A voice in the wilderness

Still more Carrier IQ madness

2011-12-02T04:09:00.000-07:00

Everything I read about the Carrier IQ bruhaha is way off base.

My big fear is that all the keystrokes are being recorded on the phone and held in a log. Never mind how much is downloaded to Carrier IQ or the cell service provider.

What happens if I loose my phone and someone just plugs in and reads the log? Any websites I log into and my passwords are in that log and the potential thief now has access to my BANK ACCOUNT!

That scares me a lot more than them selling my location at 10 AM Friday morning to some mythical third party.

Once again the media is watching the hole and missing the donut.

Passion for the work

2011-08-16T08:23:00.001-07:00

Buffalo Wild Wings CEO Sally Smith: When interviewing job applicants, Smith looks primarily for one thing -- passion, no matter what it's for: "Is it a sport, is it reading?"

This only works when the company is willing to invest in the employee to create a passion for the product/service/customer. If you expect the employee to show up with a full set of skills, expect them to act like a hired gun with a passion for their pay check and if you're very lucky a passion for doing their job very well.

You can’t hire passion for your product, you can only grow it!

Why can't the press report the facts?

2011-08-06T10:18:00.002-07:00

Births in the United States in 1985 were 3.760,000. 17 years later in 2002 approximately 2,900,000 students graduated from U.S. high schools. Divide those 2,900,000 students by 12 months and you get 241,666,667 people entering the work force every month.

Some may go to college but the ones graduating in the same year just replace them. There might be some minor variations in the numbers starting and finishing in any given year but that should be such a small number that we can safely ignore it.

Some may not enter the work force at all for a lot of reasons, some may become housewives or house husbands, some may not get a job for health reasons, some because they have independent means and don’t have to work. So lets cut that number to 200,000 new jobs every month.

The point being that any month that we don’t hire roughly 200,000 workers we are loosing ground. While the June 2011 number of new hires (117,000) represents “only” 83,000 first time workers who can’t find a job it’s an increase of exactly that number of people who are out of work.

This number is represented as a gain because more people found jobs in June than in May. That’s always good, but if we accept the June figures as representative then over the course of a year 996,000 more people will be out of work over that 12 months.

And that’s before we even talk about getting jobs for those people who were out of work at the beginning of the year!

We expect politicians to quote only the most favorable numbers so I won’t fault them. But it took me less than an hour on the US government web site to dig up these numbers AND to write this. So how is it that trained professional reporters can’t do the cursory fact checking to put the statements into perspective to show what is really happening?

If I believed in conspiracy theories I’d think the press was in collusion with the government, but my common sense tells me that it’s just too many journalists to ever get them all to “toe the party line”. So I’ll fall back on a quote:

Never ascribe to malice that which is adequately explained by incompetence.

Napoleon Bonaparte

How come?

2011-07-17T16:43:00.002-07:00

Quick question: if a 0.3 percent decrease in unemployment in May (2011) was a noteworthy trend, how come a 0.3% increase isn’t equally noteworthy? If a .3% change is noteworthy then the statistics watchers should have caught that one as a leading indicator before the job market crashed.

Had the watchers paid as close attention to that tiny drop way back when, we might have been able to make the necessary changes when it was easy and cheap.

How do you motivate temp workers?

2011-06-07T09:05:00.002-07:00

I like to answer questions at Linked In, the online business-networking site. Today someone asked a question about motivation that sparked an email discussion with the person posing the question.

A few years before I was born, Abraham Maslow posed his “Hierarchy of Needs” pyramid. The issue in today’s discussion was how to best motivate temporary workers. What shocked me was the automatic assumption that the basic need of Maslow’s first and second tier had already been met. That all the workers had established their psychological and safety needs.

In fact in modern society food (part of the psychological needs) and employment (part of the safety needs) are intertwined with our jobs.

Since most temporary workers are still trying to meet the two basic need of Maslow’s hierarchy the rest of the motivators cannot begin to take effect.

The person I was corresponding with, who made the assumption that those needs were already met, referred me to a video by Daniel Pink on The Surprising Science of Motivation. What surprised me was that Mr. Pink, a well-respected motivational speaker and writer, made the same fundamental assumption. In his video he seemed shocked that money only motivated until the most basic needs were met, after that personal satisfaction and growth became the prime motivators.

The big surprise to me was that both Pink and my correspondent forgot that the subject gets to define at what point those basic needs were met. For some, paying the rent on a minimum apartment and cable TV is enough. Others need (or think they need) a 2,500 square foot house, with all the trimmings, and two new cars.

My point that the observer doesn’t get to decide when the minimum needs are met, that the subject does really matters when you are trying to discover the correct motivator for your workers. Each one will have a slightly different key to their “basic” needs just as each one will have different things that give them personal satisfaction.

What you must remember when you are trying to motivate your temp workers is that most of them either haven’t met or are just barely meeting their most basic need for food and shelter. On top of which they are deeply concerned about sustaining or increasing their basic level of food and shelter. After all, you are using temps because it costs less than full time permanent employees and you expect the work to only last for a short time after which you plan to cut them loose.

You can’t expect to invoke Maslow’s higher order needs fulfillment of love/belonging, esteem, or self-actualization unless and until you fulfill the more basic food and security needs first! In the same vain you can’t expect to use Pink’s video as a key since the fundamental assumption that the basics have been met is generally false for most temporary workers.

A surprising find

2011-05-25T12:05:00.002-07:00

We have a friend visiting and her mother was born in Winsor, Colorado, so we drove up so she could see the town just for fun.

Since it was lunchtime we decided to try a Mexican restaurant, called the Pueblo Viejo, because it was close to the freeway and on our way back from Windsor. From the highway it looked quite large, but pulling into the parking lot it looked like your typical strip mall storefront and we almost didn’t stop.

When we got in it was a really nice looking place, clean with nice decorations and a wonderful hostess, who we later found was, with her husband, the owner.

My wife, her friend, and I all picked something different from the menu and each of us were very pleased with our choices. I was really surprised to find a Pescado Costeno (a breaded Tilapia topped with jalapenos, cheese and bacon) that was first rate.

I didn’t expect to get a fish dish that outstanding from a strip mall storefront Mexican restaurant!

Pueblo Viejo in Windsor has two other locations in Fort Collins and Colorado Springs, and while I can’t vouch for the food in any other location, based on the food at the Windsor store I’d try any of them when I am in that area.

I can’t recommend them highly enough, so I’m attaching a link to their Fort Collins location for you to follow up if you like.

Impossible

2011-05-22T08:43:00.002-07:00

On October 3, 1957 I was telling my dad about a science fiction book I had just finished. My father, not being a science fiction fan finally said: “Just shut up until they do it!”

The next morning, October 4, my dad woke me up very early before he went to work and said “That story you were telling me about yesterday, finish telling me.” Then he showed me the newspaper headlines “Russians launch Sputnik satellite”.

While I did learn the not everyone would get as excited by a sify book as I did, it taught me a valuable lesson about keeping an open mind to things I am not immediately interested in or familiar with. Lean whatever you can about everything you bump into.

One big lesson was that to be able to enjoy a science fiction story you must suspend rational disbelief. That is you must accept that faster than light travel (for example) is possible or you just quit reading because FTL is not possible under physics as we understand it.

This ability to not prejudge flowed over into the rest of my thinking and allows me to look at problems and, at least mentally, try on “impossible” solutions. Since I don’t automatically reject it because it doesn’t conform to my preconceived ideas.

People do the same thing in watching movies all the time. We know that it is very unlikely for a librarian to really be mistaken for a spy but we disbelieve that rational knowledge during the movie to enjoy the story and the action.

In the same way to find new solutions to old problems, you must forget the old restrictions and just pose impossible solutions. Try it and you will find that at least one is not as impossible as you might think. The impossibility might just be like flying to Paris – impossible until the Wright brothers figured out the basic principles. Impossible until a host of others figured out how to make stronger airplanes, better engines, and all the necessary inventions to make a flight that long possible.

Impossible to fly to the moon until Neil Armstrong did it!

Those changes may have been taking place in the background leading up to today, unnoticed by you, and those changes may make what was truly impossible last week, possible today!

No Brainer Decisions

2011-05-16T05:19:00.001-07:00

Just watching a story on CNN about a man with a 4 cent (yes $0.04) tax bill and since he didn’t pay it for several years they are trying to collect $200 in penalties and late fees.

This kind of obvious craziness happens all the time in a bureaucracy where decision-making authority is held at too high a level. Shouldn’t the lowest level clerk have the discretionary authority to fix this instead of having an IRS agent deliver the tax bill?

Why is this an issue worthy of discussion; more importantly do you have the same kind of silliness costing your business? Driving up costs by diverting necessary assets into spending more in time and effort than the return is worth?

At the hourly rate for the lowest level IRS clerk who has the file on the 4-cent underpayment, the time spent on this file has to be orders of magnitude above the recovery amount. Holding the discretionary authority to just write off the $0.04 above that level wastes the time of both the clerk and the people chasing down that payment.

Is your organization wasting the manager’s time authorizing deviations from regular policies that are so simple that the lowest level clerk should be making that decision? Not only are you wasting time the more senior manger could be spending on other issues, the clerk could be helping someone instead of dealing with this no-brainer issue.

Your customer knows that the four-cent problem should be a no-brainer and the fact that your clerk has to get permission for something that obvious makes them wonder if they really want to do business with you.

Memories

2011-05-05T06:18:00.002-07:00

I just read that Alan Shepard, the first American in space flew just 50 years ago and it reminded me of the second time I met him.

The year I turned 16, my parents took me to a friend’s New Years Day open house. I was hanging with their 15-year-old grandson in the “game room”. They had a pinball machine and a few other games to play while the adults did whatever adults did at a New Years Day party.

During the day, my friend’s uncle showed up and we cornered him to talk about his experiences as a Navy test pilot, he was the first to land a Phantom on an aircraft carrier. At one point, my father and the host came to rescue this guy from the kids and let him get back to the adults at the party.

While getting this poor guy away from us, my father happened to see a picture of the host in uniform in front of a world war one biplane and asked about it, The host told us that he had indeed flown in World War I as a fighter pilot.

Were we were in his game room talking to Phil Brewer and his son-in-law Alan Shepard! Image how I felt a few weeks later when Shepard flew the very first space shot!

When we watched the launching in class on live TV, I claimed to have met him and the teacher called my mother (later in the evening) to find out if I was telling the truth. That’s how much celebrity the first astronauts were in their time. Claiming to have just met one was automatically questioned.

What I mostly remember of that brief meeting was how kind and generous Shepard was to two young hero worshipers. As I remember 50 years later, he spent close to 45 minutes talking to us about the astronaut program and his personal experiences. In fact, this many years later, I really only remember that it happened and no details about the conversations, but I still remember his kindness to his nephew and a family friend.

The other thing I remember is being amazed, even at 16, at meeting two men, the older who flew the first fighter planes and the younger the first rocket ship!

Cause and effect

2011-05-02T07:14:00.003-07:00

I have had low back pain on and off for years. My doctor’s are not sure what causes it but I dumped one who told me that my back hurt because I had bad posture.

Why did I dump him?

Because any doctor who can’t identify that walking bent over is an effect of back pain not the cause darn sure can’t help me find the cause.

In much the same way we are lingering in the current recession much longer than we really need to because the decision makers are mistaking effect for cause.

The high debt level of American workers was not the cause of the recession. Debt levels were a symptom of wages not keeping up with costs and workers trying to maintain their standard of living! Creative housing loans were not a cause they were a symptom. The salaries of jobs that used to pay enough to support home ownership fell behind costs, so banks developed creative loans to keep those people (whose salaries used to allow them to buy those same houses) as customers for home loans.

This confusion is caused by economists that don’t understand that economics is just money at a national or global scale. Money a medium to exchange and store labor. I do work today and either get goods directly from you in return or I accept money that I exchange for someone else’s goods or hold to exchange in a day, week, or year.

That’s it. All the economists do is track and project that process. Banks aggregate the medium (money) by collecting stored labor (cash deposits) and share it in the form of loans in exactly the same way that a battery stores electricity and delivers it elsewhere later.

If I get paid one quart of milk for chopping a cord of wood or a dollar for the same effort and can trade that dollar for a quart of milk, the rate of labor exchange is equal. When I make a small part that ends up in a larger and more complex product it gets harder to see the relationships, but it is there just the same.

In my wood for milk example, I can clearly see that if I can figure out how to cut more wood in the same time, I would be more productive and I would get the direct benefit of that increase. If I am doing more work in the same time, shouldn’t I get more per hour?

If I am chopping that wood with a hand axe and buy a chain saw then I should be able to cut more wood per hour and my income per hour will go up. But what if I work for someone else and they pay for the chainsaw? Who gets the increase? Should we both share in that increase or should the owner of the saw get it all? The chainsaw takes training to operate and I paid for the training and you paid for the chain saw. Shouldn’t we split the increase somehow?

This is close to what has been happening for the last 10 or 15 years. Industry has been investing in improved tools while workers have been investing in improved training. The cause of the recession is that most businesses have not passed on enough of the increase in profits as higher salaries to cover the workers’ investment in their skills and knowledge.

Investing in jobs

2011-04-27T07:11:00.001-07:00

I have been reading blogs for a few years now and one post just started me thinking. In the blog post titled Recycling Capital at A VC, by Fred (Wilson of Union Square Ventures), talks about investing in startups at the very beginning. These investors differ from most venture capitalist investors and are usually referred to as early stage investors or angles and usually provide the seed money to create the first iteration of the product.

In the article, Fred describes the American system of investing in startups as the “envy of the world” and I’d bet that’s true. But I’d also bet that it’s pretty limited to computer-based companies like Facebook and Goggle. Right now there doesn’t seem to be a big investment process for hardware.

Most of the companies the investors are funding are developing software and those companies don’t hire large numbers of people to build and ship a product. What this means is that while the investors may make a nice return on the investment and the small core group of programmers may make a nice living, the number of people involved is quite small. The group is also limited to a small number of people with a limited skill set.

Nearly everyone these days gets some programming training in either high school or college and still only a small number of that group end up programming so there is some “self selection” going on that limits the number of people who will end up with jobs in those computer based businesses.

While this is still a good thing since the rest of us benefit from the new capabilities in many ways, it does limit the number of job created directly by those businesses. While the social media now being developed may give us lots of indirect benefits that end up helping our working lives, they won’t create jobs at the rate we need today.

What steps can we take to help develop new or expand existing companies that will directly employ the number of people coming into the work force in future? If we accept the evidence of history, only a few people will continue to move into the software development business leaving a huge number of workers floundering for real jobs.

Where are the investors in business that will eventually employ the large numbers of workers that will end up creating the vast number of jobs we need? No one seriously expects us to find enough jobs to put just the people left unemployed by the recession in “cottage” industries. And that’s what a lot of the new employment is, small business that only have a few workers.

The economic engine of the modern world was not lots of small business owners, it was industrialization. The vast majority of people who ended up in the middle class did so because they were specialized workers in a large industry.

Denver sure has funny weather in April

2011-04-14T05:41:00.001-07:00

Yesterday I was out and about in a short-sleeved shirt. This morning it’s snowing! Just a day short of two weeks ago we went to the opening day of the Colorado Rockies baseball team in shorts and short-sleeved shirts. The thermometer hit just over 80 degrees.

Now I know what people meant when they said that “if you don’t like the weather, wait a minute!” Since my wife (born and raised in Southern California) doesn’t drive in the snow, I have to take her to work, a 50-mile round trip on the freeway.

The small suburban town where she works is reporting 2 inches of snow already and we won’t leave for another hour and a half so who knows how much snow I’ll have to deal with.

When I went to take my driving test way back in Pennsylvania it was early February and there was a little over an inch of snow on the ground with more falling. My father didn’t think they would let me take my test because of the snow. The tester told him they would give the test and said “He’ll have to drive on it after he gets it license”.

While everyone prefers clear dry roads, I’ve been driving for exactly 50 years in all kinds of weather and the car has 4-wheel drive so it should be no problem. Especially since most people here know how to drive in snow. My biggest problems has been in places with the rare snowfall where the locals never learn the skills of driving in the snow and then do dumb stuff which gets those of us who know what to do caught in the mess.

Biker Jim’s Gourmet Hot Dogs

2011-02-19T09:48:00.001-07:00

Decided to go downtown (Denver) for lunch the other day and got off the bus at 16th and Arapaho. There are lots of restaurants with in a short walk of the bus stop and many have outdoor seating. The weather was one of those great days where it’s cool in the shade but still comfortable to just sit in the sun.

Facing the bus stop was a street cart selling hot dogs. I am always on the lookout for a good dog, ever since I was a kid and my dad took me to a place called Yocco’s in Allentown, Pa.

Since Biker Jim’s Gourmet Hot Dogs was voted Best Dog in Denver by Westword Magazine, I thought I’d try it. Weird dogs on the menu! Elk Cheddar Jalapeño, Alaskan Reindeer, Wild Boar, and more, way down at the bottom was a plain old Kosher dog.

I tried the Elk dog and it turned out to be a really great dog! I like my dogs with just mustard and fresh chopped onion so that’s how I fixed it. Turn out to be about the best dog I’ve ever had. Just the right mix of Jalapeño and Cheddar with a bun that was not too doughy or dried out.

A group of 5 at the next table had gotten several different types of dogs, had then cut, and sampled each. Shamelessly eavesdropping I listened to them compare the Elk and Reindeer dogs with their favorite being the Elk.

Here’s the website so you can check them out the next time your in Downtown Denver. Believe me, if you like dogs, you’ll like Jim’s.

Free markets

2011-02-17T09:35:00.006-07:00

The theory holds that within an ideal free market, property rights are voluntarily exchanged at a price arranged solely by the mutual consent of sellers and buyers. They engage in trade simply because they both consent and believe that what they are getting is worth as much or more than what they give up. Market price is the result of buying and selling decisions en masse as described by the theory of supply and demand.

So the prices the unions in the United States were able to negotiate with companies were either “free market” agreements or were the result of the union’s coercing the companies into unsupportable wage agreements.

If, and it’s a big if, the unions created unrealistic wage scales, how come the companies were able to make huge profits during the heydays of unionism in the 60s, 70, and 80s? According to Fortune Magazine, GM made 873 million dollars in profits for 1960. The same source reports GM profits for 1970 at $14,820 million, and for 1980 as $32,215 million. In 1990 $173,297, and in 2000 $273,921,000.

Why is this important? If the unions were really behind the demise of GM in 2009, we should have seen a downward trend in GM profits over the preceding 40 years and in fact the reverse is true as profits went up not down.

Don’t even try to make the case that the “legacy” cost of pension and retiree health care is the problem since those benefits are really deferred compensation. Earned during the workers productive years and banked for their retirement. Seen the article Where Does Your Pension Come From for full details of how pensions really cost GM nothing.

The next time someone who hasn’t bothered to do their home work tries to tell you that the unions are the problem, ask them why the companies that managed to make a lot of money from those union employees now want to blame them for management's failure to manage their deferred costs?

Flying saucers

2011-02-03T06:34:00.001-07:00

In the TV show X-Files Molder used the phrase “Absence of proof is not proof of absence”. The idea being that just because you don’t have proof that something exists you still can’t be sure that the thing in question isn’t real.

So, can we now say that flying saucers really don’t exist since almost everyone has a camera on their cell phone and has that with them all the time?

Admittedly cell phones don’t capture lots of detail like film cameras or even low end digital point and shoot cameras do. But, even a lot of second rate, grainy thumbnail photos from the average cell phone should have begun to turn up.

Given the shear number of cell phones with built in cameras out there, we should have huge number of photos of UFOs and we don’t’. Can we reasonably infer that we don’t have that huge number of photos because there is nothing to take pictures of?

The other phrase from X-Files was “I want to believe!” and as a reader of science fiction starting in the early 1950s I do want to believe. Even someone like me has to see proof sometime and those missing photos really go a long way to convince me that unexplained flying objects (UFO) are really unlikely to be “flying saucers”.

Mongolian in Denver

2011-01-31T08:36:00.001-07:00

My wife’s daughter is visiting from Las Vegas and we walked downtown for dinner. We decided to try a place that is new to us called DBs Mongolian Barbeque. Good food, good prices, and great staff.

Worth your time to try next time you are in downtown Denver.

Is history repeating itself?

2011-01-19T12:17:00.001-07:00

I’m reading Edmond Morris’ book “Colonel Roosevelt”. While Teddy was always a hero of mine, I was surprised by how many of my political opinions were shaped by his actions.

What particularly interested me was that Roosevelt did not consider his positions so much political as ethical. Creating a more level playing field for small business faced with the scale of the emerging corporations and holding businesses accountable for failures to protect their workers from the dangers of the mechanized factories then being build was more about honesty and fairness than a political view.

It’s fascinating to me that we are seeing many of the same complaints about “big business” today that we read about in histories of that time. Are the complaints the cause of the movement to remove many of the “square deal” restrictions on big business that Roosevelt championed or are the complaints the result of the removal of those regulations?

Perhaps we are living through the natural demonstration that those who don’t learn from history are condemned to repeat it.

True Grit

2010-12-25T19:26:00.000-07:00

I enjoyed the “original” with John Wayne. I just saw the remake with Jeff Bridges and was blown away!

I’ve always thought Bridges was a much better actor than he was ever given credit for and his Oscar wining performance in Crazy Heart proved it. Well he’s back and even better in True Grit.

Everything I’ve read about the move claims that it’s more true to the book. Not having read the book I can’t say. What I can say is that Bridges is terrific. Matt Damon shows a dimension that only The Departed tapped before. I expect him to show a much greater range of acting skill as he is tapped for more demanding parts. Newcomer Hailee Steinfeld is outstanding as Mattie and delivers a dimension to the character that was missing in the original movie version.

Put this on your “do not miss” list. Worth every penny of the admission!

It’s rarely about profit and loss

2010-12-17T05:44:00.001-07:00

I have been screaming that the loss of manufacturing in the US is not caused by the difference between profit an loss, it’s caused by the difference between profit and more profit. Finally an article in Fast Company supports my “gut check”. The following quote from the article illustrates my point quite well.

"The authors offer a scenario in which Apple suddenly decides not to pursue profit maximization, dumps the oft-criticized Foxconn, and decides to pursue a model of corporate responsibility and patriotic we're-in-it-togetherness. It's true that U.S. workers fetch about 10 times as much as Chinese workers, and the manufacturing costs would rise to $68 per phone from about $6.50 per phone. But if Apple sold the phones at an average of $500 (already the asking price for some models), they say, it would still clear a 50% profit margin."

Thank god someone a lot smarter than I am gathered the statistics to prove my pattern recognition opinion. I’ve been saying for years that the choices most companies are making to manufacture their products overseas are rarely about profit and loss, they are about percent of profit.

Now don’t get me wrong there is nothing wrong with making a profit or making as much profit as you can. What’s wrong is making that profit while killing your customer base!

When I lived in Seattle I watched a major company kill their customer base by off-shoring a lot of their production from small local vendors. Now the major customers for their products are American companies and the customers to those American companies are the American people. So, every job lost is a customer lost since without a well paying job, those Americans can’t afford to buy from that mega companies customers – the mega company looses sales since their direct customers don’t need to buy more.

Our current economic problems are completely driven by short-term thinking; buy focusing on profit rather than realizing that profit is a by-product of building a good product and supporting customer’s who buy your product. What I see from the bottom of the pile is tactical thinking.

The cure of course is to start thinking strategically. Start planning for a long run and not putting too much effort into next quarter’s stock price. Better to give up 10% profit this year or for the next two years but to ensure not only future profits but also existence for the next 10 years.

Back when I was in the Army I was taught that the troops do what the commander checks. In this case, the moneymen are the commanders and they are checking the tactical stuff (profit this quarter or this year) and at their level they should be checking the strategic (profit for the year after next and the next 5 years).

What Torrino can teach Cleveland

2010-12-03T07:38:00.001-07:00

I just found this article in today’s Time magazine online and one of the key elements jumped out at me. The article begins; “The closure of Torino's Lingotto assembly plant in 1982 was a body blow for the Italian car capital”.

And goes on to describe how Torino overcame the effects of a 100,000 person layoff when the plant closed. To quote further "Today the Lingotto plant stands once again as the symbol of the city. Only now the old factory serves as a testimonial that there can be life after the auto industry. Redesigned in the 1990s by Italian architect Renzo Piano, it forms the hub of a revitalized commercial district."

The unanswered question is “What did all those people do for that 8 years while the city got it’s rebranding off the ground?” While the human impact of the 8 lean years shouldn’t deter anyone from beginning to make these kinds of changes any plan must include the human element and that is not described in this article.

It should be obvious to the most casual observers that just focusing on companies and bringing in “trained” workers leaves your citizens to take the bottom end jobs at low wages and benefits. Left to their own devices, most people can’t afford either the time or tuition to go back to school full time. Part time is demanding and disruptive of family life and finances since the available jobs rarely pay well enough to maintain the family life style AND pay schooling costs.

Leaving this out makes describing the revitalization process much easier but is grossly misleading of the complexities that the agencies face. Without a well prepared work force to match the business friendly climate the article describes, those displaced workers will just fall by the wayside and you develop am unemployed underclass and we all know how well that has worked for may big American cities for the past hundred years.

Read the full:

Downtown Dogs

2010-11-28T14:15:00.002-07:00

Not the critter on the end of your leash, but a real eatable hot dog.

Sneer if you will, but to me a great hot dog is one life’s greatest pleasures. In the search for a good dog, you eat a lot of junk food. Sort of a metaphor for life.

Today we found a really nice place called Billy’s Gourmet Hot Dogs. Really good dogs! I always start with a plain dog, fresh onion and spicy mustard. Why? Cause I want to taste the dog, not the coverings. Really good dog.

My wife had the chili cheese dog and really liked it. But the most outstanding thing was their hand cut french fries! No cooking oil residue and just enough salt to taste but not over salted.

Since this is my first “dog in Denver” I can’t tell if it’s the best in town, but if you love your dogs, you should put Billy’s Gourmet Hot Dogs on your must try list.

Here is the link to his website.

The myth of retirement

2010-08-09T07:23:00.001-07:00

Since I semi-retired, I’ve gotten out of my morning routine. I used to get up, start the coffee pot and take my shower while the coffee brewed. Now, I make the coffee and read my emails, check the news sites, read my blog feeds and later in the day take my shower and run my errands.

I commented to my wife that I should get back into a routine of showering as soon as I get up. She said, “That’s why you retired, to not have that routine”. I answered, no; I retired because I couldn’t find a job!

This exchange caused me to think about retirement and some of the nonsense put out by the press, specifically about social security. The biggest piece of nonsense is that horse pucky about people living longer so we should raise the social security retirement age.

This shows the speaker’s lack of real world experience. Yes, if you are an economist, you can work till your 70 or 80, if you’re an electrician, try wiring a house or crawling through an attic at 65. Think about a carpenter, or a waitress, or any storeowner trying to do the physical labor involved at 65 or older.

I’ve worked as an electrician and a carpenter, my hobby is woodworking and while at 65 I can still do most things, I don’t have the stamina I would need to keep doing that all day, every day. I can still lift a full sheet of half or three-quarter inch plywood, but after the 3rd sheet or so, it really eats me up!

I got laid off when I was 59 and started a handyman business because I couldn’t find work in my regular trade, writing technical manuals. After about a year, we decided to sell our house in the city and move to a weekend home in the mountains with the idea that I would continue my handyman business. When I moved, one of my last employer’s customers ask me to work some projects for them and since it pays a lot better than handyman work I jumped on it.

I still tried to find handyman jobs to fill in for the gaps in writing projects and found over the next 5 years, I was less and less capable of doing the heavy lifting involved in many of the projects. A self employed friend (just a year to two younger than I am) who also does handyman work between his regular gigs has also seen a real change over the last few years in how much he can do.

The next time some fool tries to tell you that we should raise the retirement age, remember that the only reason they believe that is because they don’t spend their days bent over under the hood of a car, digging a ditch, driving a tractor, or standing on their feet.

Sure, you can work long past 65 if the only thing you have to “work” is your jawbone!

Style or substance

2009-12-01T07:25:00.001-07:00

So long ago that I no longer remember where or when, I heard this statement: The measure of a leader is not the measure of the cause.

How many effective and charismatic leaders who lead evil causes does history tell us about? How many great causes were lead by flawed men?

Back when I was in the army, we played poker for recreation. We had a saying that the cards spoke for themselves. That is when you laid down your hand, it didn’t matter what you said you had, you actually had what the cards showed. And the qualities of the leader both good and bad are not the qualities of the cause, good or bad. The results of the cause, good or bad, speak for themselves and define that cause’s qualities.

We’ve all seen televangelists that preach a Christian life but don’t come close to living it themselves. Does their inability to meet their own standard make that standard less worthy? I think not. Just as someone’s idea is neither better nor worse because they present it poorly or well.

The same is true for business ideas. The idea is either good or bad on it’s own merits not on the quality of the presentation. If the life’s blood of your business is a product or service then improving either the product, the service, the efficiency of production or delivery is crucial to your survival.

If improving your product or service or even developing a new product or service is important to your business, you’ve got to spend the time to look beyond the presentation to find your next big thing or next great employee.

Why the economy imploded

2009-10-25T08:09:00.003-07:00

A lot of well-trained, very smart people made decisions that seemed quite rational at the time. They followed their best training and the collective wisdom of their industry.

Since those decisions lead directly to the current economic crisis, we really need to understand what happened and why it happened so we can try to prevent this kind of global collapse from happening again.

Each of these people has somewhere between 250 and 500 hours of dedicated classroom training in economics, how it works, and how to manage businesses using that knowledge. If only one or two of this huge number of people, worldwide, had made the kind of serious misjudgments that lead to this crisis you might attribute it to their individual misunderstanding or misuse of that schooling or you might simply say they didn’t properly execute the steps that training recommended.

You might, if only a few of them had made those mistakes. That’s not what happened. Far too many of this select group acted in the same way at the same time for it to be simple human error.

Which seems more likely to you, that literally thousands of individuals, spread all over the world made similar mistakes at approximately the same time or that the knowledge gained in those 250 to 500 hours was simply wrong?

The fact the existing tracking systems, created by those same classically trained economists, didn’t catch a lot of people misusing or not properly executing the accepted economic wisdom makes it seem even more likely that the decision makers were doing exactly what that accepted economic wisdom expected them to do.

Without a detailed study of the current recession we can’t be sure, but it is unlikely in the extreme that so many people would all screw up in the same way at the same time. Much more likely that they were filtering the information through the same misguided theories.

I submit that a lot of people following a bad plan is much more likely than a lot of people screwing up in the same way at the same time. I further submit that the fundamental flaw in the underlying theories is that they mistake cause for effect!

There is an old saying that nothing happens until someone sells something, and from the limited perspective of the salesman that’s true. The broader view is really that nothing happens until someone buys something. Using that broader statement leads to other obvious conclusions.

For anyone to buy something they must have money; implying jobs that pay enough to buy that stuff. So any economic theory that does not hold as its keystone the availability of jobs and the income level of those jobs is fundamentally flawed. Yes, the current crop of economic measures and theories do include jobs and salaries, but only peripherally not as the central measure of economic health.

While this may seem simplistic or limited to someone trained in “classic” economic theory it seems obvious to the most casually observer that since one of the most highly trained economists, Alan Greenspan, didn’t see this coming that the training he spent a lifetime acquiring might have blinded him to factors that a lay person in his innocence recognizes as critical.

Benjamin Franklin is quoted as saying “Insanity is doing the same thing the same way and expecting different results”, we got where we are following our current economic theory and only examining and revising those theories stands a chance of charting a course out of our economic morass.

Are you looking for the right things?

2009-09-20T07:04:00.002-07:00

Bill Gates left Harvard in his junior year, Paul Allen dropped out of the University of Washington. Steve Ballmer graduated from Harvard with a bachelor’s in math and economics.

These three started with an idea and turned it into a major corporation.

If someone with the credentials of any of these three (two college dropouts and and a math major with no practical experience) came to you with the idea for Microsoft would you have bankrolled them? More importantly will you recognize the next Gates, Allen, or Ballmer?

I promise you that the Steves (Wozniak and Jobs) started in their garage because they had to, not because working in a garage was the “best” place to start. They believed, rightly or wrongly, that they couldn’t get any investor to give them the money to do what they wanted to do. Not because what they wanted to do was all that risky, but because the investors they could find had a lack of vision and were much more interested in the creator’s presentation skills than the fundamental idea.

What process do you have for the janitor to tell you about some hip, slick and cool new thing he found? Do you restrict your pool of new ideas to a select few managers at your staff meetings? And most importantly of all, will you remember that it’s your staff’s job to find the ideas, it's your job to pick the winner and figure out how to make money from it?

One of the problems with the economy today is the understandable urge to reduce risk. While managing and reducing risk seems like something any business should be doing, when you forget that without risk there is no growth, your business and the whole economy stop growing! One of the reasons Silicon Valley has had so many startups is the collection of people willing to take risks in that one small area.

The biggest blockage to a new idea is that a great idea is useless without someone else with money and a willingness to risk that money supporting the new idea.

Your gut check is most likey right

2009-09-16T06:12:00.004-07:00

I correspond (email) with my elder son quite a lot about various business issues. I like testing my experience-based ideas against his MBA trained thinking.

Our last discussion was about the missing data in the reports about unemployment. I believe that underemployment is the one of the biggest components in the current economic crunch. I also believe that the economy has to generate about 250,000 new jobs every month just to accommodate the people entering the workforce for the first time. You can see my blog post Digging Out for details.

When I complained that the reports don’t deal with either element very well and that the popular press doesn't tell the readers that this is critical but missing information, his reply was that collecting the underemployment data was difficult and would, probably, be lost in the noise of the bigger out-of-work number anyway.

I think this misapplication of the idea “if it can’t be measured it ain’t science” completely that ignores the fact that just because you don’t know how to measure it doesn’t mean that it isn’t critical. I also think that not including it has caused too many decision makers to miss key elements that are creating unintended consequences and pushing up unemployment numbers dramatically.

Just as you can see the differences between my poor writing and real art, your individual judgment will spot trends and underlying information that cannot be measured, reduced to numbers, and plugged into the currently popular economic equation. As long as you are analyzing the available information and not trimming to fit your pet theory, conspiracy or otherwise, your “gut check” much more likely to be right than the folks starting with a theory and complex math.

An if you think the complex math is more likely to be right, remember that John Nash, who shared the 1994 Nobel prize in economic science, developed the mathematical theory that underlies the complex equations that allows the development of derivatives trading. The same derivatives that drove the market collapse because those Nobel Prize winning equations didn’t really capture all the critical elements.

Alan Greenspan, former Chairman of the Federal Reserve Bank is a pretty smart guy and Wikipedia has this quote from him: In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation [..of financial derivatives..] and stated, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief." Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

The other quote that comes to mind is from Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

You’re supposed to find your passion, you’re supposed have a passion for your work.

2009-09-07T06:35:00.001-07:00

How many really do?

If you didn’t go to college, your first job was probably whatever you could get. That job led to other jobs that turned into a career. Mostly life handed you lemons, you made lemonade and your career progressed by Hobson’s choice.

If you went to college, you took what you thought you liked – at 17! As you studied you may have changed direction but you graduated at 21 or 22 and then began to find many new and surprising directions that you never new about, much less considered when you picked your major.

Now, in the middle of a recession with jobs hard to find, you are being told that you must find a job that fits your passion. You’ve been too busy making whatever your Hobson’s choice got you into work to find out what you love. That also means a career change in a job climate were employers are not looking for crossover skills, they are looking for a “perfect match”.

You will find that most of the people claiming that you should find work you are passionate about are in social professions – psychologists or psychiatrists – or sales. You will never hear an engineer, a chemist or truck driver tell you to follow your passion. You rarely see “must have a passion for driving a fork lift or accounting” in a job description. The only jobs I remember seeing talk about passion is sales. All the push for job passion is driven by our workplace change from maker to designers and sellers.

I am writing this on a Mac book and in the process of making this laptop computer someone sat at a workbench checking resisters. Measuring the resistance value of some percentage of the incoming parts to make sure that they are correct. How passionate would you be about measuring the resistance of these small parts?

You might get a lot of satisfaction from doing your job well and knowing that you are part of making a great laptop for some unknown guy to write on.

But, passion? Not so much.

Digging out

2009-08-21T06:06:00.002-07:00

According to the website infoplease.com , there were just over four million births (in the US) in 1991. Why is that number interesting? Because those people will turn 18 this year, and 18 is the traditional age when Americans start working full time.

Some percentage will be stay-at-home moms (or dads), some will be unable to work because of health issues or physical disabilities. The actual number of people entering the work force each month is generally estimated at around a quarter of a million workers. This means that we have to create 250,000 jobs every month. We can create new jobs or fill existing jobs where workers retire or quit working for another reason; but 250,000 people need a first, full-time, permanent job every single month - forever.
This number should help you understand the news reports on the economy. Any month we don’t create 250,000 new jobs, we are loosing ground. Doesn’t matter which expert predicts that this month’s numbers show a trend, until we create 250,000 new jobs, we aren’t even close to coming out of this recession.

Economist (and reporters) use short forms for numbers because they work with such big numbers every day. One billion becomes 1 and nine hundred million becomes 0.9 with a note at the bottom “All numbers in billions”. That works for people who deal with it all the time – almost. The problem is that the number has no gut check value. It’s far too easy to loose sight of the human impact when you don’t write out the full number.

0.025 (billion) just feels like a small number while 250,000 makes it much easier to see the real, live people who need a job. Depending on the source, that 250,000 is open to debate, but whatever the number, until we crate that number of jobs EVERY month, we are nowhere close to coming out of this recession.

I’ll believe the politicians when they address the obvious issues in health care

2009-08-17T04:21:00.001-07:00

I’ll believe the politicians when they recognize that the part of health care my employer pays for is part of my salary. When they demand that any cut in what the employer pays for health care is balanced by an increase in my hourly rate, so I can pay for the coverage my self.

I’ll believe when they demand insurance companies charge an individual the same amount as for an employee of the biggest companies for the same policy. The insurance company decided to put me in a group called individual instead of a group called company XYZ employee.

I’ll believe when they require insurance companies to accept my pre-existing condition exactly as they did when I started with XYZ Company. The insurance company decides to accept a pre-existing condition or not based on which group they assign me to.

Which group an insurance company assigns me to is an accounting fiction decided by that insurance company and nothing will change as long as it’s in the insurance companies interest (higher profit margin) to not change.

Remember, if the insurance company wasn’t making a profit selling that policy to XYZ company, they wouldn’t sell it. So it’s not a profit or no profit decision, it’s how much profit.

Economic shift

2009-08-11T04:45:00.000-07:00

Kurt Andersen in Time magazine on line wrote: “as some of the huge, dominant, old-growth trees of our economic forest fall, the seedlings and saplings — that is, the people determined to produce and sell new kinds of transportation and housing and media and other merchandise in new, economically rational ways — will have a clearer field in which to grow”

One big failure of all the economists trying to formulate a government policy is really shown in this choice of metaphor. Yes, in a forest, the big trees die to make way for the next generation of big trees. The problem with his use of the metaphor in today’s economy is that it is incomplete.

The trees can represent the businesses that are constantly growing, dieing and being replaced by the next “tree”. In this metaphor there are no people. Not to push the forest image beyond reality, the people are the birds and animals that live in the forest. When the forest dies of natural causes, one tree at a time, the “critters” that live in the forest have time to adjust and only a very few loose their home or food source.

If our economy is a forest, then current conditions are a forest fire where the fire burns through the forest so fast that the critters don’t have time to escape or adjust. They just die.

In his article, Mr. Andersen talks about Aptera Motors, Fisker Automotive, Tesla Motors, and Bright Automotive as the model replacing GM and Chrysler. Kurt, how many cars will any of these new companies need to sell to get the loans for the kind of money it will take to set up an assembly line to churn out 600,000 cars a year, and remember that the average person can’t afford a $30,000 car. At the same time these new companies need to generate huge sums just to build the plant to make cars, they need to cut the selling price by half.

And if current employment trends continue, that $15,000 car price might have to shrink to $10,000 to $12,000. If the economy takes 5 years to recover, how many people living in the “Obamavilles” (remember in the great depression they called the shantytowns Hoovervilles) will be able to buy those cars?

Prof. Gates and the Cambridge police

2009-07-31T08:58:00.002-07:00

Professor Gates of Harvard identified himself with his driver’s license and Harvard ID card. His driver’s license gave his residence address as the house he was in.

Any reasonable police officer would at that point recognize that he was dealing with the homeowner and say “Thank you, Sir. We were just making sure that you were, indeed the homeowner. Have a nice day.” Then leave.

This was not about race; it was a cop on a power trip. This officer has a real problem with authority figures.

Wait, you say, “isn’t the officer the authority figure?” Only until he finds out that the person he is talking to is not a “suspect”; he or she is a “citizen”. In the case of Professor Gates, that happened in the instant that he showed the officer his identification that he was not breaking in, that he was the homeowner.

In that moment the citizen became the authority figure and the officer the public servant.

Why job boards don’t seem to work for candidates

2009-07-23T15:15:00.001-07:00

Over 45 years ago when I was still in school, most tests were multiple choice and essay. The teachers loved multiple choice because they could grade them very quickly while essays had to be carefully read and that took time, slowing down the grading process.

Job boards and electronic resume submission forms work more like multiple choice than essay and work really, really well with skills. Skills like; types 60 wpm, welds aluminum, or 5 years experience as a plumber. They don’t work very well with essay type answers; Increased sales by 20%, etc.

Essay type answers demand discrimination and most artificial intelligence systems available today can’t do the level of discrimination that a human reader can. That means that a real live human has to read, closely, a resume for jobs that require judgment. That includes most jobs beyond entry level.

Since these tend to be the better paying jobs, there are a lot of applicants and this means a real investment in time by the HR departments.

I’m looking into what it will take to start a local business incubator in my hometown and wrote a white paper, which I asked some contacts to read. The funding sources were buried on the next to the last page on purpose. All the people who “read” it asked where the funding would come from! This told me that they hadn’t read the whole thing, just skimmed for key words.

How does this relate to job boards?

Job boards and computerized job applications do exactly the same thing, they “skim” for key words. If your key words are different from the expert system’s (or the human reader’s) you’ll get missed. The big problem is the preconceived ideas of the person writing the expert system or key word list. If they don’t really know the keywords that span industries and job descriptions, they will arbitrarily limit their candidate pool.

While this is a problem for job seekers, it’s an even bigger problem for business. A stable expert with years of experience in logistics, for instances, is much more valuable to your business than someone with lower skills and less experience. You’d like to find someone who can hit the ground running and not take a significant amount of time to learn the job.

There is not now, and may never be, a substitute for a live human actually reading a complete resume. Companies will continue to have problems finding high quality employees until they recognize that the key place to apply resources is at the initial screening. The first person to read a resume must have a great deal of experience with a large variety of industries and a deep knowledge of the day-to-day demands of each job they are screening for.

The initial screener is grading your “raw materials” and that job demands a high degree of knowledge, skill, and plenty of time to do the job right.

Why are growth numbers so important?

2009-07-18T07:17:00.001-07:00

I just heard a segment on CNN news, running in the background on my TV while I write. They were talking about a business that is down because of the economy but will still expect to show double-digit growth.

Who cares how fast it grows? All businesses eventually saturate their market and show limited growth. The only measure of business health is profit. It is possible to have a stable, profitable business and not get much bigger.

True, you do have to look ahead since the market does change, your product or service may have to change, delivery methods may change, cost structures may change and you have to keep on top of all that while turning a profit.

The idea of constant growing sales comes from lazy financial monitors, mainly stock price followers, looking for a single simple measure of performance where the truth is much more complex. Those lazy people have infected the rest of the business community with their shorthand performance measure and that in turn has twisted management’s view and investor’s expectations to unrealistic levels.

I remember Apple’s stock price dropping because their profit was slightly smaller than some Wall Street analyst’s projections at the same time they returned over a billion with a B in profit. That was even up slightly over the year before, just not as much as the analyst expected (wanted?)

Unfortunately far to may companies are focused on what the stock market does and not on what their customers want and are willing to pay for. The customer buying products ultimately funds companies not stock sales.

Too big to fail

2009-07-06T06:20:00.002-07:00

A large part of the rational for the massive government bail out is that the companies are “too big to fail”. I, as a layman, take that phrase to mean that the particular company is so interwoven with its industry that letting it fail would hurt the entire industry. I also take it to mean that the damage to that particular industry would damage the entire economy.

The politicians listened to the industry experts and began dismantling the Glass-Steagall Act of 1933 with changes the Depository Institutions Deregulation and Monetary Control Act of 1980 and by the Gramm-Leach-Bliley Act.

Some, but by no means all, of these changes were key to the financial melt down in the US economy. A few financial experts warned against those changes which allowed the merging of banks into such big conglomerates. A lot of us laymen worried about those same changes and warned whoever would listen (not many people) that these changes were risky.

One of the big reasons sighted was to allow the aggregation of capital to finance bigger projects than the smaller institution could finance. The truth be told, it never was about figuring out how to finance the projects, it was always about those specific companies being able to finance the entire project by themselves, instead of forming a limited corporation to finance that single project.

We’ve known how to create a corporation to finance big projects for several hundred years. The problem, of course, is that the profits are shared by all the partners not retained by a single entity.

We recognized in 1933 that some financial transactions should be firewalled from other transactions. We also knew that we needed to regulate the size of any single institution to keep them from getting "too big to fail". We changed those regulations, not to make the public safer, not to make the business more efficient for the public, we change the regs to make selected institutions more profitable. Not to keep them alive, but to enhance profit.

One thing you learn in business that politicians don’t seem to learn is that if it’s not working, stop doing it!

The changes to the banking regulations that apparently helped create this firestorm need to be changed back, and as quickly as possible to the ones that gave us a stable economy for almost 60 years. We need to demand that those over-bloated banks get back to a size where no single institution can ever be “too big to fail” again.

Leveraging innovation

2009-06-30T07:34:00.003-07:00

Innovation in the past created jobs. Innovation drove the manufacturing of products and that meant lots of jobs in the factories.

Innovation today means one or a handful of programmers, with a creative spark, writing the next big application like Twitter or those neat tricks for the iPhone. Once that individual or small team is done – they’re done. They don’t create a host of jobs for a lot of other people.

So when the economic experts and politicians talk about “leveraging innovation” what is their plan for the people who won’t have jobs because the innovation stops when those few creators finish? What happens to the people who used to work making products when you ship the manufacture overseas to cheap labor markets?

Just a little common sense

2009-06-26T05:33:00.001-07:00

I’ve been watching the growing mortgage crisis with awe and admiration for the consummate stupidity of the entire banking industry. If that sounds harsh, look at what they are doing.

People who were paying their mortgage on time until the adjustable rate mortgage (ARM) adjusted up now can’t pay. So rather than adjust it back, they foreclose and loose even more money by selling the house at a huge discount.

As job loss grows, homeowners who had been paying their mortgage and need a quick fix can’t get bankers to work with them. All they need is a one or two or three month mortgage holiday. So allow them to skip the payment for a month or three and add those payments on the end so it’s not a 20 or 30-year mortgage, it’s a 20 or 30-year plus the extra payments that were missed. The lender misses a very small amount of interest but they don’t have to foreclose.

How about a homeowner who gets fired and takes a lower paying job because that’s all they can find? Better to cut the interest (the biggest part of your monthly payment) and keep the loan active than allow it into foreclosure. Don’t believe me that interest is the biggest part of your payment?

If you have a $200,000 home loan for 40 years at 7% your payment is 1330.60. Divide $200,000 by $1330.60 and you will pay off that house in 151 months. 30 years times 12 is 360 months and that means it will take you 209 months to pay the interest. So, the interest is $ $278,095.40 or just over doubling the cost of the house. The higher the rate (8% versus 7%) the more you pay in interest.

What does that interest get you? The use of the banks money for a long, long time and that’s a valuable thing. The point is that you’re paying more in interest than you are paying for the house so that’s the easiest place to cut. If you change the interest rate to 6% your payment is $1199.10, savings of $131 a month. Drop your rate to 5% and you save $256 - making the payment $1080 and that just might be the difference between your keeping the house or foreclosure.

There is an old saying - “When you’re in a hole, stop digging”. When the banks add late fees or demand an interest payment to “skip” a payment, they are digging the hole deeper and making it that much more likely that the loan will default!

Any banker that can’t see that taking a $1,000 loss in fees and interest is so much better than taking back a house mortgaged at $200,000 and selling it at a foreclosure auction for $125,000 shouldn’t be allowed to walk around with out adult supervision!

Making money is better than loosing money, but when the choice is between loosing $75,000 and loosing $25,000, which would you pick? And, are you sure that you want to trust your savings account to a banker that thinks foreclosure and a big loss is better than a small loss to work out a way for the bank’s customer to keep paying?

Insanity

2009-06-23T06:00:00.001-07:00

Insanity is doing the same thing the same way and expecting different results. Benjamin Franklin.

A couple of weeks ago I dropped by the state unemployment office to get help finding a job. I talked to the veteran’s assistance specialist, who recycled the same advice I’ve gotten before and which hasn’t worked.

What shocked me is that his recommendations to rewrite my resume were diametrically opposed to the recommendations the specialist at the other state unemployment office gave me. His suggestions would take my resume BACK to its original form.

He also observed that my resume was filled with the references to management and that I should be careful not to “manage yourself out of a job”.

Fascinating!

The last person told me to focus on my management background.

When speculators don’t add value

2009-06-19T09:41:00.001-07:00

Gas prices are on the rise again. The reporter for CNN money is claiming that a large part of the increase is caused by investors, who expect the dollar to be worth less because of borrowing to finance the “stimulus”.

So the answer is speculators.

Now we all know that speculators are not evil people, and in fact add a great deal of value to the economic system. When speculators buy futures, they make cash available today to people who won’t sell their products until next week, next month, or next year. Since the speculator doesn’t have the use of their money until the product sells, they should get some payment for the time their money is not available.

When you put money in the bank, the bank pays you interest for the use of your money. The longer the money is locked up the higher your return. A 6-month CD pays more than passbook savings because you can pull the passbook savings right now. The oil and gas speculators may not get their money for long periods of time, so the percentage of return is that much higher.

Is the speculator still adding value when their “fees” for the use of their money today become a significant part of the final cost tomorrow?

One problem is that a small number of players dominate the oil and gas markets and the cost of entry is huge.

This is not a monopoly in the usual sense. These people are, probably, not agreeing on a single price. It’s just a small number of people making independent decisions in a market where their self-interest leads them in the same direction.

The big problem with oil and gas is that a small number of players control a necessary resource and have an inordinate impact on prices. Oil and gas products are seasonal. We use more of certain products depending on what month it is and less of others. When the seasons change, the product mix changes as well. This also means that there may be excess of some products at some times. If a small number of speculators can control that excess they can move the price of the entire market up or down, usually up, by their actions.

At what point should they be more closely regulated and at what point does their negative impact on the consumer outweigh their value to the system as a whole?

Clearing the health care nonsense

2009-06-14T21:47:00.001-07:00

Washington is wrestling with health care costs yet again. The politicians have failed to get a consensus on how to cut or even hold down the shocking increases in costs we’ve seen with each successive administration for at least the last 20 years.

The best way to solve any problem is to look for and fix the simplest elements first. Not only do you gain momentum, but you also remove clutter and reduce the complexity of the problem.

One simple thing to fix in health care is multilevel pricing that forces people to pay higher prices for the same coverage as an individual than as an employee. The insurance company costs are exactly the same for an individual buying an independent policy as for that same person when insured as a worker for small three-person office or in a large national company.

The idea that the insurance company can spread the costs for that individual over a larger pool of insured is true only if you can forget that the number of people in the pool is an arbitrary fiction of the insurance companies’ accounting department.

Remember that the insurance company decided to put you into their internal accounting group labeled XYZ Company and not one labeled Joe Smith.

The second question is why, when I start a new job, the insurance company can accept my preexisting conditions but either cannot accept me as an insured because of those conditions as an individual or have to charge me a much higher rate?

Again the cost difference is an accounting fiction caused by which internal accounting group the insurance company assigns me to.

Nationalized health care would put ALL insured in a single pool with the same rules and prices spreading the cost across a large enough group to even out. Of course the private insurance companies could do the same thing right now and make a lot more money by insuring a lot more people.

You can't change what you don't acknowlege

2009-06-08T06:09:00.001-07:00

In September of 2007 I wrote a blog post called “Call it what it is” about euphemisms.

The latest word game is the use of “laid off” for fired. Traditionally you are laid off only when the company really intends to bring you back to work in a few weeks.

During the annual model changeover shut downs at the automakers, the workers are laid off for a couple of weeks while the factories are retooled for the next year’s models. The company and the workers both understand that all the workers will be called back once the changeover is completed.

Does anyone really expect the workers now loosing their jobs will be rehired within a few months? Six months? Next year? If recalling those workers is not part of your business plan, they are not laid off - they’re fired!

It’s not just the intellectual honesty of calling it by its right name, it’s just as Dr. Phil McGraw said, “You can't change what you don't acknowledge”. If you use the wrong labels, you acknowledge the wrong things, then you and the people around you waste time trying to fix the things you labeled, not what’s really wrong.

Training your customers

2009-06-03T01:01:00.002-07:00

I was just watching a commercial from Home Depot, and as many companies are these days, they are advertising lower prices. Seems like a good deal all around - the customers get cheaper products and the companies sell more “stuff”.

The problem is that you’re training your customers to believe that the sale price is the “real” price and the discount was your excess profit! You also train them to believe that any increase goes directly into your pocket as profit.

The automakers fell into this trap with discounts and sales. Customers began to expect that sale price all the time. The other result was that customers who might have bought in May bought in February to take advantage of the savings. So while sales were up in February they were down in May. Why? Cause those folks who would have bought in May already bought in February!

Now, you might lower the price on one item or even on several selected items to get people into your store. Supermarkets have used “loss leaders” for years. Selling one item, sometimes lower than their real cost, just to get you into the store in the hope that you will buy the rest of your groceries while your there. Again, while it gets the customer in to the store, it also teaches the customer that the “real” price of your house brand peanut butter is 89 cents not $1.45 as marked.

It’s really scary how fast we get used to stuff

2009-05-30T20:50:00.001-07:00

In January we lost just over a half a million jobs (598,000 non-farm jobs). If Chrysler closes, we loose 55,000 direct jobs and an unknown number of secondary jobs. Secondary jobs are suppliers to Chrysler and places that sell things like food and clothing to Chrysler employees. When we loose almost 600,000 jobs in one month, 55,000 doesn’t sound so bad until you put that number in to a human perspective.

The number of employees directly impacted by a possible Chrysler shut down is greater than the entire population of the town I live in. Imagine every business in my entire town closing the doors!

One of the most important skills a senior manager needs is to be able to switch back and forth between macro and micro thinking. That is, looking at the “big picture” and the individual details. Knowing the size of your market but still being able to understand the needs of individual end users.

I believe that part of the reason our economy is in such disarray is the planner’s lack of ability to deal with big numbers and still see the individual costs. By focusing only on the macro, the big picture, they missed a lot of leading indicators embedded in the micro. Problems for a single individual in one place, a single company in another, or a single industry in yet another city, didn’t crack their macro view. Once the leading indicators got large enough to get their attention it was too late to for them to stop the downward spiral.

It’s time to find the “contrarians”, the people who tried to call your attention to the dangers of your current plan. Those folks who said, those trade agreements are not a good idea, the economists who warned their banks that they were taking on too much sub-prime mortgage risk, the investment experts that warned against buying too heavily into derivatives.

Those people saw the problem long before anyone else and since events have proven them right they are the most likely to spot a solution first. Besides, they’ve been thinking about the problems, as problems, longer than anyone else. Everyone else was too busy saying, “there is no problem - the economy is fundamentally sound”!

Memorial Day

2009-05-24T07:34:00.001-07:00

Back in the 1950s there was a TV entertainer named George Goble (see this Wikiapedia link). During an interview he was asked if he served in World War II and he answered yes I was pilot. The audience applauded.

When asked what he flew, he replied, C-47s and the audience applauded again. When asked where he was stationed, he replied, Omaha, and the audience laughed. He gave his trademark long pause and stared at the audience, then replied, “That’s where they sent me”.

Some served in combat, some as clerks, some in the reserves but all veterans have this in common, they served where their branch of the military sent them.

As a Viet Nam veteran, I have a common bond with all veterans; we put our name in the hat and took the luck of the draw. Each of us was willing to put aside our own lives for some period of time to support and protect our country. However dramatic or humble the service, that willingness is what I believe we honor on each Memorial Day.

In an unbroken tradition that stretches from the Revolutionary War to Iraq the women and men of our armed services have put themselves at greater or lesser risk for their extended family – the United States of America!

The worst mistake you can make in a meeting

2009-05-19T11:56:00.003-07:00

The worst thing you can do in a meeting is make your employees think you are holding them responsible for things beyond their control.

When you talk to your employees about “owning” a process you must remember that they can only own it if they have the authority to drive and control the process. You cannot be responsible for something you don’t have control over.

Your employees can only think to their level of influence. If you have a mixed level of managers and workers in the same meeting, make sure that each knows which parts of the briefing apply to their level.

They need to know the high level goals of the company, business unit, and department but only in general. They only need to know the details of the part they can influence because they will not be responsible for anything beyond their control.

About those banker's bonuses

2009-05-15T09:30:00.002-07:00

This Time article in their online version discusses the importance of paying the Citibank traders their bonuses.

The well-reasoned and thoughtful article is based on the premise that since they make huge amounts of money for Citibank, keeping them is in the bank’s best interest. If they left, not only would Citibank loose the profits, but since these men and women are so good, business would naturally leave Citibank and follow them to their new firms.

Horse pucky!

If these guys are the best and brightest, why did they recommend buying stocks and derivatives at prices that “The Market” over valued.

Don't think they were over valued? Ask the market that crashed to burst the bubble. If we accept that the current economic situation is a market correction for improperly priced financial products, then the people who must carry the largest responsibility are the people who advised buying at that price. If they were that wrong then, why should we want to keep them?

If your business judgment was that bad, would your boss want to keep you much less pay you a bonus?

I am constantly flabbergasted by the policy makers and pundits who have a totally different set of performance standards for the CEO of a major company than for the slob that fixes their plugged up commode.

Thinking too global?

2009-05-13T03:49:00.002-07:00

One problem with the government’s response to the “global economic crisis” is their focus on the word “global”.

In an episode of the TV show West Wing, one of the characters asked the president “Why is an American solder’s life worth more than a ...” and inserted the name of the fictional country they were talking about. By the end of the episode the president answered, “It’s not”.

While that may appeal to our sense of honor, it misses the point. The President of the United States was not elected to preserve and protect the lives of whatever country is under discussion, he was elected to preserve and protect the lives of Americans!

We did not elect our President, our Senators, or our Representatives to support the global economy. We did elect them to take care of the citizens of the United States of America. Events have shown that they worried so much about the impact of their decisions on “global” markets that the forgot the impact on their own citizens.

We've bled jobs to foreign countries for years because of trade agreements that made it cost effective for businesses to shift work away from the United States. Yes, we got cheaper products, but lost jobs so much faster than we created new ones that we destroyed our biggest customer base.

If your friends and neighbors don't have jobs, they can't buy your stuff!

What are you telling your workers?

2009-05-11T06:37:00.002-07:00

If you wouldn’t accept the answer yourself, don’t try to sell it to someone else. (Least of all a subordinate!)

Flying from the east coast back to Seattle, we were told the flight had been moved from to a different gate. A real inconvenience when the gates are in different terminals at Dallas-Fort Worth airport. On arriving at the gate we were told that the plane was going to be 2 hours late.

I could have accepted the delay except for the aircraft loading at the gate for Sacramento with a departure time of 5 minutes before my scheduled flight to Seattle. Airlines don’t plan for two aircraft scheduled to depart with in 5 minutes of each other to occupy the same gate. Obviously someone knew that the Seattle flight would not be filling that gate at that time far enough in advance to schedule the Sacramento flight to load there.

The change in plans is a so what, travel can be like that. The insulting part was to get an answer that was obviously not true! The truth was obviously that we should have been told - Your flight is delayed 2 hours. It is now scheduled for 5PM at gate 16.

How would you feel if your boss gave you an answer that you would not accept from a subordinate? Worse yet, how do you feel about yourself if you give a subordinate an answer you wouldn't accept from them?

The single test for the answer you are about to give is “Would you be satisfied with the same answer from a subordinate or supervisor” if the answer is anything less than an unequivocal yes, DON’T SAY IT!

Why do your workers feel betrayed?

2009-05-05T05:20:00.002-07:00

Why are American workers so upset with all the job loss? Not because it’s hard to pay their bills, not because they may loose their homes, not because they can’t afford to see a doctor – it’s because they are expected to pay ALL the costs of the economic down turn!

Most of us had little control over what the companies we worked for did. They built too much capacity without asking us what we thought of that decision. They made loans (that turned out to be questionable at best) with out asking us if it was a good deal. They supported legislation that made it cost effective to ship our jobs “off shore” and never gave us a chance to argue against that practice.

Then when those choices turn out to be very bad choices, we pay for the mistakes!

When those decision makers get fired they still get bonuses that are larger than most of is will make in a lifetime. Bonuses for making choices that cost us our jobs and damaged many American businesses to the point they are facing bankruptcy.

The vast majority of workers did their work with a commitment to making the best products and giving the best service, now decisions outside their control have left far too many without their old jobs and no place to find a new one. This, while the decision makers are getting paid well enough to retire at a much richer lifestyle than those average workers will attain IF they can find a new job.

A big part of the problem is that American managers have created an adversarial system between managers and workers. They did this by not understanding that without someone putting boxes on truck, the product never gets to the customer. Yes, yes, I know – freight dockworkers are easy to replace since a lot of people can do the work and training costs are low.

It all comes back to the decision makers’ confusion about value versus cost. Just because something is cheap, doesn’t mean it’s not valuable. One of the cheapest parts on your car is a 12-cent cotter pin that holds the steering linkage together. But how valuable is keeping your car's steering linkage from failing?

My blog is down!

2009-04-30T05:22:00.002-07:00

Not posting for this week, back soon.

You can’t be creative and think statistically

2009-04-25T09:41:00.002-07:00

New ideas are by definition different from what went before if they weren’t, they’d be old ideas. Statistics are a snapshot of history thus only report on old ideas. The more you concentrate on what happened last week the less you think about what comes next.

Statistics may help you see what did or didn’t work well in the past, but they do not show you what will come next, for that you have to forget statistics and think outside the limits of how you did it when you took that snapshot. Everyone is familiar with the phrase “Think out side the box”, the statistical snapshot of the past is part of the limits of the box.

Albert Einstein said “The significant problems we face cannot be solved at the same level of thinking we were at when we created them”. Which is essentially the same as my much more informal statement, and if one of the most creative thinkers in history recognized that the past is a prison to new ideas you should at least consider that you need to stop looking at those spreadsheets and charts of last year and last week.

To prepare for the future, you have to put the past out of your mind, put your feet up on the on the desk, stop answering your phone, and think about what may come next and how to turn it to your advantage.

The Susan Boyle Effect

2009-04-22T06:52:00.001-07:00

Who the heck is Susan Boyle?

She is a singer on the TV show “Britains Got Talent 2009” who’s voice just blew the judges out of the water.

So what! So, she absolutely doesn’t look the part. If you watch the video link above, you can see the judges and the audience’s reaction to her appearance and accent when she walks out on stage.

Then she sang. She sang and the world changed! You suddenly see her as a professional singer with the wardrobe, makeup, and hairstyling all perfect. This should be more than an interesting cultural note, it should be a wake up call to how you find and hire talent for your business.

Susan boyle’s resume was her appearance and accent and the audience and judges discounted her on that initial look. When she sang, she demonstrated her capabilities and they are magnificent.

The TV show American Idol is entertainment and the failures are almost as entertaining as the successes. Without a venue like Britians Got Tallent, Susan might never have gotten past the initial “she really doesn’t look like my preconceived idea of what a singer should look and talk like”. What a talent the world would have missed.

Is your system so narrow and your preconceptions so strong you are missing great talent for your business? Before you start claiming you don’t have time to talk to everyone, think about the following:

A backhoe without an operator is a lawn ornament while a worker with a shovel will still get work done. Maybe not as much or as quickly, but the worker is the key, not the equipment.

If presentation skills are not part of the job you are filling, then presentation doesn’t matter. The number of workers who have focused task skills AND presentation skills is much smaller than those with just task skills. Every time you hire based on how good the resume looks and how well they interview, you risk hiring a skilled presenter and not a skilled worker.

We all knew people in school who tested well but had no clue what the class was about or how to apply the lessons. Is your HR process screening for great singers or people who just look and talk like great singers? Unlike a TV talent show, you have to hire the worker to “hear them sing”. Make sure your process is getting the workers you need and not just the ones that are easy for HR to pick.

Tooth-to-tail

2009-04-20T08:05:00.001-07:00

In the military they talk about “tooth-to-tail”, referring to the ratio of supply clerks (tail) to fighters (tooth). Keeping the tail as small as necessary to support any given number of teath is an ongoing leadership effort at all levels for military commanders.

One of the big contributors to the current economic crisis is the tooth-to-tail ratio of the biggest American business. Too many administrators and managers to too few workers. Workers in this usage is defined as people who actually design, build, sell, or deliver a product or service to the customer. Now, there are essential support functions. Someone does have to to do payroll, clean the restrooms, and so on.

But too many managers and administrators getting too large a salary and bonus at the top is the first place to cut. The guys and gals on the shop floor should be the last.

To push the military tooth-to-tail analogy just a little further, without the logistics tail to supply the fighters teeth, you have an inefficient army, but inefficient armies have won wars. A superb logistics system with no fighters has never won a war

In the same way, the people who actually build the product or deliver the service to your customer are the key to your profits. All the rest of the functions are support and deal with the efficiency of your process, not if it delivers your product or service at all.

Is profiting from failures ethical?

2009-04-16T08:47:00.002-07:00

Back when the railroads were first building their network of rails, many startups failed, were bought up at bankruptcy prices, and then went on to financial success once the debt was washed away. We saw the same thing with some of the long distances fiber-optic cable companies. They borrowed huge sums of money to build their infrastructure and couldn’t earn enough to pay back the loans, individual assets were bought by other companies at bankruptcy prices, and then used by the new owners to make a lot of money.

In the current economy the push seems to be to wash many companies debt to retired employees away by reneging on their pensions and health benefits. Allowing the retirees to “fail” will help the companies to stay afloat and to generate a profit in place of their current losses. The “new” profit comes directly from the money not being repaid to the original investors or in this case the people who already worked for the retirement payments and health benefits.

Do the beneficiaries of those bankruptcies have an ethical obligation to the people who lost their investment (in form of hours worked or in the cash used to buy stocks) in the original company? If those investors and employees had not fronted the hours or money the asset would not have been created, and these future profits never realized.

Fighting tough times

2009-04-13T06:07:00.001-07:00

I just saw yet another article recommending that people use the current economic crisis as a time to reevaluate their life and, for those who loose their jobs to ask “What would your life look like if money was not an issue?”. The suggestion is that since you’re out of work anyway, try to turn the lemon into lemonade. Always a good idea, but what do you do if the answer is “My life would look exactly like it did before I lost my job!”

Simply telling workers to use the forced time off for self examination and to find a new direction is useless. Real advice would give them some way to evaluate their personal capabilities and interests, advice on matching their personal capabilities and interests with a new career field, directions on how to learn new skills and how to pay for the classes and living expenses while taking the classes, and instructions on how to connect with an employer to put those new skills to work.

Don’t bother claiming that it’s the individuals job to figure out the answer to those questions, you’re the one who decided to set yourself up as the “expert” by giving advice in the first place. Unless and until you can answer those questions, your not only not helping, you are diverting attention from the real problems and solutions.

Open markets create customers for US business

2009-04-08T09:04:00.002-07:00

This has be an article of faith to almost all economist for my entire lifetime. Calling it into question is treated by both economists and politicians as heresy and the people who question this particular “faith” are treated as economically challenged.

Well lets look at the results of this particular idea.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced on Friday, March 13, 2009 that total January exports of $124.9 billion and imports of $160.9 billion resulted in a goods and services deficit of $36.0 billion. That means we bought 36 billion dollars from foreign companies than we sold.

Somehow these practices didn’t create more customers for US businesses it created more customers for the foreign companies. And in creating those customers, Americans lost their jobs.

According to the US government Bureau of Labor Statistics web site as of March 2009 the total unemployment was 8.5%. With 301,000,000 people in the US, that’s 2,558,500 people.

In addition to spending that $39 billion somewhere else, we gave up a huge amount of money in salaries for people who lost their jobs.

Lets suppose that each person earns a salary of $25,000 per year. That means the nation as a whole is loosing $63,962,500,000,000.00 each year they are not working.

The entire trade deficit as of January 2009 was $36,000,000,000.

If we subsidized US companies by the amount of the deficit ($36,000,000,000.00) we could put at least half the unemployed back to work. I say at least half, because those people would be buying things and paying taxes and that would spark the economy to hire even more people.

The biggest problem with the proposed solutions is that the “usual suspects” who advised us to make the trade policies and business regulations that got us here are the people being asked for the solution! Let me make sure I understand - the people who recommended policies that failed are now being touted as the experts who can solve the problem.

If your mechanic hosed up your car, would you take it back to them to fix it? And why should economic advisers be treated any differently?

It’s really scary how fast we get used to stuff

2009-04-03T05:56:00.001-07:00

I was just reading an article a the CNN website titled “15 Companies That Might Not Survive 2009” by Rick Newman. Rick named Chrysler as one company that might not make it through the year.

In January we lost just over a half a million jobs (598,000 non-farm jobs). According to the 2005 annual report from Diamler Chrysler, Chrysler had 84,100 employees. If Chrysler were to go the way of American Motors or Studebaker all of those workers will be on the street. When we loose almost 600,000 jobs in one month, 84,100 doesn’t sound so bad until you put that number in to a human perspective.

The number of employees directly impacted by Chrysler going out of business is twice the number of the entire population of the town I live in. Imagine every business in the entire town closing their doors! Then imaging it happening twice in a single location.

One of the most important skills a senior manager needs is to be able to switch back and forth between macro and micro thinking. That is looking at the “big picture” and the individual details. Knowing the size of your market but still being able to understand the needs of individual end users.

I believe that part of the reason our economy is in such disarray is the planner’s lack of ability to deal with big numbers and still see the individual costs. By focusing only on the macro, the big picture, they missed a lot of leading indicators embedded in the micro. Problems for a single individual in one place, a single company in another, or a single industry in yet another, didn’t crack their macro view. Once the leading indicators got large enough to get their attention it was too late to for anyone to stop the downward spiral.

It’s time to find the “contrarians”, the people who tried to call your attention to the dangers of your current plan. Those folks who said “those trade agreements are not a good idea”. The economists who warned their banks that they were taking on too much sub-prime mortgage risk. The investment experts that warned against buying too heavily into derivatives.

Those people saw the problem long before anyone else events have since proved right are the most likely to spot a solution, particularly since they’ve been thinking about the problems as problems longer than anyone else. Everyone else was too busy saying “there is no problem” and “the economy is fundamentally sound”!

Blame the victim

2009-03-29T07:07:00.002-07:00

Journalist Ruben Navarrette Jr. In a article on the CNN website wrote about talking to a Las Vegas Nevada construction worker who was complaining about illegal workers driving down wages. Mr. Navarrette opined “And of course, he never thought to look in the mirror and blame himself for not taking steps to improve his skills in the last 20 years. Maybe he could have gone into a different line of work long ago. He decided not to. I suppose illegal immigrants were to blame for that, too.”

I for one am sick and tired of the top 28% of the country blaming the bottom 72% for not being as smart as the top 28%.

Say what?

According to the US Census bureau 28% of the US population has a college degree and if you believe the college entrance exams, they are the “smartest” of each year’s high school graduating classes. So now a construction worker who didn’t get a degree is being blamed for not being born as smart as the author. When I googled his name I found out that Mr. Navarrette has two (2) degrees from Harvard. That puts him in some small percentage of that top 28%.

Now I’m sure Mr. Navarrette worked hard for his degree, but three quarters of the population can’t match his performance. If they could, we wouldn’t have entrance exams, anyone who wanted to could just sign up and attend college. The exams are used to limit who can attend college to the people that the school expects can actually do the work and learn the material. I’m sure that some percentage of people who don’t get good enough scores on the college entrance exams just goofed off and didn’t study, but the majority did the best they could and still couldn’t make the cut.

Like the construction worker who is the subject of the article, they went on and got the jobs that they could and made the best of their talents and abilities. Along comes this writer in the top 1/4 and blames the construction worker for circumstances beyond his control.

Chaps my hide!

Just a little common sense

2009-03-24T06:22:00.000-07:00

I’ve been watching the growing mortgage crisis with awe and admiration for the consummate stupidity of the entire banking industry. If that sounds harsh, look at what they are doing.

People who were paying their mortgage on time until the adjustable rate mortgage (ARM) adjusted up now can’t pay. So rather than adjust it back, they foreclose and loose even more money by selling the house at a huge discount.

As job loss grows, the number of home owners who had been paying their mortgage and now need a quick fix can’t get bankers to work with them. All they need is a one or two or three month mortgage holiday. So allow them to skip the payment for a month or three and add those payments on the end so it’s not a 20 or 30 year mortgage, it’s a 20 or 30 year plus the extra one, two, or three month’s payments that were missed. The lender misses a very small amount of interest but they don’t have to foreclose.

How about a home owner who gets fired and takes a lower paying job because that’s all they can find? Better to cut the interest (the biggest part of your monthly payment) and keep the loan active than allow it into foreclosure.

There is an old saying - “When you are in a hole, stop digging”.

When the banks add late fees and demand an interest payment to “skip” a payment, they are digging the hole deeper and making it that much more likely that the loan will default!

Any banker that can’t see taking a $1,000 paper loss in fees or interest is so much better than taking back a house mortgaged at $250,000 and selling it at a foreclosure auction for $150,000 is a bad idea shouldn’t be allowed to walk around with out adult supervision.

Making money is better than loosing money, but when the choice is between loosing $100,000 at a foreclosure sale and loosing $1,000 in lost interest payments which would you pick?

And, are you sure that you want to trust your savings account to a banker that thinks foreclosure is better than a small loss to work out a way for the owner to keep paying?

More euphemisms to hide the truth

2009-03-21T08:01:00.001-07:00

In September of 2007 I wrote a blog post titled “Call it what it is” about euphemisms.

The latest word game is the use of “laid off” for fired. Traditionally you are considered laid off only when the company really intends to bring you back when business picks up. During the annual model change over shut downs at the automakers, the workers are laid off for a couple of weeks while the factories are retooled for the next year’s models. The company and the workers both understand that the workers will be back at work once the change over is completed.

Does anyone really expect the workers now loosing their jobs to be rehired within a few weeks" A month? Six months? Next year?

If recalling those workers is not part of your business plan when you let them go, their not laid off, they’re fired! At least have the honesty and integrity to tell the truth and not play word games.

Global or national?

2009-03-16T16:00:00.001-07:00

One problem with the United States government’s response to the “global economic crisis” is their focus on the word “global”.

In an episode of the TV show West Wing, one of the characters asked the president “Why is an American solder’s life worth more than a ...” and inserted the name of the fictional country they were talking about. By the end of the episode the president answered, “It’s not”.

While that may appeal to our sense of honor, it misses the point. The President of the United States was not elected to preserve and protect the lives of what ever country is under discussion, he was elected to preserve and protect the lives of Americans!

We did not elect our President, our Senators, or our Representatives to support the global economy. We did elect them to take care of the citizens of the United States of America.

Events have proven that they worried so much about the impact of their decisions on “global” markets that the forgot the impact of their decisions on their own citizens.

"Mister" or President

2009-03-09T07:08:00.001-07:00

I have CNN on in the background as I write this and just heard yet another aone of their reports refer to the President of the United States as “Mister”.

Simple courtesy demands that reporters use the correct honorific - President!

Calling the President mister seems somehow disrespectful. You may not like him and you may not like his policies, but he is the President and deserves to be addressed by and referred to by his title.

Perhaps it’s just the casual times we live in but it leaves me with the impression that it’s an attempt by the reporter to inject their personal political agenda into a news story.

The truth about compensation.

2009-03-03T04:26:00.003-07:00

The US congress is talking about limiting compensation for Wall Street managers. By all reports the financial community thinks this is a bad idea and will be counter productive since the managers get large bonuses for creating profit.

A great idea if they actually had created big profits!

Unfortunately those big profits that drove big bonuses were illusory. We know they were illusory because the companies that paid those bonuses for generating those big profits are the very companies with their hands out to the government. If they really had made big profits, they wouldn’t be begging for government bailouts.

The real problem is that the companies linked compensation to SHORT TERM results and this led to only looking at how big the sale was without regard to the long term quality of that sale.

If you want to share in the rewards for good times, simple honesty demands that you be equally willing to share in the costs of the bad times. Maybe the better way to structure bonuses would be like the commission on insurance policies. You get an upfront commission for the sale but the rest is paid as a residual for as long as the policy payments are continued.

Managers would get their bonus with some percentage up front and the bulk in relationship to each successive year’s profitability, so that if you make short sighted decisions you’re residual income is directly impacted. While the details might take some time to work out, it would force the decision makers consider both the short term gain and the long term cost.

Severance pay for top executives should be the same as anyone else in the company. If the janitor gets 2 weeks severance pay for every year they worked for the company, why shouldn’t the president? The senior executive of a bank might get $1,000,000 a year while the janitor might make $20,000 so if each worked for the company for 5 years the janitor gets $20,000 divided by 52 equals $385 times 5 or $1,923 severance pay. The senior executive gets $1,000,000 divided by 52 equals $19,230 times 5 or $496,153.

Before you bring up the argument that the senior executive is more valuable to the company and harder to replace than the janitor, remember that severance pay has nothing to do with relative value. Severance pay is supposed to be compensation for good and faithful service and both employees gave good and faithful service or they would have been fired for cause and be ineligible for severance pay.

What makes an expert.

2009-02-26T07:59:00.002-07:00

Webster’s defines an expert as:

1: obsolete: experienced
2: having, involving, or displaying special skill or knowledge derived from training or experience

I think the biggest part of our problems are caused by the first definition being judged as obsolete. To me the expert is the person who has a history of being right more often than wrong. Not about how many books you read, or how many you’ve written. It’s how many times you actually did it and did it right! Sometimes it’s not the number of times you were right or wrong, it’s how big an issue you were right or wrong about.

Well, the experts who told us that making the current crop of foreign trade deals was a good thing, were hugely, spectacularly wrong! To the tune of 600 BILLION dollars a year. We are bleeding jobs an alarming rate and we are creating new ones so slowly they are functionally invisible.

I submit that it’s because those experts really didn’t know what they were talking about.

They created some gorgeous theories, conferred each other with expert status, and now that their theories have failed to deliver in the real world, those same experts are clamoring to sell us their latest theory.

I think “the experts” were wrong enough to cost them their expert status. I think they were wrong enough to cause us to start looking for that non-expert who was screaming “Your wrong!” when those deals were proposes and ask him what to do. Since he was right the last time, I have a lot more confidence that he’ll be right again.

Step one in fixing the economy.

2009-02-21T06:43:00.003-07:00

Benjamin Franklin said that “The definition of insanity is doing the same thing the same way and expecting different results.”

There are three simple steps to fix the US economy:

Stop making agreements that cost us more than they earn us.

Get out of the current agreements that are costing us money as quickly and as cheaply as we can.

Start creating agreements that make us money!

Protectionist or common sense?

2009-02-13T06:57:00.003-07:00

Is it protectionist, xenophobic, or nationalistic for me want to do business with my next door neighbor? Especially when he spends his money at the local McDonald’s and the local Mickey D’s spends their money with me!

The real question about our foreign trade policies is “How’s that working out for you?”

We spend a lot more money with other countries than they spend with us. The plan was that we would buy low tech from them and they would buy high tech from us. Well it didn’t work out that way, in 2008 we spend 249 plus billion dollars (yes, thats BILLION) more than we sold.

And it’s been like that since we signed those trade agreements. OK, you big brains sold us this plan, now we expect you to tell us when do we start:

a) Developing more tech jobs?
b) When do our trade partners start buying that stuff from us?

Until you answer those questions, you're just another loud mouth with a theory that didn't work!

Legacy costs aren't the problem.

2009-02-07T04:42:00.002-07:00

A friend of mine was bewailing the high pension costs at the US automakers as the one big causes of Detroit’s problems. I emailed this back to him.

You surprise me! You of all people (as an MBA) should understand that the retirement plans for the people who are now retired were paid for by cars sold in the years they were working. The burdened rate for the worker included their future pension costs. So each time that worker touched a component or car, some part of the cost of their retirement was added to the sale price. The auto manufactures have already collect the money to pay the pensions! That’s for both current and future retirees.

I think it was in the mid or late 80s that the auto manufacturers lobbied congress to allow them to tap the huge cash reserves they had set aside for pensions, and permit them to pay the future pensions from future revenues. Now they’ve spent the pension reserves, are crying poor, and blaming the pension costs and not themselves for wasting the reserves.

Toyota was able to negotiate lower wages because there were no other competitive wage jobs in Tennessee and there was a lot of competition for workers in Detroit. At least there was a lot of competition for workers when the contracts were signed.

The problem lies with Detroit demanding a 6.1% profit instead of 6% or whatever the real percentages are. That pressure for a tenth of one percent drove short sighted decisions that prevented innovation and quality improvements. For instance, according to the manufacturer’s web sites, the entry level Honda has a 110 cubic inch displacement (CID) engine producing over 145 HP, Chevy has a 350 CID engine producing 275 HP. Using the Honda as the gauge, the 350 should be producing over 460 HP. Even if it doesn't scale precisely, the Chevy should be producing a lot more power per cubic inch than it is. Why not? Because Detroit didn't invest in quality improvements, they spent their money trying to fight the CAFE standards and avoiding new technology because it would eat the 1/10 of one percent profit!

Picture if you will an empty cubicle with a turned off computer - no work done. Then picture the same cubicle with a worker - work done. Sorry to burst some accountant’s bubble, the important part of the plant is not the physical fixtures, it's the person doing the work. Even if we accept that the workers have negotiated excessive salaries, it still doesn't answer why the big three are in trouble when they have cars at the same price point as Toyota, Nissan, and Honda.

Detroit cars aren't selling.

Not because of price, it's the design and quality of the product. Most of the low to mid price cars from Detroit are butt ugly and not very interesting. The US automakers could just as easily built cars that look and work as well as their competition's for very close to the same price. But they would have had to invest some of their profits back into the company and then the stock price would have fallen by that magic one tenth of one percent.

Stop listening to the people who were wrong!

2009-02-03T13:26:00.003-07:00

Back in February of 2008 I told people that “we are in a recession” and was told No Way!

This article in the San Francisco Chronicle puts the lie to that “No Way”; “It took seven economists 11 months to decide what should seem obvious given all the foreclosures, bank failures and layoffs - the United States is officially mired in a recession.”

I told people that the big problem with the economy is that wages had not kept up with prices, so people used credit cards and borrowed to keep up and was told No Way!

At the beginning of the American Recovery and Reinvestment Bill of 2009, the authors write: "Since 2001, as worker productivity went up, 96% of the income growth in this country went to the wealthiest 10% of society. While they were benefiting from record high worker productivity, the remaining 90% of Americans were struggling to sustain their standard of living. They sustained it by borrowing ... and borrowing ... and borrowing, and when they couldn't borrow anymore, the bottom fell out." Puts the lie to that “No Way”.

I also claimed that “free trade” would be a net loss to the American worker and was told No Way!

Well now...

The US census bureau figures reports that in 2008 the US bought $246,453,000 more in goods and services from China than we sold to them.

The same source also reports on their website that “The Nation's international deficit in goods and services decreased to $40.4 billion in November from $56.7 billion (revised) in October, as imports decreased more than exports.”

Once again, I seem to be right.

My question is - how many times do I have to be right before people start to listen? The folks who told me No Way have been proven wrong which should call their theories and their ability to forecast trends into question, but those same people are the ones being asked to help solve the crisis their forecasts and theories caused.

By the way, for those of you who think NAFTA was such a good deal;

2008 we spent over 60 million dollars more in Mexico than we sold.
2007 we spent over 70 million dollars more in Mexico than we sold.
2006 we spent over 60 million dollars more in Mexico than we sold.

Sound like I was right about that being another looser, huh?

As my wife pointed out there were some public figures that said the same things at about the same time I said them. So why are the decision makers still listening to the “experts” that told us “No Way” and not to the people who told them that those policies would be a disaster? Seems to me that you would listen to the guy who turned out to be right not the one who was wrong!

An open letter to Vice-President Biden

2009-01-26T06:19:00.002-07:00

Mr. Vice-President:

I’m just watching your interview on Face the Nation (Sunday, January 25, 2009) and when the question was asked “Aren’t things worse that you thought?” you replied “Things are worse than anyone thought!”

Mr. Vice, I beg to differ. The working people who have been watching the job market collapse have known things were bad for years before it got bad enough hit the people you are listing to. Michigan was the canary in the coal mine and our leaders ignored it. My industry, technical writing, has been bleeding jobs for 10 years and no one paid attention. The textile industry in the southeast was decimated and that too was ignored.

The real problem is that as long as things are good in New York, L.A., Atlanta, and Washington (DC) the politicians and media talking heads can ignore anything. You’d be better served to have a policy board of plumbers, electricians and small business owners to help you understand what is happening the the rest of the country.

According to Time magazine's business section on line (http://www.time.com/time/business/article/0,8599,1873234,00.html?xid=rss-business) the American Recovery and Reinvestment Bill of 2009 addresses the government’s planning failures.

At the beginning of the bill, the authors write: "Since 2001, as worker productivity went up, 96% of the income growth in this country went to the wealthiest 10% of society. While they were benefiting from record high worker productivity, the remaining 90% of Americans were struggling to sustain their standard of living. They sustained it by borrowing ... and borrowing ... and borrowing, and when they couldn't borrow anymore, the bottom fell out."

If we are expected to trust this bill, we must accept this part of their analysis. Something that any person working in a factory, as an auto mechanic, or like me - writing technical manuals already knew and tried to tell you and all our representatives. You listened to the “experts” and that’s good, the problem is that you should have ALSO listened to us. You need to bring in a different set of ordinary people both working and out-of-work on a regular basis to include their representative problems in your calculations. And how about weighting your sources toward the practical (those regular folks) and not the theoretical (those experts again)?

Detroit and a lack of vision.

2009-01-15T07:22:00.000-07:00

As I write this, the cable TV show Car Crazy is on in the background and listening to them talk about how much they like the look of old cars got my attention. One of the people being interviewed made an interesting statement - “It doesn’t matter if your a ‘car guy’ or not, almost everyone who sees a well restored old car goes Wow!”.

And it started me thinking, back in the day cars were very different between manufactures. Fords looked different from Chevy or Chrysler. Within manufacturer’s product lines, cars looked different. Chevy looked different from Pontiac, Fords from Mercury and so on.

Look at the cars the people love/hate and they each have a distinctive character. The Smart car fits a particular owner. Nobody (at least nobody in their right mind) buys one to drive from Phoenix to LA! They buy one to run around town, where small size, maneuverability and low gas milage are much more important.

I’ve been complaining for years that Detroit is not building interesting cars that “just folks” can afford. Yes the Chrysler Crossfire and the Chevrolet Corvette are cool, but out of the price range for most of us. The 57 Chevy or Ford looked cool and were affordable for most people. You could also seat 6 adults in the thing.

Most of the econo-boxes look the same except for minor details. They also only seat two in the front, and two kids in the back or two very cramped adults. You can’t convince me that Detroit, if they’re as smart as they claim, can’t build a six seater with individuality that meets the safety, emission, and gas regulations for the same price as the stuff they’re putting out now.

Yes, they may have to settle for one or two percent less profit. Right now the choice seems to be between slightly lower profit and being out of business!

This time the recession is different

2009-01-09T10:38:00.002-07:00

In listening to the talking heads sprout about the current “recession” I keep hearing references to past economic downturns. It seems that no one wants to understand that this recession is different in scale and kind from all others.

First, the book title “The World is Flat” wasn’t just a book title. It truly described how connected our world is and how different it is from what went before. Second, in all previous recessions the jobs came back, this time they won’t!

Big talk for a small personal blog ain’t it?

This recession is different in scale because of the connectivity of global finance. Because the slow sale of toys in New Jersey causes a factory in China to stop production. In all the other recessions a down turn in one country only had a marginal effect in another. This time it’s true, if the United States catches cold, a country half way around the world will sneeze.

Jobs that are lost to this recession will be in finance, manufacturing, and industries that support them. Business in India, Thailand, China and other countries now have the capacity to compete directly with business in the US and at lower wage scales. Part of this recovery will be shifting work to those cheaper locations with the corresponding loss of income in the US.

We must figure out how to support our out of work while we fit them for the new jobs that we still have to figure out how to create. Pretending that workers who invested in educating themselves for the jobs they just lost can predict what they need to do to find a new job when the economic experts can’t answer the same questions just plain dumb.

The people loosing their jobs did the best they could with the advice our teachers, our media, and our government gave then I think all those advisers have an obligation to do their homework and tell those out of work people what new direction they should follow. And if you think it’s not the government’s business, it was the government that was bragging only a few short years ago that allowing those jobs to migrate “off shore” was a good thing and would create jobs.

Now it’s time for the government to show the workers where those jobs are!

Up side of store closings.

2009-01-04T02:59:00.002-07:00

I found this article on CNN.com about the expected closing of a lot of big retail stores due to the economy.

Two things struck me.

First that as these big stores close they open the way for the small retailers to fill the gap. Second their suggestion that we will by less may also mean that we will spread our buying over time. Instead of a big slug of back to school buying in August, the same money may be spread out over the school year. Back in the day, my parents used to buy a years worth of shirts and slacks for me to wear to school, enough notebooks and pens and pencils, etc. for the whole year.

I suspect that instead of retailers facing those boom-bust cycles, the buying will now be spread more evenly throughout the school year. I also suspect that a lot more people will buy on line, not for any cost savings (my experience is that the shipping costs eat up most of the perceived savings) but because they can get the shirt in blue with stripes that the local store isn’t carrying due to “down sizing”.

Market Forces

2008-12-28T11:02:00.004-07:00

We’ve been hearing a lot about “market forces” in the news lately. A lot of people, including the self proclaimed experts, don’t understand what market forces are and how they really work.

One definition of market forces is: “in economics, the forces of demand (a want backed by the ability to pay) and supply (the willingness and ability to supply)”.

That’s fine but it leaves out some critical information, such as:

1. Market forces are only clear to history.
2. Market forces only react to events, they never cause them.
3, Market forces don’t react to small leading indicators, only to big
changes or events.

You can’t manage an economy using market forces since you won’t really know what market forces think about a decision for months or years and by that time it’s too late to change anything.

You’ve got to have yet a set of tools to estimate the direction that current events will drive you.

The decision makers saw the same little changes that the workers saw but the decision makers thought “That’s too small to matter.”

Well they were wrong. They were looking at the wrong leading indicators, and drawing the wrong conclusions.

It’s not about blame, it’s about recognizing the decision makers who were wrong and those who were right (darn few) and to start listening to the ones who got it right! In a manufacturing process, when the end product doesn’t pass the quality check, you look at where in the raw materials or on the production line the product first failed to pass the quality checks. I the case of our economy it’s the end result of a lot of small decisions that turned out to be wrong.

Now companies are going to have to look at who, within their organization, was telling them “Don’t do that” and start listening! That person was right and EVERYONE who said “Yes, we should” was wrong. Who do you want to follow, the one who turned out to be right, or the one who gave you the bad advice?

The product comes first!

2008-12-22T08:30:00.001-07:00

I just checked the Honda website and found that the 09 Civic has a 140 HP 1.8 liter engine. 1.8 liter equals about 110 cubic inches.

By that standard a 350 cubic inch engine from Chevy should pump out 445 HP. In fact the current (09) model puts out 315 HP. Gives you some idea about how much effort GM has put into improving the efficiency of their products.

I have not investigated to see if the processes used to get that much horse power from the smaller displacement will scale to give the same results in an engine three times the Honda’s size but, absent proof to the contrary, we should be able to get very close.

We could all have the performance we want with much smaller engines (and smaller fuel bills) if auto companies' focus was on building cars and not just on profit.

Yes, all business must make a profit and to get large investments they must make large profits, but as Warren Buffet said, “Take care of your business and your stock price will take care of itself”.

I suspect that most of the problems are caused by the difference between 6% profit and 6.1% and not between profit and loss.

Far too many American businesses have forgotten a fundamental principle of business - profit is a byproduct of a the product, not the sole goal of business. If you don’t believe me, explain why people are flocking to Honda, Toyota, and others when the US car makers have products at the same price point that aren’t selling nearly as well. Why is Apple computer’s share of the market growing in spite of their higher price?

About the Bailout

2008-12-13T10:46:00.001-07:00

I have been following the auto bailout. Without discussing the pros or cons of the bailout, frankly I can make a convincing argument for either side, I really want to know what the companies will change TOMORROW to fix the problem.

I believe that we are the sum of all the decisions we’ve made. If you find that depressing, it’s a different discussion. If I’m right, then the auto manufactures are in their current state because of the decisions they made last year, 5 years, 10 years, 20 years ago.

Ford, Chrysler, and GM all spend huge amounts of money every year on market research. The cars they developed aren’t selling well against the competition and haven’t been for years. They’ve been spending a lot of money on manufacturing that is resulting in their customer’s perception of poor quality when compared to the competition. They spend a lot of money on negotiations with their workers yet their competition, at plants in the US, have lower labor costs.

Just for the record, I drive a Chevy 1/2 ton pick up truck, but before I’d loan any of these clowns a thin dime, I’d demand a clear statement of what they plan to do differently.

Either their focus groups were talking to the wrong people or the planners weren’t listening to the answers. Either they’ve been living in a cave or they are in denial cause somebody else's cars keep getting voted “Best Car of the Year”, readers choice, and selling better! The public’s perception of Detroit’s quality has been bad since the mid-1970s, deserved or not. The Big 3 haven’t aggressively worked to correct it.

They diluted their brands by trying to have a product from each brand in the same size/price segment. Any third year marketing student could have told them that’s a recipe for disaster. Plymouth and Dodge got so close that one became redundant and Plymouth, one of the oldest brand names, is gone.

Now they want me, through my elected officials, to “loan” them my tax dollars to keep making the same kinds of mistakes that got us here!

A good friend who is in the investment business told me that the president of GM’s job has nothing to do with building cars, it’s about raising money. Well pardon me, but NONSENSE! If he did his job building cars, he wouldn’t have to rase a bloody dime. His products would make enough profit to finance any improvements he wanted to make. If he needed bridging capital, he’d have people with cash standing in line to give it to him.

If you think of the car business as an assembly line (no, I’m not trying to be funny) and look where the process failed, it’s not with the workers building the product. It’s at the planning phase. We are building the wrong product, using the wrong methods and we have got no chance to fix it until we recognize that we are doing that because the people deciding what to build and how to build it picked wrong.

I’m not sure why they picked wrong and I’m not sure it matters at this point. Cause the cure is for the leaders to either admit they were wrong and that they can’t do it that way ever again or for the senior managers to get the heck out of the way so someone who will listen to the customers can lead.

Back when I was a very young child, my mother taught me that “I’m sorry” is an incomplete sentence. The complete sentence is “I’m sorry and I won’t do it again!”

This was originally written before the Senate rejected the proposed bail out - at least the Senate understood that if they can't articulate their ideas to the senate, then they probably don't really have a new direction.

Catching up with reality

2008-12-06T07:48:00.001-07:00

There is an old saying “When it’s time to railroad, people will railroad”. Which I take to mean that the technology and need must coincide with people being ready to accept the new idea. So how might that work with the public efforts toward a global, or at least a more global, economy?

When movement of ideas, people, and goods between countries was slow and relatively expensive we had highly independent nation states. As transportation of goods and people between countries became much less expensive the “separations” are much less important barriers between nation states. As we are witnessing in Europe, cultural, economic, and religious differences are breaking down and, albeit slowly, a more homogeneous society is being created.

The worlds financial markets are now so closely interlinked that China, which limits it’s citizens contact with foreign visitors and news sources, is feeling the impact of the financial troubles in the United States.

Have we reached a point where we are being forced by events to let go of an outmoded idea of who “we” are? Is the current terrorism the last violent gasps of a world view that no longer accurately represents how countries interact with each other?

It seems that just to “do business” on a global scale, we will need to globalize some of the support functions, like finance. If banks in New York are financing a factory in India, that may drive a closer relationship between financial institutions in both countries that will drive more conformity in the banking laws. That in turn may drive changes in tariffs and visa regulations to allow easier movement for citizens of both countries. We already have closer financial and visitation practices between the US and Canada and the US and Mexico than anyone would have predicted even 30 years ago.

We have changed the character of the United States in my life time. I remember my shock and surprise in the early 50s when I first saw black and white restrooms and drinking fountains the Memphis, Tennessee. In 2008 we elected a president who is African American, that’s was unimaginable 50 years ago!

The reality is that manufacturing is now global, with components and products made in locations around the world dictated by cost and ability. White collar jobs depend on the availability of trained professionals and their salaries not on the workers geographic location. Nearly instant audio and video communication is allowing people anywhere in the world to meet and work without actually being in the same room.

Like Pandora’s box, once this is “out of the box” it can never be put back in! It seems that we are all ready a global society but our institutions and thinking must catch up.

What is the new job market?

2008-11-25T02:15:00.001-07:00

This article at Time business on line supports what I’ve been claiming for some time. That jobs lost now are not being replaced with new jobs at the same pay rates.

Studebaker built carriages and his sons built automobiles. That’s the way it worked in the past, the workers who built carriages became the workers who built cars. Now those jobs aren’t shifting industries as demand changes, those jobs are disappearing to cheaper labor countries with no replacement job where the job was lost.

The next big government failure is tracking workers. Only the government could create a system that says a worker who lost a $45,000 a year job and took a $35,000 a year job is still employed. The truth is they are underemployed. And not identifying that in your job statistics is a big part in why the experts were surprised by the current economic crisis. This failure is also why so many politicians kept saying “the economy is fundamentally strong” long after it became obvious to the people on the street that something important was going wrong.

This failure to measure the right things and to publish the information in a timely manner is a big part of the crisis, people without information or with incomplete information make bad choices.

What the news doesn't tell you

2008-11-17T06:20:00.003-07:00

In describing the problems facing GM and the other auto makers, Ali Velshi the CNN economics commentator, mentioned one of the big issues is the heavy pension load the car manufacturers are carrying.

Pensions are not a gift to workers, they are deferred compensation. If the auto manufactures had not offered pensions, they would have had to pay a higher hourly wage. The cost of the pension was figured into the labor cost for the cars or components built by that worker and included in the sale price of the individual cars.

Now the auto makers are claiming that paying the pension with money they already have, the money that was collected when the cars were sold, will break them.

I don’t know what the answer is, but stealing from the auto manufacturers’ former employees sure isn’t it!

My argument with the news media is that they don’t educate their viewers and readers by reporting the the true facts.

1. The workers already earned the money represented by the pension
2. The companies already collected the money that should pay for the pensions
3. Not paying the pensions is exactly the same your not paying for gas after you fill your car’s tank

Why the experts missed the leading indicators

2008-11-11T06:08:00.001-07:00

In the movie Midway, the intelligence analyst played by Hal Holbrook was trying to determine the Japanese plans and found a reference in a single message to “AF”. By analyzing the location of the airplane sending the message they suspected that “AF” was the Japanese code for the island of Midway. By falsely reporting a problem with the fresh water distillation system on Midway, they tricked the Japanese into referring to Midway, using the code “AF”, in a subsequent message. Knowing that “AF” was Midway allowed the analysts to predict the Japanese attack on Midway in time for the US forces to be in place to defeat it.

The point is that in most cases the leading indicators are very small and easy to over look. By the time those small indicators grow to a size that can be analyzed with statistical tools it’s tool late to do much to fix things.

Without the almost insignificant reference to “AF” the US forces would not have known that Midway was the true Japanese target until it was too late to get the US forces into position to block that attack.

In the same way the “experts” missed the small leading indicators for the current economic woes. The sub-prime mortgage losses and the derivatives that fueled the collapse were not created by the people who bought the mortgages or derivatives, those were conceived of by the smartest people the banking and securities companies could hire. While the experts patted each other on the back and collected huge bonuses for the sale of those mortgages and securities, the leading indicators of factory closings, lay offs, and people who were now working below their experience, skill, and former salary levels got missed.

The problem is that the “experts” waited until the conditions were obvious, which would be like the US waiting for the enemy forces to attack rather than looking for those tiny leading indicators that would allow you predict events.

Are the experts stupid? Not at all, but I believe they fell into two traps, first they fell victim to their own expertise and only looked at the leading indicators within their specialties and only at the indicators that their theories told them were important. Second, like an expert witness in court, they got paid to justify decisions that their employers had already decided were correct.

In the case of the loss of manufacturing jobs and the switch to the “knowledge economy” they failed to recognize that there will never be enough knowledge jobs to support the shear number of potential US workers losing the old jobs. In the case of the financial markets, the got paid to come up with new financial methods to allow previously ineligible borrowers to get loans and credit.

In both cases the experts didn’t see that as jobs were lost those borrowers ability to repay loans was more and more at risk. Again, the experts watched as the leading indicators showed that the limits had been reached and the theory got pushed to a ridiculous extreme. As with most things when pushed to the extreme, the lending practices failed. But, since the decision makers income was tied to making more loans, they continued long after prudence dictated they should stop.

Upton Sniclair, may have said it best “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

Modern shopping

2008-10-27T17:47:00.000-07:00

I was at the supermarket this afternoon and tried to buy some bone in chicken breasts for dinner. I couldn’t find them in the chicken section of the meat department, so I ask the butcher for help. He check where he “knew” they should be but decided that they must have sold out and another product filled into the empty slot.

I commented that if there were a position holder for the item, I would have know they were sold out and not had to bother him. He agreed and replied that they used to be able to make the decisions about how much of what to stock and how to mark the bins in the store, but that now it was done from a central office.

I may not like the answer, but I’ll continue to shop their because at least I got an honest answer not a song and dance. Keep in mind that this is a store that thinks it’s my job to fill in their paper work for an item I’d like them to keep selling. A product that I regularly buy from them. I did my part as a customer when I told a store employee! Putting that into their system is the stores job, not mine.

The store thinks that they are saving money for the employee’s time and they are, by shifting that cost for time from their employee to me. My time to fill out their card is worth at least as much as their employees and since the profit from selling me the product accrues to them, why should they shift the cost to me?

It's always about salaries

2008-10-20T04:14:00.002-07:00

I’m watching CNN this morning (Monday, Oct. 6) and their reporting the world wide impact of the current US financial crisis. Markets are responding to the projected lower spending of US consumers.

Lets put this in perspective:

The same kids who took a sandwich to school on Friday will take a sandwich to school today. The same people who drove to work on Friday will drive to work today. People will still wash cloths and use detergent. They will stop doing those things only when they loose their jobs and don’t have an income. The most likely reason for them to loose their jobs is companies that don’t understand that for every job they shed, the economy looses that worker as a buyer of that same companies products.

I remember a statistic that explained how many jobs were created by a single new manufacturing job. This was back in the days when manufacturing jobs were actively sought by communities instead of big box stores. The understanding was that if you created three (or five or some other number of) manufacturing jobs you created one additional job in the community.

Those jobs in the community were at the burger stand, the car dealership and the local grocery store. Create 3,000 manufacturing jobs and you get 1,000 (or what ever number of) support jobs. That’s the coffee shop, the grocery store, mechanics and sales staff at the local car dealership, the doctors office, etc.

What we’ve been doing is cutting $45,000 a year jobs, creating two $25,000 a year jobs. Do this at the same time that your government is spending more than it takes in and you’ve got a recipe for disaster.

The idea that we could create an economy out of “information” was proven false on a smaller scale in Pittsburgh, Pennsylvania when the steel mills closed. The idea there was to take those displaced workers and retrain them into high tech. Only a few actually made it.

Not because they were stupid, but because people are not all the same. Think about the people around you. How many are really smart but just not scholarly, they do well in practical, hands on stuff but not in classroom stuff? A lot of people just go nuts cooped up in an office all day.

I’m not particularly well educated, but I was taught in high school that the economy was interconnected. People with good paying jobs buy stuff, they buy houses, cars, cloths, etc. People who had good paying jobs take on some debt to buy big ticket items like houses, cars, major appliances, things like that. Far too many got down sized, out sourced or their benefits cut leaving less income than they planned for.

They try to keep up with their debt but unless they can get their income back to it’s previous level, they’re doomed to keep falling farther behind. At some point it gets so far behind that they loose their houses. If this sounds like what’s happening today, your right. But the root cause is low wages. Add to that predatory lenders and bad public polices and you’ve got the perfect economic storm.

Please remember that we created sub-prime loans because such a large percentage of people were earning such low wages that they couldn’t qualify for traditional house loans.

The stock market is bouncing back.

2008-10-14T05:53:00.001-07:00

The point is that people are selling off stocks. I’ll say that again people are selling off stocks ----- that means that someone is buying.

Why did you pay $25 for your shirt? Because you think its a good price for the utility of the shirt. Why is someone buying the stocks that are being sold? Because they think that the stock is a good value at the offered price.

People are panicking and selling for what ever they can get. Someone else is looking at that price and saying “If I buy it now at that price, it will be worth a lot more later”. It’s like your house, before the bubble burst it was worth three hundred thousand dollars after the bubble it’s worth only $200,000. The only reason it matters is if your going to sell.

It’s value as a living machine is still the same, the same three bedrooms, two baths, same back yard. If your plan is to live in it, do you really care how much the house would theoretically sell for?

The same is true for your stock portfolio. The selling price only matters when you sell. If you’re not retiring this month, why sell your IRA? If your retiring this month, it’s too late to make any big changes.

Do you really want your retirement in the stock market?

2008-10-06T06:02:00.001-07:00

Remember a year or so ago when all the experts were saying that we needed to create a system where individuals could put part of their social security money in the stock market? How good an idea does that seem now?

Yes, over a long enough time the stock market out performs the return on investment that we get through social security. Great, I’ll have a larger retirement income - unless I need to retire this year! Anyone starting to draw their money in this market will loose money, a lot of money. While the amount of income from social security is not as great as the potential income from the market, it is much more secure. Well, until the politicians decide that if it’s OK for United Airlines to renege on pensions then it must be OK for the United States government to renege on social security.

One thing no one wanted to talk about when they were pushing the stock market option was that risk equals return. As the market conditions today (Friday, October 3, 2008) show when the risk is too great, the market corrects by lowering the price. We spent a longer time than normal in the “sweet spot” where risk (and the associated reward) was at the higher end of the acceptable scale. Now, many of those risky investments are proven to be much higher risk than the market accounted for.

The leading edge of the baby boom will start “cashing out” in the next 3 years or so. What impact will that have on the already troubled financial market?

The "experts" really don't get it.

2008-10-03T12:52:00.001-07:00

I know I’ve said this before and you may be getting tired of hearing it, but the “experts” I hear analyzing the current financial crisis really don’t understand the problem or the solutions that will really work!

The problem’s root cause is people not paying their loans. Why aren’t they paying their loans? They really would rather pay for and keep their houses, they would really rather pay their credit cards every month.

Most of them didn’t get into trouble by over spending, they got into trouble because productivity in the US is much higher than 10 years ago. This means that companies can produce the same amount of goods for less labor. It also means fewer workers in that industry. A lot of the manufacturing is now being done overseas and that means fewer workers in the off-shored industry.

How can unemployment be low if all those workers are being laid off? They are finding jobs, but the jobs don’t pay what the old job did. Or they had to pay their own relocation expenses and that big expense put them behind on the rest of their bills.

Easy credit made it possible to try and keep up their life styles by using equity in their houses and credit cards. That cash flow problem for banks caused by mortgage defaults is exactly the same problem that individuals have been having for several years just bigger and more concentrated.

The only solution is better paying jobs and lots of them. I watched a news piece on CNN where they were interviewing the owner of a gourmet popcorn shop and he was saying that because business was slow, he had already used his line of credit and couldn’t get an increase to help during his slow business season. He was not taking a paycheck so that he could pay his employees. Can you imagine the senior managers at any big corporation not getting paid so that they didn’t have to lay off workers?

Until the big corporations understand that capital circulates. Money in a bank is loaned to build houses and the paychecks for the carpenters and the carpenters buy the cars and washing machines that the big corporation makes and sells, some is put into the bank and loaned again. But that money is just a place holder for the hours of labor and if your not putting into the system (by hiring and paying your workers well) there will not be money in the bank for you to borrow to operate your own business.

Just who is the expert?

2008-09-29T07:05:00.001-07:00

In reading a Time business on line article (I'd include the link, but Time already took the article off their site) about the AIG bailout, the author noted that one reason the government decided to jump in was the size and global reach of AIG.

On thing worth noting is that is that AIG got in trouble not because of it’s core insurance business, but because of it’s investments. Investments, what is an insurance company doing in the investment business?

Simple, investments are a place to park the huge profits from insurance premiums. All that money they collect from the people buying insurance is invested at the highest rates they can find. What did you think, they put it in a vault somewhere and let it sit?

Insurance companies put that money to work, keeping only the cash reserves the regulators tell them they need in case they have to pay you for a loss.

What this tell us is that the people making the investment decisions at AIG, the best and the brightest they could find, really didn’t understand the level of risk involved in their investments.

Now when the decisions made by the best and brightest minds we could find go bad, who do we turn to for advise, the same people who made the decisions and the people who trained them.

When I was still working, if I screwed up this bad, I’d be the last person my boss would ask for advice. After all, if my best thinking got us here, why would he expect my best thinking to fix it?

Why the financial savior plans won't work!

2008-09-22T06:01:00.002-07:00

In reading about the current crop of “savior” plans for the US financial crises I realized why they won’t really solve the problem.

They are all top down plans and the problem is a bottom up problem. What the government is trying to do is like fixing the fuel pump on your car when the battery goes dead.

Take the mortgage melt down as one example. Bailing out the lenders with direct cash subsidies doesn’t do a thing to stop foreclosures, it only makes it possible for the lender to pay it’s bills and make new loans. A better use for the money is to subsidize the home owner who can’t pay the mortgage directly and let them keep paying on time.

The mortgage crisis is only a crisis if the people who have loans can’t pay them. A lot of the problem surfaced when ARMs (adjustable rate mortgage) reset and drove the monthly payments up. The rest of the problem is people who lost their jobs and can’t find another, or at least one that pays what the lost job paid.

At the core of our financial problems is the fact that peoples income has not kept pace with costs and the cure is to put money back in the hands of the people in trouble. Take the same 700 million dollars, pay it to the same banks, but pay it as assistance to individuals who need help keeping their homes and businesses. Take the interest rates back to where they were when people were making their payments, pay 10% or 20% of the mortgage and let the home owner pay the rest.

The next big example is US auto makers, who don’t need large influxes of cash, they need a large influx of customers. The best way to subsidize Detroit is to subsidize buyers. If you going to give GM, Ford, and Chrysler assistance, do it by making it possible for them to sell their product at a price people can afford. Again, lower interest rates or down payments using the same money you were going to give in the form of a subsidy.

When you prime a pump, you don’t pour a huge volume of water down the well, you pour just a little into the pump! The big companies are the well, the consumers are the pump.

Shareholder Value

2008-09-16T05:40:00.002-07:00

I was just reading a question on Linked In, the business networking web site, about how to use the Balanced Scorecard method in business. One of the answers talked about “Shareholder Value” and it started me thinking.

Focusing on shareholder value has caused far to many American companies to loose sight of their real business. To paraphrase Warren Buffet “Take care of your product and your shareholder value will take care of itself”.

If you build a quality product, in a cost effective manner, and market it well, then shareholder value is an automatic byproduct. The more you focus on shareholder value as a goal, the less you focus on the product and the product drives your business.

For most businesses shareholder value is measured by stock price and If you manage your business to control your stock price, then your business is your stock price. If you manage your business to produce (and sell) your product, then your business is producing (and selling) your product.

One reason far too many companies focus on stock price is that the stock price and not product sales has become the measure of the senior manager’s success or failure. It’s the kind of thinking that causes Apple to beat all the analyst’s expectations and still have their stock shares loose $17.47, or 10.5 percent in after-hours trading.

Yes, earnings are down from last year, but with over a billion dollars in profit this year, Apple looks they they are making money when a lot of businesses aren’t. So anyone in the real world would say that Apple is successful and that if the market is rational then their stock should be valued to reflect success and their stock price should hold or rise while only failure would drive falling stock prices.

One more short sighted decission

2008-09-10T18:32:00.000-07:00

Bell Labs ends fundamental research and focuses on applied research.

This article at Wired.com reports that Bell Labs has ended it long history of basic research and shifted it’s focus to research that applies to it’s current business.

How does this jibe with the often reported stories that the US will become the idea “factory” for the rest of the world?

Bell Labs created the laser as part of their basic research and really didn’t know that it would apply to telephony as a way to send voice messages over fiber optic lines. The fundamental research more than paid for itself by allowing more messages over fewer lines and that supported Bell Telephone’s core business.

What profit making opportunities will Bell now miss because of this decision. We’ll never know but rest assured that just as Japan and China are investing is space they will invest in basic research and that research will result in products that outpace American products. I can’t tell you where or how, but history supports my position that basic research always pays off. It just may not pay off this week.

Health Care

2008-08-28T03:29:00.002-07:00

As a bonus to overcome World War Two wage and price controls companies began offering “fringe” benefits including health insurance. We came to expect that as a part of our compensation package. As health care costs increased, companies began increasing the employee payment and raising the co-pays. Now many companies are cutting health care coverage or eliminating it altogether.

Many (most?) employees would buy their own policies BUT when the companies stop offering the coverage, they don’t add the money they used to spend for non-cash compensation to your salary at the end of the week.

For those of you who are not sure what I mean, your have a compensation package which includes your salary, the value of your health insurance, paid vacation, sick leave and paid personal time (like for doctor’s appointments).

The value of the things your company pays for that you don’t have to pay for directly is call non-monetary compensation. But you must calculate it as part of your hour wage when comparing job offers. Think about one company offering a company car for business travel and another offering mileage. One package may be slightly better or worse than the other.

If your company stops paying for something like health care, you just got a pay cut since you’ll now have to take that amount off your weekly check to pay for the same coverage. Your take home pay went down and that is the real definition of a pay cut.

When a company claims that they need to "cut costs" and the cost is part of your compensation, what they are really saying is "we want you to take the loss so our profit won't". My question is always "why should I pay to keep your profit level above some arbitrary number?"

In most cases of cost cutting the issue is not keeping the company open it's 7% profit versus 9% and the company want's you to take the loss to keep that number higher.

Why I'm not rich.

2008-08-18T19:38:00.000-07:00

Lets see if I get it. Apple beat all the analyst’s expectations and their stock shares lost $17.47, or 10.5 percent in after-hours trading.

So that’s why I’m not rich, when a company does better than projected, I expect that the value goes up, not down. Yes, earnings are down from last year, but with over a billion dollars in profit this year, Apple looks they they are making money when a lot of businesses aren’t.

More fuzzy thinking

2008-08-11T18:51:00.000-07:00

In this article describing the presidential candidates positions on the economy I found the following quote.

"If you don't tax them, they can pay their workers more," said Taylor Griffin, the candidate's (John McCain) senior adviser.

This kind of fuzzy thinking is what got us into this economic mess. In a capitalist society any savings will accrue to the company and they will hire workers at the lowest salary necessary to get the quality of worker they need.

The person making the statement either knows better and is just creating a sound bite or has no clue about how business really works.

Employee training

2008-07-28T18:36:00.002-07:00

Lets see if I get it - American business have stopped investing in employees and expect them to arrive fully trained, but some Indian companies are investing in large scale employee training. This article at Fast Company describes one Indian company's efforts to build a world class work force and the amount of time and effort they are investing in their employees.

I’ve watched the transition in American business as employees went from being viewed as creating value to an expense. And as that change took place, many (most?) companies quit investing in training. Is this change in India part of a trend by those companies to view workers as partners in building profits? If so will American business pick up on this new view in time or lag behind as we have with so many other trends?

American business, at least the auto industry, was slow to recognize that continuous quality improvement was key to building world class products. We were slow to recognize rising demand for key resources, like oil,and didn’t invest in developing our resources. By lagging behind we not only have to play catch up, but our costs of adopting the new ideas and methods is much higher because we have to implement the changes as a crash program rather than evolving into them.

Big change made over a short time is almost always more expensive than a measured phase in of new processes or procedures.

Midwest floods and self reliance

2008-07-22T07:58:00.001-07:00

Any ideas on why the people displaced by the midwest floods aren’t rioting and complaining that FEMA is not supplying coffee makers? I think it’s mostly because the flood victims are small business owners. Farmers, small store owners, small auto repair business; that kind of thing.

These people are used to solving problems themselves and making things work. When the floods destroyed their homes and businesses they started figuring out how to make things work again. Since they built it once they know they could build it again. All they really need is a little time and the cash to get started. The people who in New Orleans who rioted were mostly used to having a government agency fix things.

I live where my taxes don’t provide trash pickup. My choices are to pay a private company to pick up my trash or take it to the transfer station myself. I take it to the transfer station once a month and save about $20 a month over the cost of pickup.

This simple example multiplied by the number of things the people in the midwest did for themselves before the floods is why they are just fixing things and not rioting against the government when things go wrong.

It’s not politics, it’s business

2008-07-17T07:19:00.001-07:00

The recession the US is facing is the direct result of political choices we made over many years. While it is simplistic to claim that any single decision of the federal government is the point cause of our economic woes, the collection of legislation certainly caused the economic results we face.

Companies make operating decisions based on both what consumers want (market forces) and what regulations will permit (government control). We have not built an oil processing plant to make gasoline in something like 20 years. Was this because there was no market for product or because the government created regulations that made it too costly to open a new plant? We have curtailed oil drilling in the US not because the oil companies don’t see a market but because the regulations make the costs of drilling too high to allow a satisfactory return on the companies investment.

We use regulations to “adjust” public behavior routinely. No smoking laws are the most obvious case of blocking your legal behavior to accommodate your neighbor’s preferences. While the case for smoking as a health risk is clear, the case against second hand smoke is less clear. Still, we enacted legislation that defines where and under what conditions individuals can smoke in public. Debating if this is good or bad public policy is not the point of this article, the point is that legislation creates the environment that business operates within.

Another example is foreign trade agreements. The US routinely makes deals with other governments to allow US business low tariff access to foreign markets by allowing those countries businesses low tariff access to US markets. Some of those agreements made it cost effective to ship a lot of jobs out of the US.

When I was taught to analyze information, I was taught to speak not of what was certain to result, but of what was more or less likely.

Anyone who has managed their own small business (as I have) predicted as one obvious results of free or nearly free trade with Mexico (the most well known example) that Mexico will, most likely, sell a lot of inexpensive good to us while we will, most likely, sell fewer expensive goods to Mexico.

We have a huge trade deficit because we buy a lot more cheap stuff than we sell expensive stuff. The legislation that makes this possible was touted as “good for the country” when passed. Once again common wisdom was right and the expert analysis was wrong. We aren’t selling more than we’re buying and we are shedding jobs a an alarming rate.

If I’m right, how did a not very smart guy like me expect the results that we now have and the super smart experts miss it? Too much theory and not enough common sense. We’ve got far too many people making decisions who’ve never had to produce a product other than conversation.

The key to economic growth is not businesses making money, its workers making money and buying products made by other workers. The lessons you learned as a kid from your allowance still apply. Your allowance (income) is fixed and if you don’t have enough income to buy the things you want, you do without. If a candy bar is $1 and you only have 99 cents, you don’t buy. The store doesn’t sell and the manufacturer doesn’t produce. The key to economic growth is workers with money who buy things.

So, again if I’m right, how do we fix it? We use the same tools that got us into this position, we legislate - but we change our focus. We give incentives to companies that create jobs into the US and put disincentives on companies that rely on foreign labor. And if situations like Toyota who has big manufacturing plants in the US confuse you about who is a US company, try this - a US company is one that has its headquarters in the US, pays US taxes, and reports the bulk of their profits on their US tax returns.

When a company is bought by a foreign company it looses it status as a US company. Chrysler was a US company until it was bought by Daimler Benz then it became a foreign company. A foreign company because the profits (if any) go to a company that reports the income in a country other than the US. As with most things the simple answer is the most accurate.

The problem, truly, is not that the profits accrue to a foreign company, it’s that the cash goes out of the US and is then spent elsewhere. The Marshall Plan of post World War Two shipped boatloads of money to Europe and Japan but most of that money came back to the US to buy American products. The manufacturing base of most of these countries had been destroyed while America had a huge excess capacity.

So, what is that common sense answer? Give the companies an incentive to spend their profits in the US! The government should give incentives for spending in the US, generally in the form of tax or tariff reductions. The rules should also apply disincentives for taking profits out of the US economy, again in the form of higher taxes or tariffs.

For better or worse, we are part of a highly integrated global economy and there is no way to isolate the US economy from the rest of the world. With a little thought we should be able to create a system that rewards companies that keep their jobs (and purchasing power) at home.

Experience

2008-07-09T06:53:00.001-07:00

I held off a while before posting this so I could see if I was writing something worthwhile or just knee jerk reacting to something that irritated me. So here are my thoughts, about a week out of date.

I was truly disappointed in General Wes Clark’s comment that Senator McCain’s military service doesn’t “qualify” him for commander in chief. It is certainly a form of experience that will be useful for a president.

John McCain’s service as a fighter pilot and prisoner of war may not “qualify” him for the office of commander in chief. But it does give him a unique understanding of some of the decisions he will have to make.

When I was in Viet Nam, we referred to someone being killed as “wasted”. In fact that term has now become a part of the language for almost anyone who is killed.

For any veteran, solders are not nameless, faceless “troops” they are the people that we lived and served with and one lesson the military instills in all its officers and noncommissioned officers is, while you may have to “spend” your people to reach your objective, GET YOUR MONEY’S WORTH!

Since Senator McCain has that unique experience, I should be able to rely on him not to waste our service people. Is that the only qualification for the office of President? Absolutely not! Is it an important consideration? Absolutely.

Labels matter

2008-07-07T07:51:00.003-07:00

Why are so many American’s worried about the economy? Simply because the price of the things they buy every day are going up faster than their salaries. And all the talk by the “experts” about if it is a true recession or not is immaterial.

The accepted definition for a recession (according to wikipedia) is “a recession occurs when real growth is negative for two or more successive quarters of a year”. The street definition is “a recession is when your next door neighbor looses his job, a depression is when you loose yours”.

One of my favorite quotes is “If you call a tail a leg, how many legs does a Tiger have? Four, calling a tail a leg doesn’t make it one!”

The experts can create all the complex descriptions they want to, the truth is what is happening on the street to real people. Inflation is when I can’t buy the same thing today with the same amount of labor that I did yesterday.

If that sounds confusing, look at it this way. You make a dollar an hour and a gallon of gas costs thirty five cents. The next day you still make a dollar an hour and a gallon of gas costs fifty cents. That’s inflation, no matter what the dictionary says.

A recession is when people are getting laid off and can’t find a new job. Doesn’t matter how many legs the experts say the tiger has, real people know it has four!

As I write this, CNN TV is reporting that there is mild economic growth. If a lot of people are not able to buy the same things for the same amount of work; that’s not anyones definition of growth!

If you think I’m wrong, remember we got to where we are by following the advice of the highly trained experts! So if their advice is not producing the results we want, we need to look at that advice and see why it didn’t work. I submit that a big part of the reason is the inaccurate descriptions they use for real world events.

Just as calling a tail a leg and stating that a tiger has five legs confuses you when you see a real tiger with only four legs, the “experts” are now lost by their inaccurate descriptions of recession and inflation.

Are you sure you want to keep listening to the experts who got us where we are?

Using the social sites in business.

2008-06-29T05:34:00.007-07:00

A CNN Money article titled "Business people find ways to save time and make money from social software pioneered by their kids.” provides further proof that web based job searches are still tech-centric. I tried to include the link, but once again the HTML that worked yesterday doesn't work today!

Job boards started with the tech world and tech jobs still lead the way for finding jobs and workers on website job boards. Far more programmers are placed through online boards than accountants. Will that change? Of course it will, just as e-mail is now a common business tool, so will the use of online services to find employees and jobs.

A lot will change in both how we list ourselves on line and how companies list openings before it becomes common in none tech industries, but it will get there eventually. Everything I’ve read talks about college students using the web but that misses a big part of the story. High schools are teaching computer use and a huge number of students that will not go one to college are just as computer savvy as the college grads. They use text messaging, they use Facebook, My Space and all the rest just as much as those college students and will expect to find a job using the same methods.

If your company is limiting it’s tech driven job search methods to the job classifications that demand a college education, your missing some great employees who will be trying to use the these methods to find your jobs that don’t require a college degree!

An open letter to both presidential candidates

2008-06-24T06:24:00.003-07:00

The problems we face are not that complex nor are the solutions. Perhaps the implementation will be complex, but the concepts are quite simple.

It has been said that nothing happens until a sale is made, no raw materials are bought, no workers employed and no products produced until a sale is made.

And while thats true, it is incomplete. Nothing happens until someone buys something. Stated that way it makes your job much simpler - you, and all the other politicians must create and sustain an environment where I can buy things. I can only buy things if I have money and that means jobs. If jobs are running out of the country, you have to crate laws to make it cost effective for business to keep those jobs here. Incentives or disincentives is your job to decide but without jobs, people can’t by things and that’s bad for business.

Inflation is no big secret either, it’s simply when prices go up faster than salaries because of none-value-added costs. If that doesn’t match what you learned in school, remember that the labels you learned in school are some “great” thinker’s theory of how they believe things work, while my definition is based on the results of following those theories. No matter what your initial goals were or what your theory is, the results are what count!

The idea of buying a product today that will be produced tomorrow has value but when speculators take advantage of the process to make huge unearned profits, it unbalances the system. When speculators drive prices up much faster than salaries (think today's oil prices), I can’t buy and if I can’t buy, business can’t sell and that kills the whole economy.

Yes, the economy will self correct, but the time an unmanaged economy takes to self correct causes a huge dislocation in day-to-day living. So we expect the government to help. Just as building a physical dam keeps the river from flooding, economic dams (regulations) keep the economy from flooding.

If your doubt my theory, remember this part of Adam Smith's economic theory: "Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer."

Henry Ford is quoted as saying that the customer pays the wages, the factory owner only handles the money. In the same way the companies that pay the lobbyists only handle the money - it's true source is the people who by things. And one last time, no job no buying things.

Smart moves?

2008-06-16T07:12:00.001-07:00

Watching the Military channel on cable TV an episode covered the Swedish aircraft industry. In talking about Saab they described the founding of the Saab Automobile company as a effort of the aircraft company to keep from laying off skilled workers and to keep the industrial base.

Now if the Swedes could understand the value of keeping skilled workers productive and their skills current and in keeping their industrial base current clear back in 1946, how come the US has forgotten these lessons?

Back in the day when I worked in electronics, we found a lot of product improvements and new products from building and repairing existing products. Without the input from the production floor, we would have missed significant improvements to our equipment.

Now, please explain to me why you would let go of the critical skills your business needs and eliminate one of the best learning laboratories your company has?

Priorities

2008-06-11T06:01:00.001-07:00

I just read a blog where the writer was talking about working hard but not on high priority items and it caused me to think - does low priority stuff need get done at all?

Well, of course it does. That’s why it on your list in the first place! If it didn’t need to get done, you wouldn’t put it on you “to do” list and assign it a priority.

Your high priority for today may be making the next sale or delivering the next order, but at some point you really do need to file those filled orders from last week and bill for the work you just finished. When we push stuff to a lower priority there is the natural human tendency to think its less important when the truth is its only less important AT THIS MOMENT. In far too many cases it's priority get higher the longer you put it off.

If you are constantly putting of stuff as “lower priority” you better make sure that some where, some how it gets done. Housekeeping tasks seem less important than the next sale or delivery, but how long can you function if with three feet of unfiled paperwork on your desk?

One possible future for mobile computing

2008-05-31T03:32:00.001-07:00

Before I got my smart phone I used a Palm Life Drive as my PDA. One neat feature was the wireless folding keyboard that let me work on documents without taking my laptop on the road.

The Life Drive was about the same size and weight as the I-phone which does everything my PDA did and a lot more. The I-phone coupled with applications over the internet and a bluetooth connected keyboard and mouse could replace the larger and heavier laptop for some mobil computing uses.

How about this:

The phone has at least 10 Gig of memory, a wireless link to your server and the internet, a bluetooth link to a keyboard, mouse, and monitor. When you get to work, you just touch the “work link” icon on the screen and automatically connect to the peripherals and your office network. When your done for the day you log out and take your phone home with you. At home, you touch the “home link” icon and you have access to all the files on your device and your home peripherals.

For people on the go, a folding keyboard and mini-mouse would allow you to use the small screen until they finally perfect the roll up flat screen. True mobile computing without having to carry a comparatively huge laptop.