Please Help New English Review
For our donors from the UK:
New English Review
New English Review Facebook Group
Follow New English Review On Twitter
Recent Publications by New English Review Authors
The Oil Cringe of the West: The Collected Essays and Reviews of J.B. Kelly Vol. 2
edited by S.B. Kelly
The Impact of Islam
by Emmet Scott
Sir Walter Scott's Crusades and Other Fantasies
by Ibn Warraq
Fighting the Retreat from Arabia and the Gulf: The Collected Essays and Reviews of J.B. Kelly. Vol. 1
edited by S.B. Kelly
The Literary Culture of France
by J. E. G. Dixon
Hamlet Made Simple and Other Essays
by David P. Gontar
Farewell Fear
by Theodore Dalrymple
The Eagle and The Bible: Lessons in Liberty from Holy Writ
by Kenneth Hanson
The West Speaks
interviews by Jerry Gordon
Mohammed and Charlemagne Revisited: The History of a Controversy
Emmet Scott
Why the West is Best: A Muslim Apostate's Defense of Liberal Democracy
Ibn Warraq
Anything Goes
by Theodore Dalrymple
Karimi Hotel
De Nidra Poller
The Left is Seldom Right
by Norman Berdichevsky
Allah is Dead: Why Islam is Not a Religion
by Rebecca Bynum
Virgins? What Virgins?: And Other Essays
by Ibn Warraq
An Introduction to Danish Culture
by Norman Berdichevsky
The New Vichy Syndrome:
by Theodore Dalrymple
Jihad and Genocide
by Richard L. Rubenstein
Spanish Vignettes: An Offbeat Look Into Spain's Culture, Society & History
by Norman Berdichevsky

These are all the Blogs posted on Friday, 7, 2011.
Friday, 7 October 2011
Warning over France's Islamic suburbs which are becoming 'separate communities in a divided nation'

From The Daily Mail

France's run-down city suburbs are becoming ‘separate Islamic societies’ cut off from the state, a report has warned. Arab communities are increasingly rejecting French values and identity to immerse themselves in Muslim culture and lifestyle, it was found. Muslim pupils often boycott school dinners if the food is not halal and most Arabs oppose marriages to white French citizens, the study by respected political scientist Gilles Kepel revealed.

As a result, France – whose five million Muslims make up Europe’s largest Islamic population – was turning into a ‘divided nation’, the study called Suburbs of the Republic found.

Dr Kepel wrote: ‘In some areas, a third of the population of the town does not hold French nationality, and many residents are drawn to an Islamic identity rather than simply rejecting or failing to find a secular one’.

The study was commissioned by the Institut Montaigne think-tank. It will make recommendations to the government in January.

Posted on 10/07/2011 6:00 AM by Esmerelda Weatherwax
Friday, 7 October 2011
That Yemeni Woman, Who Can't Recognize The True Source Of Oppression

One of the women chosen by the Norwegian committee that awards, so often wrongly, the Nobel Peace Prize, is one Tawakkul Karman. She is being billed as a "brave fighter for women's rights" yada yada. No one appears to realize that she is a "brave fighter" against a particular regime, but not against the very Islam that is the source of the miserable condition of women in Yemen, and in any society where Islam is taken too much to heart.

She belongs to the Islah Party. This is a political movement that contains members of the Muslim Brotherhood, and a Salafist group (you know, the extremist extremists), and then a tribe, or a sub-tribe, headed by someone, and that someone's family members, who don't like that other someone, Saleh, and his family members, ruling Yemen and divvying up the loot. They, you see, want the loot for themselves, their family members, their tribe.

It was folly to award the prize to her, given what is known about her.

She is not what she is depicted as being. Or at least, the company she has been keeping suggests that, for it is hair-raising.

Everyone, sooner or later, will find out.

Posted on 10/07/2011 8:10 AM by Hugh Fitzgerald
Friday, 7 October 2011
Olli Heinonen, Of The I.A. E.A. On How The Iranians "Tricked And Misled Us" And The Menace Of Pakistani Nuclear Trafficking

From Spiegel On-Line:

The Iranians 'Tricked and Misled Us'

In a SPIEGEL interview, Olli Heinonen, the former deputy director of the International Atomic Energy Agency in Vienna, offers his first assessment of his 27 years at the global nuclear watchdog. He addresses Iran's nuclear program, his concerns about the security of Pakistan's nuclear arsenal and mistakes made in Fukushima.  

SPIEGEL: Mr. Heinonen, if you consider your time as the United Nations' atomic "watchdog," do you look back in anger? Or did you succeed in making the world safer from nuclear bombs?

Heinonen: There are quite a few things I'm proud of. While I was at the International Atomic Energy Agency (IAEA), we played a significant role in putting Abdul Qadir Khan -- the most dangerous nuclear smuggler of all times -- out of action. But when I think about the nuclear activities of certain states, for instance Iran's nuclear program, I have to say that we allowed ourselves to be placated too often. We should have done more than carrying out our inspections. Yes, with hindsight you could perhaps even say we failed.

SPIEGEL: You sound worried. Is Tehran really on a direct path to becoming a nuclear state?

Heinonen: It's undeniable that Iran's nuclear program is far more advanced than it was in 2003, when the discovery of the Natanz facility brought it to the IAEA's attention. At the time, uranium enrichment tests were being carried out in secret on a small scale. But at the end of 2003, the Iranians admitted they were also planning to set up a heavy-water reactor in Arak to generate plutonium.

SPIEGEL: In other words, the other ingredient you need to create either nuclear power or an atom bomb.

Heinonen: Iran always told us it was only interested in the civilian uses of atomic energy. I've always had my doubts about that, more so now than ever.

SPIEGEL: Why don't you say what your former boss, Mohamed ElBaradei, said: That you haven't found the so-called "smoking gun" -- i.e. clear proof that Iran is developing nuclear weapons?

Heinonen: Before opponents of the Iranian regime exposed the existence of Natanz, those in power in Tehran had kept parts of their nuclear program secret for two decades. Today the facts are as follows: The conversion plant in Isfahan has produced 371 tons of uranium hexafluoride. Some 8,000 centrifuges in Natanz are being used to enrich this raw material. In February 2010, Iran began increasing enrichment to 20 percent. That's a significant step closer to making an atomic bomb because it takes only a few months to turn that into weapons-grade material. And at the beginning of this year, Fereydoun Abbasi was appointed the head of the atomic energy organization in Tehran ...

SPIEGEL: ... a scientist who has been on a UN list of suspected bombmakers since 2007, whom a UN Security Council resolution forbids from traveling abroad, and who just barely survived an assassination attempt in Tehran 10 months ago suspected to have been carried out by the Israeli secret service.

Heinonen: In early June, Abbasi announced that Iran was moving the 20-percent enrichment of uranium from Natanz to Fordow, where they are tripling production. Incidentally, the construction of the Fordow plant near Qom was so shrouded in secrecy that the Iranian authorities first admitted it existed less than two years ago.

SPIEGEL: And none of this makes sense for a civilian nuclear program?

Heinonen: You don't need 20-percent enriched uranium to generate electricity for light bulbs. And, in any case, the produced volumes far exceed what Iran might possibly need for its research reactor. What's more, Tehran has announced that it intends to build 10 more enrichment plants, and Iranian experts have conducted experiments with neutron sources and highly explosive detonators that would only make sense for military applications. They're also making progress at the heavy-water reactor in Arak, so much so, that by 2014 they'll have enough plutonium to build an atom bomb.

SPIEGEL: So you think Iran will declare itself a nuclear power in 2014? Will the leaders of the theocracy already have a working atom bomb by then, or will they only threaten to build one?

Heinonen: I don't know. I am, however, convinced that Tehran will reach the "break-out capabilty" -- in other words, the capacity to produce weapons-grade uranium -- as early as by the end next year. In that sense Iran aims to be a virtual nuclear power with the capability of producing the ultimate weapons at any time.

SPIEGEL: Was the Iranian program not damaged in any way by the Stuxnet computer worm that it appears Israeli scientists engineered and used to infiltrate the Natanz facility?

Heinonen: Sure it was. It had a delaying effect and was so effective that, by my estimates, it knocked out almost 2,000 centrifuges in Natanz. But the Iranian scientists are smart, and they got the problem under control.

SPIEGEL: Do you favor bombing Iran, as Israeli Prime Minister Benjamin Netanyahu still appears to be considering?

Heinonen: Not in the least. I agree with former Mossad Director Meir Dagan, who considers such a first strike to be "insane." We don't even know all the sites that would have to be bombed. [why would it be "insane"? Dagan, and those who repeat this word, need to explain why it would be any more "insane" than the bombing of the Syrian installation, or that in Iraq. Repeating the word "insane" is not a convincing or even a cogent argument.]

SPIEGEL: What do you mean?

Heinonen: It's pretty certain that Iran has secret facilities where they have hidden materials and could probably start enriching uranium quickly again if Natanz were ever destroyed. Iran's political leaders certainly wouldn't let the IAEA back into the country after an attack, and they would put all their efforts into making as many atomic bombs as they could. And I suspect they would have the backing of a very large majority of the Iranian people. I'm not a politician, but I dare not think about the consequences of such armament, not to mention the possibility of retaliatory attacks against Israel and the West.

SPIEGEL: So is it better we let Tehran have its way, and focus on limiting its chances of getting the bomb?

Heinonen: We should push the Iranians to abide by the additional protocol to the safeguards agreement, which Tehran has already agreed to ratify and which grants the IAEA the right to carry out as many checks as it wants, even unannounced. If Iran's leaders continue to fail to meet their country's obligations, the UN Security Council must react by continuing to increase sanctions, step by step.

SPIEGEL: That hasn't achieved anything so far. And with all due respect, it sounds pretty helpless. Looking back, do you think the IAEA has been like a guard dog without teeth?

Heinonen: Every global organization is only as strong as its members want it to be. And let's not forget that the Iranians have always been very clever in their actions. Officially they have largely stuck to their obligations ...

SPIEGEL: ... while at the same time leading the international inspectors on a merry dance with new plants again and again.

Heinonen: We protested officially, but they tricked and misled us, and used the time creatively to keep pushing forward. My former boss and good friend Mohamed ElBaradei never understood that it's too late to act if Iran has violated all agreements, has touched the nuclear material and its weapons program is already in its final stages.

SPIEGEL: ElBaradei's successor, Yukiya Amano of Japan, who has headed the IAEA since December 2009, has noticeably toughened the rhetoric against Tehran ...

Heinonen: ... which is also more in line with the (IAEA) Department of Safeguard's perspective. But the situation has also worsened considerably in Syria in recent years. As Tehran did before it, Damascus is now resisting pressure from the international community.

SPIEGEL: Didn't Israel do the IAEA's job for it back in 2007, when it sent planes to bomb a secret Syrian reactor near Deir al-Sur in a night-time raid? Or are there grounds to doubt this story, which SPIEGEL helped to uncover with its reporting but was never confirmed officially?

Heinonen: All the evidence seems to suggest that the destroyed building really was a nuclear reactor. But the IAEA only got one opportunity to inspect the site. I feel the IAEA should have exercised its right to a special inspection. We were refused permission to enter Syria to carry out more research there and at other sites, and that remains the case to this day. It's a clear, sanctionable breach of the agreements. Incidentally, the Deir al-Sur reactor bears a striking resemblance to the North Korean Yongbyon reactor.


North Korea Considers Bomb To Be 'A Kind of Life Insurance Policy'

SPIEGEL: You have very special memories of Yongbyon.

Heinonen: Yes, I lived together with North Korean scientists for several months in the 1990s as an IAEA inspector. It was a very tough time. There wasn't any heating, even in the bitterly cold winter, and we had to go to great lengths to have heaters flown in. Even the vodka distilled on the site did little to offset the cold. Everything was fine while we were able to keep an eye on things. But in 2002, Kim Jong-Il decided to withdraw from the Nuclear Non-Proliferation Treaty and build the bomb.

SPIEGEL: Then, in 2006, the North Koreans tested their first atom bomb. Did that mark the end of your trips to Pyongyang?

Heinonen: No. Things looked better again a year later. I was able to return and monitor the dismantling of the Yongbyon reactor.

SPIEGEL: Since then, work has allegedly begun again in secret on a new uranium enrichment facility and the construction of a new reactor. Kim Jong Il considers that to be politically expedient and believes that Libya made a huge mistake by giving up its nuclear ambitions. Pyongyang's state-controlled media has even written that is the only reason NATO dared to bomb the country.

Heinonen: The regime clearly considers the atom bomb to be a kind of life insurance policy.

SPIEGEL: It's rumored you may now be "reactivated" as a negotiator because of your personal contacts with the North Koreans. Is that true?

Heinonen: I can't confirm that. It's true that North Korea has signaled its willingness to enter into negotiations, and I think we should take them up on it.

SPIEGEL: North Korea has benefitted from the black market of terror. Without Khan, the father of the Pakistani bomb and later a dealer in atomic know-how and nuclear materials, Pyongyang probably would never have gotten this far.

Heinonen: And not only North Korea. Neither would Iran and Libya.

SPIEGEL: Have you ever met Khan? Were you at least able to question him after his arrest in Islamabad in 2004?

Heinonen: I followed his trail for years, and met several of his confidantes. But I never got to speak to him. Nevertheless, he answered some of my questions in writing through secret channels.

SPIEGEL: From his house arrest he now insists he had nothing to do with passing on nuclear secrets or having made lucrative private deals. Do you believe him?

Heinonen: It brings tears to my eyes. Of course Khan was the worst black marketeer and made millions from it. Even so, it's quite possible that others -- for instance Pakistani generals or leading secret-service officials -- profited even more than Khan did. It's more than likely that his country's political authorities were often aware of his dealings.

SPIEGEL: Just like India and Israel, Pakistan never signed the Nuclear Non-Proliferation Treaty. The IAEA has therefore never been allowed to carry out any official inspections there ...

Heinonen: ... and that worries me, especially in Pakistan's case.

SPIEGEL: Because terrorists could gain access to nuclear facilities?

Heinonen: That, too, is not unproblematic. But I'm even more concerned about the government's official policies. The five classic nuclear powers -- the United States, Russia, China, France and Britain -- have halted all production of fissile material and are negotiating on reducing their nuclear arsenals. Not so with Pakistan. It's going in the opposite direction; building new nuclear weapons, increasing its production of plutonium and continues to make highly enriched uranium. It looks like Pakistan is in the process of building another reactor, its fourth, most probably so that it can launch a counter strike in the event of a nuclear war.

SPIEGEL: US President Barack Obama is propagating a nuclear weapons-free world. Is that a completely unrealistic dream?

Heinonen: Such bold visions are important. After all, man has managed to scrap the guillotine. Why, then, shouldn't we have a world without nuclear weapons one day?

SPIEGEL: The IAEA is supposed to prevent the proliferation of nuclear weapons, yet one of its explicitly declared aims is the promotion of fissile material for civilian use. Did the Fukushima nuclear disaster sow any doubt in your mind about this?

Heinonen: The world needs nuclear power -- and will continue to do so for a long time. There's no affordable alternative for rapidly growing developing nations.

SPIEGEL: Nuclear power is finished in Germany. Do you think Berlin's decision to abandon nuclear power is irrational?

Heinonen: To be quite honest, I think it's an over-reaction.

SPIEGEL: So you believe the risks are calculable?

Heinonen: Yes. But it is also true that, as Fukushima in particular has shown, we have to include calculations for even the most unlikely threat scenarios. In that regard, we were reckless there. The Japanese didn't do so, and that was a huge mistake -- as was the IAEA's reaction to the catastrophe.

SPIEGEL: Are you suggesting your former colleagues weren't on site quickly enough?

Heinonen: For days on end, the IAEA did everything strictly by the book. It reacted like a fire department that notices a major fire, but says, "I'm sorry, the route there would take us down a one-way street. We'd better keep out of that." It wasn't until very late that they turned up at the scene of the disaster with their own measuring devices and specialists. We need higher safety standards. Nuclear installations must be far better prepared for the possibility of losing both normal and backup electricity. Nuclear facilities also need better protection against terrorist attacks and the theft of nuclear materials.

SPIEGEL: Are you still in contact with Mr. ElBaradei?

Heinonen: Yes, he only recently sent me a text message to tell me about the latest developments in Cairo and in the nuclear world.

SPIEGEL: Will he become Egypt's next president?

Heinonen: I don't think so. He's an extremely skilled politician who always looks for balance, but I think a different kind of politician is needed on the streets of Cairo. Nevertheless, the Egyptians should capitalize on his dedication. After all, they'll find no better person to write them a new, democratic constitution.

SPIEGEL: And what about you? Do you ever yearn to return to your exciting job as a nuclear watchdog?

Heinonen: To a limited extent. I enjoy my academic freedoms here in the United States. I occasionally make a little detour into observing politics as well.

SPIEGEL: Mr. Heinonen, we thank you for this interview.

Interview conducted by Erich Follath

Posted on 10/07/2011 9:37 AM by Hugh Fitzgerald
Friday, 7 October 2011
Civil War In Afghanistan -- To Be Deplored, Or Welcomed?


Afghanistan civil war a significant risk, 'cold-eyed' British review to warn

On 10th anniversary of start of war, patchy progress brings fears civil war or Taliban takeover could follow Nato's 2014 withdrawal [why "fears" of civil war? why should the West fear "civil wars" in any Muslim land?]

British troops come under fire while on patrol in Helmand province
British troops come under fire while on patrol in the Babaji district of Helmand province, southern Afghanistan. Photograph: Sean Smith for the Guardian

A British government review of the Afghan conflict is to warn that there are "significant risks" of civil war or a Taliban takeover of the south and east of the country after Nato withdraws its combat troops at the end of the 2014.

On the 10th anniversary of the start of the war, military progress is patchy with fighting still intense in the east and in parts of Helmand province. Over the past few days, British troops have been sent in to the thick of a bloody, drawn-out struggle along the Helmand river valley, taking over a fiercely contested area from US marines a few miles south of Sangin town, the site of the UK's heaviest losses since its forces moved into the province in 2006.

With three years to go until Afghan security forces are supposed to fight the insurgency without the help of foreign combat troops, the Afghanistan review will portray a country in turmoil. Last year's 30,000-strong US troop surge and new counterinsurgency tactics have pushed the Taliban out of much of the territory it controlled a year ago, but with the widespread use of improvised mines and roadside bombs, as well as a campaign of assassinations, the insurgents have sought to paralyse the Kabul government and hinder western-backed development.

Retired General Stanley McChrystal, the former commander of the Nato-led International Security Assistance Force (Isaf), said the force was only "50% of the way" to achieving its goals in the country.

President Hamid Karzai's administration remains weak and corrupt, reliant on a loose coalition of warlords. The country's biggest bank has been crippled by rampant embezzlement, and there have been a string of assassinations of high-profile Karzai allies, culminating last month in the killing of the government top peace envoy, Burhanuddin Rabbani.

The government review, ordered by David Cameron in the summer and due to be delivered in mid-November, will warn of significant risks of the recent, hard-won progress unravelling and the very real threat of a multi-dimensional civil war between insurgent factions, regional and tribal groups, fuelled by neighbouring powers jockeying for position.

Another possible outcome is referred to as the "Talibanisation of the Pashtun belt", in which the Pashtun areas on both sides of the Afghan-Pakistan border slip permanently under the control of ultra-conservative militants, further destabilising Pakistan, an already fragile state armed with nuclear weapons.

The report, as described by officials, will make clear that these remain worst-case scenarios which can be avoided. But even the outcome judged by the report to be most likely after the 2014 transition, a precarious Afghan state with pockets of chronic violence, would leave the terrorist threat to the UK from the region as potent as it is today.

A senior British diplomat would not comment on the specifics of the review as it is classified and has yet to be finalised, but confirmed that "those sorts of scenarios are being studied".

"It is going to be a cold-eyed realistic appraisal," the diplomat said.

The 20 September killing of Rabbani by a suicide bomber with explosives concealed in his turban, has set back hopes of a negotiated settlement with the Taliban. While senior Nato officials believe the evidence leads back to the Taliban's Pakistan haven in Quetta, they do not think the assassination was specifically ordered by the top leadership, but rather was the work of an over-zealous second-tier commander. That leaves open the possibility that informal US contacts, begun last year, could resume.

But levels of distrust, both between Nato and the Taliban, and between Rabbani's northern kinsmen and rebel Pashtun tribes in the south, are now higher than ever.

"Anyone who is following the situation in Afghanistan is worried. A civil war is a real possibility," said Martine van Bijlert of the Kabul-based Afghanistan Analysts Network.

"There is a real feeling of instability, that the future is unsure. People don't know who are their friends and enemies. So they try to make themselves ready for any eventuality, positioning themselves politically and worrying about how strong they are. People are falling back on old networks and old loyalties."

In Helmand, last year's influx of 11,000 of US marines has suppressed the insurgency in several districts and reduced the pressure on British troops garrisoned in the province. But Barack Obama is now drawing down the surge, and the troops are going home or redploying to the eastern provinces to counter the threat of splinter jihadist groups based in the Pakistani tribal areas.

Three hundred soldiers from 2nd battalion the Mercian Regiment are currently being deployed with Afghan troops along a particularly volatile stretch of the Helmand river south of Sangin, replacing a US marine battalion that was unable to make progress against the local insurgents and found itself under daily attack, suffering five deaths over six months and more than 80 wounded.

Danish forces stationed further south towards the town of Gereshk were forced to withdraw earlier this year from a forward base known as Armadillo as a result of an insurgent onslaught, dismantling the fortifications stone by stone and shipping part of it back to a military museum in Denmark.

The newly-arrived British troops and their Afghan counterparts will be patrolling an area known as Qal Yeh Gaz, just eight miles south of Sangin town. One of the departing US marines, Captain Andrew Terrell told the BBC that "not a lot has changed" since he was was deployed nearby with Royal Marine 40 Commando four years ago.

"The situation is no better. The people here are not fed up with the fighting, they've not reached the limit of what they're willing to accept from the Taliban," Terrell said. "It's easier for them to move out of the area and hope it settles down, but they don't look much further than tomorrow."

A coalition of Afghan and western aid agencies has published research suggesting that despite the influx of $57bn in foreign aid since 2001, progress in health, education and a public sense of security has been patchy and tenuous.

Farhana Faruqi Stocker, the director of Afghanaid said: "Investments have been made where there is the greatest insurgency rather than where there is the greatest need. Impoverished regions have been ignored because they are 'secure'."

She added: "Afghan lives have improved but the gains are fragile and reversible."

Posted on 10/07/2011 10:03 AM by Hugh Fitzgerald
Friday, 7 October 2011
Benjamin Netanyahu In 1978

Watch here.

Note his use of the phrase "Palestinian Arab" and his avoidance of promoting the word "Palestinian" from geograpic adjective to ethnic noun.

He should go back, deliberately, to his 1978 vigilance with words.

And what he says the Arabs in the "West Bank" (a term he had no time to hold up for examination and consequent ridicule) deserve can  most succinctly be expressed thus:

The Arabs will get as much autonomy - on land assigned by the League of Nations to the Jewish National Home -- as is CONSONANT WITH ISRAELI SECURITY.


Note, by the way, a young Fouad Ajami, who later became an important opponent of Edward Said, but more recently has shown himself, for those who can detect such things, an insufficient critic of Islam, and therefore still incapable of recognizing that the war against Israel is a Jihad, and has no end, and can be held in check, as all Muslim aggression can only be held in check, through deterrence.


End of story.



Posted on 10/07/2011 11:50 AM by Hugh Fitzgerald
Friday, 7 October 2011
Keith Yost On Being A Business Consultant

This was published in April, 2010 but its contents do not date. And they could be seconded by many hundreds of thousands of people, all over the Western world, working in similar jobs.

From The Tech

By Keith Yost

Aprill 9, 2010 :

 The story BCG offered me $16,000 not to tell
The city was strange and the society unnerving, but what disturbed me the most about my experience was my job as a business consultant.

The city was strange and the society was unnerving, but what disturbed me most about my Dubai experience was my job as a business consultant for the Boston Consulting Group.

I really had no idea what to expect, going in. In my mind, consulting was about answering business questions through analysis. It was supposed to be Excel sheets and models, sifting through data to discover profit and loss, and helping clients make decisions that would add the most value for themselves, and by extension, society.

It was worrisome to enter a new job without any guarantee that I would be qualified. I assumed BCG would train me, and that as it had been with MIT, intelligence and hard work would prove sufficient. Still, I wondered what I would do if for some reason it turned out that I couldn’t get my head around the analysis? In hindsight, analytical skills should have been the least of my worries.

Stretching reality

The first clue that my mental picture of consulting was off came with “training” in Munich. I expected instruction in Excel programming, data analysis, and business theory. Instead, Munich turned out to be little more than a week long social outing with other recently matriculated consultants and analysts within the BCG’s European branches. We donned name tags, shook hands, and drank often. Classes were fluffy, and mostly consisted of discussion of high-level, almost philosophical topics. I got along well — as both an American and a member of the Dubai office, I was doubly foreign and therefore double the curiosity.

After a pleasant week of pseudo-partying, I returned to Dubai and was assigned to writing case proposals. In the consulting business, it is standard practice for clients to write requests for proposals, describing the question they would like answered. The consulting firm in turn writes a case proposal: We will answer A by having Consultant B do X, Y, and Z. A well written case proposal promises much, but is deliberately vague about what concrete things the consultants will produce.

Case proposals were despised by the rank and file — one had a dozen bosses, unclear objectives, and virtually no coordination with co-workers. But in one sense, the proposals were good practice for real case work. Both involved stretching reality to fit whatever was assumed the client desired.

Despite having no work or research experience outside of MIT, I was regularly advertised to clients as an expert with seemingly years of topical experience relevant to the case. We were so good at rephrasing our credentials that even I was surprised to find in each of my cases, even my very first case, that I was the most senior consultant on the team.

I quickly found out why so little had been invested in developing my Excel-craft. Analytical skills were overrated, for the simple reason that clients usually didn’t know why they had hired us. They sent us vague requests for proposal, we returned vague case proposals, and by the time we were hired, no one was the wiser as to why exactly we were there.

I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual. In any case it fell to us to decide for ourselves what question we had been hired to answer, and as a matter of convenience, we elected to answer questions that we had already answered in the course of previous cases — no sense in doing new work when old work will do. The toolkit I brought with me from MIT was absolute overkill in this environment. Most of my day was spent thinking up and writing PowerPoint slides. Sometimes, I didn’t even need to write them — we had a service in India that could put together pretty good copy if you provided them with a sketch and some instructions.

Burning out

I worked hard at MIT. I routinely took seven to ten classes per semester and filled whatever hours were left in the day with part-time jobs and tutoring. It was a fairly stupid way of going about my education, and I missed out on many of the learning opportunities that MIT offers outside of classes. I don’t recommend what I did to anyone. But as stupid as carrying double course loads was, it had one advantage: After all the long hours I put into MIT, I believed I was invincible. If MIT couldn’t burn me out, nothing else ever could.

It took roughly three months before BCG disproved my “burn-out proof” theory. Putting together PowerPoint slides was easy, the hours were lenient, and the fifth day of every week usually consisting of a leisurely day away from the client site. By all accounts, I should have been coasting through my tasks.

What I learned is that burning out isn’t just about work load, it’s about work load being greater than the motivation to do work. It was relatively easy to drag myself to classes when I thought I was working for my own betterment. It was hard to sit at a laptop and crank out slides when all I seemed to be accomplishing was the transfer of wealth from my client to my company.

I’m a free marketeer. I believe that voluntary exchange is not just a good method of incentivizing people to provide their labor and talents to society, but a robust moral system — goods and services represent tangible benefit to people, market prices represent the true value of goods in society, and wages represent the value that a worker provides to others. Absent negative externalities or monopoly effects, a man receives from the free market what he gives to it, his material worth is a running tally of the net benefit that he has provided to his fellow man. A high income is not only justified, but there is nobility to it.

My moral system is organized around a utilitarian principle of greatest good for the greatest number — that which adds value cannot be wrong. It did not bother me therefore when I was handed consulting reports that had been stolen from our competitors. If the information in those reports would help us improve our client, then who could say we were doing wrong? Like downloading MP3s, it was a victimless crime.

What I could not get my head around was having to force-fit analysis to a conclusion. In one case, the question I was tasked with solving had a clear and unambiguous answer: By my estimate, the client’s plan of action had a net present discounted value of negative one billion dollars. Even after accounting for some degree of error in my reckoning, I could still be sure that theirs was a losing proposition. But the client did not want analysis that contradicted their own, and my manager told me plainly that it was not our place to question what the client wanted.

In theory, it was their money to lose. If they wanted a consulting report that parroted back their pre-determined conclusion, who was I to complain? I did not have any right to dictate that their money be spent differently. And yet, to not speak out was wrong. To destroy a billion dollars is to destroy an almost unimaginable amount of human well-being. Spent carefully on anti-malarial bed nets and medicine, one billion dollars could save a million lives. This was a crime, and failing to try and stop it would be as bad as committing it myself. And if I could not prevent it, then what reason was I being paid such a high salary? How could I justify my income if not by prevailing in situations such as these?

Sit down, shut up

Early on, before I began case work, one manager I befriended gave me some advice. To survive, he told me, I needed to remember The Ratio. 50 percent of the job is nodding your head at whatever is being said. 20 percent is honest work and intelligent thinking. The remaining 30 percent is having the courage to speak up, but the wisdom to shut up when you are saying something that your manager does not want to hear.

I spoke up once. And when it became clear that I would be committing career suicide to press on, I shut up.

With a diligent enough effort, one can morally justify nearly anything. It was clear that the client was going to go forward with their decision regardless of how I acted. How could I be responsible for a foregone conclusion? And if I had no power to change things, then why shouldn’t I take the course of action that lets me keep my job? Who would it benefit for me to give up my paycheck? With my salary, I could make large and regular contributions to Red Cross or Doctors Without Borders — without it I would just be another unemployed bum.

But there is a large difference between telling yourself a story and believing it. Ultimately, the core reason I stayed silent wasn’t altruistic, but selfish. At my salary level, and with my expected advancement path, I could comfortably retire in my thirties. That would mean nearly a full lifetime at my disposal, a solid forty years to find true love and raise a family without distraction. It was the opportunity to travel, to achieve great things, to self-actualize. It was the prospect of living a life free of want and need. Who was I kidding? I wasn’t going to donate half my salary to Red Cross. I was going to deposit it into an index fund and speed off as soon as I was sure there was enough gas in the car.

The conscience is a pesky thing. It was no consolation that I had gotten the moral calculus to work out in my favor. I should have been the most relaxed man on the planet, and yet every day I went back to my hotel room and spent most of my time nervously pacing. I couldn’t sleep at night. I’d fill up a bathtub and scream into it. I couldn’t get over the feeling that this was not how I was supposed to spend my life.

Staying silent was agonizing. Nominally, my job was to provide advice and aid in my client’s decision-making process. In practice, my job consisted of sitting quietly and resisting the urge to dissent. Each day was like a punishment from Greek mythology; with every meeting my liver would grow anew to be eaten again by eagles.

I was reminded of the Milgram experiment. I wanted to quit. I didn’t want to have any hand in this, I didn’t want the responsibility of being the destroyer. But the man in the lab coat was telling me that the experiment must continue. Burnout soon followed.

It wasn’t just that I lost all motivation for my job; it was also that it is much harder than one would expect to do unsound analysis. There is an interesting kabuki dance to be done when crafting figures to fit a conclusion. The conclusion may be wrong, but you still need to make it believable. You still need numbers to fill out your PowerPoint slides, and the numbers need to have enough internal consistency not to throw up red flags at a casual glance. Honest analysis, even when it has weak areas, is easy to defend. If the numbers look fishy, there’s an explanation — you didn’t have direct data on such and such and had to use estimates from another report, or made a reasonable assumption somewhere. But when the numbers actually are fishy, and there’s no underlying logic to defend, you can’t have any rough areas for others to poke at. And when you know everything is fishy, you can’t tell what will look fishy to someone who hasn’t seen any numbers before.

This leads to what I like to call, “Find me a rock” problems. The classic “find me a rock” story is as follows: A manager goes to his engineer one day and asks for a rock. “A rock?” asks the engineer. “Yes, a rock. That isn’t going to be a problem, is it?” replies the manager. The engineer laughs and tells the manager he’ll go pick one up during his lunch break and it will be no problem. After lunch, the manager visits the engineer again and the engineer shows him the rock. The manager looks at it for a moment before telling the engineer, “No, that one won’t work at all. I need a rock.”

“Find me a rock” problems sound dead simple, but in actuality have requirements that are poorly stated or unknown. You never know what you’re looking for; you only know that you’ll know it when you see it.

When you disconnect analysis from reality, it would seem like you are freeing yourself up to do your job any way you like. In actuality, you are exchanging one set of clear objectives and rules for another that is complex and ill-defined. At one point my manager said to me, “Change the numbers, but don’t change the conclusion.” Of course, there’s no trouble in changing the numbers — it’s not as if there was much of a basis for this set of numbers over another — but change them how, and to what? Who knows? Find me a rock.

I don’t know if I’ll ever have kids. Still, when I find myself in a moral quandary, I like to think it through by imagining how I would explain the situation to my future, hypothetical children. What would I say? How would they react? Could I justify my actions as having been in their best interest?

I wasn’t sure at the time, but having had enough free time of late to ponder such questions, I think I’ve come to the conclusion that having a father who can pay for a top-notch education outweighs the disadvantage of being raised by a hypocrite. Sticking with the job for the sake of a paycheck passes the children test.

I was not surprised the day I lost my job. The writing was on the wall. BCG’s management might have been releasing reports claiming countries like Dubai would be islands of stability in the world’s rough financial seas, but to the ground troops, it was obvious the economy was not doing well. From the very beginning of my employment, I hadn’t met a single employee who planned on staying with the company — all of them were scrambling for lifeboats, trying to land cushy jobs with cash-stuffed clients or find their way back to their home countries.

What did surprise me was the offer BCG made to me as I was on the way out the door. In exchange for me signing an agreement, BCG would give me the rough equivalent of $16,000 in UAE dirhams. Much of it looked boilerplate, like any common compromise agreement used in Europe — in return for some money, I would stipulate that I hadn’t been discriminated against on the basis of race or gender, etc.

But the rest was very clearly a non-disclosure agreement, and it made me uncomfortable. I signed a non-disclosure agreement when I first took the job, but that only covered BCG’s intellectual property and client identities, things that seemed entirely reasonable to protect. This agreement went much further. Not only did it bar me from making any disparaging comments about BCG or my work experience, but I wouldn’t even be allowed to reveal the existence of the non-disclosure agreement itself. The implication was clear: I could either be a cheerleader for BCG or stay silent, but anything else would bring swift legal retribution. When I asked to have the non-disclosure clauses removed, I was told that the agreement was a standard offer to employees, and that its terms were non-negotiable.

As hard as it was to decide whether or not to stay at my job, it was easy to pass up the hush money. Mistake or not, my future hypothetical children deserved to hear their father’s story, and $16,000 did not seem like a lot of money in the grand scheme of things. After rejecting the offer, I enjoyed a full night’s rest.

This is the third in a four-part series on the author’s experiences as a consultant in Dubai.


When I posted the story above, I knew nothing about Keith Yost. I then ran across something else he wrote, a few months after he wrote the piece above, on the Muhammad cartoons and the attempt -- successful -- to intimidate the writers of South Park (though that successful silencing of them was not mentioned last week, in the laudatory treatment of them as bravely willing to attack anything -- anything! -- even the Mormons -- in a piece on 60 Minutes),

Google "Keith Yost" and "Muhammad cartoons" for more. 

Posted on 10/07/2011 12:13 PM by Hugh Fitzgerald
Friday, 7 October 2011
A Musical Interlude: Down In The Alley (Memphis Minnie)

Listen here.

Posted on 10/07/2011 12:21 PM by Hugh Fitzgerald
Friday, 7 October 2011
Israel‘s “Black Gold� – an Interview with Dr. Scott Nguyen

by Jean-Patrick Grumberg with Introduction by Jerry Gordon (October 2011)

When we posted an article on The Iconoclast, “Could Israel’s Shale Oil Development be a Game Changer?”, the stunning story of the potential oil shale development in the Shfela basin in Israel, there was skepticism. Skeptics thought that despite the presence of Dr. Harold Vinegar, former Chief Scientist at Shell, and the backing of major UK and US investors, that Israel could not avoid the environmental and economic problems that have plagued oil shale developers in North America. French blogger, Jean-Patrick Grumberg of was in Jerusalem last month and interviewed a key member of the Israel Energy Initiative (IEI) Technologies team, Dr. Scott Nguyen, a colleague of Dr. Vinegar at Shell who moved from Houston, Texas to join in this important petro-resource development project for Israel’s and Western energy independence. more>>>

Posted on 10/07/2011 1:13 PM by NER
Friday, 7 October 2011
Dov Zakheim Can't Possibly See What Is Wrong With The Strategy, And Wants To Pour Good Money After Bad

Dov Zakheim doesn't want all those hundreds of billiions to have been "expended in vain." So he wants more hundreds of billions to be spent. He simply cannot own up to having been colossally wrong. Nor can so many of those who took the same tack, and have stuck with it, because they are incapable of a mea maximissa culpa, or even a hint of a glimmer of recognition of how miscomprehending of Islam, and how unclever, they have been.

He can't possiblyt see that the entire foundation of the efforts in Afghanistan and Iraq are the same -- the refusal to grasp the nature, and thus the menace, of Islam,and instead of trying to prevent sectarian and ethnic cand sometimes political onflict within Muslim states, and instead of trying to make them unified and prosperous, the Infidels should be doing nothing to prevent such sectarian and ethnic  and political conflict within Muslim states, and nothing to prevent economic conflict among Muslim states (if we can force the non-rich Arabs and Muslims to start demanding of the oil-rich Arab and Muslim states a share in Allah's bounty), but rather, be delighted both to recognize, and to exploit, all pre-existing fissures.

Since he cannot do that, because to do thatr would be to recognize one of the greatest folies -- of which he was a part -- in American history, Dov Zakheim prefers to give the usual argument, that since "so much has already been spent in Afghanistan we can't let it go to waste, have been a waste, and therefore must spend more." He just can't see the building of that bridge over the River Kwai. Nor can Petareus. Nor can those colonels, such as John Nagl, who served under Petraeus as his so-called brain trust, and came up with such cockamamie ideas as that there is an "average life" to "insurgencies" -- how could such data ever have been arrived at? what would count, in the long and wide history of Man, as an "insurgency" and who would do  the toting up, and then the averaging? -- as if that would be relevant to anything at all, in trying to limit the power of the Camp of Islam. 

Here's Zakheim's piece, in all of its folly:

Where We Went Wrong in Afghanistan

The United States is currently fighting a war it needn’t have fought. During the first few years after it launched Operation Enduring Freedom exactly a decade ago, al-Qaeda was on the run and Bin Laden was in hiding, as was the Taliban. No one spoke of the Haqqani network. Refugees returned to Afghanistan by the millions, small shops and businesses were starting up, the drug trade was nearly dormant and American civilians did not have to wear body armor when they visited the country.

Unfortunately, the Bush administration, and the Office of Management and Budget in particular, seriously underfunded the reconstruction of Afghanistan in those first few years. Less than a year after the American attack on the Taliban, Iraq was dominating the thoughts and actions of most American policy makers. Afghanistan was relegated to a distant second place in Washington’s priorities. After nearly seven years of neglect, the United States found itself at war again, with a rejuvenated Taliban that had regrouped in neighboring Pakistan. The ousting of Pervez Musharraf complicated matters even more. Pakistan’s previously inconsistent policy toward the Taliban was further compounded by the weakness of the new civilian government, the ambivalence of the military, and the determination of the ISI to dominate Afghan affairs and to support the increasingly active Haqqani network based in Miram Shah. And Washington became ever more disenchanted with the man it had lionized since 2001; President Hamid Karzai was now portrayed as mercurial at best, bipolar at worst.

Shortly after taking office, President Obama responded to the deteriorating situation in Afghanistan by increasing American forces deployed there. He announced a further increase, a “surge,” in December 2009, but undermined his plan by simultaneously announcing that the United States would begin to withdraw its forces by July 2011 (while his senior aides informed the press that he planned to withdraw most American troops by 2013). His message, followed by a June 2011 speech announcing the return of all surged forces by September 2012 and a “complete process of transition” by 2014, led all the regional players to recalculate their positions. Karzai became even more difficult for Americans to work with. The Pakistanis intensified their support for the Haqqani group. The rush to exit the country, which had already begun with announcements by the Netherlands and Canada that they would be withdrawing their forces, threatened to turn into a stampede.

Even the appointment of General David Petraeus, the hero of the Iraqi surge, to lead American troops and the International Security Assistance Force in July 2010 could not offset the impact of Obama’s withdrawal announcement; by the time Petraeus returned to the United States a year later, the Taliban still controlled parts of Afghanistan and the Haqqani network was as strong as it had ever been. Indeed, the insurgents, fueled by drug money and the proceeds of shakedowns of American subcontractors, became ever more daring, as highlighted by their attack on the U.S. Embassy compound in September 2011.

Despite the damage that the withdrawal announcement caused, a change in strategy, first begun by General Stanley McChrystal before he was sacked in June 2010, has definitely decimated the Taliban leadership. The killing of Bin Laden was a serious blow to al-Qaeda. Drone attacks on top Taliban and Haqqani personnel have disrupted the operations of both groups. And these attacks continue daily, despite protests—which may be pro forma—by the Pakistanis. At the same time, Washington has begun to rely more heavily on its northern supply route via Russia and its former Central Asian republics, thereby creating a hedge against Pakistan’s on-again, off-again policy related to American supplies crossing its territory.

Several factors will determine Washington’s ability to prevent the insurgents from launching a full-scale civil war—or, worse still, taking control of the central government. To begin with, the withdrawal of forces must not include those training the Afghan security forces, Special Operations units, and forces supporting the activities of Provincial Reconstruction Teams that are scattered around the country. In addition, the pace of drone attacks should be maintained at current levels, and terrorists should be denied a safe haven in Pakistan.

Finally, reconstruction efforts should not be dropped, though they should be modified to ensure that programs launched by the U.S. Agency for International Development and other U.S. agencies are both realistic and sustainable. Monies should not be spent on contractor projects in high-risk areas, nor should subcontractors be so unsupervised that they can pay protection money to insurgents. The Commission on Wartime Contracting in Iraq and Afghanistan has recommended a series of actions by the executive and legislative branches to ensure that American taxpayers get their money’s worth and that Afghans truly benefit from reconstruction projects. Both branches of government should implement these recommendations at the earliest possible time.

The war in Afghanistan was launched in retaliation for a heinous crime committed by terrorists under the protection of that country’s government. It has lasted a very long time—longer than any other American conflict. Thus, every effort should be made to ensure that when it ends, the blood of American men and women, and the treasure that taxpayers have heaped on that country, will not have been expended in vain.

Dov Zakheim was under secretary of defense (comptroller) from 2001-2004 and recently completed his term as a member of the Commission on Wartime Contracting in Iraq and Afghanistan. He recently published A Vulcan’s Tale: How the Bush Administration Mismanaged the Reconstruction of Afghanistan.

More by

Posted on 10/07/2011 1:56 PM by Hugh Fitzgerald
Friday, 7 October 2011
Why Should Tunisia Be Given American Or Other Western Aid?

From The Wall Street Journal:

Tunisian Premier Vows Nation to Stay Moderate


WASHINGTON—Tunisia will remain a moderate nation after its elections, despite concerns abroad about rising Islamist political influence, its prime minister said in an interview on Thursday here, where he is appealing to U.S. officials for financial support.

Tunisians head to the polls on Oct. 23 in the first free elections to emerge from the Arab spring democracy movement. More than 100 political parties are vying for the 217 seats in a constituent assembly that will rewrite the nation's constitution. Ennahda—a once-banned Islamist party—leads the pack.

Prime Minister Beji Caid Essebsi acknowledged a "big phobia" emerging outside the country about Ennahda ...

Posted on 10/07/2011 2:10 PM by Hugh Fitzgerald
Friday, 7 October 2011
Hertz suspends Muslim workers for praying on job

From CBS News and the Sacramento Bee

Rental car company Hertz indefinitely suspended 34 Somali Muslim shuttle drivers at Seattle-Tacoma International Airport for praying on company time, and the workers' union is trying to put them back in the driver's seat after what it calls a sudden policy change.

The drivers are required to clock out, under the terms of a settlement two years ago with the Equal Employment Opportunity Commission, Hertz spokesman Rich Broome said.

"We felt it was reasonable for our Muslim employees who need to pray a couple times during the workday to clock in and clock out," Broome said. It's not about pay - break time is paid time - but to ensure workers were staying within the 10-minute time slots, which has been a problem, he said. Muslim workers who clocked out were not suspended.

One suspended shuttle driver, Zainab Aweis, says she was not aware the rules had changed until she arrived at work Sept. 30 and managers told her and other women who were about to pray that several other employees had been sent home that day for praying. "I like the job," Aweis said. "But if I can't pray, I don't see the benefit."

On Wednesday, a few dozen people from labor and faith organizations protested outside the Hertz counter at the airport, waving signs saying, "Respect me, Respect my religion."       

Posted on 10/07/2011 2:13 PM by Esmerelda Weatherwax
Friday, 7 October 2011
Somali bomber denounced education, extolled jihad

From the San Francisco Chronicle

Mogadishu, Somalia -- The Somali suicide bomber who killed more than 100 people, including students seeking scholarships, in an attack near the education ministry was a school dropout who had declared that young people should forget about secular education and instead wage jihad.

Bashar Abdullahi Nur, who detonated a massive blast Tuesday that covered the capital in dust more than a half-mile away, had given an interview before the attack that was later aired on a militant-run radio station.

"Now those who live abroad are taken to a college and never think about the hereafter. They never think about the harassed Muslims," he said.

 . . .more than 100 people had died in the explosion in Mogadishu. Dozens were wounded, including Somalia's deputy health minister. Tuesday's attack killed some of Somalia's brightest young minds, including students gathered around a notice board to learn about the results of scholarships from the Turkish government.

However, it is not the first time the al Qaeda-linked militants have targeted students. In 2009, the al-Shabab group attacked a graduation ceremony, killing medical students and doctors.

"These attacks, which targeted some of the country's very few university-level students, as well as the dedicated civil servants working to enhance Somali public institutions and social services under extremely difficult circumstances, are a direct blow to the fabric - and future - of the nation," said Shamsul Bari, the U.N.'s independent human rights expert in Somalia.

Al-Shabab has pledged to increase attacks "day by day" . . . The group considers the secular education as a form of Western invasion into the minds of the Muslims.

Posted on 10/07/2011 2:25 PM by Esmerelda Weatherwax
Friday, 7 October 2011
Pat Condell on the 'Palestinians'

Those "Palestinians" with their self-inflicted "plight" get short shrift from Pat Condell. Arabs don't hate Jews, he says, because of Israel - they hate Israel because of Jews. And the same goes for the Guardian, and parts of the BBC, and far too many idiots. I think Hugh has already linked to this, but I'm re-posting in case anyone missed it first time:

Condell for Prime Minister!

Posted on 10/07/2011 5:30 PM by Mary Jackson
Friday, 7 October 2011
A Musical Interlude: Sittin' Up And Waitin' For You (Ted Weems Orch., voc. Red Ingle)

Listen here.

Posted on 10/07/2011 6:29 PM by Hugh Fitzgerald
Friday, 7 October 2011
The Administrators Of Higher Learning, And How They Do

The Case for Making Harvard Pay Taxes

For elite private U.S. universities with large endowment funds, fiscal 2011 was a very good year. After suffering a 30 percent decline in its endowment in 2008, Harvard University reported last month that its fund — the largest in the country — grew by $4.4 billion to $32 billion last year, reaping the university a 21.4 percent return on its investments. The high returns have some economists, lawyers, and even some lawmakers, questioning the merits of continuing to give deep-pocketed universities tax breaks at a time when federal and state budgets are starved for revenue. 

Stanford, Yale, the University of Pennsylvania, and Massachusetts Institute of Technology also posted gains of 22 percent, 21.9 percent, 19 percent, and 17.9 percent, respectively, in the fiscal year that ended June 30. Other Ivy League schools also saw strong returns.

“At some point, a nonprofit gets so rich that it seems kind of obscene to let wealthy universities get out of paying taxes,” said James Miller, an economics professor at Smith College. “Especially with this new Super Committee, I think the federal government is going to start looking a lot harder at the revenue running out the door every year — especially to institutions like Harvard that don’t exactly need it.”

Like most non-profit organizations, universities pay no property tax, which has led to an unprecedented legal challenge in Princeton, New Jersey.  According to, the university is being sued by a group of local residents who argue that Princeton owes property taxes on nearly 20 buildings not directly related to classroom or educational activities.

“…the university is not paying its
fair share of taxes and thus
homeowners in the borough are
shouldering a larger burden
than they ought to be.”

Princeton lawyer Bruce Afran told, “Activities take place in those buildings, both profit-making activities and non-educational activities, that the state legislature never intended to be tax exempt. The result is that the university is not paying its fair share of taxes and thus homeowners in the borough are shouldering a larger burden than they ought to be.”

Universities like Harvard have multiple revenue streams: tuition, room and board, unrestricted alumni giving , ancillary revenue from sporting events, book sales, royalties, and other material, and, of course, the big one — the endowment. University endowment funds — supplied with capital from tax-deductible contributions — help pay for scholarships and tuition assistance, faculty salaries, upkeep of facilities, new research projects, or virtually any endeavor the university’s administration decides. But the fund can also pay a college president and other administration officials exorbitant incomes and benefits.  

Yale University president Richard C. Levin made a base salary of $1,181,032, not including health care and other benefits, free housing, transportation, cleaning services, gardening, travel and entertainment expenses, and the like. Duke's head basketball coach, Michael Krzyzewski, made $3,763,373 in 2009. Of course, Duke and other universities run their athletic departments as profit centers, with revenues from television, ticket sales, clothing, and memorabilia. Massachusetts universities are awarding dozens of key administrators extravagant half-million-dollar or more pay packages, according to a report released last month by the Tellus Institute, a nonprofit research and policy organization aligned with unions. 

Endowment funds are typically comprised of thousands of smaller funds established by individual donors. But once that money is donated, it is invested in a mix of stocks, bonds, private equity funds, hedge funds, and real assets at home and abroad.

As nonprofits, those investment returns are exempt from the 15 percent capital gains and dividends tax private companies, investors, and individuals pay on investment income — so long as that income is used to further the university’s tax-exempt function, in this case education.  Universities, like all nonprofits, are also exempt from paying federal corporate income taxes, and state and local sales and property taxes. 

Large university endowment funds have advantages over individual and private investors, according to a 2010 Wells Fargo report. They have the benefit of holding investments indefinitely, have few liquidity constraints, and as a result, can take on more risky investments. “Larger institutions in particular benefit from access to the best managers, alternatives such as natural resource partnerships that are unavailable to individuals, and the lowest fees and trading costs,” the report said. 

“These university endowment funds are the most sophisticated investors in the tax-exempt sector,” said Bruce Hopkins, an attorney for nonprofit organizations and a senior partner at Polsinelli Shugart. The larger endowments’ aggressive investment strategies, which include funneling money into overseas funds and domestic hedge funds, “is very much the same as what a commercial enterprise does with its money, only in this case, it’s not taxed,” he said. Indeed, 82 percent of large academic institutions reported making foreign investments through their endowments. Large universities are more prone to make risky, aggressive investments because, unlike private foundations which are required to pay out 5 percent of their endowment assets each year, universities don’t have that requirement, he said.  


“They [the universities] should ask themselves whether offshore investments are an appropriate use of endowment funds and whether those funds would be better used by making tuition more affordable for students,” said Sen. Charles Grassley, R-Iowa, in a statement to The Fiscal Times. Grassley has accused universities of hoarding too much of their endowment funds, rather than using it to spend on scholarships and tuition assistance. “Taxpayers and students deserve to understand what they’re getting in return for the tax benefits awarded to these institutions,” he said in a January 2011 statement.

According to Hopkins, Congress could alter the law to mandate that if a university’s asset base exceeds a certain amount, it would have to pay income tax. “But all the members of Congress have institutions they went to and look out for, and so far, colleges and universities have just not been picked on that way.”

That’s with good reason, according to higher education advocates and lobbyists. “Nonprofit colleges, by definition, have to put revenues toward public purposes. This is different from what companies do with profits,” said Karin Johns, director of Tax Policy for the National Association of Independent Colleges and Universities. “Where the private sector’s mission is to generate profits and reward their shareholders, college endowments exist to support financial aid for students, support research and advance those institutions charitable mission,” said Steven Bloom, director of Federal Relations with the American Council on Education. “How would you tax university endowments in a way that would raise a significant amount of revenue, without harming these institutions that are really a jewel in the crown of this country that generate educated students that build long-term economic growth and innovation? I don’t see how you could.”

While it’s unclear how much revenue could be recouped by taxing universities investment profits, tax-exempt treatment of all nonprofit organizations costs the federal government $30.7 billion to $95.7 billion per year, and costs states between $26.4 billion and $46.4 billion per year, Congressional Research Service economist Jane Gravelle estimated this summer. States forego anywhere between 1.5 percent and 10 percent worth of the states’ property tax collections each year because of  charitable tax exemptions, which translates into higher property tax rates for homeowners and businesses, concluded a 2010 report from the Lincoln Institute of Land Policy.
The endowments at Boston College, Boston University, Brandeis, Dartmouth College, Harvard, and MIT — which collectively own $10.6 billion in tax-exempt real estate — would owe $235 million per year in property taxes if they were not tax-exempt, according to a 2010 study from the Tellus Institute, which studies nonprofits. These institutions do pay voluntary payments to local governments to help offset the costs of using city services and land, called Payments in Lieu of Taxes, but they only amount to about 5 percent of that $235 million, the study found. 

Athletics and bookstores are
examples of untaxed university
enterprises that deserve a second
look. “These are arguably commercial
enterprises that could be paying
income tax on profits, but they don’t."

“I would love to see Congress rewrite the rules so that when you have a nonprofit organization that is clearly in the business of making money, they pay income tax,” said Howard Gleckman, a resident fellow at the Tax Policy Center. “You think about the amount of dough that the academic institutions make investing, and I think there’s probably some real money there.”

All nonprofit organizations are required to pay tax on any income they earn that is deemed unrelated to their basis purpose, called the Unrelated Business Income Tax. But according to Gleckman, almost nobody pays it. He cites college athletics and bookstores as textbook examples of untaxed university enterprises that deserve a second look. “These are arguably commercial enterprises, and they could be paying income tax on profits they earn, but they don’t because they’ve hired their tax-deductible lobbyist [who] argued for one reason or another that this particular activity is intrinsic to the entity an should be tax-exempt,” says Gleckman.

But taxing universities is not without consequences. Increased taxes could lead universities to hike tuition or cut back on student aid, Gleckman said. And schools like Harvard say that removing tax exemptions would erode the donor base. “If donors knew that the money they bequeathed to their alma mater would partially or fully be heading to the state, they would think twice before writing that check,” said a 2009 piece by the Harvard editorial board. They were responding to a plan Massachusetts legislators pushed to levy a 2.5 percent annual tax on the portion of college endowments exceeding $1 billion. The plan was killed. 

However, according to Smith College’s Miller, universities’ argument that taxing them more heavily will increase their costs is somewhat invalid.  “If universities are giving the exact reasons that would apply to a business for why they shouldn’t pay tax — that their costs will go up — then they’re arguing no enterprise should pay taxes,” he said. There’s a valid economic case for taxing wealthy, successful schools more than you do business because those institutions are not likely to close down or move locations, he said. “The worst thing that can happen when you tax a business is that they close down or leave. There’s no way Harvard, MIT, or Yale are going to leave the states they’re in, or close down and risk alienating those localities, let alone the faculty, students and alumni.”

Posted on 10/07/2011 7:47 PM by Hugh Fitzgerald
Friday, 7 October 2011
Just Something About Him
October 7, 2011 8:28 PM

From AP:

Man arrested at JFK for carrying weapons

NEW YORK - Authorities say a man going through airport security at Kennedy Airport was arrested after weapons were detected in his carry-on luggage.

The Transportation Security Administration said the man who was headed to Paris was stopped on Tuesday.

The TSA says seven items were confiscated, including a sword, two stun gun flashlights and four pairs of brass knuckles.

A Port Authority spokesman says 31-year-old Ahmed Aboukhabar, of Alexandria, Egypt, was charged with nine counts of criminal possession of a weapon fourth degree, all misdemeanors. No other information on the man was immediately available.

Posted on 10/07/2011 8:05 PM by Hugh Fitzgerald
Friday, 7 October 2011
Tawakkul Karman's Party Celebrated Her Nobel In Advance

Islamist militants blast oil pipe line in Yemen

By Mohammed al-Kibsi
October 6, 2011

Militants affiliated to Islah Islamist party blasted the oil pipe that links oil fields in Marib province to Ras Isa oil port in Hodeida province on Thursday, said website of the ruling party.

The website quoted local sources in Marib as saying that the militia of Islah party blasted the oil pipe at al-Wadi district 30 kilometers off Marib city on Thursday.

The governor of Marib Naji al-Zaidi that escaped two assassination attempts by Islamist militants said that the blast took place in Erqain area.

He added that this was the sixth time in row in the past ten days that the oil pipe line in Marib is exposed to sabotage.


Posted on 10/07/2011 10:49 PM by Hugh Fitzgerald

Most Recent Posts at The Iconoclast
Search The Iconoclast
Enter text, Go to search:
The Iconoclast Posts by Author
The Iconoclast Archives
sun mon tue wed thu fri sat
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31      

Via: email  RSS