Should the Upper Middle Class Take the Biggest Tax Hit?

Humans learn the concept of fairness at a very young age. After all, it doesn’t take long for a child to start whining about a sibling who gets an extra serving of ice cream. As the Republican-controlled Congress tries to push through tax reform this year, one group of Americans may similarly question why it’s coming up a scoop short.

The upper middle class gets relatively few benefits and a disproportionate number of tax hikes under the $1.4-trillion Tax Cuts and Jobs Act approved by the U.S. House of Representatives last week. Families earning between $150,000 and $308,000—the 80th to 95th percentile—would still get a tax cut on average. But by 2027, more than a third of those affluent Americans can expect a tax increase, according to the Tax Policy Center.

If the House bill becomes law, overall benefits for the upper middle class will start out small, and later vanish almost entirely.

Is this fair? Some argue it’s only right for the upper middle class to carry a heavier burden. This is because the top fifth of the U.S. by income has done pretty well over the past three decades while the wages and wealth of typical workers have stagnated. People in the 81st to 99th percentiles by income have boosted their inflation-adjusted pre-tax cash flow by 65 percent between 1979 and 2013, according to the Congressional Budget Office. That’s more than twice as much as the income rise seen by the middle 60 percent. (The top 1 percent, meanwhile, saw their income rise by 186 percent over the same period, but that’s another story.)

“Many upper-middle-class families will tell you they do not feel wealthy,” said Brian Riedl, a senior fellow at the Manhattan Institute, a right-leaning think tank. “Their standard of living [is] closer to the middle class than to the top 1 percent.” The income numbers don’t tell the whole story, he explained. The upper middle class is weighed down by high costs: Affluent workers live in expensive areas, pay a lot for real estate and daycare, and are taxed far more than Americans further down the ladder.

Richard Reeves, a senior fellow at the left-leaning Brookings Institution, isn’t buying that argument. He’s the author of “Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It.”

“There’s a culture of entitlement at the top of U.S. society,” Reeves said. While others focus on rising wealth of the top 1 percent, Reeves argues that the gap is widening between the top 20 percent and everyone else. The upper middle class is guilty of “hoarding” its privileges, using its power to skew the job market, educational institutions, real estate markets, and tax policy for its own benefit, he contends.

“The American upper middle class know how to take care of themselves,” Reeves said during a presentation at the City University of New York last week. “They know how to organize. They’re numerous enough to be a serious voting bloc, and they run everything.”

So by his measure, the tax legislation’s disproportionate hit to the upper middle class is indeed fair.

A family earning $240,000 a year is bringing in four times the U.S. median household income of $59,000, according to the U.S. Census Bureau. All that money, along with the upper middle class’s political power, buys some huge advantages, Reeves said. For example, affluent parents compete for access to the best schools, bidding up home values in the best school districts. Then, they use zoning rules to prevent new construction, keep property values high, and prevent lower-income Americans from moving in. In the process, children of this demographic end up at the most prestigious universities, nab the best internships and jobs, and ultimately join their parents at the top of U.S. society. 

The very existence of the House tax bill rebuts Reeves’s argument that the upper middle class is in a position to manipulate Washington. (The Senate is considering its own tax legislation, which differs from the House bill in several ways.) Compared with middle class Americans, the upper middle class is less likely to see marginal tax rates fall under the House legislation. The bill also limits or scraps entirely some of the group’s favorite tax breaks, especially deductions for state-and-local taxes, and medical expenses, and tax breaks for education.

If you’re part of the upper middle class and concede you should be paying more, don’t count on wealthier groups making the same sacrifice—at least under the House bill. 

While a repeal of the alternative-minimum tax helps some people with incomes below $300,000, it’s more likely to benefit those on the higher wealth rungs. The very rich, including President Donald Trump, who has been pressing for a legislative victory before the end of his first year in office, would benefit from a repeal of the estate tax, lower corporate tax rates and a lower “pass-through” rate on business income. The House bill explicitly tries to limit the pass-through benefit for doctors, lawyers, accountants, and other high-earning professionals—traditional denizens of the upper middle class. 

This all may seem terribly unfair to members of the upper middle class, but there are some provisions they can take solace in. The bill leaves untouched some sweet tax breaks that predominately benefit people with lower six-figure salaries, such as 529 college savings plans and 401(k)s and other retirement perks. The CBO calculates that two-thirds of the government’s costs for retirement tax breaks go to the top 20 percent.

But beyond these few exceptions, much of the upper middle class will still take it on the chin.

And maybe they should. Higher taxes on the upper middle class make sense to some liberal tax experts—but only if the proceeds are used the right way, they said, for things like better health care, more affordable college, and rebuilding infrastructure. Under the House bill, though, any new tax revenue is used to offset tax cuts—much of which will benefit the super wealthy and corporations, especially over time.

“There would be a lot of people in the country who would be willing to chip in for those goals,” said Carl Davis, research director of the left-leaning Institute on Taxation and Economic Policy. In the House plan, however, the upper middle class is “going to pay more for a bill that’s going to grow the national debt, and provide the lion’s share of the benefits to corporations and their shareholders.”

Riedl, who has advised Republican candidates, argues the upper middle class should get a more generous tax cut under GOP tax reform. “It’s hard to argue the upper middle class is not currently paying its fair share,” he said. Reeves said the U.S. should ultimately tax the upper middle class more—but “the top 5 percent more still.”

Looking at Republican tax plans, Reeves said, “it’s like they only read half my book.”

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    Sephora Hit With Lawsuit After Woman Claims She Got Herpes From One Of Their Testers!

    Let this be a warning to shoppers!

    A California woman is suing Sephora after she says she contracted herpes from using one of their lipstick tester samples in 2015, this according to

    The unnamed woman is suing for emotional distress from her “incurable lifelong affliction.”

    Sephora hasn’t commented on the lawsuit, although a spokesperson did share a statement with Fashionista:

    “While it is our policy not to comment on litigation, the health and safety of our clients is our foremost priority. We take product hygiene very seriously and we are dedicated to following best practices in our stores.”


    May this be a reminder to stay away from the communal testers…

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    5 Signs Hollywood Has No Idea How College Works

    As Millennials are set to become the most educated generation in history, it has never been so important to properly prepare young folks for how college truly works. Which is harder than you might think, because Hollywood is constantly filling their smartypants heads with the wrong information. For example …


    “The Dean” Is In Charge Of So Much Less Than Movies Think

    Ah, the dean — the end-of-level boss any fun-loving college kid has to deal with at some point in their education. But are they really gods on campus, Judge-Dredd-like adjudicators who wield absolute power over the lives of their students, kicking them out for the slightest infraction / date rape?

    In Monsters University, Mike and Sully are immediately expelled by Dean Hardscrabble for their spooky hijinks without so much as a tribunal or a conversation with the university president.

    And they become the best scarers, so college degrees are basically meaningless.

    In Animal House, whenever one of the Deltas’ “pranks” goes awry, it’s always Dean Wormer who arrives to deal with the situation.

    “Hey, why are you going over our grades with us instead of our academic advisors?”

    The dean in Necessary Roughness is in the process of shutting down the football program of a major college, which would be a feat slightly more impressive than teleporting the entire school to another dimension. Hell, the dean in Patch Adams has the power to punish Robin Williams merely for being too happy.

    But in reality, the power of these administrators isn’t that big of a deal, mostly because there are so. Many. Deans. The title of dean is often honorary, and deanships come with so few actual responsibilities that schools hand them out like particularly easy scout badges to their senior staff members. In plenty of colleges, there are now deans for every silly department. In real life, if a club/frat/sorority was doing dangerous or stupid stuff, they’d probably have to deal directly with a faculty advisor, who would then probably report to some kind of designated disciplinary group, who would probably then report to some other board. Even worse, there are real deans out there who hate that they’re now deans instead of professors, because they’re totally unable to do anything they wanted to. The red tape they thought a dean could clip had more red tape behind it. So sure, don’t fuck around with a dean, but mostly because they’re likely miserable enough already.


    These Days, Everybody Can Get Into College

    According to Hollywood, the first major hurdle a college kid faces happens long before their first keg stand: admission. Waiting on the envelopes that decide your future can be so nerve-wracking! The tension! The drama! The disappointments and triumphs! Of course, it wouldn’t be as dramatic if those kids could simply turn to one of a hundred other colleges that are sure to accept them — which is exactly what they can do in reality.

    Getting into college has literally never been easier in the entire history of higher education. By some estimates, there are up to 44 percent more seats available for every student who wants to go to college in the United States. Sure, it’s still a total crapshoot to get into prestigious universities like Harvard or Yale. But that pretty decent college two blocks down from your favorite Burger King? Walk in with a credit card, and you get as much learning as your brain can handle.

    So consider the lead in Accepted, who, thanks to his straight-C average, is unable to get in anywhere, and thus constructs an entire fake school in order to fool his parents — a ruse which includes completely renovating an abandoned hospital(!!). The movie is set in Ohio, which has a number of schools that would probably happily take our poor hero. For example, there’s the nearby University of Akron, which has a 97 percent acceptance rate.

    Universal Pictures
    Which is even more shocking when you consider that 5 percent of all applications are nothing but feces smeared on the form.

    Glee is another show set in Ohio that bafflingly overlooks this. At one point, state-championship-winning quarterback and glee club leader Finn has a chance to play a football game in front of a scout from Ohio State, but his chances of wooing the school fall through when the scout ends up much more enamored of another player. So instead of accepting an almost guaranteed spot at a large number of Mid American Conference schools (or even Division II or III colleges in Ohio, including football powerhouse Mount Union), Finn gives up on the idea of college altogether and joins the Army, where he poetically winds up shooting himself in the foot.

    Pfft, name one current pro player who went to a MAC school besides those 74.


    A Fancypants Letter Of Recommendation Doesn’t Mean A Damn Thing

    When it comes to letters of recommendation, Hollywood seems to think that colleges have the same mentality as a street gang — the only way you get in is if someone cool vouches for you (also, if you want to get into Harvard, you need to kill a snitch while the dean of admissions watches). A letter of recommendation is a guaranteed way to stand out from all the other applicants. Unfortunately, because Hollywood has convinced everyone it’s so important, it no longer is.

    Partially as a result of too many misleading TV plots, the recommendation letter market has become completely saturated. Many colleges now receive thousands of letters a year. It’s nuts. This is especially the case for the Ivy League, where every other kid’s dad is golf buddies with someone in the Fortune 500. In 2017, a former Dartmouth admissions counselor admitted that even letters of recommendation from former presidents and olympians all blur together after a while. In fact, the one that’s made the most difference was from a school custodian whom a student had become friends with.

    So why does Hannah Montana’s older brother Jackson feel the need to slave away for his next-door neighbor? He wants a recommendation letter, and ends up giving his neighbor massages and pedicures and doing his laundry. Even their dad gets dragged into it, forced to go on a date with the neighbor’s obnoxious sister. In the end, Jackson rips up the recommendation letter, which in reality would alter his chances of getting in about as much as ripping up the college janitor’s second napkin while he’s eating at Quizno’s.

    And it’s not like Hollywood writers seem unaware of how pointless these letters are, given how often they let their characters fuck them up to make a point. When Doogie Howser has to write a recommendation letter for his best friend Vinnie, he winds up screwing him over by badmouthing his achievements. This doesn’t (as Hollywood tells us) destroy their friendship and Vinnie’s future, but happily teaches Dougie a lesson in friendship. Meanwhile, Me And Earl And The Dying Girl ends with the titular dying girl posthumously explaining in a recommendation letter to a film school why the titular “Me” had missed so much school — to hang out with her, a dying girl. If terminally ill people could guilt NYU into accepting C-students, a lot more Make-A-Wish kids would receive bribes to write recommendation letters.


    Parents Are Going Back To School Alongside Their Kids, But It Ain’t For Wacky Shenanigans

    Yet another hilarious plot device! Dad moves into college with his son, they get closer than they thought they would, and hilarity ensues despite the implication that the “adult” in this situation seemingly has nowhere else to go. Surprisingly, Hollywood kinda gets tidbits correct here and there on this subject — it just completely misses the point of second chance education.

    In An Extremely Goofy Movie, our ol’ pal Goofy loses his job and finds out that he needs to go back to college in order to reenter the workforce. Forget about the fact that he was more or less a line worker in a factory; it sets up the entire central conflict that both Goofy and his son Max have a lot of learnin’ to do about each other.

    Over in Arrested Development, Michael Bluth chooses to move in with his son George Michael at Cal while attending the University of Phoenix online. The forced close proximity that the duo used to value when living in the attic of the model home has now become a point of tension in their lives.

    So the reality is somewhere in between. Parents are now taking more unique routes to further their education, be it part-time evening classes at a local college, or online classes, or even specialized certificate programs. They’re going back to school at higher rates than ever before. What they’re not doing is making much of an attempt to get into wacky shenanigans with their kids. They’re goddamned serious about this education stuff, with plenty of college kids pointing out that their parents are often working harder in classes than they are.

    Weirdly enough, a number of parents are going back to school so that they’ll be better equipped to help their kids with homework. Math is hard, guys.


    You Can’t Get Randomly Hired As A Professor

    Being a college professor must be a sweet gig, right? You work few hours and earn crazy amounts of money, and if you land tenure, you’d have to set a student on fire before you could get fired. So it makes sense that a bunch of smartypants protagonists get to become professors at the end of their stories, retiring from hijinks to inspire the next generation of all-white genius heroes.

    This happens to sort-of-alright architect Ted Mosby. After losing his job, as a consolation prize for being stood up at the altar, his love rival pulls a few strings and gets Ted a position teaching architecture at Columbia University. Columbia University. Because he knows a guy who knows a guy. We’re not even entirely sure Ted has more than a bachelor’s degree.

    In the penultimate episode of Girls, after fans have spent an entire season worrying about her future, Hannah gets also gets this last-minute parachute thrown at her. Thanks to her being a “hot shot” writer, a cool upstate New York college has offered Hannah a job teaching “the internet” to kids who were probably contributing to BuzzFeed before she even figured out how to pick another background for her WordPress blog. Still, the job is steady (with benefits, she proudly exclaims), and will allow her to amply provide for herself and her newborn infant. We know people want their characters to get happy endings, but this is about as believable as Hannah becoming god empress of Mars because the head of NASA liked one of her tweets.

    In real life, random goobers have a precisely zero percent chance of being given a steady gig teaching college. Becoming a professor is a difficult and costly process. Almost every position in academia goes to PhD graduates who have spent their entire education desperately trying to make sure they’d never have to look for a job in the real world. And if their discipline is in the humanities (as it is with writer Hannah and architect Ted), even a doctorate only gives these nerds about a 50/50 chance of landing a job in academia.

    But even taking into account sitcom characters’ leprechaun levels of luck, wanting to get into teaching college isn’t that good of a career move. Starting professors make little over poverty wages, get no health benefits, and their job longevity is worse than that of a Bond villain. There’s no stumbling into that bad a deal; you have to be really committed to not wanting to become a Starbucks barista.

    Isaac is still way too proud of his college degree. Follow him on Twitter.

    You probably think we’re going to just link to that college sweater from Animal House and we just did, BUT you could really use a 6-pack of air freshener if you’re in a dorm. Thank us later!

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    Sen. Lindsey Graham: If we don’t pass tax reform, Democrats will take the House and try to impeach Trump

    (CNN)South Carolina Republican Sen. Lindsey Graham said Friday that if Republicans don’t pass tax reform, then Democrats will take back the House of Representatives and attempt to impeach President Donald Trump.

    “Well, I think all of us realize that if we fail on taxes, that’s the end of the Republican Party’s governing majority in 2018,” Graham said on Fox News Radio’s “The Brian Kilmeade Show.” “We’ll lose the House, probably lose ground in the Senate and President Trump has got a profile different from the party — there’s kinda two or three different Republican Parties now, I guess. But we’re all in it together.”
    “I can’t imagine how he could be successful with Nancy Pelosi running the House,” Graham continued. “They’d try to impeach him pretty quick and it would be just one constant investigation after another. So it’s important that we pass tax reform in a meaningful way. If we don’t, that’s probably the end of the Republican Party as we know it.”
      On Thursday, the House passed a budget resolution that clears the path for Congress to tackle tax reform legislation. House Republicans are expected to unveil their tax reform legislation on November 1, with plans for the bill to move rapidly through both chambers in the following weeks.

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      Labrador puppy stolen by thieves returned to ‘devastated’ little girl

      Eight-week-old labrador puppy, Sasha, was stolen from a family.
      Image: victoria police

      An eight-week-old puppy that was stolen from a house in Melbourne, Australia, has been returned to a “devastated” family after local police launched a public appeal.

      A number of items including a laptop, an iPad and jewellery were also stolen from the home on Monday. 

      Yet it was the missing labrador, Sasha, that distressed the family most — especially the daughter of the dog’s owner, four-year-old Maia.

      “We’ve only had her a week, but she’s part of the family. She was my daughter’s best friend, and those two spent each night falling asleep together in the dog bed,” Sasha’s owner, Ryan Hood, told Today.

      Police failed to find the dog anywhere in the home or in the neighbourhood, and a investigation was launched. But on Thursday, Sasha mysteriously returned to the family’s home. 

      Hood’s wife woke up to make a coffee, when she noticed a moving figure by the kennel. It turned out to be their missing dog.

      “We think that whoever took her had either a conscience, or got scared and dropped her over the fence … we don’t care to be honest. We’re happy to have her back,” Hood told Today on Thursday.

      Hood said his daughter, Maia, was “ecstatic” as was the dog. The dog appeared to be unharmed and in good health, although has a fascination with shoes now.

      None of the other stolen items were returned, and Victoria Police said it’ll still be investigating the burglary. 

      Through all the bad, fortunately there’s still a little bit of good left in this world.

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      This visionary organization wants to improve the lives of 50 million people by 2030

      Image: pixabay

      Imagine delivering a child in a place where you’re required to bring your own water to the delivery room, in a healthcare facility in which there’s no viable way for the staff to wash their hands before bringing your baby into the world.

      This scenario, says Dr. Greg Allgood, the vice president of water at World Vision, is more than simply a disturbing hypothetical. In fact, he explains, it’s the reality for more than a third of healthcare facilities in the developing world. A lack of latrines and education about proper sanitation leads to rampant disease (and often death) in these rural communities, particularly among young kids.

      One of the largest relief and development organizations in the world, World Vision aims to combat water shortages and health-compromising sanitation practices such as open defecation. World Toilet Day, coming up on November 19, is a prime opportunity to examine these types of initiatives — and the partnerships that make them possible.

      Collaborative, community-centric approach

      Bringing World Vision’s ambitious goals to fruition requires a global, collaborative effort. To effectively enact change on a mass scale — the organization aims to improve the lives of 50 million people by 2030 — World Vision employs a number of partnerships. The organization works with major corporations like the Hilton Foundation, Procter & Gamble, and Kohler. Support from these partnerships helps meet objectives like bringing improved water and sanitation systems to 3,000 healthcare facilities in the next five years.

      Not only does World Vision raise funds remotely from overseas, they also have boots on the ground in developing communities. As the world’s largest child sponsorship program, World Vision staff spend up to 15 years working and living in rural communities around the globe. When it comes to initiatives like introducing modern latrines, success largely depends upon the community relationships that have been established via on-the-ground efforts.

      When implementing sanitation solutions, World Vision stresses sustainability and ownership. “We empower communities to take charge of their own sanitation needs,” explains Allgood. “Community-led total sanitation methodology is something we’ve really embraced. It works really well with our system because there’s so much trust between our staff and the volunteer network of people that they set up to inspire healthy behaviors.”

      We empower communities to take charge of their own sanitation needs.

      In Zambia, one of the 45 countries for which World Vision has a long-term business plan, nearly a third of the country’s 15 million people lack access to clean water and modern latrines. In the next five years, World Vision hopes to reach one in every six Zambians. The comprehensive plan for meeting this goal spans every corner of the community — from individual families to schools to religious leaders. The support of authority figures like village chiefs, says Allgood, has also been huge.

      Private-sector partners are another critical piece of overarching strategy. “We work with a number of private-sector companies; the thing we offer them is access to new markets based on our strong community presence,” says Allgood.

      In September 2015, when World Vision announced a game plan to align with the UN’s Sustainable Development Goals (which include specific goals for clean water and sanitation), the response from the organization’s partners was overwhelmingly supportive. Kohler, for example, made a commitment to help World Vision scale up its water/sanitation/hygiene work.

      “Kohler’s aspirational goal is ‘Gracious Living.’ They recently changed that to ‘Gracious Living for All’ in recognition of the desire to help underserved communities, and it was great to see that commitment. To have them in this space has everyone in the development sector really excited,” says Allgood.   

      Next week, World Vision will host a team of Kohler researchers in Malawi and Lesotho in an effort to ideate how to bring new products to Africa. In addition, World Vision has helped introduce the Kohler Clarity filter into a number of communities.

      “We’re seeing how people love having this well-designed filter in their homes,” says Allgood.

      Empowering via education

      Academic and educational partnerships also have a significant impact upon World Vision’s efforts — particularly on those that target kids and families. 

      A partnership with Sesame Street, for example, in which the beloved children’s program introduced a new character named Raya to focus on sanitation, hygiene, and water, is proving promising.

      “Raya and Elmo go into schools with World Vision to help teach kids about healthy sanitation, water storage and conservation habits, and hand-washing,” says Allgood, who adds that World Vision is now in 11 countries with Sesame Street. “We started in Zambia, and the program was so successful that the Ministry of Education embraced it. Our goal was to reach 10,000 kids, but we quickly reached more than 50,000 because of that support.” Now, similar efforts are expanding to countries in the Middle East like Afghanistan and Lebanon, as well as to Asia, Honduras, and numerous other African nations. 

      “When you empower kids and teach them these habits in a fun, loving way, they take those habits home to their brothers and sisters — and even to their parents,” says Allgood. “It really affects the entire household.”

      World Vision’s efforts are paying off. In the parts of the world in which the organization operates, an average of eight communities every day become certified as open-defecation free. On the water side of the equation, Allgood adds, World Vision provides clean water at an unprecedented rate of one new person every ten seconds.

      Another one of the UN’s Sustainable Development Goals? Revitalizing global partnerships. Here, too, World Vision and partners like Kohler are exemplifying how collaborative efforts can help turn these lofty visions into concrete realities.

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      North Korea’s internet is as weird as you think it is

      PYONGYANG, North Korea (AP) — Ever so cautiously, North Korea is going online.

      Doctors can consult via live, online video conferencing, and lectures at prestigious Kim Il Sung University are streamed to faraway factories and agricultural communes. People use online dictionaries and text each other on their smart phones. In the wallets of the privileged are “Jonsong” or “Narae” cards for e-shopping and online banking. Cash registers at major department stores are plugged into the web.

      It’s just not the World Wide Web. This is all done on a tightly sealed intranet of the sort a medium-sized company might use for its employees.

      The free flow of information is anathema to authoritarian regimes, and with the possible exception of the African dictatorship of Eritrea, North Korea is still the least Internet-friendly country on Earth. Access to the global Internet for most is unimaginable. Hardly anyone has a personal computer or an email address that isn’t shared, and the price for trying to get around the government’s rules can be severe.

      But for Kim Jong Un, the country’s first leader to come of age with the Internet, the idea of a more wired North Korea is also attractive. It comes with the potential for great benefits to the nation from information technology — and for new forms of social and political control that promise to be more effective than anything his father and grandfather could have dreamed of. It also allows for the possibility of cyber-attacks on the West.

      Pyongyang’s solution is a two-tiered system where the trusted elite can surf the Internet with relative freedom while the masses are kept inside the national intranet, painstakingly sealed off from the outside world, meticulously surveilled and built in no small part on pilfered software.


      The regime created, in other words, an online version of North Korea itself.


      Rising from Ssuk Island in the Taedong River, which divides Pyongyang east and west, is a building shaped like a colossal atom.

      The “knowledge sector” is a key priority for Kim Jong Un, and the sprawling, glassy Sci-Tech Complex, a center for the dissemination of science-related information throughout the country, is one of his signature development projects. It houses North Korea’s biggest e-library, with more than 3,000 terminals where factory workers participate in tele-learning, kids in their bright red scarves watch cartoons and university students do research.

      Pak Sung Jin, a 30-year-old postgraduate in chemistry, came to work on an essay. It’s a weekday and the e-library is crowded.

      Unlike most North Koreans, Pak has some experience with the Internet, though on a supervised, need-only basis. If Pak needs anything from the Internet, accredited university officials will find it for him. As a scholar and a scientist, Pak says, it’s his patriotic duty to be on top of the most up-to-date research.

      He echoes the official condemnation that the Internet has been poisoned by the American imperialists and their stooges. “There ought to be a basic acceptance the Internet should be used peacefully,” he says.

      Today, he is relying on the Internet’s North Korean alter ego, the national intranet.

      Below a red label that states his black “Ullim” desktop computer was donated by Dear Respected Leader Kim Jong Un, what’s on Pak’s screen is for North Korean eyes only. The IP address,, indicates he’s on the walled-off network North Koreans call “Kwangmyong,” which means brightness or light.

      Using the “Naenara” browser — the name means “my country” but it’s a modified version of FireFox — Pak visits a restaurant page, his university website, and cooking and online shopping sites.

      There are very few actual sites on Kwangmyong. An official at the Sci-Tech Center said they number 168.

      They are spread across separate networks for government agencies, schools and libraries, and companies. It’s all domestically run, though government-approved content culled from the Internet can be posted by administrators, primarily for researchers like Pak.

      North Korea’s national intranet concept is unique and extreme even when compared with other information-wary countries. China and Cuba, for example, are well known for the extent of control the government exerts over what citizens can see. But that is done primarily through censorship and blocking, not complete separation.

      Like most North Korean computers, the desktops at the Sci-Tech Complex run on the “Red Star” operating system, which was developed by the Korea Computer Center from Linux open-source coding.

      Red Star 3.0 has the usual widgets: the Naenara browser, email, a calendar and time zone settings, even “kPhoto” (with an icon that looks a lot like iPhoto). Older versions featured a Windows XP user interface but it now it has a Mac design, right down to the “spinning beach ball” wait icon.

      Versions of Red Star that have made it out of North Korea and into the hands of foreign coding experts also reveal some rather sinister, and for most users invisible, features.

      Any attempt to change its core functions or disable virus checkers results in an automatic reboot cycle. Files downloaded from USBs are watermarked so that authorities can identify and trace criminal or subversive activity, a security measure that takes aim at the spread of unauthorized content from South Korea, China and elsewhere.

      Red Star also uses a trace viewer that takes regular screenshots of what is being displayed. The screenshots can’t be deleted or accessed by the typical user but are available for checking if a trained government official decides to take a look.

      Outside North Korea, Android phones have a similar trace-viewer feature, noted Will Scott, who taught computer science at the Pyongyang University of Science and Technology in 2013 and is now a doctoral student at the University of Washington. But the Red Star version reflects the regime’s very specific surveillance and violation-busting priorities. It doesn’t collect much more than the Android would; however, it is designed to make getting at that information easier for a local authority who isn’t an expert programmer.

      Scott said the North has been “very effective” in using such technology to serve its goals.

      Nat Kretchun, deputy director of the Open Technology Fund, said the kinds of censorship and surveillance software in Red Star and the mobile operating systems of phones and tablets reveal a new information control strategy.

      Under Kim Jong Un’s predecessors, the flow of information was primarily controlled through a resource-intensive human network — the State Security Ministry’s “thought police,” for example, or Pyongyang’s iconic traffic controllers — that kept tabs on what people were up to. But the advent of the Internet and advances in communication technology poked holes in that strategy, particularly among the better educated, younger and more affluent, the very segment of society that could be most likely to pose a political threat.

      So, while maintaining its old school tactics on the ground and enforcing the blackout of the global Internet, North Korean officials have learned to adapt by using the online devices themselves as yet another tool for surveillance.

      “In North Korea cell phones and intranet-enabled devices are on balance pro-surveillance and control,” said Kretchun, who has been studying North Korea’s relationship to the Internet for years.


      The most common online experience for North Koreans isn’t on a laptop or desktop. It’s on a smart phone.

      A decade ago, only a small cadre of select regime and military officials had access to smart phones. Now, according to the main provider’s most recent financial reports, there are an estimated 2.5-3 million mobile phones in North Korea, a country of 25 million.

      The rapid spread of mobile phones is one of the biggest success stories of the Kim Jong Un era. After a couple of false starts, the North’s foray into mobile telecoms began in earnest in 2008 under Kim Jong Il. But it has truly blossomed over the past five years with the introduction of 3G services, thanks in large part to two foreign investors — Loxley Pacific of Thailand and Egypt’s Orascom Telecom Media and Technology.

      Like the walled-off intranet, North Korea’s phones deny access to the outside world.

      Local phones allow North Koreans to call and text each other, play games, surf the domestic intranet and access some other services. Users have hundreds of ring tones to choose from, and can get weather updates, look words up in dictionaries and snap selfies. But they cannot receive or place calls to numbers outside that network — the rest of the world, in other words.

      It’s easy enough for North Koreans to buy phones, though the phones must be registered and approved. A good “Pyongyang” or “Arirang” model smart phone costs from $200 to $400. More basic phones go for much less, especially if the phone is second-hand.

      On the second floor of the Pottonggang IT center, a clerk stands behind a glass display cabinet filled with tablets and USB flash drives. Signs on the wall behind her advertise anti-virus software and apps to put on mobile phones, which they can do by Bluetooth at the store. One of the most popular apps is a role playing game based on “Boy General,” a locally created hit anime series. It costs $1.80.

      Foreigners in North Korea are relegated to a different network and cannot make calls to, or receive calls from, local numbers. They can buy local phones if they want, but the devices will be stripped of the apps and features that they normally carry and securely coded so that the apps can’t be added on later. Wi-fi use is banned for North Koreans, and tightly restricted and monitored to block surreptitious piggybacking on foreigners’ signals.

      North Korea undoubtedly imports and rebrands some of its IT products. But over the past few months, two companies have generated quite a stir among Apple fans with products billed to be wholly domestic: the “Jindallae (Azalea) III” mobile phone and the “Ryonghung iPad.”

      The gadgets’ insouciant similarity to Apple products, and the flat-out appropriation of the “iPad” name, isn’t especially surprising. Kim Jong Un likes Apple products — he has been photographed with a MacBook Pro on his private jet, and even had a 21-inch iMac on the desk beside him when state media showed him reviewing a nuclear “U.S. mainland strike plan” four years ago.

      It seems North Korean coders have also lifted some ideas from Apple.

      Outside experts believe a program similar to what Apple uses in its OS X and iOS is believed to be the basis of the booby-trap that thwarts attempts to disable security functions in Red Star. It’s now a staple on North Korean phones. And by 2014, all mobile phone operating systems had been updated to include the watermarking system to reject apps or media that don’t carry a government signature of approval.

      It’s the same mechanism used by Apple to block unauthorized applications from the App Store, but in North Korea’s case serves instead to control access to information.

      “The stakes are infinitely higher in North Korea, where communications are monitored and being caught talking about the wrong thing could land you in a political prison camp,” Kretchun noted.


      While blocking off the masses, North Korea allows more Internet access to a small segment of society, including the country’s elite and its cybersoldiers.

      To create a snapshot of the online behavior of the elite, U.S.-based cyber threat intelligence company Recorded Future and Team Cymru, a non-profit Internet security group, analyzed activity in IP ranges believed to be used by North Korea from April to July this year. They found that the limited number of North Koreans with access to the Internet are much more active and engaged in the world and with contemporary services and technologies than many outsiders had previously thought, according to Priscilla Moriuchi, Recorded Future’s director of strategic threat development and a former NSA agent.

      “North Korean leaders are not disconnected from the world and the consequences of their actions,” she said.

      How deep the access goes isn’t known. Recorded Future and Team Cymru officials contacted by The AP refused to comment on details of their dataset, including how many “elite” users were observed and how foreign tourists or residents in the North were excluded.

      Even so, it stands to reason at least some members of the North Korean leadership have the access they need to keep up on world events and that specialist agents are allowed to monitor and cull intelligence from the internet.

      There is also strong evidence that North Korea allows people involved in hacking or cyber operations the access necessary for a deep engagement in cyberattacks and cybercrime.

      According to the FBI, the North’s bigger hacks include the recent WannaCry ransomware attack, which infected hundreds of thousands of computers in May and crippled parts of Britain’s National Health Service. It has been linked to attacks on the Bangladeshi central bank last year and on banks in South Korea going back to 2013. There was also the 2014 hack of Sony Pictures over the release of the “Interview,” a black comedy that graphically portrayed Kim Jong Un being killed. U.S. authorities recently dubbed North Korea’s cyber presence “Hidden Cobra.”

      Weaponizing cyberspace is a logical option for the North because it can be done at relatively low cost and at the same time denied, according to a Congressional report submitted in August.

      Pyongyang has denied hacking allegations, but the ability to carry out sophisticated cyber operations is a powerful military weapon in the hands of a state. Just as assuredly as North Korea is developing its nuclear and missile capabilities, most experts assume, it’s honing its cyber warfare tool box.

      Beau Woods, the deputy director of the Cyber Statecraft Initiative at the Atlantic Council, cautioned of a “preponderance of question marks” regarding North Korea’s cyber skills. But he warned of how potentially devastating a more cyber-active North Korea could be.

      Those concerns are turned on their head back at the Sci-Tech Center in Pyongyang.

      Pak, the chemist, supports the official line in North Korea that the increasing danger of cyberattacks and slanderous Internet propaganda comes from the U.S. against Pyongyang. The government says that justifies “protective” walls to shield the masses from aggressive propaganda, and virtually requires extensive cybersecurity measures in the name of national defense.

      “Don’t you see how severe the anti-Republic slander of our enemies on the Internet is?” Pak said, although the restrictive policies make it difficult for him to carry out his research. “There are a lot of cases where the Internet is being used to raise hostility against us.”

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      Bowe Bergdahl gets dishonorable discharge, avoids prison time

      Fort Bragg, North Carolina (CNN)Bowe Bergdahl received a dishonorable discharge from the US Army, but will avoid prison time for desertion and misbehavior before the enemy after abandoning his outpost in Afghanistan in 2009, a military judge ruled Friday.

      The judge ordered that Bergdahl’s rank be reduced from sergeant to private. Additionally, Bergdahl will be required to pay a $1,000 fine from his salary for the next 10 months.
      “Sgt. Bergdahl has looked forward to today for a long time,” Eugene Fidell, Bergdahl’s civilian attorney, said at a news conference after the proceedings.
        “As everyone knows, he was a captive of the Taliban for nearly five years, and three more years have elapsed while the legal process unfolded. He has lost nearly a decade of his life.”
        The sentence is effective immediately, except for the dishonorable discharge, which Bergdahl is appealing, according to Fidell.
        Bergdahl appeared visibly shaken as the sentence was announced, according to CNN affiliate WRAL. Two of his attorneys stood by his side with their hands on his back while the judge, Army Col. Jeffery R. Nance, read the sentence.
        The soldier, whom the Taliban held for five years after he deserted his Afghanistan outpost, pleaded guilty last month to the charges.
        Bergdahl was released in May 2014 in a controversial exchange for five Guantanamo Bay detainees.
        He originally faced the possibility of life in prison, but the prosecution asked the judge for a 14-year sentence. Bergdahl’s attorneys asked Nance for a punishment of dishonorable discharge.
        Bergdahl had chosen to be tried by a military judge instead of a jury.
        Gen. Robert Abrams, the commanding general of Forces Command and the convening authority in Bergdahl’s case, will review the sentence, according to Paul Boyce, an Army spokesman. Abrams could potentially reduce Bergdahl’s sentence.

        Defense: Bergdahl ‘should not have been in the Army’

        Bergdahl’s attorneys asked the judge for leniency during sentencing hearings, arguing he had a previously undiagnosed mental illness when he left his post.
        “Hypothetically, he probably should not have been in the Army,” said Capt. Nina Banks, one of his military defense attorneys, in her closing argument.
        Bergdahl suffered from numerous mental illnesses, including schizotypal personality disorder and post-traumatic stress disorder, according to Dr. Charles Morgan, a forensic psychiatrist and professor at the University of New Haven and Yale University. He testified for the defense Wednesday.
        Morgan said Bergdahl was raised in a tense and sometimes scary household that contributed to social anxiety and cognitive defects that he was suffering from before he enlisted in the Army.
        The defense also argued the information Bergdahl was able to provide upon his return — and his willingness to share that information and cooperate with investigators — warranted a more lenient sentence.

        Prosecution: Bergdahl put soldiers in danger

        But government prosecutors said Bergdahl was aware of the risks when he deserted, and that doing so put his fellow soldiers in danger.
        Soldiers who searched for Bergdahl after he deserted were called to testify and shared stories of the grueling conditions they endured while looking for him.
        One witness, Capt. John Billings, was Bergdahl’s platoon leader in Afghanistan. Billings said the platoon searched for the then-private first class for 19 days, going without food or water.
        Retired Navy SEAL Chief Petty Officer James Hatch testified that he and his dog came under fire while looking for Bergdahl. He was shot in the leg, and his K-9 partner, Remco, was shot in the face and killed.
        “I thought I was dead,” said Hatch, who now walks with a heavy limp after 18 surgeries. He said he was concerned because there was little time to plan the search for Bergdahl, and other soldiers knew he had willfully walked away.

          Report: Bergdahl diagnosed with personality disorder

        When asked why he would go searching for Bergdahl, Hatch said, “He is an American.”
        “He had a mom,” he added.
        Bergdahl tearfully apologized this week to the service members who searched for him.
        “My words can’t take away what people have been through,” he said. “I am admitting I made a horrible mistake.”

        Lawyer: Trump’s remarks ‘preposterous’

        Following the sentencing, President Donald Trump tweeted that the decision was a “complete and total disgrace to our Country and to our Military.”
        Bergdahl became a political talking point in 2014 after President Barack Obama’s administration traded five detainees at Guantanamo Bay in exchange for his release.
        In February, Bergdahl’s defense team argued he was unable to have a fair trial after Donald Trump became president because of comments Trump made on the 2016 campaign trail.
        During the campaign, Trump called Bergdahl a “dirty, rotten traitor” and said he “should be shot” for deserting his post. “In the good old days, he would have been executed,” Trump said.
        Fidell had denounced Trump’s critical campaign comments, saying “every American should be offended by his assault on the fair administration of justice and his disdain for basic constitutional rights.”
        Bergdahl’s attorneys argued that Trump’s comments, as well as critical words from Sen. John McCain, violated his right to due process. But Nance ultimately ruled against dismissing the charges, saying that while Trump’s comments were “troubling,” they did not constitute a due process violation.
        “Trump — when he was a candidate, of course — made really extraordinary and reprehensible comments targeted directly at our client,” Fidell said Friday. “It’s one of the most preposterous state of affairs that I can think of in American legal history.”

        Investigator said jail time would be ‘inappropriate’

        Since his return home to the United States, the 31-year-old from Idaho has been the subject of scrutiny while the US military investigated his decision to leave his post.
        Bergdahl has said he abandoned his post because he wanted to travel to a larger base to report “a critical problem in my chain of command,” though he did not specify what the problem was.
        He was charged with desertion and misbehavior before the enemy in March 2015.
        Kenneth Dahl, the Army general who led the investigation into Bergdahl’s actions and interviewed the soldier for a day and a half, previously testified in a preliminary hearing that jail time would be “inappropriate.”
        During his time in captivity, Bergdahl said he was tortured, beaten and spent months chained to a bed or locked in a cage while his health deteriorated. For five years, he said, he was completely isolated, had no concept of time and was told he would be killed and never see his family again.

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        NFL’s Litany of Excuses Runs Out After Ratings Fall for Second Year

        TV networks are running out of excuses for the dwindling popularity of the National Football League.

        They blamed the election for ratings declines last year, and hurricanes for a soft week one in September. Protests during the national anthem, and President Donald Trump’s criticism of the league, have faded from the headlines. 

        Advertisers are starting to believe a different explanation: the viewers aren’t coming back. Audiences are down an average 7 percent from a year ago through the first eight weeks of the season, excluding last Monday. That’s on top of a decrease of about 8 percent last season that spurred numerous changes in the broadcasts, from shorter commercials to better matchups earlier in the year.

        “There’s just not as many people watching TV the way they used to watch TV,” said Jeremy Carey, managing director of Optimum Sports, a sports marketing agency. “It’s going to be an issue for advertisers when they can’t reach a large-scale audience the way they have.”

        With CBS Corp., 21st Century Fox Inc. and Walt Disney Co. set to report earnings in the next few days, analysts are bound to raise questions. These companies have used the popularity of the games to extract additional fees from cable operators, promote other shows on their networks and sell lots of commercials. Pro football games drew about $3.5 billion in ad spending last year, including the postseason, according to SMI Media Inc.

        Media companies have spent billions of dollars on the right to air football games, which had been immune to the erosion of viewership for other TV programming. Audiences for TV networks have diminished for years as the growing popularity of online alternatives Netflix and YouTube and the availability of most shows on-demand have reduced the appeal of dramas and comedies. Live TV, like sports, was supposed to be immune, but that theory looks highly questionable now.

        Ratings for the NFL suggest the same societal trends are now affecting the league, even if the declines aren’t as dramatic. The drop in game viewership ranges from 5 percent for NBC’s “Sunday Night Football” to 11 percent for the CBS Sunday package. “Monday Night Football,” on Disney’s ESPN, has attracted more fans this year than a year ago, but the numbers are still down from 2015.

        Viewership of the four main broadcast networks fell 8.7 percent last year, and 12 percent among adults 18 to 49, an important demographic for advertisers.

        CBS’s 11 percent slump for NFL games is the steepest of the networks. Its parent company, which reports earnings after the close Thursday, is more vulnerable than rivals to the trend because the vast majority of its earnings come from the broadcast network. The declines at CBS reinforce a complaint that has gotten louder and louder in recent weeks: The league got greedy in adding the Thursday night game on broadcast.

        Reserving top games for Thursday night robbed other time periods of good match-ups. After a nosedive in ratings at “Monday Night Football” last season, the league has scheduled better games for that time period, further damaging Sunday afternoon.

        “Ratings declines on both general entertainment and NFL programming could be the single biggest point of focus for investors this quarter, and we’re not sure what media companies can say about the health and tone of the ad market to assuage fears,” Steven Cahall, an analyst with RBC Capital Markets, wrote in a note last month.

        Viewership is dropping fast among people under 54 — a key demographic for advertisers — and even faster among those 18 to 34. Audiences for games on CBS, NBC and Fox have slid at least 10 percent among that younger cohort.

        Advertisers aren’t abandoning the NFL, one of the only places they can still reach more than 10 million people at once. But they are growing concerned. John Schnatter, who appears in TV spots on behalf of his Papa John’s Pizza International Inc., laid into the league on a conference call this week, blaming the ratings for his company’s slow revenue growth and calling for the league to put an end to player protests.

        Networks and other advertisers identify a wide range of reasons for the NFL’s struggles. The league has overexposed itself by making highlights available on Facebook, YouTube, Twitter and Snapchat. Identifiable stars like Peyton Manning and Aaron Rodgers have either retired or gotten hurt. The quality of play has deteriorated. Player protests and concussions have driven away some fans.

        Some executives argue viewership of the league has still improved over the long term while dropping for every other show. Yet the amount of time people have spent watching football this season is at the lowest point since 2011, back when there were fewer televised games, according to Mike Mulvihill, Fox Sports’ head of research.

        “The cumulative effect of everything happening in the world at large is having an impact on NFL viewership,” Mulvihill said. “ The league was defying the laws of gravity.”

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          Demanding a Bachelors Degree for a Middle-Skill Job Is Just Plain Dumb

          Ever wonder why employers demand advanced credentials for jobs that don’t seem to require them? So did Joseph Fuller, a professor of management practice at Harvard Business School. He co-led a study that found it’s “a substantive and widespread phenomenon that is making the U.S. labor market more inefficient.” To take one egregious example, two-thirds of job postings for production supervisors require a four-year college degree—even though only 1 in 6 people already doing the job has that credential.

          Credentialism obviously harms job applicants. What’s less obvious is that employers suffer, too. They miss out on new hires who—the study found—work hard, cost less, are easier to hire, and are less likely to quit. In other words, companies are deliberately bypassing a deep pool of talent. At many human resources departments, “Everyone’s strategy is to row as close as they can to the other boats and fish there,” says Fuller.

          What was excusable myopia in a time of high unemployment has become inexcusable at a time when the pool of college grads is severely overfished. The unemployment rate for people with bachelor’s degrees was just 2.3 percent in September, the lowest in nine years.

          The study, released on Oct. 24 by Harvard Business School, Accenture, and Grads of Life, is called . Says the report: “Over time, employers defaulted to using college degrees as a proxy for a candidate’s range and depth of skills. That caused degree inflation to spread to more and more middle-skills jobs.” It adds: “Most employers incur substantial, often hidden, costs by inflating degree requirements, while enjoying few of the benefits they were seeking.”

          The study is based on a survey of 600 business and HR executives, as well as 26 million job postings from 2015 parsed by Burning Glass Technologies, a job-market-analysis company that earlier published its own report on the topic. It found that 70 percent of postings for supervisors of office workers asked for a bachelor’s degree, even though only 34 percent of the people doing the job have one.

          Some major employers have figured out that this doesn’t make sense now, if it ever did. The study says that at Wal-Mart Stores Inc., 75 percent of store managers joined as entry-level employees, and the company has trained more than 225,000 associates through its Wal-Mart Academies. A January article by Bloomberg BNA quotes David Scott, the company’s senior vice president for talent and organizational effectiveness, as saying store managers can earn $170,000 a year without a college degree. “I started out at Wal-Mart as a stock boy myself,” Scott said.

          The report also cites Swiss Post International Holding AG, JPMorgan Chase & Co., Barclays Plc, CVS Health Corp., Expeditors International of Washington Inc., Hasbro Inc., State Street Corp., LifePoint Health Inc., and Chipotle Mexican Grill Inc., among others, for recognizing the value of applicants who lack a four-year degree.

          A few governors have taken the lead in addressing the problem in their states, Fuller says in an interview, citing John Hickenlooper of Colorado, Bill Haslam of Tennessee, and former Governor Jack Markell of Delaware. 

          People without a bachelor’s degree may need more training before digging into the job, but the cost of training is quickly recovered, and the training period itself can be a useful tryout, Fuller says, if it’s in the form of a paid internship, apprenticeship, or work-study program. “Asking for a bachelor’s degree is kind of a lazy man’s way of stipulating what you’re looking for,” he says. “When I witness the person doing the work, I’m making a hiring decision based on seeing a person over time, vs. looking at a résumé. The leading cause of failed hires for this type of job is a soft-skills deficit. For that, observation is invaluable.”

          Say what you want about American health care, but it’s ahead of many other sectors in suppressing credentialism. Nurse practitioners now perform many functions once reserved for physicians—including, in some states, writing prescriptions and even setting up their own practices. This is partly of necessity: There simply aren’t enough doctors to go around. But there’s nothing second-class about the care of a nurse practitioner. “I prefer being treated by them. Because they take their time. They might see me for 20 minutes, 30 minutes. If it’s something that’s complex, they’ll call in a physician,” says John Washlick, a Philadelphia lawyer who specializes in health care. His firm is Buchanan, Ingersoll & Rooney, based in Pittsburgh. 

          I also spoke with Gerald Chertavian, the founder and chief executive officer of Year Up, which trains urban young adults and places them in six-month internships that lead to jobs in finance and tech. Typical trainees go in earning $5,000 a year and come out earning $40,000 a year, Chertavian says. State Street alone has employed more than 500 of them. Employers find that hires from Year Up are staying three or four times as long as conventional hires out of four-year colleges—a major advantage given the high cost of recruiting and filling empty positions. 

          Chertavian says he came out of college with an economics major but no special skills. “I was a Chemical Bank trainee 30 years ago,” he says. “I benefited from at least eight to nine months of full-time classroom training that Chemical put into me.” Companies dropped a lot of their training programs to save money, but now the enlightened ones are reinstating them, he says.

          Harvard’s Fuller is right to focus on the folly of credentialism, Chertavian says. “These young people have the engines in the wings. They come as fully intact planes. But they’ve never been afforded the luxury of a runway.”

            Peter Coy
            Bloomberg Businessweek Columnist

            Peter Coy is the economics editor for Bloomberg Businessweek and covers a wide range of economic issues. He also holds the position of senior writer. Coy joined the magazine in December 1989 as telecommunications editor, then became technology editor in October 1992 and held that position until joining the economics staff. He came to BusinessWeek from the Associated Press in New York, where he had served as a business news writer since 1985.

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