Saturday, February 28, 2009

Surowiecki again

I'm not fond of writing in a way that suggests piling on. Obviously, anyone could take a, say, Thomas Friedman book and spend days going through and pointing out the infelicitous phrasing, the lack of willingness to climb past the self-aggrandizing neo-cliches, and the inability to take any thought to the next level. But that's pretty pointless, though I reserve the right to do that with any Friedman book or column I happen to come across.

So I'm not trying to focus on James Surowiecki of The New Yorker, even if it appears that way. It just happens that he's written on topics that interest me, so I will write about him again, even though I did so just yesterday. I actually have two points here.

1) It can be dangerous to look at what people quote in preference to reading the whole thing. Case in point, Andrew Sullivan quotes Surowiecki:
Historically, productivity has been “procyclical”: it rose during booms and fell during recessions. But not this time. Even as the economy did a cliff dive in the last quarter, productivity rose an impressive 3.1 per cent. And since, in theory, workers get paid more the more productive they are, their increased productivity has helped them avoid pay cuts.
I read this and thought, has Surowiecki missed the boat this thoroughly again? Since productivity is generally measured as output per hour of employment, all we need is what we're seeing, where the denominator (hours worked) is falling faster than the numerator (economic output). And this is true enough, and belies the Sullivan title for his post, Silver Lining Watch. It's not good news at all that we are shedding jobs faster than we can cut spending.

Added to that was the loopy application of a true-enough theory, workers get paid more as productivity rises, to a specific point in time, one short enough that the theory does not hold. If we are avoiding pay cuts (and we're not - Microsoft is cutting pay for its contingent staff [at least that's what I'm told in my comments], and Acco Brands is cutting pay by 47% for a while - so it's premature to argue that this won't happen), it has little to do with perceived productivity and more to do with the general stickiness of wages.

To my surprise, once I read the entire article, I found that Surowiecki has actually spoken to most (I stress, most) of these issues. It's actually a good piece, notwithstanding the flaw about pay cuts, that wages are not quite as sticky over the long haul as many would like to think. My conclusion is that it's important to look past the quote that Sullivan cited and read the whole thing.

2) However, Surowiecki misses something else, and it's a big something else:
Bad times have always meant job losses, of course. But what’s distinctive about the speed and depth of today’s job cuts is that, even before the recession hit, American companies were, by historical standards, running lean operations. While the economy grew at a respectable rate for much of this decade, hiring did not. So one might have thought that companies would have had less room to slash payrolls, since they were already relatively slim. Instead, the same companies that were slow to hire after the last recession have been fast to fire during this one. G.D.P., after all, actually grew for much of 2008. Yet every month companies were cutting jobs. And after the credit crisis erupted, in September, companies wasted no time: as fast as consumer spending was plummeting, businesses were cutting payrolls even more aggressively. Companies have always wanted to do more with less; nowadays it’s a positive obsession.
This is true enough, but what is completely missed is the existence of greater labor pools. I'm referring, of course, to the existence and accessibility of overseas labor. Companies don't need to, as Surowiecki puts it, "hoard labor," because they can get warm, cheaper bodies that are a T1 line away.

Missing this factor is a huge omission. What we are seeing is a revolution in the way we hire and retain labor, and how we account for it. Frankly, I don't trust any of the productivity numbers I see any more; determining this was always problematic, but the presence of giant sources of hitherto untapped labor has thrown these statistics up for grabs, and I doubt we're capturing a lot of that.

You cannot hope to understand the labor market of the 1970s and '80s without considering the influx of women, and you can't discuss today's without taking offshoring into account. That we continue to try, among the punditry and the statisticians, is a major logical flaw, and no article that misses these factors can reach conclusions we can trust.

Friday, February 27, 2009

Moral hazard

James Surowiecki is a New Yorker writer best known for his book, The Wisdom of Crowds. This book, which I concede I haven't read (only excerpts), is notable for the way its message quickly spread through the landscape. Essentially, Surowiecki contends that groups of people have abilities to make decisions that far exceed what any organized effort could do.

He went into some detail as to the conditions that would allow this to happen; of course, as the idea became popularized, it became oversimplified, to the point where his work was cited as confirmation of the "The market is always right" dictum. From what I've read, his argument is far more subtle and detailed than that. (Does it suggest something that the wisdom of the crowds is lacking when it came to understanding of the message of The Wisdom of Crowds?)

Andrew Sullivan directs us to a Surowiecki post in The New Yorker that confounds with its lack of insight. He writes about moral hazard, the idea that we will, through our current policies, encourage bad behavior:
[T]his is a very odd time to be worrying about people taking too much risk. In fact, as he writes, the problem we’re facing right now is “too little risktaking, not too much.” People are so understandably worried about their jobs, their savings, and so on, that they’ve become far more risk averse than they normally would be. Bailouts may make people a little more likely to take a gamble. But at the moment, that’s precisely what the economy needs.
Can he really not understand that the fears of moral hazard do not involve actions of today or tomorrow, but of the future? We've become a nation of real estate speculators, stock pickers, and lottery players, and the current crisis demonstrates that we are finally paying the price for our wanton disregard for prudence. And Surowiecki wants us to encourage the very behavior that got us into this mess.

Moral hazard is pretty simple to understand. It involves the providing of external incentives for behavior that, taken on its own, would be intolerably risky. Should you buy a house you can't afford? Normally, anyone would say no, but, if you have a promise of a bailout should you get in over your head, the terms change, and it will be a go decision. A lot of people would walk a tightrope only if there was a net below; that doesn't make it the responsibility of the rest of us to provide that net.

And that's where moral hazard has its force. We are demanding that the people who were prudent take a portion of what little they have left and subsidize those who were reckless. In doing so, we encourage them to be even more reckless the next time around, because they know we'll be there for them.

Surowiecki is a smart enough writer to understand that, so I don't know where he's coming from in this piece. What next, a federal program to give slot machine vouchers to every American so we can get our economy gambling again?

What we need to do is figure out what our economy will look like in 5 or 10 years, and take the steps now to get us there - not reheat the bubble economies of the last decade that have led to amazingly little fundamental advancement in our standard of living.

Thursday, February 26, 2009

The perfect Google

There is outrage across the Net that Google had an outage to their Gmail service; they were down for 2-1/2 hours on Tuesday. It's their sixth outage in the last 8 months, and represents downtime of "about 10 to 15 minutes a month" over the last year. (At the higher estimate, this constitutes 99.97% uptime.)

Apparently some of the contracts Google has with corporate customers call for 99.9% uptime, but it's per month, so they will be providing credits for this month's outage. This last problem came from some new software that caused "cascading problems" from one data center to another.

Of course, the drama here comes from expectations that Google, this great monolith of the Web, should do nothing wrong, never disappoint a customer. We naturally expect a level of quality from this highly-publicized company that we would never expect from a normal service provider.

But let's look at this without the sense of awe that surrounds this successful company. Google's main business, that which has given us a new English verb, is search. We assume that their search is perfect because it's so vast in its results (and its mindshare).

We're comparing, however, apples and oranges. Google search is not required to hit 100%; we simply have no idea what results we're missing, because they're not there. Try putting the same query terms into a number of search engines, and you'll get a widely varying number of hits. And Google does not always have the biggest number. These companies are using different algorithms, different caching strategies, different indexing, so they're going to come up with different results.

Hosting web mail is quite different. It's not just a matter of having a strategy that's superior (though I quite like Gmail), or better software, it requires keeping the machines and attendant software up 24/7. This skill set is different from writing cool search or app software, and we shouldn't evaluate a company's ability to do one by how well they do the other.

If you have a business that's dependent on 100% e-mail uptime (a problematic strategy, if you ask me), then you need to get away from the thinking that the great Google will ensure that for you because, "they're so great." They may have really neat mail and feed readers and maps, but that has little to do with keeping server software humming.

Wednesday, February 25, 2009

Darn, she got there first - Microsoft edition

One of the challenges in trying to produce something novel every day (as opposed to the bloggers who churn out tens of rip-n-point posts) is that smart people tend to plow the same ground, and they're often quicker than I. Citizen Carrie has done that to me again in her work the past few days on the two big Microsoft stories.

First, she used the overpayment to laid-off Microsoft workers as a springboard to a discussion of outsourcing. There's a lot here, but the big takeaway is just how much offshoring is done under the radar. As I've written before, there is no official count of just which jobs and how many are being sent overseas, which leaves the question open enough that opinions end up carrying the day. The business apologists contend that the issue is overstated, that few jobs are in fact moving. After all, there are no numbers to back it up. (Personally, as someone in one of the major offshoring job categories, I think there's plenty of it, and more to come.)

Carrie also has this:
If you ever want to know what it's like being the low person on the totem pole, try working in the unglamourous fields of finance, accounting, payroll, human resources, legal compliance, etc., (heck, might as well add IT) in most corporations. These employees are scorned for not adding direct value to an organization and are treated as nothing more than parasites draining away profits. Instead of being treated as valuable team members, they are treated as being people who are ripe for outsourcing to the BPO company that comes in and gives the niftiest PowerPoint presentation.
2Truthy had a comment that HR folks "tend to have the loftier roles in companies." It turns out they're both right. The lower-down people, those who administer benefits and do pre-interview screening, tend to be, just as Carrie says, down in the pits with all the other outsourceable people. I've seen a big evolution there in the IT world, where, in many companies, there are no HR people at all. Hiring managers have had to add base-level resume screening to their repertoire of talents.

On the other hand, 2Truthy is right in that the top HR people are thought of as massively important. After all, we can't expect a CEO to deal directly with the outside search company that's been hired to conduct a "nationwide" hunt for the next CFO. Very often, an executive who's being groomed for bigger things is given a top role in HR so he or she can get an overview of the company.

Of course, this just makes the gulf between management and the rank and file wider, but this is necessary if the big guys are going to be able to make the tough decisions. Only by dehumanizing the employees can the non-sociopaths in the executive suite (there are a few) handle the rampant destruction they cause.

[Carrie also links to the recent Friedman column that talks up innovation. In his typical fashion, he issues pronouncements without having to consider reality. Essentially, the government should go into the venture capital business and, when the new-energy version of Microsoft or Intel hits, we the people will make 80% of the returns.

This sounds somewhat compelling, but fails to talk about the end game. Does the government retain that stake on into the future, thus nationalizing the energy industry, or do we miss out on the greatest returns?

Friedman also returns to the curious point that he has been pushing, that we should strive to produce this new energy at the lowest price possible, his so-called ChinIndia price. That it is not the goal of an American country to provide low-cost energy to the world, not if there is a higher-cost point that leads to greater profits, never occurs to our happy pundit.]

Carrie also has a post about Microsoft's other great announcement, their "Elevate America" project. As Carrie puts it:
[T]hey will take the few remaining people in the U.S. who don't know how to type up resumes, much less send them off as email attachments, and educate them into crackerjack, top-notch Microsoft Certified professionals.
I plan to keep my eye on this, but what has been presented so far does not overwhelm. There are four sections at the link, three of which are essentially ads for training programs. The one free part features five courses, each taking 2-3 hours, and they essentially constitute Computing for Dummies.

This kind of thing may be helpful for a very few people, but it's hard to believe that any of this will lead to a way upwards for our economically downtrodden. I'm guessing that the vast majority of the people who can read this blog will pass the "Digital Literacy Certificate Test" without cracking a course.

Still, I'm not an anti-Microsoft person (nor am I a zealot for them as are so many). They have a great number of resources for developers on the Internet, and it's possible that Elevate America will evolve into something useful. At the same time, let's not, for example, ramp up the H-1Bs just because MS has a program with the word "America" in the name.

Tuesday, February 24, 2009

Two stories of two brothers

Bob and Dave make pretty much the same income. They each bought a house for $300,000.

Bob lives paycheck to paycheck, spends big, has the latest electronics, upgraded the kitchen, put an addition on the house, drives nice cars. To finance this lifestyle, he redid his mortgage every time he heard some guy on the radio talking up low rates. He's got a balloon payment due in a few months, his home equity loan is massive, and he's struggling just to cover his credit card debt. He owes more on the mortgage than the house is worth.

Dave lives much more modestly. He not only dutifully pays his mortgage each month, but he puts money away so he'll be able to keep the house if he should lose his job. He still has a 19" TV, no cable, no satellite. His car is a 1995, still runs OK. Since he had an old-style mortgage, he's been paying down principal, so he owes less than the house is worth.

Bill and Frank make pretty much the same income. Both live pretty carefully, with savings and low debt. But both brothers have just been laid off.

Bill bought a house for $300,000. It's nice, but the monthly payments are kind of steep for someone with no job.

Frank bought a primary house for $200,000, and a vacation cabin at the lake for $100,000. He actually pays a little more each month than his brother because he couldn't get quite as favorable terms on the cabin. He's going to have trouble with both of his mortgage payments.

What will the government do for these two sets of brothers? We all contend that it is undesirable to throw people out of their homes, so there is going to be some kind of assistance to those who are having problems.

Bob is going to get major help. By whatever means, we the people are going to do everything we can to assist him. No one wants to live next door to his empty house, and it would be cruel to turn Bob's family out into the street. On the other hand, Dave will get nothing, he's in fine shape. (He might have a little problem later on when taxes go up or inflation hits, the only two ways we have of paying to help out Bob.)

Bill's going to get to keep his nice house, even if his mortgage is under water. Frank will also get help, but less so because he only has a $200K house to preserve. His vacation home - too bad, he'll have to sell that at a big loss or just walk away from the mortgage. No help there.

As many people have pointed out, any large-scale program is going to suffer from problems like these. Some people will be helped who don't need it or don't deserve it, others will fail to get as much help as they require. It's easy to conjure up examples, as I've done here.

Except that these examples are not particularly contrived. They're actually pretty realistic, and, in both of them, there is an arbitrary aspect to the outcome. In the first, one brother has been irresponsible, and that irresponsibility will be rewarded, what we call moral hazard. In the second, each brother has been equally responsible and has made roughly the same choices, with one small difference that will lead to a dramatically different outcome.

There's something larger here, in my view, and let me digress somewhat to make the point. The rich-favoring tax cuts of George W. Bush were not diametrically opposed to our concept of America. They may have been ill-advised, built around a discredited trickle-down model, but they don't violate principles of the American Dream.

Why? Because every American can imagine himself or herself as a wealthy person. We're just one Survivor stint or one lottery ticket away from being a nabob, and we really don't begrudge the wealth of those who have attained it. Cutting taxes disproportionately may seem like a bad thing, but it isn't so bad if it means you'll pay less taxes when you make your millions.

But these bailouts, these series of emergency measures that seem to favor CEOs and auto executives and profligate homeowners, they seem in some real way to violate a sense of Americanism. Too many of us may spend beyond our means, but we really don't admire that; the old virtues of thrift and caution are still an essential part of the way we see ourselves.

And we're rewarding the people who have most offended these virtues. CEOs enrich themselves and send jobs overseas with no concept of community, and we pay to make sure they'll retain their spots. Homeowners treat their homes like piggy banks, and we pat them on the head and tell them it's OK.

I'm neither favoring nor predicting riots in the streets, but I wonder just how long the people will be comfortable with this distortion of what we know America to be. I wonder if we aren't heading for a 1960s-style rebellion in some form or another, one in which some kind of traditional belief structure is reasserted. The danger, of course, is that it will accompany some sort of fundamentalism (not necessarily the religious kind). We might throw away a lot of what constitutes our best chance of progress in a rush to restoration of a semblance of fairness.

Monday, February 23, 2009

Jerry Lewis

I've never been a big fan of the comedy of Jerry Lewis. His unrestrained hamminess always seemed to come out of a limited palette; see him once, you've pretty much seen the whole thing. My mother, who was not noted for having any sense of whimsy, pretty much hated his act.

However, when she worked in the shopping center industry, she had the chance to meet Jerry Lewis and talk about "his kids," and, from then on, she was a fan of the man (still wasn't running out to the video store to rent The Nutty Professor, however). His sincerity was obvious, and, whatever what one might think of the bathetic moments of the annual telethon, he has devoted a remarkable amount of his time to raising money for muscular dystrophy treatment and research.

So I was pleased that Jerry Lewis was given the Hersholt Humanitarian Award at the Oscars last night. (I hope that the brevity of his acceptance was by his choice, rather than a desire of the producers to leave more time for the odd grinning of Danny Boyle, or limitations of his health.) I know about the controversy that surrounds his efforts, the concern of disability advocates about the references to "his kids," the alleged portrayal of the disabled as less than whole, but one must temper current sensibilities with the recognition of what Lewis has tried to do.

According to the telecast, he's raised $2 billion for the cause, and, by any measure, that is impressive. It reflects a sense of commitment and dedication that no one should deny, even if they find the approach somewhat old-fashioned and even insensitive.


$2 billion is a rounding error in the current stimulus package. There are 604 people on the Forbes billionaire list from last year who have more money. Despite the effort and the hectoring and the staying up all night every Labor Day, Lewis has rasied a comparatively small amount of money.

What this shows, I think, is the inherent limitation of private charity. This was the biggest flaw with Bush's "compassionate conservatism," that we could somehow get necessary things done through total reliance on the private sector. There will simply always be things to do that free market capitalism cannot and will not accomplish. We should perhaps ask ourselves if things should be considered in that light, that certain things that cannot pay their way should not be done.

But many of them should, and part of being a community of any size is that we give to the common, that we help those for whom capitalism has not provided the means to do certain things. The rigid ideology which has strangled public thought over the past 25+ years is a direct cause of our current problems. Now we're playing catch-up, with all the potential for mistakes that entails.

Should we replace roads with light rail in certain places? Of course we should, but our reluctance to take on such projects means that the cost of inserting rail into already-developed areas is much higher than it would have been a few decades ago. Add to that the need to spend money on shovel-ready projects, and we'll end up both improving the roads and shoehorning some kind of inadequate rail projects into populated areas, and that doesn't sound real smart at all.

Sunday, February 22, 2009

The Oscars - again

[Yes, I'm reprinting this from last year. Elizabeth retains its status, though I almost took advantage of the AMC deal to watch all five nominated Best Pictures for $30. The Emmy telecast was still dreadful, and I only caught enough of the Grammys to add Stevie Wonder and Jonas Brothers to my list of awful collaborations.

[The main reason I'm putting this up again, however, is that I think it one of my most vacuous posts ever. There's nothing here, little entertainment value and less insight. I reprint it to keep me humble.]

I have nothing particularly profound to say about the Oscars. Except, I have no idea why I watch each year, why I actually look forward to the telecast. The last time I saw a film that had been nominated was 1998, when I saw Elizabeth. (Of course, I've seen movies since that had been nominated or won, I'm referring to those I had seen before the nominations.) I'm just not a big first-run movie person.

Yet I really enjoy watching the telecast, and it's the only awards show I feel that way about. I will watch the Emmys (and wasn't the last one dreadful, with the in-the-round stage and Ryan Seacrest), and the Grammys sometimes have some interesting collaborations (though Carrie Underwood and the (faux-?) Stomp did not qualify). But the only truly unmissable one for me is the Academy Awards.

Is this because it's a shared world experience, so I'm connecting with people everywhere in marveling at the glories of George Clooney in a tux? Is it because it brings up memories of the family gathered around the television in happier, simpler times? Is it to feed my envy of those of easy glamor and privilege?

I don't know, I only know I'll be watching, and you might as well too. Either that, or enjoy a good book.

Winesap or Red Delicious

One bad apple don't spoil the whole bunch, girl.
Oh, give it one more try before you give up on love - One Bad Apple, The Osmonds, 1970
With all due respect to the wisdom of 13-year-old Donny Osmond, there is now some research indicating that the negativity of one person really can bring down an entire team. Jeff Atwood writes about it here in Coding Horror.

The study took teams of four college students, gave them a task to do, but, in some groups, one member was actually an actor playing the role of one of three personality types: depressive pessimist, jerk, or slacker. The researcher found that "groups that had the bad apple would perform worse." Also, the group as a whole would take on the characteristics of the bad apple.

There's a lot to criticize in this study. The task took 45 minutes, so the group really had no chance to readjust itself. The negative groups performed 30 to 40% worse; if one of four was trying to undermine the team, this doesn't seem like such a surprising result. Having such small teams distorts the results, as a larger team might have been able to work around the apple more easily. And it's not clear to me that college students will create ad-hoc teams that are as resilient as standing teams made up of people who have some experience dealing with the difficult.

Experience tells me, however, that there's also some real truth in this study. Someone who's determined to be negative really can hurt the performance of a team. But there's even another level to which we should take this thinking (I'm going to omit my thoughts on what happens if the manager is the bad apple, which I've seen; suffice it to say that there's nothing more dreadful than to work for someone who is undermining the team at every turn).

This kind of study can easily be used by upper management as an excuse for hiring and retaining the sunny positive people who already seem to do disproportionately well in our society. There are two basic kinds of negative people: those who are just plain ornery, determined to bring their own personal unpleasantness into every situation and interaction; and those who are responding to conditions and circumstances that are counterproductive.

The first type really are dead weights, naysaying everything because that's their world view. Teams can get infected by these sorts, though a good manager will recognize it and find ways to correct it.

The second type, on the other hand, are worth listening to. Their negativity is coming out of real-world events, and reflects an environment that has problems that should be addressed if the team is to be at its best.

We can look at the last eight years in this country, especially the last five or so, where so many were critical of President Bush. Some did so because they saw potential partisan advantage accruing to themselves, but there was nothing to be gained by listening to them, though they could well create an unpleasant climate.

The others were trying to bring to light some very real risks and dangers that the Bush presidency constituted to the ideals of this country. Sure, they were negative, but it was a negativity borne out of the optimism that this country really could live up to its own standards.

We need to work to differentiate the two types of bad apples. The first type foments chaos, the second can bring needed change. I'm not optimistic, not when "Keeping a positive attitude" is a rated category on job performance assessments. We will continue to value those who remain cheerfully oblivious over those who are sardonically clear-headed. The cheerleaders will continue to win, even though change tends to come from the cynics.

Saturday, February 21, 2009

Andrew Sullivan's worried

Andrew Sullivan, in yesterday's A Conservative of Doubt, feels like so many that we need to support the stimulus because we have little choice, and because the Democrats are in charge and have the right to try their solutions. But he's nervous:
I fear the depression that we are in will lead to more and more decisions that, while pragmatic and defensible by themselves, can add up to a huge shift in government's role in ways that will not help and we may not recognize till it is too late; I worry that throwing a lifeline to some in a tail-spin might unwittingly lead to a deeper sense that deadbeats and gamblers will always be rewarded by government while thrifty and ethical people get the shaft; I worry that Keynesianism is not a panacea and may prevent a necessary long-term reckoning with debt and deadwood; I worry that the consequence-free, debt-fueled capitalism we let grow this past decade requires a nastier payback than we think we deserve.
This is exactly what I've been concerned about, that we will see such a swing back toward the "cool, steady hand" of government (big sarcasm intended) that we will create undampened, growing perturbations in our economy. I expressed this just Tuesday in "I'm excited," a post that decried the reckless enthusiasm that some have for this very risky strategy.

One commenter wrote that I was "naive" to take the enthusiasm of some Democrats, as personified by Maxine Waters on ABC's This Week, at face value, that "our leadership needs to communicate calm comfort." I can only assume that this commenter missed the show, because Rep. Waters was anything but calm; she was downright giddy at the prospect of spending trillions of taxpayer dollars.

I think our new president has hit the right note for the most part. Obama has been serious, realistic, and has talked about the faults in the system that will have to be corrected. I think he understands the gravity of the problems, and knows that we're going to have to go through some difficulties before we get back on track, no matter what the government does.

Are his fears equivalent to Sullivan's and mine? I don't know, but I'm guessing he's as daunted by the new great experiment as I am. The risks he faces are not just political; this nation really could end up damaged in major ways. Just because, as quoted in the Chicago Tribune today, "frugal is the new cool," doesn't mean that we should take pride in the clipping of coupons or the creation of compost heaps. This reduces a situation that is causing real pain to people and families to the level of a craft project, and is as unrealistic as the old profligacy.

Friday, February 20, 2009

State motto

As many people know, the official motto of Chicago is "Urbs in Horto," Latin for "city in a garden." This seems a tad optimistic, but I guess that's what mottoes are for, to be aspirational rather than descriptive.

Something I didn't know until researching this post is that my town's motto is "Great Service All the Time," which has an uncomfortable corporate feel to it, and doesn't really inspire me at all.

The little-known motto of the state of Illinois is, "State Sovereignty, National Union," representing, I guess, an attempt to play both sides of the whole states' rights issue, but comes off as pretty incoherent.

So I am suggesting a new motto for the state, one that reflects the prevailing sentiment of its leaders. It's especially fitting in these days of Blago and Burris: I've Done Nothing Wrong.

I suppose I could dig out the old Latin textbooks and try to translate that, but I think it's more effective in the vernacular.

More seriously, to watch the pathetic party hack Roland Burris stumble around as if his career has amounted to anything more than being the first African-American this or first African-American that is embarrassing. I understand that political pioneers have to take one of two stances: bravery, in which they stand up to the powers that be and force their way in through the strength of their appeal to actual voters; or inoffensiveness, in which they go along to get along, never ruffling the feathers of the people with real power.

For African-Americans in the age of Obama, the latter type is outdated and unlikely to be of any real assistance to their people (not so by the way, I find any kind of "their" representation to be offensive; with our massive problems at the local, state, and national levels, we need the best on board, not those who feel they have a brief to represent any gender or race or any other grouping). It's time to transcend the existence of these symbolic pawns who fit a certain constituency.

I don't doubt that it still, if we must look at things broken down into groups, is more difficult to be black in this country. But it's a huge leap from that to saying that the junior Senate seat from Illinois "belongs" to a black, as some in the state are pretty much contending...and using that as justification to support the continued existence of Roland "Tombstone" Burris as one of 100.

Whether he can be legally turned out is debatable, and his ego, so much larger than his accomplishments, almost certainly won't allow him to resign, so we will probably be stuck with his small presence among our other lawmakers (and I'm not suggesting that he will be, by any means, the worst of these solons). However, if the people of Illinois somehow reelect this guy in a little over 20 months, added to our two-time support of the mentally challenged Blagojevich, I will be tempted to pull a Baldwin.

Thursday, February 19, 2009

Thoughts on housing

So Obama now has a plan to help out homeowners. It appears, at first glance, to be restrictive enough to avoid some of the concerns about moral hazard, though there still seems to be some sense that it's necessary to prop up the housing market. For any of us who lived through the tech bubble at the turn of the century, we know that "not all bubbles are created equal." No one was helped through the roller-coaster ride of the NASDAQ, even though its rise and fall was similar to what we've just seen in the real estate market.

Robert Reich articulates the difference:
Expect the usual grousing about "moral hazard," especially from Republicans who normally grouse about normal hazard. And under normal circumstances, they have a point. The government should not be bailing out mortgage lenders who should never have lent money to people unlikely to be able to repay, or borrowers who should never have taken out a mortage loan. Under normal circumstances, government shouldn't be bailing out bankers, either. But these aren't normal circumstances. We're in an economic crisis. And a failure to put millions of homeowners on a firmer footing would send more shock waves throughout the economy. Not only will more people lose their homes. Surrounding homes will lose value as well, as neighborhoods become blighted with more empty houses. And lenders, worried that even more borrowers can't repay loans, will stop making additional ones.
The astute Professor Reich makes good points here; however, it is getting tiresome to see all kinds of questionable policies trotted out under the "economic crisis" banner. It's getting to the point where the discussion has been templatized: Government shouldn't be doing A, but (all together now) we're in a major crisis, so A has suddenly become a standard part of the repertoire. Is there anything that isn't justifiable?

As I've written before, I'm concerned that current conditions require a level of fine-tuning that government isn't capable of performing. Can we really unwind all these programs when conditions warrant, or will we over-correct, steer away from the mountain and right over the cliff?

But let's look a little more closely at Reich's statement. There's a kind of blackmail going on here, as those homebuyers who made foolish decisions ("sure I can put 60% of my income into housing") are "helped" because the alternative is that the rest of us will end up paying for it anyway. Tumbleweed will roll through our desolate streets as even those of us who were prudent end up in a "blighted" neighborhood, trapped as our homes become unsalable and bands of brigands run amok.

There is reason to be concerned, but we need to consider something else: There are communities that should not exist, that came into being only because people had inflated expectations about what they could afford and where they could live. I wrote in October about Yorkville, a nice small farm town 50 miles west of Chicago that got the hype and saw itself becoming a major city. Reality has now set in, mainly to the homeowners who are sitting by themselves in desolate subdivisions.

The developers moved in, bought up farmland, stripped off the topsoil, and started building with little concern for infrastructure. The early buyers got deals on their four-bedrooms on a sixth of an acre, feeling that they had made it. Then came the crash, and those early birds are now surrounded by a mix of empty land and empty houses, and they've found that the resale market is lousy.

The question: do we help these people work out their mortgage? Do we accept that, once a developer has put a faux-brick sign (there are a lot of subdivision name generators out there; a good one is here, and I'm going to adopt "Musty Acorn Pointe" for my area) in the middle of a clay field, the ground becomes consecrated and MUST BE SAVED?

On the other hand, if we do decide that Dowdy Cave Pointe must be allowed to die (and there's nothing in any bill, real or proposed, to do that), what can be done? It won't revert to farmland, as the growing conditions have been ruined. There aren't enough transshipment warehouses in the world to fill all the failed subdivisions.

When a country as a whole does foolish things over a long period of time, there is eventually a price to pay. We want to believe that various policies and programs will create a "soft landing," that we'll all share the pain and get through it together.

That kind of naivete is foolish and easily exploited by those who will seek to gain from the current crisis, either financially or politically. It's fair for us to ask questions about our actions without slipping into Republican-style obstructionism.

Wednesday, February 18, 2009


I'm a sap. My wife is a sap. There are any number of other Americans who are saps, but not as many as there are non-saps.

We've reached the end of week 4 of the Brave New World of the Obama presidency, which means right around 1% is over (if he gets re-elected). I'm not getting my power through wind, or the sun, or hydrogen. Our schools have not been transformed into 21st century innovation academies. We haven't pulled out of Iraq, nor have we fixed Afghanistan. Banks have not started lending, and we're not seeing the big industrial companies add workers by the thousands. Have we made 1% of the progress we need to make? Probably not.

What we have done is endure four weeks of ludicrous political wrangling on both sides, the kind of crass manipulation that the mediocre and incompetent always use to cover up the fact that they have no solutions to anything. In the words of Billy Crystal's Fernando, "It is better to look good than to feel good."

Oh, why are we saps? Because we pay off our credit card bill in full each month, we paid off our mortgage early, we save as much as we can, we cook at home, we've always done all those things that have now become "Yuppie craft projects," 30 kicky things you can do to save money. We went out and earned graduate degrees, went to work and did more than what we were asked to do, played the game exactly as it is supposed to be paid.

And what has been the end result? Our retirement funds have been devastated, so much so that we will likely have to work years beyond our original plan. But at what? I have heard the term "overqualified" time and again from so-called employment professionals, which actually means, "We aren't going to pay you what we have decided you think you're worth"; let me tell you, I have no illusions any longer as to what the market thinks I'm worth - bupkes. My wife works at a trivial job, a clerical job, because she fears what would happen if we were without health insurance.

But our money, well, that's being taken and given to bank shareholders and business executives and various folks hanging around the process of doling that money out, to the politically-connected and the lobbyists and the other barnacles dangling off the ship of state, to the junketeers and the buccaneers and the Mouseketeers who are not working on my problems, or my country's problems.

What I could have done five years ago is take my money and "invest" it in a cool car, or a big-screen TV, or a state-of-the-art computer. Heck, my neighbors were all doing that. But, no, I was going to do the smart thing and invest, save my money and prepare for a nice life, later, the whole ant and grasshopper business.

Those neighbors have been able to enjoy their big-screen TVs, their satellite dishes, their cool cars all this time. Not a one of those things has any residual value, in financial terms they're a complete loss.

But so is my portfolio, and I don't have five years of surround sound as compensation. We've done what we were "supposed" to do, denied ourselves things in the now so as to have a better future, and we've missed the now and the future is not looking so good.

The solution: keep shovelling money out the door to those who have already proven untrustworthy. Either beg other countries to continue to finance our national profligacy, giving them incredible leverage over our future decisions, or print currency to inflate our money, rendering our savings even more worthless.

Yes, this post is an emotional rant, but it's my life, and I get to be emotional about it. This isn't some political game being played in far-off Washington, it's the real world for millions of people, and the lip service just isn't getting it done. We are not abstractions who should be spoken about, we are Americans who should be spoken to. I wish our "leaders" would remember that.

Tuesday, February 17, 2009

"I'm excited"

I'm excited - Maxine Waters (D-CA), ABC's This Week, 2/15/09 (said twice)
Representative Waters shared this feeling with us on Sunday with George in talking about the stimulus bill.  She's clearly pumped about taking billions of dollars from Americans (or printing them up, which will amount to the same thing) and dumping them into projects of dubious merit.  I've written before that it's probably necessary, that the spare capacity of the economy has to be soaked up somehow, and government will have to provide that (no matter how imperfectly).

But, "excited"?  Excited at what, the opportunity to spread the pork around under the guise of "necessary" spending?

Here's what Ms. Waters and her other excited colleagues should feel: stark terror, bowel-watering, hand-shaking fear that this massive transfer of wealth will suffer the law of unintended consequences.  Because let us make no mistake about it, this is an experiment, a shot in the dark by a group of people who have no real knowledge that it's going to work.

And it's an experiment that sits on top of all the other experiments we've suffered through these last decades.  Just to name a few:
  • Government can never do anything as well as ruthlessly efficient private industry.
  • Work can expand to employ everyone in the world with no harm to anyone.
  • CEOs should be trusted to make foreign policy.
  • Giving rich people as much money as possible allows everyone else to benefit.
  • Regulation just gets in the way of the business masters and should be dispensed with whenever possible.
  • Free trade is always a good thing; after all, our simple models tell us it's true.
And on and on.  Now we're buying into the idea that spreading incredible amounts of taxpayer money around will possess synergistic effects, as the "magic multiplier" that comes out of the world of economics (and we know there can't be anything wrong there) will create far more wealth than it costs.  (We still don't have an answer as to why we don't always run a gargantuan deficit, given that spending is such a good thing.)

We have serious commentators saying that it's time to nationalize our banking system, which is the same thing as admitting that we have no one who actually knows how to run a bank, so we may as well give government employees a shot at it.  We're propping up companies that are using that money to expand their overseas operations, showing us what may well happen to the "magic multiplier."  We have people saying that the answer is to spend money as if there's no problem, but those people will be nowhere to be found when the layoff comes and the debt crushes real American families.

This is not "exciting," this is terrifying, because there's a very real possibility that this new experiment will hasten the decline of the United States.  This is a time to set priorities, to understand that there are things that we can't do as individuals and as a nation, to start paring down the list.  But we're not doing that, we're still not getting serious, we're just spending in an orgy of excess under the theory that "all spending is stimulus."

I have hopes like everyone else.  I hope that Tim Geithner is the Chesley Sullenberger of the financial world, that he's going to take a shot at landing the economy on the Hudson, and that he can pull it off.

But what if the "experts" are wrong?  What if we've slipped across that boundary between reasonable spending to invoke stability, and complete unpredictable chaos?  I'll have more to say tomorrow about this from a personal standpoint, but only a fool would consider this Hail Mary "exciting," not considering how steep the fall into the abyss is.

Monday, February 16, 2009

Two reporters

A story in the Chicago Tribune by media reporter Phil Rosenthal tells us that two Tribune Company reporters have accepted jobs in the Obama administration.  What interested me is that both of these reporters have been featured on this very blog.

First, Peter Gosselin of the L.A. Times has gone to work as a speech writer for our new Treasury Secretary, Tim Geithner.  I reviewed Gosselin's book, High Wire, this past December, and I considered it one of the best jobs of reporting I have ever come across.  In its focus on the ways in which risk has been transferred from the institutions most able to handle it to the individuals least able, it expertly showed what happens when we, under the guise of ideology, sell the safety net and give the proceeds to the well-off.  Gosselin exposed just how close we all are to falling between the cracks, and how unequipped our society is to fix the fissures.

I don't know how integrated Gosselin will be in the workings of the Treasury Department; I understand that there is a fairly wide range of experiences for speech writers, some of whom become close aides, others of whom put pretty words on paper.  I hope he will be given the chance to bring the people he interviewed for the book into the national discussion.

Second, Jill Zuckman of the Tribune will be moving to the Transportation Department to serve as assistant to the secretary and director of public affairs.  I wrote about an interview Zuckman conducted with Sarah Palin back in October, finding it an appalling example of the way a campaign can get an award-winning journalist to play ball.  Zuckman's questions were softball, and she injected her own commentary when she termed the questionable image spending of the Palin campaign as "nitpicking."

So we have two reporters from the same company both leaving journalism to become public servants, and I wish them well.  I cannot help but hope that Gosselin has an influence on policy, and that Zuckman regains her footing - especially as we will be paying their salaries now.

My Chicago - miserable?

Forbes magazine has come out with another of their peculiar (at Forbes, we substitute faux precision for actual analysis) rankings of things, this time coming up with the most miserable U.S. cities. [I would have linked to Forbes' own site, but I received errors on several browsers, making them almost unreadable.] There were nine categories used to do the rankings: commute times, corruption, pro sports teams, Superfund sites, taxes (both income and sales), unemployment, violent crime, and weather. The "winner" was Stockton, CA, followed by Memphis, TN, and for the bronze, Chicago.

The complete top 10 list:
  1. Stockton
  2. Memphis
  3. Chicago
  4. Cleveland
  5. Modesto
  6. Flint
  7. Detroit
  8. Buffalo
  9. Miami
  10. St. Louis
I am not going to spend time criticizing the methodology, because I couldn't find out exactly what it was. As such, I can't criticize the weightings, but I strongly suspect that those are flawed. Forbes seems to be trying for an experiential evaluation, that is, they are trying to rank how it feels to live in each of these places. That's really the only reason to include something as massively inconsequential as sports teams. But, then, are they trying to measure an average feeling, or the worst someone could feel, or what? (Yes, I realize I'm overthinking something that's used to sell magazines.)

What amuses me is how the local stations react to this, trotting out various talking heads to say, with great indignation, that Chicago is a great city, with Millennium Park, the symphony, the opera, the lakefront, Navy Pier, blah, blah, blah.

I love the idea that reporters, at least the ones who still have jobs, are the folks who are picked to give their evaluation. They tend to live pretty well, they are de facto not unemployed, corruption is a source of entertainment to them, violent crime doesn't often reach their neighborhoods, and weather is endured only in quick dashes out of the news truck. I'm certain we can find people in Stockton who are very happy to live there.

Of course, there are always those who go the other way, like local writer Dennis Byrne. He feels, quite strongly, that the rankings didn't come close to capturing the truly bad condition of Chi-town. Not a big fan of Mayor Daley, he writes:
Any public official who would launch a midnight sneak attack on a federally funded and highly useful lakefront airport is hardly worthy of “good manager” repute. Tyrant would be more like it. He’s the mayor who lambastes the city’s labor force as a bunch of slackers, while pretending that, as mayor, he has nothing to do with it. He’s the guy who plots to toss $20 billion or more of taxpayers’ and airline passengers’ dollars into an absurd and dangerous plan to expand O’Hare Airport, basically to lag more jobs and contracts to insiders.
There's actually a lot of truth in what Byrne is saying, that corruption is not just pervasive but damaging (I've written before that I actually see very little cuteness in the Blagojevich saga). And there is not a lot going on to mitigate the negative.

Chicago is no longer (in the words of Carl Sandburg):
HOG Butcher for the World,
Tool Maker, Stacker of Wheat,
Player with Railroads and the Nation’s Freight Handler;
Stormy, husky, brawling,
City of the Big Shoulders:
We have no large financial institutions left here, our big companies are dwindling in number and size (one of our big gets, Boeing, brought just a handful of jobs here), we're even losing our candy manufacturers. The photogenic trading pits are being replaced by dueling computers, which means the Board of Trade can be used by people anywhere in the world. Our attempt to get on the technology map, the so-called Silicon Prairie, died aborning.

The mayor, faced with huge obligations he can't possibly pay without pushing already-high taxes up, is selling everything but his own office furniture. He's desperate for tourism, so much so that he's foisting off a half-baked, uncertainly-funded Olympic bid on the people without telling them the true cost.

And yet, with all that, I don't have the feeling that Chicagoans are "miserable." I grant that the long-term prospects for the city are questionable, and, had Forbes decided to measure that, a third-place ranking wouldn't seem so wrong. But people don't live in the long term (which carries its own problems), and, for the most part, misery isn't the prevailing emotion. Concern, to be sure, frustration, perhaps, but not "misery."

Sunday, February 15, 2009

Some Sunday fun

Since I had the temerity to publish something serious today, I want to also put up something fun. Since I was critical of the over-processing rife in the music business on Friday, I should point out how much fun music can be. One of my favorites is the song, well-known (extremely) in Canada, not so much here, "If I Had $1000000," by the Barenaked Ladies. This group has never become huge in the U.S., though their song "One Week" has received some play in commercials.

At any rate, $1000000 is a parody of a country song, but it is quite catchy in its own right, and the lyrics are to my mind as funny as any I've heard (of course, your comedic mileage may vary; my wife doesn't find it nearly as funny as I do). I won't recount the Kraft dinner business here, I'll leave that to Wikipedia and hope they got it right. This video from YouTube is apparently from a show in 1999:

"Not a real green dress, that's cruel" - makes me laugh, at least (maybe I'm a closet Canadian).

Red Oak's Five Things

In an earlier post, I followed a fascinating comment thread to a post of Citizen Carrie's that went through some of the current immigration issues. As the discussion wended its way along, with a hapless anonymous poster who brought very little game being taken to the hole by Carrie and Red Oak, Oak made an excellent point about certain types of arguers:
Description: He "knows" five things, those five things constitute the entire universe of things to be known (outside of the things he needs to know for his own profession, one hopes), he will repeat, all at once or in rotating order, those five things in response to anything you write, and while an occasional new factoid may penetrate, such that the List of Five becomes the List of Six or Seven, no new information is capable of modifying or transforming the original opinion.
If this attitude were confined just to bloggers or commenters, there would be very little to say about it. The wonderful world of Web 2.0 have brought some positives, but it's also given a forum to people who would normally only have the bartender to listen.

But there are serious professionals with major credentials who have the same attitude. It's fairly clear that large segments of our lawmakers are concerned only with adhering to either: strict party orthodoxy, or self-aggrandizement in preparation for the next election. (Oh, wait, I said serious professionals.)

So let's talk about economists, and let's talk about the subject of the original Carrie post: immigration policy. Economists "know" a few things: free trade is always good, the labor market is just like any other, an increase in supply (with constant demand) leads to lower prices (I could probably find two more to bring us to five, but these will suffice).

Where do those three things lead us? First of all, globalization is an unalloyed good. To believe that requires us to take a two-nation, two-good model that everyone accepts and extend it to a couple of hundred countries, multinational entities, government, and citizens with differing priorities and needs, but, no matter, the conclusion still applies.

Therefore, since labor is just like any other good, it makes sense to move it overseas or to bring lower-priced workers to this country. Either way, this action increases the labor supply.

So, since the supply of labor has increased, and, presumably, demand is roughly constant, the price of labor must go down, whether it's for manufacturing that has moved to Shenzhen or computer programming being done by H-1Bs in Phoenix.

Now is where we run into a pretty big problem. It's going to be very hard to make up for the loss of a career by saving a few bucks on a sweater, and most people can see that pretty clearly. But free trade is always good. Paradox!! (And we're leaving out the part where economists are actually embedded in the world of politics, so they can't admit that there will be losses to major parts of our population through their policies.)

This is just one example how clinging to Five (or Three) Things leads one astray. At some point, to make sense of it all, an honest economist would have to question the basic assumptions. But too few of them are willing to do that, so everything that impinges on free trade in goods, services, or jobs is labelled with the dirty word, "protectionism." The clear result, that letting the market have its way will make quite a few people substantally poorer, disproportionate shares of them on the "wealthy" side of the trade, is impossible to fathom, so the "experts" just elide over it, or attack those who ask questions about it.

We can conclude that Anonymous may well not just be some random shouter on the Web, he or she may be a respected, tenured economist at a major university.

Saturday, February 14, 2009

Foolish simplicity

Having had some other business this week, I have been light on blogging, and even more behind on keeping up with my feeds, even for some of my favorite blogs. So I'm a week late commenting on this post by Citizen Carrie. It provides links to stories about some current wrangling over proposals to support American workers with American bailout money, a link to an entertaining reaction to Jowl-Boy's (I'm sorry, I mean respected New York Times Pulitzer-winning columnist Tom Friedman) suggestion that we can save the housing market by importing more of those always-fab H-1B holders, and a "study" that purports that people with funny names (all of whom are, presumably, visa-holding non-citizens) file a whole bunch of patents.

What I found most notable about this post, other than how impressed I am that Carrie always manages to dig out these things, is that it received 22 comments. For me, the interesting part comes when someone named "Anonymous" weighs in by trying to create a false dichotomy:
H1B visas fill up jobs that require "special" skill set that is not available or in scare in US.

Why don't government do something to the "illegal" immigrants? Don't you think those millions of illegal immigrants are taking away millions of American jobs? Do they pay taxes? I guess not.
See the logic here? "You guys are doubly wrong, you're ignoring the mad magical skills of H-1B visa holders, and missing the real problem, the illegals." But Red Oak does a better job than I could of pulling this apart:
Anonymous - you should not infer that people are unaware of other issues in immigration because they happen to be focusing on a particular aspect. Both legal and illegal immigration present problems and both should be discussed and debated. If you are particularly passionate about the problem of illegal immigration, there are any number of blogs and fora covering it. You're free to jump right in. But you have no basis whatever for your inference that people discussing H-1Bs aren't "seeing the big picture".

Furthermore, if you'd bothered to look around your hostess's site, you would have noticed that she has covered in great detail your claim that "H1B visas fill up jobs that require 'special' skill set that is not available or in scare in US". So much so, in fact, that "special skills" is a running in-joke here.

And please refrain from the tiresome "your ancestors immigrated here at some point in the past, too". In the first place, this is not news to anybody. I know this might surprise you, Anonymous, but most Americans are perfectly well aware of where their ancestors came from, and you aren't exactly shaking their world-view to its foundations by pointing out that they're probably not the descendants of the Mohicans. Second, immigration policy, like every other government function, should be based on "promoting the general welfare" of the nation and its citizens. There is no more mindless and irresponsible argument in public policy today than the which asserts that "we had lots of immigration in the past therefore we have to allow lots of immigration now and in the future."

Guys, I am not defending H1B people.

Sure you are - what do you think your "special skills" argument is? And nothing wrong with that, but it's programs, not people that are being criticized here. You're welcome to defend those programs, too, if you think they're a good idea - you just need to up your game a bit. Remember, it's a good bet that someone who has dedicated a whole blog, or a fair chunk of a blog, to any topic, is way past the "sound bite" level of debate you're operating at here.
Anonymous shows a certain amount of persistence, if not logic, as he/she comes back with:
Again, you got to understand the bigger picture. Do you know where most of the H1B visa goes? It goes to the Medical (docs), and I.T. and Engineering professionals.

Who gets the H1B? 90% goes to Asians and Indian. What do they contribute to the country? They provide support to already struggling industries.

Now, does US have many people available to fill up jobs in these industries (both in terms of qualification and numbers)? I don't thinks so.

Another think, if you stop H1B, who would do research on brain cancer or breast cancer in US?

Do you know half of the NASA employees are foreign workers? Do you know the R&D of Motorola, Microsoft, IBM and Intel is foreign workers who provide US corps advantage to compete on world level.
Carrie does a good job of taking care of these "arguments," but Red Oak comes back with something even more useful, an elucidation of those who tend to reason like Anonymous and spend way too much time on message boards:
Description: He "knows" five things, those five things constitute the entire universe of things to be known (outside of the things he needs to know for his own profession, one hopes), he will repeat, all at once or in rotating order, those five things in response to anything you write, and while an occasional new factoid may penetrate, such that the List of Five becomes the List of Six or Seven, no new information is capable of modifying or transforming the original opinion.

He also "knows" that you do not know these Five Things, no matter how firmly embedded in the category of No Shit Sherlock some of them that are not outright falsehoods may be, because surely no one who knew The Five Things could possibly disagree with him, and thus he is compelled to keep repeating The Five Things, because obviously if you keep disagreeing with him, you weren't listening the last 500 times he tried to enlighten you with the knowledge of The Only Five Things.
Actually, putting the number at 5 is most kind on Red Oak's part, as we have certainly seen people who top out at One Thing. My favorite is the guy who insisted that there was no recession because it hadn't been officially called, then, when it was (and most of us had been right all along), insisted that it still really wasn't.

Anyway, back to the main thread, "Anonymous" seems to return as someone named "Dev" (identity is pretty much meaningless on the Internet, isn't it?), contending that "whoever is efficient wins" and takes up that "special skills" argument again, and is again shot down by Carrie and Red Oak.

I have a larger point about Red Oak's Five Things, but I'll leave my ruminations on that to a later post (I promise).

Friday, February 13, 2009

TIME-ly (??) music article

The current issue of TIME magazine has a lengthy story on Auto-Tune, the music pitch-changing software. We'll agree to ignore the fact that this article is largely a ripoff of a New Yorker piece from last June (Cher? Check. T-Pain? Check. Retune speed to zero, instead of the normal 10? Check.)

What is most remarkable about this article is its remarkable lack of timeliness, given how long Auto-Tune has been used to fix wobbly or, let's face it, non-existent pitch in our top singers. There are people out there who essentially can't sing, but they are propped up by technology. I understand that's always been true to some extent; listen to any record where the lead singer is "augmented" by backing vocals in certain difficult spots.

The technology behind this is fascinating, but there is a line that I think we're crossing now. If you caught the Grammys last weekend, you could hear that Taylor Swift and Katy Perry clearly cannot sing at all, yet on recordings they sound fine.

I think there may be people who don't quite understand that a song is just another data file, like a spreadsheet or a memo. Just as the latter two can be changed at will, so can music. If a producer wants to make Britney Spears sound like Leontyne Price, no problem, just boot the computer and change a few numbers.

To be fair, the TIME article does touch on some of this near the end, claiming that pop's current soullessness may well be the result of this technology. I don't know about that, I think corporatization of the industry may be more the culprit, as we take the photogenic (but talent-free) and turn them into brands. We also have a perverse reward structure, which takes a songwriter of some potential like Swift and provides incentives for her to become a performer, despite little aptitude in that area.

Thursday, February 12, 2009

Textbook prices

I'm not trying to pick on Kevin Drum; it's actually a measure of my respect for him that I read him so closely (he was, perhaps, the first political/economic blogger I read regularly). In general, we have similar views on things, and from what he has written, our backgrounds are not so different.

He posed a question yesterday that he spent too little time thinking about. He's wondering why textbooks are so expensive, even comparing one of his from 1976 to the current price, finding that it's more than doubled in real dollars. The book is, apparently, pretty much identical to the 33-year-old version:

This, then, is obviously a book that ought to be cheaper today than it was three decades ago. The costs of production have long since been paid back, there's a ton of competition from the used book market since the book hasn't changed in 30 years, and I imagine that author royalties are the same as ever. For reference, a similar size commercial hardback would run about $40 these days.

So what is the deal? Why are textbooks such a ripoff?

Drum points us to the Andrew Gelman post that got the topic started, and to Henry Farrell's effort. Farrell takes us a little closer to some part of the truth as he mentions the "captive market" of students, who are pretty much at the mercy of whatever whim the professor uses to make a choice.

But none of the three mention the larger reason, that book publishers are under the same pressures to bloat profits as any other company. In many cases, they have become subsidiaries of conglomerates, and the book publishing division is as much on the hook as is any other corporate piece. They see a monopoly situation, they're pretty much bound to jump on it and milk it for all it's worth.

Add to that the low profit margins found in their overseas markets. In India, textbooks that are identical except for some cover art and the binding cost maybe a tenth of what they cost here. Much like the prescription drug market, the book publishers are going to get their money somehow. If they can't get it at the Indian Institute of Technology, they're going to get it by soaking the "rich kids" of America. We, in effect, are subsidizing the foreign textbook market.

So it is no wonder that textbooks cost so much - they're being used to advance social objectives that have nothing to do with educating American students. They are a hidden form of foreign aid.

Wednesday, February 11, 2009

Using words

I recognize the power of specific words, but I think that effect is often overestimated. Take as an example the news about merging financial companies Morgan Stanley and Smith Barney. They're using their bailout money for, ahem, interesting purposes (from Sam Stein through Kevin Drum):

The soon-to-be-merged financial giants — Morgan Stanley and Citigroup's Smith Barney — announced the payments during an internal conference call last week, but warned advisers against describing them in terms that would cause PR headaches.

"There will be a retention award. Please do not call it a bonus," said James Gorman, co-president of Morgan Stanley. "It is not a bonus. It is an award. And it recognizes the importance of keeping our team in place as we go through this integration."

I've worked in corporate America a long time, and I never fail to be amazed at the ineptitude with which executives use words. That a president of a large firm would believe that "retention award" would somehow get people to say, "Ah, that's fine, at least it's not a bonus," is laughable.

Certainly, I've seen these before. AIG paid these out last year, even after we the people kept the insurance giant afloat. Lucent Technologies, despite the use of near-Enron accounting tricks, ponied up similar money back in 2002.

What I think happens is that management gets scared to death that the rats will desert the sinking ship, even if it's not clear that there's another ship to jump to. Then they'll be faced with two extra problems, one real, the other PR: they'll have to find replacements, and they'll be forced to explain the exodus. Neither of these is easy, and CEOs don't like hard; despite all their big talk about going head-to-head with the "big challenges," they actually prefer a path that is laid out for them. Risk is anathema, and they'll do a lot to avoid it, especially when they're playing with other people's money.

Since we're talking about executives and words (and Kevin Drum), let me point out that Drum missed the point of a recent Hendrik Hertzberg post:
If America is a classless society*, why is that a manual worker gets paid wages and a middle manager or cop or teacher earns a salary, but a corporate boss condescends to accept “compensation”?

. I have to say, I get a little dizzy with disgust whenever I hear that word used to describe some C.E.O.’s pay envelope. “Compensation package” is even worse. What, exactly, are these people being “compensated” for? Are they victims of crime? Or is it the long hours, the loneliness, the inability to spend time with their children—so much more terrible than the plight of a middle-aged immigrant mother working double shifts as an office cleaner? Or the fear of having their company go on public assistance, in which case, thanks to Obama, their welfare payment will be slashed to less than $10,000 a week? Or the fear of getting laid off with nothing but a golden parachute to put food on the table and lifetime use of the private jet to get around on?

The poor dears.

*I know—straw man. But still.
Drum commented on this:
This really isn't so hard. "Wages" refers to hourly earnings. "Salary" is typically a fixed yearly amount for exempt employees. "Compensation" is used for corporate honchos because you need a word that encompasses the fact that a big part of their earnings are in stock, deferred salary, capital gains, pension payments, and various perks. There's really nothing very sinister about all this.
He failed to see that Hertzberg's primary complaint was about the word "compensation," not that "honchos" had a different term to refer to their paychecks. He hasn't answered the question, "What are these people being compensated for?"

Tuesday, February 10, 2009

What is, where have the Jeopardy writers gone?

I've mentioned before that I generally only watch Final Jeopardy, as I don't find the questions in the first two rounds interesting enough. (Even then I only catch 2 or 3 a week; I guess Jeopardy isn't quite must-see TV for me.)

It seems to me, based on my limited sampling, that the Final Jeopardy questions are a lot easier this season than they have been previously. For every one that requires you to know who Damon Runyon was ("He was also the U.S.'s best-paid sportswriter, with stories of people like Chicago O'Brien & Jack the Bookie"), there seem to be quite a few that are fairly simple ("On Oct. 14, 1947 in the Mojave Desert the first of these sounds was made by man; it was the byproduct of another first" - What is a sonic boom?).

Well, now that I've said that, I'll probably strike out on ten in a row. Bring it on, Alex.

[I was able to get the exact wording of the questions, um, answers, from the excellent Jeopardy fan site, J! Archive.]

I'm So Paid

I don't profess to know a whole lot about the music industry, in particular the considerations that accompany release of various versions of popular songs. Take the Akon song I'm So Paid as an example. There's a radio edit that lasts about 3:20, while the video version goes another minute or so (it has an invaluable rap from Young Jeezy [!?]).

Since 4:20 is not overly long for a pop song these days, I'm not sure why there's more than one version (unless Young Jeezy with Lil Wayne is not as big a draw as Lil Wayne himself, which doesn't make any sense). More importantly, though, the mix is different. The main accompaniment, a series of synth block chords, is much less prominent in the video version. Perhaps there was some feeling that actual music would detract from the Miami Vice-like plot, but it seems like a curious choice.

I'm sure there are reasons for the change, but I can't come up with anything plausible (which means the answer is probably quite simple, right in front of my face).

Monday, February 9, 2009

Contractor hell

A short post today, necessitated by a lack of time, time I put into dealing with a difficult contractor. In brief, we hired a fellow we've used before to lay a vinyl floor in our kitchen and entrance hall. And we hit the trifecta: the job was late, it was severely underestimated, and the quality ended up being far below any possible standard.

We had a rather contentious meeting with him today, one which ended with him storming out of the house like a petulant teenager, threatening to call an attorney.

Without going into the details of the job any further, here's my larger question: Is there really no attempt to please the customer any more? Companies sell computers that don't work, then they sell customer service to get their product functional...and they're doing you a big favor if they let you pay extra to talk to someone who speaks English.

With this guy, every time we brought something up, he'd put on this little dismissive laugh, as if things like poorly cut edges or a hole in the floor were humorous matters that had nothing to do with him. It's as if he was doing us a big favor for doing a job that, clearly, he didn't have the chops to perform. (Had he just said that, we would have gone in a different direction with no prejudice, because he has done some other things reasonably well in the past. He even admitted, but only today, that we really couldn't expect a professional job from him on this.)

So this post is a rare personal vent, I suppose. But that's about all I've got for you today - maybe you can read some of my older posts if you're looking for the usual sharp and incisive commentary.

Sunday, February 8, 2009

Review - Just After Sunset

Is there any point in my writing a review of Just After Sunset (2008), the new collection of short stories by Stephen King? He's written so much over such a long time that I would think that most readers would have their opinions of his work pretty well fixed by now.

These 13 stories are, with one exception, recent, and they fall into the same genre as most of King's work, that is, there are no westerns or love stories (though there are some where love is a key element) here. We read about fairly ordinary people who come under sinister influences of one type or another, and spooky things happen, and we see the result.

I tried to be neutral in the above paragraphs, but I have enjoyed King's writing for a long time. His work is solidly in the fantasy area, but grounded in such relatable reality that the works take on a vividness that, say, Lovecraft never does for me. I appreciate the sense of "what-if?" that King brings to his characters, but I can also see where he can be polarizing. My wife is one of those who has very little tolerance for the preposterous (I sometimes feel she struggles to get through episodes of Lost), while I am generally willing to allow a talented creator to take me in an intriguing direction.

Just After Sunset doesn't strike me as major King, there is little of the universal themes that inform his best long-form works (like the neglected The Stand). But these tales are involving, and, unless you're opposed to the whole idea of Stephen King, you'll be interested in where they're going. They may not haunt my dreams (my nightmares don't come out of fictional depictions, anyway), but they are a good read.

Saturday, February 7, 2009

Paying the most talented

Steve Chapman of the Chicago Tribune had a post on his blog a couple of days ago that well summarized the thinking of those who find a cap on executive salaries distasteful. (I understand that there are already considered opinions that say that business "leaders" will be able to find ways around that, and I'm sure that's true. For the moment, let's take the cap at face value.)


President Obama slapped banks getting federal money with new limits on executive compensation, which will max out at $500,000 a year. This figure is below what most CEOs get, which suggests that these institutions will have trouble recruiting or retaining the best managers. That would be hard enough without the pay cap, since the job description--pulling a bank out of near-bankruptcy in the midst of a serious recession--is enough to make a lot of prospective CEOs contemplate the pleasures of retirement, something most of them can afford.

A common reaction is to say that we can do without the most talented executives in the financial sector, given their disastrous performance. But it's never wise to assume that someone else can't do an even worse job. The New York Yankees, who have the biggest payroll in baseball, haven't won a World Series lately. Any team in baseball would still agree that spending more improves your chances of winning.

Hardly anyone believes politicians are competent to set salaries in any other private sector industry. The fact that some banks are getting federal aid may be an excuse and a means to tell them what their executives should earn, but it doesn't render the government any more capable of handling a task that can only be handled by the interplay of supply and demand.

This is quite the mix of right and wrong. I certainly share Chapman's concerns about the involvement of the federal government in the hands-on running of public companies, even though it is fair to question whether the banks and auto makers getting government help are truly market-based any longer.

Chapman fancies himself a libertarian, so he strongly tends toward acceptance of market solutions to any problems, which requires one to believe that industry is invariably more efficient than government, something that has been pretty well disproven by now. We're actually left in a real dilemma, where we have to decide if we'd rather have John Thain or a GS-14 running our financial institutions.

Where Chapman falls off the track, however, is when he throws around terms like "best" and "most talented." If we measure by results or prescience, the current crop of financial managers are neither of those things. We have bank CEOs who rode a clear bubble in real estate to great personal riches and outsized company returns. It is quite obvious that accomplishing those things wasn't all that difficult; it would have been far more impressive if one of them had broken away from the herd and positioned their company for what was inevitable.

Chapman makes a false analogy in comparing this situation to that in baseball. The goal in baseball is not to make the most money, but to win championships. In business, there are no championships - the goal is to achieve profits, which you do partly by controlling costs. Yes, to a certain extent, you spend money to make money, but one of the great challenges is walking that line. Steinbrenner has never looked at his Yankees the same way.

This column also features the common belief that executive salaries are the natural result of supply and demand. Is there anyone left who believes that CEOs get and retain their jobs strictly on that basis? There are many features of the marketplace for "executive talent" that do not fit the assumptions of the free market. (Look at this post from November where I cite Mark Thoma on how markets fail to match up to theoretical models.)

If we had seen executives act responsibly (when the going gets tough, the tough redecorate their offices), we might be able to trust them a little more. But they haven't.

And Chapman also forgets that this cap is not permanent. If one or more of these clowns figure out how to "pull a bank out of near-bankruptcy," the compensation will come...maybe not this year or next, but soon enough.

Friday, February 6, 2009


Emancipate yourselves from mental slavery;
None but ourselves can free our minds - Redemption Song
Bob Marley would have been 64 today. He's been gone almost 28 years.

As the years go by, I find myself turning to his music more and more. It isn't just "world music," to which reggae is so often relegated. It's music with a social conscience, but it also rocks. If you are growing tired of hearing Britney work out her personal psychodrama, or accepting that music is best enjoyed as a backing track for a TV hospital show, put on some Marley. Some samples:

Could You Be Loved

A truncated Stir It Up

No, Woman, No Cry - a live version of a song that proves that Jamaica has its own version of the blues

Redemption Song

More jobs, maybe, or nothing

As I'm writing this, Congress is fooling around with the economic stimulus bill. One of the primary objections, particularly from Republicans, is that there's too much in the bill which will fail to create jobs. Considering that the official unemployment rate jumped to 7.6% (and I haven't been able to find the newest calculation of the U-6 rate, which gives a better idea of where we are), one can certainly understand why job creation would be the highest priority.

I've written before that I have questions and concerns about whether Obama's economic plan will create jobs in the numbers forecast. There are now too many other places companies can get work done, some of the jobs may well not be incremental, and it seems focused on some sectors, absent in others.

However, since we're not going to get answers to any of these questions from either side of the aisle, the lack of an offered alternative is troubling. Sure, I find the administration's numbers rosy, but what would the Republicans do? Nothing? How many jobs will that create?

Because that's the choice, spend some money in hopes of creating some jobs, or doing nothing and praying that the free market will magically create those jobs. From a long-term perspective, I might prefer to let the market have its way here, but people need to eat and be housed in the short term. So we should do something.

The challenge will be to unwind this in time, to move government back out when the market is back on its feet, and there is certainly the danger that they won't. One of the bigger risks here is massive inflation, so we'll have to hope the adults are paying attention.

But Congress is either going to have to go along with what is on the table, or put something there that's better. And I don't trust them to do that at all.

Thursday, February 5, 2009

The future

As I pondered today what I would write about, I realized that I'm tired of thinking. IBM is sending jobs overseas and inviting otherwise laid-off employees to follow them...but, of course, at the prevailing wage of the destination country. The stimulus package is wending its weary way through the halls of Congress, and people are disappointed that bipartisanship hasn't magically become the tone. Speaking of magic, the consensus is that the stimulus will work because of the magic multiplier, in which government spending is transformed into higher GDP (then why don't we always spend a whole lot of money we don't have?), and, moreover, this time that GDP increase will be spread among all the people. Large media companies are jumping on Facebook and Twitter, trying to "establish a presence," despite any proof that there will be tangible returns. And I've just come through consideration of the nature of Wikipedia.

In each of these cases, and others, I try to ask questions in getting to the heart of the future. If Wikipedia crowds out other information sources because of its ubiquity and positive press, will their casual attitude toward accuracy cause problems? If people spend a great deal of time formulating less-than-140 character Twitter messages, will that loss of productivity outweigh whatever positive applications end up being built on that platform? What will happen when reporters become "content producers" whose objective is to generate massive amounts of stuff for the multiple-platform media thing; will reporting and insight take a back seat to fast typing?

Will New Energy get off the ground now that gas prices have gone back down? Does our uncertainty indicate that the market model for energy innovation might have some flaws? Will New Energy necessarily lead to incremental jobs? If so, where will those jobs be, and what kinds of qualifications will they require?

Can a company like IBM move the home base of a consultant job to India, pay that wage, but require the worker to spend 100% of their time working with clients in the U.S., or is this somehow prohibited by current labor laws? Does this presage a drop in compensation for virtually everyone? If so, what happens to our economy?

Will applying more market discipline to education really make better schools? Can we really make 3 million great teachers through the carrot-and-stick approach? If we succeed, will we end up with large numbers of young people overtrained for the actual jobs that we'll have in the 21st century?

In each of these cases, writing a post would require me to think seriously and take some kind of position. Today, I don't want to do that, as I'm tired of thinking about the future.

The reality is, nobody knows the answer to these questions. I know what I think about them, but no one, no matter how emphatic they are, actually can see all the unforeseen consequences of our current decisions. The economy may come roaring back, with great jobs for all and a stock market that shoots through the 20,000 mark. Some American genius may come up with a breakthrough that brings dirt-cheap energy to the world, and reestablishes the U.S. as the dominant world power. And so on.

We just need to remember that no person, not Nobel Laureate or humble blogger, can tell us what the world will look like 5, or 10, or 50 years from today. We are all, through our daily decisions, creating that future, whether we're voting for someone or accepting one job over another or buying the Taylor Swift album, and it will depend on those 6 billion people making trillions of decisions.

So, just for today, I'm going to raise those questions, but give my brain a rest by not trying to answer any of them. Discuss among yourselves.
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