Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?" Last time, we looked at outsourcing the American dream. This time, we look at something rarely discussed: the national security risks offshoring creates. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

What's particularly disturbing in a post-9/11 America supposedly more aware of national security issues is just how much confidential American data is finding its way into the hands of foreign nationals.

According to the same U.S. Trade Commission report described last week, "Some of the earliest U.S. services outsourced to India included medical transcription services, payroll accounting, credit card call collections, mortgage and insurance claim processing, and data processing."

That means individuals and companies in foreign countries have access to our credit card records and much of our personal identity information, our confidential medical records, and even detailed information about our homes. According to a study by McKinsey Global, nearly 45 percent of the Indian business process outsourcing market consists of financial work, administration work, and payment processing activities.

In a world where identity theft is a huge problem, giving foreign nationals access to our most confidential private information is a dangerous security risk. Consider this: the countries most likely to engage in cyber-espionage with the United States are also the countries with lower-wage employees - places where we're actively sending our most confidential data.

We're also outsourcing our intellectual property and our most valuable trade secret data

Our top technology companies - IBM, Microsoft, and Oracle - are also among the most active in both bringing in foreign technology workers and in outsourcing technology work to foreign nations.

Consider that a typical American computer programmer can demand a salary from $60,000 to $90,000 (and often a lot more). In India, an equivalent job pays from $6,000 to $10,000 per year. Forrester estimates 472,632 software development jobs will be outsourced to India by 2015.

The impact of this is not just lost jobs. You're looking at nearly half a million people outside the United States who will have access to the source code that runs our computers, our systems, and our lives. Instead of Americans having access to the confidential crown jewels of modern technology, it'll be technology experts with loyalty to another nation.

There's also a huge cadre of foreigners in the United States with access to top-secret and sensitive information. Our technology universities often hire professors and graduate students who are foreign nationals. Those same universities often do research projects for both the American military and America's leading industrial firms. Who, exactly, do you think is doing the work? It's not just Americans.

In fact, there are thousands of foreign nationals working on sensitive projects in the United States. But where does their loyalty lie? To the U.S., or to their home country, where their families are often waiting for them to return?

Beyond security concerns, this drain of tech work to foreigners directly impacts American competitiveness. We have long relied on our ability to out-engineer other nations. But if the design and innovation jobs are outsourced, there will be far less reason for students in America to learn these skills and far less Americans providing the creative juice that has long fueled American economic growth.

Make no mistake: each and every one of us is competing with people across the world for our jobs and our income. You may not be a programmer trying to explain why you should be paid $120,000 (or even $60,000) when an equally competent Indian is willing to work for $6,000, but nearly everyone in America will feel the impact as spending power moves offshore.

After all, if a U.S. programmer is out of work, he's not going to buy all the stuff middle-class Americans buy. And, given that his Indian counterpart makes 10 percent of what the American would make, the overseas software developer is also not going to be able to make all the discretionary purchases that the American would have made. Each U.S. job shifted overseas has a ripple effect on America's overall economy.

And there's a lot of people available to do those jobs. Billions, in fact...

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Some stories refuse to go away. One such story is the case of the missing White House emails. Over the course of two years beginning in 2007, I documented this story in my book, "Where Have All The Emails Gone?" and followed it up with articles written both here on AC360° and elsewhere.

It was announced today that some of those missing emails have been recovered. At the core of the story were millions of email messages that the Bush Administration was unable to deliver to the National Archives in compliance with the Presidential Records Act. They weren't able to deliver the messages because of what seemed most likely to be almost incomprehensibly poor IT (information technology) management practices within the Executive Office of the President.

Two organizations, the National Security Archives of George Washington University and Citizens for Responsibility and Ethics in Washington brought suit, demanding the White House turn over the missing records.

Commenting on the state of the current White House email system today, Meredith Fuchs of the National Security Archives stated: "We have been briefed on the system in use since the beginning of the Obama Administration and we believe that the system now in use fixes the significant problems with the prior system, including by capturing everything, properly categorizing the emails, and preventing unauthorized deletion."

According to the two plaintiff organizations, the Obama White House found and properly archived 22 million messages that the Bush White House was unable to find since 2005.

In addition, the White House has agreed to a set of general principles for email management, searching, archiving, and future record keeping.

Only part of the problem

While certainly a victory, the resolution of the White House email lawsuit leaves perhaps the larger part of the White House email problem completely unresolved.

In fact, it was never even explored as part of the lawsuit.

In 1939, a law was passed called The Hatch Act. This law still exists today and it now governs government communications, including email. In particular, it says that certain government employees can't conduct political activities using government resources.

From the perspective of email, this means that White House staffers sent most of their politically-related email outside the White House email system. In the book, I estimated the Bush administration sent some 80 million email messages outside of the White House email system, none of which are accounted for and none of which were explored by the lawsuit.

According to both Congressional testimony by Bush-era staffers as well as White House press briefings given by the Bush press office, it became clear that Karl Rove and other Bush-era senior staffers used private messaging systems for the bulk of their email.

None of these messages have been recovered, either.

It's exciting to see that the actual EOP systems are improving. But until the Hatch Act is reconsidered in light of modern technology, administrations will still be forced to use outside, often unsecured messaging systems for much of their email activity, and most of those messages will never be recorded in compliance with the Presidential Records Act and the Federal Records Act.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?" Last time, we looked at the failure of the H-1B visa program. This time,we look at how outsourcing is becoming a growing problem for American employees. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Back in the dot-com boom, the dot-coms had a lot of work to be done, and not enough Americans were available to do it all. Many of the dot-com firms began to outsource much of their work to make up for the lack of available U.S. workers.

At about the same time, many companies were concerned about the so-called Y2K crisis. If you recall, this was the worry that many computer programs were built with only two-digit date codes, but once the year went from 1999 to 2000, all the date calculations in all those programs would fail.

American companies started to send work offshore.

The Internet, of course, made this much easier to do. Email and the Web, along with the rise in instant messaging, made communication across previously daunting distances virtually instantaneous (and dirt cheap). With the availability of high-speed broadband Internet and VOIP (Voice-over-IP), a telephone call from New York City to Bangalore often costs less than a call over the plain ol' copper telephone system from New York City to Albany.

And that's why, when your computer fails, you're probably going to wind up talking to someone in India instead of someone in Indiana. When you call a U.S. number for support, your call is routed over the Internet (for free) to a call center located across the ocean. Call centers no longer have to absorb extreme telephony charges.

Your rant about your inability to get your computer to work so that you can order that fancy new $200 pair of shoes is likely to be responded to by someone in India who, if she's lucky, might own one pair of 10-year old shoes and makes less than $200 for an entire month's work.

The information technology research firm Forrester estimates that 400,000 jobs were lost in the first four years of the new century and up to 3.3 million jobs will be of-fhored by 2015. A McKinsey report published in 2004 predicted that up to 4 million IT worker and back-office jobs would be outsourced to India alone by 2008 - and that prediction was made well before the 2008/2009 financial crisis.

I think it'll be a lot worse. A lot worse. As you'll see in the coming chapters, there are a lot of people outside the United States willing to work for a very small fraction of what Americans need (and that's before our cost of health care). With dwindling profits, I think it's going to be almost irresistible for larger American companies - and an almost unimaginable numbers of jobs will be sent to where the labor is dirt cheap. Unless, of course, we do something.

American firms got their feet wet sending work overseas during the dot-com boom, got comfortable with the idea, and when they suddenly needed to save a lot of money, decided that off-shoring would be a key business strategy.

And that's where off-shoring becomes compelling to companies in today's economy. A U.S. International Trade Commission report estimates that outsourcing to India can save American companies 30 to 70 percent on labor costs.

Off-shoring also allows U.S. companies to avoid paying ever-increasing health benefits. And off-shoring allows U.S. companies to convert a payroll expense into a fixed cost, making it far easier to budget and analyze production expenses.

Consider IBM. The global technology company began American layoffs in early 2009, dropping more than 5,000 workers. To make up the slack, according to the Wall Street Journal, many of those jobs were created in India. "IBM can pay an engineer in the U.S. $120,000 or an engineer in India $25,000, like the Indian providers do," says Ben Pring, research vice president at Gartner.

Next week: why outsourcing is a national security risk.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Sometimes it's tough to tell whether something's a sign of the Apocalypse or a sign that everything's really alright with the world.

Today, I got an email from the Ronald Reagan Presidential Foundation. In it, I was offered the official iReagan application for my phone. Seriously.

According to the offer, the application includes:

* Full-length speeches including his famous Berlin Wall and "Evil Empire" speeches
* Iconic photos of President Reagan
* Stunning images and descriptions of the Reagan Library's "Christmas Around the World" exhibit
* A message from former first lady Nancy Reagan
* Inspirational quotes from "The Great Communicator"

It's free, so it's kind of a no-brainer for all Republicans. Or is it?

It's been taken as almost sacred canon that if you're a Republican, you love Ronny. But what if you're a Conservative? Or a Tea Bagger? What then?

After all, Mrs. Reagan made an impassioned plea to the Democrats (of all people) in favor of stem-cell research. Is she conservative enough? If you're a Tea Bagger (the political leaning, not the lifestyle choice), can you even like someone whose widow supports stem-cell research?

And that brings us to the bigger issue. Is it honoring the 40th President of the United States by carrying him around in our pockets? Or is iReagan some sort of idolatry, carrying him around as almost a pocket saint and peon to a wistful and warped memory of the go-go 80s?

As the Republican party searches for meaning and identity, where does Ronny fit in? And if it's not clear where Ronny fits in the diaspora that's today's GOP, what is today's GOP?

Will it be able to form a real identity by next fall's elections and will it find one leader to rule them all by the 2012 elections? Or will there really be a Conservative Party, a Tea Bagger Party, and, perhaps, the broken shards of the once-proud Republican Party?

I don't know, but now that I've got Ronny-in-the-pocket, I'm definitely going to consult my own, personal iReagan.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?" Last time, we looked at how the dot-com bubble lost $5 trillion. This time, we begin our look at outsourcing and how its hurting American jobs. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

To many Americans, the word "outsourcing" is a four-letter word. It implies, as Ross Perot called it, a "giant sucking sound," where jobs leave the United States for less advantaged countries.

Perot was concerned about NAFTA in the early 1990s sucking good paying American jobs to Mexico, but as it turns out, he had no idea what was coming - and certainly no idea of the magnitude of the problem we'd be facing a couple of decades later. As you'll see, NAFTA is the least of our worries.

We've been actively permitting foreign companies to set up shop here, and then bring in their people to displace ours.

Outsourcing is one of our main job-related problems and I'll talk more about it later in this chapter. But it's not our only problem. In fact, the policy of the American government over the last half a decade or so has not only made outsourcing economically viable, it's all but encouraged bringing foreign workers into the United States.

And, in a shining example of your tax dollars at work, we weren't just bringing foreign nationals into the United States, we've been actively permitting foreign companies to set up shop here, and then bring in their people to displace ours.

The failure of the H-1B visa program

So, while China and India were slowly moving their 2.5 billion people out of abject poverty and into the world economy back in the late 1990s, many American investors were trying to figure out how to make billions of dollars by creating companies that produced no products, provided no value, and made no money - in other words, the dot-com craziness was in full force.

To support the insanity, companies that didn't exist six months earlier and had no plans of ever figuring out how to make a profit were hiring thousands of workers at a break-neck pace. For a short period of time, it was nirvana for job hunters. Companies were offering not only excessively high compensation packages, but side benefits like a company masseuse and cafeterias run by chefs who used to work for 5-star hotels.

In order to meet their soaring demand for workers, particularly specialty technical workers, many of the largest established tech companies as well as many new startups both took advantage of the U.S. government's H-1B visa program and started to "insource" jobs from - you guessed it - India and China.

The U.S. H-1B visa program allows U.S. employers to temporarily employ non-citizens and keep them in the United States for an extended period of time - three years, extendable to six, and extendable again for up to another four years - for a total of 10 years for certain workers.

Back in the early days of the program, only 65,000 H-1B visas were granted each year, and the cap was never reached. But once the Internet boom took off, American companies lobbied to have the quota increased. In 1998, it got bumped up to 115,000 and then in 2000 (at the peak of the dot-com boom) to 195,000.

Since the quota increases were temporary, they eventually dropped back down to 90,000 by 2004 and then, shortly after, to 65,000. But that didn't last.

In 2006, the United States Senate passed a bill which permanently raised the 65,000 quota to 115,000, set it to automatically increase the quota by 20 percent whenever the top-end was reached (with no provision to lower it back down), added another 6,800 visas for various trade agreements, added 20,000 additional visas for those with graduate degrees, and made visas for work at nonprofit organizations completely and totally exempt from the quota - which means colleges, hospitals, and other enormous nonprofit enterprises can bring in as many foreign workers to America as they'd like.

Ostensibly, the H-1B visa program was intended only for workers with special skills, skills that either Americans don't have, or for which there aren't enough American workers to go around. But the special provision for additional H-1B visas to those with graduate degrees showed that special skills requirement was quite loosely defined.

You'd think American companies would be the ones most likely to be issued H-1B visas, since the whole purpose of the program was to allow American firms to hire foreign individuals of unique skill.

You'd think that, but you'd be wrong. Six of the top 10 companies issued H-1B visas: Infosys, Wipro, Tata Consultancy Services, Satyam Computer Services, Patni Computer Systems, and Larsen & Toubro Infotech are all based in India. A seventh company, Cognizant, has most of its employees in India but has a U.S. headquarters in Teaneck, New Jersey.

Rounding out the top ten are Microsoft (ranked #3), IBM (ranked #8), and Oracle (the huge California-based database software maker, ranked #9).

The bottom line is the H-1B visa program doesn't work - and actually harms American workers. A program designed to bring in foreign workers with special skills to help American companies instead helps foreign companies bring foreign workers into the U.S. to displace both American workers and American companies.

While foreign workers were being brought into the U.S. to displace American workers with the help of the U.S. Congress, American jobs were also being sent to India and China...

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Those of you outside the U.S. might not be aware of a little tradition we have here: Thanksgiving. According to our grade school classes, Thanksgiving is a holiday that came about when those wacky Pilgrims finally had a bountiful harvest, held a celebration, and gave thanks.

The historical reality is far more unclear, and very definitely subject to interpretation. A quick Google search of "thanksgiving" and "meaning" turns up more stuff than you'd believe.

Besides, nobody cares. Thanksgiving isn't about Pilgrims. The whole Pilgrim/Mayflower/Indian story serves merely as the MacGuffin that gives us our day of glorious gluttony.

In America, Thanksgiving means parades, football, families, and food. The last two, of course, are the challenge, and here's where my very short survival guide comes in.

I, like most folks, have fond memories of family Thanksgiving celebrations. But for years, they somewhat overwhelmed me. Often, we'd be joined by far-flung relatives whose names I couldn't remember. There'd be hugs from old people who shouldn't be allowed to hug without first getting a safety certification. And while there was plenty of food, there was never pizza.

It took me well into my 30s to develop two techniques that, when used together, never fail to make Thanksgiving enjoyable to me and those around me. The key, however, is to use these techniques together. Either, used alone, will often result in disappointment, or - worse - more chicken soup than your freezer can possibly hold.

Technique 1: It's all about the dark meat

You may or may not like turkey (what are you, a Communist?) and you may or may not like dark meat. I love dark meat turkey and I'm not really a fan of white meat. The first half of David's Patent-Pending Thanksgiving Survival Program is to make the day all about dark meat turkey.

Nothing else and no one else matters.

Your mission, above all, is to get to the celebration and to get the dark meat before anyone else can. If you have to hockey check your great aunt to get that haunch, do it. If you have to blockade the kitchen door, do it. Whatever it takes, get yourself that plate full of dark meat (and maybe some gravy).

Here's how this part works. First, getting the dark meat means you'll enjoy your meal. But having that as your mission means you'll know what to do and what to say to every family member in attendance. Every action on your part is measured by whether it gets you closer to acquiring or consuming the dark meat.

Once you've finished the meal, of course, it's perfectly reasonable (and even accepted) to take a nap, watch a game, or fire up that Xbox you've been praying your cousin still has.

The dark meat quest is extremely satisfying, but it'll backfire without the second technique.

Technique 2: Effusively complimenting the cook

Nothing reclassifies you from "rude, gluttonous pig" to "extremely polite, nice man" than complimenting the cook. A lot. In every way you can think of. You may have just practiced your body block technique on Uncle Bob, but if you turn to Aunt Alice and tell her how much you love her turkey, you'll get that welcome smile.

I'm serious about this. You can get away with nearly any marginally reprehensible behavior at a family gathering if you make sure to effusively say nice things to the cook.

I'm talking Jedi-level powerful stuff here. It's amazing. Use these techniques together and it's like you can walk through walls, turn lead into gold, and get all the dark meat you want.

Be kind to your geeks

Thanksgiving has taken on another role in American society, that of the 'Great American Fix My Computer Day.' That's right, for most Moms in America, Thanksgiving is the culmination of a week of food preparation. And for most of us geeks, it's the day we spend fixing all our relatives' stuff.

Most geeks don't mind spending their day off essentially working. Many of us are often more comfortable fiddling with wires than conversing with Aunt Harriet about her recent surgery.

And while us good techies are ready and willing to fix anything you throw at us, we do find one thing hard to manage: the coordination between eating and fixing.

Most non-geeks rightly think of us as technical gods, able to fix anything instantly with a mere wave of our mouse hand. This, of course, is true. Except for the instantly part.

Reinstalling an operating system, removing viruses, or upgrading software takes time. In between typing in codes, clicking on annoying reminders, and selecting the time zone, we're able to come to the table and chow down. But understand that we're going to have to spend a lot of time with your gadgets.

So, please, don't give your geeks a hard time if they can't be at the dinner table for the entire event. It's not that we disrespect the family time. It's just that we love you so much, we're willing to give up together time to make your stuff work.

Black Friday

Edible gluttony on Thursday eventually leads to commercial gluttony on Friday. My last Thanksgiving survival tip for 2009 is this: chill out.

Feel free to shop on Friday, but don't worry. Bargains will be around for weeks. There's no need to be at the store at 12:01am on Friday, pressing so hard on the crowd that the guy in the front is squished as flat as a playing card.

Seriously, be smart and be safe. Have a great Thanksgiving. And remember, save all the dark meat for me!

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?".Last time, we looked at how India has been transforming itself into a world-class competitor This time, we start to look at the Internet and how some of the early irrational exuberance has led to some of today's job market problems. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

While many of the tasks we perform here in the 21st century are pretty much the same as those we performed before the turn of the century, many factors have changed the flavor, pace, and experience of 21st century employment.

Chief among the factors changing the employment world has been the Internet. Of course, as we all know, the Internet existed for quite some time before we began the 21st century, but its almost overwhelming ubiquity has been a phenomenon of the last few years.

You may remember the boom (and subsequent bust) of the early World Wide Web. From about 1995 though about 2001, the excitement and irrational exuberance of the dot-com bubble seized the imaginations of financiers wanting to make billions from entrepreneurs and entrepreneurs wanting to make millions from their sweat and smarts.

This was a time before Google and YouTube, a time when Amazon was just starting up and we were all wondering if anyone would be willing to use their credit cards online. It was a time when us techies found ourselves explaining to the less computer-savvy what ".com" meant, what those "www" things were, and trying to help our family and friends understand the difference between email and the Web. Twitter and Facebook were still years in the future.

For those who were dot-com entrepreneurs (and that included me), the Internet seemed to hold virtually unlimited promise. We were all convinced that this Web thing had the potential to change business and the world - and make us all tons of cash in the process.

We were half right.

Without a doubt, the Internet has changed the world. How it changed the nature and flavor of jobs is much of what this piece is all about. But while Internet investors and entrepreneurs were measuring what they called "eyeballs" (the number of people looking at Web pages), many forgot some basic business fundamentals like value, return on investment, and that tiny little thing called profit.

And so the dot-com bubble burst.

Excite.com was sold for $6.7 billion dollars in 1999. What's left of it is now a teeny-weeny part of the Ask.com property. Lycos and AltaVista were the big search engines of the day. Little bits of both are still around, but they're certainly not big-value properties. The list of failed dreams is virtually endless.

But out of the dot-com bubble came a rebirth. A few properties became absolute game changers. These were the Google, Amazon, eBay, YouTube, Facebook, Wikipedia, and Twitters of the world. These Web sites became more than just Web sites or Internet "properties" - they became essential resources for just about everyone.

Virtually no one calls a company to order a brochure anymore. Now we all just do a search and visit the Web site. Many people now make their entire living selling on eBay or Amazon. These two companies provide virtual shopping hubs so if you happen to want an old, out-of-print, original edition copy of The Flexible Enterprise (a book I wrote back in 1996), or a fender to a 1956 Buick Roadmaster, or, for that matter, an original 1954 Fender Stratocaster owned by Hank Williams, Jr., you can find one online.

So why did the dot-com bubble burst?

Today, there's one Amazon, one company that sells virtually anything you want online. During the dot-com bubble, there were thousands of companies that wanted to be Amazon.

Today, there's one Google, one company that provides deep search access to anything you want on the Internet. During the dot-com bubble, there were thousands of companies that wanted to be search providers and portals.

Today, there's one eBay, one company that provides online auction services for millions of people worldwide. During the dot-com bubble, virtually every Web site wanted to have an auctions section.

Of course, there are still other e-commerce sites, search engines, and auction sites. They just don't really matter much to anyone. These three sites built a level of critical mass and brand awareness that proved to be a barrier of entry to their competitors.

And then, there was the rise of user-generated content. Instead of Web site operators hiring writers to do all their writing and creating all their content, so-called "Web 2.0" operators created sites as frameworks for their users to create content.

Facebook, for example, generates very little of its own content. Instead, you, me, and a few million of our "friends" create our own profiles. YouTube doesn't create its own videos. Instead, everyone uploads videos of their kittens, Metal versions of The Munsters theme song, and movies of firecrackers exploding out some kid's, well, you've seen it...admit it.

Although there were a few huge winners, the dot-com bubble burst because of unrealistic expectations and impractical business models. I was there. I remember showing an investor how I could build a nice, million dollar online magazine business. In response, he told me that he'd invest $5 million - if I promised he'd get back $5 billion within 18 months.

Many Internet entrepreneurs would promise anything they were asked, so long as they got their funding. I just couldn't do it. I couldn't bring myself to promise some banker that I could make him billions. It wasn't that I was more high-minded than the other guys. It's just that after studying what makes companies work for more than two decades, I knew these valuations weren't sustainable.

I figured that if I took their money and knowingly made false promises, somehow it'd come back and bite me. It just seemed like a bad idea.

Instead of taking outside capital, my company continued to run along nicely, fueled solely by our own sales. We always made just a bit more than we spent, and managed our costs so that we were always funding ourselves. That's why my company, ZATZ Publishing, is still around and many of those dot-com companies aren't.

Many entrepreneurs of that era would sign "term sheets" with investors, venture capitalists mostly, and start their businesses. They'd get some money to operate, but they'd always spend far more money than they made until they got so many visitors to their site that they could sell the business for billions.

Some lucky founders managed to cash out, and it was the acquiring company that bit the big one. Excite.com is a good example. Excite.com was bought for $6.7 billion dollars on January 19, 1999 by @Home Networks, a company owned by cable giants TCI, Comcast, and Cox Communications. On October 31, 2001, @Home filed for bankruptcy and over the next year, 1,350 employees lost their jobs.

But other dot-coms simply died because their investors wouldn't give them any more money to lose. Pets.com was a classic example. This company began operations in February of 1999 and closed shop in November, 2000. After buying a $1.2 million Super Bowl ad and burning through $300 million dollars in investment capital, the company closed. Once the dot-com bubble started to deflate, no one was willing to invest good money after bad in a company that lost money on every order. About 320 people lost their jobs.

According to the Los Angeles Times, when the dot-com bubble burst, it wiped out $5 trillion dollars in market value for tech companies. More than half of the Internet companies created since 1995 were gone by 2004 - and hundreds of thousands of skilled technology workers were out of jobs.

But before all these people were fired, even more needed to be hired. And that, in a bizarre twist of fate, brings us to outsourcing...

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor's Note: This article continues our series excerpting AC360 contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last time, we looked at our changing relationship with work This time, we'll begin our look at how changes China and India will be impacting our workforce for years to come. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?".Last time, we looked at how China has been transforming itself into a powerhouse nation This time, we'll begin our look at changes in India and what that might mean for Americans. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

For much of the 20th century, India followed an extremely socialist economic policy.  Its economy was excessively regulated, protectionism was rampant, corruption was everywhere, and growth was slow.

But in 1991, India changed its policy. Throughout the 1980s, India made it somewhat easier for businesses to grow. Rajiv Ghandi, India's Prime Minister from 1984 to 1989, removed price restrictions, and dropped corporate taxes to a much lower level than they'd ever been before. While growth increased, so did deficits (less taxes meant less money in the government's treasury).

India's primary trading partner was the Soviet Union and, in 1991, the Soviet Union fell. For all intents and purposes, India lost its best customer. And then oil prices went up during the first Gulf War.

All of this lead to a serious monetary crisis for the Indian government, which also suffered from a leadership vacuum. Rajiv resigned after losing an election in 1989 to Vishwanath Pratap Singh. Singh lasted in office for less than a year. Next came Chandra Shekhar who became Prime Minister on November 10, 1990 and resigned on June 21, 1991. Finally, Pamulaparthi Venkata Narasimha Rao took office in June, 1991 and served until May of 1996.

India was in deep trouble. There were serious concerns that the government would need to default on its loans. India eventually requested a $1.8 billion bailout from the International Monetary Fund.

The bailout came with strings attached. The IMF demanded reforms. Rao's government initiated a program of economic liberalization, ending many public monopolies and allowing direct foreign investment in many of the country's industries.

Since then, like China, India has been riding the growth rocket, growing an average of 7.5 percent each year. Even more astounding is India's level of "economic engagement," a measure of India's goods and services trade in the world market. Between 2004 and 2006, India's level of economic engagement grew an astonishing 72 percent, from $235 billion in 2004 to $437 billion in 2006.

Economists now estimate that India's GDP will quadruple by 2020 and India's economy will pass America's by 2043.

Living on $2 a day

India isn't doing as well as China in fighting poverty. More than 80 percent of Indians live below that $2 a day line, while only 40 percent of Chinese do. But that still leads to some astounding numbers. In countries experiencing astonishing economic growth, there are more than 912 million Indians and more than 528 million Chinese living on less than $2 a day.

Almost five times as many Chinese and Indian citizens live on less than $2 a day than there are people in the United States. According to Stanford University, the average person in India makes about $500 a year, and what they call the "composite urban" Chinese makes about $828 a year.

When you contrast these numbers to the United States median income of about $50,000 a year, you can begin to see why many American companies are so interested in the potential of outsourcing - and why the governments of India and China are so interested in encouraging the practice.

And all that, strangely enough, brings us to an untold story from the so-called "dot-com" Internet bubble...

Editor's Note: This article continues our series excerpting AC360 contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last time, we looked at our changing relationship with work This time, we'll begin our look at how changes China and India will be impacting our workforce for years to come. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last time, we looked at our changing relationship with work This time, we'll begin our look at how changes China and India will be impacting our workforce for years to come. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO

AC360° Contributor

Editor-in-Chief, ZATZ Publishing

Here's an interesting universal truth: everyone wants a better life. This is as true of the desperate poor in third world nations as it is of middle-class Americans. And while economic downturns are scary to most Americans, even the poorest of Americans live a better life than the shocking level of never-ending squalor experienced by some of the poorest of the poor in developing nations.

Almost five times as many Chinese and Indian citizens live on less than $2 a day than there are people in the United States.

Nations like the People's Republic of China and the Republic of India have vowed to change all that. Together, China and India make up 37 percent of the world's population. By contrast, the United States has only 4 percent of the world's 6.77 billion people and yet our Gross Domestic Product (GDP) is almost double that of China and four times that of India.

That means that if you want to understand the current job situation in America, you absolutely, positively have to understand the job situation in China and India.

China's economic overhaul

Both China and India began their long march to first-world status decades ago. Until about 1978, the PRC's economy was barely a blip on the world's radar.

When measured in terms of purchasing power, the economy of the People's Republic of China (PRC) is now the second largest in the world, with a $7.8 trillion GDP in 2008. The European Union's economy is technically larger, but that's for a cluster of countries.

China's economic reforms were gradual, often in response to specific problems or economic circumstances.

Since its inception in 1949, China ran a Soviet-style economy. Consumer spending was virtually non-existent, central planning determined nearly all economic activity, and the nation's industrial growth consisted mainly of building big factories. Entrepreneurship was not only not encouraged, it was actively punished.

Chinese laborers work at a construction site in Hefei, Anhui province.

From 1949 through the 1970s, China tried all sorts of economic gimmicks. The Great Leap Forward turned out to be a great leap into failure. The country's leaders attempted to move its farmers into communes and force the formation of small-scale factories and agriculture. The country's peasants weren't prepared for this, and agricultural productivity plummeted.

Small-scale factories produced output of scarily bad quality that was incredibly expensive to produce. During this time, the Soviets and the Communist Chinese found they couldn't play well with each other, and even though they shared similar economic philosophies, relations soured. China lost its Soviet advisers, and production quality dropped even more.

By the late 1960s, the situation had gone from bad to worse. Chairman Mao resigned. Liu Shaoqi became the second President of the PRC and headed up the country until 1968.

Liu Shaoqi instituted a series of changes, first among them letting farmers have private plots of land to tend. Communes got smaller and teams managing production were given greater independence. All this helped China's economy.

But then, in 1966, Mao decided he wanted to retake power and began the Great Proletarian Cultural Revolution. Although the Cultural Revolution didn't have a specific economic plan, it generated enough confusion and unrest to cause the country major economic damage as millions of people stopped working.

The Cultural Revolution left lasting damage to worker productivity. Salaries were frozen, bonuses eliminated, factories employed too many workers simply to counter the extreme unemployment, and workers were hired on a permanent basis, with no regard for performance or quality. For almost 14 years, China's workers simply phoned it in and while the country's GDP grew, it didn't grow by much.

In 1978, Chairman of the Chinese Communist Party Deng Xiaoping initiated a series of economic reforms with the support of Chinese economic pragmatists. They reasoned that previous reforms like the Great Leap Forward hadn't really worked and didn't generate enough of an output surplus.

China's economic reforms were gradual, often in response to specific problems or economic circumstances. In some cases, like the closing of state-run enterprises, the government didn't really want to carry out the policy change, but found that economic necessity forced the change.

Initially, China began to allow farmers to keep their surpluses, which effectively incentivized them to be more productive. The Chinese government then began to allow international trade and direct foreign investment. These basic reforms increased the overall standard of living for many Chinese, which provided encouragement and motivation for later reforms.

As China entered the 1980s, the government worked to transform production from an industrial base driven primarily by dictates from a central management committee into an industrial base driven much more by market forces.

A key to this was a dual-track price structure, where some goods were offered at state-specified prices, while other goods were allowed to price-fluctuate based on demand. Over time, the ratio of price-controlled to market-driven pricing dropped, and by the 1990s, the pricing of nearly all goods was driven by market demand.

By the end of the 1980s, the Chinese system was a strange mix of near-capitalism and old, Soviet-style central planning. But there was a lot less poverty and China was beginning to enter the world economic stage.

China began to encounter a new problem, one which is still suffers today: wealth disparity. Some Chinese had solidly entered and embraced the middle class, while many others remained dirt poor.

Despite the problem of wealth disparity, by the 1990s, it was clear China was onto something. Growth was increasing, foreign investment in industry had increased markedly, and inflation soared, but then later dropped as interest rates went up. And, in 2003, one of the biggest changes was made in the Communist Party's Third Plenum (a legislative assembly of sorts). In 2003, protection was enacted for private property rights.

Change was working. China has seen an astounding level of GDP growth, averaging around 10 percent per year.

Living on $2 a day

In 1981, 53 percent of Chinese were subsisting at the poverty level. By 2001, only 8 percent of Chinese citizens were considered at the poverty level. Of course, what China considers middle class is a lot different than what we here in America do. Although the poverty rate dropped from 53 percent to 8 percent, it's not like 92 percent of Chinese now have homes and cars.

Many Chinese who are no longer considered "in poverty" still live in huts with dirt floors. But now they have enough food to survive. To the Chinese, anyone making more than the equivalent of $2 a day is middle class. That's $730 a year, or about what most of us Americans spend on cable TV each year.

In the next article, we'll look at India, and then we'll start to explore why the economies of these two nations are so tightly linked to our own future and the future of American jobs.

Editor's Note: This article continues our series excerpting AC360 contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last time, we looked at our changing relationship with work This time, we'll begin our look at how changes China and India will be impacting our workforce for years to come. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

Republican Chris Christie defeated Jon Corzine in New Jersey's gubernatorial election on Tuesday.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

I think it's time I weighed in on the New Jersey election results. Some in the GOP (Chairman Michael Steele, for example) are claiming "historic" victories. Others, most notably Democrat Nancy Pelosi, are doing their level best to completely ignore the gubernatorial election results. That's right, Nancy. If you close your eyes, it never happened.

The punditocracy is going to town over this. First, most of us didn't even realize we were going to get the gift of politics until we turned on our TVs last night. It's like finding a post-season All Stars game on your TiVo when you didn't even know one was scheduled to record.

Talking heads. Pontification. Spin. It's enough to make a guy geek out all giddy with delight.

Back to New Jersey. First off, I'm a Jersey boy. I grew up in the Garden State and lived there on and off until just a few years ago, when my love for my wife (and her desire to live somewhere without winter) overwhelmed my deep connection with my native soil.

I'm telling you, it's weird down here in Florida. The Wal-Mart greeters actually greet you, sometimes even wishing you a "Blessed day". Back home in New Jersey, you never made it past a Wal-Mart greeter with anything warmer than "What you lookin' at?"

I miss New Jersey. But I digress.

I want to talk about why Democrat Jon Corzine really lost to Chris Christie. First, let's be clear about Corzine's history: he was a banker. And he wasn't just a banker, he was the banker. Jon Corzine was Chairman and CEO of Goldman Sachs until the late 1990s. Yes, that Goldman Sachs.

And if you don't think New Jerseyians aren't pissed off by the banks and, in particular, Goldman Sachs, you don't know my fellow citizens. So, completely separate from the issue of whether Corzine had been a good governor (and all indications are a resounding "meh"), he had one very serious point against him. He was was a super-wealthy banker running for office at a time when super-wealthy bankers should probably just be running and hiding.

And then there's the weight thing. And here's where I'm convinced he lost the election.

Jon Corzine lost by 4.4 percent to Chris Christie, a man who is by any measure big-boned. Corzine lost to Christie by just about 101,659 votes. In other words, he lost by the population of a mid-sized New Jersey town.

Corzine has made something of a campaign issue over Christie's weight, even to the point of running a campaign commercial accusing the heavier candidate of "throwing his weight around".

The dig was lost on nobody and was a matter of heavy press coverage for quite some time during the election process.

The thing is, we New Jersey folk don't take being insulted lightly. I'm a big guy and so are a lot of New Jersey citizens. Sure, there's some svelt former bankers running around the Garden State, eating up all those yummy Jersey-grown organic veggies, but New Jersey also has its fair share of rotund (and proud of it, you gonna make something of it?) citizens.

So here you have a fat cat picking on a fat dude. Out of the 2.2 million or so New Jersey residents, could there possibly have been 100,000 or so who didn't vote on issues and didn't vote on party, but voted because they were simply pissed off about the fat ads?

New Jerseyians who vote because they're pissed off? If New Jerseyians do one thing really well (and we do a lot really well), we do "pissed off" with panache. Give us something to get righteously indignant about and we're happier than a pig in a poke.

And that's what I think happened to Jon Corzine. I don't think it was a resurgence of the GOP's reach and influence. I just can't see the helicopter-hunting Sarah Palin carrying New Jersey in any way, shape, or form.

I just think some New Jersey residents remembered how much they hated bankers like Goldman Sachs and remembered that Corzine was the banker at Goldman Sachs. And I think some other New Jersey residents simply voted an "Oh, no, he didn't" about the weight thing.

I'm telling you. Don't piss off New Jersey. You'll regret it.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last time, we looked at riots, massacres and the transactional nature of work This time, we'll look at our changing relationship with work. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Our relation with work has changed as time passed. With the advent of the Industrial Revolution, more and more people lived in cities and areas removed from the land. Individuals became more reliant on buying food and goods rather than growing their own.

America transformed from a tradesman-based economy to one based on the economies of scale factories and industry could produce. The shoemaker, for example, who'd spent years honing his craft and would take weeks to make a pair of shoes, couldn't compete with the industrial age shoe manufacturers that could crank out virtually identical shoes of equal (and sometimes better) quality in mere minutes, and at a fraction of the cost.

For a newly industrialized America, the Great Depression was a one-two punch. Farmers, who were normally relatively self-sufficient, were put out of work due to a man-made occurrence known as the Dust Bowl. But because of the worldwide economic downturn, there also weren't jobs in the cities. Farmers couldn't move to the city to find work, and city dwellers couldn't move to the non-arable open land.

Both of these problems (the economic downturn and the bad land) were man-made. Every school child has been taught about the 1929 stock market crash and the massive bank failures that led to the economic disaster that followed.

But few of us are aware of what caused America's worst man-made disaster.

Because farmers kept deep-plowing in the same land over and over again, without any plan for crop rotation, the land's ability to create grasslands and generate soil-retaining root structures was all but depleted. When a drought hit the Great Plains in the 1930s, soil that should have been able to withstand a drought and prairie winds had nothing to keep it in place. By the end of the crisis, more than half a million people were homeless and more than 2.5 million moved out of the prairie states.

For millions of desperate people looking for the very few jobs still hiring, the power balance was all in the employer's favor. Desperate workers left home and their families, traveling anywhere there were even rumors of open jobs available.

Interestingly, because homes were smaller and people didn't live as long, most displaced families didn't have the option, no matter how undesirable, to move "back home" to Mommy and Daddy. In many cases, neither Mommy nor Daddy was still alive, or their homes were much too small to handle additional residents, or they had been displaced as well.

Of course, there's a disturbing parallel between the Great Depression/Dust Bowl era and what we're living through now, in 21st century America. We've got a devastating downturn in the economy and the potential of global warming, a climatological condition that most scientists believe is caused by us industrially flatulent humans - a condition that many respected scientists fear could become a devastating, world-wide natural disaster. It's something to think about.

World War II changed the calculus of employment demand. A large percentage of the nation's male population was deployed overseas and there was a huge demand for weapons and war material. So many jobs were open and in desperate need of workers, that America's women entered the workforce en masse.

After World War II ended, many American G.I.'s returned to the workforce, but women also remained, working in factories and offices throughout the country. The Servicemen's Readjustment Act of 1944 (what most people know as the G.I. Bill) initiated a profound change in the American workforce. The G.I. Bill provided for college or trade skill education, a year of unemployment, and low-interest loans for buying a home or starting a business.

Many Americans think the reason the 1950s were boom times was because of all the money spent on the war, fueling industry and jobs. But there is some strong evidence that the real reason the 1950s took off so strongly was because of the "stimulus" provided by a wildly generous (and effective) G.I. Bill.

It was during this post-war period, with many newly former servicemen flush with low-interest loans to buy homes, that our modern-day suburbia was borne. More and more people wanted and had the means - courtesy of Uncle Sam - to buy homes. This meant that more and more houses (and supporting infrastructure) needed to be built. This gave rise to solid employment numbers during a period that would have otherwise experienced an employment crisis due to all those returning servicemen.

And then, there were the Baby Boomers. The Baby Boom was named for its best-known product: lots and lots of babies. The boom times after World War II, coupled with many couples reuniting, and, well, coupling, resulted in a boom in baby birth.

Time would pass and by the 1970s, most of those babies were in the job market. Of course, many of them hit the workforce during the late 1970s gasoline shortage and by the mid-1980s, most Boomers were well into their employment years. But with occasional economic recessions, intense consumer demand, and a whole lot of people competing for a finite pool jobs, getting and keeping a job required serious commitment from employees.

For the Boomers of the 1980s, the power balance had moved back toward the employer.

Next came our current generations of workers, GenXers and beyond. For a while, these kids had it good. Business was booming, there weren't enough employees to go around, and many Americans started to think about things like "work-life balance," and working from home.

For at least a portion of the 1990s, the power balance was no longer with the employer, but the employee. The Internet also became a force, email, instant-messaging, Twitter, Facebook, and social networks all changed the nature of work. I'll be talking a lot more about the Internet in later chapters.

And then came the economic crisis of late 2008 and 2009. More than 65,000 jobs were lost on one Monday in January, 2009, alone. By April, 2009 unemployment was at a 25-year high. The U.S. lost 663,000 jobs in March 2009, 651,000 jobs in February, and 741,000 jobs in January. By mid-April, more than 5.1 million jobs had simply disappeared.

Job losses were so extreme that venture capitalist Fred Davis, who has funded many of Silicon Valley's most successful start-ups, declared that 22 years of job creation were wiped out in one day. General Motors, once the scion of American business, closed all of its plants for nine weeks in the summer of 2009, declared bankruptcy, and became a ward of the state.

While there are now many more people looking for jobs than hiring, the power balance has not returned to the employers. Instead, employers (including their most senior managers) are all simply struggling to hold onto their companies - and even top executives are wondering whether they'll be employed tomorrow.

But don't lose all hope. Jobs can be saved and jobs can be created. That's what this book is all about. But that's later in the book. In the next chapter, I'll show you what we Americans are competing against. If you were losing sleep before, wait until you read this next chapter.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last week, we discussed A short history of jobs This time, we'll look at riots, massacres and the transactional nature of work. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

Protesters in the United Kingdom gathered outside an oil refinery this summer, after hundreds of striking workers were laid off.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

In today's civilization, it's virtually impossible to survive without money. One-hundred-and-fifty centuries ago, if a Natufian wanted to build a hut, he'd find an empty spot of land and dig. But, today, if an American wants to build a house (or even a hut), land has to be bought. If you want to live inside a structure, a transaction of some sort has to take place and that requires money.

It is the transactional nature of a job that creates its complexity in terms of the rest of society. If you want to work for someone else (and have them pay you), you have to convince them that employing you will meet their needs. If you're self-employed, you have to convince prospective clients and customers that hiring you will meet their needs.

In other words, getting a job or getting a gig requires some level of marketing to make someone aware you're there to do the job and some level of sales to convince them you're the right person for the job.

Over the centuries, the nature of work evolved to eventually result in the world of employment we've all come to know and love. There's now always someone buying work and someone else selling it.

The transactional nature of work has also led to all sorts of power imbalances. When there's too much work and not enough workers, it's a seller's market and the workers have more power over what jobs they accept and at what pay level.

When there's not enough work to go around, we have a buyer's market and then the employers can set the terms, confident that if one worker won't accept the pay or conditions, some other worker will.

This power imbalance has led to some seriously bad situations.

The 1999 massacre at Columbine High School wasn't the first Columbine massacre. Back in 1927, in a town with the sadly ill-suited name of Serene, Colorado, miners at the Columbine Mine went on strike. More than 500 miners had brought their families to the mine as part of their strike demonstration.

Members of the newly-created Colorado state police, dressed in civilian clothes, blocked the miners' path to the mine. A fight broke out, machine guns were fired into the crowd of demonstrators, and five of the striking workers were killed.

On May 26, 1937, members of the United Auto Workers planned a demonstration at the Ford River Rouge car plant. The union wanted workers to make $8 for a six-hour work day, instead of the $6 for the eight-hour day they were then working. Adjusted for today's money, workers were making about $11.25 an hour and the union wanted wages raised to the 1937 equivalent of today's $20 per hour.

Timed for a shift change with 9,000 workers cycling through the plant, union organizers planned a photo-op. Two of the organizers posed in front of a Ford sign for Detroit News photographer James E. Kilpatrick. Reports claim that as many as 40 members of Ford's security force came down on the workers, leaving the demonstrators battered and bruised, and at least one demonstrator was left with a broken back as a result of the beating.

These are just two examples of protests and fights that have taken place between employees and employers. American history is filled with stories of labor riots, like the Haymarket Affair that took place in Chicago's Haymarket Square in 1886. A bomb was thrown at police, eight police officers died, eight protesters were charged with murder, four were put to death, and one committed suicide while serving time in prison.

Stay tuned. Next up, we'll look at our changing relationship with work.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article begins our new series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in December. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". Last week, we answered the question, What is a job? This week, we'll look at a short history of jobs. To learn more about the book, you should follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Human civilization goes back more than 16,500 years. Harvard Professor of Prehistoric Archeology Ofer Bar-Yosef talks about a civilization he named the "Natufians." These were a people living near modern-day Israel, an ancient tribe he believes were perhaps the world's first farmers.

Today, the area near Israel and Jordon is barren and dry. But 16,500 years ago, it was very different.

Using palynological (the study of spores and grains), paleobotanical (fossil plants), and geomorphological (the origins of landforms) data, Professor Bar-Yosef describes the region as "an oak-dominated parkland and woodland that provided the highest biomass of foods exploitable by humans."

In other words, it was very Garden of Eden-y.

These early humans were unconcerned about being able to pay their mortgages or buy their next cars. Instead, they had four fundamental needs: food, some form of clothing, objects crafted into tools and weapons, and shelter.

When these early humans "went to work," they were initially hunter-gatherers. Their time was spent chasing game and finding animals and other objects they could transform into food, tools, and weapons.

As far back as 16,500 years ago, Natufians processed their food. Archeologists have found ancient bowls and ground stone mortars, which imply that ancient humans transformed the raw food substances they hunted and gathered into a form they found more edible.

Later, Natufians lived in semi-underground, round huts. Archeologists have found stone and lime-plaster-covered benches, as well as hearths and even kilns for burning limestone and creating bone tools. The people who made these objects were humanity's earliest masons and engineers.

Over time, the Natufians, for a variety of reasons - including changing climactic patterns and populations, began to settle down. Tools have been found that indicate planting and land cultivation, as well as larger settlements.

The difference between work and a job

This is a good place for us to discuss the difference between "work" and "jobs." Many of us go to work, and that work is often a job. While the Natufians clearly worked (digging, planting, hunting, foraging, building), the concept of trading currency for labor was far off in the future.

And that's it, really. Work is labor. A job is trading currency for labor. Trading for labor is an ancient practice. Unfortunately, sometimes people were traded as if they were property.

Historians can trace slavery as far back as ancient Egypt. As abominable a concept as slavery is, it would have never existed as a practice if some people didn't need other people to get work done. Prisoners were often turned into slaves, as were criminals. America, of course, has its own history of slavery, where Africans were captured (or, in some cases, sold by other Africans) and shipped - in the most deplorable conditions - to the nascent United States.

Another form of labor ownership was the so-called debt-slave or indentured servant. Although illegal almost everywhere, this practice still exists in parts of the world today. In order to pay off one's debts (often incurred in the most unfair ways possible), a person becomes a virtual slave, working to pay off debts that never seem to lessen enough to free the worker.

Yet another form of indentured servitude was apprenticeship, where an individual would trade labor in return for training. In some cases, a child or teenager would be sent by his parents to a craftsman to be treated almost as property and used for free labor until the child fully learned his or her trade from his craftsman owner/instructor.

Colonial America was a place of tradesmen and guilds. With the exception of a very few world-spanning enterprises like the East India Company, there were few large employers. Most people either worked for themselves or for local tradesmen and merchants.

So much did these early craftsmen identify with their trades that their surnames became associated with their tradeskills. Today we have surnames like Archer (someone skilled with a bow and arrow), Baker and Baxter (both used to describe people who make yummy cakes and breads), Brewster (a female brewer), Carter (often someone in charge of stables or wagons), Chamberlain (someone in charge of the household), Chapman (a merchant with a marketplace booth), Connor (an inspector or tester), Cooper (someone who makes barrels), Granger (the steward of a farm), Harper (someone who plays the harp), Jagger (the person in charge of trains in a coal mine), Joyner (someone who joins pieces of wood), Mason (someone who works with stone), Mercer (someone who deals in expensive silks), Parker (someone who manages parks), Poynter (a lace maker), Rodman (today, a very flamboyant basketball player, but back in the day, a surveyor's assistant), Sawyer (someone who cuts timber), Smith (someone who makes or repairs metal items), Turner (someone who uses a lathe), and Wainwright (someone who builds or repairs wagons).

Thankfully, very few families adopted the trade of "ankle beater" (someone who drives livestock to market) and although a "batman" was an officer's servant in the army, our Batman is known to everyone as Bruce Wayne's alter-ego (and the owner of that hottest of hotrods, the Batmobile).

For the record, my last name - Gewirtz - means herb or spice and although my immediate family has no record of any ancestors in the spice trade, my great-grandfather lived in a part of the world that was on the ancient spice trade routes. I also know for a fact that us Gewirtz's are pretty spicy folk!

Back in colonial times and earlier, skills were passed down through apprenticeship. Guilds were created to control trade, share skills, and create barriers of entry to outsiders.

One of the closest analogies we have today for indentureship is in the scholarship practice of most modern universities. Nearly all modern Ph.D. programs consider graduate students to be a neverending supply of nearly free labor, assisting staff and professors in various research projects, in return for course credit and thesis support.

Stay tuned. Next up we'll talk about the transactional nature of work.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Every topic needs its own day or month, and I guess cybersecurity is no exception. This October is the sixth annual Cybersecurity Awareness Month sponsored by the Department of Homeland Security. And while it may seem silly for cybersecurity awareness to need its own month, there's nothing silly about keeping your computer secure.

Let me be very clear here: there are bad guys out there and they are trying to hurt you through your computer.

I know that seems melodramatic, but it's all too true. Cybercriminals, hackers, terrorists, and other malcontents (that sounds so "get off my lawn," doesn't it?) are constantly pushing the limits of Internet security. Most of the time, it's about making money. Sometimes, it's about breaking through security and gaining bragging rights. And, once in a while, it's about causing widespread chaos. No matter the motivation, it ain't good.

This is an arms race.

They'll find a way in, we'll create a new defense, they'll counter-program against the defense, and on and on and on. This is an arms race between security professionals and criminals. Fortunately, there's a lot you can do to defend yourself and your family, and once you've established the right mind-set, you'll be able to take some very basic precautions that'll go a long way to keeping you more secure.

So, let's talk about that mindset first. A lot of people I talk to tell me I'm worrying too much. They tell me they're not important enough to be attacked. They tell me that no one is going to go after them. They tell me that "just this once" there won't be a problem. They tell me that it's all a hoax.

It's not. Here's the thing: attacks are highly automated and easy to do. Every device on the Internet has a number, called an IP address, which consists of four sequences of up to three numbers, like 192.168.1.1. Each sequence ranges from 0 to 255, so the lowest number is 0.0.0.0 and the highest is 255.255.255.255.

All hackers have to do is dial through those sequences automatically, test each address, and see if there's any vulnerability. It's like having a telephone autodial all of the phone numbers in your exchange. It's a little time-consuming, but it's cheap and easy. That's what hackers do online. They also mine the Internet for published email addresses, Facebook names, Twitter names, and any other information they can find that'll help them get into your computer.

Once they get into your computer, there are a few things they can do.

The first is they can install some hidden software. This software can search your computer for credit card numbers, passwords, and bank accounts or hide, to someday be part of a mass of zombie computers performing a denial of service attack. See "Attack of the zombie computers" for more about what this is like.

Other bad things can happen to your computer as well, from other forms of malware, like viruses that can either steal your information or just cause your computer to break down. Spyware is often in place to send you to damaging Web pages or, once again, steal your information.

Sometimes, the software that runs on your computer is designed to hide, turning your computer into a storage resource for bad guys. Many home computers have been turned into unsuspecting servers, sharing everything from copyrighted materials to child porn amongst the scumbags of the world.

Instead of using your computer to host illegal data, a criminal might use a program running on your computer to send all your documents somewhere else. That's how the secret plans for the President's helicopter wound up on a computer in Iran. See "How the President's secret helicopter plans wound up in Iran".

Criminals can also sneak inside your computer's "routing table" and fool your computer into thinking it's going to one Web address, when instead it's going somewhere else. Imagine you're dialing a phone number (say 555-2222). If you thought, when dialing 555-2222 you were going to get your bank, but some hidden device instead dialed 555-9323, you'd think you were talking to your bank, but you might be talking to someone else.

This can happen on your computer as well. You might think you're going to your bank's Web site, say, but instead there's a program in your computer that intercepts those Web requests and channels you to a fake Web site that looks almost exactly like that of your bank. Obviously, what happens next is you type in your access information and the scammers get your banking information - and soon enough, your money.

The bottom line is this: cybersecurity is important and something you really should be paying attention to. If you don't, it'd be like giving your credit card to anyone you happen to meet, and telling them to just go ahead, run up a charge. On billing day, you're not going to be a happy camper.

Next time, I'll show you some easy ways you can protect yourself.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

I know I should be celebrating. The Dow hit 10,000 yesterday after more than a year in the doldrums. So why do I have this really bad feeling in the pit of my stomach?

It's not like the fundamentals of our economy are that much more sound now than they were six or nine months ago. Health care reform still seems like a $2.4 trillion boondoggle intended to benefit those who thrive off our pain. We're still about 20 million jobs below where we need to be for most Americans to be adequately employed. And millions of Americans are still underwater in their homes, if they have anywhere to live at all.

And, oh, sure, the bankers are reporting epic profits, but those profits aren't really real. Those profits are there because taxpayers got suckered into giving away the store to the banks, and the banks kept most of the money, called it profits, used it to boost their stock price, and then gave themselves all millions of dollars in bonuses.

Heck of a scheme, if you can get away with it.

The Dow itself is also something of a farce. You may think the Dow is an average of stock prices, but that's not really the case. It's actually an artificially-generated number gerrymandered by a bunch of guys in suits.  Seriously. The Dow is actually managed by the editors of the Wall Street Journal.

These editors of the Wall Street Journal choose the stocks to be included in the Dow. Choose different stocks and the Dow goes up or down. But to smooth things out and make it meet some sort of editorial standard, they don't just average the price of all the stocks. Instead, they multiply that average by a mystical multiplier - and it's that multiplier that gives them editorial control over the final Dow number you see in all the news.

So the mere fact that the Dow broke 10,000 isn't necessarily something to celebrate. It's a cooked number that could have broken last week or next month, depending on the multiplier and set of stocks the editors chose.

But still, it's nice to see the Dow is now a shiny, happy number again. Except.

Except most investors are, well, to put it gently, morons. That's how we got the dot-bomb bust. Investors follow the herd, they're lemmings, and if someone they trust says things are good, they invest. The reason we had the housing collapse, the financial collapse, and the dot-com collapse all relate to this herd mentality of investors.

And if you really want to lead investors around by the nose, there's no lure better than the Dow. It's an easy number. If it's up, they're happy. If it's down, they're sad. Unfortunately, since the fundamentals of our economy are still anything but strong, having a highly positive Dow now means many lemming investors are going to be stupid again.

They're going to follow the lure of greed. Regulations still haven't been put in place to fix the last round of idiocy. And someone's going to get hurt. Any guess who? It's not going to be the bankers. They're celebrating their hundreds of millions in bonuses.

Nope, it's going to be you and me that get hurt. Because the Dow isn't really real, greedy bankers are going to be greedy bankers, and, at 10,000 in this economy, it's all a house of cards.

Unfortunately, you can't live in a house of cards. When it collapses, and it will, let's hope you and I live inside something more substantial - and that we'll still be able to pay for where we live after the bankers and the insurance companies finish sucking us dry - just so they can have another Happy Dow Day.

I know. Cheerful thoughts.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article begins our new series excerpted from AC360°'s contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. Over the next few months, we'll be excerpting the first section of the book, which answers the question, "How did we get here?". The second section consists of recommendations about what we need to do as a country to save jobs. The third, final section is a series of hands-on tips and techniques, things real people and real companies can do right now to help keep and create jobs - without waiting for anyone in Washington to get it right. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Job. Such a simple word has such a profound meaning for everyone in our society. Three simple letters reflect where we spend much of our time as adults, how well we can support ourselves and our families, and even our standing in our communities.

When we're making a living, or having an occupation, a trade, a career, a profession, a calling, a vocation, and a livelihood, we're also talking about jobs. But what exactly is a job? Why do jobs exist? How are they created? How are they lost? And, most importantly, how can we save them?

You need to understand why a job exists.

Let's talk for a minute about what, exactly, a job is. Fundamentally, a job is a trade of time, skill, and spirit for something of value, usually money. You and I put in a good work week and we expect to get paid.

But who pays for the jobs? To answer that question (and it's a very important question), you need to understand why a job exists. At its root, a job exists because somebody needs something done and either can't, or won't - or doesn't want to - do it himself.

Sometimes, we rent that skill. For example, when you go to see a doctor, you're renting a portion of her time, in return for her wisdom, experience, and skill. Many people who freelance or who perform trade work (plumbers, electricians, carpenters, etc.,) often also rent their skill like doctors – a few hours at a time to each client or customer.

If you're a freelancer or a sole proprietor, you not only have to do a good job, you need to create your jobs, get your gigs, and run your own business. This information might help you, because it will help make your business more successful. It might even help you reach the point where you're creating additional jobs.

The more traditional job exists because a company hires an employee. The company needs work done, and the employee agrees to do the work in return for a paycheck - and those all-important benefits.

What's your occupation? How are you occupied? Do you work for someone else, have them tell you what to do and how to spend your time, in return for money and benefits? Many jobs are great and people love them. But many other people hate their jobs, staying simply because the job market is so soft or because they're trapped by a benefits package.

Your company does not exist to create jobs. Jobs are the by-product of enterprise.

When I first left engineering school more than a quarter of a century ago and entered the labor force as a newly-minted computer scientist, I didn't really understand what made my job possible and, honestly, as long as I got paid and the work didn't suck too much, I certainly didn't care why my job existed.

Many employees don't think very far beyond that basic transaction of time for work (and health insurance). Oh, at a very general level they understand the company needs to be making money, but the details of that process often seem very far removed from the tasks done each day.

Things become more tangible during down markets. It's at this time that layoffs happen. A company usually reduces its headcount because it's not making enough money or is somehow not successful enough to keep everyone employed. A company reduces headcount because something's not working right.

Sometimes, the company hired people it shouldn't have and layoffs are a correction. Sometimes, the company uses a down economy as an excuse to get rid of poor performers and those with bad attitudes. And sometimes, the company simply can't afford to make its payroll.

In all these cases, it's the business climate that informs the company's employment strategy. Clearly, the better the company is doing, the more likely it is to keep its employees - and perhaps even hire more.

A job, fundamentally, is a way of supporting oneself and his or her family. It doesn't necessarily mean going to a place of work and having a boss. Your job could involve freelancing or building your own business.

My job is like that. I last had an official, go-to-work boss all the way back in 1986. That means I've been making my own living by creating products and services, writing and publishing, and helping other businesses succeed for almost 25 years.

But while a job, in the eyes of most employees, is a way of supporting themselves, companies do not exist to create jobs. Jobs are not the purpose of enterprise. Jobs are the by-product of enterprise. This is a very important concept and is absolutely fundamental to the mission of saving jobs.

A company is not successful because it has created jobs. A company creates jobs because it has some level of success. The more successful a company is, the more jobs it creates to support that success.

It stands to reason, then, that if we want more jobs and we want to save the jobs we have, our companies need to be more successful. The answer to the question of "How do we save jobs?" is this: create more successful and sustainable companies.

Later in thisseries, I'll tell you how to do just that. I'll help you understand some tactics and strategies for making sure your business is more successful, and help you understand how you can thrive in times of challenge and times of change.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our multi-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360° contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter @DavidGewirtz.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Our earlier discussion of the insurance mess, of course, leads us to the push for reforming health care. Americans are getting systematically ripped off by our own medical establishment at levels that almost defy comprehension.

Since the American health care industry is far larger than any other industry in America, and America has the largest economy of any country, that makes the American health care industry the largest industry in the world - and the single largest economic interest bloc in the history of mankind.

The single largest economic interest bloc in the history of mankind

So, as you might guess, the members of the health care industry aren't as interested in reform as those of us who aren't siphoning off an excess trillion dollars a year from the American populace.

You might think that the prestigious American Medical Association is a scientific organization representing the nation's best healers. And while the AMA does have a membership some 250,000 physicians strong, I believe it's anything but a scientific organization. In fact, the AMA is one of the leading lobbying organizations - fighting tooth and nail to keep the status quo.

According to The New York Times, in comments submitted to the Senate Finance Committee, the American Medical Association said:

The AMA does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.

Further, according to the Times:

The group has historically had a strong lobbying operation, supplemented by generous campaign donations. Since the 2000 election cycle, its political action committee has contributed $9.8 million to Congressional candidates, according to data from the Federal Election Commission and the Center for Responsive Politics. Republicans got more than Democrats in the four election cycles before 2008, when 56 percent went to Democrats.

$9.8 million is a very small price to pay, when trying to preserve a $2.4 trillion windfall that pays out more and more each year.

But the AMA is not alone. According to Nate Silver of the excellent FiveThirtyEight.com Web site, political action committees associated with pharmaceutical companies, hospitals, HMOs, health services companies, medical supply companies and physicians', dentists' and nurses' groups have all given contributions to congressional campaigns:

Overall, health care PACs have given an average of $482,870 to Republican senators and $407,979 to Democrats. There is a larger discrepancy, however, when the contributions are taken as a share of overall campaign funds - the average Republican senator has gotten 3.6% of his funds from health care PACs, while the average Democrat has gotten 2.1% of hers.

Senators in favor of a public option have received, on average, $335,308 or 1.8% of their total campaign contributions from health industry PACs. Senators opposed to it have received an average of $486,629 or 3.5%. Undecided senators have gotten $530,968, or 2.9% of their total campaign funds, from health industry PACs.

The big issue, at least as I write this, is something called the "public option." The idea here is that citizens can choose to buy their health insurance from commercial insurance companies - or they can somehow get it from an as-yet unformed federal insurance program of some kind.

Proponents claim the public option will provide economies of scale and bargaining power that no other option will offer. Opponents in the insurance, pharmaceuticals, and health care industries claim it will create a situation of unfair competition, making life harder on the health care industry providers as a whole.

Based on my analysis in this chapter, the health care and insurance industries in America need a reboot. As we've seen over and over, Americans are getting screwed instead of getting healed.

But if all we're doing is adding one more big insurance operation to the mix, we're missing something really fundamental. The whole concept of insurance isn't working here.

Insurance is basically a bet against yourself. You're paying a certain amount each month, betting against the house that you won't get sick.

But the people you're paying, the insurance companies, don't have their interests aligned on your behalf. Insurance companies are the house, and their bet is that you will spend more than they have to pay out. And, like every casino in Las Vegas, they stack the odds far in the favor of the house, not the gambler.

It's very strange. Throughout most of America, gambling is illegal. But for the single biggest industry in the history of the world, we're all gambling.

Right now, we're all losing.

Author's note: As you have seen, this is a very scary topic and unless something is done soon, America is in a deep world of hurt. Write, call, email, Twitter, and otherwise let your elected officials know that not only won't Americans stand for being ripped off by wildly over-priced healthcare, as patriotic Americans, we know the health of the country's citizenry is essential to the health of the country.

This situation must be fixed, and while the health care industry wants a seat at the table, the needs of Americans must come before the extreme profit demands of an industry already raking in obscene profits at the cost of our very lives.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our multi-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360° contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter at http://www.twitter.com/DavidGewirtz. Last week, we looked at the steps insurance companies take to avoid paying your medical bills. This week, we'll look at the problem with health insurance, overall - and what it means if you're an employee with health insurance and you're suddenly out of a job.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Clearly, the insurance system is a failure for vast numbers of Americans. That's why it's particularly disturbing that the Senate's new health care bill appears to be putting even more faith in the insurance companies.

Using the insurance industry's own numbers, about 13 percent of every medical dollar goes into the insurance industry, rather than the medical industry. So, of the $2.4 trillion dollars we overspend annually on health care, at least $312 billion feeds the insurance industry.

Here we have the insurance industry, sucking 13 percent off our already excessive costs for health care, and, according to The New York Times, making profits above $60 billion in 2006. Based on the American Journal of Medicine numbers, medically-related bankruptcies account for an annual loss to American citizens of about $6.3 billion.

Lose the job, lose the insurance. Lose the insurance and, suddenly, you're a statistic.

The industry makes $60 billion in profits, but is willing to bankrupt hundreds of thousands of Americans over an amount that's a mere 10 percent of its already astronomical profits.

To be fair, the fault isn't just with the insurance industry. Every industry has a right to make profits. Likewise, we, as consumers, have the right to choose to purchase from a business - or not. If we like the quality, service and value, we buy more and the company succeeds. If we don't like the quality, service, and value, we shop less and the business doesn't succeed.

Except the health insurance business. Here, we have very little choice.

The insurance industry has set itself up between those of us who are consumers and those providing medical care. In fact, there are so many layers and filters and barriers between the consumer and the product that it's virtually impossible to comparison shop for anything in the health care business.

According to the Kaiser Foundation:

Employer-sponsored insurance is the leading source of health insurance, covering about 158 million non-elderly people in America.

That means that about half of all people in America get their health insurance through their employers. Of course, as more and more people lose their jobs, more and more people are also losing their health insurance. According to researchers James Kvaal and Ben Furnas of the Center for American Progress, approximately 14,000 people are losing health insurance each day.

Our system of employer-provided health insurance is one of the big reasons for the health care-related bankruptcies discussed earlier. More than 37 percent of those suffering a medical-related bankruptcy were forced to quit their jobs or were fired due to their illness. According to The American Journal of Medicine study, more than half of American companies cancel coverage within a year of when an "employee suffers a disabling illness," and a quarter do so almost immediately.

So they get sick, which means they can't do their jobs - but it's the insurance provided through their jobs that's supposed to help them when they're sick. Lose the job, lose the insurance. Lose the insurance and, suddenly, you're a statistic.

Our insurance premiums went up an average of 119 percent in the last decade. But we're definitely not seeing more value. In fact, The American Journal of Medicine study also tells us:

Since 2001, the proportion of all bankruptcies attributable to medical problems has increased by 50%.

So our costs for the insurance that's supposed to protect us from bankruptcies more than doubled - and medically-related bankruptcies also went up, by a whopping 50 percent.

And that leads us to the topic of the day: health care reform. That's next and it'll wrap up our series.

But just in case you're starting to feel good about the American health care system, think about who we're putting in charge of reforming health care. That's right, it's the politicians. I'm not exactly sure why that worries me so much...

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our 8-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360° contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter at http://www.twitter.com/DavidGewirtz. Last week, we looked at how those with insurance are being forced to file bankruptcy. This week, we'll look at the steps insurance companies take to avoid paying your medical bills.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

There is a concept in the insurance biz called rescission. It's the insurance world's equivalent of a marriage annulment, allowing an insurance company to back out of an already-paid insurance policy and deny the policy holder insurance coverage.

If you have a serious medical problem, you stand a better than even chance of losing your insurance and never getting paid. And if you don't work for a major company or the government with a good group policy, your chances go up to virtually 100 percent.

Most insurers claim the rate of rescission is fairly small. In testimony before the U.S. House of Representatives Committee on Energy and Commerce, Don Hamm, CEO of Assurant Health stated "Rescission is rare. It affects less than one-half of one percent of people we cover."

And yet, according to a story by Karl Vick in the September 8, 2009 issue of the Washington Post:

In the past 18 months, California's five largest insurers paid almost $19 million in fines for marooning policyholders who had fallen ill. That includes a $1 million fine against Health Net, which admitted offering bonuses to employees for finding reasons to cancel policies, according to company documents released in court.

Of course, $19 million in fines across five companies is a drop in the bucket compared to how much insurers are saving by abandoning those paying customers who have the audacity to get expensively sick.

Vick's story continued:

Officials from three insurance companies told a House Energy and Commerce subcommittee this summer they had saved $300 million by canceling about 20,000 policies over five years.

ABC News reported that Wellpoint, another insurance provider, claimed rescission rates of 0.01 percent, and, in a 2007 article in Money Magazine, authors Walter Updegrave and Kate Ashford pegged the rescission rate across insurance companies at 1 percent.

Despite Assurant CEO Hamm's testimony that rescission is rare, the practice turns out to be a very big problem for Americans. Once again, a little math is in order. To fully appreciate the problem, recall that insurance coverage is supposed to spread the risk among all the policy holders, so the vast majority of healthy customers help pay for the relatively small percentage who are actually sick.

Instead, by practicing rescission and by making misleading statements about percentages, what the insurance companies have in many cases managed to do is get all their customers to pay premiums, but deny payment to those who need it most. In effect, rescission allows the insurance companies that practice it to violate a sacred trust and instead of providing insurance coverage to their customers, they are merely grifters running a long con with billions of our dollars.

So let's see how they're running this con. To start, according to the U.S. Department of Health & Human Services (HHS), a full 50 percent of Americans incur almost no health care expenses. A lot of Americans are relatively healthy.

So let's move on to another group of Americans. According to HHS, "A small proportion of the total population accounts for half of all U.S. medical spending."

In fact, just 5 percent of Americans account for 49 percent of all medical spending. According to HHS, "Among this group, annual medical expenses (exclusive of health insurance premiums) equaled or exceeded $11,487 per person."

But even that's not all that expensive to an insurance company with rapidly increasing premiums. The top 5 percent of the population incur insurance expenses that really amount to just about two years of premium payments.

It's the next cohort that becomes impressive. According to HHS, a mere 1 percent of all Americans account for 22 percent of all the health care costs in the United States, with annual health care expenses in excess of $35,000 per person.

Stick with me. I know this is a lot of math, but if you want to see how you're probably getting ripped off, you'll need to keep reading.

If you remember way back to the beginning of this chapter, you'll recall that about 85 percent of Americans have health insurance coverage. So, of the 1 percent  of Americans incurring relatively large medical expenses, that really turns out to be just 0.85 percent of those covered by health insurance. Stick with me. This will become clear in a minute.

Looking at the HHS numbers, it becomes clear that the vast majority of health insurance policy holders don't ever make claims that exceed the cost of the premiums paid. It stands to reason, therefore, that insurance companies wouldn't ever care about rescission for most of the policy holders they cover, since they're making a profit off of these policy holders.

But once those payouts start to get expensive, for that remaining 0.85 percent of policy holders, rescission becomes a more and more attractive option for policy holders. And here's where Hamm's testimony become freaky. Follow along carefully.

The point at which rescission becomes attractive is for that 0.85 percent of policy holders that actually need serious health care. It's for this kind of health care expense (more than about $35,000) that's the reason we all buy insurance. It's therefore almost overwhelmingly likely that virtually all rescission would be applied to the 0.85 percent of policy holders that actually cost insurance companies serious money.

What does this mean for you and your family? Well, if you take Hamm's 0.5 percent rate (which is a good median between the Money Magazine numbers and those from Wellpoint), and you divide that by the 0.85 percent of policy holders who actually need real insurance, you get 58 percent - that's the percentage chance that if you have a serious medical problem, your insurance company will simply drop your policy and refuse to pay.

Of course, it's actually worse. About half of those Americans who are paid by "employer companies" work for companies with 500 employees or more. These companies have really good group policies, and so the odds of an employee of, say, IBM being denied coverage or having his or her contract yanked is very small - because, after all, an insurance company isn't likely to want to upset its best customers.

What that means is that rescission is most likely to be practiced on those who work for smaller companies or who buy insurance on their own - about half of those getting insurance. And so, before we accounted for employees of big companies, we learned that there was more than a 58 percent chance you'd be denied coverage. But the odds are doubled if you factor out those who work for big companies. Bottom line: if you don't belong to a large group policy, you have virtually a 100 percent chance that you'll be denied coverage if you need it.

After all, as insurance CEO Hamm stated in his Congressional testimony:

Rescission ... is one of many protections supporting the affordability and viability of individual health insurance in the United States under our current system.

In other words, if an insurance company has to pay out too much in claims, rescission could be a get-out-of-paying-free card. And this is where it gets disturbing.

Let me make that clear: if you have a serious medical problem and you're not part of a major corporate group policy, you stand a statistically 100 percent chance of losing your insurance and never getting paid. Here's an easy thing to look for: if your medical bills exceed $35,000 a year, your insurance company is probably, right now, trying to find a way to drop you.

The bad news: there's an almost guaranteed chance they'll do it, too.

According to documents obtained by the House Committee on Energy and Commerce and reported on by Lisa Girion in the Los Angeles Times:

The documents show, for instance, that one Blue Cross employee earned a perfect score of "5" for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.

Did you make even the slightest mistake or omission on those overly-complex, designed-to-confuse applications? Bingo. You're gone. Is there any other excuse the company could use? Poof, you're history. And, since you're now stuck with a pre-existing condition and a history of being dropped by an insurer, you may not get the health care you need. Slam. You're screwed.

And - I swear, I'm getting tired of saying this - it gets worse.

Wendell Potter used to be the media relations director for insurance giant Cigna. In June, 2009, he testified under oath before the Senate Commerce Committee, stating that insurance companies:

...dump small businesses whose employees' medical claims exceed what insurance underwriters expected.

All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year's premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether - leaving workers uninsured. The practice is known in the industry as purging.

Read that carefully. All it takes "is one illness or accident among employees at a small business" for the insurer to go out of its way to purge the entire company from its system.

BusinessWeek wrote about this. In an August 27, 2009 article, Joshua Kendall reported:

In a February conference call with analysts, Cigna President David Cordani said: "In 2008 we were essentially actively decreasing our posture in several markets, particularly the under-50 book of business [companies with fewer than 50 employees]. You could use the term 'purge' if you'd like."

Kendall continued:

Compounding the problem is the fact that entrepreneurs, if slapped with hefty premium increases, may end up with fewer alternatives. In half of the states in the country, according to a 2008 survey by the Government Accountability Office, the largest small-business insurer has 47 percent or more of the market; in Alabama, one carrier insures 96 percent of all small businesses.

This is America, the country that should have the best medical system in the world. But this is also a country where one employee getting sick or hurt could either cause all the other employees at a small company to lose their insurance coverage or, worst case, cause their employer to go out of business.

Something's wrong.

This is also a country where, once you're actually sick and even if you've paid all your insurance premiums, year after year, you stand an almost 100 percent chance of losing your coverage, and where insurance company employees earn bonuses if they can successfully drop thousands of policyholders in need.

It's abundantly obvious that the insurance system is terribly, terribly broken.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Editor's Note: This article continues our 8-part series excerpted from the "Healthcare Hostage Crisis" chapter of AC360° contributor David Gewirtz's upcoming book, How To Save Jobs, which will be available in October. To learn more about the book, follow David on Twitter at http://www.twitter.com/DavidGewirtz. Last week, we looked at how America's healthcare compared with other countries. This week, we start our look at how America's insurance system is failing those who are already insured.

In his address to Congress on Wednesday, President Obama pushed for the government to help the uninsured.

David Gewirtz | BIO
AC360° Contributor
Editor-in-Chief, ZATZ Publishing

Insurance coverage is another myth. We've all been led to believe that as long as we have insurance, we'll be taken care of. As insurance rates go up and up and up, we've been promised that even though it costs a lot more, it's worth it because our future is being assured.

But, like we've come to see with other aspects of the health care industry, health insurance is worse than broken - to many people, it seems more scam than service.

In August 2009, The American Journal of Medicine published a clinical research study entitled "Medical Bankruptcy in the United States, 2007: Results of a National Study." The research team consisted of David Himmelstein, MD, of the Harvard Medical School, Deborah Thorne, Ph.D., of Ohio University, Elizabeth Warren, JD, of Harvard Law, and Steffie Woolhandler, MD, MPH, also of Harvard Medical School.

I'm pointing out the research team here because I want you to understand that this is highly credible data.

There's one other thing I need to point out. This study was done in 2007, before the massive economic downturn that began during the 2008 presidential election cycle. What this means is the data presented provides far greater clarity about the health care industry's contribution to bankruptcy than it would have had the study been conducted later, when a lot of other bank failure-related issues might have muddied the mix.

Here's the key conclusion of their analysis:

In 2007, before the current economic downturn, an American family filed for bankruptcy in the aftermath of illness every 90 seconds; three-quarters of them were insured. Over 60% of all bankruptcies in the United States in 2007 were driven by medical incidents.

They had insurance

Some might say, "Those are pretty sobering numbers, but that's what they get for not having insurance." But here's where it gets really, really scary:

Most medical debtors were well educated, owned homes, and had middle-class occupations. Three-quarters had health insurance.

Three-quarters had health insurance. Put those two numbers together. Sixty percent of all bankruptcies in America were driven by people who couldn't pay their medical bills,  most of whom actually had health insurance.

The health insurance they'd been paying for. The health insurance, that for some people, cost more than their mortgage or their rent. The health insurance that many of their employers had been forced to pay as a mere factor of the competitive environment.

That health insurance. The health insurance that didn't insure their health.

So, let's run some numbers. Using the study's statement that a medically-related bankruptcy occurs every 90 seconds, that's 350,400 medically-related bankruptcies in 2007.

So how much did these medically-related bankruptcy filers owe? After all, insurance does have a coverage cap, usually somewhere in the millions of dollars. Clearly, if their coverage exceeded millions of dollars, it'd make sense for their insurance to run out.

Ah, but that wasn't the case. On the average, most of these families (or their employers) paid $12,680 for their insurance. Each year. And how much money was it that caused their bankruptcy? Take a deep breath. This is gonna make you very, very angry:

Out-of-pocket medical costs averaged $17,943 for all medically bankrupt families.

That's right. Most families (or their employers) paid an average of $12,680 per year and their bankruptcy (which will ruin their lives for far more than one year) was for $17,943 - a difference of a mere $5,263.

Next week, we'll look at some of the schemes insurers use to drop your coverage once you get sick.

Follow David on Twitter at http://www.Twitter.com/DavidGewirtz.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.