January 31, 2005

Ward of the State U - V

I was preparing for an exam when this happened, so I haven't gotten round to it until now.

Ward Churchill has resigned as chairman of the Ethic Studies Department at CU. This is not, of course, an end, but a beginning. Almost any professor will confirm that being a department chairman is more of an administrative nightmare than an honor. It may sound impressive to civilians, but nobody inside the academy really covets the title. Therefore, the university faculty can't be allowed to pretend that this is actually a sacrifice of any sort.

In the course of resigning, he released a statement that is as dishonest as his original essay was malicious.

In 1996 Madeleine Albright, then Ambassador to the UN and soon to be U.S. Secretary of State, did not dispute that 500,000 Iraqi children had died as a result of economic sanctions, but stated on national television that "we" had decided it was "worth the cost." I mourn the victims of the September 11 attacks, just as I mourn the deaths of those Iraqi children, the more than 3 million people killed in the war in Indochina, those who died in the U.S. invasions of Grenada, Panama and elsewhere in Central America, the victims of the transatlantic slave trade, and the indigenous peoples still subjected to genocidal policies. If we respond with callous disregard to the deaths of others, we can only expect equal callousness to American deaths.


It is not disputed that the Pentagon was a military target, or that a CIA office was situated in the World Trade Center. Following the logic by which U.S. Defense Department spokespersons have consistently sought to justify target selection in places like Baghdad, this placement of an element of the American "command and control infrastructure" in an ostensibly civilian facility converted the Trade Center itself into a "legitimate" target. Again following U.S. military doctrine, as announced in briefing after briefing, those who did not work for the CIA but were nonetheless killed in the attack amounted to no more than "collateral damage." If the U.S. public is prepared to accept these "standards" when the are routinely applied to other people, they should be not be surprised when the same standards are applied to them.


These points are clearly stated and documented in my book, On the Justice of Roosting Chickens, which recently won Honorary Mention for the Gustavus Myer Human Rights Award. for best writing on human rights. Some people will, of course, disagree with my analysis, but it presents questions that must be addressed in academic and public debate if we are to find a real solution to the violence that pervades today's world. The gross distortions of what I actually said can only be viewed as an attempt to distract the public from the real issues at hand and to further stifle freedom of speech and academic debate in this country.

Don't buy the book, but go ahead and read the whole thing. On an empty stomach.

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Gillette, RIP

I don't have anything against P&G, but its acquisition of Gillette looks to me like a stunning betrayal of Gillette's history.

And this may seem frivolous in the face of such larger issues, but Gillette has a great history and a unique culture, and over time, it will get swept into the dustbin. King Gillette, an amazing larger than life character who more than 100 years ago invented the modern safety razor and what could arguably be considered the business model of the modern age (how many businesses operate on a "razor blade" replenishment model?), will fade even further into history.

Gillette had run into trouble before and managed its way out of it. Its heroic CEO Colman Mockler was profiled in Good to Great:

While it might be a stretch to compare the 11 Level 5 CEOs in our research to Lincoln, they did display the same kind of duality. Take Colman M. Mockler, CEO of Gillette from 1975 to 1991. Mockler, who faced down three takeover attempts, was a reserved and gracious man with a gentle, almost patrician manner. Despite epic battles with the raiders—he took on Ronald Perelman twice and the former Coniston Partners once—he never lost his shy, courteous style. At the height of the crisis, he maintained a calm business-as-usual demeanor, dispensing first with ongoing business before turning to the takeover.

And yet, those who mistook Mockler’s outward modesty as a sign of inner weakness found themselves beaten in the end. In one proxy battle, Mockler and other senior executives together called thousands of investors, one by one, to win their votes. Mockler simply would not give in. He chose to fight for the future greatness of Gillette even though he could have pocketed millions by flipping his stock.

Consider the consequences had Mockler capitulated. If a share-flipper had accepted the full 44% price premium offered by Perelman, and then invested those shares in the general market for ten years, he still would have come out 64% behind a shareholder who stayed with Mockler and Gillette. If Mockler had given in, none of us would likely be shaving with Sensor, Lady Sensor, or the Mach III—and hundreds of millions of people would have a more painful battle with daily stubble.

Certainly, the Wall Street Journal (subscription required) has speculated on the difficulty of aligning management and shareholder interests:

While some say Mr. Kilts, 56 years old, deserves every penny for turning Gillette around and adding billions in shareholder value, his big payday after just four years is spotlighting some longstanding issues about CEO pay in general: Are top executives sometimes motivated to do mergers, at least in part, by personal gain? And is it right for the top people to walk away with megamillions while thousands lose their jobs in post-merger downsizing? P&G and Gillette have said 6,000 jobs are likely to be cut in the combined company.

I'm not sure there's a right answer here. A substantial part of Larry Ellison's pitch to shareholders was that management was failing them by refusing to sell Peoplesoft to him. It doesn't have to be one or the other, but it does mean that there's no automatic right answer.

I think the problem was more lack of commitment than outright greed. Kilts had done this before at Nabisco, revitalizing the brand and then selling it to Phillip Morris. And he never moved his family to Gillette headquarters in Boston. Kilts had also brought a large group of managers from Nabisco over with him to Gillette. He may have known how to make Gillette's culture work, but I doubt he really saw anything special in the place.

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When Does "Warning About" Become "Rooting Against?"

The self-styled "Progressives," continue to live in the past. Someone should renew their subscription; they've obviously been reduced to pulling out the cardboard boxes with the old newspapers and love beads...

by Peter Grose, Special to the New York Times (9/4/1967: p. 2)

WASHINGTON, Sept. 3-- United States officials were surprised and heartened today at the size of turnout in South Vietnam's presidential election despite a Vietcong terrorist campaign to disrupt the voting.

According to reports from Saigon, 83 per cent of the 5.85 million registered voters cast their ballots yesterday. Many of them risked reprisals threatened by the Vietcong.

The size of the popular vote and the inability of the Vietcong to destroy the election machinery were the two salient facts in a preliminary assessment of the national election based on the incomplete returns reaching here. . .

A successful election has long been seen as the keystone in President Johnson's policy of encouraging the growth of constitutional processes in South Vietnam.

If these guys are this heavily invested in this story line, they're certainly not leaving any doubt about their policy. And for those of you who've forgotten how well it worked out the last time, I refer you to that decade of American triumph, the 70s. You know, first time tragedy, second time farce, and all that.

Fortunately, there's an antidote to this sort of simplisme - actual scholarship. Brought to you by Mack Owens of No Left Turns. It's a review of Lewis Sorley's A Better War: The Unexamined Victories and Final Tragedy of America's Last Years in Vietnam.

The defenders of the conventional wisdom will reply that Mr. Sorley’s argument is refuted by the fact that South Vietnam did fall to the North Vietnamese communists. They will repeat the claim that the South Vietnamese lacked the leadership, skill, character, and endurance of their adversaries. Mr. Sorley acknowledges the shortcomings of the South Vietnamese and agrees that the US would have had to provide continued air, naval, and intelligence support. But, he contends, the real cause of US defeat was that the Nixon administration and Congress threw away the successes achieved by US and South Vietnamese arms.

The proof lay in the 1972 Easter Offensive. This was the biggest offensive push of the war, greater in magnitude than either the 1968 Tet offensive or the final assault of 1975. The US provided massive air and naval support and there were inevitable failures on the part of some ARVN units, but all in all, the South Vietnamese fought well. Then, having blunted the communist thrust, they recaptured territory that had been lost to Hanoi. Finally, so effective was the eleven-day “Christmas bombing” campaign (LINEBACKER II) later that year that the British counterinsurgency expert, Sir Robert Thompson exclaimed, “you had won the war. It was over.” Three years later, despite the heroic performance of some ARVN units, South Vietnam collapsed against a much weaker, cobbled-together NVA offensive. What happened to cause this reversal?

First, the Nixon administration, in its rush to extricate the country from Vietnam, forced the government of RVN to accept a cease-fire that permitted NVA forces to remain in the south. Then in an act that still shames the United States to this day, Congress cut off military and economic assistance to South Vietnam. Finally, President Nixon resigned over Watergate and his successor, constrained by congressional action, defaulted on promises to respond with force to North Vietnamese violations of the peace terms. Mr. Sorley describes in detail the logistical and operational consequences for the ARVN of our having starved them of promised support for three years.

Please, please, please Read the Whole Thing. And then this. And then this.

This war is similar in the ways that benefit us, and entirely different in ways that benefit us.

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Attention Intelligent Design Advocates

There's a reason this is funny:

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Ward of the State U - IV

Ah, it gets better. It turns out that DU has access to an extended academic database, where I can limit my searches to refereed publications. There, I did find one other pre-tenure piece, bringing the total to two, I believe. Possibly three. (Note that the stated publication date on the UCTP site is 1991, making it possibly one of the sounds, reasoned arguments that earned Mr. Churchill his tenure.)

What really caught my eye, though, was "Deconstructing the Columbus myth: was the "great discoverer" Italian or Spanish, Nazi or Jew?", which made it into Social Justice, Summer 1992 v19 n2 p39(17).

The question of Columbus' possible Jewishness nonetheless remained intriguing, not because I held it to be especially important in its own right, but because I was (and am still) mystified about why any ethnic group, especially one that has suffered genocide, might be avid to lay claim either to the man or to his legacy....

For Jews, at least those who have adopted the Zionist perspective, a "unique historical suffering" under Nazism translates into fulfillment of a Biblical prophecy that they are "the chosen," entitled by virtue of the destiny of a special persecution to assume a rarefied status among -- and to consequently enjoy preferential treatment from -- the remainder of humanity. In essence, this translates into a demand that the Jewish segment of the Holocaust's victims must now be allowed to participate equally in the very system that once victimized them and to receive an equitable share of the spoils accruing from it. To this end, Zionist scholars such as Irving Louis Horowitz and Elie Weisel have labored long and mightily, defining genocide in terms exclusively related to the forms it assumed under Nazism. In their version of "truth," one must literally see smoke pouring from the chimneys of Auschwitz to apprehend that a genocide, per se, is occurring.(1) Conversely, they have coined terms such as "ethnocide" to encompass the fates inflicted upon other peoples throughout history.(2) Such semantics have served, not as tools of understanding, but as an expedient means of arbitrarily differentiating the experience of their people -- both qualitatively and quantitatively -- from that of any other. To approach things in any other fashion would, it must be admitted, tend to undercut ideas like the "moral right" of the Israeli settler state to impose itself directly atop the Palestinian Arab homeland.

This is, not to put too fine a point on it, garbage. It practically qualifies as an intellectual landfill all on its own.

There was a point in time, back when I was growing up, that certain Jews felt it necessary to try to prove Jewish connections to as many Western figures as possible. As the song says "But what kind of nut would you have to be/ To borrow a ship and put out to sea/When you don't know what's on the other side". Say what you will, it takes a special kind of courage to point your ship towards the open sea at a time when everyone else is creeping down the African coast, afraid that their ships will spontaneously combust when you get too far south. Freberg was making fun, but my guess is that we learn more from his history than from Churchill's.

As for his understanding of Jewish theology, the concept of "chosenness," and practically every event in Jewish history since 1933, he's got enough problems in his own field before venturing out into that world. I'm sure he doesn't get out much, but he might have taken in a high school version of "Fiddler on the Rez." You know, the one where Tevye looks up at God and asks, "Couldn't you choose someone else once in a while?" Chosenness isn't a virtue, it's an obligation. The hostility of the Nations is a biblical concept, and goes back just a wee bit further than even Columbus.

As for Zionism, it's an idea with many currents. But in its dominant form in the 1930s and 40s, its purpose wassn't to exempt Jews from history - we'd had quite enough of that for a few millenia, thank you very much - it was to mainstream Jews back into history.

Most Jews I know are perfectly comfortable calling Darfur a "genocide," far more comfortable than the UN is, for instance. It's the term "holocaust" that we want to preserve as evidence of a unique event. The costs of not doing so were on display in last week's London Auschwitz commemorations, as Muslim organizations variously declined to participate, objected to the whole thing, or did go based on the notion that other people died too, so it was ok to look past the Jews. Someone who's immoderately protective of ethnic identity should certainly be sensitive to others' history being stolen.

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Carnival of the Capitalists

For the business blogger in you...

Someone you know may have made the cut, but please, go read someone else. There's a lot of really, really good stuff there this week.

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Technology Mismatch

Is there any truth to the rumor that Mac will allow the iPod to simulate the radio experience even more realistically by hooking up with your car's GPS and fading out through underpasses & tunnels?

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Ward of the State U - III

Regarding the excrable Ward Churchill, whose exploits in academic rigor and inquiry have been discussed here, and here, more people are weighing in, some in postings I didn't have time to read before writing here.

David Harsanyi brings an appropriate sense of moral outrage to the question:

The problem is, as with all tenured professors, Churchill doesn't have to answer for his actions.

That brings us to a delicate matter: How do we balance the need to protect diversity and academic freedom with the need to protect impressionable students from hate-filled ideologues?

I'm not sure that students are so delicate they need to be protected from the likes of Ward Churchill. I do wonder, though, why the university is so eager to protect Churchill.

So does Paul Campos. He posits a hypothetical response from an academia with backbone:

"To compare the victims of the 9/11 massacre to one of the chief architects of the Holocaust is both intellectually bankrupt and morally depraved. To do so in a published essay, and to repeat this opinion to the media, after being asked whether he wishes to reconsider it, calls into question the author's fitness to continue as a member of this university's faculty.

"Members of our faculty should keep in mind that a grant of tenure is not a guarantee of perpetual employment. Tenure protects against dismissal without cause; but professional incompetence and moral depravity are both sufficient grounds for firing tenured faculty.

And Roger Kimball brings up the Case of David Irving, which also came up in my discussion with Ms. Kent:

But the truth is that freedom of speech, like all human freedoms, thrives only when it is limited. The law recognizes this by limiting free speech--shouting "Fire!" is a crowded theater is one proverbial instance.


I think Shils was right. Colleges and universities are institutions dedicated to the pursuit and transmission of the truth. Because the truth is often hard to establish and only imperfectly grasped, encouraging real intellectual diversity on important issues is a salutary part of the business of liberal education. But that does not mean that anyone can say anything he likes and have it accepted as a legitimate point of view. The case of Ward Churchill dramatizes the issue. It is, I believe, analogous to the case of the Holocaust deniers.

In this last case, you really should Read The Whole Thing.

In any event, the university's Board of Regents has scheduled a meeting for the sort of action that academics do best: be appalled.

UPDATE: Ironically, just as the Ward Churchill controversy was afoot, FrontPage Mag published "The Susan Rosenberg Debate," on Hamilton's previous struggle with morality, by Jonathan Rick, a senior at Hamilton.

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The WaPo Defends Its Constituency

The Washington Post today editorializes about Civil Service Reform, opposing it. In one breath, they oppose potential "politicization," and in the next breath defend the "mostly Democratic unions."

The irony must have escaped the Post editors.

They also note that

The vast majority of government managers have no experience making more sophisticated evaluations. Training managers will take an enormous amount of time and money, both of which the government is notoriously stingy about committing.

In fact, it's going to take more than that. If managers are simply handed a news system to implement, they'll see it as more paperwork to accomplish the same ends, and it won't change anything at all. Managers need to be trained to understand the system as a whole, a means of aligning systems with strategy and mission. Clearly this big picture has eluded the Post editors.

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January 30, 2005


I had an long, interesting conversation with Sandra Adams of McMad Neighbors this afternoon. Ms. Adams and I ran through some of the issues, many, many of the complaints, and a fair number of the complexities of putting a McDonald's at Krameria and Colfax. I'll need a little time to digest the whole thing, but look for a post on the subject soon.

The impression I got is that there are some valid concerns, but that they are of an extremely local nature. This doesn't make them less valid, but it does make them of less interest. Therefore, in order to gain greater interest, the group has had to exaggerate other potential impacts. And at the same time, McDonald's and the developer aren't necessarily the bad guys here - the city government and CDOT could take some simple steps to alleviate the legitimate worries altogether.

As I said, McMore to come.

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With the mechanics' union rank-and-file voting down concessions, including some pretty severe ones like jobs cuts, United Airlines is once again facing bankruptcy.

Oh wait, we're well past that. They're looking at liquidation. The union is claiming that it can save the airline millions of dollars without further cuts, and let's hope they're right, because everyone agrees that a strike will kill the airline once and for all. The real question is, when the local spokesmen say that mechanics are ready for that, is it the real turtle soup, or only the mock? Because now it's for all time, and not merely a lark.

Pointing that the unions (not this particular union, though) sat on United's board for years, and helped to plunder the company just as surely as any Global Crossing executive doesn't help things now. But it does raise some interesting questions about this au currant idea known as "Stakeholder Theory."

Briefly put, Stakeholder theory claims that a business has responsibilities that go outside of satisfying shareholders. Milton Friedman has argued vociferously that if you don't like what a company's doing, pass a law, or maybe strike, but that to load all the responsibilities of the world onto corporate management is to create insolvable problems. It's bad enough they're expected to make a profit when the guy next door is trying to do the same thing; burderning them with other, fairly ill-defined obligations is just going to sink the company in the long run. The employees, neighbors, suppliers, customers, generations future and past, and presumptive visiting space aliens all have the means to defend their own interests if they exist.

Nevertheless, Stakeholder Theory is now standard fare in b-schools. Hundreds of books have been written, thousands of seminars taught, millions indoctrinated, so going back probably isn't an option. And to be fair, to cite a current topic of conversation, it might not, strictly speaking, be a food chain's fault that it smells like french fries and its customers forget how to use trash cans when they walk out the door. But the company might still be considered to have an ethical obligation to mitigate some of those effects.

Now these are usually presented as management obligations. In the first place, the people teaching ethics tend to lean a little to the liberal, though not usually Leftist, side. Still, the mechanics' case suggests that this water may flow in many directions.

For the sake of argument, let's suppose that the union proposal, due in court this morning, saves cash but prevents improving internal processes. The company won't emerge from bankruptcy, and it wouldn't be any better-able to compete in the long run. The company would liquidate.

Who would be hurt? All the other employees, who have accepted cuts, for one thing. United's debt-holders, who have gone along with this long-running last act for years, hoping to get paid back. Airport business employees and owners, who would find their concourse following the mining industry. Not to mention a judge who'd have to find another case to manage. All these people would be perfectly furious with the mechanics, and rightly so. If management has an ethical obligation to consider employees and customers, unions have no less an obligation to consider other employees and downstream businesses.

In a way, this argument should be resolved by now. Margaret Thatcher and, to a lesser extent, Ronald Reagan, were both elected as a result of union intransigence that was hurting non-members. Like the people freezing to death for the greater glory of Scargill.

At the same time, maybe the union is, in a perverse way, actually aiding stakeholders. United isn't coming out of receivership any time soon. It retains its death-grip on gates it can barely use, and can't possibly be the most efficient tenant for. It's already prevented Frontier from expanding service, and reconsidering its plan for a maintenance shop here. As sinking ships go, United is taking a lot of surrounding shipping with it.

There's no way to do this calculation, of course. Once you start expanding the universe of people with claims, there's practically no end. Not to mention the fact that if shareholders have to consider everyone else, who'll be left to consider the shareholders? Which is perhaps the best reason to leave Stakeholder Theory on the shelf, for now.

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Modern Management

Last week, the Bush Administration began implementing the new, non civil-service rules for the Department of Homeland Security.

The Bush administration unveiled a new personnel system for the Department of Homeland Security yesterday that will dramatically change the way workers are paid, promoted, deployed and disciplined -- and soon the White House will ask Congress to grant all federal agencies similar authority to rewrite civil service rules governing their employees.

The new system will replace the half-century-old General Schedule, with its familiar 15 pay grades and raises based on time in a job, and install a system that more directly bases pay on occupation and annual performance evaluations, officials said. The new system has taken two years to develop and will require at least four more to implement, they said....

A raise or promotion -- moving up in a pay range or rising to the next one -- will depend on receiving a satisfactory performance rating from a supervisor, said officials with homeland security and the Office of Personnel Management.

"We really have created a system that rewards performance, not longevity," OPM Director Kay Coles James said in a briefing for reporters. "It can truly serve as a model for the rest of the federal government."

And soon it might. The White House will propose legislation within a month to allow all agencies to restructure their personnel systems in a similar way, said Clay Johnson III, deputy director for management at the Office of Management and Budget.

Naturally, the government employees' unions aren't happy about this change, and its proposed extension. After all, using actual evaluations instead of a clock-punching, time-marking system for grade and pay-scale threatens the very core of the civil service.

"They are encouraging a management of coercion and intimidation," said John Gage, president of the American Federation of Government Employees. He added: "This is not a modern system. This is a step backward."

Actually, it's a quantum leap forward, the very definition of modern management, fraught with the perils and promising the rewards that business managers have been dealing with for generations:

Smaller-scale experiments with changing pay systems at the Internal Revenue Service and the Federal Aviation Administration have produced mixed results. Managers at both agencies have said that it is easier to recruit talented workers at higher salaries than before, but it has also been difficult to create new pay systems that rank-and-file employees view as fair.

The current civil service system dates to the Pendleton Act of 1883, which replaced the "spoils system" of distributing jobs through political patronage with a merit-based system.

The proposed system appears to be based on an evaluation practice called the Balanced Scorecard, a means of aligning and evaluating employee and unit performance and activities with the organization's broader mission. In this sense, there's no reason why public sector organizations, or non-profit and government agencies can't apply it just as effectively as businesses. And there's absolutely no reason why it should only apply to agencies with a national security interest. The Balanced Scorecard Institute has been helping the Feddle Gummint do just that for a while now.

Initially developed in a series of Harvard Business Review articles, the Balanced Scorecard develops four sets of metrics for any organization: 1) financial, 2) customer-based, 3) internal processes, and 4) learning and growth.

Developing a balanced scorecard for an organization can be a very strenuous and time-consuming approach. It requires clear definitions of missions at all levels of the organization, and for all units. It requires a clear vision of the strategy to accomplish those missions. Established companies that may have strayed can spend months or years figuring this stuff out, all the while still having to conduct business.

Defining the measurable results is probably the next-hardest goal, and it's one that many companies have punted on, using traditional metrics like profit margin and ROA. Those measurements are derivable from public sources, so they're ones favored by analysts. And if a company is interested in pleasing analysts, those are the metrics it may focus on in the short- to mid-term.

But public information is decidedly and intentionally limited. The Balanced Scorecard approach is intended to make more sophisticated use of managerial accounting which uses internal numbers. To take an example from Jim Collins, Walgreen's measures its store performance in profit-per-customer-visit, something an outside analyst could only guess at, and even then only at a company-wide level.

According to Gallup, 60% of Fortune 500 companies now used the Balanced Scorecard in whole or in part. That number will probably grow as companies adopt it earlier in their lives.

Posted by joshuasharf at 01:19 PM | Comments (0) | TrackBack

The RMPN and the War

Arguing with the RMPN is a bizarre experience, rather like the last election's rhetoric extended forward into real time. You're never quite sure what they're getting at. For some reason, they have a bone to pick with me this morning.

It seems they don't like the fact that, as the Princess Bride would have it, "I do not think that report says what you say it says." In fact, the Duelfer Report says quite explicitly that Saddam was keeping intact his weapons programs and research teams, using the Oil-for-Food program to do so. Contemporaneous MSM accounts of the report, at the height of an election season, make this quite clear. My point in the original posting was that the Duelfer Report was being quoted as saying one thing, when it says quite another. The link above will take you to a number of contemporaneous media accounts of the Report, all confirming the plain meaning of the report.

There can be no doubt that the administration used the presumed WMD threat as a justification for the timing of the war. That no substantial quantities of WMD had been found played a large role in the election, although not one large enough to defeat the President. Nevertheless, the larger goal of democratizing Iraq, thus defeating the terrorists ideologically on a central battlefield, was always part of the plan, as the contemporaneous demonization of Paul Wolfowitz bears out.

Finally, everyone, all the time, makes policy based on what they think will happen. The prospective story that Duelfer tells, that a bought-off France, Germany, Russia, and China, would help keep Saddam on life-support until the sanctions regime was removed, and after that, would help him rebuild, including WMDs, squares with both evidence at the time, and subsequent history.

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January 29, 2005

Making Numbers Lie

Our friends over at the RMPN are once again demonstrating their ability to use the subtraction, addition's tricky friend, even as their post claiming that "These Numbers Don't Lie," um, lies.

Conflict-related civilian deaths in Iraq. July 2004 to January 2005
3,274 civilians killed in total
2,041 by coalition and Iraqi security forces
1,233 by insurgents

12,657 civilians wounded in total
8,542 by coalition and Iraqi security forces
4,115 by insurgents

They draw their numbers from the BBC, quoting official Iraqi government statistics.

Except that the BBC report now states,

Today, the Iraqi Ministry of Health has issued a statement clarifying matters that were the subject of several conversations with the BBC before the report was published....

It states that those recorded as killed in military action included Iraqis killed by terrorists, not only those killed by Coalition forces or Iraqi security forces; and that those recorded as killed in military action included terrorists themselves, and Iraqi security forces.

The BBC regrets mistakes in its published and broadcast reports yesterday.

For the record. The BBC page was updated at Saturday, 29 January, 2005, 11:19 GMT, while the original RMPN posting was at January 29, 2005 07:58 AM, Mountain Time, or 14:58 GMT.

It's quite an achievement to be less reliable that the Beeb.

For the Democrats' sake, let's hope their budget calculations are little more reliable.

Hat Tip: Best Destiny.

Posted by joshuasharf at 09:28 PM | Comments (0) | TrackBack

Ward of the State U - II

Later, I had an extended discussion with Ms. Kent about academic inquiry, and the rights and responsibilities of the faculty of a university in policing itself. I should stress that during this part of the chat, Ms. Kent was emphatically not speaking as a school administrator, but as a faculty member and history professor. I'll do my best to represent her views fairly here, although this isn't a transcript.

Ms. Kent was quick to point out that she disagrees rather strenuously with Mr. Churchill's screed. As a member of an academic community, she finds it not only troubling, but extremely painful and disappointing that someone would write this kind of thing. She finds it outrageous, offensive, hurtful, and harmful. Any defense of inaction on the part of the university should not be seen as agreeing with Mr. Churchill's rant, but as a defense of the current tenure system.

The tenure system was created, Ms. Kent went on, to protect individuals who say controversial things from retribution by both outside forces, like congressmen who have called for Mr. Churchill's scalp, and the Chancellor or Board of Regents. It is, as she put it, "the First Amendment extended to the university."

While, again, Ms. Kent was speaking as a professor, the university administration does share her views:

Although Churchill has been tenured since 1991, CU spokeswoman Pauline Hale said, "We view this issue more as an issue of freedom of speech, than of tenure."

As for tenure, she added, rules established by the Board of Regents allow for a tenured professor's firing only for the following offenses: demonstrable professional incompetence, neglect of duty, insubordination, conviction of a felony or any offense involving moral turpitude, or sexual harassment or other conduct that falls below minimum standards of professional integrity.

Ms. Kent also proposed that, as contemporary writing, Mr. Churchill's tirade could be used as a classroom text to promote discussion on the war directly, or on the Limits of Dissent, the title of the Hamilton College forum he'll be on a panel at.

Although the discussion was long, my point was fairly direct: faculty inaction would be an case of an institution supported, nurtured, and respected by a society, refusing to defend that society but instead attacking it. I do not believe the issue is one of hurtfulness or offensiveness - nobody has the right not to be offended. (I note with relief that CU has no speech code targeting hate speech.) This is a case of someone not criticizing the US in order to improve it but making common cause with its enemies, and were he to "win" the argument, it would result in the defeat of that society, and the murder of many, many of its members.

Moreover, there's plenty of writing that can be used to provoke thought, starting with Socrates, and I'd add that the punishment I'm proposing falls a little short of what was expected of him. In fact, having Mr. Churchill pack his bags and head for well-earned obscurity wouldn't keep someone from using his "text" in a class. Nothing says that a case study has to have a happy ending for its participants.

This is, quite clearly, a violation of the university's principles and its mission, and it seems to be most appropriate for a faculty congress, if such a thing exists, to hear the unrepentant Mr. Churchill out, and then give him 30 minutes to clear out his desk. If there are no current rules permitting that punishment, they should be adopted and enforced. Ms. Kent agreed that the question was one of how far a university faculty would go in governing itself. I would add now that if an organization effectively insulates itself from any form of outside governance, its members really have no choice but to govern themselves.

The fact is that universities make these sorts of judgments all the time. I described incidents on other campuses where newspapers had been stolen, conservative or religious organizations denied funding for ideological reasons, the abuse of sexual harassment rules, and so on. I got the impression that Ms. Kent was largely unaware of these incidents. This implies that there may be enough people of goodwill, even liberals, who are simply not aware of how bad things have gotten. That's a hopeful sign.

A less hopeful sign was her reaction to ROTC. "Twenty years ago, when I first entered academia, I wouldn't have been able to make the case [for it]. But by being around it, I see where both I and other students have learned so much from having it on campus, that I'm glad that it's here." Fair enough, if you look at ROTC as another extracurricular, albeit one with an attitude. And it's certainly refreshing to see ideological diversity extended to something that must look pretty conservative.

But the reason for having ROTC on campus is that it trains officers in a military sworn to defend this country. It's really as simple as that.

Just like telling a enemy of the country that his services are no longer required.

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Ward of the State U

By now, everyone knows about the University of Colorado's Ward Churchill and the atrocious screed he wrote after September 11, essentially accusing the entire country of being "little Eichmanns." Today, the Rocky Mountain News's Charlie Brennan wrote puff-piece intended to portray this, um, iconoclast, as a brave, lonely warrior, worthy of admiration and sympathy.

So, people are mad at Ward Churchill. What else is new?

For a man who has weathered anonymous death threats telephoned to his home, the latest turmoil is comparatively tame.


Churchill, chairman of the Ethnic Studies Department at the University of Colorado, is at the center of controversy - again. This time it's students at Hamilton College in Clinton, N.Y., upset about his scheduled appearance there next week.

They are disturbed by an essay Churchill wrote in the wake of the Sept. 11, 2001, terrorist attacks suggesting they were justified.

In an essay written the day after the attacks, Some People Push Back: On the Justice Of Roosting Chickens, he said America was merely reaping what it had sown through a long history of violent domination and assault upon indigenous people.


Among those spitting mad is Debra Burlingame of Westchester, N.Y., sister of a pilot who died on Sept. 11. She said the CU professor's remarks are "beyond the pale."

To find himself outside the mainstream is not a novel experience for Churchill; this is the same man who, in an interview last year, said "it may be that more 9/11s are necessary."

Notice how Churchill is "outside the mainstream," "weathered anonymous death threats," and "suggests" that American citizens deserve to have a little jet fuel with their morning coffee. Notice, too how his opponents are "spitting mad" and "disturbed." As though death threats were all that uncommon. Basketball coaches, reporters, even bloggers I know personally have received them.

Brennan also is curiously uninterested in Churchill's academic credentials. It turns out that Churchill has no PhD. According to Susan Kent, Associate Vice Chancellor for Academic Affairs at Colorado, this is unusual, but not unprecedented. The "terminal degree," or the degree required for tenure, is determined by the academic organization that the professor's department is affiliated with. So, for instance, MESA determines if professors in Middle East Studies should be expected to have PhDs. In certain departments, such as Music, PhDs are not expected.

She was unsure of the specific requirements at the time that Churchill received his tenure (1997), for a professor in the Communications Department. However, the conversation did proceed as though an exception was made in his case. This was done because Mr. Churchill had an "exceptional" record of peer-reviews publication.

A search of the Academic Search Premier database reveals that since 1986, Mr, Churchill has published 25 academic articles. Only 3 of those were published before 1997, with 4 more occurring that year. This hardly seems like an astonishing output for a full professor, especially given that the majority are quite short, including a 2-page book review and a 2-page discussion in Progressive attacking the FBI.

Mr. Brennan was at the Greeley Presidential rally I attended, and had to be talked down by Mike Littwin from saying that the invocation called President Bush "appointed by God," and was way too eager to take my joke about the lead-in music (endlessly replayed) as being from Apollo 13as factual.

Apparently, some facts are more important than others.

UPDATE: According to today's Rocky, Churchill received tenure in 1991, at which point he had exactly two publications, one of which was the aforementioned hit-piece on the FBI.

He had also published a book. One of the requirements for tenure is, according to Ms. Kent, usually something like a book and substantial progress towards another book. And indeed, Mr. Churchill did indeed find something called "Common Courage Press" to publishe books in 1992, 1993, and 1994. Neither his first publisher, South End Press, nor his second look much like an academic press to me.

I should also add, in fairness to Ms. Kent, that she did not hold her current position in 1997, and is not in the Communications Department which Mr. Churchill was infesting at the time. She wasn't even at CU in 1991. Therefore, I didn't think it appropriate to ask her to defend the university's tenure grant.

Cross-Posted at Oh, That Liberal Media.

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January 27, 2005

The Succession Struggle is Underway

Who will succeed Hinderaker at Powerline?

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Your Tax Dollars at Work

Ward Churchill, a professor at the University of Colorado at Boulder, wrote this (among other things) after the September 11, 2001 attacks:

It states: "The most that can honestly be said of those involved on Sept. 11 is that they finally responded in kind to some of what this country has dispensed to their people as a matter of course."

The essay maintains that the people killed inside the Pentagon were "military targets."

"As for those in the World Trade Center," the essay said, "well, really, let's get a grip here, shall we? True enough, they were civilians of a sort. But innocent? Gimme a break."

The essay goes on to describe the victims as "little Eichmanns," referring to Adolph Eichmann, who executed Adolph Hitler's plan to exterminate Jews during World War II.

He also goes on to claim that the US has "killed 500,000 children to impose its will on other countries," a number whose source was apparently neither given nor asked for.

When CU comes back to the state for more money, or want to raise tuition, someone should ask why this guy's still on the payroll.

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Words Mean Things

The folks over at the RMPN are having a grand old time rounding up folks who think Wayne Allard has better things to do that protect marriage as we know it.

Now, everyone's entitled to their priorities. Rep. Boyd (D-Lakewood) wants to eviscerate the free exercise clause of the First Amendment, for instance. So if the self-styled "progressives" want to play litigator, arguing budget when they don't have the social issues, and social issues when they don't have the budget, that's their business.

But words mean things, and it says a lot about their world-view that the only reason they can imagine that someone would oppose gay marriage is "hate." There's a vast online literature documenting the healthy debate on the right (as opposed to the monolithic approval of the Left) over this issue. I don't believe I've ever seen anything approaching hatred of gays be even hinted at in, say, National Review Online's Corner.

It's a straw man, designed to cow opponents into explaining themselves, or better yet, silence. Opposing gay marriage doesn't mean I hate gays, any more than opposing affirmative action means I hate blacks. Like so much the Left has done over the years to debase the currency of language, this posturing is designed to mark out more and more space and unfit for debate. They might admire what that approach has done for the political culture of Europe, but I don't.

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January 26, 2005


Clay's got the text of a letter concerning what at least is carelessness and at worst borders on criminal neglect. Honestly though, it makes your eyes roll more than anything else.

I remember watching a tape years ago of a British reporter interviewing some government flunky at the site of a particularly dangerous piece of highway. Naturally the flunky was denying there was any problem at all. And naturally, on tape, a car went off the road behind him as he was speaking.

That's kind of like using boxes of sensitive information that have been lying around to demonstrate how vulnerable our sensitive information is to theft...

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Blogs in the Classroom

When will we see the first class taught using a blog as source material? I think I've found a candidate.

Michele Leder is a financial reporter who likes finding things in footnotes, where companies hide - or try to hide - the really scary stuff. She posts once a day to her blog, Footnoted, about some juicy tidbit she's found in some company's 10-K or 10-Q. Her book, Financial Fine Print: Uncovering a Company's True Value, looks like a very accessable discussion of what companies will do not to disappoint the analysts.

So instead of an accounting text that the professor ignores and that I may never open after I graduate, but that I still have to pay $40 for, how about making the book required reading, and using the blog-postings as the basis for in-class discussion.

Obviously, professors have a tremendous financial incentive to publish their own case-studies, and then to update them every year or so. But how much more fun it would be to look at live examples rather than ones already under glass.

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More Steel

Sometimes you win on long-term contracts, sometimes you lose. California's Grey Davis lost big time. US steel producers, who've been enjoying a very good year, may be insulated from suddenly rising iron ore and coking coal prices.

North American steelmakers have stronger relationships and longer-term contracts with their suppliers and are expected to be less affected. Still, the effect of higher raw materials could be felt by steel consumers world-wide. Steel prices were expected to remain near current high levels for the first half of the year, then taper off in the second.

"What this is going to do is push up selling prices [for steel]," says Chuck Bradford, a New York-based steel analyst with Bradford Research/Soleil Inc.

Well, maybe. But with profits strong, it may also be a chance to weed out some of the weaker producers, and a market-share opportunity for US steel producers. After all, "[i]n some ways, the price run-up is a delayed reaction to high steel prices."

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The Bush Doctrine

I like the Bush Doctrine. I think it is a clear statement of our country's BHAG (big, hairy, audacious goal), that both clarifies and inspires, without requiring the slavish obsessiveness of the Carter Administration.

That said, I have to agree with Charles Kesler that optimism must also include a stomach for hard work.

I'd also add that democracy is not only hard to get up and running, it can also run down pretty easily. Just because we can add a country to the Democracies List doesn't mean it'll necessarily stay there. Allende in Chile, Chavez in Venezuela, Lula in Brazil, the decidedly unfree nature of the EU Constitution, the impending return of Ortega in Nicaragua, even successes like the Orange Revolution and Georgia, show how people can, over time, choose security over freedom.

When there's only one democratic choice, every election becomes a referendum on the very existence of the next election. So the democratic choice holds together by fear of the consequences of losing, instead of splitting or reforming itself as it ought to be free to do.

Reversing these reverses isn't cheap, either, since the dictator usually comes to power with a solid, if minority base of support, imbued with the fervor of the converted. In the case of Germany and Japan, it took WWII and a lengthy and comprehensive occupation. So along with worrying about pushing the front forward, we also have to be very worried about defections.

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Asymmetric Warfare

Next Tuesday night, Israeli Israeli Brigadier General Natke Nir will speak at the Denver JCC on "The Imperative of Morality in the IDF."

We can expect peace sometime after the first public address by a Palestinian leader on "The Imperative of Morality in the Al Aqsa Martyrs' Brigade."

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The Budget Battles

The legislative Democrats are signaling an increasing willingness to go it alone on TABOR. Their goal is to take the high-water mark of state spending, as use that as the baseline for future spending caps. The Republicans are, I fear, on the verge of making the Bush I mistake - being accused of intransigence while letting the other side roll up the table.

Last year, the Democrats opposed any effort to link Amendment 23 with TABOR, dooming Republican efforts to deal with both in resolving the budget crisis. The Democrats then ran a campaign accusing the Republicans of ignoring the problem.

After winning control of the legislature, the Democrats again vowed to be bipartisan, and again have stiffed any effort to weaken their sop to their parent company. And again, they are arguing that the Republicans simply want to deny them a legislative victory that would help them in 2006. As a result, the Republicans can easily end up looking obstructionist for merely holding the Democrats to their word.

At the same time, Sue Windels is proposing bill after bill that would weaken school accountability, underming charter schools, and eliminate testing as a metric for school performance. The Republicans, as part of their strategy to get Amendment 23 back on the table, need to link these sets of actions - it's a return to entitlement without accountability.

The problem with threatening a separate ballot measure is the Constitution's requirement that any referendum only address a single issue - a requirement that the State Supreme Court has rigorously enforced when it comes to conservative propositions. Thus, if the Democrats only want to deal with TABOR in their way, they can pass that through the legislature on a majority vote and send it to the voters this fall. Any Republican attempt to link the two would need to be on separate ballot measures, both needing signatures to get to a vote.

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Checking in With the Mother Ship

Jonathan Sabin of Mangled Cat is in town this week, and we had a chance to get together at the company store last night, and chew over his new HP Tablet PC, business in general, and Howard Schultz's creation, in particular.

Jonathan has completely drunk the KoolAid Latte for the place, but it's hard to argue with him on objective grounds. As part of their training, Starbucks employees each get a copy of Pour Your Heart Into It, and Schultz makes a point of stopping by to autograph every copy. Starbucks really hit its stride when he took over, so there's a question as to whether or not it qualifies as Good to Great, or just great, but if you're looking for a case study to do on your own, there are worse places to start.

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January 25, 2005

American Banks Enter China

Merrill Lynch is going to enter the market for underwriting Chinese securities, it reported today.
Man, Walter Wriston dies and everyone forgets everything his Big Latin American Misadventure taught him. Let's just hope they're going in with their eyes open.

But many say there is no need to rush into the market, citing the difficulty in finding the right partner, regulations precluding majority control, and the pace of regulatory changes in China's fast-evolving securities markets.

Under existing regulations, foreign banks must work with a Chinese partner to do business in the country. Chinese rules allow foreign firms to own as much as 33% of securities joint ventures, and permit underwriting -- but not trading -- of domestic securities. In other parts of China's financial sector, such as the asset-management business, foreign firms can own up to 49% of a venture.

Add to that opaque financial and unreliable economic numbers, cozy loans from banks to state-owned businesses (a la South Korea), and an increasingly untenable currency situation. Sure, the Chinese boom is likely to go on for a while. A few serious financial reverses won't alter the long-term trend there, any more than they did here, 150 years ago. But that's no reason to set yourself up.

Still, if Merrill has learned something, and has the guts to stand up to its domestic partners (so to speak) and demand better reporting, it could help to encourage better standards on the part of Chinese businesses. Or, they could end up lending their good name and respectability to enterprises doomed to destroy market capital on an untold scale.

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Meaningless Numbers

When even the professor gets sucked into a meme, you know it's powerful. It's a shame it's also meaningless.

Consumer confidence rose again last month. Now, while I'd rather have people cheerful than depressed (financially or emotionally), this is one of the less useful numbers around.

As our securities analysis professor said, "never trust anything that anyone tells you." We ran a correlation between the consumer confidence numbers and economic performance, leading, trailing, and side-by-side, and we got "pretty close to irrelevant" as our answer.

While it makes intuitive sense that a confident consumer is our best customer, in fact, consumer confidence has a lot less to do with objective national or personal economics, and a lot more to do with the news you're getting. Freed from the frenzy of a national election, not only is MSM reporting probably less tilted, but people's perceptions of it are probably less biased, too.

This isn't bad news, but it isn't really good news, either. It's just no news.

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Tu B'Shevat

Today is the Jewish holiday of Tu B'Shevat, or literally, "The 15th of Shevat." It marks the legal New Year for Trees. Jews aren't allowed to harvest the fruit of new trees until the trees are 4 years old, so this is the milestone for counting a tree's age.

Over the years, Tu B'Shevat has been associated with the Zionist movement (especially with the JNF's famous blue boxes for planting trees in Israel), and with the environmental movement.

Recently, we've developed a pleasant, cheerful custom of the Tu B'Shevat seder, a festive meal loaded with mystical overtones. There's no set liturgy for it. There's nothing particularly halachic about it. It can feature different groupings of fruits and nuts, different mixtures of red and white wine (or grape juice, for that matter). I would argue than in a religion that has an authentic ritual for everything, part of the Tu B'Shevat seder's popularity comes from its freedom to invent.

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Nokia, the Official Cell Phone of Blue America

OK, that's a little harsh, but these comments from Nokia CEO Jorma Ollila show a couple of things.

Nokia's chief executive, Jorma Ollila, said in a rare television interview that the world is living in "an era of selfishness" very different from his childhood days in a small town in central Finland, when family values were of prime importance.

"Put in a nicer way, it is an era of individualism. This is a very self-centered period, which also has plenty of good features too because, when understood correctly, it can help you live independently and stand on one's own two feet," Ollila, 54, said in a candid interview broadcast on state-run YLE television.

Speaking with Finnish philosopher Esa Saarinen, a personal friend, Ollila said he thinks people are more concerned about individual rights than taking responsibility for their actions and trying to have a positive influence on society.

"What I'm worried about is that if this disintegration of values continues and develops further, we'll get a conservative counter-reaction precisely like what has actually happened in the USA," he said.

"This ultraconservatism, coupled with the elements of the church ... which, as we well know, has also supported the current (U.S.) administration, is a powerful counter-reaction to a longtime vacuum of values in society," Ollila said.

Later on in the interview, Ollila talks about the importance of his company being an "educartional establishment," which means that not only do the employees learn, but that the organization's implicit knowledge improves, too. It's a key insight, and part of what's made Ollila such a successful CEO.

No, what this interview shows is that any leader, even a CEO, especially a CEO, is only as good as the information he gets. Ollila gets gobs and gobs of market research data on the US, and yet clearly understands so little about our culture and how we see ourselves. He clearly gets his political news from the European MSM (or whatever the Finnish acronym is), who very quickly adopted the Americans-as-religion-obsessed-reactionaries meme.

"The church," as such doesn't exist in the United States. Perhaps Ollila is viewing religion through the European experience of established churches? In fact, religion in America has adapted quite well to individualism, paralleling business success.

The marketplace of religion in America never resembled AT&T as The Telephone Company. It may have, centuries ago, resembled post-breakup AT&T and the regional Baby Bells. Bur if Ollila wants a good analogy, it's the telecom market of today, with competing companies offering competing versions of competing technologies. Ironic, that.

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Steel Steal?

So, this catches my eye in the earnings reports (hey, you, wake up, this gets interesting).

U.S. Steel Corp., the first major domestic steelmaker to report earnings, swung to a fourth-quarter profit of $462 million from a year-earlier loss, helped by strong demand, particularly in its tubular business.

The company posted net income of $3.55 a share, its fourth straight quarterly profit after four quarters of losses in 2003, before a pricing boom lifted the steel industry's profits and share prices.

U.S. Steel, the country's largest steelmaker, had a loss of $22 million, or 26 cents a share, a year earlier. Fourth-quarter revenue surged 47% to $3.93 billion.

The company was able to make a $255 Million pension contribution, and will have about $1 Billion in the bank for foreign acquisitions. It's not just rising prices, either, as shipments were up 14% over last year. The company seems to be running as somewhat leaner operation, as SG&A and per-unit cost of production have fallen. US Steel has lagged behind Nucor for years, but may have actually caught it this quarter, and may pass it in cash on hand.

Imagine that. An industry that was being taken to a chop shop itself a few years ago is now ready to buy up foreign competitors. I'm sure this isn't news to industry followers, but for people like me, it's going to mean a whole new paradigm shift. While my parents had to shake their heads at a crumbling empire, I got used to seeing the dead mills in and around Johnstown, PA. (I had a weekly commute from DC to there for a brief time.)

Now, I'm going to have to get used to thinking of the US steel industry as profitable.

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Party of Reason - I

Concerning the proposed Federal Marriage Amendment:

While Colorado's new progressive majority seeks to avoid contentious social wedge issues, in the interest of getting important bipartisan fiscal work done, the national Congress freely indulges.

And just like last year, it's our own local Talibs leading the way --
And once again, the madrasa right plays their hateful fiddle while Rome burns. Allard himself is willing to devote all his energy to this crusade, a mere week and a half after telling America that the federal government figures it's just going to default on trillions it owes us...

And just like that, the RMPN shows it understands neither the meaning of "majority," nor the word "avoid," nor the stakes in the War on Islamic Radicalism, nor the definition of "default." (It would trivialize the argument to point out the lack of parallel construction in the last paragraph.)

A referendum banning gay marriage placed on the ballot here would pass handily, as it did in 11 other states last fall. So far Sue Windel has proposed dismantling school accountability and cutting back charter schools, while Rep. Boyd wants to require all hospitals to endorse abortion for rape victims. The Taliban didn't ban gay marriage - they simply banned gays. To the best of my knowledge, no dates at Mile High or Coors Field have been reserved for the executions. And a government, like a company, may continue to have debt forever without defaulting on any of it.

At the risk of being a little too apt, I'd suggest that Messrs. Gordon and Romanoff, and Mesdames Fitz-Gerald and Madden be very careful whom they climb into bed with.

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January 24, 2005

What is Your Name?

Am I the only one who hears the new TurboTax commercial and is surprised when the next question isn't "What is your quest?"

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More Trouble for GM

Won't American car companies ever learn? Heaven is a place where the English are the Police, the Italians are the cooks, and the Germans are the mechanics. Hell is a place where the Germans are the police, the English are the cooks, and the Italians are the mechanics.

There may have been some American-Italian car partnerships that succeded, but I can't remember them. Chrysler spent hundreds of millions of dollars to build a few hundred specialty cars with Maserati back in the 80s. Now, GM is trying desperately to find a way out of its money-hemorrhaging deal with Fiat (the WSJ has a superb article, but you need a subscription).

The problem is a $2 Billion put option that Fiat holds - over GM's head - as part of the price of the 20% acquisition. Both companies have gotten killed in Europe:

According to the Journal:

The negotiations are coming to a head as GM, which paid $2.4 billion for a since-diluted 20% stake in Fiat's car unit in 2000, faces a possible cut in its credit rating. In its core market of North America, GM has been losing market share and been forced to cut production amid increased competition from Asian rivals such as Toyota Motor Corp. and Nissan Motor Co. If GM is forced to pay a hefty settlement to wriggle out of the put option -- or worse, has to acquire the Italian auto maker and its $10 billion in debt -- it could weigh heavily on an already burdened balance sheet...

When Mr. Wagoner negotiated the Fiat tie-up he also agreed to another clause -- the put. The agreement, which is valid between 2005 and 2010, gives Fiat the right to force GM to buy out all of the Italian company's car unit at a price to be negotiated. Fiat had insisted on including the put option as an insurance policy should its alliance with GM go awry, something which neither company considered likely.

Now, puts between companies aren't normal, but they're not unusual, either. Sometimes they can be added when one company is selling a division to another. When one Canadian telecom sold a division to another, it included puts, to be followed by calls. At other times, they're included to limit risk.

But GM might have been expected to smell a rat here. If "neither company considered [failure] likely," then Fiat shouldn't have insisted on it. Instead, they cheerfully went along, and are now looking at the unappealing possibility of litigating in the famously arbitrary Italian courts, a home field advantage for Fiat if ever there was one. Now, Fiat is using the put to hold up GM for cash it needs, while GM is trying to avoid shredding its balance sheet beyond recognition.

Things may have improved since Luigi Barzini wrote The Italians, but if you were GM, how eager would you be to test that thesis? And don't you wish that GM's CFO had a blog?

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Carnival of the Capitalists

It's up, and...it's Good!

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Keeping the Troops in Line

While it appears that Tsar Romanoff has been able to strike a deal over TABOR that formally puts Amendment 23 on the ballot, the Senate has been a tougher nut to crack. Some of us think that this may be a matter of a more pragmatic majority leader Ken Gordon trying to keep Senate Duchess Joan FitzGerald in line, which may be a problem for the Dems throughout the next two years.

On this one issue, taxes, Gordon and FitzGerald have similar Colorado Union of Taxpayers ratings, but Gordon's go much further back. From '93, when he was in the House, he had been very low, but consistently in the double-digits. Both he at FitzGerald entered the Senate with the Democratic takeover there in the 2000 elections.

Gordon's ratings dropped to 0 and 5 for the next two years, somewhat reflective of the overall shift to the left, and dealing a not-so-subtle rebuke to the idea that power and responsibility go together. These were FitzGerald's first years in the legislature, and she voted with 7% and 9% ratings.

After 2002 when the Republicans retook the Senate, their ratings jumped up to the mid-to-high 20s, and yes, there were plenty of Senators who had lower ratings than that. Gordon appears to have learned his lesson, which is that extremism in the cause of taxation is no virtue, while FitzGerald seems to see her President status as a chance to ram through her vision.

Gordon was the one, you'll remember, who floated the idea of offering Republicans a symbolic olive-branch of committee vice-chairmanships. FitzGerald's rhetoric has been more strident since before the election, and as Senate President, it's hard to imagine that she hasn't been involved at some level in coming up with the majority position over there.

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United Out of Bankruptcy?

From flying to United. The Rocky is reporting typically optimistic comments from United CEO Glenn Tilton that the airline will be out of receivership by the fall. Where have we heard this before?

Nobody wants United to die - there are too many jobs at stake locally - but the airline's been operating in backruptcy for over 2 years. Labor and management reached sweet deals which drove up the industry standard and have helped contribute to the airlines' recent malaise. But merely undoing those contracts won't solve the problem.

United has both a customer service and a cultural problem. I have never encountered the kind of rudeness that I have at a United ticket counter. United doesn't seem to have a culture of improvement that the smaller airlines have. I don't think it'll be able to overhaul its outdated hub system, destined to become more outdated as the FAA permits point-to-point flying rather than forcing prescribed routes.

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William Shatner's Nightmare

No, not a man on the wing. The Rocky's Ann Imse discusses the NTSB's frustration with trying to get the FAA to adopt new rules for airplane icing. Apparently, the Cessna Caravan is a particular problem, with something like 2% of all Caravans sold since 1984 involved in ice-related crashes. This is an enormous percentage for a particular cause of accidents.

Ice has been a problem forever, with St. Exupery, Langewiesche, and Robert Buck all writing about it. As a VFR pilot I rarely encountered it, except to make sure it was cleared off before I took off. Even then, a very light frost on a sunny but cold day wasn't a problem, which leads me to think it really is a problem with the Caravan's wing.

Ironically, local pilots who should be in a position to know didn't. Alaskan Caravan pilots didn't seem aware of the plane's problems, so despite all the merits of local knowledge, sometimes there really is merit to a centralized database.

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January 23, 2005

The Bush Doctrine Abroad

My friend Peter Baker has written a suitably pessimistic article about President Bush's inauguration address, and the Bush doctrine in general, and their foreign reception. Peter's not normally a snarky guy, (although he has hankered for the MSM ever since at least the 4th Grade). But his piece today does pretty much everything to frame the Bush Doctrine as an inevitable failure right out of the box. There's a lot to pick from, but I'll work on the choicest pieces, and let you do the rest.

We can start with the description of the Bush doctrine's innovative style:

The inspiration for Bush's thinking lately has been Natan Sharansky, the former Soviet political prisoner turned conservative Israeli politician. Bush read Sharansky's book " target="_blank">The Case for Democracy: The Power of Freedom to Overcome Tyranny and Terror and invited him to the White House in November to talk about its ideas. Since then, Bush has been recommending the book to nearly everyone he sees, from friends to journalists to foreign leaders, telling CNN last week that "this is a book that . . . summarizes how I feel."


The book takes on conservative "realists" who focus on preserving stability and national interests rather than advancing noble causes such as democracy...

Well, yes, except that the conservative "realists" now tend to be holdovers from the Bush I administration, while the ones that show up on the talk shows are all from the Clinton years.

Putin logically would be Bush's first test of his inaugural pledge to confront "every ruler" about domestic oppression and predicate relations on "the decent treatment of their own people." ...

Putin usually bristles at even mild U.S. criticism, and others around the world seem no more eager to listen to a proselytizing president.

As good a job as Peter does of explaining the origins and underpinnings of the Bush doctrine, he seems to have a somewhat tenuous grasp of its underlying realism. We may oppose tyranny wherever, but that doesn't keep up from fighting today's battle today, while setting up the pins for tomorrow. We're not at war with Russia, we're at war with Islamo-fascists.

Richard Holwill, a former Reagan administration diplomat, said Rice would make a difference at State because of her close relationship with Bush. "They're going to greatly improve the administration's foreign policy machinery," he said.

But he added that the administration needs to rethink its approach to fighting terrorists. "Bush presents everything in very black-and-white moralistic terms," Holwill said, "and I truly hope that we get a more sophisticated approach to the war against the Salafists," or Islamic radicals, "because they are gaining ground on the Arab street."

I don't want to be too hard on Mr. Holwill, but this sort of people, people who would quite literally take Mr. Holwill's head off before negotiating with him, don't define black-and-white morality, then the diplomatic machinery really does need some new blueprints. After all, blunt talk does preclude things like mixed signals from trade representatives.

And a nice touch, there in, "Salafists." I'm sure this is a term that resonates deeply with Islamic scholars and some academics, but it doesn't mean much to the man on the street. Naming something gives you a certain power over it, but only if that name conveys something of its essence. "Salafists" sounds more like sandwich-makers than bomb-throwers.

..."We need to work on a public diplomacy effort that explains our motives and explains our intentions," [Bush] said.

"That line," said Talbott, "particularly stood out as the interview was read on Embassy Row. The Europeans would like to see more than better explanations of American positions. They would like to see actual dialogue. . . . They want some give and take."

That last bit is such a good straight line, it's hard to know which direction to go with it. Of course by now, everyone's well aware of Europe's having squandered 500 years of military tradition on 50 years of dependency, so it's pretty obvious which direction the giving and taking is going to go in that case.

The Talbott quoted, by the way, is Strobe Talbott, who was responsible for that smashingly successful approach to Russia during the Clinton Administration. You know, the one that left all the goodies that weren't disintegrating into iron oxide filings in the hands of a few families, leaving the opening for Mr. Democracy, Tsar Vladimir I to step into power.

Peter opens and closes with a description of the President's post-election trip up North.

To avoid any unpleasantries, Martin sacked a shrill critic of Bush from his governing party, and Bush aides steered the president away from speaking to Parliament, where he might have been heckled. Canadian officials said their U.S. counterparts assured them that Bush would not put Martin on the spot on his refusal to join the U.S. missile defense system.

But Bush did confront Martin and used the sort of language that sets Canadians on edge. "He leaned across the table and said, 'I'm not taking this position, but some future president is going to say, 'Why are we paying to defend Canada?' " said the senior Canadian official who was in the room and noted that he had been assured by Rice and Secretary of State Colin L. Powell personally that Bush would avoid the subject.

"Most of our side was trying to explain the politics, how it was difficult to do," the official said. But Bush "waved his hands and said, 'I don't understand this. Are you saying that if you got up and said this is necessary for the defense of Canada it wouldn't be accepted?' "

Well, if nothing else, this ought to put to bed the idea that Powell and Rice were in the room to handle the marionette-strings. More than that, the President was challenging Mr. Martin to be a leader. That may be a bit much to ask of a premier leading a coalition government with a coalition dedicated to keeping the country defenseless. Still, there's something to be said for marginalizing irresponsibility, and if Mr. Martin is forced out in the next year or so, he could have left behind a party committed to a bipartisan foreign policy.

In any case, it's a bit rich for the Canadians to be complaining here of double-crossing when they were avoiding publicly humiliating the man responsible for their defense. After all, Mr. Bush voiced his objections in private, and it's the oh-so-discreet diplomats in the room who made them public. For some reason, Peter wants to make this the President's fault.

Posted by joshuasharf at 11:10 PM | Comments (1) | TrackBack

Rumsfeld's Game

The Washington Post reports today on an effort by the Pentagon to do what the CIA Directorate of Operations has been unable and unwilling to do in the War on Terror.

Rumsfeld's efforts, launched in October 2001, address two widely shared goals. One is to give combat forces, such as those fighting the insurgency in Iraq, more and better information about their immediate enemy. The other is to find new tools to penetrate and destroy the shadowy organizations, such as al Qaeda, that pose global threats to U.S. interests in conflicts with little resemblance to conventional war.

That the Agency has been woefully lacking in both strategic and operational intelligence gathering should be clear to anyone who's been paying attention for the last 3+ years. The Pentagon decided so early on that it needed on-the-ground assets that it could rely on, and that the best way to get them was to channel Bll Donavon rather than to try to reform his sclerotic heirs.

The Left and Congressional Democrats will almost certainly howl, "end run," and want to know why, if this organization is so much better, it didn't know about the WMD. It also explains at least partly the disproportionate public hostility of the Agency to the President. Certainly it explains some of Rumsfeld's concerns about the intelligence reorganization, especially that one sentence about the new law's not impeding the DoD's own responsibilities.

The President has noted a number of times that the War will consist of operations both public and private, and will take place on battlefields all over the world. As long as this new effort remains active and isn't allowed to degenerate into another bureaucracy, it should help to integrate real-time intelligence into large- and small-scale military actions.

Such pro-activity may also explain the singular ineffectiveness of terrorist operations as time goes on.

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Iran in the Sights?

The mullahs in Iran have apparently seen the tapes of President Bush's inaugural, and are back with what sounds like a great deal of bluff and bluster. The American public has no taste for another invasion right now, and that might not even be the best way to "deal with" the mullahs (if by "deal with," we mean, "have used as pinatas on Multicultural Day in the Teheran Public Schools"), letting them have a bomb is just not on the agenda.

I'm sure that 1) this would lengthen the war, and 2) the Left would be perfectly happy to spend the next 50 years explaining to use why this was actually a good thing, 3) the Left would also patiently explain that the whole thing was our fault anyway, 4) it would almost certainly mean the end of Israel and quite possibly mark the beginning of the end of the US as a great power.

Edward Luttwak, a realist who has been extremely skeptical of the Bush Doctrine, uses this week's Telegraph column to defend the need for such action, with or without the Europeans.

If Iran is to be prevented from acquiring nuclear weapons, effective diplomatic or military action will have to come soon. Production facilities can be bombed but once actual weapons are assembled, locating and destroying them will become next to impossible. And Iran will then be in a position to threaten not just Israel, but all of our oil-producing Arab allies.


Conventional wisdom says that bombing Iran would lead to Iranians rallying round their government. I am not sure that would happen in today's Iran. Its rulers' bizarre combination of rigid religious conservatism, blatant corruption and economic incompetence has made them exceptionally unpopular. Half of the population is not Persian – and many of them would view an attack on Iran's nuclear facilities not as an attack upon them, but on their imperialist rulers. Even the Persian majority may not want their hated clerical despots to control nuclear bombs. A raid on nuclear sites, nearly all of which are in remote locations, may not provoke the population to rally round their rulers but, of course, the Iranian government would not collapse. Some form of retaliation would be inevitable.

...The truth is that nuclear- armed ayatollahs are unacceptable in Europe, America and Israel. Even the clerics, in their calmer and more rational moments, must know that accepting rewards for freezing Iran's nuclear programme is a better deal than getting bombed.

To which I can only say, go get 'em Edward, but I'm not so sure. The mullahs are canny and calculating, but they may be feeling the march of history a little too personally right about now. They've obviously made the calculation that the Europeans are already so cowed that a nuclear Iran won't make much difference in their foreign policies, and have staked the future of their dismal worldview on obtaining a bomb and just about all costs. They're probably right.

If we do decide to do something about Iran's reactionary reactors, it'll probably have to be another Made in the USA production.

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Week's Best Line Overheard at a Party

"So he has his father's hypochondria and his mother's melodrama."

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Teachers and Their Discontents

See the difference between uncritical acceptance and critical analysis of a union-sponsored poll of Denver Public School teachers.

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January 22, 2005

New House

Less time now to cruise the mean streets, looking for misbegotten homes, but some of the nicer ones are still worthy of comment.

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January 21, 2005

See? This is What the Problem Was

So K-Lo couldn't recognize Salazar. I think he'll probably find that a lot people make that mistake. Lose the hat, Ken. Nobody will mistake you for Tom Daschle if you do.

That said, he really does come across as a nice guy. Much easier to run against the actual Daschle, than to try to create one where none exists.

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Holtzman and the Big Tent

"You serve your party best by serving your country first." - Marc Holtzman quoting Jack Kemp

Clay has a good summary of Marc Holtzman's appearance before yesterday's House Republican Caucus meeting.

For a speech two years out from the election, he hit all the right notes, and demonstrated a good grasp of the issues facing the state and the party. I was particularly pleased to see him quote Jack Kemp's line. It keeps the focus on being a governing party, not merely an election-winning one. At the same time, as Clay points out, Holtzman addressed in some detail specific structural and operational problems the party needs to address.

He also tried to present an appropriate line for the party on social issues - fight the battle where the battlefield is, not where you might want it to be. The Republican party in Colorado is pro-life. But the argument now is about partial-birth abortion and parental notification. Democratic rabble-rousers may cry that the right to teenage infanticide protects a woman's right to choose, but that's a losing argument.

We'll see where his education and health care proposals come out, but at least he's consulting with the right people. And when one member suggested he had forgotten about transportation and water, Holtzman tried to roll them into an overarching environment and resource plan.

Finally, and not to be hyper-critical, but his speaking style emphasized his smallish physical size. It may have been the informal venue, but Holtzman had a habit of bending at the waist for emphasis, as though the force of his ideas weren't enough. Perhaps in a larger venue he's better.

Posted by joshuasharf at 11:23 AM | Comments (0) | TrackBack

Republicans Stiffen Their Spines

To the extent that ideas, rather than money, helped the Democrats win the legislative elections last fall, it was on the mantra of being able to get things done. So while they may think Republican obstructionism might help them in '06, they still have to deal with a Republican governor right now. Owens won't sign a bill that most of his caucus opposes. They need a bipartisan deal.

The missing piece so far has been Amendment 23. While a lot of us had resigned ourselves to waiting for next year, when then Republicans' hand would be weaker, the House Republicans, led by Mr. Stengel, have put that on the table this year.

This week, both sides agree, negotiators added something else: a plan to ask voters in 2006 to tweak Amendment 23, which mandates state spending hikes on education regardless of the economic situation. Discussions centered on delaying some of that mandated spending in times of recession.


Peter Groff, the Senate president pro tem, said Democrats need the governor's support and that "we're trying to figure out a way to be as bipartisan as we can." Romanoff called the party-line claim "absurd."

Groff said Senate Democrats were still considering proposed changes to Amendment 23, which he said Republicans raised "not even 48 hours ago."

Groff's got a good reputation, and one certainly understands what he means by this. But the Republicans have been linking these two issues for well over a year.

There's a complicated political calculus here. The TABOR changes would get voted on this year, while Amendment 23 would wait until the '06 vote. Do the Democrats back the changes, or just the referendum, and then count on the teachers' unions to paint the Republicans as anti-reading?

Democrats could send a TABOR change on to the voters without the Governor's signature. He's talking about a competing ballot initiative, but Owens doesn't have a great record when it comes to referendum votes. Still, the Democrats are obviously eager to avoid looking like they're railroading things through. Stengel has made it harder for them to do that.

Also, the Democratic House leadership is younger and less-experienced than in the Senate. But the margin in the Senate is only one vote. The Dems there have a trickier balancing act, and Stengel may be playing off their situation against the eagerness of House Democrats to reach a deal.

So right now, both sides have great incentives to reach a deal, while also saving enough ammunition to paint the other side as instransigent if things fall apart.

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Foreign Policy Framework

First of all, Peggy Noonan aside, the President was not immanentizing the eschaton. Islamists have a goal - make the whole world Muslim. Three hundred years ago, as the Heathen Turk retreated from Vienna for the second time, Europe seemed out of reach. Now, ask the Dutch what they think. That our goal won't be achieved in 100 or even 200 years doesn't mean it's not the right one.

In the short term, freedom won't necessarily make Iran less nuclear, but it will change the world. I've always thought that Iran was sort of the Soviet Union of this war, the beacon that Islamists point to, and the country that's most aggressive in pushing Islamism outwards. So if the mullahs end up like living versions of that statue of Dzerzhinsky, game over.

Secondly, the China problem is probably worse than we think. The goal of China's naval capability isn't to use it against us. It's to keep from having to use it against us. Show enough muscle, and the countries in theater will start to think about cutting a deal with them. After all, most of those local trading partners are running surpluses with China.

Finally, there's Latin America. A growing set of left-wing elected leaders, with moral cover from such titans as Chris Dodd and Jimmy Carter, and turning Latin America away from the US, and possibly back towards dictatorship.

I know, I know, one problem at a time. But as Michael Ledeen says, "Faster Please."

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Health Care, the New Pensions

Underfunded defined-benefit pensions are killing corporate giants. They've already taken out Bethlehem Steel and TWA, and now they're stalking airlines and car companies. The companies had to choose between huge cash flow diversions and remaining competitive. Sometimes, they didn't even get to choose.

Now, it's health care. From yesterday's Wall Street Journal:

A decision by the ratings company, while not imminent, would represent a significant symbolic blow to a 108-year-old company that has epitomized the strengths and weaknesses of the American manufacturing belt. It could also deal a financial hit to one that has recently relied on cheap borrowing to keep its costs low while it deals with foreign competition and rising health-care costs.

If this isn't a canary in the coal mine, I don't know what is. Smaller companies groan underneath the radar. But GM? (It's a shame their CFO doesn't have a blog.) GM may be decades away from failure, but western Pennsylvania had turned into a junkyard 20 years before Bethlehem finally went under. We don't have Europe's welfare state problems, but we do have the same laws of economics and mathemtics, and as interest rates rise, it's going to be harder for GM and others to play this shell game.

Defined contribution 401(k) have largely replaced defined benefit plans. Give us the money, we'll take care of ourselves. Health Care needs a comparable shift. Employers, as the deep pockets, have been subsidizing rising costs, and now even deeper pockets are being called in.

Health Savings Accounts (Ted Kennedy's shrieks of indignation notwithstanding) are a good start. Other ways to get decision-making back down to the consumer level need to be found.

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January 20, 2005

From the Nobody Ever Learns Anything Department

If JP Morgan thinks this is going to satisfy anyone, they need to do a little more historical research:

JPMorgan Chase & Co. is the first company to acknowledge that two of its predecessor banks had specific links to the slave trade. The filing was meant to comply with a Chicago ordinance requiring such disclosures.

The bank, the nation's second largest, said in a statement Thursday that the two Louisiana banks had received thousands of slaves as collateral before the Civil War.

The New York-based bank also apologized for contributing to "a brutal and unjust institution" and said it was setting up a scholarship fund in Louisiana as a way to make amends.


The bank said that historical researchers had found that two now-defunct predecessor banks - Citizens Bank and Canal Bank, both based in Louisiana - served as banks to plantations from the 1830s until the Civil War.

"Collateral" for mortgages and other loans "included land, equipment and/or enslaved individuals," the statement said.


The two Louisiana banks merged in 1924 but failed in March 1933 amid the Depression. A federally chartered bank in May 1933 assumed some of the failed banks assets, and that institution - the National Bank of Commerce in New Orleans - was a precursor of Bank One Corp. Bank One was purchased last year by JPMorgan.

So let's get this straight. JP Morgan is claiming implicit moral responsibility for two failed banks who (presumably) stopped trading in slaves 68 years before they failed, and we acquired by a bank that later was acquired by a bank that was later acquired by JP Morgan Chase. If I've got my genealogy right, that's a cousin subsidiary precusor three times removed through marriage. By this logic, it should be sometime this year that we get an official statement from the Palace that Queen Elizabeth II has taken personal responsibility for some massacre perpetrated by William of Orange.

The worst part is that Morgan has managed to make the worst of a silly situation. They've implicitly claimed moral responsibility for a problem, and then put down money that wouldn't pay the paralegal fees for any claimant's case against them. They've accepted the bogus social science that links slavery to today's poverty, and the agitators they're trying to appease won't care, they'll just use it to hijack the next company.

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Les Moonves, Put Down Your Lamp

Dan Rather's replacement has been found!

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The Nanny State Continues

Since the theme of the day is Liberty, let's take a quick look at a rising-power-wannabe that could use a refresher course ("Brussels Warns on Junk Food"

The food industry has been given a year to stop advertising junk food to children and improve product labelling or face legislation in the European Union.

Markos Kyprianou, EU health and consumer affairs commissioner, warned in a Financial Times interview that urgent action was needed to tackle Europe's obesity problem, particularly among the young.

Mr Kyprianou believed self-regulation in the food industry was the quickest and most effective way to tackle the problem. But he warned the European Commission would resort to legislation if progress proved disappointing.

"Nice business ya got here. Wouldn't want anything to happen to it."

We won the Cold War for this?

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Accounting Conservatism

In Financial Accounting and Reporting last night (also known as Fraud 101), we started in on Enron. With masks and gloves and scale at the ready, we pulled back the covers and began our own autopsy. Amid the talk of stock watering and push-me-pull-me companies, came the discussion of red flags, especially compared to other industry companies.

"But," the professor asked, "what is Enron's industry? They're trying to create a new industry all by themselves." It certainly does make it hard to find a standard for comparison. Enron's business, fraud aside, was to try to be the bookmaker for the world, to become a marketplace for just about any saleable commodity. "They even were talking about setting up a market in pollution tax credits!"

Wait a second.

Just as some cops come to believe that inside every citizen is a thug, do some accountants come to believe that inside every legitimate market is a fraud? What Enron did with its own stock was repulsive. But Global Crossing was just as crooked, and nobody would claim that long-distance or fiber optic capacity weren't legitimate assets. Pollution tax credit markets are a fine way to help reduce pollution, although they offend the regultory impulses of environmentalists. As long as the asset is real, there's no reason it can't serve as the basis for derivatives.

This professor's reaction helps confirm some of my worries about Sarbanes-Oxley. Accountants may well go from asking how we value an asset to assuming that we can't. Along the way, a large number of good ideas may get thrown out with the few truly fraud-inducing ones.

Business is too important to put in the hands of accountants.

Posted by joshuasharf at 11:24 AM | Comments (1) | TrackBack

The Governor, the Tsar, and the King

And then there were three. In addition to the Governor's plan and Speaker Romanoff's plan, Republican representative King has entered a plan into the TABOR Sweepstakes.

Jim Tankersley, as usual, has a good summary of the three plans.

Both the Governor and Speaker Romanoff would lower the tax rate to 4.5%, but they would calculate spending limits differently. The Governor would ask for a one-time bump in the TABOR baseline, effectively to allow the state to meet its current obligation. Romanoff would tie spending to the government's 2000 share of the state's economy.

Of these two, Romanoff's plan is the more generous to the state, and so the more dangerous. Romanoff makes room for more permanent programs and long-term obligations, while ignoring the other two parts of the vise - Amendment 23 and Gallagher. Owens's plan doesn't address these immediately, either, but by using current programs as the baseline, he makes it more likely that the legislature will have to deal with Amendment 23 next year.

The King-Teck proposal is a little different. It lowers taxes to 4.45%, and cuts the maximum state growth rate to 5% for three years, while also giving a one-year bump to the baseline. King-Teck also basically keeps a tight lid on discretionary spending, which would mean dealing with Amendment 23 sooner rather than never.

Naturally, the Tsar is displeased:

Romanoff said he welcomed the plan but questioned parts of it.

"We can't wish those needs away," he said. "We have to close the gap between the revenues we've got and the services we want, or tell voters which campuses we'll close, which roads we're going to ravage, which prisoners we're going to set free."

Or, we have to go to the people and actually ask them for their money for these things. Or, we have to decide that we're not going to build automatic raises into one part of the budget. Meaning we'll have to make choices. Gee, what a novel idea.

Naturally, business leaders (who always follow the majority) and Democrats, think it's a PR problem:

The business leaders chatting with Democrats Tuesday saw some lessons there. They strongly supported a long-term budget fix that includes increased state spending, and several said to pass it in November, proponents need to control the campaign war of words.

They suggested replacing "TABOR refund" with "TABOR throwaway" and "money in your pocket" with "investing in the state."

"This is more marketing than it is politics," said powerful attorney Steve Farber. "It's going to have to be marketed smarter than we've ever marketed before."

Steve, politics is largely marketing. And anyone who's going to tell people that letting them keep more of their own money is "throwing it away" must not like being in the majority that much, after all.

Posted by joshuasharf at 06:17 AM | Comments (0) | TrackBack

Shale Oil

Someone needs to remind Tom Shales of the Washington Post that he writes a TV column, not a political one. His years of faux-bemusement at President Bush's preference for blue ties finally came to an end this year when Kerry started showing up in them. His routine panning of Republican convention speeches, and praising of Democratic ones continues, in spite of the current tradition of Republican inauguration speeches.

Today, he derides CBS's Les Moonves's somewhat bizarre attempts to remake the Evening News. If he would stick to the facts, and forget trying to rewrite the background, he'd be a lot more convincing. Shales isn't faulting Moonves for focsing on style over substance. He's faulting Moonves for doing anything at all. Four hundred years ago, he'd have been one of Pope Julius's chief enablers.

Rather had long planned to retire later this year, but the date was moved up to March after controversy arose over the "60 Minutes Wednesday" report, for which Rather, busy with other news duties, basically just served as on-air correspondent. He did not do the reporting. The segment dealt with Bush's National Guard service and with his allegedly being found deficient by a commanding officer. It's common knowledge that Bush was a spoiled little rich boy who did not serve with any great distinction, so this story wasn't exactly a blockbuster. It was more a matter of new details.

That Rather "didn't do the reporting" is at least open to question. He was personally responsible for a vetting process that deliberately turned big, blind, CBS eye to evidence it didn't like. And in any case, what's a "managing editor" to do? If the Bush Administration tried to absolve the President of mistakes by claiming he was just reading the announcement, Shales would be all over that with President Cheney jokes and marionnette snarks. And while "spoiled little rich boy" is one interpretation, serving without distinction is a far cry from service with disgrace.

Unfortunately, the details weren't true. Or at least the segment made a sloppy case for their being true. Some of the documents uncovered were apparently faked by a longtime Bush basher. Mapes apparently failed to subject her sources to enough skeptical scrutiny and should have been more careful about the documents.

If anyone doubted that the Thornburgh investigation report would be used to put the most charitable face possible on CBS's electoral manipulations, they need look no further than this paragraph. The Challenger disaster didn't stop with the O-rings.

Stern action by Moonves, on the heels of an independent report criticizing the segment, was seen at least partly as a sop to quiet angry conservatives; for decades, going back to Edward R. Murrow's heroic debunking of Joe McCarthy, CBS News has been the far right's punching bag.

Oh, yes, that's what was going through the Poweline guys' minds. "Let's win one for old Joe. After all, they never proved that the list wasn't real." Please. McCarthy-ism was never as horrible as the dissolute McCarthy himself, who's only an idol to the aging Birchers trading stories as they wait for the staff to bring them their creamed peas.

Moonves is also despised by some insiders and observers for what he hasn't done. He has failed to come to Rather's defense even after Rather's 30 years of unquestioned loyalty to the company. Rather is such a team player that he apparently felt that standing by the controversial report, even as it was being condemned left and right (mostly right, of course) was the equivalent of standing by his colleagues and being supportive of people he had worked with and grown to trust.

I suppose one might equate taking a wrecking ball to your employer's most valuable asset with loyalty, but only in some alternate universe inhabited by myopic TV critics. Another example of Thornburgh and its Uses.

Network TV news is largely a commodity, and one whose futures are falling, at that. Chancellor, Brinkley, and Cronkite may have built the MSM Party, while Jennings and Rather and Brokaw lived off their accumulated credibility capital. But Rather led a borrowing-and-spending spree of that capital. Now there are probably no reporters large enough to rebuild that trust on their own.

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January 19, 2005

Ask Not For Whom the Man Dates...

Between actual work, school work, presentations to clients, and, well, class, the dance card is pretty full today.

For the moment, though take a look at this bit from the RMPN ("Got Me a Man-Date", which, despite the title, has nothing to do with same-sex anything). Go ahead. I'll wait.

Now, what on earth do the results from a BBC poll of the rest of the world have to do with President Bush's mandate? Apparently the Left, having lost the national debate, is looking to expand the franchise.

The Colorado Democrats need to be careful - very careful - about whom they allow themselves to be seen with in public.

Posted by joshuasharf at 09:31 AM | Comments (0) | TrackBack

January 18, 2005

Fun and Games With Streaming

For some reason, the KRLA player on the computer at work speeds up people's voices slightly, but raises their voices about an octave. Gary Coleman sounds about normal, but K-Lo sounds like she's in high school, and one of the callers to Hugh's show, full of um's and ah's, sounded like an incarnation of one of the characters from Lum and Abner.

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Good to Great

Another week, another book review. I've finished reading Jim Collins's Good to Great, about how good companies transform themselves into great ones. Collins also wrote Built to Last, a study of the great companies, some almost 200 years old. The later book isn't concerned with great companies as such, but how companies were able to overcome the inertia of being good enough, and move on to being great. Given that the thing has been on the business best-seller list since the Nixon Administration, it hardly needs another review to pump up sales.

The thing about Collins's studies that distinguishes them from b-school case studies is their time scope. Usually, a b-school study will look at a decision point or a problem, and ask the student to develop and defend a solution. At the end, the professor tells the class what happened, but even cases with strategic scope usually only focus on one aspect: alliances, say, or positioning. While a typical case study might follow an industry for half a decade, Collins's work traces a company's success or failure over 30 years. And since he thinks institutionally, rather than financially, his results seem applicable to all sorts of organizations and even individuals.

For people who like big ideas (cough, Jared, cough), this is a terrific read.

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More on those Layoffs

As more word filters out about the Oracle/Peoplesoft layoffs, there's both good and bad in the mix. Contrarty to speculatrion, about 1300 of the layoffs came from Peoplesoft, meaning that about 3700 came from Oracle, so it's not simply a case of Oracle protecting its own. And a lot of Oracle employees got unwelcome surprises on Saturday.

The company will carry those let go for three months of severance pay and health benefits, which may or may not be so bad, depending on length of service. When Coke downsized a few years back, their policy was one month of severance per year of service. My guess is that averaging it out like this is another "expedient."

The fact that about 3/4 of the layoff came from Oracle also means that this was a pure efficiency move, and didn't have much, if anything to do with corporate culture. Oracle was the leaner operation, in terms of SG&A vs. revenue.

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January 17, 2005

Electoral History

Hugh today on the Kennedy "dynasty":

The Washington Post has a funny headline: "The Roosevelts, Kennedys, and Now the Bushes." Let's review the history. TR and FDR were on a total of seven national tickets, and they served 20 years as president. The Bushes --to date-- have been on six national tickets, with eight years as president completed and four more beginning this week, as well as eight years for 41 in the vice-presidency. The Kennedys have been on a total of one national tickets (sic), with JFK's term as president lasting under three years, Bobby's campaign for the presidency uncertain of the nomination when he was murdered, and Teddy's 1980 campaign a failure as was his surrogate's John Kerry's.

In fact, it's even worse than that.

First of all, the Roosevelts were on eight national tickets. Teddy ran as McKinley's veep in 1900, as President in 1904, and for President in 1912. (No fair not counting this one. While he didn't make the ballot in Oklahoma, Taft - a sitting President - missed making it in both South Dakota and California, and finished fourth or worse in at least 5 states I counted. Teddy & Hiram Johnson finished second in both popular and electoral votes.)

But for all the Post's wishful thinking, one could make the case that even the Adlai Stevensons were a more successful political dynasty. The original won as Grover Cleveland's veep in 1892, ran as Bryan's veep in 1900 and lost, in addition to the two Presidential losses by II. In addition, II was Governor of Illinois for one term, and III senator for two terms, a state more populous, more consequential, and more mainstream than Massachusetts for most of the 20th century.

The point is that the country is full of great local political families: the Byrds of Virginia (not West Virginia), the Tafts of Ohio, the Lees of Virginia. For that matter, the Kennedys don't even rank first in their own state. Does the name "Adams" ring a bell?

In the meantime, Teddy could take a hint from another long-serving self-styled Progressive Senator, Hiram Johnson of California. Johnson bitterly opposed FDR's build-up in advance of WWII, but when war came, he recognized the stakes and supported it.

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January 16, 2005

Larry Ellison - Working Man's Hero


In my review of In Good Company, I complained that the companies that were most likely to treat their employees like checkers were the ones run by kids. Of course, as Ringling Brothers Barnum & Bailey always reminds us, children can be of any age.

From yesterday's Rocky:

Oracle Corp. Chief Executive Larry Ellison is firing about 5,000 employees after combining Oracle and PeopleSoft Inc., and as many as 600 of those job cuts could come in Denver.

PeopleSoft employees were told Friday they would find out their fate today in an express letter sent to their homes from Oracle.

Oh, that's classy. Complete a hostile takeover of a company, gloat about how the employees don't really have any other options, and then tell them to wait at home, enjoying a nice Friday night meal with their families waiting to find out if they'll have a paycheck in two weeks. Ellison is famous for winning sailing races and infamous for taunting people still out on the course by buzzing them with his plane. It's a shame he couldn't have put a couple of dozen people on that plane to go tell people face-to-face that he was letting them go, and what the company would do to help them.

Gloat? Consider this exchange from a December 13 interview with Neil Cavuto:

CAVUTO: Let me ask you, are you worried that in the months that this battle ensued that you had a bit of a brain drain to deal with, that some of the best and brightest at the company might have already left?

ELLISON: I don`t think so. Keep in mind that Silicon -- this is not the Silicon Valley of the dot-com era. It`s not like there are hundreds and thousands of really wonderful jobs available for engineers in Silicon Valley.

I'm sure that the 12,000 employees at Peoplesoft were looking forward to serving their new boss, Mr. Warmth, but I also seem to recall the Peoplesoft buyout of J.D. Edwards having a little different tone. Maybe those Peoplesoft executives who fought tooth-and-nail to save their company actually did have something more than their own jobs in mind.

In Good to Great, Jim Collins recounts how Colman Mockler fought to save Gillette from Ronald Perelman, The deal would have meant an immediate 44% profit for shareholders, and the company would have been carved up with its own razors and sold for scrap. Sometimes, it's not about today's cash.

Collins also talks about the need to be rigorous, cutting people who won't fit the corporate culture rather than keeping them on, damaging the company, and preventing them from finding a new niche. He uses the example of Wells Fargo's takeover of a more traditional bank whose managers enjoyed more traditional bankers' perks.

I did take a look at some of the relative overhead costs of the two companies, based on their most recent annual financial statements. (Oracle and Peoplesoft) It does turn out that Oracle is running a leaner operation than Peoplesoft. Oracle's SG&A is about 3/4 of Peoplesoft's as a percentage of revenue, not entirely surprising giving Oracle's revenues are about 4 1/2 times larger. So some cutting is probably justified.

I'm sure Ellison believes these cuts are necessary, and businesses have a right to run their operations as they see fit. But there's a reason more and more people are rooting against him.

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Live In Studio

Here we are in studio with Jennifer Correy, and, oh yeah, John Andrews at 710-KNUS, a real step up. We're actually being asked to talk about real substance, which is unusual for us.

Now, John's back to talking about blogging. Sooner or later, we're going to be expected to talk about actual issues.

UPDATE: I'm back home now, with a little time to say thanks to John, Matt his producer, and Jennifer, for having us on the show, and making us feel at home. I have a feeling that the novelty of blogging hasn't quite worn off, nor has the lingering sense of unease that some people feel about handing out megaphones for free. So for a while yet, we'll still be asked to discuss the process and present our bona fides.

I now realize that there's real time, and then there's radio time. Radio time moves at about twice the speed of real time. Radio time is also measured out in teaspoonfuls, while real time sort of flows along in one big stream.

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January 15, 2005

Media Alert

Heh. Probably the first and last time I'll be using that headline.

Clay and I will be John Andrews's guests on his 710 KNUS show tomorrow night at 7:00 Mountain Time, as Dusty Saunders like to call it, the "forgotten time zone." We expect a fair representation of the Alliance to call in.

KNUS has live streaming now, so feel free to listen and call in.

Posted by joshuasharf at 11:34 PM | Comments (0) | TrackBack

Back Up

Looks as though the jsharf.com site is back up now, houses, trip photos, books reviews, and all. It was actually back up within minutes of the original posting, but the UPDATE at the bottom didn't reach everyone...

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January 14, 2005

You Go to Budget Negotiations With the Elected Officials You Have

There's good and bad here, and then there's setup for next year and the election cycle.

The securitization makes sense from a fiscal point of view. You can't try to outsmart the market, which means that the greater the uncertainty, the higher the interest rate that third-party will use to discount the revenue stream. Since the risk-dependent rate gets added onto the risk-free rate, and the risk-free rate is at historic lows, there probably won't be a better time to strike that deal than now.

While Owens talked about putting very severe limitations on when the rainy-day funds could be used, legislatures do have a tendency to start spending that money on predictions of cold fronts moving through Utah. While ultimately, the fate of that money rests with the citizens, it's better to start off with all the restrictions we can come up with.

As for the TABOR changes, at first blush the base may think that we had to destroy it in order to save it. But it's not destroying it. Owens correctly points out that this is with the consent of the public, and has always been a built-in contingency. If the main goal is to keep the state out of receivership without giving the Democrats too much leeway to take on new long-term obligations, then all we're arguing about is the points.

On a side note. If higher education is going to complain about being squeezed, it's only fair that it be subjected to accounting supervision at least as rigorous Sarbanes-Oxley imposes on private concerns. That this bill is bipartisan gives me hope.

Ben is all over the Senate Dems who want to spend even more money they've made sure we don't have. We don't have it, in large part, because of Amendment 23. (Kestrel's right about the moral hazarf of getting everything you want, anyway.) If the governor is going to make essentially revenue-side concession this year, he's going to have to make the case repeatedly that these choices are because of Amendment 23. Over and over. So that whoever the nominee is doesn't have to start from scratch. So that our chances of getting a modification on the ballot - which would need 2/3 to pass - will be improved. This is the sort of pro-activity that I don't think we saw enough of last year, but can still come in time to save the game for next year.

Most of what the majority is proposing to do is statutory, and the referenda involved need only a majority to pass, and can make it onto this year's ballot. Most of what we'd really like to do requires Constitutional change, would need to pass more restrictive timelines, and wouldn't make it until next year.

The title of the posting isn't intended to dis the Governor, but to show that when you don't have a majority, especially in Colorado's budget process, your options are limited.

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The Post Buries the Lead

While the guys at the RMPN claim to be wondering what state the governor was describing, I'm wonder what speech the Denver Post reporter was at. The story (Owens vows to wield the veto; Governor defiant in State of State), spends half of the article describing the governor as unyielding, threatening, and intransigent.

In fact, the discussion of non-negotiables lasted less than 1/10th of the speech, and was brought in at the end to set up some red lines in an otherwise conciliatory address. The fact is, many, many of the legislators whom Governor Owens thanked for sponsoring or carrying legislation were Democrats. For instance, when Owens talked about making the accounting records of public-university foundations a matter of public record, he thanked Senator Ron Tupa (D-Boulder) for carrying that bill.

One of the keys to retaining the governor's mansion is going to be solving problems while not appearing either weak or obstructionist. The governor's speech was an excellent start. The Post's deciding it likes a good fight better than the facts doesn't make his job any easier.

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The general jsharf.com site it going to be down while the Hostlane guys make the switch over to ColdFusion MX from 5.0. I've been wanting to do this for a while. There's nothing there that's database-driven, although there are some apps coming on line that will be. So a long weekend is as good a time as any to be down.

Be patient, and the trip photos and funhouses will be back in due course.

UPDATE: Well, that was fast.

Posted by joshuasharf at 11:22 AM | Comments (0) | TrackBack

Governor Owens's Budget Solution

During the meeting with the Governor yesterday, the first, biggest, baddest issue of all came up quickly, and didn't go away for quite a while: the budget. I came in very skeptical of a plan that looked a lot like surrender, especially from a governor whom I've criticized for not providing much executive leadership on the issue last year. I came out at least willing to consider the idea, and certainly with a better understanding of it.

Essentially, there are two parts to the budget problem - 1) this year and 2) every year after that. Part 2) may be solved by a one-time increase of the TABOR base, approved by the voters in November. Up until now, TABOR's only impact has been to prevent the legislature from walking away with more of the state's money without having to ask for it. (Why is it that the Left values every individual right except property rights?) The governor's proposal, borrowing heavily from something the Tsar has proposed, would reduce the state income tax to 4.5%, while raising the baseline limits on TABOR spending.

TABOR uses a formula that says that state spending can only increase, year-over-year, by inflation plus population growth. This year, that's 0% + 1.5%. The governor want to up that to 3.5% or 4% this once, but it also increases the baseline for the out years. And further tinkering, or even going back on the tax cut, would also require voter approval.

Since this won't show up on the ballot until November, we also need to to something about this year's budget. The large wealth transfer tobacco settlement coming our way is somewhat uncertain, and scheduled to be paid over a number of years. Governor Owens wants to securitize this income stream. Essentially, it means to sell the rights to that income to a third party for a lump sum. They build an annual interest rate into that payment, which is why it's not just the total of all the expected payments. At that point, the state's out of the loop. If people stop smoking, and the tobacco money disappears, that's the risk that the government is selling, and the third party is buying.

Of course, this would yield much, much more money than even a Democrat-controlled legislature could spend in one year. So after we patch up this year's mess, we would take the rest and put it into a rainy-day fund.

That's the plan, as I understand it. Analysis to follow.

Posted by joshuasharf at 08:29 AM | Comments (1) | TrackBack

January 13, 2005

The Parade Continues

Here's another one. Enjoy it now, because there's a house going up behind it, and that lovely view they spent all that effort on is liable to go away forever...

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Photoblogging the State of the State

A few photos from the Visitors' Gallery seats that the Governor's Office was generous enough to procure for us.

But first, one small note about the speech. Governor Owens recognized a set of school administrators in his speech as being particularly effective and praiseworthy. They were sitting two rows in front of us, and one of the honorees was so moved, I could see the tears streaming down her face. If you're human, you don't photograph something like that, but it sure was touching.

Now, on to the photos...

Here's the governor getting ready to speak. The painting behind him is called Long's Peak, and it's really a terrific piece of art. Long's Peak is the highest mountain in Rocky Mountain National Park, and is something of a symbol for the state.

Now, if you had served in opposition for most of your political career, and suddenly got a chance to head up the state Senate, you'd probably pay attention to what the speech had to say. Or at least, realizing you'd be sitting directly behind the governor, you'd pretend to care. But then, you're not State Sen. Joan FitzGerald (D-Golden):

At first, looking through the 30 or so pictures I took (isn't digital grand?), I thought I might have just caught her blinking, or perhaps deep in prayer. Here's one of the two or three other shots that capture the same sentiment:

The governor finishes the speech, and the Senate President and Speaker of the House stand there with him. Now Romanoff has to be "The Tsar." Has to be. Shanahan is "The Mastermind," Romanoff was, quite literally, born to be "The Tsar." But how do you solve a problem like FitzGerald?

Well, the name FitzGerald comes from the illegitimate children of some English kings. (Spare me the emails; I'm not casting aspersions on Joan's parentage or that of her husband. "Sharf" comes from "sharp," but who ever heard of a pointy-headed conservative?) Frequently, these folks would end up as Dukes or Duchesses, since the king was pretty much the only guy around for whom extra kids weren't an embarrassment. So, "the Duchess" it is.

Here they are, together for the very first time, The Duchess, The Governor, and the Tsar.

Tomorrow, some real commentary. I promise. Mostly about the budget, and a few drips and drabs about water.

Posted by joshuasharf at 09:54 PM | Comments (0) | TrackBack

More Social Security Public Accounts

Nathan Newman has responded. My ups.

What policies could the government impose on companies due to holding a board seat that they can't impose through legislation? State pension funds hold significant shares of a number of companies and, most of the time, the problem is that management ignores most of their good governance complaints. The only time their presence makes a difference is when a lot of other shareholders get concerned about the same issue. And if the social security fund is reflecting the views of other investors in the private equities marketplace, we are hardly talking about a galloping socialist impulse.

Whether or not that's the problem depends on whether or not you think their good governance complaints are valid. Certainly, if you're Eliot Spitzer, you can legislate through the courts. But in a well-regulated economy, there's a process both for passing laws and for adopting regulations. Calpers and others like it do indeed have an oversized voice in corporate governance already, and a bully pulpit to push it from. A Social Security Investment Corporation would have the threat of government action behind it, as well. not merely on one board, but on many, many boards.

I said,

investing in inefficient domestic companies virtually guarantees the investors - you - lower returns. In effect, you're subsidizing inefficiency, a national version of making everyone pay more for groceries because you don't like WalMart.

In a fair comparison, returns are returns, no matter who's doing the investing. And domestic economic growth only happens when there are returns to investors. Governments don't get any more out of that than anyone else.

And Newman replies,

This last point is the ideological argument that "what's good for General Motors is good for America," but it's also patently untrue in this situation.

If the social security trust fund loans money to build housing in the United States and gets an 8% return on investment, but also gets additional payroll tax payments from the labor involved, the additional payroll payments are hardly irrelevent to the gains to the trust fund over time. Money is money whether it comes through dividend statements or taxes. If that same investment by the social security fund goes to Enron investing in off-shore financial investments and there are no payroll taxes generated, the social security fund may do worse even if Enron pays slightly higher dividends than the housing investment paying the 8% return.

I'm actually not making the "good for General Motors" argument. I've always despised that argument. It refers to the chairman of that company arguing for preferential treatment on the grounds that he was better for the economy than the alternatives. I was obliquely referring to laws, such as Manhattan had for decades, that kept small groceries open at the expense of larger shops, by limiting the size of certian types of retail establishments. Everyone paid more for plums because of this policy. Which means they ate fewer plums, or less of something else.

The latter point stands. The government collects taxes whether those new jobs were created through private investment or public investment. And the businesses that created those new jobs did so by rewarding their investors. The comparison between dividends and taxes had occurred to me, too, but I rejected it because taxes aren't dividends. If the government holds shares of AT&T, it collects dividends, too. You can't count things in one column and not the other, and you can't count things twice.

Those taxes that get collected will be reinvested at a lower rate, as well. Newman claims they compound the return. I say they compound the shortfall in the returns.

Posted by joshuasharf at 07:05 PM | Comments (0) | TrackBack

State of the State

More on this later, but I did want to let everyone know that we actually made it to the capitol, that Sean and Michele took very good care of us, and that I'm sure we'll all have something up soon on the speech and the post-game interview.

The cohort consisted of Clay, Richard, Jim, Michael, and I. We got terrific seats for the speech, a little legislative briefing from Michele, and 30 minutes with the governor.

The speech itself came across as confident, and the governor seemed almost more comfortable in the role of having to work cross-party. He's got experience at it from the other side, of course. I did notice a fair amount of navel-gazing and watch-checking from the Democratic side when Owens rattled off a list of compromisese he wouldn't make.

I can't speak for everyone else, but I found him to be gracious, sharp, and on top of things. I came in very skeptical of the TABOR plan being proposed, and walked out willing to think it over. At the same time, I think he knew he was speaking to his base, and wanted to make sure we understood why and how the dynamics at the Capitol had changed this year.

The only drawback was that the editor-in-chief of 5280 was there, tape recorder running, and I'm sure that put a bit of a damper on some of the give-and-take. But the answers we got were, I think, fair and honest, and on polilcy (as opposed to politics), I don't think he or we pulled any punches.

Posted by joshuasharf at 02:51 PM | Comments (0) | TrackBack

Harsanyi Gets It

Some people in the old media don't feel threatened.

The Rocky Mountain Alliance of Blogs (RMA), a collective of conservative Coloradans, is, according to them, the first bloggers group in the nation specifically invited to attend and provide coverage of a State of the State address.

After his speech today, Gov. Bill Owens will sit down with RMA members for up to 30 minutes.

Earlier this week, Colorado House Minority Leader Joe Stengel invited the bloggers to take part in a retreat of Colorado House Republicans. The meeting was set to discuss strategic and tactical plans for the legislative session and next election cycle. Speakers include Owens, Stengel, Bob Beauprez and Dick Wadhams - who talked about the influence of bloggers in the 2004 race.

Now, you may ask yourself, why in the world would the governor or the Republican leadership put stock in what a blogger - or, as Jonathan Klein, a former executive vice president of CBS News, so smugly put it, a "guy sitting in his living room in his pajamas writing" - has to say about the future of Colorado?

"What they understand is the importance of the new media," says Clay Calhoun, an RMA member whose blog had 8,000 unique visitors in November.

"What they're interested in doing now, as they are the minority, is searching for new ways to communicate with the constituents and leverage this new media."

Posted by joshuasharf at 09:16 AM | Comments (0) | TrackBack

January 12, 2005

New House

Today's new entry in the Parade. There are a few more in the pipeline. Man, I love this town.

Posted by joshuasharf at 11:26 PM | Comments (0) | TrackBack

Public Savings Accounts

Nathan Newman of New York University wants to know why his idea of having the government invest Social Security money in the stock market is such a bad idea. I don't think any of the arguments I present here will persuade him, but an honest effort demands a thoughtful response.

Efficiency...while current administrative costs for social security are just $15 per worker involved, private accounts could cost as much as $50 per year. Such a system would knock out up to thirty percent of the touted accumulated returns on investment.

Could knock out up to 30%, on average knocks out much, much less than that. In the first instance, I think he overstates the cost. Most of the reasons for increased costs that he cites are already either built in or would remain irrelevane. Even give an extra $35 a year, though, if an employee gets a 12% contribution on $30,000, that's $3600 per year. Thirty-five dollars is almost exactly one percentage point interest. If current after-inflation returns are close to zero, and they are, the extra costs come to 14 of the added return. Mutual fund companies with hundreds of thousands of customers routinely make do with much less than that. Even to give the government that much is to confirm conservative suspicions about giving them the cash in the first place.

Government investments could be directed to investments that strengthen wage growth: The idea that the government might actually use all this capital in the social security trust fund in a pro-active manner gives rightwing economists hives, but it makes a lot of sense. James Glassman from the American Enterprise Institute attacked Clinton's proposal to have the government invest in stocks with the S scare word:
I do not want to sound overly dramatic, but, by definition, the plan is a step toward the dictionary definition of socialism: government ownership of the means of production.

Yet even in Glassman's hyperbolic venting, he admits that the government would own only 3.7 percent of the total value of the shares on the stock market, hardly enough to implement five-year plans. The government's existing regulatory powers over business gives it far greater potential control of business operations than this tiny minority share of stock would. Even with this reality, many promoters of government investing in the stock market call for elaborate controls to require blind investments in stock indexes.

This is just nonsense. Anyone with experience in the financial markets knows that a 3.7% share in a company is gigantic. It guarantees broad say in policy decisions, great leverage in proxy fights, and frequently means a seat on the board. Outside of confiscatory taxation, I can't think of a better example of galloping socialism than to start giving the government board seats.

Add to that the fact that this money wouldn't be invested evenly across the entire universe of funds, and you realize that for many companies, government ownership would exceed 5%. At those levels, it becomes almost impossible to punish bad management by just dumping shares without crashing the stock. This has exactly been the justification that CalPers has used to start exercising extra-legal regulatory powers over a number of its biggest holdings.

To compound the problem, which Newman's suggested use of this power may or may not be benign, there's nothing inherent in the proposal that would insulate the government from making political decisions with the money. In the long run, I don't believe such safeguards are possible.

The only way to manage that problem is to, in effect, forbid the government from trading by forcing it to hold some large, fixed portfolio. This doesn't replace distributed decision-making with centralized decision-making, but with no decision-making. Those shares have to just sit there, free-riding on the market. You'll get a better return than T-bills, but I'm not sure you'll be contributing in any meaningful way to economic growth.

I don't want to get into the whole colossal off-shoring issue, which is where Newman takes this argument. However, it's worth noting that investing in inefficient domestic companies virtually guarantees the investors - you - lower returns. In effect, you're subsidizing inefficiency, a national version of making everyone pay more for groceries because you don't like WalMart.

Newman also argues that collective investment spreads the risk more. That's true. But it also highlights the difference in incentive that inevitably makes government returns less attractive. The government's job may be to spread risk, but an individual investor will tend to be motivated by a desire to maximize return.

Finally, there's this:

Privatizers want to talk about "returns on investment" from social security, while ignoring the fact that social insurance systems are not like regular investments. Individuals start out with a fixed amount of capital and the only returns that matter are from annual investment returns. But governments investing their capital have two sources of economic returns from those investments -- conventional returns from equity or bond markets PLUS the taxes derived from the domestic economic growth fueled by those government investments.

This is a bait-and-switch. In a fair comparison, returns are returns, no matter who's doing the investing. And domestic economic growth only happens when there are returns to investors. Governments don't get any more out of that than anyone else.

Posted by joshuasharf at 11:02 PM | Comments (1) | TrackBack

Standards of Evidence

Trunk over at Powerline asks why metaphysical certainty appears to be the standard for proving bias in the CBS case.

I've been wondering myself how people who are responsible for creating entire classes of thought crimes, impose speech codes to control for bias, escalate the severity of punishment based on bias-as-motivation, convict whole companies of bias based on one transcript, and throw the word "racist" around like rice at a wedding, can say things like, "bias is hard to prove" and not have their pictures show up in the dictionary under "sophistry."

Posted by joshuasharf at 09:50 PM | Comments (0) | TrackBack

The Budget Positioning Starts

The calendar says 2005, but for those of us old with memories, it feels a little like 1995. The opposition party has taken over the legislature, and the governor now has to deal with leadership from the other party in both houses, for the first time in 40 years. And one of the lingering questions is whether or not this party, out of power for so long, can resist its more partisan and polarizing instincts. Then, as now, the budget moves to the center of this question.

In 1995, it was the Republicans led by Newt Gingrich and Bob Dole. Today, it's Ken Gordon and Tsar Andrew Romanoff. Initial signs are mixed.

Romanoff is floating a proposal to use the high-water mark of 2000, rather than the ratcheted-down level of 2002 or so, as the baseline for permissible TABOR expenditures. It completely ignores that third-rail of state-level politics: education spending, in this case, as mandated by Amendment 23.

The Democrats ran as compromisers, understanding all three elements of the problem, but are now apparently proposing to "fix" only one side of the triangle, as a sop to their primary constituency.

The AARP can run all the bogus polls it wants. If they, and the League of Women Voters, and Bell, and Bighorn thing that Coloradoans are going to vote to raise their taxes without controlling spending, they're going to get a big surprise in November. A strong response by the minority, led by a strong response by a still-popular governor with nothing to lose, is exactly the formula that led Clinton back from the abyss in 1995-96. The same instincts that led Coloradoans to kill Amendment A can work in our favor this time.

Posted by joshuasharf at 06:47 AM | Comments (0) | TrackBack

In Good Company

I don't normally do movie reviews. I see plenty of them, to be sure, but I usually walk in wanting to like the film I'm plunking down good money to see, so unless the plot's completely incomprehensible or thoroughly unbelievable, I'll at least shrug and say, "you know, that was pretty good." Still, when the producers of In Good Company started advertising free tickets to bloggers who promised to review the film, I figured it was worth a shot.

The working title of this movie, according to IMDB, was "Synergy." It should have been "The Good, the Bad, and the Lazy." It probably would be a lot more fun to write a review where the highlight was Jared and I giving each other the thumbs-up during (we thought) a planned assassination of the UN Secretary General in a preview, but in fact, the film was pretty enjoyable, as long as you concentrated on the characters and allowed the plot to be so much scenery.

Dennis Quaid plays a 51-year-old director of sales for a high-flying sports magazine, Dan Foreman. When the conglomerate who owns the title sells it to another conglomerate, Topher Grace's Carter Duryea follows his boss over to replace Quaid, who settles for a demotion back to wingman.

That's the business end. On the personal front, Grace's character finds himself deserted by, and then divorced from, his wife of 7 months. Quaid's wife is unexpectedly pregnant. And when the dispirited Quaid mock-invites the desperately lonely Grace back for a family dinner, Grace accepts, and then meets and starts dating Quaid's college-age daughter Alex, played by Scarlett Johanssen.

The Good is the main characters and the performances. I've liked Quaid since The Right Stuff and lately, The Rookie. His face has real character, and he plays the everyman role as well as anyone. He's not brashly heroic, and should probably stay away from those roles. But as Willie Loman with a chance, he's terrific. Scarlett Johansson handles the not-yet-serious about life Alex perfectly. And Grace makes you forget within 5 minutes that he ought to be dating some redhead named Donna.

The Bad is the language. When a film that so freely tosses around four-letter exclamations has a salesman explain that "PFG" means "Pretty Friggin' Good," all it does is emphasize how unnecessary the other profanity is. I'm not a prude, and I enjoy a good cursing as much as anyone, but if it weren't for that, and a very brief shot of Mr. Quaid living out Randy Moss's recent ambitions, it could have been an ABC after-school special, only with depth. A scene leading up to, um, dating between Carter and Alex ends with the leading-up-to, and that's all we need to see.

Unfortunately, even in a character-driven movie, the characters need to have some reason for being, usually called a plot. The Lazy.

Hollywood seems incapable of portraying a company as anything other than evil, layoffs as anything other than unnecessary. But it's ok to have an evil company if it makes sense. I've seen companies that move people around like checkers, and they're not the big ones, they're the little ones run by guys Grace's age who haven't learned anything about people. And the first thing you learn - in 6th grade - is to buy low and sell high. So tell me how Tycoon Teddy K made his mint by buying high, running the property into the ground, and then selling it.

Jonathan Last pointed out in a Weekly Standard article once that Hollywood has an impossibly long timeline for movies. That must explain why Carter's answer to ad revenue targets is "synergy," something that AOL-Time Warner has turned into a bad joke. And the only way I can explain the presence of a "360" in its incarnation here is sheer trend-happy laziness.

The Plot rests on the secondary characters, Foreman's wife Ann, an older salesman Morty played by David Paymer, Carter's go-getter butt-busting win-at-all-costs-even-when-it-doesn't-matter boss, Steckle, and a cameo by Malcolm McDowell as the Titan of Industry. Steckle and Morty are just taken from central casting. The extra skin from Marg Helgenberger's forehead has been used to patch up burn victims. And during the climactic speech by Quaid, you half-expect McDowell to pull out a bowler and reprise his role from Clockwork Orange.

The problem here is the temptation to take all this too seriously. Everyone wants companies to be from Norma Rae or Broadcast News, and they're not. It also says something about contemporary America that a 26-year-old really doesn't know what he wants to do with his life, and we buy it. Forty years ago it would have been Jack Lemmon as Carter, the Grace would have been Kelly, not Topher, and the boss could have been Spence or Rex Harrison or Fred MacMurray. It would have been about people acting their own age and passing judgment on those who didn't, and they would have called it The Apartment. If I take the movie's charicature of business seriously, I'm only doing so on its own terms.

But it's not The Apartment, or even High Society. It is what it is. And as long as you can avoid dwelling on the scenery and look at the characters, it's pretty satisfying.

UPDATE: Jared's much better review is up. I have to concur about the dinner scene. It's very funny. And no, the main point of the film - which redeems a lot - wasn't lost on me.

Posted by joshuasharf at 12:15 AM | Comments (0) | TrackBack

January 11, 2005

State of the State Address

The Rocky Mountain Alliance, in the persons of Clay, Jim, and I, will be blogging Governor Owens's State of the State Address from the capitol on Thursday. Afterwards, the governor has been kind enough to give us about 15 minutes of his time for question. Michele Austin and Sean Duffy, who arranged the whole thing, has informed us that the governor is expecting us to ask some serious, tough questions about the speech and this year's agenda. It's a testament to the growing influence of the blogosphere.

Since blogs serve best as both an information source and a feedback channel, I'd like to open up the floor. What do you want to ask the governor? I'll pick a question, ask it, and make sure that the governor knows it came from you. You can use the comment section here, but your odds are probably better if you email me.

Posted by joshuasharf at 05:20 PM | Comments (1) | TrackBack

New Service - Notifications

For those of you who don't like or don't have RSS feeds, View From a Height can now send an email to you whenever there's a new posting. Just use the little form over there on the left. Yes, that one, over there, under the Search tool. Enter your email, and you can add yourself to the mailing list.

The more I learn about MoveableType, the more I like it. Actually, it just proves the usefulness of reading manuals.

Posted by joshuasharf at 03:54 PM | Comments (1) | TrackBack

Judge Chertoff

Well, if Judge Chertoff is good enough for the Volokhians, he's good enough for me. The Weekly Standard has posted some of his writings on the legal response to the war, and the hideous International Criminal Court, and both are very encouraging.

I've always got some concern when people switch branches like that. Earl Warren drifted from moderate conservativism to pretty severe liberalism under the influence of William Brennan, and judges frequently don't have the administrative skills to run large departments (remember Judge Webster at CIA?).

Chertoff's experience as a prosecutor should serve him well in a sensitive Cabinet position, always under scrutiny for both effectiveness and respect for civil rights.

Posted by joshuasharf at 03:44 PM | Comments (0) | TrackBack

Scharansky and Freedom

Natan Scharansky pleads today in the Wall Street Journal for the West and the rest of the free world to hold Mahmoud Abbas's feet to the fire in creating a freer Palestinian society.

What Oslo's architects did not understand was that dictators need external enemies to justify the repression necessary to keep their societies under control. In contrast, democratic leaders, dependent on popular support, have a powerful incentive to deliver peace and prosperity to their citizens.

So, again, I ask, when does Abbas's term end?

Posted by joshuasharf at 09:48 AM | Comments (0) | TrackBack

Disaster Relief

In view of Powerline's extensive quote from Diplomad,

In Jakarta, aside from flags at half-staff, we have seen no signs of mourning for the victims: while employees and dependents of the American embassy spent their holiday loading trucks and putting together medicine kits, the city's inhabitants went ahead with New Year's parties; nightclubs and shopping centers are full; and regular television programming continues. At least 120,000 of their fellow countrymen are dead, and Indonesians hardly talk about it, much less engage in massive charitable efforts. The exceptionally wealthy businessmen of the capital -- and the country boasts several billionaires -- haven't made large donations to the cause of Sumatran relief; a few scattered NGOs have done a bit, but there are no well-organized drives to raise funds and supplies.

I point out this description of domestic disaster relief in its infancy, from the 1906 San Francisco Earthquake, especially the following:

Supplies and donations (both military and civil) began coming to San Francisco from all over the country, even arriving before the fires ended. Train boxcars filled with donations carried signs such as "For the California Sufferers, From Denver, Colorado, More to Follow." The Southern Pacific Railroad reported 1,800 carloads of relief supplies that came into the city in a single month.

At first, I figured the curious absence of numbers and activity from the Indonesian and Sri Lankan governments was an illusion, that of course those numbers were just rolled into the economic damage headings that we see, that they must be working feverishly on behalf of themselves. Alternately, maybe it was the response of a people who wanted to respond, but just didn't have the structure to do so. Now, I'm not sure what to make of it.

Posted by joshuasharf at 06:46 AM | Comments (0) | TrackBack

January 10, 2005

The Great One Pouts

Although not necessarily without cause.

Hugh Hewitt is upset. He's upset that the general blogospheric reaction to the Memogate report is positive. He's upset because Thornburgh got as far as showing a possible connection between CBS and the Kerry campaign, and a possible connection between CBS and the Democratic Party, and then stopped at the gates. The analogy he draws is to Ben Bradlee urging on his boys to break down the White House gates.

Now, some would note a certain irony in Hugh's asking the blogosphere to behave as the WaPo did in the defining events of the MSM as we know it. I think it's actually pretty apt. Watergate was a problem, and the public did have a right to know whether the President was subverting the political process. Just as now, the public has a right to know whether one of the major networks, the Tiffany Network, the Pajama Network, was acting to subvert the political process.

That Hugh sees this is a net plus rather than a risk is a result of his faith in the blogosphere as the distributed, collective wisdom of the people, rather than wisdom concentrated and dispensed by the elites. It's a sound, although not infallible instinct. Still, the odds of finding yourself being rolled through the streets in tumbrils are slightly lessened if you don't act like Louis XVI in the first place.

So why is the blogosphere acting like satisfied dolphins rather than energized sharks? One reason is that this election was both nasty enough and decisive enough to return politics to normal, and nobody want to refight it. Secondly, Kerry lost.

The former is a red herring. Nobody is asking anyone to refight the election. The latter is also a red herring. Kerry lost, but the detritus of his campaign, and that of the DNC, is all around us, and some of it could end up at the helm of the Democratic Party. It'd be helpful to know what sort of people they are.

Still, in the couple of cases so far of campaign or government collusion with media old or new, it's the media that gets hung out to dry. Jon Lauck and Armstrong Williams are derided, not the John Thune or the Ed. Dept. lackey who let the contract.

So the real target can only be CBS. But heads did roll. Also there's a sense that the points have been either proven or conceded, and that CBS News is already a synonym for Mickey Mouse, with apologies to ABC.

So let's follow Hugh's comparison to the Reformation. The Church's initial reaction to the debate was to flail, excommunicate people, and basically try to exercise power that it no longer had. They had been talking to each other too long even to realize that anyone else existed. Eventually, the cardinals did absorb the lessons, root out the worst of the corruption, and learn to confine itself to spiritual matters, rather than artistic, monetary, and carnal ones.

In the long run, networks that are dysfunctional and irrelevant become confirmed in their irresponsibility. Perhaps the only way that CBS will ever accept the truth about itself, and serve as an example to the others, is if it's forced to look at the portrait in its attic long and hard, warts and all. Otherwise, it's only going to get worse.

Posted by joshuasharf at 09:40 PM | Comments (0) | TrackBack

Tracking Them Down in Their Lair

Thanks to the good offices of Michele Austin and Joe Stengel, Clay and I were able to be Flies on Da Vall of the Republican legislative retreat. It was a real pleasure getting to meet the members, and there seemed to be real interest in both blogging, and how we bloggers could be of use to the party.

We missed the morning session, and discretion obviously mandates that most of what was said remain private.

The estimable Dick Wadhams, fresh from South Dakota and the Toppling of the Daschle, gave his take. Blogs played a large role in that campaign, and one of the questioners specifically asked about them, and mentioned one blog booster in particular.

After lunch, Rep. Bob Beauprez spoke, and I get the feeling that if the party is smart enough to follow his advice, things may turn out all right in '06, after all. He mentioned a couple of topics where the party probably has an advantage over the Democrats, and as they come up during the legislative session, we'll be sharing some of his choicer quotes.

All in all, I don't think the party has any illusions about the task in front of it. Soon we'll find out if it's up to the task.

Posted by joshuasharf at 02:00 PM | Comments (1) | TrackBack

President Abbas

With the election of Mahmoud Abbas, the first task really needs to be to get his house in order. The chances of his actually doing this are slight, though, if Palestinian spokesmen are to be believed.

One appeared on FoxNews yesterday, and while I don't have the transcript yet, he used every opportunity to continue the tactic of blaming Israel. When asked what Abbas's first job was to be, he replied, "to engage Israel to remove the occupation." Everything remains Israel's fault, and therefore Israel's responsibility.

Old hard to break, even if you're trying. Just remember, the important test for a democracy isn't the last election, it's the next one.

Posted by joshuasharf at 08:43 AM | Comments (4) | TrackBack

Business Blogs IV

Hard on the heels of that Fortune article and Hugh's book (what? Hugh has a book out? I hadn't heard), is a conference on businesses and blogging. Among those Who Should Attend: PR agency execs, employee communications managers, marketing managers, and crisis communications managers.

The sponsorship tells you a lot about where this is heading. Not only are blog-technologists like Six Apart (of Moveable Type fame) and PR firms like PR Newswire there, but also companies that are promising to put their ears out on the blogostreet and find out what people are saying about your company.

The topics of conversation are pretty much what any business cares about: image, product placement, and the techniques and mechanics of blogging. Honestly, this has the feel of a Web technology conference around 1996 or so. Mature enough to be interesting, new enough to be exciting.

A follow-on conference is planned for France later this year. Europe so far has been very far behind the blogocurve, but I wonder if business, being more tightly controlled, may also be seen as a safer topic of conversation than the Zionist Entity.

Posted by joshuasharf at 06:16 AM | Comments (0) | TrackBack

Carnival of the Capitalists

Blogging from around the world of business, investing, and economics.

Posted by joshuasharf at 05:14 AM | Comments (1) | TrackBack

January 09, 2005

Where In the World Is Blog?

Too late for the contest. 20 Years too late.

Posted by joshuasharf at 04:56 PM | Comments (0) | TrackBack

Muslim Charities and the Tsunami

Muslims in Colorado are apparently using some discretion in deciding where to direct their Tsunami relief money. Although it's not clear that it's always for the right reasons.

No doubt most of this is for the right motivations,

Chaudhry, of the Colorado Springs mosque, heard about Islamic Relief on CNN. The mosque checked to make sure the group wasn't on a government website listing charities with suspected terrorism links.

This is the new reality of safeguarding one of Islam's most sacred traditions, Chaudhry said.

"That's what we should do," he said. "We don't want to support the wrong organization. For most people who give money, it's a religious obligation. That money should really go to poor people, not support any political agenda."

I was also glad to see the charities gaining credibility by intergrating themselves into rigorous accounting and transparency regimes:

Some Muslim charities, meantime, are redoubling their transparency efforts. One is the organization the Colorado Springs mosque singled out: Islamic Relief USA, part of an international Muslim charitable network undertaking a $10 million tsunami fundraising effort.

The agency conducted a self- audit after Sept. 11, posts its financial records on the Web and advertises its four-star ranking from Charity Navigator, a group that ranks charities' efficiency, said Arif Shaikh, a spokesman for the Burbank, Calif.-based nonprofit.

At the same time, there was the requisite carping and whining about how the government is trying to make sure that those dollars don't just blow themselves up:

Helping the poor is central, it's mandatory, especially under the circumstances," said Liyakat Takim, a University of Denver religious studies professor who teaches about Islam. "On the other hand, Muslims have to be careful because they don't want to jeopardize their positions or get into trouble with Homeland Security. Muslims are far more careful as to where and who they give their funds to now."


Following Sept. 11, President Bush signed an executive order allowing the government to shut down and freeze assets of organizations linked to funding terrorism. As a result, four Islamic charities in the United States have been raided or shut down by the government, and millions of dollars have been frozen.

None of the raids has led to terrorism-related criminal convictions. One high-profile case will head to court this month when three members of the Texas-based Holy Land Foundation go on trial on charges of funneling cash to a relative who is a high-ranking official with the militant group Hamas.

While U.S. Muslim organizations have condemned using charitable donations to fund terrorism, some are concerned the government went too far to punish groups without a finding of wrongdoing. The independent 9/11 commission echoed those concerns in its report last year.

"At this point, the Muslim community in America has kind of thrown up its hands and said, 'We have no idea what the government is going to do next,"' said Ingrid Mattson, a professor of Islamic studies at Hartford Seminary. "There is a cynicism building that is rather unhealthy. But that's not stopping people from giving."

Naturally, it's a non-Muslim professor doing the complaining. In fact, the Holy Land Foundation has been under suspicion for almost a decade. My friend Yehudit Barsky, who has been following this stuff for many years, has a comprehensive discussion of Hamas, linking it to a number of US charities, using sources that date back to well before 9/11.

The problem here, as usual, isn't that the government has moved too quickly, but that it coddled a non-existent "peace process" by moving too slowly. In anything, four is not enough.

These kinds of complaints are aimed at "criminalizing" the war by reducing it to law enforcement standards. This might be useful is the government were to start thinking about these charities as RICO targets, but that's clearly not the aim of Ms. Mattson.

Posted by joshuasharf at 12:33 PM | Comments (0) | TrackBack

The AP and Religious Strife

The AP reports that:

Two hand grenades hurled in a clash between Christians and Hindus killed at least three people and wounded 37 in a part of eastern Sri Lanka where international aid workers are helping tsunami victims, police said.

No aid workers were injured or near the explosions, officials said. U.N. Secretary General Kofi Annan, in Sri Lanka to see tsunami damage, was in Colombo at the time of the blast.


He said Christians were angry that Hindus had demolished a church and may have carried out the attack in retaliation.

Clashes between Hindus and Christians are rare since both groups belong the Tamil minority and believe they are oppressed by the country's Buddhist Sinhalese majority.

Sri Lanka's east coast was ravaged by the Dec. 26 tsunami and more than 30,000 people have been killed nationwide with 800,000 displaced. International aid workers have been setting up camps and guarding against the spread of disease.

The Tamil Tiger rebels, who have been fighting for two decades for a Tamil homeland, have both Hindus and Christians among their ranks.

About 76 percent of Sri Lanka's 19 million people are Sinhalese while Tamils make up 18 percent.

First of all, the AP's concern for UN aid workers is touching. While I certainly don't want to see anyone killed, I have to wonder if, had UN workers been killed or injured, that august organization would have cut and run as quickly as they did in Iraq, or have whined about the US Navy not providing sufficient security.

But what really strikes me about this report is the difference between how the AP is reporting this religious violence, and how it reports Muslim-inspired violence. Contrary to popular opinion, there is such a thing as Hindu militancy. There's not much of it, and, to the best of my knowledge, there's no internal need within Hinduism to convert the world. So they make mischief by taking down churches and mosques on Hindu holy sites, and burning Valentine's Day cards. None of which, of course, justifies throwing grenades.

It appears from the report that the ongoing civil war, insurgency, whatever, is an ethnic conflict, rather than a religious one, since Hindus and Christians are fighting together. Also, Buddhists (at least in America) advertise their beliefs as compatible with other religions, so it's hard to believe they have a long history of oppressing them.

Also, look how little religious information is actually contained in the report. We know there are Muslims in Sri Lanka. After all, that was supposedly the reason that the government didn't want Jews Israelis there. But we're not told if they're Tamil or Sinhalese. The totals given add up to 94%. What are the other 6%?

According to the World Fact Book, 74% of the population is Sinhalese, 18% is Tamil, and 7% is "Moor," a term I thought went out with Shakespeare, but is singularly undescriptive here. Religiously, 70% is Buddhist, 15% Hindu, 8% Christian. Which means that at least 4% of the population is Sinhalese but not Buddhist, while at least 5% of the population is Hindu or Christian, but not Tamil. What are the sympathies of that roughly 4.5%? That would go a long way to characterizing the conflict.

So what we're left with is a report that focuses on an odd case of religious violence in an ethnic civil war, while at least partly casting that civil war as being religious. But when Aceh, and southern Thailand, and parts of Pakistan, and Nigeria, and Sudan, and Israel, and Saudi, and Iraq, and the Balkans, and schools in Russia, go up in flames, the cause is always ethnic.

Posted by joshuasharf at 11:34 AM | Comments (0) | TrackBack

January 08, 2005

Business Blogs III

Powerline mentioned this Fortune article, and now it's online.

Businesses are already catching on to this. As usual, the hardest part is resisting the impulse control. Which is why I think that in the end, the Blog will become an extension of the Street.

Posted by joshuasharf at 06:33 PM | Comments (1) | TrackBack

January 07, 2005

Pension Plans

Coyote Blog has some sound discussion on the transition between fixed benefit pension plans, and fixed contribution plans.

I think, however, that he's a little hard on the company in terms of their obligations to their workers. The unions, as he points out, were also perfectly aware of what the books were saying, and yet continued to insist on defined benefit plans. This sort of "generosity" is exactly the thing that helped sink Bethlehem Steel, giving them less and less room to maneuever even as their equipment aged and their market share shrank.

While he also overstates the risk from inflation in a properly managed plan, the cost of insuring against inflation would have been greater deductions from the cash flow. Using bond immunization, it's possible to manage a large plan in such a way that it's virtually free from risk due to interest rate changes. Barring the body-snatching of Alan Greenspan by Arthur Burns, inflation without higher interest rates is almost unthinkable. Such a mechanism would have required greater cash outlays, but it also would have sent out warning signals much earlier.

Posted by joshuasharf at 04:52 PM | Comments (0) | TrackBack

Minor League Expansion?

It looks as though an independent baseball league may want to expand to Aurora, and then add another team in the area, very broadly defined as stretching from Pueblo to Cheyenne, and from Limon to Golden.

After I graduated and came back to DC, I started going to the minor league games on occasion. There were three, possibly four minor league teams nearby, one more if you count Richmond, and one more than that if you count Baltimore-under-Angelos.

Personally, I'm a bit of a purist, in that I like baseball-as-competition rather than baseball-as-entertainment. The honesty of competition is better in independent league ball than in the structure minor leagues, or could be. Managers are paid to win, rather than develop talent that can be snatched away. It makes it more rewarding to follow a team over a season.

Posted by joshuasharf at 08:05 AM | Comments (0) | TrackBack

Business Blogging II

Hmm. Bob Lutz, who is GM's VP for product development, and Chairman for North America, has started a blog. As Rob May points out, posting can be a lot of work, but by begging for feedback at the beginning, Lutz is making it clear he hopes to read as much as he writes.

I follow cars as a consumer, and on the highway, not as a passion or as an analyst. But when Lutz says that Saturn's brand has been associated with quality rather than a look or design, that sounds about right to me.

Posted by joshuasharf at 07:46 AM | Comments (0) | TrackBack

The AP Keeps At It

BokerTov, Boulder is pointing out both bad spelling and bad history over at the AP.

The 700,000 number comes from including grandchildren, probably great-grandchildren now, of refugees from the 1948 war. The Arab countries have refused to integrate these poor souls into their countries, preferring to use them as a club to bash Israel. And of course, the UN famously refused to let Israel build permanent, decent housing in West Bank "camps" back in the 70s, fearing that it would legitimize Israel.

According to that logic, Israel herself is home to about 4,000,000 refugees from post-WWII Europe, and America home to almost 300,000,000 refugees from various world conflicts and oppressive regimes over the centuries.

Posted by joshuasharf at 07:20 AM | Comments (0) | TrackBack

January 06, 2005

Index Funds and Volatility

Is all this investing in index funds bad for the market? To restate it, at what point does all this investing in index funds become bad for the market?

Index fund investing is based on the idea that since it's incredibly hard to beat the market, it's a better use of your time not to try. Market returns average 8% a year after inflation, which is pretty good, and good enough for most people.

That it's incredibly hard to beat the market is based on two piece of theory. One is the Efficient Market Theory, that information is so quickly absorbed into a stock's price that you can't get ahead of it. The other is the Capital Asset Pricing Model, which argues that there's exactly one mix of assets that optimizes return for a given amount of risk. Put these two together, and you decide very quickly that you should just find that optimum portfolio and let your money sit there, rebalancing every once in a while to account for some companies doing better than others.

Of course, nobody really believes these things.

At least securities analysts and portfolio managers don't, which is why they do what they do for a living. But for most people, told that they can eliminate risk over the long term and make great returns, without having to wire money to Nigeria, will try to do just that.

Over history, most investing has been done on a security-by-security basis, building portfolios that satisfy certain criteria, but nonetheless are composed on individually-evaluated stocks. Index funds are just a way of capturing market efficiency without having to do all the work.

So here are the problems: First, excessive investing in index funds will increase market volatility. Therefore, second, it will decrease market efficiency in allocating capital. Third, it can become an excuse for analysts and investors to become lazy.

It will increase market volatility by reducing the ability of the market to act as a balanced portfolio. Instead of moving independently of each other (in terms of investing, not in terms of economic factors), index issues will be traded in tandem. Instead of balancing out each other's volatilities, index issues will instead tend to reinforce those movements.

To the second point, this means that good companies will be rewarded less than they would have been, and poorly-managed companies will be punished less. If you're trading AT&T and IBM together, simply because they're part of an index, you're not taking into account anything specific about AT&T's and IBM's management or prospects. Instead, you're treating them as a single security, even though they are completely difference entities.

The last point. In theory, the market is only efficient because people seek out information and try to apply it to stocks. That's the only way information makes it into the market. Index trading takes advantage of that efficiency without contributing to it.

This model certainly does have some assumptions built into it. For instance, we have no idea at all if or when these effects would start to make themselves felt. People are ingenious, and would find ways other ways to invest that took advantage of whatever inefficiencies were introduced. We don't even know if index trading even is introducing increased volatility. I hope to use my last term at DU for an independent study on the matter.

But the logic itself looks pretty good, and it does have one whopping implication for public policy. If and when we do allow private Social Security accounts, we should be very, very careful about what restrictions we place on peoples' investment choices. A massive infusion of cash, in a way that increases market volatility, would only make those who don't trust people not to lose their money into self-fulfilling prophets.

Posted by joshuasharf at 07:22 PM | Comments (0) | TrackBack

New Colorado Political Blog

Hat tip to Walter in Denver for this one. A new, seemingly well-informed left-leaning Colorado political blog is up. He seems to be paying attention, which is at least half the battle. Whoever he is.

He lists himself as three very early Colorado governors, referring, perhaps, to this rather bizarre incident just under 100 years ago:

In 1904, [McDonald] was nominated as Lieutenant Governor and was elected to that position by a decisive majority. Alva Adams won as governor and took office in January, 1905.

When the legislature met a few days later, Adams' election was contested by James H. Peabody, the Republican candidate. For weeks, legislators at the capitol and citizens of the state seethed as the battle over the governorship continued. Finally, Peabody was seated on condition that he would immediately resign to be succeeded by Jesse F. McDonald. Colorado thus had three governors in a twenty four hour period on March 16, 1905!

And on the Internet, nobody knows you're a dog wearing pajamas.

Right now, he's handicapping the governor's race.

I do have a couple of bones to pick, though. I think he's overestimating Hickenlooper, and underestimating Coffman. The last two governors have both been treasurer first. And while the Mayor of Denver vitually controls the budget process beginning to end, the governor has to work more through persuasion and public opinion. For instance, while the legislature pretty much owns the budget process, the City Council has to take nine separate votes to change a line item in the mayor's budget.

Posted by joshuasharf at 01:45 PM | Comments (1) | TrackBack

Israel and the Tsunami

It appears that the Catholic World News, along with the Vatican Observer, is now claiming that its report of the Vatican paper's report of the Vatican criticizing Israel for stinginess was based on a mistranslation. I suppose in the interests of getting along, we need to politely accept both the explanation and the implied apology.

But the correction, slipped in without comment, hardly begins to match the damage caused by the initial comments. The incorrect first report will be repeated as truth throughout the Arab world (and eventually Europe) as truth for years to come. It plays into historical stereotypes about Jews, at a time when pretty much any slander of Israel is willingly accepted by most of the world. It came just as Jan Egeland was criticizing America for not giving more generously to UN bureaucrats. And by using the passive, "a mistranslation was responsible," the CWN and the Vatican both get to avoid actual blame.

Maybe they could make some token donations through Magen David Adom. The American Red Magen David of Israel is collecting necessities and money, as well. Tactfully, the only press releases posted on their site that mention Sri Lanka talk about the aid that was sent and accepted.

The PDF on the main MDA site also makes mention of the generosity of Israeli Arabs, and of the Israeli Arab business community. The ironies abound. An Israeli organization, banned from joining the ICRC out of pure anti-semitism, provides the conduit for what is probably the most generous per-capita Arab and Muslim donation to other Muslims. Only in America.

For their part, the Sri Lankans are claiming that the whole thing was a misunderstanding, anyway. Given that Sri Lanka is mostly Hindu, not Muslim, that's a believable claim. The notion that cravenness, rather than mere hatred, was responsible for the rejection probably added to the confusion and anger to the initial mininformation.

Sri Lanka and Israel have “close diplomatic relations,” according to a statement by the Sri Lanka Embassy in Washington. The Sri Lanka Embassy in Tel Aviv has been functioning since October 2000; Israel’s embassy in New Delhi, India, is also accredited to Sri Lanka.

Subasinghe noted that representatives of his country and Israel attended a ceremony at a synagogue in Washington Saturday night as a “display of solidarity between the two embassies in light of the misinformation that was spread.”

There was evidently another prayer service Sunday morning, organized by one of Washington's Orthodox synagogues.

On a personal, the spirit of competitive giving is all well and good, but should be done with a certain attitude of humility. It's important that we don't allow the victims to become the Flavor of the Month.

Posted by joshuasharf at 09:34 AM | Comments (0) | TrackBack

January 05, 2005

Differences Between Business and Business School

  • In business school, the professor spend the first 5-10 minutes of class writing stuff up on the whiteboard, instead of distributing it in electronic format.
  • In business school, you send someone an email, explaining your absence, and asking for a schedule, and get back a response ignoring your question and telling you how important it is for you to show up.
  • In business school, operations management gets done on a whiteboard rather than the overhead projectors just champing at the bit to display spreadsheets.

    There are more. The administration here is the most businesslike, flexible, accomodating, and professional that I've ever encountered. Just because these guys are professors of business doesn't mean they act like businessmen.

    Posted by joshuasharf at 05:42 PM | Comments (0) | TrackBack
  • Progress on Colleges?

    According to the Denver Post, 25 of Colorado's colleges and universities have agreed to limit tuition increases to that necessary to cover "mandatory costs," to include things like salaries, insurance, and energy bills. (I've got a call in to the Colorado Commission on Higher Education to see what else falls under this category.)

    Apparently, by doing this, they qualify for an exemption from TABOR, which considers tuition to be a tax. They'll need to justify higher tuition charges by linking them to specific projects or expenditures.

    I've been whining for a long time that higher education doesn't get more support, in part, because it considers itself entitled. This may be a step in the right direction.

    On the other hand, I'm nor sure what actually falls into the "mandatory" category, and therefore, what it might be possible to hide in there. Any bets on how long it'll be before we hear of our first higher education accounting scandals?

    Posted by joshuasharf at 02:28 PM | Comments (0) | TrackBack

    Maryland does Health Insurance "Reform"

    For a while now, Maryland's Republican governor has been fighting with the overwhelmingly Democratic state legislature over a number of issues - taxes, budgets, regulation, and now heath insurance. Gov. Ehrlich has kept up these positions even as the local press, from Baltimore and Washington, assail him for having the temerity to actually behave as though he were - gasp! - a Republican.

    Taking a look at the health insurance bill the Democrats have produced should make Marylanders happy they didn't put a Kennedy in Annapolis. Now, the doctors and the hospitals, figuring that they won't get anything better, and that they know which way the wind is blowing, have decided to give in and go along with the bill, no doubt hoping to avoid political wrath when the time comes to look at them.

    But they said the legislation includes many welcome provisions, including establishment of a state fund that would hold doctors' insurance increases to 5 percent this year. Without state intervention, doctors insured by the state's largest carrier face an average 33 percent increase.


    The two groups took no position on Democrats' plan to pay for the doctors' relief fund with a tax on HMO premiums, a provision that is central to Ehrlich's opposition.

    Read that again. The legislature is going to subsidize malpractice attorneys by taxing health insurance. Talk about cutting out the middle-man!

    We all know that this was how the market, such as it is, was working anyway. Doctors got sued, their premiums got raised. They passed those costs on to their customers, the insurance companies. (What, you though you were their customer? Ha! Who actually pays those bills? Anthem, that's who. And you wonder why they set rules on treatment?) The insurance companies, most of whose premiums come from employers, not individuals, turn around and pass on those costs. It's one set of deep pockets turning around to the next set until they get to you.

    The legislature is just adding another set of deep pockets to go after - the government's, i.e., all of yours. It's a classic case of socializing the risk while privatizing the benefit.

    In the process, they're asking for a cut for one of their prized constituencies - professional bureaucrats. Highly unionized. Give lots to campaigns. I suppose I could be really cynical and suggest that another Democratic legislature is taxing you to pay for their political campaigns, but I'm sure they'd object to putting it in those terms. After all, any of those union members who really want to could spend half of the rest of their lives in front of union grievance board and government oversight committees forcing the union to stop withholding the "political" portion of their dues. That is, if the union leadership hasn't already gone to NEA school to figure out how to claim with a straight face that they have no political expenditures.

    Yes, the bill also halves the "pain and suffering" cap from $1.6 million to just over $800K. That's a diversion. We all know that the main cost of litigation is from class action suits which the bill doesn't address, and the fear of lawsuits, which it barely addresses.

    No wonder the doctors and the hospitals are happy to have it. And no wonder they "don't take a position" on how it's funded.

    I can think of about 400 simple objections to this piece of "reform." Why 5% and not 10%? What happens next year? Why not start creeping the rate downward, so that eventually all of the doctors' malpractice costs are covered? And if that's such a good idea for malpractice insurance, why not for health insurance? If malpractice insurance is so profitable, why not find a way to encourage competition? If health insurance is so profitable that there's room for a tax, why not find a way to encourage competition?

    Here's one nobody wants to ask: what about making people, rather than a succession of institutions, responsible for their own health care costs?

    Posted by joshuasharf at 12:06 PM | Comments (0) | TrackBack

    January 04, 2005


    If sausage-making really were like this, we'd all starve. Fact is, there were some clarifications proposed, but nothing earth-shaking. All of three people showed up. The real action is going to be Friday, when the BRP, the Blue Ribbon Panel, gets together.

    I do want to thank Common Cause, though, for bringing to public attention one nightmare of a proposition. The SoS wants to amend rule 14.7.7 to make sure that, during hand recounts, that slippery demon "voter intent" is divined. I have visions of elections officials, placing the ballot, Karnak-like to their foreheads.

    "Voter intent" is relatively meaningless outside of obvious efforts to fill in circles or boxes. Voters are notorious for doing all sorts of things to their ballots, none of which registers intent. It's that trojan horse of a rule which brought us Florida 2000, Washington 2004, and Who's Next? 2006.

    Posted by joshuasharf at 04:01 PM | Comments (1) | TrackBack

    Cost of Malpractice Suits

    During the Colorado Senate race, Ken Salazar was fond of claiming that the cost of medical malpractice suits was only 0.1% of all medical costs. Sadly, Pete Coors never really articulated an effective response to him. In today's Wall Street Journal, solo practitioner Benjamin Brewer summarizes nicely the actual costs of out-of-control tort lawyers.

    Here's the map:

    And here are the numbers:

    At this point, I am the only doctor in a county of 14,000 people and 486 square miles who regularly performs Cesarean sections -- a delivery method any mother must be prepared for even if it's not what's planned. (One of my hospital's two general surgeons will do a C-section in an emergency if I'm out of town.)


    While base rates can be around $150,000, some rates reached as high as $230,000 in the Chicago area in 2004, according to a report cited in a publication of the American Medical Association. (Rates vary based on the number of surgeries performed and babies delivered, as well as doctors' claims experience.)

    ISMIE, a mutual medical malpractice insurer in Illinois, raised rates 35% in 2003 because of an increase in the size of payouts and number of lawsuits, according to its annual report. (Only three percent of ISMIE's invested assets are in common stocks, the report says.)


    At Gibson Area Hospital, where I deliver, we had five family doctors doing OB care five years ago. At the end of 2004, we had just two. Of those two, only I do C-sections.

    At least our hospital delivers babies. Of the 102 counties in Illinois, 26 have no hospital obstetric services. An additional 23 counties have no hospitals at all. In many of these areas, women travel far within our state or travel to bordering states to deliver their babies.


    Some hospitals with critical needs have subsidized some of the increases in insurance costs for delivering doctors. For hospitals in rural areas, this strategy only goes so far. Red Bud Regional Hospital in southern Illinois closed its OB department in November when the insurance costs for their two delivering doctors reportedly hit $250,000 per year -- or $2083 per baby.

    My hospital is helping me continue to practice. It paid most of the $31,000 increase in my insurance costs for 2004. (I pay taxes on the money they paid on my behalf, which cuts down on the benefit a bit.) I paid the remainder of the $49,500 bill for professional liability insurance. I deliver about 60 babies a year. I haven't been sued.

    Ironic that the same people who romanticize the little guy, the solo practitioner, the small businessman, when it comes to HMOs and WalMart, are so eager to back a system dedicated to their destruction.

    Certainly the left's first response will be to subsidize the service, which really means subsidizing the tort lawyers. Their second response will be to require hospitals and doctors to provide an increasing number of services at below-market prices, and thus, substandard quality.

    As you see, it isn't merely the dollar amount of the damage awards that matters. It's the cost of the litigation. It's the cost of keeping attorneys on staff, or on retainer to deal with these. It's the cost of insurance, which companies need to have money on hand in case Typhoon Edwards strikes. It's the rising risk-aversion that pervades every aspect of our medical care and, increasingly, the rest of our society as well.

    All isn't lost. Dr. Brewer notes that Texas and Mississippi have both restored some sanity to their systems, and even California has made some progress. But until we start adding in other costs, citizens of states like Illinois will continue to drive for hours to deliver their babies.

    Posted by joshuasharf at 11:22 AM | Comments (0) | TrackBack

    Many Ways to Give

    It says something good, I think, that a country that has so often been criticized for competitive consumption now seems seized by a fever of competitive giving. There are many fine organizations funnelling money into tsunami relief. Here are several.

    IsraAid, and the Jewish Federation of Colorado both have links. According to the Jerusalem Post description, IsraAid is "a coordinating body of Jewish organizations worldwide and non-governmental organizations (NGOs) based in Israel, which are active in humanitarian relief work and concerned about global issues." And the Orthodox Union is accepting checks, as well.

    Given that the Vatican still hasn't made amends for accusing Israel of stiffing Sri Lanka, and the Sri Lankan government isn't likely to be held accountable for letting its people die rather than take an Israeli field hospital, these are both good ways to make sure Jews get appropriate credit for valuing human life.

    The American Red Cross is getting money from Amazon. (These are the good guys, not the ICRC, which for some reason considers the national emblem of Israel to be religious, and the cross and the crescent to be, um, national?)

    And Jim, over at ThinkingRight, has a link to give through World Vision.

    Posted by joshuasharf at 10:21 AM | Comments (0) | TrackBack

    January 03, 2005

    Business Blogging

    The last sections of Hugh's book talks about the benefits of blogging as opening up new two-way communication channels. There's a lot of truth to that, although the way blogs will be used will probably look a lot different from what Hugh suggests.

    There are, I think, a couple of fundamental roadblocks to blogs being used the way he envisions, and they don't just come from the attorneys. (Although, I've no doubt that the reason lawsuits from blogs haven't happened is that most bloggers don't have deep pockets.) But that doesn't mean that good, creative businesses won't use them, just the same.

    While narrowminded legal objections are one source of roadblocks, there's also a question of content. Good blogs can range over an entire range of issues and questions, economic, technical, ethical, public policy. Most CEOs spend some time dealing with these things, but usually in the context of corporate strategy that they may or may not want to advertise to their competition.

    There also just usually isn't enough internal news to justify daily postings. Perhaps senior management as a whole could generate enough postings to be interesting. But then, there's the danger of wrongheaded tea-leaf reading, either by employees or by the market.

    That said, many of the best CEOs like to write think-pieces for the Wall Street Journal or other business periodicals. A personal blog, intended not for internal company communication but as a sounding board to the world at large would probably attract a lot of interest and feedback.

    This doesn't have to happen at the senior management level to be interesting. This Wired article suggests two uses. Steve Rubel is only a VP at CooperKatz, but runs MicroPersuason. It's a place to air out ideas without affecting the company so directly.

    Secondly, company or product fan-clubs have been around for a long time. Hugh suggests hiring the best writers outright. I think that compromises their integrity and their "earned" eyeballs. A better idea would be to troll blogs for news and buzz about their company and its products. Companies are already reselling this service.

    If any of the blogs feature good, insightful writing, the company could establish informal relationships with those writers, treating them as reporters, inviting them to company events and using them to float trial balloons. Obviously there's risk here, too. A blogger who becomes to closely identified with the company can lose his credibility, while a company who manipulates a blogger or uses him for disinformation runs the risk of losing its source. These, however, are problems attendant not to blogs, but to media as a whole. "There is nothing new under the sun."

    Hugh quotes from Ecclesiastes (Kohelet, to those of us who know Hebrew): "Vanity, vanity, all is vanity," in order to break it to the bloggers that their dreams of longstanding influence are so much vapor. He might well have quoted another verse: "There is nothing new under the sun." Business is both more innovative and more conservative than we think. For a while, blogs will be an extension of current practice. Eventually, they'll be used in ways we can't imagine now, but it'll take a lot of trial and error to get there.

    Posted by joshuasharf at 11:11 AM | Comments (0) | TrackBack

    January 02, 2005

    Denver Photoblog

    Nice winter day today, good day for a morning walk with the dog down to Cherry Creek North and a cup of coffee. This is within the Denver city limits.

    Click to Enlarge

    Posted by joshuasharf at 07:27 PM | Comments (0) | TrackBack

    January 01, 2005

    New Houses

    A couple of new houses up over on the Main Site.

    Happy New Year!

    Posted by joshuasharf at 08:41 PM | Comments (0) | TrackBack