Wednesday, August 31, 2005

Up and Up

The Institute for Policy Studies, a progressive think tank that quotes IF Stone on its home page, has been reviewing CEO compensation for about a dozen years. Their data comes from Business Week and the proxy statements of about 400 large public companies. So, while I'm sure they've read the numbers using their progressive bent, the basis of their reports is essentially sound.

They report that in 2004 the ratio of the compensation of their average CEO to the average worker was 431:1. In 2001 the ratio was 301:1. Do you really think CEOs are worth that much?

At our conversation group this week, a Bear Stearns stockholder reported that the top five executives of the company received dividends of about $115,000,000; the rest of the shareholders received $85,000,000. Sound reasonable to you?

At least he didn't dress up as a pilot

Yesterday, President Bush spoke to sailors in California on the occasion of the sixtieth anniversary of the end of World War II. He tried to make the case that the war in Iraq is much like World War II. In doing so, he misread history. Let me count the ways.

“Once again, war came to our shores with a surprise attack that killed thousands in cold blood.” True, in 2001 and 1941 our shores were attacked without warning and many good people died and were injured. However, it was a sovereign nation that attacked us in 1941, not a bunch of madmen. Iraq did not attack us, we attacked Iraq. We entered WWII the very next day after an act of Congress. We did not wait more than eighteen months to attack Japan.

Roosevelt did not go to war to promote democracy. He went to war to defend democracy.

“And he (Roosevelt) called on Americans to defend that liberty” True, and he also called on all Americans not to go shopping (as did Bush) but to sacrifice at home as well as in war.

We did not ride roughshod over our Allies and act unilaterally. It was the Allies that were at war with the Axis, not a coalition of the willing.

There was a post-war plan.

Also, he has a problem with today’s reality when he says “We’re putting the terrorists on the run all across the world.” My reading says that Iraq is the biggest advertisement for terrorists that one could imagine. Despite our killing terrorists every day, their number does not diminish.

Isn’t there a saying to the effect that “patriotism is the last refuge of scoundrels”?




Fukuyama Weighs In Again!

And it's not on the neocon side. From today's NY Times .

Tuesday, August 30, 2005

Better Off?

The Census Bureau reported some news today that should give pause to those who claim we are in a strong economy.

The poverty rate continues to climb. In 2001 it was 11.7%, in 2004 12.7%. That translates to 37,000,000 people living in poverty in this rich country. In New York City 20.3% of the population live in poverty.

The number without medical insurance rose from 45 million to 45.8 million in 2004.

The median household income was unchanged between 2003 and 2004 - $44,389.

Are we better off now than four years ago?

Monday, August 29, 2005

The Cost of Saving Souls

The UN envoy on fighting AIDS in Africa has accused the Ugandan government of cutting back on their condom program in favor of more emphasis on abstinence, as the US government would prefer. The envoy, Stephen Lewis, says that the supply of condoms is low; the Ugandan Health Minister disputes that charge. Lewis also said that the price of condoms has tripled over the past few months. I suspect that the laws of supply and demand work in Uganda as they do elsewhere and confirm the low supply.

Isn't our government's concern with people's souls - and allocating money based on a country's acceptance of a policy of abstinence - a violation of the Constitution?

Even Elephants!

Those who know me personally know that I have an abiding interest in prostheses for the leg. So, excuse me if I tell you that an elephant has been using a temporary prosthesis for almost two months now.

The elephant, Motala, lost a foot and the bottom part of a leg when it stepped on a land mine in 1999. The operations done at that time left one leg shorter than the rest and walking was somewhat difficult. I guess those who take care of Motala were impressed with the progress made in prostheses for human legs and decided to try to help the elephant.

Motala is 44. At that age it's not easy to adapt to a prosthesis for humans. So, in some ways this is another medical miracle. Read about it here.

The Mainframe Is Not Dead - Part 2

When I was working, I read several trade journals in the belief that I'd get a more complete picture of what was happening in the software business. A friend of mine recently confirmed the wisdom of this approach.

Last week I used a Boston Globe column by Hiawatha Bray to comment on the declining supply of mainframe programmers. Had I looked at other articles, I would have seen that IBM and Share are trying to do something about the problem. For one, they are acknowledging the problem, which is the first step in resolving it. IBM has convinced 150 colleges to offer mainframe courses. IBM and Share are helping to recruit young people to the mainframe world. And IBM is even sponsoring a mainframe blog.

Sunday, August 28, 2005

Foreign Affairs Does It Again?

In the Summer of 1947 "Foreign Affairs” published an article that profoundly changed our views of how to act towards Russia. It’s possible that in the Summer of 2005 they have published an article that will profoundly change our views of how to act in Iraq. The 1947 article, of course, was the proposal of the containment policy by George Kennan. The 2005 article is entitled “How to Win in Iraq” and is written by Andrew Krepinevich, Jr., a retired Army officer and author of “The Army and Vietnam.”

Krepinevich argues that we have no strategy in Iraq, neither for defeating the insurgency nor for achieving our larger objectives. This comes as no surprise. He feels that Bush describes a withdrawal plan not a strategy when he says, “Our strategy can be summed up this way: as the Iraqis stand up, we will stand down.” Nor does the author feel that a speedy withdrawal is much of a strategy either. As has been said before, withdrawing now will only makes things worse for us, for the region and for most Iraqis.

Krepinevich proposes an “oil-spot strategy”. You defeat the insurgents not by killing them, but by making the regular Iraqis secure and able to lead a fairly normal life. That is, the cliche “winning hearts and minds” is, in fact, mandatory to defeat the insurgents. His ‘oil-spot’ idea is to focus on building up areas where the people can feel safe and can live fairly normally. Once those goals have been achieved for an area(s) you can expand the area, just as an oil spot starts small and seeps to cover a large area.

Krepinevich acknowledges that the strategy is risky, costly and requires us to be in Iraq for a long time. But it is a strategy that has worked in Malaysia and the Philippines. He feels that it is a clear strategy that should be presented to the American people, who can decide whether the costs of implementing the are ones they want to bear. His confidence in this country’s people echoes Senator Biden’s.

Let’s look at more of what Krepinevich has to say.

The Face of the Insurgency
In Krepinevich’s view the insurgency has three causes: the lack of any post-war planning by Rumsfeld and company; Iraq’s tradition of government being the prize of those who wrest power by violence; the jihad caused by our invasion of Iraq.

Since the insurgents cannot beat us militarily, their goal is to promote disorder and prevent the establishment of a legitimate Iraqi government. Their arguments are simple. if the leaders of the nascent government can be killed and captured, how can the average Ali feel safe? And, they also rely on Reagan’s question, “Are you better off today than four years ago?”.

There are some things with regard to the insurgency that are working in our favor, according to Krepinevich. The insurgents are fairly isolated from the people; Sunnis comprise the majority of the insurgents, but are only 20% of the population. And, they have no positive message to inspire the people’s support.

Centers of Gravity
Krepinevich recognizes that we have to “win the hearts and minds” of three different constituencies: the Iraqis, the American public and the American soldier. Essentially, all three groups must believe that the war is worth the sacrifice and progress is being made. It’s very difficult to really make the case if we don’t have real control of an area. And, our current modus vivendi does not give us that control.

The way we are operating now emphasizes killing the enemy while minimizing American casualties. He feels that we should emphasize the security of the Iraqis. Our various ‘operations’ have little lasting effect; once we leave, things essentially return to what was happening before we attacked. We’re focusing on the number of Iraqis trained, rather than how well they are trained.

The big problem in combating insurgencies is obtaining good intelligence about the insurgents. Unless the Iraqis feel that defeat of the insurgents is in their interests and they are living a reasonably normal life, it’s unlikely that they will give us the intelligence they have and we need.

History Lessons
Today, life in fourteen of Iraq’s eighteen provinces is reasonably normal and secure as these provinces are controlled by coalition troops or local militia, such as the Pesh Merga. It is in these provinces that the ‘oil-spot’ should begin. And, it can begin, by making the Iraq army stronger through training, embedding our soldiers in Iraq units and providing quick-reaction troops to aid the Iraqis.

The quick rotating of officers and generals must stop. This was needs the most capable leaders we have. It is a serious mistake to bring experienced, highly capable officers back to sit at a desk in Washington when they could be leading troops in Iraq.

The Grand Bargain
You defeat the insurgency only if the political and the military are interrelated. Politically, we should strive to win over ‘a substantial portion’ of each of the Iraq major groups, Sunni, Shia, Kurd, so that we would have the critical mass necessary to support a democratic and unified Iraq. But, in order to do so, we need to understand Iraqi tribal politics, which is almost always in flux.

Better Metrics
An axiom of my managerial canon is “You can’t manage if you don’t measure.” So, I was pleased to see this topic.

Krepinevich proposes some interesting metrics: the number of assassinated government officials (can the government protect its own), the number of insurgent leaders killed (which would discourage recruits), battles which we initiate (meaning we’re getting good intelligence from Iraqis), the price paid by the insurgents to someone willing to bomb his fellow Iraqis (the higher the price, the fewer supporters).

Will our leaders listen?

Interesting

Daniel Dennett, who teaches philosophy at Tufts, suggest in today's NY Times that the Discovery Institute, the large backer of intelligent design, publish a peer-reviewed journal in which the 'theory' of intelligent design can be explained and argued over as most scientific theories are.

Not a bad idea.

Friday, August 26, 2005

The Mainframe Is Not Dead

A good article by Hiawatha Bray in today’s Boston Globe. He points out that many of our mainframe programmers have died, are dying or are retiring.

Many of them, like me, started their working life writing software for a machine that filled a room. I can recall seeing the first Honeywell machine; the tapes weighed twenty-five pounds. Today, my five pound ThinkPad has more power than the Honeywell D1000.

While you may think that mainframes have gone away, let me assure you that they have not. Most mammoth companies and governments could not function without today’s mainframe, which, by the way, takes up a lot less space, uses a lot less energy and is a hell of a lot more powerful and easier to use than the D1000.

The problem is that there are very few young people being trained as mainframe programmers. Mainframes are no longer taught in schools, so any training is basically on-the-job, just as mine was. I think a young technically-oriented person who wanted to get into programming would do well by becoming a mainframe programmer. The declining supply pool coupled with the increasing reliance on the mainframe to do our most serious work means that the new mainframe programmer will probably do much better financially than the Windows programmer.

Thursday, August 25, 2005

It's not all rosy in China

Some interesting statistics on China as reported by the Population Reference Bureau:
  • 47% live on less than $2 a day, which is the poverty line as defined internationally
  • Not everyone has access to good drinking water. Even in the cities it is less than 100%, 92% to be exact. It's 68% in the country.
  • The per capita gross national income based on purchasing power is lower than the average for the world. In China it's $5530, world-wide it's $8540, in the US it's $39,710.

What's wrong with Boston Scientific?

They've received their second warning letter from the FDA this month. The latest concerns two people in shipping who shipped equipment that had failed quality tests and been placed in quarantine. They overrode a computer system designed to prevent this from happening.

Now, it's not as though the company makes simple, non-critical medical devices. They make stents, the devices that are inserted in arteries. Nor is Boston Scientific new to the world of medical devices. They've been making them for twenty-five years and sold more than $5 billion last year.

Shades of James Michael

The news that Mikhail Khodorkovsky, the jailed Russian oil tycoon, would run for parliament although in jail reminded me of James Michael Curley. He was elected Congressman, Boston City Council member, Mayor of Boston and Governor of Massachusetts. In 1947 he was convicted of mail fraud as a result of his taking a Civil Service test for a consituent. He wound up serving five months in Danbury while Mayor.

Ah, the days of the colorful politician!

Wednesday, August 24, 2005

The 4th Plane Crash in August

Yesterday a plane went down in Peru. It was the fourth this month. None of the planes was from a major international airline. The last time a major international airline lost a plane was in 2001. Thus far this year the number of airplane crashes are slightly above the average of the past seven years, 6 vs. 5. However, flying is actually safer as the number of miles flown is up considerably. Over a longer term (twenty-six years) the number of accidents per million miles flown has decreased from three on 1979 to 1/2 in 2004. I guess that should make you feel safer on your next flight.

Tuesday, August 23, 2005

Has he lost his mind?

Pat Robertson, the Christian evangelist, proposed that the US assassinate Hugo Chavez, the President of Venezuela. I thought there was a commandment that said something to the effect that "Thou shalt not kill." Maybe that applies to non-Christians only.

Monday, August 22, 2005

A Fatal Mistake?

It looks like Merck really screwed up defending its first Vioxx case. According to reports, the jury ignored any science facts Merck presented; apparently these facts were not presented in a way that the average Joe could understand. Bad marks for the Merck lawyers.

Then, the jurors were upset at the taped presentation by Raymond Gilamartin, Merck's CEO. They expected Gilmartin to be there in person. Bad marks for Merck.

All in all, it looks like a classic case of hubris by lawyers and company alike. This may be the first nail in Merck's coffin. It will be if they run the other 4,000 Vioxx cases as they did the first one.

What would Pangloss Say?

As we all well know, earnings are meant to be manipulated, at least that's what many public companies would have you believe. Now comes word that many members of the banking industry appear to be united in believing that loan quality has gotten so much better that they can set aside smaller amounts for possible loan losses. Of course, setting aside smaller loan reserves improves today's earnings and, in the world of Wall Street, today's earnings are really all that count.

In fairness, it must be admitted that the percent of loan loss reserves to problem loans is at its highest since 1999. That's a good thing.

However, the question is the definition of problem loans. Whether they are loans that are in trouble today or likely to be in trouble tomorrow is crucial. In 1999 the number of interest-only loans was miniscule and there were very few variable rate mortgages. Today, I think the quality of credit is not what it was only a few years ago. Plus, we have a housing bubble in many states.

Today, the ratio of loan-loss reserves to total loans is at its lowest in 19 years. That, I think, is a bad thing. Just look at what happened to Japan when its banks pursued a policy of low quality loans.

Iraq in miniature?

Yesterday four more American soldiers were killed in Afghanistan. That makes 65 this year and 181 since 2001. Combine these deaths with the slow pace of reconstruction, the limited government beyond Kabul, the need for the people to grow opium because of the poor economy and you've got another incipient quagmire.

Sunday, August 21, 2005

I thought the BBC had higher standards

The BBC reports on the Muslim Council of Britain (MCB) today in a Panorama special (which, I suspect, is like our 60 Minutes). The MCB, consisting of over 400 mosques and other Islamic groups, is supposed to represent mainstream Muslim opinion in Britain. I wonder just how insightful the report is. It's true I have not seen the show and am relying on a post on the BBC News web site. But could the web site differ very much from the TV show they are discussing?

The reporter finds that the MCB and affiliates promote anti-Semitic views. But, this finding appears to be based on the Secretary General of the MCB attending a memorial service for a Hamas leader who supported suicide bombers in Israel rather than attending a Holocaust Day Memorial. What would you do? Miss a memorial service for someone you knew or for Jews in general?

The article disparages a group calling itself Al-e-Hadith for saying that imitating non-Muslims means you’ll go to hell. This doesn’t much differ from the nuns and priests telling me that non-Catholics would most likely burn in hell.

You want to believe that most Muslims oppose the Islamic fundamentalists, and they should speak out more. But a report like this is not one that would encourage them to do so.

The CEO’s Shadow Account

There have been intermittent stories about the firing of Robert O’Connell, the CEO of MassMutual, an old New England company. Although Mr. O’Connell really did a good job for the company (revenue was up 50% and shareholders’ equity by 62% in the five years he ran the company), he was sacked in June. Based on an article this week in the Wall Street Journal, there were a couple of reasons for letting him go: a possible affair with a subordinate, nepotism, the usual ‘management style’ and, the most interesting to me, misuse of his shadow account. Shadow accounts appear to be a fairly common 'perk' among large company CEOs.

What, you may ask, is a shadow account? Well, it’s another perquisite of being a CEO of a big company. When O’Connell started with MassMutual, he was awarded $4,100,000 in a ‘funny money’ investment account, referred to as a shadow retirement account. I say ‘funny money’ because no money actually changed hands; it was like monopoly money. Except in this case - as with other CEOs - the company would pay him the real money value of this account when he retired.

The real money value of the account would change as Mr. O’Connell made hypothetical trades. He was able to convert his original kitty of just over four mil to $30,600,000 by March of this year. Had he invested in the Dow Jones, his kitty would have grown to ‘only’ $5,500,000. How did he do so well? Basically, by cheating and by the lack of any real supervision of the account by the company.

The people who signed off on the account were Mr. O’Connell’s subordinates and really did not review his hypothetical trades and understandably so. This wasn’t enough for O’Connell. Although he was restricted to ‘trading’ in either of 15 mutual funds or Dow Jones stocks, he ‘invested’ in IPOs of such household names as CoSine Communications, Inc. Not only did he invest in unauthorized securities, he took advantage of the hypothetical nature of his trades by investing early in the morning at the previous day’s closing price; so he could take advantage of any after hours news.

Being CEO of a large public American company is still the best job in the world. You can be incompetent. You can cheat. You can be a thief. You’ll still walk away with millions.

Friday, August 19, 2005

Another View of the War on Terror

Remember when Kerry claimed that we might be better off if we treat terrorists as criminals rather than being at war with them? As with much he said in that campaign, this idea never got the traction it deserved. If you want a reasoned argument for Kerry’s claim, read this month’s issue of the Strategic Studies Newsletter, a publication put out by the US Army War College. This issue reports on a conference held earlier this year on “Law vs. War: Competing Approaches to Fighting Terrorism”.

The article you want to read is “Squaring the Error” by Michael German, who worked as an undercover agent in terrorist groups for the FBI. His basic argument is that we have played into the terrorists’ hands by abandoning the strengths inherent in a free democracy largely because we have failed to try to understand terrorists. In German’s experience, terrorists see the world in “us” versus “them” terms. Kind of like the way we see the world in our War on Terror.

In his experience, all terrorists, by and large, have a very similar view of the world: they don’t like the status quo; they can’t change the status quo through legitimate means; they don’t have the military power to force change. Their goal is to devise an attack that will change the status quo and throw things into chaos out of which right will emerge.

Like Richard Clarke, German thinks of the terrorist’s world as being made up of concentric circles. The hard-core members are at the center and those with lower levels of commitment are in different circles. The terrorists have to act to gain influence among these various circles. As they move to different circles, the circle is bigger, the people’s commitment less; thus, it becomes harder to gain the circle’s attention and confidence. So, they perform an act that seems to benefit the community, such as killing a policeman who has been shaking down local businessmen. German argues that this stage is critical and the terrorists must be branded as criminals; overreacting by treating them as warriors in battle and clamping down hard on both the innocent and guilty members of the community will only bolster the terrorists’ position.

He uses the French actions in Algiers as an example of what can happen. The French broke the FLN, but activated other Algerian resistance so that eventually the French lost the war in Algeria, although they won the Battle of Algiers. German thinks that we are close to being in the same situation as the French: “divided at home, alienated from allies abroad, fighting an enemy all over the globe that can strike when and where it wants.”

What can we do to avoid our own Battle of Algiers?

One thing we have to keep uppermost is that “Nothing makes it more difficult for a terrorist to convince people that the government is oppressive and unjust than scrupulously protecting his rights in a public criminal trial”. Tell that to the people in Guantanamo!

Take Sun Tzu’s advice and know ourselves as well as we know our enemy. Knowledge cannot exist unless we are honest about why 9/11 was not prevented. We had the information; we just didn’t act on it due to bumbling and mismanagement.

Treat terrorists as criminals. Their community will see them as bad guys, not heroes, and see us as validating our authority. Try them in public.

One of the biggest fears of the terrorist is that their group has been compromised by an infiltrator. Sharing and publicizing information about one terrorist group has a negative effect on other terrorist groups in that instead of acting they have to constantly resort to other plans.

We stepped on the solidarity the world provided us after 9/11 and handed terrorists a golden opportunity to legitimize themselves by departing from the rule of law and alienating our friends. Respect the law. Restore international cooperation.

Stop demonizing our enemies as the terrorist demonizes us.

“Terrorism will never go away, and free and open societies will always be especially vulnerable. But we do not win by becoming less free and less open. Ironically, al Qaeda does not have the power to destroy the United States of America. But we do.”

Shades of Gray

It's seldom that something is all white or all black. So it is for me with dance and Morgan Stanley.

I am not a fan of dance, particularly ballet. But, in support of Habitat for Humanity here on the Vineyard - yes, there is a crying need for affordable housing on Martha's Vineyard -, I went to a performance of Lorraine Graves and Friends last night. The company is made up primarily of principal dancers from the Dance Theatre of Harlem. In short, they were fantastic. How they made some moves I'll never know. One of my friends, a physical therapist, was almost convinced that the human body could not move that way. The best part was the variety, the music varied from Dvorak to James Brown.

Over the past several months I've written a few negative articles on Morgan Stanley as run by Purcell. While my articles were, I feel, more than validated, I have to acknowledge that this dance performance was underwritten in large measure by Morgan Stanley. It was the first time a major Wall Street firm had unwritten the arts on the Vineyard. Kudos to Morgan Stanley for their generosity.

Thursday, August 18, 2005

Can you find 26 people who will agree on a very complex subject?

Some newspaper stories have lambasted NASA because seven of the twenty-six panel members of the Return to Flight Task Group published a dissent to the conclusions reached by the Task Group, although the Task Group’s report was far from a whitewash.

The Task Group was charged with reviewing how well NASA had implemented seventeen recommendations of the Columbia Accident Investigation Board. Looked at strictly by the numbers, NASA did okay: they implemented eleven, had mixed results with three and did not succeed with three.

It so happens that the three not implemented are thought by some to be the most critical recommendations: to eliminate all foam insulation debris from the external fuel tank; harden the shuttle's heat-shield system to resist any impacts that do occur; and develop reliable tile and wing leading edge repair techniques. But is improper inspection (which was a problem with Columbia) really less important than any one of the three failures? Yet, that was only one area where NASA improved significantly. What about an improved ability to deal with safety contingencies? As in most cases, we all have our own personal slant on things.

The Task Group concludes by reminding us that “Space, by its nature, is a hostile environment.” “…it is likely that another accident will happen in the future; if not with Space Shuttle, then with whatever vehicle replaces it.”

Wednesday, August 17, 2005

More budget information

In their recent report predicting a significant decline in the estimated budget deficit for this year, the Congressional Budget Office (CBO) also made a couple of scary forecasts:

  • If the administration's tax cuts are not rolled back on their sunset date of 2011, the projected deficit could grow from $281 billion to $1.5 trillion.
  • Mandatory spending (such as Medicare, Social Security) is now 8% of our GDP. In 2030 it could grow to 12-17% of GDP.


What's with the medical profession?

Last week it was doctors promoting drugs for companies in which they own stock. Then, there was the story questioning the peer review process used by medical journals. Yesterday there was the story of universities misusing NIH research funds.

A study by the University of Minnesota and HealthPartners Research Foundation found that more than half of the scientists used NIH grant money of $20 billion a year - that's our tax money, folks - on projects for which no grant money was designated by NIH.

Cornell is the example used in the article in the Wall Street Journal. They paid the NIH $4.4 million to settle charges, such as phantom projects, phantom nurses, phantom patients, using grant money for other than the intended purposes.

Last year it was the priesthood that was off its pedestal. This year it looks as though the medical profession will soon be joining the priesthood.

Who's Telling the Truth?

The BBC reports that the Brazilian fellow who was killed in the London subway last month did not jump the turnstile; was wearing a denim jacket, not a winter coat; was held while being shot eight times. If this is true, the police are guilty of murder and covering up murder.

Tuesday, August 16, 2005

California sees the light.

The Supreme Court of California has put back on the ballot Arnold's idea of having a judicial panel draw the redistricting lines. As I've said many times before, the only way we will get out of this situation of having the same people represent us until they die or take a lucrative lobbyist post is by taking redistricting out of the hands of the politicians. Arnold has taken that first step for California voters. Let's hope other governors do the same thing.

What a difference 60 years makes

Yesterday’s 60th anniversary of VJ Day brought back memories of WWII. Then, I started to list the ways that war differed from today’s Operation Freedom Iraq. I know the following list is far from complete but it is early in the morning here on the Vineyard:

  • We were the attacked, not the attackers.
  • The democracies of the world wanted us to enter the war. Today, most of the leading democracies opposed our invasion of Iraq.
  • We had the Marshall Plan to restore our enemies’ world. Today, we can’t even ensure the Iraqis will have electricity for a full day. Which brings to mind that we had a post-war plan because we were not under illusions about how wonderful the world would be for the defeated nations.
  • Everybody – whether you were 5 or 75 years old - in this country knew we were at war. And everybody sacrificed.
  • We were not afraid that a photo of a casket containing a dead soldier would inflame the populace against the war.
  • Income taxes were not lowered. Our leaders were not convinced that we could have a guns and butter economy.
  • Just about everything was rationed. Roosevelt didn’t urge us to fight the enemy by shopping.
  • We had a President who listened to his generals. Now, we are seeing what happens when you think you know more about war and securing the peace than those who have spent their life at it.
  • Roosevelt told it to us straight. Why can’t Bush have the same faith in the American people?

I’ll stop now. It’s time for breakfast.

If you’re old enough, why don’t you add to the list?

Monday, August 15, 2005

VJ Day

Although it’s been sixty years, I still remember August 15, 1945. It was the day the Japanese surrendered. It so happens to also be the Feast of the Assumption (a fact noted by the religious among us).

It was a wild day for all of us, young and old. My sisters, cousins and I spent the day cutting up newspapers which we threw from the window when the formal announcement was made. The whole country was a bedlam. Even Cambridge Street was crowded unlike any other time before or since. You could cross the street only with great difficulty and with a degree of risk. Drivers and others were drunk. I can still see the guy down the street playing his bagpipes. The blaring of car horns was constant. It was an unbelievable day across the country and around the world. Finally, we thought, man might have learned something from the war and its ending.

What does PSC stand for?

In Defense Department parlance PSC stands for Private Security Corporation. PSCs provide security in Iraq. After reading an article in yesterday’s NY Times Magazine, I think PSC should stand for Pretty Shitty Command by our Defense Department (DOD).

First of all, the idea of a mercenary army fighting for our side goes against the American grain. Didn’t we fight against German mercenaries in the Revolutionary War? Is it possible that some soldiers don’t re-enlist but join a PSC for the money since the typical PSC fighter is paid between $400 and $700 a day? DOD has hired as a consultant on outsourced security one Lawrence Peter, a paid advocate for the PSC industry. Talk about independent consulting!

This particular type of ‘outsourcing’ started at the very beginning of our occupation of Iraq. A PSC was hired to protect the staff of the Office of Reconstruction and Humanitarian Assistance, the precursor of the CPA. In the words of General Jay Garner, our first ‘governor’ there, it was done because, “The military just hadn’t provided enough numbers.” Again, the belief that Rumsfeld knew better than General Shinseki (who was fired for saying we’d need a heck of a lot of troops to pacify Iraq) has led to another fiasco.

No one really knows how many mercenaries are in Iraq. The best estimate is 25,000. That’s about 15-17% of our real soldiers and these guys do not report to anyone in the normal military chain of command; in the words of DOD, “PSCs are not being used to perform inherently military function.” Yet, although they have fought against the insurgents and protected bigwigs, I guess these activities are not inherently military.

Now, if the average mercenary earns only $100,000 annually and there are 25,000 of them, we, the taxpayers, are shelling out $2,500,000,000 a year for these guys. Then, of course, you have to add in overhead and a profit margin. We are paying one company $250,000,000 for one year. This company employs about 1,000. If you assume that our costs are the same for the 25,000 mercenaries, then the bill jumps to $6 ¼ billion a year. How many real soldiers could we support for that amount of money?

Private Security Company or another example of Pretty Shitty Command? You tell me.

Sunday, August 14, 2005

What is collective bargaining?

Remember the commotion over employee rights when the Homeland Security Department ws being created? Well, the union sued and the case was finally decided. Here's what the judge, a Bush appointee, said, "The department could unilaterally absolve itself of contractual obligations while employees and their unions would be bound by those agreements....Collective bargaining has at least one ireducible minimum that is missing: a binding contract."

In other words, the government tried to screw its employees.

Over 50

It's not age I'm talking about. It's dead bodies. Dead American soldiers. The month is not quite half over, yet we're on track for 100+ deaths in Iraq in one month. Of course, since the insurgency is in its last throes, as our Vice President has said, things will be getting better soon.

That is, they might get better if the Army can figure out how to get adequate armor to our troops. For over a year now, the Army has been unable to equip our troops properly.

Hmm. I wonder why recruiting new troops is not going well.

An "interesting" year for Law on Martha's Vineyard

2005 will go down in Martha's Vineyard history as the year of the stupid lawsuits. There have been three of them. The sad part about it is that in only one of these cases has a party to the suit been a private citizen; in the other two cases both parties in the suit have been government entities, which means that you and I, average taxpayers, are footing the bill, not the government entities who are involved in the suits.

The first suit decided this year concerned the Wampanoag Indians and the Town of Aquinnah. About twenty years ago when the tribe was recognized by the federal government, they made an agreement with the Town of Aquinnah that the tribe would be bound by the laws and regulations of the Town. Well, as time went on, I guess the tribe forgot about that agreement, as they built a shed without obtaining approval (re zoning and other issues) from the Town. The tribe's argument was that they were a sovereign nation and, thus, not subject to Town laws. The Town disagreed and sued the tribe. The Town prevailed but not until considerable money had been spent not only by Aquinnah but by the other Island towns who filed amicus curiae briefs.

About ten years ago the Martha's Vineyard Airport was in bad shape, financially and operationally. Fortunately, a new set of airport commisioners came on board; many of the commissioners were good businessmen as well as pilots. They hired a professional manager, who turned things around so that the airport became one of the best run airports in New England. As a reward for the manager's good works, the commissioners wrote a new contract with the manager and his assistant. End of story, right? Well, not quite, as the airport commissioners are appointed by the county commissioners. The county Treasurer would not include the additional amount in the paychecks of the manager and assistant manager as the salaries for their position were not part of the county's payroll structure. So, suit number two began, this one financed on both sides by we taxpayers. The county lost and is now on the hook for almost $900,000 (their budget is $4 million plus), which will have to be paid by the taxpayers.

The third suit is a dispute between Wiliam Graham, of Washington Post money, and the town of West Tisbury, where I live. The assessment on Graham's property almost doubled within two years. He felt that his property was overvalued and tried to come to an agreement with the Town. He had one meeting with the assessors. I guess the meeting went quite badly in the assessor's eyes as they would not meet with him again. The result is a suit by Mr. Graham filed with the Appellate Tax Board of the state. It's not over yet, but as reported in one local newspaper, the Gazette, things don't look good for the Town, which will spend at least $250,000 (2% of the Town budget) on this suit. Now, the other local paper, the Times, claims that the owners of the Gazette are friends of Graham and, perhaps, their coverage is not impartial. Whether this is true or not, the fact of that $250,000 that has to be paid by the taxpayers, will, I'm sure, be a major factor in next year's Town elections.



Saturday, August 13, 2005

Stem Cell Research and Innovation

Here are some quotes from the Science Journal column from Friday's Wall Street Journal, not exactly known for its espousal of liberal causes.

  • "'..cutting-edge scientists are leaving because they can't do research here as a result of strict limits on human embryonic stem-cell studies. This overlay of values onto research is a very alarming development." Alan Leshner, CEO of the American Association for the Advancement of Science.
  • "Countries that never had a tradition of cutting-edge biomedical research now have an entree as a result of US stem-cell policy. Americans are at a disadvantage in not having the opportunity to develop the technical know-how." Evan Snyder of the Burmham Institute, a leader in stem-cell research.
  • "This anti-scientism couldn't be more damaging to young people contemplating devoting their life to research. The sense of opportunity that was always predominant in the US now lies elsewhere." Ira Black, stem-cell researcher.
  • "..the US will no longer be dominant in innovation. A larger number of international patents are being obtained overseas, R&D facilities are moving overseas. If we are not innovating here, the economic benefits will go elsewhere, too." G. Wayne Vlough, president of Georgia Institute of Technology.

Now you could argue that all of the above have an ax to grind, as they are in the stem-cell business in one way or another. But listen to Sharon Begley, the person who writes Science Journal for the Wall Street Journal, "Allowing a minority opinion to stifle research is only one symptom of politics undermining science.Some appointees to federal scientific advisory panels have been chosen for their ideology rather than their expertise; staffers with no research credentials alter the scientific (not only the policy) content of reports on climate change. Politicians' attacks on the science of evolution continue, even though "intelligent design" may make a fascinating lesson for a philosophy class, but it is not biology."


And you wonder why the number of US scientific papers is down, why we have fewer graduates in the sciences, why fewer and fewer scientific breakthroughs come from here!

Good news; Bad news

The good news is that the budget deficit was down from last July, $52.79 billion vs. $69.16 billion. So, it looks like the full year’s budget deficit will be down from last year’s record of $412 billion; it may be down to $325 billion. This is due mainly to revenue increases. Of course, this good news does not offset the fact that we have paid $156.52 billion in interest on the debt; last year we had paid a little less than $140 billion at this point.

The bad news is that the trade deficit hit its highest level in four months, largely due to the rise in oil prices. This was not expected by the feds. Although the dollar has dropped 15% over the last three years, the trade deficit does not shrink as it should in classical economic thought. Another concern of the trade deficit is that some products we used to export, such as tvs and other electronic products, we no longer do. Autos seems to be going the same way; we import $16.4 billion and export only $6.2 billion.

Entertainment is not a gift

Last Christmas I gave my daughter two tickets to a play. To one of my sons I gave a book. In February I told another son to take his girlfriend to a nice restaurant for Valentine’s Day and I’d pay for it. Which was a gift?

If I worked for a NASD member firm, only the book would be considered a gift and, thus, subject to a $100 limitation. The play tickets and the meal would be considered entertainment and, as long as the tickets or the meal were not given ‘so frequently’, they would be allowed by the NASD, even if they cost $1000 each.

Of course, all three were gifts, different kinds of gifts, but, in the real world, gifts. However, in the world of high finance, giving entertainment was not a gift.

The distinction was really played on by the Jeffries Group in trying to win business from Fidelity Investments. They hired someone, Kevin Quinn, who had ties to Fidelity’s traders. Quinn was successful in getting more business from Fidelity; he moved the company from 50th to 15th in terms of the commissions Fidelity paid to brokers. He was helped in doing so by having a $1,500,000 annual expense account reserved solely for seducing Fidelity traders. Now, that the SEC is investigating these payments to Fidelity people, Jeffries is trying to put all the blame on Quinn, ignoring the fact that they gave Quinn the money to break the law.

Going to America

We leave Martha's Vineyard at least once a month and go to America. Normally, our time on the mainland is fairly tightly scheduled: doctor's appointments, family visits, shopping, etc. On this last trip, however, we had the afternoon free and decided to go to a movie. The only convenient place to see it was at the Coolidge Corner Theatre in Brookline.

In the Summer, village centers on the Vineyard are crowded with tourists. But, the crowds here were nothing like those in Coolidge Corner. Boston being a college town, Coolodge Corner was filled with summer students, most of whom had tattoos. But, there were more than students there. There were people of all colors and ethnicities, old people, a few odd-looking people. The signs in some of the stores were in Russian; in other stores the signs were in Hebrew. The rapid transit, which goes right through the area, is quite different than the buses plied by Vineyard Transit.

The theatre was a marvelous old movie theatre. It was run by people who love movies and do not feel that they need to fill the lobby with arcade games. Similarly, there were no ads or previews before the movie. The first thing on the screen was the feature and when it ended there was nothing else on the screen until the next showing. I did not have to wonder what the answer was to the question of what 'famous' movie star was a mouseketeer. For the cineastes there were reprints of reviews of the movies being shown. The theatre was big, perhaps 700 seats. Symbols of Roman gods surround the screen. And, on a Thursday afternoon there were maybe 150 - 200 people there.

Part of the reason for the crowd was the movie: "Broken Flowers". This was Jim Jarmusch's first mainstream movie. And, it's a good one with a great cast - Bill Murray, Jessica Lange, Sharon Stone, Frances Conroy, Tilda Swinton, Julie Delpy.

All in all, Thursday was a fine example of the great city of Boston. Now, if I could convince my wife to move..........

Monday, August 08, 2005

How long can 5% feel like 33%?

The US has 5% of the world's population but a third of the world's scientific and engineering researchers. More than half of the doctoral-level scientists and engineers under 45 are foreign-born. How long can this continue when more and more Chinese and Indian kids are studying at home and we are putting up barriers to foreigners studying here? With their populations above a billion each, China and India can easily outnumber our native-born scientists and engineers with only a small percentage of their population involved in the sciences.

As Richard Freeman points out in this paper, we need to make science and engineering careers more attractive to our students. Business must not only scream about the lack of graduates, they have to pay them more.

Sunday, August 07, 2005

It's your country

If you want the opportunity to elect people more representative of the views of the American public, read the latest report from the Center for Voting and Democracy.

If I don't acknowledge it, it doesn't exist

Yes, the former members of the 9/11 Commission have no legal powers. On June 16 they sent letters to the President, the Department of Defense, State Department, FBI, CIA and other executive agencies asking for interviews and updated information on what's being done to prevent terrorist attacks here.

To date they have received zero responses, not even an acknowledgement that the agencies received the letter. I guess the agencies feel that common courtesy is not needed when a war on terror is being fought. And, that war on terror is going so well - in their minds, anyway - that they need not report on it to the public.

What does 18.4 cents buy you?

18.4 cents is the federal tax on each gallon of gas sold in this country. It is supposed to be spent on fixing our roads and mass transit systems. Well, it seems that many of the roads and transit systems are in Alaska. For every person living there the new transportation bill will spend $1,501; the bill authorizes the munificent sum of $83 per person for the rest of us. Alaska, which ranks 47th in population, will receive more money than all but three states. It will receive almost a half billion dollars for two bridges that nobody wants. Is it a coincidence that the chairman of the House Transportation and Infrstructure Committee is from Alaska?

Over the years the number of pork projects encapsulated in the transportation bill has increased from 10 in 1982 to - sit down - 6,371 in 2005. This is a period when the rise of the professional politician was in full flower.

Hell, our roads stink; professional societies give them a grade of D. Mass transit is stagnant. And we're giving money to a museum that touts the history of the Packard automobile.

We need a better way to select our representatives. We must eliminate the gerrymandering that has made the profession of politician possible.

Saturday, August 06, 2005

Coincidences?

The average parking meter in Boston requires repair four times a month. However, meters near restaurants which offer valet parking have to be repaired much more often. Coincidence or a profit-making opportunity?

Valet parking companies are required by law to park cars in garages. Of course, the valet people have to pay the garage. If they can park cars on the street, they pay no one and lower their cost of doing business. Ergo, net income is higher.

Is it a coincidence that 500 foreign objects were placed in meters in the major restaurant district in July? It certainly doesn't sound that way to me.

Friday, August 05, 2005

Reporting on Afghanistan

This month the GAO issued a report on Afghanistan reconstruction and it's not much better than that issued for Iraq. Management problems are virtually the same - "USAID lacked a comprehensive strategy to direct its efforts. USAID did not systematically collect information needed to assess the progress of its major projects...measures provided by the embassy to decision-makers in Washington did not comprehensively portray progress in each sector of the overall US program."

On this last point(poor reporting by the embassy), isn't our new ambassador in Iraq (Zalmay Khalid?) the same guy who led the embassy in Afghanistan? I hope he's read this report.

The report also pointed out the difficulties in planning when one is relying on a supplemental appropriation as we are doing in funding our wars. Not only is this an attempt to mask the true cost of these wars, but it also makes managing them harder.

Thus far, reconstruction has not done much to benefit Afghanistanis. They're still the fifth poorest country in the world. Half of them live below their poverty line. 20% don't get the minimum food they need daily. Perhaps, that's why opium production continues to rise.

Thursday, August 04, 2005

Truth? Science? I know better

A quote from John Marburger, Bush's science adviser, "intelligent design is not a scientific concept". Another quote: "evolution is the cornerstone of modern biology".

And the other day, the Boss, George Bush, said that intelligent design "ought to be properly taught" alongside evolution in public schools. Another case of believing in something no matter what the facts are?

Another World

We sometimes have to be reminded how many of our fellow earthlings live. Here is a reminder.

The Court Sans Personalities

The current Atlantic Monthly has, as you’d expect, two articles on the Supreme Court. But they’re not about Roberts or the conservative-liberal divide. Thank God.

The first article, “Remote Control” by Stuart Taylor, Jr., argues that over the past 30 – 40 years the Court has become less involved with the real world. Taylor points out that the Court in the 1950s included a governor, former senators, attorneys general, solicitors general and SEC chairman. They had been prosecutors and had extensive experience in commercial law. Of the current Court, only O’Connor has held elective office and only Souter has presided over a commercial or criminal trial.

His argument is that the members of the 1950s’ Court had intimate experience with our political and judicial systems and, as a result, a good knowledge of the “beliefs and concerns of everyday Americans”. The current Court does not have similar experience as they have come from the appellate courts or academia, which are not exactly the places ‘everyday Americans’ inhabit. This is not good as their decisions are further and further removed from the lives we lead.

Further exacerbating the issue is that the average Justice stays on the Court longer; before 1970 the average tem was 15 years, since then it’s gone to 25 years. So, the opportunity for new blood to invigorate the Court is quite limited.

The second article, “Without Precedent” by Benjamin Wittes, argues that the Court doesn’t do a very good job. It “ignores its own principles and precedents…, misstates facts, and issues shoddy opinions”. Only someone with expertise in the workings of the Court can really comment on the accuracy or inaccuracy of Wittes’ claims. But, it is good to see someone raising the issue of the performance of the Court vis-à-vis the judicial, rather than a religious, system.

Wednesday, August 03, 2005

A Religious Protest

Buddhist monks - and I emphasize the plural as thousands of them are involved - are protesting a planned IPO by Thai Beverages on the grounds that a successful IPO will increase the sale and consumption of alcohol in Thailand. And alcohol consumption, they say, is contrary to Buddhist teachings.

Remember when Buddhist monks were protesting wars?


$6 Million Here, $6 Million There

Our friends at Morgan Stanley have just agreed to pay $6 million in fines and restitution to customers whom they over-charged.

Given the size of their previous fines and settlements, Morgan Stanley is probably paying this one out of petty cash.

Monday, August 01, 2005

A True Idiot

On yesterday's Stephanopolus program, Richard Santorum, the esteemed senator from the great state of Pennsylvania, said about the sex abuse scandal in the Catholic Church, in 2002 ''The senators from Massachusetts did nothing. They spoke nothing. They sat by and let this happen."

What planet is this guy on?