Roy Ho’s Blog

Carter says Hamas is ready.  Why is Hamas “ready for peace” all of a sudden?  What does it mean to us?  Carter’s full transcript is here:

http://abcnews.go.com/print?id=4641038

Middle East is a difficult place to negotiate peace.  It is even more difficult between Israel and the rest of the Middle East.  Israel, due to historical baggage or lack of military depth, does not deal with anyone who does not recognize its existence. 

Hamas understands they do not much chips to bargain with since Palestine is small, no resources to fight.  The best they can do is to use their quantity and determination to maximize the damage in order to draw a negotiation.  Their pledge to destroy Israel could be a real commitment among the religious zealots but cannot be taken seriously among the politicians in Hamas. 

The question for Hamas should always have been timing: Are we ready to negotiate?  They could have been ready for a while and we just do not hear much about it.  These are the reasons they could be ready: they are confident they will be able to direct the debate in the next referendum, should a truce be produced with Israel and Abbas; Egypt is pushing toward an end game; they have completely digested their political gain from 2006 and military seizure of Gaza.

If peace deal is produced, Hamas would want to defeat it if it is not to the Hamas’ liking.  Given that they are a grass root movement and they had a good election infrastructure proven by 2006 election victory, they should be able to feel that they are the ones who will have the veto power of the next peace process product: a truce. 

Ever since Israel no longer manages the Gaza border with Egypt, this border became open and thus the border management became the responsibility of Egypt.  And it would be difficult for Egypt to say no for people moving in and out of Gaza.  So, this border management issue became a refugee management issue literally.  For Israel, since peace means co-existence, two-state is inevitable.  So, why border with it? Let it be someone’s problem.  And if it became Egypt’s problem, Israel can make the argument that Egypt is failing in the war against terrorism.  Now Egypt may have a greater incentive than before to push for a quicker resolution. 

Hamas would not want to get eat more than they can chew.  They were the underdog; they had to win over Fatah in order to face Israel.  Then they won the election without “representation” internationally.  Now they have a complete control of some territory, they now do not only have some vague concept of militia before the international media, but the military force in Gaza, electoral majority from 2006 election, they can be ready. 

Hamas have a few good chips on their hands: 1) any deal needs democratic affirmation and they had the majority, so their opinion counts; 2) they out gunned everyone in the last battle (Gaza), they are here to stay and no one can get rid of them; 3) the pledge of “destruction of Israel” is on the table for negotiation. 

For Israel, they know they will always be outnumbered.  Even within Israel the Arab population is the fastest growing population.  Peace cannot come from military might, for it requires an extinction of the enemy.  When Hamas did not have any kind of mandate, Israel could afford not to negotiate to Hamas.  After 2006, it would be a difficult proposition.  Both sides needed a proper stage to facilitate en entry. 

Carter may want to project this issue in the election.  If Bush really wants to accomplish something like he said he was going to try, he could use this opportunity.  Israel would want to wait and see who the next president is to formulate their next course of action.  2008 is unlikely to be the year for this kind of breakthrough. 

The most important thing is Hamas will recognize a referendum.  Hamas refusal to recognizing Israel will be dropped if the populace takes peace and precedence.  Hamas cannot recognize Israel without a price.

Bush announced his goals on climate change.  Sierra Club already says Bush’s plan will require a miracle to save our planet.  Even McCain’s ideas are more agressive than Bush’s.  Very little is said about climate change in yesterday’s Pennsylvania presidential debate between Clinton and Obama.  Why is Bush anouncing something so useless and so late?   Is it part of his last minute legacy plan?  How does it relate to my non-profit organization when it is not an advocate of climate change?

This is his stall tactics. 

Getting a bill passed requires a process in the congress and senate.  It goes through committee, agenda arrangement, scope definition, text proof reading among members and aides, negotiation among members, parties and administration.  By providing something (anything), it takes off some of this momentum to his goals. 

Bush realizes that something will get passed in the next administration.  But providing something so vague, he can drag the bargain wide open for the next round of lobbying and thus provide a possibility of pushing a resolution less aggressive than it otherwise would be. 

In other words, he is not aiming for any kind of success.  He is aiming for a pay back to his constituence.  He is not even aiming for a legacy.

However, one point is worth noting: if Bush recognizes the need to address this issue, it will be difficult for anyone in the future to deny climate change.  The remaining question will be what and how: what should be done and how to get it done.

A lot of attention will be focused on what the emission will be.  However, the how question will affect more people in a wider range than media will be able to focus on.  Advocacy groups/nonprofit organizations representing interests not directly affected by the emission will have to pay attention on the how question.  Unfortunately, since media do not focus on the how part, advocacy groups and nonprofit usually lose their sight of it. Here are two examples to achieve the same goal with different implementations and their corresponding effects outside of pollution.

Example: emission legislation requires enforcement.  This will increase the government budget, i.e taxes.  Who gets the worst of it? Small business since cost of compliance always takes up a higher proportion of cost than a big business.  Emission can also be achieved by placing a higher gas tax and increasing personal income tax exemption at the same time without affecting the federal government’s revenue as well as its budgeting.  And the effect will be significantly different in aspects outside of the pollution. 

The former will increase government participation in the overall economy.  The latter will not.  The latter will at the same time help elevate the tax burden on the lowest income bracket tax payers, same the $10k/year income group.  Now, the poverty group suddenly have an interest in how the goals are achieved. 

When attention is so focused on emission, attention on other pressing issues are forgotten.  That is why climate change can be percevied, as an elitest cause, as a competing interest against other interest groups, say proverty groups.  It needs not be.  In fact, groups of different causes can exploit opportunities of any issue to further its own goal without sacrificing the issue of the moment. 

And exactly because advocacy groups and nonprofit organizations may not be able to follow these legislation details as well as being not able to provide these suggestions to complement the legislation to achieve its goals (piggy bag), politicians now can service the interests of the lobbyists’ paying customers without much scrutiny.   Therefore, if the issue of the moment is to discourage a certain behaviour (pollution), then your organization can always advocate to tax that behaviour and cut taxes (or spend that same tax revenue) for your constituence (seniors, students, low income, domestic abuse victim).

Fiscal policy is boring.  However, that is the most effectively way to modify the aggregate behaviour to achieve a goal.  Aggregately, people adjust their behaviour to the most use of their budget.  Even people who do not subscribe to that specific ideology now gets taxed and contributed to the cause.  An issue completely unrelated to your organization’s goal can help you when the implementation can be compromised to your favour.  In fact, you can suddenly become an ally of any issue of the moment, if you can demonstrate you can mobilize votes to support a legislation.

Clinton’s fundraising figures for March is not released yet.  This democrat primary has not been concluded yet.  However, Obama vs. Clinton has given a lot of advocacy organizers, fundraisers and non-profits a very good lesson.  This primary also demonstrates the effect of the changes on election financing laws.    

The news this morning regarding Obama’s fundraising focuses on the $ raised in March.  I would like to stress that it is the quarterly fundraising filing, not a monthly filing.  And the detailed report illustrates only the donors with total amount >$200.  

The donation limit forces candidates to reach a wider donor base than before.  And Clinton appears to miscalculate this effect: she never cultivated this group of donors.  And since Obama was 1) the underdog; 2) was unable to tap into the bigger donor base than Clinton and 3) had experience in organizing grassroots campaign, he farmed the small donors.  And there is an advantage of farming small donors: they are more likely to be your advocates.

Small donors also have less leverage on the candidate (or your nonprofit organization), they cannot assert as much influence as a $100k donors can and do.  That gives the candidate more flexibility which can be a good thing as well as a bad thing.  

Cultivating these donors also require a different kind of talents.  Small donors usually come through direct mail, tele-marketing, online, face-to-face / door-to-door and media buy.  Therefore, the message management team has to play a bigger role, which advantage Clinton should have had.  However, Obama’s fundraisers managed to overcome this. 

Obama obviously had better donor segmentation to achieve this result.  For a nonprofit, this is equally important.  The knowledge of your donor base can see when your donors will have to exit the donation cycle.  Can you see the danger if 70% of your donors are over age 65?  Yes, you can certainly start a bequest/major gift campaign.  But you still need to worry about the sustainability of your organization 5 years from now.  How to create such a campaign anyway?  A lot of organizations are very much into major gift and bequest.  Very few organizations understood bequest campaigns requires talents that are unrelated to major gift fundraisers.

Obama fundraising team should have had better technology in phone bank management.  However, the most dramatic difference between the 2 campaigns is the online advantage Obama had.  Obama has web team that is more capable of generating traffic (keyword management, inbound links, etc).  

Before the donation limit put in place, all these techniques may have been relevant although lower priorities.  Now, they are critical.  Small donation limit means the candidate cannot afford to have face to face with donors himself.  This turns everything into an industrious enterprise.  It’s not about 1 to 1 any more; it is about 1 to N.  

This will be the same for the nonprofit industry, anyone who is (wants to be) a strong advocate of a cause.  Foundation money is larger, but they assert a much larger influence on your cause.  Technology, not only web technology, has made small donor acquisition easier than before and is able to make your cause successful, Obama is a good example of your long ignored cause.  

A small donor is also more likely to be more committed to your cause.  And they are more likely to donate a small amount over a longer period of time.  This makes the financial risk of an organization smaller since financial revenue fluctuation is now smaller.  Converting a donor from a one-time donor to a monthly donor is another specialty in fundraising.

A lot of boards have a difficulty in finding board members who are not only committed to the cause, but also has institutional memory with the organization.  Well, a good place is to find it among its donors.  And so, it is a large number of donors that will help this goal.   

A lot of organizations have fundraising plans.  They usually have a 5 year plan on what to accomplish.  However, they also need to have a 5 year fundraising plan.  What is the % of donors who are <age 45 5 years from now (compare to today)?  What is the % of monthly donors will it be?  How long does a donor stay with the organization (life time value)?  Which occupation / industry gives you the most donors?  Are you surprised of the amount they give and the occupation they are in? Is this an untapped market or under-cultivated donor base?

From organization development perspective, this pro-longed primary is actually good for the Democrats.  They are building up a better donor base, more lists, tapping into markets where they have not been serviced.  This will build up their base for 2010 congress election and beyond.  Of course, there is a cost for that, i.e. reducing time to fight McCain and win the White House.

Obama’s campaign is actually educating a lot of people who are in the field of fundraising and nonprofit/advocacy.

CNN has a summary of Social Security proposals among the three candidates here:

http://money.cnn.com/2008/03/25/news/economy/socsec_candidates_trustees/index.htm?postversion=2008032508

The problem with Social Security is similar to any pension plan, GM’s or Chrysler.  The fixes are also similar to those too.  They all revolve the following, like them or not:

1)      Increase the quantity of contributors, i.e. workforce or taxfilers.

2)      Increase the amount of each contributor, i.e. increase taxes or increase income (productivity)

If we only consider domestic options, then the increase in contributor can only be done through 5 things:

1)      Optional retirement instead of mandatory;

2)      Decrease minimum labour age.

3)      Increase the amount of immigrants

4)      Increase the birth rate

5)      Increase the female labour force participation rate

The increase in contribution per contributor can only accomplished through 2 things:

1)      Increase in taxes

2)      Increase the income of the contributors, i.e. productivity

There are only 7 options.  Some of them are not politically viable to any politician, even the Obama type.  Some of them are not really political solutions.

US is not China.  US is not playing a catch-up game.  So, there is no growth of 8% / year to make up the needed funding for Social Security.  So, this one is out.  Increase birth rate takes too long.  Well, it takes at least 16 years for one to join the workforce!  Female labour participation has been around the same for years and probably is difficult to get any more lift.  Decrease minimum labour age?  Out of your mind. 

That is why there are always the same options being talked about:

1)      Optional retirement instead of mandatory;

2)      Increase the amount of immigrants

3)      Increase in taxes

4)      Increase the income of the contributors, i.e. productivity

Increase productivity will have to involve technology improvement.  This kind of things does not come out of a “technology factory”, a gadget / month kind of a deal.  This is either about the mode of production so that each worker can produce more than before, or something others cannot produce.  

We all know how increase in taxes is like politically.  So, do you want immigrants or optional retirement?  

Now look at the voter base. 

Obama will have a huge black voter base.  That may prevent him from enlarging the immigrant pool.  That would leave him with either more taxes and/or optional retirement.  

McCain will have more white voters, and more voters who will get the biggest impact by tax increase.  As long as optional retirement is optional and not affecting their benefits (Go study Canada’s experience since they have a more acute problem), McCain will have to get that option or inaction.  Clinton will have the largest Hispanic voter base of the three, she will be the most likely candidate to enlarge immigration pool.  Then it will be optional retirement for her.

CNN’s story confirms my previous post regarding Chinese currency appreciation and US inflation:

http://money.cnn.com/2008/03/17/news/economy/dollar_usconsumerspending/index.htm?postversion=2008031713

mine:

http://royho.wordpress.com/2008/02/28/freely-traded-chinese-currency-us-inflation-more-votes-for-obama/

So, if you republicans really want to have a draw in this election, then better calm the foreign policy hawks.

Democrats finally got sued by a Florida resident for not seating the Flroida delegates.  I expect this case to go all the way to supreme court.  And I want to see how the 2 new justices will write their majority opinion.

http://www.ajc.com/news/content/news/stories/2008/03/14/fladelegates_0314.html 

If the Floridian Victor DiMaio wins, then DNC will not be able to control any kind of scheduling in the future.  Similarly, Republicans will be unable to control their schedules.  So, we may even see Republicans to be Friends of Court in this case!     

Even if DiMaio loses, as long as there will be more similar cases coming, then defending these lawsuits maybe so costly that there will be no more centrally controlled schedules.   In fact, by having primaries of different states held at different times, the later states would get very little say into this presidential nomination process.  Therefore, one may argue the rights of citizens’ political participated are compromised.  One remedy would be no centrally controlled schedule.  Another remedy would be all states to have their delegate selection at the same time.  

That will directly result in 2 things: 

1) Only candidates who are well funded right at the beginning will have a real chance.

2) There will be a much higher probability that the nomination gets determined on the convention day, where there will a lot of horse trading exercises among the candidates.

3) The influence of super-delegate will significance in this nomination even if this lawsuit is not brought up.  However, this lawsuit will definitely increase their influence in the future even more so than without this lawsuit. 

4) The lost candidates will also be more important than ever in a run-off process and encourage horse trading on that very convention day.

5) If parties (DNC and RNC) will want to avoid horse trading exercises, then a sequential run-off on the convention day or a preferential ballot will have to be implemented. 

Preferential ballot has the least social costs to the members.  Unfortunately many organizations claim it is too complicated to implement.

This lawsuit will also have election financing implications as well, which I will write.