Big Brother just wants to help

Big Brother just wants to help

Mar 8th 2007
From The Economist print edition


Software: The use of data mining by governments need not be sinister, and could help to deliver public services more efficiently
Belle Mellor




WHEN you order books from an online bookstore or buy groceries from a supermarket's website, the personalised book suggestions that pop up, and the reminder that you normally buy milk, are generated by data-mining software that analyses buying habits. The use of such technology by retailers is commonplace. But now governments are adopting it too, in fields from education to tax collection, in order to plan, implement and assess new policies. “Not only do firms like Tesco have good operational systems that control their costs, but they understand their customers and can offer particular product mixes which are attractive to certain groups,” says Peter Dorrington of SAS, one of the biggest providers of data-mining and analysis software. Why, he asks, shouldn't governments do the same?

After all, government policies, like a supermarket's special offers, are designed to meet the needs of particular subsets of the population. Using data-mining tools, it is possible to spot trends and optimise processes. Take, for example, the British government's efforts to encourage more people from poor backgrounds to go to university. The government gives universities extra funds if they recruit and retain students from poor backgrounds. The Universities and Careers Admission Service (UCAS) categorises the 2m university applications it processes each year by age, gender, ethnic origin, parental occupation, domicile, and the desired institution and course. Universities use this data when selecting candidates and the government uses it to see how its policy is working and to assess the effects of changes in policy.


Last year UCAS tested the use of data-mining software from SAS to evaluate applicants' suitability for courses based on their personal statements and references. For a set of applicants—those who had applied for medical school in recent years—the text from these documents was analysed to look for keywords such as “patient”, “experience”, “hospital” and “team” that might indicate that applicants had relevant experience and other signs of commitment. Data-mining software then looked for links between the occurrence of these keywords and outcomes, such as whether an applicant was accepted on a course or whether that applicant completed the course. If such links can be reliably identified, it would enable universities to select students who are most likely to complete a given course irrespective of their socio-economic backgrounds. That could help to reduce discrimination against poorer applicants, who may be regarded as bad risks by universities.

Similarly, a number of school districts in American states including Iowa, New York, Alabama, Colorado and Minnesota are using data-mining tools from SPSS, another software firm, to analyse students' records and spot trends in order to meet the requirements of the No Child Left Behind Act. These are relatively small projects so far, but could easily be scaled up. Big commercial users of SPSS's software, such as telecoms firms, use it to analyse databases of over 40m customers, says Colin Shearer of SPSS. So there is no technical reason why large government databases cannot be mined for insights.

One of the largest government systems to employ data mining is Centrelink, Australia's benefits agency, which deals with over 6.4m claimants and carries out more than 5 billion computerised transactions a year. Centrelink already has a predictive model, called the Job Seekers' Classification Instrument, which evaluates benefit claimants and assesses the risk that they will become long-term unemployed. Claimants thought to be at high risk are then given more help in finding a new job. The agency is now planning a scheme to test the use of data mining to identify fraudulent claimants. The inspiration comes from insurance companies, which use predictive risk models (developed from thousands of claim histories) to analyse claims. Low-risk claims are paid quickly, and high-risk claims are investigated further. Similarly, Centrelink plans to use data mining to identify claimants for whom further investigation is merited.

Tax agencies around the world already mine data to look for possible fraud. But a more recent trend is text-mining to help taxpayers avoid errors. Sweden's tax authority is using SPSS's software to analyse the patterns of mistakes in tax returns so as to provide better guidance and improve the design of tax forms. And Australia's tax office is employing SAS tools to sort queries from taxpayers who are uncertain whether the rules apply to them or not. The office can then supply taxpayers with the right information—and learn which parts of the tax code are causing the most confusion. Data-mining software is also used by Denmark's National Board of Health, France's benefits agency, the South African treasury and Belgium's finance ministry for performance measurement and policy planning.

All of these schemes use data mining in an effort to improve the delivery of public services. But despite the good intentions, the collection and analysis of personal data by governments inevitably raises Big Brotherish concerns over civil liberties. In Britain, for example, the National Health Service is establishing a national database so that the most important data about patients can be called up by any hospital in the country. But many family doctors are refusing to hand over records, which are now kept in local surgeries, because to do so would break patient confidentiality. Liberty, a human-rights campaign group, worries that data collected by one arm of government will be made available to others.

Another worry is that data mining could prove counterproductive. “Those at the more vulnerable end of the social scale are likely to stop seeking advice and help if they know that the information will be noted and generally available,” says Gareth Crossman of Liberty. Yet another concern is that data-mining and classification schemes can get things wrong. The American Civil Liberties Union, for example, is worried about the Automated Tracking System, an American security scheme that uses data mining to assign a risk score to anyone who enters the country. If a model labels someone as high-risk, there is no way to find out why or to challenge the label.

Dr Paul Henman from the University of Queensland, who has written extensively on the subject, raises a rather more philosophical objection to government data-mining: that the technology starts to transform the nature of government itself, so that the population is seen as a collection of sub-populations with different risk profiles—based on factors such as education, health, ethnic origin, gender and so on—rather than a single social body. He worries that this undermines social cohesion. “A key principle in liberal democracies is that we are all peers and equal before the law,” he says. But for proponents of the technology, such segmentation is the whole point: policies, like supermarket special offers, are often aimed at groups—and the more accurately they can be targeted, the better.


Copyright © 2007 The Economist Newspaper and The Economist Group. All rights reserved.

Public v private equity

Public v private equity The business of making money

Jul 5th 2007
From The Economist print edition
Daniel Mackie


Private equity's strengths and its increasingly apparent weaknesses

BACK in the late 1980s, the Financial Times carried a spoof story about a planned buy-out of General Motors. Nowadays the sale of such a giant would not be regarded as a joke. Every day yet another company seems to succumb to the clutches of private equity. And this week saw what could be the biggest deal ever: a $48.5 billion offer by a consortium of investors for BCE, a Canadian telecoms group. It was swiftly followed by a potential $22 billion bid for Virgin Media, a British cable-television company, and the $26 billion purchase of Hilton Hotels.

Even after those deals, the private-equity titans have plenty of firepower left. According to Private Equity Intelligence, a research group, the industry raised $240 billion in the first half of this year, leaving it well placed to surpass last year's record of $459 billion. That compares with less than $10 billion raised in 1991. In the process, private equity's share of mergers and acquisitions has grown massively (see chart).






Private equity has become a byword for money-making skills. “Why are we here attending conferences when we should be setting up private-equity firms?” quipped Niall Ferguson, a historian, at a conference held at the London Business School on July 2nd. But the industry's wealth has also made it plenty of enemies, with trade unions and left-wing politicians calling for curbs on its activities and higher taxes on its earnings.

The intellectual argument in favour of private equity has not changed much in 20 years. In 1989 Michael Jensen, of the Harvard Business School, wrote a paper* suggesting the public company had outlived its usefulness. Economic developments, in particular the recession of the early 1990s, made that forecast seem premature. But its underlying arguments have more force today.



Public tedium
Life is no longer much fun in a publicly quoted company. Executives have to suffer the slings and arrows of intrusive media coverage, the oppressive tedium of “box-ticking” corporate-governance codes, the threats of activist investors and short sellers, and the scrutiny of single-minded political campaigners.

And what do companies get in return? Traditionally they have had three main reasons to list their shares on a stockmarket. The first is to raise capital, either to expand the business or to allow the founders to realise their wealth. The second is to help retain staff, who can be offered share options as an incentive to stay and work hard. The third involves prestige; customers, suppliers and potential employees may be reassured (and attracted) by the apparent seal of approval given by a public listing. However, all three reasons seem to be less compelling than they used to be.

Historically companies have got their equity capital from four sources: pension funds, insurance companies, mutual funds and retail investors. The first three groups faced legal or regulatory impediments to buying unquoted shares, while the public naturally valued the liquidity a stockmarket listing could bring.

In the absence of a public quote, companies often had only one financial alternative: the banks. In some areas of the world this worked quite well. Banks were reliable partners to Germany's Mittelstand of unquoted companies and to Japan's industrial empires. But in the Anglo-Saxon economies companies often felt nervous about being in hock to the banks. A change in lending policy, due to new management or an economic downturn, could lead to the sudden withdrawal of credit.

Nowadays companies have many more options when it comes to raising money. Banks are much less important as a source of lending; they have been “disintermediated” by capital markets. Banks might arrange loans, but they quickly offload them to outside investors such as hedge funds. Bond markets are much more liquid than they used to be, and thanks to high-yield products even companies with a poor credit-rating can tap them.

Then, of course, there is private equity. It can provide finance at an early stage (venture capital) or as an attractive alternative for companies that have a public quote (the leveraged buy-out). Whereas pension funds will be reluctant to hold a direct stake in an unquoted company, they are willing to pay hefty fees to private-equity firms to invest money on their behalf.

So companies have no difficulty in finding capital outside the public market these days. Just as importantly, in recent years they have had little need to raise capital at all. Corporate profits have risen to a 50-year high as a proportion of America's GDP. Companies have used the cashflow from those profits to buy back shares and pay down debt.



Mr Motivator
In the 1990s it seemed as though everybody in America had a neighbour or a relation who was about to become a millionaire through their stock options. Companies were handing them out like free newspapers on Piccadilly. Company boards were happy to offer options since accounting rules allowed them to pretend they had no cost. Employees were happy to take them in the belief that an ever-rising stockmarket would allow them to buy the condominiums of their dreams. Companies without a listing seemed likely to fall behind in the race for talent.

But the collapse of the dotcom bubble made lots of options worthless. These days many employees would just as soon be rewarded with good old-fashioned cash. And now that options are properly accounted for, companies are just as happy to hand cash over.

Besides, partnerships such as lawyers and accountants (not to mention hedge funds) have historically managed to offer very generous rewards to their top employees without the need for a stockmarket quote. And private-equity groups have also been successful at retaining important staff by offering them potentially lucrative stakes. Indeed, top executives may prefer the private sector. For a start, private-equity bosses can keep what they earn secret, while chief executives of quoted companies find themselves the subject of impertinent comments from the media and activist shareholders.

Perhaps as a result, managers can earn a lot more in the unquoted sector. The most famous example is Dave Calhoun, a top GE executive who turned down jobs at S&P 500 companies for the chance to run privately owned VNU, a Dutch media group, for a reported $100m package.

Of course, such executives will take more risks and work hard for their money; private-equity partners can be tough taskmasters. But at least there will be only one set of masters and the goals will be clear. There is no need to worry about the onerous bits of the Sarbanes-Oxley law (in America), or shareholder resolutions separating the roles of chairman and chief executive (in Britain) or hedge funds demanding that businesses be sold off (pretty much anywhere). Public companies have to reveal a lot more than private ones. Pressure groups can pore over every detail of company policy from the use of child labour to carbon emissions.

The danger is that executives running public companies end up spending so much time dealing with shareholders, regulators and campaigners that they neglect the business. Indeed, these different “stakeholders” may well demand different, and irreconcilable, things. Entrepreneurs, the type of people who like to “get things done” may not want the hassle.

There is another problem, identified by Professor Jensen almost two decades ago. The structure of a public company creates an inherent conflict between investors and the managers they hire to run the business. The main problem is what to do with free cashflow, the money left over after all profitable investment projects have been funded. In theory this money should be returned to shareholders, but managers may be reluctant to do so. Holding on to cash means they do not have to go cap in hand to capital markets.

Professor Jensen argued that borrowing imposed discipline on executives. They needed to generate cash to meet interest payments. And, if they wanted to finance a project, they would have to convince investors that it was worthwhile. The result ought to be fewer unprofitable projects because cash is no longer left burning a hole in managers' pockets.

Private-equity firms apply this lesson in spades. They gear up the balance sheets of companies they buy with more debt than public firms are willing to accept. Nearly 20 years of economic stability have led some to believe that even notoriously cyclical businesses, such as carmaking, can now bear higher levels of debt.

In theory, executives working for private-equity owners respond by cutting costs, weeding out unprofitable operations and expanding those parts of the business where returns are highest. This is what generates charges of asset-stripping. But some of this occurs in most takeovers, whether public or private. Most takeovers are justified by “synergies”, which usually means shedding jobs at head office. This is all part of the “creative destruction” process that allows capital to be allocated more efficiently. Academic studies have suggested that private-equity firms create jobs rather than destroy them, although a lot more research needs to be done before everybody will be convinced.

Workers do have a legitimate concern about the security of their pensions. When a company takes on a lot of debt it undoubtedly makes the “covenant” between a company and its pensions scheme less secure. For a start, it increases the risk that a company may go bust, and so may not be making contributions into the scheme in future. And in the short term executives will concentrate on paying down debt rather than making additional payments to close a pension deficit.

It may well be that the shift away from quoted companies turns out to be detrimental to workers' pensions rights. However, those rights were already being eroded, with many quoted-company schemes being closed to new members or to future accruals for existing employees. Private equity is not the main, or even a leading, cause of the pensions crisis.



The conglomerate model
Another potent criticism of private equity is the parallel with the conglomerates of the 1970s and 1980s, such as ITT, BTR and Hanson. Like private-equity firms, the conglomerates used their financial muscle (in their case, highly rated shares rather than borrowed money) to construct diverse industrial empires. They argued, just as private equity does today, that they could improve the companies they owned through superior management.

Eventually, those empires fell apart. Like a shark compelled to keep swimming forward to catch its prey, they needed ever-bigger acquisitions to make progress. Investors concluded that they could diversify on their own, by buying shares in different sectors. They did not need a conglomerate to do the job for them.

Private-equity groups insist they will not run into the same problem. “We don't hang on to the businesses,” says the leader of one. But that creates another potential problem: investing for growth. If a business is going to be sold within, say, five years, what incentive is there to approve the financing of projects that may take a decade or more to pay off?

Private-equity bosses maintain that it is not in their interest to ruin the companies they buy, because they want to sell them again. And it is also the case that the executives of publicly quoted companies can sometimes skimp on capital expenditure, given that they are often under pressure to meet quarterly profit targets.



Superior returns?
In the end, the argument comes down to a simple one: if private-equity firms are organising the assets of companies more efficiently, then the founders of the industry deserve their billions (though not, perhaps, all of their tax breaks). But it is hard to measure the efficiency of private-equity firms directly. The best that can be done is to look at their returns. Here, the evidence is murky. One much-cited study** found that average returns, net of fees, were roughly equal to that produced by the S&P 500 index between 1980 and 2001. That implies that private-equity firms do improve the businesses they own, since gross returns outperform the market. But investors do not seem to benefit. “Overall, returns have not been that special, especially if you adjust for risk,” says Richard Lambert, director-general of the Confederation of British Industry, Britain's main business lobby-group.

The calculations can be complicated by the tortuous accounting used to calculate the private-equity industry's returns. A recent study† suggests that the residual values of companies that remain in private-equity portfolios may have been overstated. Allowing for this cuts the average net return to three percentage points below that of the S&P 500 index.

However, analysis does suggest that a small proportion of private-equity groups has consistently achieved superior returns. And a study by three American academics†† found that the results achieved by end-investors (such as pension funds and private banks) differed widely; college endowments earned returns that were 14 percentage points better than average. This suggests that a headlong rush by pension funds into the sector in pursuit of diversified returns from “alternative assets” might leave many disappointed.



Going private
Could the private-equity model become the norm, replacing the public company? And would that be a good thing? What might be logical for an individual company might not be best for the economy overall. If all companies were to substitute debt for equity on the scale that private-equity firms have, there would be an increase in the cost of debt. That would make superior equity returns hard to achieve.

In addition, private-equity firms need an exit route to sell their investments. Although there is a growing trend for secondary deals, where one group sells a firm it has bought to another, there must be a limit to which further efficiencies can be squeezed out of any particular business. In the end, a public market will be needed for someone to realise their profit.

Indeed, the need for an exit route was neatly demonstrated by the recent flotation of Blackstone, one of the largest private-equity groups, on the New York stockmarket and the decision this week by Kohlberg Kravis Roberts, another of the industry's titans, to follow suit. It does seem a bit hypocritical for these firms, who regularly tout the benefits of the private model, to head for the public markets—but what other route could they take? They could hardly agree to be bought by each other.

A bigger role for private equity might make the economy more vulnerable. Historically, recessions have often occurred when rising interest rates have cut into corporate profits, causing firms to slash employment and capital expenditure. In a world where most companies carried private-equity-style debt levels, companies would be much more vulnerable and recessions might become much more frequent. Monetary policy would become more difficult, with even small changes in interest rates having the potential to cause massive damage to business. And government revenues might be affected if large portions of industry were financed by tax-deductible debt.

But private equity still accounts for only a small proportion of corporate ownership. Much of the industry's activity is among small and medium-sized companies. There is still plenty of scope for private-equity firms to expand.

It may well be, however, that the peak of the cycle is close at hand. Private equity is inevitably a “feast and famine” business: when one fund can raise a lot of capital, they all can. Competition to buy companies then pushes up the price of doing deals, increasing the interest burden and reducing the returns for equity holders. More deals will be done this year, but they may not deliver the kind of returns that investors are hoping for, just as the late 1980s buy-out of RJR Nabisco, the emblematic deal of the era, proved a disappointment.

Since 2003 conditions have been almost ideal for private-equity firms, with low interest rates, lots of liquidity and rising asset prices. But recent events have been moving against them. Bond yields have been rising, making takeovers (which replace equity with debt) more expensive. The high level of corporate profits suggests that there may not be much more to be wrung out of businesses. And the relentless campaign against private-equity tax privileges has made the groups look like easy targets for finance ministers. It may be symbolic that Blackstone's shares quickly slid below the offer price.



Bad debts
Investors also seem to have woken up to the potential risks, perhaps alerted by the losses being suffered in another part of the credit universe—subprime mortgages. They had previously been happy to extend credit on easy terms, such as “covenant-lite” loans (debts with few checks on operating performance) or payment-in-kind notes, where borrowers can substitute more debt for interest payments. Now they are starting to turn down deals where private-equity firms push their luck too far. Banks are getting reluctant to provide the “blank cheques” that private-equity groups were demanding for the bridge financing of deals. In addition, exits may be becoming more difficult: the sale of New Look, a British retailer, collapsed when the last two remaining bidders pulled out.

It is important, however, to distinguish between the cyclical and structural tides. The 1980s private-equity boom ended in the face of rising interest rates and a slumping economy. The same combination might cause another retreat over the next few years. But after that tide has ebbed, more businesses will be in private hands. And when interest rates inevitably fall again, the private-equity wave will once again capture new ground.

*“Eclipse of the Public Corporation”, by Michael Jensen, Harvard Business Review, Sep-Oct 1989

**“Private Equity Performance: Returns, Persistence and Capital Flows”, by Steven Kaplan and Antoinette Schoar, Journal of Finance, August 2005

†“The Performance of Private Equity Funds”, by Ludovic Phalippou and Oliver Gottschalg, April 2007

††“Smart Institutions, Foolish Choices? The Limited Partner Performance Puzzle”, by Josh Lerner, Antoinette Schoar and Wan Wong, MIT Sloan Research Paper 4523-05, January 2005

An Earth Without People

An Earth Without People

A new way to examine humanity's impact on the environment is to consider how the world would fare if all the people disappeared

By Steve Mirsky

TIMELINE: The Fall of New York City
VIDEO: The Earth Without Humans

Editors’ Introduction
It’s a common fantasy to imagine that you’re the last person left alive on earth. But what if all human beings were suddenly whisked off the planet? That premise is the starting point for The World without Us, a new book by science writer Alan Weisman, an associate professor of journalism at the University of Arizona. In this extended thought experiment, Weisman does not specify exactly what finishes off Homo sapiens; instead he simply assumes the abrupt disappearance of our species and projects the sequence of events that would most likely occur in the years, decades and centuries afterward.

According to Weisman, large parts of our physical infrastructure would begin to crumble almost immediately. Without street cleaners and road crews, our grand boulevards and superhighways would start to crack and buckle in a matter of months. Over the following decades many houses and office buildings would collapse, but some ordinary items would resist decay for an extraordinarily long time. Stainless-steel pots, for example, could last for millennia, especially if they were buried in the weed-covered mounds that used to be our kitchens. And certain common plastics might remain intact for hundreds of thousands of years; they would not break down until microbes evolved the ability to consume them.


Scientific American editor Steve Mirsky recently interviewed Weisman to find out why he wrote the book and what lessons can be drawn from his research. Some excerpts from that interview appear on the following pages.

The Interviewee

Alan Weisman is author of five books, including the forthcoming The World without Us (St. Martin’s Press, 2007). His work has appeared in Harpers, the New York Times Magazine, the Los Angeles Times Magazine, Discover, the Atlantic Monthly, Condé Nast Traveler, Orion and Mother Jones. Weisman has been heard on National Public Radio and Public Radio International and is a senior producer at Homelands Productions, a journalism collective that produces independent public radio documentary series. He teaches international journalism at the University of Arizona.

Q&A With Alan Weisman

If human beings were to disappear tomorrow, the magnificent skyline of Manhattan would not long survive them. Weisman describes how the concrete jungle of New York City would revert to a real forest.

“What would happen to all of our stuff if we weren’t here anymore? Could nature wipe out all of our traces? Are there some things that we’ve made that are indestructible or indelible? Could nature, for example, take New York City back to the forest that was there when Henry Hudson first saw it in 1609?

“I had a fascinating time talking to engineers and maintenance people in New York City about what it takes to hold off nature. I discovered that our huge, imposing, overwhelming infrastructures that seem so monumental and indestructible are actually these fairly fragile concepts that continue to function and exist thanks to a few human beings on whom all of us really depend. The name ‘Manhattan’ comes from an Indian term referring to hills. It used to be a very hilly island. Of course, the region was eventually flattened to have a grid of streets imposed on it. Around those hills there used to flow about 40 different streams, and there were numerous springs all over Manhattan island. What happened to all that water? There’s still just as much rainfall as ever on Manhattan, but the water has now been suppressed. It’s underground. Some of it runs through the sewage system, but a sewage system is never as efficient as nature in wicking away water. So there is a lot of groundwater rushing around underneath, trying to get out. Even on a clear, sunny day, the people who keep the subway going have to pump 13 million gallons of water away. Otherwise the tunnels will start to flood.

“There are places in Manhattan where they’re constantly fighting rising underground rivers that are corroding the tracks. You stand in these pump rooms, and you see an enormous amount of water gushing in. And down there in a little box are these pumps, pumping it away. So, say human beings disappeared tomorrow. One of the first things that would happen is that the power would go off. A lot of our power comes out of nuclear or coal-fired plants that have automatic fail-safe switches to make sure that they don’t go out of control if no humans are monitoring their systems. Once the power goes off, the pumps stop working. Once the pumps stop working, the subways start filling with water. Within 48 hours you’re going to have a lot of flooding in New York City. Some of this would be visible on the surface. You might have some sewers overflowing. Those sewers would very quickly become clogged with debris—in the beginning the innumerable plastic bags that are blowing around the city and later, if nobody is trimming the hedges in the parks, you’re going to have leaf litter clogging up the sewers.

“But what would be happening underground? Corrosion. Just think of the subway lines below Lexington Avenue. You stand there waiting for the train, and there are all these steel columns that are holding up the roof, which is really the street. These things would start to corrode and, eventually, to collapse. After a while the streets would begin cratering, which could happen within just a couple of decades. And pretty soon, some of the streets would revert to the surface rivers that we used to have in Manhattan before we built all of this stuff.

“Many of the buildings in Manhattan are anchored to bedrock. But even if they have steel beam foundations, these structures were not designed to be waterlogged all the time. So eventually buildings would start to topple and fall. And we’re bound to have some more hurricanes hitting the East Coast as climate change gives us more extreme weather. When a building would fall, it would take down a couple of others as it went, creating a clearing. Into those clearings would blow seeds from plants, and those seeds would establish themselves in the cracks in the pavement. They would already be rooting in leaf litter anyhow, but the addition of lime from powdered concrete would create a less acidic environment for various species. A city would start to develop its own little ecosystem. Every spring when the temperature would be hovering on one side or the other of freezing, new cracks would appear. Water would go down into the cracks and freeze. The cracks would widen, and seeds would blow in there. It would happen very quickly.”

How would the earth’s ecosystems change if human beings were out of the picture? Weisman says we can get a glimpse of this hypothetical world by looking at primeval pockets where humanity’s footprint has been lightest.


“To see how the world would look if humans were gone, I began going to abandoned places, places that people had left for different reasons. One of them is the last fragment of primeval forest in Europe. It’s like what you see in your mind’s eye when you’re a kid and someone is reading Grimm’s fairy tales to you: a dark, brooding forest with wolves howling and tons of moss hanging off the trees. And there is such a place. It still exists on the border between Poland and Belarus. It was a game reserve that was set aside in the 1300s by a Lithuanian duke who later became king of Poland. A series of Polish kings and then Russian czars kept it as their own private hunting ground. There was very little human impact. After World War II it became a national park. You go in there and you see these enormous trees. It doesn’t feel strange. It almost feels right. Like something feels complete in there. You see oaks and ashes nearly 150 feet tall and 10 feet in diameter, with bark furrows so deep that woodpeckers stuff pinecones in them. Besides wolves and elk, the forest is home to the last remaining wild herd of Bison bonasus, the native European buffalo.



“I also went to the Korean DMZ, the demilitarized zone. Here you have this little stretch of land—it’s about 150 miles long and 2.5 miles wide—that has two of the world’s biggest armies facing off against each other. And in between the armies is an inadvertent wildlife preserve. You see species that might be extinct if it weren’t for this one little piece of land. Sometimes you’ll hear the soldiers screaming at one another through loudspeakers or flashing their propaganda back and forth, and in the middle of all this tension you’ll see the flocks of cranes that winter there.


“But to really understand a world without humans, I realized I would have to learn what the world was like before humans evolved. So I went to Africa, the place where humans arose and the only continent where there are still huge animals roaming around. We used to have huge animals on all the other continents and on many of the islands. We had enormous creatures in North and South America—giant sloths that were even bigger than the mammoths; beavers the size of bears. It’s controversial as to what actually wiped them out, but a lot of indications point the finger at us. The extinctions on each landmass seemed to coincide with the arrival of humans. But Africa is the place where human beings and animals evolved together, and the animals there learned strategies to avoid our predation. Without humans, North America would probably become a giant deer habitat in the near term. As forests would become reestablished across the continent, eventually—in evolutionary time—larger herbivores would evolve to take advantage of all the nutrients locked up in woody species. Larger predators would evolve accordingly.”

Thinking about an earth without humans can have practical benefits. Weisman explains that his approach can shed new light on environmental problems.


“I’m not suggesting that we have to worry about human beings suddenly disappearing tomorrow, some alien death ray taking us all away. On the contrary, what I’m finding is that this way of looking at our planet—by theoretically just removing us—turns out to be so fascinating that it kind of disarms people’s fears or the terrible wave of depression that can engulf us when we read about the environmental problems that we have created and the possible disasters we may be facing in the future. Because frankly, whenever we read about those things, our concern is: Oh, my God, are we going to die? Is this going to be the end? My book eliminates that concern right at the beginning by saying the end has already taken place. For whatever reason, human beings are gone, and now we get to sit back and see what happens in our absence. It’s a delicious little way of reducing all the fear and anxiety. And looking at what would happen in our absence is another way of looking at, well, what goes on in our presence.


“For example, think about how long it would take to wipe out some of the things we have created. Some of our more formidable inventions have a longevity that we can’t even predict yet, like some of the persistent organic pollutants that began as pesticides or industrial chemicals. Or some of our plastics, which have an enormous role in our lives and an enormous presence in the environment. And nearly all of these things weren’t even here until after World War II. You begin to think there’s probably no way that we are going to have any kind of positive outcome, that we are looking at an overwhelming tide of geologic proportions that the human race has loosed on the earth. I raise one possibility toward the end of the book that humans can continue to be part of the ecosystem in a way that is much more in balance with the rest of the planet.


“It’s something that I approach by first looking at not just the horrible things that we have created that are so frightening—such as our radioactivity and pollutants, some of which may be around until the end of the planet—but also some of the beautiful things that we have done. I raise the question, Wouldn’t it be a sad loss if humanity was extirpated from the planet? What about our greatest acts of art and expression? Our most beautiful sculpture? Our finest architecture? Will there be any signs of us at all that would indicate that we were here at one point? This is the second reaction that I always get from people. At first they think, This world would be beautiful without us. But then they think, Wouldn’t it be sad not to have us here? And I don’t think it’s necessary for us to all disappear for the earth to come back to a healthier state.”


More to Explore
Plastics and the Environment. Edited by Anthony Andrady. John Wiley & Sons, 2003.

Twilight of the Mammoths: Ice Age Extinctions and the Rewilding of America. Paul S. Martin. University of California Press, 2005.

Extinction: How Life on Earth Nearly Ended 250 Million Years Ago. Douglas H. Erwin. Princeton University Press, 2006.

The Revenge of Gaia. James ­Lovelock. Allen Lane/Penguin Books, 2006.

© 1996-2007 Scientific American, Inc. All rights reserved.
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First baby born from egg matured in lab and frozen

First baby born from egg matured in lab and frozen
By BEN HIRSCHLER
July 2, 2007—


LONDON, July 2 (Reuters) - The first test-tube baby created from an egg matured in the laboratory and then frozen has been born in Canada, in a breakthrough offering hope to women with cancer and others unsuited to normal IVF treatment.

The baby is doing well and another three women are pregnant by the same method, researchers told a medical meeting in Lyon, France, on Monday.

Conventional in vitro fertilisation (IVF) involves using high doses of expensive hormone drugs to stimulate the ovaries to produce multiple mature eggs.

But some women seeking to preserve their child-bearing capacity may not have enough time to undergo ovarian stimulation or may have a condition that makes it dangerous, such as hormone-sensitive breast cancer.

For these patients, ripening eggs in the lab -- so-called in vitro maturation (IVM) -- makes sense. Until now, however, scientists have never frozen, thawed and then fertilised a lab-matured egg. This multi-step process increases significantly the flexibility of fertility treatment.

"We have demonstrated for the first time that it is possible to do this and, so far, we have achieved four successful pregnancies, one of which has resulted in a live birth," Hananel Holzer of the McGill Reproductive Center in Montreal said in a statement.

The research is still at an early stage and has not yet been proven in cancer patients, he told the annual meeting of the European Society of Human Reproduction and Embryology (ESHRE).

But Holzer and other experts believe it has the potential to become one of the main options for fertility preservation.

Women diagnosed with cancer are likely to be the main beneficiaries, since cancer treatment can make them sterile and they often have no time to take fertility drugs.

At present, there is the experimental option of having ovarian tissue removed, frozen and transplanted back later. But this brings with it a theoretical risk of re-introducing cancer.

Holzer tried his new technique on 20 infertile women with polycystic ovary syndrome, a leading cause of infertility.

Joep Geraedts, ESHRE's chairman elect, said the resulting four pregnancies, or 20 percent success rate, was "quite good".

"If this works in cancer patients, it might ultimately be possible to do this in all women that undergo IVF or assisted reproduction because then you don't need to bother them with hormones," he told Reuters in a telephone interview.

It could also save money, since treatment with hormone drugs can cost thousands of dollars. Leading makers of fertility drugs include Merck Serono and Akzo Nobel's Organon unit, which is being acquired by Schering-Plough. Geraedts said there should now be large-scale clinical trials to assess the new procedure definitively.


Copyright © 2007 ABC News Internet Ventures


Labs Mature Eggs From Girls With Cancer
Doctors Bring Young Cancer Patients' Eggs to Maturity, Giving Hope for Future Childbirth
By MARIA CHENG
The Associated Press
LYON, France


Doctors have removed eggs from young female cancer patients and for the first time brought the eggs to maturity before freezing them, giving the girls a better chance to one day have children.

Previously, scientists had thought viable eggs could only be obtained from girls who had undergone puberty.

"We didn't expect young girls to have eggs that could withstand the process of maturation," which involves adding hormones, said Dr. Ariel Revel, who led the research at the Hadassah Hospital in Israel.

The research will be presented Tuesday at the annual meeting of the European Society of Human Reproduction and Embryology in Lyon.

In related work, Canadian doctors on Monday announced the first birth of a baby from eggs matured in a laboratory, frozen, thawed and then fertilized a key development that holds promise for infertile women.

The year-old baby girl was born to a woman in Canada, doctors told the conference. Three other women are pregnant from eggs that had been matured in a lab, frozen, thawed and then implanted, they said.

The 20 women involved in the study are infertile with an average age of about 30. None have a history of cancer. Until now, doctors did not know whether eggs matured in a lab could withstand the fertilization process, adding that the research is still in early stages.

"It has the potential to become one of the main options for fertility preservation," said Dr. Hananel Holzer, the study's lead author and an assistant professor in the department of obstetrics and gynecology at McGill University in Montreal.

In the study involving young girls with cancer, Revel surgically extracted the eggs and then artificially matured them in a laboratory, with the idea of re-implanting them one day should the patient wish to have children.

To obtain the eggs, Revel and his colleagues performed surgery on 18 patients ages 5 to 20. Of 167 eggs, 41 were successfully matured, including some from prepubescent donors. They were then indistinguishable from those of older women, Revel said.

"Any advance that enables young women to have children one day after having cancer is positive," said Simon Davies, head of Teenage Cancer Trust, a charity based in Britain. Davies was not linked to the research.

But as the extraction of eggs is an invasive operation, Davies said more information was needed about potential risks to young women fighting cancer. There might also be ethical concerns, as the decision to remove eggs from very young girls would likely be made by the parents, not the patient.

Experts think cancer treatments can affect female fertility. Chemotherapy usually affects all body cells, attacking not only the cancer, but other areas including the ovaries for which it is often deadly.

Unlike men, who produce sperm throughout their lifetime, women only have a set number of eggs from their birth, which decreases as they age. Young girls who undergo aggressive chemotherapy treatments often experience a sharp drop in the number of their eggs, and some become completely infertile.

The cure rate for childhood cancer can be as high as 90 percent, and doctors are investigating options for preserving patients' fertility. Another experimental method involves removing a thin layer of ovarian tissue for re-implantation later, but trials so far have resulted in only a handful of pregnancies worldwide.

Immature eggs from adult women have previously been matured in the laboratory, but until now, no one had ever tried it with eggs from young girls.

The real test will come when the girls on whom the treatment was performed might be ready to have children. "We will only know the final chapter of this story in about 10 years, when we hope to close the circle of this research," Revel said.

None of the eggs has yet been thawed, and experts are unsure if the process of artificial insemination could result in other problems such as chromosomal abnormalities. Additional surveillance, such as amniocentesis screenings to check the baby's development, probably would be necessary.



Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Copyright © 2007 ABC News Internet Ventures

The Move to Expand DNA Testing

The Move to Expand DNA Testing
by Aubrey Fox
21 May 2007

Governor Eliot Spitzer’s proposal to greatly expand the state’s database of DNA samples along with the exoneration last week of a New Jersey man who served 19 years in jail for the gruesome murder of two children has reopened debate about the use of a technology that could fundamentally change how justice is administered in New York City.

Spitzer wants to require testing of all individuals found guilty of felonies or misdemeanors, in state prison or on parole or probation, while making it easier for defendants to use DNA sampling to prove their innocence. In attempting to pass legislation that has been blocked several times in recent years by the state Assembly, Spitzer seeks to emphasize the role that DNA testing can play in freeing the innocent, as well as in fighting crime. It’s a powerful combination, given recent high-profile wrongful conviction cases, such as Alan Newton of the Bronx, freed by DNA sampling after serving 22 years on a rape charge, and Scott Fappiano, erroneously imprisoned in 1983 for the rape of a Brooklyn woman, that have rocked New York’s criminal justice community.

The legislation includes measures that make it easier for defendants and judges to request DNA testing. It would also create a state office to examine wrongful conviction cases in New York State and propose reforms.

Spitzer’s bill has the support of Brooklyn Democrat Joseph R. Lentol, chairman of the Assembly’s committee on criminal justice issues. Other prominent players, such as Assembly Speaker Sheldon Silver, and Barry Scheck and Peter J. Neufeld of the Innocence Project, which has used DNA testing to free 23 wrongfully convicted New Yorkers, have not yet announced a position. The New York Civil Liberties Union has come out against the bill, citing concerns about the state’s ability to set, and enforce, consistent rules for the storage and processing of DNA materials.

Passage of the legislation would have a dramatic impact on New York City, which has invested over $250 million in a state-of-the-art forensic laboratory in Manhattan. Mayor Michael Bloomberg and his police commissioner, Raymond Kelly, enthusiastically support Spitzer's proposal. In the past, Bloomberg has argued for expansion of the state’s DNA sampling program on the grounds that many people who commit minor crimes also commit more major offenses and so that having DNA from so-called “petty criminals” would help solve bigger cases. He and Kelly have argued that the state’s existing restrictions on DNA sampling restrictions hurt the city’s ability to use DNA to reduce crime rates even further.

Regardless of the bill’s prospects for passage, DNA testing – only a little more than two decades old – offers a potentially transformative crime fighting technology. What may be less clear to New Yorkers are its benefits and drawbacks.

A NEW TOOL

Deoxyribonucleic acid, or DNA, is a molecule that can be found in all cells and is left behind in blood, saliva, sweat, semen, hair and skin, biological evidence that can often be found at crime scenes. DNA testing was developed by geneticist Alec Jeffreys of Leicester University in England in the early 1980s. He discovered that DNA could be used to isolate a “genetic marker” unique to each individual.

Jeffrey’s new technique was employed almost immediately to help solve two notorious rape and murder cases in the nearby countryside. After a 17-year-old confessed to one murder but not the other, the police asked Jeffreys to conduct a DNA test of the suspect. It revealed that he had given a false confession – making him, in Jeffrey’s recollection, “the first man ever proved innocent by molecular genetics.” The police then took blood samples of over 5,000 men from the nearby community and stumbled on the real killer when he was overheard bragging about getting a friend to submit a substitute sample.

NEW YORK’S DNA PROGRAM

Launched in 2000, New York’s DNA database holds 250,000 samples. Spitzer's proposal would immediately add 50,000 samples from prisoners, probationers and parolees, while hundreds of thousands more would be added over time from a broader array of newly convicted offenders.

The database is currently divided into two sections, a Forensic Index, which contains DNA samples taken from crime scenes, and a Convicted Offender Index. Supporters of DNA testing hope to collect as many samples of individual DNA as possible to compare to DNA taken at crime scenes. According to their logic, the likelihood of a crime scene “hit” goes up if there are more DNA samples in the Convicted Offender Index. The testing itself is quick and simple: Just a cotton swab dabbed at the individual’s mouth

At first, sampling in New York was limited to individuals convicted of sex crimes and some other felonies, but the law has since been amended to cover many more offenses. Currently, about half of all individuals convicted of a crime in New York are required to contribute a DNA sample. Spitzer’s legislation would extend testing to all convicted felony and misdemeanor offenders, though it would not include individuals who plead guilty to lower-level violations such as disorderly conduct. In addition, 50,000 samples from state prisoners, as well as individuals on probation and parole, would be added to the database.

A NEW TOOL FOR POLICE

Since it was introduced in New York, DNA sampling has emerged as an important tool in hard-to-solve cases like burglaries, in which, according to the New York Times, arrests are made in only about 15 percent of reported offenses. In 2004, a pilot program launched in Queens called Biotracks, which netted 23 suspects tied to 34 burglary cases in a nine-month period, according to the Times. It led to the arrest of one man, Robert Medina, who pled guilty to five burglaries after DNA on a scarf he left at a crime scene was matched to a sample taken from him after a previous felony arrest.

The same procedure can be used with sex offenses, which are also difficult to solve. In a recent case, DNA from a Queens man convicted on a drug-related charge was matched to a sample saved from a rape kit that included a taunting note left for the victim. As a result, he was found guilty of first-degree rape and second-degree burglary.

Speaking in 2006, Police Commissioner Kelly asserted that DNA testing had led to the arrests of 210 sex offenders. New York City. The technology spurred the elimination last year of the state’s five-year statue of limitation for rape cases.

Perhaps the strongest case for expansive DNA sampling comes from England, which, in the last decade, has embarked on the world’s most aggressive DNA gathering effort. The country’s DNA database maintains over 4 million samples, covering about 6 percent of the population, more than ten times the rate at which DNA samples are collected in the United States. The database has yielded close to 3,000 crime scene matches per month, according to NewScientist.com, including “hits for 15 murders, 45 rapes and sexual offenses and 2,500 car, theft and drug crimes.”

At the same time, DNA sampling can help prove the innocence of individuals wrongly convicted of a crime. The Innocence Project, which uses DNA to try to win the release of the wrongfully convicted, has helped exonerate 201 individuals in the United States, and 23 in New York State. Most recently, DNA testing was used to exonerate Byron Halsey, the New Jersey man who had served 19 years in jail for the murder of the seven and eight-year old children of Halsey’s girlfriend. DNA testing instead implicated a neighbor who had testified against Halsey during the trial. In a statement that shows the powerful impact of DNA, the victims’ mother said, “I knew Byron loved Tyrone and Tina. It didn’t make sense to me that he could have done this. I always had my doubts, but I didn’t know what to do about them. I am thankful that the DNA testing has identified who really did this to my children and that Byron is being released today.”

THE CIVIL LIBERTIES ISSUES

But along with its promise, any tool as powerful as DNA is bound to raise concerns as well. Some fear the technology can be misused, that DNA sampling is a slippery slope that will inevitably extend beyond a relatively small number of convicted offenders.

For evidence, some civil libertarians point to Britain. While the Spitzer proposal extends testing only to those convicted of crimes, however minor, in the United Kingdom the police take DNA samples from all those arrested. Since 2001, they can retain those samples even when the arrest results in an acquittal. And in 2004, the police received the authority to collect DNA from suspects, an even lower threshold than arrestees. The country’s database also includes samples from children under the age of 16, including two 12-year-old children who gave a DNA sample after they were accused of damaging a tree they were using to build a tree house.

While the large number of samples makes it more likely that police authorities can make a “hit” to DNA recovered at a crime scene, keeping samples from innocent people arguably violates the legal principle of “innocent until proven guilty.” As one civil libertarian said, “If your DNA is on the database it means that you are forever an automatic suspect for any crime in the future.”

Those who tend to dismiss arguments often draw an analogy to fingerprints– the criminal justice antecedent of DNA sampling. They are widely collected in the United States, private companies and government agencies use fingerprinting for security purposes, and consumers may soon be able to “unlock” cell phones, laptops and even their homes with fingerprint censors.

Why should New Yorkers be any more concerned about DNA sampling than they are about fingerprinting? One argument is that the information in a DNA sample is much more detailed, containing clues about an individual’s health and ethnicity. In the future, it might offer clues to an individual’s propensity to violence and criminal behavior. In light of this, some critics fear a science-fiction world where DNA sampling could convict individuals before they even commit a crime. Even Alan Jeffreys, who created DNA sampling, has been quoted saying that “as a geneticist I would greatly value the potential enormous power of the database for research, but it’s a gross infringement of civil liberties.”

MANAGING THE EVIDENCE

A less abstract argument raises the issue of whether the state’s already overburdened crime laboratories will be able to handle the increased numbers of samples. If not, evidence could be lost, mislabeled or used inadvertently to make false matches. In a press release critiquing the legislation, the New York Civil Liberties Union focused on what it calls the lax regulation of the state’s DNA laboratories. “Expansion of the databank will overload crime labs and undermine effective criminal investigation,” the statement said, and lead to “large backlogs in the processing of samples [that will] significantly delay the identification and apprehension of violent felons.”

In an op-ed published in June 2006 entitled “Think Before You Swab,” New York state Senator Thomas Duane raised a number of similar issues. He also asked whether an expansion the DNA database could lead to diminishing returns, citing statistics provided by the Division of Criminal Justice Services that fewer DNA “hits” resulted from expansions beyond a small number of felons. “Does [that] signal that adding genetic material from people convicted of lesser crimes has no positive impact?” Duane wrote. “Moreover, is it possible that increasing the number of samples will so overtax the system that the database will actually be less effective?”

It’s perhaps telling that the New York Civil Liberties Union centered its critique on the effectiveness of DNA sampling. The group may well have calculated that DNA sampling, which promises to solve crime and free the innocent at the same time, is too politically popular to take on directly. Or perhaps it shows an underlying confidence that the United States, which has a stronger tradition of civil liberties than Britain does, will be able to navigate the thorny trade-offs between exploiting the full potential of DNA sampling and protecting privacy rights.

In any case, one issue that DNA proponents and critics appear to agree on is the need to improve the state and city’s ability to process and analyze DNA, as well as other crime scene materials. Unfortunately, criminal justice authorities do not have a great track record on this score. Bronx resident Alan Newton, who served 22 years in prison for a rape he did not commit, is a good case in point. For a decade, police officials insisted that they could not find a rape kit that would allow for a test against Newton’s DNA. The kit, held in an enormous Queens warehouse along with over one million pieces of evidence, was finally found in its original 1984 storage bin.

Or take the example of Scott Fappiano, who spent 21 years in jail on a wrongful conviction for rape because key evidence was found only after an intensive two-year search. “It’s appalling that 21 states around this country have enacted preservation statutes for biological evidence, but New York has not,” the Innocence Project’s Peter Neufeld has said

Given that record, the key to ensuring public support for expanded DNA sampling may rest in more in New York’s ability convince the public it can use the technology effectively and responsibly than in the technology itself.

Aubrey Fox is project director of Bronx Community Solutions, aimed at changing the Bronx court system’s approach to low-level crime.

---

Gotham Gazette - http://www.gothamgazette.com/article/crime/20070521/4/2186

Sell the Buildings, Too

Sell the Buildings, Too
HOWARD HUSOCK



New York City Housing Authority ’s announcement that it would start to sell vacant land within the boundaries of its housing projects appears to signal the start of a new era in the city. It is, after all, an unprecedented step: historically, the Authority has been in the business of taking land — not selling it, and certainly not to private buyers, as planned.

But it’s not clear whether or not the sale of parking and vacant lots in Chelsea and East New York in order to raise $50 million is anything more than a stop-gap to allow the creaky NYCHA machine to keep going for a while. Instead, it should be the start of a wholesale re-examination of the financially troubled public housing system.

For those who complain that New York lacks “affordable housing,” it’s important to understand that the city has more subsidized housing of all kinds — especially public housing owned by NYCHA — than any other city in the country, both in total numbers and per capita.

New York’s 178,000 public housing units far outstrips that of runner-ups San Juan, which has 57,000 units, or Chicago which once had nearly 40,000 units but, after demolishing many of its most infamous high-rises, plans on retaining just 25,000.

NYCHA is a city-within-a-city in Gotham: there are more than 400,000 people who live in NYCHA-owned properties. This number is greater than the population of a city in the rest of the state — Buffalo’s population is less than 300,000.

Yet NYCHA’s real estate has been essentially frozen. As the city’s economy changes and neighborhoods change with it, public housing stands apart. The Ingersoll Houses in Brooklyn, for instance, were built for the shipyard workers of the Brooklyn Navy Yard — itself long gone and replaced by an industrial park with dozens of innovative small businesses.

That’s not all that’s changed. Originally, public housing was meant to be financially self-supporting. Government would finance construction — but working families would pay rents sufficient to maintain the buildings. It was thought that many would move up and out, as well.

Today, more than 40% of NYCHA households have been in their apartments for more than 10 years and fewer than half of NYCHA household heads are employed, according to the U.S. Department of Housing and Urban Development’s data. The rent rolls aren’t nearly sufficient to cover the cost of maintaining aging structures.

The result is a financial crisis — a $225 million budget shortfall appears to have motivated the first-ever land sell-off. The benefits of 6,000 new apartments to be built on the land should not be minimized. But the larger problem of the “frozen city” is far more important in the long term.

The total real estate footprint of New York’s public housing projects is equivalent to the size of some 156 World Trade Center sites. The city can ill afford to declare so many sites in so many neighborhoods to be off limits to change.

Cities thrive, in part, by allowing their

real estate to be put to its highest and best use. In doing so, jobs and wealth are created — for all social classes, not just the rich. Setting aside land for those who earn low incomes is a deeply pessimistic policy — one that assumes there will always be a need for thousands of units of such housing.

Not only does such a system tie up a great deal of land with none of it on the property tax rolls, but also it requires a sprawling administrative and operational structure to keep it going, funded by a tax base depressed by the extent of public housing. Worse, it encourages continued poverty — by providing low-priced housing to the single-parent, female-headed families who dominate it — more than 70%, nationally.

It makes sense for the city to exit the public housing business in a gradual, humane manner. Selling off land could be a first step in that process. But it would be far better to start selling off whole buildings. The proceeds of the sales of buildings in hot real estate markets would do far more to help fund the existing system.

How to do it? As units become vacant, tenants from other buildings can move in. It is not unreasonable to pressure tenants, perhaps by raising the rent, to exit the system. This is the sort of turnover that happens in all neighborhoods; aging residents, faced with a decision as to whether it’s worth paying taxes on a big house, for instance, choose to make a move. NYCHA reports that more than 39,000 of its apartment units are what it calls “underoccupied units,” where the family size is less than the number of bedrooms. This newspaper’s suggestion of allowing public housing tenants to be given property rights to their apartments, which could then be sold, can help provide the incentive for movers.

The big picture is this: The public housing financial crisis is chronic, not passing. It is best solved not through a minor change akin to Lenin’s New Economic Policy, his brief flirtation with capitalism before a return to socialism. Instead, there must be a consolidation of the system in order to allow a gradual sell-off of property. Doing so will help spark real estate revitalization from Brooklyn to East Harlem to the South Bronx — and ultimately benefit all New Yorkers.

Mr. Husock, author of “America’s Trillion-Dollar Housing Mistake,” is vice

president for programs at the

Manhattan Institute.

BUILDING BOOM IN THE CITY

Danger & ripoffs are on the rise

How hot construction biz brings a black market, scams & death

BY BRIAN KATES
DAILY NEWS STAFF WRITER

Posted Sunday, May 27th 2007, 4:00 AM

The biggest building boom in more than 30 years has spawned a cadre of scofflaw developers in every borough who routinely violate building codes, flout zoning regulations and ignore basic construction safety, a Daily News investigation shows.

As a result, entire neighborhoods are being placed in danger, workers are being killed and injured in record numbers and the city is losing millions to a growing off-the-books construction economy.

The News investigation has uncovered:

Low-rise middle class neighborhoods battered and overwhelmed by the construction of high-rise condos for the wealthy.
Residents forced to flee their homes or pay massive repair bills because of shoddy and dangerous construction - often performed by contractors working on projects next door or nearby.
Abuses by architects and engineers in the self-certification program, where they attest that regulations have been met without an independent inspection.
Developers who ignore fines and penalties, or treat them as the cost of doing business.
Workers forced to work in unsafe conditions while being cheated of their rightful wages.


With permits for residential units more than doubling between 2000 and 2006, to 30,927, The News found sloppy oversight, regulations that encourage developers to sacrifice safety for speed and a seeming disregard for the legitimate complaints of ordinary New Yorkers.

The city's building boondoggle is being fed by a massive off-the-books construction industry that underpays workers and robs the city, state and federal governments of tens of millions in taxes.

Interviews with dozens of workers, union officials and industry experts reveal that much of the city's new housing is being built by nonunion workers, many of them undocumented immigrants paid in cash, well below the legal prevailing wage.

About 30,000 workers are illegally employed in the city's burgeoning residential housing sector, according to estimates by the Fiscal Policy Institute, a New York-based research group.

Nowhere is this shadow workforce more active than in city-subsidized housing, where only 5% of the workforce is unionized and most jobs go to the lowest bidder, encouraging contractors to shave wages and cut costs.

Hiring workers off the books shifts costs to taxpayers and law-abiding contractors and gives unscrupulous builders an unfair competitive advantage, especially in contracts awarded to the lowest bidder.

The underground construction economy cheats the government of no less than $85.3 million in payroll and personal income taxes, health insurance premiums and Medicaid costs each year, the Fiscal Policy Institute estimates.

The situation promises to worsen as the city Department of Housing Preservation and Development works to meet Mayor Bloomberg's goal of creating 92,000 affordable housing units in the next 10 years.

Enforcement of prevailing wage standards is spotty, and fines minuscule. In 2006, penalties for contractors caught underpaying workers amounted to only 14% of the underpayment, according to Public Interest Economics, a New York-based consulting group.

In December, the city controller's office investigated 20 buildings in the HPD's Tenant Interim Lease subsidy program. "The results were troubling to say the least," a high-ranking official said in a confidential e-mail obtained by The News.

"A large majority of the workers who were willing to talk to us said they were being paid substantially less than prevailing wages," the e-mail continued. "Only a few [sites] had sign-in sheets for the workers and none of the contractors would make payroll records available to our investigators."

The official also reported that "few of the workers had hardhats or other safety equipment."

In a rare prosecution, a contractor and the management company that hired it were penalized in March for cheating workers at an HPD-subsidized project out of almost $190,000 in wages.

But justice was not swift.

The work at 536-538 W. 163rd St. in upper Manhattan was done in the winter of 2003-04. None of the seven workers was owed less than $6,000, and two carpenters were owed nearly $48,000 each.

The contractor, Integrity Construction, was barred from doing business with the city or state for five years after an administrative law judge determined it had cooked its books to avoid paying prevailing wages.

The management company, Melcara Corp., which has been awarded more than $93 million in HPD contracts since 1990, was ordered to pay $350,000 in back wages, fines and penalties.

The job, which went to the lowest bidder, was worth $1.1 million, according to the controller's office. It was part of a $12 million contract Melcara won to supervise jobs at numerous subsidized housing sites, city records show.

Conditions were horrendous, according to workers.

"It was like working in Siberia, the gulag, bitterly cold," testified mason tender Dedan Kimanthi. "The contractor never provided heat [and] there was no bathroom on the site."

Kimanthi was paid $10 an hour. The prevailing wage for mason tenders is $29.85 an hour in straight pay plus $18.99 in benefits. Kimanthi was cheated of $17,299, investigators concluded.

"This set me back tremendously," said a carpenter who asked not to be identified. "I was no better off than those people in the street. I got in trouble for nonpayment of rent." Investigators determined the worker was owed $47,588.

Because off-the-books workers go uncounted, the vast army of shadow workers appears nowhere in official statistics.

However, "given the large increase in housing starts, it strains credibility to believe that Labor Department numbers accurately reflect construction employment," said Fiscal Policy Institute economist James Parrott.

Between 2000 and 2005, the number of new residential construction permits issued in the city increased by 110%. That should have triggered at least an 88% increase in construction employment, Parrott reported, citing industry standards. Yet official government sources put the job increase at only 48%.

"The employment increase should have been a projected 38,140 instead of the reported increase of 21,088," Parrott said. "That means about 17,000 workers are being paid off the books."

An additional 13,000 of the 26,500 workers reported in 2005 as being independent contractors are suspected of being full-time workers misclassified by employers to avoid paying them benefits, according to the institute.

bkates@nydailynews.com




Fatal gaps in the safety system

--------------------------------------------------------------------------------

BY BRIAN KATES
DAILY NEWS STAFF WRITER

Sunday, May 27th 2007, 4:00 AM

Thirty-one New York City construction workers were killed in 2006, the most in five years and nearly twice as many as in 2000, according to the federal Occupational Safety and Health Administration.

Five workers have died on the job so far this year.

Virtually all the deaths occurred in buildings where city building codes were violated or federal safety regulations ignored.

Yet the number of inspectors for OSHA and the city Buildings Department, the first lines of defense for worker safety, remains woefully inadequate.

Since 2003, the number of OSHA compliance officers in the five boroughs has dropped from 51 to 44, according to spokesman John Chavez.

"OSHA is underfunded and understaffed," said Bill Kojola of the AFL-CIO's department of occupational safety and health. "With more and more sites to inspect, they are falling farther and farther behind."

And last fiscal year, the Buildings Department's 350-person inspection force was called upon to conduct a whopping 413,844 inspections and respond to nearly 118,000 complaints.

This year, the department has added 34 more inspectors. But the workload continues to grow.

Buildings Commissioner Patricia Lancaster has conceded that the workload puts "strains on the department and on the communities its serves."





41 violations and $628,000 later...

--------------------------------------------------------------------------------

BY ROBERT GEARTY and BRIAN KATES
DAILY NEWS STAFF WRITERS

Sunday, May 27th 2007, 4:00 AM
"Every piece of property he develops turns into a nightmare," city Councilman Tony Avella (D-Queens) said of rogue builder Thomas Huang.

Nowhere is this more apparent than in a series of stores and apartments Huang is building along Broadway and 51st Ave. in Elmhurst.

Area residents have filed 55 complaints against the project, and Huang has racked up 41 serious building violations. The city has slapped him with $54,050 in fines, but so far he has paid only $10,150, city records show.

One tangled piece of the project is an eight-story, 28-unit apartment house at 85-23 Broadway, where Huang told investors he was building three three-family houses. When they learned of the switch, the investors sued.

In court papers, Huang said he changed plans after miscalculating the amount of space needed to get permits.

Last December, Huang settled with the investors, agreeing to return $328,000 in deposits and an added $300,000. But that didn't solve his problems at the site.

Last May, as construction of the troubled apartment house continued, Huang was issued two violations for excavation that allegedly caused the driveway of the neighboring Reformed Church of Newtown to sink.

Additionally, at least two stop-work orders have been issued.

Elsewhere on the block, Huang was denied a certificate of occupancy for a new three-family home at 86-09 51st Ave. after he failed to obtain necessary permits. Faulty excavation there allegedly cracked the foundation of the house next door.

Homeowner Alvin Toy said he has spent more than $130,000 in legal fees fighting Huang. "We're at our wit's end," he said.

Huang did not respond to requests for comment.



To city, Karen Lieberman is the invisible woman

--------------------------------------------------------------------------------

BY BRIAN KATES
DAILY NEWS STAFF WRITER

Sunday, May 27th 2007, 4:00 AM
Karen Lieberman has lived in the same apartment for more than 25 years. But when the building's new owner began converting it to a single-family home, it was as if she did not exist.

Last May, developer Warren Malone received a permit to demolish the inside of his brownstone at 30 W. 85th St. The plans, certified by the architect but not confirmed by inspection, failed to show that Lieberman, the sole tenant, was living there.

Lieberman, who lives on Supplemental Security Income, has a lease for the first-foor rent-stabilized flat through Nov. 30, 2008.

Her plight underscores problems with the Buildings Department's much-criticized self-certification program.

In court papers, Lieberman charged that demolition caused damage to her ceiling and walls and sent water streaming through a light fixture. Workers slathered paint remover on the facade, filling her apartment with noxious fumes, she charged.

"I developed a cough and my eyes were red and swollen," Lieberman said. She had to be treated for allergic conjunctivitis, medical records show.

On Oct. 30, six days after granting him a single-family use permit, the Buildings Department cited Malone for "hazardous conditions" throughout the apartment.

Malone created a four-point tenant protection plan and signed an agreement to put Lieberman in a hotel and pay her $1,000 while he made repairs.

When she returned, cracks were still there and her sturdy wooden door had been replaced by "an improperly fitted metal door with a poor quality lock," according to court papers.

Malone's attorney, Joshua Price, charged that Lieberman is disgruntled because her prior landlord, a friend, had waived the rent for six years. Malone has sued Lieberman for nonpayment.

Lieberman's suit, meanwhile, was blocked in Manhattan Supreme Court after a judge agreed with the Buildings Department that she failed to take her fight first to the Board of Standards and Appeals.

While Lieberman ponders her next step, she continues to live in the middle of a construction site.

"The problem of self-certification is that it keeps the Buildings Department ignorant of potential safety problems," said Lieberman's attorney, Allega Chapman of MFY Legal Services. "Had the agency asked point-blank if a tenant lived in the building and if it had inspected, she might have been protected."

bkates@nydailynews.com

Queens developer is like one-man wrecking crew

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BY ROBERT GEARTY and BRIAN KATES
DAILY NEWS STAFF WRITERS

Sunday, May 27th 2007, 12:08 PM
Nothing seem to stop developer Thomas Huang. Not his long record of violations of the city's building and zoning codes. Not numerous lawsuits. Not dozens of formal complaints.

His shoddy construction practices have wreaked havoc in Queens and even forced the evacuation of a city firehouse - not once but twice.

Huang's problems go back nearly two decades. Yet, like many dubious developers cashing in on the city's record construction surge, Huang continues to obtain permits to build.

In 1986, he acquired the RKO Keith's Theater in Flushing for $3.4 million and announced plans to build a movie complex, shopping mall and hotel.

But the city revoked the building permits in 1990 after parts of the theater's landmarked grand staircase were bulldozed. Later, the theater was torched in an arson fire that remains unsolved.

In 1997, Huang pleaded guilty to allowing some 10,000 gallons of heating oil to leak into the building. He was ordered to serve five years' probation, pay a $5,000 fine and clean up the spill. Five years ago, he sold the theater for $12.1 million.

In 1999, after he was sued by the state attorney general for irregularities at a Flushing housing complex he built, Huang was permanently barred from selling co-ops and condos in New York.

But he was not barred from putting up houses or apartment buildings.

Take Huang's since-abandoned project at 86-57 Grand Ave. in Elmhurst, Queens. Structural problems caused by faulty excavation forced the evacuation of the adjacent Ladder Co. 136 firehouse in December 2005 and January 2006.

After the second evacuation, the project manager, Thomas Cottone, 85, was arrested and charged with reckless endangerment for ignoring a stop-work order at the site and possession of a forged instrument for altering a building permit.

In a plea bargain, he admitted to the forged instrument charge and on April 25 was sentenced to five years' probation.

Owners of two adjacent properties sued Huang last year for causing damage to their buildings. That case is pending.

While building a house at 82-66 51st Ave., Huang's workers ripped off the gutters of the neighboring house, leaving only a foot between them, according to homeowner Luz Rodriquez, a retired Catholic nun.

"This was a detached house, now it's an attached house," she said.

Then there are the 11 houses Huang built at 34th Ave. and Union St. in Flushing.

The Buildings Department approved them as three-family homes in 2002, only to learn that Huang incorrectly listed the top floor as a mezzanine and built them so close together that the Fire Department could not gain access.

After the Board of Standards and Appeals revoked the certificates of occupancy in 2005, eight buyers, who paid between $500,000 and $600,000 for the homes, sued.

They settled last October after Huang promised to make necessary alterations.

Three other buyers sued in Brooklyn Federal Court, claiming they were defrauded of $321,000 down payments in a civil racketeering conspiracy led by Huang.

The case was privately settled in March.

bkates@nydailynews.com



The neighborhood killers

Homeowners rip overdevelopment and lack of city help

BY BRIAN KATES
DAILY NEWS STAFF WRITER

Sunday, June 17th 2007, 4:00 AM
The Daily News investigative series "Building Boom-doggle" prompted scores of e-mails, letters and phone calls from angry New Yorkers with overdevelopment horror stories of their own.

The series also has given a boost to reform legislation and extracted a promise of increased enforcement from the Bloomberg administration.

Many readers said they felt city bureaucrats gave them the brushoff, while others said the Buildings Department duly recorded their complaints and issued violations and imposed fines, but problems persisted.

Typical was an e-mail from Ed Jaworski, vice president of the Madison-Marine-Homecrest Civic Association in Brooklyn.

His group "has generated a construction Dumpster's worth of correspondence [to] Community Board 15, to the Board of Standards and Appeals, even to the mayor's office," Jaworski wrote. "We've spent thousands of hours in meetings and on the phone. But building and zoning regulations are being manipulated to change the character of neighborhoods, house by house, block by block."

Ann Marie Amodeo wrote that an unscrupulous developer undermined the foundation of her mother's house on 70th St. in Dyker Heights, Brooklyn, damaging the wall and ruining the backyard when he demolished a building next door.

"Calls and formal complaints to the Buildings Department had little result," she wrote. "Under threat of a lawsuit, this builder eventually purchased my mother's house, but refused to pay market price."

Buildings Department spokeswoman Kate Lindquist said, "We take our enforcement responsibilities seriously, and will be announcing new enforcement initiatives in the near future."

She added that the department has boosted its inspection staff by 48% since 2002, and is increasing penalties for infractions.

Like homeowners in other city-subsidized buildings featured in The News series, Shanita Wells and about 20 of her Brooklyn neighbors are complaining about roof leaks, bad plumbing and crumbling stoops in front of the two-family houses they bought on Clifton Place in Bedford-Stuyvesant last year through the city Department of Housing Preservation and Development.

Their purchase agreements require them to live in the homes for 30 years or pay back about $160,000 in city subsidies.

"What should have been a dream is a nightmare," Wells said. "We are being ignored and don't know who to turn to."

Many building professionals confirmed The News' findings of widespread code violations and unsafe construction.

Bronx-based carpenter T.J. O'Connor wrote: "If the Department of Buildings exercised their power to not only issue violations but to enforce stop-work orders until fines are paid, the revenue collected from unscrupulous developers could be put toward hiring the needed inspectors."

Several readers added to the litany of complaints about the shoddy practices of architects and engineers who falsely certify that their work complies with building regulations and zoning codes.

But master plumber Robert Mengler mentioned another disturbing wrinkle.

"Master plumbers are also allowed to self-certify their work," he wrote. "There are certain licensed plumbers that have made lots of money by renting out their licenses. . . . The chances of this work being inspected is very, very, very low."

"Despite what the administration and the Buildings Department has said about dramatic changes, the DOB is in a perpetual state of chaos," said Councilman Tony Avella (D-Queens), chairman of the zoning committee and a member of the buildings committee. "They are not improving enforcement and insuring that construction is safe."

bkates@nydailynews.com


Anger rises along with bigger home in College Point

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BY BRIAN KATES
DAILY NEWS STAFF WRITER

Sunday, June 17th 2007, 4:00 AM

Norman Kara is at his wit's end.

He lives in a two-story attached house at 12-07 115th St. in College Point, Queens, and half of the building - not his half - is being transformed into a 2½ -story duplex by a new owner.

The two homes, mirror images of each other before the work began, share a wall and a walkway.

Since work began in May 2005, the new owner, listed in city records as Sasy Motti, has racked up 12 Environmental Control Board violations, nine of them recorded as "high severity."

Four of the citations were for "failure to provide adequate protection to adjacent property" - that is, Kara's home. Buildings Department records confirm that Kara's house was "damaged by rainwater" due to improper construction practices at the other part of the structure.

"My rear patio has collapsed, and my front walkway is cracked and sinking," said Kara, who has lived in the house with his wife and son for 11 years. "Work goes on in the wee hours of the night. The noise is deafening."

Kara and his neighbors have filed 53 formal complaints with the Buildings Department and rallied support from Councilman Tony Avella (D-Queens) and state Sen. Frank Padavan (R-Queens). But the work continues.

"Mr. Kara's half of the house is totally dwarfed by this," Avella said. "His quality of life is gone, and the economic value of his property is gone, too, unless he sells to a similar developer who will do the same thing, and that creates a domino effect for overscale development in the neighborhood. This is a serious problem throughout Queens and the city."

But Buildings Department spokeswoman Kate Lindquist said, "Inspectors have been to the site numerous times to ensure the builder is complying with the stop-work orders and to make sure construction is compliant."

"My house is ruined," Kara said. "If this is the sign of growth, then you can keep it."

Motti could not be reached for comment.



'Fines galore,' but eyesore lingers in Riverdale

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BY BRIAN KATES
DAILY NEWS STAFF WRITER

Sunday, June 17th 2007, 4:00 AM
For the past four years, the view from Irene Olsen's balcony has been the graffiti-covered, cinder-block shell of a house left half-completed next door.

A wall of her home and a side of the uncompleted property at 3190 Cambridge Ave. in Riverdale, the Bronx, are only 3 feet apart.

Rotting timbers frame nonexistent rooms. Warped plywood sheets cover what would be the second floor. Windows have been installed, but are broken. The site is littered with empty beer bottles, broken glass and construction debris.

A well-worn path through adjacent Ewen Park leads to the site, where a broken chain-link fence gives vandals easy access.

"Children of different ages hang out there after school," said Olsen, a widowed 85-year-old retired social worker. "On weekends, they are there until midnight. The kids break windows. You hear girls scream. The police told me not to go out."

Buildings Department records show permits were issued for work on the site in 2003 and 2005, but Olsen said no major construction has been done there for about four years.

She said she has complained via the 311 hotline and has called the 50th Precinct, the public advocate's office and Assemblyman Jeffrey Dinowitz, who wrote a letter of complaint to the Buildings Department.

"Please be advised that one of our inspectors visited the site on 3/23/07 and a violation was issued for defective job site fencing," a department bureaucrat wrote Dinowitz on April 30.

The Buildings Department has slapped $24,000 in fines on the property since 2003, including one for $10,000, levied Nov. 9, for failure to maintain the chain-link fence that is supposed to surround the site.

"There are fines galore," Olsen said. "But what does anybody do about it? I have lived with this for four years."

None of the fines have been paid, Buildings Department records show.

"If the developer continues to neglect his duties to maintain a safe construction site, the city will step in and pursue demolition and bill him," department spokeswoman Kate Lindquist said.

The building owner, Frances O'Brien, could not be reached at phone numbers listed in city records.

'N.Y. Times' Scooped Again, This Time on Miller's Notes

'N.Y. Times' Scooped Again, This Time on Miller's Notes

By E&P Staff

Published: October 08, 2005 10:35 AM ET updated 11:00 PM

NEW YORK As the Plame/CIA leak case continues to unfold, The New York Times is maintaining its recent track record of getting scooped by others--many others--on critical developments in the legal twists and turns involving its own reporter, Judith Miller.

Last week, the paper was late in revealing that Miller had left jail. Thursday it was behind the curve in disclosing that the federal prosecutor in the Plame case had scheduled another meeting with Miller next week. And Friday, it was scooped by, first, the New York Observer (a weekly) and then Reuters, in reporting the rather significant news that Miller had somehow discovered notes of a conversation with I. Lewis "Scooter" Libby that took place about two weeks before the discussions that were the focus of her testimony to the grand jury last week. This was significant enough, Reuters reports, that the newly-found notes could help form the basis for a wide-ranging conspiracy charge.

When the Times did get around to covering this latest development, it provided few details, such as how, why and when the discovery took place, or why the newspaper has been so slow to cover its own employee. This was the extent of its report on this fresh angle:

"The meeting [on Tuesday] is expected to focus on newly discovered notes compiled by Ms. Miller that refer to a conversation she had with Mr. Libby on June 25, 2003, according to a lawyer in the case who did not want to be named because Mr. Fitzgerald has cautioned against discussing the case. Until now, the only conversations known to have occurred between Ms. Miller and Mr. Libby were on July 8 and 12, 2003."

The June chat with Libby pre-dates Joseph Wilson's July 6 op-ed in the Times which accused the White House of twisting intelligence on Iraq, and was thought to spur the administration backlash.

Late Saturday, Newsweek's Mike Isikoff reported on the magazine's Web site an interesting detail missing in the Times' account: the Miller notes apparently had been found in a notebook in the paper's Washington bureau.

Earlier, on Friday, David Johnston wrote in the Times that federal prosecutor Fitzgerald "has indicated that he is not entirely finished with Judith Miller, the New York Times reporter who recently testified before the grand jury after serving 85 days in jail. According to a lawyer familiar with the case, Mr. Fitzgerald has asked Ms. Miller to meet him next Tuesday to further discuss her conversations" with Libby.

After that Fitzgerald will have to decide whether to summon Miller for further testimony before the grand jury.

Apparently, the discovery of these notes will slow the Times' promised full accounting of Miller's role in this drama.

Bill Keller, the executive editor of The Times, told Johnston that Miller had been cautioned by her lawyers not to discuss the substance of her grand jury testimony until the prosecutor finished questioning her.

"We have launched a vigorous reporting effort that I hope will answer outstanding questions about Judy's part in this drama," Keller said. "This development may slow things down a little, but we owe our readers as full a story as we can tell, as soon as we can tell it."

A Times spokeswoman told E&P on Friday, "The timing is still yet to be determined."

A Washington Post report on Friday hinted that there's a chance that Miller's testimony last week may have added to Rove's vulnerability. It suggested that only three people have testified since Rove's last appearance: Matthew Cooper, Miller, and Rove's secretary.

Johnston of the Times, meanwhile, observed that in recent days, "Rove has been less visible than usual at the White House, fueling speculation that he is distancing himself from Mr. Bush or has been sidelined. But according to a senior administration official, Mr. Rove and his wife are on a long-planned college visiting trip with their teenage son. Several lawyers who have been involved in the case expressed surprise and concern over the recent turn of events and are increasingly convinced that Mr. Fitzgerald could be poised to charge someone with a crime for discussing with journalists the identity of an undercover C.I.A. officer."

And Johnston observed, "Recently lawyers said that they believed the prosecutor may be applying new legal theories to bring charges in the case.

"One new approach appears to involve the possible use of Chapter 37 of the federal espionage and censorship law, which makes it a crime for anyone who 'willfully communicates, delivers, transfers or causes to be communicated' to someone 'not entitled to receive it' classified information relating the national defense matters."

NOTE: Go to current column by E&P's Greg Mitchell on Miller, Libby, Jon Stewart, and the infamous "aspens turning" letter, found on our main page, right side, under Columns.

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E&P Staff (letters@editorandpublisher.com )