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Berkeley. Schmerkeley. California’s most important educational institution is UCLA.

Now would be a good time for Californians to recognize this, and not only because the school in Westwood is celebrating its 100th birthday this year. UCLA’s rapid rise is also a California triumph that offers a thorough rebuttal of all our excuses for not supporting our most vital institutions.

Like California itself, UCLA’s impact is so broad and diffuse that it can be hard to appreciate. While we Angelenos often take the place for granted—it’s our local UC and feels like it’s been around forever—UCLA is actually one of the world’s youngest elite universities. Even by the standards of Southern California, it’s young: the Automobile Club, the Department of Water and Power, Ralphs supermarkets, USC, Caltech, Occidental College, and Pomona College are all decades older.

But despite its late start, UCLA may come closest to meeting the essential California challenge: Being the best while still also being accessible. It has come to embody the American dream of what college could be—it receives more applications each year than any U.S. university, nearly 140,000, from all 50 states and 149 countries.

While its academics and research rival those of the Ivy League, UCLA educates far more poor kids than other elite American colleges. Some 35 percent of undergraduates receive Pell grants (a rate twice that of the Ivies), and one-third of graduates are the first in their families to earn a four-year degree. UCLA leads the UC system in educating transfer students—those who enter UCLA as juniors, often after spending two years in community colleges.

Yes, I can hear the howls from the Bay Area. Simmer down. Sure, Stanford is great, but it has a smaller, richer student body—enrollment of 17,000 compared to UCLA’s 45,000—and an admissions rate so low that it’s now more exclusive than the Bohemian Club. And while Berkeley retains its academic prestige, UCLA has more students, better sports teams (117 NCAA team championships and counting), and more academic options, including a world-class medical center.

My own loyalties on UCLA vs. Berkeley comparisons are conflicted. Zócalo Public Square, the publication that produces this column, partners with UCLA on public events, though I write this wearing a Cal T-shirt given to me by my two siblings, who are both Berkeley alums. But what all Californians should appreciate, regardless of school affiliation, is this: UCLA became what it is today in the face of relentless hostility from Berkeley.

Before UCLA, Berkeley was the University of California, and the university’s leaders, and their powerful friends in Sacramento, had little interest in creating a second campus in Southern California—as Marina Dundjerski shows in her smart history, UCLA: The First Century.

A 75-ton granite boulder, Founders’ Rock, was installed in October 1929 at UCLA’s new Westwood campus. Courtesy of UCLA Archives.

By 1915, more Berkeley students were from Los Angeles than San Francisco. But in Berkeley, the University of California president, the regents, and the faculty resisted establishing even the two-year school that would become UCLA, arguing it would weaken the University of California’s prestige.

Nevertheless, in 1919 the Los Angeles newspaperman Edward Dickson, a regent and Berkeley graduate, successfully fought to open a two-year campus on Vermont Avenue. It had no degree-making power, and the snobs up North wanted to keep it that way. They even complained that UCLA’s early mission—producing teachers, from a student body in which women outnumbered men 6-to-1—was unworthy of UC’s academic standards.

But Dickson and other traitorous Berkeley alums persisted, developing a four-year, degree-granting college despite the objections of UC President David Barrows. “If something in the nature of an academic rival, laying siege to the State Treasury for the limited funds which are available for higher education, is to be established at Los Angeles,” Barrows wrote to San Francisco Chronicle publisher and fierce UCLA opponent M.H. de Young in 1923, according to Dundjerski’s book, “not only will higher education suffer in the State, but the prospects of our union as a people will be grievously hurt.”

The North-South clash grew so bitter that UCLA’s first head, Ernest Carroll Moore, complained that he “felt most of the time as if I had drunk kerosene.”

UCLA nevertheless expanded rapidly not because of deep official support, but because of the people of California, who kept enrolling, whether there was room for them or not. The end of World War I and women’s suffrage inspired Californians to head to universities.

By 1926, UCLA was already the fifth largest liberal arts college in the nation. (Berkeley would remain first, but not forever). In 1929, having overgrown its first home, the school moved into a new campus in Westwood, with the taxpayers of L.A., Santa Monica, Beverly Hills, and Venice providing funds via bond measures. This expansion occurred against some Berkeley resistance, though the project’s Berkeley-trained engineer did name some Westwood streets—Le Conte, Hilgard, Gayley—for his NorCal professors.

In some sense, that has been the heart of the UCLA story ever since. Even without the support of Northern California, UCLA kept getting bigger and better.

The stock market crash arrived five weeks after classes started in Westwood in 1929, and state appropriations for higher education were slashed 25 percent in the Depression. But UCLA nevertheless accommodated a surge of new students and faculty. After the war, the regents and the UC president resisted the establishment of professional schools like law and medicine, but UCLA started them anyway.

And even during research cutbacks, UCLA kept growing an academic operation that ultimately sent the first internet message, advanced AIDS research, and produced the nicotine patch.

The indignities from the North never really stopped. It wasn’t until 1951 that UCLA got its first chancellor. In 1960, new chancellor Franklin D. Murphy created a furor by insisting that the phones be answered “UCLA” rather than “University of California” as part of his fight against the “desire up there to keep this little brother from getting too big and keep it from gaining its own strength and visibility and self-confidence.”

Murphy and his successor, Charles E. Young, who led UCLA from 1968-1997, weathered Governor Ronald Reagan’s political turn against the university and 1978’s Proposition 13 revolution, which created a new tax and budget system that produced a massive disinvestment in public universities. And even in the face of the anti-immigrant and anti-affirmative action politics of the 1980s, UCLA kept working to diversify, transforming from a student body that was 67 percent white in 1980 to one that was 64 percent non-white in 1991.

UCLA’s budget now relies on the federal government, private fundraising, and higher tuition (including the full rates charged to its larger numbers of out-of-state and international students). It has grown to $7.5 billion today (from $160 million in 1967), even as state funding has shrunk to less than 7 percent of all revenues.

“The one central notion that carries throughout UCLA’s history,” writes Dundjerski in her UCLA history, “is that the institution was built on risk.”

Unfortunately, California has forgotten this important lesson about risk. We still produce transformational plans for health care, education, energy, and infrastructure—but we tell ourselves we can’t accomplish them because of our existing rules, or powerful Sacramento politicians, or because of our lack of money.

But none of that stopped UCLA.

Certainly, UCLA’s diversity was dealt a setback by the passage of the anti-affirmative action measure Prop 209 in 1996; this century’s budget crises forced some cuts; and its admissions standards have gotten more exclusive (which is one reason why UCLA was a target in the highly publicized admissions scam). But UCLA’s ambitions seem undimmed.

Its enrollment management wizard, Youlonda Copeland-Morgan, is using everything from smartphones to Starbucks meetings to connect to prospective students in poor communities as early as middle school. And its current leadership has launched a public program of “Grand Challenges”—aimed at shifting the L.A. region to 100 percent local water and renewable energy, and to cut the burden of clinical depression in half by 2050.

The next 100 years will require even more risk-taking. California needs millions more college graduates. To do that, UCLA must grow far bigger, turn more of its record number of applicants into graduates, and reduce the costs of attending—all without sacrificing excellence.

Such a transformation will require far greater flexibility, and probably formal independence, from meddlesome regents, budget-cutting governors, and any other interfering Northerners. Our greatest university should be free to become all we need it to be.

Then maybe Berkeley can follow its lead.

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Those twinned arguments were among the wide-ranging claims made at a Zócalo/UCLA Downtown event titled “Is America Enabling Autocrats to Run the World?”

Before a full auditorium at the National Center for the Preservation of Democracy in downtown Los Angeles, a panel of two journalists with deep global expertise and two scholars of international relations examined whether President Trump, and previous American governments, have supported autocrats abroad. But the discussion frequently turned back inward to questions of whether the U.S. is truly a democracy and whether democracy is itself prone to authoritarianism.

The evening began with the event’s moderator, The New York Times editorial board member Carol Giacomo, pressing panelist Washington Post Global Opinions editor Karen Attiah about the murder of Post columnist Jamal Khashoggi, whom she edited.

Attiah, who joined the conversation by phone from Washington because an illness prevented her from traveling, said she had been heartened by the finding from the CIA that Saudi Crown Prince Mohammed bin Salman had ordered the murder, and by strong words from representatives of both parties in Congress about confronting the crown prince and his regime.

But, she added, “I was very disappointed and upset—and frankly scared—by the reaction from Trump and from the White House,” which included public statements valuing the American alliance with the Saudi regime, and the value of weapons purchases by that regime, over the value of a person’s life. She said that the Trump administration “sent a very chilling message” not only to journalists but to anyone who opposes an autocratic regime.

Asked by Giacomo what she would consider to be justice for Khashoggi, she said that would be a credible process, including an independent international investigation, and a trial not only for those who brutally killed him but for the Crown Prince who ordered it. She said there had been some justice in the damage to the reputation of the Crown Prince and the Saudis, and that further justice would come with the release of various other people, particularly women, who are imprisoned by the regime.

“Justice comes in many forms,” she said.

Giacomo, who has visited more than 100 countries and covered eight secretaries of state, pivoted from that conversation to a question about whether the world was becoming less democratic, and whether the U.S. and President Trump are part of the problem.

Kal Raustiala, an international relations and intellectual property scholar who directs the UCLA Burkle Center for International Relations, said that the evidence of democratic backsliding was pretty strong, and that the American president had been cheering on autocrats around the globe.

“Trump has a great affection for authoritarians around the world. I think he wishes he was one,” said Raustiala. But there are restraints on that power—both the restraints of the American system to check Trump’s authoritarian tendencies, and on the limits of the U.S. to have much of an impact on democracies around the world.

Americans, Raustiala said, should promote democracy, but “we should be sober about our ability to do it.”

But, from there, UCLA political scientist Richard D. Anderson, who has worked on the staff of the CIA and in Congress, dominated the conversation by challenging American assumptions and even definitions of democracy.

He said that democracy often elevates more authoritarian leaders who we don’t like—he cited Vladimir Putin, Hungary’s Viktor Orban, and even the two U.S. senators from Texas, Ted Cruz and John Cornyn. But these leaders are democratic actors, who are aligned with the views of the majorities of the voters.

Anderson said he strongly opposed Trump as a president, but said he was undeniably a democratic figure. At the same time, he questioned Trump’s ability to influence what happens in other countries, or even his own.

And he noted pointedly that American support of dictatorships predates Trump. Even President Obama supported the overthrow of Egypt’s elected government and the military dictatorship that followed.

The bigger question, Anderson said, is whether majorities in America or other countries where minorities run the government can organize to stop leaders like Trump. He said such work was hard for Americans because of the fact that America’s founders were hostile to democracy, and because of profound racism and sexual discrimination that make the U.S. less than democratic.

“We don’t want the preservation of democracy,” he said. “We should want its transformation.”

During a question-and-answer session near the close of the event, some audience members pressed on the limits of American credibility, especially given U.S. support for the Saudi regime as well as its history of supporting the overthrow of leaders of other countries, notably the democratically elected Salvador Allende in Chile in the 1970s.

“We can’t impose democracy, and democracy is not just elections,” said Giacomo.

Anderson said that the way to ensure democracy is for citizens to organize for it in their own countries. “That’s the thing about democracy,” he said. “You’ll have it if you all use your voices.”

The post The U.S. Overestimates Its Power to Promote Democracy or Enable Authoritarians appeared first on Zócalo Public Square.

But the same scholars warned that the court’s conservative majority, reinforced by the recent appointment of Justice Brett Kavanaugh, also could grant greater power to corporations and curtail affirmative action, reproductive rights, and protections for immigrants and LGBT people.

The scholars—law professors with expertise in areas from guns to government regulation to education—were addressing the central question of the event, “How Will the New Supreme Court Change America?” at the National Center for the Preservation of Democracy in downtown Los Angeles. But they offered their predictions with caution and caveats, with one panelist, UCLA Law School’s Adam Winkler, noting that law professors have poor records of prognostication.

The moderator, The Wall Street Journal Supreme Court correspondent Jess Bravin, noted in his opening that the court is unique in that “it’s only answerable to itself.” And so despite the justices’ general respect for precedent, the court can break new ground. Bravin pressed the panelists on where they think that ground might lie.

Beth Colgan, a UCLA School of Law professor who teaches and researches criminal procedure and juvenile justice, pointed to the new questions technology is raising about privacy. Recent cases, including one that limited law enforcement’s use of cell phone data, and some words from the relatively new Justice Neil Gorsuch, suggest that the court is skeptical of the power that technology gives the police to gather information on our lives.

She said future cases could look at automatic license plate readers used by police and examine surveillance tactics in Baltimore, where planes fly over the city to record and store everything taking place, so that police can use it later. “I always tell my students that I fear our future robot overlords, but I think the court does too,” she said.

Winkler of UCLA School of Law, a specialist in constitutional law who has written about gun rights and corporate rights, said the newer justices—Gorsuch and Kavanaugh—seem likely to curtail the ability of administrative agencies in the government to regulate corporations. He also asked whether the logic of a recent decision, in Janus v. AFSCME, which prohibited public employee unions from collecting fees from non-union employees they represent, might be applied to challenge union prerogatives in private employment.

“If that’s the case, it’s hard to see how unions can survive even in the private workplace,” he said.

When Bravin pressed for other areas where the court could make big shifts, Winkler cited reproductive rights, which he argued have already been reduced by state laws that have forced the closing of clinics that provided abortions.

“The only question is whether the court will overturn Roe v. Wade,” Winkler said. “And I think undoubtedly that it will,” he added, to gasps from some audience members.

Justin Driver, a University of Chicago Law School professor who clerked for Justice Stephen Breyer and former Justice Sandra Day O’Connor, said he too saw change coming in reproductive rights. He noted that some justices seemed to be avoiding the mention of important abortions rights precedents in their decisions, a sign that they may be preparing to overturn those precedents.

Driver, author of the new book The Schoolhouse Gate: Public Education, the Supreme Court, and the Battle for the American Mind, also predicted that race-conscious college admissions and other forms of affirmative action “may be on their way out.” And he expressed concern that if states pass laws taking away public benefits from undocumented immigrants—including the right to attend public school—the current court might back the states.

Driver pointedly challenged the conventional wisdom that the U.S. Supreme Court tends to reflect the views of American society at large. He said that far more important than public opinion are the views of particular people on the Supreme Court. He suggested that if same-sex couples had not fought for marriage rights while a sympathetic Justice Anthony Kennedy was on the court—and instead waited for the current court—those rights might have not been vindicated by the Supreme Court in a 5-4 decision in 2015.

Indeed, Driver and Winkler both expressed concern that the current court’s inclination to protect the religious rights of businesses to refuse to serve LGBT customers—as in a recent case in which the court sided with a Colorado cake shop that wouldn’t bake a wedding cake for a gay couple—might portend more decisions unfavorable to gay rights. Driver said that, while Republican-appointed justices of previous generations sometimes drifted left while on the court, that seems less likely to happen with the younger GOP-appointed justices, who all had worked in the executive branch under Republican presidents.

Colgan, though, pointed out that, while the U.S. Supreme Court “sets a floor” for the law, state supreme courts and state legislatures have the ability to push forward into new legal frontiers. She expected states might be willing to lead in reform in the criminal justice arena that would go beyond what the U.S. Supreme Court could do. “Oftentimes, we put the Supreme Court on a pedestal, but it’s not the only place where we get to change the law,” she said.

During the question-and-answer session, one audience member said she found the discussion “incredibly depressing” and asked, when it comes to the Supreme Court, “what do we have to look forward to?”

Driver answered that he saw potential for progress if liberals and libertarians find common ground in advancing the law in creative ways. He thought they could succeed, for instance, in eliminating corporal punishment in schools at last. Colgan said she thought the court might rule in ways that would protect Americans against excessive fines and financial penalties—as when police seize the cars of defendants accused of low-level drug dealing.

Bravin, the moderator and veteran Supreme Court reporter, closed by urging people to go to the Supreme Court web site and listen to audio of the oral arguments. He said that while Americans are not terribly impressed by the oratory and thinking they see in Congress, Supreme Court justices do handle difficult questions thoughtfully and seriously.

“I’ve found that almost anyone who actually comes to watch a Supreme Court argument walks away having their expectations exceeded,” said Bravin, adding that people may be impressed even when they “listen to the justices that you expect to disagree with.”

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These five men could have been called the original Fabulous Five. And that designation was no exaggeration, because they went on to change the cultures of professional athletics, entertainment, the civil rights movement, and politics.

The athletes who played together in the 1939 school year were:

• Jackie Robinson, who would break the color barrier in Major League Baseball in 1947 and become a prominent advocate of racial equality after his baseball years.

• Kenny Washington, who took down the color barrier of the National Football League when he played for the Los Angeles Rams in 1946.

• Woody Strode, who would join Washington with the Rams and later become an accomplished actor in movies such as Spartacus, Sergeant Rutledge, and The Professionals.

• Ray Bartlett, who would go on to serve on the Pasadena police department (at that time, only the second African American) and as a prominent Los Angeles area civic leader.

• And then there was the fifth, Tom Bradley, who would transform Los Angeles into a global city during his 20 years as mayor. He also would make history as L.A.’s first black mayor, and the first in a major city that had a white majority.

At UCLA, these athletes came to know each other, creating a bond of fellowship that lasted for their entire lives.

The decision to recruit a roster of African-American football players came after UCLA had experienced a 20-year drought on the gridiron. At the time, this recruiting decision represented a bid for competitive advantage, since most schools, including rival USC, were uninterested in recruiting black players in that era. Washington and Strode came first to UCLA in 1936, and were followed by Robinson, Bradley, and Bartlett, who would team up in 1939.

Their recruitment helped create an accepting atmosphere at UCLA for African Americans. That was a challenge. African Americans numbered only 50 of the university’s 9,600 students that year. At the time, the campus was predominantly a commuter school. All five athletes lived at home, as no blacks were allowed to reside in Westwood, the neighborhood surrounding the campus where some students lived. For social activities, they would attend a club for African Americans called the Sphinx.

Nonetheless, the school was an oasis in a more hostile environment. “UCLA was the first school to really give the Negro athlete a break,” Bartlett said. Strode later said: “Whatever racial pressure was coming down in the City of Los Angeles, the pressure was not on me in Westwood. We had the whole melting pot, and it was an education for all of us. […] I was just like any other athlete. And I worked hard because there was always the overriding feeling [that] UCLA really wanted me.”

Bradley was convinced that UCLA played a vital role in setting a standard of acceptance for black athletes, and ultimately for African Americans as students and leaders. “Some of the schools with which UCLA had an affiliation did not permit blacks to compete on the same teams,” he said. “And UCLA administration made the decision that no school that would discriminate against its athletes could any longer compete in athletics with us.”

But Jackie Robinson wasn’t so sure that all was as cozy as Bartlett, Strode, and Bradley saw it. He remarked during his UCLA years that he was treated like a hero when playing in front of a huge crowd on the football field but as soon as the game was over he was simply Jackie Robinson, the Negro.

Jackie Robinson during his track-star days at UCLA. Photo courtesy of Wikimedia Commons.

What is clear is that that recruitment of the athletes was news off campus as well. Nationally, by the late 1930s, no more than 38 African Americans suited up for major college football across the country—none in the South. “Three African-American players out of eleven in the starting lineup was highly unusual for the time,” says Kent Stephens, curator and historian for the College Football Hall of Fame in South Bend, Indiana.

UCLA’s roster of black players on the football team made it the most racially integrated squad in college football history. “We have yet to find another single coach in the history of football that has had the guts to play three of our race at one time and have [four] on the squad,” a reporter for the Chicago Defender, a newspaper for black readers, wrote later in the year.

In contrast to the four football players, Tom Bradley, who had been an all-city football player at John H. Francis Polytechnic High School, received an academic scholarship. He eventually decided against playing for the football team, preferring to focus on competing in the 440-yard run, the 880 races, and the 1,600 relay in track. That race fit perfectly his tendency to be something of a loner. He later said: “The whole business of competition—in track, particularly, because you’re kind of one-on-one in track—involves a kind of discipline you have to develop for yourself …. I think it really became part of my lifestyle.”

But Bradley did have teammates on the track-and-field team, including the four star football players, who competed in track during the spring. There were three other black runners on the team—Tom Berkley, Bill Lacefield, and James LuValle, who ran at the so-called Nazi Olympics in 1936 and became a scientist and an administrator at Stanford. These athletes formed lifelong fellowships that included several reunions.

The best athlete of the group, Jackie Robinson, lettered in four sports at UCLA, the only Bruin to accomplish the feat. Robinson won the NCAA championship in the long jump (then called the broad jump) while also leading the Pacific Coast Conference in scoring one year for the basketball team. His worst sport was his future professional avocation: baseball, in which he batted .097 and committed 10 errors in his single season.

Many of the other athletes excelled in multiple sports. Bartlett also played four sports but didn’t earn a letter in all like Robinson. Washington threw the shot put, and Strode the discus and shot put. Washington played baseball as well. Rod Dedeaux, who coached USC baseball for 45 years and scouted for the Dodgers, said he thought Washington had a better arm, more power, and more agility than Robinson. (Washington got a tryout with baseball’s New York Giants in 1950, but by then he was past his prime.)

Each of the athletes had his own life, shaped by the fact that they lived at home and held down part-time jobs along with other personal responsibilities. Robinson tended to avoid social activities on the UCLA campus. Bradley and Strode joined different black fraternities, while Bartlett and Washington concentrated on academics, as did Bradley. None of the athletes graduated in four years. What held them together was their dedication to sports.

Of the five, Robinson was the one who most vigorously battled racial discrimination throughout his entire life. The other four, while acutely aware of the racial climate in their lives, adopted a more passive approach of “going along to get along,” which was the safest mode of operation in those days.

Robinson devoted a great deal of his life after he broke the color barrier in baseball to working for civil rights. Strode had little to do with the civil rights movement. He believed that what he accomplished on the field and life was the best way to break down prejudice. Bradley fought discrimination in the Los Angeles Police Department and as mayor, while Washington and Bartlett worked within the political system to seek racial equality.

Some relationships among the five were closer than others. Robinson and Bartlett, who grew up together in Pasadena, were lifelong friends. (Bartlett represented Robinson, who died in 1972, as grand marshal of the 1999 Rose Parade.) Strode and Washington were like brothers; Washington was emphatic that the Rams sign Strode if they wanted him to play. And Bradley and Bartlett were in frequent touch as they became policemen and civic leaders in Los Angeles.

Their legacies remain strong today.

The post How UCLA Helped Break the Color Barrier in College Athletics appeared first on Zócalo Public Square.

These institutions range from families to religious tithing to formal insurance contracts and diversification strategies for market investing. But, whether formal or informal, social or financial, all serve to ensure that those of us who are unfortunate enough to face adversity at any one time are taken care of by those who are not.

The very ability to share risks allows us to be bolder, more adventurous and frankly, take more risks. Why not? After all, taking more risks and exploring uncharted territories brings rewards. But this also means that when risk-sharing systems fail— as all systems are bound to fail sometimes—the consequences are direr, failures more glaring, and disasters unprecedented. In some senses, the safer we feel, the more at risk of big disaster we may be.

If this makes you think of the financial crisis of the last decade, you’re right—this is a perfect example of the phenomenon. Before the crisis, the financial markets appeared to work well: Mortgages were easy to find, and it was convenient for lenders to transfer some of the risks they faced to other financial institutions with fancy financial instruments such as the credit default swaps. Individuals as well as institutions loaded themselves up with excessive debt. But when the housing crisis hit, these interlinked systems came crashing down leading to a recession, unemployment, and bankruptcies.

The financial crisis was treated as a fluke, a product of specific bad regulations and bad actors. I disagree: This pattern of crisis in risk and resource-sharing systems is common. It is a feature, not a bug.

How? First, better risk-sharing encourages more risk-taking—for good reasons. Secondly, as we search for better and better risk-sharing mechanisms, complexity increases—as we witnessed with innovation of complex financial hedging instruments before the financial crisis. In time, the combination of complexity and risk-taking becomes increasingly difficult to monitor and police. It was only in the aftermath of the financial crisis that we began to decipher the complex web of interdependencies that were built in among the various financial institutions, including banks, large insurance companies, and the government.

In fact, this relationship between risk-sharing and increased risk of systemic collapse is not limited only to financial systems—it is a property of many domains, and its mixture of safety and unseen risk is woven through many aspects of modern life.

Take transportation, for example. Societies first built small roads that could carry horse carriages for transporting goods and people. The roads were not heavily traveled and accidents occurred but were often not severe or life-threatening. As societies progressed, the costs of building big, smooth roads fell, and governments began building highways and freeways that could accommodate many vehicles simultaneously traveling at ever increasing speeds. This is an example of sharing a resource that made traveling large distances at fast speeds easy and convenient. That is the good news. But every now and then, there will be an accident on the freeway or closure due to inclement weather that could cause a multi-vehicle collision often leading to congestion, injuries, and deaths.

Or consider grocery and household stores. Mom-and-pop shops were friendly, convenient, and just around the corner, but they could not carry a large or varied inventory because that was expensive. The supermarkets could handle the expense of endless variety, more competitive prices, and more well-stocked inventories. They were not as close, but faster cars and access to freeways made it easier to travel to these stores and buy large quantities at one time instead of visiting the local store more often.

But what happens when there is a big disruption in supply to one of these stores because of a labor strike, a trade dispute, or an international conflict? The arrival of big box stores has accelerated a wave of consolidation in agribusiness, so that food comes from fewer and fewer large suppliers making us more dependent on larger and more complex supply-chain systems. We haven’t experienced a collapse of this system so we do not yet know how deep or destructive it might be.

Last but not the least, we have become so accustomed to using the internet to obtain knowledge, manage our financial affairs, and make our travel plans, among other things, that the very thought of life without Google, Wikipedia, Expedia, or Paypal is inconceivable. These gains raise the damage that an internet shutdown, or of a web-attack paralyzing our systems, could cause.

Are we better off in this complex and risk-filled world? To answer that, we must take into account the benefits of resource and risk-sharing, and the costs of large crises that enables. And it would appear that the benefits outweigh the costs, right? Or why else did we as a society allow ourselves to become reliant on global financial markets, networks freeways and air travel, giant super-stores such as Amazon, big machines and industrial complexes, and other large systems? Food is cheaper than ever before and is available year-round in most places. Communications even across long distances have become instant and inexpensive. Ever-increasing amounts of knowledge are available online, and you can receive high-quality teaching at very low cost through the Khan Academy, Coursera, Udacity (and even, through online platforms, top universities such as MIT, Stanford, and Princeton).

But maybe the answer isn’t so easy. The benefits of large and complicated systems accrue to individuals but some of the risks they generate are systemic. Economists call these risks negative externalities. Consider again faster automobiles and freeways that allow us to travel at high speeds. We all understand that driving at 80 miles per hour on a freeway has benefits of faster travel but also carries an increasing risk of a serious accident. Balancing these individual trade-offs, we may still decide to drive 80. What we do not consider is the costs we impose on others who might be affected by our decision—those who lose a family member or friend or co-worker, or who even lose time and productivity because of traffic accidents.

Getting a better balance between individual benefit and systemic risk—whether the matter involves traffic safety, financial regulation, or other complex systems—requires collective action, political will, persistent persuasion, and efficient design of incentives and intervention. It is easy to get mired in systems that are inefficient, corrupt, and exclusive to only some powerful sections of the society. Moreover, collective action increasingly requires cooperation across borders and across societies that have different priorities and norms. Navigating and negotiating international agreements is complicated, time-consuming, and complex.

But the stakes for getting this right have never been higher. How can I assert this with such confidence? It is precisely because life has never been more pleasant and satisfying than it is right now. I feel comfortable, but I am also worried.

The post Risk-Taking Is Profitable—but Perilous in Our Interdependent World appeared first on Zócalo Public Square.

I don’t need to add my opinion to the millions that have been expressed about the incident. But as a professor of operations management, I am interested in the fundamental economic problem that led to the confrontation caught on video: What is the best way for a business to handle overbooking?

Overbooking is a necessity for airlines to manage their seat capacity. That’s because of a fact of life: Many people fail to show up for flights upon which they’re booked. The trouble comes when more passengers show up for a particular flight than there are available seats. In those situations, airlines need to have proactive mechanisms that treat customers fairly without breaking the bank.

United clearly failed in that. And so far, the airline’s response has not been detailed enough. On April 27, 2017, United printed a full-page announcement with a title “Actions Speak Louder Than Words” in all major newspapers and sent email to all United Mileage Plus members. United claimed that it would identify volunteers to give up their seats earlier, in cases of overbooking, and would increase incentive payments for voluntary rebooking up to $10,000. But those pledges are still just words, without a real plan for implementation.

I believe research and practices in information and technology show that there are cost-effective ways to make sure overbooking is customer-friendly.

Such a plan starts with earlier planning and action by the airline. For starters, check-in information for flights should be collected early; this means using technology.

First, encourage more customers to check in early over the Internet or mobile phones. And second, when an overbooking situation develops, inform volunteers as early as possible via Internet or mobile phone, or at the gate. Both measures not only give people more warning, they can give United more data to crunch and use to prevent overbooked flights.

Indeed, with millions if not billions of such past flight records, United can conduct “predictive analysis” to estimate the number of volunteers that is needed for a particular flight. As time progresses, United can compensate those pre-registered volunteers and make alternative travel arrangements way before boarding time. This makes it easier to make volunteers feel warned and respected.

But beyond moving early and using data, United should create a new mechanism to identify and compensate passengers who give up their seats. That mechanism should be a sealed-bid process.

Here’s how it would work: During online check-in, United could gently ask passengers if they were willing to be added to the volunteer list. At the same time, United could ask passengers to state the dollar value (up to $10,000) that they would accept as compensation for volunteering their seats. That amount they submit is the sealed bid.

Passengers should be told that the passenger who submits the lowest bid will be selected to give up their seat, receive compensation, and have the airline make alternative travel arrangements.

With this method, United can identify potential volunteers and their requested compensations in advance. That, at the very least, reduces the likelihood that anyone will have to be wrestled off the plane.

There’s another benefit. Considerable research on auctions shows that such a sealed bid process entices passengers to reveal the “true value” of their seats. The late William Vickrey, the economist and Nobel laureate, used game theory to describe how best to optimize such auctions. His work also has been applied to congestion pricing on toll roads in places like London.

And if United wanted to get really fancy, it could try to capitalize on one of his insights: People will make more generous bids in a process that awards the best bidder the amount of the second-best bid. Vickrey showed that letting people know this fact when they bid made them less likely to try to game the system by guessing what others might bid, and instead submit their best bid according to their “true” private valuation of their seat that is not known to others. United, by making its sealed-bid for volunteer compensation a Vickrey option, would give the winning volunteer, or volunteers, a little bit more than they asked for—e.g. the winner asked for $200 in compensation, but gets $250, which was the second best bid—while overall producing bids that are more generous to the airline. (Of course, this might be too complicated, but even a regular sealed-bid process would be a vast improvement.)

No mechanism is perfect. And clearly, some passengers will refuse to be added to the volunteer list. But some would be willing to volunteer if their demands are met. Such a process is also consistent with the values of volunteerism: If you volunteer to give up your seat, compensation should be on your terms. A sealed-bid auction makes it less likely that the airline will overpay the volunteers. And airlines can fall into that trap. Delta, for example, sets the dollar amounts for volunteers and can end up attracting too few volunteers if the suggested dollar amount is too low. Or it can end up overpaying too many volunteers if the suggested dollar amount is too high. (The figure below shows how that happens.)

Smart design of information technology and clever use of business analytics can make a huge difference for a company and its customers. With a proactive process like the above, United, even after the damage of that infamous video, could make the skies friendlier again.

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Which is the world you want to live in? One where low-skilled, disillusioned factory workers call for protectionist barriers? Or one where entrepreneurs—using their ingenuity, state of the art technology, and the open market access that American trade negotiators have secured over the past eight decades—sell to customers across the planet, and grow their businesses, hire new people, and realize their full potential?

If you choose the latter world, that’s great. But we will need a new roadmap to navigate it.

The image of globalization, imprinted on many minds, is of American factories fleeing to Mexico or China. But here’s what globalization really is: the voluntary, mutually consenting exchange of goods and services between a buyer in one country and a seller in another country.

More important, here is what globalization is becoming: cross-border sales of goods and services among small businesses—like Travis’s motorbike gear venture—that are selling online, and foreign buyers who are finding them there. Why would we want to shut down such globalization?

E-commerce is breaking what seemed to be an “iron law” of international economics: that exporting was possible only for large companies. Today, while fewer than 5 percent of U.S. companies export, 97 percent of U.S. eBay sellers do. In a new survey of more than 3,000 developing country companies, my firm Nextrade Group finds that half of small online sellers export (while only 20 percent of small offline sellers do), and that more than 60 percent of online sellers export to two or more markets (as opposed to offline sellers, who tend to export to only one market).

Workers manufacture car dash mats at a maquiladora belonging to the TECMA group in Ciudad Juarez, Mexico, Dec. 27, 2013. Photo by Ivan Pierre Aguirre/Associated Press.

Companies today are born global because they are born digital. Which makes this a historic time. We are at the verge of creating a global equivalent of a medieval town square where small sellers and buyers come together to transact. It is a market where anyone can sell to anyone, anywhere, anytime.

While e-commerce enables developing countries to leapfrog to the 21st century’s technology-powered world economy, countries like the United States are particularly well-placed to benefit. We already have the connectivity, logistics, online services from payments to finance to cutting-edge online services, intellectual property, and people with wide-spread digital skills, which developing economies lack.

But we are not optimizing this opportunity. If we were, we would be celebrating free trade and open markets as enablers of our small businesses and online entrepreneurs, not bashing them as enemies of our factory workers whose time has passed. McKinsey Global Institute—which uses dozens of indicators to create an index of digital assets, usages, and workers—finds that the United States is using only 18 percent of its full digital potential; Europe is at just 12 percent. In a survey I recently conducted, U.S. middle market companies graded themselves C- on digital readiness. And more than 50 percent of developing country small businesses rate as poor or very poor in a number of areas in their economies needed for e-commerce to work, such as digital regulations, e-commerce logistics, access to online finance, and their own capacity for cross-border e-commerce.

Policymakers who aspire to empower small businesses to thrive in the global online marketplace need to think outside the box. To name five ways how:

• Microloans for micro businesses. Export credit agencies have traditionally provided trade credit insurance and guaranteed exporters’ working capital loans issued by banks. E-commerce presents a new challenge: Micro and small online sellers often need much smaller and faster working capital loans than banks are able to issue. At the same time, FinTech and online lending companies are on a tear, literally making up for lack of bank lending for small business. Online lenders offer a huge opportunity for export credit agencies like Export-Import Bank to guarantee diversified portfolios of microloans for export-driven online sellers, thus lowering their cost of capital.

• Export promotion for online sellers. Getting online is one thing; successfully exporting online is another matter. Cross-border e-commerce requires keen know-how about export promotion that smaller countries and even government agencies (like the export-promoting Commerce Department) don’t have—such as how to create an international multi-channel shopper strategy or build savvy online advertisement strategies for different markets.

So who knows how to promote e-commerce exports? Global e-commerce platforms do, and they have a keen interest in cultivating new e-commerce users. One innovative model for e-commerce capacity-building is a social impact bond, whereby private foundations, social impact investors, and commerce platforms make the initial investment in promoting exports and get compensated at a premium by the government and development agencies if the project meets certain pre-established metrics that governments value, such as the number of e-commerce-related jobs created, or the amount of new exports. Social impact bonds have been used to cure malaria and save rhinos. So why not to promote e-commerce?

• Customs procedures for small business. Customs regimes in many countries are still tailored to the needs of traditional traders and large companies, rather than to small businesses with limited compliance capabilities. Study after study show that complex customs requirements are a top concern for small exporters and importers in the U.S. and worldwide. The silver bullet for getting rid of these barriers and fueling small business trade is raising de minimis levels—the value of shipment below which goods enter duty- and tax-free. High de minimis creates free trade for small business. In a major service to small foreign businesses selling to U.S. consumers, and to U.S. consumers and companies buying from abroad, the United States raised its de minimis to a very respectable $800 per shipment in 2016. However, de minimis is in many countries laughably low, such as $15 in Canada and $150 in the European Union).

One solution is to launch negotiations on de minimis among a “coalition of the willing.” In such an agreement, each member government might commit to ratcheting up the de minimis level over a period of five to seven years to, say, $1,000, in exchange for a similar commitment from the other members. In other words, each member government would give a little market access at the lower rungs of trade in order to gain a lot more market access in return, just as in a tariff reduction schedule in a trade agreement.

• Digital regulations. My new survey shows that even small online merchants often struggle with digital regulations when seeking to export. For example, in the United States, small financial services companies report suffering from stringent consumer data privacy and protection rules in foreign markets, and from uncertain legal liability for internet intermediaries for user content on their sites. In a survey of Latin American companies, I found that one-third of online sellers viewed uncertain legal liability rules as “very significant” obstacles, while one-quarter were negatively impacted by foreign data localization and data privacy rules.

This is an area where the United States has gold standard rules, and needs to drive trading partners to adopt measures that are interoperable with ours. The Trans-Pacific Partnership was just that vehicle, and its killer, the Trump Administration, has to come up with a new and better one. A pilot could be run with the United Kingdom, whose officials have stressed digital trade as a path to competitiveness.

• Trade adjustment. The giant question mark in tomorrow’s economy is adaptability of labor—whether workers like Nicole and Jennifer could be retrained to take advantage of the seemingly limitless possibilities opened by the global online marketplace.

The answer to this question is not at all clear. Existing tools—such as the Trade Adjustment Assistance that helped retrain more than 230,000 workers impacted by trade over the past decade—will not be enough. The policy question should rather be how to equip tomorrow’s workers to thrive in the global digital economy, one where the pace of change is very fast and competition is ubiquitous. One place to look is at Singapore’s model of active retraining of workers. Another solution: create public-private partnerships between the government and the resented “tech elite” companies such as Facebook to deploy corporate PR and social responsibility dollars to fuel the retooling and rehiring of digital-era workers, in exchange for lower payroll taxes.

Globalization as we’ve known it is coming to a close. It’s time to stop chasing its ghosts—and to start crafting creative policies to empower workers and businesses so that they can leverage the 21st century tools for growth: e-commerce and open markets.

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