Before they spend more so-called stimulus money, both President Obama and the Congressional Democrats should carefully consider these words written by Scottish philosopher David Hume who lived from 1711 - 1776:
"The practice of contracting debt will almost infallibly be abused in every government. It would scarcely be more imprudent to give a prodigal son a credit in every banker's shop in London, than to empower a statesman to draw bills upon posterity."
Republicans, too, should contemplate their part in the fiscal follies of the George W. Bush era. It is one thing to cut taxes: the simultaneouse increase in spending, at the highest rate ever, surely amounts to High Crimes and Misdemeanours.
Unfortunately, there is no way to impeach Representatives and Senators but we can vote all of them out of office.
This year.
Wednesday, June 30, 2010
Tuesday, June 29, 2010
Not Set in Stone
Those who believe that the United States Constitution should be set in stone may wish to consider these words written by Thomas Jefferson:
"Some men look at constitutions with sanctimonious reverence, and deem them like the Ark of the Covenant, too sacred to be touched. They ascribe to the men of the preceding age a wisdom more than human, and suppose what they did beyond amendment. . . . Let us follow no such examples, nor weakly believe that one generation is not as capable of taking care of itself, and of ordering its own affairs . . . Each generation is as independent of the one preceding, as that was of all which had gone before."
Times changes and our fundamental laws may well need to change with them. Both slavery and the denial of women's suffrage were permitted by the Consitution as originally adopted. The first was an unpleasant political compromise lest the new nation never come into being and the latter merely reflected the custom of the times.
Eventually, however, those wrongs were righted.
Still outstanding is the denial of representation in the House and Senate for the six hundred thousand citizens of the District of Columbia. Can we, with a straight face, describe ourselves as a democracy when we disenfranchise so many people for no other reason than the fact that they live in a particular jurisdiction?
The Constitution is a good, but still imperfect, document. It could become better if the fundamentalists were to recognize that Mr. Jefferson actually gave us permission to amend it.
"Some men look at constitutions with sanctimonious reverence, and deem them like the Ark of the Covenant, too sacred to be touched. They ascribe to the men of the preceding age a wisdom more than human, and suppose what they did beyond amendment. . . . Let us follow no such examples, nor weakly believe that one generation is not as capable of taking care of itself, and of ordering its own affairs . . . Each generation is as independent of the one preceding, as that was of all which had gone before."
Times changes and our fundamental laws may well need to change with them. Both slavery and the denial of women's suffrage were permitted by the Consitution as originally adopted. The first was an unpleasant political compromise lest the new nation never come into being and the latter merely reflected the custom of the times.
Eventually, however, those wrongs were righted.
Still outstanding is the denial of representation in the House and Senate for the six hundred thousand citizens of the District of Columbia. Can we, with a straight face, describe ourselves as a democracy when we disenfranchise so many people for no other reason than the fact that they live in a particular jurisdiction?
The Constitution is a good, but still imperfect, document. It could become better if the fundamentalists were to recognize that Mr. Jefferson actually gave us permission to amend it.
Monday, June 28, 2010
Big Corporations and Short Term Thinking
BP's management, like that of many other large companies, seems to have been so focused on short term earnings and cost avoidance that it forgot an old adage:
You can pay me now or you can pay me [a lot more] later.
In the world of big corporations, thinking is driven by the fear of the effect that modestly reduced profits next quarter will have on the stock price. Corner cutting and risk taking, as well as ferocious lobbying to reduce the number and scope of applicable regulation, are a standard part of such short term thinking. They appear to have been major contributing factors to the Macondo oil well disaster and in several other incidents where BP has been involved.
It is only rarely that such behaviors result in an incident. When, however, things do go wrong, they go very badly wrong indeed and the costs are frequently extraordinarily high. Nor is the company the only one to bear the burden: many innocent bystanders also suffer. The Macondo oil well disaster is a classic case.
Regulation would not be necessary if honorable, far thinking, managers were to take it upon themselves to adopt state of the art safety practices and to take into account the real risks of their technologies and business models. The only government body needed, then, would be one that was charged with disseminating information about new and improved safety technologies and procedures. Perhaps even that would not be necessary if there were an enlightened industry association to do the job.
Few humans, however, are capable of thinking accurately beyond the short term. Further, since a positive attitude is a necessity for success in business, most employees grossly underestimate the risks that are being taken. As a result, the need for regulation cannot be avoided. Mere compliance with regulations, however, is insufficient even though compliance with applicable regulations is often offered as a defense in court.
Although it is not remotely possible to avoid all disasters, an attitude of "doing the right thing" for the benefit of all stakeholders can certainly reduce the frequency of such events and the unintended damage that is caused when the inevitable occurs. It is, however, a reality that those who focus on the risks being taken are regarded as merchants of gloom and doom, Cassandras, or just as undesirable negative influences. That they should be removed from the company as soon as conveniently possible is accepted by almost everyone.
Unfortunately, laws governing corporations require their directors and managers to act solely in the interests of shareholders. Worse, many courts have spoken in such a way as to interpret 'in the interests of shareholders' as 'in the very short term interests of shareholders' thus encouraging the very behaviors that too often leads to disaster.
So, at the very least, changes to corporate law and company by-laws are needed. A more radical thought would be to consider the abolition of corporations and a severe reduction in the limits of liability.
If Corporations were to be replaced by Limited Partnerships, there could be limited liability for passive investors. Senior executives, members of the Board, and owners of more than, say, ten percent of the company, would make up the General Partnership and be subject to unlimited liability. Little harm would likely occur if an exception to this rule were made for small privately held businesses.
Such a structure would remove many of the perverse incentives that encourage corporations, and their managements, to do the wrong thing.
Consider, after all, the generally constructive activities of Goldman Sachs when it was organized as a General Partnership. In 1999, the company became a corporation with its stock being publicly traded. The risks that it took, in search of quick profits, would have been unacceptable to the former Partners Committee of the company. When short term greed replaced long term greed, the consequences included a major contribution to the current financial crisis.
Your correspondent does not expect that corporations will soon be abolished. Instead, the dead hand of new regulators, and regulations, will impose procedures and costs that will have some impact although little of it will be positive.
It is the nature of big corporations to create problems. Since those problems can only rarely be addressed by regulation, it is reasonable to expect a regular stream of disasters whose underlying cause is short term thinking.
Unfortunately, we have little alternative other than to expect the worst. The Boy Scout motto "Be Prepared" provides a valuable road map.
You can pay me now or you can pay me [a lot more] later.
In the world of big corporations, thinking is driven by the fear of the effect that modestly reduced profits next quarter will have on the stock price. Corner cutting and risk taking, as well as ferocious lobbying to reduce the number and scope of applicable regulation, are a standard part of such short term thinking. They appear to have been major contributing factors to the Macondo oil well disaster and in several other incidents where BP has been involved.
It is only rarely that such behaviors result in an incident. When, however, things do go wrong, they go very badly wrong indeed and the costs are frequently extraordinarily high. Nor is the company the only one to bear the burden: many innocent bystanders also suffer. The Macondo oil well disaster is a classic case.
Regulation would not be necessary if honorable, far thinking, managers were to take it upon themselves to adopt state of the art safety practices and to take into account the real risks of their technologies and business models. The only government body needed, then, would be one that was charged with disseminating information about new and improved safety technologies and procedures. Perhaps even that would not be necessary if there were an enlightened industry association to do the job.
Few humans, however, are capable of thinking accurately beyond the short term. Further, since a positive attitude is a necessity for success in business, most employees grossly underestimate the risks that are being taken. As a result, the need for regulation cannot be avoided. Mere compliance with regulations, however, is insufficient even though compliance with applicable regulations is often offered as a defense in court.
Although it is not remotely possible to avoid all disasters, an attitude of "doing the right thing" for the benefit of all stakeholders can certainly reduce the frequency of such events and the unintended damage that is caused when the inevitable occurs. It is, however, a reality that those who focus on the risks being taken are regarded as merchants of gloom and doom, Cassandras, or just as undesirable negative influences. That they should be removed from the company as soon as conveniently possible is accepted by almost everyone.
Unfortunately, laws governing corporations require their directors and managers to act solely in the interests of shareholders. Worse, many courts have spoken in such a way as to interpret 'in the interests of shareholders' as 'in the very short term interests of shareholders' thus encouraging the very behaviors that too often leads to disaster.
So, at the very least, changes to corporate law and company by-laws are needed. A more radical thought would be to consider the abolition of corporations and a severe reduction in the limits of liability.
If Corporations were to be replaced by Limited Partnerships, there could be limited liability for passive investors. Senior executives, members of the Board, and owners of more than, say, ten percent of the company, would make up the General Partnership and be subject to unlimited liability. Little harm would likely occur if an exception to this rule were made for small privately held businesses.
Such a structure would remove many of the perverse incentives that encourage corporations, and their managements, to do the wrong thing.
Consider, after all, the generally constructive activities of Goldman Sachs when it was organized as a General Partnership. In 1999, the company became a corporation with its stock being publicly traded. The risks that it took, in search of quick profits, would have been unacceptable to the former Partners Committee of the company. When short term greed replaced long term greed, the consequences included a major contribution to the current financial crisis.
Your correspondent does not expect that corporations will soon be abolished. Instead, the dead hand of new regulators, and regulations, will impose procedures and costs that will have some impact although little of it will be positive.
It is the nature of big corporations to create problems. Since those problems can only rarely be addressed by regulation, it is reasonable to expect a regular stream of disasters whose underlying cause is short term thinking.
Unfortunately, we have little alternative other than to expect the worst. The Boy Scout motto "Be Prepared" provides a valuable road map.
Thursday, June 24, 2010
Interesting Surprise
"There are two clocks: one of them is counting down the time to our debt crisis; the other can wake us up to see our situation as it is, not as we want it to be, or as our ideologies say it should be. And the kind of country our children will live in -- growing or stagnant, on the rise or in decline -- depends on which clock goes off first."
"We can keep making easy choices and hoping that the crisis clock just keeps ticking. But sooner or later, if that's what we choose, there will be a time when we find that we have hardly any choices left at all."
Sometimes a politician is actually brave enough to speak truth even when it contradicts the prevailing attitude of his party. Surprisingly, the statements above were actually made by the Majority Leader of the House, Representative Steny Hoyer (D-MD).
In keeping with the old adage that no good deed goes unpunished, your correspondent strongly suggests that Congressman Hoyer take up residence under any convenient table. His own party will soon be accusing him of gross disloyalty while assembling vast stockpiles of rotten fruit and vegetables to use as missiles.
Republicans, meanwhile, will watch gleefully as the Democrats take another step towards self destruction and a major loss in the mid-term elections this year. That Republicans will likely win is a given but they will only deserve the victory if they, too, are willing to speak truth to the voters.
"We can keep making easy choices and hoping that the crisis clock just keeps ticking. But sooner or later, if that's what we choose, there will be a time when we find that we have hardly any choices left at all."
Sometimes a politician is actually brave enough to speak truth even when it contradicts the prevailing attitude of his party. Surprisingly, the statements above were actually made by the Majority Leader of the House, Representative Steny Hoyer (D-MD).
In keeping with the old adage that no good deed goes unpunished, your correspondent strongly suggests that Congressman Hoyer take up residence under any convenient table. His own party will soon be accusing him of gross disloyalty while assembling vast stockpiles of rotten fruit and vegetables to use as missiles.
Republicans, meanwhile, will watch gleefully as the Democrats take another step towards self destruction and a major loss in the mid-term elections this year. That Republicans will likely win is a given but they will only deserve the victory if they, too, are willing to speak truth to the voters.
Wednesday, June 23, 2010
War in Afghanistan (2)
In 2001, when the United States first sent troops to Afghanistan, the country was ruled by the Taliban who then provided a safe haven for our real enemy, al-Qaeda. The initial military operations were largely successful in that al-Qaeda was driven into hiding and its operations severely disrupted. To have captured, or killed, Osama bin Ladin would have been a bonus but the fact that it did not happen does not significantly reduce the success of the initial operations.
The Taliban can reasonably described, at least by Western standards, as really unpleasant religious zealots with a primitive medieval outlook on human and, specially, women's rights. On the other hand, we only have one real issue with them which is that they still supply a safe haven, albeit less useful than before 2001, for our enemy. The task (see also mission creep) in Afghanistan has now morphed into an attempt to create a functioning nation state from what has only ever been a collection of warring tribes whose ferocity, and determination to remain autonomous, cannot be questioned.
Between 1839 and 1922, the British fought three Afghan Wars and found the task of controlling the country to be impossible. The Russians retired in disarray in 1989 after ten years of fierce fighting. The only successful invaders of Afghanistan were the Arabs in 656 AD. Even then, it took more than two hundred years for the country to be made safe for Islam.
Given that we are now fighting a war on behalf of a weak and corrupt government, we seem doomed to fail. Creating a nation in Afghanistan will not take years or even tens of years. It will take centuries.
The only possible solution - other than years of fighting for little gain - is to make a deal with the Taliban that might look something like this.
Perhaps this proposal is too simplistic but, had we acted on the advice given to President Lyndon Johnson by the late Senator George Aiken (R-Vt) during the Vietnam War, it is not clear that the long term outcome would have been much different. Let us, then, borrow Senator Aiken's words: "Declare victory and leave" so that we may begin to prepare for the very real threats posed by a nuclear armed North Korea and a soon to be nuclear armed Iran. Unless we are prepared to use our own nuclear weapons, we do not have the resources to fight in Iraq and Afghanistan while still providing a credible deterrent against these other enemies or an adequate response if worst comes to worst.
Our leaders, therefore, must establish priorities and your correspondent believes that Afghanistan is low on the list.
The Taliban can reasonably described, at least by Western standards, as really unpleasant religious zealots with a primitive medieval outlook on human and, specially, women's rights. On the other hand, we only have one real issue with them which is that they still supply a safe haven, albeit less useful than before 2001, for our enemy. The task (see also mission creep) in Afghanistan has now morphed into an attempt to create a functioning nation state from what has only ever been a collection of warring tribes whose ferocity, and determination to remain autonomous, cannot be questioned.
Between 1839 and 1922, the British fought three Afghan Wars and found the task of controlling the country to be impossible. The Russians retired in disarray in 1989 after ten years of fierce fighting. The only successful invaders of Afghanistan were the Arabs in 656 AD. Even then, it took more than two hundred years for the country to be made safe for Islam.
Given that we are now fighting a war on behalf of a weak and corrupt government, we seem doomed to fail. Creating a nation in Afghanistan will not take years or even tens of years. It will take centuries.
The only possible solution - other than years of fighting for little gain - is to make a deal with the Taliban that might look something like this.
- So long as you, the Taliban, promise, in the name of Allah, to refuse safe haven for al-Qaeda or any other terrorist group that is sworn to destroy America and its allies, we will depart and leave you alone.
- You must give us safe passage to leave.
- If you kill or capture Osama bin Ladin and his senior colleagues, we will send you large sums of money.
- If you renege on this agreement, we will use air power and missiles to turn your cities into smoking ruins.
Perhaps this proposal is too simplistic but, had we acted on the advice given to President Lyndon Johnson by the late Senator George Aiken (R-Vt) during the Vietnam War, it is not clear that the long term outcome would have been much different. Let us, then, borrow Senator Aiken's words: "Declare victory and leave" so that we may begin to prepare for the very real threats posed by a nuclear armed North Korea and a soon to be nuclear armed Iran. Unless we are prepared to use our own nuclear weapons, we do not have the resources to fight in Iraq and Afghanistan while still providing a credible deterrent against these other enemies or an adequate response if worst comes to worst.
Our leaders, therefore, must establish priorities and your correspondent believes that Afghanistan is low on the list.
Tuesday, June 22, 2010
General McChrystal
Anyone who has a much contempt for his superiors and colleagues (President Obama, Vice President Biden, Ambassador Eikenberry and several others) as General Stanley McChrystal is going to have a hard time doing his job effectively.
While his judgement may be accurate, senior members of the military are expected to give their best advice to the civilian leaders of the nation. When their advice is not taken, or conflicts with the strategy that has been adopted, their next step is to accept the decision and keep their mouths shut in public while taking all possible actions to execute the strategy. In short, say "Yes, Sir", salute, and charge up the hill. If that is too difficult, retirement or resignation are both honorable alternatives.
General McChrystal acted appallingly - perhaps even dishonorably - when he communicated his negative opinions to his staff. Worse, he and his staff then passed them on to a journalist working for Rolling Stone magazine. That the result was an inflammatory article, likely harmful to U.S. interests in Afghanistan, should be no surprise to any thoughtful person.
General McChrystal's actions indicate that he is sadly lacking in leadership skills and, therefore, unfit to serve in the position of Commander in Chief of U.S. and NATO forces in Afghanistan. It is your correspondent's opinion that he should be relieved of command for incompetence.
On the other hand, if the Commander in Chief, President Obama, is feeling generous, he may wish to accept what is reported to be General McChrystal's offer to retire.
Either Thursday or Friday of this week would be a good day for a retirement ceremony.
While his judgement may be accurate, senior members of the military are expected to give their best advice to the civilian leaders of the nation. When their advice is not taken, or conflicts with the strategy that has been adopted, their next step is to accept the decision and keep their mouths shut in public while taking all possible actions to execute the strategy. In short, say "Yes, Sir", salute, and charge up the hill. If that is too difficult, retirement or resignation are both honorable alternatives.
General McChrystal acted appallingly - perhaps even dishonorably - when he communicated his negative opinions to his staff. Worse, he and his staff then passed them on to a journalist working for Rolling Stone magazine. That the result was an inflammatory article, likely harmful to U.S. interests in Afghanistan, should be no surprise to any thoughtful person.
General McChrystal's actions indicate that he is sadly lacking in leadership skills and, therefore, unfit to serve in the position of Commander in Chief of U.S. and NATO forces in Afghanistan. It is your correspondent's opinion that he should be relieved of command for incompetence.
On the other hand, if the Commander in Chief, President Obama, is feeling generous, he may wish to accept what is reported to be General McChrystal's offer to retire.
Either Thursday or Friday of this week would be a good day for a retirement ceremony.
Monday, June 21, 2010
The National Guard and the BP Oil Spill
President Obama has mobilized seventeen thousand members of the National Guard to help with the oil spill clean up. Since many of these people have civilian jobs, there will be businesses which suffer hardship and inconvenience as employees depart, for an indeterminate time, and return with little notice.
The United States Employment and Re-employment Rights Act (USERRA) protects employees from adverse personnel actions when they are called to active duty. The Act also entitles them to be re-employed when their period of active duty ends. The exercise of these rights inevitably involves costs that are borne by businesses. That is, however, an acceptable price to pay to ensure the proper treatment of those who serve our nation in the armed forces. The President should, however, take care not to activate the National Guard when there is an alternative.
What special skills are required to clean up oily beaches? If specialized skills are required, do these members of the National Guard possess them? Why not offer these jobs to those who are currently unemployed? Surely there are many who would welcome the ability to earn their own living again - even if for a limited time - rather than existing on a government handout.
If there is paid work available but the unemployed don't want to do it, stop wasting taxpayer money on them. Worse, to take members of the National Guard away from their jobs, while there are others available to do the work of oil spill clean up, is idiocy.
How else to describe this than just another exercise in government mismanagement and incompetence?
Enough said.
The United States Employment and Re-employment Rights Act (USERRA) protects employees from adverse personnel actions when they are called to active duty. The Act also entitles them to be re-employed when their period of active duty ends. The exercise of these rights inevitably involves costs that are borne by businesses. That is, however, an acceptable price to pay to ensure the proper treatment of those who serve our nation in the armed forces. The President should, however, take care not to activate the National Guard when there is an alternative.
What special skills are required to clean up oily beaches? If specialized skills are required, do these members of the National Guard possess them? Why not offer these jobs to those who are currently unemployed? Surely there are many who would welcome the ability to earn their own living again - even if for a limited time - rather than existing on a government handout.
If there is paid work available but the unemployed don't want to do it, stop wasting taxpayer money on them. Worse, to take members of the National Guard away from their jobs, while there are others available to do the work of oil spill clean up, is idiocy.
How else to describe this than just another exercise in government mismanagement and incompetence?
Enough said.
Sunday, June 20, 2010
Getting Real About Energy
When he spoke to the nation on Tuesday, President Obama offered the usual cliches and platitudes - perhaps better described as processed organic refuse ejected from the south end of a northbound bull - about ending our 'century old addiction to fossil fuels'. Since he did not offer any solutions, the only conclusion that can reasonably be reached is that Mr. Obama entirely deserves the title of Posturer in Chief.
What then should the President have proposed?
Start with a very simple concept from Economics 101. If the price of a good increases, the demand will decrease. The President, then, should have proposed a substantial tax - say $5.00 per gallon - on fossil fuel used for transportation and a somewhat smaller tax on all other energy derived from fossil fuels. The reason for the different rates is to take into account the fact that users of fuel for transport can more easily and rapidly reduce their energy consumption than can industrial, residential and commercial facilities.
Because of the time required to improve the fuel efficiency of equipment and vehicles, alter behaviors, and change housing patterns (suburban sprawl and long drives to jobs), these taxes will need to be phased in over a fairly substantial period of time. If the taxes are to be effective, the phase in period should last no more than seven years which, not coincidentally, is the average length of time that people own each of their homes and less than the average length of time that they own their vehicles.
How should the receipts from these taxes be used?
A good solution would be to rebate the tax by reducing the Social Security and Medicare taxes paid by employers. Since this will significantly reduce labor costs, demand - and therefore employment - can be expected to increase. In addition, demand for labor will increase as companies and homeowners take action to reduce energy consumption. The result will be that the market, through the price mechanism which is generally efficient, rather than government, using always inefficient subsidies, will determine the future of non-fossil fuel energy sources. Although there will be winners and losers, the net impact on tax revenue is zero with the likelihood that business competitiveness improves and fossil fuel use is reduced.
Approval from most Democrats can be assumed while many Republicans, save only those those who are entirely consumed by chants of 'No New Taxes' or by mindless opposition to anything proposed by a President from the other party, should be able to support such a program.
Take inspiration, Mr. President, from these many times written words of Winston Churchill: "Action this day."
What then should the President have proposed?
Start with a very simple concept from Economics 101. If the price of a good increases, the demand will decrease. The President, then, should have proposed a substantial tax - say $5.00 per gallon - on fossil fuel used for transportation and a somewhat smaller tax on all other energy derived from fossil fuels. The reason for the different rates is to take into account the fact that users of fuel for transport can more easily and rapidly reduce their energy consumption than can industrial, residential and commercial facilities.
Because of the time required to improve the fuel efficiency of equipment and vehicles, alter behaviors, and change housing patterns (suburban sprawl and long drives to jobs), these taxes will need to be phased in over a fairly substantial period of time. If the taxes are to be effective, the phase in period should last no more than seven years which, not coincidentally, is the average length of time that people own each of their homes and less than the average length of time that they own their vehicles.
How should the receipts from these taxes be used?
A good solution would be to rebate the tax by reducing the Social Security and Medicare taxes paid by employers. Since this will significantly reduce labor costs, demand - and therefore employment - can be expected to increase. In addition, demand for labor will increase as companies and homeowners take action to reduce energy consumption. The result will be that the market, through the price mechanism which is generally efficient, rather than government, using always inefficient subsidies, will determine the future of non-fossil fuel energy sources. Although there will be winners and losers, the net impact on tax revenue is zero with the likelihood that business competitiveness improves and fossil fuel use is reduced.
Approval from most Democrats can be assumed while many Republicans, save only those those who are entirely consumed by chants of 'No New Taxes' or by mindless opposition to anything proposed by a President from the other party, should be able to support such a program.
Take inspiration, Mr. President, from these many times written words of Winston Churchill: "Action this day."
Saturday, June 19, 2010
A Thought for the Weekend
This is an election year in the USA and, so, we should consider the words of Edward Langley, an artist who lived from 1928 to 1995, as a call for action:
What this country needs are more unemployed politicians.
Enough said.
What this country needs are more unemployed politicians.
Enough said.
Thursday, June 17, 2010
Democrats and Business
BP is clearly at fault with respect to the massive oil spill in the Gulf of Mexico.
The political universe, however, is consumed by the attacks - for little more than short term partisan advantage - currently being made on the company by President Obama and many other members of the Democratic Party. When the oil spill problem is over, the punishment can begin but, until then, these criticisms are counterproductive.
All of which simply reinforce some of the contradictory attitudes of Democrats:
The political universe, however, is consumed by the attacks - for little more than short term partisan advantage - currently being made on the company by President Obama and many other members of the Democratic Party. When the oil spill problem is over, the punishment can begin but, until then, these criticisms are counterproductive.
All of which simply reinforce some of the contradictory attitudes of Democrats:
- they love jobs but hate employers.
- they love businesses but hate owners who become rich because their businesses are successful.
- they love small business for creating jobs but ignore the fact that small businesses fail at much higher rates than large businesses.
- they love small businesses for creating jobs but hate them because they can not afford to provide uneconomic levels of pay and benefits.
Wednesday, June 16, 2010
A Step Toward Tyranny or Merely Posturing?
Last night, President Obama spoke to the Nation about the oil spill in the Gulf of Mexico.
While he has no solutions, he is more than able to pretend that he is doing something. Nor does he lack the arrogance to assume powers that do not exist either in law or the Constitution. Although he is a lawyer by training, his statements, about the ways that BP will be made to pay for the damage that the company's negligence has caused, are either nonsensical or border on the tyrannical.
Perhaps both.
Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.
And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party.
Under which laws - or what part of the Constitution - does the President have the authority, absent a court order, to seize assets from a privately owned business? Even if the President did have such authority, how will the terms 'legitimate claims' and 'fair and timely manner' be defined and by whom?
When President Harry S Truman seized the nation's steel mills in 1952, it did not take long for the Supreme Court to rule that no such authority existed and the mills were promptly restored to their rightful owners.
If BP chooses to make voluntary payments to those that it has damaged, that is its right and such a course of action is likely to be better business than awaiting court action. To the extent that individuals or businesses do not feel that they have been adequately compensated, they may go to court where liability will be determined and damages assessed in accordance with the law.
President Obama states that the fund will be administered by a so-called 'Independent Administrator'. Does any thoughtful, and intellectually honest, person exist in our country who seriously believes that extreme political pressure will not be brought to bear on such an administrator to interpret 'legitimate claims' and 'fair and timely manner' in curious ways that favor political agendas?
The purpose of Mr. Obama's fund, then, seems to be to punish BP - while rewarding favored groups - rather than to make individuals and businesses whole from the damage that they have suffered. That BP deserves punishment appears to be self-evident but that is a process that takes place in court. In addition, the company's [former] customers may inflict further punishment by choosing to buy elsewhere.
In 1780, John Adams described America as a 'Nation of Laws, not of Men'. Notwithstanding the fact that he taught Constitutional Law for a period in his career, President Obama seems to be willing to ignore that statement in favor of granting unfettered power and discretion to a single person.
What Mr. Obama is attempting to do can, perhaps, be described as akin to an act of Royal tyranny - a term that your correspondent does not use lightly. From 1775 to 1783, Americans contributed many lives and much treasure to ensure that, never again, would such a form of government exist in our country.
We are left, then, with two equally unappetising conclusions: either Mr. Obama is just posturing or that he has taken a long step down the road towards tyranny. Whichever is the case, the sooner that Mr. Obama is no longer President, the better.
While he has no solutions, he is more than able to pretend that he is doing something. Nor does he lack the arrogance to assume powers that do not exist either in law or the Constitution. Although he is a lawyer by training, his statements, about the ways that BP will be made to pay for the damage that the company's negligence has caused, are either nonsensical or border on the tyrannical.
Perhaps both.
Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.
And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party.
Under which laws - or what part of the Constitution - does the President have the authority, absent a court order, to seize assets from a privately owned business? Even if the President did have such authority, how will the terms 'legitimate claims' and 'fair and timely manner' be defined and by whom?
When President Harry S Truman seized the nation's steel mills in 1952, it did not take long for the Supreme Court to rule that no such authority existed and the mills were promptly restored to their rightful owners.
If BP chooses to make voluntary payments to those that it has damaged, that is its right and such a course of action is likely to be better business than awaiting court action. To the extent that individuals or businesses do not feel that they have been adequately compensated, they may go to court where liability will be determined and damages assessed in accordance with the law.
President Obama states that the fund will be administered by a so-called 'Independent Administrator'. Does any thoughtful, and intellectually honest, person exist in our country who seriously believes that extreme political pressure will not be brought to bear on such an administrator to interpret 'legitimate claims' and 'fair and timely manner' in curious ways that favor political agendas?
The purpose of Mr. Obama's fund, then, seems to be to punish BP - while rewarding favored groups - rather than to make individuals and businesses whole from the damage that they have suffered. That BP deserves punishment appears to be self-evident but that is a process that takes place in court. In addition, the company's [former] customers may inflict further punishment by choosing to buy elsewhere.
In 1780, John Adams described America as a 'Nation of Laws, not of Men'. Notwithstanding the fact that he taught Constitutional Law for a period in his career, President Obama seems to be willing to ignore that statement in favor of granting unfettered power and discretion to a single person.
What Mr. Obama is attempting to do can, perhaps, be described as akin to an act of Royal tyranny - a term that your correspondent does not use lightly. From 1775 to 1783, Americans contributed many lives and much treasure to ensure that, never again, would such a form of government exist in our country.
We are left, then, with two equally unappetising conclusions: either Mr. Obama is just posturing or that he has taken a long step down the road towards tyranny. Whichever is the case, the sooner that Mr. Obama is no longer President, the better.
Sunday, June 13, 2010
Headscratcher (7)
After twenty five minutes of frustration, your correspondent has just given up trying to get help from one of Symantec's call centers.
The first step was to listen to, but only understand less than half of what an Indian customer service (customer service?) representative, with an incomprehensible accent, was saying. The second step was to wait to speak to a supervisor whose accent was only marginally easier to understand. That was followed by another wait to be transferred to a technical expert who, after listening to the problem description, stated that he was not trained to address Internet related problems.
This episode is a clear example of the old adage that you don't always get what you pay for but you rarely get more.
Why, then, do companies think that outsourcing their call centers to India is good business? Money - perhaps substantial amounts - is saved in the short term but, frequently, the long term result is to alienate their [about to be former] customers.
Or are these companies so arrogant that they actually believe that their customers have no alternatives?
A headscratcher indeed.
The first step was to listen to, but only understand less than half of what an Indian customer service (customer service?) representative, with an incomprehensible accent, was saying. The second step was to wait to speak to a supervisor whose accent was only marginally easier to understand. That was followed by another wait to be transferred to a technical expert who, after listening to the problem description, stated that he was not trained to address Internet related problems.
This episode is a clear example of the old adage that you don't always get what you pay for but you rarely get more.
Why, then, do companies think that outsourcing their call centers to India is good business? Money - perhaps substantial amounts - is saved in the short term but, frequently, the long term result is to alienate their [about to be former] customers.
Or are these companies so arrogant that they actually believe that their customers have no alternatives?
A headscratcher indeed.
Tuesday, June 8, 2010
Academia or Politics
Barack Obama's performance as President - too cool, too professorial, too detached - suggests that he is not really one of us and that he has little clue as to the desires and feelings of the American people.
He also bring to mind the famous statement made by the late William F. Buckley Jr. who said that he would rather be governed by the first two thousand names in the Boston telephone book than by the Harvard faculty. It is a shame that President Obama abandoned academia, where he belongs, for politics where, it seems, he is as disconnected from us as was President Jimmy Carter.
After President Clinton's disastrous second term, and George W. Bush's general ineptitude, America needed a successful President. We can only hope that Mr. Obama's similarities to President Carter include his retirement, whether forced or voluntary, after a single term.
He also bring to mind the famous statement made by the late William F. Buckley Jr. who said that he would rather be governed by the first two thousand names in the Boston telephone book than by the Harvard faculty. It is a shame that President Obama abandoned academia, where he belongs, for politics where, it seems, he is as disconnected from us as was President Jimmy Carter.
After President Clinton's disastrous second term, and George W. Bush's general ineptitude, America needed a successful President. We can only hope that Mr. Obama's similarities to President Carter include his retirement, whether forced or voluntary, after a single term.
Saturday, June 5, 2010
Wrong Answers
Among the spectacularly wrong - but not actually harmful - historical misjudgements is this statement made by Heinrich Hertz:
"I do not think that the wireless waves that I have discovered will have any practical application."
Lord Kelvin merely compounded the error when he said:
"Radio has no future."
So, be sceptical - very sceptical - of those who claim to foretell the future.
"I do not think that the wireless waves that I have discovered will have any practical application."
Lord Kelvin merely compounded the error when he said:
"Radio has no future."
So, be sceptical - very sceptical - of those who claim to foretell the future.
Tuesday, June 1, 2010
Public Discourse
In spite of general disdain for some of the old fashioned virtues, the public forum would be more civilized if participants were to heed these words written by Mark Twain:
"It is by the goodness of God that in our country we have these three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence to never practice either."
Mark Twain understood that having the right to do something does not always make the doing wise. Let us try to practice what he preached and, perhaps, make the world a slightly better place.
"It is by the goodness of God that in our country we have these three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence to never practice either."
Mark Twain understood that having the right to do something does not always make the doing wise. Let us try to practice what he preached and, perhaps, make the world a slightly better place.
Monday, May 31, 2010
Memorial Day
Memorial Day is not about beer, hot dogs, barbeque, hamburgers, the pool or the beach. It's about those who sacrificed their lives so that we might be free.
Nor should we forget the warriors who survived but with wounds that cause them permanent disability. We owe them special thanks and remembrance too.
Nor should we forget the warriors who survived but with wounds that cause them permanent disability. We owe them special thanks and remembrance too.
Saturday, May 29, 2010
Sarah Palin and Feminism
One of Sarah Palin's feminist inspirations, she claims, is Susan B. Anthony.
Your correspondent wonders if Ms. Palin has considered that her new heroine once said:
"I distrust those people who know so well what God wants them to do because I notice it always coincides with their own desires."
Enough said.
Your correspondent wonders if Ms. Palin has considered that her new heroine once said:
"I distrust those people who know so well what God wants them to do because I notice it always coincides with their own desires."
Enough said.
Thursday, May 27, 2010
Corporations Acting Badly
The recent oil spill in the Gulf of Mexico appears to be much more than a mere accident. Shoddy workmanship, corner cutting and deliberate disregard of warning signals all appear to have contributed to the disaster.
The situation brings to mind something that Freeman Dyson, arguably the best physicist never to have received a Nobel Prize, once said:
"Wherever one looks in the world of human organization, collective responsibility brings a lowering of moral standards."
Cutting corners, taking actions that are ethically suspect even if they are not quite illegal, and ignoring the accepted bounds of decent behavior are all too often characteristics of corporate life. The Hall of Shame has no shortage of exhibits. Enron, Goldman Sachs, most of the medical insurance industry, the vast majority of tort lawyers, a whole gallery of grossly overpaid and under performing CEOs, another gallery of predatory sub-prime lenders and, now, BP are all prominently displayed.
It would be nice to think that there is a solution but the population is too large, and modern life too complex, for a return to Thomas Jefferson's ideal of an agrarian paradise where, among other things, individuals take total responsibility for their own actions. When faced with low standards of behavior, the statement 'we don't do that here' is powerful but it needs to be repeated - very frequently - by parents, teachers, managers and executives. That is, everyone in any position of authority.
Such is your correspondent's desire. Unfortunately, he has a strong suspicion that he may merely, in the words of William F. Buckley Jr., "be standing athwart the path of history shouting STOP."
The situation brings to mind something that Freeman Dyson, arguably the best physicist never to have received a Nobel Prize, once said:
"Wherever one looks in the world of human organization, collective responsibility brings a lowering of moral standards."
Cutting corners, taking actions that are ethically suspect even if they are not quite illegal, and ignoring the accepted bounds of decent behavior are all too often characteristics of corporate life. The Hall of Shame has no shortage of exhibits. Enron, Goldman Sachs, most of the medical insurance industry, the vast majority of tort lawyers, a whole gallery of grossly overpaid and under performing CEOs, another gallery of predatory sub-prime lenders and, now, BP are all prominently displayed.
It would be nice to think that there is a solution but the population is too large, and modern life too complex, for a return to Thomas Jefferson's ideal of an agrarian paradise where, among other things, individuals take total responsibility for their own actions. When faced with low standards of behavior, the statement 'we don't do that here' is powerful but it needs to be repeated - very frequently - by parents, teachers, managers and executives. That is, everyone in any position of authority.
Such is your correspondent's desire. Unfortunately, he has a strong suspicion that he may merely, in the words of William F. Buckley Jr., "be standing athwart the path of history shouting STOP."
Wednesday, May 26, 2010
The Corruption of Language (10)
John Brennan is President Obama's top counter-terrorism advisor. In a speech, today, at the Center for Strategic and International studies, Mr. Brennan is quoted, by the Washington Post, as saying:
"Our enemy is not terrorism, because terrorism is but a tactic. Our enemy is not terror, because terror is a state of mind and, as Americans, we refuse to live in fear.
Nor do we describe our enemy as jihadists or Islamists, because use of these religious terms would be play into the false perception that al-Qaeda and its affiliates are religious leaders and defending a holy cause when, in fact, they are nothing more than murderers.
The United States is at war. We are at war against al-Qaeda and its terrorist affiliates."
Reading these clear and simple words, compared to the mangled syntax of most bureaucrats (and that of former President George W. Bush), is a rare pleasure.
The rate at which George Orwell is spinning in his grave is surely a little slower.
"Our enemy is not terrorism, because terrorism is but a tactic. Our enemy is not terror, because terror is a state of mind and, as Americans, we refuse to live in fear.
Nor do we describe our enemy as jihadists or Islamists, because use of these religious terms would be play into the false perception that al-Qaeda and its affiliates are religious leaders and defending a holy cause when, in fact, they are nothing more than murderers.
The United States is at war. We are at war against al-Qaeda and its terrorist affiliates."
Reading these clear and simple words, compared to the mangled syntax of most bureaucrats (and that of former President George W. Bush), is a rare pleasure.
The rate at which George Orwell is spinning in his grave is surely a little slower.
Monday, May 24, 2010
Oil Spill in the Gulf
Out of control oil wells used to be common. Now there is technology that, when it works, quickly brings a gusher under control. As a result, in the past forty years, there has not been a major oil spill in US waters.
Until now.
This time, the Blow Out Preventer, which is the device designed to shut down a runaway oil well, failed. The wonder is that anyone was surprised that such a thing could happen. All technology fails - for one reason or another - as this version of Murphy's Law states:
"If anything can go wrong, it will and at the worst possible time, in the worst possible way."
The wonder is that BP seems not to have had a plan to manage a runaway well in the conditions in which it was operating and, more than a month since the blowout, is still making things up as it goes along. Worse, the Minerals Management Service, an Agency of the Department of the Interior, does not seem to have required that there be a plan. Worse yet, neither the Coast Guard nor the Environmental Protection Agency seem to have a plan, or access to sufficient resources, to respond effectively to what may become one of the worst environmental disasters ever in North America.
Those who undertake potentially risky and dangerous, albeit often very valuable, activities should make detailed plans to respond to things that, inevitably, will go wrong. When making these plans, they should also keep in mind another really important adage:
Murphy was an optimist.
Drilling for oil, in the deep waters of the Gulf, is important to our national and economic security. While the current situation shows that much more effective regulation is required, let us hope that the Congress can refrain from taking, or forcing, hasty and ill considered actions that serve no better purpose than to create sound bites and generate campaign contributions.
The first objective must be to maximize the chances that drilling can take place without a major spill occurring. The second objective is to ensure that there are plans in place, complete with the necessary resources, to minimize the damage that will occur when the inevitable technology failure occurs.
Until now.
This time, the Blow Out Preventer, which is the device designed to shut down a runaway oil well, failed. The wonder is that anyone was surprised that such a thing could happen. All technology fails - for one reason or another - as this version of Murphy's Law states:
"If anything can go wrong, it will and at the worst possible time, in the worst possible way."
The wonder is that BP seems not to have had a plan to manage a runaway well in the conditions in which it was operating and, more than a month since the blowout, is still making things up as it goes along. Worse, the Minerals Management Service, an Agency of the Department of the Interior, does not seem to have required that there be a plan. Worse yet, neither the Coast Guard nor the Environmental Protection Agency seem to have a plan, or access to sufficient resources, to respond effectively to what may become one of the worst environmental disasters ever in North America.
Those who undertake potentially risky and dangerous, albeit often very valuable, activities should make detailed plans to respond to things that, inevitably, will go wrong. When making these plans, they should also keep in mind another really important adage:
Murphy was an optimist.
Drilling for oil, in the deep waters of the Gulf, is important to our national and economic security. While the current situation shows that much more effective regulation is required, let us hope that the Congress can refrain from taking, or forcing, hasty and ill considered actions that serve no better purpose than to create sound bites and generate campaign contributions.
The first objective must be to maximize the chances that drilling can take place without a major spill occurring. The second objective is to ensure that there are plans in place, complete with the necessary resources, to minimize the damage that will occur when the inevitable technology failure occurs.
Sunday, May 23, 2010
Last Word on Rand Paul
Dr. Rand Paul, a darling of the Tea Party Movement, is now the Kentucky Republican Party's candidate for election to the United States Senate. His reported opinions on such Federal laws as the Civil Rights Act of 1964 and the Americans with Disabilities Act can only be described as both eccentric and extremist.
As soon as the furor broke over Dr. Paul's remarks, he ran for cover. After presenting an incoherent defense of his position in various interviews, Dr. Paul then canceled his scheduled appearance on NBC's 'Meet the Press', one of America's most significant news shows.
While his words may indicate that Dr. Paul is just a common or garden variety bigot, his actions certainly show that he lacks courage.
Worse, while peddling snake oil in the form of a Balanced Budget Amendment that will never be ratified, Dr.Paul opposes any cuts in Medicare which, after Social Security and Defense, is the third largest budget line item - and the one that is most out of control. Perhaps it should be no surprise to find that that Dr. Paul is an ophthalmologist and, according to various reports, at least half of his patients are covered by Medicare.
That makes Dr. Paul just another politician who is unwilling to do the right thing if it would include any sacrifice on his part. While bigotry, cowardice, and hypocrisy are all common characteristics of politicians, they usually go to great lengths to conceal them. For failure to conceal these faults, add incompetence to Dr. Paul's resume.
The world will be a better place if the voters of Kentucky permit Dr. Paul to continue his medical career by not forcing him to work in the United States Senate.
As soon as the furor broke over Dr. Paul's remarks, he ran for cover. After presenting an incoherent defense of his position in various interviews, Dr. Paul then canceled his scheduled appearance on NBC's 'Meet the Press', one of America's most significant news shows.
While his words may indicate that Dr. Paul is just a common or garden variety bigot, his actions certainly show that he lacks courage.
Worse, while peddling snake oil in the form of a Balanced Budget Amendment that will never be ratified, Dr.Paul opposes any cuts in Medicare which, after Social Security and Defense, is the third largest budget line item - and the one that is most out of control. Perhaps it should be no surprise to find that that Dr. Paul is an ophthalmologist and, according to various reports, at least half of his patients are covered by Medicare.
That makes Dr. Paul just another politician who is unwilling to do the right thing if it would include any sacrifice on his part. While bigotry, cowardice, and hypocrisy are all common characteristics of politicians, they usually go to great lengths to conceal them. For failure to conceal these faults, add incompetence to Dr. Paul's resume.
The world will be a better place if the voters of Kentucky permit Dr. Paul to continue his medical career by not forcing him to work in the United States Senate.
Friday, May 21, 2010
More on Rand Paul
Dr. Rand Paul, following his victory in the Kentucky primary election on Tuesday, is now the Republican candidate for election to the United States Senate in November.
Among Dr. Paul's less acceptable ideas include his apparent belief that the Civil Rights Act of 1964 and the Americans with Disabilities Act of 1992 represent gross intrusions by the Federal Government into matters that are properly the responsibilities of the States. He also seems to believe that the right of free association, as guaranteed to citizens by the First Amendment, allows businesses to exclude or otherwise discriminate against those that they do not like - for any reason or none. For more detail, see this article from the May 20th edition of the Washington Monthly: http://tinyurl.com/2dchh29
A citizen does indeed have the right to associate with, to avoid, or to dislike anyone, for any reason, whether good or bad. Notwithstanding the Supreme Court's recent curious decision in the matter Citizens United vs. Federal Election Commission, that right to discriminate or avoid applies to individuals, and does not, nor should it, apply to corporations and businesses or to individuals acting as agents and employees of those businesses.
Notwithstanding the provisions of the Fourteenth Amendment, ratified on July 9, 1868, which guarantees equal protection under the law, none of the former Confederate States, prior to 1964 and the passage of the Civil Rights Act, had any intention of changing the invidious and hateful 'Jim Crow' laws that enabled - and frequently mandated - discrimination and segregation. There was, therefore, no alternative to Federal action. Similarly, when it comes to treating disabled people properly and fairly (full disclosure - your correspondent is a double leg amputee), there are times when only government action can force businesses to do what is both morally right and, as it happens, good business.
Before Dr. Paul again expresses his views on these matters, he would be well advised to read the Declaration of Independence which, while not a legal document by which we are governed, well describes America's ideals and aspirations:
"We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness..."
What more need be said?
Among Dr. Paul's less acceptable ideas include his apparent belief that the Civil Rights Act of 1964 and the Americans with Disabilities Act of 1992 represent gross intrusions by the Federal Government into matters that are properly the responsibilities of the States. He also seems to believe that the right of free association, as guaranteed to citizens by the First Amendment, allows businesses to exclude or otherwise discriminate against those that they do not like - for any reason or none. For more detail, see this article from the May 20th edition of the Washington Monthly: http://tinyurl.com/2dchh29
A citizen does indeed have the right to associate with, to avoid, or to dislike anyone, for any reason, whether good or bad. Notwithstanding the Supreme Court's recent curious decision in the matter Citizens United vs. Federal Election Commission, that right to discriminate or avoid applies to individuals, and does not, nor should it, apply to corporations and businesses or to individuals acting as agents and employees of those businesses.
Notwithstanding the provisions of the Fourteenth Amendment, ratified on July 9, 1868, which guarantees equal protection under the law, none of the former Confederate States, prior to 1964 and the passage of the Civil Rights Act, had any intention of changing the invidious and hateful 'Jim Crow' laws that enabled - and frequently mandated - discrimination and segregation. There was, therefore, no alternative to Federal action. Similarly, when it comes to treating disabled people properly and fairly (full disclosure - your correspondent is a double leg amputee), there are times when only government action can force businesses to do what is both morally right and, as it happens, good business.
Before Dr. Paul again expresses his views on these matters, he would be well advised to read the Declaration of Independence which, while not a legal document by which we are governed, well describes America's ideals and aspirations:
"We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness..."
What more need be said?
Wednesday, May 19, 2010
A Just Reward
Politicians usually get away with unprincipled acts. Just occasionally, however, they do receive their just rewards.
Last year, Senator Arlen Specter switched parties for no other reason than the fact that, as a moderate Republican, he was unlikely to win the 2010 Pennsylvania Republican primary. This was no act of principle: just a desire to keep a job that he had already held for too long.
Senator Specter's analysis was more acurate than he thought. Not only was he unlikely to have won the Republican primary but, yesterday, he was solidly defeated (54% - 46%) by Representative Joe Sestek in the Democratic Party primary.
Our country will be a slightly better place without a man who, having held the job for nearly thirty years, now seems to define himself as a Senator rather than as a man who is serving his country in the United States Senate.
Enjoy your retirement Senator Specter. Your country will be happy to see you enjoying the quiet life.
Last year, Senator Arlen Specter switched parties for no other reason than the fact that, as a moderate Republican, he was unlikely to win the 2010 Pennsylvania Republican primary. This was no act of principle: just a desire to keep a job that he had already held for too long.
Senator Specter's analysis was more acurate than he thought. Not only was he unlikely to have won the Republican primary but, yesterday, he was solidly defeated (54% - 46%) by Representative Joe Sestek in the Democratic Party primary.
Our country will be a slightly better place without a man who, having held the job for nearly thirty years, now seems to define himself as a Senator rather than as a man who is serving his country in the United States Senate.
Enjoy your retirement Senator Specter. Your country will be happy to see you enjoying the quiet life.
Tuesday, May 18, 2010
Balanced Budget Amendment
Today is Primary Election Day in Arkansas, Pennsylvania and Kentucky.
In the Kentucky Republican Senate Primary, Rand Paul is the favored candidate of the Tea Party movement. Part of his campaign speech includes a commitment to fight for a Balanced Budget Amendment to the United States Constitution.
The idea of a Balanced Budget Amendment is nonsense and Dr. Paul should know better than to be promoting it. If he does not, then he lacks sufficient knowledge of economics (and of the United States Constitution) to serve effectively in the United States Senate. The world, then, would be a better place were he to return to the practice of ophthalmology.
A modest deficit - in the range of two percent of the Gross Domestic Product over the economic cycle - is entirely supportable provided that the money is spent on real investment such as infrastructure (roads, bridges, ports, air traffic control systems etc) that will provide significant returns over many years. Basic research, where the value of any given project is unpredictable and therefore will not be performed by corporations, is also worthy of funding with debt. Deficits also allow for some automatic stimulus - the deficit grows a bit - in recessionary times and some automatic fiscal restraint - the deficit shrinks or even becomes a modest surplus - in boom times.
Another use of government debt is to provide a benchmark interest rate for debt that is free of credit risk. In addition, there is a desire, on the part of retirees, pension funds, banks and other financial institutions, for highly liquid investments that carry zero credit risk.
Even if there was no good economic rationale for government debt, the likelihood of a Balanced Budget Amendment ever being adopted is close to zero. The Constitution is extremely hard to amend (see Article 5 http://www.usconstitution.net/xconst_A5.html) because it requires a two thirds vote in each of the Senate and House followed by ratification by three quarters of the States. The only Amendments that have survived this process are those that command overwhelming support.
Even were a Balanced Budget Amendment to be adopted, there still remains the hard labor of deciding what expenditures to cut and, if that is not sufficient, what taxes to increase. To do that work does not require that the constitution be amended.
Since the proposed 2011 budget shows that the Federal Government plans to borrow more than thirty cents of every dollar it spends, abolishing foreign aid and other trivialities like the Departments of Energy and Education, will hardly make a difference.
Rather than engaging in Orwellian doublespeak, perhaps Dr. Paul would like to tell us what cuts he proposes and whether they will be sufficient to achieve a balanced budget. If his proposed cuts are insufficient, then he should tell the voters whether he will abandon the effort or whether he will propose increased or new taxes.
There is an old adage that a nation gets the government that it deserves. If we fall for lies and misinformation, dressed up as easy solutions, then we will indeed deserve what we get.
Friday, May 14, 2010
Starting Right
The United Kingdom's fiscal problem bears a strong resemblance to America's: too much debt and too large a budget deficit.
The only redeeming factor is that the bond market vigilantes, who have hammered Greek government bonds and are now eyeing those of Spain and Portugal, have not yet turned on either the USA or the UK. As a result, interest payments on our monstrous debts are, at least for the moment, relatively modest.
At its first meeting, the new British Cabinet decided that the Prime Minister, and all members of the Cabinet, would take an immediate five per cent pay cut. Not a pay freeze but a real cut. While this is a largely symbolic act, it is also a distinct sign that there are politicians who do understand some of the basic concepts of leadership. The message is clear:
Times are going to be hard, and there will be savage spending cuts, but we are all in this together.
It would be wonderful if President Obama and his Cabinet would make the same sacrifice. Even better would be to see some of the multi-millionaire political appointees and members of the Congress - specially those serving [themselves] in the Senate - decide that it would be appropriate for them to work for their country as 'dollar a year men'.
Don't hold your breath waiting, you will only turn blue.
The only redeeming factor is that the bond market vigilantes, who have hammered Greek government bonds and are now eyeing those of Spain and Portugal, have not yet turned on either the USA or the UK. As a result, interest payments on our monstrous debts are, at least for the moment, relatively modest.
At its first meeting, the new British Cabinet decided that the Prime Minister, and all members of the Cabinet, would take an immediate five per cent pay cut. Not a pay freeze but a real cut. While this is a largely symbolic act, it is also a distinct sign that there are politicians who do understand some of the basic concepts of leadership. The message is clear:
Times are going to be hard, and there will be savage spending cuts, but we are all in this together.
It would be wonderful if President Obama and his Cabinet would make the same sacrifice. Even better would be to see some of the multi-millionaire political appointees and members of the Congress - specially those serving [themselves] in the Senate - decide that it would be appropriate for them to work for their country as 'dollar a year men'.
Don't hold your breath waiting, you will only turn blue.
Thursday, May 13, 2010
The Corruption of Language (9)
Last month, at a press conference, President Obama made a big announcement: he had ordered his Cabinet Secretaries to find $100 million dollars in spending reductions.
At the time of the announcement, your correspondent was unable to find suitable words to describe that paltry sum compared to a total budget of some $3.7 TRILLION dollars and a projected deficit of about $1.3 TRILLION dollars. This short video, however, makes the point clearly, understandably and concisely: http://www.wimp.com/budgetcuts/.
President Obama claims Abraham Lincoln as one of his heroes. Perhaps he, and every member of his staff, would be well advised to spend some time, every day, thinking about President Lincoln's views on "spin":
"You can fool some of the people all of the time and all of the people some of the time but you can not fool all of the people all of the time."
All Mr. Obama has done with his posturing is to cast doubt on his seriousness while, simultaneously, causing an increase in the speed at which George Orwell is spinning in his grave.
At the time of the announcement, your correspondent was unable to find suitable words to describe that paltry sum compared to a total budget of some $3.7 TRILLION dollars and a projected deficit of about $1.3 TRILLION dollars. This short video, however, makes the point clearly, understandably and concisely: http://www.wimp.com/budgetcuts/.
President Obama claims Abraham Lincoln as one of his heroes. Perhaps he, and every member of his staff, would be well advised to spend some time, every day, thinking about President Lincoln's views on "spin":
"You can fool some of the people all of the time and all of the people some of the time but you can not fool all of the people all of the time."
All Mr. Obama has done with his posturing is to cast doubt on his seriousness while, simultaneously, causing an increase in the speed at which George Orwell is spinning in his grave.
Wednesday, May 12, 2010
Customer Service
We are still enduring the aftermath of a serious recession and it will be months, more likely years, before the economy is back to normal. Companies, therefore, should be competing hard - both on price and service - to attract as much business as possible.
Some do but many do not.
There are too many companies that have forgotten - or never learned - how to pronounce the words CUSTOMER and SERVICE. They also seem to have forgotten that there are other suppliers and, in a time when frugality is becoming cool again, the option to do without is real.
Although not widely regarded as a management thinker, Mahatma Gandhi understood the real relationship between a business and its customers:
"Who is a customer? The customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider in our building, he is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so."
Those are simple thoughts but many business failures can be linked to neglected or ill treated customers. Sometimes the issue is incompetence and lack of interest on the part of the company's employees. More often, however, the culprit is fixation on routine together with resistance to any deviation from established process and procedure.
Because employee judgement is far from perfect, it is inevitable that companies, which trust their employees to do the right thing, will incur losses. The gains, however, so greatly outweigh the losses that any other course of action can only be based on a misunderstanding of the real world.
Acting in accordance with the old adage 'doing well by doing good' actually works. What more needs to be said?
Some do but many do not.
There are too many companies that have forgotten - or never learned - how to pronounce the words CUSTOMER and SERVICE. They also seem to have forgotten that there are other suppliers and, in a time when frugality is becoming cool again, the option to do without is real.
Although not widely regarded as a management thinker, Mahatma Gandhi understood the real relationship between a business and its customers:
"Who is a customer? The customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider in our building, he is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so."
Those are simple thoughts but many business failures can be linked to neglected or ill treated customers. Sometimes the issue is incompetence and lack of interest on the part of the company's employees. More often, however, the culprit is fixation on routine together with resistance to any deviation from established process and procedure.
Because employee judgement is far from perfect, it is inevitable that companies, which trust their employees to do the right thing, will incur losses. The gains, however, so greatly outweigh the losses that any other course of action can only be based on a misunderstanding of the real world.
Acting in accordance with the old adage 'doing well by doing good' actually works. What more needs to be said?
Tuesday, May 11, 2010
The Nature of Lawyers
As primary election season begins, one of the noteworthy features of the political landscape is, as always, the number of lawyers who are reinventing themselves as politicians.
Since lawyers thrive on conflict, they make poor politicians when there are, as now, hard choices to be made. Anyone who doubts their love of conflict should consider this old adage:
The only lawyer in a small town will be poor. If a second one moves to town, both will soon be rich.
Lawyers can provide useful services but they are technicians rather than leaders and strategists. J.P.Morgan exactly characterized their nature when he said:
"I don't hire a lawyer to tell me what to do, I hire one to tell me how to do what I want to do."
Enough said!
Since lawyers thrive on conflict, they make poor politicians when there are, as now, hard choices to be made. Anyone who doubts their love of conflict should consider this old adage:
The only lawyer in a small town will be poor. If a second one moves to town, both will soon be rich.
Lawyers can provide useful services but they are technicians rather than leaders and strategists. J.P.Morgan exactly characterized their nature when he said:
"I don't hire a lawyer to tell me what to do, I hire one to tell me how to do what I want to do."
Enough said!
Saturday, May 8, 2010
Goldman Sachs and the SEC (2)
Recent reports in the Wall Street Journal www.wsj.com indicate that Goldman Sachs's management is showing interest in a settlement of the civil fraud charges filed by the SEC.
CFO David Viniar and Vice Chairman J. Michael Evans are both reported as saying that the company would be happy to settle. Viniar is further quoted as saying: "the company does not want to antagonize the SEC."
Only two conclusions can be reached from these reports. The first is that Goldman's senior executives were lying when they denied any wrongdoing. Given that both ethics and honor appear to be endangered species in the Wall Street jungle, such actions are, while more than regrettable, merely part of the background. Were the Senate Finance Committee to ask the Department of Justice to bring charges of perjury against Goldman's executives, with respect to their testimony - under oath - before the committee, the world would be a slightly better place.
The second conclusion, based on the quote about 'not wanting to antagonize the SEC' is that the government has successfully blackmailed an innocent company - although, admittedly, it can hardly be described as either honorable or sympathetic - and will, eventually, extract large sums of shareholder funds in a so-called settlement. Your correspondent uses the qualifier 'so-called' because the payment would be better described as ransom.
If the latter situation is the case, then Goldman is facing yet another example of excessive and unrestrained government power. That the power is being directed at one of the current villains does not make its use right.
Wasn't there a successful revolution in America, about two hundred and twenty five years ago, that was provoked by the abuses of power committed by the British King and his Ministers?
CFO David Viniar and Vice Chairman J. Michael Evans are both reported as saying that the company would be happy to settle. Viniar is further quoted as saying: "the company does not want to antagonize the SEC."
Only two conclusions can be reached from these reports. The first is that Goldman's senior executives were lying when they denied any wrongdoing. Given that both ethics and honor appear to be endangered species in the Wall Street jungle, such actions are, while more than regrettable, merely part of the background. Were the Senate Finance Committee to ask the Department of Justice to bring charges of perjury against Goldman's executives, with respect to their testimony - under oath - before the committee, the world would be a slightly better place.
The second conclusion, based on the quote about 'not wanting to antagonize the SEC' is that the government has successfully blackmailed an innocent company - although, admittedly, it can hardly be described as either honorable or sympathetic - and will, eventually, extract large sums of shareholder funds in a so-called settlement. Your correspondent uses the qualifier 'so-called' because the payment would be better described as ransom.
If the latter situation is the case, then Goldman is facing yet another example of excessive and unrestrained government power. That the power is being directed at one of the current villains does not make its use right.
Wasn't there a successful revolution in America, about two hundred and twenty five years ago, that was provoked by the abuses of power committed by the British King and his Ministers?
Thursday, May 6, 2010
Head Scratcher (6)
The United Kingdom, like the USA, holds its elections on a work day: Tuesday for America and Thursday for the British.
Today is Election Day in the United Kingdom and the polls opened at 7:00 a.m. which is the same as the usual opening time in the USA. British polling stations, however, will be open until 10:00 p.m. in contrast to ours which generally close at 7:00 p.m or in some places at 8:00 p.m.
The head scratcher, given our generally poor turnout, is why we do not keep our polls open later so that it is easier for those with jobs, and difficult schedules, to vote. Perhaps the election workers get tired (poor dears!). Or, worse, are demands from the television channels for prime time results overwhelming the democratic process?
Your correspondent begs to differ with those who claim that on-demand mail in ballots can solve the problem. Voting is a civic duty but so is paying attention to the entire campaign. Other than in exceptional circumstances, voting three weeks before election day does not meet the test of engaged citizenship.
There is a relatively simple solution. The wonder is that so few are interested in considering it.
Today is Election Day in the United Kingdom and the polls opened at 7:00 a.m. which is the same as the usual opening time in the USA. British polling stations, however, will be open until 10:00 p.m. in contrast to ours which generally close at 7:00 p.m or in some places at 8:00 p.m.
The head scratcher, given our generally poor turnout, is why we do not keep our polls open later so that it is easier for those with jobs, and difficult schedules, to vote. Perhaps the election workers get tired (poor dears!). Or, worse, are demands from the television channels for prime time results overwhelming the democratic process?
Your correspondent begs to differ with those who claim that on-demand mail in ballots can solve the problem. Voting is a civic duty but so is paying attention to the entire campaign. Other than in exceptional circumstances, voting three weeks before election day does not meet the test of engaged citizenship.
There is a relatively simple solution. The wonder is that so few are interested in considering it.
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