Retailers' Woes Have Nothing to Do with Amazon

One more of the most confounding features of modern times is that we have more information than ever before, but less common sense. In short, we have more data, but it doesn't help us because we're unable to commandeer it properly.

Retailing data tells us Amazon.com--which recently had 1 billion USD of sales in 30 hours--is going to destroy traditional "brick and mortar" stores. Others argue 90% of retail sales are still done in-person, so while the internet's share of sales is increasing by 1% a year, traditional retail is not dead.

Everyone misses the point. I visited the local mall today. I live in an affluent area where people have lots of disposable income. Here's what the mall looked like inside: 

Looks dead, right?

The main foot traffic was in the food court, a cafe, Starbucks, Apple, and Hollister (which has somehow solved the puzzle of teenage fashion). With Amazon and other online choices now ubiquitous, we've forgotten the days when internet sales weren't successfully gaining market share and "dot com" was synonymous with "bust."

1. Internet Retailing Was Once Considered a Fad

It wasn't always certain that internet retailers could even survive. Amazon.com was allowed a sales tax exemption for many years because it continually posted losses and claimed poverty. States that tried to tax Amazon soon saw it move completely out of their state to limit the law's ability to tax entities without minimum contacts in a particular jurisdiction.

Recognizing his business's unusual dynamic, Bezos once said, "[W]e don't make money when we sell things. We make money when we help customers make purchase decisions." By the year 2000, Amazon had posted a loss of 1.4 billion USD. At one point, Amazon hired Walmart executives to increase profitability, causing a major culture clash with existing employees, who were generally younger and more urban. Most of the managers poached from Walmart eventually left Amazon, but Amazon's poaching left a bitter taste in Walmart's mouth that persists to this day.

Today, Walmart is more profitable than Amazon but has finally realized it needs to catch up in the online space to prevent Amazon from capturing retail market share as Amazon continually improves efficiency and passes cost savings to customers--just like Walmart. Bezos has always been unperturbed about profitability comparisons: 

"[D]on't worry about our competitors because they're never going to send us any money anyway. Let's be worried about our customers..." 

2. It's All about Inventory, Inventory, Inventory

Stores are expensive to maintain. You've got lawsuits resulting from poor customer service or arbitrary hiring decisions. You've got some customers slipping and falling on your floors--sometimes intentionally. You've got theft, which most Americans don't realize costs retailers about 40 billion USD annually--with the plurality of the theft coming from employees, not customers, in the U.S.

The biggest hassle of retailing, however, is inventory management, not HR. Most retailers live or die by major holiday events and new product launches. If a store buys too many products that later become unpopular, they either have to mark it down--which they can't always do because of complicated MAP, or minimum advertised pricing rules--or return them to the supplier for a fraction of the costs already paid. In some cases, with very popular items, a retailer is not allowed to return any portion of the inventory bought and is stuck with it no matter what. Under such a framework, retailers who overestimate or underestimate customer demand--especially during the holidays--tend to see wild swings in revenue while still dealing with relatively fixed overhead.

Amazon bypasses such issues by theoretically having unlimited shelf space and using algorithms to personalize the shopping experience for each customer. While Macy's and Nordstrom must not only figure out which products are "hot" and stylish, but how to allocate enough shelf space for them--potentially losing sales on less popular but profitable items--Amazon can stock everything. While Gap and Target can't really individualize your shopping experience without assigning you a personal shopper as soon as you walk in the door, Amazon is able to collect information every time you log on its website and browse--even if you don't buy anything. With online retailers' greater abilities to reduce human error and gather reliable customer data, how can brick-and-mortar compete?

3.  Actually, I Lied: It's All about Customer Service

If it's all about inventory management, why isn't Starbucks failing? How come Chick-fil-A has lines every time I visit? Well, have you ever seen the outside of a Starbucks look like this? 

In a local mall's parking lot

Oh, you're going to argue I'm only using food retailers as examples? Ok, why are Apple and Nike so popular? Why did Apple open "brick and mortar" stores several years ago? Why is the Apple store always busy while the Microsoft store across from it in my local mall almost always empty, except for kids trying out video games?

It's the customer service--a long lost art. When you go into any Starbucks, you can personalize your drink any way you like. If you still don't like it, you can demand the barista re-make it. When you have a problem with an Apple product, you can bring it into a store and get it looked at by experts. When I question the workers at the Genius Bar, they take such pride in knowing everything about their products, they often get offended or bemused. When I pointed out one of the outlets in the table didn't work, the worker smirked and said he knew--the implication being, "You can't know more than us about Apple, buddy." Another Apple employee once answered numerous questions about DJI and GoPro drones in depth--which aren't even Apple's own products.

Does Starbucks make money on its 100% customer satisfaction policy? In terms of hard numbers, absolutely not. Does Apple maximize profits by paying higher wages to experts who actually care about their products when it can sell its products online or through other retailers? Nope. But both companies have such high margins, they don't mind losing money here and there if it brings back customers. In short, high margins are supported by excellent customer service, and excellent customer service allows higher margins.

From The Everything Store (2013)

Lots of people shop at Ross and Kohl's, but they wouldn't go there unless they could get 75% off original prices. When you have non-existent customer service, you can lose customers easily unless you keep prices so low, they will tolerate ineffective and surly employees--who might be adding to the $40 billion theft problem while you shop. Unfortunately, you can't quantify the value of consistently excellent customer service in a spreadsheet, so some managers who take over stores with declining YoY revenues focus on everything but the customer experience, dooming their efforts from day 1 and antagonizing formerly loyal employees. 

4.  Overseas Malls Are Mostly Doing Just Fine

Let's contrast the American shopping experience with other countries. Malls are central meeting points in many non-U.S. countries because they offer air conditioning, excellent WiFi, and wonderful food courts.

Discounters haven't made inroads overseas. (A Filipina friend, a highly educated regional manager of a popular pizza joint, has never heard of Ross or Kohl's.)  American brand names still command high prices because MAP restrictions force retailers to compete based on excellent customer service, not low prices. Dirty, unappealing malls exist, but they only have mom-and-pop stores and small businesses, not brand-name retailers. Every single mall overseas I've seen with brand-name businesses is pristine and staffed with people who work hard.

When customer service fails overseas, it's because good intentions often overwhelm common sense. For example, in Panama, as soon as I walked in a sporting goods store--where I eventually bought an authentic Kobe Bryant jersey for 40 USD--an employee asked if I needed help. When I said I was just looking, she still followed me around. At first, I thought she believed I was a potential shoplifter, but then she started being really helpful, like taking the hangers from the clothing I was looking at and pointing to nearby mirrors. I take a long time before buying anything because I walk around for at least 5 minutes, asking myself, "Do I need this? Do I really need this?"

After 5 minutes of walking around doing my usual retail self-questioning, I decided the cute, petite Panamanian employee following me everywhere was working on commission, and it would be rude not to buy something. When I told her I was going to buy the jersey, her expression didn't change. She walked me to the cash register but didn't ring up the sale herself. That's when I realized--she wasn't working on commission. That's just normal overseas customer service.

It's not just in Panama where I experienced "excessive" customer service. Let's take another "P" country, the Philippines. Every time I walked into a middle class or upscale mall, I saw at least three workers ready to assist me in each section. 

Quick--how many store employees do you see? 

Like I said earlier, I'm so used to American customer service--or lack thereof--it took me a long time to realize I just had to patiently deal with overly helpful employees when shopping. 

5. Retail Used to Be a Viable Career and Still is Overseas

Many SE Asian malls, such as ones operated by Ayala Corporation, prefer to hire college graduates as workers, the idea being that such persons will speak English and are able to identify with affluent shoppers. Yet, even in overseas malls where the staff comes from more humble circumstances, I experienced genuinely helpful, normal, and intelligent people. 

When I bought a soccer jersey in a mall frequented by Panamanian locals where workers make 2.60/hr USD, I still got got excellent customer service. Using Google Translate, I was my usual annoying self and asked a lot of personal questions from the employee, including about her wages.  I tried to tip her after she amiably answered my prying questions, but she looked surprised and called to her supervisor, asking if she could accept the tip. Her supervisor cocked an eyebrow, then nodded and looked away, probably having committed a violation of store policy but at least having the discretion and common sense to know when to override it. 

Retail wages in other countries are generally good. In Panama, the worker making 2.60/hr USD could afford to buy a home, which cost her 59,000 USD. (Yes, I ask a ton of questions--I have no shame when it comes to gathering data.)  She took out a mortgage with an 8% interest rate, which most people would consider quite high, but she owns a home--something almost no retail worker in a developed country can do. Sure, she's far away from the Malecon, where a one bedroom high-rise condo costs 250,000 USD in a beautiful area resembling Venice Beach, but she owns property and isn't at the mercy of a fickle or greedy landlord/slumlord.

In hindsight, Amazon's most valuable competitive advantage didn't come from data, but from the underlying premise of Bezo's business model: if a process works, lower-level workers should talk to each other less, reducing the potential for conflict or mistakes. If a customer has to email someone and ask for help, there's a flaw in Amazon's self-contained eco-system, and because Amazon owns every piece in the system, it can keep perfecting its processes until you can get anything you want, however you want it, without needing to contact an underpaid American customer service worker. Even before robots, AI, and drones, Bezos envisioned and created seamless automation, bypassing the risks of imperfect customer-facing service. Amazon is taking market share from "brick and mortar" not because of lower overhead due to the lack of a physical presence, but because it focused on creating a seamless customer experience. In fact, Amazon will be opening a traditional brick and mortar store right across the street from the mall I visited today. That mall is the most posh outdoor mall in the entire city. When it comes to the customer experience, Amazon doesn't mind paying more. 

In contrast to Bezos, Starbucks CEO Howard Schultz made coffee a premium beverage by encouraging employees to create the perfect in-person customer experience. Before Schultz, no one could charge more than 1.50 USD for a cup of coffee, but after seeing the more fashionable coffee experience in Europe, Schultz returned to America, determined to bring a better coffee culture to the States. 

From Schultz's Onward (2011)

Read my last line above--pay particular attention to the word, "culture"--and the words, "human connection," in Schultz's own book. Schultz didn't bring coffee to America. He brought a specific cultural vision and added excellent customer service.

Two CEOs, two seemingly different visions, but the same focus: a perfect customer experience.

6. Conclusion

I don't have an MBA, and I've never managed a retail store, but I'm not surprised customer-facing American retail is suffering. In the absence of sincere, dedicated leaders, relatively low wages make it hard to convince employees to deliver excellent service or to see themselves as a part of a brand's cultural continuity. 

In addition, lower-level employees, including store managers, often lack discretion to satisfy customers, so higher wages alone may not increase initiative. In fact, Costco pays higher wages, but people go there for competitive prices, not customer service. Unsurprisingly, Costco is struggling to find its niche with a younger generation of shoppers who want better overall experiences, not just lower prices. 

If individual American retailers cannot consistently create excellent experiences, then mall operators themselves should. Ethnic malls have a much more diverse tenant mix, which increases foot traffic at different times of the day, alleviating parking woes. Such malls usually have a grocer as the anchor tenant (H Mart, Mitsuwa, etc.) as well as sleek food courts within the grocer itself or the mall, using delicious food and smells to drive traffic. Upscale malls overseas have numerous events sponsored by major brand names--just think of the fun activities and giveaways inside an American sports arena on gameday, and you'll get a good idea of what a Hong Kong mall looks like on a daily basis. American retail is suffering from an identity crisis and is trying to compensate by increasing ad dollars and focusing on image, not experience. Yet, companies like Abercrombie and Fitch (excluding Hollister) and J. Crew, which arguably care the most about their image, are suffering the most. It's time to get back to basics. 

Disclosure: I own shares of ANF, M, TGT, various REITs, and other companies mentioned herein. My positions may change at any time. You are responsible for your due diligence.

10 Reasons to Avoid Cuba (Part 2)

[Continued from HERE (Part 1).] 

5.  Cuba Still Rations Basics, and Prices Make No Sense

By the end of my month in Cuba, I was dreaming of entering a Whole Foods or Target and filling up a shopping cart. This is what Cuba's "supermarkets" sell: 

Your eyes do not deceive you.  You are indeed looking at large cans of tomato paste. Of all the items the store chose to advertise, this is what they felt was their best selection. (Maybe they wanted something large to fill up the window? It's not like they have competition.) I bought two toothbrushes for 50 cents each. I wanted shampoo, but they didn't have shampoo.

If you visit Cuban neighborhoods outside Old Havana, you'll see many people walking with trays of fresh eggs every day. You'll eventually realize Cubans get their food through rationing cards, just like the British did during WWII. As you might expect, a thriving black market exists, driven by remittances and products sent from abroad. My neighbor might live three to a room with a kitchen the size of a small closet, but her two sons own a used Xbox, probably smuggled into the country after bribing a guard.

Cuba claims to be opening up, but it's hamstrung by U.S. sanctions and its own poverty. Any ship that docks in a Cuban port cannot dock in an American port for at least 6 months. As a result, the main countries with trade agreements and enough products to sell solely in Latin and South America are China and Spain. Almost all of Cuba's new cars--which, due to limited supply, cost almost as much as a small apartment in Havana, or about 22,000 USD--are Geelys made in China. (Most of the old cars are Ladas, which are Russian-made and still running after 20+ years.) Everything that consistently works in Cuba is made in China, from buses to fridges to trash pickup trucks. A cynic would say China uses Cubans as guinea pigs to make sure their products work before shipping them to more developed countries, but I didn't see any evidence of inferior quality. 

Cuba is known for having old American cars, but such cars are popular because Cubans don't have sufficient disposable income to justify having any auto dealerships. Once you realize this, the old cars start to look sad. 

Old because Cubans can't afford new cars

They're also a convenient way for Cubans to make money from excitable tourists. A taxi ride in an old American car costs about 5 USD a person, whereas Cubans accustomed to the old cars see them as just another option in the taxi business and pay about 40 to 50 cents a ride. I rode in a few old cars and enjoyed the large and comfy seats, but otherwise, they're nothing special. Just more propaganda from a country that doesn't have much to offer outsiders, forcing it to rely on gimmicks to attract tourists (and foreign currency). 

Just for fun, here's an actual Cuban cop car--try not to laugh: 

I did see one encouraging sign. Cuba recently opened several "supermarket" locations called Jabon y Agua (literally, "Soap and Water"). These stores offer more consumer choices, but their prices make no sense and are unaffordable for the typical Cuban, so it's possible they're another way for Cuba to gouge foreign exchange students or visitors. On the other hand, maybe the stores are a way to compete with the black market. I saw someone offering to sell a Gillette Fusion razor blade to a restaurant owner for 20 USD, twice the price in the U.S.  He didn't have any blade refills, so I'm not sure if the seller understood his own product. 

Cubans cannot afford 9 USD for shaving cream so who's buying?
Why is it over 2x the EU and USA price? 

To summarize, Cuba isn't nostalgic by choice--things are old because of economic failure and poverty. My landlord summarized the situation perfectly: 

6. Cuban Culture Gets Stranger the Longer You Live in Cuba

Cuba was the only country in Latin and South America where I saw a police officer catcall a woman. It's the only LatAm country I've visited where the men look prettier than the women and where construction workers commonly have perfectly coiffed hair and six-packs. 

A Cuban man, whether rich or poor, looks like he's spent hours in front of the mirror before leaving the house. Perhaps young Cuban men think they're required to look like Colombian pop star Maluma (like Justin Bieber, but talented) in public. In a place where few people read for pleasure (newspapers are official government propaganda, and why bother reading if all the dollars are tourism-related?), and televisions show mostly anti-Western propaganda (imported from Venezuela) or music videos, looks matter. After all, brains won't get you the girl when everyone makes the same government salary. 

I always play basketball when I travel, not just because I like the game, but because it's a simple way to determine a country's culture. For example, how often and when do people foul? How hard do they play defense? Are they more interested in showmanship than fundamentals? When there is a dispute, how is it resolved? Do they even let strangers play?

In Cuba, basketball is a theater-like performance. I've never seen so much preening and flamboyance. Games that should have lasted 10 minutes took 30 minutes. When a foul is disputed, no one "shoots for it" and gets back to playing. They take turns demonstrating how upset they are and then argue their case before all the sitting players, who function as an informal jury. Both players will storm off in opposite directions, gesticulating wildly, and then return to the center and loudly proclaim their innocence or the other player's malevolence. This happens every single time a foul is called, whether offensive or defensive. (If Cuba doesn't already have a national mascot, I propose a hybrid of a peacock and an angry chihuahua.)

It gets better. If a particularly lucky shot goes in, the shooter might do a dance that would put former NFL player Ickey Woods to shame. One player, after humping the air and moving forward for 10 seconds, progressed to actually humping his defender, who had to push him away. The shooter continued humping, this time in a stationary pose.

Basketball fundamentals are non-existent because Cubans can't go on YouTube to learn anything, which makes Charles Barkley's 1992 Olympic elbow even more flagrant. When I started doing high pick-and-rolls with two other American tourists on my team, the Cubans didn't know how to switch. One skilled Cuban player, after being subjected to the same play two times, spent a minute dramatically expressing his frustration at his teammates before passing the ball (yes, even when there was no foul, a Cuban player found a way to lengthen the game).

I started to understand when the government gives you a guaranteed job (at low pay) and controls your food supply, there's no place where people can feel heard--except the basketball court or other public places. If your work ethic or words won't get you a promotion, you're not going to suggest doing anything differently--you'll just want to finish your job with minimal effort and go home. In a sense, the basketball court in Cuba, at least for the working class, is one of the only places where results matter. Perhaps that's why they're so adamant about spending as much time on it as possible.

Even in the straightforward world of sports, it's hard not to feel Cuba is a tragedy. I met a wrestler distinguished enough to award medals at the local youth wrestling tournament, and he showed me pictures with famous Cuban wrestlers Mijaín López and Ismael Borrero. He also proudly showed me a video of his 11 years-old son in a tournament. I'm a former wrestler lucky to have had two state champion coaches in high school, but my training started and stopped in high school. (By the way, everyone seems eager to praise teachers, but my high school coaches--the Vierra brothers, Mr. Gilmore, Mr. Cunningham, and my track and field coaches were most responsible for any maturity I might have today, whereas I despise almost all of my high school teachers and wish them fiery deaths.)

With this young wrestler, I was taken aback by the many simple changes that would quickly improve his skill level. The son and I grappled for a few minutes, and I showed him how to make improvements, but I couldn't shake the feeling I was showing him things he should have learned in his first three months of training. Increasing my discomfort was the fact that Cuba is formidable in boxing and wrestling globally, so lack of internet access shouldn't impact institutional knowledge. Yet, somehow, this eager young man's talents were not being developed adequately.

I realized the father was athletic when I saw him at a street food and coffee stall. His forearms were twice my size, and I'm no slouch at 230 pounds. I decided to challenge him to an arm wrestling match to break the ice, and he agreed. Much to my surprise, I won. After seeing more and more Cuban men larger and more chiseled than me, I realized they weren't strong. Even the ones who lifted weights didn't seem strong, and I couldn't figure it out until I saw two random Cubans in a mall.  I didn't think they were Cuban because they wore completely new brand-name clothing and were obviously fit. I walked up to them and asked if they were Cuban, and they said they were. That's when I realized the problem. Poverty destroys everything. 

Most of the Cuban men I saw didn't have access to protein except for eggs. Even if they exercised 3 times as much as me, they wouldn't be able to compete effectively on their diet of rice, beans, and the occasional chicken leg (not to mention the copious amounts of sugar most Cubans ingest). I had become so used to seeing poor Cubans, I literally couldn't believe it when I finally met a few strong and affluent ones. That's Cuba. A place where poverty seeps into every aspect of people's lives, rendering everything hollow, even in places where one's efforts should produce strength.

[To be continued...] 

American Hubris, or Why Revolutions Usually Focus on the Educated Classes

In America, the two federal legislative bodies are trying to reform a healthcare bill passed by a previous administration. The old bill increased premiums, especially for younger people, and didn't sign up as many people as expected in some states.

I'm seeing a lot of Americans encouraging people to vote on the healthcare bill who don't realize the terms are not yet final. The CBO report--issued by a nonpartisan government agency--relied upon by the media addresses the last version of the bill, not the latest negotiations.

In response to the CBO report, Congress is attempting to resolve inconsistencies between the House and Senate bills. The House bill received more support from the CBO, causing the Senate to revise its own version. If someone tells you to vote "No" on the healthcare bill as of July 7, 2017, s/he is missing the key point: there is nothing final to vote on.

Too many Americans have the hubris to encourage others to vote a particular way without knowing the facts, which is a pattern among modern-day Americans with high levels of education: they like to encourage supportive acts that make themselves feel good, but without any substantive understanding of the issues. Such hubris has torn the country apart and allowed Trump to flourish.

When choosing between a team that thinks it knows enough about healthcare to encourage voting a particular way on a bill that hasn't even been finalized, and a team actually trying to reduce long-term healthcare costs--which sap resources from younger generations--it doesn't take a Ph.D to figure out which side makes more sense.

Bonus: Nothing prevents states from raising taxes, borrowing money, or taking other actions to make up any shortfall in federal healthcare funding. For example, if Medicaid was completely eliminated, California has Medi-Cal and would still be able to provide any service currently subsidized by the federal gov. States want unlimited or ever-increasing funds from the federal government, a paradigm that masks the true costs of gov programs; keeps taxes artificially low; causes national security risks by putting future generations in debt to foreign creditors; reduces state and local gov flexibility by increasing dependency on the federal gov; and reduces accountability. 

Healthcare in America: Symptom of Overall Decline

I just ordered a new hearing aid. I bought it from the same entity I pay health insurance to. Hospitals may be non-profit or for-profit, but the label isn't very helpful because any entity with salaries and overhead must focus on getting money or go bankrupt.

Americans are confused about "for-profit vs. non-profit" because they're not used to seeing actual sticker prices for healthcare services and because insurance has allowed diffusing ever-escalating costs. Such a system works only if more people are added to the same insurance pool each year, which gets trickier if true competition exists. 

On paper, a for-profit entity has more incentives than a non-profit to be efficient and better at preventative medicine, thereby lowering long-term costs. Yet, even that basic premise is questionable if a non-profit has leadership that rewards employees for efficiency and reducing the number of unnecessary third-party tests. The trick is getting the balance between efficiency and customer service right.

Why do other countries seem to handle healthcare better? Reasons might be counterintuitive or simple. For example, they could be dealing with a population that drives less because of better public transportation, which increases daily walking time and therefore decreases heart disease rates. Maybe people are less stressed because they have less debt or more free time. Perhaps fewer people engage in excessive drinking or prefer wine to beer. (Even the "wine vs. beer" factor requires more analysis because the main difference might be that most wine is more expensive than most beer, encouraging less consumption and therefore fewer negative health effects.) Is the climate extremely hot, encouraging more showers and therefore more cleanliness, reducing disease transmission? Or does a hotter climate make it harder to walk more, increasing health risks? 

The more we analyze complex problems, the more it becomes obvious that nothing can be fixed on a national level in any large country, and one reason smaller countries like Singapore are so successful is because they are smaller and can act locally and more quickly when problems arise. (Note: "democracy" isn't necessarily the answer to anything once you realize any system that encourages local solutions, accountability, and more humility works.)

Back to my hearing aid purchase. I've been severely hearing-impaired since birth. American health insurance doesn't fully cover hearing aids, even if medically necessary. Also, tax write-offs require such a high level of medical expenses, almost no one actually qualifies. (Meanwhile, a dollar spent on advertising creates an automatic, above-the-line deduction--the best kind of tax break.) I will be paying 1200 USD out-of-pocket for the most basic Oticon aid, labeled as "entry" level. I probably need two more functional aids costing 2600 USD each, but I tend to spend a lot of time alone (cue the chicken or the egg debate), and I'd rather use my money for more pleasurable experiences like eating out or even giving it to a friend who can pay off high-interest consumer debt.

Why do I share my experience with you? I want you to get a sense of why American healthcare is so problematic and why labels like "single payer" or "for-profit" don't help. When I made the appointment to purchase the new aid, I already had the benefit of a previous visit, where the audiologist explained the different options and price points to me. I was given a standard half-an-hour appointment, but I saw the system scheduled the next patient in 20 minutes, creating an incentive to minimize the time spent with me.

Not knowing about the 20 minute scheduling until my follow-up visit, I brought another aid I use as a back-up, which needed a simple tubing replacement. The audiologist looked at it and told me it's not common for Kaiser to work on an aid not purchased through its own service. She turned the aid over a few times and finally left for three minutes and returned with a tube.

A tube is just a piece of plastic attaching the earmold to the electronic aid that goes behind the ear, but if the five cent piece of plastic isn't replaced regularly, the expensive aid won't work optimally. Before Kaiser, I had a private audiologist, and it was standard procedure to clean or replace the tubing if requested. Unlike Kaiser, the private audiologist doesn't get an automatic stream of customers referred from the overall insurance pool, so it has incentives to treat customers well. It is a for-profit entity, while Kaiser Permanente is one of the nation's largest non-profit health plans. Before I go further, I want to say I like Kaiser. It has an integrated-care model, which is the future of healthcare--if we get it right.

Interestingly, the audiologist told me Kaiser's hearing aid unit was "for profit." I'm not a tax lawyer, and the idea of a non-profit entity with a for-profit subsidiary sounds odd, but it's possible the audiologist isn't a tax expert and mis-spoke. Later, I realized the audiologist's use of "for profit" might have been a way to subtly get out of performing a basic medical service. If you only have 20 minutes a patient, and if you don't need to attract new patients because they're part of an existing insurance network, why do extra work? What is the incentive to treat the patient as a whole person, regardless of whether your corporate structure is for-profit or non-profit?

Such problems aren't unique to healthcare. Even mid-sized law firms now require associates to charge 10 or 20 cents per copy, limiting copy machine use by requiring an electronic client billing code. In the past, firms would also charge an inflated flat rate to send faxes. As you might suspect, the incentive to nickel-and-dime clients in a for-profit system is high, which leads many people to advocate a non-profit system where the culture can, in theory, focus on seeing the person as a whole human being. Yet, here I was, in a non-profit entity, and the incentives clearly discouraged an audiologist from assisting me in a simple way. The lesson? Tax structures don't tell you anything about employees or their dedication. They don't tell you whether the employee is burned out or if she feels like a meaningless cog. They don't tell you if the employee wants to help you but is constrained by policies discouraging common sense.

A for-profit system might be better if it attracts the most ambitious, hard-working employees, especially if a non-profit system pays less or attracts burned-out employees. Indeed, even a non-profit system must manage patients efficiently, and software now handles day-to-day operations for most large entities, restricting flexibility and personal initiative. 

Remember going to a doctor's office and waiting for 20 to 30 minutes after your appointment time? What if that inefficiency allowed the doctor to listen to patients more and give everyone the benefit of more personal service? What if technology has sacrificed our ability to feel useful and to take care of people in ways that build lasting relationships? What if tolerating technological advances that limit personal flexibility but increase efficiency has seeped into other parts of American culture, limiting our ability to think long-term?

I don't know the answers to the above questions, but removing personal discretion from employees and increasing hurdles to long-term customer relationships aren't the solutions. To be fair, the audiologist did give me extra options that answered other questions I had. However, by the time she showed me a catalog with useful add-ons, I didn't know if she was genuinely trying to help me, or if she had a sales quota. 

Dealing with American healthcare is enough to make a diehard capitalist into a committed socialist. That should scare us all. 

Bonus: "Despite all the false positivity, I find Americans to be generally the most stressed out and unhappiest people on the planet. Despite all the resources, and all the money they have, they are sadder than people I know who can barely make ends meet in other countries, but still know how to live in the moment." -- Benny Lewis 

Mind the Gap: Individualism in Modern America

I recently had a strange dream. I was telling a colleague's child that he was very smart, but he had to pick a group to join to really make an impact. His mission in life, in addition to earning money and staying out of non-dischargeable debt, was to find his "tribe."  

He asked, "Isn't America about individualism?" 

"Not anymore, unless you have access to millions of dollars." 

If that sounds dystopian, you're right. In the old days, when life was simpler--and more harsh, with limited options--if a group of people had an idea, they could go to the town hall or a local event, discuss it, and implement it. Taxes didn't need to be raised--people contributed their time. More often than not, there was nothing to implement. You had a family--a large one--and your life revolved around taking care of them and avoiding disease. 

Today, as more adults in developed countries have delayed having children because of the high cost of homes in good school districts; greater unpredictability in relationships; and the need to go in debt to gain access to decent-paying careers, societies have struggled to replace the family with some other equally meaningful "work." In fact, many modern communities are tasked with filling in the gap that religion and family used to occupy and are learning Facebook, food trucks, specialty coffee, and Netflix don't provide the same ability to bind people together. 

If we have to go and "find" our families instead of creating them organically, we can see attending the "right" middle school, high school, and college counts. We can also see it's easier to exclude people when we or our parents choose private schools, stay within our "found" social networks, and don't take public transportation. 

Once we "choose" our new tribes, especially when we start working full time, it's easier to let social media and television influence how we feel. We've all seen videos of government officials in the 1960s destroying Beatles records. You might not know that even England banned Sesame Street, with the BBC's chief of children's programming calling the show "non-democratic and possibly dangerous for young Britons." Television was a game-changer, even when its programming was innocuous because societies understood that for the first time in history, an element other than family and school was vying for influence over their children's lives. The old conservatives weren't wrong to feel threatened. As the 2016 American presidential election showed, television's and media's influence sometimes overwhelm everything else. 

A few decades ago, if we disagreed with someone not in our social group, we might go and talk with him. We couldn't google a person's name and make assumptions. We might have gossiped about someone different, especially in smaller cities, but having different political or other beliefs didn't seem to impede social lives because so many other factors brought the community together and allowed opportunities to see an individual's integrity or work ethic. Without credit card or other consumer debt being widespread and with lawyers and the law serving local interests, the community could also assume a person in a neighborhood was there on his or her own merit. 

Today, many native-born Americans and Europeans might exclude or denigrate others based on political affiliations, whereas in the past, Jacklyn might see Miguel and grow to like him based on his capacity for hard work--political differences be damned. (True story, by the way--that's how Amazon.com was eventually created.)  Although it's easier to date interracially now than in the past, which increases possibilities on paper, we've managed to make relationships harder by excluding persons who don't share our opinions--even if they have a strong work ethic or character. 

Humanity seems to have a special capacity for shooting itself in the foot with every technological advancement, but the "meaningful relationship" gap isn't just about greater possibilities a la Tinder and Happn. With debt everywhere and laws giving certain groups preferential status, determining a person's character at a young age or combining lives becomes much more difficult. There are too many moving parts. Do you work a dead-end job to help your wife go to medical school, only to see her split up after she starts getting paid well? Do you stay at home, lower expenses by cooking at home, and take care of the kids while your husband moves up the corporate ladder, only to see him run off with the secretary? When we are unable to use information to establish character and instead use it to divide ourselves based on superficial differences while powerful groups form political alliances to protect themselves against change and consequences, why shouldn't things not to fall apart? 

Humans have never been a very tolerant species, but we were intolerant on our own dime in the past, not OPM and certainly not with money we borrowed from our children's yet unborn next generation. If someone bought a new car, we could look at it and assume s/he sacrificed and saved up to buy it. Sure, the car was shiny and had useful new features, but the real attraction--whether we realized it or not--was that we were lucky to know someone who made an effort to convert his time into something tangible and share its unique experience with us. If the car broke down, the neighborhood felt the owner's anguish, and the car manufacturer or dealer would lose his reputation unless the owner--our owner--was made whole. If a police officer was shot or attacked, we all felt the blow because we saw him walking our streets at nighttime. At the same time, if he committed excessive or unnecessary violence against a member of our community, the mayor and police chief answered to the neighborhood, not the union, not an MOU, and not a lawyer authorized to use every procedural trick in the book. 

I was never very good at algebra, but here's a formula you may want to consider: excessive debt + a lack of tolerance + a dearth of ways to show character and integrity - trust = dystopia. In short, the American president is the least of our problems. 

Vaclav Havel, Disturbing the Peace (1991)

10 Reasons to Avoid Cuba (Part 1)

I just returned from three months living in Latin America, including Cuba. So many Spanish curse words to learn, so little time. Pinga. Maricon. Mierda. Puta. Best of all, if you want to double down, you just add a "re" to the beginning of a swear word, and you've got a new way to express yourself.  These words would come in handy in Havana... 

Cuba

Plaza de Revolucion

My first day, I walked past a building that looked like a kid's powder-blue castle. I entered and realized it was a police department. Seeing Fidel Castro's words on various plaques on the walls, I thought I'd take a picture and translate it later. Someone stopped me at and directed me to the front desk, about 30 feet away. I approached and asked if I could take a photo of the plaque. The uniformed woman said I couldn't.  Stunned at her lack of common sense, I walked backwards, sarcastically saying, "No es posible tomar una photo de palabras de Fidel Castro? En Cuba? Viva la revolucion!" 

My month-long experience in Havana did not get better from there. Before I explain exactly why and how Cuba relies on hype to boost its tourism numbers, I'll give you some tips if you--against all reason and decency--still want to visit.

The Good

You can see Havana in three days. Almost all the action is in or near Old Town, or Havana Vieja, and if you want to visit, stay there. An excellent tour bus costing 10 USD per person starts and ends at Plaza de Revolucion--you should take it as soon as possible to see where you'd like to go.

The usual list of places to see includes Capitolio (similar to America's Congress), Ernest Hemingway's house, Playas de Este (a beach), a tobacco factory or shop, Casa de la Musica, the Malecon, Bodeguita del Medio, Callejon de Hamel, Museo del Chocolate (a cafe), Hotel Nacional, Museum of Fine Arts (Museo Nacional de Bellas Artes de La Habana), and Fabrica de Arte (a hipster club).  Some people take bus tours via Cubatur or Havanatur to Trinidad, Varadero, Vinales, or Cienfuegos (known for fishing), but I only stayed in Havana.

My favorite spots were Museo del Chocolate, Museo Nacional de Bellas Artes, the beach (Playas de Este--wear sunscreen!), and Hotel Nacional (go inside and to the outdoor bar).  

by Mariano Rodriguez

Playas de Este

"Museum" of Chocolate

Cuba is unique because it lacks widespread WiFi (pronounced wee-fee in Cuba). To access WiFi, you must find hotspots throughout the city and input a number from a card.  You can buy a one-hour card from someone in the hotspot area for 3 USD.  If you're frugal like me, go directly to the local phone company's office (I went to the one on 17th and B), wait in line, show ID, and buy one for 1.50 USD. (Cuba's economy is so terrible, buying and re-selling anything to tourists is usually more attractive than working for the government.) 

Make sure the password isn't already scratched off, clear your browser's cache, and you'll get a pop-up ETECSA website prompting you for the two numbers you'll see on the card.  

Some other information:

1.  Cuba's national soda brand is Ciego Montero, and the cola flavor is better than Coke. As you might expect, it uses real sugar. If Cuba adds a small sticker on each can or bottle saying, "Made with Real Cuban Sugar" and exports it to the EU and China, it can watch the money roll in. Unfortunately, there's a U.S. naval blockade, and other countries aren't keen to let foreign companies compete with their own. 

The more you travel, the more you realize there's no such thing as "free trade." Every country protects its own farmers and agricultural sector, and the reason foreign-produced coffee is so widely available in North America is because its soil isn't ideal for growing coffee beans commercially.  In other words, there's no domestic coffee bean industry to protect, so America has few restrictions on foreign coffee beans. You still won't see many Juan Valdez or Cafe Britt cafes in North America, partly because of higher operating and legal compliance costs, which make it harder for countries with weaker currencies to open physical locations in the U.S. without preferences (such as lower tariffs and low insurance costs). Sadly, it's easier for developed countries to whine about trade deficits than actually create long-term incentives for truly effective international competition and cross-border investment. 

Cuba's best products -- not coming to a store near you

2.  When you go to any busy place, there will be a line.  Always ask, "Ultimo?" to determine whom you're behind, and when that person gets in line or moves forward, follow him or her. 

3.  Finally, download maps.me, a free VPN, and an offline Spanish-to-English dictionary on your cell phone before you visit.  Once you're in the country, some apps or webpages might not work, even if you have WiFi. I noticed one Google article on Cuba didn't load when I had WiFi. Next time I accessed WiFi, I tried again with the VPN and downloaded the article--which was not critical of Cuba--seamlessly. If something doesn't work in Cuba, don't automatically assume the government is blocking it--it's more likely Cuba doesn't have the necessary infrastructure to be compatible or to make it work.

The Bad and Ugly

I've visited about 40 countries, including impoverished ones like India, where I saw people living in shacks and sleeping on the ground a few meters from the Baby Taj, and people desperate enough to follow me for half a mile begging for money. I don't mind a lack of first-world amenities. I always try to live like the locals when I travel, partly because it's cheaper, but also because I don't see the point in traveling just to meet other tourists or see yet another beach. (Unless you're in Nice, France, where the beach has a stone surface, how much water and sand can you see in one lifetime?)  

I *uckin' hated Cuba.

1.  Cuba is like America, if the Least Business-Savvy Cotton Plantation Owners Had Won the Civil War

Cuba has all of modern America's worst traits--its jingoism, its excessive patriotism, its inability to handle criticism--and none of its best traits--entrepreneurship, technological infrastructure, and open media. After hearing me criticize Cuba, one waitress became upset and told me, "We have a saying in Cuba: 'If you don't love your country, it's like you don't love your mother.'" (I didn't ask if the phrase still applied if your mother was an abusive kleptocrat.)

Cuba was the penultimate country in the Western Hemisphere to ban slavery in 1886 (Brasil banned it in 1888, though it banned slave trading earlier). Cuba relies and relied so much on its tobacco, cocoa, and sugar industries--all linked to manual labor--it needed slaves to run its economy, just like Brasil. Today, in Cuba, a clear racial division exists between higher class jobs in medicine and academia and other jobs, even if the pay isn't vastly different.

I try to walk about 7 miles a day and take public transportation when abroad, so I notice patterns others might not see. When I passed by local hospitals or saw doctors in local restaurants getting lunch, almost every doctor had blue or green eyes and light skin. I met a black medical professor and raised my concerns with her. She agreed and said black professionals need to be twice as a good as non-black ones to be accepted in educated Cuban society. (Pop quiz: what other country does that remind you of?)

William Faulkner, on race relations generally and Emmett Till specifically

Property ownership is another way to gauge wealth. My Airbnb property owner had whiter skin than most Scandinavians. The government tries to provide housing for Cubans, but so many people have moved to Havana from smaller cities looking for tourism-related work, it could not keep up with demand. In Havana and elsewhere in Cuba, almost everyone lives in crowded conditions with family unless they have generous remittances or bought property a long time ago. 

Who rides the cramped buses in Havana? Besides me, almost all black-skinned persons, senior citizens, and almost no one with light eyes, indicating they need to commute to work much longer distances or can't afford taxis. Mind you, shared taxis for locals aren't very expensive--about 50 cents--but the bus is even cheaper at about 4 cents a ride. 

One doesn't need to be a keen observer to notice Cuba's oddities. A neighbor in my apartment complex enjoyed blasting music or the television at 12 in the morning. When I complained to my Airbnb landlord's assistant, she warned me against confronting him and pointed to her arm, saying, "Negro"--black.  Except for America, I've never been in a country where it was so openly acceptable to link a lack of manners to one's skin color. (My landlord eventually talked to him, and after some yelling, he stopped playing loud music at 11pm.)

Cuba taught me that it's possible to have racism without segregation. Like Brasil and Costa Rica, Cuba is racially diverse. I was born in the Middle East, and I can pass for a local in all three countries, but only in Cuba did I realize why Southern whites supported Jim Crow in America. If you had to deal with millions of poor people suddenly having the same rights as you, but without an education or way to succeed economically, would you take advantage of an opportunity to keep them away from your neighborhood, at least until they had similar education or financial support as you? 

Most Cubans have someone in Miami sending them money each month, but I wouldn't be surprised if most of the darker-skinned Cubans lack such connections because their families live or lived in more rural places where manual labor jobs would be more plentiful and news of refugee and exile programs more difficult to verify. In short, remittances from Miami probably favor educated and/or light-skinned Cubans. With private businesses finally being allowed, but banking loans unavailable to most people, Cuba might end up with major wealth disparities based on race--just like America.  (Some revolution, huh?)  

When you allow chattel slavery, it has long-term consequences. When looking for a place to live, if you can choose, pick a place that banned slavery or slave trading earlier rather than later, allowing more time for economic progress. Such a yardstick might not be useful in isolation, though. For example, Vermont partially banned slavery in 1777, but didn't need slaves to run the comparatively less labor-intensive business of dairy farming. Even today, Vermont is 95% white. 

Contrast Vermont's ban with Cuba's, and you'll see a potential source of Havana's odd culture. Spain banned slavery in 1811, including in colonies like Cuba; however, Cuba rejected the ban. In other words, given a choice, it intentionally decided not to take the more moral option.

Both America and Cuba have sold themselves a revolutionary vision that has no connection with what's actually happening on the ground. If America doesn't make a cultural u-turn, it may resemble Cuba in 200 years--glossy on the outside, rotten on the inside, bolstered by slick propaganda, and divided based on race and wealth.

2.  Smoking is Everywhere

Dunhill cigarettes cost 1.75 USD.  There is no sales tax.  I've never seen so many high school kids smoking in my life.  I even saw middle schoolers smoking. So much for Cuba's great educational system.  

To be fair, the elementary school kids I saw were well-behaved and played well together, and one Canadian-born father told me when the teachers tell the pre-schoolers to sleep, they all sleep without a fuss.

3.  Health Care is Free for Locals but is Decades Behind

I haven't gotten to Cuba's dual currency system, which incentivizes tourist theft, but let me tell you a story: when I needed Immodium, I asked a doctor, who said he needed to write me a prescription (probably for generic loperamide). He'd do it for free if he had a script, but he didn't have one, so he had to borrow one from a co-worker, and he needed 15 USD for it. Unfortunately for him, as he was saying this, he opened his wallet, which had a script. I didn't take him up on the offer. (In case it's not obvious, tourists do not receive free healthcare, and I'm not sure if Cuba still requires incoming airlines to add and collect a small healthcare fee on its behalf.) 

Why did I need a prescription for anti-diarrhea medicine? Because Cuba regulates and controls everything. When I got sick in the Philippines or Thailand, I could go anywhere and get medicines that would require a prescription in the U.S.  (I still remember floating in the air and giggling after taking muscle relaxants in Bangkok that were suggested to help me recover from diarrhea and exhaustion.) Pharmacies, when you can find them, only seem to have Vitamin B and C available, though I did see a Cuban-made anti-cholesterol medicine in one of Old Havana's pharmacies. I couldn't find ibuprofen or antibiotic cream in any pharmacy.

The lack of selection isn't limited to OTC drugs. I've been hearing-impaired since birth and have been lucky to see firsthand technological improvements in hearing aids over three decades. In Cuba, I saw a few people wearing hearing aids. They were the same ones I wore about 20 years ago. 

Don't believe the hype--Cuba lacks technology, including in medicine, though basic care is quite good. The people most fervent about Cuban healthcare are younger Cubans, who have only experienced rudimentary functions like annual checkups or vaccinations. Many people will tell you about someone with cancer who was cured after receiving free treatment, but upon delicate cross-examination, will disclose they don't actually know the person who received cancer treatment; in other words, it's hearsay and unreliable. It's true foreign medical students study in Cuba, but if you look closely at the flag on their sleeves above the Cuban flag, it's almost always an African country even poorer than Cuba. 

4.  Everyone Will Try to Rip You Off if You Don't Speak Spanish or Look Cuban

I expect a certain level of mendacity when I travel to poorer countries, but in Cuba, it's practically a national pastime. 

Cubans are poor, and main sources of wealth include tourism jobs, Miami remittances, or smuggled items (I met a Floridan in the airport who brought 5,000 USD cash to his relatives--he told me Cuba has been going downhill for a while). Because private businesses are new concepts to many Cubans, they haven't learned that creating good relationships can lead to higher income or repeat business. Like some American businesses, they tend to see everything in the short-term--a one-off opportunity to extract as much money from you as possible--a mindset encouraged by most tourists' decisions to stay only three or four days in Cuba. 

It's hard to hold a grudge, though. Doctors, like most government employees, make the equivalent of about 25 USD a month in Cuba, not including bonuses. As I explained above, they will rip you off just like almost everyone else in Cuba if given a chance.

Many restaurants and food stalls "forgot" to give me proper change or substituted the wrong currency. Even a fancy restaurant in Old Havana, when given a 100 CUC bill for a 20 CUC charge, gave me back 60 CUC. (That reminds me--when exchanging currency, get 10 CUC bills--anything larger will be difficult to break. Also, there's a 10% fee for changing U.S. dollars but not any other country's currency. Bring Euros, pounds, or Canadian dollars to avoid the ripoff, er, fee.)

In case you don't know already, Cuba has two currencies. One is called CUP, or moneda nacional. The one used by most tourists is called CUC.  Technically, as a tourist, you're not supposed to have CUP, but you'll get some as change if you pay CUC to an honest street vendor or build a relationship with a local business and ask to do an exchange.

CUCs are equivalent to U.S. dollars, and it takes 24 or 25 CUP to equal a single CUC.  You'll be able to identify the difference after a day or two, but just remember: CUC bills do not have pictures of people on the front, and CUC coins are generally silver-colored, not gold-colored. (By the way, if you're American, you cannot use the ATM machines--sanctions inconvenience you, too--whatever cash you bring in, that's it.) 

Quick--which one's worth more? 

Sometimes, the dual currency system leads to genuine mistakes. For example, a taxi ride in an old American car within Havana is usually 5 CUC for a tourist, but only 40 to 60 cents for a local. (The yellow cabs charge 5 CUC for any number of people if empty, but the price will vary depending on your Spanish.) When I was with a Cuban friend for a day, he told me to keep my mouth shut in taxis so we wouldn't be charged the tourist rate. At the end of our tour, before we went separate ways, he negotiated a ride in a motorized "rickshaw" after confirming in English with me it would be 10 CUP. The driver, however, thought he was being helped by his Cuban colleague and would be paid 10 CUC (double the tourist rate!). At the end of the short trip, after some yelling and threats of physical violence, the driver and I both departed angry. 

Cuba's attitude seems to be, "If you get hustled, you deserved it."  There's no remorse whatsoever. Always remember: you are expected to negotiate in Cuba. Most prices should be cut in half unless you know the going rate. Go with a local Cuban everywhere if you can, and let him or her do the talking. Your experience will be much more pleasant. If renting from Airbnb, stay with a family and negotiate your meals being included. I stayed in an apartment solo, which was a mistake. Most Cuban residential buildings aren't set up to have privacy, so I gained little by having a place to myself.

I'll end Part 1 with a joke:

Q: How do you know when a Cuban is lying to you? 
A: His lips are moving.

I wish I was kidding. 

[To be continued...] 

A Nation of Immigrants? Not Unless the Bondholders Agree.

"If we ever close the door to new Americans, our leadership in the world would soon be lost." -- President Ronald Reagan

America has always claimed it is a nation of immigrants, but we are discovering it is a nation of immigrants when it needs them--especially ones with technical skills--and hostile to them when convenient.  Is America's openness to immigrants based on whether it can exploit their labor? 

Over 150 years ago, America needed immigrants to farm and work in the fields, so it got them--illegally.  Their legal status didn't matter. America needed railroads, too, but when the Chinese proved to be better than the natives, America decided it disliked competition and passed the Chinese Exclusion Act of 1882 restricting immigration.  

Today, America is restricting immigration directly by spending more on immigration enforcement, even against law-abiding residents with American children, and indirectly by restricting H1B and other visas. It's true if one country designs its school system around math and science instead of trying to teach all things to all people, it will have an advantage over a Dewey-designed system that prizes social control above practical skills. Yet, America's response to being outgunned, outmaneuvered, and out-educated has always been the same: do anything but change the status quo unless absolutely necessary, demonize the other side, and pass laws restricting their ability to compete.

Before you get too upset, it's useful to realize America has always used the law to defend the status quo, whether it was Buck Leonard playing baseball too well in the Negro Leagues and being excluded from MLB; Muhammad Ali correctly analyzing the Vietnam War better than the so-called experts and having his title taken away; Jackie Robinson getting court-martialed by the military; Swedes and Norwegians in Minnesota discriminating against immigrant Finns; and so on.

The modern American Establishment uses land-use restrictions to prevent building mosques while allowing churches with political connections an easier process; restricts H1B visas but does little to reform K-12 educational outcomes; sends PhD graduates back to their home country even if their skills are useful and their character good; protects government teachers, mostly native-born, from accountability; attacks charter schools, Uber, and Airbnb because they take revenue away from existing players with political connections; and does not adequately audit tax exempt entities that claim charitable works. (How many students could afford to pay for colleges, which are nonprofits even if public or private, without receiving government-backed student loans? How many churches could show they spend most of their funds on charitable services serving the public rather than their own members?) 

Ironically, Americans able to effectively protest and change existing rules were often protected by the police or the military--the same Establishment upholding those same rules. Muhammad Ali discovered boxing after a white police officer introduced him to the sport, which later put him under the protection of Louisville's most established lawyers. Baseball's #42, Jackie Robinson, was drafted by the Army in 1942.  Malcolm X? Murdered. MLK? Killed.

Edward Snowden, the whistleblower who exposed the NSA? Ex-military, from a military family, and ex-intelligence. He's having fun with his girlfriend in Moscow. Daniel Ellsberg, the whistleblower who brought down President Nixon and helped end the Vietnam War? Marine Corps officer (First lieutenant). Still alive and very much an activist.

No matter what, the Establishment prevails, which always favors insiders rather than outsiders such as immigrants. Today, barriers are systemic, and the Establishment prevails through legal loopholes, legal restrictions, and high prices. Resistance to change is a feature, not a bug, of America's debt-soaked system. It prioritizes bondholders getting paid in order to continue to keep taxes lower than otherwise possible and government employment relatively constant or growing. When your economic system depends on ensuring bondholders are paid every three months or every month, openness to outsiders who cannot contribute immediately to the tax base becomes more difficult, long-term thinking be damned.

Let's take a more personal example.  Want to be a politician and help society? First you have to go to law school.  How much is law school? 40,000 USD a year, including room and board? You're going to need lots of loans. Once you're saddled with six figures in student loans, are you going to protest your professor or government official, who may be able to assist you with job placement? Even if you wanted to protest, how would you first gain the relevant experience necessary to determine which ideas weaken accountability and which ones might work? If one day, your professor or government official decides fewer rather than more immigrants are ideal, what can you really do?  You're in debt, and student loans are non-chargeable in bankruptcy. You may want to assist immigrants, but what if that immigrant is going to compete against you for a job or divert revenue that might otherwise help subsidize your loans? Having debt automatically limits options because it forces you to prioritize your own financial interests rather than the public good or long-term outcomes. When your entire society runs on debt, the Establishment will accept outsiders only if it benefits the insiders--and their ability to pay off accumulated debt. 

Slavery was wrong in America even when some slaves were allowed freedom and the ability to migrate. Slave-mastering is wrong today, even if its form and shape have been modified to resemble the smiling faces of a college admissions employee, a bank's mortgage officer, and a retail employee asking to open a credit card account. 

© Matthew Rafat (2017)