Luvpuri’s Weblog

Blending Islamic beliefs with a free market economy

By Luv Puri

Shabir Mohammad Aziz came to New York City in 1988, with a burning ambition to become an entrepreneur in the United States. He was 22 years old, had a wife and two kids. Aziz belonged to a family of cloth merchants in Pakistan. The business empire of his family had suffered huge economic losses, and crumbled. Aziz had a liking for perfumes and wanted to become an entrepreneur and sell perfume products. To become an entrepreneur in the United States, it was essential for him to follow the rules of a capitalist system, but some of the regulations were at odds with his religious beliefs. Shabir was a devout Muslim and his religious beliefs prevented him to borrow money on interest. Islam prohibits the concept of interest. Riba, or interest, is the practice of charging a borrower for deferred payment. The religion forbids all forms of interest, since it is believed that it involves both oppression and exploitation.

Initially Aziz worked in a cloth house as a tailor in Brooklyn, and after a decade of hard work,he was close to possess the seed capital required to buy a store on lease. In 1999, he spotted a store on sale for $100,000 in Brooklyn. A childhood friend living in the city agreed to pool the half of the sum. Even then, Aziz was short of $25,000. He could borrow the money on interest but the religious stricture prevented that. As a last resort, he contacted his brother living in London who told him that he could give him the money without interest in three-week time. On that assurance, Aziz borrowed money from a bank. He purchased the store and within a month returned the borrowed money to the bank without giving interest -the time period when the interest accrued was one month. He started his store and named it as Dream Land. In the first year he profited nearly $200,000 in a year’s time. Thus Aziz successfully chased his dream of becoming an entrepreneur in a capitalist world without violating his religious beliefs.

Aziz’s story is emblematic of the American Muslim entrepreneurship as it successfully blends the Islamic beliefs with that of the core capitalist system and free market economy. Even then a perception exists that Islam is at odds with the American economic system. There is a view that Islamic beliefs are medievalist and, therefore, not in conformity with that of the modern economic system. The post 9/11 scenario also contributed to this opinion. The documentation and the analysis require nuanced handling. Osama Bin Laden, presently America’s most wanted man on earth, is responsible for most of the contemporary Islam phobia in this country. Osama belongs to a Muslim business family which owes much of its economic success to its engagement with the American economy. Two-time Pulitzer Prize winner Steve Coll in his book The Bin Ladens brilliantly chronicles as to how the American economy was central to the business strategies of the Bill Laden family. Bill Ladens could not have succeeded without following the rules of the capitalist system.

A study of every day life of American Muslim entrepreneurs is critical in reversing the popular perception that capitalism and Islamic beliefs are directly opposed to each other. They may complement and supplement each other. Forty-eight- year old Zafar Iqbal, a Pakistani immigrant who employs over 100 workers in his company, Carpet City represents the successful blending of capitalist and a devout Muslim. On a Saturday afternoon, inside a carpet store, Zafar in his business suit helps his co-workers lift heavy carpets. “I believe that it is important to demolish barriers between the workers and the boss. This is the message of my religion which stresses on equality and dignity of labour,” says forty-eight- year old Zafar Iqbal, a Pakistani immigrant who employs over 100 workers in his company, Carpet City. The son of a poor farmer in Islamic Republic of Pakistan, Zafar Iqbal is one of the successful and Carpet-merchants of New York City. Carpet city has become one of the most popular complete floor-covering enterprises drawing clients from New York City and New Jersey. His enterprise represents the view that Islamic ideals and the American business ethics are not contradictory. “What I achieved here financially I could never dream anywhere else. But more than that my example demonstrates that it is possible to abide by Islamic principles and do business in a capitalist society. The two concepts are not antithetical.”

Islam has a social and economic code for its followers and the holy book Quran is the guide book. In order to be a true follower, it asks each Muslim to abide by its principles. Islam stresses on the concept of equality and dignity of labour. “My organization’s work ethics are based on Islam and therefore I set by example. Many a time people in the organization are surprised when they see me doing hard labour just like any other co-worker. But this is what my religion teaches me and I have no shame doing any sort of work even though I am the owner, ” says Iqbal while affirming the fact that he tries to abide by Islamic preaching as part of his work ethics.

A fiercely competitive merchant, Iqbal incorporates the religious teachings of Islam in his business. By virtue of being a practicing Muslim, he tries to reconcile it as per the tenets of Quran, the holy book of Islam. In terms of business practices, Iqbal avoids lending money on interest. He possesses a checking account but no saving account. This distinguishes Iqbal from many of his competitors. He even does not have a stock portfolio. “I set aside my earnings for daily living but reinvest most of my profits in the business.” Islam also prohibits taking money on interest. In this regard, Iqbal had to make a compromise whenever he borrowed capital from financial institution to expand his business. “No body will lend you money without interest payments. I cannot force others to abide by my religious principles. This is the compromise I have to make. Even my religion directs me that I cannot force others to follow my beliefs.”

Iqbal believes that the solution lays in Islamic banking. Islamic finance has gained popular currency in many parts of the Muslim world namely the Middle East and Southeast Asia. It is also gaining popular acceptance in some parts of Europe and the United States. A report says that the total assets worldwide are estimated to exceed $250 billion, and are growing at an estimated 15 percent a year. In the United States practically the concept could not bring much relief to the Muslims as the money which can be dispensed is quite less. Strong community relations ensure that the desired money gets collected from the bank. More than one person applies for loan so that the needy person is able to raise the money.

Many Islamist scholars believe that it is wrong to believe that the idea of free markets goes against the tenets of Islam. Dr Sabahuddin Azmi, co-chairman of the Emirates Institute for Banking and Financial Studies believes that Islam, as a matter of principle, prohibits all activities which may cause harm either to the traders or the consumers in the market. It encourages the prevalence of free market where everyone earns his sustenance without government intervention. Iqbal echoes this assertion and emphasis that religious interpretations have a contextual relevance. “Religions do not choke but it’s the follower’s interpretation which chokes. The very fact that Islam and American business ethics are not contradictory concepts clearly illustrates it.”

Islam also believes in charity, a concept popularly known as Zakat. Iqbal tries to abide by the directive. He was the eldest child of a poor marginal farmer in a region whose rural economy bears resemblance to a medieval feudal structure. In the absence of land reforms, feudal land-lords hold the bulk of the land leaving marginal farmer to impoverish. Iqbal had escaped from the whirlpool of poverty more than two decades back and he headed to this country to fulfill his dream. “It is incumbent on every Muslim to make contributions to the needy. Besides making direct contributions to the needy, I have devised an organizational strategy which directly serves the purpose. For instance there are many within my organization that I have given employment not because of their ability but their respective need. Ever since I started my business, not a single employee in my organization has been sacked. This is my contribution to Zakat, though to other people it may seem to be an unwise business strategy,” informs Iqbal.

Islamic beliefs are viewed as inherently anti-women which limits the professional cum social capabilities of females. The business practices of American Muslim entrepreneurs refute this. For instance when American Muslim Farooq Kathwari took over the chairmanship of Ethan Allen, one of the leading brands in the Furniture business in the country, in late 1980’s,women made up only 2% of the higher end decisions and today, 85% of the women at Ethan Allen are in management positions. In recognition of his outstanding professional achievements, Mr. Kathwari was honored with the Outstanding American by Choice Award. “The fact remains that the underlying ethical principles of Islam are in conformity with the principles on which this great nation was based. I again refer to the common values of mercy, charity, social justice, living peacefully with the various peoples of the world and the use of reason,” says Kathwari.

On July 15, 2007, The New York Times published an article with the headline “The Richest of the Rich, Proud of a New Gilded Age.” The most prominently featured of the “new titans” was Sanford Weill, the former chairman of Citigroup, who insisted that he and his peers in the financial sector had earned their immense wealth through their contributions to society.
Soon after that article was printed, the financial edifice Mr. Weill took credit for helping to build collapsed, inflicting immense collateral damage in the process. Even if we manage to avoid a repeat of the Great Depression, the world economy will take years to recover from this crisis.

All of which explains why we should be disturbed by an article in Sunday’s Times reporting that pay at investment banks, after dipping last year, is soaring again — right back up to 2007 levels.

Why is this disturbing? Let me count the ways.

First, there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks.

Remember that the gilded Wall Street of 2007 was a fairly new phenomenon. From the 1930s until around 1980 banking was a staid, rather boring business that paid no better, on average, than other industries, yet kept the economy’s wheels turning.

So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.

Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks?

Still, you might argue that we have a free-market economy, and it’s up to the private sector to decide how much its employees are worth. But this brings me to my second point: Wall Street is no longer, in any real sense, part of the private sector. It’s a ward of the state, every bit as dependent on government aid as recipients of Temporary Assistance for Needy Families, a k a “welfare.”

I’m not just talking about the $600 billion or so already committed under the TARP. There are also the huge credit lines extended by the Federal Reserve; large-scale lending by Federal Home Loan Banks; the taxpayer-financed payoffs of A.I.G. contracts; the vast expansion of F.D.I.C. guarantees; and, more broadly, the implicit backing provided to every financial firm considered too big, or too strategic, to fail.

One can argue that it’s necessary to rescue Wall Street to protect the economy as a whole — and in fact I agree. But given all that taxpayer money on the line, financial firms should be acting like public utilities, not returning to the practices and paychecks of 2007.

Furthermore, paying vast sums to wheeler-dealers isn’t just outrageous; it’s dangerous. Why, after all, did bankers take such huge risks? Because success — or even the temporary appearance of success — offered such gigantic rewards: even executives who blew up their companies could and did walk away with hundreds of millions. Now we’re seeing similar rewards offered to people who can play their risky games with federal backing.

So what’s going on here? Why are paychecks heading for the stratosphere again? Claims that firms have to pay these salaries to retain their best people aren’t plausible: with employment in the financial sector plunging, where are those people going to go?

No, the real reason financial firms are paying big again is simply because they can. They’re making money again (although not as much as they claim), and why not? After all, they can borrow cheaply, thanks to all those federal guarantees, and lend at much higher rates. So it’s eat, drink and be merry, for tomorrow you may be regulated.

Or maybe not. There’s a palpable sense in the financial press that the storm has passed: stocks are up, the economy’s nose-dive may be leveling off, and the Obama administration will probably let the bankers off with nothing more than a few stern speeches. Rightly or wrongly, the bankers seem to believe that a return to business as usual is just around the corner.

We can only hope that our leaders prove them wrong, and carry through with real reform. In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again.
The NYT

That may seem like good news. But it is also a major reason these and other Web companies with big global audiences and renowned brands struggle to turn even a tiny profit.

Call it the International Paradox.

Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results.

This intractable contradiction has become a serious drag on the bottom lines of photo-sharing sites, social networks and video distributors like YouTube. It is also threatening the fervent idealism of Internet entrepreneurs, who hoped to unite the world in a single online village but are increasingly finding that the economics of that vision just do not work.

Last year, Veoh, a video-sharing site operated from San Diego, decided to block its service from users in Africa, Asia, Latin America and Eastern Europe, citing the dim prospects of making money and the high cost of delivering video there.

“I believe in free, open communications,” Dmitry Shapiro, the company’s chief executive, said. “But these people are so hungry for this content. They sit and they watch and watch and watch. The problem is they are eating up bandwidth, and it’s very difficult to derive revenue from it.”

Internet start-ups that came of age during the Web 2.0 era, roughly from 2004 to the beginning of the recession at the end of 2007, generally subscribed to a widely accepted blueprint: build huge global audiences with a free service, and let advertising pay the bills.

But many of them ran smack into global economic reality. There may be 1.6 billion people in the world with Internet access, but fewer than half of them have incomes high enough to interest major advertisers.

“It’s a problem every Internet company has,” said Michelangelo Volpi, chief executive of Joost, a video site with half its audience outside the United States.

“Whenever you have a lot of user-generated material, your bandwidth gets utilized in Asia, the Middle East, Latin America, where bandwidth is expensive and ad rates are ridiculously low,” Mr. Volpi said. If Web companies “really want to make money, they would shut off all those countries.”

Few Internet companies have taken that drastic step, but many are exploring other ways to increase revenue or cut costs in developing countries.

MySpace — the News Corporation’s social network with 130 million members, about 45 percent of them overseas — is testing a feature for countries with slower Internet connections called Profile Lite. It is a stripped-down version of the site that is less expensive to display because it requires less bandwidth.

MySpace says it may make Profile Light the primary version for its members in India, where it has 760,000 users, although people there could click on a link to switch to the richer version of the site.

Perhaps no company is more in the grip of the international paradox than YouTube, which a Credit Suisse analyst, Spencer Wang, recently estimated could lose $470 million in 2009, in part because of the high cost of delivering billions of videos each month. Google, which owns YouTube, disputed the analysis but offered no details on the site’s financial situation.

Tom Pickett, director of online sales and operations at YouTube, says the company still hews to its vision of bringing online video to the entire globe. In the last two years, it has pushed to create local versions of its site in countries like India, Brazil and Poland.

But Mr. Pickett also says that YouTube has slowed the creation of new international hubs and shifted its focus to making money. He says that does not rule out restricting bandwidth in certain countries as a way to control costs — essentially making YouTube a slower, lower-quality viewing experience in the developing world.

“We may choose to set a limit to how much we are willing to pay in bandwidth cost,” Mr. Pickett said. In some countries, he said, “there may be particular peak times where instead of high definition, we might decrease the resolution.”

The Facebook social network is also considering lowering the quality of videos and photographs delivered to some regions in an effort to reduce expenses.

The NYT

The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.

The NYT

Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.

Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.

If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay — much of it in bonuses — recover from the lows of last year.

“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”

Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”

In total, the banks are not necessarily spending more on compensation, because their work forces have shrunk sharply in the last 18 months. Still, the average pay for those who remain — rank-and-file workers whose earnings are not affected by government-imposed limits — appears to be rebounding.

Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker — almost as much as the pay in 2007, a record year.

“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”

Indeed, last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation it had set aside when earnings were stronger.

At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.

To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money. Moreover, executives say that for many well-paid bankers, a good portion of their bonus compensation is in stock, whose value can decline if the performance of the bank lags.

Representatives of several of the largest banks said much of their compensation budget covered expenses other than bonuses, like salaries, health care, pension plans and severance.

Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.

This expense includes money for year-end bonuses. For high earners, bonuses can account for three-quarters of pay.

Compensation is among the most cited causes of the financial crisis because bonuses were often tied to short-term gains, even if those gains disappeared later on. Still, as profits return, banks do not appear to be changing the absolute level of worker pay — or the share of revenue dedicated to compensation.

Historically, investment banks have paid workers about 50 cents for every dollar of revenue. The average is lower at commercial banks like JPMorgan Chase and Bank of America, because they employ more people in retail branches where pay is lower.

But every dollar paid to workers is a dollar that cannot be used to expand the business or increase lending. Some of that revenue, too, could be used by bailed-out banks to pay back taxpayers.

Wall Street, of course, has a long history of high wages. Not all that long ago, most investment banks were private partnerships, and the workers were also typically the owners. Even when those firms began listing their shares on public stock exchanges, a standard was set in which half of their revenue was paid out to workers.

President Obama told banking executives this week to clean up their credit card business. He made clear that he understands the billowing anger and the huge strains placed on millions of American cardholders who face sudden interest rate spikes, hidden fees and tricky contracts that no one without a law degree and a magnifying glass can hope to master.

His promises will amount to little unless he follows through quickly to strengthen bills in Congress designed to protect credit card customers.

The president said after meeting credit card executives on Thursday that he and his economic team recognize the need for credit cards, especially in a tough economy. Small businesses often depend on the cards to order goods or meet the payroll. And consumers have learned to enjoy instant credit at the checkout counter. But as a longtime user of credit cards himself, Mr. Obama told banking executives that it is time to reform this area of their business.

He demanded stronger protections against unfair rate increases and abusive fees along with more oversight and enforcement. He called for clarity. He wants contracts written in plain language, minus fine print or “anytime, any reason rate hikes.” He wants people to be able to comparison shop online, with one option being “a plain-vanilla, easy-to-understand, simplest-terms-possible” card for the average user.

Credit card operators have long resisted such reforms, and earlier experiments with self-policing resulted in very spotty improvements. After complaints from cardholders who felt tricked by their banks, the Federal Reserve last year proposed several useful changes that will not, unfortunately, take effect until July 2010.

There’s a better way to help consumers. A credit card bill of rights proposed by Democratic Representatives Barney Frank of Massachusetts and Carolyn Maloney of New York would codify many of the Fed’s rules into law. It would ban interest rate increases on existing balances unless payment is more than 30 days late, and it would forbid “double-cycle billing,” which means charging interest on debts paid off the previous month.

It would also require 45 days’ notice for a rate increase in most cases. An even stronger bill by Senator Christopher Dodd of Connecticut would make it harder for people under the age of 21 to get cards, far too many of whom now think plastic is simply another form of cash. It would also require creditors to apply a cardholder’s payment to the balance with the highest interest rate. So far, these reforms face fierce Republican opposition, especially in the Senate.

If the president is really serious about credit card relief, he could pressure Congress to end some of the industry’s worst tricks right now. Remember when credit card limits caused great embarrassment at the restaurant? These days, many cards allow the overcharge, sparing the embarrassment but socking the customer with a large fee at billing time. One solution would be to offer consumers the choice of a real ceiling that renders cards unusable above that limit.

Mr. Obama has spent a lot of time and energy trying to save the banks. He and Congress must also do more to spare their customers.

The NYT

Wisconsin has unveiled a new official state slogan, “Live Like You Mean It,” much to the dismay of some Wisconsinites who wondered why their tourism department spent $50,000 to come up with a catchphrase that used to be in a Bacardi Rum ad campaign.

“It wasn’t so much we didn’t like it as — it’s been used,” said Warren Bluhm of The Green-Bay Press-Gazette, who wrote an editorial denouncing the choice. Under further questioning, Bluhm admitted that he also didn’t like it.

I have been thinking a lot about state slogans this week. Some days when you’re confronted with the Chrysler bankruptcy and the deteriorating situation in Pakistan, you just decide that this is the moment when you’re going to take a cold, hard look at the difficulty marketers have in coming up with a good state tourism campaign.

Besides, I am a big fan of State Things — the ever-growing national collection of mottos, songs, slogans, nicknames and state birds, flowers, rocks and animals. This began back when I was a legislative reporter in Connecticut and covered a hard-fought contest for official status between the deer and the whale, during which the State Senate, in a moment of extreme pique, voted to make Connecticut’s state animal the human being.

Even as we speak, the spotted salamander is engaged in a fierce battle to become Ohio’s state amphibian, and its chances of success are said to be excellent. Go salamander!

It’s hard to go wrong when you’re picking a state flower, but the number of bad slogan-driven tourism campaigns is legion. For a while, Louisiana was trumpeting “Come As You Are. Leave Different,” which sounded sort of sinister, recalling that TV series about vampires roaming the bayous.

Until fairly recently, Connecticut’s slogan was “We’re Full of Surprises,” which was really bad. While the state has a long shoreline and nice bed and breakfasts, when you think of Connecticut surprises, you mainly remember the time the governor went to jail. And we will not dwell on the period when Rhode Island christened itself the “Birthplace of Fun” and allowed the tourism division to dot the landscape with 6-foot-tall statues of Mr. Potato Head.

Happily, all of these states have moved on. But the slogan arc does not always move upward. West Virginia replaced “Almost Heaven” with “Open for Business.”

And Wisconsin has “Live Like You Mean It,” which sounds less like an invitation to vacation than a self-improvement project. As a matter of fact, besides being an old Bacardi slogan, it is also the title of a motivational book whose authors promise to guide you toward “a meaningful, fulfilling, and happier life with results worthy of legacy building.”

I don’t know about you, but when I want to get away from it all, I do not want to take my legacy along with me.

Kelli Trumble, the secretary for the Wisconsin Department of Tourism, said she was heartened that the new slogan already has an “amazing” 90 percent awareness rate in the state, although it’s pretty easy to get attention when you have a radio news anchor in Milwaukee blogging “Wisconsin: We have a lame slogan … AND WE STOLE IT!”

In a telephone interview, she insisted that people were getting past the issue of originality and beginning to tell each other: “I see how this speaks to the essence and spirit of Wisconsonites.”

The essence and spirit of Wisconsinites was unearthed by a panel of brand experts brought together to determine what makes the state different from its competitors — i.e., Illinois, Minnesota and Michigan. This is where the trouble started. Wisconsin always proudly billed itself “America’s Dairyland” and that is still on the state license plates. But if you ask a bunch of brand experts to report on what people think of when they think of Wisconsin, do you think they’re going to come back with “cows?” No.

“What we identified is — our brand essence is that the Wisconsin culture fuels creativity and embraces original thinking in business, travel and education,” Trumble said.

I know, I know. Don’t write to me, Michigan, Minnesota and Illinois. I don’t want to hear about how you have so much original thinking and creativity it’s sloshing over the border. Tell it to the Wisconsin Department of Tourism.

I went to school in Wisconsin, and it never struck me as the sort of place where people were worried about living like they meant it. But they were so deeply into being the nation’s dairy capital that they once banned the importation of margarine across state lines.

Then, in 1985, Gov. Anthony Earl of Wisconsin decided “America’s Dairyland” was boring and sponsored a contest for a new state slogan, which drew an avalanche of suggestions. A screening committee declined to consider the popular favorite: “Eat Cheese or Die.” I truly believe that nothing has gone right for Wisconsin on the slogan front ever since.

The NYT

In his second month as a professor at Arizona State University, Tim McGuire was standing in front of 13 students teaching “The Business of Journalism” when his inner voice interrupted. “You dummy,” he recalls thinking, “you are teaching a history course.” It was fall 2006, and he was talking about the production of a daily newspaper, but not about the parallel production of a 24-hour-a-day Web site. He was explaining the collapse of the print classified advertising market, but not the striking success of Google search advertisements.
The course, new to the curriculum, was in desperate need of a revision already. Mr. McGuire, a 23-year veteran of The Star Tribune in Minneapolis, was in need of a re-­education himself.

“I knew what I knew until I realized there was an earthquake underfoot,” he says. He immersed himself in Internet business models. He started a blog. The course was renamed “The Business and Future of Journalism.” He quickly learned that today’s journalism students don’t enroll to hear, in Mr. McGuire’s words, “old newspaper farts telling them that the business is doomed.”

“They know the model is broken,” he says. “They think, We’ll just have to fix it.” And so he started this semester by outlining an intimidating theme for the course: “How do we pay for journalism?”

Right now, there may be no other field of education where “I don’t know” is spoken so often.

At the Walter Cronkite School of Journalism and Mass Communication, on Arizona State’s Phoenix campus, and across the country, professors are hustling to figure out how to teach journalism at a time when the field is undergoing a sweeping transformation.

The American Journalism Review estimates that 15 percent of the nation’s newspaper newsroom jobs were lost in 2008 as news consumerscontinued to gravitate to online sources and as traditional revenue streams dried up; so far this year, major newspapers in Denver and Seattle have folded altogether. At the same time, the shift from a print-based, scheduled world of media to a digital, on-demand world of options is changing how journalists do their jobs. “New media” doesn’t mean transplanting old media to a new medium; it requires a new vocabulary, a new relationship with the audience — a massive social network that now talks back — and, sometimes, a new set of expectations about objectivity and timeliness.

At stake is a generation of reporters, and the continued role of journalists as the eyes, ears and questioners for the public.

The changes are forcing colleges and universities to rethink what a journalism education should look like. The perennial debate about journalism programs — theoretical teaching versus professional skill building — has been displaced by more urgent questions: How can you help students find sustainable business models, while introducing the formerly verboten subject of the business side? What are the implications for the craft of journalism in the shift to digital? And how do you position students for an uncertain future in the media?

“I don’t know a journalism dean in the country who knows what the solution is, or where the journalism industry is going,” says Christopher Callahan, the dean of the Cronkite School. “I am convinced that those answers are going to come from people of their generation,” he says of the students. “Not my generation.”

To raise its national profile, Arizona State has invested heavily in its journalism program. In a new curriculum, Mr. Callahan is trying to instill an ethos of innovation — a sea change for an industry that has acted for decades like a slow-moving train, with J-schools the caboose. “Newsrooms have tended to be highly inflexible; innovation was not encouraged,” says Mr. Callahan, former associate dean at the University of Maryland’s journalism school. Deans across the country say they can’t afford to be the caboose anymore.

The new forward-thinking approach is to bracket traditional journalistic values withWeb classes and an entrepreneurial spirit. Take the weekly entrepreneurship course at Arizona State taught by Dan Gillmor, a former columnist for The San Jose Mercury News, in which students create products for news consumers — last fall, a team built a site for local filmmakers. The purpose of the course, Mr. Gillmor says, is to learn to “invent your own jobs.” (Because they may have to.) Mr. Gillmor also runs the Knight Center for Digital Media Entrepreneurship, a catalyst for the student projects; that the center even exists is a testament to the changes that are afoot within journalism education.

First-year students at the Medill School of Journalism at Northwestern University now take “Multimedia Storytelling” and “Introduction to 21st-Century Media.” In the fall, the school of journalism at the University of North Carolina, Chapel Hill, will be adding an immersion experience in “communication, business and entrepreneurship.” With $8 million from the former newspaper executive Leonard Tow, the graduate schools at Columbia University and the City University of New York are creating two centers for new media innovation.

The NYT

By BONO

I AM in Midtown Manhattan, where drivers still play their car horns as if they were musical instruments and shouting in restaurants is sport.

I am a long way from the warm breeze of voices I heard a week ago on Easter Sunday.

“Glorify your name,” the island women sang, as they swayed in a cut sandstone church. I was overwhelmed by a riot of color, an emotional swell that carried me to sea.

Christianity, it turns out, has a rhythm — and it crescendos this time of year. The rumba of Carnival gives way to the slow march of Lent, then to the staccato hymnals of the Easter parade. From revelry to reverie. After 40 days in the desert, sort of …

Carnival — rock stars are good at that.

“Carne” is flesh; “Carne-val,” its goodbye party. I’ve been to many. Brazilians say they’ve done it longest; they certainly do it best. You can’t help but contract the fever. You’ve got no choice but to join the ravers as they swell up the streets bursting like the banks of a river in a flood of fun set to rhythm. This is a Joy that cannot be conjured. This is life force. This is the heart full and spilling over with gratitude. The choice is yours …

It’s Lent I’ve always had issues with. I gave it up … self-denial is where I come a cropper. My idea of discipline is simple — hard work — but of course that’s another indulgence.

Then comes the dying and the living that is Easter.

It’s a transcendent moment for me — a rebirth I always seem to need. Never more so than a few years ago, when my father died. I recall the embarrassment and relief of hot tears as I knelt in a chapel in a village in France and repented my prodigal nature — repented for fighting my father for so many years and wasting so many opportunities to know him better. I remember the feeling of “a peace that passes understanding” as a load lifted. Of all the Christian festivals, it is the Easter parade that demands the most faith — pushing you past reverence for creation, through bewilderment at the idea of a virgin birth, and into the far-fetched and far-reaching idea that death is not the end. The cross as crossroads. Whatever your religious or nonreligious views, the chance to begin again is a compelling idea.

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Last Sunday, the choirmaster was jumping out of his skin … stormy then still, playful then tender, on the most upright of pianos and melodies. He sang his invocations in a beautiful oaken tenor with a freckle-faced boy at his side playing conga and tambourine as if it was a full drum kit. The parish sang to the rafters songs of praise to a God that apparently surrendered His voice to ours.

I come to lowly church halls and lofty cathedrals for what purpose? I search the Scriptures to what end? To check my head? My heart? No, my soul. For me these meditations are like a plumb line dropped by a master builder — to see if the walls are straight or crooked. I check my emotional life with music, my intellectual life with writing, but religion is where I soul-search.

The preacher said, “What good does it profit a man if he gains the whole world and loses his soul?” Hearing this, every one of the pilgrims gathered in the room asked, “Is it me, Lord?” In America, in Europe, people are asking, “Is it us?”

Well, yes. It is us.

Carnival is over. Commerce has been overheating markets and climates … the sooty skies of the industrial revolution have changed scale and location, but now melt ice caps and make the seas boil in the time of technological revolution. Capitalism is on trial; globalization is, once again, in the dock. We used to say that all we wanted for the rest of the world was what we had for ourselves. Then we found out that if every living soul on the planet had a fridge and a house and an S.U.V., we would choke on our own exhaust.

Lent is upon us whether we asked for it or not. And with it, we hope, comes a chance at redemption. But redemption is not just a spiritual term, it’s an economic concept. At the turn of the millennium, the debt cancellation campaign, inspired by the Jewish concept of Jubilee, aimed to give the poorest countries a fresh start. Thirty-four million more children in Africa are now in school in large part because their governments used money freed up by debt relief. This redemption was not an end to economic slavery, but it was a more hopeful beginning for many. And to the many, not the lucky few, is surely where any soul-searching must lead us.

A few weeks ago I was in Washington when news arrived of proposed cuts to the president’s aid budget. People said that it was going to be hard to fulfill promises to those who live in dire circumstances such a long way away when there is so much hardship in the United States. And there is.

But I read recently that Americans are taking up public service in greater numbers because they are short on money to give. And, following a successful bipartisan Senate vote, word is that Congress will restore the money that had been cut from the aid budget — a refusal to abandon those who would pay such a high price for a crisis not of their making. In the roughest of times, people show who they are.

Your soul.

So much of the discussion today is about value, not values. Aid well spent can be an example of both, values and value for money. Providing AIDS medication to just under four million people, putting in place modest measures to improve maternal health, eradicating killer pests like malaria and rotoviruses — all these provide a leg up on the climb to self-sufficiency, all these can help us make friends in a world quick to enmity. It’s not alms, it’s investment. It’s not charity, it’s justice.

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Strangely, as we file out of the small stone church into the cruel sun, I think of Warren Buffett and Bill Gates, whose now combined fortune is dedicated to the fight against extreme poverty. Agnostics both, I believe. I think of Nelson Mandela, who has spent his life upholding the rights of others. A spiritual man — no doubt. Religious? I’m told he would not describe himself that way.

Not all soul music comes from the church.

Bono, the lead singer of the band U2 and a co-founder of the advocacy group ONE, is a contributing columnist for The Times.

Eric Schmidt looks innocent enough, with his watercolor blue eyes and his tiny office full of toys and his Google campus stocked with volleyball courts and unlocked bikes and wheat-grass shots and cereal dispensers and Haribo Gummi Bears and heated toilet seats and herb gardens and parking lots with cords hanging to plug in electric cars.

The C.E.O. of Google doesn’t look like a Dick Cheney World Domination sort whom we should worry about as Google ogles our houses, our oceans, our foibles, our movements and our tastes.

But there is a vaguely ominous Big Brother wall in the lobby of the headquarters here that scrolls real-time Google searches — porn queries are edited out — from people around the world. You could probably see your own name if you stayed long enough. In one minute of watching, I saw the Washington association where my sister works, the Delaware beach town where my brother vacations, some Dave Matthews lyrics, calories Panera, females feet, soaps in depth and Douglas Mangum, whoever he is.

The 53-year-old Schmidt is soft-spoken, exuding the calm knowingness of a therapist as he explains why privacy is passé and why passé newspapers are not going to pry more money out of Google to save themselves.

The therapist tone works with me because my profession is in a meltdown. Firms, like Google here and Craigslist in San Francisco, have hijacked journalism, making us feel about as modern as the Tyrannosaurus rex model that sits on the Google campus.

Google is in a battle royal over whether it has the right to profit so profligately from newspaper content at a time when journalism is in such jeopardy.

Robert Thomson, the top editor of The Wall Street Journal, denounced Web sites like Google as “tapeworms.” His boss, Rupert Murdoch, said that big newspapers do not have to let Google “steal our copyrights.” The A.P. has threatened to take legal action against Google and others that use the work of news organizations without obtaining permission and sharing a “fair” portion of revenue. But what’s fair will be hard to prove.

“So,” I ask Schmidt in a small conference room that, disturbingly, has an ejector seat. “Friend or foe?”

“We claim we’re friends,” he replies, maintaining equanimity even when a cartoon stuffed doll on a desk behind him falls on his head.

Why can’t Google, which likes to see itself as a “Don’t Be Evil” benevolent force in society, just write us a big check for using our stories, so we can keep checks and balances alive and continue to provide the search engine with our stories? After all, Schmidt acknowledges that a lot of what’s on the Internet is “a sewer.” He told me people don’t come to Google for “crap,” but for what’s “useful.”

He declines to pony up money, noting that newspapers could opt out of giving their content to Google free and adding, “We actually like making our own money for obviously good capitalist reasons.”

He says: “The best way to get out of this is to invent a new product. That’s the way Google thinks. Incumbents very seldom invent the future.”

He admits that it’s harder for newspapers to target ads as precisely as Google does. If you’re reading about a murder with a knife, he says, you can’t show a cutlery ad. He’s talking to newspapers about a new ad model that “understands your history” and your interests.

“They’d know enough about your demographic to know male, female, age group, what have you,” he says. “The whole secret here is the ads are worth more if they’re more targeted, more personal, more precise.”

To save journalism, Google has to know my most intimate secrets?

“Johnny Carson smoked, and for 30 years he was never pictured smoking a cigarette,” Schmidt says. “Today that would be impossible.”

Of course Google is a leader in stripping away privacy, although Schmidt says if anyone complains about being captured in an embarrassing shot by Google Street View cameras, they will implement a “de-facing” device known as “the anonymizer.”

“It’s fair to say that there will be no heroes,” Schmidt says. “Heroism requires understanding the person in the absolute best light. I’m not sure this is good. What was Barack Obama like in elementary school? ‘Oh, yeah, here’s a picture of him picking his nose. God, he’s no longer a hero.’ ”

When I ask him if human editorial judgment still matters, he tries to reassure me: “We learned in working with newspapers that this balance between the newspaper writers and their editors is more subtle than we thought. It’s not reproducible by computers very easily.”

I feel better for a minute, until I realize that the only reason he knew that I wasn’t so easily replaceable is that Google had been looking into how to replace me.

NYT

Where recruiting clashes with immigration limits

Matt Richtel

Where’s Sanjay?

The question comes from one of dozens of engineers around a crowded conference table at Google. They have gathered to discuss how to build easy-to-use maps that could turn hundreds of millions of mobile phones into digital Sherpas — guiding trav ellers to businesses, restaurants and landmarks.

“His plane gets in at 9:30,” the group’s manager responds.

Google is based in Silicon Valley. But Sanjay G. Mavinkurve, one of the key engineers on this project, is not. Mavinkurve, a 28-year-old Indian immigrant who helped lay the foundation for Facebook while a student at Harvard, instead works out of a Google sales office in Toronto, a lone engineer among marketers. He has a visa to work in the United States, but his wife, Samvita Padukone, also born in India, does not. So he moved to Canada.

“Every American I’ve talked to says: ‘Dude, it’s ridiculous that we’re not doing everything we can to keep you in the country. We need people like you!’” he said.

“The people of America get it,” he added. “And in a matter of time, I think current lawmakers are going to realise how dumb they’re being.”

Immigrants like Mavinkurve are the lifeblood of Google and Silicon Valley, where half the engineers were born overseas, up from 10 per cent in 1970. Google and other big companies say the Chinese, Indian, Russian and other immigrant technologists have transformed the industry, creating wealth and jobs.

Just over half the companies founded in Silicon Valley from the mid-1990s to the mid-2000s had founders born abroad, according to Vivek Wadhwa, an immigration scholar working at Duke and Harvard.

The foreign-born elite dating back even further includes Andrew S. Grove, the Hungarian-born co-founder of Intel; Jerry Yang, the Chinese-born co-founder of Yahoo; Vinod Khosla of India and Andreas von Bechtolsheim of Germany, the co-founders of Sun Microsystems; and Google’s Russian-born co-founder, Sergey Brin. But technology executives say that byzantine and increasingly restrictive visa and immigration rules have imperilled their ability to hire more of the world’s best engineers.

While it could be said that Mavinkurve’s case is one of a self-entitled immigrant refusing to live in the United States because his wife would not be able to work, he exemplifies how immigration policies can chase away a potential entrepreneur who aspires to create wealth and jobs in the U.S.

His case highlights the technology industry’s argument that the United States will struggle to compete if it cannot more easily hire foreign-born engineers.

“We are watching the decline and fall of the United States as an economic power — not hypothetically, but as we speak,” said Craig R. Barrett, the chairman of Intel.

Barrett blames a slouching education system that cannot be easily fixed, but he says a stopgap measure would be to let companies hire more foreign engineers.

“With a snap of the fingers, you can say, ‘I’m going to make it such that those smart kids — and as many of them as want to — can stay in the United States.’ They’re here today, they’re graduating today — and they’re going home today.”

The idea is opposed by staunch foes of liberalised immigration and by advocates for American-born engineers.

“There are probably two billion people in the world who would like to live in California and work, but not everyone in the world can live here,” said Kim Berry, an engineer who operates a non-profit advocacy group for American-born technologists. “There are plenty of Americans to do these jobs.”

The debate has only sharpened as the country’s economic downturn has deepened. Advocates for American-born workers are criticising companies that lay off employees even as they retain engineers living here on visas. But the technology industry counters that innovations from highly skilled workers are central to American long-term growth.

It is a debate well known to Google, and it is a deeply personal one to Mavinkurve. — © 2009 The New York Times News Service