Wednesday, July 29, 2009

A shameless bid for Google attention

The Illinois Lottery is running a couple of commercials for their second chance lottery game, one of those things where people can win by saving their losing tickets. One of those commercials has a funny line, though I'm ignoring the fairly obvious implication that girls with accents are easy (leading the lottery-playing character to get a creepy smile on his face). One of the Vegas dancers is trotting down the street and says, "I'm a dancer. I can dance." The actress gives a good reading of the line.

I mention this only because I want to see what Google does with this post. Only one result currently comes up in a search with <"i'm a dancer i can dance" lottery>; this post should make two.

Monday, July 27, 2009

Another tragic death

The word "legendary" finally died today. It had been on life support for some time, but it took the Chicago Tribune to push it over the edge:

Alexis Cohen, legendary 'American Idol' contestant, killed in hit-and-run in New Jersey

Legendary for her cursing rant against Simon Cowell

I acknowledge that this is a tragedy for her family and friends, and I'm not trying to make light of her death.

But when a headline writer for a major metropolitan newspaper destroys the meaning of a word in some lame bid to draw attention to one of the more minor stories of the year, it is not wrong to wonder just how low our standards will go.

Wednesday, July 15, 2009

"Keeper of cool"

Sometimes I'll go to the Web to see if something is bothering others the way it bugs me; in effect, I'm pathetically looking for support in my dissatisfaction. I don't know if other people do that, but I rather suspect they do. I would think there were Google searches for "michael jackson too much coverage" from people who were attempting to discover that others felt that the "news" outlets were focusing overly much on a less-than-that-important story (I suspect that, had Jackson passed away during fall premiere season that the number of hours devoted to it would have been far less).

Anyway, I've been irritated for some time by the radio commercials for Cisco's WebEx product. It's a teleconferencing product, and the campaign has featured at least two spots starring a businessman who uses WebEx to enhance his ability to do presentations and hold internal meetings. The facts behind the campaign aren't bad; I'm a big believer that teleconferencing is going to become ever more important, that at some point it will curtail the rosy forecasts of ever-increasing business air travel (even if fact is lagging the enthusiastic projections of those who sell these systems).

What I don't like is the narrator - I've taken a visceral dislike to this guy. In the first spot, he talks about how he can appear all over the world making presentations, yet still be available for tonight's date with "the very lovely Rachel," and I just find something smug and smarmy about the way he delivers the phrase.

The newer ad demonstrates how this guy can pull his creative team together to implement some idea he had (perhaps on a date with tvlR, I don't know). His idea bounces from his head to various other cities, and the other members testify as to their contributions, and our main guy comes back to tell how his great idea was instantly translated into reality because of WebEx. (This is a pretty rosy picture of innovation, but it is an ad, I suppose.)

In this case, it's not Rachel's boyfriend who bugs me as much as "Logan in Cambridge," who proclaims himself, "I'm kind of the keeper of cool." And he's more smug than the Rachel guy, and it all just rubs me the wrong way.

So this morning I get on the Web to see if anyone else is as bugged by these ads as I am, and the answer is, apparently not. But here's the funny thing: There seems to be one transcript of this commercial that has been replicated numerous times, so it propagates the same funny errors. (Oddly, the transcripts aren't exactly the same, so is it using some kind of voice recognition software?)

First, we have "so I gathered my eighteen to meet online using WebEx," which is not what he says at all; it's "gathered my A team." Then comes Cool Boy, and his segment is transcribed as, "Logan in Cambridge Canada keeper of cool." As I've already pointed out, it's "I'm kind of the," not "Canada."

So I've gone from being nettled at an ad that just sticks in me to being perturbed by an Internet mystery: why these strange renditions, and why are they spreading (and another, why isn't anyone else bugged by these ads, but maybe I'm just going to have to accept that it's my own pathology being measured here)?

Tuesday, July 14, 2009

Bubble machine

Occasionally I will take requests on the blog (actually, I'd love to get more), suggestions on something to write about, and I'm happy to put something together if I can think of something to say. A reader/friend asked me to write something about Matt Taibbi's Rolling Stone article titled The Great American Bubble Machine. In it, Taibbi lays the blame for our financial meltdown on investment bank Goldman Sachs:

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

Reaction has been severe. Of course, Goldman Sachs has responded with outrage, but many other commentators have leapt to the barricades, accusing Taibbi of overreach and sloppiness. One who has attracted a lot of attention with her "takedown" is The Atlantic's Megan McArdle, and I'll swing back to her in a moment.

But, you ask, what of my take on the original article? Ah, yes, but there's a problem: Rolling Stone has, in their infinite old-media wisdom, not published the whole thing online; the link I provided above is a series of excerpts interspersed with videos of Taibbi. So it's hard for me to provide any cogent analysis of the article without running out to the store and picking up a copy of the mag, and I'm not going to do that. (Kevin Drum fell into the trap, reviewing the article without realizing he was looking at bits and pieces. Once he got on track, he read the whole thing, concluding that, "It's a very good takedown of the modern financial industry and well worth reading." Drum also provides a link to a site that purportedly offers the whole article, but that's not working for me.)

I am left, then, trying to review an article based on excerpts, and that's not fair to the piece. I will not try to claim total objectivity anyway, as I am a fan of Taibbi's writing. His reviews of the Tom Friedman oeuvre are canonical, but I already praised those enough. He is a passionate writer, one who, perhaps, sometimes allows his passions to get in the way of precision.

But that's who he is, and to take the other side, to argue that his vehement eloquence is disqualifying is to refuse to engage with his points. And that is a far greater sin. Witness the quote in a TIME piece from a former journalist, "For the record, I don't think any article that contains the line 'vampire squid sucking the face of humanity' [Taibbi's opening description of Goldman] is real journalism." That quote is vacuous and completely unenlightening. (Taibbi himself responds to TIME's piece here.)

Here's Taibbi's position in an somewhat unfair nutshell: Goldman Sachs has been at the center of every negative investing trend over the last several decades, and their involvement in questionable financial instruments and oil speculation directly led to the current world financial crisis. Furthermore, their connections to people in high places ensures that they will be allowed to profit mightily no matter what happens in the global economy.

And that doesn't really seem too wrong. I sense maybe a little too much conspiracy in Taibbi's article, a bit too much willingness to credit Goldman with prescient malevolence. In my experience, there is rarely a decision arc in even the most powerful companies; rather, there is a culture which approaches problems in consistent ways, thus leading to similar results. Once that culture is seen as successful, it becomes widely adopted and the influence is magnified.

One thinks of, in the business consulting realm, the influence of McKinsey. McKinsey is not responsible for some of the worst management trends of the past 30 years, but they do tell their well-paying clients what they want to hear. Once the concepts (things like dehumanization and offshoring, anything in which customers can reap gains without paying the full costs) get the official McKinsey imprimatur, they become consecrated as holy writ, and McKinsey appears to be at the cutting edge of modern management techniques. I believe something similar happens with Goldman Sachs, that whatever they do quickly pervades the industry, giving the appearance of a conspiracy where none exists.

Which brings me to Megan McArdle. I find this self-styled libertarian to be maddeningly inconsistent, capable of penning some clear-eyed pieces that cut through cant (as in this post about retraining, where she couples her own experience with conventional wisdom and finds reasons to question the "wisdom"), but too often falling into a mush of disorganization. One could pin that on the blog format, but she is a major force in the blogging world and I expect more from her.

At any rate, her criticism of Taibbi has received quite a bit of attention, probably because she begins:
What I think, sadly, is that Matt Taibbi is becoming the Sarah Palin of journalism. He seems to deliberately eschew understanding his subjects, because only corrupt, pointy-headed financial journalists who have been co-opted by the system do that. And Matt Taibbi is here to save you from those pointy headed elites.
(Sarah Palin analogies are always attention grabbers.) Her argument is that Taibbi misemphasizes the importance of the things that Goldman did, that they did do those bad things but they're old news and other people did stuff that was worse, so why pick on Goldman?

She then takes her U of Chicago MBA (a degree she shares with this writer) and rolls right off the tracks:
But in fact, everyone was aware that CDO's were repackaging crap mortgages--that was the point. The idea was pure portfolio theory, broadly agreed upon by everyone involved. Everyone knew a lot of the mortgages might go bad, either by defaulting or prepaying. (This is a risk for bankers, who don't like the idea that if interest rates drop, their 7% mortgage might suddenly turn into a pile of non-interest-bearing cash which can only be invested at 5%.) But if you pool the risk, only some of the bonds will go bad, while others pay off. The result is a less risky, less volatile investment than any individual junk mortgage bond. And it would have worked, too, if it hadn't been for those crazy kids a collapse in the housing market of a scale not seen since the Great Depression.
This betrays a misunderstanding of portfolio theory, in that the risk of the pooled security is less only if there is minimal correlation among the component securities. Diversification works only when the underlying elements are different in nature; when they all stem from the same source, for example, residential mortgages, any downturn in the overall housing market will destroy the value of the pooled security, which is, of course, exactly what happened. There is no magic that allows anyone to take D-level garbage that is all of the same type and turn it into AAA by clever dividing and recombining. That's absolutely basic.

McArdle then hedges her own bets by agreeing with Taibbi's basic point:
Wall Street is an arrogant beast that more than held up its half of the devil's bargain which drove us into our current ugly straits. Bankers who thought they were geniuses were deceived by models that assumed away the possibility of a second great depression. They made a terrifying amount of money doing it. And now that the taxpayers have bailed them out at considerable expense, we don't even get a goddamn fruit basket. Instead they merrily go along paying themselves gigantic bonuses for the singular feat of not driving our economy entirely back to the stone age. I think some populist rage is more than warranted.
She simply disagrees with the way Taibbi chose to illustrate these problems, claiming that he didn't ask the right questions and, therefore, profoundly misunderstands the true nature of the problem. So we should be mad at Goldman, but we should also be mad at others too, and we can't know exactly who we should be mad at for what, and so forth into its own brand of incoherence.

McArdle got some pushback for her piece, especially for her assertion that, "financial meltdowns don't offer villains, for the simple reason that no one person or even one group is powerful enough to take down a whole system." So she wrote another long blog post about that, defending herself with this analogy:
A woman gets into her car, and waves at her husband, who is crossing in front of the car. Pressing the pedal to the ground, she puts it into gear . . . and steams forward at full speed, crushing him against the wall of the garage.

Is she a villain? It rather depends, doesn't it?

Scenario #1: she's angry because she found out he had an affair, and decided to kill him "by accident" for the insurance. Scenario #2: she thought she was stepping on the brake, and stepped on the gas instead. The former is a crime, the latter a tragedy. But you can't divine which simply by knowing that something terrible happened....Villainy involves people who know, or should have known, that what they were doing was likely to lead to the awful results.

I mean, you can quibble and say "You should have known that that was the gas pedal", and indeed you should have, but if, for whatever reason, your senses deluded you, you're not a villain. No, even if you were thinking about the presentation you had due at work--or how angry you were at your husband for having a fling with his secreatary--rather than concentrating on your driving.

When something is common enough, I think it definitionally isn't villanous. It may be a practice that should be fixed--we should all be more careful when starting our cars, I'm sure.
This is a bad analogy, so let's try to fix it. Let's say the woman may or may not know how to drive. Her husband asks her if she knows which is the brake pedal. She confidently answers yes, then steps on the gas and kills him.

Alternatively, she chooses to flip a coin as to which pedal to step on.

Is she a "villain" in either of those scenarios? I don't know, but she is certainly criminally negligent, and we do have societal punishments for that kind of recklessness.

And this is closer to what we've seen from our financial corporations. They took unconscionable risks, actions that could bring down a world financial system, then pled, "No one could have known," when it all went south. Their perverse incentive policies made gambling with OPM (other people's money) acceptable, even necessary. This is not their senses deluding them, this is arrogant heedlessness and, whatever the merits of Taibbi's contention that a great deal of it was due to deliberate manipulation on the part of Goldman Sachs, can't be wished away by McArdle's limp argument.

Then, unsurprisingly, McArdle yet again hedges her bets, telling us that she actually doesn't like Goldman Sachs at all:
I have no reason to love Goldman Sachs, and I don't. I didn't like them when I was interviewing for investment banking internships in business school (worst interviews by far were sponsored by Goldman Sachs and Bear Stearns). I dislike the way their alums, and indeed, their current employees, have permeated our politics and our financial regulatory system like some sort of insidious fungus. I have been repelled by Jon Corzine ever since he spoke at my business school graduation ceremony, where he jovially described how he had cheated his way into a diploma by getting his girlfriend to do his final project for him. He seemed to think this was funny.
She goes on in this vein for a while, but ultimately defends the bankers by claiming that they were stupid, but so was everybody else, and that doesn't equate to villainy, and that no change to history would have allowed us to avert the financial crisis (?!?):
But I think the case needs to be a leetle bit tighter than the fact that bankers make stupid decisions, bankers get paid a lot, and we just had a financial crisis. I'd like to see someone make the case that they did things that were actively, knowingly, illegal and morally turpitudinous, rather than simply totally moronic. Because with the total moron thing, they had an awful lot of company.
Of course, that's actually just the case that Taibbi is making (perhaps it is not as airtight as we would like, but it's a start). When money is entrusted to people who are reckless with it, that's wrong - I suppose we can debate the word "villainy" at some length. But the hands-off, "no one is more wrong than anyone else" attitude is profoundly unhelpful, no matter how much the principal actors in this piece would like it to become the prevailing approach.

[Update: I have come across a site on which the whole Taibbi piece has been posted. I don't believe a complete reading changes anything I've already written, but I'll ponder it some more and come back if I have any additional comments to make.]

Monday, July 13, 2009

Used to put the paycheck in the bank, now we get it there

Kevin Leicht is guest-blogging at Credit Slips this week, and he starts off with an excellent post that discusses the way in which our economy has moved from one in which people consumed based on what they were paid, lowering their risk over time, to one in which consumption is based on debt. He concludes:

More importantly, Henry Ford’s original idea (that workers should be treated well in part because they spend money as a consumer outside the office door) was discarded as a quaint old-fashioned notion. “Let the other guy treat people well, I can’t afford it” seemed to be the individual response of employers around the country and, for a long time anyway, Wall Street loved it. In the business section of the newspaper major downsizing on the front page was accompanied by major jumps in stock prices on the back page.

Over the long term this exposed a classic public goods problem – U.S. consumer purchasing power is something everyone has an interest in but no one has any concrete incentive to contribute to themselves. There are so many alternatives to paying people a decent wage that virtually any alternative is more acceptable than paying people more money or even paying people what they’re worth.

Is this sustainable?? It is difficult to see how. After all, if someone told you that we were going to base the largest developed economy in the world on (a) treating the mass of employees badly, (b) producing many products and services that are consumed offshore and then (c) loaning these same employees money to buy the basic goods and services to keep the entire economy afloat, I would say that someone just walked off a postbellum Southern plantation to sell us on the virtues of sharecropping(!) .

The current economic downturn gives us an opportunity to think hard about this entire I-borrow-because-I-can’t-get-a-decent-wage system. Simply restoring the ability of banks to loan money is not enough. Instead, the actual real earnings-based purchasing power of the American consumer must be restored. This is a much tougher task. Loaning people money is not a perfect substitute for paying them, but it is the easy way out. It produces real differences in political and economic power that can’t be ignored. It also isn’t economically sustainable.

Nothing to add, except to point out that we have structural problems which will prevent the recovery, when it comes, from being a return to what it was before. Robert Reich sees this, in a post from last week:

My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin.
There are those of us who have been arguing this for some time, that the rules and the landscape have changed, and we had better start preparing ourselves for reduced opportunity and circumstances. We could do that through intelligent planning, through a recognition that the old rules don't apply any more, but I'm pretty sure we won't do that.

Friday, July 10, 2009

Gettin' all renegade-y

A lot of people have already commented on TIME's cover story on Sarah Palin, and I'm certainly not going to go through the whole thing - it's all I could do to read it. It's a curious piece, one almost obsessed with creating an image of Palin as quintessentially Alaskan, and thus foreign to normal understanding. There is some talk of her negatives, but that all seems to get washed away in a tide of admiration, forced, I suppose, by the attempt to explain her appeal. But there is, along with a Web sidebar titled "See the fashion looks of Sarah Palin," which probably never accompanied a TIME story about Eisenhower, this:

Whether that is true or not, Palin's unconventional step speaks to an ingrained frontier skepticism of authority — even one's own. Given the plunging credibility of institutions and élites, that's a mood that fits the Palin brand. Résumés ain't what they used to be; they count only with people who trust credentials — a dwindling breed. The mathematics Ph.D.s who dreamed up economy-killing derivatives have pretty impressive résumés. The leaders of congressional committees and executive agencies have decades of experience — at wallowing in red ink, mismanaging economic bubbles and botching covert intelligence.

If ever there has been a time to gamble on a flimsy résumé, ever a time for the ultimate outsider, this might be it.

This is simply claptrap, not illuminating at all. That we should believe that Palin stepped away from the governorship because of her "ingrained frontier skepticism" of her own authority is almost insulting. It suggests that she doesn't trust herself to run something, and, while I think a little self-doubt is a good thing, this is not exactly the quality we look for in a president.

We still trust credentials a lot, as we don't ask our barber to take a little off the top and fill a bicuspid while he's at it. We might be starting to understand that credentials don't guarantee wisdom, but I don't think that credentialism is on the wane at all. If anything, it's become more prevalent as we tell our kids that the only road to success leads through college.

What's interesting is the title used on the cover of the print edition: The Renegade. I believe we're supposed to admire Palin for taking "the road less traveled." And this seems strangely reminiscent of another politician, one who bucked the system, voted his conscience, a press-deemed "maverick."

And as I wrote about John McCain close to a year ago:
Is it possible that John McCain, the original maverick, thinks that "maverick" implies random, unexplainable decisions, rather than adhering to a set of principles that are sometimes at odds with a party's orthodoxy? Because I think the people think that McCain is the latter, and I'm beginning to suspect that McCain is the former.
As entertaining as the press may find randomness, it seems a very poor quality to seek out in our leaders. A little unpredictability may be admirable; running amok rarely is.

Hello? Is anyone there?

Greg Glockner, at the Dwaffler Decidedly blog, tells A tale of two outsourcings. The first is actually a counter-outsourcing story, as Boeing plans to buy one of their key suppliers for the "revolutionary" 787 airplane, running directly counter to their master strategy of strewing bits of manufacturing across the world and assembling the results in magically short time. This hasn't gone at all well, as I wrote about a year and a half ago:
This, of course, is the logical consequence of modern-day management thinking. You out-manage your risk by transferring it to others, relying on contract compliance to take the place of responsibility. You conceptualize or ideate, not even descending to the point of high-level design, rather shifting that to the "experts" who know better than you what you need.

But you can't take a contract and glue it into a working airplane. Perhaps Boeing will get some money back, eventually, through negotiation or lawsuit. Will they ever make up the deficit to Airbus in market or mind share? I doubt it.
Apparently the newest solution is to bring the suppliers into the company, so the mystical world of contract compliance will give way to the old-fangled solution of actually managing something.

Greg's second example comes from the world of telecommunications: Sprint is going to outsource their network operations to Ericsson:
So what will be left of Sprint? They don't manufacture the equipment. They won't operate the network. According to Matt Hamblen of Computerworld, "Ericsson will manage day-to-day operations of the Sprint CDMA, iDen and wired networks, while Sprint retains control and customer care under the deal."

Customer care? Excuse me while I laugh. Someone I know endured atrocious customer experiences from Sprint. It took months of letters - the old-fashioned, paper kind - to resolve a simple billing issue. Customer service is not a strength of the mobile phone industry.

Oh, and isn't customer care just another job that will be outsourced someday?
The answer to the last question is, of course, yes. Which will leave Sprint with control and...nothing else.

I may well have mentioned this before (my great ideas get lost in the swirling mists of time), but I think we're approaching the logical consequence of this thinking. Eventually, there will be a Fortune 500 company that will have about 12 employees. There will be a CEO, a few people who stay up all night to talk to the various suppliers around the world, and some flunkies who will make lunch and airplane reservations for the CEO. That'll be it.

The value of the company will not come from any value-added work they'll be providing, because there won't be any. The company won't make anything, won't sell anything, won't ship anything. It will simply be a holding company for a collection of brands, with all the work done by others as cheaply as possible. The CEO will negotiate contracts (at the highest level), check with the lawyers to ensure contracts are being complied with, give presentations to analysts, and do as much media as possible to "build the brand."

At that point, maybe we'll all finally understand that it is not a function of American business to employ Americans, and we'll stop accepting some pretty weak arguments that we have to do more for these companies. Then, corporate welfare will stop, lobbyists will have less influence on politics, and we'll be able to work for the welfare of the people.

Ha, ha, I made myself laugh.

Saturday, July 4, 2009

An entertainer in the Capitol? No way

Republicans seem to be upset that former Saturday Night Live writer and occasional performer Al Franken has finally been certified as the winner of a Senate seat from Minnesota. He "stole the election," he's "unqualified," and so forth.

What could they ever think of a president who had appeared in movies like:
  • Cowboy from Brooklyn
  • Girls on Probation
  • Naughty but Nice
  • Alice in Movieland
  • Juke Girl
  • The Rear Gunner
  • Stallion Road
  • She's Working Her Way Through College
I mean, come on, do we want some porn actor in Washington, in the seat of power?

Of course, these are all movies from the oeuvre of Republican saint Ronald Reagan. Maybe Stuart Smalley isn't looking quite as bad now.

Friday, July 3, 2009

Palin was different

Ezra Klein, in the wake of Sarah Palin's surprise resignation, quotes some research by a Penn graduate student that indicates that Palin had an unprecedented effect on the presidential race, completely out of line with that of any other candidate for the second spot:
Judgment on her was incontestably important. The correspondence between dynamics in her ratings and dynamics in McCain vote intentions is astonishingly exact. Her marginal impact in vote-intention estimation models dwarfs that for any Vice-Presidential we are aware of, certainly for her predecessors in 2000 and 2004. And the range traversed by her favorability ratings is truly impressive. But why? We are unaware of any theory that opens the door to serious impact from the bottom half of the ticket.
I don't think this is particularly surprising at all. Most veep candidates come from a pretty narrow range of candidates, the experienced governor/senator/representative community. They usually have some kind of track record, might have been contenders for the presidency themselves, and are genially competent (Dan Quayle notwithstanding).

This does not describe Sarah Palin at all. She was and is a woman of modest accomplishments, an appalling lack of qualification for a presidency that she very well might have had to assume, and an ideologue whose beliefs were entirely out of step with the mood of the nation.

In other words, we don't need a theory to wrap around the Palin effect, we need to look at Palin herself - and that's just what the nation did, and they decided that they didn't want her a heartbeat away from the Oval Office, and McCain was reckless in picking her. If there's anything to be learned here, it is that the "bold" pick will be taken negatively if it represents an unacceptable amount of risk. We might conclude that Oprah is unlikely to be tabbed any time soon.

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