Razors $54, Telephones $16

Who would have thought that Gillette would have sold for so much more than AT&T? About four times as much? And to have the ignominy of being bought by your child, SBC! O miseria.

The Human Spirit is Indomitable

No matter what your view of the US invasion of Iraq, you have to admire the courage of the Iraqi people. I doubt that many of us would have voted in the circumstances the Iraqis did.

By the same token the Ukrainians have also to be commended. Their demands of the existing government also took an extraordinary amount of courage.

Wishing will not make it so

"The U.S. current-account deficit is a problem for the whole world,"said Jacob A. Frenkel, an economist and former governor of the Bank of Israel, at the start of the Davos conference. "I don't see the budget deficit being taken seriously."

The question can be expanded to whether we are taking our economic condition seriously. In 2005 the hot topics are our deficit and the sinking dollar, yet the Bush administration sent no one to Davos this year; in prior years they’ve sent Cheney and Powell.

Wishing and talking are no substitute for economic policy and action.

Even George Agrees

"But all our Cabinet secretaries must realize that we will not be paying, you know, commentators to advance our agenda. Our agenda ought to be able to stand on its own two feet," Bush said today.

Who's Next?

Today’s Washington Post reports that another columnist was paid by the federal government to promote the administration’s agenda. Maggie Gallagher, another columnist of whom I’ve never heard, was paid $21,500 by the Department of Health and Human Services to promote the marriage initiative as a way of strengthening families. While she did earn her pay and plumped for this cause in her writings and TV appearances, she never mentioned the fact that she was being compensated by the US of A.

I don’t know what is worse: her not mentioning being a hired gun or the government hiring a gun. I suspect the latter.

Is this the effect of the blizzard?

Maybe it was the blizzard and being cooped up in my house for a couple of days, but, strangely, Monday’s Wall Street Journal ran an op-ed with which I actually agreed. Mark Helprin, who is quite conservative, wrote about “Our Blindness”. He inveighed against:

• The administration’s belief in nation building. We don’t have anywhere near the number of troops in Iraq and that country was not completely whipped as were Germany and Japan in WWII.
• The very, very slow start of Homeland Security.
• The lack of any policy for dealing with the rise of China as a world power.

Sounds like three rather important issues for us to consider.

He also raises the question of why we assume that a democracy is incapable of supporting terrorism and he points out that we are forcing our naval strength to its lowest level since the 1930s. Hmm!

Meet Your Partner

Did you know that you are a partner in Wal-Mart? That is, if you’re a taxpayer. The House Committee on Education and the Workforce in a February 2004 report, Everyday Low Wages, estimated that a Wal-Mart employing 200 cost federal taxpayers $420,000 a year, or $2,103 per employee. This is due largely to the need for many Wal-Mart employees for federal welfare of some sort. Even though they are employed, they still qualify for such federal assistance as children’s health care, tax credits and deductions for low-income families and housing assistance.

You can extrapolate this to a subsidy of $2 ½ billion each year. And this doesn’t count the state benefits available to low-income families, e.g., in California Wal-Mart employees got $20 ½ million in medical care paid by the state in 2003.

I wouldn’t mind having a business where someone else paid a nice share of my employee costs. Would you?

A Real Massachusetts Winter Storm

The question is what was worse: the last real blizzard of the 20^th century (1978) or the first real blizzard of the 21^st century (today).

The 1978 blizzard caused the state of Massachusetts to be closed for about a week. There was no driving, no mail, no activity. It was a chance to meet your neighbors either shoveling, walking or at an impromptu potluck dinner. The storm was a sneak one. It had not been forecast so there were no preparations or warnings, hence the nasty aftermath. With the 2005 blizzard we’ve had ample warning and most people are prepared. Hopefully, reasonably normal activity will resume in a day or two. But, this storm is worse because of the wind. With gusts of 60mph or higher it feels at times as though the Vineyard will be blown away.

Inauguration Speech

Brezinski had it right: Bush’s inauguration address was a sermon. It’s full of generalities and nice sounding ideas, but in many cases the reality is quite different.

Our allies can know: ”we honor your friendship, we rely on your counsel and we depend on your help.” Somehow, I don’t recall this happening with regards to Iraq.

“America will not impose our own style of governing on the unwilling.” How many of the Iraqis want a democratic government?

“We will encourage reform in other governments by making clear that success in our relations will require the decent treatment of their own people.” Tell that to the Saudis.

“we will bring the highest standards to our school” It would be nice if enough money accompanied this effort.

And, of course, there was no mention of the economic difficulties we find ourselves in.

A typical inauguration speech.

Strategy or Stupidity?

Bush appears to be following the same path with Social Security as he did with Iraq: define a problem as an immediate crisis, try to solve the crisis on the cheap, don’t consider alternatives and pay no attention to any opposing views. Consider

Iraq

The problem: Everyone acknowledged that Saddam was a bad guy.
The crisis: He was about to unleash weapons of mass destruction.

The military solution: According to our senior military man we would need hundreds of thousands of troops to win the war and control the aftermath.
The cheap solution: Let’s fire the senior military man and get someone in there who thinks the war can be won with far fewer troops. Post-war? Who cares? They’ll just love us to death.

The alternative: Let the weapons inspectors do their job.
The Bush response: The weapons will be here soon.

Opposing views: Most of our Western allies whom we led in the Cold War.
The Bush view: I am right and have God on my side.

Social Security

The problem: When my kids start to retire there won’t be enough money for their full social security benefit if things go on as they are and if the projections are on target.
The crisis: The system is virtually bankrupt.

The rational solution: Collect more money today and, maybe, reduce benefits tomorrow.
The Bush solution: Float another couple of trillion dollars of debt. If I time it right, the shit won’t hit the fan until I’m out of here.

The alternative: Eliminate the salary cap on FICA.
The Bush alternative: Taxes are evil. I love debt. Especially, when I’ll probably be gone when the bill starts coming due.

Opposing views: Most rational people, the same kind of people that solved the real crisis of the ‘70s.
The Bush view: It’s my way or the highway.

Am I Just A Nostalgic Old Fool?

What in God’s name is happening with this country? Today’s Wall Street Journal reports on the efforts of partisan political groups on both right and left to indoctrinate our youth. And, by youth, I’m talking about kids as young as 5 or 6. Was it Hitler who said something about the virtues of being able to indoctrinate kids? Where are the parents in all of this? This being:

• The Liberty Counsel whose spokesman says, “The entire cultural battle is over the children.”
• Jerry Falwell who sends e-mails to hundreds of thousands of students every week.
• Turn Your Back which is using kids to protest this week’s inauguration.
• The ACLU activism kits that show children how to lobby legislators.
• A book entitled “Help! Mom! There Are Liberals Under My Bed”.
• A 10 year old who says, “If you listen to liberals, they take away your dreams and hopes for the future.”
• A book entitled “No, George, No!” which points up Bush’s errors using cartoons.
• The Democratic National Committee’s “Kids for Kerry” program.
• On Halloween, kids bypassing houses that had Bush campaign signs.

Why do we have such a need to make our kids into adults? We seem to be going back to the early days of the Industrial Revolution where kids slaved in factories.

If we, as a nation, don’t lighten up soon and practice some of the virtues that made this country great, I fear for all of us.

SSA Article in Yesterday's NY Times

The article reinforced my view that there is a problem, not a crisis. However, if we do nothing now, there will certainly be a crisis within our kids’ lifetimes. Here are some interesting points.

We forget about the time span that is being talked about. We can’t be certain of next month’s economic numbers. How can we be so certain of what will happen 50 – 75 years from now. Remember the projections are based on many things, some of which are not economic: aging, medicine, immigration. The crisis of the late ‘70s came about because of faulty assumptions.

Without Social Security 48% of the recipients would be below the poverty level.

There have been 11 years since 1970 in which the SSA has run a deficit. In each year, they redeemed the trust fund bonds with no problem.

Private accounts, if implemented on an individual basis, will require a change in behavior of a heck of a lot of us. Studies of 401k participation indicate that many of those eligible do not participate and those that do often fail to match the maximum employer contribution.

It's good that Bush has made SOCIAL Security a major issue

No, we are not in crisis mode, but it is a problem that must be addressed. If we don't address it now, it will only get worse, much worse.

Today, I'd like to talk about four parts of this issue.

1. Social Security is not the primary problem.
The real issue is our overall economic health today and in the future.
a) The record deficits we are running both in trade and fiscally do not bode well for the future. We cannot keep racking up the debt. Sooner or later it will catch up to us. Retaining Bush's tax cuts do not reduce the deficit; they exacerbate it.
b) We are in a new economic world. Our hegemony is being threatened by at least two upcoming economic powers - China and India. We have yet to figure out what to do. Yes, we were able to overcome the funk caused by the rise of Japan in the '80s, thanks largely to their imploding. Will China and India implode?
c) Nothing is being said, let alone done, about Medicare where the deficits will triple those of Social Security.

2. Risk analysis does not seem to exist in our government.
a) I am in favor of private accounts to a degree. However, while, in the long run, investing in the markets may have paid off (at least for those with hindsight), how would you have liked to be entering your retirement in October 1929 when, if Social Security and private accounts existed, the market went to hell? In the long run we'll all be dead. The question is how do I survive and prosper in the short run of my life. What are the risks involved from various actions?
b) Ownership is a risk. Some owners prosper, some don't. The implication in all this talk about private accounts is that everybody will prosper. I'm not willing to bet on that. Are you?
c) The citizens of some countries have done reasonably well with private accounts. Some have not. For example, the British Pension Commission concluded that 75% of those having private accounts will not have enough to provide "adequate pensions". We need more information about the experiences of other countries. Isn't that one way of measuring risk?
d) Whether or not we come down on the side of private accounts, it is absolutely nuts to take on much, much more debt to convert to private accounts now. I think the risks of so doing are crystal clear. We can't have our cake and eat it too.

3. Does not government have a responsibility to its citizens?
It was not called SOCIAL SECURITY for nothing. Before Social Security many of our elderly lived in abject poverty. Now, no one is becoming rich on their monthly check. But, it is something. And, it is a something that means that many of our elderly don't have to suffer from the ravages of poverty.
Unfortunately, Social Security will become more important in the future as fewer and fewer companies provide the generous retirement benefits of yore.

4. Of course, I have the answers.
a) Remove the cap on salaries subject to the Social Security tax. There is no cap on Medicare. Why Social Security?
b) Index benefits to prices, not wages. (Of course, for new retirees. Not me.)
c) Modify the income tax so that the wealthy pay a high rate on their Social Security benefits.
d) Repeal the Bush tax cuts.

James Fallows Does It Again

His article, Success Without Victory, in the current Atlantic Monthly posits a “containment” strategy for the Terrorist War of the 21^st century. He has three basic points.

1. “Less talk about terrorism in general and more about the few real dangers”

When I drive to the Post Office every afternoon, I run the risk of getting involved in an auto accident. Do I think about the risk? No. I know that one day I will die. Do I spend a lot of time talking about it? No. Is the risk of my being murdered here on Martha’s Vineyard greater than the risk of a young kid being murdered in a city slum? No. Do I really think that a Homeland Security rating of red means that I should do something here on Martha’s Vineyard? No. Like every human being, I evaluate risks constantly and act upon my evaluation. Does our government?

If I were driving in freezing rain at night and had no lights, would I worry that my risk of getting into an accident had increased? Yes. If I developed pancreatic cancer, would I worry and probably talk a lot about it (at least initially)? Yes. Would I be more careful walking down a city street in a slum area than I am walking down Main Street in Vineyard Haven? Yes. Like every human being, I would try to protect myself if I felt that the risk of being injured or killed were high. Does our government?

Do more people travel by plane every day than travel by car, or subway, or train? No. Why, then, has the government assumed that terrorists are more likely to attack airplanes than subways? 80% of the Transportation Security Administration’s budget goes to airport screening. 20% goes to every place else where people and goods move. We are spending 80% of our money on 20% of the mobile population, assuming that airline passengers are somehow more important or more vulnerable than all other passengers.

Is it more likely that Casper, Wyoming, or New York City will be the subject of a terrorist attack? Most people would answer “New York City”. Yet, because Congress has mandated that 40% of the Homeland Security money must be divided equally among the states, Wyoming gets $35.50 per capita from Homeland Security, New York gets $5.10. Some places are more dangerous than others; we should allocate our limited funds with regard to the risk and the likely cost of an attack.

2. Know Your Enemy

Know the competition is almost the first rule of business, or sports or almost any of man’s endeavors where competition is involved. We like to talk about freedom and democracy, but the opposition seems more interested in justice.

Fallows uses the Strategic Communications report by the Defense Science Board (DSB) and reports by other think tanks to emphasize that more than guns are needed in the War on Terror. To quote from the DSB report:

“the United States is engaged in a generational and global struggle about ideas, not a war between the West and Islam.”

“Muslims do not “hate our freedom”, but, rather, they hate our policies.”

“Policies will not succeed unless they are communicated to global and domestic audiences in ways that are credible and allow them to make informed, independent judgments.”

“The focus is more on capturing and killing terrorists than attitudinal, political and economic forces that are the underlying source of threats and opportunities in national security.”

“Islam’s crisis must be understood as a contest of ideas and engaged accordingly.”

3. Control Nuclear Weapons

It takes just one nuclear weapon from the Soviet arsenal to do a number on us. There are 30,000 of these weapons still around and they are not exactly under lock and key, although it’s been thirteen years since the demise of the Soviet Union. Clinton spent a little money trying to put these weapons under lock and key; Bush is spending less. Of our $500 billion dollar military budget, about .2% (that’s two-tenths of a percent) is devoted to getting control of something that could very easily destroy the world, let alone give terrorists the capacity to wreak awesome damage to their enemies. Yet, estimates are that $30 billion dollars (or what we spend in six months in Iraq) could give us and the world the right lock and key. Would that be a good investment for a future world?

We managed to ‘contain’ the Soviets for decades without the world blowing up. It seems that Fallows has laid down the outline of a strategy to contain the 21^st century enemies of civilization.

The Dumbest Lawyer in America?

Charles Graner is on trial for his role in the Abu Ghraib scandal. In his opening statement, Graner's lawyer, Guy Womack said, "Don’t cheerleaders all over America form pyramids six to eight times a year? Is that torture?’’

How's that for a sound argument that might get your client off? I hope Graner is not paying this guy. But, maybe his strategy is to appeal his convinction because of the poor representation of his lawyer.

I just can't believe this

This is truly unbelievable and shows my naivete. But, USA Today reports that the US Department of Education paid $240,000 to a columnist and TV talking head, Armstrong Williams, to promote the No Child Left Behind Act. This was part of a million dollar deal with the Ketchum PR firm. A million dollars to promote a government law!

And this is not the first time our government has hired PR firms to push an issue. They did it with the Medicare prescription drug plan also.

What have we come to?

The Social Service Agency of the 21st Century

Is the world changing faster than I thought? Or, am I older than I thought? Today’s topic is the role of the schools in our society at the start of the 21^st century.

I was talking with the principal of one of the local grammar schools trying to find out the reasons for the significant growth in school staff over the past ten years. For example, one school has just about doubled its staff in that time period while the student population has declined somewhat. She attributed it to the rise of the schools as a social service agency.

Since I haven’t had kids in grammar school since 1992 (way back in the 20^th century), I was intrigued by her response and asked her to explain it further. First of all, there is the rise of mandated special education (SPED in the world of education). Our school system spends about 25% of its budget on SPED. SPED education can range from sending someone to a residential school (at $100,000 a year) to a kid spending a half-hour a week meeting with a counselor. Some students get one-on-one training each and every day; a classroom might have a teacher, a teacher’s assistant and one or more people helping SPED students. SPED students usually have an individualized education program (IEP). And some parents take along their lawyer when they meet with the school staff to discuss their child’s IEP. Clearly, all of this SPED activity clearly falls under the social service agency banner.

But, there is more to it than special education. Many households have two working parents who have decided that they need to work two jobs more than they need to fully parent their kids. So, they depend on the schools to provide a lot of the informal stuff – particularly socialization skills - our parents did in raising us.

A glance at a magazine on the principal’s desk convinced me that she was right; schools are expected to be more of a social service agency than when I or my kids went to school. Then, we and our parents were expected to solve our problems; the school was there to educate children. The magazine was published by an outfit called the Bureau of At-Risk Youth. The fact that someone saw an economic opportunity in “at risk youth” was the clincher; there had to be some truth in what the principal said.

Naturally, when I got home, I looked up this organization on the web and found out that it is part of something called Guidance Channel which offers 5000!! items for people dealing with at risk youth. And, they are not alone. Google returns 970 answers in a search for “at risk resources”. Entering “at risk children” I got 297,000 answers.

Here are some of the topics on web sites concerned with “at risk students’:
Assessment, Child Abuse & Neglect, Delinquency & Violence, Depression, Disorders, Eating Disorders, Family Issues, Grief & Loss, Poverty / Homelessness, STDs & AIDS, School Drop-outs, School Dropout, Substance Abuse, Suicide, Teen Parents, Positive Parenting, Alcohol/Drug/Violence, Mental Health And Wellness, Preteen Guidance For Ages 8 - 13, Self - Expression Journals Ages 5 - 10, Coping, Parenting Special Children, Parental Guidance, Parenting Difficult Adolescents.

Sure sounds like social services to me.

Then there was one site, http://www.youthchg.com/, that offered “live on-line help”. You could solve the following now: apathy, bad behavior, violence, school failure and more. Or, you could learn all about interventions (elementary and secondary interventions, all-time favorite interventions). Or, subscribe to newsletters on ADD, apathy “& more”. Or, get the best answers for the worst problems.

We’ve certainly come a long way from the days of Sr. Agatha, who could straighten out most of us by a simple glance and an implied threat to tell our parents.

But, the real question is: are we better off? Is this generation going to be less troubled than previous generations? Contribute more to the world? Be a peaceful generation?

Not Invented Here

You can’t say that China has not become very outward looking. Each year it send thousands – yep, thousands – of mid- and high-level government officials to study governance abroad. Most of them go to the West: France, Canada, Japan, Singapore, Australia and the US of A. Here, they attend programs at Harvard, Syracuse, Maryland and Rutgers today and there will be more tomorrow. In fact, short training programs for Chinese government officials is now one of the hottest segments of the education market.

More Alphabet Soup That Will Be Tough To Digest - PBGC

Here’s another upcoming problem as the economic world shifts: the Pension Benefit Guaranty Corp (PBGC). PBGC is a federal government entity that pays the pension for companies that have gone bankrupt leaving their employees with little, if anything, from their defined benefit pension plan. Last year it ran a deficit of $23.3 billion, double the deficit of the previous year. And, with this week’s decision by a judge in Virginia allowing US Air to turn over three of its pension plans to the PBGC, it doesn’t look as though things will be getting better soon.

One of the reasons for the difficulty is that many of these pension funds were not fully, or even close to fully, funded. For example, US Air claimed the pension plan for its pilots was 94% funded; the PBGC and the courts found it was only 33% funded. What this means is that you and I and the rest of the US taxpayers wind up paying most of the pilots’ pensions. The pilots lived up to their deal with US Air. Why should we have to pay because US Air did not live up to its side of the bargain? Why was US Air able to get away with claiming the pension was 94% funded? Shouldn’t the CEO and CFO be held accountable?

Sometimes taxes are necessary

So, it seems as though there are two legs to the Bush Administration’s Social Security reform program:

• allow people to put social security tax money into private accounts and
• index future Social Security benefits to prices rather than wages as is done now.

There should be at least a third leg: remove the cap on the amount of salary which is taxed for Social Security purposes.

And, of course, repealing the Bush tax cuts would go far in addressing our current and up-coming financial problems.

Still more of the same

Here is some recent economic activity by China as reported in today’s Wall Street Journal:

• Eyeing Unocal, the ninth largest US oil company.
• In talks to buy Noranda, the world’s third largest zinc and ninth largest copper producer.
• Could become a minority investor in a new Russian oil company.
• Will soon start exploration activity in Africa.
• Runs a major drilling operation in Sudan.
• Is the largest foreign direct investor in Latin America.
• Accounts for more than half the increase in world oil demand for the past two years.
  

Yesterday’s Journal talked about a proposed oil partnership between Saudi Arabia and India.

Do you get the feeling that there is a lot going on in the so-called less developed countries and the US is totally out of the picture except as a potential acquired company?

Arnold doesn't like Gerry

In his State of the State speech yesterday Gov. Schwarzenegger really stirred up the legislators by proposing the establishment of an independent panel to control the redistricting process. The legislators like gerrymandering as it increases their chances of remaining legislators. Whether it's good for the people of the state is another matter.

If California does change its method resditricting, how long will it take more states to follow? Back when I was a young man and California was in its prime, there were a number of issues that first became law there, Proposition 2 1/2 being one of the more famous.

Damned if you do. Damned if you don't

I think I’m getting too cynical with regard to President Bush. I’m even questioning two of his actions vis a vis the tsunami disaster: his appointment of his father as co-head of one of the relief efforts and Jeb Bush’s trip to Indonesia at our expense. The President is damned if he does and damned if he doesn’t.

It was a good move to appoint ex-Presidents, his father and Clinton, as co-heads. What other Republican ex-President could he have appointed? Ford is probably too feeble.

It is less obvious to me that there are not deeper political implications in sending his brother to Indonesia. True, Jeb was governor through three hurricanes this Fall. But, is this good training for really helping in a disaster of the scope of the tsunami? I guess running the relief operation for parts of a state of one of the most advanced nations on earth does give you some experience. But how transferable is it to the relief efforts in several under-developed nations? I really don’t have a firm opinion, but I have my doubts.

Weird Headlines of 2004

A commentary on mankind from Reuter's:

Click here

Another emerging economies note

Two interesting items from today’s Wall Street Journal:

• India’s manufacturing sector grew faster than its services sector in the last quarter and we all know how well the services sector (fueled by outsourcing of US software work) has grown over the past few years.

• Chinese automobiles will be imported into the US starting in 2007. The importer is Malcolm Bricklin, who introduced one failure (Yugo) and one success (Subaru) into the US car market. Who knows what will happen with this one? Bricklin says the cars will be 30% cheaper than comparable ones and he’ll be offering a 10 year, 100,000 mile warranty, which could be perceived negatively as much as positively. He has been able to convince Allen & Co. to act as his financial adviser; they’ve had a fair amount of success with Asian companies.

It’s just another sign that we have to improve our act in reality, not simply in words.

A Quote to Start the New Year

From “America the Vulnerable: How Our Government Is Failing To Protect Us From Terrorism” by Stephen Flynn

“The secretive, top-down, us-versus-them culture that is pervasive in government security circles must give way to more inclusive processes.... Rather than working assiduously to keep the details of terrorism and our vulnerabilities out of the public domain, the federal government should adopt a new imperative that recognizes that Americans have to be far better informed about the dangers that they face.... How much security is enough? We have done enough when the American people can conclude that a future attack on US soil will be an exceptional event that does not require wholesale changes to how we go about our lives.... We must continue to remind the world that it is not military might that is the source of our strength but our belief that mankind can govern itself in such a way as to secure the blessings of liberty.” (My emphasis)

A New Year

Here on this small island the weather on this first day of our new year is wonderful. Despite it being our eleventh day of winter, the temperature is 50 degrees and the sun is shining. So, the year is starting out well for us on our little island at least as far as the weather is concerned. Let’s hope it’s a precursor of a better year for all of us on our little planet.

It can be a better year for our little planet if, in the words I heard so often in my Catholic grammar school, each of us “lights one candle rather than curse the darkness”. I seem to be recalling these words more often of late. Looking back on 2004, I see so much cursing of the darkness rather than trying to do something about it.

When I was in the business world, I was often struck by the number of people I met who were not exercising their potential. Some had not been given a chance. Most had simply either not realized the depth of their talents or lacked the confidence needed to display their talents.

In a world that is in deep trouble we need all the talent we can get.