mind over blather

where inescapable facts meet unavoidable conclusions

Archive for the ‘Business and the Economy’ Category

the (negative) sum of the parts

I like my accountant.  He’s a really nice guy and does a really good job – for which I pay him a fair fee.  But the sad fact is he really doesn’t do anything that contributes, in a meaningful way, to anything important.  He does my taxes.  That’s not the most complicated thing in the world – and, yeah, I can buy some inexpensive software that will probably do much the same thing for less than I pay a CPA.  The issue isn’t the cost.  It’s that there is a whole industry (tax preparation) that is based on doing things that, if you think about their inherent value, are pretty meaningless.

In point of fact much of our economy is based on people doing things that add no value – or very little – to the overall quality of the products and services we need and use in our daily lives.  Car dealers could be substantially replaced by on-line, manufacturer-direct, ordering systems.  Insurance agents do very little beyond taking information you provide and submitting it to underwriters.  They could do more – like help their clients minimize risk – but I have never had an agent propose anything like that to me.

Much of the debate about health care isn’t really about health or care.  It’s about preserving jobs and revenues attached to a model that, rationally, makes little sense.  Health insurance companies don’t add anything of value in terms of health.  They don’t even mitigate costs because of the (similarly irrational) fee-for-service model employed by the health delivery system.  At the end of the day, they are a net negative.

You can find other disconnected dots in other industries.  The ski industry is bemoaning the effects of climate change (one recent report says that Aspen will have the same climate in near future as Amarillo enjoys today).  It is also bemoaning the fact that many ski resorts are located in states in which the elected leaders have the most fossilized environmental outlook.  But the industry fails to understand that, regardless of how green it wants to make itself and its surroundings, the act of getting to and from the slopes puts it on the list of dumb things to promote if you want to reduce GHGs.

Don’t get me wrong.  I like to ski.  But it’ll be a cold day in Amarillo before I buy into the notion that flying from Newark to Steamboat and back is, somehow, part of the solution to Climate Extinction.

To bring this full circle, Paul Krugman recently published a really dumb idea in the New York Times.  Using tax policy to adjust behavior just gives the lawyers and accountants who, nice guys though they may be, another opportunity to contribute nothing of value to the world.  There is no reason to have a complicated tax policy that spawns and supports an entire, pointless, industry.  In fact, what Krugman is proposing is, essentially, a cop-out.  If financial speculation is the problem he is making it out to be, a better policy would be to increase the risk penalties to speculators.  Make them insure their bets, top to bottom, personally – without any backstop from government programs or institutions.

Krugman wants to hand out clean syringes to the addicts.  That won’t solve the problem – and it’s apt to have other unintended consequences.


Written by unreal2r

November 29, 2009 at 1:42 PM

renaming the whirlwind

The climate science community is populated by a lot of very nice people who, unfortunately, believe in a kind of dainty political correctness when it comes to languaging.

The discourse is dominated by headlines that talk about climate “change”.  Now, there’s a powerful descriptor.  As in, “I think I better change the baby’s diaper.”  Or, “We’re going to dinner and then the opera, so I need to hurry home and change.”  Or, “He’s so obdurate, he’ll never change.”

And then there’s the more stick-in-your-eye alternative, climate “warming”.  That really has some frightening connotations.  Like, “I’m warming the milk for some cocoa.” Or, “We’re warming the tires on the Ferrari before Sir Stirling takes it out for the record run around the Nurburgring.”  Or, “The Phillies have two pitchers warming up in the Bull Pen.”

A few people have tried to break out of the trap of politically correct soft-and-fuzzy speech.  Some brave Brits have taken to climate “heating”.  That sounds like an optional method of keeping your house warm.  “Would you like forced air, hydronic baseboard, or climate heating in the new family room?”

Let’s get real about this.  Wit’s End thinks we should refer to it as “Climate Chaos” or, better, “Climaticide”.  Those are certainly improvements – but the first calls to mind things like “chaos theory” – which will invariably provoke the kind of asinine public debate that still surrounds evolution. [See, “it’s only a theory“]

I prefer “Climate Extinction” because, to my mind at least, it hits the nail squarely on the head.  It’s pretty hard to misinterpret extinction as something other than an existential threat.

It’s kind of like “Death Panel” or “Euthanasia”.  Even the more cretinous denizens of Teabagistan will be able to get whatever-passes-for-a-mind around the concept of extinction.

And it’s easier to spell than “annihilation” – a life preserver tossed to our brain-addled brethren still struggling on the far side of Da Nile.

Oh, and while we’re on the subject of languaging, I’ll address another pet peeve: let’s pound a stake into the heart of “renewable energy”.  This is another one of those friendly sounding concepts that, when you pop the hood and get a good look at the mill, makes you wonder how many cylinders are really firing.

There’s been a good deal of critical commentary aimed at the underlying economics of making fuel additives from corn, soybeans, and biomass (none of which work without substantial gummint subsidies).  But there’s another factor in this equation that hasn’t received much airtime.

Burning ethanol produces tropospheric ozone and a number of carbonyls including acetaldehyde.  Acetaldehyde reacts in the atmosphere to become peroxyacetal nitrates (PANs).   These pollutants are remarkably efficient herbicides (trees, crops, flowers – they are an equal opportunity annihilator).  And they are alarmingly carcinogenic.

Renewable?  Sure, it’s renewable funding for the corporate welfare queens who are living on the gummint crop subsidy and fake science dole.

Let’s stop talking about “renewable energy” and ratchet up the discussion about “free energy” – solar, wind, geothermal, tidal – because those are proven, scalable, off-the-shelf technologies that can completely transform our energy economy with little heavy lifting and fewer environmental downsides.

Written by unreal2r

September 29, 2009 at 8:26 PM

how to make qom go “boom”

Were you surprised by the revelation that Iran had built a second nuclear enrichment facility in secret?  Really?  Would you be interested in buying a bridge?

There’s nothing good that can possibly occur if a country run by crazed Islamists obtains the means to construct and deploy nuclear weapons.  Nothing.

And there’s also not a lot – short of nuking the f***ers – that is likely to cause the regime to change course.

Except for one thing.

End our dependency on fossil energy and they will become irrelevant in terms our national interests – and those of our allies.

In fact, there is nothing we could possibly do that would alter the significance of the Middle East – and the position it occupies as a focus of our national concerns – than to make it a non-factor in our economy.

Without a product to supply that occupies a position of such seemingly irreplaceable need in our lives, Iran and its neighbors will revert to a status of relative insignificance.

And they will no longer have the economic means to develop weapons – or sustain the forces required to be players on the global stage.

An alternative energy economy will cause heads – and economies – to implode from Qom to Mecca.

The sooner the faster.

Written by unreal2r

September 29, 2009 at 12:15 AM

creative destruction

Whenever there is a paradigmatic shift in market forces, entrenched interests battle to maintain their share.  More often than not, they lose and are swept into history’s dustbin.  The automobile supplanted the horse and carriage.  Diesel electric locomotives spelled the extinction of the steam engine.  Jet propulsion eclipsed propellers powered by reciprocating internal combustion engines.  Vacuum tubes gave way to transistors.

(A good interview with Ira Magaziner – snatched from Climate Progress – on this subject here.)

Invariably, every time the fundamental nature of a technology changes, there are winners and losers.  The fossil fuel industry is on the brink of extinction.  The resistance to change that is expressed in different ways and by different spokesfools – from fossilized politicians like Senators Imhofe and Byrd to birdbrained pseudo-scientists like  Anthony Watts and Bjorn Lomborg – are just part of the death rattle of the soon-to-be-displaced special interests.  (Even the smarter guys among the established interests – like Duke Energy and Exelon – are already jumping ship and lining up for a place in the fossil-less energy future.)

There are only two important questions that have yet to be answered as the shift from fossil energy to free energy rolls out:

1.  Who will the winners (other than the inhabitants of the planet) be?  Clearly guys like Jeff Immelt, who has bet the future of GE on new energy technologies is going to be among the winners – as will GE shareholders.  There’s a good chance that Shai Agassi will be among the winners – as will investors in his electric car venture, Better Place.  But there will be many others.  From the development and deployment of high efficiency photovoltaic solar panels.  And the invention of new quick charging, long lasting battery technologies.  And many other technological wonders that are just over the horizon.

2.  Will we get there in time?  This is the most important existential question the world now faces.  The science says we have until 2015 to cap GHG output – and then begin to roll it back to 350 ppm or lower.  What’s the over and under on that?

Written by unreal2r

September 28, 2009 at 5:19 PM

so sue me

One of the more novel aspects of our government is its division into three co-equal branches (remember, the guys who designed it were – for good reason – inherently distrustful of government and, accordingly, came up with a blueprint that is intentionally incapable of being effective and efficient unless threatened with imminent catastrophe).

This results in a structural incapacity that is facilitated by politicians who often lack the brains or testicles to tackle big issues.

Enter the Courts.

Not the most elegant of solutions, but effective nonetheless.

Let’s apply this to the current dilemma over climate heating.

Only 1% of the scientists in the world do not accept the relevant findings of climate science.  But this 99% majority is not mirrored in the galactically void minds of elected officialdom, the media, or the teabagging masses yearning to be free.

Ergo, this is one of those issues that is apt to be substantially resolved in places that have rules and deadlines and tend to make decisions based on the weight of evidence and other troublesome metrics.

Good thing, too.

We have until 2015 (at the latest) to cap GHG emissions globally – and then wind them back – or the die may be cast for the end of the human genome project:

Sue the f***ers!

All of them!

And that mental Lilliputian, Glenn Beck, just for good measure!

Written by unreal2r

September 22, 2009 at 4:05 PM

parallel looniverse

I am an equal opportunity offender – as happy to take aim at the deficiencies of the left as I am at the excesses of the right – and vice versa.  Each often warrants a full compliment of cynicism and an extra helping of disdain.  Fortunately, both ends of the political spectrum are target rich environments.  Here’s what I mean . . .

Progressives are often quick to recognize important inconsistencies and inequities in the world.  They are, more often than not, the driving force behind measures aimed at moral issues like discrimination and inequality, public policy issues like health care and climate heating, and personal economic issues like minimum wage and retirement.  But they are also apt to identify an issue and then completely misidentify its cause – which, more often than not, results in solutions that camouflage the underlying problems – and never fully resolves them.

Traditionalists (I hesitate identifying them as conservatives because most of them are simply articulating variations on a theme premised on a large, intrusive, and costly bureaucracy – funded by deficits, and debt, and inflation) are the canaries in the national security coal mine and masters of the status quo.  They’ve never met a conspiracy that isn’t plausible (especially if it involves a threat that can be, even tentatively, linked to a foreign source), never met a criminal not deserving of life (with the possibility of execution for good behavior), and never read a passage in the bible that isn’t literally true.  Their world does not allow for uncertainty or doubt because an invisible, all-seeing, all-knowing, and all-powerful cosmic wizard (with whom they have an intimate personal relationship and who intercedes in the minutiae of their daily lives) is on their side.  They are always right . . . regardless of the facts.

A couple of applied examples of these observations:

Climate Change.  Those who (rightly) see climate heating as the most significant existential threat facing the world in the history of the human species are baffled that anyone has a different opinion.  This generally prompts a lot of mea culpa naval gazing aimed at identifying the cause of this otherwise inexplicable disconnect, and its political implications and consequences.

It’s the media’s fault – they are pandering to their fossil industry advertisers and/or inflating the (false) validity of deniers and delayers by giving them equal ink and air time.  It’s human nature – we are genetically and/or culturally programmed to avoid the unpleasant implications of the future and, instead, see only a fantasized destination filled with endless pleasures.  Or my favorite, it’s the result of an aversion to science – a fundamental ignorance that belies an inability to grasp basic principles of chemistry and physics.

It is hard to make heads or tails out of a world constructed of such infinite complexity.  Where to start?  Nationalize the media and force the public to accept a daily diet of science facts?  Go on a crash course to reprogram the human race culturally and genetically?  Fix education?  Ban religion and other iterations of mystical fantasy?  May as well just cut the soles off your shoes, climb a tree, and learn to play the flute!

Like most other issues, this is just not that hard.  We’ve known for decades that pumping bad stuff into the air changes atmospheric chemistry and results in a variety of negative outcomes.  Many of these effects are well-documented – like acid rain, increases in asthma, and increases in cancer and other diseases.  But, regardless of political orientation, most policy wonks come to the most inane conclusions.  Carbon sequestration for “clean coal”, for example.  If ever there was a Rube Goldberg solution, this one has to take first prize.

Let’s apply Occam’s Law of Parsimony: stop using fossil fuels.  Phase them out over, say, ten years.  Make them illegal – all of them.  Force the economy to switch to alternative energy.  It will – simply because it won’t have a choice.  If you insist on adding a government catalyst, increase the patent protection period on new energy technologies to 100 years – and watch the mutants who brought us hedge funds and derivatives stampede down Wall Street to place their bets in the new Patent Futures market.

In other words, don’t try to change human nature – take advantage of it.  Harness the power of shameless greed to the benefit of the planet’s future.  Give the robber barons a new and better opportunity to loot and pillage.  They’ll abandon their carbon addictions in a New York minute for a shot at the new high.  It’s in their nature.  They won’t be able to resist.

Education.  If public education was a product like an automobile or a microwave oven, we’d have to increase the size of the Court system by an exponential factor just to handle the consumer fraud and liability claims.

The progressive response to a public education system that is beyond redemption is, generally, twofold.  First, they send their kids to private schools.  Second, they pump more money into a system that is inherently irrational and dysfunctional.  It’s the traditional way the government works – if a program doesn’t work, spend more money on it.

The traditionalist response is not much different.  They have a personal interest in maintaining the status quo because (a) they send their kids to private schools and don’t want them to have to compete (or associate) with the progeny of common folks (which would inevitably occur if the entire education market was privatized and school admissions were based on academic merit), or (b) they are the plumber or beautician sitting on the local school board and are addicted to the sense of power and self-esteem that comes with being an indispensable watchdog of the community’s interest.

The recent flap over Obama’s “stay in school” pep talk is illustrative. Some of  the stupendously vapid plumbers and beauticians who sit on local school boards from coast-to-coast – egged on by the so-called conservatives on the right wing lunatic fringe of the media – rallied to protect America’s youth from the potential despair that would inevitably result from listening to the words of a freed slave who managed to make something of himself.

This is all bulltinky.  It makes no more sense for the gummint to own education as it does for the gummint to own General Motors (ooops!).  There’s a difference between providing access to education and providing the education itself.  The first is what the government should do – provide equal access to affordable education.  The second is what is at the heart of the massive ignorance about basic science (and history, and math, and geography . . .) in this country.

Why?  Also very simple.  Any time the government creates a program it also invests one or more constituencies with one or more special interests.  The constituencies that dominate the content and direction of education in the US are not the consumers of educational services – rather, the government serves the institutional interests of teachers and schools and publishers and the rest.  Several decades ago, Milton Friedman argued eloquently for the replacement of the current public school miasma with a voucher-funded, student-centric, totally privatized system.  It’s long overdue.

The take away: government never solves problems – it only manages them.  If you want to imbue a problem with immortality, aim a government program at it.  If you want to solve a problem, turn it into a opportunity in which quality results become the distinguishing factors in the eyes of the consumer – and in which the consumer holds the important cards.

healthcare redux

I am not at all enthusiastic about the portents for a rational public policy response to what is, by any objective analysis, an emergent – and growing – political issue.  As a matter of philosophical preference, I would much prefer a market-based solution.  Having said that, the market has failed – massively – to minimally, let alone comprehensively, address even the most basic of health-related issues.  By way of example, we have the technological means to digitize and standardize medical records – and yet the entire health care industry, from doctor and hospital record-keeping to insurance company billing, is operating in the dark ages.

In many other industries, there are ongoing efforts to eliminate waste and inefficiency – and, generally, these efforts result in higher quality and lower prices.  My first cell phone – which was permanently mounted in my car – cost around $900.  I paid roaming charges, long distance charges – and a ludicrous (by today’s standards) per-minute base rate for local (within the same area code) calls.  My first monthly bill was north of $500.  Today I get a lot more service from my Crackberry – for a lot less money.

I can apply the same model to computers.  The first computer I operated was an IBM 360 Model 40.  It filled the first floor of an office building, had a whopping 144 kb memory, and disc drives (this is when DOS was really DOS) that required a semi-annual hernia waiver to move.  We had modems the size of refrigerators that transmitted at teletype baud rates – and all of this miraculous stuff costs hundreds of thousands of dollars.  In fact, the first “portable” terminal I used was packed in a fiberglass suitcase and weighed close to 100 pounds.  I used to buy a ticket for it and strap it into the seat next to me when flying to a sales call.  The stupid thing cost around $10,000 and hardly ever worked.   Today, my laptop – around $1,200 at Costco – is hundreds of times more powerful than all of that ancient (circa 1970) equipment.

There are other models that run contrary to these examples.  The office space in which that old IBM clunker was housed rented at $6.00 per square foot.  Today it’s close to $25.00 psf.  And the BMW 2002 tii that I bought for around $4,500 in 1971 would, comparably, sell for nine or ten times that today.

And then there’s health insurance.  I started a business in the early 1980s.  One of the first things that I did was arrange for a small group health insurance plan for me, my partners, and our handful of employees.  It covered everything.  Well care.  Sick care.  Hospitalization.  X-rays and labs.  Medication.  Dental.  Eyeglasses.  It even came with a life insurance policy.  There was a modest deductible that was capped at some infernally low amount.  The paperwork amounted to two simple forms – one that had to be filled out at the beginning of every year on the first visit to a doctor – one page, front and back.  And another that was half a page – just enough room for some very basic information (name, policy number, physician’s name and address, a few lines of description for whatever the issue was, and an amount to be paid).  My family coverage (two adults, three kids) cost less than $300 per month for the works.  And it was accepted by every doctor and every hospital I ever encountered while I had it.

Today, a comprehensive policy would be four or five times that – probably more – and would likely not provide anywhere near the same coverage (in New Jersey, for example, thanks to the miracle of incestuous state regulation, medication coverage can’t exceed 50% and is further capped at some inanely low annual maximum).

All this is just by way of introduction.  What I really want to do is ask two relatively straightforward questions.

First, what, from a consumer’s perspective, is the value proposition of the health insurance industry?  I’m sure industry spokespeople have a litany of answers – all of which are based on the same kind of actuarial logic that makes casualty or life insurance make sense.  But does the same value proposition apply to health insurance?   Put another way, what value (again, from the consumer’s perspective) do health insurance companies actually add to the health care process?  They clearly don’t add efficiency, cut waste, or contain costs.  What is their value proposition to the health care consumer?

Second, why do we have government funded, government run, insurance plans for banks (FDIC), stock brokerages (SIPC), health care for retirees (Medicare) and veterans (VA) – and even potentially flooded properties – all delivered in a single payer context – but that isn’t socialism, or nazism, or part of a liberal conspiracy to hand the treasury over to the Chinese or the Muslins or some as yet unidentified third round African draft choice?  We just blew a few trillion bucks paying off the bad bets of the geniuses in our financial services industry – and bailing out the boneheads in the auto industry – but when it comes down to regular check-ups and flu shots and sick care for the average citizen, it becomes part of some alien invasion conspiracy.  Why?

Answer those questions honestly and objectively.  Put your preconceptions aside.  The answer could be to privatize everything – jettison the FDIC, dump the flood insurance program, turn Medicare over to Goldman Sachs and Social Security over to Morgan Stanley, and so on.  That wouldn’t necessarily get the government off the hook because when those guys screw up – as they invariably will (giving money to a banker is like giving heroin to an addict) – the government will still be holding the bag.  But if it makes you feel better to think that the law of gravity can be broken, have at it.  On the other hand, if you think that the gummint can do a super swell job running things – give it your best shot.  The “public option” may wind up looking like FEMA or the Army Corp of Engineers or the IRS or the Pentagon.  I’m sure there’s an agency or two or three that you can think of – the EPA, the FDA . . . the choices are almost limitless – that is the exception that proves the rule.

I haven’t changed my earlier solution, mind you.  I’m just trying to spark a discussion that doesn’t involve the kind of abject stupidity the nine twelvers – or the single payers (particularly the dim bulbs who think that’s a dating service for Pay Pal members) – have been tossing around.

Just be consistent.

Written by unreal2r

September 16, 2009 at 2:15 AM