Posts Tagged ‘stupidity’

Yesterday, the Massachusetts Senate approved an act that takes away the MA citizens’ right to select our nation’s president.  I find that very troubling.  From my understanding, our nation was set up as a republic that gave more power to the states versus the federal government.  The reason for this was to ensure as much individual freedom as possible by making government as large as desired locally, and the smallest to still be functional, nationally.

That is changing now.  And not for the better, in my opinion.  Massachusetts will become the sixth (as stated in the article below) state to give up the right for their citizens to vote for president.  They have decided that no matter how your state votes, they will vote for the presidential candidate that the nation chooses.  That’s called diluting one’s vote.  It’s also called populism.

If the desire, as stated by those that vote for this type of legislation, is that it will be more fair and get people to think their vote matters more.  They are wrong and illogical.  Though the intent is nice, the path leads in the opposite direction.  I, for one, will feel disenfranchised by this.  I live in a state where the vast majority voted for Kerry in 2004, yet it’s electoral votes would have been given to George Bush.  How is that empowering for the voters of this state?  (Clue:  It’s not).

If the intent was to ensure more weight for the individual, why not allow proportional voting where the states electoral votes mimic the outcome fo the state’s popular vote rather than the all-or-nothing method currently employed by the majority of states?  In that way, you leverage your local community rather than being diluted by those in distant parts of the nation.

To win future elections, candidates will spend all the time in the most densely populated areas as that will be where the return on investment will be greatest.  Is that fair?  Our candidates platform will be  built on the needs/desires of a select few that reside within the major cities, never finding it valuable to go to Iowa, Indiana, Louisiana,  the Dakotas, Montana, or Colorado.  They, as recognized states within this republic, will go unheard.

I just don’t understand this need to prop up the media organizations with federal assistance.  Some fear that we will see the industry drop in numbers and that this will, in some way, limit our freedom of speech.  So, their answer?  Let’s get the government involved!  Yup, that will cure our ills and make speech even more free and opinions much more diverse.

The WSJ has an opinion piece on why we should protect these large dinosaurs.  I have some questions.  First,  aren’t we there already? AP, NewsCorp, ABC, …  Last time I checked, most news articles that are in print or on air are produced by a select few global news organizations.  So, any government involvement will not be to prevent the pool from getting smaller, it will be in protecting the small number we already have.  And, if you are going to be one of the select few chosen to survive with the assistance of federal monies, it is only logical that the federal government get to make up some of the rules on fairness and accuracy, no?  They want that in Healthcare, Auto Bailout, and in the Financial Reform Act, so why not here,also?  Oh, but the feds will need to lean on the expertise of the industry (those select few that have the ability to spend on lobbyists) to craft the new rules.  And the cycle goes until federal help turns into a federally-endorsed oligopoly on news outlets.  Step by step, inch by inch…

So, more questions;

From Wikipedia,

A single point of failure (SPOF) is a part of a system which, if it fails, will stop the entire system from working. They are undesirable in any system whose goal is high availability, be it a network, software application or other industrial system.

The assessment of a potentially single location of failure identifies the critical components of a complex system that would provoke a total systems failure in case of malfunction. Highly reliable systems may not rely on any such individual component.

Though CIRCLE’s main ‘beef’ with large, centralized governments is the high risk (and historical precedence) that they turn against individual freedom and towards tyranny, another issue high on our list is the very idea that the centralization of action produces the most efficient results.  It’s  illogical at its core, at least to us engineers.  That idea of centralization leads to a design flaw called a single point of failure.  As defined above, SPOF’s are bad for any high reliability system.  They are to be avoided at all costs.

To design a large system that is to 1) run under all conditions, 2) be stable no matter the input, and 3) react in deterministic ways, with a single point of failure is ludicrous.  Just think about this hypothetical,

Imagine if we had a communication company that built their business around one cable that went between New York and San Francisco.  Let’s say they expanded their presence up and down the coasts but had all calls routed from one coast to the other over that one cable.  Would that be smart?  What would happen if a ditch digger in the Midwest hit and cut it by accident?  It wouldn’t be good.  The company’s repair crews, of course, would be on the East and West Coast as that is where the customers are, but the cut in the line would be in a small town in Indiana, or a rural stretch of Route 66 in North Texas.  Days would be required to get there and then more time needed to repair it.  No communication between the left and right sides of the country until it got repaired.  The media outlets would scream about how the company was unprepared for such a catastrophic event.

The media would be right but for the wrong reason.  It wasn’t the response that was the issue, it was the design.  They set themselves up for a relatively minor accident (incorrect placement of hole) to result in a complete outage.  Poor design trumps the poor response.

Yet, that is the path our elected officials in the federal government, and many in society, continue to follow.  Every issue is met with the need to centralize the solution.  It’s why the downturn in house prices resulted in a global financial crisis (don’t believe me?  Read The Big Short, The Devil’s Casino, and On The Brink, then get back to me).  Our federal government endorsed 3 ratings agencies, implicitly guaranteed over 50% of mortgages, and instituted policies within the banking system that resulted in a system with a single point of failure.  Nationwide decline in real estate prices?  Kaboom!

It’s the desired route by many when it comes to healthcare.  Instead of reducing the barriers of entry, allowing more to offer healthcare services (state certificates of need for new hospitals and clinics, high compliance costs, etc), the proposed solution is a single payer system.  One group, making decisions on what is allowable, determining treatment prices, providing best practices.  How sturdy do you think that system would be?  Not very, if you ask me.

Reaction to the gulf oil spill?  One central command that approves all offers of international assistance and course of action.  Yet, he doesn’t have the ability to communicate with everyone.  He doesn’t own the resources needed to collect the oil.  But hasn’t he (Thad Allen) been anointed by our president as “in charge”?  SPOF.  We have 4 governors waiting for various federal government agencies to approve things.  We have companies around the world capable of helping but sitting on the sidelines until EPA, Coast Guard, White House officials give the a-okay to act.  This actually isn’t one SPOF, it’s many.  And they are all connected to one basic assumption that central planning and centralized action can solve complex problems. [Don't get me wrong, coordination is needed and useful but that is absent in this instance.  It's the difference between an orchestra conductor and a puppet master.  We need a conductor, we have a puppet master.]

Want another example?  How about the water main that ruptured in Boston a few months ago?  We wrote about it here.  In the infinite wisdom of someone that appears to have very little to spare, it was decided that one mother of a pipe should handle all the water for 2 million people north of Boston.  SPOF.

And just last night, NPR reported on the ongoing issues with school lunches in the Boston Public Schools.  They want one provider for all schools within the system.  They spent much time writing the request for proposal only to get one response.  The problem is so complex that only one company felt willing to take on the challenge.  SPOF.  [ To make this even more entertaining, it turns out that the biggest issue is with 60% of the schools and that a nice solution exists for that segment, but the COO of BPS wants only one provider for all the schools.]

Either by luck or skill, our founding fathers appeared to be quite smart design engineers.  Understanding the risks of single points of failure, they came up with a great idea that respected the complexity of life, handing the responsibility to act in the hands of the individual, leaving the federal government in charge of defending borders and individual freedom.

Today, the federal government finalized the finance reform bill.  From all that I have spoken to that have read through it, it does little to actually correct the isses we experienced over the past 10 years.  Hooray!  One more large monster federal bill that has little benefit but lots of impact.

Two quotes in the attached article unnerved me.  The first was from Mr.  Dodd (senator of CT) where he said;

“No one will know until this is actually in place how it works.”

And the other was from Mr. Frank (representative of MA) where he is quoted;

“We’ve put in the hands of the president a very powerful set of tools for him to reassert American leadership in the world”

Why would any sane person want these quotes attributable to themselves?  Let’s see, the first one says that we just made 2,000 pages of laws and have no clue what the impact will be for the one industry that touches every single citizen.  Or, the 2,000 pages of laws that we all just passed are so general and vague that one can assume that they will be deployed in ways that are completely arbitrary, ways that we can never fully grasp.

The second quote jives with it perfectly.  Mr. Frank essentially celebrates the fact that our representatives, those that we rely on to check and balance the president, have given enormous power to one person.  And to make it all the more exhilarating, a president that has no economic background and has demonstrated a complete lack of respect for free markets.  Oh joy!

And one more thing, please read towards the bottom where they mention that 18,000 auto dealers (actually, the number is closer to 16,000 after the government forced some to close down)(also, at least 20% of them are selling government made cars) are exempt from the consumer protection portion of the law.  Keep in mind, the second largest expense for most citizens is an automobile with the majority of them financed.

Corrupt and stupid make for a very bad combination.  Worse, when it’s mixed with power.

And we should expect something different?

This past weekend, Boston was hit by a tragic, dare I say, life changing event.  No, it wasn’t a SARS epidemic, or the eruption of a volcano, or even a train derailment.  2 million people had to boil water over the course of 3 days.   eeekk!

I would be surprised if you didn’t read about it since it was considered a national event.  On Saturday evening, a big pipe that supplied water to Boston and many surrounding towns burst at a seam. (News article).  Now, before you get weepy eyed over the agony faced by those that fought for bottled water or that needed to boil water for one minute to protect themselves from drinking lake water, understand that the pipe was fixed (within 2 days) and it turned out that the water from the lake tested fine.

However nightmarish this event was, rest assured that our government pounced on this like a kitten on a ball of yarn.  Governor Patrick surveyed the hole created by the broken pipe (is he an engineer?) with rolled-up sleeves.  And thankfully, it didn’t stop there, he was able to convince our president to declare a state of emergency, calling on the Department of Homeland Security and FEMA to aid in the rescue efforts (from what is still unclear to me).  And not to be out done, the state senate will hold hearings to “get to the bottom of this” and determine why a 7 year old 10 foot in diameter pipe that carried tens of millions of gallons of water daily could possibly fail.  They want to make sure they find those at fault and get their pound of flesh.

A number of questions have popped up in my mind.

• Who thought it a great idea to have such concentration in our water supply?
• Are we past the point where mechanical things break just because?
• Is it really so costly and drastic of an event that required national assistance?
• Why did our president react faster to this than to the Gulf oil spill?
• Shouldn’t the state senate be asking why we are so dependent on one system rather than asking how to make that one system more sophisticated?
• Why were store shelves depleted of bottled water yet were stocked with milk and fruit juices which cost less (on average)?

I’m not a big fan of foul language in public but was jail time really necessary?  What was the judge protecting law abiding citizens from?  A shirt?

As of last night, it appears there is agreement on bailing out Greece.  Between Europe and IMF (which depends on the US for 25% of their funding), Greece will get about $150B worth of loans (paying a 5% interest rate)  in order for them to meet their current debt obligations (private investors demand an 8% interest rate given the risk) and internal needs.  In return for these loans, Greece has bitten the bullet and will dramatically cut salaries and pensions… temporarily.

I think it important to state a few facts about Greece.

• They rank second from the bottom on the Index of Economic Freedom (highly socialized economy).
• They import 3x more than they export (net users).
• Their government has overspent tax revenues by at least 15% each year for the past 5 years (spent more than produced).
• They have a debt level that is at least 125% of what they produce in a year in GDP .
• Public services account for 40% of their published GDP (so about half of their “GDP” is value productive).
• 42% of those between 55-64 are employed versus 52% in Europe and 62% in the US (few work).
• Tax rates on income are some of the highest in Europe (over 40%)
• Their fertility rate is below replacement rate (i.e. aging population that retires early).
• Their government spends over 12% of their GDP on pensions, double the US, second only to Italy at 15%.

So, with that little amount of information, what is the likelihood that Greece can pay off these loans?  Remember, in the agreement as formed last night, Greece only needs to get their spending down to 103% of their tax revenues by 2014.  In other words, they will still spend more than they make.

Now on to the dramatic cuts.  Riots were all the rage over the weekend as pensioners and union employees protested the expected cuts in entitlements and the anticipated rise in taxes.  The question that hit me was, who are they protesting against?  It’s a democracy from what I understand.  They are the ones benefiting from the large promises they made to themselves (early retirement, large pensions, free healthcare, etc) from which they are the sole providers of the funds for those promises.  Their government officials only act as the transfer agents; taking tax dollars from the few that work and place it into the hands of all in the form of entitlements.  Most likely, they are protesting that their guardians, their providers, are no longer able to borrow money to pay for promises that had no reasonable economic foundation supporting them.

I was struck by a quote in this article,

“These are the harshest, most unfair measures ever enacted. That is why our reaction will be decisive and dynamic. You can’t always make the workers pay for the results of failed policies,” Stathis Anestis, spokesman for Greece’s largest umbrella union, GSEE, told The Associated Press.

I find this to be very circular:  People are protesting because they cannot fund the promises they made to themselves.  (I just don’t see how this loan solves anything or how this ends well for anyone).

This is worth reading…

If you’re interested in knowing a little more about the Federal Reserve and the political mess that is about to happen with the Financial Reform Bill, I would suggest the post from John Mauldin.

With the passing of the healthcare reform mess, it’s now time for us to tackle the next big issue: jobs.  I don’t think I need to tell any of you that jobs are what make the world go around.  It’s how people pay for shelter, food, and transportation.  So, to solve it, we need to understand the root problem, don’t you agree?  I think most of you would be alarmed with the fact that the cities with the largest unemployment also have the lowest percentage of households that own…  cars.  I know, it surprised me too.  But in hindsight, it makes sense.  How can one expect to get and hold a job if they don’t have adequate transportation.

As I investigated more, shock and horror saturated my being when I found out the following:

1. Though there are over 240 million autos in the US, less than 2/3rds of the population owns one.
2. The average price of a new automobile in the US grew 30% faster than inflation since the late 1970′s.
3. Americans spend 20% of their income on transportation, more than every other expense category outside of shelter.
4. Gas prices, a key cost to transportation, have had a 10% per year inflation rate since 1999.
5. Cleveland, with an unemployment rate worse that the US average, has major parts of their city with only 35% of the households owning a car.
6. There is a great inequality in automobile ownership with an estimated 15% of the population having more than three.

Before you go into the fetal position over these datapoints, please be comforted by the fact that it’s not too late for us to act.  We can recover and be a stronger nation when we reform the auto owning process and right the wrongs of society.

Now, some may disagree with my belief that car ownership is a huge problem that risks destroying our society, leaving us uncompetitive with other nations.  You may disagree with me but understand that you are a heartless person and blind to the needs of those that don’t have a car and find it difficult to get to work.  Your cavalier attitude towards those working families that continue to struggle to make ends meet so that they can maintain their auto sickens me.  You are a selfish bastard if you think we should just ignore the problem and have people walk the 10, 20, 30 miles to their jobs.  Just because you are lucky enough to afford a car doesn’t mean you should ignore the plight of others.  Etc.

Now, on to the solution…

The only reason for someone not to own a car is that they could not afford it.  Period.  The end.  Not up for discussion.  (Why would anyone not own a car if they could?  It’s absolutely ludicrous to even think that).  So, how do we make them, oops, I mean, how do we help them get a car?  For me, it comes down to cost.  Basic economics suggests that the price of a good drops with the amount of that good produced.   It’s called Economies of Scale and is the same idea that made WebVan so successful as they followed the thinking that profit would come from scale.  Duh!

So, to cut this short, the best way to lower the cost of a car so that all can have one is to make everyone own a car.  (Logic is fun).  That is why CIRCLE is proposing a new law, the Auto Buyers Betterment Act (aka ABBA).  Now, we wish all ABBA had to do was mandate car ownership but that would be silly and potentially harmful to the hard working middle class.  But we, the authors of ABBA, are on top of this.  We are going to have to help in other ways to lower the cost of the freedom we are advocating for (car ownership in case anyone forgot).  Through an exhaustive study (looking mostly at headlines and out of context data supplied by the Bureau of Labor Statistics and others), we feel we have a clear understanding of the value chain that is our auto industry.

First, ABBA will institute a new agency to review the specs of newly introduced cars to make sure that the evil, self-serving automakers don’t pull a fast one and try to cut costs by removing the brakes.  The agency will be called the Federal Auto Protection Agency (FAPA).  They will, in time, write regulations that specify the minimum standards of new cars.  This, of course, means that ABBA will provide them the authority to define the features (safety and otherwise) of all new cars sold.  Don’t worry, it will not pertain to those cars on the road… until 2018.

Second, ABBA will authorize funding for a new program of tax rebates and other credits to those below 3.5x the federal poverty level.  This will ramp immediately as we have the systems in place given the Cash for Clunkers program of 2009 (haven’t received your refund yet?  the check is in the mail).

Third, the proposed auto reform act will create a panel of industry and government employees to analyze proposed new innovations that will likely lead to better cost management within the industry.  Best practices will be shared and later mandated.  This panel, called the Center for Auto Advancement and Research Services (aka CAARS) will also have the authority to set prices of all features so that industry can earn (or not) an adequate (and just an adequate) return on their investment.

Fourth, in order to protect the distribution channel, the car dealerships, ABBA will institute a fixed sales commission for all new car purchases.  The current system appears to provide unequal outcomes as some are better negotiators than others and this “fix” will level the playing field.

Fifth, there are a lot more items within ABBA that will best be explained after it passes as the urgency required to help jobs is far too high to get bogged down in the remaining details.  (Did you forget that this whole thing was about jobs?)

Now, there is, without a doubt, a cost to implement and maintain ABBA.  We all have to take responsibility for this as we know that ABBA will be the right medicine for our jobless ills.  No matter how bitter.

First, we will be instituting a special tax on all auto part manufacturers.  Why?  Well, I understand it doesn’t make much sense but the congressmen from the states heavy in auto parts manufacturing really haven’t been supporters of this bill and the money has to come from someplace.

Second,  through our ownership of GM, we will be pushing for lower prices from our suppliers (on top of the taxes noted above).  But don’t worry about them, they will make it up through the added volume in car sales and the lower unemployment insurance they will need to pay since they will be hiring a lot more unionized labor due to the added work rules we are putting in place for worker safety, etc.

Third, we will be adding a special sales tax on new car sales that will be paid directly by the dealers and will not at all be passed onto the auto buyer.

Fourth, leaving the biggest source of funds for last, we will be implementing a special tax on all the management  within the auto industry.  This will take care of at least 75% of the cost of ABBA.  (To those affected, don’t worry, we have an amendment to the bill that will stop this from happening in the first 2 years and we have the votes to keep it from ever happening).

There you have it.  It’s amazing what a few very bright and ambitious people can do in a very short period of time.  We have presented a very simple, yet complex to implement, and completely arbitrary solution to the jobs problem.  Man, we feel like heroes.  You may find it hard to swallow now, but trust us, it will work out in the end.

P.S.  If we do not see the mandate of auto ownership lowering the cost of a new auto, we have a backup plan.  We will mandate a new car purchase every 3 years which will increase the volume enough to lower the costs.  With this being such a large expense, aren’t you happy that someone up high is worry about it?

This is above and beyond funny.  Rep. Waxman, a champion of all things good and absurd, finds the recent accounting actions by large companies, with regard to writing up the cost of providing healthcare to their pensioners, “a matter of concern.”  He actually calls the act of abiding by the law and current accounting practices “assertions.”  I really feel like this is a shark jumping point in time, at least I hope.

“Man has a single basic choice: to think or not, and that is the gauge of his virtue. Moral perfection is an unbreached rationality–not the degree of your intelligence, but the full and relentless use of your mind, not the extent of your knowledge, but the acceptance of reason as an absolute.” – Ayn Rand

We have an issue in this country.  We think the wrong people are stupid.  Sarah Palin may be the best current example.  Watching the interviews with Katie Couric would give many the impression of stupidity, less so if you read the uncut transcripts.  (Editors are magicians, aren’t they?)  However, stupidity is a descriptor relative to some absolute.  So, what is she stupid at?  Managing a complex and inherently unstable federal system that dominates over 25% of the US economy?  Maybe it’s her inexperience in negotiating with terrorists?  Or maybe its her desire to exert her right to have an opinion on the act of abortion without getting into the legality of it?  Why are those adequate measures of intelligence?

I don’t want this post to become a discussion on Mrs. Palin’s intelligence but I use it as an example of a problem I see when people disparage her.  I feel comfortable saying that I have listened to more of Sarah Palin’s speeches and interviews than the typical person.  Even with that, I do not have the confidence in saying anything about her mental abilities.  And if I can’t, I dare say most can’t.  Honestly, at least.

Why is it that no questions were directed at her philosophy of governing?  I think she has a leg up over many in the current federal government system because of her beliefs that less government influence in our personal lives will lead us to a stronger nation.

NOTE:  Right after hitting the publish button on this post, I went to the WSJ Opinion page and saw an opinion piece by Norman Podhoretz.  Chills up and down my spine…  For a much better discussion on this topic, I would refer you to the WSJ article.