TIME politics

Obama’s Wrong About Our Go-It-Alone, Imperialistic, America-First Tax Code

Burger King To Buy Tim Hortons Chain For About $11.4 Billion
A vehicle drives past a Burger King Worldwide Inc. restaurant in Peoria, Illinois, U.S., on Tuesday, Aug. 26, 2014. Burger King Worldwide Inc. agreed to acquire Tim Hortons Inc. for about C$12.5 billion ($11.4 billion) in a deal that creates the third-largest fast-food company and moves its headquarters to Canada. Bloomberg—Bloomberg/Getty Images

Andrés Martinez is editorial director of Zócalo Public Square, for which he writes the Trade Winds column.

Our "territorial” tax system is just Yankee imperialism

The Obama administration is not living up to its promise to move the country away from an arrogant, unilateral approach to the world. And it has not embraced a more consensus-driven, multipolar vision that reflects the fact that America is not the sole player in the global sandbox.

No, I am not talking here about national security or counter-terrorism policy, but rather the telling issue of how governments think about money — specifically the money they are entitled to, as established by their tax policies.

The president and Jack Lew, his treasury secretary, have labeled companies that relocate overseas “unpatriotic.” This week the administration announced a series of executive actions meant to crack down on such relocations — legally known as “inversions” — when they entail folding a U.S. entity into an overseas holding company, often for tax purposes. Walgreens, the drugstore chain, recently backed down from a plan to pull off an inversion given the firestorm around the issue.

The political fight around these inversions have pitted profitable corporations (mostly pharmaceuticals) and their lobbyists against politicians and pundits lamenting the fact that some folks refuse to pay their “fair share” or to appreciate the benefits bestowed upon us all by our American citizenship. And we all know which side of that fight we’re supposed to be on.

But hold on. The political debate around this issue is — and I know this will come as a shock! — divorced from the real underlying problem. The inversions debate is less about greedy companies wanting to lower their taxes and more about the fact that ours is a country with an outdated tax code — one that reflects the worst go-it-alone, imperialistic, America-first impulses.

Most of the arguments around inversions, and most of the media coverage, are purely focused on tax rates. And that’s understandable. We’re used to squabbling about rates and, at 35 percent, America’s corporate income tax is among the highest in the world. So this story of unpatriotic companies is almost entirely told as a quest for lower rates elsewhere.

But the far more significant problem is old-fashioned Yankee imperialism. The United States persists in imposing its “worldwide taxation” system — as opposed to the “territorial” model embraced by most of the rest of the world.

Under a “territorial” tax system, the sovereign with jurisdiction over the economic activity is entitled to tax it. If you profit from doing business in France, you owe the French treasury taxes, regardless of whether you are a French, American, or Japanese multinational. Even the United States, conveniently, subscribes to this logical approach when it comes to foreign companies doing business here: Foreign companies pay Washington corporate taxes on the income made by their U.S. operations.

But under our worldwide tax system, Uncle Sam also taxes your income as an American citizen (or Apple’s or Coca-Cola’s) anywhere in the world. What confers jurisdiction in this case is not the location of the economic activity but your home base or residency, as a company or individual. So $100 made by Apple selling a device in Shanghai or Paris is the same to Uncle Sam as $100 made in Los Angeles.

Well, almost the same. The one difference is that the $100 profit Apple makes in another country is first taxed by that country, and only taxed by Washington when it is literally brought back home (“repatriated,” in tax lingo). At that time, Apple receives a credit for the taxes paid elsewhere (just like you get to deduct your state income taxes from your federal tax bill).

So, let’s assume Apple makes $100 in a country with a 15 percent corporate tax. Apple pays that country’s tax authority $15. Then, Apple must decide whether or not to keep the rest of its money overseas. Bringing that $85 back to the United States to invest in business here or return to shareholders would require Apple to pay an extra $20 tax to Uncle Sam. (Apple would owe $35 in U.S. taxes minus the $15 credit it would receive for taxes paid elsewhere on that income.)

This deferral in imposing a tax that shouldn’t be imposed in the first place gives us the worst of all possible worlds — in complexity, inefficiency, and disincentives to investing in America and its future. Defenders of the status quo and corporate critics like to point out that companies often don’t pay a full 35 percent rate on their global income because a hefty portion of their overseas profits remains trapped overseas. So they shouldn’t whine about the rate, the argument goes, as if companies relish these artificial hurdles to allocating resources where they are most needed.

Imagine you are a California-based widget manufacturer competing around the world against a Dutch widget manufacturer. You both do very well and compete aggressively in Latin America, and pay taxes on your income there. Trouble is, your Dutch competitor can reinvest those profits back in its home country without paying additional taxes, but you can’t. Alibaba, the Chinese online retailer that just floated its massive IPO in New York, may face a lot of challenges expanding beyond its Chinese market, but taxes certainly won’t be one of them. USA Today reported that the company’s effective tax rate is 11.9 percent, compared to more than 30 percent for Amazon. And, the Chinese company won’t be hounded by its Communist regime to pay taxes on money it makes outside China.

The big underlying conceptual problem is that our worldwide approach to taxation, dating back to the 1920s, is the tax code equivalent of gunboat diplomacy. It presupposes that America has jurisdiction over anything Americans do elsewhere, and that other countries don’t really matter. It presupposes that it is our government, and no other, that is responsible for creating the conditions for business to take place. This approach dates back to a time when it would have been unimaginable to think that iconic American multinationals could one day do more business in foreign lands than at home, or that they might face formidable foreign competitors (even within the U.S. market!).

A number of companies have moved their headquarters outside the United States because our tax code makes it so difficult to run a global business. But it was emblematic of our nationalistic hubris that Burger King was also denounced as “unpatriotic” recently when its merger with Canada’s Tim Horton’s was announced. The company’s relocation to Canada (hardly a dodgy, tax-evasion haven) makes sense given where the combined companies’ operations are, but in Washington this was just seen as another treason by inversion – because in our myopic worldview, other countries don’t matter.

Instead of attacking companies struggling to compete in the global marketplace, the Obama administration should work with Republicans to move to a territorial tax system. That’s even more important than fiddling with the actual rates, because it is what will level the playing field between U.S. companies and their foreign competitors. Both would pay the U.S. rate here, but not elsewhere.

If we modernize our tax system to reflect the realities of the global economy, we won’t just stop more American companies from leaving. We’d also be encouraging plenty of foreign companies to pull off inversions of their own, to America. We may not be the only country that matters (sorry, D.C.), but if we fix the tax code, we’d be about as good a place to do business as anywhere else on earth.

Andrés Martinez is editorial director of Zocalo Public Square, for which he writes the Trade Winds column. He wrote this piece for Zocalo Public Square.

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TIME Business

Uber Unites Politicians in Hypocrisy

The Hamptons Lure Uber Top Drivers Amid NYC Slow Summer Weekends
Bloomberg—Getty Images

Republicans and Democrats alike want to help the company avoid regulations

Uber has pulled off what few others can these days: The beloved car service has united politicians of all persuasions. Republicans, Democrats, and Libertarians are all vying to outdo each other in portraying the popular company, and its political struggles to avoid regulatory strangulation, as a poignant validation of their worldview.

Uber last month hired David Plouffe, President Obama’s former campaign manager and White House advisor, to direct its “campaign” against “Big Taxi” and local transportation regulators across the country. At the same time, conservative Republicans like Senator Marco Rubio and anti-tax crusader Grover Norquist championed Uber even though it is the darling of harried urbanites in Democratic enclaves like San Francisco and New York City.

Republicans understandably salivate at the sight of liberals, for once, railing against government overreach – excessive licensing requirements, taxes, and safety regulations – threatening a service they love. Is it too much of a stretch to hope that these ride-share fans might rise up to oppose similar government-imposed obstacles facing plenty of other American businesses – power utilities, financial companies, industrial manufacturers?

Good luck with that. The big regulatory clashes of the Internet era – the various iterations of net neutrality, the Microsoft antitrust case, the disputes over taxing online commerce, the Napster music download battles, the recent Aero TV Supreme Court case, and the current fight over how to regulate Uber, Airbnb, and other “sharing economy” firms – haven’t produced conceptual breakthroughs for how regulate other areas of the economy.

Instead, these “new economy” fights have deepened the dysfunction of our very old political system. Because they have typically involved definitional squabbles— Is Uber merely another limo company? Was Aero TV more akin to your old VCR or a rogue cable company? — and because it is so difficult to update old regulatory approaches, these Internet-era fights stand out for their brazen hypocrisy, cynicism, and intellectual inconsistency.

Take Uber. It’s hard to imagine Republicans cheering the company on if, instead of stealing market share from local union-controlled monopolies, it was stealing market share from a handful of large, publicly traded national taxi companies that had invested heavily in their infrastructure while satisfying regulations the new entrant was trying to avoid.

That alternative scenario is pretty much how things stand in the telecom sector, where Republicans have generally defended the prerogatives of incumbent players against regulators and new competitors preaching “net neutrality” (the principle that owners of the Internet’s pipes or airwaves cannot make separate deals with content providers on price or speed but must treat everyone equally).

But conservatives aren’t alone in their hypocrisy, or semantic creativity, when it comes to Uber. Liberal Uber lovers, instead of addressing cities’ burdensome transport regulations head-on, are more comfortable arguing that the company doesn’t belong in the same category as those old yellow taxis and limo companies. Uber, you see, is a technology company!

This sort of semantic nonsense has been a staple of all Internet regulatory fights. For a long time Internet enthusiasts felt it was OK to “share” copyrighted music and films online widely, since it was somehow different than old school piracy. And if you think Tesla shouldn’t be forced to sell their cars through third-party dealers, arguing that it’s a tech company that shouldn’t be subject to the old rules is far easier than seeking to take on the anachronistic and anti-consumer laws hurting all car companies. Better to create a loophole or carve-out for the new players than to bother modernizing the entire system.

The “sharing economy” moniker, as applied to the likes of Uber and Airbnb, is itself a brilliant but disingenuous fiction. What exactly am I “sharing” in an Uber transaction? As far as I can tell, the company owners are “sharing” with me a driver it has hired so long as I pay a certain amount of money to get from Point A to Point B. The service is good and prompt, but I am not sure what is being “shared” that my community’s yellow cab service doesn’t also “share” with me.

So let’s get real. The transformation of numerous industries by nimble players leveraging formidable information technologies on behalf of consumers is to be celebrated, but not to the point of pretending that things that are aren’t, or that aren’t are. There’s plenty of that already taking place in our traditional politics.

Andrés Martinez is editorial director of Zocalo Public Square, for which he writes the Trade Winds column.

TIME Media

Stop Pretending Nothing Happens in August

President Richard Nixon Resignation At White House In Washington On August 9Th 1974
President Richard Nixon Resignation at White House in Washington on August 9th 1974. Keystone-France—Gamma-Keystone via Getty Images

The month of beach vacations is also when World War I broke out, Iraq invaded Kuwait and the U.S. bombed Hiroshima and Nagasaki

The headlines these days all seem to demand exclamation marks. Iraq is teetering on the brink! Russian troops are massing on the Ukrainian border! Gaza lies in ruins! World’s worst Ebola epidemic afflicts Africa!

Oh, and it is also National Goat Cheese Month. Welcome to another quiet and peaceful August.

Yeah, right. One of the puzzles of summer is why so many of us persist in pretending that August is a month when nothing happens, when we can step back, tune out, take a break, and recharge. Europeans even think they are entitled to take the entire month off.

Perhaps there’s something about late summer, a couple months gone since school let out in June, that makes us forget our history. This year, August is full of reminders. We’re commemorating the 40th anniversary of President Richard Nixon’s resignation and the 100th anniversary of the outbreak of World War I.

Bellicose August also brought the Gulf of Tonkin incident that triggered our involvement in Vietnam, Iraq’s invasion of Kuwait in 1990, the failed coup attempt against Mikhail Gorbachev in 1991, the Ribbentrop-Molotov Pact in 1939 that enabled Hitler to invade Poland on September 1, and the atomic bombings of Nagasaki and Hiroshima in 1945 and ensuing Japanese surrender. Hurricane Katrina also occurred in August, but let’s leave Mother Nature out of it.

There’s a melancholic quality to August, a month nearly synonymous with “waning days of summer.” Less acknowledged in our cultural vernacular is the extent to which the “waning” feeling is as much about the end of another year as it is about the end of summer.

Sure, we sing “Auld Lang Syne,” kiss under the mistletoe, and wish each other a “Happy New Year” when December turns to January. But who among us doesn’t feel that the real reset moment each year, the new beginning, comes in September, the day after Labor Day? The fall is when we start school and football season and the U.S. government fiscal year, and when we get serious, if we ever do, about our work.

August, then, is about the waning not only of summer, but also of each passing year, and lost possibilities. It is about the waning of life, even. There is a grasping, desperate quality to many of the historical events that took place in August—hence the resonance of the title of Barbara W. Tuchman’s historical bestseller about the outset of World War I, The Guns of August. It’s quite fashionable to study the sequence of events that led to the so-called “Great War,” which in retrospect appear like dominoes falling as if on a predetermined course. The rest of the war is far less fashionable to read about, as it proves too muddled a narrative. Best to focus on the August beginning, and how it ended all that came before.

Mischief conspires with melancholia in August, the notion that mice can play while the cat’s vacationing. It’s not clear whether Saddam Hussein thought he would get away with taking over Kuwait if he did so while the American president was summering in Maine, or whether that president’s son, when he was in office a decade later, would have taken warnings of an airborne al Qaeda plot more seriously had he been briefed about them at some time and place other than August at his Texas ranch.

August and the waning days of summer (and of the year, I insist) is when we let our guards down, creating an opening for those with an agenda, be it the invasion of Poland or Kuwait, or the shorting of the pound (George Soros famously bet against the British currency in August 1992, and won big). So keep your eye on colleagues who seem especially busy and eager to stick around the office this month. Who knows what they’re up to?

Financial markets are notoriously slow in August, the month of lowest trading volumes, when bankers follow their clients to the beach. But “slow” can be a deceptive term in business as in life, given that lower volume and less liquidity in a market can make it more volatile, and more susceptible to speculation. If you buy or sell 1,000 shares of a company, you are far more likely to influence that stock price on a day when only 5,000 shares trade hands than on a day when 100,000 shares trade hands.

That same dynamic applies to anyone seeking to influence the outcome of any event: your influence increases the fewer people are engaged. Which is what makes this such a dodgy month, and the current news headlines so ominous.

And now, I’m off to the beach for a week. It’s August, after all.

Andres Martinez is editorial director of Zocalo Public Square, for which he writes the Trade Winds column. This piece originally appeared at Zocalo Public Square.

TIME Sports

How Soccer Is Destroying American Exceptionalism

FBL-WC-2014-BRAZIL-FIFA-CONGRESS
Performers dressed as football fans dance on stage during the opening of the FIFA Congress in Sao Paulo on June 10, 2014, two days before the opening match of the 2014 FIFA World Cup in Brazil. Nelson Almieda—AFP/Getty Images

For most of the 20th century, when so much of American culture was being adopted by others, Americans were adamant about not reciprocating by adopting the world’s sport. Now things have changed.

When I was 17 I spent the summer in France on an exchange program, living with a family in an idyllic town in Normandy, parlando the language of Napoleon and Camus (OK, so my conjugations may be a bit off, it’s been a while) and doing my best to avoid eating cheese, which wasn’t easy seeing how it was both a national and regional obsession. My French “parents” seemed to think it was incroyable and pas possible that someone would come all the way to France for a summer and not eat cheese (my attempts to explain that j’aime pas le fromage everywhere fell on deaf ears).

But away from the dinner table, I had a far easier time assimilating with the natives than most of the other American kids in my study program. That’s because I played and shared the French kids’ obsession – le football. Not only could I make friends by playing in the park, but also, as a result of having grown up in Mexico, I had a reservoir of shared knowledge binding me to French kids that my American classmates simply did not have: the World Cup.

The World Cup has provided a tidy punctuation to my life every four years, and in the summer prior to my Normandy adventure, the most memorable match of the Spain 1982 World Cup was the French semifinal overtime loss to the Germans. Even a year later, by pretending I had been rooting for the French and grousing about how dirty the German team had played, I could fit right in.

Soccer (like religion) remains one of the few non-American narratives binding the world together. When it comes to global pop culture, if it isn’t the latest World Cup or European Champions League, the only things kids in France, Mexico, Ghana, and South Korea share in common are U.S. imports: Hollywood blockbusters, American TV series, music, video games, and the English language. The NBA and NFL have followings overseas, but sport still remains the weakest link in America’s hegemonic control over global culture.

In fact, global soccer culture is changing the United States, thanks to the interest of both affluent white suburbanites and immigrant groups. Today the United States boasts a highly respected national team that easily qualifies for the World Cup every four years; a decent domestic league established as a legacy of the 1994 World Cup played here; and armies of youth soccer players.

Far more people in the United States watched the Spain-Netherlands final of the 2010 World Cup (24.3 million) on TV than watched the decisive fifth game of Major League Baseball’s World Series that year between the Texas Rangers and San Francisco Giants (15 million). Heck, only 4 million more people watched Game 7 of the Celtics-Lakers NBA Finals that year than the World Cup final. Remember, the match we’re talking about pitted Spain against Holland. Kicking a ball around.

Equally impressive, and more important in the long run, is the proliferation of media outlets for international soccer. NBC airs English Premier League matches, and a number of cable channels serve up games from the German, Italian, Spanish, and Mexican leagues every weekend. A generation of young gamers is hooked to FIFA’s soccer on their Xbox or Playstation. I console myself that when my kid is seemingly lost to the hypnotic powers of the video game, he is actually learning about other countries. (The other day I caught him playing Dortmund against Valencia).

It’s hard to exaggerate how much soccer’s incursion into American life threatens to erode American exceptionalism, not to mention our traditional geographic illiteracy. American kids now routinely wear the jerseys of teams in places like Barcelona and Munich, much like their counterparts in the rest of the world. Soccer offers American sports fans a sense of global, not just national, connectedness.

For most of the 20th century, even when so much of our culture was being adopted by others, Americans were adamant about not reciprocating by adopting the world’s sport. The prevailing culture was suspicious of the game, which at times could seem futile. Imagine going an entire match without scoring! Or, worse, tying! It seemed the duty of patriotic Americans was to avoid soccer, and even ridicule it, as much as it was to refuse measuring in centigrade or meters. We compensated for our sports provincialism by calling the champions of our domestic sports leagues “world champions.”

But all that is changing. With the World Cup in the Americas for the first time in 20 years, the United States will experience this year’s tournament in a big way, and the exciting narratives that spin out of it will help bind young American fans to cheese-eating kids in Normandy, and elsewhere.

Andres Martinez is Washington editor of Zocalo Public Square, for which he writes the Trade Winds column. This piece originally appeared at Zocalo Public Square.

TIME Business

The Rising Cost of Not Opting Into Loyalty Shopping Programs

In the future, every retail experience could be defined by whether you're in or out of network.

I am having a hard time being loyal to all my loyalty programs. I have frequent flyer/buyer/rider/sleeper/eater/drinker cards with two airlines, three hotel chains, a grocery store, two booksellers, one drug store, a coffee chain, the salad place near my office, an office supply store, a credit card, a Vegas casino, a yogurt shop, a steakhouse, a diner, a sporting goods store, an online travel agency, a dining reservations site, a railroad, a smoothie stand, and a boot store in Tucson (that last one must really mess with data brokers’ attempts to profile me—seeing how that was more of a vacation fling).

I may be forgetting one or two others, but my quick count makes me fairly representative: The research firm Colloquy estimated last year that the number of loyalty programs per U.S. household stands at 22.

I have derived tremendous value from some of these programs, particularly those of the airlines and booksellers. Having concentrated most of my flying on United lately, I am rewarded with a little extra legroom in coach and the ability to check my bags for free. I know, I know, it’s a glamorous life: I even get to board with Group 2 these days, and once in a long while I have been able to trade in miles for a free trip.

At Barnes & Noble, the 10 percent discount I get with my paid membership adds up, even if it represents a conflict of interest with my Amazon Prime membership. Prime (also a pay-to-play) is among the more ingenious of all loyalty programs, featuring unlimited free two-day shipping—whose value to me (and cost to Amazon) increases with every purchase I don’t make elsewhere.

Now that I think of it, it feels odd being in a relationship with both booksellers. What kind of loyalty is that? Retailers call it “polygamous loyalty” (a term I advise you try not to use in other contexts), which speaks to the lack of seriousness underlying the loyalty program craze. By 2012, Americans had amassed 2.65 billion loyalty program memberships, which isn’t difficult when loyalty is defined so loosely.

It’s not hard to understand the reasons for our current craze for this form of marketing, which began in the mid- to late-1990s. Companies want to track your habits and preferences to improve their business. And new technologies like cell phone apps are making it ever more easier for companies to vie for your next purchase with targeted seduction.

The Federal Trade Commission issued a report last week on just how extensive the tracking of your consumer data is; the FTC also called for legislation to force more transparency around the issue of how much privacy you are surrendering for your loyalty. Your consumer behaviors are tracked even if you don’t sign up for a rewards card at your neighborhood grocer, but the tracking is far more individualized and accurate if you do open an account. Still, I suspect a majority of consumers are perfectly content to surrender their privacy not only to get better deals, but to recreate (even if in a virtual way) a seemingly more intimate, relationship-driven identity not just as a consumer but as an individual. Most people like the fact that multi-billion-dollar enterprises like Amazon and their grocery chain “know” them, much like people in a different era appreciated being known by the general store clerk, or the dairyman who made daily deliveries. It’s all about shrinking our worlds down to a scale where we matter.

Retail rewards and loyalty programs aren’t new, of course. I can remember being impressed as a child, on visits from Mexico to my relatives in East Texas, by how fun one of the pioneer loyalty programs seemed. We’d go shopping at Piggly Wiggly and get rewarded with a bunch of green stamps that would go in an album that could be traded in for goodies. And banks for decades would lure in customers with promises of free toasters or other tangible goods. Still, you have to credit Robert Crandall, the CEO of American Airlines who launched the first frequent flyer program in 1981, as the patron saint of contemporary loyalty/rewards programs driven by once unimaginable computing power. Few business leaders have had a bigger impact on how we lead our lives, even if his legacy has little to do with the mechanics of how we fly.

I am torn about all this commercialized loyalty. Yes, I have benefited. I derive some satisfaction (and, dare I say it, purpose and identity) in defining myself by the choices I make as a consumer. But I am often annoyed by retailers’ clinginess. Sometimes I just want to buy a cookie without entering into a lasting relationship (I’m talking to you, Panera Bread). As much as I benefit from my relationships with United or my grocery store, I enjoy being an uncommitted free agent in other arenas. I am loyal to no gas station, department store or barbershop, which gives me a lot of freedom and anonymity, at the cost of picking up some rewards.

What’s most worrisome is the rising cost of not opting in. There have long been members-only stores, but I fear we are heading into a future where every retail experience will be defined by whether you are in or out of network. Fly an airline whose program you’re not signed up for, and you’ll be treated as an aggravating nuisance. Refuse to hand over your card or phone number at the grocery store, and you’ll be greeted with incredulity, making you feel like an anti-social element, or a visitor from North Korea. And they’ll charge you higher prices.

One welcome exception to this trend is Albertsons, the West Coast-based grocery behemoth, which announced last year that it was discontinuing its rewards card and offering the same “special” prices to all customers, all of whom deserve to be treated equally well. What a concept. Too bad Albertsons isn’t in my area—I could imagine becoming quite a loyal customer.

Andres Martinez is Washington editor of Zocalo Public Square, for which he writes the Trade Winds column. This piece originally appeared at Zocalo Public Square.

TIME foreign affairs

Modern-Day Singapore Pays a Price for Globalization

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Singapore by night. webphotographeer—Getty Images/Vetta

The city-state has done all it can to succeed in the global marketplace, only to end up feeling some unease at having its distinctive sense of place eroded.

You land at Changi Airport after flying for what seems a lifetime, and you’re disoriented even before you hit the customs booths with bowls of mints, dire warnings about the death penalty for those bringing in drugs, and digital comment cards asking if the service was to your liking.

Duck into a public restroom and you’ll be exhorted to aim carefully and to “flush with oomph” for the sake of cleanliness. Outside, it’s tropical sticky but impeccably clean, in a city is inhabited by Chinese, Malays, Indians, and guest workers from around the world—all speaking English.

Singapore is an assault on one’s preconceptions.

Singapore calls itself the Lion City, but it would be more accurate to call it the Canary City—the canary in globalization’s gold mine. Arguably no other place on earth has so engineered itself to prosper from globalization—and succeeded at it. The small island nation of 5 million people (it’s really just a city, but that’s part of what’s disorienting) boasts the world’s second-busiest seaport, a far higher per-capita income than its former British overlord, and a raft of number-one rankings on lists ranging from least-corrupt to most-business-friendly countries. So long as globalization continues apace, the place thrives.

On the event of its 50th anniversary as an independent nation, Singapore’s defining achievement is summed up in the title of its longtime leader Lee Kwan Yew’s memoir, From Third World to First. When it split off from Malaysia a half-century ago, Singapore had little going for it, other than a determination to become whatever it needed to be—assembly plant, container port, trustworthy banking and logistics center, semiconductor hub, oil refinery, mall developer, you name it. But the brilliance of its founding fathers—OK, it was mostly one father, Mr. Lee—was in realizing that the precondition for all of this was good governance.

Over a recent week of briefings with Singaporean business and government leaders sponsored by the nonprofit Singapore International Foundation, I heard one business leader say that he has never had to pay a bribe in his lifetime. To an American audience, that may seem like a fairly modest boast, but as this speaker noted, it’d be a difficult claim to make in neighboring Southeast Asian countries (or developing nations anywhere). Like Americans, Singaporeans worship the concept of meritocracy. Unlike Americans, Singaporeans entrusted their society to an all-knowing one-party technocracy that has delivered the goods across two generations—including affordable, publicly built housing for a majority of the population and a system of private lifetime savings vehicles that are the envy of policy wonks the world over.

Still, even at the height of its success, Singapore doesn’t get much love from the legions of foreigners who avail themselves of its First World amenities. It’s almost obligatory for Westerners visiting or residing in Singapore to complain about the “sterility” of the place, and joke about the pristine shopping malls, contrasting Singapore unflatteringly to the grittier authenticity of nearby Cambodia and Vietnam.

It’s a form of colonial prejudice to begrudge Singaporeans their lack of Third World “charm.” But the interesting new wrinkle is that Singaporeans themselves are joining in the second-guessing about the price of development.

Opposition parties are gaining some ground, capitalizing on unhappiness with strained public services, soaring prices, and an influx of super-wealthy foreign investors. Having taken care of its population’s basic needs and then some, it must be galling for Singapore’s relentlessly pragmatic leadership to see a surge of yearning for rooted authenticity. The few older neighborhoods that haven’t been demolished—including the first generation of public housing complexes—are now heralded as historic landmarks.

This ill-defined sense of nostalgia reflects the tensions inherent in globalization. You can leverage all of your comparative advantages to succeed in the global marketplace, only to end up feeling some unease at having your distinctive sense of place eroded.

Until recently, Singapore was among the most welcoming places to outsiders, with one out of every three residents born elsewhere. But with fertility rates dropping, the country opened the floodgates to immigrants to ensure continued growth—turning immigration into a lightning rod. One triggering event for a national debate on the subject was a modest riot late last year in the city’s Little India Quarter. A government official, off-script, said with some relish: “Imagine that, we had a riot: we must be a real place.”

In the aftermath, the government slowed down its intake of immigrants and tapered its growth projections. The move was a testament to how responsive Singapore’s system can be to its citizenry’s needs and desires, without being terribly democratic.

It was a testament, too, to how perfect Singapore—and its paternalistic, technocratic cosmopolitanism—is for this age of interdependence.

Andrés Martinez is the Washington editor of Zocalo Public Square, for which he writes the Trade Winds column, and Vice President of the New America Foundation.

TIME Sports

Germany’s Crushing Inequality Works on the Soccer Field

FC Bayern Muenchen v Real Madrid - UEFA Champions League Semi Final
Real Madrid challenges Bayern Munich during the UEFA Champions League semi-finals. Boris Streubel—Getty Images

Good competition isn't about equally matched teams. Just look at Bayern Munich's dominance, which shows how a Darwinian approach to sports can attract fans.

Don’t let Europeans self-righteously lecture you about inequality in America—especially not Germans. If you compare the American and German professional “football” leagues each society considers truly important, you quickly arrive at a startling conclusion: Germans are far more tolerant of inequality than Americans.

Bayern Munich, the perennial powerhouse of the German Bundesliga, is this year’s champion … again. Over 51 seasons, Bayern has won the championship 23 times. This season is still ongoing, mind you, but the Bayern steamroller clinched the title on March 25, with seven games left to go, the earliest any team has mathematically wrapped things up (the Bundesliga, like most domestic leagues in Europe, has no playoffs). Until a 1-0 slipup in early April against lowly Augsburg, Bayern had put together an astonishing streak of 53 unbeaten games in the Bundesliga. The team plays a beautiful synthesis of strong Germanic tactics and more soulful Mediterranean fluidity. Bayern is stacked with the stars of the German national team squad that will go to the World Cup in Brazil, along with Dutch, French, Spanish, and Brazilian stars, all coached by the legendary Pep Guardiola. Opposing German clubs don’t just drool at the talent Bayern lines up in its starting 11; they covet the stellar leftover talent that rides its bench as well. The league’s smaller clubs barely spend one-tenth of what Bayern does on players.

By contrast, America’s National Football League – supposedly putting on a more brutal game in a more cutthroat winner-take-all society – is a socialistic paradise relentlessly striving for parity. The league has perfected a strict salary cap and a revenue-sharing plan that levels the playing field between teams, regardless of their owners’ wealth or cities’ size. Add in the consoling of weaker teams with softer schedules and higher college draft picks, and it becomes hard to think of another institution, of any type, that has abided as successfully as the NFL has by the old Marxist maxim of “from each according to his ability, to each according to his need.” The system appears designed to encourage all teams to take turns winning the Super Bowl, or at least to make each city’s fans believe they are one or two seasons away from glory.

Back in Europe, it isn’t only the Germans that embrace uneven playing fields. The continent’s major soccer leagues all command global followings and high revenues to be inequitably distributed. Six of the world’s ten 10 highest-paying sports teams are European soccer clubs, including Bayern, according to an ESPN/SportingIntelligence analysis of average player compensation, with the New York Yankees, Los Angeles Dodgers, Chicago Bulls, and Brooklyn Nets being the other four. European leagues typically feature a small number of rich clubs lording over the rest of the field. Spain’s “La Liga” is essentially a Barcelona-Real Madrid duopoly, with occasional guest appearances by third clubs like Valencia, Sevilla or, this year, a surging Atlético Madrid. In Britain’s Premier League, the circle of haves dribbling circles around the have-nots is slightly bigger – five or six teams have realistic aspirations at the start of each season.

But in Germany, a country we don’t often associate with crushing inequality, Bayern stands in a league of its own when it comes to talent and resources. A year ago, when fellow Bundesliga squad Borussia Dortmund met Bayern in the European Champions League final (the super-league where the top clubs from each country play each other), Forbes noted the grotesque mismatch of resources being fielded, with the Bavarians outspending Dortmund 4-to-1 on payroll. Munich prevailed then (and has gone on to sign two of Dortmund’s top stars) but last week stumbled in its defense of its European crown, losing in an upset to Real Madrid (a team that can match its resources) in one of this year’s semi-finals.

Why do Germans bother following a league so lacking in Chancengleichheit (what Americans call equal opportunity)? Wouldn’t it be endlessly frustrating being a Stuttgart or Freiburg fan, knowing year in and year out that things are hopeless, even before the first match? And wouldn’t it get old being a Bayern fan, knowing you purchased your wins? Yet the Bundesliga continues to attract more fans to its games, on average, than any other European soccer league.

“Americans have this notion that there must be competitive balance to keep things interesting,” says Stefan Szymanski, co-author of Soccernomics and a sports economist at the University of Michigan. Szymanski confirms that no other major soccer league in Europe is so dominated by one team as the Bundesliga is by Bayern.

“But what fuels sports fans’ interest is a compelling story, and that can sometimes be the opposite of parity,” he adds, citing Tiger Woods as a draw for golf when he was at his unbeatable peak. People want to see a master at play, see how long dominance can be stretched. Bayern’s awesome prowess these days does have a history-making feel about it; it’s hard to look the other way.

And, as Szymanski also points out, European soccer teams have many interests, “so much more at stake for fans beyond trying to win a championship.” Survival, for one thing. Instead of boosting the worst teams with all sorts of competitive advantages as the NFL does (think of it as Gridiron Welfare), the Bundesliga, like most other soccer leagues around the world, features the nifty Darwinian tool of “relegation.” Each season, the worst-performing teams get flunked down to a lesser league, whose champions ascend, and so on down the chain, between second, third, and fourth leagues. Some teams never come back, but just fade away, ruining the franchise financially and traumatizing its fans.

Americans clinging to their version of football’s radical parity, especially fans residing in places like Oakland and Cleveland that rely heavily on its redistributionist policies, had better hope that the NFL never is tempted to embrace the Darwinian inequality of European football. Not only would it consolidate all success in a handful of teams, it would also deprive us of needed ammunition to counter tiresome European lectures about American inequality.

Andres Martinez writes the Trade Winds column for Zocalo Public Square, where he is Washington editor. This piece originally appeared at Zocalo Public Square.

TIME Family & Parenting

Three Reasons Why I Bought My Kid an Xbox

Three Reasons Why I Bought My Kid an Xbox
Tosca Radigonda—Cultura RM/Getty

I thought gaming was a gateway vice to a life of ruin. Now I’m grasping to find some redeeming educational purpose.

The purchase was so out of character for me that my credit card company wanted no part of it.

If all these rationales sound flimsy, akin to the proverbial claims of buying Playboy ‘for the articles,’ let’s just go ahead and blame my brother.“Martinez is buying an X-Box? Sure he is … This’ll be the easiest fraud to identify all year,” someone must have scoffed at Amex’s global command center. Declined!

A few moments later, under the watchful eye of the tattooed sales clerk at GameStop, I was calling Amex to say, “Umm, no, really, it’s me. I know it’s crazy …”

I always vowed my kid wasn’t going to be a video game junkie. Our home was going to be about books, sports, TV (yes, TV), and plenty of games, but the kind you pull off a shelf, open the box, and wonder where the missing dice are. Video games had never captured my imagination beyond a passing infatuation with Pong and fond memories of the Pac-Man console in the pizza place we’d frequent in high school. Gaming was a gateway vice to a life of ruin in my estimation.

So why cave now, decades later, when I am a productive member of society and Sebastian, at age 9, is well on his way to having a healthy relationship with the real world?

Let me offer up three reasons. The first, and most pathetic, is peer pressure. Many of Sebastian’s buddies, and his soon-to-be stepfather, have video game systems, which Sebastian raves about. And so for a while now, I’ve been mulling over the existential question of whether I really want to be the one providing the no-fun home. What’s more, Sebastian already plays a fair amount of games on an iPad. I figured if we could spend that time playing together on the large screen, we’d be engaging in more of a father-son bonding experience.

Second, I’ve had a sneaking suspicion that sidelining myself completely from the video game realm was making me more of a Luddite: A considerable degree of technological and cultural innovation is now taking place in a realm as foreign to me as the inner workings of a NASA spaceship (assuming they still have those).

My third, somewhat related reason, was that I’d read with unease that these game consoles I thought of as dumb had become the smartest media hubs around, connecting your TV to the Internet and streaming services like Amazon Instant Video and Netflix. As someone who’d often cuddled up with my laptop watching downloaded movies in view of my large, darkened TV screen (see, I do have strong Luddite potential), I could see Xbox’s value as the ultimate media concierge.

If all these rationales sound flimsy, akin to the proverbial claims of buying Playboy “for the articles,” let’s just go ahead and blame my brother. Sebastian and I visited him in Dallas earlier this year and were forced to experience the sheer awesomeness of FIFA 14, the blockbuster Electronic Arts soccer game.

This game had nothing in common with Pong and showed little resemblance to Pac-Man. It was like nothing else I had ever seen. Playing for only a few minutes convinced me that this game was, yes, incredibly enjoyable but also extremely challenging. It required both precise eye-hand coordination and an understanding of the sport.

And so it didn’t take long after our return from Dallas for me to walk into GameStop, much to the surprise of both Sebastian (wow, Daddy is fun!) and American Express (no way it’s him buying this).

I am working at mastering FIFA 14 (still the only game we own). It takes a nimble mind and digital dexterity to remember in real time the right controls to make your defenders slide versus tackle versus contain, or to make a player shoot a chip shot versus cross the ball. Heck, sometimes I find it hard to keep track of which player I’m controlling at any given time.

But I’ll get the hang of it. Those awkward moments when my players dash off away from the ball as if to jump into the stands are becoming fewer and farther between, and I feel a remarkable sense of accomplishment when I mount a well-choreographed advance, using an intricate series of commands to march down the field.

I have no doubt that this video version of the game I love — and the game in which I’ve coached my son — helps us to understand the real thing better. There’s nothing like FIFA 14 to convince Sebastian that dribbling the ball on your own from midfield is not the best way to score a goal, or to get him thinking about the value of the well-timed pass into space behind the defenders. (For which you have to hit “Y,” not “A.”)

And the computer’s formidable memory contains the updated rosters of hundreds of teams from around the world. Part of the fun is choosing whether to play a classic rivalry such as Chelsea-Arsenal or Brazil-Argentina, or to be a more creative matchmaker, and host a friendly between such unlikely opponents as St. Petersburg’s Zenit and Mexico’s Toluca, or between teams of different generations. The sounds and sights and atmospherics of each stadium are remarkably authentic, and there’s nothing headier than having two of England’s most famous announcers do the play-by-play on your moves. Which, in my case, leads them to say things like: “Well, that move is an absolute waste under the circumstances.” Or sometimes, more charitably: “Well, that was the right idea, even if the aim wasn’t there.”

Sebastian and I have been playing our own version of a World Cup featuring 16 countries. As part of my guilt at becoming a video game-enabling parent, grasping for some redeeming educational purpose, we first find the countries about to play on a map. We then look up their respective populations and GDP size (today’s takeaway is that there are two-and-a-half Argentines for each Dutchman, but the Dutch are considerably wealthier). And finally, before we hit “start,” we listen to their national anthems. But no, if my kid ends up being both a geek and a nerd, it certainly won’t be my fault.

FIFA 14’s graphics are so realistic and beautiful on the big screen that at times it seems like reality and the game are converging. Watching Real Madrid take on Barcelona last Sunday in what’s arguably the greatest rivalry in all sports, I found myself trying to exercise control over the Barça players. I wanted to tell Messi where to run with my joystick, to press “X” and make Piqué slide when Cristiano Ronaldo approached him with the ball.

And that, I have to admit, was a tad scary.

Andrés Martinez is Washington editor of Zócalo Public Square and vice president of the New America Foundation. This piece originally appeared on Zócalo Public Square.

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