Category Archives: Public policy

NREL prizewinner: solar at ‘critical’ stage

Lawrence Kazmerski, director of the U.S. Department of Energy’s National Center for Photovoltaics at the Golden-based National Renewable Energy Laboratory (NREL) sees the U.S. solar energy industry at a “critical stage,” with future progress dependent on continued government and university research.

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Kazmerski — who spoke Thursday at the University of Delaware after receiving the Karl Böer Solar Energy Medal of Merit and a $40,000 prize — says the energy department’s recently unveiled Solar America Initiative was a major turning point for solar energy in this country. Last month the DOE announced it would provide up to $168 million for 13 industry-led solar energy research projects.

“It’s kind of like Nixon going to China,” he said in an article reported by the university’s daily newspaper. “A lot of people would not associate President Bush with renewable energy and anything like this, but he did make this initiative, part of which is in solar.”

Kazmerski said the new initiative positions the United States to be “a major player” in developing affordable solar energy technology, but notes that federal funding for solar technology development is just starting to recover from years of cutbacks. Last year’s $139 million merely brought the level of federal solar research funding even with what it was in 1982.

“Photovoltaics is at a tipping point, and right now it’s at a very critical stage [in] what happens and how fast this technology disseminates,” he said.

Kazmerski joined NREL’s predecessor, the Solar Energy Research Institute, in 1977 and has been director of its photovoltaics center since 1999. He also has been an adjunct professor at the University of Colorado, Colorado School of Mines and the University of Denver.

He said he plans to donate the money from the award to start a program for university students to conduct research at NREL.

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Sorry, tech visas are all gone

An article in yesterday’s Electronic News notes that the fiscal 2008 U.S. quota for H-1B visas — which allow scientists, engineers, computer programmers and other skilled workers from around the world to to work here for limited periods — was filled in just two days.

Visa applications were accepted starting April 2, and within two days the U.S. Citizenship and Immigration Services (USCIS) received about 150,000 applications — more than twice the maximum 65,000 new visas alotted for the entire upcoming year. An additional 20,000 applicants with a US-earned masters or higher degree are considered exempt from the cap, but the USCIS is not sure yet how many of the initial rush of applicants met that criteria.

Meanwhile, I’d estimate that close to one-fourth of the enrollment in my children’s Colorado schools these days are the children of illegal Mexican and Central American immigrants (that’s just the illegals — the total Latino school-age population is closer to 40%). These are not, for the most part, the children of H-1B applicants.

You can’t blame these families for wanting to come here, where the jobs are plentiful and the quality of life is far better than in their own poverty-stricken countries. Yet this influx of illegal immigrants is putting a real strain on our schools, health care and law enforcement systems.

You have to wonder what U.S. immigration policies (or the lack thereof) are trying to accomplish.

Clearly there are legitimate questions that need to be addressed about the efficacy and aims of the H-1B program, which if not properly regulated could depress wages and cost the jobs of U.S. scientists and engineers.

On the other hand, our universities simply aren’t turning out enough top-notch graduates in these fields, at least not graduates with U.S. citizenship, and the only way many of our companies are getting by is by recruiting foreign scientists and engineers.

Boulder venture capitalist Brad Feld, for one, says he’s constantly trying to find enough qualified software developers for companies he’s investing in. “There is just no reason why there should be a quota on this type of H-1B visa,” he writes in his Feld Thoughts blog.

What’s more beneficial to the U.S. economy — skilled scientists and engineers who boost the productivity and innovation of our knowledge-based economy, or the mostly uneducated throngs that pour across our southern border in search of menial labor?

Why are the best and brightest applicants limited to a relative trickle, while the doors are thrown virtually wide open for millions of the world’s poor, huddled masses?

Immigration is a complex, emotional issue that could emerge as a major factor in next fall’s presidential elections. And I don’t pretend to have all, or even most, of the answers.

But it’s time for us to begin dealing rationally with the nearly insatiable desire of foreign nationals to work here, and U.S. companies’ eagerness to employ them. Surely we can be smarter and more deliberate about harnessing that supply and demand, and directing this remarkable influx of human talent towards goals that further the best interests of the United States.

CU prof questions private equity profits

During a week when Kohlberg Kravis Roberts & Co. agreed to pay $25.6 billion for Greenwood Village-based First Data Corp. — the second- biggest leveraged buyout ever — some are questioning whether private equity firms are paying their fair share of taxes.

And one of the voices speaking in favor of increased taxation is University of Colorado Law School Associate Professor Victor Fleischer.

An editorial in Monday’s New York Times cites a recent paper by Fleischer presenting several arguments against the current U.S. practice of taxing private equity “performance pay” as capital gains, rather than as ordinary income. The distinction is important because capital gains are taxed at a modest 15% rate, less than half the rate of most other corporate and personal income.

Reuters, Bloomberg and Wall Street’s Dealbreaker blog also have picked up on Fleischer’s blog comments regarding the Blackstone Group’s proposed public stock offering, which is controversially structured to allow it to keep its favorable tax rates.

Private equity certainly looms as a large and tempting target these days. But what bothers most critics is not so much the favorable tax rate on the returns from “at risk” money used to fund the buyout deals. What really draws their ire is the industry’s customary “two and twenty” — a hefty 20% of deal profits and 2% of funds under management — that private equity managers collect for their services. Those fees also are taxed at the favorable 15% capital gains tax rate, rather than as ordinary income.

“This quirk in the tax law allows some of the richest workers in the country to pay tax on their labor income at a low rate,” writes Fleischer.

Private equity investors such as KKR, Blackstone, the Carlyle Group and Texas Pacific Group, having raised hundreds of billions of dollars in cheap capital in recent years, are now pouring it into a flurry of acquisitions at a record-setting pace. There’s much debate about whether deal values are getting too high, and about the ultimate social impacts as hundreds of companies are privatized, broken up, downsized and re-sold, often for huge profits.

Those issues aside, however, one reason for the recent private equity boom is almost certainly the favorable tax treatment these deals, and their architects, receive.

The New York Times editorial calls for Congress to address the issue of private equity’s “preferential” tax rate. And Sen. Charles Grassley (Rep.-Iowa) is reportedly considering just that. British lawmakers also are considering tax changes to collect a bigger share of private equity profits.

Fleischer, writing this week in the Conglomerate business law blog, says he’s “agnostic” about whether the preferential capital gains rate on private equity investment capital is appropriate. “But I certainly agree that allowing that preferential rate for capital gains on returns to human capital (i.e. labor income) is excessive,” he says.

AeA issues U.S. tech warning

Today, for the second time in two years, the American Electronics Association (AeA) issued a strident call for U.S. education reform, greater investment in basic science and technology research and a more lenient visa system to encourage the world’s best and brightest engineers and entrepreneurs to come here to pursue their careers.

In a report entitled “We are still losing the competitive advantage” (see full pdf copy here, or executive summary here), the Santa Clara, Calif-based organzation noted that although awareness of America’s lagging tech competitiveness appears to have increased, very little actual progress has been made.

Congress introduced numerous bills during the last session calling for visa reform, increased R&D investment and improved science, technology, engineering, and math education. But as the report notes: “Not one of these bills was passed or ever seriously debated.”

In a letter accompanying the report, AeA CEO William Archey and Chairman Timothy Guertin describe the United States as “the proverbial frog in the pot of water, oblivious to the slowly rising temperature of a world catching up to us. Today, the heat is still rising and we are still in the pot. There is hope that we are finally feeling the heat and are poised to do something about it. Hope, but not certainty.”

Numerous signs of declining U.S. competitiveness are evident right here in the Mile-High state.

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AeA recommendations

Today’s AeA’s report on U.S. competitiveness offers two tiers of public-policy recommendations, ranked in order of priority.

The first tier suggests immediate changes that already have been introduced in various bills and appear to have widespread bipartisan support. The second tier is more challenging, having generally not yet been introduced as legislation, or having the same degree of bipartisan support. Nonetheless, the group describes these longer-range measures as “equally critical” to long-term American competitiveness.

1st Tier Recommendations:

  • Dramatic improvements in U.S. education
    • Improve K-12 math and science instruction
    • Sustain, strengthen, and reauthorize the No Child Left Behind Act
    • Promote undergraduate and graduate science, technology, engineering, and math education
    • Create a Human Capital Investment Tax Credit to promote continuous education
  • Support and increase research and development
    • Increase federal funding for physical science, engineering, math, and computer science basic research through the National Science Foundation, the National Institute of Standards and Technology, the Department of Energy, and the Department of Defense
    • Strengthen the R&D tax credit and make it permanent
  • Enact High-skilled visa reform
    • Lower barriers for high-skilled individuals to get temporary work visas
    • Give green cards to all U.S.-educated master and doctoral students

2nd Tier Recommendations:

  • Create a more business-friendly environment in the U.S.
    • Reduce the “onerous and disproportionate” tax that small- and medium-size companies incur by complying with Section 404 of the Sarbanes-Oxley Act
    • Address rising health-care costs through initiatives such as electronic medical records
    • Fully fund the U.S. Patent and Trademark Office to reduce lag time between patent filing and approval
  • Engage proactively in the global trade system
    • Advance free and fair trade policies and agreements and conclude the Doha Round of global trade talks
    • Renew the President’s trade promotion authority
    • Promote stronger worldwide enforcement of intellectual property protection
  • Promote broadband diffusion
    • Offer industry incentives to promote broadband diffusion
    • Ensure affordable broadband access for every American within five years

A parting thought from the report:

“When one of America’s strongest competitive advantages in the global marketplace is a knowledge-based economy, it does not bode well for the future when the United States neglects the infrastructure that supports its wealth creation.”

Digital TV shift to hit the rural West?

EE Times writer Dylan McGrath notes in an article yesterday that the looming shift from analog to digital TV transmissions — currently scheduled for February 2009 — could impact rural and difficult-to-penetrate mountain communities in the West that depend on translators to re-broadcast weak signals.

While some of you big-city folks out there may be worrying that the shift to digital will render your older analog TV tuners useless without a converter box, the article suggests that many of us living out in the sticks could lose broadcast TV signals entirely. That’s because the FCC currently exempts translator stations from the costly mandate of having to convert to digital transmissions.

Such a mandate could be a somewhat moot point anyway, since many translators are operated by local governments and non-profit community groups, which may not be able to afford the $5,000 to $25,000 conversion cost.

So what’s the impact likely to be in places like my own Glenwood Springs? Not much.

Nearly everyone here already relies on either Comcast cable or Dish and DirectTV satellite services. The nearest Grand Junction TV signals are too weak and fuzzy to be worth watching, and Denver TV signals are non-existent on this side of the Continental Divide.

Similarly, most other American viewers are likely to view the shift with a big yawn, since most now get their TV from either cable or satellite services. A Neilsen Co. study released this month reports that the average U.S. home now receives 104.2 TV channels — up from 18 in 1985 and 61 in 2000. And you can bet those channels aren’t being delivered via the good old rabbit-ears antenna.

My sympathy to those still watching free broadcast TV. But for the majority of us who long ago got used to paying $50-plus a month for TV service, the coming shift to digital TV should be pretty much a non-event.

Ready or not, gender-selection has arrived

Denver Post columnist David Harsanyi poses the question today: “Would you pick the gender of your child if the technology was available?”baby_pic.jpg

Dave’s question may be slightly premature for most of us, but not because the technology doesn’t exist.

 

For more than a decade Fort Collins-based XY Inc. has been assisting in the conception of a wide array of sex-selected cattle and horses. More recently the company’s patented sperm-sorting technology has been applied to cats and dogs, dolphins, elk and even water buffalo.

This month the company announced the birth of the world’s first dogs to have their sex selected prior to conception. The resulting litter of black Labrador puppies — three female and two male — was a partly successful effort to produce more females, which are preferred over males for service-dog work because of their intelligence and calm temperament.

The mixed litter shows the current limits to XY’s technology, which can significantly increase the odds of a specific gender being conceived, but does not offer a 100% success rate. Yet the company typically guarantees at least a 90% accuracy rate in cattle and horses, where the technology has been rigorously field-tested in breeding for many years.

XY — which began in 1996 as a joint venture between Cytomation Inc., and Colorado State University — describes itself as the global leader in sex-selection technology for “non-human mammals.” Other vendors, however, are plunging ahead into the tricky field of human sex-selection for profit.

As Harshanyi notes, numerous fertility clinics in Colorado and elsewhere already offer gender-selection services, which mainly rely on selecting embryos with the desired gender during in-vitro fertilization. Sperm-sorting technology, at least theoretically, does away with the need to destroy viable embryos, by assuring that only sperm with the desired gender traits are given a chance to procreate.

Human sex-selection opens a Pandora’s box of ethical and legal issues, which for reasons of time and space I won’t try to sort through now. For a a look at some of the ongoing debate, check out Jennifer Lahl’s recent post about the “Top Ten Objections to Sex Selection” at The Human Future blog, or the International Center for Technology Assessment’s assertion that “a new eugenics age” already has begun.

One thing’s for sure, though. Where there’s demand, a market is certain to follow. And many would-be parents appear eager to choose the gender of their offspring.

Companies such as The Fertility Clinics — with locations in Los Angeles, Las Vegas and Mexico — advertise aggressively on the Internet and reportedly are attracting well-heeled customers from around the globe, who gladly pay $20,000 for in-vitro gender selection.

Sperm-sorting technology, still considered experimental by the FDA, reportedly costs $4,000 to $6,000, not including in vitro fertilization. The New York Times says that one Virginia clinic has produced more than 900 pregnancies, with a 91% success ratio for parents who wanted girls, and 76% for those who wanted boys.

So move over dogs, cats, horses and dolphins. Ready or not, the brave new world of human sex selection has now arrived. Can designer babies be far behind?