My Thoughts on .NET

Over on Of Two Minds blog, Charles Hugh Smith outlines how we’ve all been conned by the financial elite and their toadies in Congress:

The Con of the Decade Part 1

The Con of the Decade Part 2

A seriously good read – highly recommended.

A few years ago, on the basis of several positive reviews I purchased Acronis True Image Home 11. The reviewers were right – this has been a fantastic program and has save my bacon a few times – as recently as a few weeks ago.

Fast forward to today, when my brother had to clone a disk and I recommended Acronis True Image. He went to the website to purchase it – of course, now, the available version is not 11 but 2010.

He tried to use this to clone his hard drive and it got about 75% of the way and then silently locked up. Restarted, repeat, same thing. Nice.

Start reading on the internet and it turns out that Acronis True Image Home 2010 is now a piece of shit – it doesn’t do anything that version 11 used to do – it locks up, corrupts backups, ad nauseum. And, in order to report the problems or attempt to get help you now have to pay in advance for any kind of support. Acronis’ own forums are full of complaints about the product with little or no company responses.

I’m left to wonder why a company would take a wonderful, highly reviewed product and deliberately break it.  My brother figured it out however – Acronis software is bundled with the non-OEM Seagate drives. Seems like a smart move for both companies. However, all hard drives now ship with bad sectors – fact of life due to the rapid increase in density and reduction in price – and he’s sure that Seagate got tired of having to swap out new hard drives that Acronis reported as having bad sectors. So they change the software to silently fail instead – blame gets distributed elsewhere, MBAs for both companies now make their quarter nut and problem solved !

My advice – do not buy any Acronis software anymore. They have deliberately crippled it and do not stand behind it. CAVEAT EMPTOR.

I've seen a few blog posts lately whining about Apple's platform decisions limiting developer's choices. Too bad - you've given them the power to close off their products and limit your choices ! Don't like their decisions ?  Vote with your feet and wallets. You're not entitled to any explanations or rationalizations. If they want a walled off garden - give it to them. There are lots of alternative choices.

Out of work ?  Try eating your Japanese or German car. Again your choices have given them the power to destroy American industry.

Lose money in the great market meltdown ?  Try not doing business with Citibank, Bank of America and the other banks that were too big to fail. Put your money in the smaller, local banks that support your community.

Tired of paying $3 for gas ?  Don't empower Morgan Stanley and the other crooks whose rampant speculation is artificially driving up the prices of this commodity.

Tired of the poor or missing Government that is ever increasing and leading us to Totalitarianism ?  Vote all of the SOBs out and look for candidates who will promise reform and enact a Constitutional Amendment for term limits and reducing Congressional elitism. The laws and conditions that we have to endure should be good enough for them as well.

If you're not part of the solution, then you're part of the problem...

Lost a hard drive over the weekend. I was running a long test over the weekend to verify that the firmware changes that I had made to a product had stopped the infrequent ‘lockup’ reported by a customer. So I stopped by the office to check in on it – it was working flawlessly – great.

As long as I’m here I thought I’d check my e-mail. Pressed a key to bring my office machine out of hibernation – blue screen !  Never a good sign. It said that it was dumping the memory to disk, but there was no progress, and the HD indicator was on solid.

After about 10 minutes, I decided to press Reset. The machine wouldn’t even enter the BIOS, the HD indicator just came on and stuck on solid. Tried to boot a memory test CD, but it wouldn’t even access the DVD drive. Unplugged the Seagate 500G HD, and now the machine entered the BIOS and booted the memory test CD – memory test runs fine.

Took the suspect HD to another machine – same symptoms. The drive spins up fine – loads the heads – no weird noises are produced – but as soon as it is plugged into the SATA – the HD activity light pegs on and nothing else can happen – BIOS, DVD drive, nothing.

Unplugged the bad HD, booted Seagate’s SEATOOLS CD, plugged in the drive and tried to run a diagnostic. The software can see the DVD drive, but not the HD. Great.

So I went and purchased a new HD, got my external USB HD with the last full backup from two weeks ago out of the safe offsite and prepared to do battle. Installed the new HD, booted my Acronis True Image recovery CD and started the recovery of MBR/Track 0, and the C & D partitions. After seeing that it had started, I left and tried not to think about it anymore – not easy to do.

Went back into the office on Sunday, the recovery process had finished. Booted the machine and it came up with no problems. Kudos to Acronis !

The same can’t be said for Seagate. The drive that had failed was purchased at the end of March 2008. It has a five year warranty so I can get a replacement, but what a pain in the ass. Back then I paid $100 for the Seagate 500G 7200.11 HD. Saturday I paid $100 for a Seagate 1TB 7200.12 HD. So in two years, the storage has doubled for the same price. I’d pay $1000 for a HD that didn’t fail however.

Switched to Seagate drives a couple of years ago after a string of Western Digital drives failed. And years ago we dumped Maxtor for similiar reasons. Also went through the IBM Deathstar drive debacle. It seems that 'reliable hard drive' is an oxymoron. Just imagine how many kids are going to grow up with no photos as their digital images are lost to drive failures, computer viruses and operator errors. 

Didn’t lose too much. I try and do regular backups, and if I’m working on something important I back up those individual projects on the office server with the RAID array and tape backup. Fortunately, I had checked-in the projects for the problem that I was working back onto the server so I didn’t lose that work. Lost some stuff that I was dinking around with and about two weeks of e-mails. It makes you paranoid which I guess is a good thing - it reaffirms the religion of backup everywhere and often.

So what do you do with your increasing data footprint to ensure it's safety ?  How many times and places do you have to backup to so you minimize the chance of losing something ?  How do you keep it all in sync ?  Maybe it makes sense to replace hard drives once a year if they have a five year warranty - the cost of using a computer - and stack the old drives up as fallbacks.

At home I have a WHS box that sits in the corner and backs up the three home PCs every night. It cost me $390 for the box with 2TB – I won the WHS software at the Sarasota .NET meeting - and it is configured to run only when one of the home PCs is on and at night when it does the backup. So far, knock wood, I haven’t had to use it to do a restore. Maybe it’s time to spend $500 and put a WHS box in the corner at the office so that next time it happens I may only lose a days worth of data. But then where do I backup the WHS server's contents ?  And where do I backup the backup of the backup ?

UPDATE: I had returned the drive to Seagate via i365 which is their data recovery service. They offerred a free evaluation to determine what was wrong with the drive, and optional attempts at data recovery starting at $500 depending upon how much data I needed to recover. They just called today and informed me that there was a firmware bug in the drive that caused the lockup. They updated the firmware with a process that is not available to the end user, and now the drive is fine - my data is intact. They are returning it to me at no charge.

Over on the Huffington Post, Ralph Gomory discusses the delusion expressed by several people that we can innovate our way out of the dilemma that we’ve gotten ourselves into:

Ralph Gomory: The Innovation Delusion

from The Full Feed from HuffingtonPost.com by Ralph Gomory

In the United States, innovation has become almost synonymous with economic competitiveness. Even more remarkable, we often hear that our economic salvation can only be through innovation. We hear that because of low Asian wages we must innovate because we cannot really compete in anything else. Inventive Americans will do the R&D and let the rest of the world, usually China, do the dull work of actually making things. Or we'll do programming design but let the rest of the world, usually India, do low-level programming. This is a totally mistaken belief and one that, if accepted, will consign this nation to second- or third-class status.

The latest offender to advance this line of thought is Thomas Friedman, who has prominently displayed this familiar and entirely incorrect line of thought in the New York Times. Unfortunately, this idea is one that is widely accepted without careful thought about either its truthfulness or its consequences.

Truth and Consequences

Cheap labor abroad is cited as the incurable handicap that explains why the United States cannot compete. But cheap labor doesn't explain the fact that Japan and Germany, both high-wage countries, are successful in the automobile industry. Nor does it explain how semiconductors, a model of a high investment, low-labor content industry, are mainly made in Asia. The premise that the inescapable burden of competing against low wages means failure is simply not correct..

Perhaps even more disturbing than the lack of truthfulness is the fact that we are not addressing the consequences of not competing. There are some inescapable truths about any economic good, be it a manufactured good or a service: (1) you either produce it in your own country, (2) you trade something you do produce for it, (3) you do without it, or (4) you import it and promise to pay later.

We are moving steadily away from producing what we need in this country. We are also moving away from producing on a scale that enables us to trade for what we do need. Rather than do without, we are increasingly importing things with a promise to pay later. This cannot go on. When our trading partners, especially China, no longer want to loan us hundreds of billions of dollars a year to be paid later, we will have little productive capacity left and we will be a poor nation.

Friedman is only the latest to assume that we can avoid this fate by emphasizing designs, ideas, and R&D and trading them for the items we need. This is an attractive idea; we often hear about innovation parks and university research centers and often their work is both exciting and good.

But the chasm-sized flaw in this otherwise alluring proposition is scale. Balancing trade on ideas and R&D simply cannot be done. The most elementary analysis shows that the scale is entirely wrong. As one who spent many years as the head of research of a large corporation, I know how much R&D matters; I also know how small it is. Eight percent is a very large percent of revenue to spend on R&D. Even in manufacturing, which is relatively R&D intensive, 4 to 5 percent is typical. It is really wrong to think that you can scale up R&D to be big enough so we can trade it for the huge quantity of things we need but don't make in this country.

A Strange and Unworkable Strategy

Ignoring the issue of scale, Tom Friedman goes on to quote authoritative Chinese sources who say that by the end of the decade China will be dominating global production of the whole range of power equipment. To Friedman's approving eye this just means that China is going to make clean power technologies cheaper for itself and everyone else. Friedman says that Chinese experts believe it will all happen faster and more effectively if China and America work together with the United States specializing in energy research and innovation, at which, he asserts, China is still weak, while China will specialize in mass production.

It is probably true that all this will happen faster with the specialization Friedman describes, but where will we be at the end of that process? China will be making power equipment cheaply, but the chasm is still there, so what will we have to trade for it? Power equipment will be cheap in China, but if we adopt this approach it may well be unaffordable in the United States.

Meanwhile the Chinese wisely welcome our nascent innovations and turn them into products. They are building plants, making things manufacturable, and adding them to their growing GDP. Friedman's article contains an excellent example of this. He describes a U.S. developer with a new approach to solar-thermal power, whose proposal to the U.S. government asking for small scale support was easily outbid by a Chinese offer that was far larger and was aimed at much larger scale plants.

Specializing in R&D, but sending its fruits on to others is a strange and completely unworkable strategy for a nation.

Other Issues

Thinking of innovation as a standalone activity without production has other major flaws. First, our global corporations, understanding that innovation and production are in fact closely tied, are rapidly moving not only production but also R&D overseas. Intel's CEO made this very clear when he said that the goal of Intel's new plant in China is to support a transition from "manufactured in China" to "innovated in China".

In addition, the standalone innovation approach leaves most Americans entirely out. After all, only a very small portion of Americans are engaged in R&D. At a recent meeting I heard "The only thing that matters is innovative and passionate people." These people do matter, but they are very far from being the only ones. This attitude misses the point that it was all our people, working in many different work settings, that made this country prosper. And all of them will all be needed in any viable future for our country.

What We Must Do - The Role of Trade

We need successful industries and we need to innovate within them to keep them thriving. However, when your trading partner is thinking about GDP rather than profit, and has adopted mercantilist tactics, subsidizing industries, and mispricing its currency, while loaning you the money to buy the underpriced goods, this may simply not be possible.

The ability to compete in a world that is half-mercantilist, half-free is inescapably tied to effective trade policy. Our present policy is to beg. We ask countries like China to stop the subsidies and currency mispricings because they are creating a one-way flow of underpriced goods; goods that are destroying jobs on a large scale in many of the most productive sectors of our economy. But why should they stop? It's working for them.

We must move to balanced trade. With balanced trade every dollar of imports is matched by a dollar of exports of goods or services produced here in the U.S.A. We are fortunate that there are in fact ways to balance trade. One very attractive way is to adopt some version of Warren Buffet's Import Certificates plan, which Buffet has described in a remarkably insightful Fortune article.

We should act now to balance trade. We should not continue to beg while jobs disappear and our productive ability erodes.

What We Must Do - Motivating our Companies

Today our companies are motivated to take innovations abroad, produce there and import the goods into the United States. Increasingly we can expect services also to go overseas. We must produce here in the U.S.A., to employ the people of this country, and we must keep their activities effective by a steady stream of innovations in design and production. While other countries roll out a welcome mat of tax breaks and subsidies for our companies because their common sense tells them that their people being employed in productive work is the road to being a rich country, we provide no incentive for U.S. companies to produce here.

We cannot continue to have our corporations, faithful only to the interests of their shareholders, engage in a one-way flow of jobs, technology, and innovation out of the country. We need to realize that with globalization the interests of our country and of our global corporations have diverged. We can realign the interests of corporations with those of our country by rewarding companies that are productive here. And that can be done in ways that are consistent with our history and with the limited capabilities of our government.

Conclusion

Specializing in innovation is an attractive idea, but a misleading one; an idea that blinds us to what we really need to do.

We need to do more than produce exciting new ideas; we must also be able to compete in large productive industries. This requires us to both balance trade and to motivate our corporations not only to innovate, but also to produce in this country. While this is hard to do, it can be done. Specializing in innovation, though often recommended, is in fact a delusion, an alluring path that in reality will lead us straight downhill.

Over on Charles Hugh Smith’s Blog Of Two Minds another example of Death by MBA:

http://www.oftwominds.com/blogjan10/self-destruction01-10.html

The Wal-Mart Model of Self-Destruction: Lowest Prices, Always

The Wal-Mart Model of Self-Destruction is simple: low prices are all that matters.

The devolution of the American citizen into a self-destructing consumer starts with the devolution of a value system into an monomaniacal obsession: "the only thing that matters is the lowest price," regardless of the true costs or consequences.

The propaganda of marketing has so hollowed out American culture that most citizens cannot recall a time that "Consumerism" wasn't the unofficial religion of American society. And what is the First Commandment of "consumerist religion"? The lowest price is all that matters.

Quality doesn't matter; we're going to move/throw it away anyway.

Who made it doesn't matter. The idea that you might pay more to keep your neighbor employed is akin to worshipping the Devil: all that matters is the lowest price.

The hidden costs to "the lowest price" don't matter; the environmental costs (conveniently passed off to the developing world) don't matter, nor do the costs of subsidizing the purveyors of "the lowest prices, always." (see below)

The health consequences of consuming low-quality food don't matter, just the low price.

The mechanisms used to obtain the lowest price don't matter; dynamite the fish, we don't care, just get us the lowest prices. Chop down the rain forests, we don't care, just get us the lowest price hardwoords and cheapest beef.

The consequence of this mono-mania is that all other costs and consequences are ignored/not priced in unless government shoves it down the retailer/manufacturers/consumers' throats.

I recently helped a friend research buying a small portable washing machine--the kind for small apartments which can be rolled to the kitchen sink and connected to the kitchen faucet, then returned to storage elsewhere.

There are few manufacturers due to the small market: Haier, the Chinese manufacturer, sells a model for under $300. Bosch (German) sells one for around $1,200, and Kenmore (Sears) sells a Whirlpool-made model for about $700.

My friend wanted to buy an appliance that would last, and one made in the U.S., and I recommended the Kenmore based on my own experience with our 5-year old (U.S. made) front-loading Kenmore washer. So we go to the Sears outlet to look at the portable washers and discover they're made in Brazil. In other words, there are no household appliances of this type made in the U.S. or even in North America. China and Germany make portable household washers but the U.S. does not.

The sales clerk, who told us she'd worked there for over 12 years, then informed us that customers had been complaining about Whirlpool's switch from an old-style dial for turning the washer on and off to a digital display which had the nasty habit of failing after a year or two.

Online complaints posted by other customers revealed that the portable washers' digital control boards failed often-- one gent said he'd bought three in three years--and the repair cost $375 each time.

In other words, quality doesn't matter. The digital display probably contains a few dollars or less of actual electronics; yet when it fails, it costs more than the Chinese-made washer to have it repaired.

As a result of this sharp decline in quality and high probability of costly repairs, the sales clerk recommended my friend buy the $129 extended warranty.

So the U.S. brand (made in Brazil), with the apparently necessary extended warranty and California state excise tax (almost 9%) is roughly triple the cost of the Chinese appliance, which cannot be serviced should it break down because Haier has no local service center.

Note to Whirlpool/Sears: do you actually read your customer feedback? If you did, perhaps you'd offer two models: a U.S.-made one with a mechanical dial which costs X dollars and carries a 10-year warranty because you manufacture it to standards you had 20 years ago, or perhaps as recently as 5 years ago, and a second low-quality one with a guaranteed-to-fail digital control board made overseas and shipped to the U.S. for X dollars (presumably lower than the quality appliance but still twice the cost of the Haier.)

Now enable consumer feedback on your two models and see which one achieves a profitable reputation and sales history.

If no one buys the higher-priced, high quality appliance which actually costs much less over its lifetime than cheap throwaways, then the American "consumer" deserves what he/she gets: low quality and high lifetime costs (i.e. everything must be repaired or replaced constantly).

If you can no longer manufacture an appliance that lasts for 20 years (and hence it is safe to warranty it for 10 years), then you deserve to go out of business.

An obsession with "the lowest price" without regard for any other issues, consequences or hidden costs is an act of self-destruction. We as a nation have absorbed the Wal-Mart model of self-destruction, and so we blindly seek the lowest price even as it guts the environment, guts local industry, guts civic centers and ends up costing us more once the total lifetime costs are tallied (all those taxpayer subsidies for "cheap" goods and retailers and high life-cycle costs for crappy goods which don't last.)

Everything we buy or don't buy is a "vote" for or against quality and low lifetime costs.

Is "convenience" and "low prices" really all that's important? Isn't it odd that we spend considerably less on food as a percentage of income than we did 30 years ago but our health has deteriorated and people are complaining about the "high cost of food" even as they rarely eat at home any more? Are "low prices" really that wonderful for the nation? Or did we "get what we paid for," i.e. low quality for low prices, with extremely high-cost consequences of that monomanical obsession with the lowest upfront price?

Maybe we should require that all the costs associated with the item be included in the retail price. Maybe we'd realize the "lowest price" is actually the costliest option we could possibly have taken.

Over on The Huffington Post, Garrett Johnson reveals how the bankers and politicians are getting ready to screw us over again:

http://www.huffingtonpost.com/garrett-johnson/here-comes-the-screw-job_b_417545.html

"The 401(k) system has to be fixed, and I don't know anybody who can fix it but the federal government."
- John Bogle

Late last week the federal government began floating proposals for reforming America's broken retirement system. The proposed reform centers around the idea of getting people to invest more conservatively and withdraw the money more slowly so that they don't outlive their savings.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are leading the effort.

Secretary Iwry developed this idea when he was working at the Brooking Institute in 2008 in conjunction with the Heritage Foundation. The concept involves rolling people's 401(k) savings into directed distribution plans unless they specifically elect not to participate.

This probably sounds like a reasonable idea until you dig beneath the surface.

"The 401(k) system today in the United States has been an acknowledged failure."
- Alicia Munnell, director of the Center for Retirement Research at Boston College's Carroll School of Management

To put this into perspective, consider that Congress reformed the 401(k) system three years ago. The idea back then was the exact opposite of the current proposal.

Late Thursday night, Congress passed a pension-reform bill that will transform significant aspects of how these plans can operate. Named for the section of the tax law that created them, 401(k) plans let workers sock away part of their paycheck tax-free until retirement. The problem is, too many people are making bad decisions, such as leaving their money parked in low-yielding investments instead of more suitable choices.
Meanwhile, the Labor Department, which regulates the plans, is on track to let employers automatically put their employees' money into riskier, but higher-yielding, stock and bond funds rather than low-yielding money-market funds that have long been the default option.

The reason for this shift in ideas has to do largely with market timing.

"We are the prey"

When the 401(k) system was being reformed in the spring of 2007 the stock market had been on a four year bull market. Stocks were getting very expensive and overpriced. Wall Street insiders, which were holding these stocks needed someone to sell them to before the stock market began declining just six months later.
In this environment, Congress "magically" decided that 401(k) holders needed to buy more stocks, and Wall Street obliged. The 401(k) holders would have been much better off if they had instead been in money market funds, like they wanted to be, but that's not what the reformers in Congress decided. What happened instead was Wall Street insiders unloaded much of their overpriced stocks on 401(k) sheeple before the market crashed.

Today's market is very different. Interest rates are at historic lows, thus bond prices are at historic highs. The government is flooding the market with record treasury issuance and mortgage-backed security yields are only being kept down by massive intervention by the Federal Reserve. Interest rates have nowhere to go but up, which means that bond prices have nowhere to go but down.
Now Congress wants to reform the 401(k) system again, this time getting people to invest in fixed-income financial products, and Wall Street is sure to oblige again. Even Secretary Iwry's proposal admits that these lifetime income products are "inflexible and expensive" with annuity fees averaging around 6% annually, as opposed to the 3% annual fees from a 401(k).

"Our rulers deliver favors to their clients...For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that "public purposes" exist. They have friends, and enemies, and as for the rest--we're the prey."
- James K. Galbraith

If you don't believe in coincidences, you might be incline to think that financial reforms are merely efforts to help Wall Street fleece the American public further.

Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He's losing.
"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

Lessons from Argentina

A giveaway to Wall Street isn't the only reason why the federal government wants to move us into overpriced fixed income assets. The massive federal deficits of the next two years will become increasingly difficult to fund.

Our credit card with China has been cut off.

The government needs another pool of money to tap in order to continue to run these massive deficits, and that means your retirement savings. Once locked into these annuities, your money will be largely directed to treasuries and agency bonds (now with unlimited federal backing).

This game plan has been done before. If you want a roadmap of how this can turn out, just look to the Southern Hemisphere of 2008.

Here is a warning to us all. The Argentine state is taking control of the country's privately-managed pension funds in a drastic move to raise cash.

...

My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital -- whether they want it or not -- and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted - or eliminated - with little due process if that is required to serve the collective welfare. This is a slippery slope.

The thing you have got to understand is that Argentina was also once considered a rich nation just like us. It was brought low over the course of many decades from ruthless and corrupt politicians and financial elite.
Like America, Argentina sold off its public enterprises for pennies on the dollar in privatization schemes. Like America, Argentina had an artificially inflated currency which crushed its industrial base and led to an over-sized trade deficit. Like America, Argentina tried to disguise these problems by borrowing from foreign creditors.

In the end, the Argentine government seized the retirements savings of their own citizens in order to continue to function after foreign creditors abandoned them. They shoved that savings into treasury-like bonds and then massively devalued their currency. In so doing, 70% of the retirement savings of the Argentinian people was wiped out overnight.
Check out this excellent video about the collapse.

What does this have to do with America? Check out this picture from an Argentina protest at the time.

It's the same damn banks! The people who screwed the Argentinian people back then are the ones screwing us right now! They bought off the corrupt politicians of Buenos Aires to get what they wanted, just like they've purchased the corrupt politicians of Washington today. They won't hesitate for a single minute to treat you exactly the same.
Too late the people of Argentina stood up for themselves, and even then the results were mixed at best. Their government simply didn't listen or care until people took to the streets. That's when their government collapsed and stopped robbing from them.

We can learn from this lesson and take to the streets right now, or we can ignore this lesson, arrogantly assume that because we are Americans "they wouldn't dare," and tempt our fates.
If we don't act, then one day we might find our neighborhood ATM is empty.

Once again, JibJab hits one out of the park:

http://sendables.jibjab.com/originals/big_box_mart

Combine this with Death by MBA and you can see why the USA is rapidly becoming a third world nation.

Over on The New Republic, Noam Scheiber writes about how Business School graduates are killing America:

http://www.tnr.com/article/economy/wagoner-henderson

Upper Mismanagement

Why can't Americans make things? Two words: business school.

• Noam Scheiber

One of the themes that came up while I was profiling White House manufacturing czar Ron Bloom earlier this fall was managerial talent. A lot of people talk about reviving the domestic manufacturing sector, which has shed almost one-third of its manpower over the last eight years. But some of the people I spoke to asked a slightly different question: Even if you could reclaim a chunk of those blue-collar jobs, would you have the managers you need to supervise them?

It’s not obvious that you would. Since 1965, the percentage of graduates of highly-ranked business schools who go into consulting and financial services has doubled, from about one-third to about two-thirds. And while some of these consultants and financiers end up in the manufacturing sector, in some respects that’s the problem. Harvard business professor Rakesh Khurana, with whom I discussed these questions at length, observes that most of GM’s top executives in recent decades hailed from a finance rather than an operations background. (Outgoing GM CEO Fritz Henderson and his failed predecessor, Rick Wagoner, both worked their way up from the company’s vaunted Treasurer’s office.) But these executives were frequently numb to the sorts of innovations that enable high-quality production at low cost. As Khurana quips, “That’s how you end up with GM rather than Toyota.” 

How did we get to this point? In some sense, it’s the result of broad historical and economic forces. Up until World War I, the archetypal manufacturing CEO was production oriented—usually an engineer or inventor of some kind. Even as late as the 1930s, business school curriculums focused mostly on production. Khurana notes that many schools during this era had mini-factories on campus to train future managers.

After World War II, large corporations went on acquisition binges and turned themselves into massive conglomerates. In their landmark Harvard Business Review article from 1980, “Managing Our Way to Economic Decline,” Robert Hayes and William Abernathy pointed out that the conglomerate structure forced managers to think of their firms as a collection of financial assets, where the goal was to allocate capital efficiently, rather than as makers of specific products, where the goal was to maximize quality and long-term* market share.

By the 1980s, the conglomerate boom was reversing itself. Investors began seizing control of overgrown public companies and breaking them up. But this task was, if anything, even more dependent on fluency in financial abstractions. The leveraged-buyout boom produced a whole generation of finance tycoons—the Michael Milkens of the world—whose ability to value corporate assets was far more important than their ability to run them.

The new managerial class tended to neglect process innovation because it was hard to justify in a quarterly earnings report, where metrics like “return on investment” reigned supreme. “In an era of management by the numbers, many American managers … are reluctant to invest heavily in the development of new manufacturing processes,” Hayes and Abernathy wrote. “Many of them have effectively forsworn long-term technological superiority as a competitive weapon.” By contrast, European and Japanese manufacturers, who lived and died on the strength of their exports, innovated relentlessly. One of Toyota’s most revolutionary production techniques is to locate suppliers inside its own factories. The New York Times’ Jon Gertner recently visited a Toyota plant and reported that the company doesn’t actually order a seat for a new truck until the chassis hits the assembly line, at which point the seat is promptly built on-site and installed. “If the front seat had not been ordered 85 minutes earlier, it would not exist,” Gertner observed. Alas, these aren’t the kinds of money-saving breakthroughs the GM brain trust has ever excelled at.

The country’s business schools tended to reflect and reinforce these trends. By the late 1970s, top business schools began admitting much higher-caliber students than they had in previous decades. This might seem like a good thing. The problem is that these students tended to be overachiever types motivated primarily by salary rather than some lifelong ambition to run a steel mill. And there was a lot more money to be made in finance than  manufacturing. A recent paper by economists Thomas Philippon and Ariell Reshef shows that compensation in the finance sector began a sharp, upward trajectory around 1980.

The business schools had their own incentives to channel students into high-paying fields like finance, thanks to the rising importance of school rankings, which heavily weighted starting salaries. The career offices at places like Harvard, Stanford, and Chicago institutionalized the process—for example, by making it easier for Wall Street outfits and consulting firms to recruit on campus. A recent Harvard Business School case study about General Electric shows that the company had so much trouble competing for MBAs that it decided to woo top graduates from non-elite schools rather than settle for elite-school graduates in the bottom half or bottom quarter of their classes.

No surprise then that, over time, the faculty and curriculum at the Harvards and Stanfords of the world began to evolve. “If you look at the distribution of faculty at leading business schools,” says Khurana, “they’re mostly in finance. …  Business schools are responsive to changes in the external environment.” Which meant that, even if a student aspired to become a top operations man (or woman) at a big industrial company, the infrastructure to teach him didn’t really exist.

In fairness, all that financial expertise we’ve been churning out hasn’t been a complete waste (much as it may seem that way today). Many of the financial restructurings of the ‘80s and ‘90s made the economy more efficient and competitive. Likewise, it would be ludicrous to suggest that simply changing the culture of business schools would single-handedly revive U.S. manufacturing. As I explained in the Ron Bloom piece, that sector faces a variety of challenges, not least the mercantilist industrial policies of our foreign competitors.

On the other hand, it’s hard to believe that American manufacturing has a chance of recovering unless business schools start producing people who can run industrial companies, not just buy and sell their assets. And we’re pretty far away from that point today.

I received a love letter from Comcast when I arrived home yesterday…  Basically after being a loyal customer for over 6 years, Comcast has decided to cancel my $99/month cable/internet service. Their new and improved equivalent service will now be $140/month, or $130/month with their triple play phone/TV/internet offer.

So today I signed up for Verizon FIOS Triple Play service for $99/month with a discount to $70/month for the first 6 months. Unfortunately, with mandatory equipment rental my monthly bill will still be about $130/month, but I will save about $40/month on my landline phone service.  I’ve been on the fence about switching, but Comcast finally helped me to make a decision.

May the Comcast MBAs choke on the flood of customer service cancellations !

Adios Comcast…

UPDATE: At the end of December, I received a customer satisfaction survey phone call from Comcast - that was fun !  The surveyor couldn't believe that Comcast raised my service by $480 per year and then wanted to know why I wasn't still a customer. Death by MBA !

Recently, my account on Facebook was hacked. A person claiming to be me was soliciting my friends for cash by claiming that I was stuck in London and needed cash to get home to Sarasota. Fortunately, my brother was informed by my niece and then told me after having a short conversation with the asshole. I immediately deleted my Facebook account.

Turns out that the developers of Facebook provide unlimited access to all of your personal information to anyone who is writing the Games, Contests and Quizes that everyone partakes of and shares. So you have no idea who knows what about you - not just your 'friends'. Think twice and then again about whether or not to post about illness, travel plans, purchases or any other social information that you would share with your friends but not with the whole world. As soon as you post it on Facebook it is in the hands of everyone - not just your 'friends'.

Would you really trust two Harvard dropouts to have your best interests at heart ?

Once upon a time, I was invited to the White House for a private  dinner with the President. I am a respected businessman, with a factory that produces memory chips for computers and portable electronics. There was some talk that my industry was being scrutinized by the administration, but I paid it no mind. I live in a free country. There's nothing that the government can do to me if I've broken no laws. My wealth was earned honestly, and an invitation to dinner with an American President is an honor.

I checked my coat, was greeted by the Chief of Staff, and joined the President in a yellow dining room. We sat across from each other at a table draped in white linen. The Great Seal was embossed on the china. Uniformed staff served our dinner.

The meal was served, and I was startled when my waiter suddenly  reached out, plucked a dinner roll off my plate, and began nibbling it as he walked back to the kitchen.

"Sorry about that," said the President. "Andrew is very hungry."

"I don't appreciate..." I began, but as I looked into the calm  brown eyes across from me, I felt immediately guilty and petty. It was just a dinner roll.

"Of course," I concluded, and reached for my glass. Before I could, however, another waiter reached forward, took the glass away and swallowed the wine in a single gulp.

"And his brother Eric is very thirsty." said the President.

I didn't say anything. The President is testing my compassion, I  thought. I will play along. I don't want to seem unkind.

My plate was whisked away before I had tasted a bite.

"Eric's children are also quite hungry."

With a lurch, I crashed to the floor. My chair had been pulled out from under me. I stood, brushing myself off angrily, and watched as it was carried from the room.

"And their grandmother can't stand for long."

I excused myself, smiling outwardly, but inside feeling like a fool. Obviously I had been invited to the White House to be sport for some game. I reached for my coat, to find that it had been taken. I turned back to the President.

"Their grandfather doesn't like the cold."

I wanted to shout- that was my coat! But again, I looked at the placid smiling face of my host and decided I was being a poor sport. I spread my hands helplessly and chuckled. Then I felt my hip pocket and realized my wallet was gone. I excused myself and walked to a phone on an elegant side table. I learned shortly that my credit cards had been maxed out, my bank accounts emptied, my retirement and equity portfolios had vanished, and my wife had been thrown out of our home. Apparently, the waiters and their families were moving in. The President hadn't moved or spoken as I learned all this, but finally I lowered the phone into its cradle and turned to face him.

"Andrew's whole family has made bad financial decisions. They haven't planned for retirement, and they need a house. They recently defaulted on a subprime mortgage. I told them they could have your home. They need it more than you do."

My hands were shaking. I felt faint. I stumbled back to the table and knelt on the floor. The President cheerfully cut his meat, ate his steak and drank his wine. I lowered my eyes and stared at the small grey circles on the tablecloth that were water drops.

"By the way," He added, "I have just signed an Executive Order nationalizing your factories. I'm firing you as head of your business. I'll be operating the firm now for the benefit of all mankind. There's a whole bunch of Erics and Andrews out there and they can't come to you for jobs groveling like beggars."

I looked up. The President dropped his spoon into the empty ramekin which had been his creme brulee. He drained the last drops of his wine. As the table was cleared, he lit a cigarette and leaned back in his chair. He stared at me. I clung to the edge of the table as if were a ledge and I were a man hanging over an abyss. I thought of the years behind me, of the life I had lived. The life I had earned with a lifetime of work, risk and struggle.

Why was I punished? How had I allowed it to be taken? What game had I played and lost? I looked across the table and noticed with some surprise that there was no game board between us.

What had I done wrong?

As if answering the unspoken thought, the President suddenly cocked his head, locked his empty eyes to mine, and bared a million teeth, chuckling wryly as he folded his hands.

"You should have stopped me at the dinner roll," he said.

I had a Windows XP MCE 2005 system at home as my DVR. Basically worked fine for many years although if you turned it off, it was unable to automatically reacquire the wireless connection via the Linksys PCI card. Service packs and driver updates never corrected the problem, so I resorted to leaving the system on all the time. I had won a free copy of Vista Ultimate at the Sarasota .NET Developers meeting a couple of months ago and decided to give it a try. I bought a new 1TB hard drive so that I could keep my XP MCE image intact in case I wanted or had to go back.

Well – it only took about 6 hours to install. Missing drivers for the Linksys wireless card, Microsoft Wireless keyboard and mouse, Hauppage dual TV tuner card, and although it’s a 3.2GHz system, with only 512MB of RAM it was paging like a mother calling her sons. It installed 86 updates – and that didn’t include Vista SP1. After the ordeal, it seemed to work although it was still thrashing.

Bought and installed 4G of RAM and it seemed a lot happier – Vista is a P.I.G. pig. Took a couple of days to tune the power and permission settings so that it worked like an appliance should – no keyboard / mouse interaction required to use it as a DVR.

Started seeing an interesting problem with the MCE remote though. After coming out of standby the remote behaved like keys were stuck – continuously scrolling the guide or screen icons after the first button was pushed. Hard resetting the Vista machine corrected the problem – now it’s no longer a DVR but yet another half-baked Microsoft computer.

Researching the problem on the Web it seems that this is a known problem – addressed in Vista SP1 – but not entirely. And there is a hotfix available, but it’s not clear whether or not this is required if you install SP1 – it reads like you still have to manually parse and edit the registry to add entries to force desired USB devices to be reset after coming out of standby.  So while I have now installed SP1 with no cure I still have this onerous task ahead. Meanwhile I have also discovered that re-plugging the MCE remote receiver corrects the problem. As the plug is accessible by reaching the back of the computer behind the entertainment center this is doable and I guess I will find out the life expectancy of the USB connectors.

Needless to say this has decreased the WAF significantly as she just wants to turn on the TV and PC and watch it – not mess with cables in order to do so.

Verizon FIOS with their DVR is looking better and better.

UPDATE:

Have installed all of the latest service packs and hotfixes. Performed the requisite registry edits. Still broken. The best workaround that I've found is to install a powered USB hub between the Microsoft remote and the Media Center PC. The hub's power is provided by a wall wart connected to the computer's UPS. This has reduced the number of failures to about twice a week.

We (ACS) design and build embedded industrial controllers for a living. So we use several dozen different software tools, compilers, IDEs, logic synthesis, logic simulation and Computer Assisted Engineering (CAE) tools for printed circuit board design layout. All of these tools have quirks and bugs – some more serious than others.

When I first started this career, printed circuit boards were hand-designed on mylar sheets, one per layer, at a 2:1 scale using stick on pads and various widths of tape to lay down traces. Improvements came with red and blue transparent tape that minimized the number of mylar sheets required as two layers of circuitry could be placed on a single sheet – improving registration.

In the mid to late 80’s Computer Assisted Engineering for circuit board layout became popular – although the tools were expensive. Over time, the number of vendors increased, the PC became the target platform and the prices dropped. Goodbye mylar sheets of artwork. My brother and I initially invested in Design Computation software 20 years ago, and later, when the DOS based tools weren’t up to the task and that company disappeared, we switched to Protel.

We've used Protel Schematic Capture v3.4 and Protel PCB Design v2.8 to design several hundred boards - mainly double-sided, mixed SMT and through-hole, some with hundreds of parts, all sizes - no problems. You build up a library of trusted components that are physically verified by their use in designs, and you learn the quirks and anamolies of the tools.

About 10 years ago, Protel ran a special and we purchased an upgrade seat of their flagship product at that time – Protel99SE. It was expensive – even when discounted, but we had had mostly good luck with their existing software and had a large investment in learning curves and libraries. The new product stayed on the shelf for several years with day-to-day pressures precluding taking on the new learning curve. Finally, frustrated with the PCB v2.8 tool’s problems with split power planes on a new 4-layer design, I moved the board to the new tool and was able to produce a product that we’re still shipping today. 

I recently did our second 4-layer PCB with Protel99SE SP6. Just received the prototypes back. When building the first board by hand, two components were on the schematic,  but not on the PCB. Bringing up the board in Protel and jumping to the component by name, the missing components were off the board, and off the screen – perhaps with a negative Y coordinate. No ratsnest wires, the router indicated that the board was 100% routed, no Design Rule Check (DRC) errors - sweet.

Did a select outside the board area, move selection, and surprise - the missing two components moved into the visible area - ratsnest wires appeared indicating where they were supposed to be connected and now the board is no longer 100% routed - it's magic !

I don't know how the two components got 'placed' off of the viewable screen, or why a zoom all didn't show them, or why the autorouter All Routes command didn't complain, or why the DRC passed...

I can no longer trust Protel99SE to produce a board that matches the schematic. This was a fundamental trust item that the tool violated with serious repercussions. I'm glad that these are just a handful of prototypes, and I can tack these two missing components on by hand. Imagine if I had made a simple change to a production board and then found missing parts and/or connections with 1000 of them in manufacturing.

Of course, this tool is now 10 years old. The company has changed it’s name – Altium – and has moved on. They are again offering a special purchase of an upgrade version…

And so it goes…

Having downloaded and installed Windows 7 Beta back in January, I was eager to try the new Release Candidate 1. What a long strange trip it’s been…

Evidently the only way to legitimately download the RC is by using the Akamai Download Manager provided by clicking on the Download button. All well and fine – but on my Intel 975XBX Quad Core machine running XP SP3 with IE8, the download manager never runs and crashes the browser.

Tried clearing the browser cache, disabling pop-ups, removing the Google toolbar, clearing the Java cache, etc.  Nothing worked.  E-mails to Akamai went unanswered. Searches on Google revealed that I’m not the only one experiencing this problem.

Finally found the workaround – went to my trusty Win2K server sitting in the corner, started up IE6 and went through the same download registration sequence and then clicked the download button. Voila – the Download Manager worked, the download started and is progressing as I write this.

I guess I’ll have to keep this older technology around for when the new magic breaks…

Recent network outages in the Bay Area as well as others around the nation have revealed the flaw in letting the Telecom carriers provide and manage an increasingly important global resource.

This is not your father's internet anymore. The network is no longer structured as it was originally designed - to survive these type of disruptions. The network is now solely at the whim of the carriers who are only interested in 'billable events'. More and more the carriers are deciding whose bits are special and whose aren't worth the effort to transport. As they continue to construct their tariffed fiefdoms, more of these network chokepoints and bottlenecks will be put in place. Poorer service and increased outages will result - but hey - at least the @#$% MBA in the corner office made his quarterly numbers.

Until we remove the telecoms from the internet scenario, we are forever doomed to live within their limited vision of what a global network should be.

Read more at:

http://blogs.zdnet.com/BTL/?p=16136

and about the increasing Telecom crisis at:

http://frankston.com/

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job however, is the changing political landscape in this country. However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a Back Story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You've seen my big home at last years Christmas party. I'm sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don't see is the BACK STORY :

I started this company 28 years a go. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business -- hard work, discipline, and sacrifice.

Meanwhile, my friends went to their jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom's for the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn't look like it was birthed in the 70's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden -- the nice house, the Mercedes, the vacations... you never realize the Back Story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for. Yes, business ownership has its benefits but the price I've paid is steep and not without wounds.

Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home, pregnant with her fourth child, waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck, you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy. Here is what many of you don't understand ... To stimulate the economy, you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this? It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

So, if you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about...

Signed, THE BOSS

Yes – it’s not Exxon/Mobile or Shell or what you’d expect…

It’s Investment Bankers (aka Crooks) who drove up the Oil prices last year. Your dollars didn’t go the the Arab Mullahs but to Wall Street:

Part 1:

http://www.youtube.com/watch?v=iO6HUwlIS_Y

Part 2:

http://www.youtube.com/watch?v=f9dA8pUpeV8&feature=related

From Clusterstock:

http://clusterstock.alleyinsider.com/2009/1/ayn-rand-for-treasury-secretary

“The most popular article in the Wall Street Journal this morning is Stephen Moore's editorial applauding the brilliant economic policies of Ayn Rand. As we recall, Atlas Shrugged was Alan Greenspan's favorite book, too.

We doubt that abolishing the income tax and firing all government workers is the quickest way out of our fix, but it might not be the slowest, either. In any event, you'll enjoy Moore's summary:

WSJ: The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."

When Rand was writing in the 1950s, one of the pillars of American industrial might was the railroads. In her novel the railroad owner, Dagny Taggart, an enterprising industrialist, has a FedEx-like vision for expansion and first-rate service by rail. But she is continuously badgered, cajoled, taxed, ruled and regulated -- always in the public interest -- into bankruptcy. Sound far-fetched? On the day I sat down to write this ode to "Atlas," a Wall Street Journal headline blared: "Rail Shippers Ask Congress to Regulate Freight Prices."

In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.

The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."

Economist Ayn's fix? Abolish the income tax:

One memorable moment in "Atlas" occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:

Galt: "You want me to be Economic Dictator?"

Mr. Thompson: "Yes!"

"And you'll obey any order I give?"

"Implicitly!"

"Then start by abolishing all income taxes."

"Oh no!" screamed Mr. Thompson, leaping to his feet. "We couldn't do that . . . How would we pay government employees?"

"Fire your government employees."

"Oh, no!"

”

A strong recommendation to subscribe and peruse Charles Hugh Smith’s blog: “OfTwoMinds”. Charles is an author of several works of fiction as well as a visionary for today’s reality.

If you’re a reader, I strongly recommend reading (or re-reading) Ayn Rand’s “Atlas Shrugged”. Written in the late fifties, it’s almost prescient in it’s parallels to today’s economic reality. Indeed, you can read a few pages, then pick up the newspaper and almost read the same thing – scary.

Over on The Big Picture Blog, a post giving 150 ways to drive oil prices higher... basically an outline of US Energy policy for the last 50 years:

http://bigpicture.typepad.com/comments/2008/05/how-to-drive-oi.html

At the New York Times, op-ed columnist Thomas L. Friedman writes about the huge transfer of wealth and power that is shaping the future ( or lack thereof) of America:

http://www.nytimes.com/2008/05/21/opinion/21friedman.html?_r=1&oref=slogin

"There has been much debate in this campaign about which of our enemies the next U.S. president should deign to talk to. The real story, the next president may discover, though, is how few countries are waiting around for us to call. It is hard to remember a time when more shifts in the global balance of power are happening at once — with so few in America’s favor.

Let’s start with the most profound one: More and more, I am convinced that the big foreign policy failure that will be pinned on this administration is not the failure to make Iraq work, as devastating as that has been. It will be one with much broader balance-of-power implications — the failure after 9/11 to put in place an effective energy policy.

It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.”

The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image.

If this huge transfer of wealth to the petro-authoritarians continues, power will follow. According to Congressional testimony Wednesday by the energy expert Gal Luft, with oil at $200 a barrel, OPEC could “potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just three days.”

But that’s not all. Two compelling new books have just been published that describe two other big power shifts: “The Post-American World,” by Fareed Zakaria, the editor of Newsweek International, and “Superclass” by David Rothkopf, a visiting scholar at the Carnegie Endowment.

Mr. Zakaria’s central thesis is that while the U.S. still has many unique assets, “the rise of the rest” — the Chinas, the Indias, the Brazils and even smaller nonstate actors — is creating a world where many other countries are slowly moving up to America’s level of economic clout and self-assertion, in every realm. “Today, India has 18 all-news channels of its own,” notes Zakaria. “And the perspectives they provide are very different from those you will get in the Western media. The rest now has the confidence to present its own narrative, where it is at the center.”

For too long, argues Zakaria, America has taken its many natural assets — its research universities, free markets and diversity of human talent — and assumed that they will always compensate for our low savings rate or absence of a health care system or any strategic plan to improve our competitiveness.

“That was fine in a world when a lot of other countries were not performing,” argues Zakaria, but now the best of the rest are running fast, working hard, saving well and thinking long term. “They have adopted our lessons and are playing our game,” he said. If we don’t fix our political system and start thinking strategically about how to improve our competitiveness, he added, “the U.S. risks having its unique and advantageous position in the world erode as other countries rise.”

Mr. Rothkopf’s book argues that on many of the most critical issues of our time, the influence of all nation-states is waning, the system for addressing global issues among nation-states is more ineffective than ever, and therefore a power void is being created. This void is often being filled by a small group of players — “the superclass” — a new global elite, who are much better suited to operating on the global stage and influencing global outcomes than the vast majority of national political leaders.

Some of this new elite “are from business and finance,” says Rothkopf. “Some are members of a kind of shadow elite — criminals and terrorists. Some are masters of new or traditional media; some are religious leaders, and a few are top officials of those governments that do have the ability to project their influence globally.”

The next president will have to manage these new rising states and these new rising individuals and networks, while wearing the straightjacket left in the Oval Office by Mr. Bush.

“Call it the triple deficit,” said Mr. Rothkopf. “A fiscal deficit that will soon have us choosing between rationed health care, sufficient education, adequate infrastructure and traditional levels of defense spending, a trade deficit that has us borrowing from our rivals to the point of real vulnerability, and a geopolitical deficit that is a legacy of Iraq, which may result in hesitancy to take strong stands where we must.”

The first rule of holes is when you’re in one, stop digging. When you’re in three, bring a lot of shovels. "