If some is good...

Practising alcoholics are firm believers that, if some is good, more must be better. Sometimes, for a change of pace, they will say that, if a thing is worth doing, it's worth overdoing. Only rarely do they realise that this approach to life doesn't really work. A few of them actually stop drinking and get sober.

The average American with decent medical insurance behaves just like an alcoholic and, while some of the care that they get is worthwhile, there is much that is harmful when it is not just a waste of hard earned money.

Try taking a lesson from Nancy Reagan and, the next time that a doctor wants to perform some expensive and painful procedures, just say 'No'. If that is too radical a course of action, then ask this question: "what are the consequences if I say no?"

If everyone acted with appropriate scepticism to the treatments peddled by the medical industry, we might all be a little healthier and a lot richer.

Evasions, Omissions, Lies and Misinformation

The Republican Party once again demonstrates its intellectual bankruptcy with its proposed 10 point manifesto. The only description for this collection of evasions, omissions, lies, and misinformation is that it is yet another gigantic step towards the lunatic right.

The lunacy is that that, unless a candidate agrees with at least eight of the points, the result will be withdrawal of support by the Republican National Committee.

Years in the wilderness anyone?

Here is the manifesto with some comments:

1) We support smaller government, smaller national debt, lower deficits and lower taxes by opposing bills like Obama’s “stimulus” bill;

Smaller government is good but reducing taxes and running up deficits is not the way to go. Starving the beast does not work. What is needed is to reduce spending. The stimulus bill is not the problem so long as it is a one-off item and the Congress sets about restoring fiscal discipline as soon as the recovery is assured.

Uncontrollable spending on entitlements - Social Security. Medicare, Medicaid etc. - will eat the budget, first, and then the economy. The courage to tackle those seems to be entirely lacking.

(2) We support market-based health care reform and oppose Obama-style government run health care;

There are times when markets fail. Markets don't work well without clear price signals and the price signals in the medical sector are particularly obscure.

Another problem is asymmetry of information. Markets also fail when consumer and provider do not have equal knowledge. Every used car salesman, prior to the Internet, understood that and it still works fairly well in that business. Tort reform would help to reduce the cost of malpractice insurance and, more significantly, the cost of defensive medicine.

(3) We support market-based energy reforms by opposing cap and trade legislation;

Admittedly 'Cap and Trade' is command and control with a leavening of market discipline but it may be necessary. What is the Republican alternative?

While it is possible to argue, with a fairly straight face, that global warming is not actually happening, there is no denying that the supply of fossil fuels is ultimately finite even if it is sufficient for a century or more. On the other hand, the capital costs and time involved in switching energy sources are so daunting that we need to start now unless we simply have no sense of responsibility towards our grand children and their children.

A carbon tax in addition to cap and trade would add a stronger price signal. Rebating the proceeds through the payroll tax process would make it cheaper to hire new employees but there is no sign of that.

(4) We support workers’ right to secret ballot by opposing card check;

Finally something sensible and democratic. Intimidation by companies is a real problem but 'Card Check' would only counter it by substituting intimidation by union organizer.

A company that gets itself a union almost certainly deserves it. Most employees don't want to pay union dues but they do have to be treated decently or they will go looking for someone to help them. Legislation to restrain some of the worst company anti-union behavior would be a good (and democratic) idea but "card check" is not it.

(5) We support legal immigration and assimilation into American society by opposing amnesty for illegal immigrants;

Get real. What are you going to do with the 12 million or so illegal immigrants that are already in the country?

Just fix the broken system which, admittedly, will not be easy.

(6) We support victory in Iraq and Afghanistan by supporting military-recommended troop surges:

The wars in Afghanistan and Iraq are political problems with a military component. This is not World War II which was a primarily military problem requiring the defeat of, and unconditional surrender by, the Axis powers.

French Prime Minister Georges Clemenceau said it well: "war is too important to be left to the Generals."

Not only should the Republican party remember this, it should also take heed of the concept of civilian control of the military. We have enough retired Generals in senior policy positions as it is and giving the uniforms carte blanche is hardly a good, or democratic, road to walk down.

(7) We support containment of Iran and North Korea, particularly effective action to eliminate their nuclear weapons threat;

What are you suggesting? Bombing - or invasion?

Fairly draconian sanctions on North Korea haven't worked and there is no real evidence that more intense sanctions would deter Iran. That leaves military action.

If so, what resources do we have available? Since we don't have the resources to start two more wars, then this is only bluffing. We may not like the Iranian or North Korean governments but they are shrewd - not stupid - and our bluff is likely to be called.

(8) We support retention of the Defense of Marriage Act;

That is one way to go but it would be nice to get some clear thinking on marriage.

One part of marriage is a religious sacrament. That, however, brings into play the 1st Amendment ('Congress shall make no law respecting an establishment of religion...') so the government should probably remove itself from the definition of that form of marriage.

The other part involves privileges and benefits that the State grants to what might be regarded as 'Family Company, Inc.' All of these 'Family Company' marriages are State sanctioned but many are not blessed by any religion. The 14th Amendment (that's the one that abolished slavery) requires equal treatment under the law. Why then are all 'family company' type arrangements - regardless of the sex of the primary partners - not treated equally?

In addition to the simple provisions of the 14th Amendment, discrimination on the grounds of gender is specifically prohibited by many laws. Why then is it permitted here?

We did eventually, after a very long gap between the ratification of the Constitution in 1878, and the ratification of the 19th Amendment in 1919, allow women (not clearly an inferior group that would justify such treatment) to vote.

(9) We support protecting the lives of vulnerable persons by opposing health care rationing and denial of health care and government funding of abortion; and

The Soviet Union had ration coupons: so do we. It is just that ours are green, have pictures of George Washington on them, and we are allowed as many as we can earn. There is no reason for rationing if you are spending your own money.

When, however, patients or their families demand that others pay unlimited sums of money for their treatments - many of which are of dubious worth with respect to well being or increased lifespan - there would seem to be some moral issues that need to be addressed.

Note also, that much health care is delivered via an equivalent to the so called public option: Medicare, Medicaid, Veterans Administration Health Benefits, SCHIP (State Children's Health Insurance Program) etc.

Perhaps rationing is the only way. Is it morally reasonable that I demand that others spend hundreds of thousands of dollars to extend my life for a few days?

(10) We support the right to keep and bear arms by opposing government restrictions on gun ownership.

How are you going to keeps guns out of the hands of crazies and ideologically motivated terrorists? Or do you suggest that we go back to the Wild West and make the whole country a free fire zone?

What do you suggest about the perverse inner city culture that makes being 'dissed' or just perceiving that one has been 'dissed' a justification for opening fire? What about all of the felons who are currently locked up but most of whom will eventually be released.

What do the victims of Maj. Nidal Hassan (Ft. Hood), Seung-Hui Cho (Virginia tech), John Allen Muhammad (Washington sniper) and many, many, others think about this idea?

So here is the scorecard as analyzed by a long time Republican who, for many years, was more or less in the middle of the party but is now hanging on by his fingernails:

Sensible 1; Partly sensible 1; Irrelevant 2; Really stupid 6

Our country deserves better. President Barack Obama may be too far left and too much of an intellectual to be a great - or even good - leader. That leaves the Republican party an opportunity which it is in the process of squandering.

The Corruption of Language (3)

One of the more offensive terms that I have heard recently is 'Turkey Day' when referring to Thanksgiving.

Surely there is much more to this holiday than than merely stuffing ourselves with even greater than usual quantities of food. If, on this quintessentially American holiday, we do not take a moment to reflect on our blessings - and regardless of our situation, there are always some - then we are missing the point.

Let's just call the holiday by its proper name and give thanks - even when tiresome Uncle Jim has had too much to drink and, as usual, mortally insults Great Aunt Ethel.

Have a very happy Thanksgiving.

The Corruption of Language (2)

As we get closer to the Copenhagen meeting that is supposed to (but will not) agree on a replacement for the soon to expire Kyoto Protocol, the common term used to describe the problem appears to be 'climate change'.

So what does that mean?

If the problem is global warming, say so. If, on the other hand, the problem is an imminent ice age, then say that.

George Orwell warned us about the deliberate misuse of language by authoritarian governments as a tool to enhance their powers. He also noted our own ability to mislead ourselves:

"[Our language] becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts."

"... but if thought corrupts language, language can also corrupt thought."

At the risk of being thought pedantic, it is time to insist on precision in language. Without precision, sloppy thinking leads to self deception, foolish policies and, likely sooner rather than later, tyranny.

Would that there were more people like the late John Lennon who, when asked how he wrote such good songs, said:

"Say what you mean, make it rhyme, give it a back beat."

Say what you mean is the critically important issue. If it sounds harsh, or offends the thin of skin, then so be it.

Former Governor Palin

If former Alaska Governor Sarah Palin, who resigned her position with eighteen months remaining in her term, plans a Presidential run in 2012, she (and the Republican Party) should keep in mind something said by renowned [American] football coach Vince Lombardi:

"Winners never quit and quitters never win."

Enough said.

The Corruption of Language

The Concise Oxford Dictionary (New Edition) defines rogue as a 'dishonest or unprincipled person' and Rogues' Gallery as 'a collection of photographs of known criminals'. The same dictionary also states that rogue is also used in a jocular manner referring to a 'mischievous child or waggish or arch person'.

So, the term 'rogue' refers to really unpleasant people or to childish pranksters.

The title of former Alaska Governor Sarah Palin's book is 'Going Rogue'.

Since the word 'rogue' in no way means contrarian, leader, or brave in the face of ruthless opposition, she appears to be, like so many other political hacks, corrupting the language in a way that George Orwell would recognize all too well.

More charitably perhaps, she and her editors are simply too lazy to have bothered to open a dictionary.

Either way, her rapid departure from the political scene would make the world a slightly better place.

Productivity and the Business of Colleges and Universities

Before the modern era, increases in individual (and national) wealth were generally the result of conquest (or colonization which was much the same thing) with its resulting theft and pillage. Only occasionally - usually at millennial intervals or greater - did some form of productivity increase result in a major increase in wealth. Examples include the invention of agriculture, the wheel, and the domestication of animals capable of providing transportation and augmenting or replacing human muscle power in the performance of useful work.

Expectations, however, have changed since the beginning of the industrial age. Now, we believe that our standard of living should increase every year. That means that our incomes must increase faster than the cost of the goods and services that we consume. When it does not, we are disappointed and disgruntled.

War is now so destructive that little or no net gain can be expected. Theft is a career option for only a few - and not often profitable given the actual and opportunity costs of spending time in a prison cell. That leaves productivity improvements as the only way forward to increased national and individual wealth.

Not all sectors of the economy are equal when it comes to improvements in productivity. In general, manufacturing productivity (in terms of reductions in cost and improvements in quality) has improved at a more than respectable rate. Productivity in many service industries has barely changed.

College education is one of those service industries where productivity, measured in output per labor hour of input, is no better than it was fifty years ago. In fact, given the deterioration in the college's raw material - because so many freshmen are ill prepared - as well as the outright waste when students flunk out or drop out and fail to complete their courses of study, together with the time spent, usually by social "scientists" researching (and students learning about) matters of supreme triviality, it can reasonably be argued that educational productivity has actually declined since the end of World War II when, with the GI Bill, the era of mass college education began.

College professors, and all of the other support staff employed by Universities and Colleges, however, expect that their money incomes will increase every year by more than does the cost of the goods and services that they purchase.

The cost of a university education, as with all goods and services, increases at a rate that is expressed by the formula:

Rate of Increase in Education Cost = Rate of General Inflation - Increase in Productivity.

When productivity increases are suffiiently high, prices drop. That is why the laptop computer (four year old Lenovo ThinkPad running Windows XP with MS Office) on which this blog is being written cost about $1,000 in 2005. Its equivalent in 1982 (Osborne 1 running CPM with two 182K floppy disk drives using WordStar and SuperCalc) cost $2,000 which, after adjusting for inflation, is about $4,000 at 2005 prices. Far more capable machines are now being advertised for $500 or so.

So, given negative productivity, it can be no surprise that college costs are increasing at a significantly higher rate than inflation.

Colleges and Universities, then, if they are not to be priced out of business, must recognize that radical changes to their business model are needed. There are currently three streams of college education and only two of them, accounting for a minority of the students who are not undergoing remedial classes, require full time attendance at the place of learning:

• The hard sciences - although not necessarily computer science - require extensive laboratory facilities as well as access to great minds.
• The humanities also require a community of scholars.

Most of the rest of what passes for college level education is either remedial basics (Math, English language and writing), the white collar equivalent of a trade or technical school or a self indulgent wallowing in trivia.

With respect to this third last group, most of the teaching, and a great many of the examinations can be delivered remotely with no loss of quality but with the potential for great improvements in productivity and reductions in cost.

The 'what' and the 'how' are important but ultimately trivial.

The 'why' is critical. The community of scholars involved in history, philosophy, the arts, and the hard sciences (Physics, Chemistry, Geology, Astronomy, Biology and Neuroscience among others) will get us closer (with apologies to the late Douglas Adams - author of The Hitchhiker's Guide to the Galaxy) to an answer to life, the universe, and everything that may be more comprehensive and understandable than 42.

In summary, if the cost of attending Colleges and Universities is not to become so great that the customers (students) can no longer afford to buy buy the service, they will need to separate their business.

The first, and most important, business is discovery. While the benefits of discovery are real, they are often diffuse and sometimes realized far in the future. As a result, that part of the business will have to be funded by endowments, charities, and governments.

The second business is the creation of a population with the skills needed to prosper - or at least survive - in the modern economic and technological environment. Whether that should funded by business, the students, or government (on behalf of society in general) and in what proportion remains an open question. All of those groups gain benefits from an educated population.

Whatever Colleges and Universities chose to do, and nothing is not a viable option, they would be well advised to be aware of this still valid criticism made by Adam Smith over two hundred years ago:

The discipline of colleges and universities is in general contrived, not for the benefit of the students, but for the interest, or more properly speaking, for the ease of masters.

That is definitely a recipe for low productivity!

A Biography of Warren Buffet

Judging by his annual letter to shareholders, Warren Buffet must be one of the most interesting men in business today. Certainly he seem to have much the same business skills and insights, although more honest, and is as much of a character as J.P. Morgan, Jay Gould, Commodore Vanderbilt and other Robber Barons of the 19th century.

[In the interests of full disclosure, I own a modest position in Berkshire Hathaway B Shares.]

Alice Schroeder's biography of Warren Buffet (The Snowball) is overly long, hard work to read, and gives the impression that Mr. Buffet is merely an obsessive compulsive with a consistent investment philosophy - value investing - learned from Benjamin Graham, dubious social skills, and a peculiar personal life.

On the other hand, his realization that he probably did not understand philanthropy, and his decision to turn over the bulk of his fortune to the Bill and Melinda Gates Foundation says sometime very profound about the man. Would that Ms. Schroeder had explored - and explained - the part of his character that led to this magnificent and unselfish decision.

The real failure of the book is that it tells, in excruciating detail, the "what" and sometimes the "how", but rarely discusses the "why" or the philosophy of Mr. Buffet's life and work.

Good writing can tell a story without overuse of words and paper but the modern trend in biographies seems to be that quantity trumps quality. One test of good writing is to tell a story in as few words as possible - although not in fewer. In this case, there is no excuse for eight hundred and thirty eight pages (plus notes and index) of what can easily be described as a repetitive and boring data dump. Had Ms. Schroeder limited herself to three hundred and fifty pages, she might have been forced to write a biography that was both instructive and entertaining or she would have given up and spared enough trees to make a respectable forest.

Perhaps, the best advice ever to writers came from Voltaire:

"The best way to be boring is to leave nothing out"

Enough said.

American Democracy (3)

Eighteen year old citizens have the right to vote in the USA. Since that is so, they are presumed to be adults - even if they are not actually grown up.

On the other hand, no State permits them to drink alcohol and, quite soon, no bank will be able to give them a credit card without a co-signer who must be both over twenty one and a person who will accept full liability. The implication of these laws, then, is that persons between the ages of eighteen and not quite twenty one are irresponsible children.

Many of them are indeed still irresponsible children but, if so, why do irresponsible children have the right to vote - with potentially significant consequences for other peoples' lives - but not to run their own lives even if they run those lives into the ground?

Perhaps the age of majority, and the right to vote, should be twenty one again.

American Democracy (2)

The founders of the United States were extremely suspicion of the passions of the common man and so created a representative republic but not - repeat not - a democracy.

Our government spends a great deal of time attempting to promote democracy in other people's countries while ignoring the fact that the USA, more than two hundred and thirty years after the adoption of the Declaration of Independence, is still not actually a democracy.

When the constitution was ratified in 1788, slaves and women were not entitled to vote. For male citizens, there was also a property qualification. Even then, the right to vote counted for less than we are now accustomed to. Although Congressmen were directly elected, Senators were appointed by Governors or State Legislators. Even in 1796, the first Presidential Election after the retirement of George Washington, the Members of the Electoral College (an abomination that exists to this day) were appointed in nine, and directly elected in only seven, of the sixteen States.

The Electoral College still exists and is arguably less democratic now than in 1796. The real scandal, however, is the disenfranchisement of six hundred thousand citizens who live in the District of Columbia. While the District does have votes, as if it were a State, in the Electoral College, it has only a non-voting Delegate in the House of Representatives and no representation whatsoever in the Senate.

Even though it is not a democracy, the USA claims to be one and should do the right thing by permitting the citizens of the District of Columbia to exercise the rights on which our country was founded. Since it may well take a Constitutional Amendment to right the wrong, the principled course of action would be to start the process now.

This should be a matter of fundamental right - not a matter of political advantage. Unfortunately, our representatives, as usual, can be found wallowing in the slough of self-interest. The Democratic Party supports voting rights for the District because its population consists overwhelmingly of Democrats: the Republican Party opposes those rights for exactly that same reason.

Were American politicians to follow Mark Twain's advice, the world might be a slightly better place:

Always do right; this will gratify some people and astonish the rest.

Regrettably, the chance of this happening is vanishingly close to zero.

Circular Firing Squads

The Democratic Party is known for its skill in assembling circular firing squads.

In the special election to fill the Congressional (NY - 23rd District) seat, left open by the appointment of Rep. John McHugh to serve as Secretary of the Army, conservatives proved that they are every bit the equal of their Democratic Party counterparts when they nominated an extreme right winger to run on the third party Conservative Party ticket.

The official Republican Party candidate - a moderate who, absent a split vote, was almost certain to win - was driven out of the race and the Democratic challenger took the prize without much difficulty. The result is that one of the few Republican seats in the north east - and one that had been in Republican hands for more than a century - has been unnecessarily lost to the Democrats.

Regrettably, the Republican party seems to have taken yet another step towards being an organization of Southern right wingers obsessed with social issues such as gay marriage, abortion and Christian prayers in public settings while simultaneously refusing to raise taxes to pay for the government spending programs that they demand. Those of us who describe ourselves as Liberals of the 19th century variety (otherwise almost identical to Goldwater conservatives who believe in a strong defense, fiscal conservatism and social tolerance) can only shake our heads and wonder where in the current party structure we fit.

Stay tuned for another episode of the right wing circular firing squad in the 2010 Florida Republican Senatorial primary. There, Governor Charlie Crist is facing strong opposition from a very young right winger, with no executive experience, named Marco Rubio who seems to be as obsessed with Fidel Castro and Cuba as anything else. This Twitter post, four days ago, sums up his attitude to a still significant number of Republicans:

"If you live in NY CD 23 vote 4 Hoffman. Send message to those who want GOP to "moderate" that we do not need 2 Democratic Parties."

The attitude of the right wing activists brings to mind the description of the British Labor Party's [extreme left wing] 1983 Election Manifesto (platform) as the 'longest political suicide note in history'. The policies that the Labor Party espoused made a major contribution to Margaret Thatcher's Conservative Party landslide. The Labor Party did not regain national office until 1997.

Is that the experience that Republicans want? Can such ideological inflexibility be good for our country? Is the Republican Party to become the 'Exclusionary Right Wing Party' instead of the 'Broad Tent Center Right Party' that is still needed for electoral success in America?

Profits at Ford Motor Company

Today the Ford Motor Company announced that it had actually made a reasonably decent profit ($997 million) in the third quarter of 2009. Unfortunately for the company that doesn't do much to offset the cumulative looses of over $28 billion in the three and a half years since the beginning of 2006.

Then there is the debt - some $24 billion - that will have to be paid back someday. Since there are only three ways to repay debt - issue more debt, sell shares, or use after tax profits - Ford will need to make significantly higher profits, for many years, before the long suffering shareholders see much, if anything, in the way of dividends.

Over the weekend, coincidentally, the membership of the United Auto Workers union rejected proposed mid-contract concessions that would have brought Ford's wage and benefit costs more in line with those negotiated by the state owned basket cases (Chrysler and General Motors). More importantly, the rejected changes also provided for more flexible work rules - the key to productivity improvements and cost reduction.

So, F0rd still has a problem going forward and management will have a major fight on its hands - at least if the company is to be returned to long term financial health - when the UAW contract is up for renewal in 2011.

Fifty years of skilled bargaining by the UAW, combined with management's pusillanimous weakness, created unaffordably high labor costs allied with abysmally poor productivity. If Ford CEO Alan Mulally is serious about the company's future, he will have to be ready to take a lengthy strike over pay, benefits and, most importantly, work rules.

Here is some advice for Chairman Bill Ford and for Mr. Mullally:

It's not what you pay your workers for working that creates an unaffordable cost structure, it's what you pay them for not working and because you allow them to work really inefficiently.

For those who are thinking about buying Ford stock on the good news: caveat emptor. Be very sure that what appears to be the light at the end of the tunnel is not the headlight of an oncoming locomotive.