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Building wealth: Best moves if you're 35 to 44

Apr 15, 2013

Money magazine's 101 Ways to Build Wealth package offers blueprints for the different stages of your life on how to achieve real financial security. In tips #28 through #52, we offer advice for 35- to 44-year-olds.

Former Virginia Governor Charged With Accepting Illegal Gifts

Updated: Jan. 21, 2014, 7:09 p.m. E.T.

Former Virginia governor Bob McDonnell and his wife were charged on Tuesday with illegally accepting gifts — including luxury vacations, private jets and large loans — from a wealthy businessman seeking special treatment from the government.

Federal prosecutors say McDonnell, a Republican, and his wife Maureen repeatedly received gifts and loans totaling more than $160,000 from dietary-supplement executive Jonnie R. Williams Sr. In exchange, the McDonnells allegedly bolstered Williams' struggling company with the prestige of the governor's office. The indictment on Tuesday charges them with 14 counts, including wire fraud and conspiracy.

In a statement on Tuesday, McDonnell, who has previously apologized for the gifts scandal but said he did nothing illegal, maintained his innocence.

"I deeply regret accepting legal gifts and loans from Mr. Williams, all of which have been repaid with interest, and I have apologized for my poor judgment for which I take full responsibility," McDonnell said. "However, I repeat emphatically that I did nothing illegal for Mr. Williams in exchange for what I believed was his personal generosity and friendship. I never promised — and Mr. Williams and his company never received — any government benefit of any kind from me or my administration. We did not violate the law, and I will use every available resource and advocate I have for as long as it takes to fight these false allegations, and to prevail against this unjust overreach of the federal government."

"I come before you this evening as someone who's been falsely and wrongly accused,""I come before you this evening as someone who's been falsely and wrongly accused," he said later in a press conference on Tuesday night. "All of these (gifts) have now been returned or repaid with interest ... I repeat again emphatically that I did nothing illegal for Mr. Williams for what I believed was his personal friendship and generosity."

McDonnell left office earlier this year after the single term in office Virginia governors are allowed. His election in 2009 heralded the first Republican backlash to President Barack Obama, and McDonnell was frequently considered a possible vice-presidential candidate, and perhaps even a future White House hopeful himself.

Newly elected governor Terry McAuliffe, a Democrat, said in a statement that he was "troubled" by the charges.

“As this case progresses, it is my sincerest hope that justice will be served and that Virginians get the answers to which they are entitled," he said. "As governor, I will remain focused on leading this commonwealth in a way that restores Virginians’ trust in government and honors their expectation of transparency and accountability."

This post has been updated to include Bob McDonnell's comments in a Tuesday-night press conference.

America's Economic Moment

Is the U.S. economically exceptional? It's a question that's suddenly worth asking, since 2014 looks to be the year the U.S. will regain its traditional position as the world's economic engine--a role that seemed lost forever in the dark years following the 2008 financial crisis. Assuming the current projections of 3%-or-more GDP growth for this year hold, the American economy will, for the first time in more than five years, expand as fast as or faster than the global economy as a whole. It will top many of the once hot emerging markets as well. The resurgence has myriad implications for the U.S., of course. But given the implications for the global economy, it's attracting attention everywhere (including among the leaders gathered at the World Economic Forum in Davos from Jan. 22 to Jan. 25).

Here's the short story: The U.S. has exited from financial crisis; Asia and Europe have not. China, the second largest economy in the world, is pretty much where the U.S. was five years ago--deeply in debt. Back then it took China just over a dollar of debt to create every dollar of economic growth, according to Ruchir Sharma, Morgan Stanley's head of emerging markets. Today four dollars of debt are needed to create one dollar of growth in the Middle Kingdom. (Sharma considers the debt-to-growth ratio the most reliable predictor of financial crisis over the past 100 years.) Growth in China is already down sharply from its double-digit peak years before 2008, to 7.7%, and it could fall even more sharply in the face of a banking crisis.

Japan, where government debt is over 200% of GDP, continues to struggle too. Short of some serious austerity, Japan will probably have to live with another lost decade or two of negligible growth. As for Europe, while central bankers have saved the euro (at least for now), deflation is making the region's already bad debt troubles worse. A new round of banking crises could reignite the whole euro-zone-breakup risk again.

In the midst of all this, the U.S. looks pretty good. Americans have a lot going for them: cheap energy, relatively skilled and low-cost workers, a newly robust manufacturing sector and, most important, private balance sheets that are back in the black. American consumers have gotten their finances in order, and businesses are sitting on more cash than ever before--as much as $2 trillion at home and the same amount in bank accounts abroad.

Whether Americans are indeed exceptional will come down to what they decide to do with these assets. A recent Accenture survey tallied the optimism among CEOs and other top executives in 20 countries and found that 64% of them were bullish on the U.S. and planning to locate more labor and operations there in 2014. Companies may finally stop sitting on so much cash and use it to invest in workers and equipment. That would spark a virtuous cycle that should ultimately lead to real, sustainable growth of 3% to 4%, which is what the U.S. needs for unemployment numbers to continue ticking down. Incoming Federal Reserve Chair Janet Yellen recently told me she's hopeful that businesses will start spending this year.

If they do, pay attention to what types of jobs get created. That's where the argument for exceptionalism gets trickier. Over half of all U.S. jobs created in 2013 were in low-wage sectors, like retail or health care, where paychecks are actually shrinking relative to inflation. Part-time workers still make up more of the workforce than is healthy. And the participation rate, meaning the number of people with jobs relative to the overall working-age population, is the lowest it's been since 1978, before women started coming into the labor force en masse. (The unemployment rate, by contrast, takes into account only workers who are seeking jobs.) While some economists argue that this reflects the retirement of baby boomers, Westwood Capital managing director Daniel Alpert points out that it's not nearly enough to account for the many millions of workers who've dropped out of the labor market. "There is much more going on here than the retirement of some lucky baby boomers," he says.

So 2014 will be a telling year. Hopefully we will learn that the U.S. is in the early stages of a traditional recovery, the kind that will eventually trickle down to the masses and create the sort of middle-class jobs we need to spur growth (albeit a lot later in the cycle than in recessions and recoveries past). It could, however, turn out instead to be something new: a two-tier recovery that will create growth and jobs but only at the top and bottom of the pyramid. We're about to find out whether the American economy is exceptional or whether Americans are just in an exceptional kind of recovery.

The Case for Snooping

It's not always true that if you're under attack from both sides of the political spectrum, you're probably doing the right thing. The smart or moral course is sometimes resolutely partisan. But watching President Obama take flak from the left and the right for his speech on intelligence reform, I believe he's striking a difficult balance on a crucial topic.

In his speech, Obama defended the essential structure of U.S. surveillance activities. He argued that the National Security Agency is not a rogue outfit, that it plays by the rules and is staffed by patriotic men and women. But in an important admission, he also made clear that after 9/11, the NSA and American intelligence efforts in general went too far. Taking advantage of its unique technological capabilities, the U.S. government did whatever it could, rarely asking whether it should. The President proposed some new checks on decisions to collect data and new constraints on how it is stored and when it can be accessed.

The speech annoyed liberals and conservatives suspicious of government overreach, but reaction from the left has been more anguished. Many voices have begun arguing that Edward Snowden's revelations show that U.S. intelligence operations have run amok and are illegal and unconstitutional and that Snowden deserves to be pardoned and treated like a hero. The factual basis for every one of these claims is weak. A large number of Snowden's revelations involve not domestic surveillance but foreign intelligence operations, a standard role for U.S. spy agencies. They show, for example, that the U.S. government is spying on the Taliban and Pakistan. They show that the NSA is spying on foreign leaders like Germany's Angela Merkel and top aides to Brazil's Dilma Rousseff. Now, you might regard some of these choices as wise and others as mistaken, but there is nothing unprecedented about countries spying on foreign leaders. Obama conceded too much when he promised not to eavesdrop on a host of them. Foreign governments will certainly not return the favor and stop what is often a relentless effort to spy on America's top officials and CEOs.

There is a gaping hole in the left's understanding of U.S. intelligence work. The U.S.--its government, businesses and people--is under massive, sustained surveillance from and infiltration by criminals, terrorists and foreign governments. The Chairman of the Joint Chiefs of Staff pointed out recently that since 2011, cyberattacks on America's critical infrastructure--chemical, electrical, water and transport systems--have risen seventeenfold. The National Nuclear Security Administration, which is responsible for the country's nuclear power plants, reported in 2012 that it faces 10 million cyberattacks every day--that's 3.65 billion in one year. Every major bank and corporation, from Bank of America to Goldman Sachs to the New York Times, faces almost continuous efforts from abroad to penetrate its networks, mine its data, disrupt its procedures and steal its secrets. The effects can range from disruption of transactions to systemic damage that feels more like a military invasion.

It would be impossible to defend against these attacks without allowing intelligence agencies to spy on foreign governments and groups abroad. But it is also crucial that the NSA and others have some ability to enter into telecommunications systems at home to track cyberattacks, figure out where they come from and render them ineffective. Former Justice Department official Jack Goldsmith notes that the New York Times objects to foreign cyberattacks yet wants the NSA to shut down its surveillance at home. In fact, he writes in the New Republic, "To keep our computer and telecommunication networks secure, the government will eventually need to monitor and collect intelligence on those networks using techniques similar to ones the Times and many others find reprehensible when done for counterterrorism ends."

We all live, bank, work and play in a new parallel world of computer identities, data and transactions. But we do not seem to realize that this enormous freedom of activity in the cyberworld, as in the real world, has to be defended. Just as the police need basic information about your life and activities, the government will need information about the cyberworld. As General Keith Alexander, the NSA's director, has pointed out, there is no way to defend these systems without getting into them in the first place.

In "Federalist No. 51," father of the American Constitution James Madison wrote (along with Alexander Hamilton) that in setting up a government, "the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself." That is the balance we have to strike, in cyberspace as anywhere else.

TO READ MORE BY FAREED, GO TO time.com/zakaria

Congress Recess
Roll Call / Getty Images

GOP, Dems Set To Collide In “High Risk Corridor”

Democrats want the Republicans to pick another fight with them over raising the U.S. debt limit, and it looks like the Republicans may oblige, thanks to a little known provision in ObamaCare. At stake are the full faith and credit of the U.S. dollar, the GOP‘s (outside) shot at capturing the Senate and the party’s prospects for widening their influence in the House during this fall’s elections.

Despite a score of polls which show that the country holds the GOP primarily responsible for shutting down the government in October, and for leading the country to the brink of default in other debt ceiling showdowns over the past three years, some leading Republicans say they will look to the late February debt limit deadline to extract concessions.

“When the debt ceiling is hit, I think that’s an opportune time to also talk about making the reforms to control spending,” says Rep. Steve Scalise (R-La.), chairman of the broad House conservative coalition known as the Republican Study Committee. “What we’ve been looking at recently…is this high risk corridor,” says Scalise.

The risk corridor is a feature of ObamaCare that will reimburse insurers with fewer healthy people than they originally expected to enroll, acting as a cost buffer during the experimental early years of the health reform program. The insurers will be paid by the Department of Health and Human Services if their costs are more than 103% of their target amount. Likewise, if a surprisingly high number of healthy people sign up, the insurers will pay the HHS. The program will only run through 2016, according to the American Academy of Actuaries, because “as more data becomes available on the health spending patterns of the newly insured, the ability to set premiums accurately should improve, thereby reducing the need for risk corridors.”

Some Republicans are calling the program a government bailout of insurance companies, and want to do away with it in negotiations over raising the U.S. debt limit, which the Treasury says it will reach at the end of next month. Conservative columnist Charles Krauthamer floated the idea of doing away with the risk corridor reimbursement in his first Washington Post column of the year, calling on the GOP to “attach the anti-bailout bill to the debt ceiling. That and nothing else.”

At least one influential Republican has signed on for the idea. “I think it would be a real tough position to sell to say that when we’re running out of money, when we’re maxing out our credit card, we should also be borrowing money from China to bail out insurance companies,” says Scalise.

It is not clear whether other Republicans will decide to push that or other concessions, or whether they will ultimately back down and raise the debt limit without much fanfare. That will come down to a calculation of political and economic costs.

The Government Accountability Office estimated that the delay in raising the debt limit in 2011 cost the Treasury Department $1.3 billion that year alone, while the Bipartisan Policy Center tallies the cost at nearly $19 billion over 10 years. The fight also lowered the country’s S&P bond rating from its sterling AAA status to AA+.

Jennifer Duffy, in her most recent Senate overview for the Cook Political Report, mentioned that the debt ceiling could cause “real problems” for Republican candidates this cycle. “Senate Democrats are very adept at setting traps for their Republican colleagues,” writes Duffy. “The test will be whether Republicans can avoid them.”

The Republicans seem to be moving in the direction of a fight. In October, Mitch McConnell told National Review, “We’re not going to do this again in connection with the debt ceiling,” noting that it’s “unlikely” President Obama “will do much” on his signature health care issue. Just two months later, however, McConnell told reporters he “can’t imagine” passing a “clean” debt ceiling raise, because “Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country.” Last night, Speaker Boehner spokesman Michael Steel said that while “we should not default on our debt, or even get close to it,” a “’clean’ debt-limit increase simply won’t pass in the House.”

Democrats, for their part, seem to be hoping for a fight. In his end of the year press conference, President Obama said, “we’re not going to negotiate with this Congress on the bills that it has accrued.”

GOP, Dems Set To Collide In “High Risk Corridor”

Democrats want the Republicans to pick another fight with them over raising the U.S. debt limit, and it looks like the Republicans may oblige, thanks to a little known provision in ObamaCare. At stake are the full faith and credit of the U.S. dollar, the GOP‘s (outside) shot at capturing the Senate and the party’s prospects for widening their influence in the House during this fall’s elections.

Despite a score of polls which show that the country holds the GOP primarily responsible for shutting down the government in October, and for leading the country to the brink of default in other debt ceiling showdowns over the past three years, some leading Republicans say they will look to the late February debt limit deadline to extract concessions.

“When the debt ceiling is hit, I think that’s an opportune time to also talk about making the reforms to control spending,” says Rep. Steve Scalise (R-La.), chairman of the broad House conservative coalition known as the Republican Study Committee. “What we’ve been looking at recently…is this high risk corridor,” says Scalise.

The risk corridor is a feature of ObamaCare that will reimburse insurers with fewer healthy people than they originally expected to enroll, acting as a cost buffer during the experimental early years of the health reform program. The insurers will be paid by the Department of Health and Human Services if their costs are more than 103% of their target amount. Likewise, if a surprisingly high number of healthy people sign up, the insurers will pay the HHS. The program will only run through 2016, according to the American Academy of Actuaries, because “as more data becomes available on the health spending patterns of the newly insured, the ability to set premiums accurately should improve, thereby reducing the need for risk corridors.”

Some Republicans are calling the program a government bailout of insurance companies, and want to do away with it in negotiations over raising the U.S. debt limit, which the Treasury says it will reach at the end of next month. Conservative columnist Charles Krauthamer floated the idea of doing away with the risk corridor reimbursement in his first Washington Post column of the year, calling on the GOP to “attach the anti-bailout bill to the debt ceiling. That and nothing else.”

At least one influential Republican has signed on for the idea. “I think it would be a real tough position to sell to say that when we’re running out of money, when we’re maxing out our credit card, we should also be borrowing money from China to bail out insurance companies,” says Scalise.

It is not clear whether other Republicans will decide to push that or other concessions, or whether they will ultimately back down and raise the debt limit without much fanfare. That will come down to a calculation of political and economic costs.

The Government Accountability Office estimated that the delay in raising the debt limit in 2011 cost the Treasury Department $1.3 billion that year alone, while the Bipartisan Policy Center tallies the cost at nearly $19 billion over 10 years. The fight also lowered the country’s S&P bond rating from its sterling AAA status to AA+.

Jennifer Duffy, in her most recent Senate overview for the Cook Political Report, mentioned that the debt ceiling could cause “real problems” for Republican candidates this cycle. “Senate Democrats are very adept at setting traps for their Republican colleagues,” writes Duffy. “The test will be whether Republicans can avoid them.”

The Republicans seem to be moving in the direction of a fight. In October, Mitch McConnell told National Review, “We’re not going to do this again in connection with the debt ceiling,” noting that it’s “unlikely” President Obama “will do much” on his signature health care issue. Just two months later, however, McConnell told reporters he “can’t imagine” passing a “clean” debt ceiling raise, because “Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country.” Last night, Speaker Boehner spokesman Michael Steel said that while “we should not default on our debt, or even get close to it,” a “’clean’ debt-limit increase simply won’t pass in the House.”

Democrats, for their part, seem to be hoping for a fight. In his end of the year press conference, President Obama said, “we’re not going to negotiate with this Congress on the bills that it has accrued.”

GOP, Dems Set To Collide In “High Risk Corridor”

Democrats want the Republicans to pick another fight with them over raising the U.S. debt limit, and it looks like the Republicans may oblige, thanks to a little known provision in ObamaCare. At stake are the full faith and credit of the U.S. dollar, the GOP‘s (outside) shot at capturing the Senate and the party’s prospects for widening their influence in the House during this fall’s elections.

Despite a score of polls which show that the country holds the GOP primarily responsible for shutting down the government in October, and for leading the country to the brink of default in other debt ceiling showdowns over the past three years, some leading Republicans say they will look to the late February debt limit deadline to extract concessions.

“When the debt ceiling is hit, I think that’s an opportune time to also talk about making the reforms to control spending,” says Rep. Steve Scalise (R-La.), chairman of the broad House conservative coalition known as the Republican Study Committee. “What we’ve been looking at recently…is this high risk corridor,” says Scalise.

The risk corridor is a feature of ObamaCare that will reimburse insurers with fewer healthy people than they originally expected to enroll, acting as a cost buffer during the experimental early years of the health reform program. The insurers will be paid by the Department of Health and Human Services if their costs are more than 103% of their target amount. Likewise, if a surprisingly high number of healthy people sign up, the insurers will pay the HHS. The program will only run through 2016, according to the American Academy of Actuaries, because “as more data becomes available on the health spending patterns of the newly insured, the ability to set premiums accurately should improve, thereby reducing the need for risk corridors.”

Some Republicans are calling the program a government bailout of insurance companies, and want to do away with it in negotiations over raising the U.S. debt limit, which the Treasury says it will reach at the end of next month. Conservative columnist Charles Krauthamer floated the idea of doing away with the risk corridor reimbursement in his first Washington Post column of the year, calling on the GOP to “attach the anti-bailout bill to the debt ceiling. That and nothing else.”

At least one influential Republican has signed on for the idea. “I think it would be a real tough position to sell to say that when we’re running out of money, when we’re maxing out our credit card, we should also be borrowing money from China to bail out insurance companies,” says Scalise.

It is not clear whether other Republicans will decide to push that or other concessions, or whether they will ultimately back down and raise the debt limit without much fanfare. That will come down to a calculation of political and economic costs.

The Government Accountability Office estimated that the delay in raising the debt limit in 2011 cost the Treasury Department $1.3 billion that year alone, while the Bipartisan Policy Center tallies the cost at nearly $19 billion over 10 years. The fight also lowered the country’s S&P bond rating from its sterling AAA status to AA+.

Jennifer Duffy, in her most recent Senate overview for the Cook Political Report, mentioned that the debt ceiling could cause “real problems” for Republican candidates this cycle. “Senate Democrats are very adept at setting traps for their Republican colleagues,” writes Duffy. “The test will be whether Republicans can avoid them.”

The Republicans seem to be moving in the direction of a fight. In October, Mitch McConnell told National Review, “We’re not going to do this again in connection with the debt ceiling,” noting that it’s “unlikely” President Obama “will do much” on his signature health care issue. Just two months later, however, McConnell told reporters he “can’t imagine” passing a “clean” debt ceiling raise, because “Every time the president asks us to raise the debt ceiling is a good time to try to achieve something important for the country.” Last night, Speaker Boehner spokesman Michael Steel said that while “we should not default on our debt, or even get close to it,” a “’clean’ debt-limit increase simply won’t pass in the House.”

Democrats, for their part, seem to be hoping for a fight. In his end of the year press conference, President Obama said, “we’re not going to negotiate with this Congress on the bills that it has accrued.”

Cities of Sorrow for Syrian Refugees

In many ways Za'atari Refugee Camp, which sits on the high desert just inside Jordan, is more like a city than a temporary way station for Syrians who have fled their country's brutal civil war. Garbage and water trucks make the rounds on streets laid out in a grid. Streetlights and satellite dishes stipple a skyline growing more horizontal than peaked as one-room prefabs come to outnumber canvas tents.

There's even a marquee shopping street, its name a blend of the traditional Arabic for Syria and a certain Parisian boulevard. On the Shams Élysées, to open a store, just carve a display window out of the prefab with a circular saw and set out your goods. From upholstered pillows to parakeets, the promenade gives impromptu expression to Syrian entrepreneurship. As TIME photographer James Nachtwey's haunting images show, Za'atari increasingly looks like a permanent settlement.

But most of its residents would go home tomorrow if the horrors they fled weren't still waiting for them there. "I really want to go back," says Abu Anas, 46, a candy seller from Damascus. "But this old man was walking down the main street--a 90-year-old man walking with a stick--oh, my God, they hit him with a cleaver." The merchant's 5-year-old son stares up, gaping at the sight of his father in tears. "I saw it with my own eyes. Our neighbor--who lives with his mother--they were incinerated."

Of the roughly 6 million Syrians pushed from their homes during nearly three years of civil war, 2.3 million have crossed the country's borders to become the second largest refugee population in the world. Nearly 900,000 are in Lebanon, many stuck in makeshift camps because the government, wary of the refugees' putting down roots, refuses to allow the U.N. to establish formal ones like Za'atari, the largest in the region. The U.N. High Commissioner for Refugees (UNHCR) and the Jordanian government established Za'atari in July 2012 to house those fleeing Dara'a, the district of southern Syria where protests against the Syrian regime first took hold. Originally built for 30,000 people, the camp quickly swelled to bursting, at one point absorbing 4,000 arrivals a day. The influx overwhelmed both Jordan, where every 10th resident is now a Syrian refugee, and the aid community.

The displacement is emotional as well as physical. Aid workers spent much of Za'atari's first year dodging rocks thrown at them by refugees angrier than many had ever seen--a sign of a population traumatized by an increasingly vicious war between neighbors. "They shot him in the head. In front of me," says a woman named Umm Mohammed, of her husband, who was killed in Dara'a last March by uniformed men. "I saw this. I never thought it would happen. Everything we saw on TV, we saw in real life."

Like a normal city, Za'atari has doctors, but here they treat children who lost their hearing to bomb blasts. And there are street signs, but here they are written in spray paint and honor not dead statesmen but family members killed in the fighting. As that fighting continues over the border, new refugees continue to arrive--about 300 a week, camp officials say. The U.N. estimates that by the end of 2014, 1.7 million more Syrians will have left their homes.

Each week that passes here seems to deepen the air of permanence--and the vengeful anger of some of the refugees, scattered like seeds across the Middle East, with little to do but dwell on what they cannot forget. "I want to go back to the revolution," says Abu Anas, the candy merchant, his eyes now dry. "As soon as we succeed, you're going to see the massacres." Which, of course, would mean a whole new refugee crisis.

The 'Tiger Mom' Superiority Complex

From time to time, every Indian American finds an email in his or her inbox, wearing a font of many colors, like the one my grandfather once sent me: "Take a Pride--Being an Indian. 38% of Doctors in U.S.A. are Indians. 36% of NASA employees are Indians. 34% of MICROSOFT employees are Indians. India invented the Number System. Decimal Point was also invented by India. Sanskrit is the most suitable language for computer software ..."

On my desk now is a book-length version of such an email: The Triple Package: How Three Unlikely Traits Explain the Rise and Fall of Cultural Groups in America, by Amy Chua and Jed Rubenfeld. You may remember Chua as the "Tiger Mom" whose 2011 memoir about the rigors of Chinese parenting set off waves of anxiety among aspirational American parents who had been raised with Dr. Spock's permissive child-rearing attitudes. Her new book, co-authored with her husband, widens its aim, purporting to explain why not just Asians (like Chua) but also seven other groups--Cubans, Jews (like Rubenfeld), Indians (like me), Nigerians, Mormons, Iranians and Lebanese--are superior when it comes to succeeding in America.

The book claims that these groups thrive because of three traits: a superiority complex, insecurity and impulse control. The ones lacking the "Triple Package" are African Americans, Appalachians, Wasps and pretty much everybody else.

Does such thinking shock you? If not, it may be because it has become so insidiously commonplace over the past decade as a new strain of racial, ethnic and cultural reductivism has crept into the American psyche and public discourse. Whereas making sweeping observations about, say, African-American or Hispanic culture--flattering or unflattering--remains unthinkable in polite company, it has become relatively normal in the past 10 years to comment on the supposed cultural superiority of various "model minorities." I call it the new racism--and I take it rather personally.

I am an American, Calcutta born. I'm writing a book about immigrants in New York, dedicated to my two American sons. I want them to know why we came here and how we found our place in this new land. I want them to know about the teachers at the Catholic school in Queens who called me a "pagan," and the boy there who welcomed me to the school by declaring, "Lincoln shoulda never let 'em off the plantations," and the landlord who welcomed us to the country by turning off the electricity.

I also want them to know why their family did well in the end. We worked hard, yes, and we read books and went to the right schools and are "well settled," as our relatives back in India describe us. But we also benefited from numerous advantages--from cultural capital built up over generations to affirmative action to an established network of connections in our new country--none of which had anything to do with racial, ethnic or cultural superiority.

When my family went to America, we left behind a system in which people are often denigrated because of their caste, religion, language or skin color. The U.S., of course, has its own deeply troubled history with regard to race, but its path has tended toward more equality.

Recently, though, the language of racism in America has changed, though the plot remains the same. It's not about skin color anymore--it's about "cultural traits." And it comes cloaked in a whole lot of social-science babble. The new racialists are too smart to denigrate particular cultures. Instead, they come at things the other way. They praise certain cultures, hold them up as exemplary. The implication--sometimes overt, sometimes only winked at--is that other cultures are inferior and this accounts for their inability to succeed.

The Rise of Groupthink

The U.S.--like Brazil or England--likes to think it has moved beyond race. After all, we elected a black President, twice. But in reality, the terrain of race-baiting has simply shifted. The condescension once aimed squarely at African Americans now also claims as its targets Latinos, Muslims and--in a novel twist--large swaths of whites. And the people doing the condescending might be black or brown themselves.

A Congolese immigrant whom I met in the course of researching my book told me about the African Americans she knows at the supermarket where she works. "We are really different," she said about her community, as opposed to African Americans. "They don't have African values. They don't have the values to be black."

I asked her what that means.

"To be black," she explained, "means you get married and you don't have children before." The American blacks at her supermarket, she said, need to go to college. "They ask if you want to have marijuana. It's just normal for them. It's easy for them to say that 'My ancestors were oppressed.'"

A book like The Triple Package, even if it takes pains to argue in nonracial terms, is an example of this sort of ethnocentric thinking writ large. And it is only the latest in a long line of books--spanning more than a century--arguing for the superiority of this or that American group over others. The roots of alleged superiority have changed over time from race to class to IQ to religion and now to culture.

In 1916 Madison Grant wrote The Passing of the Great Race, which purported to demonstrate the racial and cultural superiority of Northern Europeans over Southern Europeans. The book was influential in drumming up popular support for passage of the 1924 Johnson-Reed Act, which barred Asians from immigrating to the U.S. and established quotas for Southern and East Europeans, to keep out Jews. Decades later, an influential 1959 article by Bernard Rosen declared that "Protestants, Jews and Greeks place a greater emphasis on independence and achievement training than southern Italians and French-Canadians." They were more successful because of an "achievement syndrome"--which sounds suspiciously like the Triple Package. (Italians, particularly, were portrayed in these works as an immobile ethnicity. But by 1975, they had assimilated, and now, as the sociologist Richard Alba has demonstrated, young Italian Americans have higher than average levels of college and postgraduate education.)

This line of argument expanded in the 21st century. In 2004 Samuel Huntington, the Harvard professor who became famous for his book The Clash of Civilizations, warned against Latino culture in a Foreign Policy cover story bearing the title "José, Can You See?" In his book published the following year, Who Are We? The Challenges to America's National Identity, he explained the differences between Anglo and Latino culture by quoting a Texas entrepreneur on "Hispanic traits ... that 'hold us Latinos back': mistrust of people outside the family; lack of initiative, self-reliance, and ambition; low priority for education; acceptance of poverty as a virtue necessary for entrance into heaven."

In 2009 an article by Jason Richwine, a fellow at the American Enterprise Institute, caught the attention of my people with its title, "Indian Americans: The New Model Minority." East Asians continue to excel in the U.S., he noted, but Indians are clearly the latest and greatest model. Why? "Exhibit A is the spelling bee." Success in spelling and other similar cognitive tasks, according to Richwine, proves that we are smarter than whites as well as Ashkenazi Jews--a happy finding for my father, who spent a lifetime in the diamond market, where they have a big presence. Richwine's conclusion: immigration policy should favor these model minorities over, say, Mexicans.

Then there is Stanford University's Thomas Sowell, who in Migration and Cultures: A World View identified six model "middleman minorities" who exemplify the entrepreneurial virtues he thinks the U.S. desperately needs. Last year he took the argument to another level, writing that there are some cultures that are just incompatible with Western values, primarily (surprise!) Muslim culture.

These bromides don't just come thundering down from the ivory tower. They're all around us in casual conversation about group accomplishment and group blame. Typical was a recent podcast by the comedian Adam Carolla, in which he interviewed San Francisco Mayor Gavin Newsom. Newsom noted that half of Latino and African-American families in California don't have access to a checking account or ATM.

"What's wrong with them?" asked Carolla. "I want to know why those two groups don't have access ... Are they flawed? ... Do Asians have this problem? ... They were put in internment camps. Are they at the check-cashing places?"

"Look at the history," Newsom responded. "It's naive to suggest that those things don't matter."

"How about the Jews?" asked Carolla. "No problems in the past? ... Why are the Jews doing well? ... Why do some groups do so much better? I'll tell you why: they have a family who puts an emphasis on education." He may have been speaking lightly, but Carolla's words show how easily the line can blur between cultural praise and cultural denigration.

Of Ethnicity and Reality

The one thing my sons are always amazed by when they visit India is the condescension displayed toward entire groups of people. They hate the way people speak to their maids, their drivers, their waiters--anybody Indians consider socially inferior. I try to explain to them that India has been independent for only 60-odd years and the U.S. for more than three times as long and that while India has made great progress in pursuing democracy, it hasn't yet translated into social and economic equality.

The new American racism, however, is turning the clock backward. While Chua and Rubenfeld are not the only ones peddling this pernicious line of thought, their book is likely to make them prominent spokespeople for it. So it's worth taking a close look at the "evidence" they marshal for their argument. Too often they--and their compatriots--ignore the realities of American history to make their half-baked theories stick.

The authors attempt to barricade themselves against charges of racism by protesting that the Triple Package has nothing to do with race or IQ; it's about ethnicity. So not all blacks are losers--look at Nigerians and Liberians! They are so well represented in the Ivy League! But the authors fail to acknowledge that Africans and Afro-Caribbeans are beneficiaries of affirmative action, won through the civil rights struggles of African Americans. What's more, African Americans are not in a bad way because of lack of racial pride or a problem with their impulses. Their challenges as a community trace back centuries; they were brought here in chains, their women raped and their families deliberately broken. This is what President Obama was talking about in his remarks after the Trayvon Martin verdict, when he said, "I think it's important to recognize that the African-American community is looking at this issue through a set of experiences and a history that doesn't go away."

Time and again, when examining the claims of the new racialists, we find other, deeper, often more complex explanations for why the children of some groups do better than others.

As Nancy Foner, a leading immigration scholar, points out in an essay, "Today, the way East Asian--as opposed to black or Hispanic--immigrants fit into New York's racial hierarchy makes a difference in the opportunities they can provide their children." Because they are not black, she notes, "East Asian (and white) immigrants face less discrimination in finding a place to live and, in turn, send their children to school." That translates into greater access to heavily white neighborhoods with good public schools. Moreover, even if they attend school with native-born blacks and Latinos, they do not feel a bond of race with native minorities--making them less likely to become part of a peer culture found among some disaffected inner-city black and Latino youth.

Cubans, meanwhile, are in favor over other Latinos among the new racialists, since they appear to do better in America than groups like Mexicans. But as City University of New York's Philip Kasinitz, an expert on ethnic assimilation, notes, "If Mexicans threw out the top 10% of their population into America, you'd be singing a different tune about Mexicans." And among Cubans, there's a subset that hasn't done well: the "Marielitos," who immigrated in 1980 when Fidel Castro emptied the island's prisons and told the inmates they were free to head to America. They were much darker in complexion than the first wave of Cubans, and they have not done anywhere near as well as their light-complected compatriots. What does this suggest? First, that if you were doing well in the country you're leaving, you'll do well in the country you're going to, and vice versa. Second, that lighter-skinned people tend to fare better than darker-skinned people when they immigrate to the U.S., even if they're from the same country.

What about Jews? Scholars like Stephen Steinberg in The Ethnic Myth have pointed out that the success of immigrant Jews was largely due to the fact that they arrived in the U.S. with "industrial experience and concrete occupational skills" well suited to the booming urban economies of the new world. Not, as Chua and Rubenfeld posit, because "Jews maintained for millennia the idea that they were God's chosen people."

Perhaps somewhat uniquely, Chua and Rubenfeld single out Mormons for model-minority status as well. They attribute Mormon business success, for instance, to the group's principles of child rearing. "Mormon teenagers," they write, "are less likely to have sexual intercourse, consume alcohol, smoke pot, or watch X-rated films than teenagers of any other faith." The authors overlook one small point about Mormons, however: they have their own state. Eighty percent of the Utah legislature is Mormon; its entire congressional delegation is Mormon. Utah has had only three non-Mormon governors in its history. This translates to tremendous political and financial clout for the religion, which is an indispensable part of Mormon business success.

Lastly, what shall we make of Indians--who, aside from Chinese, are perhaps the new racialists' favorite model minority? Indians in America are, as Chua and Rubenfeld note, "by any number of measures, the most successful Census-tracked ethnic group in the country."

Well, if Indians are so great, what explains India? The country is a sorry mess, with the largest population of poor, sick and illiterate people in the world, its economy diving, its politics abysmally corrupt. For decades, those who could afford to get out did. The $1,000 that it takes to purchase a one-way ticket to the U.S. is about a year's salary for the average Indian. If India shared a border with the U.S. and it were possible for its poorest residents to cross over on foot, we would fast cease to be the model minority, and talk-show hosts would rail against us just as they do against Mexicans.

The groups Chua and Rubenfeld and the other new racialists typically pick out as success stories are almost without fail examples of self-selection. Forty-two percent of Indians in the U.S. ages 25 and older have a postgraduate degree. But only about 20% of those they've left behind in the motherland even graduate from high school, and 26% of the population is illiterate. It's the same with Nigerians: the ones who are here represent a vastly richer and better-educated subset of the country's population as a whole.

Further, the authors pay almost no attention to the role of networking, which accounts for so much of the success of groups like Jews, Cubans and Indians. Part of the reason so many immigrant groups thrive is that when they arrive in the U.S., they already have an uncle who runs a store and cousins who are tutors, doctors or lawyers who can help them negotiate the new country.

When my family immigrated in 1977, we didn't do well because of delayed gratification or cultural superiority or a chip on our shoulder. We did well because my uncle in Detroit, an engineer, brought us over on the family-reunification bill, not in shackles or in steerage. When my father started his diamond business on 47th Street in Manhattan, there was a network of Indian diamond merchants who could show him the ropes. My sons, in turn, will benefit from my connections.

Much of The Triple Package focuses, naturally enough, on immigrants in New York City--then and now the immigrant capital of the country, if not the world. So you could profitably browse a gold mine of a book just put out by the NYC department of city planning, The Newest New Yorkers, a compendium of figures about the diverse groups that make up my hometown.

Chinese Americans in New York City, it turns out, earn less than other groups lacking the Triple Package. The median household income of Chinese in the city ($42,766) is lower than that of Ecuadoreans ($46,126), Haitians ($48,175) and Pakistanis ($50,912). The New York City group with the highest percentage of high school graduates isn't Chinese or Indians; it's Ukrainians (94.4%). But rarely are we treated to encomiums about the cultural superiority of the Borscht Mom.

America's Real Exceptionalism

The pity is that this book, and this entire line of argument, is taken seriously--among my relatives, for instance--when all the scholars I've consulted laugh at it. "Every one of the premises underlying the theory of the Triple Package is supported by a well-substantiated and relatively uncontroversial body of empirical evidence," the authors assert. "Give me a break," said Foner, who is one of the authorities cited in the endnotes. "There is a large body of literature showing that the most important factor predicting success among the children of immigrants is parents' human capital." That is: skills and education, from family to family and individual to individual.

Which is not to say culture is meaningless--even if "bad culture" is a convenient way to throw blame at struggling groups, as opposed to dealing with the structural causes behind those groups' disparate outcomes. We all have a linguistic, religious, racial, ethnic or national culture that shapes much about us. The cultural values of a group are an important part of the answer to the question of why certain groups seem to do better, at particular times, than others.

But cultural values are never the whole answer--even as we've come to privilege them over all other explanations for success and failure, such as political and economic ones. And culture is rarely either an unambiguously good force or an unambiguously bad one. Thus, Confucian values of education and family fealty certainly are one factor in explaining why Chinese students from low-income backgrounds do better than their peers. But as we've seen, that's not the whole story. Meanwhile, many in China would like to see less conformity in their culture, believing that it inhibits much of the freethinking that powers creativity and innovation in America and that it results in a citizenry that passively tolerates suppression of dissent and censorship of the Internet.

Chua and Rubenfeld make another mistake when they try to set up a hierarchy of good culture vs. bad culture--in which good culture invariably means getting rich. They take their definition of success from that of Oliver Wendell Holmes Sr.: "the gaining of money and position." Nowhere are cultural traits like kindness, community and public service or martial valor given any value.

Immigrants, claim Chua and Rubenfeld, are wary of "an excessively permissive American culture"--the bogeyman that haunts the dreams of so many who see the U.S. as losing the vigor of a former age. But isn't that permissiveness exactly what makes America work: this messy mix, this barbaric yawp, this redneck rondeau, this rude commingling? Isn't that what permeates its films, movies, books? And isn't that the principal product it can still export? It is American culture's permissiveness, its new world energy, that still attracts the masses to the "golden door."

As it did with my father, who in college in 1950s Calcutta was first exposed to the great rock-'n'-yell of Chuck Berry and Elvis--music the Jesuit deans of St. Xavier's tried to ban because they couldn't stand to see students gyrating their pelvises. My father had never heard such an awesome caterwaul before, and--along with America's decadent movies and books--it seeded the young man's desire to go live there someday.

It's not conformity that makes this country great; it's an individual striking out against the expectations of his culture, Bill Gates and Mark Zuckerberg dropping out of Harvard, Miles Davis coming out of heroin addiction to produce 'Round About Midnight, the 14-year-old Billie Holiday turning the pain of her childhood into the bluest beauty, Sylvia Plath taking on death with pills and poetry, William S. Burroughs writing from the bowels of his addiction in Naked Lunch; it's Hemingway and Fitzgerald and Cheever and Carver drinking and writing, writing and drinking through their demons. Imagine what American culture would be if American artists had kept a tight check on their impulses.

When people dream of moving to America, it's not just so that they can be prudent, studious, restrained. My uncle Vipinmama would tell me a story about his parents, my grandparents, who had emigrated from Ahmedabad in India to Nairobi in the 1920s. All their lives, they denied themselves luxuries in the new country in order to store them for their retirement. They had rented a room in Ahmedabad, which they filled with refrigerators, washing machines, steel cupboards, juicers--all the goods and furnishings of life they abstained from in Nairobi. When they retired they were going to buy a house in Ahmedabad and stock it with their hoarded treasure.

As the room in Ahmedabad bulged with the goods sent from Africa, the ranks of appliances waiting to be turned on one distant day, their lives in Nairobi continued in great simplicity and thrift. One day in her 50s, my grandmother had a heart attack and died--she "went off," as the Gujaratis say. My grandfather left Nairobi then and went to Ahmedabad and bought a house. But he could not bear to live in their dream without the one who was to share it. So within a month, he sold both the house and all the goods they had so patiently saved up, without ever having used them, and left for London.

This had a powerful influence on Vipinmama, and he lived every day of his life in the pursuit of happiness. Every good bartender in Bombay, New York and Antwerp knew him. He played the guitar. He played cricket for his college. He went on vacation, even when it wasn't good for his business. He too went off, following a heart attack at 34 from congenital heart disease--but it was not after a life postponed. Whatever he purchased, he brought home and turned on immediately. If it was a stereo, he danced to its music; if it was a VCR, he invited all his friends over to watch movies that very evening. You might think my grandfather would have wanted my uncle to be more prudent, more restrained. But in fact, my grandfather was very proud of his son--prouder than any of the fabled Indians in the email he sent around--because his life was not spent deferring happiness, waiting for power.

Mehta is the author of Maximum City: Bombay Lost and Found and teaches at the Arthur L. Carter Journalism Institute at New York University

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