Tuesday, December 27, 2011

Paul Krugman's Relentless Optimism

Hey, it's wishful thinking I would prefer to share, but I still see it as wishful thinking. In something that's not quite a reply to David Brooks' standard emission of "What our country needs is a good, stiff dose of morality, which of course means stiffing the middle class and working poor", Krugman argues,
All around, right now, there are people declaring that our best days are behind us, that the economy has suffered a general loss of dynamism, that it’s unrealistic to expect a quick return to anything like full employment. There were people saying the same thing in the 1930s! Then came the approach of World War II, which finally induced an adequate-sized fiscal stimulus — and suddenly there were enough jobs, and all those unneeded and useless workers turned out to be quite productive, thank you.
That is a fair retort to those like Brooks who argue that human nature has been somehow transformed and that the nation's problems are of a moral and not an economic nature. It's not only reasonable to say that human nature is pretty much the same as it was back in the depression era, but that if you're going to blame the present economy on a shift in morality (one that, it would seem, pervades the entire developed world), you should explain why our present degenerate nature nonetheless led to a huge economic boom as recently as the 1990's, and what various people on the right were trying to tell us was a boom up to the point that the housing bubble burst in late 2006.

But I find myself taking issue with Krugman's extrapolation:
There is nothing — nothing — in what we see suggesting that this current depression is more than a problem of inadequate demand. This could be turned around in months with the right policies. Our problem isn’t, ultimately, economic; it’s political, brought on by an elite that would rather cling to its prejudices than turn the nation around.
World War II was not only a "fiscal stimulus", but was also a war. The U.S. did develop huge numbers of manufacturing jobs during the war, but the success of our nation's manufacturing sector after the war was buoyed not only by the newly created technologies and capacity, but by the fact that much of Europe and Japan had been reduced to rubble.

Right now we have an economic crisis in which the world's manufacturing capacity remains intact and underutilized. Low-skilled manufacturing labor that might have provided a middle class income after WWII has in no small part been outsourced to other nations, and the low-skilled jobs that remain tend not to pay well. Thanks to automation, over the past sixty years the number of workers required to produce a given quantity of manufactured goods has declined precipitously. Also, even before the bubble burst, the middle class was under obvious stress with a ridiculous percentage of families spending more each month than they earned in wages. Even if we could return to the status quo ante, it would not be sustainable. We might be able to engineer a slower collapse, but absent something to reinvigorate the nation's middle class it was inevitable that we would reach a point where middle class standards of living could no longer be sustained by increased household debt.

I'll agree, it's possible that something as cataclysmic (and I'm leaving open the possibility of a positive upheaval, not just a war or disaster) will occur and reinvigorate the middle class. But as Krugman would be happy to point out in many other contexts, merely saying that something has happened before or assuming that something will happen falls far short of drawing sound conclusions through the application of economic principles. Economic formulas do not predict such an upheaval or make it inevitable. That part is wishful thinking.

Let's say that we were to enact a stimulus following Krugman's model and that his projections are correct: six months from now we have turned the economy around. Krugman assumes that nothing material has changed, and thus that a recovery will recreate the jobs that were lost over the past five years, and that people whose job skills are presently found wanting will once again be "quite productive". Except that's not going to happen. First, jobs will continue to be outsourced to other nations. Second, many jobs that re-emerge will pay less than they did before the bubble burst. While wage stickiness may have prevailed through this recession, for decades we've experienced stagnant middle class wages and declining working class wages. I fully expect that workers, back on the job, will be as productive as ever, but that we'll continue to see the benefit of that productivity directed to the top.

My cynical side looks at human history and sees our large, robust middle class as an aberration. I see a trend toward wealth and income distribution that looks more and more like that of the 19th century (or earlier) than that of the modern era. And I'm left wondering, how much stress can you place on the modern middle class before it cracks? And once you break the middle class, what will it take to bring it back?

Krugman is the economist, and I'm merely a cynic. But in this context his assurance does not come across as a sound application of economic theory. It strikes me as wishful thinking. I can easily see how we could have a remarkable recovery that primiarily benefits the wealthy, results in modest job creation for the working classes, and does nothing to diminish the pressures upon or wage stagnation experienced by the middle class.

Update: I just came across an article in Esquire that shares my cynical view of the economic trends in this country:
There are some truths so hard to face, so ugly and so at odds with how we imagine the world should be, that nobody can accept them. Here's one: It is obvious that a class system has arrived in America — a recent study of the thirty-four countries in the Organization for Economic Cooperation and Development found that only Italy and Great Britain have less social mobility. But nobody wants to admit: If your daddy was rich, you're gonna stay rich, and if your daddy was poor, you're gonna stay poor. Every instinct in the American gut, every institution, every national symbol, runs on the idea that anybody can make it; the only limits are your own limits. Which is an amazing idea, a gift to the world — just no longer true. Culturally, and in their daily lives, Americans continue to glide through a ghostly land of opportunity they can't bear to tell themselves isn't real. It's the most dangerous lie the country tells itself.

Post-hope , it is hard to imagine even any temporary regression back to the days of the swelling American middle class. The forces of inequality are simply too powerful and the forces against inequality too weak. But at least we can end the hypocrisy. In ten years, the next generation will no longer have the faintest illusion that the United States is a country with equality of opportunity. The least they're entitled to is some honesty about why.
Again, I'll be very happy if "something happens" that reinvigorates the middle class, and I leave open the possibility that good fortune will smile upon us. But as I look to history, the absence of any objective reason to expect that level of good fortune, and a concerted effort by powerful interests and political leaders to squash what's left of the blue collar middle class and drive more wealth to those who are already the wealthiest, I remain skeptical that the present trends won't continue and, at some point, accelerate.

Update 2: Via LG&M, a cynical response to David Brooks, also from Esquire.

Not Just Politically Tone Deaf....


Although I'm sure everybody in "Newt Hampshire" is impressed, that hurt my ears.

But hey - If they cover Newt's solo, as modified by me, I'll still listen to their next video.

Investing in the Misunderstood

Fred Wilson has some words of advice for people looking for places to invest their money:
When people ask me, "how do you know which companies and services are going to be the biggest successes?", I usually tell them to look for the companies and services that are mocked and misunderstood. For some reason, that correlates highly with the biggest breakout successes.
That seems reasonable, to a point. If you see momentum toward a product or technology that "doesn't make sense to me", odds are you're missing something. And the more investors who say, "That doesn't make sense, so I'm not going to invest in it," the more opportunity there is for those who see its virtues, or don't see its virtues but trust in the wisdom of the crowd, to become early investors in a technology that may turn out to be the next big thing.

As a VC, Wilson has experience investing money in ventures that fail. So I don't want to read too much into his defense of Twitter, a phenomenal social success that has had great difficulty translating traffic into revenue.
For years, every post, column, or article written about Twitter would have comment after comment making fun of a service where people "told the world what they had for lunch." Of course, people were doing that on Twitter and people still do that on Twitter. But what those mocking Twitter were missing is that in between the tweets about pizza and pita were posts about politics and poetry. There was substance in the midst of nonsense.
I've commented on what I believe to be the primary attraction of Twitter, the illusion of close contact or relationships with other Twitter members, including celebrities. But whatever you make of Twitter, and even if you filter the wheat from the chaff so as to read about "politics and poetry" rather than "pizza and pita", it's difficult to see how that distinguishes Twitter from other technologies or starts it down the path toward profitability. Before the public's attention shifted to Twitter feeds and walls, the blogosphere was ridiculed for its superficiality - despite being full of good political commentary, poetry, and information of substance that in a Twitter feed would appear only as a link. Twitter is not a unique, stand-alone phenomenon, but is part of a progression of technologies that facilitate the public exchange of information. But is that enough to make it viable in the longer-term? It's an open question. The dot-com graveyard is full of good ideas that attracted traffic but made no money, as well as companies who did not find a way to monetize their ideas before they were copied and commoditized by others, and even of companies that briefly made money before being supplaced by something "newer and shinier" or swallowed by and incorporated into a larger company.

If I were investing millions in startups, and expected that only one in three of my investments would succeed, a company like Twitter might look like a good bet. Get in early enough and there's a possibility of making serious money when the company finds a way to turn its traffic into cash. Even if the company never figures out how to turn a profit, it may still be possible for it to go public and provide a huge return on my investment at that time. But as an individual, investing on a very different scale and with very different expectations, my first real chance to get in on a company like Twitter is after the IPO - and if you look at recent IPO's for similar companies, if you join the early rush to buy their stock on the promise or expectation that they'll eventually figure out a path to profitability you're apt to lose some money.

Pat Buchanan and the War on Christmas....

Given the number of years Pat Buchanan has been rehearsing and repeating his argument that there's a War on Christmas, you would think that he could by now build a more compelling case. When I received a card from a Jewish friend wishing me "Happy Holidays", for example, that was neither evidence of a war on Christmas or Hanukkah, nor was it evidence of an effort to inject secularity into the holiday or to deny the existence of a Christian majority. It was a demonstration of goodwill and inclusiveness toward people of other religions.

Still, some people aren't happy unless they're imagining themselves at the epicenter of a culture war. Take Pat Buchanan please, for example. Complaining "Whose Country Is It, Anyway", Buchanan whines that the numbers of "Christmas-haters... have grown since the days when it was only the village atheist or the ACLU pest who sought to kill Christmas." To support this claim, he resorts to a Washington Times article1, which (par for the course) relies on "Reader's Digest Reasoning",
Although more formally known as the "Hasty Generalization", I think of that type of fallacious logic as "Readers Digest reasoning" because, with no offense intended to that publication, that is where I first encountered this particular rhetorical tool, and it is one that publication has historically used with significant frequency. The proponent of a position collects a set of sensational anecdotes, and strings them together to advance a political position. If you look past the surface such an argument usually falls apart pretty quickly - the "examples" are found to be completely unrelated and isolated, and the "trend" ostensibly shown by stringing them together simply doesn't exist.
Buchanan's parade of horrors seems pretty pedestrian - a couple of childish pranks, an ill-behaved protester, a couple of examples of people exercising their right to present their own religious views when the government chooses to allow private displays of religious belief in a public space. Buchanan quotes from the Times editorial, "In the Wisconsin statehouse, a sign informs visitors, 'Religion is but myth and superstition that hardens hearts and enslaves minds.'" A bit of digging reveals that it's... pretty insignificant, as signs go.

Buchanan complains,
The First Amendment does protect what they are doing. But what they are doing is engaging in hate speech and anti-Christian bigotry. For what is the purpose of what they are about, if not to wound, offend, insult and mock fellow Americans celebrating the happiest day of their calendar year?
Buchanan's hyperbole having been duly noted, his conclusion is nonsense. The First Amendment does not create a freedom from being offended, nor would some form of blasphemy law be consistent with the First Amendment. Further, although presumably Buchanan would impose a blasphemy law exclusively to the benefit of Christianity, it is fair to observe that public expressions and affirmations of Christianity can potentially offend people of other faiths. Even if we pretend that it's impossible for the typical American to avoid encountering one of the four isolated, trivial examples Buchanan provides of the "War on Christmas", it would not be consistent with the Constitution to limit the First Amendment's protections only to Christian sensitivities.

Buchanan continues, "Even if a man disbelieves this, why would he interfere with or deny his fellow countrymen, three in four of whom still profess to be Christians, their right to celebrate in public this joyous occasion?" First, virtually nobody would be aware of the four, trivial incidents Buchanan cites if not for the effort that people like Buchanan make to magnify and publicize them. Second, sorry, if you allow your holiday to be ruined by learning that an atheist argues that the world needs kindness and not religion, the message of the Wisconsin sign, or that an insignificant number of people respond in an immature manner to the use of pubic spaces to advance a religion they don't share, you have bigger problems than a "War on Christmas".

Buchanan can't keep himself from attacking the President as part of this "war" on Christmas and Christianity.
Not long ago, the Supreme Court (1892) and three U.S. presidents — Woodrow Wilson, Harry Truman and Jimmy Carter — all declared America to be a "Christian nation."

They did not mean that any particular denomination had been declared America’s national religion — indeed, that was ruled out in the Constitution — but that we were predominantly a Christian people.
I'm left wondering, where are Buchanan's heroes - Richard Nixon, Ronald Reagan, George H.W. Bush and George Bush, on that list? Where's any Republican President? The issue, of course, is not that Republican Presidents have not made expressions of faith, but that they have not used Buchanan's preferred magic words. Reagan's statement that we're a nation "Under God" is inclusive - the sort of quote that undermines the very notion of (or makes Reagan a part of) the supposed war on Christianity and Christmas.

Having told us that a President should feel free to affirm our nation's Christianity, not through a literal expression that "" but through an acknowledgment that "", what does Buchanan do next? He lies.2
Was it a manifestation of tolerance and maturity, or pusillanimity, that Christians allowed themselves to be robbed of their inheritance to a point where Barack Obama could assert without contradiction that we Americans "do not consider ourselves to be a Christian nation"?
If you're like me, your first reaction to that claim would be skepticism - Buchanan provides no source, no date, no context, and the meaning Buchanan attributes to the statement is inconsistent with the President's beliefs and philosophies. Fortunately the President's statements are all easily accessible through whitehouse.gov, and the comment is found within a statement made in April, 2009, during President Obama's trip to Turkey:
I think that where -- where there's the most promise of building stronger U.S.-Turkish relations is in the recognition that Turkey and the United States can build a model partnership in which a predominantly Christian nation and a predominantly Muslim nation, a Western nation and a nation that straddles two continents -- that we can create a modern international community that is respectful, that is secure, that is prosperous; that there are not tensions, inevitable tensions, between cultures, which I think is extraordinarily important.

That's something that's very important to me. And I've said before that one of the great strengths of the United States is -- although as I mentioned, we have a very large Christian population, we do not consider ourselves a Christian nation or a Jewish nation or a Muslim nation; we consider ourselves a nation of citizens who are bound by ideals and a set of values.
Buchanan has told us that a President's statement that we're a "Christian nation" means "that we [a]re predominantly a Christian people" - you know, exactly what the President said. And when he acknowledges that the Presidents who have described the U.S. as a Christian nation "did not mean that any particular denomination had been declared America’s national religion", that's also exactly what the President said.

Buchanan's criticism thus becomes, "Rather than saying that we're a 'Christian nation', by which he would mean that we're predominantly a Christian people living in a land with no national religion, the President said that we're predominantly a Christian people living in a land with no national religion - and I'm horrified." That takes us back to the earlier issue - rather than imagining a war on Christmas or misrepresenting the President's statements to manufacture outrage, perhaps Buchanan should spend some of the Christmas season actually thinking about and reflecting upon the meaning of the religion and holiday he purports to be defending.
1. The Washington Times, of course, has an overt political agenda. Buchanan may appreciate the Unification Church's defense of his old boss, Richard Nixon, "back in the day", but it's interesting to me that he will accept without question the religious proclamations of a paper that is controlled by a family that is decidedly non-Christian and would just as soon the nation converted to their own faith.

2. A defender of Buchanan might attempt to argue that we should infer that Buchanan was speaking in ignorance of the facts, and that his flagrant misrepresentation of the President's statement should thus not be viewed as a lie because lying is an intentional act. If Buchanan wants to admit to that level of sloppiness with his facts and reasoning, I'll retract "He lies" and substitute, "He reveals himself as an ignorant buffoon".

Thursday, December 22, 2011

Election Year Christmas Carols

For the President,
I don't want a lot for Christmas,
In this weak economy,
It would be too much to ask you,
For a quick recovery,

This is all I want to say:
To make my election day,
Ron Paul would be a hoot,
But all I want for Christmas is... Newt.
For the Republican candidates,
Here we come a-caucusing,
Across our land so free,
Come and hear our pand'ring
And demagoguery.

Graft and pork, come to you,
And big farm subsidies, too,
And God bless you, and send you
To vote for me next year,
And God send you to vote for me next year.
Newt's solo,
Oh little town of Bethlehem,
Your people are a fiction,
And even if you're Christian,
You should get an eviction.

I claim to be an expert,
But some say I'm a hack,
My Ph.D. in history,
I sold to Freddie Mac.

Monday, December 19, 2011

By Blind Trust....

Romney, of course, means transparent.

Jeb Bush Flatlines in the WSJ

Jeb Bush seems to be trying to set himself up as the candidate people wish had run for the Republican nomination. It's a "Don't pay any attention to what I did as governor (or what my brother and father did as Presidents, or what my grandfather did as a Senator) - I've discovered Ron Paul and libertarianism, and regret "succumbing" to the temptation to "do something" about economic problems.

The short version is that Jeb has supposedly been moved by Ron Paul's allusion to "The right to rise" as a "core concept of economic freedom", and as a result wants to free businesses of regulation and to free individuals from any form of government assistance.
We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.
You know, like being born to a family that has been fabulously wealthy and politically connected for more than a century. The sort of fortunate birth that many people confuse with qualification for public office, but that's apparently something we are now supposed to celebrate rather than regret in the wake of a duopoly of increasingly disastrous Bush presidencies. (Anybody wanna go for a trifecta?)

The primary target of Jeb's editorial is regulation, which he tells us "abridge our own economic freedoms". He paints with an incredibly broad brush, but fails to identify any actual regulation that he sees as harmful, or to identify any actual harm. I don't think that's because he could not identify a regulation in which the costs and benefits were out of balance. I suspect that it's because to do so would reveal that this is penny ante stuff - that he could not identify any significant impediments to big business arising from regulation and that people would very easily identify the need for the regulations he specifically described even if agreeing that they should be modified.

It is fair to say that regulation of business impairs the ability of small businesses to enter highly regulated markets, and to compete with larger businesses that have legal departments that allow them to navigate or bypass regulation. But it's also fair to observe that as much as businesses rail against regulation, they recognize that complexity can be their friend - a clear regulation must be obeyed, while labyrinthine regulations are inevitably full of loopholes. Simple regulation also doesn't serve as a barrier to entry, while complexity may deter competitors from entering their markets. A similar phenomenon can be seen with newer high tech companies complaining about patents as a barrier to their success, and then not seeming so bothered by them after they build their own catalog of patents to use to threaten or negotiate with competitors.

But Jeb is speaking about personal freedom, and he provides no link between the regulation of businesses and the freedom of individuals. Having supposedly been inspired by Ron Paul, perhaps he has been listening to some of Paul's inanities on libertarian markets. As much as a certain faction of right-winger would like to pretend otherwise, history's lesson is clear: In the absence of regulation, business and wealth run roughshod over individual rights and freedoms.

Jeb offers some stump speech-style rhetorical questions,
Have we lost faith in the free-market system of entrepreneurial capitalism? Are we no longer willing to place our trust in the creative chaos unleashed by millions of people pursuing their own best economic interests?
If you succumb to the temptation to answer the questions, they're easily revealed as simplistic and inane. But that's not the point. Jeb is suggesting that there's a horrible "other" at work in our government that is out to undermine "entrepreneurial capitalism" and individual economic freedom and, implicitly, that it's men like him who are the answer... that is, now that they're out of power and no longer "succumb" to the temptation to pass the regulations that they would not dream of passing if they are returned to power.

When Jeb says, "We see an industry dying and we demand it be saved," I expect that he's speaking of the domestic auto industry, more specifically of GM and Chrysler, that both his brother and President Obama thought necessary to save within the context of a massive economic meltdown. Except the auto industry was not going to fail - just two of the three domestic manufacturers. Do you believe for a second that, had Jeb been President, he would have stepped back and allowed GM to collapse rather than providing funding to keep it afloat while pushing it through a structured bankruptcy? I suppose he could be referring to the financial industry, as that industry might have collapsed pretty much in its entirety had it not been bailed out by the government, but the chance of President Jeb not stepping in with a bailout package would have been zero percent. Let's be real. The "right to fail" is an individual right, and provides a context in which Jeb would have no difficulty distinguishing large corporations from real people.

I liked this line:
The right to rise does not require a libertarian utopia to exist.
Have you ever paused to wonder what a libertarian utopia would look like? Were you to smoke opium you might dream up something along the lines of Ron Paul's fantasy:
The regulations are much tougher in a free market, because you cannot commit fraud, you cannot steal, you cannot hurt people, and the failure has come that government wouldn't enforce this. In the Industrial Revolution there was a collusion and you could pollute and they got away with it. But in a true free market in a libertarian society you can't do that. You have to be responsible. So the regulations would be tougher.
I once heard a sarcastic, but much more likely vision of a libertarian utopia: anarchy with lawyers. You only have rights to the extent that you can privately enforce them, meaning that you need lawyers and money (or guns) on your side to prevail. Once you start allowing the government to regulate such things as what you do with the toxic sludge you dump on your own land, such that it doesn't leach into the groundwater or create toxic runoff onto neighboring parcels, you're creating the "collusion" that Ron Paul assures us will only serve to ensure that the polluter will get away with it, or the "loss of personal freedom" that Jeb implies will inevitably arise from the regulation of industry.

Jeb, as a politician, saw his party cater to the legal drug dealers of his state - pain clinics that rake in millions of dollars legally selling pain medications to addicts from around the country - and failed to pass legislation that would have created a state system for tracking the prescription of scheduled medications. Such a database is an imperfect tool, but is one that can help the state track both doctor shopping by patients and the doctors who are most obviously selling prescriptions as opposed to practicing medicine. Perhaps, having seen the "folly" of such regulation, Jeb has come to believe that people should have the freedom to get intoxicated on the substance of their choice. More realistically, he came to understand that it's sometimes the most immoral, most repugnant businesses who have the deepest pockets for lobbyists and to find ways to buy off government officials who might otherwise limit their harmful practices.

Within that context, I have a difficult time not being cynical about Jeb's call for "Rules that sunset so they can be eliminated or adjusted as conditions change". The non-cynical interpretation is that he's proposing that we test how regulations work in practice and only renew them if they work as planned, and return benefits that exceed their cost. The cynical interpretation is that if you set a sunset period of, let's say, four years, every four years you get to return to the trough to be fed by the industry's lobbyists.

Meanwhile we are to pretend that regulations are never revisited, that nobody ever looks at costs and benefits, and that nobody can figure out how they work. Great hyperbole, and like any good lie containing a kernel of truth, but a lie nonetheless. Sure, there's always an element of uncertainty in the creation and passage of new regulations, and there are always regulations that continue long after their original goals are fulfilled. But it's absurd to pretend that industry doesn't figure out how to operate in a regulated environment, that its lobbyists are not consistently working to amend or revoke unwanted regulations, and that some of the zombie regulations live on because they benefit an industry, directly or indirectly subsidizing certain activities and operations. We can also easily look back on episodes of deregulation and see direct, negative consequences on industries, public welfare and the economy. For example, although Jeb would probably prefer that we not recall his brother Neil, whose reputation was shattered by his role in the Savings & Loan debacle, or how the more recent financial industry collapse was a repeat of the S&L collapse, on steroids, but it would take a fool to not see how deregulation played a significant role in both financial disasters.

With no apology for his hyperbole, Jeb tells us the horrors that will inevitably come from regulation:
We either can go down the road we are on, a road where the individual is allowed to succeed only so much before being punished with ruinous taxation, where commerce ignores government action at its own peril, and where the state decides how a massive share of the economy's resources should be spent.
You might believe from Jeb's first statement that, since his father was in the West Wing and Oval Office, taxes have been on the rise. But then there are those nasty facts - taxes went down significantly under big brother G.W., and have again been reduced under President Obama. If Jeb wants us to believe that we're on an inescapable downward spiral of regulation that can lead to nothing but higher taxes, the facts have a cruel way of raining on his parade. Now it is fair to say that our course is unsustainable - that the damage the G.W. Bush years, with their unfunded wars, entitlements and tax cuts, bloated budgets, stagnant wages and out-of-control spending did to the economy leaves us with no choice but to raise taxes. But none of that has a whit to do with regulation. And, as a good Republican, Jeb prefers to pretend that we can magic away all of that harm by eliminating regulations and cutting entitlements.

I'm not sure when we were last in a world in which commerce could avoid paying attention to government action. It appears that Jeb is unfamiliar with the U.S. Constitution and how it empowers the federal government to regulate interstate commerce, or how that regulation has facilitated commerce between the states. Or how he can be unaware that treaties and negotiations have facilitated commerce between nations. Even so-called "free trade" agreements are a form of regulation, not deregulation - rules and policies that both sides must follow in order to avoid tariffs. You don't believe me? Read NAFTA and... in a few hours, or perhaps tomorrow, when you're done, come back and explain to me how little it regulates.

As for Jeb's concern that the state "decides how a massive share of the economy's resources should be spent", well, let's take a look at the budget. The biggest expenditures are for Social Security and the military. Social Security is an insurance program, perhaps a redistribution of wealth but not the government deciding how the money is to be spent - the government may write the check but, as a beneficiary, you're free to spend your check as you please. (The same is true for income security programs such as unemployment). So is Jeb railing against military spending? Unquestionably, the government controls how every penny of the military budget is spent. But we know what would happen if we were to directly ask Jeb about military spending as the state deciding how a massive amount of money should be spent - we would get a word salad that boils down to "That's different."

But I'm (cough) beating around the bush. Jeb is talking about medical spending, and is implying that the Affordable Care Act's shifting around of the deck chairs on the Titanic amounts to deciding how the nation's healthcare dollars are spent. Never mind that for most people there will be no discernible difference between their health care or health insurance expenditures before and after 2014, or that the plan pushes money into the hands of private health insurance companies. Never mind that if "free markets" inevitably brought the efficiencies that people like Jeb promise, we would already have the cheapest, most accessible health care system in the world, while instead we have the highest costs in the world without a corresponding level of access or performance. Never mind that the ACA at least attempts to reign in medical inflation, and that without corrective action the present system will collapse.

The alternative to Jeb's imaginary parade of horribles is the "return" to a world that exists only in his imagination:
Or we can return to the road we once knew and which has served us well: a road where individuals acting freely and with little restraint are able to pursue fortune and prosperity as they see fit, a road where the government's role is not to shape the marketplace but to help prepare its citizens to prosper from it.
Would that be a road through which the son of a millionaire can become a millionaire Senator, and have a millionaire son who becomes President, and have a millionaire grandson who despite a track record of non-achievement can also become President while his more accomplished (but still not all that impressive) brother can become a governor who obviously hopes to also become President? Because the road is a lot tougher for the rest of us, and the Horatio Alger myth remains a myth. Jeb speaks of choice between "the straight line promised by the statists" (an allusion, perhaps, to equality?) that turns out to be "a flat line" and "the jagged line of economic freedom" (where you and I have our ups and downs, while brothers like Tripper and Tumbler - the Secret Service code names Jeb and George respectively earned as they staggered through their drunken young adulthood - emerge from their wastrel youth float into adulthood, buoyed by an inherited name, family fortune and political connections... but in fairness, Jeb did let us know, up front, that we need to let people enjoy "the fruits of... good luck".

So let's pretend that a return to the era of the robber barons, the age in which the Bush family fortune was first accumulated, will be an era of equal opportunity, of a rising middle class. Let's ignore that the greatest innovations in the world's history occurred in no small part through public-private partnerships of the modern era - NASA, ARPAnet, the Manhattan Project, military technology, etc. - and pretend that we would be better off in the era of child labor, violent union-busting, rampant inequality, and corrupt government. Because it would appear that to Jeb Bush, those are the good old days. Make the pie lower.

For the diminishing number of people who still believe that a new candidate can enter the Republican primaries and save the party from Mitt, sorry, it won't be Jeb. It's far too late for that. So why emerge from the woodwork now? To attempt to position himself as relevant and, should the economy stagnate for another four years, to point back on his essay with an "I told you so". Why offer an essay that is so lightweight, weakly reasoned, devoid of examples? For the same reason - in the event that the economy turns around, by leaving the meat off of the bones he's not making any statements that his future opponents might use against him.

Palin's Non-Endorsement, Translated

"In order to demonstrate my continuing power and influence, I am going to wait until I know who is going to win the nomination before endorsing a candidate."

In fairness, Palin offers some false modesty: "And I also believe that my endorsement and anybody else’s really sometimes doesn’t amount to a hill of beans when you consider the independent thinking and the wisdom of the voters." But... That would be the "independent thinking and the wisdom" that resulted in her losing the election as McCain's running mate? The "independent thinking and the wisdom" that has marginalized her within the party and caused her to sit out this nomination process? If she has so much respect for the independent thinking and the wisdom" of voters, and the resulting irrelevance of her endorsement, why the grandstanding?

Saturday, December 17, 2011

Comcast - The Worst Product Support in the World?

If you have Comcast, at one point or another you have probably had to try to navigate through their voice mail system. And you've probably experienced how it includes helpful suggestions such as, when you're calling over a loss of Internet connectivity, suggesting that you use their online support to address the problem. The navigation to product support is so cumbersome, and the hold times are so long, it seems as if they designed their phone support system to get people to give up and hang up long before they reach a real person. It can easily take half an hour to reach a live person.

As a basic rule of thumb, if you are having recurring problems with all of your services at the same time the source of problem will typically be somewhere between the utility pole and your in-home devices. If you are having problems with some services while others function well, and the resetting of your cable box or cable modem doesn't fix the problem, odds are the problem is Comcast's.

A while back I worked through their phone support to ask about a repeated problem with Internet and phone connectivity. Cable TV was working, so I expected to find that the problem was at Comcast's end. By the time I got through the problem had resolved itself, their "computer" didn't indicate that there was any work going on in my area, and they couldn't test for the source of the problem because the system was working. "Call back when the problem is still going on." So I did just that, via cell phone, again working through their ridiculous menu and tolerating their excessive wait times, and was told that this time their "computer" indicated that there was work going on in my area so that was "probably" the source of the outage.

I indicated that the problem had been recurring, that in the past I had difficulty getting through their phone system before the problems cleared up, and that it would be very helpful if they could provide a direct number so that I could more easily have somebody test for the source of the problem when it happened again. "We don't have a direct line." Well, I find that difficult - but not impossible - to believe. Many years ago I had phone service through a carrier that deliberately didn't assign direct lines to customer support so that you couldn't bypass their menu system (unless you're a VIP, because pretty much every company has special support numbers for special people, but ordinary customers aren't special). Intentionally terrible customer service. So here I am again, hearing a story that tells me either that the support person is lying to me or that Comcast is giving intentionally terrible product support for customers with repeat problems.

Now, let me travel back in time a few years. I had a cable installer come to the house to install high speed Internet and, as part of that process, he tested the completed installation including the television. He recommended setting a PIN for pay-per-view, both because that way we couldn't accidentally order a PPV movie and because children grow up and figure out how to use remote controls. Fair enough. It was a simple process, and the installer demonstrated it in action.

Fast forward to the present. My daughter, using the xfinity iPad app, manages to order a PPV show without entering the PIN. I check online and sure enough, the website suggests that this is not possible.
If the program is protected by your parental control settings, you will need to use your Comcast remote to enter the 4-digit PIN you have established.
The Internet is working so, why not? I'll try that online support they recommend over their inefficient phone support system. I explain the problem and get an obvious boilerplate reply, not responsive to the issue. I cycle through that a few times and then finally get a boilerplate reply indicating that their current system uses two separate PINs, both the parental control PIN and a purchase PIN. even though you won't find any mention of a separate "purchase PIN" in their Xfinity TV App FAQ, and even though this was a reprogramming of their system to effectively turn off the PIN protection I had previously implemented, I was at fault for not knowing that the system had changed.

Email support provides little but cut-and-paste answers, each from a new support person who identifies his or herself by "name" and then disappears into the ether. There's no continuity of service. Each email goes to a new person who has no knowledge of the history of the exchange, and no apparent interest in reading that history. Half don't even seem interested in, or perhaps it's capable of, understanding what you are saying.

Within that context, I received a cut-and-paste response instructing me how to set the "purchase PIN". So I go to the television to set the purchase PIN and, sure enough, the instructions are wrong. I find the exact same, incorrect instructions on Comcast's website. Wonderful. So I muddle around in the menus to find where they've buried the setting and create the purchase PIN. I then respond to Comcast explaining that their instruction was incorrect, that the instruction on their website was incorrect, and a walkthrough of the actual steps to set the purchase PIN. I also informed them that the instructions on their website for setting up a parental control PIN were also out-of-date.

The "helpful" response I received? Instructions on how to set up a parental control PIN. That's right, the one PIN that was set from the beginning. And the instruction on how to set that PIN? A cut-and-paste version of the same instruction from their website that I had just informed them was inaccurate.

The biggest problem, it would seem, is that Comcast has outsourced its email support services to the developing world and that although it's staff is competent to cut-and-paste simple answers to simple questions, many or most of their support staff lack the English language skills to respond to anything more than a simple question and instead scan for keywords or phrases to try to figure out what the customer is asking about.

At the end of this, having failed to understand my inquiry, failed to provide accurate information, and failed to correct their cut-and-paste "support" materials even after being put on explicit notice of their erroneous content, one of their reps not-so-helpfully suggested that I send feedback to some other division of Comcast to give feedback on my customer support experience. Here's the thing: When it's clear that they've dropped the ball on customer service, a customer service representative should take the initiative to pass along the issue to customer care himself.

Cue from above: A bluebird just flew past my window and, while not knowing if it is in fact the bluebird of happiness, it's time to move on to happier thoughts.

Some Things, You Shouldn't Have to Explain

Following up on the much-maligned essay by Gene Marks, Megan McArdle offers what I think is a reasonable interpretation of Marks' thesis: it's much harder than most people think to transition from being poor to being middle class. McArdle tends to oversimplify, but at the same time she acknowledges the general reality of the situation:
[Poor people] could be middle class if they made a series of hard choices. But those choices are really hard - much harder than they are for the people who are already there. Chances are, you would also have a hard time making those choices.
Some people find it very easy to point to a child in poverty and say, "If you acted like a middle class kid you would escape poverty," never mind your parents, peers, schools, support system.... Marks simply reveals that when those who have enjoyed lives of comparable privilege speak of "acting middle class" they are describing taking a level of action and initiative at least an order of magnitude greater than what a typical middle class child must do to stay in the middle class - in simple terms, struggling against the odds vs. coasting.

I had a client many years ago, abandoned to his elderly grandmother's care by his drug addict parents, caught at the age of seventeen selling crack, and in court as an adult (at 17 you're an adult in Michigan for criminal prosecution). The image that sticks with me is when, at his sentencing, I described to the court why I believed probation was appropriate and referred to him as intelligent. His reaction telegraphed that nobody had ever used that word to describe him. Out of control, troublemaker, and the like, sure. But intelligent? Nobody noticed. Nobody was looking.

Tuesday, December 13, 2011

Romney's Tax Cuts For the Wealthy

As Paul Krugman notes, Ezra Klein appears to have lost track of what motivates the modern Republican Party,
[T]he GOP is not now, and never has been (at least not since the 1970s) concerned about the deficit. All the fiscal posturing of the last couple of years has been about using the deficit as a club to smash the welfare state, with the secondary goal of frustrating any efforts on the part of the Obama administration to help the struggling economy.
But this also had me scratching my head. Klein notes the contradiction, with "Washington Republicans say[ing] their reticence to pass a larger payroll tax cut is explained by the deficit" while "on the campaign trail, the Republican candidates seem unburdened by any similar concerns". But when describing how the various would-be nominees are proposing various deficit-expanding tax cuts for the wealthy, usually with associated tax increases for the middle class, Klein contends,
The only major Republican candidate who hasn't proposed a massive tax cut for the wealthy is Mitt Romney. His plan mostly just extends the Bush tax cuts, wipes out the estate tax, and makes some vague noises about tax reform. He does propose a new tax cut on income from capital gains and dividends -- but only for taxpayers making less than $200,000.
What a world we live in, when somebody can argue with a straight face that "extend[ing] the Bush tax cuts" is not a massive tax cut for the wealthy, and follow it up with the claim that "wip[ing] out the estate tax" isn't also a massive tax cut for the wealthy.

Monday, December 12, 2011

Good to His Friends, Good to His Family, a Penny Pincher....

I won't say that we look for presidential candidates who are bad to their families as, despite a certain tolerance of serial monogamy and the prioritization of career over family, that's not the case. There would likely be something nice in having a truly committed family man become President. But it's not a qualification. Mitt Romney may well be, as a friend writes, one of the finest parents in the world, but he's not running for daddy in chief.
We recently recommended that Mitt and Ann invite a film crew into their family Christmas party later this month and give people a more intimate look at their great relationships with their outstanding sons and their families and give the public a little more of a private look at the more casual Mitt — funny, relaxed and a great singer, along with being a genuinely compassionate person who really cares about others. We're now second guessing that suggestion because it might make him look even better, even more perfect, even more exceptional.
One hardly knows what to say. Romney's problem is not that he looks too perfect or too exceptional. It's that he comes across as opportunistic and disingenuous.
Everyone says they want change, want something new, want competency and want an outsider/manager rather than an insider/politico. But so many seem to think Romney is just a little bit too new, too different and maybe too good.
So Romney offers us change we can believe in? Been there, done that. He'll be an "MBA President"? Been there, tone that. He'll be an outsider, having made a five year career of running for President? First, these days everybody is claiming to be an outsider. Second, whatever the appeal of having an "outsider" be President, where's the evidence that an outsider will be effective, let alone more effective than an "insider"? If by "outsider" they mean "Not beholden to special interests," that's great - he can emphasize that. But it's difficult to see Romney as more of an outsider than any other former governor, with the outsider claim diminished by his prior campaigns for the Senate and Republican nomination.
The problem, you see, is that there are three very different skill sets required for: 1. Getting nominated; 2. Getting elected; and 3. Governing as president. The skill set required for No. 1 seems to be rigid, uncompromising, far-right positions and a total distrust (or even hatred) of all moderates and liberals. The skill set required for No. 2 is the ability to reach out to the center of the political spectrum and to take positions that everyone can understand and appreciate even if they don't agree. The skill set required for No. 3 is to be able to attract the best and the brightest, to listen well, to analyze well, and to make and clearly explain strong, reasoned decisions that turn our country around and move it forward.

Mitt is best at skill set No. 3, second best at No. 2 and probably worst at skill set No. 1. If he gets over that first hurdle, he will be a remarkable general election candidate and, we believe, an extraordinarily successful president.
In relation to the first hurdle, Romney has not displayed "sterling character". He has demonstrated a willingness to walk away from any prior position, no matter how strongly voiced in the past, in order to better position himself for the nomination. It is not "ridiculous" to reject the claim that Romney has simply "evolved and progressed in [his] positions and their views". Why not? Because since he started his campaigns for the Presidency, with no exception I can presently think of, every single time Romney has moved away from a prior position it has been to take the majority position that you would expect to find from a poll of likely primary voters. If his were a natural or thoughtful evolution, you would expect some variation.

Is Romney truly better at reaching out to the center than he is at getting nominated? It's hard to tell, as he appears to be prioritizing "saying what it takes to get nominated" over "reaching out to the center". If we are to infer that we should disregard Romney's more extreme statements on the assumption that once nominated he will change his views to be more pleasing to the "center", that's not exactly reassuring. It seems to be an acknowledgment that once he crosses the initial hurdle of winning the nomination, Romney will again shift his positions based on a broader set of polls.

I personally might like hanging around a Romney mansion over Christmas, watching him enjoy his family and sing carols. But I'm not willing to accept that a pattern of opinion changes that are invariably the same shifts you would take as an opportunistic candidate are, in Romney's case, all the result of careful and honest reconsideration of prior opinions. Frankly, when I see him stand behind an ad in which his campaign lies about the President's past statements, I see consistency with opportunistic flip-flopping, not a sign that Romney's a man of impeccable character. I'll admit, it would be very difficult for a man of impeccable character, and who is willing to compromise and work toward the best resolution, to win the Republican nomination. But to the extent that Romney is willing to "do what it takes to win", even if it means walking away from his past beliefs whenever a poll tells him to do so, making misleading and mendacious statements and attacks, and failing to demonstrate the sterling character he and his friends insist is hidden behind a "too perfect" facade, he is compromising his character.

To the extent that Romney can point to a seminal achievement as Governor of Massachusetts, it would be the bipartisan compromise that led to that state's healthcare reform. I would feel much better about voting for a Mitt Romney who stood firmly and squarely behind that effort - both in terms of process and outcome - as opposed to the guy I see on the campaign trail try to wriggle and squirm around its obvious parallels to the Affordable Care Act. Perhaps I should see it more as an indictment of the Republican Party than of Romney that to do so would cost him the nomination, but I can't - because Romney wants the nomination so badly he's willing to sacrifice what his friends assure us is his true character.

On a related note, Romney's odd attitude toward money has received some press. I'm willing to take it at face value - that it's not simply P.R. from a rich man who wants to look like he holds middle class values, but if this article is typical it's difficult to believe it's not at least in part a P.R. effort. I can get around the seeming contradiction between Mitt Romney's frugality and his profligate expenditures on his multiple mansions, as an indulgence of his wife and family. Even the extravagant remodeling makes sense if Romney is a man who has a strong sense of quality - if you're going to do the job, you do it right. Having invested in a costly, quality anchor for the family boat, I can understand Romney's wanting to teach his teenage son a lesson about the value of money and property by making the effort to recover the anchor when his son expressed that it was lost.

In terms of business, I can understand why Romney wanted to discourage expensive habits and purchases on the part of employees - costs that would be borne by the company and, if not necessary, eat into the bottom line. Had he not been so personally invested in the business he might have approached things differently, as the executives of publicly traded companies too often seem to view the company as a personal piggy bank. But I'll give him the benefit of the doubt that he is part of that dying school of business leaders who believes that you should manage other people's money as if it's your own, and not fritter it away on indulgences you would not buy with your own money. (Realistically speaking, though, the bag lunches at the computer weren't about being cheap - by any reasonable measure of boss behavior they were a message to the staff that they should work through lunch.)

If Romney's character is to be frugal, perhaps that's part of why the $10,000 bet seemed so disingenuous. But I am not sure how I should expect Romney's frugality to play out, were he to become President and, unfortunately, the demagoguery of the campaign trail leaves no good sense of what might happen. If we look at his history as governor, Romney would work to reduce the deficit by raising taxes... today he would be fighting his own party to raise so much as a penny. (I don't buy Romney's claim that the increased revenues didn't come from taxes, given that a huge chunk of the money applied to balance the state budget came from a previously scheduled capital gains tax increase and it's perfectly reasonable to characterize some of the "fees" he created and raised as taxes. A two cent per gallon gasoline "delivery fee", for example, does not seem to be in any way distinct from a per gallon gas tax, and the overall tax burden on state residents increased over his tenure.)

A final word to Romney and his friends: If Romney wants to make a statement clarifying who he is and where he stands, apologize for his past actions that cast a shadow over his sterling character, and proceed from this point forward by demonstrating a sterling character and honest campaigning, I'll give him the benefit of the proverbial "reset button" and judge him from that point forward. But if he keeps on doing what he's doing, to the extent that his character gets muddied I don't see that he has anybody but himself to blame.

I'll Bet You $10,000....

That Romney's "bet" line during the debate was carefully scripted and calculated, intended to catch the attention of the media and to shut down a "zombie lie" that had been repeatedly used against him. I will (rhetorically) bet you $10,000 that Romney and his team weighed what dollar amount to use... they didn't want anything too small because it might sound silly or suggest Romney thought he might lose, but they didn't want anything too big because it might sound like something a child might say while also magnifying Romney's wealth. Heck, if we increase by orders of magnitude, you would probably have to make it, "I'll bet you $100,000,000", before you reached the point where Romney's long-term budget would be affected by the loss, $1 billion before it would actually be more than he could cover.

It's no surprise that Rick Perry is trying to build a comeback on the bet,
Perry on Fox News Sunday called the bet "a little out of touch with the normal Iowa citizen." The Perry campaign also produced a web video focusing on Romney's position on the health insurance mandate and the debate moment. While ominous music plays and images of Romney flicker, words on the screen read, "One bet you can count on... the truth isn't for sale."
What's missing from that? Any concession that Romney was right and Perry was wrong. Amazing, Romney tried to kill a lie and it's his tactic that gets all the attention. The truth? Who cares, right? (At the same time, Romney has suggested that a mandate would be a good approach for many, perhaps most, states, so Perry's mistake was in focusing on an imagined contradiction between versions of the book as opposed to focusing on Romney's past statements about mandates. Although, given Perry's new tack of "I'll win this by bashing gays," perhaps the real problem is that he doesn't understand that a "mandate" doesn't involve being compelled to date men.)
Former Utah Gov. Jon Huntsman -- who is trying to gain momentum in New Hampshire, where Romney currently leads -- went so far as to create an entire website slamming Romney for the debate moment: 10kbet.com.
Yes, featuring headlines like "Romney's $10,000 bet highlights personal wealth". Thanks, Jon, for letting us know that rich people shouldn't run for President and... that you'll be dropping out of the race? Seriously. Perhaps you should be taking notes from Newt Gingrich, yet another out-of-touch rich man, that you shouldn't be saying and doing things that suggest that you, also, are out of touch. I'll grant, Gingrich has a number of money-related issues that Huntsman has avoided, but I doubt that Huntsman really wants the eyes of the nation focused on his wealth and lifestyle.

Romney's comments over the years have confirmed that, as a phenomenally rich man, he is out-of-touch with the financial situation of an average person. Which, in terms of national politicians positioned to gain a presidential nomination, is par for the course. The shock these days is when somebody whose net worth is probably only in the seven digits manages to prevail. If "Romney's rich and out of touch" is a real story, worthy of potentially taking down his bid for the nomination, why only now? To me, it seems like the media is following, and thereby magnifying, the buzz rather than covering the story.

Wednesday, December 07, 2011

Cameras and the Supreme Court

Not that the Supreme Court is apt to approve cameras any time soon (meaning "ever"), but apparently it's something we should nonetheless be concerned about? A law professor argues that the Supreme Court "is the most trusted branch of government" and that its popularity is helped by "the relative obscurity in which the justices work". I'm not sure that the critics of Bush v. Gore would call that a good thing. That is to say, obscurity may help with reputation management but it doesn't necessarily mean that the resulting benefit is deserved. The obvious counter is that greater openness can cause an institution to act more responsibly, rather than relying on its obscurity as cover for poorly reasoned or controversial decisions.

The author accepts the status quo belief that "Justices use oral argument to develop their thinking in a case". Well, no, not all justices do that. Some barely, if ever, participate in questioning. I've heard appellate court judges say that oral argument is influential in probably 10% of the cases they hear. Despite the ostensibly greater difficulty of the cases the U.S. Supreme Court chooses to hear, I would venture that the influence of oral argument isn't even that high. Court watchers are very good at predicting the outcome of cases, which Justices will vote in a given way on a given issue at the point the court agrees to hear the case, even without seeing how the issues are formally framed or reading the briefs. I appreciate that oral argument can influence an opinion and on rare occasions might change a Justice's mind, but on the whole I don't buy into the conceit that you have a significant opportunity to sway the court at that point in the game.

I suspect that it's true that "Cameras will alter the dynamics of oral argument" and "will make lawyers and justices guarded in their exchanges", but I'm not sure that's entirely, or even mostly, a bad thing. Frankly, from the standpoint of the public, most cases are boring. The issues and arguments can be sufficiently obscure that they're boring to most lawyers. Where's the guarding likely to occur? Perhaps there will be some caution in the analogies used in "reductio ad absurdum" questions - those questions that attempt to show how absurd an argument is if taken to its logical extreme. I expect that the Justices are savvy enough that those inclined to be a bit outrageous will substitute theoretical outcomes that won't provoke (similarly theoretical) outrage.

To the extent that a Justice who has a parochial view of, for example, the rights of women, a candid question may reveal that perspective; I don't think that's a bad thing. Justices may be more cautious about questions that make them look egocentric or are designed not to illuminate but to humiliate, but no big loss there. If I may place the onus on the author of the argument, given that transcripts are available, can she point to some questions or an exchange that she believes would not have occurred had cameras been rolling? Any of the questions she fears would, had they been filmed, "live forever on the Internet" and "leave the public with distorted views of the court"? Between transcripts and audio recordings, why haven't we seen even one such instance of outrage - there's been plenty of Internet outrage, after all, at the statements of public figures and politicians that were not caught on video, or weren't even recorded at all.

Also, as fun as "law and sausages" analogies are, the proposal is not to film and broadcast the inner workings of an actual sausage factory. The proposal is to film nine intelligent people who, aided by a vast support staff and bevy of clerks, are being asked to decide really important issues. By the standards of an ordinary American, they are highly paid for their efforts. They are given incredible insulation from public opinion and reaction to their decisions by virtue of their life tenure. How much more protection do they need?

One thing I can guarantee is that the public would not look favorably upon a Justice who is seen, argument after argument, tilting his chair back, eyes closed, demonstrating what appears to be either profound indifference or deep slumber. The public might not like seeing a Justice admonish or humiliate a litigant over a petty issue, when there are serious issues before the court. The public might not appreciate a Justice's questions that, over the course of a case or over time, suggest that the Justice has retrograde opinions on an issue such as gender equality. And whether the publicity causes the Justices to improve their conduct or results in embarrassment for its continuation, I don't see that as a bad thing.

Gingrich vs. Romney, the Campaign Song Edition

If the race for the Republican presidential nomination truly is down to "Mitt v. Newt", it seems that I should update my campaign song suggestions. Back in 2007 I suggested that Mitt Romney should choose "Everything To Everyone", by Everclear, and earlier this year I suggested "Stuck With You", by Huey Lewis and the News. (I will admit that Romney's long-awaited introduction of himself reminds me of the first line of "Sympathy for the Devil", but not so much the rest of the song.) For Newt, I suggested "Boy For Sale", by Lionel Bart. Those suggestions still seem fitting, but if it truly is a two person race perhaps I should update my suggestions to reflect that reality.
  • Newt Gingrich: "Two Princes", by the aptly named Spin Doctors. It's not just that Newt will be emphasizing his humble roots, or using endorsements of Romney to suggest that he's some type of outsider. It's also that I can picture him campaigning, not so much by shaking hands and kissing babies, but by showing up at your door, announcing himself as the presumptive nominee, and asking if you've bought him flowers.

  • Mitt Romney: "Everything You Want" by Vertical Horizon.

    I am everything you want, I am everything you need,
    I am everything inside of you that you wish you could be,
    I say all the right things at exactly the right time,
    But I mean nothing to you and I don't know why....

Whatever role Romney took back in his days as a corporate raider, if the past five years are any indication it seems reasonable to infer that he was not the guy you could count on to close a deal.

Inside-Out Over Newt Gingrich

Even though they reportedly detest Gingrich, Republican Party "insiders" are afraid to attach their names to their criticism.
For them, the natural inclination is to assume the best about big-name Republicans, and to treat any negative stories about them as the usual garbage from the liberal media. That will change once they start hearing national conservative leaders calling Newt a “farcical character” and questioning his conservative bone fides, as Club For Growth’s Chris Chocola and others did in the Washington Post article on Newt’s policy positions this morning.
A handful of personal attacks during a primary campaign is, in my opinion, not very significant. How many people in the nation (outside of the 1%) know who Chris Chocola is? How difficult would it be for Gingrich to turn the Club For Growth's preference for Romney against Romney?

Yes, if it snowballs and we reach a point where the right-wing media and Republican establishment lets loose on Gingrich, they'll almost certainly knock him out of the race. I suspect that would have happened, but for the fact that many of them aren't enamored with Romney. (I suppose it's possible that they are slow to react because they're in a state of shock that a significant percentage of Republicans take Newt Gingrich seriously as a candidate, but that would mean they somehow missed all of the surges that came before Gingrich's.)

It's all about winning. The decision about whether to take Gingrich out of the race, to let him compete for a while, or to back him over Romney will not be driven by a substantive analysis of either candidate - it will be driven by the polls.

Jon Huntsman Races for the Bottom

When you've already lost the race, why humiliate yourself?

What Will Poor Mitt Romney Do With His Life....

Mitt Romney decided to leave his life as a corporate raider because, having acquired substantial wealth (tens, perhaps hundreds of millions of dollars, enough to place him firmly in the... middle class?), prompted by his wife he found himself wondering, "What am I going to do with my entire life, and am I going use all of it just earning money."

I'm reminded of a guy I used to work with who left his business (law firm) to take on a salaried job, IMHO a job paying more than he was worth. He liked to talk about how successful he was in business but that he reached a point where "it's not fun any more" and he wanted to take a job to "give back" to the profession.

A year or so later a prominent lawyer was looking into a job in the legal department of a university, a job that paid well, but well below the lawyer's historic income, also offering the explanation that running his firm was "not fun any more." Then he withdrew his application and my colleague commented, "He must be making money again." It's not too difficult to connect the dots between that statement and why my colleague actually left his practice.

I'm not saying that Mitt Romney wasn't making money as a corporate raider, but whenever I hear excuses for somebody's supposedly self-sacrificing job shift such as "It's not fun any more," "I want to give back to the community / profession", or the classic "I want to spend more time with my family," my cynicism kicks into high gear. I've met some who were sincere, but those who seem most inclined to vocalize their reasons seem to be engaged in a form of reputation management that suggests worry that others will think their careers are tanking, to be those most likely to have another reason for the change, or both.

Were Romney honest, I expect that he would explain that having started on third base thanks to his father's name, wealth and connections and, from that privileged position, having proceeded to "hit a home run" in the financial world, he recognized that he had to change his career path because the chances were very small that he could step out of Bain Capital into a presidential race and be taken seriously as a candidate.

A guy who really wants to give back to the community doesn't job hop through assignments that position him to get the job he (like his father) have always wanted. He does't effectively retire and spend almost a decade doing little other than positioning themselves for, and campaigning for, the job he has always wanted. He does something that demonstrates his values. Some wealthy people retire to take up a cause, or to become philanthropists. What values (for lack of a better word) have we seen demonstrated by Romney since he left Bain, other than those of a man who will say and do anything to be elected President.

Monday, December 05, 2011

The Lifespan of Dot Coms

A while back I read an editorial that argued,
It appears to take about 10 to 15 years for technology to improve enough to make a new idea powerful enough to dislodge the incumbent money maker on the Web. To date, no one has been successful at turning around an Internet company that is past its peak.
I agree with that in part - it has proved to be very difficult to turn around a failing Internet company. But I disagree with the author's concept of the 10-15 year lifespan, or her reasoning behind asserting such a lifespan.
Consumer-oriented Internet companies are brought to life through the application of a new technology and then unseated about 10 years later by a newer technology. Yahoo had an incumbent advertising platform (display ads) that couldn't do advertising as well as Google search. Google today has an incumbent platform that can't do better than Facebook because Facebook began with a clean sheet of paper and an extra 10 years of technology.
But take a look at MySpace, "unable to turn itself around despite its first-mover advantage", and ask yourself whether that had more to do with outdated technology, or its acquisition by a company that didn't know what to do with it. For an example from much earlier in the life of the Internet, Yahoo! and Excite ran neck-in-neck until Excite was acquired by @Home Networks, and its subsequent tanking seemed to have a lot more to do with post-acquisition management decisions than with technology. I similarly find no merit in the notion that Facebook has an a technological advantage over Google - I suspect the opposite, particularly in relation to its core service of social networking - or that it's nascent advertising platform is going to be Google's undoing.

But as I see another dot com bubble emerge, with our being urged to believe that perennial money-losers like Angie's List, companies with no clear path to significant earnings like LinkedIn, or companies like Groupon and Facebook that respectively claim that their brand is so powerful that we can ignore their unprofitability or that their valuation is justified by their potential to develop new revenue streams from a large user base, I can't help but be reminded of the first dot com bubble.

First, the thing that makes Internet companies so attractive to investors or buyers (and here I'm speaking of VC's, angels and corporate acquisitions, not ordinary investors) seems to be the same thing that makes them vulnerable to collapse. You can start a dot com with a good idea, a tiny core staff, and a seven figure investment. You can create a company ostensibly worth billions that has (or rents) a server farm, and has a few hundred to a couple of thousand employees. But if what the company does is not special, or does not remain special, a competitor will have the opportunity to take most of its market share. When a genuine competitor is available, minor missteps by management can have serious consequences for the company's long-term viability.

Although it's an imperfect test, one interesting thing about companies like LinkedIn, Groupon, Facebook, Twitter and the like is how little disruption there would be if they dropped off the face of the planet. If you woke up tomorrow morning and you weren't an employee of Zynga, how much would your life change if you found that Facebook was gone? Minutes? Hours? If it would take you days, odds are you're either a major online marketer or you simply aren't invested enough in Facebook to take the time to set up, say, a Google Plus account.

Second, no company can survive in the long-term unless it has a path to profitability. If you want to roll the dice on the IPO of an unprofitable or barely profitable Internet company and you're not an insider, recent IPO's confirm that you should wait for the dust to settle as the share price is likely to drop significantly within days to weeks. Even then, you're evoking the expectations of the first dot com bubble - that "eyeballs" will translate to massive profits before the company burns through its cash and investor confidence wanes.

If an Internet company brings nothing special to the table, and barriers to entry remain low, and they lack either the vision or the capital to preempt a "new kid in town," it's reasonable to expect that they will eventually be replaced by a "cool new" alternative. And once your popularity tanks, no matter how cool you were the first time around, if you want to pull off a comeback you will probably need to rebrand.

George Will [Hearts] Huntsman

George Will offers a tepid endorsement of his wife's employer,
Rick Perry (disclosure: my wife, Mari Will, advises him) has been disappointing in debates. They test nothing pertinent to presidential duties but have become absurdly important. Perry’s political assets remain his Texas record and Southwestern zest for disliking Washington and Wall Street simultaneously and equally.
As a commenter noted in response to a reaction by Daniel McCarthy,
In his framing of the situation, that is, it’s as if Bush Jr. and his tenure never existed. It truly is as if we are back in December of 1979, debating who to best take on Jimmy Carter.
Will embraces Huntsman as "the most conservative" candidate in the race, which translates unsurprisingly into "The candidate I believe agrees with me on the issues most important to me."
Jon Huntsman inexplicably chose to debut as the Republican for people who rather dislike Republicans, but his program is the most conservative. He endorses Paul Ryan’s budget and entitlement reforms. (Gingrich denounced Ryan’s Medicare reform as “right-wing social engineering.”) Huntsman would privatize Fannie Mae and Freddie Mac (Gingrich’s benefactor). Huntsman would end double taxation on investment by eliminating taxes on capital gains and dividends. (Romney would eliminate them only for people earning less than $200,000, who currently pay just 9.3 percent of them.) Huntsman’s thorough opposition to corporate welfare includes farm subsidies. (Romney has justified them as national security measures — food security, somehow threatened. Gingrich says opponents of ethanol subsidies are “big-city” people hostile to farmers.) Huntsman considers No Child Left Behind, the semi-nationalization of primary and secondary education, “an unmitigated disaster.” (Romney and Gingrich support it. Gingrich has endorsed a national curriculum.) Between Ron Paul’s isolationism and the faintly variant bellicosities of the other six candidates stands Huntsman’s conservative foreign policy, skeptically nuanced about America’s need or ability to control many distant developments.
Jon Huntsman, billionaire's son, is a champion of eliminating taxes on unearned income, while George Will cheerleads? I'm shocked. (Will gets bent out of shape at the notion of heirs potentially paying taxes on their inheritances, even if only in the form of capital gains, but he has no apparent concern about the double-taxation of wages through income taxes and FICA.) And note that balancing the budget is irrelevant, unworthy of mention in a column endorsing massive tax cuts for the rich, although Will is happy to implicitly endorse massive cuts to both Social Security and Medicare - does he care about balancing the budget, or is it all about savaging people who have to work for a living in order to benefit the rich?

Unless you view military adventurism as a conservative value, it's difficult to see what's "conservative" about the Will/Huntsman approach to foreign policy.

It's not that Will is wrong on everything - he's correct about the poll-driven opportunism of Romney and Gingrich, and he's right about certain bad policies those candidates endorse. You don't win Iowa by promising to eliminate agricultural subsidies. But in his effort to flush the past few decades down the memory hole, Will wants to wash away his own sins - the sordid history of a Republican Party that, in taking an approach you would think Will would endorse. As Daniel McCarthy puts it,
George W. Bush was quite the free trader, aberrations on steel notwithstanding; he certainly cut taxes; and he wasn’t as much of a regulator as the present incumbent. All of that was nowhere near enough to guarantee the economy’s health and stave off the Great Recession.
No connecting of the dots required: You can draw a direct line from deregulation of the financial industry under Reagan to the S&L debacle, and of the larger financial industry deregulation under Clinton and Bush to the financial industry's collapse. And as McCarthy points out, today's economic woes do not echo those of the 80's and there's no reason to believe that a further embrace of free trade or supply side economics would contribute to an economic recovery.

Huntsman just might be the guy to bring huge new tax cuts to the privileged few, slash benefits for the working masses, run the deficit up to new heights (as would seem to be an inevitable consequence of his policies), and further erode the domestic manufacturing industry. But it's odd that Will sees those as reasons to rally behind him.

Attention Job Seekers - Here's Some Advice You Can't Use

This has been making the rounds due to its comical allusion to The Grapes of Wrath as a path to prosperity. But really?
There are phases to the building of the business that works today.
  1. Come up with the idea
  2. Flesh out the idea quickly
  3. If it involves computer programming, find someone to program it. You may even be able to use something like WordPress to launch your business with a blogging platform and the correct plug ins
  4. Find a paying customer.
The new path to prosperity is to start a blog? Oh, wait, I guess the answer is in choosing "the correct plug ins". Right....

If my idea is more complex than one that can be launched through a blog, where can I find cheap, competent programmers who will transform my "idea" into "paying customer(s)"? Most really good programmers are employed, doing their own thing, or charge a premium price per hour. And the bad ones? They'll take your money, give you an unusable product, and call it a day. Assuming they don't try to steal your idea.

This guy's other business idea is to gamble on hiring the candidate who "feels right" regardless of qualification - so maybe he thinks the path to prosperity is to team up with an untested, uncredentialed programmer and "take a chance".... (Or perhaps he means that you should bluster your way through interviews for jobs you're not qualified to get, because between offering to work for reduced pay and "incentives" and being "risky", eventually an employer is going to see you as the best long-term bet?)

I'm also wondering what ideas we're talking about? Come up with the idea for the next Facebook or Groupon, then build it using WordPress plugins? Make and sell crafts? (If so, a better approach may be to sell through auction sites or Etsy.) Seriously, what does this guy think he's talking about?
Eventually you may be on to something big. Or, at the least, you will have a nice lifestyle business you can operate. Plus, if you run your own show you don’t have to worry about big corporations or Wall Street. Get big enough and they’ll be your client you won’t be theirs.
You may be onto something big, or not. (I would love to hear this guy's examples, and surely he must have dozens, of this model in action.) And then you can have a nice "lifestyle business" (whatever that is... perhaps beer money) that you can transform into something so big that big corporations and Wall Street will become your clients! "And all I have to do is... act naturally."

Look, I'm all for entrepreneurship and self-employment. But let's approach it from a real world perspective.

Saturday, December 03, 2011

David Brooks on the Work Ethic

I had intended to follow up my post, David Brooks vs. The Facts, by challenging his assertion that "nations like Germany and the U.S." are rich because we share "values, habits and [a] social contract upon which the entire prosperity of the West is based", to be distinguished from the European nations presently in crisis, but a flood of others have already done the job. I will grant that it's true, you will find commonalities between western democracies, but as those others have pointed out, when Brooks attacks nations like Greece and Italy and praises Germany he ignores Germany's higher social spending, lower average annual hours worked, high government spending, and embrace of social democracy.

Brooks states a basic philosophy that most people would describe as fair:
People who work hard and play by the rules should have a fair shot at prosperity. Money should go to people on the basis of merit and enterprise. Self-control should be rewarded while laziness and self-indulgence should not. Community institutions should nurture responsibility and fairness.
He's also correct that you can undermine that ethos, one of the obvious lessons we can draw from the communist experiment. But I think he's being both parochial and incorrect when he argues that there exists some form of Northern European / North American work ethic that simply doesn't exist in the rest of the world. I also think he misunderstands the genesis of the work ethic and what sustains it.

Let's start with Brooks' observations about the supposed decline of work ethic, something he believes is a new phenomenon,
Right now, this ethos is being undermined from all directions. People see lobbyists diverting money on the basis of connections; they see traders making millions off of short-term manipulations; they see governments stealing money from future generations to reward current voters.
Does Brooks believe that lobbyists are new? That historically they have not diverted money "on the basis of connections"? Such a belief would seem to be completely at odds with history. As for "traders making millions off of short-term manipulations", since when is that new? When we transitioned from Jimmy Carter telling us to tighten our belts to Ronald Reagan's ushering in the era of "Greed is Good", we witnessed the Savings and Loan debacle, insider trading scandals, and plenty of evidence of crony capitalism. Brooks' notion that workers have suddenly become lazy because "they see governments stealing money from future generations to reward current voters" seems absurd.

Although it's true that Medicare costs more than one would have anticipated when the system was created, and as it turns out Social Security is on the whole a good deal for most lower- and middle-earning workers (and not such a bad deal for workers who want some level of affordable disability insurance), does Brooks truly see that the nation's living up to its promises to workers who have paid into those systems over the course of their working lives constitutes "theft"? And if he does, why the praise for social democracies like "Germany and the Netherlands" that "steal" even more money to ensure that retirees avoid poverty and citizens have access to quality healthcare? It's simply not the case that the work ethic has materially changed since the housing bubble burst, or that it is weakened by offering workers the promise of eventual retirement or access to medical care.

Further, in speaking of nations that "have lived within their means, undertaken painful reforms, enhanced their competitiveness and reinforced good values," he explicitly omits mention of the United States. That's fair, given that by Brooks' measure we do not appear to have done any of those things. Yet there we are, in Brooks' mind, sitting at the top of the heap of exceptional nations due to our work ethic. What gives?

As with "kids these days" editorials, people have been writing about the decline of the work ethic pretty much since the time it was first conceptualized. Brooks seems to be asserting two contradictory thoughts - first, that the U.S. has a remarkable work ethic as compared to the rest of the world, and second that it is newly threatened by the scandals of the past six years.

I am reminded of John McCain's comments from a few years ago, suggesting that Americans are too lazy to perform hard physical labor, and wouldn't spend a season picking lettuce even at $50 per hour. If a willingness to pick lettuce or work in sweatshop conditions for wages that are a small fraction of that $50, it would see that Americans have nothing on the poor of the world - China has no shortage of workers willing to toil in factories for long hours under unpleasant conditions, Southeast Asia is full of factories producing consumer goods in what can reasonably be called sweatshop conditions, and we use thousands of Mexicans, both legally and illegally in the U.S., to harvest crops, clean houses, cut lawns, or work in the building trades. You could draw a comparison to the working poor of the industrial revolution, who also worked ridiculous hours in horrible conditions for meager pay. The commonality, of course, is not "habits, values and social capital" or a delusion held by the workers that their jobs will lead to "a fair shot at prosperity" - it's their lack of better alternatives, and fear of what will happen if they lose their meager remuneration.

Even though by historic standards, taxes are low, without presenting any evidence to support his claim Brooks contends that people are put off working by the notion that the government is "stealing" their money to support unworthy others. Can Brooks name one person who has "Gone Galt" due to the fact that our nation hasn't completely eliminated its comparatively meager social safety net, or because seniors get Social Security and Medicare? One person who has so much as slacked off at work over outrage over lobbying in Washington? When the Tea Partiers rose up against the financial industry bailout, did they quit their jobs? What am I missing?
The real lesson from financial crises is that, at the pit of the crisis, you do what you have to do. You bail out the banks. You bail out the weak European governments. But, at the same time, you lock in policies that reinforce the fundamental link between effort and reward. And, as soon as the crisis passes, you move to repair the legitimacy of the system.
Let's relate that suggestion to the U.S. - what did we do after the financial industry bailout to "reinforce the fundamental link between effort and reward" or "repair the legitimacy of the system"? The steps the government took would seemingly fall under Brooks' conception of "stealing money from future generations", with a huge reward going to a privileged special interest, well represented by lobbyists, as opposed to "current voters". But no, it's not stealing to take hundreds of billions of taxpayer dollars from future generations in order to ensure that bankers never miss a bonus - that's "necessary". But if you promise somebody approaching retirement, who has paid into Social Security and Medicare for their entire career, that you will fulfill the promise that it will be there when they retire, Brooks apparently sees an act of "theft". (Does Brooks endorse any financial industry reforms that will make that industry less of a lottery, help ensure that there won't be additional crises and tie pay to actual performance?)

Although taking away the social safety net, job security, decent wages, and the other factors that helped our nation develop its middle class may in fact be effective at creating a population desperate enough to take any work at any wage, it would seem to move us much more toward the ethos of China or Cambodia than that of Germany. The retort, "But we'll still have the Horatio Alger myth", seems like small solace.