on various factors such as if you are married and how many children you have, you pay zero taxes. On the next lower segment of income you have, you pay the lowest marginal rate. If your earnings increase through each bracket, (again depending on factors mentioned) you pay a larger percentage on the amount above the previous bracket.

And so on. The top bracket is $388,351 for an average family. So it is complicated, and your total tax is a sum of the various marginal rates on each segment or bracket of you total income. This is called a progressive tax and basically people with larger incomes pay a higher percentage of that income in taxes. The more you earn, the more you pay, at least on the amount over the last bracket.

This is income from wages. Income from investments has a different tax scale depending on things like how long you held the investment. (The Bush Tax Cuts cut these investment tax rates too.) Finally, of course, there are all kinds of deductions to reduce your taxed income. For example, you get to deduct from you gross income money spent on mortgage loan interest and local taxes. There are also tax credits that reduce your total taxes for things like job training and college tuition. All these deductions and exemptions make taxes very complicated. Let’s try to keep it simple.

Here are the marginal rates both BEFORE the 2001 “Bush Tax Cuts” and CURRENTLY for each income bracket. (Income below $17,401 is not taxed.) These incomes are "taxable incomes" which means after deducting for certain expenses such as mortgage interest and after exemptions for the number of children, etc.

     Income    Before  Current

    $17,401     15%      10%

    $70,701     28%      15%

   $142,701     31%      28%

   $217,451     36%      33%

   $388,351     39.6%    35%

One reason to be aware of these numbers is that the extensions to the Bush Cuts end on Dec. 31 of this year. Without congressional action, we will return to the "before" marginal rates. There is a lot of discussion about extending the cuts. The midst of a recession seems to most economists as a very bad time to raise taxes. There is also a great debate about the rich not paying their fair share. We all have a serious problem with making ends meet. We are currently spending more on the federal level – a lot more – than we are making from revenues such as income tax. That is called deficit spending and so the federal government is borrowing money to make up the difference. Many would like to see this borrowing end or at least be reduced and get the budget back in balance or closer to a balance.

There are really only two ways to do that: cut federal spending or increase federal revenue. Of course, both could be done, and that would have a greater effect than just trying to balance on one end of the expense / revenue equation. Since income taxes are the largest single revenue source to the federal government, it is at the center of these discussions.

Suppose we restored all tax rates to their 2000 level – pre the Bush Cuts. That would produce something like an additional $243 billion in annual revenue according to reliable sources such as the Congressional Budget Office. Estimates do vary because a change in tax rates will change spending habits and have an effect on the overall economy, but these are good figures for discussion. For comparison, the US deficit in 2011 was around $1,300 billion. So compare the increased revenue of letting all the Bush Tax Cuts expire of $243 billion, and you can see there is still a ways to go to balance the budget.

OK, times are tough and this is no time to raise taxes on those who barely can make a living, so why don’t we just tax the rich? OK, what is rich?

Let’s assume that is anyone who makes over $1,000,000 a year. Most would call those people “Millionaires.” Most people would consider that a very good income. If we restore the pre Bush Cuts rate to all families that make over $1,000,000 a year then the resulting revenue would only increase by $28 billion. A lot less than the $243 billion the total Bush Cuts are costing the US Treasury.

Well, let’s lower the bar a little. Suppose we use Obama’s number. He says he would raise taxes only on those that make over $250,000 a year. Restore the pre Bush Cuts at that level and the extra revenue will be $40 billion. Now every little bit helps and $40 billion is a lot of money, but it is not much compared to $243 billion.

You see, in this country, it is still the middle class that is the financial king of the hill. Don’t count the poor. They are not paying any income tax at all either before or after the Bush Tax Cuts. Of course, they are paying other taxes such as Social Security and Medicare taxes as well as property and sales tax, but the Bush Cuts are all about income tax. 

And, of course, the rich may have access to more tax savings and other deductions, although the best tax deduction may be having a large family with lots of kids. We could find a lot of additional revenue if we dug into the overly complicated tax code and started whittling away the special benefits hand crafted for certain groups … but then we’ve always used tax policy to encourage other policy aims such as home ownership … so that is a real complicated solution. If we can’t agree how to fix the most basic tax rates, how are we going to make changes to the volumes of special tax rules that get enacted every year. What about the petroleum depletion allowance? I didn’t know petroleum got an allowance.  :-)

I’m not arguing a particular side or course of action. I think we should consider both the fiscal and societal issues around taxes rates and brackets and tax cuts and tax policy. I’m just pointing out that taxes are very complicated and that the amount of revenue lost due to tax cuts is something we should consider carefully.

While it sounds good to say “tax the rich.” After all, everyone loves a tax that someone else has to pay and they don’t.  And, there are real issues of fairness and benefits from taxes. But I see a lot of slogans thrown around, and little hard mathematics in these discussions. I know most US citizens are more afraid of math than of spiders, and innumeracy is a bigger problem in the US than illiteracy. So, as a person who can actually add two and two and get the correct answer (four), I’m looking for more numbers in the debate.

For those clamoring to “just raise the taxes on the rich,” I’m here to tell you that that will not make a lot of difference to the federal budget. It might be the fair thing to do, and it might not hurt the people who are struggling during this financial crisis, but the numbers just aren’t there. I know that the highest bracket was 90% during Eisenhower’s time in office, but I don’t see how you can say it is fair to take 90% of what someone is earning just because you think they earn too much. If you want to make the “fairness” argument, you have to be fair to both the rich and the poor.

Just to be sure that I'm clear, let me say this. I do not oppose raising taxes on the "rich." Restoring the top bracket to the pre-Bush level is fine with me. They can afford it and every little bit of extra revenue will help balance the budget. And I doubt that that small raise will have any adverse affect on our economy. I am simply stating that that alone won't solve the problem. Some act like raising the taxes on the rich would solve all our fiscal problems. It won't. The amount of extra revenue from restoring the original tax rate to the top bracket is very small relative to the size of the annual deficit. It will take a lot more. It won't be easy. Stop thinking in slogans and examine the numbers.

We are approaching a time when several different tax cuts are due to expire … not just the Bush Cuts, but many others too including the last two year’s reduction in the employee portion of the social security payroll tax. I for one think the current fiscal situation is non sustainable and we are spending money our children and grand children will have to repay. I look at the fiscal crisis of the week somewhere in Europe, be it Spain or Greece or Ireland or wherever, and I see the future of the US. If you think the European debt crisis is bad, wait until the US national debt is declared to be junk bonds.

I think we must make some very important decisions in the next few months, and it is congress that will make most of those decisions. We the people have an obligation to educate ourselves … including understanding the numbers. That is the point I’m making.

If we continue on this road of deficit spending there will be a crisis. We have to balance our expenses and revenue. The government is no different than the family when it comes to budgets. You must live within your means and use borrowing intelligently.

If we don’t make some changes soon, it will be time to plant gardens in the back yard for food and get out the kerosene lanterns. Life, as we know it, will end. Just sayin’.

Lewistown

I was born and raised in Lewistown, Montana. This small community is located in central Montana between the cities of Billings and Great Falls. It is located at the exact geographical center of the state of Montana, and at the turn of the last century was a thriving commercial and manufacturing center of the Judith Basin. It is the county seat of Fergus County and has an impressive county court house located on Main Street.
 

The current population is over 5,000, but it peaked back in 1920 at around 14,000 and has been dropping ever since. As transportation improved, Lewistown became less important as a commercial hub. Since the 1950’s the loss of manufacturing such as the brick plant or commercial enterprises such as the Eddy’s bakery are typical of trends in the US of consolidation and improved transportation and less dependence on smaller cities.

I recently attended an “All Sixties” high school reunion that included the graduating classes from 1960 to 1969 of both the Fergus County High School and St. Leos Catholic High School. About four hundred former classmates and some spouses attended and it was great fun reconnecting with old childhood friends and memories.

My wife Linda, along with my brother and sister, trekked all over town reliving old adventures and inspecting the places where our youth had been spent. We walked by the big mansions on Boulevard Street and read the historical sign describing the “Silk Stocking” district. This small collection of half a dozen homes represented an earlier time for Lewistown.

The seven large residences that comprise Lewistown’s mansion, hence “silk stocking,” district were built during the city’s period of greatest prosperity, from 1904 to 1919. In this small neighborhood, central Montana’s major entrepreneurs, whose fortunes represent historic area resource development, built their homes. In 1904, J. T. Wunderlin, a partner in the Barnes-King gold mine at Kendall and an organizer of the Empire Bank and Trust of Lewistown, built his home here. Rancher George Wiedeman built his home in 1905, better able to follow his interests in the Montana Hardware Company and the Lewistown Brick and Tile Company. In the following years, homes were also built by Weymouth D. Symmes, owner of Power Mercantile and a Lewistown mayor; by John Waite, pioneer sheep rancher, banker, and state senator; by department store owner E. C. Swietzer; by rancher-businessman Fred Warren; and by banker T. T. Taylor.

Note the variety of styles—Roman Revival, Shingle style, Arts and Crafts, and Georgian. They attest to the exuberance of this special era in Lewistown’s history.

The dates that these homes were built coincide with the dates on most of the large brick and stone buildings that line Main Street. Typical of most western cities and towns, Main Street is lined with three and four story masonry buildings built in the dozen or so years following the turn of the 20^th century. In Lewistown, as in many small towns, local stone and brick was used.

Stone buildings constructed by skilled Croatian stonemasons are intrinsic to Lewistown’s unique personality. Here are many fine illustrations of Croatian building traditions imported by immigrants who settled in Lewistown. These Old World artisans accomplished all phases of the masonry work themselves: extracting the stone from Big Spring Quarry, then rough cutting, transporting, shaping, and finally laying each finished piece in place. Simple arched windows, single-piece downsloped windowsills, and walls of graduated coursed cut stone are crafted with the hands of a skilled master.

Lewistown received electric service in1893, but within a decade the demand for more power had increased with the population. Big Spring Creek was an ideal source for hydroelectric power. In 1903, the Citizen’s Electric Company built the main powerhouse, which produced 450 kilowatts of electricity for the city of Lewistown. The Upper Spring Creek Power Plant, in operation until 1928, extends over a deep eddy that was once the outlet for the water that drove the water wheel. Power generating equipment occupied the main floor, while the upper level served as living quarters for the operators.

Around 1900 Lewistown experienced the beginning of a population boom that extended to 1917. When the Catholic population reached a peak in 1915-16, the need for a new Catholic church became critical. The resident pastor, Reverend Victor J. Van den Broeck, and his building committee chose the well-known firm of Link and Haire to design the new church. Work on the new church began in July 1915. Bishop Mathias Lenihan of Great Falls dedicated the new structure on November 12, 1916. The design of St. Leo’s Catholic Church incorporates a blend of Italian Early Christian and Romanesque styling on a Roman cross plan. The campanile, or bell tower, rises to a height of 95 feet. Blind arcading, exterior buttressing, rose windows, and intricate brickwork with terra cotta highlights complement the integrity and nobility of this magnificent building.

In the dark days following the December 7, 1941, attack on Pearl Harbor, Congress appropriated massive defense appropriations. The US Army selected Great Falls, Montana, as the site of a major air base. Concurrent with its construction were satellite airfields at Cut Bank, Glasgow, and Lewistown.

On October 28, 1942, the first Boeing B-17 Flying Fortresses roared over Lewistown’s Main Street with their bomb bays open, buzzed the treetops, and landed at the Lewistown Airfield. Crews trained day and night combining navigation, bombing, and gunnery practice. The men familiarized themselves with all aspects of the B-17 and trained with the top secret Norden bombsight, a computerized aiming device that reportedly could “put bombs in a pickle barrel.”

After one to three months of instruction, aircrews then flew directly to join the air war in Europe. Nearly 1,000 GIs trained at the Lewistown Airfield. They became a welcome part of the community, married local girls, and won the hearts of the townspeople.

Many never came home. B-17s carried 4,000 pounds of bombs and served in every World War II combat zone, but casualties among bomber squadrons were horrific. A single mission over Germany in October 1942 claimed 60 B-17s and 600 lives.

The Lewistown Satellite Airfield was deactivated after eleven months of service. As the US Department of Defense systematically removes “temporary” World War II buildings, this Airfield is a rarity and its intact Norden bombsight storage shelter is the only known identifiable example remaining in the United States.

 Built in 1936, the Lewistown Civic Center was home to dances, basketball games, and dozens of other recreational activities. It was on the dance floor of the Civic Center that my father first met my mother. He was stationed in Lewistown for a short time training at the base flying B-17 bombers. After serving in the air war over Europe based in England and then flying over the Himalayas to China from India in C-46s, he returned to Lewistown to marry my mom. He went to work as an air traffic controller and we lived in Alabama, Florida, and Wyoming before he ultimately settled in Lewistown to raise his family.

  

He built our first home on Ridgelawn and worked as a partner with my grandfather until 1966. After the death of my grandparents that year, dad sold all of his property and went back to work for the F.A.A. He finally retired from air traffic control in the 90’s.

I've called Colorado home since 1974, but I'm always proud to claim my Montana heritage. After four generations in Lewistown, there is no one left there. We've all moved on to other states. My sister still lives in Montana, but the rest of the family has moved to Colorado, Oregon, and Washington state. But Lewistown will always be home.

Buggy Whips and Our Economy

According to the National Bureau of Economic Research, the U.S. has been in a recession since December 2007. According to “official” measurements, we came out of that recession. But most Americans would not recognize that technicality, and we feel we’ve been stuck in the economic doldrums for at least the last four or five years, if not longer.

Many are calling this the worst recession since the great depression. No doubt the news is bad and all the major economic indicators signal that growth is glacial. The question on most people’s minds is how long will this recession last. It is frustrating to read about all the bad news making headlines everyday and it would be nice to read a positive headline such as, “US economy adds 500,000 jobs.“

Jobs and unemployment is really the key issue to most Americans. Pay stagnation and loss of our usual optimistic view of the future are all symptoms of the malaise. Many are looking for a political solution to the problem. If only the political party that they support could get control and increase / decrease government spending or decrease / increase taxes or enact more / less business regulation, then the problems would be solved. If only the economic stimulus had been larger / smaller or the banks and wall street could be punished / unfettered, then the economy would spring back to life and the great “Middle Class” (that is all anyone talks about in an election year) would reemerge as the marvelous economic engine that it has been in the past.

There is no doubt that the middle class is the key. It is the size and economic power of the middle class in America that has been its economic strength for seventy or more years. We are concerned about the poor, and many complain about the contrast between the “haves” and the “have-nots,” or the difference between worker pay and CEO pay. We talk about raising taxes on the "rich," and blame the 1% or 2% as if it was all their fault. Political campaigns are full of finger pointing and dire predictions, but is this really a political or even an economic problem? To me, that is the question.

I wonder if it isn’t, at its core, a technological problem. Things change. We’ve already witnessed in our recent history sweeping economic and political change driven by technology. Whether it is the industrial revolution driven by steam, or the early twentieth century revolution driven by the automobile, or the current revolution driven by the computer. Technology is causing great change.

Consider the Amish of Pennsylvania. They deny change. In order to maintain a consistent and orderly lifestyle, they refuse change. By keeping it simple and consistent, they protect their society from the impact of change. Along comes the automobile … no need to change, keep the horse and buggy. A society based on agriculture transitions to manufacturing … not for the Amish … keep living off the land. The advantage is that grandpa is not obsolete. He is needed for his skills and knowledge because those skills are still vital.

It is a quaint and effective method to maintain a society, but it doesn’t work for most Americans. As we are reminded regularly, this is a global marketplace and we must compete. Looking for a symbol of obsolescence, it is the buggy whip maker. With the exception of the Amish, the buggy whip maker just has no place to go … to market.

It is sad but true. Only when the buggy whip maker wakes up to reality and changes his or her profession will the problem be solved. I grew up hearing economic explanations that included the poor buggy whip maker. You didn’t want to be one. The underlying idea is that the buggy whip maker’s time has come and gone. Change is needed. The concept is that change is good. It is only those that don’t recognize the need for change and insist on keeping the old ways that will suffer. The poor buggy whip maker!

Now apply that message to our situation today. Most have already noted the loss of manufacturing in the U.S. Often we blame that on outsourcing and exporting jobs to China. Certainly the globalization of industry has a part in the change. But, in fact, that is technology too. Modern transportation and communications, including worldwide computer networks and the Internet are part of that shift in manufacturing. Imagine that a car can be manufactured in Asia, and then transported across the wide Pacific Ocean to the U.S. and sold in competition to our domestic industry. Yet that is what is occurring today. The transportation and communication technologies have made this possible.

But I think the bigger shift is coming through automation. While automobiles used to be assembled by thousands of well paid workers, now we see robots welding and big machines assembling the cars. It is similar in the technology industries. Automation and robots have reduced the number of workers required to assemble everything from televisions to computers to the manufacturing of the wafers and chips themselves.

There are still workers required, but fewer workers, and possibly more important, more highly trained and educated workers. Someone is running the robots. The automation is doing the jobs of a dozen workers, and one highly skilled worker is programming and running the robots. The new jobs are in the robot manufacturing.

Dozens of laborers digging and shoveling on roadways have been replaced by giant machines that smooth, grade, and lay the pavement. Farms are harvested by great machines. Mines are dug by powerful machines. Even the grading of school papers  and counting election results are done by machines.

This country used to have well paid jobs in places like the steel mills and automobile factories. These jobs had good pay and good benefits. They didn’t require much beyond a high school education to perform. Well, that’s today’s buggy whip makers. These good and well paid jobs for relatively untrained workers are gone. Many moved overseas and many were replaced by automation.

Further, the income from these well paying jobs allowed average Americans to become world-class consumers. We bought cars and trucks, boats and RVs, houses and vacations. And that further enriched our economy as the marginal propensity to consume fired a great commercial class selling us those cars and trucks, boats and RVs, houses and vacations. Everything was humming like a speeding locomotive.

Speaking of locomotives, modern trains didn’t require as large of crews to operate. For many years the unions tried to ignore that fact and invented “feather bedding” and “no-work” job positions to protect the workers. But inefficiency never protects anyone. A failure to recognize just who is making buggy whips is bad for our economy.

Early aircraft had large flight crews with pilots and copilots and engineers and navigators. Stewardesses (that we now call flight attendants) had glamorous and well paid jobs, and air travel was comfortable. But then competition … and improvements in technology … came along. Now airlines are wobbly enterprises and passengers no longer even get a hot meal on a flight. Although we may wish to go back to the “good old days,” it really is a technological and economic shift that, like entropy, you just can’t reverse.

Consider the lowly garbage truck worker. At one time there was a driver and possibly several other workers who would fan out in the neighborhood, collecting trash cans, and dumping them by hand (and back) into the truck. There were a lot of injuries and problems with that method. In our municipality, the city gave out large carts on wheels. Now two workers would arrive. One would roll the cart to the truck and connect it to a mechanism that lifted the cart and dumped the contents without effort or injury. A few years later and the trucks and carts were replaced again, this time with large robot arms that pick up the cart at the curb. Now only one worker is required to collect the garbage.

Another trend supported by modern technology is mergers, acquisitions, and consolidation. Small businesses are replaced by giant corporations and coast-to-coast franchises. Although many view Wal-Mart as a company built on the backs of poorly paid workers, in reality the great success of Wal-Mart is more due to modern data processing. Giant computers in Arkansas process the previous day's sales and identify trends, order new goods, and manage a transportation system that carries these goods all across this land. The mom and pop store has been replaced by Wal-Mart, PetSmart, Home Depot, and the restaurants replaced by chains from McDonalds to Red Lobster. The service station attendant has been replaced by the self-service pump. The technology of advertising and leveraging economies of scale aided by the ever present calculating and computing machines has reshaped the commercial landscape.

Consider all the other business areas affected. Offset presses are replaced by digital copiers, libraries are replaced by the Internet, police directing traffic on the corners are replaced by signal lights. Even lawyers are being replaced by web sites. We’ve all seen advances in technology replace the old ways of doing business … if not entirely, then at least partially. And we’ve also seen many businesses fail because they didn’t change with the times.

My grandfather was a grocer in the 30’s and 40’s. He was part of the revolution called “self service.” Prior to that the grocer would reach onto high shelves behind the counter and get down the item requested by the customer. The new way of doing business was to let the customers pick out the item for themselves. Instead of the clerk taking the money and sending it up to the cashier in a small basket, that was replaced by the cash register, or in today’s markets, the laser scanner that the customer uses to check out their own goods … and pay with a little piece of plastic.

Most of us have lived long enough to witness giant leaps and bounds of technology and how it affects our daily lives. That new technology is affecting business too. Who would seek a job today without skills in Microsoft Word or Excel or knowledge of computers in general?

That is my thesis. The current “Great Recession” and particularly the slow job growth has much more to do with a sweeping technological change in the workplace rather than a failure of wall street and banks or the housing market or a political failure due to the poor policies of the Democrats / Republicans.

The solution: obviously it involves education and re-education, job training, better schools, a different attitude of our students today, and about a thousand other things that need to be tried, improved, or emphasized. My point is that as long as we try to boost the buggy whip manufacturing in our country, the greater the great recession will become. Make work, job stimulus, government spending is not going to create new jobs in areas that just don’t match our modern society and technology. Some things must be left in the past. We can’t all become like the Amish and keep our old ways.

You can’t go back. “And, when you can't go back, you have to worry only about the best way of moving forward.”
― Paulo Coelho, The Alchemist

There is a place for government. Transitions of this scope are not going to be easy, and people will need protection from the negative effects of change. I'm not suggesting more government spending nor less. I'm arguing for clear priorities. There are buggy whips in some old government programs too. How can we maximize the investments made by the market and government to truly respond to these changing conditions? Some say the Pentagon is always fighting the last war. Is congress always responding to the last crisis? Is what worked in the Great Depression going to solve the Great Recession? Or is new thinking required? What should be the priorities for government spending in this twenty-first century?

How must businesses respond to these changes? How must American workers respond? Schools? Institutions? Charities? Investors? Tax payers? The news media? The public?

It is a new world, reborn. The future belongs to those that grasp this simple fact of the future -- change! The horse and buggy is gone except for quaint county fairs, museums, and central Pennsylvania. Take a serious look at your skill set. Are you a buggy whip maker? Are you training your children to be buggy whip makers? Do you yearn for the return of the buggy whip industry?

And most important, is the U.S. becoming a country of buggy whip makers? What is the solution? I think the first step in solving the problem is clearly understanding the problem. I think the problem is really one of technological change. The world will change. Will we change with it or be left behind … with a buggy whip in our hand?