30 September 2008

Change, Change, CLANG - Change for Fools

It seems like the key to managing large, complex systems is to make sure that no individual can change or impact them. This does, however, have its drawbacks.

It is important that complex systems not be overly fragile or subject to damage by the acts of one rogue or incompetent, So, they are typically made fairly robust against any disruption. This is a good thing. Or can be, if not for the fact that most any change initially shows up as disruptive.

For the same reason that these big corporations or financial systems or airplane designs or governments or computers are fairly secure against disruption, they are also hard to change. This would be significantly better news if the world did not change and they did not have to adapt and evolve.

Because it seems that for whatever goals a system has - it is only a matter of time before the goal to which all other goals is subordinated is the goal of self-preservation, or resisting change.

29 September 2008

Market Plunge & Baby Boomers Bust

"Do what you love," they said. "Find work that you enjoy."

Now, finally, they tell us that this is because we are going to work into our late 80s.

10 years ago, about 80% of retirement plans were pension plans. If you work for 30 years and you are 60 years old, you'll get, say, 90% of your salary until you die.

Today, about 80% of retirement plans are 401(k), or IRAs. If you save for 30 years and you are 60 years old, you could be rich or you could be a pauper - no one knows. And the money you've saved might be enough to finance your retirement and your children's retirement - or might scarcely be enough to finance your grocery store habit through the end of next month.

This market crash is coming at a terrible time for the baby boomers who have just begun turning 60. To have the market drop by 30 to 40% just years before you were going to retire is terrible. No one has talked about the fact that their retirements have just been delayed by years. By the time the dust settles on this year, they may be the group that pays the biggest personal price.

27 September 2008

Strategy or Tactic? The Difference Between Obama & McCain

From Friday night's debate:
OBAMA: But understand, that was a tactic designed to contain the damage of the previous four years of mismanagement of this war.

MCCAIN: I'm afraid Senator Obama doesn't understand the difference between a tactic and a strategy.

OBAMA: We had a legitimate difference, and I absolutely understand the difference between tactics and strategy. And the strategic question that the president has to ask is not whether or not we are employing a particular approach in the country once we have made the decision to be there. The question is, was this wise?

So the question is, do you want to elect a president who thinks that his strategy ought to begin with the question of how best to win a war or who thinks that his strategy ought to begin with the question of what – including war, investment in research into alternative energy, tax cuts, health care, etc. – is going to do the most to improve quality of life?

A president should not focus on the best strategy for educating the youth, extending longevity, enhancing the safety of pensions, or creating transportation solutions that minimize commuting time and carbon footprint. The president should focus on the best strategy – among these and various other options – for improving quality of life.

For Obama, the change in the approach to the Iraqi occupation is a tactic and the decision to make the world safer by invading Iraq is a strategy. For McCain, the decision to invade and occupy Iraq is a given and how best to do that is a strategy. McCain remains the good soldier. He is not, it would seem, running for president so much as Commander in Chief.

Paul Newman Dead

One day I'd flown into Provo, UT, and was eating lunch with a guy who told me this story about a woman who worked for him, someone we'll call Jennifer (because that was her name).

Jennifer took the day off from work to ski Sundance, Robert Redford's ski resort. She was alone and joined by a man on one ride up the lift. As she rode, she glanced back at the chair behind them and was startled to see Robert Redford.

One of the reasons that Redford enjoys that part of Utah is that the locals give him room and don't cluster around him requesting autographs, photographs or even phonographs.

"Oh," Jennifer said the man beside her. "Isn't that Robert Redford?"

The man beside her looked back and said, "Yes, I think it is."

"Oh, this is so exciting," Jennifer said. "I have never seen him before."

"Yes," the man said. "That is exciting."

"Do you think that I should wait for him at the top and say 'Hello?'" she asked.

"You could," said the man with a smile.

"I don't know," she said. And she fretted aloud for a time before deciding to just ski down rather than wait. "I don't even know what I would say," Jennifer confessed.

The man wished her a good day as she skied away and as she waved to him, she began to wonder where she had seen him before. He looked familiar but she couldn't quite place it.

About halfway down the hill, it hit her. She had just ridden the ski lift with Paul Newman, who waited at the top for his friend Bob. I can only imagine that Redford and Newman got a great laugh out of the fact that she recognized Redford from 50 feet away and yet did not recognize Newman, whose face was only inches from hers.

Paul Newman died today, at 83. He seemed like a class act, turning his fame into a wildly successful non-profit business, a man who did not see a conflict between being an international icon and family man. That's sad news for Hollywood - and the rest of the world.

26 September 2008

Video: Keynesian Economics & the Great Bailout of 2008

Again, I try the video experiment.

As I videoed this, the negotiations for some kind of intervention seemed to be stalled or even breaking down. I completely support the notion of debating and challenging the Paulson plan. I cringe at the thought of the free market advocates just derailing any kind of plan, as if there is not some financial system that we need to protect. The neoconservatives convinced that this problem can be left to markets are the same ones who saw nothing wrong with the invasion and occupation of Iraq.

25 September 2008

First Day of the Last Year

It is the first day of school. For my daughter's last year as an undergrad. Sigh.

Bernie and the Bad Psychology of Republican Politics

Maddie's eyes had a twinkle as she poured the packets of sugar into her diet coke. "That Omama guy had better look out now," she said happily.

"Excuse me?" Bernard asked, looking confused as he touched his hearing aid.

"McCain has announced that he's putting on his campaign suspenders! He's getting serious now."

"Um," I offered hesitantly. "I think that you might have that wrong."

"Huh?" Maddie frowned. And then she followed my eyes to her glass and laughed. "Oh! This?" she waved the sugar packets. "I just add the sugar because they say that the artificial sweetener in diet coke is not good for you, so I add the natural stuff."

"No," I said. "John McCain suspended his campaign. There was no mention of a wardrobe malfunction or costume change."

"Although," Bernard drew himself up, running his thumbs through his own suspenders, "there is nothing wrong with suspenders."

"If you want people to know you were born before World War II," I mumbled. "But it might be time for someone in Washington to don a cape," I added.

Bernard leaned forward. "McCain's problem has nothing to do with his wardrobe. His is a psychological problem."

"What?" I asked, my attention momentarily diverted by the arrival of my Reuben sandwich.

"It's called all or nothing thinking," Bernard said. "I read about it. It is a cognitive disorder."

"You and your books!" Maddie said with a shake of her head.

Bernard gave her a look and continued. "This really happens. Some kid gets a B on her report card and suddenly, she thinks that she'll never get into medical school and since she can never be a doctor, she'll never find any career that interests her and since she has no future now she doesn't even want to go to school. It's called all or nothing thinking," Bernard said. "It is one of the worst kinds of distortions of reality, because reality is rarely so stark - a choice between bliss or your own personal purgatory."

"What does that have to do with the way John McCain dresses?" Maddie asked.

"Nothing!" Bernard said. "I'm talking about his speeches over the last couple of weeks. And Bush's speeches. Two weeks ago, the fundamentals are sound, everyone should just stop worrying and go shopping. This week, we're in a financial crisis. We have to pay $1.3 trillion to bailout out banks and brokers! You know how much that is? Out of 170 countries, $1.3 trillion would make you the 10th largest economy on the planet! Just smaller than Canada, just larger than Brazil and tied with France! Suddenly, we go from everything is fine to teetering on the edge of disaster?"

"So, you think that McCain's problem is psychological?"

"Yes! Those Republicans have nothing but contempt for subtlety, and yet life is always shades of gray."

"So why don't they just say so?" I ask, as it turns out, stupidly.

"Because the people who vote Republican don't want nuance, complexity or subtlety. They have no patience for it. They pay for the simplification of reality. That's why they put candidates in office - to assure them that life is predictable and makes sense."

"You are talking in circles again, Bernie." Maddie reached over to pat his hand and turned towards me. "Even when he was a kid we could never follow him. He could never make things simple. For him it was always layers of complexity."

"Reality is complex!" Bernard insisted.

"So you say, Bernie," Maddie tucked her head down and took another bite. "So you say."

“The neurotic person distorts reality, makes demands upon it, imposes premature conceptualizations upon it, is afraid of the unknown and of novelty, is too much determined by his interpersonal needs to be a good reporter of reality, is too easily frightened, is too eager for other people’s approval, etc. It may be expected that as a culture improves, thereby improving the health of all its citizens, truth seeking should improve.”
- Abraham Maslow

23 September 2008

Just the Facts

Why people have grown cynical about politics
A Los Angeles Times investigation revealed that much of the money collected by professional fundraisers does not get to charities. "Philanthropy watchdogs say fundraisers should never keep more than 35 cents on the dollar, but the Times found the overall average was 54 cents, and for missing children charities, fundraisers kept 86 cents. (Fundraisers for an organization called Citizens Against Government Waste kept 94 cents.)"

Which one of these candidates didn't know how many houses he owns?
Percentage change by 2012 in the after-tax income of the top 0.1 percent of the U.S. earners, under Barack Obama's tax plan: -5

Percentage change under John McCain's tax plan: +12

Why the government may have to buy $700 billion in bad mortgages:
Percentage change between 1989 and 2007 in the median price of an American single-family home: +130

Percentage change in the median down payment: +3.7

Well, okay - not just the facts:
And since I'm quoting from The Funny Times, here is the caption to a cartoon featuring a women talking to two smiling friends at a cafe: "My ideal man is kind, sensitive, intelligent, six-two, a hundred-eighty pounds, and made of solid milk chocolate."

Why Not Program-Specific Government Bonds?

Scott Adams of Dilbert fame makes an interesting suggestion at his blog. What if the rich were given an option to, say, buy homes with bad mortgages and required to rent them out? It would sort of be a tax but it would offer the rich the hope of a return, taking some of the sting out of "paying" extra taxes.

But what if investors had more options than a simple government bond? We have 37 kinds of ketchup but only one kind of federal bond? Why not a bond that finances alternative energy and another that finances war and another that finances transportation infrastructure? It would be even better if the bonds not only paid the traditional interest rate but offered a premium based on the performance of what they financed.

For example, let's say that there was a bond for community college programs to train trades people for plumbing, electrical, and carpentry work. If graduates from the program were employed in the trades at a rate of 85% or higher (to pick a number out of the air), you would get a premium of 1% on your annual return. If the rate of successful placement were 96%, you would get a 4% premium. The more promising you thought the program, the more likely you'd be to invest.

This would put markets to work as a means to finance government programs, letting investors "vote" on programs they felt would yield better returns, would create more value for the community.

And once that is in place, I see no reason why we couldn't go further with this, allowing taxpayers to indicate, when filing taxes, where they would like their money to go. I suspect that the Pentagon would get less and the National Science Foundation or National Institute of Health would get more. And I suspect that future generations, who would benefit from this research and investment, would thank us.

22 September 2008

There is No Excuse for This Sort of Post, Really

Miley Cyrus may abandon her stage name of Hannah Montana. Just so everyone is clear, I have first dibs on it when she does. I’ve talked to the marketing director at R World and he assures me that posting as Hannah Montana would drive more traffic to the blog.

Having tired of TV, radio, recorded music and other home entertainment options, Bernard has begun to hold open-mic evenings three nights a week at his home. He tells me that the talent is pretty hit and miss, but he’s meeting lots of interesting people.

Today at Home Depot, I was excited to see that they had a Blog Materials section. It was, alas, a visuo (the visual equivalent of a typo): the section was actually labeled Bldg. Materials.

Hallmark has begun to sell same-sex wedding cards. To me it seems obvious that sexual orientation is not chosen. If it were, all men would choose to be in relationships with women and, I’m sure, so would all women. If it were not for genetic compulsion really, who would choose to be in a relationship with a man?

Judeo-Christian is a term often confused with Judo Christian, the ancient martial art of compulsory proselytizing.

The graffiti read, “For a good time, call 619-555-xxxx,” so Jerome called. After he said “Hello, I’m calling for a good time,” this small voice said, “7 PM is usually a pretty good time.” Jerome did not call back.

21 September 2008

My $5 Billion Idea

It took the U.S. government 200 years to finally spend $700 billion a year. It took Treasury Secretary Henry Paulson a few days to propose spending this much to buy bad mortgages and George Bush a few hours to say yes. I have an idea for propping up mortgage markets – and by extension financial markets - that might be less expensive.

George Bush wants to spend another $700 billion of your money. And he needs you to agree to this now - this week. [This with the rest of the week's new spending is equal to about $1.3 trillion. If you are not outraged you are not paying attention.]

How much is $700 billion? To put this in perspective, it was not until 1982 that Reagan approved a federal budget of more than $700 billion (and not until 1985 that he collected revenues greater than $700 billion).

This is more than we spend on all categories* of discretionary spending except for defense.

It seems to me that when a salesman tells you that he needs you to commit to $700 billion (or more) by the end of the weekend, you might be getting rushed into a deal that can't stand much scrutiny.

The economy could slow as a result of financial markets, but it won't be immediate. Call me an idiot, but I don't know why we have to act this week in order to stem economic slow down. In fact, I think that another $700 billion in deficit spending might do as much to hinder economic growth over the next few years as stimulate it.

I'd like to make a more modest proposal. I have an idea that could save you (the American taxpayer) hundreds of billions. Maybe. (And all I ask is 1% of the savings – hence the “$5 billion idea” post title.)

The Bush / Paulson idea is to buy about $700 billion in mortgages, propping up a market that could take down broad swaths of American financial markets. One problem with this plan is that it'll likely drive up the price of mortgage securities - which will make the bailout even pricier. There might be a cheaper way to do it.

When Walt Disney wanted to establish Disney World, he set up a secret company that bought individual farms. Had the farmers all known what Walt was up to, he would have paid a multiple of what he did. Why not do something similar to prop up the mortgage and financial markets?

The Treasury Department could buy mortgage securities, but no one would need to know how much they were going to buy. Prices would stabilize, perhaps even rise a little. And the government could buy a small amount or large, depending on the performance. Everyone would know that the government was going to intervene, but no one would know how much they were going to buy or when. Knowing that the government was intervening should keep markets from tanking; not knowing by how much should keep markets from artificial highs that will just cost taxpayers more and would still need eventual correction. (This would basically be like monetary policy in government bond markets temporarily extended to include mortgage-backed securities.) And this would give the policy makers time to assess this situation and perhaps devise a better plan.

It could be that the government would need to spend $700 billion anyway, but this is not a foregone conclusion. And at a minimum, this would give the next president some room to maneuver. A new bill that increases discretionary spending by 75% in a single week would basically make it impossible for the next president to do anything of consequence – whether it is Obama’s plan for expanded health care or McCain’s plan for more tax cuts. (Which may well be what they want.)

Rushing into this bill seems too reminiscent of rushing into the invasion of Iraq. No one has convinced me that the Paulson / Bush plan is the best option or that it needs to be enacted before it has been scrutinized.

Oh, and I promise that if I do get the $5 billion finder’s fee, I’ll host a most bodacious party for you R World regulars. It may involve renting a small Caribbean island and about 3 months of snorkeling, sailing, and deep and silly conversations.

[*More than all categories combined. That is, the money we spend on the executive, legislative, and judicial branches, small business administration, the corps of engineers (which didn't have enough money to properly protect New Orleans from Katrina), the national science foundation, commerce department, environmental protection agency, social security administration, the departments of interior, labor, treasury, transportation, agriculture, justice, energy, state, homeland security, housing and urban development, veterans affairs, education, and health & human services, and NASA - combined - is less than what Paulson and Bush would like to spend on bad mortgage debt.]

20 September 2008

Lee Coulter - 2010's Breakout Artist

When my wife Sandi first used her iPod, she was on the treadmill, getting a running measure of her pulse. "Oh," she confessed later, "I had a weird thing happen. When Jack Johnson's song came on, my heart beat rose by 10 beats per minute." Tonight at Lestat's, we discovered a talent who, on the Jack Johnson accelerated heart beat scale, was probably a 15.

Listening to Lee Coulter, I could hear elements of some of the rhythmic play of G. Love and lyrical fluidity of Jason Mraz and, of course, the smooth feel of Jack Johnson. His lyrics are smart and actually provoke laughter and paint images. It would not surprise me at all to hear I Would Love, Jeep Song, or She Fell in Love with the Mirror being played (repeatedly) on the radio next year.

Lee is from Australia but now lives in San Diego. As we waited for the show, we heard a sound check that seemed to never end, wondering why a band would play and play just to get the mix and volume right. As it turns out, Lee and his band were playing together for the first time. To my ears, they have something that could explode.

Here is I Would Love, a video of Lee playing solo. The song was enhanced by the band, but it'll give you some idea of how lyrically smart he is. If you want to hear more, go to Lee's myspace page. There you can download the song Earthquake, with special guest Stepchylde, who was inspired in his performance with Lee and the band tonight.

When Lee breaks out in the next 18 months or so, you regular readers of R World can say that you knew about Lee way back in 2008. "Some pseudo-futurist predicted that he'd be big," you'll say. "Turns out he was right."


18 September 2008

Why the Bailouts Don't Seem to Be Calming Markets

The value of financial derivatives is about $500 trillion.
Global GDP is about $70 trillion.
The U.S. Economy is about $13 trillion.
The U.S. Federal Budget is about $3 trillion.

Is it any wonder that markets seem to doubt the U.S. government's ability to actually stem the tide of financial crisis? The whole of our government's budget is not enough to cover a movement of even a few percent in global financial markets.

During this age of globalization, when financial markets around the world are increasingly interconnected, we should have been moving towards global regulatory mechanisms, replicating the success of Keynesian policies within national economies. Instead, conservatives have been busily deregulating even within national economies.

17 September 2008

Rock & Roll Bombs

Keith Richards was 1 when he was evacuated from suburban London to avoid German buzz bombs. What are the odds that a pioneer of rock and roll's loud sound would have first become conscious of the world during a time of loud explosions and great excitement?

Bob Dylan (credits? blames?) the atom bomb for rock and roll. He said,

I know [the atom bomb] gave rise to the music we were playing. If you look a ll these early performers, they were atom-bombed fueled. Jerry Lee, Carl Perkins, Buddy Holly, Elvis, Gene Vincent, Eddie Cochran ...

How were they atom-bomb fueled?

They were fast and furious, their songs were all on the edge. Lyrically, you had the blues singers, but Ma Rainey wasn't singing about the stuff that Carl Perkins and Jerry Lee were singing about, nobody was singing with that type of fire and destruction.

With that as background, here is the inimitable genius David Byrne (I'm fairly certain that Jane Fonda got the idea for the aerobics craze from a Talking Heads concert).

A Day of Excess

Today is my birthday. I was thinking about keeping a low profile in the hopes that the gods of aging will miss the house and fly over, leaving me un-aged. But birthdays are for excess. Eating and drinking to excess sounds tedious to me, and exercising or dancing to excess sounds dangerous. So, I decided instead to post to excess this morning.

My first day of blogging, I made 9 posts. The next, 7. My daughter rightfully declared that ridiculous and since I have actually tried to rein in my propensity to post. Today, though, given it is my birthday, I decided not to hide the idearhea. Enjoy.

Nazi Propaganda, Modern Advertising, and the Psychology of Manipulating the Masses

One reason that the liberal economies rose to prominence while Germany self destructed under the Nazis is that they used the powers of mass psychology to stimulate visions of consumption rather than world domination.

We really did learn a great deal about psychology early in the 20th century. Sadly, what we’ve learned has largely been mis-used. The Nazis may have been the first to use the power of psychology. Specifically, they applied these principles to propaganda and the manipulation of mass media as a tool to create the consensus trance, to define national opinion. Used as a tool for stimulating delusions of world domination, the Nazis caused Germany to self destruct, killing about 60+ million people before they were done.

The Allies – the UK and even more so, the US – used this newfound power of mass psychology for something better. Rather than focus the masses on world domination, they focused the masses on consumption. Advertising, branding, and admonitions to “go shopping” keep us all focused on the importance of making and spending more money. This way, the masses are still manipulated but rather benignly. I’m almost positive that’s better.

Obama and McCain Unqualified to be CEO?

Carly Fiorina, former CEO of an $80 billion company, said that the presidential and vice presidential candidates competing to run a $3 trillion federal budget would not be qualified to be CEO. (Curiously, the market seems to have had a similar opinion about Fiorina. During her tenure, HP’s market value dropped in half. After she left in 2005, the stock rose by 224%)

My initial reaction to this was scorn for Fiorina. Here, I thought, is another CEO who actually believes her own compensation package. But then I woke up this morning to news of the bailout of AIG – something that will cost taxpayers $85 billion. It is true, I thought. Any president who could nod his head at that kind of a bill would not be able to run an $80 billion a year company.

Time to Draft Spitzer?

About 18 months ago, I predicted that McCain would be president from 2008 to 2012 and that Elliot Spitzer would be president in the 8 years after, until 2020.

In spite of the obvious problems he had governing his penis, I still like that idea. As former attorney general of New York, no one did more to go after bad financial institutions and rogues and no one seemed to better understand the importance of getting financial regulation right. As the financial industry continues to make a giant sucking sound that threatens to bring the rest of the economy down with it, maybe voters will come to appreciate the importance of this kind of understanding in a politician.

Maybe some day expertise on financial regulation will be as valued as experience as a sports broadcaster.

Don't Games Usually Have Rules?

Those Republicans hate regulation. That hatred seems a little awkward to explain now that financial markets are teetering on the brink of economic catastrophe.

Conservatives more than anyone pointed out that it is ridiculous to have the referees play the game when they railed against socialist government that nationalized companies and industries. That is fine and good. But it is nearly as foolish to play a game with no referees.

McCain recently said that greed on Wall Street is the problem at the heart of the current financial market woes. That is just foolish. Greed is always there. We all want higher returns. People don’t cheat because they want to win – everyone wants to win but not everyone cheats. The problem on Wall Street is one of oversight and regulation. It should be simple: we don’t let the referees play and we don’t leave refereeing to the players. Anyone fan can tell you that competition is enhanced by good rules and fair officials. Enhanced, that is, unless you like it when your golf tournaments look like ultimate fighting matches.

In Praise of Confident Incompetence

Dahlia Lithwick, who normally makes a great deal of sense, is advocating that Sarah Palin be a Supreme Court justice.

Sarah has a 6 year degree – a BA in broadcast journalism. Someone who has not even studied law is going to be a good Supreme Court judge? Does this mean that someone with an AA would do well in a lesser position, serving on a State Supreme Court for instance? (Why are we so enamored of inexperience and a lack of education in the arena of politics? How much bumbling incompetence do we need before it begins to lose its charm and appeal to the average American voter? Apparently more than 8 years, he says,to himself.) I guess as long as a person is confident, it really doesn't matter how unprepared they are.

Some days I wonder if I’m the only person in the U.S. who doesn’t know where to find hallucinogenics on short notice.

16 September 2008

I Am Gonna Make It Through This Year

Tomorrow is my birthday. My daughter made me a mix that includes this song. The line, "I am gonna make it through this year if it kills me," rather ominously caught my attention. I might be inclined to make it mean less if it were not on a mix for my birthday.

Really, though, I am just glad that this is a blog and not a novel, where such a line would suggest foreshadowing (just one of the many advantages of being a nonfiction character, I suppose). Meanwhile, you get to hear the kind of music you would be listening to if you had a daughter still hip to the jive and able to update you on the bands with an edge. Enjoy!

15 September 2008

Social Distortion

An old friend (Tim, who has recently begun reading and commenting) sent me an interesting email, listing some suggested reasons as to why Obama is slipping in the polls. It seems intelligent and well reasoned and might even be right. It could be, though, that there is a simpler reason: this is the same country that twice elected George Bush.

Scott (commenting as LSD) pointed me to a Camille Paglia essay at Salon. An excerpt:

Oh, the sadomasochistic tedium of McCain's imprisonment in Hanoi being told over and over and over again at the Republican convention. Do McCain's credentials for the White House really consist only of that horrific ordeal? Americans owe every heroic, wounded veteran an incalculable debt of gratitude, but how do McCain's sufferings in a tiny, squalid cell 40 years ago logically translate into presidential aptitude in the 21st century? Cast him a statue or slap his name on a ship, and let's turn the damned page.

We finally have a woman VP candidate and a black presidential candidate. Obama was raised in Hawaii, Palin in Alaska. Apparently there were no qualified blacks or women in the lower 48. Who knew we were looking in the wrong place all this time?

Since 2001, the percentage of Americans believing that humans are causing climate change has dropped by 4%. Dropped. Meanwhile, in the last century the average length of a heat wave in Western Europe has doubled.

By 2007, 41% of Americans believed that it was Saddam Hussein, not Al Qaeda, who was responsible for 9-11. Worse, 85% of service personnel in Iraq believed that the US mission was mainly to retaliate for 9-11.

Fighting the Viet Cong in the Middle East

This morning, thousands of San Diegans are discussing how the Chargers could have won yesterday. Two weeks in a row, the Chargers would have won if games were only two minutes shorter.

But the Chargers are 0-2. The “could have won” sentiment is very real but largely irrelevant.

This month’s Atlantic reports that the biggest proponents of staying the course in Iraq are those who think that we could have won in Vietnam. We could have won, I suppose. The Nazis could have won World War 2.

And had we won in Vietnam, what would have been different today? Would Asia have been saved from the dominoes of communism and instead be a hotbed of capitalist activity – even places like communist China?

Why did Americans lose interest in supporting a decades-long war in southeast Asia? Because sometimes it matters less what you could do than what you ought to do. Could we eventually “win” in Iraq? Could be. You could keep that job but lose your family life. You could buy that car but not afford a vacation for the next five years. The real question is whether this victory is worth pursuing at the cost of sustained deficit spending and loss of life. Would our foreign policy be better served by investing $100 billion a year in Iraq or into research on alternative energy?

It is worth remembering that Osama bin Laden never thought he could topple the American government directly; he did, however, think that he could get us to over-react in ways that would seriously weaken our country (driving deficit spending, for instance, that could strain our financial markets) like when an immune system turns on itself in an allergic reaction.

Could we win in Iraq during the next century, as McCain proposes? Perhaps, assuming that we have nothing better to do with our time, attention, and resources between now and 2100. And assuming that the focus on "winning" over there doesn't mean that we lose here at home.

12 September 2008

Where Change Comes From - Insights from Peter Block's New Book

I watched and listened to and read transcripts of various speeches from the Democratic and Republican National Conventions. It occurred to me that political speeches and social progress have about as much to do with each other as drug use and songwriting; the two often happen in the same place, but it is not obvious that there is any causation between them or that it is positive.

The older I get, the more convinced I am that it is a lie to say that Reagan's denouncement of communism had anything to do with its collapse or even that Kennedy's goal of landing a man on the moon had anything to do with it happening. Deep structures and organic processes cause outcomes. God said "Let there be light" and there was light. By contrast, man speaks and God laughs.

It would be hard to imagine a worse approach to building social consensus and resultant change than bringing folks of the same ideology together into one room to cheer each other. The technical term might be ideological bubble.

Which brings me to a beautiful book I recently read. I have worked as a consultant for about 15 years. I have worked inside of organizations like the CIA, GM, Intel, and Lilly. I have formed strong opinions about work and management. This new book by Peter Block seems to me to get it right - to suggest a model for change that actually works.

I once heard Peter Block say, "Leadership is a collusion between control freaks and people who don't want to accept responsibility." His new book, Community: The Structure of Belonging, continues in that vein. He suggest something wonderfully different from what we see inside of most organizations and in our political process. To me, it defines essential elements behind sustainable change. I highly recommend the book and doubt that you could have much success with change without having somehow gained at least some of the insights he articulates.

To give you some sense of its message, here are some excerpts that I thought worth sharing.


... freedom being the choice to be a creator of our own experience and accept the unbearable responsibility that goes with that. Out of this insight grows the idea that perhaps the real task of leadership is to confront people with their freedom.

They know that learning best occurs when we structure meetings in a way that puts people in contact with each other where they experience in a conference the same dilemmas they face in life.

The most organizing conversation starter is "What do we want to create together?"

Bornstein concluded that well-funded efforts, with clear outcomes, that spell out the steps to get there do not work. Changes that begin on a large scale, are initiated or imposed from the top, and are driven to produce quick wins inevitably produce few lasting results. This may be a clue to why our wars such as those on drugs and poverty have been consistently disappointing and sometimes have even produced more of what they sought to eliminate
If you reflect on the stories of the successful leaders who Bornstein documents, you realize that these entrepreneurs were committed enough and patient enough to give their projects time to evolve and find their own way of operating. There were years spent simply learning what structures, agreements, leadership, and types of people were required to be successful.
It was after the model had evolved and succeeded on its own terms that it began to grow, gain attention, and achieve a level of scale that touched large numbers of people.
This means that sustainable change in community occur locally on a small scale, happen slowly, and are initiated at a grassroots level.

Allan Cohen claims the ability to herd cats, which many have said is impossible. He does this by tilting the floor, which changes the conditions under which the cats are operating. Emergent strategies focus on conditions more than on behaviors or predictable goals.

The media's power is the power to name the public debate. Or, in other words, the power to name "reality."

The essential aspect of restoration of community is a context in which each citizen chooses to be accountable rather than entitled.

Every gathering, in its composition and in its structure, has to be an example of the future we want to create.

The small group is the unit of transformation.

Questions that have the power to make a difference are ones that engage people in an intimate way, confront them with their freedom, and invite them to cocreate a future possibility.


Postive change will happen in your lifetime. It just might not come from where you expect.

Have a great weekend.

11 September 2008

The Pretty Face and Ugly Policies of Sarah Palin

Well, they've done it again. The Republicans have found a way to distract voters from policy and its aftermath by making people think personality is more important than policy or worldview.

The election news has focused on Sarah Palin. She's better looking than Biden. She has kids. She has taken on good old boys in the Republican Party. She has won beauty pageants and the state basketball championship. Suddenly, the question seems to be, wouldn't you rather support this woman we can all relate to and admire rather than that wonkish and not quite one of us candidate with the funny name?

But does it really matter how personable someone is if they still think that blood letting is the way to cure illness? Palin’s policies are pretty much Bush’s policies. It is not obvious how her good looks and missing Y chromosome will make those policies any less of a disaster.

The poverty of Palin's policies ought to be evident. As a person, she could be wonderful or she could be a pitbull. I really don't care. I do know that the vapidity of her advocacy for abstinence-only education for teens should be evident to anyone who sees the consequence of that in her own house. Her unwed seventeen year old is about to give birth within a year of her mom. If this is the consequence of her policies, does it really matter whether or not she is likable?

Of course, for all their talk of accountability, the Republicans never actually do take responsibility. The collapse of Fannie Mae and Freddie Mac and the bailout by American taxpayers (a bill that will total tens, perhaps hundreds of billions) is in no way related to the Republicans love for deregulation. At least not in their minds. These mortgage giants are too big to fail but they were left in private hands, largely unregulated, until they did fail. The profits are left in private hands and the losses are made public, passed on to taxpayers. This is not a random act. This is a direct consequence of ignoring lessons learned from financial busts past. Of course, those hard to understand policy wonks who explain financial regulation could never compete with the lovable politician who said, "And I say get government out of financial markets. Ours is a capitalist system. Government can't be trusted!" And so they deregulate things they can't understand - or refuse to understand because it conflicts with their ideology. And then the party that will not raise taxes taxes us twice - once to bailout the institutions and again in the form of unemployment and slow economic growth.

And like the candidate George W., Sarah is a governor who pledges to make government smaller and lower taxes. Having heard this promise by a man who then began spending like a 9 year old who just got his first VISA card, expanding government more than anyone since FDR (who dealt with a Great Depression and a World War), you would think that American voters would want more than a simple promise. The question is, can she do it? The answer is, she sure hasn't done it in Alaska.

Some states pay more in taxes than they get back from Washington. No state gets more from Washington than Alaska. Alaska ranks No. 1 in spending per citizen, but much of this is paid for by those of us in states like California, where we pay in more than we get back. Palin is an expert on deficit spending. When she gets into office in Washington, she won't have other states to borrow from. Or, rather, she'll have to borrow from other nation-states, continuing George W.'s massive dependence on the nation-state of China, for instance.

Palin is not ready to take action against climate change but is ready to take action against Iran. Like George, she is biased towards action and not given to deep thought.

The question is not who is Sarah Palin. Delving into that could reveal ugly warts or things to admire. The question is, what would be the consequence of implementing her policies? When she talks about what we should do with government, she sounds just like George Bush. I'm guessing that the results she would get would be no different.

The Republicans are the incumbent party and have had a chance to pursue their policies unfettered for six of the last eight years. Their foreign and domestic policy has been expensive, ineffectual, and left us all (Americans and the rest of the world) worse off. Nothing that Sarah Palin has said or done suggests she sees any connection between these policies and outcome or any reason to change. Why that doesn’t make everything else about her irrelevant escapes me.

08 September 2008

Bernard's Big Idea About Relationships

Bernard had a spark in his eye. I looked up from my morning paper and saw him looking at me with a grin.

“What?” I asked, wondering if I had crumbs on my chin.

“I’ve had an idea,” he said with a flourish of his hand, as if he were about to pull a rabbit out of his sleeve. And at that very moment, Maddie arrived, breathless and excited. Bernard seemed pleased she’d be here to witness this.

“You two already started?” she asked.

“He,” Bernard pointed at me, “never waits. In the morning it is all I can do to make him wait until we’re at a restaurant to eat. He wakes up hungry.”

“And you?” she said, “why couldn’t you wait?”

“I’m a social creature,” Bernard shrugged. “He eats and I eat with him.”

“What’s your big idea?” she asked. Bernard smiled, like he was about to lay down a royal flush after throwing in all his chips.

“It’s about universals in relationships.”

“You mean like alien abductions,” I asked. “Relationships across the universe?”

Bernard scowled. “No, you idiot. This – this I’m serious about.”

“Okay,” I folded up my paper. “Tell us.”

“Okay, it occurs to me that there are three universals across any kind of relationship – business, family, lovers.”

“Why three, Bernie?” asked Maddie who was now stirring one package each of splenda and sugar into her coffee.

“Why do you have five fingers?” Bernard gestured. “I don’t know why three. It just works out that way. Can I talk?”

“Sure, sure,” she said, looking for her waiter.

“Three universals: responsiveness, empathy, and inspiration.”

“That’s it?” Maddie said. “That’s your big idea?”

“Well let me explain,” Bernard said, drawing himself up. “The better a relationship, the more responsive two people are to each other – or a group is to each other. But it is not enough to respond. You can respond all wrong. You have to have empathy as well. Your response has to work for that person, show you know who they are. And ideally, in a relationship, someone inspires you – makes you feel more alive and more acutely aware of what great things are possible in your life. They respond to where you are now and have a sense of - and might even play a part in getting you to - where you could go with your life.”

Maddie and I chewed on this for a bit. Finally, Maddie spoke.

“Bernie, you are always abstract. What does this have to do with anything?”

“Relationships have to do with everything,” Bernard said.

“Well what relationship are you talking about, Bernie? How has this helped you?”

And with that Bernie looked deflated. He crumpled into his chair. Suddenly, he looked about 15 years older. He teared up.

“Maddie,” I said, starting to rebuke her.

“No,” Bernard waved her off. “She’s right.” He stared at the table cloth.

Maddie reached forward and touched his hand gently. “Bernie, hon. Ideas about relationships are not the same as real relationships. You might want to trade in your idea for a person. You think?”

Bernard just nodded. Sometimes ideas are kinder than the truth. I kind of wish that Maddie had just let him be, but then I realized that she couldn’t. She didn’t have that kind of relationship with her brother. And maybe that was the real lesson – our relationships never transcend who we are. Relationships are not things like responsiveness or potential as something that lies in the gap between us. Relationships emerge out of who people are and that might just be why we spend so much energy trying to change the people we’re in relationships with. Bernie did seem to have a good idea. The thing was, it wasn’t obvious that Bernie or Maddie or me or anyone was ever going to exploit that insight.

06 September 2008

Zone Defense: Strip Malls with Actual Strippers

A guest post by Daryl Morey

For the second time ever, I have a guest blogger - and this one I did not have to sleep with as an inducement to post. My buddy Daryl has generously offered to write something for R World and I eagerly agreed. I've written about Daryl (in his first season as the Houston Rockets GM, the team put together the second longest winning streak in NBA history) and how much I enjoy him. Daryl is one person I never feel as though I have to slow down for when I'm engaged in conversation. He's quick, but he also loves big ideas, and he is not afraid to go deep or silly on any number of subjects. I'm delighted to share a little bit of him for you all here at R World. Enjoy!

As Ron has stated eloquently in his blog before (Rockets Win Again with Rookie GM), "I go where the data goes". This tendency, along with the fact that "I doubt the deep doubts" (Socrates) makes life a bit of an adventure as I might change a belief at any moment. To demonstrate my willingness to change, I will provide one recent anecdote.

First, a little background. I generally have libertarian views and believe the government should basically only do roads, courts, police, the army, and tax externalities. Otherwise, stay out of our lives please.

When I moved to Houston, I was excited to hear they had no zoning. I was very curious to see how well this worked, independent folks finally able to make free choice in how to use land! Long story short, I have basically come to the conclusion that it does not work and the list of what Guvment should do is now reluctantly one longer.

Exhibit number one into evidence is probably this picture. This spot is about 4 miles from our house. The sex shop is apparent but what is not apparent is that the unlabeled building behind said shop is actually a Niemen Marcus that is connected to the most high end mall in the city. One stop shopping for sure!

Actually, it is not this particular arrangement that caused me to now support zoning, as I find it mostly humorous. What made me a supporter of zoning is the fact that nothing in Houston makes any logical sense and it contributes to a host of negative outcomes: longer commute times, confusion, and general waste of both public and private space.

[Editor's note: Daryl's post is, for those of you keeping score, the 800th here at R World.]

05 September 2008

Social Invention as the Most Important Future Trend

A $20 bill is worth exactly $20 for no other reason than this: we all agree that it is worth $20. As soon as we stopped agreeing that it was worth $20, it would no longer be worth $20.

This is an oddity of social reality. Its medium is not wood or metal but consensus.

One day, everyone agrees that a certain amount of gold is worth $20. The next day, everyone agrees that mere paper will be worth $20. This is called progress.

Social invention and progress

Even little children know stories about technological invention. They know that inventions like the cell phone allow them to text incessantly and cars can take you places, if only you can coerce an adult into giving you a ride.

Yet even adults rarely think about the fact that social inventions are also essential to progress. (Perhaps one of the reasons they rarely think about social inventions is that they can't just focus on texting but also have to drive.) Like the microwave oven, churches, banks, and corporations made this a different world. Although his life was rough, early man never had to stifle a yawn in church, bounce a check, or stare at the clock waiting for 5:00.

Although the car was invented in the 1800s, today's cars are vastly different than those early models. Now that scenery is covered in billboards, car occupants need DVD players. Most every invention evolves.

This same thing is true of the bank, the corporation, the nation-state or any social invention. Even dance moves change and evolve once they are invented - or perhaps it is just aging bodies that make it look this way.

Social Invention by Accident

We've been intentional about technological invention. Corporations budget for it and assign project teams to make them happen. By contrast, social inventions come from entrepreneurs and revolutionaries - from outside the system. Social invention gets little support. People seem to think that the social inventions through which we work and govern will not change, in stark contrast to their expectations of technological inventions. This will soon change.

In the economy just emerging, social innovation will become as common as technological innovation We might find this disorienting but our grandchildren will think it normal. New ways to learn, to work, even new ways to worship will be invented and evolve at unprecedented rates.

Social invention will be to the next economy what industrial inventions were to capitalism. The pace of social evolution and the rate of social invention will rapidly increase in the next few decades. No social trend will have more sweeping impact or do more to change the daily lives of people.

Next, I'll talk about consensus trance as an obstacle to social invention and progress.

Want to know more about social reality?
The Construction of Social Reality, by John Searle
Reality Isn't What it Used to Be, by Walter Truett Anderson

03 September 2008

Our Bush League Economy

If you had pulled money from the stock market and put it into a European savings account on the day that George Bush was sworn in, you would have twice as much money as someone who left it in place.

As the Republicans talk up the economy, it might be worth looking at some hard data.
About 10 years ago, roughly 80% of Americans were in a pension plan. Stock market performance was of some interest. Today, nearly 80% of Americans are in 401(k) plans that directly depend on stock market performance.

Imagine two people who had $500,000 invested in the S&P 500 on January 20, 2000, when George took office.

Denny the Democrat, fearing George's policy and not knowing what else to do, sold all his stock at the opening bell and bought euros, putting all his money in a decent but conservative 3% a year savings account.

Reggie the Republican, delighted that his man was now at the helm, left his money in the S&P 500, trusting in the American economy and dollar.

Reggie lost 15% of his money, leaving him with just $424,765.

Denny made more than 69%, leaving him with $850,410, exactly twice as much as Reggie.

Reggie will have lost more than $75,000, while Denny will have made more than $350,000. Funny thing - no one has bothered to mention this at the convention. In fact, if you listen closely to McCain and his fellow speakers at the RNC, you would think that were NOT the incumbent party.

It's not just rising gas and grocery prices that have wearied folks. It is not just stagnant wages. It is no surprise that only 10% of Americans feel good about the economy. It is a surprise that the Republicans are able to gather a crowd in Minneapolis.

Bush Surveys Damage From His Presidency

Bush Tours America To Survey Damage Caused By His Disastrous Presidency

02 September 2008

Bush Speaks (so hooray for speech therapy)

Tonight, the head of the Republican Party addresses the party faithful. If I could, I would ask attendees of the RNC one question: wouldn't you think that if Bush kept doing the wrong things poorly that these two would eventually cancel one another? If you continuously execute poorly on bad ideas, wouldn't you think that your failure to do the wrong thing would eventually HAVE to result in the right outcome? Even in politics, wouldn't it sometimes be true that two negatives make a positive?

Just wondering here.

"It is better to do the right thing wrong than to do the wrong thing right."
- Russell Ackoff