Foreign Financial Account Reporting; Chemnitz Unrest

August, 2018

Berlin -- This week four members of American Voices Abroad (AVA) sat down for dinner in Berlin. One of our discussion topics was tax reporting of foreign financial accounts to the IRS.

We all have faithfully reported our accounts at German financial institutions, even when there has been no otherwise reportable need for it. This requires a separate form with a separate due date. The reported information can be used by the IRS to match up account reporting the U.S. requires of German institutions. The paperwork is sufficiently onerous that some German banks just refuse American customers.

But it was all worth it, we felt, in order to catch money-launderers and international criminals.

Then along comes the Paul Manafort trial. Indeed, his failure to report on the FBAR did him in, according to one juror who explained the jury's reasoning for convictions on eight counts of fraud. But the juror also said that Manafort would not have been discovered had it not been for the Robert Mueller investigation. She took a dim view of the Mueller probe and had actually hoped that Manafort could have been found not guilty.

So much for the little fish filling out all our paperwork to catch the big fish. Manafort brazenly flouted the law and the IRS let him do it. It's remarkable there was a conviction at all, given the presiding judge's rulings to prevent the prosecution from presenting evidence of Manafort's ostentatiously high-living. This does not inspire confidence in our tax-collection system.

Another discussion topic was the neo-Nazi uprising in Chemnitz and the role of Facebook in organizing it. Meanwhile, all over Berlin, in the streets and subways, Facebook is putting up posters that it is all about family and friends, not fake news. Events in Chemnitz, however, belie the advertising campaign. I wonder if those ads are appearing in Chemnitz as well.

It is no longer unthinkable to put controls on social media for national security purposes. Of course, more than neo-Nazis can use social media to organize. Around Hermannplatz in Berlin, thousands are gathering to protest the violence in Chemnitz. Good for our neighbors in Neukölln.


August, 2018

Berlin -- In the neighboring state of Saxony-Anhalt, the Elbe River at Barby is low because of drought. The ferry is not running, perhaps because of low water. Barby is one of the villages where, in 1945, Russian and American soldiers met at the Elbe, days before Berlin fell to end WWII in Europe. American forces remained on the left bank as German civilians and soldiers alike tried to cross the river to escape Russian attacks.

Westward the drought shows itself along the Autobahn as dust lowers visibility. Farmers working stubble fields for next year's wheat crop create huge dust clouds. (I hope the farmers are wearing masks.)

At Quedlinburg, at the foot of the Harz Mountains, a fountain in a town square is still. Up in the mountains, autumn is arriving prematurely as leaves are falling. One hopes that when the witches dance, they'll be careful with their fires.


August, 2018

Berlin -- It is cloudy today, and smoky from the wildfires that are burning south of the city. The summer has been extremely hot with no rain.

The forests surrounding Berlin are dry. The wildfires are difficult to fight because unexploded WWII ammunition poses a danger to firefighters on the ground. As fire progresses, explosions are set off.

Surely the fires will not reach Beelitz, a favorite place with a tree-top walkway over an abandoned sanitarium. But they could, and farther. Three villages have been evacuated.

Berlin's parks are brown and dusty. They are as hard as the cobblestone streets.

Germany and the Facebook Disease

August, 2018

Berlin -- An unsettling new research paper links Facebook usage in Germany with acts of violence against refugees. When Facebook usage is one standard deviation or more than average, such violence is fifty percent higher.

The findings do not apply to general internet usage, only Facebook.

There is no suggestion in the paper that this is unique to Germany. In fact, Germany has been more welcoming of refugees than most other countries.

Chancellor Merkel, known for her support of an accommodating refugee policy, survives under duress in part because she has no obvious successor. As a local Kreuzberg resident expressed it, "Who? Not anyone from the SPD, they have nothing to offer," and as for the CSU and Horst Seehofer, "that's just impossible."

If only there were an immunization for the Facebook disease.

Humboldt amid the Hohenzollerns

August, 2018

Berlin -- This city is full of ironies and contradictions: war and peace, ugliness and beauty, superstition and science.

Add another contradiction as the new Humboldt Forum is being completed. It is the centerpiece of the reconstruction of the massive old palace of the Hohenzollern royalty on Unter den Linden, in the heart of Berlin. The Humboldt Forum will house antiquities and artifacts acquired by German expeditions and colonizations.

The irony is that Alexander von Humboldt, among the world's greatest scientists and a native of Berlin, was anti-colonialist. When he met Thomas Jefferson in 1803, in Washington, at the end of Humboldt's exploration of the Americas, they agreed that the colonial system was destructive of peoples and their habitats. Humboldt was appalled at what Spanish colonial governments were doing to South and Central America. He soon would meet with Simon Bolivar in Europe and inspire him to revolution.

Humboldt gave us a unified view of the natural world; he was the "inventor of nature," as the title of a new biography* of Humboldt suggests. He is, of course, honored in Berlin with the eponymous university and around the world with countless Humboldt-named places. But when the Humboldt Forum opens next year in Berlin, it would be well to remember his anti-colonialist convictions.

* The Invention of Nature: Alexander von Humboldt's New World, by Andrea Wulf.

Germany, Turkey, Russia

August, 2018

Berlin -- The atmosphere here seems tense, and not just because the German government coalition could break apart at any moment. Added to the problem are new strains on the Turkey-Germany relationship, what with a popular soccer star enflaming the sport's fans about national loyalties and a drastic drop in the value of Turkey's currency. Will Berliners of Turkish heritage be called upon to send Euros to their relatives in Turkey? Will that be seen as propping up Turkey's leader Erdogan?

Then there is the meeting this weekend, just north of Berlin at Meresburg, between Chancellor Merkel and President Putin, hastily called. Surely one topic will be Turkey's financial condition. Merkel will press Putin not to make it worse; Putin will say he won't, if Germany relaxes sanctions against Russia. Sensible American guidance will not be forthcoming.

I remember less tense days, south of Berlin at Wünsdorf, when Russians, Germans, and Americans mixed easily at the Soviet Officers club. It was 1991; I was invited to lunch along with other members of a local historical club. Was Putin present? I've often wondered, since he was posted back then as a KBG agent in East Germany. The Russians were about to depart Germany, their relocation paid for by the German government.

Putin has said the breakup of the Soviet Union was a calamity, a humiliation. That will be the backdrop of the Meseburg meeting.

Iron Triangles: Part VIII

August, 2018

Washington -- The for-profit higher education sector's "Iron Triangle" grip at the U.S. Department of Education is squeezing ever tighter. Now the White House is overtly getting involved.

The key triangle individuals have been moving through the revolving door of interest groups and the Department for many years. Strada (formerly USA Funds) leader William Hansen was instrumental, as Deputy Secretary in 2002, in giving for-profit schools "safe harbors" against oversight, after which they experienced boom times. (Consumer fraud likewise soared.) Diane Auer Jones is closely associated with the for-profit sector and has not recused herself from Department decisions dealing with the for-profits.

The target of the new squeeze is the nation's higher education accreditation system. The integrity of federal programs under the Higher Education Act relies on a "triad" of enforcers: the federal Department of Education, the states, and accrediting bodies. The Department has already been captured by the interests it is supposed to regulate, and it is trying its best to emasculate the states through its policy of federal "preemption." Only the accrediting bodies remain to be dealt with.

Ordinarily, there would be two countervailing forces against this attempt to undermine accreditors.

One would be Congress, where majorities of both Democrats and Republicans would be bulwarks against diminishing the role of states and accreditors. Now, however, Republicans like Lamar Alexander, the Senate authorizing committee chairman, are eager to view integrity as just so much red tape that needs to be cut.

The other countervailing force would be higher education institutions themselves, public and non-profit, which need the confidence of students, families, taxpayers, and alumni in the value of their teaching, research, and public service. Accrediting bodies are creatures of these institutions. They will not welcome an attempt to undermine accreditation by having it taken over or replaced by people and companies who see billions in federal higher education spending as just another opportunity to cash in for themselves, although that is the driving force behind the tightening grip.

Lamentably, the higher education establishment has not distinguished itself historically in standing up for integrity over opportunism. Some of the weaker higher education systems in both the non-profit and public spheres have repeatedly welcomed lower standards; often they have prevailed over the interests of the nation's leading colleges and universities.

Another test is now upon the nation's higher education leadership.

William Jennings Bryan and Populism

August, 2018

Washington -- New York Times columnist (and Nobel prize winner) Paul Krugman has sent many of his millions of readers to look up William Jennings Bryan if they want to know who is and who is not a "populist."

The problem with Krugman's linked Bryan-bio is that, at the end, it disparages Bryan wrongly and gratuitously by alleging "shallowness and ignorance of science and archaeology."

Bryan was the founder of the modern Democratic party, of which there is little dispute. A progressive, he paved the way for the election of Woodrow Wilson and was the force behind constitutional amendments approving the federal income tax, direct election of U.S. senators, and women's suffrage. At the end of his life, he fought the teaching of evolution, memorialized in the play and movie Inherit the Wind.

It is the movie version of Bryan that seems to be the source of the "shallowness and ignorance" description.

Bryan was in fact quite well read on evolution and the science of the 1920s. Evolution at that time was understood to comprehend "social Darwinism" (survival of the fittest, including in economics) and eugenics. The textbook that Bryan opposed taught eugenics as science, including the hierarchical rankings of different human races, with Caucasians at the top, superior to all others. This was contrary to Bryan's lifelong work.

Bryan was a world-traveller and followed foreign affairs closely. He was Wilson's first secretary of state. His wife, Mary Baird Bryan, a lawyer and student of German, read German language newspapers to him. Bryan was well aware that the eugenics movement in the United States was being taken up by German institutions and political movements, and was alarmed by it.

Germany in the 19th century had given America its model* of higher education; America in the early 20th century gave Germany eugenics. We know what happened next.

This side of Bryan, his abhorrence of xenophobia, is seldom acknowledged. Progressives are calling for a remake of the movie.**

Bryan is also in the news as his statue, along with that of J. Sterling Morton, is being removed from the U.S. Capitol. It is a benign recall, at least in the case of Bryan, as the Nebraska legislature has chosen Willa Cather and Standing Bear to represent the state henceforth in the Capitol's statuary hall. As the statues come back to Nebraska and are relocated, it would be a good time to review the legacies of Bryan and Morton, both Democrats but political enemies. Morton was a Bourbon Democrat, a southern sympathizer, a foe of Bryan, and is now becoming the subject of more scrutiny. It may have been only a matter of time before Morton had to go.

Krugman has the right person in Bryan to contrast with today's so-called populists, but it would be even better if the real Bryan was correctly portrayed.

* The University of Berlin model of teaching combined with research was first emulated by Johns Hopkins University, from which it spread rapidly across America.

** If there is a remake, it should also stick to Scopes trial testimony in which Bryan, speaking on archaeology, reveals himself not to be a biblical literalist, as he takes the offensive against Darrow's mistaken assumption that he is. Where Darrow got the better of Bryan was in ending the trial quickly with a guilty plea, preventing Bryan's attack on eugenics, which Bryan had planned for his closing. A remake could also make the point that evolution as now taught is more firmly grounded than it was in Bryan's time, as evolutionary theory has adapted to accommodate Mendelian genetics, is now accepting the emerging field of epigenetics, and has shed its ugly past association with "social Darwinism" and eugenics.