But as Romney clumsily half-courts the Hispanic vote, conditions at our southern border are growing more dire. The brutal drug-related violence that has long gripped Mexico is on the rise. Two weeks ago, 49 bodies missing their heads, hands and legs were found near Monterey, Mexico.  A message left nearby indicated the Zetas cartel was responsible. One week earlier, 18 dismembered bodies were found in Guadalajara. One week before that, 23 bodies, with indications of torture, were found hanging from a bridge in Nuevo Laredo on the U.S. border. They are casualties of an apocalyptic drug war, a thriving human smuggling trade and, more broadly, a deeply dysfunctional relationship between the U.S. and Mexico.

Both Romney’s rhetoric and this recent rise in violence belie our extraordinarily schizophrenic attitudes toward immigration and the Mexican border. But according to Steven Bender, law professor at Seattle University, those can be fixed. In his new book, “Run for the Border: Vice and Virtue in U.S.-Mexico Border Crossings,” Bender takes a historical look at the north- and southbound journeys that citizens of both countries have taken since the U.S. and Mexican boundaries were defined. He argues that much of our border policy is determined by long-held stereotypes of the Mexican crosser – the lazy immigrant coming to gouge social services, the sly immigrant coming to steal jobs, or the criminal immigrant endangering American communities – when, in fact, the vast majority of Mexican immigrants come to work for their own survival and that of their families. Bender also makes clear that Mexican workers are possibly more crucial to the American economy now than they’ve ever been.

“Run for the Border” calls for a more honest and, in Bender’s words, “compassionate” border policy that can make both the United States and Mexico safer and stronger.

So far, border policy and, to an extent, immigration reform don’t seem to have become as prominent in this election cycle as they were in 2008. Do you agree? And why do you think that is?

I think both Democrats and Republicans realize that they’re at an impasse and that there’s little political capital to be gained by pushing forth immigration reform, particularly comprehensive immigration reform. Democrats are going to resist anything that’s too restrictive, and Republicans are going to resist anything that has anything involving what they would term “amnesty,” which would include the DREAM Act.  So, even portions of immigration reform that have previously been bipartisan – such as the DREAM Act – are stymied awaiting the election.

Four years ago, on the other hand, there was an assumption that we would finally turn as a nation to resolve the problem of immigration reform. But quickly, with states like Arizona and Alabama taking their own action, the dynamics of immigration within the U.S. shifted, and then the global economic crisis hit. Traditionally, it’s very difficult to have realistic, meaningful, compassionate immigration reform in times of economic turmoil. And now that we seem to be starting to emerge from the economic distress, the onset of election season politics has further stymied reform. It’s really a matter of getting past the election and going [forward] from there.

There are enormous differences between how the U.S. deals with its Mexican and Canadian borders. Since the middle of the Bush administration, our restrictions on the Canadian border have become tighter, but they are still much more lax than those on the Mexican border, even though a fair amount of marijuana is trafficked into the U.S. from Canada.

That’s correct. And it’s interesting that in the wake of 9/11, even though none of the 9/11 terrorists had crossed the U.S.-Mexico border, we have focused so much energy on the southern border as a gateway, presumably for terrorists. There has really been only one possible terrorist link to the U.S.-Mexico border since 9/11, yet we have focused so much in terms of resources and technology and wall building on that border in the name of homeland security. It’s today’s face of immigration – the Mexican face – that explains why there is so much emphasis on walling off Mexico rather than Canada.

[Also] interesting in relation to Canada is that, in the last couple of weeks, the Canadian paper The Globe has run a series on Canada’s immigration woes. The editorial that opened the series stated that Canada needs one million immigrants, in the short-run, to handle the necessary jobs, given the aging population. That is, of course, completely opposite from the tenor of the debate in the United States, where we view immigrants as somehow coming in and stealing jobs to which they’re not entitled.

Recently we’ve learned that more than half of babies born in the U.S. are now non-white. How do you think the country’s changing demographics will affect the way we think about border policy and immigration?

Well, at the same time that Anglo births are decreasing, the Mexican birthrate is also decreasing. But rather than comparing, it’s important to note that ultimately we may be in the same position as Canada, in terms of needing more young, viable immigrant labor. And, given the contributions of immigrants to the overall birth rate (including immigrants from all countries), and in light of the pressing needs of our social security system, our need to compete in the global economy, and the needs of the housing market, we ought to celebrate the fact that we still remain viable as a country, in large part due to immigrant births.

The American military has been experimenting with drone technology on the border for years.  There are now concerns that border vigilantes – on the U.S. side – could begin to use drones, which are already being purchased by police departments. 

There’s a long history, particularly in the U.S. and on the Arizona-Mexico and Texas-Mexico borders, of vigilantes. Most recently, the Minuteman Project vigilante campaign was really the precursor to Arizona’s immigration law — SB1070. There were a number of documented instances where the Minuteman project and ranchers exceeded the U.S.’s lawful bounds. As for drones, there are some chilling comparisons to the use of drones in Asia and the European Union. Considering the possibility that the border could some day be patrolled by drones, it’s important for us to ask this question: If, as I posit in my new book, undocumented workers who are crossing the border are among the most virtuous of border crossers, how is a drone going to evaluate and assess virtue? Not at all. The drone is going to be programmed simply to keep [border crossers] out, whether they are bringing drugs or they’re coming to work in U.S. fields and factories. So, I fear that.

You argue that Americans need to reduce demand for drugs, rather than simply cracking down on the supply. How do we do that?

We’re basically the biggest drug user in the world [sitting] next to a poor supplier country, Mexico. One of the ways to reduce demand is through selective legalization. The funds that our country would accrue through that change could be used for greater intervention and treatment – which is part of the answer to your question. But I also suggest the possibility of a moral imperative for U.S. residents to take greater responsibility for the mounting death toll in Mexico from the drug wars, and, in light of that, to really re-think drug use from that perspective.

The book argues that American cultural and economic needs can converge with those of Mexico, leading to a “compassionate” border policy.   

Yes. There are a number of grounds on which the economic (and other) interests of U.S. residents converge with a border policy that expands lawful immigration. Such a policy would assist the ailing social security system, address the need for replacement laborers, [and] aid the housing market – which depends on entry-level buyers. Increased immigration is also a way of competing with emerging economies, such as China and India. Immigrants are going to be essential for remaining competitive in a global market place.

You believe that immigrant populations can have a “renaissance” effect on economically depressed U.S. cities. Where has this happened? 

I think virtually every city that’s lately experienced a boost in immigration has experienced the potential for a renaissance that they may not recognize because immigrants tend to be far more entrepreneurial than other residents, in terms of everything from starting new restaurants and stores to running other businesses. Particularly when you’re looking at an infusion of immigrants into a place where there’s otherwise been a population exodus – the Rust Belt area, for example — and notably in places that have also been regions of backlash against immigration, such as Hazleton, Pennsylvania. These areas have failed to recognize the potential renaissance in their communities [due to] immigrants.

Many American corporations take advantage of the maquiladora structure – Mexico’s largely unregulated manufacturing system. Like American illegal immigrants, workers in maquiladoras lack the legal protections that most American workers take for granted. But are they worse off than undocumented Mexican laborers in the U.S.?

The laws between the United States and Mexico – considering the flashpoints of environmental protections and labor laws – are fairly similar, but in practice they’re quite different. Through corruption and through lack of resources for enforcement, environmental and labor protections that we take for granted in the United States are easily subverted in Mexico. And so the workers in [Mexico's] factories and the citizens in surrounding communities face worse environmental hazards and receive lower real wages, particularly in the borderlands communities where the cost of living is not much lower than across the border in the United States. Those workers have a very difficult time making ends meet. And that’s what prompts the allure of making a few dollars an hour vs. a few dollars a day; and that’s what has prompted, over recent years, particularly since NAFTA, a very strong push of immigrants across the border looking for jobs in the United States. The maquiladoras also benefit Mexico in particular ways. Certainly they provide, and have provided, a number of jobs that pay better than many other jobs in Mexico. At the same time, they have contributed to the uprooting of families from the interior of the country. They have been sites of labor abuses, and they’ve contributed to environmental degradation in the communities they’re found in.

They may also be to blame for the huge amount of murders of civilian women in Juarez. Some have noted that the poor treatment of women has been so institutionalized, through the factories, that murder somehow becomes acceptable. 

Yes. It’s the idea that was suggested by a law professor, Elvia Arriola, who has extensively studied the impact of the maquiladoras on women, particularly on the hundreds of unsolved murders – what is a femicide in Juarez over the years. She contends that the culture of subordination of workers, particularly that of female workers – who are desired by the employers because, among other things, they are perceived as less likely to object to the miserable working conditions – has contributed to a subordination of women in the broader community and to a local culture that does not value their lives and is not concerned with solving these mass deaths.

Many U.S. citizens go to Mexico to retire, which, as you discuss, has a complicated effect on the Mexican economy. There are benefits to an influx of relatively wealthy people, but there are also very specific ways that it harms the Mexican economy.  

Yes. Like the maquiladora experience in Mexico, the influx of U.S. residents as retirees, or even as buyers of second homes and vacation homes, really leaves a conflicted economic record. Certainly there’s a boost to the local economy, with the initial building of these retirement and other homes, but that tends to be a fleeting economic presence, and if anything it drives up prices and really excludes Mexican residents from the prime real estate. You have this dichotomy then between the sort of walled-in southern-California-type oasis that’s inhabited by the retirees and the working-class housing of the laborers on the other side of the walled-in community. And that’s a dichotomy that we find in the United States as well, but it’s a particularly stark contrast in these Mexican retirement havens.

A running theme of the book seems to be that the Mexican government has tended to make border policy decisions that are rational in terms of economic self-interest, while the U.S. government has behaved in its own self-interest, with an added slice of irrationality based on stereotypes and fears. How do you think race plays into the decisions of our government?  

One of the main ways it plays out here is in how we undervalue immigrant labor. The Mexican face has become the face of immigration, and we simply don’t see virtue in Mexican border crossers, whether they’re coming for jobs (which is most often the case) or for other purposes. We tend to view their entrance in a derogatory way: that they are coming to either commit crime through drug dealing or to wrest public services away from more deserving populations. That’s the lens through which we view immigration proposals, and that’s why there have been such stymied efforts to pass comprehensive immigration reform. It’s because of the Mexican face of immigration and how racialized that debate has become.

There is a dynamic that has emerged in the immigration debate in which, while it might be improper in some civilized settings to make overt racialized attacks on Mexicans and Mexican-Americans, by couching the attack as against “undocumented immigrants,” anything goes.  Anything can be said with impunity about “undocumented immigrants” because they’re being discussed as a group that is apparently not racialized. But in fact we all know that the things that are said about immigrants are being said about Mexicans.

The war on drugs has narrowed down the cartels to the most efficient and brutal groups, and violence against civilians in Mexico is increasing. What can be done?

The Mexican government needs to return to its long-standing policy – what is unfortunately a policy of corruption, but a less bloody solution – of treating the drug cartels more as businessmen, similar to how the United States treats the alcohol industry. I don’t suggest that lightly, but with the mounting death toll, that’s a reasonable compromise that makes more sense and that better serves Mexico.

Wouldn’t such a policy would allow for greater competition and decreased profits for the few cartels currently in power? 

I think what the drug cartels would be most opposed to would be selective decriminalization or legalization of drugs in the United States, particularly of marijuana, which might alone account for 60 percent of cartel profits in Mexico. That is what would scare the cartels to death: If we on the other side of the border finally tackled the elephant in the room of decriminalization and legalization beyond medicinal marijuana.

As for decreased criminalization within Mexico, I believe the cartels prefer whatever leads to more chaos. If lives are viewed as expendable, then there is potential for profit in great chaos.  So, I think that some of the cartels would, I agree, be opposed to increased legality within Mexico because they would lose that advantage of profit and the chaos that ensues today.

It seems unlikely that anti-immigration sentiment can be changed through policy alone, and that we may need vigorous public re-education before we can manage to get legislators to change policy in the first place.  

I agree. I think that to begin to address the derogatory image of the immigrant, before there can be anything along the order of compassionate immigration reform, we need to re-learn who these migrants are.  And I think that happens in face-to-face local settings, where people begin to hear the stories of these workers, begin to realize the compelling human interests that are driving them, and begin to recognize, really, the desperation that comes with poverty and that the immigrant’s search is really a search for the American dream. I think that when those dialogues occur, one-to-one, person-to-person, face-to-face, the image of the migrant can change into one of a virtuous contributor to the U.S. economy.

But given that xenophobic sentiment seems to be on the rise in some parts of the country, this seems difficult. In Arizona, people are going to have interactions with immigrants regardless of whether they wish to or not, but plenty of people who strongly oppose immigration live far from the border or immigrant populations – they could be in Appalachian Ohio, for example. They might not have any of these interactions. 

I actually think that the long-term is going to demand leadership from political leaders, community leaders, and civic leaders. And it’s going to need to happen in what I could call bastions of hate, which include parts of Arizona and places such as Hazleton, Pennsylvania, Farmer’s Branch, Texas, and parts of the South. That’s where these dialogues are going to have to take effect, and unfortunately it’s not an overnight thing.  In the meantime, people are dying crossing the border, and people are dying in the drug war. And while my book calls for, in the first instance, an immediate halt to the bloodshed while policies are transformed, realistically the blood is going to continue to flow while we hold these crucial debates and while we rethink what it means to be an American.

For those of us who believe that there’s something seriously wrong with the Republican Party (and see Tom Mann and Norm Ornstein’s new book; see also my argument that the problem is not about how “conservative” they are, but about their radical style), the big question is whether anything can be done about it. American democracy needs two strong, solid political parties, but currently one of the parties is just a mess – incapable of making coherent policy when it’s in office, and dangerously obstructionist when it’s out of office.

So how can a party recover? I think there are three ways, but two are unfortunately quite unlikely, and the third is at best uncertain.

Some talk about the possibility that the electorate will punish Republicans for their radicalism. Unfortunately, I think that’s unlikely. Note that consecutive blowouts in 2006 and 2008 certainly didn’t make things better. Part of the problem here, too, is that elections generally don’t work that way. It’s true that the impression of ideological extremism can be costly, as Barry Goldwater and George McGovern learned the hard way, but we’re talking here about 2 or 3 percentage points in a presidential election. Direct action by the voters just isn’t enough to do it. After all, as voters, they can only choose between the nominees that they’ve been offered, and if anything voters are more partisan than ever; they’re not likely to defect just because a candidate embraces the crazy, even if they don’t like it, because they would still have a strong preference for that candidate otherwise.

A second possibility is that they’ll wind up with a successful president who sets a strong example of sane conservativism and who is strong enough within the party that he or she can push a lot of the crazies to the fringes and beyond. That could work. Presidents have limited influence in general, but one thing that a popular president can do is to define normality for his or her own party. They can reward some and punish — or at least avoid rewarding — others, creating real and meaningful incentives that can be very different from what came before. The obvious analogy is Dwight Eisenhower’s maneuverings against Joe McCarthy. The problem is that for this strategy to work it takes a skilled and popular president who decides to try it, but Republicans might have to wait a long time before they get another Ike.

So the first method probably can’t work, and the second one is unlikely to happen. That leaves one other possibility: that the Republican coalition itself might demand change. Specifically, that Republican-aligned interest groups – perhaps business, national security or others – might become upset enough with the crazy, or worried enough that the crazy will impede their ability to get things done, that they’ll push to end it. After all, part of the problem with the crazy is that it truly is random; you really never know what nonsense Limbaugh or the Breitbart sites are going to be up to next, and there’s every possibility that it could interfere with groups within the party pursuing their interests. Even worse: Politicians who believe they were elected because their most valuable allies convinced the electorate that the president was a radicalized foreigner are going to be responsive to those supporters, and not to organized party groups. Those groups have enough troubles as it is, since in the current free-for-all campaign finance environment they have to compete with random billionaires who might have all sorts of unorthodox policy preferences.

We’ve seen a little bit of this already. During the healthcare debate, many normally Republican-leaning groups chose to work with the Obama administration and cut their best deal, rather than sticking with the rejectionist GOP. Several companies quit the conservative state lobbying organization ALEC when it became controversial by lobbying for ideological and partisan goals. On the national security side, a break has emerged between the Department of Defense and movement conservatives; both conservatives who care about national security and (on some issues) businesses might choose to stick with the Pentagon. And it’s not quite the same thing, but there’s been a small but steady stream of defectors from the movement.

Nevertheless, something like this would likely play out in nomination politics, with party-aligned groups insisting on candidates who are willing to fight for their interests while rejecting the crazy, and there certainly isn’t any sign of that yet. Will it in 2014 and 2016 if Romney falls short this fall and the crazy gets even worse? I have no idea – but that’s the only path out of this that I can imagine.

Something about my incompetence made Fred furious. In the locker room after lacrosse, he would snap at my ankles with his stick until they turned bright red. One day during practice, he dropped any pretense of chasing after the grounded ball and simply rammed into me with all his force. My helmet disappeared; my sweaty gloves flopped on the ground.

“Are you OK?” asked the assistant coach, a tall, heavy-set man who was also the head of the upper school we would both be joining next year.

I nodded, trying to breathe and pretending I wasn’t about to cry. But I lived the next months in fear. That August, before the start of high school, I walked into my brother’s room and asked him, with the most serious face I could muster, if he could teach me how to punch somebody.

But I didn’t have to learn. Fred left our school. I heard his dad was seen screaming in the office about what a screw-up his son was, a detail I relished with a grim smile. Mostly, I was relieved Fred was gone, and I could stop jumping every time I heard a locker slam.

Life was good. It got even better when I met John during soccer practice. He was quirky; he wore the same pair of purple sweatpants to school every day, and he joked about how much he masturbated.

“One time I did it 10 times in one day,” he said at practice, both of us standing at the end of the field waiting for the coach’s call.

“How does that even work?” I asked.

“I guess it was more just to prove that I can.” He shrugged. “By the end nothing was coming out.”

We became best friends.

I was happy to have someone to sit with at lunch, but eventually John started to do something I didn’t understand — he would constantly tell me I was gay. He wrote it on my textbook in biology, where we sat together, and he would whisper it while pointing at me. At that point, I had only had the most fleeting of interactions with girls. I was 14 and barely knew what sex was beyond the definitions I’d gleaned from health class and pornography. But I knew that “gay” meant more than having sex with men. “Gay” was a word that boys tossed around like hot potato, everyone hurling the insult in the vain hope it wouldn’t stick to them. It was a word to be feared, but still buoyant enough not to always be taken seriously. I figured John was using it playfully, among friends, the way he would also call me “Jew.”

A few weeks later, John invited me to join an online conference using our school’s in-house email system for a movie he wanted to make. The film was about one of our heavier friends, Drew, escaping from fat camp. (Fat. Gay. Jew. The words were piling up, but I didn’t care. I had finally wedged my foot in the door.) We went over to John’s house to mess around with a camera one Saturday, but all we ended up filming was Drew chasing a line of bagels rolling down the street while chanting “donut, donut, donut!” Instead, the conference became a place to jab at each other while sitting on school computers. Eventually, John started making more of his gay jokes.

At first I was flattered. This was still a form of attention. And, frankly, I craved attention. But things got weird around spring break. John wrote stories about me taking little boys and animals into the woods to have sex with them. Stories about me being molested by priests and loving it.

Finally, I asked him to stop. The insults meant nothing, I told him in an email, but I agreed to bow out of the group. Still, I would stay up late at night at the family computer, reading and re-reading more elaborately crafted insults and waiting for the page to refresh.

“Since Yannick isn’t reading any more,” he posted, “I can now say: Yannick is GAY GAY GAY GAY GAY GAY GAY GAY . . . ”

It went on like that for a while. The other boys just laughed.

Then one morning, I checked my email in the school library and saw a note from our IT adviser. He had discovered the online conference. The news spread quietly through the administration, which did its best to stop any further damage. A faculty member reminded kids during Monday announcements to be mindful of the correspondence we keep on the school’s email. John was identified as the ringleader and quietly whisked away for probation. Drew was called out for a note saying he was going to kill me (something I again took in jest).

I was rushed in to meet with the head of the upper school, my old lacrosse coach. Again he asked me that bland, unanswerable question: Are you OK?

I thought back to that sunny day on the lacrosse field when he looked down at me with concern while the other boys milled around idly, waiting for the drill to restart. It was all too familiar. Again he towered over me with concern, again the rest of the students milled around idly, having no idea what just happened right next to them. Only this time, the tears were in his eyes as he apologized for what the school had let happen to me.

There’s a weird tension once authorities become involved in teenage arguments. The “can you take it?” approach to maleness sees running to grown-ups as an act of cowardice, which is the very reason I never told anybody outside the email circle what was happening in the first place. In that way, it was a relief that someone finally made it stop. But it was equally bizarre to hear our conversations reinterpreted by adults who were trying to determine the arbitrary moment when a cruel jest slid into unacceptable hatred.

I sat with my mother and the school counselor as they flipped through pages of our correspondence. Read aloud, they sounded different than the jokes I’d convinced myself they were.

The night the news broke at school, John’s mother called me. She was livid with him, she said, and didn’t understand why someone would do something like this. She couldn’t say she was sorry enough. I stammered out the same response I would learn to tell everybody.

“It’s OK, I’m fine.”

Then she put John on the phone. It was the first time we’d spoken since an army of adults swarmed around us. It was the last time we would really speak for almost three years.

“Yannick?” John’s voice was frail, as if he was barely finished crying. I thought about his parents standing above him as he sat on the couch in his living room, face buried in his palms, trying to explain things he couldn’t and didn’t want to. It was the same position I was in earlier that day, the same position I would be in many times in the coming weeks. “I’m really sorry.”

“It’s OK,” I said. “I’m fine.”

“I really don’t know why I did that. I don’t know what I was thinking — I wasn’t really thinking, was I?” he asked to his mother. “Still friends?” he asked me.

“Still friends.”

We both knew the words were hollow. I switched seats in biology. One day, John and I got trapped walking down the same hallway. We joked weakly until my mother rounded the corner. An hour later, she yanked me into her office with my brother. This man is a monster, she said, and now you’re walking down the hall laughing with him? My brother fumed about how the school needed to expel him, to call the police. I sat with my face in my hands, telling them that everyone wanted me to be angry, but all I wanted was to have my friend back.

Hating Fred was much simpler. The violence of getting your head kicked into a locker is so obvious— I could either let it fester within me or redirect it. At night during that spring lacrosse season, I would stare at the knife rack in my kitchen and wonder what it would be like to make one of us bleed. I don’t think I really wanted to hurt him, or even myself. I just wanted him to go away. But John hadn’t hurt me in a way I understood. The standard call-and-response of bullying was gone.

So I did my best to disappear. I spent days down in the photo lab, bringing my lunch there to avoid the cafeteria. I took as many classes as I could. Empty space and time were to be feared. I pretended to search through my locker until the hallway was empty so I could walk to class alone. I tied and retied my shoes.

The next fall I dropped out of soccer. The coach didn’t ask why. John went to the varsity team and became class president. Every time he did something remotely public, someone would whisk me into an office and ask how I felt.

“It’s OK,” I would say. “I’m fine.”

By the end of senior year, my classmates would ask me periodically if I still went to school there.

The last time John and I spoke about what happened was senior spring. Each student was asked to give something called a “focus speech” to reflect on their time in high school. I emailed him that week to let him know I’d be talking about what happened between us.

“You were my best friend at the time,” he wrote back. “I can’t believe I messed that up so much.”

John wasn’t in the room when I gave the speech, but three of the other guys were. Afterward, one of them stood up and said he wanted to publicly apologize for what he participated in. The other two came to me later. Apologies are always awkward, and these were no exception. Our eyes never met.

For a long time, I didn’t hate the people in high school so much as I loathed the school itself for forcing me into this situation. The irony of our cultural anxiety over homophobic bullying is how people deplore it in teens even as it mimics the very policies of our most respected cultural and political institutions.

In that way, bullying isn’t a disease but a symptom of a larger social problem. We can gaze aghast at the horror of bullies every time a new tragedy surfaces, but asking where this violence truly comes from is much more difficult. The year after my school recorded its first case of cyber-bullying, the same administrator who cried in front of me in his office did his best to stop the school’s Gay Straight Alliance from hosting a queer prom. Lower-school parents, he explained to my friend who was planning the event, had seen posters in the high school hallways and didn’t want their children to be affected. I wonder if he ever questioned why there wasn’t a single openly gay teenager walking down those halls.

I’m grateful for one thing my school did, though. They forced all of us boys out of a little world where “gay” could mean anything and everything and into one where we had to look at each other and ask what we were doing. They were trying to foster our empathy.

But did it work? I still don’t know what the answer is.

One summer during college, I logged on to Facebook and saw one of the boys’ statuses unfold down my newsfeed. “Max is gay,” it read. Then a moment later, “Max is really gay,” followed by “Max is super hella gay.” Finally, it ended: “Thanks Dan for updating my status.”

I don’t know if John would still do the same. But I doubt it.

Facebook’s botched IPO adds a new wrinkle. In contrast to Bain-style private equity wheeling-and-dealing, the Silicon Valley venture capital model for new firm creation has always enjoyed a much more positive public relations profile. Maybe it’s a West Coast vs. East Coast thing, but conjuring up the likes of Intel or Apple or Google from thin air is a lot more sexy than swooping down on a troubled firm, brutally slashing costs and stripping assets, and then reselling for a huge profit a few years down the line.

But the Facebook mess, with all the questions it raises about insider trading, and the clear abuse of small investors in favor of the big boys, reminds us that everybody’s got their warts and nobody should get a free pass. Facebook’s early venture capitalist investors and the big investment bank clients that got preferential access to new, and negative, information about Facebook’s future profits, were able to cash out while the little guy was left holding the bag. Sifting through the aftermath, it’s hard to avoid the conclusion that a lot of people got ripped off. And coming right in the middle of all the back and forth about the merits of private equity, Facebook’s IPO raises a provocative question: Just how is it that capitalism, East Coast or West Coast style, currently serves the interests of the American people?

Because here’s the thing: Over the past 40 years, the venture capital and private equity buyout industries have grown dramatically, from basically nothing to becoming crucial drivers of corporate formation and growth. Last year, venture capital firms invested $32 billion in new start-ups in the U.S. while private equity funds raised over $100 billion for buyout activity. All along the way, government policy lavished both sectors with extraordinarily lenient tax policy — including massive cuts in the capital gains tax and the so-called carried interest rule that allows Mitt Romney to fork over only 14 percent of his income to the IRS — which has allowed financiers of every stripe to vastly increase their individual wealth. But over that same period, income inequality has grown and the average worker’s wages have stagnated, while the cost of healthcare and education has skyrocketed.

Facebook’s IPO and Bain Capital’s track record end up telling us exactly the same thing. State-of-the-art American capitalism works very efficiently for the 1 percent, and leaves just crumbs for the rest of us. Efficiency is good for them, but not for us. That’s quite the achievement.

“Forty years ago,” David Brooks proclaimed in a New York Times column earlier this week, “corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.”

The specific purpose of Brooks’ column was to defend Bain Capital, Mitt Romney and private equity in general from demonization by Obama. But we can also throw venture capital into his “reform and transformation” pot. After all, strictly speaking, venture capital is a subset of the larger category of “private equity.” (Nothing’s “public” until the IPO.)

In pragmatic terms, there’s a key difference. What we typically call private equity generally involves a group of investors (i.e., Bain Capital) who borrow money to purchase an already-existing company — what’s known as the “leveraged buyout” — while venture capital typically focuses on investing non-borrowed cash for the purpose of creating or nurturing a new enterprise. The distinction is important, but we’ll come back to that later. For now, let’s assume that David Brooks is correct: 40 years ago, American businesses had forgotten how to compete, but today they’re much more fearsome operators. And let’s share the credit between private equity, headquartered in New York, slicing-and-dicing its way through old fogies, and venture capital, headquartered in Silicon Valley, relentlessly spawning new giants to stride the earth.

Again, the Silicon Valley venture capital model has always gotten better press (with the possible exception of the height of dot-com bubble insanity). The reason is obvious. It’s much easier to make the case that there are clear economic benefits to the country as a whole when new firms are being born and jobs are being created. It’s a lot more difficult to make the same argument about private equity, since it is very often the case that one of the ways in which the new owners “streamline” operations and make things more “efficient” is to cut costs by firing workers. To successfully defend the idea that private equity serves the interests of the general good, you have to fall back on hard-to-quantify things like the theory that weeding out the poor performers “frees up” productive forces to find better uses in the larger economy. That’s a hotly debated topic, and if you’re looking for a direct rejoinder to the assertions made in support of private equity by David Brooks, go read Josh Kosman’s new Rolling Stone Op-Ed “Why Private Equity Firms Like Bain Really Are the Worst of Capitalism.” Suffice to say, the story is not as slam dunk as Brooks would have us believe.

But never mind that. For our purposes here, it’s more interesting to focus on how the venture capital model and private equity models are similar — in the sense that the manner in which both types of investors encourage corporations to operate more efficiently and profitably can be argued to work against the interests of American workers. This is a critical point, because what have we gained from American corporations becoming less bloated over the last 40 years, if, at the same time, the fabric of our society has deteriorated and our upward mobility has become more limited?

I first really began to understand the extent to which Silicon Valley was no longer the vaunted job creation engine it had long been held up to be seven years ago when I visited the Santa Clara offices of PortalPlayer, a microchip designer riding high on Apple’s decision to use its premier product as the brains of the iPod. PortalPlayer was a state-of-the-art Silicon Valley venture-backed play. A significant portion of chip design and software development was outsourced to a fully owned subsidiary in Hyderabad, India. The chips themselves were manufactured in Taiwan. Less than half the company’s employees were located in the United States.

The visit was eye-opening. From a venture capital investment standpoint, PortalPlayer’s business model was an ultra-efficient application of resources. Indian coders were cheaper, and the time difference between Santa Clara and Hyderabad meant that PortalPlayer could develop software around the clock. Likewise, it made no sense for a small independent chip designer to fabricate its own hardware. But from an American software developer’s perspective or that of a prospective employee at a chip manufacturing plant, PortalPlayer’s model was discouraging: It clearly implied tough wage competition and fewer hiring opportunities. Repeat this model a few hundred, or a few thousand, times, and you start seriously hollowing out the United States semiconductor design and manufacturing capacity. Good for the V.C. investors, not so great for the country.

Facebook doesn’t fit as neatly into the the offshoring/outsourcing screw-the-American-worker model as do so many of today’s new technology start-ups or a Bain Capital outsourcing company. But the details of how the IPO was bungled illustrate another important way in which the wealthy benefit far more from how modern financial markets work than the general public. The emerging story of how top investment bank clients were told directly that Facebook had adjusted its revenue projections downward due to trouble selling ads on cellphones is evidence of a broken system. It calls to mind the string of dot-com frauds brought to market in the late ’90s that had no revenue at all or even the barest rudiment of a sane business plan, but still ended up delivering millions to the early V.C. investors before the newly public companies went bankrupt. For a few years, sure, there was a lot of job creation — but then everyone was laid off. Similarly, with Facebook, the earliest V.C. investors, the Greylocks and Accel Ventures, were able to cash out long before the clouds started to darken. Where Facebook is headed now is not their problem.

The private equity model of capitalism results in eerily similar outcomes for workers. One of the ways in which the new private equity owners of a firm streamline costs is through “business process outsourcing” — a bloodless phrase that means, in practice, hiring cheaper workers (either domestically or abroad) on a contract basis to perform tasks previously kept in house. Call center support operations move to the Philippines or Bangalore. Manufacturing goes to China. Et cetera.

All of these measures clearly succeed in cutting costs in the short run, which is important, because the new owners have added a lot of debt to the company’s bottom-line that needs to be paid off. But they’re not the same as making investments in the future. It’s not analogous to pouring money into research and development or taking risks developing new markets. Short-term “efficiency” is easy to maximize at the expense of long-term growth but it’s a very open question as to whether the benefits of that efficiency are broadly shared.

Bain Capital, it should be noted, didn’t just apply cost-cutting strategies that involved outsourcing to the companies it bought; Bain invested in at least two companies, Stream.com and Modus Media, that specialized in providing outsourcing services to Fortune 1000 companies. This is how American capitalism eats itself. You buy the companies that you use to carve up the other companies that you buy into little pieces.

Facebook’s IPO reminds us that even the most high-profile venture capital plays are often rigged in favor of the big investor — something that we should never have forgotten after dot-com boom became bust. But enraging as the behavior of investment bankers and Facebook executives might be, those run-of-the-mill shenanigans obscure a deeper problem. Whether the engine is powered by private equity or venture capital, we’ve created a machine that generates wealth for the few, while actually exerting downward pressure on the many. And that’s not something we’re likely to hear much about from either presidential campaign.

I saw “Oslo, August 31st” last year at Cannes and found it powerfully affecting, but I never would have guessed that this small movie from a small country would have touched an international nerve the way it apparently has. In the wake of a breathless profile of doctor-turned-actor Lie and his supermodel wife, Iselin Steiro, in the New York Times’ style magazine — which made the film sound rather like a fashion accessory, or a handbook to Oslo architecture — I almost feel the need to dial back expectations a little. Yes, there are drugs and dance clubs and traveling shots but, honest to Pete, we’re not talking stylish, scenic, lovable hipster romp here, people. While “Oslo, August 31st” definitely has the dynamism and street-level energy of, say, an early Godard picture, and may indeed leave you eager to visit Norway, it’s first and foremost an intimate tragedy about a likable young man who has wandered off the path of life into some very dark woods, and isn’t necessarily finding his way back.

As in Trier’s equally wonderful first film, the 2006 “Reprise” — I’m pretty much the president of the cult on that one — the director is interested in exploring the existential dark side of Scandinavian social democracy, with its largely homogeneous character and devotion to equal opportunity. When I talked to Trier about that film, which featured Lie and Espen Klouman-Hoiner as a pair of arrogant, doomed aspiring novelists, he observed that in Norway “there are a lot of people with a lot of choices. It sounds wonderful but there’s a darker side to that. Lots of people are not dealing with those choices very well.” Anders in “Oslo, August 31st” is something like the worst-case outcome for Lie’s character in “Reprise”; he’s a guy from a loving, middle-class family who’s got looks, health, intelligence and education, but for unknowable reasons finds himself on the edge of middle age as a penniless, unemployable, supposedly recovering junkie.

Trier and co-writer Eskil Vogt adapted their central premise from “Le Feu Follet,” a 1930s novella about alcoholism by Pierre Drieu La Rochelle, but “Oslo, August 31st” could really be set anywhere at any time. It’s about the painful necessity of adapting to change, every single day that we’re alive, and if we identify with Anders even as we rage against his despair, it’s because every living human has at some point considered the possibility that it’s just too much and the struggle isn’t worth it. Anders is doing well in drug rehab, and has cautiously been granted a one-day leave to visit Oslo friends and apply for a job. But we can tell from the first moments of the film that his agenda is more complicated than that; Anders is in the position of a certain Danish prince, evaluating the reasons for being against the reasons for ceasing to be. (Trier, by the way, is cousin to another famous Dane, “Melancholia” director Lars von Trier, and one could argue their visions of the world are related as well.)

“Oslo, August 31st” runs a lean, mean 95 minutes, and not one second seems unimportant. Anders moves through the streets of Oslo looking for reasons to live and reasons to die, and even though we don’t know those streets as he does, we can tell that they’re haunted with memories and private agonies. The city is dotted with construction cranes and demolition sites, remorselessly regenerating itself while he appears to stand still. Indeed, Anders’ family home will soon be sold, and one of his personal missions is to pay a final visit. (The fluid, poetic cinematography is by Jakob Ihre.) He insults a prospective employer, refuses to make peace with his alienated sister, falls off the wagon — at first tentatively, and then enthusiastically — and leaves increasingly pathetic messages for his lost love, a woman who’s now in New York. (It’s the voice of Steiro, Lie’s real-life spouse.) On the other hand, he flirts with a younger girl who seems affectionate and charming, and who seems to open for him the promise of a new beginning. Their scene together at an Oslo swimming pool that has just closed for the season, so suggestive of both death and rebirth (and, literally, of baptism) is so gorgeous I wanted to cry. OK, I did cry, and that wasn’t the only time.

But none of that, not even the scenes where we feel that Anders is in imminent danger of taking his own life, are quite as painful as his visit with Thomas (Hans Olav Brenner), an old friend and veteran of long literary discussions and booze-and-drug sessions. Thomas has a wife and a kid now, and his vices involve an occasional bottle of beer. In the manner of one-time bohemians who’ve more or less grown up, he’s kind of an ostentatious jerk about it — but then admits to Anders, when they’re alone, that he’s desperately unhappy. Perhaps that’s the “ordinary unhappiness” Freud wrote about, the unhappiness we all have to accept to get from the last day of August into the first day of September, in Oslo or anywhere else. But is that enough? Is that ever enough, for anybody? And can we forgive those who decide that it isn’t?

“Oslo, August 31st” opens this week at the IFC Center in New York, and June 1 at Laemmle’s Playhouse 7 and Laemmle’s NoHo 7 in Los Angeles, with more cities and DVD release to follow.