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Thursday, July 31, 2008

Selling Sen. McCain's Computer Illiteracy - WSJ's "Opportunity" Cost

Recently, Sen. McCain's admission that he can't use a Computer has been in the news.

Quite predictably and expectedly(just as sunrise every morning), the WSJ followed up with a story titled "Note to Next President: Avoid Computers" written by Lee Gomes. On its face this suggestion seems obviously stupid- no one can function in today's world without using technology, especially computers.

The crux of Mr. Gomes' argument is this - "Everyone has heard the puzzle about whether Bill Gates, upon walking to work, should bother to stop and pick up a quarter he saw on the sidewalk. Yes, the quarter is bright and shiny, but a careful assessment of the situation would reveal that, for someone of that earning potential, the time spent retrieving the coin could be spent much more profitably at the office. At least in theory.

For a president, a computer can be a similar distraction. Sure, he could spend five minutes reading an especially insightful blog post from one of his core constituencies. But it would be better for him to be spending the time having coffee with the person thinking the thoughts that the world will be blogging about a week or a month hence."

Perhaps Mr. Gomes doesn't know, but this is called Opportunity Cost. If the opportunity cost of the time spent in picking up a quarter is less than a quarter, then Bill Gates should pick up the quarter. This has nothing to do with the 'average cost' of Mr. Gates' time. Perhaps Mr. Gomes is not aware that Mr. Gates worked at Microsoft for many years for an annual salary of $1. Clearly, according to Mr. Gomes, he should have spent his time doing something else.

A President can have his aides assist him in keeping up-to-date and responding to constituents. This should be separated from the desire and the capability to use a computer. One can blame the current myriad problems facing the country on the fact that President Bush has no curiosity, wants his people to give him 'short' soundbites, and 'delegates.'

If Mr. Gomes had titled his article along the lines of "President Should Use His Time Judiciously" it would make sense but it would be stating the obvious. Telling the next President to "avoid computers" is a rather blatantly obvious attempt to portray McCain's computer illiteracy in a positive light.

As a side note, my mother, who is 73 years old, took an 'Introduction to Computers" course this summer and now does email and online chat and reads newspapers online. What makes it all the more remarkable is that she took courses in English for four years prior to this, as she had never studied English before and she never got an opportunity to go to high school. She is incredibly curious, and has a great desire to learn- something our current President and Sen. McCain have not demonstrated.

Wednesday, July 30, 2008

CEO Group - Corrupt, Egregious, and Odious Group

A Socialistic Solution to Protect "Capitalistic" Managers
Right after I had written a blog about corruption, I read the following in the Wall Street Journal, a.k.a. the Murdoch's Opinion Piece.

"Displaced-Worker Aid Is Proposed CEO Group Backs $22 Billion Package,Funded by Taxes By DEBORAH SOLOMON
July 30, 2008; Page A12
A policy paper commissioned by the chief executives of the nation's largest financial-services companies recommends a huge expansion in programs to assist workers displaced by international trade, with the $22 billion price tag financed through tax increases. The Financial Services Forum paper comes amid a growing backlash against global trade that has threatened to curtail U.S. trade agreements. The banking, investment and other CEOs who belong to the group have consistently cited protectionism as the leading threat to continued U.S. and global economic growth."

The Doha round of WTO talks collapsed yesterday because U.S., on the one hand and China and India on the other could not agree on a range of issues.
The CEOs, who have personally benefited greatly from trading and specifically from outsourcing, want to continue it and make it look like a win-win for everyone. However, to pull the wool over people's eyes, they want to the Government to provide aid to 'displaced workers'- an insulting phrase for people who have been fired. These are the same CEOs who got the dividend tax eliminated, got a cap on capital gains at 15%, and have also benefited from lower income tax rates- personal and corporate.
And now, they want to shift the burden for the problem they have created, to the public taxpayer, when the government is running a $500 Billion deficit next year. They are proposing funding this aid from taxes, while gleefully exploiting tax loopholes?
Business may not have any responsibility for creating employment, in which case it should come out and flatly say so. But using and discarding people like inanimate objects, and then couching it in slick language makes one sick.
A sad commentary on the business leaders.

Tuesday, July 29, 2008

Corrupt Environment and Corrupt Justice

Prof Nicholas Dorn writes a thoughtful letter titled "Just where does the locus of corruption lie?" in the Financial Times in which he talks about the Ponzi scheme developed by the U.S. based financial institutions.

While the common perception is that other countries are far more corrupt than the U.S., students in my courses consistently rank the U.S. as being high in corruption. In fact they are surprised that the U.S. ranks as high as it does in the Corruption Perceptions Index.

The definition of corruption needs to be broad based, as its effects are widespread and pernicious. Any action which deviated from fairness and impartiality it was 'influenced by money or power or other variables' and caused damage (or created the potential for damage) can be regarded as corrupt. Some recent examples:
  • The U.S. Environmental Protection Agency is ordering its staff to "not respond to questions or make any statements" if contacted by congressional investigators, reporters or its own Office of Inspector General, according to documents released today by Public Employees for Environmental Responsibility, PEER. The EPA is gagging its employees- and this is supposed be be public service.
  • Apparently "senior aides to former Attorney General Alberto R. Gonzales broke Civil Service laws by using politics to guide their hiring decisions, picking less-qualified applicants for important nonpolitical positions, slowing the hiring process at critical times and damaging the department’s credibility." - NYT.
  • Former CEOs of Citi, Merrill Lynch and other institutions who created the current mess but made away with many millions of dollars.
  • President Bush commuting the sentence of Scooter Libby.
  • Iraq War.
  • Senator Ted Stevens of Alaska
  • And plenty of other examples.

End of the Road?

* Update*
The WSJ reports that "Bush Calls for New Highway Tolls, More Private Funding of Roads."
Last we checked, states were trying to essentially sell the highways (99 year leases, and other deals) and get money up front. Illinois, Indiana, and Pennsylvania have done it.


According to the WSJ "An unprecedented cutback in driving is slashing the funds available to rebuild the nation's aging highway system and expand mass-transit options, underscoring the economic impact of high gasoline prices." The article adds that "In many areas, the ragged edges are already showing. About 25% of bridges in the U.S. are either "functionally obsolete" or "structurally deficient," like the Mississippi River bridge that collapsed in Minneapolis last August, killing 13 people."

Driving around in Chicago and the suburbs can be a dangerous experience because of the condition of the roads. It was particularly bad this past winter, with enormous pot holes.

The United States is the only industrialized country with a poor (or non-existent) public transportation system. Perhaps the current oil prices will spur the public and the politicians to invest in public transportation that will, at the end of the day, boost Productivity, while saving resources.

Monday, July 28, 2008

Budget Deficits Justified by Intellectual Deficits

Today's news brought a couple of contrasting headlines.

First, AP reported that "US deficit soaring to record half-trillion dollars as Bush leaves; sagging economy blamed." Apparently, "government's budget deficit will hit $482 billion in the 2009 budget year that will be inherited by Democrat Barack Obama or Republican John McCain, the White House estimated Monday. That figure is sure to rise after adding the tens of billions of dollars in additional Iraq war funding it doesn't include, and the total could be higher yet if the economy fails to recover as the administration predicts." Then the article repeats the White House view that this budget deficit would be around 3% of the GDP.
In FY 2007, the total interest expense paid by the U.S. Government was nearly $430 BILLION,on an average debt of 8,778 BILLION - an approximate interest rate of 4.9%.

A 2009 deficit of $550 billion (a conservative $68B for the war funding) will increase outstanding debt by more than 6%, and will increase the interest expense by $27 Billion per year at the 4.9% interest rate.

The total Receipts or Revenues for FY 2007 were $2,568 Billion dollars. The Receipts for FY 2008 are projected to be lower, at $2,521
Billion dollars. The OMB projects receipts to rise in FY 2009 to nearly $2,700 Billion. Even if we give this optimistic (foolish) forecast credibility, the total Interest Expense of approximately $450 Billion in FY2009 will account for 16.7% of receipts.

Would any fiscally responsible bank lend money to a person who is already paying more than 16% of his or her income in interest on existing debt? Whose debt level is more than 3 times his or her annual income?
And the debt is 'unsecured?' Banks lending money without looking at these metrics is the primary reason behind the current financial crisis.

Sen. McCain, in his supposed 'straight talk,' says that he will balance the budget upon taking office by

  • cutting pork - something he never truly cut in his twenty five years plus in Congress because he actually loves 'pork'
  • cuting taxes for wealthy individuals and businesses- the' supply side economics' actions that GWB and Ronald Reagan have embraced and saddled us with the current big deficit problem
  • Committing to keeping troops in Iraq for 'as long as it takes, even hundred years'- though how this reduces the deficit is yet to be explained
Mr. Obama wants to achieve deficit reduction by
  • Selectively repealing Bush tax cuts
  • Increasing tax cuts for the lower income people
  • Reducing troop levels in Iraq but increasing them in Afghanistan
  • Increasing public spending.
Again, what is implicit is that Mr. Obama waves a magic wand and the deficits disappear.

Debt as a % of GDP is misleading and simply fools people. What is fundamentally important is the revenue picture and the interest payments as a % of revenue. No one looks at a company's financial statements and looks at interest payments as a % of GDP.

Story # 2:
WSJ reported today that "India's Swelling Deficit Has Potential to Set Off Cascading Economic Trouble. "The writers criticize the Indian Government for running up a deficit "that could hurt much-needed investment in India's ramshackle infrastructure, boost inflation and undermine growth." It deplores a proposed once-a-decade salary increase that Standard & Poor's estimates could mean pay increases of as much as 40% for 2.9 million central government employees.
The money is going to government servants who have been historically underpaid and have had to deal with the skyrocketing inflation.

Both these articles show the partisan nature of the business news media, with little care of intellectual honesty. The politicians have a vested incentive to prevent the public from 'getting educated' and 'thinking about the problems.' The major mass media support the politicians because they have a vested interest in exploiting the gullible public.

Sunday, July 27, 2008

The Onus of Promoting an "Ownership Society," and Business Week Predictions

As I was going through my old collection of business magazines, I came across the following articles from Business Week:

A Prescription For Health-Care Reform (9/20/2004). Glenn Hubbard wrote that "An "Ownership Society" agenda has taken center stage in President George W. Bush's agenda for a second term, with proposals for Personal Accounts in Social Security, expanded incentives to save for retirement, and Personal Reemployment Accounts to aid workers in finding a new job. But a central plank of this agenda, and one that can be enhanced to improve markets for health care, is already law: the Health Savings Accounts (HSAs) passed in the recent Medicare reform." Nearly four years later, none of the three proposals put forth by Dr. Hubbard have seen the light of the day; in fact they have been dead for a while. It is rather scary to think of the consequences if people had put their "Personal Accounts" funds into the equity market as it was reaching a top, only to see the sharp downturn due to the credit crisis.

The September 20, 2004 Business Week issue had an article on tax code titled "What A "Fairer" Tax Code Might Look Like: A reelected Bush may rework the existing system -- or try for a consumption tax. " It says that "President George W. Bush has the tax code back in his sights -- but this time he's not just talking about tax cuts. In his Sept. 2 speech to the Republican National Convention and on the stump since, he has called for making the tax system "fairer, simpler, and more pro-growth" than the current 'complicated mess.' "
Another rosy forecast for a second Bush term. This forecast proved to be very taxing.

America's Stark Fiscal Choice. Another article in the same issue says that "While President Bush's soaring campaign rhetoric promises Americans that they can have it all -- new and expanded tax credits for private health, savings, and retirement accounts plus big permanent tax cuts -- the reality is beginning to bite. The cost of these ambitious plans, on top of committed expenditures for the new Medicare drug benefit, the war in Iraq, homeland security, agriculture, energy, highways, education, and more, will add trillions of dollars to a federal budget deficit already spinning out of control. Responsible Republicans are beginning to say that Bush must make a choice between his radical plan to change Social Security, health care, and savings programs and making his first-term tax cuts permanent. The wise choice would be to go with entitlement reform. America is facing a severe crisis as its health-care system cracks and the baby boomers approach retirement. "

The "business" publications like BW and WSJ painted such a rosy forecast of the Bush second term- however the results speak for themselves. Perhaps the greatest disaster Bush's eight years have wreaked is the creation and destruction of hopes and dreams in millions of people, both in the U.S. and abroad- especially that of home ownership. Prudent progress towards it was derailed by the financial innovators, the Fed, and the Government.

Saturday, July 26, 2008

McCoke doing the public a favor

Prices for food related commodities including grains, vegetables, and meat have been going straight up like an F-22 doing a demo at an air show. Consequently, food and beverage peddlers have been a) either raising prices to offset their cost increases, and/or b) shrinking the package sizes but keeping the price unchanged, i.e. lowering their cost per package and recovering the margin. While the paying public might feel that its goose has been cooked, perhaps McDonald's and Coca Cola are doing their customers a favor by reducing the portions. Perhaps they should charge customers for reducing their potential health care costs, assuming they would have consumed the previous portions if available at the same price.

Coke to shrink size of cans in Hong Kong. "Hong Kong's Coca-Cola drinkers are the commodity boom's latest victims. Cans there are being cut in size from 355ml to 330ml. The reason? The price of aluminium has jumped 25 per cent this year owing to rising energy prices. The Chinese mainland's struggling power grid exacerbates the problem. Some smelters agreed to cut output temporarily to reduce the risk of blackouts during the Olympics."

Friday, July 25, 2008

Getting a Charge out of Deregulation

The textbook I use for a course on Global Business, (Global Business Today by Charles Hill) extolls the virtues of Deregulation and asserts that deregulation along with privatization and protection of intellectual property rights, are necessary for a market economy. Part of the argument is that deregulation and privatization increases competition.

There are counter examples over the past thirty years to show that the behavior of companies is predatory, and that companies will try to squelch competition and tend towards monopolistic behavior unless 'regulated.' A good example is the M&A that followed the break-up of Ma Bell in 1984, when the seven Baby Bells and AT&T were created and MCI was there too. Now have reverted to Verizon and AT&T and a little of Qwest.

Some interesting stories on deregulation.

Deregulation Jolts Texas Electric Bills

Amid Turmoil, U.S. Turns Away From Decades of Deregulation

Funny thing is that the Republicans including Mr. Paulson are pushing for Regulation in the Housing and Mortgage Industries. The events to watch for surround water. According to smart analysts, and in line with the mythical 'common sense' water should be treated as a scarce commodity and should be priced much higher to dry out the demand. How will people deal with life when opening the faucet produces air, if anything, but not water? Of if a person cannot afford to pay?
Looks like for now, the Re in RePublicans stands for ReGulation.

Food for 'Weighty' Thoughts

Two interesting gardening stories...

The Vegetable Patch Goes Luxe: Homeowners Hire Experts to Install Lavish Gardens; Why the Help Gets the Bounty

A Locally Grown Diet With Fuss but No Muss: For a fee, Mr. Paque, who lives in San Francisco, will build an organic garden in your backyard, weed it weekly and even harvest the bounty, gently placing a box of vegetables on the back porch when he leaves.

Now, did you know that

Fat friends can boost your size....?



The Times, They Are A-Changin' .....Bob Dylan

Thursday, July 24, 2008

Living up to One's Name

Rep. Duncan Hunter’s (R-CA) staff recently contacted the U.S. embassy in Chad to see whether he could visit the country and distribute food at a refugee camp. He said he wanted to hunt wildebeest and then distribute the meat to the refugees...Read more of the story.
Way to go, Rep. Hunter. You live up to your name.

After flooding the world with cheap $ and creating a series of destructive bubbles, Former Fed Governor Alan "GreenSpan" denies responsibility for the current financial crises. With a name like 'green'span, he should be doubly careful.

Personal Need for PRM

The 1980s and 90s saw the widespread deployment of ERP systems in the Enterprise. The recent ten plus years have seen increasing deployment of "relationship management" applications including Customer Relationship Management (CRM) and Supplier Relationship Management (SRM).
Study: CRM, SRM Key to Operational Excellence.

This decade has also seen "life cycle management" applications including Product Life cycle Management (PLM), Asset Life cycle Management (ALM), Technology Life cycle Management, and Software Life cycle Management.

What this author sorely needs is Personal Relationships Management, or PRM. Since success depends on managing relationships throughout their life cycles, and everything is 'personal' managing personal relationships is critical to the success of the individual and of the enterprise.

I will elaborate on this fascinating topic in a future blog, along with a model for Friendship Life cycle Management.

In the meantime, the curious reader will be well rewarded by reading a thoughtful and entertaining article, "The ex factor," by Ms. Susie Boyt in the Financial Times. It examines reunions between ex-partners and reunions between ex-friends.

My data points suggest that the 'dramatic' fall-outs between friends happen when one person hurts another person's core, and what makes it dramatic is that one does not expect it to come from good friends and is blind-sided. In my case, when any one of my friends puts me in a situation where I have to blink at my personal ethics and support his or her actions, that usually results in an ugly fall-out.

Over time, I have realized that even my ex friends had attributes I liked enough to have them as my friends once upon a time. So I am much more forgiving now, and when I run into one of them I get over the initial awkwardness and try to create a new friendship.

A more interesting situation involves people who start out by being friends, but after romance enters and leaves the picture, the friendships become very awkward.

Wednesday, July 23, 2008

McCain needs "Surge Protection"

The Katie Couric interview of Sen. McCain is still getting news...perhaps the only way for the Katie Couric show to get noticed. McCain is trying hard to spin his version of what 'surge' is and when the 'surge' happened. The Guy sorely needs 'surge' protection- his memory seems to be short circuiting whenever he has to talk about a substantive issue.

Tuesday, July 22, 2008

Can Technology Prevent Ethical Lapses?

With cheating and plagiarism rearing their ugly heads quite often these days, especially in business schools, the headline in the WSJ, Business Schools Try Palm Scans To Finger Cheats, caught my attention. According to the article, vein scans will be required of students taking the GMAT.

What a shame that so many resources are being invested in preventing students from cheating, when the great irony is that students are cheating to ostensibly get an education?

CBS& Katie Couric - Neither News Nor Entertainment

By all accounts, CBS appears to have edited out from the broadcast of the Katie Couric interview with Sen. McCain a factual error by the latter. Other bloggers have been all over this.

One could have expected this from a network like Fox, but CBS has had a rich heritage of news. It is sad to see how far it has fallen.

Monday, July 21, 2008

Capitalism for the Few, Socialism for the Masses

The WSJ's article, "Like S&Ls? Paying the Tab For a Cleanup" draws parallels between the S&L bailout of the 1980s (under George H.W. Bush) and the proposed "resolution" of the current financial problems (under the administration of George W. Bush). It ends with the following: "Any taxpayer solution will only worsen already troubling fiscal problems. But that's the price for a system that - as New York University economist Nouriel Roubini and others put it- privatizes profits and socializes losses."

Comes close, but not close enough. I had commented on this topic in the past-Capitalism for the C_Os, Socialism for the Rest of Us. The current system effectively transfers wealth from the masses to the select few. It happened with Enron, WorldCom, Elan PLC, and plenty of others in the past, and now with Bear Stearns and the rest of the financial institutions. The 'select few' are smartly buying the political leaders - one can easily check the massive amounts of money donated by the 'select few' to support one or both parties, but especially the Republican party. Even 'Buyer Beware' warning cannot help the masses. Which brings one to the question of education- education of the masses.

* Addition*

Joshua Rosner's excellent article in the Financial Times, Goodbye capitalism, provides food for thought. He discusses the current GSE mess and the nationalization of losses.

Sliding into the Future- Appendix A

* Update 7/21/2008

NYT article "Women Are Now Equal as Victims of Poor Economy" is an interesting read. It states that "Indeed, for the first time since the women’s movement came to life, an economic recovery has come and gone, and the percentage of women at work has fallen, not risen, the Bureau of Labor Statistics reports. Each of the seven previous recoveries since 1960 ended with a greater percentage of women at work than when it began........The Joint Economic Committee study cites the growing statistical evidence that women are leaving the work force “on par with men,” and the potentially disastrous consequences for families."

Another reflection on the past seven years, and an inkling of what to expect in the near future.

* Update 7/16/2008
The WSJ's article, "Retiree benefits take another hit" describes the decision of General Motors' management to "kill" retiree health benefits for salaried workers aged 65 and over.

On NBC, Matt Lauer had a migraine-inducing interview on this topic of retirement benefits with Jean Chatzky. Her brilliant healthy suggestion was that "that the writing is the wall, the companies will continue to do this, and you have to take a very hard look at your budget."

One more data point to support the thesis that the standard of living has to come down. *


Back on April 11, I had made the following forecasts:

#1. The median standard of living of living in the United States will come down 'substantially.'
#2. The role of the US as the world's police force will diminish.
#3. Real Inflation, not the bogus ones reported by governments, will go up substantially.
#4. Significant new business models will come from other countries, along with new managerial systems.

In this post I will put forth the argument for the first forecast.

  • Despite the decline in the dollar (nearly 14% decline in the dollar index over the past two years) and the wage appreciation in the emerging economies, the wage differential for skilled workers between the U.S. and the emerging economies is still sufficiently large. Further the supply of skilled workers in the emerging economies is increasing. This will continue to put downward pressure on U.S. Wages for skilled workers.
  • Unfortunately, there is no major outcry against the way the U.S. government massages (fudges) reports on labor, unemployment, and inflation. I have written in previous blogs on the way the government creates 'phantom' jobs and distorts the real employment picture. A few commentators, including myself, have written about the serious underestimation of inflation by the U.S. government. Recently, Mr. Bill Gross of Pimco, explained this fact in a well-written article. It is rather simple to prove that the 'normal' operating expenses for an adult in the U.S. has gone up by much more than 5% p.a. over the past five years.
  • Nominal wage inflation in China and India (the primary manufacturing and services suppliers) is much higher than 10% p.a. in the relevant sectors. This, along with the local currency appreciation against the U.S. dollar, will continue to pressure inflation in the U.S.- prices of goods and services will trend higher.
  • Domestic demand for goods and services in the BRIC countries is trending sharply higher. This creates a significant pressure on the 'supply' side, especially on food and energy.
Little to no wage increases in the U.S. + significant inflation + hot emerging market growth = serious decline in median standard of living in the U.S.
While some citizens can maintain their 'normal' standard of living through 'borrowing' this is just pushing pain further out into the future.

Added on 6/11/2008:
Pimco's McCulley: Government Understating Inflation

Sunday, July 20, 2008

Society's F: Fabrication of A Social Fabric

A couple of disturbing articles provide 'rich' insights into the turmoil underneath the calm waters of a society in trouble.

The WSJ's article, Communities Pay for High Prison Rate, discusses the problems faced by communities in states like Arizona where people are raising their grand-kids and and in some cases great grand-kids because a parent (or parents) are in prison.

The NYT, in its article "Given a Shovel, Americans Dig Deeper Into Debt" presents the case study of one person whose home is in foreclosure and and who is in dire financial straits. It describes the exploitation of her situation by giants like Citi and Capital One, while recognizing that ultimately she was responsible for her actions. Here is some data from this article:

"Today, Americans carry $2.56 trillion in consumer debt, up 22 percent since 2000 alone, according to the Federal Reserve Board. The average household’s credit card debt is $8,565, up almost 15 percent from 2000.College debt has more than doubled since 1995. The average student emerges from college carrying $20,000 in educational debt.Household debt, including mortgages and credit cards, represents 19 percent of household assets, according to the Fed, compared with 13 percent in 1980. Even as this debt was mounting, incomes stagnated for many Americans. As a result, the percentage of disposable income that consumers must set aside to service their debt — a figure that includes monthly credit card payments, car loans, mortgage interest and principal — has risen to 14.5 percent from 11 percent just 15 years ago."

When prudence falls by the way side and citizens want to have the immediate gratification, companies work overtime to exploit this weakness and the government machinery is oiled to help these companies. The underlying social fabric that binds society is not just fraying at the edges, it is becoming like a donut with a huge emptiness in the middle.

Saturday, July 19, 2008

The 'Education' of a Democracy

Sen. McCain is attacking Sen. Obama because the latter has not visited Iraq and Afghanistan until now. Obama's capability to be the 'Commander-in-Chief' is being called into question by McCain and the puppet media.
Had Senator Clinton become the democratic nominee, the Republican machine would have gone all out in trying to convince the American public, men and women, that a woman could not be a commander-in-chief.
Which raises some relevant questions.

  • Why is the minimum age for voting 18 years but the minimum age for drinking alcohol is 21? A vote has much more significance than consumption of alcohol, but the legal structure says that youngsters should wait to turn 21 for alcohol but can vote much earlier.
  • Why is it that the U.S., which declared itself Independent in 1776, has not had a female President or Vice President in its history? Mrs. Indira Gandhi was the Prime Minister of India for many years and defeated Pakistan in the 1971 war and Mrs. Golda Meir was the Prime Minister of Israel and defeated the Arab countries in the 1973 war. Women have proven that they can lead countries during war time and be tougher than the men they faced. Margaret Thatcher was a tough Prime Minister of the U.K. in the eighties. Even 'macho' countries like Nicaragua have had female leaders.
  • Why is the U.S. system designed to make it nearly impossible for a viable third party to emerge?
The fundamental issue, at the end of the day, is the education of citizens in a democracy. Whose responsibility is it to train citizens
  • to be inquisitive,
  • to ask questions
  • to collect data
  • to analyze data
  • to voice their opinions, but be open to challenges
  • to cast their votes
  • to protest irregularities, and so on?
Perhaps citizens should undergo periodic mandatory 'educational' testing prior to obtaining voting privileges, similar in process to obtaining a driver's license.

Friday, July 18, 2008

Stand By Me

The Bush Government and the Fed have clearly signaled that they will stand by their friends in the finance sector, even if their actions shift the enormous burden to an already tired, overworked, flattened but passive and non-protesting tax payer.

The question is- why isn't the public making a big deal out of this? Why aren't there any major protests in the streets? James Grant, the editor of Grant's Interest Rate Observer, writes in the WSJ that Wall Street firms are run to maximize employee compensation by taking on high leverage. He should add that it is not employee compensation but top management compensation, especially those of the CEOs and CFOs.

It is also surprising that while the polls indicate that the public 'gets it' - that the economy is in a tough spot and that jobs are tight- the public apparently does not want to do 'anything' about it. In other countries there would have been protests in the streets.

Perhaps people are so busy trying to make ends meet that they do not have time to protest. This hypothesis does not hold water, given the advance ticket sales for "The Dark Knight." It is time to take the wraps off the Joker in real life.

* 'Stand by Me' - a great movie with River Phoenix and an inspiring song by Ben E. King.

Thursday, July 17, 2008

'Degree's of Education

There is an interesting article in the WSJ today titled "The Declining Value Of Your College Degree." Its basic premise is that the 'college degree" premium has changed little since 2001, and college educated workers, when averaged, made less in 2007 than in 2001, after adjustment for 'official' inflation.

Rather than the value of a college degree declining, the half life of knowledge is shrinking rapidly, especially in technology. I spent years learning and becoming proficient in FORTRAN in the 80s. It is extinct now. I learnt programming in operating systems like VMS and CDC Cyber. All that knowledge is useless now. There are plenty of such examples. In addition, the "newer" areas attract people from all over the world, thus increasing competition.

For most people, including those not blessed with rich or well connected parents, a College degree is a 'necessary but not sufficient' requirement for professional and financial success.

Wednesday, July 16, 2008

Today's Undergrads, Future Grad Students

In response to my blog piece,Guarded, hopefully not misplaced, Optimism, a thoughtful reader 'teaparty' asked the following: "Do you think that graduate students' experience in the workplace contributes to their 'undermotivation'? And that the promising undergrads of today will become the heartburn of 2013, after they have had the opportunity to 'gain valuable realworld experience'?"

This is certainly a valid hypothesis and is part of the reason for my usage of the word 'guarded.'
But broadly speaking, the pool of graduate students (especially in business) can be classified into the following groups:

  • Those who were motivated and learnt well as undergrads, then went to gain 'valuable work experience,' and advanced at work, and came back to school to get the higher degree to move ahead in management in their careers
  • Those who were unmotivated and blew off their undergraduate education, then went to gain 'real world experience,' found that their education was lacking and came back to school with a serious dedication to learning.
  • Those who did not care much for education during their undergraduate years, found themselves in a dead-end job, and then thought that getting a graduate degree can help them change jobs, but have no motivation to learn.
Some of the undergraduates I reference as being in the top 20% are already in the workplace and are doing well. But they are now planning to get their MBAs because they realize that they lack specific skills needed for senior management roles. These students would be in my first group.

In my current graduate courses, I have a few students I would place in the second group. But I would place the majority in the third group because they don't have good foundational skills, are not in exciting jobs, and don't have a desire to learn.

Using systems analysis, one can model these behaviors using feedback loops. Motivation helps learning, which helps performance in the workplace, leading to more motivation and learning- a positive feedback loop.
On the other side, not taking education seriously at a young age can limit progress, which may lead to the desire to get a degree but does not generate the motivation to learn- a negative feedback loop.

In summary, yes, it is possible that 'work experience' can make a difference in motivation, but I think there are intrinsic motivational and learning elements that can be nurtured and developed at the undergraduate level that will persist for a long time...this forms the basis for my dedication to education.

Tuesday, July 15, 2008

Out of Breath with the BnB 1-2 Punch

Today, Dr. Ben 'Helicopter' Bernanke and President Bush both talked about the economy, albeit at different venues.
According to the NYT, "In testimony before the Senate Banking Committee, Mr. Bernanke avoided the word “recession” in characterizing the current economy, noting instead that consumer spending and exports were keeping growth “at a sluggish pace” while the housing sector “continues to weaken.”

He added that spending for personal goods had “advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes.”

While the risks to the overall economy were still “skewed to the downside,” he said, inflation “seems likely to move temporarily higher in the near term.”"

The same article quotes Mr. Bush as saying in a press conference that "“My hope is — is that people take a deep breath and realize that their deposits are protected by our government,” the president said. He added that economic growth “was not the growth we’d like” but expressed confidence that the country would overcome “a time of uncertainty.” The nation’s troubled financial system is "basically sound," he added." When a reporter asked what the short-term advice for Americans was in light of the high gas prices, Bush's main response was "There is no immediate fix. This took us a while to get in this problem; there is no short-term solution. I think it was in the Rose Garden where I issued this brilliant statement: If I had a magic wand -- but the President doesn't have a magic wand. You just can't say, low gas. It took us a while to get here and we need to have a good strategy to get out of it."

While Dr. Ben, along with Hank and Cox, is taking extra-ordinary measures to bail out and lend a helping hand to the financial and quasi-financial institutions with public money, Mr. Bush thinks that people should a deep breath and keep the faith. Perhaps he should add that by singing 'Don't Worry, be Happy" everything would be all right.

Guarded, hopefully not misplaced, Optimism

Mr. Clive Crook, a columnist for the Financial Times, recently wrote a nice article titled "America’s human capital is tested." As I am in the education business, I responded with a letter which the Financial Times graciously printed. In it I expressed guarded optimism based on my experience with recent trends in our undergraduates; however the graduate students give me extreme heartburn and make me seriously concerned. I received a few comments from readers which provided me with more data points.

Just today, I received an email from a freshman in which she sent me an article on word of mouth. She is doing an internship at a Marketing Consulting Firm. I would like my retirement money including social security to depend on motivated students like her, rather than on the 'smart guys' on Wall Street and in Washington DC.

Monday, July 14, 2008

First, Speculators, then the Shorters

Last week the CNBC crowd went on and on about short sellers and how they were ruining the market by spreading rumors. The SEC joined this "mad money" crowd by warning traders about spreading rumors. Prior weeks were focused on speculators and how they were driving up gasoline prices.

Quite a few people have been negative on this market for a few years, because they have figured out that it was coasting on easy credit. While some may initiate or spread rumors, that does not have much of an impact on the market. What does is sentiment, and current sentiment indicates that life is going to get much worse.

People should watch their cash carefully- no one else is doing the watching for them.

Sunday, July 13, 2008

Air Travel Falls to Earth

Air travel has become a miserable experience. Every one of my scheduled flights in the last year was delayed or canceled. The taxes and fees add up to 50% of the base air fare in some cases. The airlines nickel and dime the customers. Nearly all airlines are reducing capacity and removing older planes from service.

Long distance air travel, the premise behind the A-380, is running into headwinds as well.

Airlines Cut Long Flights To Save Fuel Costs

Flying Was Supposed to Be Better This Summer. It's Not

Given that oil prices are expected to stay at elevated levels from here on, airlines can make money on a consistent basis only if
  1. Their salaries and wages comes down significantly, and/or
  2. They raise fares much further, and/or
  3. They fly only a few routes where they can keep high load factors.
Any or all of these changes will make air travel less of a routine convenience and more of a luxury. This contrasts with the growth in air travel in India and in China, where any new airports are being built and more of the middle class is flying.

"The answer, my friend, is blowin' in the wind,
The answer is blowin' in the wind."...........Bob Dylan.

Saturday, July 12, 2008

NEED HONEST LIARS (Label Investigation and Approval Regulatory Services)

On the main page of today's NYT one sees the headlines:
McCain’s Conservative Model? Roosevelt (Theodore)
Obama Supporters on the Far Left Cry Foul

The Chicago Tribune has
Obama sees new shades of blue in Deep South

The use of labels by the media and the public to categorize nearly everything into 'easy to identify' and 'love or hate' binary buckets dulls the intellect, does not encourage questioning and discussion, and does great harm to a democracy. I will analyze the American fascination with labels in a future piece, but here are some common ones:

Liberal or Conservative
Red states or Blue states
Republican or Democrat
With Us or Against Us
Pro-Immigration or Anti-Immigration
Pro-Abortion or Anti-Abortion
Pro-Choice or Pro Life
Left or Right
Pro-business or anti-business

Friday, July 11, 2008

Ben, Bush and Hank's "The Song Remains the Same" - Me no Mea Culpa...

The NYT reports that "Ben S. Bernanke, the Federal Reserve chairman, and Treasury Secretary Henry M. Paulson Jr. told Congress on Thursday that new regulatory powers are needed to insulate the national economy from damage if a big Wall Street firm collapses."

So far, no one- neither President Bush, nor Mr. Paulson nor any of the previous Treasury Secretaries nor any of the CEOs of the home builders, mortgage brokers, or banks nor any of the regulators- has accepted blame or taken responsibility for his or her role in creating the current credit crisis and an ethical crisis. Quite a few people, including myself, had sounded warnings as early as 2004 and 2005 about the crooked practices used to juice up the mortgage market and the basic bet that the government will bail out the risk takers. While this is exactly what has happened, there is no public outcry about the culpability of the leaders. The American public, myself included, sorely needs an education in accountability- or have we progressed to a higher level where we do not want accountability?
Another example:
Charles Prince, the guy who led Citi to its current miseries, under whose reign Citi committed a number of grossly unethical acts, and who was effectively fired from Citi, was elected to Xerox Corporation's Board of Directors. Great Reward for a Job Well Done!

2004 American Jobs Creation Act - Wall Street (Journal) and Main Street

On July 1 the WSJ, run by Rupert Murdoch and his News Corporation, ran an article titled "Corporate Tax Cut Windfall." The authors lavishly praised the 2004 American Jobs Creation Act, and suggested that the dramatic lowering of the corporate tax rate on repatriated earnings was a great success.
I wrote a response to this article, which the WSJ predictably chose not to print. I am putting it up here for interested readers. (I will note that 'double taxation' and whether corporations should be taxed at all are separate issues that are not considered here.)
***
Dear Madam or Sir,

In your Editorial Opinion article titled "Corporate Tax Cut Windfall"
(July 1, 2008) you praise the 2004 American Jobs Creation Act and cite IRS
data that showed 'more than 800 U.S. corporations repatriated $362
billion from foreign operations.' You also claim that these dollars are
now being invested in the U.S., rather than remaining in Europe or China.

To be intellectually honest, you have to first determine how many
incremental American Jobs were created, because that is THE title and the
objective of the Act. Secondly, regarding your claim that these dollars
are being invested in the U.S., you have to first determine how many
investment opportunities were being left on the table by these 800
companies in 2003/2004 because they were short of dollars or capital,
prior to the Act. I am also curious about the methodology used to
differentiate the use of this repatriated money from the use of cash from
operations or from other sources by the companies.

Thursday, July 10, 2008

Schools, not Students, should be 'Booked!'

Being an academician who teaches business and takes ethics seriously, I read with dismay the article "As Textbooks Go 'Custom,' Students Pay" in the WSJ. According to this report some professors are creating "custom" textbooks for their courses. Students cannot buy these books the used book market, and usually cannot sell them after completion of the course. The 'bottom line' is that academic departments get a 'kickback' from the publishers in the form of royalties.

I have used custom books for my graduate courses and for some advanced undergraduate courses, using services like Xanedu or University Readers. For the advanced courses, there is often no appropriate text, and the reading materials I prescribe include chapters from different texts, case studies, journal articles and other material. I don't expect a student to resell this book, so the resale value is irrelevant to me. However, I don't take any royalties or bribes, even if it goes to the department.

Some departments have argued that these royalties from publishers help subsidize other valuable areas. It is precisely this type of argument that guts the development of a sound ethical base in students. And then folks wonder why there is widespread cheating in every sphere of life. The recent story involving GMAT takers and the website Scoretop- GMAC and FBI expose test cheats, should be reminder to all those in academia to practice ethics first and then to enforce them ruthlessly.

Wednesday, July 09, 2008

What a GAS!

GAS = Google, Apple, and Starbucks

I use all these firms as case studies in my courses, as they provide excellent illustrations of classical principles in engineering, operations and marketing.

Google
Personally I am a big fan of Google products. Gmail is amazing at blocking spam- I hardly ever see it in my Inbox. Yahoo Mail, on the other hand, is pitiful. Google Earth, Picasa, Docs, and others are applications that serve user needs very well. While YouTube was not an 'original' Google, it has provided an invaluable platform for the many immigrants living in the U.S. In my case I go there every day to watch songs from Indian movies of my childhood days. Hence my personal gratitude to Google.

When we talk about Google in class we discuss the R&D function and platform developments versus incremental innovations and marketing folks exploiting the 'network' effects. But perhaps the most important part of a discussion on Google revolves around its 'Do No Evil' ethos. I use the LETTER FROM THE FOUNDERS - “AN OWNER’S MANUAL” FOR GOOGLE’S SHAREHOLDERS to initiate discussions on management of expectations and business ethics. It takes a sense of ethics and some guts for managers like Dr. Brin and Mr. Page to say the following:
As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to “make their quarter.” In Warren Buffett’s words, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.”

Recently, Google made news for deciding to raise the fees it charges its employees for day care for their children. It is quite amazing what people expect out of Google, when one considers the fact that more than 45 million people in the U.S. have no health insurance, and the big names in big industries like air travel and automotive are dramatically cutting benefits.


Apple
Apple is synonymous with Steve Jobs. Much has been written about the iPods and the iTunes and the iPhones, and how the 'i' mystique is helping Apple sell more Macs. I remind students that new product development involves placing bets, and even the smart people have dogs to go along with the stars. Apple's Newton and Steve Jobs' NeXT workstation both ended in the trash heap of electronic products. Apple's pricing of iPod is an excellent illustration of skimming the cream and following up with a broader penetration pricing.

Starbucks
As a coffee lover and an avid coffee drinker I enjoy Starbucks coffee regularly. I have witnessed its meteoric rise and its current struggles. I often discuss the positioning of Starbucks relative to its peers in my marketing course. My students and I eventually capture it as "A Luxury You Can Afford." I emphasize that it is not "Affordable Luxury," or luxury that has been watered down to be affordable. Rather, it is a true luxury, but something that a regular Joe or Jane can afford, as opposed to a Ferrari. An article today titled "Starbucks tests free coffee vouchers, discounts across US, but says no value menu in sight" provides more data points from Starbucks' managers.

Tuesday, July 08, 2008

The Alan and Ben Show - Don't Worry, Be Greedy

Tow interesting headlines:

Fed may keep open lifeline to financial firms

Fed Sees Turmoil Persisting Deep Into Next Year


According to the article Mr. Bernanke said that the Fed would issue next week long-awaited rules to restrict new exotic mortgages and high-cost loans for people with weak credit.

Looks like Mr. Alan (Greenspan) and Mr. Ben were on a different planet all these years. ANYONE with a brain knew exactly what was going on- new financial products being 'engineered' and sold, by greedy firms and individuals to greedy firms and individuals. Lack of fiscal responsibility, and wanton ignorance of risk by both creators and buyers was evident to anyone who wanted to observe. The federal institutions and the people charged with oversight chose to sit back and smoke cigars.

Now, after the 'fast and loose' train has derailed and destroyed many a life, Ben seems to have seen the light and wants to craft appropriate regulations. The Alan and Ben Show has certainly been trying - to let the financial companies know that they need not worry as the 'Fed' is on their side....those firms can just continue to be greedy.

UnHealthy Fare for Health Care

* Update*
An interesting story in the WSJ on cancer drugs and how oncologists are having to make tough decisions regarding the use of these drugs which can cost many thousands of dollars per patient.
Pricey Drugs Put Squeeze on Doctors

One of my very good friends went through these treatments for a maligant form of cancer and I have a good understanding of the costs and risks.
The escalating cost of drugs and health care in general, and investors and managers putting larger profits before lives is cancerous- the system would rather stand by and watch than try to prevent death.


Interesting stories on health care including maternity leave/care keep on coming every day. Some are posted below.

More Americans Delay Health Care

In sickness and no wealth: costs hurt the middle class



I will update this list on a periodic basis.

A Hip Story:
A couple of months ago, a young lady came into my office. She was a reseller of books and I wanted to give her some books I had. During our conversation she told me that she was going to Chennai, India, shortly to get a "hip resurfacing." She did not have health insurance in the U.S., and the procedure, if done in India, would cost her 20% of the medical bill in the U.S.. This is including airfare and hotel charges in the Indian medical bill. Finally, she said that Indian doctors were far more experienced in this procedure than U.S. surgeons- the latter do more hip replacements rather than resurfacing.


Monday, July 07, 2008

Hot Air Again..from the President

President Bush, in Japan for the G-8 summit, again insists that China and India have to "share the same aspirations" and goals for the U.S. to act on reducing greenhouse gas emissions. Looks like the Bush Brain is unwilling to absorb the reality that on a per-capita basis, the U.S. far exceeds China and India in contributing to greenhouse gas emissions. Per capita measurement is important because individual lifestyles and habits drive resource consumption and greenhouse gas contributions The industrialized countries have to adopt policies to 'reduce' their contributions while the developing countries have to adopt the right policies and technology to slow down, if not stop the rise in their emissions. If China and India adopted currently available technology in constructing new power plants, other infrastructure, homes, and adopted mass transit they can cut down significantly on the increase in their emissions (based on available data).

Some data on OECD greenhouse gas emissions can be found at
Greenhouse Gas Emissions per Capita - 2003


Too Busy....to State the Priorities?

Recently, I was conversing with a friend about a lag in our communications. She said that she was 'very busy.' This reminded me of a discussion I had a long time ago on this topic with Bob, my manager at the time and a smart person. After a lengthy analysis, we both agreed that since everyone has 24 hours in a day to accomplish his or her tasks, everyone is equally 'busy.' The real question is one of priorities and which task takes precedence over other (lower ranked) tasks. However, it is hard to tell a friend that he or she is 'lower on the priority list.' Another example of human emotion trumping accuracy, something even I have succumbed to.

Sunday, July 06, 2008

"Lobby" is wide open...

One cannot escape the headlines about the current crises facing the United States. Some expect the conditions to get much worse before any recovery takes place.
The Credit Crisis Is Going to Get Worse

While a number of pundits, including Ben Stein, declare that the U.S. will come through the current crises just fine, the more thoughtful amongst us worry not just about the crisis du jour but about the future of 'effective' democracy in our country.

Increasingly the popular vote is becoming meaningless as Money does talk, and Big Money talks Very Loudly.

Recent headlines about lobbying in Washington are depressing. The Housing Industry is spending lots of $ to get Congress to pass a "bail-out bill."
Housing Industry Ramps Up Political Donations.

Se. Mccain is essentially encouraging his party to skirt the very rules that he and his colleagues wrote in the Campaign Finance Reform bill that became law.
McCain Allies Find Finance-Law Holes.

Sen. Barack Obama has announced that he would opt out of the public financing system for the general election and raise his own funds, obviously expecting to raise far more than what the public funding would give him.

This kind of money influencing the elections and candidates will further obligate the elected officials and make them subservient to the corporations and to the wealthy donors. One can this outcome to widen the gap between the richest 5% of the nation and the rest. Unfortunately the 'rest' do not get any rest- they are working harder just to prevent a steep slide in their quality of life.

Senator Barack Obama - Please don't get 'Kerry"d away!

* Update*

Obama Courting Evangelicals Once Loyal to Bush

Obama Backs Expanded Government-Funded Faith Organizations



Sen. Obama practices one of the basic principles of marketing- spread uncertainty...He is trying to thread the needle on the 'abortion issue.' At this rate, he will keep losing his core supporters, because it is better to have a Bush third term with the Republicans than with the Democrats. At least the 'Right' party gets the credit. Obama's abortion answer spurs questions.

* Updated*
Article from the Financial Times, Obama seeks to tackle doubters, describes the Senator's changing positions.

WSJ has a brutal Op-Ed on Obama- Bush's Third Term

Two headlines from the past couple of days involving Sen. Barack Obama:
  1. Obama backs faith in public life and Obama Seeks Bigger Role for Religious Groups
  2. Obama courts conservatives with new faith program
  3. Obama Voters Protest His Switch on Telecom Immunity
Mr. Obama and his staff are doing their calculations and making their bets on how many independent/evangelical votes they stand to gain and how many liberal votes they might lose by these positions. Mr. Obama has been actively cozying up to the religious right/evangelicals by promising government money for "faith-based" activities and supporting the right wing element of the Supreme Court in its recent rulings on guns and capital punishment.

While many people blame the "Swift Boating" by President Bush's cronies for Sen. Kerry's loss in 2004, perhaps an equally important reason was that Mr. Kerry did not offer a clear, conscientious, liberal alternative to the Republicans. In nearly every issue, he came across as Republican-lite, and the public preferred the 'real' deal rather than the 'lite' version.

At a fundamental level, one's principles should guide one's thoughts and then the resulting actions. There is no reason why the telecommunications companies should be granted immunity, and there is absolutely no reason why government should get involved in religion.

While compromise is part of any political process, it should be on specific policies and procedures and not on principles. Mr. Obama risks losing part of his "core" supporters, and as any successful leader knows, one has to build on the Core and attack from strength- not weaken the Core.

Friday, July 04, 2008

Government says, Media relays

One of the reasons for the problems in our democracy is the "Cheerleader Of Washington (the Government)" or COW role played by the Media. The recent manifestation of this behavior is in the reporting of the 'Employment Situation Summary' data released by the Bureau of Labor Statistics. This BLS press release leads off with "Nonfarm payroll employment continued to trend down in June (-62,000), while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and employment services, while health care and mining added jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month." Nowhere does the press release say these these numbers are not 'actual' numbers but are only ESTIMATES. In fact BLS used 177,000 in June (217000 in May) as the number of jobs ESTIMATED to be created using the Birth/Death Model. No one can verify the creation of these jobs. Without these phantom jobs, the number of jobs lost could have been much grimmer.

One can understand the government trying to spin its way out of bad news with obfuscation. Not one of the major media reports-including
New York Times: Outlook Darker as Jobs Are Lost,
BBC: US loses 62,000 jobs during June,
Wall Street Journal: Payrolls Shrank Again in June; Jobless Rate Steady at 5.5%,

and the others used the word 'estimated' in reporting the government released data. The media outlets report the government data as 'gospel.' The average reader or the viewer is left with the impression that 62,000 is the 'actual' number of jobs lost. The true number could be lower or higher, but it is the perception that counts.

This same behavior is displayed by the media in reporting other forms of data released by the government. As usual, a modified version of 'Caveat Emptor' applies- the Information Receiver should be Suspicious (IRS).

Thursday, July 03, 2008

Dollar 'am'Bushed

President Bush, now on the farewell leg of his presidency, proclaimed that "We're strong dollar people in this administration, and have always been for a strong dollar, and believe that the relative strengths of our economy will reflect that" on his trip to Japan for the G-8 meeting.
The only problems, albeit very minor ones, with this statement are as follows:

  1. He has increased the federal debt held by the public from $3.3 trillion in 2001 to $5 trillion plus this year.
  2. He has been putting pressure on countries like China and the Middle East nations to raise the value of their currencies.
  3. He has created the housing bubble as part of the ownership society he has implemented, and his sidekick Fed has lowered rates.
Yep....and he wants a strong dollar.

Wednesday, July 02, 2008

Republicans and Democrats- A One Party System?

I had written this piece while the primaries were going on...........
****************

Back when we were studying history in grade school we often had to answer questions that asked us to “compare and contrast” two different rulers. I thought it might be interesting to apply that technique to the two parties trying to “win” the election this fall. Based on publicly available comments and policy statements issued either by the candidates or by their parties I have developed the following position summaries and have come to the conclusion that the differences between them are more of tactics than of principles. Consequently I have identified a “liberal” stance that perhaps can offer a significantly different alternative to the positions of the two major parties.

Issue

Republican Stance

Hillary and OBama / “Low Carb” Republican Stance, (a.k.a. Democratic Stance)

An alternate view based on principles

Right to “Pre-emptively attack” others

America’s Right, bestowed by God

We agree (with the Republicans)

If we are civilized, we do not attack others, we defend ourselves if attacked

Respecting international law

America does not need to obey international laws; heck we don’t even recognize international laws

We agree

Civilized people and countries do not consciously disobey laws, as they know it results in anarchy

Big Business buying Government

GOD means Government of the Dollar, meant for the Corporations

We agree, but will make a little more noise in protest (see the $$ raised by Democrats from Big Biz)

Public funding ONLY for elections, and ban all forms of private or personal funds

Killing living creatures for fun or for sport

GOD told us to hunt- never mind our “pro-life” slogan

We agree, we just don’t think you need an ICBM for hunting

In civilized societies people are actually “pro-life”- all forms of life

Corporate taxes

Corporate taxation is SIN. We would like to eliminate it, but until such a time comes, we will keep reducing it

Cut corporate tax rate by another 5%

Tax corporate income at the highest (individual) tax rate, then make distribution of after-tax corporate income to shareholders free of taxes.

Income tax

Eliminate income tax; if absolutely necessary we can impose a national sales tax

Cut taxes for all but the top 2% of tax payers; eliminate Bus tax cuts for the top 2%- note that the top 2% pay no more than they did (as a %) prior to GWB’s reign

Taxes should be seen as a contribution made by society to help those in need, not as an “incentive.”

Health Care

Medicare Prescription Drug Benefit Plan to benefit pharmaceutical companies; Medical Liability Reform to benefit doctors and insurance companies

Promise cut in premiums and expanded coverage without explaining how to pay for it; import drugs from Canada while ignoring the true drivers behind high drug prices

The fundamental question is- how much profit should a civilized person/society make from a fellow human being’s suffering?

Education

“No Child Left Behind”

Fund “No Child Left Behind”

Have to ‘reverse’ the following pay scales that are in existence currently:

Median cash pay for Fortune 500 CEOs-- base salary and bonus -- $2,029,500

President’s salary: $400,000

Congressperson’s salary: $158,100

Average Salary for teachers: 45,771

Separation between Religion and State

Church IS State

We believe in religion, but we try to separate government from it

Government policies and actions should be based on objective analysis, not “beliefs”

Energy

We are GOP- “GAS, OIL, and POLLUTION” party

Invest towards reducing oil dependency

Develop and encourage mass transportation, focus on renewable energy sources, and simultaneously hike taxes on gasoline

Environment

Business knows what to do with the environment

Put more funding into enforcement of environmental laws; protect parks

Environmental protection should be funded seriously as a prevention method for short and longer term human health and other benefits.

Corporate control of media, government influence over media

Uh!

Uh!

Public funding of fair media, and mandatory education for all adults


The democratic party policies differ significantly from those of the GOP primarily on the energy and the environmental issues while they are disturbingly similar on issues of security, defense, corporate funded elections, religion and health care. Given the close resemblance between the two parties, we have little to complain about the one party communist system in China and in other such countries.