Category: Politics

Thoughts on outsourcing bill before Congress

Last week an ITA member company asked for the ITA’s position on an outsourcing bill proposed by Senator Durbin. I responded the same day with some quick thoughts, and share that below for anyone that’s interested:


ITA is not predominantly a lobbying organization; we exist to help our member companies grow and to impact economic development for the region. To that end, occasionally we have advocated on behalf of member companies. There have been times I’ve testified in Springfield, and trips where I’ve accompanied member companies to Washington.

We have not taken any specific position regarding Senator Durbin’s proposed legislation (nor have we been asked to study it carefully on behalf of any member company, and I have not personally read it).

That being said, I am happy to offer you a few random thoughts, with the caveat that these are not particularly researched, I am firing them off with a few moments break between other projects, and they should not be considered a definitive point of view.

Global outsourcing is a complex and easily misunderstood economic force. It is tempting (especially when America has high unemployment) to respond with emotion and knee jerk reactions, both for and against continued outsourcing.  But I think the facts belie any sort of emotional or easy response:

  1. Unemployment in America is not because of a lack of IT jobs today; the phone calls we get to ITA every day are from companies desperate to find high quality talent to hire, not from engineers looking for work. Unemployment is mostly from other sectors (i.e. manufacturing, etc); any public policy that conflates IT job outsourcing with manufacturing job outsourcing is not well considered.
  2. Most experts predict a significant shortage of information technology candidates to fill demand over the coming decade. We simply aren’t educating enough kids in STEM education to fill the pipeline, and this country will face a far greater crisis when demand far outstrips supply of innovation workers.  Much of my recent work with the ITA has been around this problem: we’ve helped launch a new high school focused on educating future tech entrepreneurs, and we’ve spent a great deal of time recruiting engineers from our local universities to join Chicago companies.
  3. Outsourcing overseas is a completely different issue than offering visas to attract smart talent to this country to join our innovation economy; conflating the two and trying to discourage both as a “way to protect American jobs” is wrongheaded.  The number of bright people who move here, get educated here and go on to create technology ventures and jobs is astounding, and we need more of that, not less.
  4. Many (most?) entrepreneurial, small technology startups turn overseas to find talent today; this actually increases the number of jobs and the amount of wealth that is created in America, and in many cases those ventures wouldn’t have been able to launch without global partners.  So it is also dangerous to create public policy that conflates “large companies sending jobs overseas” with smaller companies that use global development teams to create jobs.
  5. More than most industries, software and technology companies tend to have customers throughout the world, and have a direct interest in the global marketplace. I am personally not a protectionist, and I’m not sure I’ve ever read a respected economist who advocates for protectionism, especially where global markets already exist.

So, you asked for a position on “tax breaks for US companies that outsource tech work to foreign countries”.  Phrased the way you worded the question, I would have to say I’m against giving such companies tax breaks. But I don’t think the question is a fair one, nor, maybe, is the underlying public policy that is being considered very well thought out.

Government can and should use tax policy and regulation to discourage bad actors in the marketplace, but developing a public policy without considering the points above (and no doubt many, many more learned ones) only elicits emotional response and restrains our economy in ways we could probably all agree is bad.

At the end of the day, I fully understand why tech companies would oppose the proposed legislation, but I also understand some of the reasons the legislation was offered. I simply think this calls for a surgery with a scalpel instead of a bayonet, and more rational debate

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Google caves to evil… consumers and citizens lose

Net Neutrality is an enormously important matter for competitiveness and freedom in this country, and Google is about to reverse course after years of heavy lobbying against a change in policy.  It’s a stupid and frustrating move, and one that is driven purely by profit opportunity for Google, without regard for the “little guy”.

The FCC cleared the way (through a lousy decision that they lacked any authority) for Verizon, Comcast, ATT and other carriers to restrict access to certain parts of the Internet… if, for example, Comcast wants to prevent you from accessing Google sites, or severely limit the speed in which you can access iTunes downloads, they are free to do that.

So the Google-Verizon deal can be summed up as this: “FCC, you have no authority over us and you’re not going to do anything about it. Congress, we own you, and we’ll get whatever legislation we want. And American people, you can’t stop us.  – Josh Silver in “Google-Verizon Deal: End of the Internet as We Know It

They can force web sites like Google or iTunes (or millions of small publishers) to “pay a toll” for users to be able to access those sites.  The telecom companies could create entire sections of the Internet that are restricted, and effectively control the relationship between user and site.

Much of this could happen regardless of what ISP (or onramp) to the Internet the user chooses, and regardless of what bandwidth providers connect into the data centers of your favorite websites… telecom companies control the transit and IP routes along the way, and could impose these restrictions and tolls throughout.

The lobbying campaign by proponents (mostly a handful of large telecom companies with lousy business models) has been sneaky and duplicitous. Here in Illinois, I’ve watched “grassroots” organizations crop up out of nowhere  to purposely confuse the issue… it was all fake grassroots, or “astroturf”, arguing how AT&T stood for the little guy, and changes to telecom law would spur innovation.

Google has been one of strongest opponents, using their muscle to stand up for millions of small businesses and publishers on the Internet that could be effected.  And now Google is cutting a deal, leaving the little guys dangling, and shifting dramatically what the future Internet could be.  It’s bad policy, and it’s bad business for a company that claims their first priority is to “not be evil”.

The arguments in favor of the telecom companies are not without some merit… the telecom companies built much of the backbone that the Internet runs on, and some web sites clog up those pipes significantly more than others. You can see why the telecom companies might argue for the ability to restrict their user’s access to certain sites, but doing so fundamentally transforms the free, equal and open Internet that has changed the world over the last two decades. This should NOT be a decision made by some cabal between giant corporations, without some government regulation or oversight.

The impact of a tiered Internet, where consumers have little control, and a small number of big telecom companies control everything being delivered over the Internet pipe (TV, phone, the flow of information, etc) is deeply anti-competitive and anti-freedom.

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Boy Soldier, a photo essay

In honor of Veteran’s Day, a captivating photo essay from the Denver Post that follows the enlistment, training, service and struggles of a young man joining the US Army. It’s easy to forget that the warriors we send to battle are often just other people’s kids, and how great their sacrifice could become. 

The United States military is full of heroic men and women that defend our country and liberate freedom around the world… people who choose to put their lives and families on hold in the name of service.

But sometimes it includes kids who simply have no alternative, who lack the family and skills or opportunity and direction in life to succeed. In the best cases, the military becomes the family, provides the skills and direction, and is the opportunity those kids need. 

Some battles are born of necessity, some lurch from the poor choices and failed policies of politicians. Regardless, the American warrior has been a force for good throughout our history, and deserves the support of a grateful nation today.

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Now… Eleven Executive Priorities for Obama

Before the election I wrote ten reasons why I would vote for Obama. I can think of at least eleven high priority, executive actions he should take now that he’s been elected.

The job before Obama is as complex and daunting as any President has faced since FDR. A global economy in crisis, two wars, a resilient radical Islamist threat… throughout the world America’s hard power is stretched too thin, and our soft power is deeply eroded.

Here at home, he faces a workforce still not ready for a flat world, an abysmal secondary education system, millions of American’s without health care, a looming energy crisis and a country conditioned to distrust each other over “wedge issues”.

Many of the things on this list may be naive and wishful thinking… and ideologically drawn from the left and the right. But these are my “armchair quarterback” executive actions the new chief executive for America should take:

Immediately convene an economic council with people like Buffet, Bloomberg and Volkner… even Paulson. Critically review the recent bailout… it’s only been a few weeks, but it’s not too soon (or too late) to correct course. Fix the unintended consequences of the bailout (i.e. lenders that didn’t get low cost cash have slowed their lending because they can’t compete at the cost of money).If the government is going to inject more capital into the credit markets, it should spur entrepreneurship and small business and jobs (i.e. loans for equipment and short-term capital needs of companies, and pump up the SBA lending programs).

Close Gitmo and stop extraordinary rendition. America’s actions will speak much louder than words. Make a clear and undeniable statement on torture. Align the State Department to rebuild America’s soft power. Challenge the world and rebuild the coalition against terrorism, and reach out with real diplomacy.The world was united after 9/11 to neutralize this threat… the Madrid train bombings, July 7 London attack, Russian school massacre… terrorism was not just America’s problem. But we squandered the coalition by focusing on Iraq, and a new call to arms is needed.

Critically review the overhaul Bush did on our intelligence agencies, and what’s left undone. We created a Director of National Intelligence in 2004 to serve as the head of sixteen different intelligence agencies within the US government… did it work? Is there better information, cooperation and effectiveness in this community?

As Commander in Chief, tell the American people what clear strategic objectives you’ve given your generals. Retain Bob Gates as Secretary of Defense… he’s a good man, and an effective manager. He’s also probably closer to your point of view than his current boss. Colin Powell is a suitable alternative. Accelerate the reorganization of the military to be leaner and more agile. Decapitate (again) a resurgent Al Qaeda, make a priority of capturing Bin Laden in Afghanistan or Pakistan or wherever these leaders are hiding. Draw down forces in Iraq. Use the same scheme of bribes to local warlords to surgically fight in Afghanistan (and acknowledge the best we can probably achieve is a friendly dictator and beholden local tribe leaders).

Challenge the country to energy independence within 10 years, and fund a Manhattan Project-style initiative for science and technology research that tackles the energy and climate change issues that are too costly for private enterprise. Private sector investment into these areas is much different than we saw with information technology… it costs more and takes longer for real results.

Embrace federalism through your policies and positions, but not through unfunded mandates. Open and maintain a regular, direct, executive-to-executive dialogue with the governors’ offices. Bring the National Guard home and reaffirm the role of governors in deploying this force, especially for the emergencies that may happen in the homeland. Restructure the education department to fund block grants to the states and spur higher standards, more creative education methods, more free market influence in secondary education, and better pay and more accountability with teachers.

Health care should be a right in this country, and every American should have access to quality care. You said during the campaign that single payer was probably not practical, so let’s not waste time on a grandiose, big government solution. There’s a raging crisis in Medicaid, where the federal government requires states to provide health care insurance to the poor, but only picks up 60% or the cost. 53 million Americans receive Medicaid at a cost of $300 billion a year. Costs are spiraling and states are cutting their budgets, and Medicaid is untenable. Reform it, and expand its availability. Let the states administer universal health insurance for the poor, but give them the resources to do it. Provide tax credits to businesses that pay health care costs for low wage earners.

Use the overwhelming influence you’ve cultivated with young people in this country for a renewed call to service… expand on Jim Webb’s Veteran’s Education Assistance Act, making military service a good deal beyond a patriotic duty. Radically grow Americorp and renew the partnering commitment to non-profit organizations, public agencies and faith-based groups. Today 70,000 people join AmeriCorp each year; you should make it a goal of your Presidency to dramatically increase the opportunities for service to our country.

As Vice President Al Gore tried a National Performance Review of the government, and an effort to reduce bureaucracy, inefficiency and waste. That was a job left undone, and the size of government has ballooned again. Waste is rampant, especially after a Bush administration dominated by lobbyist and populated through cronyism. Appoint a new czar, state a goal to cut 15% or 20% of waste from the bureaucracy and hold your Cabinet responsible for cleaning house. You can do this… no one will ever see it coming from a Democrat.

One man’s pork is another man’s road, bridge or school. An omnibus appropriations bill from Congress needs the President’s executive leadership, and an administrative focus on the real infrastructure needs of America, another good chance to work with governors. The Federal Funding Accountability and Transparency Act you sponsored in the Senate is a start, but the country needs even more visibility into spending priorities and projects.

Put forth a conservative balanced budget; temper Congress, especially from liberal excesses. Set the tone with Congress that America will not tolerate a far left agenda, and that the party in power today must be more responsible, more sane and ultimately more conservative than the administration that is exiting. This Congress could waste a lot of time settling scores, prosecuting an administration that broke the law (war crimes and other), and bickering. Or it can chart a sane course, and manage the government in a more responsible way. The latter is what will keep them in power, and move the country forward.

Get started with these executive initiatives, and maybe in his second term we can tackle tax reform. 🙂

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Ten reasons I’m voting for Obama (and against McCain)

The Republican Party and conservatism shifted radically away from me over the last decade, and John McCain is not the man I believed him to be.

Obama is honest, thoughtful and charismatic. He may also become the most inspirational leader of my lifetime. When America is adrift domestically and abroad, Obama has the best chance of changing our course.

Will someday I develop buyer’s remorse? Possibly.

And I know we’re electing a President, not a savior. It’s impossible for Obama to live up to the expectations his supporters have of him.

Do I like the prospects of a dominant, single party rule in Washington? Nope. Nor do I have much respect for the current Democratic leadership in Congress.

But change must come, now. And I can think of at least ten reasons:

1. More of the same is unthinkable
Republicans veered horribly, perhaps irrevocably, off track. The ideals of Goldwater, Buckley and Reagan are long abandoned: less, but good, government… rugged individualism… private liberty for all people… calm, reasoned approach to policy instead of petulance… fiscal conservatism.

This administration instead amassed the largest debt in history and passed along a near impossible burden to future generations of Americans. The crony-laden incompetence of Katrina (and the shame of seeing black, poor Americans suffering through some third-world-like disaster recovery) exposed Republicans as unable — or unworthy — to govern.

Today’s Republican leadership is little more than jargon and a wistful embrace of ideals they have abandoned time and again. Maverick McCain voted 90% of the time with Bush, and the Republican Party needs to be made accountable.

2. A prudent execution of foreign policy

The last eight years has seen a devastating collapse in America’s reputation abroad, despite a world united with America after September 11. We’ve squandered our moral authority with belligerent and ineffective foreign policy and hypocrisy laid bare for the world to see. We institutionalized and sanctioned torture.

We weren’t prepared to wage war against a stateless terrorism, and we’ve done relatively little to adapt. We’re closing in on a trillion dollars for an Iraq war where “success” is now defined as getting the shit back to shoe level, and we’ve underfunded the battle in Afghanistan where terrorist networks have reassembled. A Republican administration (which was either lying or incompetent) declared “major combat operations over” in 2003, and set a budget of $60 billion to fund a war. At this rate, assassinating Saddam and bribing every Iraqi $125,000 would have been cheaper and more prudent than a neocon-led strategy.

Obama was right about the Iraq war, and more than 18 months ago called for a refocused effort in Afghanistan. He has realists advising him, and he won’t abdicate leadership to a military without clear goals.

3. Thoughtful and powerful oratory matters

Words matter. Words can inspire, and rouse others to greatness. Words can break barriers and divisions between people. Words can define how we look at ourselves, and how the world sees us. The American presidency is about leadership not management… Reagan was a great communicator, and through a simple narrative made America a shining city on the hill, reckoned with an evil empire, and challenged the world to freedom.

No politician — no person — has delivered a speech that so stirred me, so surprised me, as Barack Obama’s speech four years ago at the national convention. I’ve been a “decided voter” since that night.

Big speeches, impassioned and inspired words, can change the world. Barack Obama has the potential to bring out the greatness of America, and mark the start a new period of American leadership.

4a. Obama is more American
Instead of embracing the Constitution, the Republican administration has brought us the unitary executive theory, seizing power in the name of “protecting America” from harm. Obama understands the President first swears an oath to uphold and protect the Constitution, and the moment we compromise the Constitution in the name of fear, instability or expediency we destroy that which makes America.

4b. Obama is more American (part deux)
This is a black man born to a single mom, raised by white grandparents, without a single head start in life. He is the very personification of the one thing that has made America unique among the world. No matter who you are, or where you start in life in this country, we all are raised to believe we can become anything, achieve anything. The ability to transcend, to move beyond where we are in life, is something Obama will spawn again for America, both figuratively and literally.

5. McCain was once an honorable man
I was a big McCain supporter in 2000, even helped organize for his campaign. He’s a hero, and demonstrated great character as a POW. His “maverick” tendencies in the Senate made me think he really did value his country over politics. But the man who said “I won’t take the low road to the highest office in the land” has been exposed as a fraud… willing to say anything to gain the Presidency. Now he campaigns to peoples’ worst tendencies… their fear, bigotry and jealousy.

Today the words that come from McCain seem made up, like he doesn’t really believe them himself.

6. President Palin, and the simple unseriousness of Republicans
Picking Palin was impetuous, pandering and dangerous, and disqualifies McCain. Her selection simply wasn’t a serious decision, it certainly wasn’t putting America first, and was more cynicism from the Republican party.

The triangle of doom that grips the party — religious fundamentalist from one angle, neocons from the second, and anti-government types from the third — have little in common but belligerence, and are tearing the soul of the party.

There isn’t much room today in the Republican party for realists, pragmatists or libertarians. Today the party is dominated by zealots and cynics and many, many unserious people.

A lot of good people will vote Republican in this election, based on an ideal view of what they thought the party once stood for… or an imagined view of what it should be. But many simply aren’t paying attention to the facts of the day.

7. Obama is a conservative

I find him personally more conservative, reserved and pragmatic than John McCain. His calm, cool temperament is in stark contrast to McCain’s erratic, hot-headedness as he’s jumped from policy to policy on the economy and picking the next American fight overseas. Obama’s tax policy is responsible. His economic policies are pro-business, especially small business. His family, faith and personal story are more traditional than McCain’s.

The next President will inherit a colossal mess, and my guess is any liberal tendencies Obama does have will be constrained by the reality of an economy on the ropes, unfinished military action abroad, and crumbling infrastructure at home.

Defending America from the threats of extremism abroad and at home was once the role of conservatism. Today, the “conservative party” is more likely to be extremists.

8. More technology, more efficiency and more support for business
Obama understands innovation, entrepreneurship and technology are at the heart of American competitiveness. He’s announced policies to eliminate the capital gains tax on investments made into startups, help small businesses create new jobs and afford healthcare, double the federal funding for science and technology research and fund a national network of public-private business incubators. He also plans to appoint a cabinet-level position of Chief Technology Officer for the United States, which could result in greater efficiency, reduced costs and a leaner, more effective government bureaucracy. He understands America could lead the world in energy technology, and that “drill, baby, drill” is a pedantic response to sending $700b a year to buy oil from regimes aligned against us, or against freedom.

9. A progressive agenda
I’ve always been a political junkie, campaigning in junior high for Reagan, proudly wearing a “Bush/Quayle” t-shirt to school, and buying into the “compassionate conservatism” that GWB promised in 2000. Fundamentally, I still believe the American people, American business and American communities are best capable of propelling our country forward.

But I’m a progressive, and I understand that certain things fall to the government to do when the country cannot, or will not. We must make an investment into the infrastructure of America, the roads and bridges, power and communication grids, and water systems. We must solve spiraling health care costs that kill small businesses and leave sick people without care. We have to fix the crisis with secondary education that ranks near the bottom of all competitive nations.

Obama represents a realistic progressive agenda. He seems likely to set achievable goals, inspire people toward success, and be honest about the challenges we face.

10. Beyond the nonsense
Obama represents a chance to move beyond the nonsense that has plagued America. He’s a new generation, untarnished by the cultural wars the Baby Boomers have fought for a lifetime. He is atonement for America’s original sin of slavery and racism, and moves beyond identity politics. His non-fundamentalist Christianity represents the best of faith without arrogance. He’s curious about the world around him, has a questioning intellect and is not dogmatic in his beliefs. He seems open to the possibility that he’s wrong about something, but unafraid to tell you what he really believes. He speaks to Americans as adults, appealing to our best nature, and not our worst.

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Five reasons Obama’s economic plan is good for startups

Obama’s economic polices strike me as pro-business, especially small business, and pretty pragmatic. Here are five things I found to like that support tech startups…

Eliminate the capital gains tax for investments made into startups. This rewards higher risk investors that are providing critical capital for the real economic engine of America, where most new jobs are created. This sort of “targeted” tax relief (as opposed to total elimination of capital gains tax) should be measured in the ripple effect (i.e. did it ultimately create more jobs, more companies, more wealth, and smarter tax revenue).

Provide $3,000 tax credit to small businesses that create new jobs in the next two years. What’s most significant is this is applicable to the employer portion of payroll taxes (which is usually the only real tax startups face). My guess is that it also becomes a net gain in overall tax revenues for America, as companies hire more people and have a little tax relief during the formative years.

Provide tax credits to small business to reduce the cost of health care. Absent a comprehensive change in the way health care is paid for in America, the heaviest burden for health care costs is carried by small businesses, many of which can’t afford to provide, and aren’t insulated from wild fluctuations in group costs.

Making the R&D tax credit permanent, and doubling the federal funding for science and technology research over the next ten years.

Invest $250m a year to fund a national network of public-private business incubators to support entrepreneurs during the start-up phase. I think this is a great  initiative as well, but as we’ve seen with the success of Chicago’s TechNexus (now 25 companies are growing there, and there was no public money to support that initiative), it’s critical for the private sector to lead this. Government should encourage business, but not try to lead it. Perhaps that $250m set aside for incubators could best be used as matching grants.

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