Spreading the Love

I’d like to direct your attention to two worthy blogs. One is about a blatant lie and another is about a long string of subtle lies.

The first is Government is Good , subtitled “An Unapologetic Defense of a Vital Institution” and “A web project of Douglas J. Amy, Professor of Politics at Mount Holyoke College.” Professor Amy, in clear, simple prose, explains why “governments are instituted among men” (See: Declaration of Independence) and why the knee-jerk critics of government qua government are wrong. It warms my heretical heart to read cogent, well supported articles with titles such as “The case FOR Bureaucracy” and “How Govt. is Good for Business.”

Bashing government is the national pastime, not baseball. And yet, as I have written before, what people really dislike about government is based on either the effect of corporate interference in government or our own misunderstanding of the rule of law.

Most of the regulatory absurdity, wasteful spending, and foreign policy blundering is the result of legislators being dependent upon corporate charity to run their reelection campaigns. On a personal level, we’d all like the law to let us do what we want to do, while preventing our neighbors from doing those annoying things that they want to do. There is a necessary symmetry to the law. You are supposed to be treated equally to the person you most despise. As Professor Amy points out, we are peeved when we deal with a bureaucrat who rigidly follows the rules, but we would be even more disturbed if that same bureaucrat had arbitrary power over us.

We are like fish in the sea, not noticing the water that sustains us. Professor Amy points out the water and its life-giving properties. It is refreshing.

The second site is BAGnews Notes, subtitled “How Politicians and the Media Spin Political Pictures.” This site chronicles and comments upon the use of images in the media, particularly political images. I find this fascinating and important because the most effective bias is the bias of background. Making a direct statement imperils the propagandist, because a direct statement can be fact-checked. The insinuation of a cleverly selected photograph is harder to confront.

The BAGnews home page presently has photos from recent Tea Party rallies, President Obama’s nuclear materials control summit, and the riots in Kyrgyzstan. All have something to say, more powerful for the absence of text. BAGnews provides the text, often an invitation to analysis as much as analysis itself.

I’m going to be frequenting these sites, and I hope you do as well.

Obliquity

I was at the used book sale at the local library last week, and I looked at one of those management advice books. I can't remember the name now, but a quick skim revealed the usual obvious truths. (Be self-observant in order to be emotionally genuine in order to interact with other people honestly.) It did explore one concept that interested me, one that I have thought about before but never had a concise name for: obliquity.

The concept is straightforward: Don’t focus only on your goal, and don’t head straight for your goal.

In business it means that keeping both eyes on the quarterly earnings reports is shortsighted and ultimately self-defeating. Witness our numbers-driven economy with its inflated parasitic financial sector, outsourced everything, tapped out consumers, and multi-billion dollar annual trade deficit. Contrast us with Germany, until recently the largest exporter in the world. Germans have worker friendly jobsite conditions due to powerful labor unions, universal health care, six-week vacations, mandated worker representation on corporate boards, and much more. Germany decided to have an economy that works for a majority of the people, with a broad spectrum of utilitarian goals. Wonder of wonders, Germany is also an economic powerhouse. Even with well paid, well treated workers they have a trade surplus. But it isn’t so surprising.

Back in the early part of the 20th century Henry Ford understood that he should pay his workers well enough so that they could buy Ford automobiles. Over the past 30 years or so the philosophy in corporate America has been to fire half the employees, keep wages flat for the other half and work them harder, and then hope that some other company’s employees have enough money to buy your product. Meanwhile, investors found that, at least in the short term, it was more profitable to plow money into a credit bubble than to actually go to the trouble of manufacturing useful things. We are experiencing how well that worked out.

Here’s an old column by Robert Cringely about high tech companies being managed to death. It includes the real life parable of the R&D department of Celanese being gutted in the name of earnings. Once again, the straight numbers guys miss the point.

One of my favorite examples of obliquity is daylighting, that is, the architectural practice of letting natural daylight into a building and intelligently managing it. The building in question is a school. Now, if you accept the premise of No Child Left Behind, the way to increase school performance is to have rigorous standardized testing with penalties for underperforming schools. (As I have written elsewhere, the educational equivalent of bayoneting the wounded.) The school in question was retrofitted with daylighting and test scores instantly jumped 15%. Apparently, just that much improvement in their work environment allowed the kids to concentrate on their studies. I wonder how much better our schools would perform if they weren’t designed like prisons or blast-proof bunkers.

A study by the Heschong Mahone Group found that the performance of workers at an incoming call center improved 6-12% with better views out windows, including more vegetation. Office workers performed 10-20% better on cognitive skills tests when they had windows with attractive views. Think about all the money corporate management wastes trying to wring out a few percentage points of financial performance when they could do so much more for the price of some windows and landscaping. Someone once pointed out to me that heating and lighting a commercial building costs less than $20 a square foot annually, but the cost of paying the people who work in the building costs hundreds of dollars per square foot annually. Increase productivity by 10% and you’ve blown away your utility costs. And yet, people still work in drab, shoddy, poorly lit cubicles.

Here’s the “Duh” quote from Adam Smith:

- "Where wages are high ... we shall always find the workmen more active, diligent, and expeditious, than where they are low." (from "The Wealth of Nations", 1776)

B-B-B-But, that would cost more money, just like providing a decent workplace and treating employees as if they mattered. Yup. Money that would pay a dividend.

Managers of all types get caught up in the raw financial numbers because raw financial numbers are what they were taught in their MBA programs. They weren’t taught to stick their heads up and look around at the general scenery. The truth being that the general scenery is where the action is.

Contrast the statements of the CEO of General Motors and the CEO of Honda. The CEO of GM once stated that GM was company that made money and that it just happens to make cars. The CEO of Honda stated that Honda is a company that makes cars and that it just happens to make money. Who is making money now?

This gets me back to the management book. It is just the business version of a thousand self help books, health books, and diet books that clog the publishing industry. All of them have a special magic formula for success, whether that success is measured by self-esteem, absence of disease, or pounds shed. It doesn’t seem to work that way. Happy people don’t deliberately follow a formula. They live full human lives. That is, they take part in their community, they spend time with family, with friends, and alone. They work, they play…this is sounding really hokey, and you know the shtick, but it is true. It is my observation that happy people don’t obsess about why they are happy or how they are going to remain happy. They just go do good stuff. Likewise with health and weight loss.  Most healthy people don’t diet. They don’t gorge on the “little known key nutrient that will extend your life and give you abundant health.” They cook often and eat good food. They live an active life. They have an overall lifestyle that works.

The cute parable on the subject is the one about the old cat and the kitten. The old cat sees the kitten chasing its tail and asks why. The kitten says “ I know that happiness is in my tail, so I chase it.” The old cat says, “It’s true that happiness is in your tail. But I just walk where I want to and it follows me.”




Vore

I’m looking for a word. I’d like you, my readers, to offer up some suggestions.

Localvore isn’t working for me. I know there are some variations on the practice of eating only locally produced food, but the term itself is absolute. I like the concept, but I also like chocolate and bananas. (See the Minor Heretic’s killer banana bread recipe) Other people’s diets are tiresome, so I’ll try to keep the explanation brief.

Your Minor Heretic is a vegetarian. I eat a lot of local products, including a type of bread called Cyrus Pringle from our local Red Hen Bakery. It is made with all Vermont grown wheat. I’ll search out local food products and often spend a little extra on them. I have been buying fresh spinach all winter from a local farmer with a greenhouse, so California is getting along without me on that front.

I do eat things from afar, but under three conditions:

1) Only if there is no true local substitute. There are no banana trees in Vermont, but there are plenty of apple trees. Ergo, I don’t eat apples from New Zealand or Chile. Sadly, nobody in Vermont makes Gruyere, so the Swiss get my money on that little luxury.
2) Fair Trade if at all available. No slave-grown chocolate for me.
3) The closest non-local supplier gets priority. 

Of course, your Minor Heretic being human, these rules get bent in order not to offend people or be a complete pain in the ass. So what does one call someone who buys local food when available and ethically as possible otherwise? I think there are a lot of people in this category, but it lacks the definitive name of the absolutist localvore. Kindalocalovore? Somewhatethicalvore? Tryingmybestinanimperfectworldovore?

Suggestions? If someone comes up with something really good I’ll make a Minor Heresies T-shirt and reward that coiner-of-buzzword.


Repo Man

You may have heard about some charges laid against Lehman Brothers, the first domino in the ongoing financial collapse. Those charges are starting to ripple out and hit others in the financial arena.

First, a primer on what they did. According to a bank examiner’s  2,000-plus page report, Lehman Brothers engaged in what is called repo transactions, repo being short for repurchase.

A parable: You are looking to get a second mortgage on your home. Problem is, your financial situation is not great. Chief among your problems is that you loaned $50,000 to your no-good Cousin Vinnie, and he isn’t making payments all that regularly. You realize that you will be lucky to get half the dough out of him.

You have a clever idea. You go to your rich Uncle Bob with a proposition. You will sell him Vinnie’s loan for $50,000 cash. Then, a month later, you’ll buy the loan back for $50,000 cash, plus a little for his trouble. Uncle Bob agrees and you deposit the $50,000. Then you apply for a loan with this big wad of cash in your account. The bank considers you a decent risk and gives you the loan. A few weeks later, Uncle Bob gets his $50k back and you are still stuck with Vinnie. The law has a word for this: Fraud.

Lehman Brothers did the exact same thing, substituting worthless bundled mortgages for Cousin Vinnie’s loan, other banks for Uncle Bob, and fifty billion, with a “b” for that fifty thousand. They temporarily ditched a mass of their CDOs when they were about to file quarterly reports and called it a permanent sale. Thus they managed to look good on paper at the moment that people, including regulators, were looking. Their CEO, Richard Fuld, and several top managers have been implicated, as well as Ernst & Young, the firm that audited them.

So far, no shocker. Big Wall Street firm gets in too deep and commits acts of fraud. But then there are the ripples. Timothy Geithner, once Chair of the New York Fed, now Treasury Secretary, is getting increasing criticism for his lack of oversight. He’s accused of cronyism and bad judgement. Geithner is widely considered to be the one who could have and should have acted earlier to end both the risky business and the fraud that covered it.

Over at Naked Capitalism there is a letter from an anonymous employee at a financial firm reporting multiple instances of non-Lehman repo transactions. Widespread repo fraud in the financial industry? Again, no shock, but a growing sense of unease. As rotten as it all looks on the surface, could it be even less resilient with the whitewash rinsed off?

Mike Konczal at New Deal 2.0 writes cogently about the problem of second liens, that is second mortgages and home equity loans. Apparently the big four of the banking industry, Citi, Bank of America, Wells Fargo, and JP Morgan, are holding just under half a trillion dollars in second liens. The problem with this is that a number of other banks are under pressure to devalue the first mortgages to be in line with actual house values. Since the second liens are second in line for payment, in that case that half a trillion dollars becomes, well, zero. The big four can fight to be first in line for repayment, but that leaves the homeowners under water and financially tapped out. This would mean that the other banks that hold the first mortgages end up with the big holes in their balance sheets. It’s like a twin-sized blanket on a king-sized bed; not everyone is going to be able to cover their asses.

When this deficit hits the mainstream consciousness we can expect a major loss of confidence and a problem for the Obama Administration. Do they pitch another few hundred billion down the fraud hole? Or do they stand by and watch the big four slowly topple? It’s both politically and financially wretched either way. It’s looking like a double dip recession, both in Washington and Wall Street.

Health Careless

“I don’t know what alarms me more, the state of our health care system or the fact that we accept it the way it is.” Thus spoke a friend of mine as we discussed the health problems of those dear to us. What follows is less of an essay and more of a series of vignettes that raised my blood pressure recently.

I was in the lobby of our local hospital recently, on my way to visit a friend who had broken his ankle rather badly. There was a large sign in the emergency room that said that the hospital is legally required to treat you even if you don’t have any money. There was another like it in the main lobby. This goes under the second clause of the initial quotation above. The fact that this isn’t simply understood by everyone tells a story about how hoodwinked people are about our basic human rights.

The friend who uttered the opening quotation also told me about an interview she heard on a British radio show. The guest was an American woman who had been diagnosed with cancer the day after her insurance had lapsed due to a clerical error by her employer. The woman spent a tense few weeks trying to rectify the situation, literally a life or death effort. Apparently the British interviewer had to keep reminding her to define her terms. “What is a co-payment? Our listeners wouldn’t know.”

Then there is the story of another friend who spends time in two different states, one in the east and one in the southwest. Her health insurance only works when she is in the eastern state. If she were to get sick in the southwest she would be on her own.

Getting back to the friend with the broken ankle, I was recently looking into bone growth stimulators. There is a class of devices that emit low intensity ultrasound directly into the affected place and stimulate bone growth. These are especially useful in cases where bones fail to heal rapidly.

I found one made by a company called Smith and Nephew. The Exogen 4000 appears to be a standard electronics box about 3” by 4” with an LCD screen and a cord leading to the small cylinder that emits the ultrasound. Apparently it retails for something between hundreds and thousands of dollars, depending on the source. This price spread is weird in itself. The real outrage, though, is how they power the thing. It has a non-rechargable, non-replaceable battery. The purchaser gets about 350-400 uses out of it and then it is junk. Used devices show up on eBay, with the sellers noting how many times it has been used and how many cycles should be left. It’s akin to buying a disposable laptop computer. It’s obvious that the device could be rechargeable or have a replaceable battery, or could even be plugged into the wall. However, Smith and Nephew, in its corporate greed, decided that profits should win out over affordability, effectively denying the use of their device to a class of uninsured. No way are these things going to be passed on from patient to patient indefinitely. It makes perfect sense financially, and it is a perfect crime against society.

Meanwhile, on the Vermont end of things, we put the call out through the neighborhood for various necessities for someone with a bum ankle, including a walker. Emails and calls came in and we found a couple who runs a free medical appliance exchange out of their garage. These good people spend their spare time maintaining and distributing walkers, wheelchairs, crutches, and the like. We all pitch in around here.

It’s a bright spot in the gloom, but not a solution. It looks as if the nation’s bought and sold “representatives” in Washington will do the bidding of the insurance and drug industries. Vermont will have to navigate its own path to a rational health care system and let the rest of the country follow along.

In the meantime, try not to get too sick, ok?

Update: Just when my blood pressure was returning to normal, I read about another symptom of the recession. Some companies are cancelling their employee's health insurance plans without telling them. The first that people know about it is when they present their insurance card to the nurse and it gets handed right back.