Later On

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Archive for the ‘Business’ Category

This reminds me of how Detroit approached innovation (with similar results): The decline and death of Eastman Kodak

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Written by LeisureGuy

21 January 2019 at 10:42 am

What does a $1.1 million lobbying contract buy in Trump’s Washington?

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I recently started reading an interesting newsletter, Popular Information, written by Judd Legum. The newsletters are brief, clear, and generally single-topic. Today’s newsletter:

Atiku Abubakar, the former vice president of Nigeria, had not visited the United States for twelve years. He is currently running for president and his inability to travel to the United States was being used by his political opponents in Nigeria as proof of his corruption and unsuitability for public office.

A former U.S. government official confirmed to Popular Information that Abubakar was formally barred from obtaining a visa pursuant to a presidential proclamation targeting corrupt foreign officials.

Then everything changed.

With the election less than a month away, Abubakar arrived in the United States last Thursday and promptly checked into the Trump hotel.

What happened? In November, Abubakar hired a key member of Trump’s political operation with a $1.1 million per year lobbying contract.

Abubakar’s visit was almost entirely ignored by the U.S. media. But it’s a story that reveals a lot about how things work in Trump’s Washington.

$40 million in suspect funds

The corruption allegations against Abubakar are detailed in a 2010 bipartisan report by the U.S. Senate, “KEEPING FOREIGN CORRUPTION OUT OF THE UNITED STATES: FOUR CASE HISTORIES.” Abubakar denies all allegations of corruption in the report and has never been criminally charged.

The report says that Abubakar, through his wife, Jennifer Douglas Abubakar, funneled $40 million in “suspect funds” to the United States, including millions in “bribe payments.” An alleged bribe which came from a major German corporation, Siemens, looms large.

Siemens has admitted in court to engaging in widespread bribery and bank records link the corrupt activity to Abubakar and his wife.

In December 2008, the U.S. Securities and Exchange Commission alleged in a formal complaint against Siemens AG, a German company, that, among other actions, in 2001 and 2002, Siemens wire transferred $2.8 million in bribe payments to a U.S. bank account belonging to Ms. Douglas as part of a scheme to bribe Nigerian officials.

In response to this and other legal actions, Siemens admitted to engaging in widespread bribery payments, pled guilty to criminal violations and settled civil violations of the U.S. Foreign Corrupt Practices Act, and agreed to pay over $1.6 billion in civil and criminal fines. Ms. Douglas has denied any wrongdoing, but the Subcommittee has obtained financial records showing the transfer of over $1.7 million from Siemens AG to Ms. Douglas’ account at Citibank.

A freezer full of cash

Abubakar was also implicated in the investigation of William Jefferson, the former Congressman who is serving a 13-year sentence for corruption. Abubakar denies any wrongdoing connected to the case and has not been charged.

But the FBI raided Abubakar’s Maryland home during their investigation. An affidavit released by the FBI describes a scheme between Jefferson and Abubakar.

The documents included an affidavit signed by an F.B.I. agent who said that the Nigerian vice president, Atiku Abubakar, now a candidate for president of that oil-rich West African nation, asked for at least half of the profits of a technology company controlled by Mr. Jefferson that was seeking to do business in Nigeria.

About the same time last year, the documents said, Mr. Jefferson told colleagues of his plans to bribe Nigerian officials, including Mr. Abubakar, in exchange for their help in winning business in Nigeria, and that Mr. Abubakar would be paid as much as $500,000 in cash.

According to the FBI, cell phone records and conversations between Jefferson and a confidential informant confirmed the scheme. The FBI did not provide conclusive evidence that any money was paid to Abubakar. But the FBI says the $90,000 in cash found in Jefferson’s freezer was intended for Abubakar. . .

Continue reading. There’s much more, and it’s interesting.

Representative William Jefferson was known by the nickname “Dollar Bill” Jefferson because he was so open in his corruption. Good riddance.

 

Written by LeisureGuy

21 January 2019 at 10:04 am

Google doesn’t want to reveal employee compensation to the government

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This is intriguing. I wonder what they’re trying to hide—and the fact that Google did not know that such information was required reeks of incompetence.

Kristin Wong writes in the NY Times:

Here’s what we know about salary transparency: Workers are more motivated when salaries are transparent. They work harder, they’re more productive, and they’re better at collaborating with colleagues. Across the board, pay transparency seems to be a good thing.

Transparency isn’t just about business bottom line, however. Researchers say transparency is important because keeping salaries secret reinforces discrimination.

“From a worker’s perspective, without accurate information about peer compensation, they may not know when they’re being underpaid,” said Emiliano Huet-Vaughn, an economist at U.C.L.A. who ran a study in 2013 that found workers are more productive when salary is transparent. Without knowing what other workers’ salaries look like, “it naturally becomes harder to make the case that one is suffering a form of pay discrimination,” Dr. Huet-Vaughn said.

For example, in 2017, the Department of Labor filed a lawsuit and investigation against Google. Their regional director Janette Wipper told the Guardian, “discrimination against women in Google is quite extreme, even in this industry.” The suit claimed that Google refused to disclose data on employee salary history, as required by equal opportunity laws.

Which brings us to the wage gap. Rather than a deliberate, methodical attempt to sabotage women’s earnings, often the wage gap takes on more subtle, but no less detrimental forms. For example, women are viewed as less likable when they negotiate. They’re also less likely than men to get what they want when they ask for a raise, according to Harvard Business Review.

“By keeping compensation secret, we might obscure structural inequalities and enable inequalities to persist,” said Morela Hernandez, a researcher and Associate Professor of Business Administration at the Darden School of Business at the University of Virginia. In the big picture, it’s easy to see how these biases might contribute to a wage gap, but it’s harder to prove wage discrimination on an individual level. Employers can hide “structural inequalities” (even from themselves) with a myriad explanations. When wages are transparent, it’s harder to hide.

It’s not just women. Pay secrecy reinforces racial biases as well, and the pay gap is wider for black and Hispanic men and women, according to a recent report from the Bureau of Labor Statistics. In a study with her colleague Derek R. Avery of the Wake Forest University School of Business, Dr. Hernandez found that when black job applicants negotiated their starting salaries, evaluators viewed them as more pushy than white job applicants who also negotiated. Evaluators also mistakenly thought black job applicants negotiated more than white applicants, even when they negotiated the same amount. Worse still, the black job applicants received lower starting salaries as a result of this.

Dr. Hernandez said that because evaluators expected black job seekers to ask for less, they perceived the black applicants as pushy when they negotiated and penalized them accordingly. In the real world, employers probably aren’t even aware of this dynamic; that’s how unconscious biases work. When numbers are out in the open, however, it’s easier to see potential blind spots.

“In my opinion, transparency in pay can be one way to help us calibrate our own views of fairness and appropriate compensation,” Dr. Hernandez said.

Katharine Bolin, a marketing professional in Minneapolis, said she once discovered a male colleague earned more than her by accident.

“In my mid-twenties, I was a D.J. at a downtown bar in Minneapolis,” she said. “I was asked to let a new male D.J. shadow me in the booth for part of his interview. Everything was going great until he said, ‘This is a pretty good gig for $15 an hour.’ I was livid.”

Earlier that week, Ms. Bolin had asked for a raise for that same amount, but she was offered less. She confronted her manager about the situation.

“I said that I was very upset as a woman and a longtime employee to hear that a potential new male hire was getting offered more than me,” she said. Her manager relented, offering her the same amount. “It’s one of my proudest moments standing up for myself.” Ms. Bolin closed her own gap, but it wouldn’t have happened without transparency.

If you find yourself in a similar situation, . . .

Continue reading.

UPDATE: See also “Women won’t ask a man for more pay – but they will ask a woman.” That article begins:

The figure of 78 cents to a man’s dollar is familiar to many of us. It’s how the United States Bureau of Labor Statistics has quantified the gender gap among full-time workers: for each dollar that men earn, women earn 78 cents. This data from the US is not an exception but the norm: in Australia, the gap is 15 cents; in the European Union, the gap is about 16 cents; and so all over the world. When trying to make sense of this wage gap, a long list of characteristics – such as gender differences in academic training, and in choice of industry or occupation – are able to explain a substantial fraction. But not all of it. There is no doubt that discrimination plays a role, but there are other factors that deserve attention. Here, we’ll focus on how gender affects salary negotiations, and how the prevalent structure in the workplace (in which the empowered party is usually a man) can negatively affect women’s negotiation outcomes and salaries.

With high-paying, high-skill jobs in particular, which demand highly qualified staff, a substantial amount of the salary is the result of one-on-one negotiations with the firm’s representative. Interestingly, the data show that the gender pay gap is higher in these high-skilled positions. It is also worth mentioning that negotiations are not a one-off experience, but rather present throughout a professional’s life, in the form of pay increases, bonuses and promotions. So, if highly skilled men and women negotiate differently and reach different outcomes, this would explain part of the gender gap that we still cannot account for. This explanation is supported by the economist Linda Babcock and her co-author Sara Laschever in their book Women Don’t Ask: Negotiation and the Gender Divide (2009). The authors show that among graduates of Carnegie Mellon University in Pennsylvania, 57 per cent of men negotiated their starting salary, while only 8 per cent of women did so. Such a disparity would certainly contribute to a gender pay gap among this otherwise identical population. But there is more to the story.

Even when men and women both negotiate, their final outcomes can differ. Men tend to be more competitive and less prosocial, which allows them to get higher salaries than women through the negotiation process. But, in our recent research, we found that gender differences in negotiation are not so general but rather depend crucially on the gender composition of the bargaining table. Put simply, women negotiating their salaries ask for lower compensation when the firm’s representative is a man than when that representative is a woman. And, given that, most of the time, a firm’s bosses are men, this dynamic plays a role in salary outcomes.

We reached this conclusion by using data from a TV show. In that TV show, a contestant was endowed with a certain amount of money. He or she was asked a simple question. Then the contestant had to find someone in the street to answer the question on his/her behalf. This is where the negotiation took place: the contestant had to buy the answer from a responder on the street, negotiating the price by a process of bargaining, in which the contestants made offers and the responders made demands. As in most real-life situations, the TV show offered a setting in which there is a strong bargaining party (the contestant) and a weak one (the responder). The contestant is able to drop the negotiation at any time to look for another responder, and the contestant also knows the amount of money available to pay. Thus, the setting replicated a typical job-negotiation situation, in which the firm’s representative knows the maximum that the firm is willing to pay the worker. And if negotiations get too hard, the firm’s representative can use the threat of breaking off altogether to hire another worker.

We used this setting to look at the final outcomes of the negotiation, based on the gender composition of the ‘negotiation table’ (male contestants with female responders, female contestants with male responders, and so on). We found that the likelihood of reaching a deal, as well as the number of offers and counteroffers (which proxies the degree of conflict during the negotiation), was the same, independent of the gender combination. However, male responders negotiating against female contestants captured more of the pie than any others, getting around 2 per cent more than responders in any other matching. Meanwhile, female responders to male contestants got around 16 per cent less than responders in any other matching – the penalty faced by women for negotiating against men. More importantly, when coming to explain this penalty, we found clear evidence that there wasn’t discrimination from men towards women through lower offers, but rather women who self-discriminated by asking for less. But, crucially, this was the case only among those women who negotiated with a man. When comparing women negotiating against other women, they behaved in exactly the same way as men did.

One critical aspect of our findings is that gender differences arise only in negotiations between a man and a woman where the woman is in the weak position, but not when the woman is the empowered party. . .

Continue reading.

Written by LeisureGuy

21 January 2019 at 9:32 am

How oat milk can help farmland

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Tom Philpott writes in Mother Jones:

Move over, almond and soy milk: An oat milk boom, as I argued in a piece last year, could help the Midwest solve some of its most dire agricultural issues. And now there’s new research out this month to help support the case for covering the region with oats.

In states like Iowa, fertilizer runoff from corn and soybean farms pollutes drinking water and feeds algae blooms, fouling water from local lakes and rivers down to the Gulf of Mexico. These farms also lose soil to erosion at an alarming rate, compromising the region’s future as a crucial hub of the US food system.

Back in 2013, I reported on “one weird trick” that could go a long way toward solving these problems: biodiversity. When farmers add more crops to their dominant corn-soybean rotation, it disrupts weed and pest patterns and means they can use fewer pesticides. It also frees up space for planting legumes, which capture nitrogen from the air and reduce the need for synthetic fertilizer. One great contender for this third crop is oats.

Earlier this month, researchers from Iowa State University and the University of Minnesota came out with a paper that adds more weight to the case for diversification. The paper reports on results from trial plots established in 2002 by Iowa State at a farm outside Ames. In one swath, the ground was planted in a two-year rotation of corn and soybeans, the standard recipe in the Midwest. In another, a three-year rotation held sway: corn, soybeans, and oats inter-planted with red clover, a legume. In the final one, the rotation was extended to four years, adding a round of alfalfa, another legume, and a forage crop for cattle.

The paper found that the longer rotations—the ones with the added crops—bring the following benefits:

Water pollution drops dramatically

Nitrogen fertilizer is a key crop nutrient, and when it’s washed away into the Midwest’s rivers and streams, it also supercharges algae growth, especially in salt water. That’s bad news for the Gulf of Mexico, where these waterways ultimately drain. Since Midwestern agriculture intensified in the 1970s, annual dead zones have been appearing in the Gulf, sucking oxygen out of the water and turning huge swaths of it into fetid dead zones. The annual Gulf dead zone fluctuates in size based on weather patterns. Last year’s turned out to be below average in area covered—but it was still the size of Delaware. In 2017, the dead zone set an all-time record, clocking in at a size four times larger than the federal target for a healthy Gulf ecosystem.

In the Iowa State farm study, the plots managed with three- and four-year rotations lost 39 percent less nitrogen to runoff than the corn-soybean control plots, partially because the presence of more nitrogen-fixing legumes in the mix reduces the need to apply synthetic nitrogen fertilizer.

And on these plots, 30 percent less phosphorus leaked away as runoff.  Phosphorus is another key crop nutrient applied to farm fields, and it’s the main driver for blue-green algae blooms in freshwater bodies like lakes. These blooms produce toxins called microcystins, which, when ingested, cause nausea, vomiting, diarrhea, severe headaches, fever, and liver damage. Lakes downstream from farms throughout the Midwest have been increasingly saddled with these “harmful algae blooms” in recent years. Toledo struggles annually to keep microcystins out of its city water, which is drawn from algae-plagued Lake Erie. Freshwater blooms also generate massive amounts of methane, a greenhouse gas with 30 times the heat-trapping power of carbon dioxide.

Soil stays in place

According to Iowa State agronomist Richard Cruse, Iowa farms lose topsoil at an average rate of 5.7 tons per acre annually, versus the natural rate of regeneration of 0.5 acres per year. As soil washes away, farmland doesn’t sponge up or hold water as well, making it more vulnerable to droughts. Erosion is already reducing crop yields in Iowa, Cruse’s research has found—an effect that will accelerate if the trend continues. On the Iowa State plots planted with oats, clover, and alfalfa, erosion rates decreased by 60 percent.

Crop yields improve—and so could the bottom line

The diverse plots in the study delivered higher yields of corn and soybeans (in the years when those crops are grown), and also required drastically lower amounts of off-farm inputs like fertilizers and herbicides. (A 2012 paper on the same group of test plots found that the diverse fields require 88 percent less herbicides because the addition of another crop disrupts weed patterns.) As a result, the authors found that the more diverse plots were slightly more profitable than the control ones.

Natalie Hunt, a University of Minnesota researcher and a co-author on the study, told me that the economic analysis assumed that the oats and alfalfa generated by the biodiverse plots would find a profitable use by being fed to cattle and hogs “on-farm or on neighboring farms.” That setup works best for diversified operations that include crops as well as livestock. A farm that planted alfalfa during its fourth year of rotation, for example, could “harvest” it by simply turning cattle loose on it for munching; and the resulting beef provides an income stream.

But such farms are increasingly rare in states like Iowa, which are made up mainly of huge corn and soybean farms, and separately, an ever-growing number of massive confined hog farms, highly geared toward consuming that corn and soy.

Another obstacle, Hunt says, are the “heavily taxpayer-subsidized crop insurance programs that keep farmers locked into a corn- and soybean-producing system year after year, even when market prices are poor,” as they have been for the past several years.

She adds, though, that if consumers demanded food from the Midwest that didn’t pollute water and damage soil, the “market would respond pretty quickly”—that is, if farmers could get a premium price for crops, meat, and milk “grown with biodiversity” or some such label, farmers would have incentive to add them to their rotations. And that was precisely the thesis of my oat milk piece. I calculated that turning grain into a beverage doesn’t require nearly enough product to create a demand surge sufficient to bring oats to millions of acres of Midwestern farmland; however, it could be a lever to raise consumer awareness of the ecological damage endemic in the Midwest. . .

Continue reading.

Written by LeisureGuy

20 January 2019 at 2:06 pm

What Life Is Like When Corn Is off the Table

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Sarah Zhang writes in the Atlantic:

When Christine Robinson was first diagnosed with a corn allergy 17 years ago, she remembers thinking, “No more popcorn, no more tacos. I can do this.”

Then she tried to put salt on her tomatoes. (Table salt has dextrose, a sugar derived from corn.) She tried drinking bottled iced tea. (It contains citric acid, which often comes from mold grown in corn-derived sugar.) She tried bottled water. (Added minerals in some brands can be processed with a corn derivative.) She ultimately gave up on supermarket meat (sprayed with lactic acid from fermented corn sugars), bagged salads (citric acid, again), fish (dipped in cornstarch or syrup before freezing), grains (cross-contaminated in processing facilities), fruits like apples and citrus (waxed with corn-derived chemicals), tomatoes (ripened with ethylene gas from corn), milk (added vitamins processed with corn derivatives). And that’s not even getting to all the processed foods made with high-fructose corn syrup, modified food starch, xanthan gum, artificial flavorings, corn alcohol, maltodextrin—all of which are or contain derivatives of corn.

“It’s such a useful plant,” Robinson says of corn. “It can be made into so very, very many things that are, from my perspective, trying to kill me.”

Read: Drowning in corn ]

Corn allergies are relatively rare, and ones as severe as Robinson’s are rarer still. (Many people unable to eat whole corn can still tolerate more processed corn derivatives.) But to live with a corn allergy is to understand very intimately how corn is everywhere. Most of the 14.6 billion bushels of corn grown in the U.S. are not destined to be eaten on the cob. Rather, as @SwiftOnSecurity observed in a viral corn thread, the plant is a raw source of useful starches that are ubiquitous in the supply chain.

It’s not just food. Robinson told me she is currently hoarding her favorite olive-oil soap, which she had been using for 17 years but recently went out of stock everywhere. (A number of soap ingredients, such as glycerin, can come from corn.) She’s been reading up on DIY soapmaking. A year ago, the brand of dish soap she liked was reformulated to include citric acid, so she had to give that up, too. And navigating the hospital with a corn allergy can be particularly harrowing. Corn can lurk in the hand sanitizer (made from corn ethanol), pills (made with corn starch as filler), and IV solutions (made with dextrose). A couple years ago, she went to see a specialist for a migraine, and her doctor insisted she get an IV that contained dextrose.

“And while in the midst of a migraine I had to argue with a doctor about the fact [that] I really could not have a dextrose IV,” she said. In the moment, she realized how absurd it was for her to be telling a world-class specialist to change her treatment.

Read: The allergens in natural beauty products ]

Because corn allergies are rare, many doctors are not familiar with the potential scope. Robinson said she was the first case her original doctor had ever seen in 38 years of practice, and he didn’t know to advise her against corn derivatives. Even official sources of medical information can be confusing, telling corn-allergy patients that they do not need to avoid cornstarch and high-fructose corn syrup. Misinformation abounds in the other direction, too, because corn allergies can be easy to misdiagnose and easy to self-diagnose incorrectly. All this means that corn-allergy sufferers encounter a good deal of skepticism. But Robert Wood, president of the American Academy of Allergy, Asthma & Immunology and a pediatric allergist at Johns Hopkins, told me that derivatives such as corn syrup can indeed cause problems for certain people.

People with corn allergies have naturally been finding one another on the Internet. A Facebook group called Corn Allergy & Intolerance (Maize, Zea Mays) now has nearly 8,500 members. Becca, a tech worker in Washington State, writes a fairly prominent blog called Corn Allergy Girl. (She asked I not use her last name because she doesn’t want her health status to affect her professional life.) The blog collates years of Becca’s research into corn allergies, as well as resources inherited from other, now-defunct corn-allergy blogs.

Members of the Facebook group have also forged ties with individual farms. Once a year, Robinson said, a farmer in California sends members of the group a big box of avocados that have not been exposed to corn-derived ethylene gas or waxes. “It’s a great month when you’re trying to get through all of them,” she said. For the rest of the time, she gets most of her food from a CSA with a local farm in Pennsylvania.

Becca, who writes Corn Allergy Girl, also gets a lot of her produce from local farms. The rest she grows. She goes to a specific butcher and meat processor who will custom-process whole animals for her without using lactic acid or citric acid. . . .

Continue reading.

Written by LeisureGuy

19 January 2019 at 4:41 pm

Failure IS an option—and looks likely: Britain is operating as if a Brexit delay is there for the taking. It’s not.

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Michael Birnbaum reports in the Washington Post:

Amid the chaos following the British Parliament’s historic rejection of a plan for the country’s orderly withdrawal from the European Union, British lawmakers increasingly feel they will need to ask to extend their impending departure deadline — and that E.U. leaders will give them what they want.

The idea is splashed across British tabloid headlines. The London commentariat takes it as a given. Hard-line advocates of the divorce from the European Union say it would be a catastrophic mistake — but even they seem to expect it will happen.

The only problem? The remaining 27 E.U. nations are not sure they are willing to give Britain a break, according to diplomats involved in the discussions — and any reprieve requires their unanimous approval.

The misalignment in views means that the risk of an accidental and chaotic no-deal Brexit on March 29 is increasing, according to diplomats and analysts in Brussels. (Most analysts in London, who have faith some solution can be worked out, don’t think there’s a problem.)

The British assumption that Brexit could easily be postponed would extend the stream of false assumptions, misperceptions and miscalculations that have plagued London policymakers since the June 2016 vote to leave the European Union. But a no-deal departure that British policymakers do not desire would be the ultimate exclamation point to end the process. If Britain left without a transition plan in place, trade would screech to a halt. Food and medicine could become scarce commodities.

“I don’t see how the current deal can be tweaked,” Dutch Prime Minister Mark Rutte told reporters Friday, warning Dutch businesses to begin “urgent” preparations for a chaotic British departure.

On Wednesday, Rutte said Brussels would look “charitably” on a Brexit extension request from London, echoing remarks from French President Emmanuel Macron and German Chancellor Angela Merkel.

But there were strings attached — many of which seem to have sunk in the English Channel on their way over to Britain.

“We have to have an idea how they want to solve things, because it is no use to continue to run in circles for a few more months,” Rutte said.

That viewpoint is widely shared in Brussels: a willingness to entertain a British request for more time, but only on the condition that Downing Street gives credible assurances that it will not use the time to press for concessions that have already failed on the continent.

Many policymakers working on Brexit in Brussels say Britain has given them little reason to expect a real plan.

“Miscalculations are a continuous fact,” one senior European diplomat said, speaking on condition of anonymity to offer a frank assessment of the British position. “There will be no extension with unknown purpose.”

E.U. policymakers say they could foresee various scenarios that would warrant granting an extension. One might be if May reconsiders her refusal to join the E.U. customs union, for example, which would take away Britain’s ability to do many trade deals but would simplify efforts to preserve peace in Northern Ireland by keeping the border with Ireland open. That has been a key sticking point in the negotiations.

Or British leaders could commit to holding another Brexit referendum, opening the door to a total reversal. Or they could try to convince Europe that they were close to finding a compromise inside their own ranks and that they just needed a little extra time, policymakers and analysts said.

Still, to read the British press, Brussels is sitting and waiting to be asked.

E.U. ready to delay withdrawal until next year,” read one headline this week in the Times of London.

“Either those sources are uninformed or making themselves interesting or just speculating,” said the senior European diplomat.

“Take ‘no deal’ off the table now, please, prime minister,” Labour Party leader Jeremy Corbyn said in a speech Thursday. In recent weeks, he has demanded an extension of the Brexit deadline to give time to hold a new election, ignoring that Britain can’t change the deadline unilaterally.

May, too, has an interest in keeping the March deadline as a way to force her own squabbling Tory camp to cooperate with her — and perhaps agree to the withdrawal deal they recently torpedoed. She has said, accurately, that she does not have the power on her own to delay Brexit.

The E.U.’s highest court ruled last month that Britain could unilaterally revoke Article 50, which initiated the withdrawal process, and reverse its decision to leave. But that decision does not apply to merely extending Article 50 and postponing the departure, which would need the okay of 27 other leaders. . .

Continue reading.

Written by LeisureGuy

19 January 2019 at 11:44 am

A Shutdown for the 99 Percent, Concierge Government for the 1 Percent

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Eoin Higgins reports in the Intercept:

THE GOVERNMENT SHUTDOWN is into its fourth week with no end in sight. President Donald Trump started the crisis on December 22 by refusing to sign a funding bill unless it contained money for his southern border wall.

A wide range of interests across the economic spectrum are jeopardized. But not all interests are suffering equally: Wealthier and more powerful interest groups have been granted preference by the government.

Over Christmas, the shutdown threatened to stop the Federal Emergency Management Agency, or FEMA, from issuing flood insurance certificates. According to federal law, FEMA must provide flood insurance certifications before banks may issue federally backed mortgages to prospective homeowners living in federally designated floodplains — even in areas that FEMA has determined should not be built on due to high risk of flooding. The National Flood Insurance Program of 1968 ensures that FEMA has the ability to issue and pay out claims for the insurance.

Without the certificates, roughly 40,000 closings a month would be at risk, resulting in millions in lost revenue for banks and mortgage companies. So it came as no surprise when interest groups successfully lobbieda bipartisan congressional cohort to temporarily reauthorize the NFIP through May on the eve of the shutdown. The stopgap bill was signed into law by Trump on December 21, hours before the federal government shuttered.

“There are 140 million Americans who live in coastal counties, millions of whom depend on this program to protect them from flood risk,” said former Rep. Tom MacArthur, a Republican from New Jersey who lost his seat in the midterm elections, during the brief House debate on the bill. “Without this program, they cannot buy or sell homes.”

But that wasn’t the end of it. Despite the reauthorization, FEMA believed that the shutdown meant that the agency could not, by law, provide these certifications. The reason? A law called the Anti-Deficiency Act prohibits government agencies from entering into contracts or spending money if the projects aren’t funded.

Craig Fugate, the former administrator for the agency from May 19, 2009 to January 20, 2017, disagrees with FEMA’s take. The NFIP is solvent, Fugate explained, subject to a different funding source and funding code, and generates its own revenue. That allows the NFIP to continue operations in the face of a shutdown. There’s no lapsed funding for the program and thus, no need to stop it from working, even in a shuttered FEMA. “As long as they’re reauthorized, they’re up and running,” said Fugate.

Nevertheless, FEMA announced on December 26 that the agency was not going to issue the certifications, citing the shutdown and anti-deficiency. The reaction from interest groups was as swift as it was predictable.

The National Association of Realtors, the largest lobbying group for the industry, made its displeasure over the possibility of lost revenue and closed home sales known. “Today’s surprise FEMA ruling jeopardizes tens of thousands of home sales across America,” said the association’s Senior Vice President of Government Affairs Shannon McGahn, “as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies.”

Once the rage of the business sector — and Congress — was made clear to the White House, the administration ordered FEMA to resume issuing the certificates. “Upon realizing the trouble they were in — especially with Republicans — they back tracked pretty quickly,” Stephen Ellis, executive vice president for government watchdog group Taxpayers for Common Sense, told The Intercept in an email.

In a December 28 statement, the agency announced that it would consider the 48-hour lapse in the program to never have happened, and that the program would be regarded as having continued without interruption since December 21.

“FEMA worked with the administration and industry partners during this funding lapse to assess the impact and determine what options exist to enable the NFIP [National Flood Insurance Program] to allow the sale and renewal of flood insurance policies to continue,” Alex Bruner, a FEMA spokesperson, told The Intercept in an email.

Looking at what happened to the NFIP, said Fugate, gives a lot of insight into the priorities of the government when it comes to the shutdown. Federal workers in the Transportation Security Administration, the Secret Service, and other agencies are expected to work without pay. Public lands are being destroyed by garbage and misuse in the absence of rangers. Those effects haven’t spurred the president or Congress to act.

“As long as the only people feeling pain are federal employees, nobody really cares about shutdowns,” said Fugate.

But when the unintended consequences of the political struggle affect the rich, the rich apply pressure. And the government doesn’t even allow half a week to go by before fixing the problem. . .

Continue reading.

Written by LeisureGuy

19 January 2019 at 8:51 am

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