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the public servant

The official student publication of the Bush School of Government and Public Service V O L U M E 1 2 , N U M B E R 4 , A P R I L

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A student publication of the George Bush School of Government and Public Service at Texas A&M University

Dean Crocker Appointed as New Ambassador to Afghanistan Rafael Gomes MPSA ‘11

As president G e o r g e H.W. Bush mentioned in the past, you never say “no” to the president of the United States. Dean Ryan Crocker lived up to that principle on the 28th of April, 2011, when he accepted President Obama’s nomination to be America’s new Ambassador to Afghanistan. The United States is going through a difficult moment in the region. Afghan president Hamid Karzai has been criticizing the United States in several public appearances recently. In addition, Karzai has been ignoring the current U.S. Ambassador Karl Eikenberry, a former national security fellow at the Kennedy School of Government, at Harvard University. The goal of Crocker’s nomination appears to be the promotion of political reconciliation among the Karzai government and insurgent groups. Given the current situation, Dean Ryan Crocker, with 27 years of Foreign Service experience and a deep knowledge about the middle-east, comes as a strategic weapon to rebuild partnerships in the region and boost diplomatic efforts.

In his short-tenure at the Bush School (one year and three months), Dean Crocker created close relationships with the students, was praised by president Bush 41 several times and initiated efforts for ambitious fundraising goals. While accepting the position, Ambassador Crocker mentioned that he thought to have found a permanent home as the dean of the Bush School at Texas A&M, but his speech reminded us that the institution carries the flag of public service, and that was the main reason behind his decision to come back from retirement and work at the embassy he helped to build nine years ago. Two important lessons can be taken from this: (1) Public Service is a noble calling; and when you hear the call, you answer it. (2) As mentioned above, you never say “no” to the president of the United States – especially when he’s been trying to bring you back in since last year. n

Dragon Flies with Elephant:

Cooperation Between China and India Bei Chen MPIA ‘12

If I could only choose one country to explore in the world besides the U.S, I would choose India without hesitation. This mysterious country with a splendid history comparable to that of china has become a trading superpower and a growing magnet for foreign direct investment. In late 1990s, Professor Robert Pastor, who worked f

The Public Servant 2010-2011 Staff List

Rafael Gomes, Editor-in-Chief Michael Walter, Assistant Editor Casey Braswell, Layout Editor Kymberly Reynolds, Treasurer Vanessa Toufaily, Calendar Coordinator Dinorah Sanchez, Survey Guru Adrian Calcaneo, Cartoonist David Arceneaux, Columnist Editors: Anne Hierholzer, Barrett Brown, Chloe Stark, Craig Welkener, Heather Gregory, Kristin Simpson, Ken Surgenor, Jessica Yeo Photographers: William Mitchell, Jeff Willey, Ken Surgenor, Paige Ericsson The views expressed in this publication are those of bush school students, not necessarily those of the George Bush School of Government and Public Service.


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or President Carter’s administration, did not include India as one of the “seven great powers” in his book called “Century’s Journey” because he thought India was not capable of exerting its influence outside of South Asia due to its poor economy. However, only 10 years later, the 21st century is commonly regarded as “The century of India and China”.

potentialities in working together and maximizing their efficiency in a broad scope. Thanks to differences in the political systems, some of the conflicts between China and India are being exaggerated by the media. In fact, China and India have common interest in climate change issues and the reform of the global financial system.

To maintain good contact with one another, India and China have also established a series of forums and summits that cover global affairs that influence their relationship. In 2008, the trading volume between China and India reached $518 billion. China is India’s the biggest trading partner and India is China’s tenthlargest partner, even though the trading volume was However, for a long time, China and India were at somewhat reduced after the global financial crisis. each other’s throats. Border conflicts over Kashmir, the allegation of Chinese-fueled In the long run, as long as India opposition in Burma, interference in and China remain on the track of Pakistan, and competition over evercooperation, the trading volume dwindling world oil supplies have could rise to $600 billion. At the been exacerbating the relationship same time, Indians often complain between these two giants. But now, that the high inflow of Chinese two of the world’s most ancient products put their own manufacturing civilizations have already emerged industry in peril. Therefore the as leading techno-economic nations. Indian government imposes a strict “anti-dumping” policy on China’s It is time for them to move beyond products and sets strict constraints on conflicts and start cooperating foreign direct investment from China. politically, economically and technologically for mutual benefits. However, this new trade protectionism will dampen Even though the development path is different for these the interests of both sides. The Chinese government two countries, China and India confront many of the clearly states that China intends to strengthen the same problems in the process of economic development. communication scheme to mitigate these trade frictions with India. Currently, to attain higher growth rate in the They both suffer from the excessive consumption of aspect of trade, Chinese and Indian enterprises are in resources which threatens the sustainable development. search of new opportunities in each other’s markets. Cooperation between China and India will enable them to better handle these challenges. For example, In terms of technological collaboration, China will India is desperately in need of infrastructure benefit from India’s nuclear energy technologies, improvements in areas such as electricity, water agricultural technologies, genetic engineering and IT dams and telecommunication while China has rich advancement. On the other hand, India will gain from experience in these areas. Chinese state-owned China’s interest in its infrastructure establishment. The companies just started outsourcing their IT services use of complementary assets from the other side lessens while India is the most developed country in this field. their technological reliance on developed countries. India’s economy has been growing at an unprecedented rate. India is the second largest emerging market in the world and its GDP (purchasing power parity) ranks only behind the U.S, China and Japan. Economists expect that the U.S, China and India will form a tri-polar world in 2035.

Undoubtedly, China and India have enormous Last








STUDENT EVENTS India and China that provides an alternative framework to counter pressure from America and Europe to adopt mandatory limits on greenhouse gas emissions in a new UN treaty. The two Asian powers will cooperate on the development of renewable power projects and improved energy efficiency programs, while rejecting any outside mandates that would slow economic growth. Lately, India and China have begun to join forces to lobby on the behalf of developing countries on contentious trade issue such as agriculture and pharmaceuticals at World Trade Organization talks. Indian Commerce Minister Arun Jaitley said, “Views of both countries are converging on these issues and this we see as a significant development because of the size of the two economies, accounting for more than one-third of world’s population.” In a word, the economic prosperity of “Chindia” is beneficial to the new world economic order. n

Bush School Brings the ‘Dillo Home

faculty member helped deliver the resounding blow to the Bleeding Hearts of Austin. The main event got off to a shaky start, as the Bushwhackers were behind 2-13 in the second inning. But with solid hitting and aggressive running, the team overcame the deficit and went into the seventh inning leading 23-18. The Bleeding Hearts continued to fight and looked poised to take its lead back, but the Bushwhacker defense prevented that from happening. Sixteen Bush School students brought back the famed ‘Dillo Cup trophy to be proudly displayed in the halls of the Bush School for the next year.

After a two-year drought, the ‘Dillo Cup returned to its rightful home at the Bush School on April 16, 2011. In the 12th annual “Duke Out for the ‘Dillo” softball game against the LBJ School, the Bushwhackers delivered a thrilling 23-21 victory to a crowd of students, faculty, staff and alumni who gathered in College Station to support the team and compete for a year’s worth of bragging rights.

After the game, the two schools put aside the rivalry to enjoy a barbecue lunch and other activities, including soccer, flag football, and Frisbee. Next year, the Bush School will look to improve its record to 8-5 when the teams meet again in Austin. n

The day’s events began with the 4th annual “Hall of Fame Game” between Bush School and LBJ alumni, staff, and faculty. The Bush School improved their record in this game to 2-2 with an impressive show ending in a score of 20-5. Six alumni, four staff, and one THE PUBLIC SERVANT | 3


Guns and Butter, or Missiles and Corn (Ethanol) Robert Bastian MPIA ’11 The United States’ intervention in Libya in support of ‘democratic’ change is attracting the old charge of meddling in other countries’ affairs in order to protect energy resources. Grumbling about the need for energy independence has become more pronounced, but the fiscal crisis has muffled calls for major government investments in ‘secure’ energy sources. Large subsidies for questionable energy sources like corn-based ethanol are weathering budget battles, while U.S. action to protect the world oil supply by firing missiles into Libya is criticized as a poor use of taxpayer money. Crude oil is a fungible commodity that is a major component of every nation’s energy portfolio. When a disruption in supply occurs, rising prices force global supply networks to realign, and the ensuing disruption is felt by all countries. Many states buy into the idea of energy independence and pay a premium on energy costs in an attempt to insulate themselves from the volatility of the world oil market. This premium comes in the form of subsidizing sources of energy that are not commercially viable, such as alternative fuels or domestic oil production, so that foreign energy resources will comprise less of that state’s energy

portfolio. Consequently, the state’s economic growth is slowed due to artificially high energy prices. However, if a major disruption in the world oil market forces the world oil price above domestic prices, the ‘insulated’ country’s oil producers will choose to sell their oil on the world market. The country that thought it was insulated then experiences the same shortage as the rest of the world. Therefore, total independence from the world oil market is not realistic. Instead, a state’s best option is to ride out the volatile oil market until higher oil prices make energy alternatives more competitive. However, in the short term a strategy should be pursued to manage the pain caused by disruptions. One way of doing this is by developing more efficient energy technology. Over the decades, research and development (R&D) in energyefficient technology has helped the U.S. reduce (but not eliminate) its need for oil. However, government-sponsored R&D is typically inefficient, since it is directed by elected officials, THE PUBLIC SERVANT | 4

rather than scientific professionals. In order to offset their weak backgrounds in energy-related topics, most elected officials are dependent on the advice of outside experts (read: lobbyists), creating the danger that investment will be based on the persuasive power of its advocate rather than the merits of the technology itself. All this makes funneling more money (if it were available) into government-sponsored R&D inefficient. An alternative approach would be to use military force to limit the frequency and severity of disruptions in the world oil supply. The U.S. has invested considerable resources in developing the capability to conduct military operations throughout the volatile but oil-rich Middle East, leaving us with a competitive advantage in forcing the compliance of actors in the region. However, as our endeavors in Iraq have shown, there are diminishing returns associated with military action; nation-building can only get us so far. So, move over nation-

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building, hello kinetic strikes. The U.S. has the capability to deploy aerial assets to almost any place on earth. Air strikes represent a small commitment by the U.S., yet they have the potential to reduce the capabilities of (and in some cases force compliance from) entities causing disruption to the world oil supply.

Invisible Jungle


Rika Mallepally, MPIA ‘12

Microbiology education is the key to creating the next generation of scientists. Unfortunately, public knowledge about the microbiological sciences is suffering. A recent report from the Congressional Research Service has unearthed the fact that STEM education in K-12 curricula is alarmingly low (Kuenzi, J. CRS Report on STEM education: Background, Federal Policy, and Legislative Action. 2008) In fact, science aptitude in the United States has been stagnant since 1994; a The current fiscal showdown is forcing elected officials to allocate resources dormancy absent in the rest of the developed world (Holland, S. U.S. Students Behind in Math, Science, Analysis Says. 2009). This lack wisely, and in this political environment it of education is not due to a lack of scientific innovation, but rather, may be easier to justify expenditures for due a lack of accessibility of new developments to the general public. established national defense projects than for risky energy research. After all, the A group of University Scholars at Texas A&M aim to bridge this gap between high level scholarly work and the general U.S. literally gets a lot more bang for its public with the radio program “The Invisible Jungle” (IJ). buck with a dollar’s worth of ‘shock and Each weekly 2-minute program features a particular facet of awe’ than with a dollar’s worth of conmicrobiology research and provides a succinct, interesting, and gressionally-directed investment in new accurate description of the developments in microbiology. The energy technology. n research, writing, formatting, and recording for IJ is completely managed by students at A&M. Our efforts with IJ Media have thus far manifested in two channels: a radio program and a website. Since May 2010, IJ Radio has broadcasted over 55 shows on KAMUFM, a local NPR affiliate to a weekly audience of 20,000 listeners. Program content is dynamic in that it draws from not only respected scientific channels, but also from personal interviews with professors about developing research projects. The website is currently in a prototype stage and site viewers are given access to the radio program via links to podcasts and iTunes. Additionally, the IJ website features educational materials via detailed broadcast summaries and archives of Invisible Jungle interviews and auxiliary reports. Though still a pilot, this website is the cornerstone of disseminating media resources to both listeners and students. Because Invisible Jungle uses multiple media to cater to a near-boundless audience, its future direction is multifacetedfaceted. We are pursuing (1) syndicating the show to stations across the country (2) creating and distributing educational materials to East Texas schools and (3) submitting grants for the NSF and corporate underwritings. As students of a renowned research university located near regions that are historically underrepresented by STEM (Science Technology Education & Math) education, we are in a uniquely fortunate position to foster Invisible Jungle’s growth. As students of public service and policy, we have no excuse to ignore any opportunity to improve our nation’s education. So remember to listen to Invisible Jungle at 7:30 on Friday mornings, visit us on the web at, or contact me if you have any suggestions or like to get involved. n THE PUBLIC SERVANT | 5


Policy Analysis of the “No Pass, No Play” Rule in Texas Ben Maddox, MPSA ‘11

Eligibility requirements for participation in extracurricular activities are increasing across the United States. No Pass No Play policies establish academic competency and excellence as a priority and therefore increase student motivation to excel academically. These policies encourage students to perform better academically and reprimand those students who fail in the classroom. In 1984, Texas House Bill 72 aroused much controversy in the education community, particularly pertaining to the newly mandated No Pass No Play rule. This rule stipulated that Texas public school students who participate in extracurricular activities, such as football, soccer, or band, must achieve a passing grade of 70% or higher for each six week grading period (HB 72, 1984). If a student receives even one failing grade on his or her report card during that six week grading period, that student is ineligible to participate in extracurricular activities for the following six week grading period until the failing grade or grades have been improved to passing level. Opponents Many outspoken critics argue that No Pass No Play limitations have detrimental effects on schools and student athletes, viewing No Pass No Play as a disservice to would-be student athletes. However, most No Pass No Play critics do not effectively examine the necessary data to support such claims.

Some challengers to No Pass No Play believe that schools are also burdened with higher dropout rates in high school and therefore increasingly pressure teachers, administration, and staff to improve retention. Additionally, other opponents worry that athletes may drop out of school or that coaches will pressure teachers to pass borderline athletes because of No Pass No Play. However, now most coaches and administrators observe that many students do not avoid tougher classes. No Pass No Play has shown its greatest impact on high school football. In the early implementation stage, Eisenhower High School in Aldine lost 83 players to its restrictions immediately after the bill went into effect. In greater San Antonio, 1070 football players flunked at least one course and therefore could not take the field. However, these data are severely outdated and most opponents continually revert to statements discussed years ago. Most of these critics have not adequately assessed and researched implications of the entire law. With such a minimum level of opposition research on the issue, it is difficult to draw strong conclusions to support their unjustified claims. In addition, most of the critics claims are drawn in the early implementation stages of the law, whereby more updated research refutes their criticisms almost every time. Most research actually confirms that there are significantly more advantages to No Pass No Play than disadvantages. Proponents Despite the claims lodged by critics, most are not supported thoroughly by adequate research. In 1988, Austin Independent School District conducted a study revealing that students did fail fewer courses and that their grades declined less than other nonextracurricular students. Furthermore, the drop-out


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rate was inconclusive, enrollment in honors courses did not decline, and students agreed that the No Pass No Play rule encouraged them to make better grades. In 1994, the Austin Independent School District conducted another study showing that enrollment in honors courses did not decrease, there was no significant increase in the number of dropouts, and the dropout rate

for students participating in extracurricular activities was substantially lower than non-participating students . Arizona and California also observed similar policy results. Since more than half of Texas high school students take part in at least one UIL (University Interscholastic League) activity before they graduate, current implementation of the No Pass No Play rule must be maintained and could be improved. n

Post-Conflict Development: Where You Can’t Even Send a Postcard Home John Travis, MPIA ‘12

Every morning for the past three months I’ve sipped my morning coffee while gazing out over a wide flowing river. On the other side, if I’m up early enough, I’ll see the fishermen preparing their dugout canoes, meticulously folding their massive nets so that they can later lay them out into the water in hope of a catch. Off to my left, a few hundred meters up river, my view shifts to the rapids, which, even though they’re modest in size, put a complete stop to river traffic. Closer still my view is marred by the razor wire and stone wall which encloses the perimeter of my compound. The river is the Congo. Joseph Conrad wrote of sailing up the massive flow into the darkness of Africa in search of Kurtz. It’s more recently been called The River of Blood, and rightly so given its history. Over a hundred years ago King Leopold II of Belgium used this river to brutally extract rubber and ivory from the country, ordering the removal of the hands of those who failed to meet a quota. Years later Mobutu Sese Seko did the same with gold and diamonds. From 1998-2008 a war fought here involving eight other African nations, often referred to as the African World War, left over 5.4 million dead – that’s over 45,000 people per month – mostly over those same treasures: Gold, Diamonds, Copper, Rubber, and now Coltan (have you heard of conflict-cellphones? You all have one.). This is the sort of setting many of us who will pursue a career in International Development may be faced with. Sure, there is work going on all over the world, and if you want I’m sure you can find some NGO in South Africa, Botswana, or Malawi which will need your help, but it’s post-conflict work which will have the financial backing of nations around the world. Plus, post-conflict zones have become the testing grounds for some of the latest development innovations. Post-conflict development, not counting the Marshall Plan after WWII, has a rather short history. After the end of the Cold War when financing sympathetic authoritarian regimes fell out of style, Wilsonian Democratic Peace theory became the driving force of international intervention. While free elections are usually the main focus of such interventions, there is also a major focus on economic development, particularly in regards to free-market reforms, institutional development (military, police, bureaucracy, etc.), education, and, more often in cases like Congo, ethical and gender-based violence work. In Kisangani, the last navigable point on the Congo River before it bends on its long journey south, the very place where Conrad’s Christopher Marlow finally found Kurtz, I’m interning for the Norman Borlaug Institute on a post-conflict agricultural initiative designed to teach Congolese soldiers how to create farms on their base and have a sustainable source of food. It’s a one-of-a-kind project which has already shown THE PUBLIC SERVANT | 7

STUDENT OPINION signs of success in its early stages and has been recognized by many government officials as something that could be replicated elsewhere. But this project is only part of the work being done here. There are military contractors training soldiers, there are construction companies assisting in reconstruction, the Red Cross are here working on expanding health services, and the United Nations is here training the police force. Much of this is institution building, as after the wars the Congo was left with virtually no functioning public or private institutions – the post office has been closed for over 10 years now and remains so to this day. There is a great deal of opportunity now in post-conflict work, but you must be willing to go to places which aren’t exactly high on the comfort list, but they’re much more sexy when it comes to street-cred. I love it when NGO workers in other countries ask to see my Congo visa. Right now, Southern Sudan is where most people I’ve met within the industry are headed. Iraq and Afghanistan will be hotbeds for post-conflict work for a long time to come. The Congo is huge and there is still fighting going on in some parts so the work here isn’t exactly going to dry up. And will all of the recent rebellions springing up in the middle-east there may be new operations springing up in the future. That being said, the prospect of obtaining a job in our weak economy shouldn’t be your reason for going into post-conflict development work. Post-conflict work is being done to prevent countries from falling back into cycles of war and death, and because of that is requires a level of dedication and strength of will unlike other international positions. It’s also dangerous. Last week when a UN plane crashed going from Kisangani to the capital of Kinshasa my family was frantic as they knew I’d recently flown with the UN. You also might not get the respect of the local-level NGO workers as you are driven around in Land Rovers and spend your time with military personnel – activities which are sometimes looked down upon by many development workers – but often the situations in the countries warrant the heightened level of security. The work is imperfect, as demonstrated by the 1993-1994 UN initiatives in Rwanda, particularly the liberalization of the radio broadcasts, directly contributed to the genocide in 1994, but agencies are learning from their past mistakes. As more peace-building operations are put into place, more information arises about what works and what doesn’t. So, when you’re considering the direction you want to take in development work, maybe you should think about hopping on a plane to Jubbah or Kabul or Baghdad or even Kisangani. Just be sure to call your family a bit more often than I do. If you’re interested in post-conflict work I highly suggest you get a copy of Roland Paris’ “At War’s End: Building Peace after Civil Conflict” which examines in depth eleven peace-building operations from 1990-1999. For further information on the Congo, I recommend Bryan Mealer’s brilliant firsthand journalistic account of what the UN labeled a post-conflict period (20032008), “All Things Must Fight to Live: Stories of War








The Unsanctioned: A Novel born at the Bush School Lucas Vinze, MPIA ‘12

The Unsactioned, a novel recently published by Michael Lamke, a former MPIA Bush School student, is a must read for those interested in current national security issues. Lamke sys that the novel was heavily influenced by his studies at the Bush School, and some of the core ideas were formulated while he was still a student here. The plot surrounds the main character Lane Evans, who works as the Aide to the U.S. Ambassador to Thailand. Lane, a veteran of Iraq, is experienced in using a secret U.S. intelligence database to uncover the identity of anonymous Internet users. When Lane unmasks a Thai Blogger, he captures the attention of Colonel (Ret.) Tom Lewis who is running a covert operation for the Director of National Intelligence to stop the world’s most influential anti-American Bloggers. The highly ambitious Ambassador dispatches Lane to support Lewis, with a secret mission to ascertain the inner-workings of this unconventional program.

STUDENT OPINION the issue of cyber terrorism, and is more up-todate than ever. It becomes impossible not to have the recent events caused by Wikileaks in the back of your mind, while reading the book. What limit to be put on public data

is the sharing?

Mike Lamke is a West Point graduate and served time in the military and as a private contractor in Iraq. He holds a MS in Science & Technology Commercialization from the University of Texas at Austin and a Master of International Affairs degree from the Bush School of Government and Public Service at Texas A&M University. He currently works for Lockheed Martin supporting Homeland Security and Law Enforcement programs. He lives in Frederick, Maryland with his wife and two children. Can we say we have our won Bush School Tom Clancy? Read it and check it out. The book is available on the student lounge book shelf. n

Leaving his Thai girlfriend, Ana Maksawan, in Bangkok, Lane travels to Washington to join Lewis and is instantly tasked with uncovering anonymous Internet users all over the world. To complete his secret mission, Lane solicits assistance from a former colleague and current CIA analyst, Eve Maier, rekindling a passionate desire that has simmered for several years. Lane’s tenacity eventually leads to a shocking discovery. Anonymous Bloggers are being killed. His intrusions haven’t gone unnoticed. Now, he and Ana are targets, and Lane has to move fast. His quest to uncover the truth, save Ana, and end Lewis’ sinister program will test his courage, challenge his faith in longtime confidants, and force him to finally choose between the only two women he’s ever loved. This is an a novel dealing primarily with the balance between national security interests and freedom of speech in the internet. The book is deeply focused on THE PUBLIC SERVANT | 9


On the Composition of the Bush School Student Population Michael Walter, MPSA ‘11 Part of what makes the Bush School unique is its ability to attract some of the best students and faculty from across the nation and world, bringing them together to learn not just about diplomacy, policy analysis, management and program development, but also the intricacies of developing those things among diverse populations. Diversity continues to be a concept that individuals tend to immediately associate with race. While this continues to be part of assessing the level of diversity, it cannot be seen as the ultimate goal in achieving a diverse population. One of the things that attracted me to the Bush School was the idea that I would be interacting with not only individuals from Texas, a place I had only visited and never lived, but also the prospect at meeting and learning from and with individuals who had varied experiences from across the nation. This is exactly what I have found as a student here. As a Californian, I learned not only about the diverging concepts, attitudes and ideas in government, but also cultural differences across the states. I also hope that I have brought a bit of my own experiences from both California and Arizona to the table. While some professors have expressed their opinion that our personal experiences don’t matter to our colleagues in the classroom, I beg to differ. My learning continues to be enhanced by the experiences that others have brought not only from regional and international diversity, but also from varied experiences across sectors, and I hope that my experiences have helped other students develop the way they approach public policy. Having spoken with some prospective students from the class of 2013, I am concerned as some of them expressed dismay at the number of Texas A&M undergraduate students applying for, and being admitted to the Bush School. While I understand the draw for an undergraduate student to extend one four-year degree into two THE PUBLIC SERVANT | 10

STUDENT OPINION in a five-year program, I feel that a significant strength of the Bush School student body is being weakened. This program, in order to reach the world-class status for which it has the potential, needs to be highly selective in both the quality and diversity of it’s student body. If we continue to be seen as an extension of a Bachelor’s degree from the Department of Political Science, the reputation of the program will be damaged. For those of us about to walk out of the door with a Bush School degree, we should be concerned

about the continued value added or detracted from it. As the program’s quality increases, so does the value of our degree. As a soon-to-be former student, I’m concerned at the direction that our program is taking. As we grow, we need to be careful to maintain, or increase, the quality and diversity of our student body. Only with investments in the areas of recruitment and student selection, will our program increase in renown. n

Sticking it to the (Tax) Man David Arceneaux, MPIA ‘12

With tax season coming to a close, many of us are still recovering from long nights of debating whether or not morning doughnuts and coffee are tax-deductible items. As aspiring investors, we must take this opportunity to recognize the importance of an individual retirement account (IRA), the investor’s way of combatting taxes through a couple of different means. There are two kinds of IRAs to know about: a traditional IRA and a Roth IRA.

Roth IRAs

Traditional IRAs

A common misconception about an IRA is that you can only open an account with a bank or investment firm and make a meager 1.5% or less per year. If this were true, you would be better off just spending the cash before it is outpaced by inflation. Fortunately, an IRA can have a vast assortment of investment vessels within it. Stocks, bonds, mutual funds, CDs, and several other investment opportu-

Traditional IRAs allow an investor to use their investment as a tax-deduction. This is particularly helpful when money is tight and a shortterm financial relief is needed. While this benefits the investor in the short term, the gains are taxed upon withdrawal. For simplicity’s sake, the traditional IRA should be considered as a short-term tax strategy.

Roth IRA contributions are not tax-deductible, but the gains are. This means that if you double or triple your initial investment, none of that is taxed when you take it out. An investor who is successful and stays the course for decades can save vast sums of money by utilizing this tax umbrella. While a traditional IRA is a short-term tax strategy, the Roth IRA is one for the long-term. Opportunities


nities are available to an investor using an IRA. One option worth mentioning in particular is mutual funds. Mutual funds are a great opportunity for IRA investors; these funds can give exposure to stocks without the individual investor needing to manage their own portfolio daily. Stocks have outperformed any other asset class over any given ten year period, so clearly the potential for great gains are present. The problem is typically that investors are not confident in their ability to manage a portfolio. Mutual fund managers do the work for you in this regard, for a nominal fee, of course. Whatever method you choose for investing, an IRA is a must-have for the long-term investor. Remember: it’s not just how much money you make investing; it’s also how much of that money you get to keep. n

Volume 12, Issue 4  

April 2011