Post No. 174a: Answer Us This Regarding Job Creation

It has been a while since we simply posed a question, and we thought that this might be a good time to do so again.

President Obama recently unveiled his job creation proposal. It was roundly criticized in a number of circles from various angles. The private sector "job creators" essentially took many of the jobs previously held by Americans and transferred them to China, India, and other countries where they could find workers willing to work for far less than most Americans. An argument has been made that the regulatory and tax environment here in the United States is what drove them to transfer the jobs elsewhere.

While listening to the criticism of the President's proposal, several questions occurred to us:

1. Assuming no change in regulations and the reduction of corporate and capital gain taxes here in the United States, will they create new jobs here or bring those jobs back here to the United States?

2. Assuming regulations are eliminated, but taxes remain the same, will they create new jobs here or bring those jobs back here to the United States?

3. Assuming regulations are eliminated, AND taxes are reduced or eliminated, do you think that the private sector "job creators" will create new jobs here or bring the jobs back home?

The ultimate question is whether we have a guarantee from the private sector "job creators" that if the government gives in to their requests, it will inure to the benefit of middle-class American workers.

Post No. 166c: We Try Harder; Do We Really?

© 2009 and 2011, the Institute for Applied Common Sense

In what areas is the United States still No. 1? Was it ever? Or was this exalted status something we told ourselves to boost our sense of pride and accomplishment?

Just this week, CNN reported that the U.S. is No. 38 in terms of the life expectancy of its citizens, far behind many nations which are poorer, and spend far less on health care.

In a previous post about the mark made by political thought giant Irving Kristol, columnist David Brooks wrote something which struck us:

“He [Kristol] was unabashedly neoconservative. But he also stood apart, and directed his skeptical gaze even on his own positions, and even on the things to which he was most loyal… ‘There are no benefits without costs in human affairs,’ he once wrote. And so there is no idea so true and no movement so pure that it doesn’t require scrutiny. There was no position in this fallen world without flaws.”

A question might be raised as to whether it would be a good thing for us, as a Nation, to acknowledge that others have surpassed us in certain areas, or are nipping at our heels. There’s lots of rhetoric these days about our “great nation” and how this is the most powerful nation in the history of humankind.

But resting on one’s laurels has its problems, as does continuing to do things the same way, simply because they worked in the past, or through rigid adherence to a particular philosophy.

The Father of one of our friends claims that golfer Tiger Woods can cruise now in his career, “since he has already made his money.” But whether it is Tiger Woods, or legendary basketball star Larry Bird, the existence of talent without continuing effort, and a desire to excel, yields few championship trophies.

In order for the Road Runner to have existed all of these years, he had to outrun Wile E. Coyote everyday, and come up with new ways to “out-coyote” him.

His survival is dependent upon his speed and agility.

A couple of years ago we watched C-Span2 Book TV's coverage of the 2009 National Book Festival, founded by former First Lady Laura Bush in 2001. That such a festival was only started recently might come as a surprise to many, but may reflect something about us.

Many of us consider a good education and the ability to read as givens. Yet, the percentage of functionally illiterate citizens in America would probably shock most.

At least those of us who can read.

A friend of ours spent some time teaching courses at a community college. He often tells the story of a student who, while taking a math test, summoned him. He told her that he could not assist her.

She noted that the issue was not a math issue, but a word issue. When he looked at the problem, she pointed to the word “suspension,” and said she did not know its meaning. Without knowing its meaning, it was impossible for her to perform the calculation necessary.

In response to this revelation, our friend decided that even in his math classes, his students would learn 10 new words each day. After announcing his new policy to his night class and the reasons for the change, a student approached him after class, and said that he was one of the people about whom the instructor had spoken.

When our friend inquired as to what the student meant, the student related an amazing story. He said that although he was not very proud of it, he got kicked out of high school one month before graduation, and did not learn to read prior to that time.

Imagine an educational system where a student can be promoted for 12 years, and still not manage to read. And consider the fact that no one single factor, teacher, school, or system can be singled out for this travesty. They all had to work in concert with one another.

One of our other friends has been in collegiate and professional athletics for years. He has always contended that he’d rather have a bunch of C grade players who hustled and gave their best, than a team of A grade players who didn’t.

After listening to the introductory speakers during the opening ceremonies for National Book Festival, it occurred to us that we have a long way to go in getting the most out of our human resources, and that acknowledging that many of our current systems are perhaps not the best in the world, might be a good starting point.

For some reason, this line of thinking made us re-visit one of the longest running marketing slogans around, that for Avis Rent a Car, the number two agency behind number one Hertz. “We try harder.”

We did not know who started this campaign, but we had a suspicion, and looked it up. And yes, it turned out to be another Bill Bernbach masterpiece.

Its beauty is in its simplicity.

It’s neither un-American, nor un-patriotic to question our standing in the world, and investigate whether what we’ve been doing is really in the long-term, national, collective interest.

Societal responsibility is not dramatically different from personal responsibility. A nation can’t complain about its standing in the world, if it hasn’t done all that it can do to excel, and use its human resources to the fullest extent possible. That includes equipping all of its citizens with competitive tools, and ensuring that they are ready for the fight.

And that’s just plain Common Sense.

Post No. 146b: Swaying the Undecided

© 2009 and 2010, the Institute for Applied Common Sense

Contrary to most commentators, we are among the “undecided” in terms of our response to most news events. Call us the Hank Kimballs of the Blogosphere. “Mr. Kimball,” you may recall, was the County Agent on the Green Acres sit-com show.

This is not to suggest that we can not take a position, or balance competing considerations, when necessary. However, most times we need a little time to think things through.

We’re generally 10 seconds away from appreciating any position. We’re just not into drawing hard lines in the sand. Plus, we might be wrong.

We’ve been mulling over George Will’s statement, to the effect that the beauty of conservatism is its “purity”, and Jonathan Haidt’s conclusion that the “pursuit of moral clarity” is the magnet which draws Republicans together, for over a year now. The concepts are beginning to come into focus.

We recently heard Joshua Cooper Ramo say something which helped crystallize our thoughts on another issue – namely the role of government.

We are systems oriented in our approach to issues. For some time now, we have argued that the U.S. is not ready, at this point in its evolution, for a nationalized health care system, just like some nations are not yet ready to embrace democracy.

We raised three concerns. First, Americans are addicted to Kentucky Fried Chicken, donuts, and giant Slurpees; avoid exercise like the swine flu; and are thus insufficiently motivated to maintain good health on the front end. Why build a back end system around people who don’t care?

Second, trying to manage a health-care system involving 300 million subscribers would be like herding 300 million cats.

Third, we do not have any experience managing a dedicated bureaucracy involving 300 million beneficiaries. Our military is about as close as it gets, and the number pales in comparison.

Our new President’s detractors call him a Socialist. The rhetoric is full of allusions to the “pathetic state” of purportedly "has been" Western European powers to whose rescue the Americans came during WWII, and the “failure” of the Soviet Union.

Not being sufficiently versed in the history of socialism, and not having any appreciation of, or first hand knowledge about, the area, we historically viewed ourselves as part of the “undecided.”

Plus, we always try to identify some element of internal consistency in our positions, when they are applied to other areas. It seems to us that if one believes that socialism or central control is a bad thing in one area, then it’s probably a bad thing in another, and another ….

How does one justify the involvement of government in any aspect of our lives, other than perhaps the military? Isn’t it disingenuous to pick areas where you feel government should play a part, and then choose others where it should not?

We raised questions about whether government should be involved in education, in responding to natural disasters, and in other areas we take for granted.

We remained open to the notion that less government is better. However, no one ever convinced us of the merits of that position, since it always appeared to be ideologically and subjectively driven, and not systemically based.

Finally, to our rescue came Rambo. Well, not quite, just Ramo. He is the author of The Age of the Unthinkable. During his book presentation on C-Span2 Book TV recently, he claimed that the world is different today than in years past, and that old approaches to problems will not work.

But this was the bottom line: Things are more interconnected today. Our economic systems are more interconnected. The more interconnected they are, the more complex they are.

The more complex they are, the more potentially unstable they are. Like a house of cards.

If any significant aspect of the system fails, the whole system is at risk. Arguably, this is what brought down the Soviet Union, and not President Reagan’s threats. Sorta also sounds like that “a chain is only as strong as its weakest link” saying.

We’ve come to recognize the importance of the manner in which a concept is framed. (For example, we've long felt that the pro-choice faction chose a poor label for their cause since a woman arguably has choices available to her long before conception.)

Once we heard Ramo refer to the “instability of interconnected systems,” it struck a chord. The emotion laden arguments against socialism or central governance always struck us as arguments of those disinterested in sharing with others, because they had theirs.

This instability argument is one which has some logical appeal.

We’ll continue to think about it over the coming year, and get back to you.

This post was originally posted on May 12, 2009.

Post No. 136: We Try Harder

© 2009, the Institute for Applied Common Sense

In what areas is the United States still No. 1? Was it ever? Or was this exalted status something we told ourselves to boost our sense of pride and accomplishment?

In a previous post about the mark made by political thought giant Irving Kristol, columnist David Brooks wrote something which struck us:

“He [Kristol] was unabashedly neoconservative. But he also stood apart, and directed his skeptical gaze even on his own positions, and even on the things to which he was most loyal… ‘There are no benefits without costs in human affairs,’ he once wrote. And so there is no idea so true and no movement so pure that it doesn’t require scrutiny. There was no position in this fallen world without flaws.”

A question might be raised as to whether it would be a good thing for us, as a Nation, to acknowledge that others have surpassed us in certain areas, or are nipping at our heels. There’s lots of rhetoric these days about our “great nation” and how this is the most powerful nation in the history of humankind.

But resting on one’s laurels has its problems, as does continuing to do things the same way, simply because they worked in the past, or through rigid adherence to a particular philosophy.

The Father of one of our friends claims that golfer Tiger Woods can cruise now in his career, “since he has already made his money.” But whether it is Tiger Woods, or legendary basketball star Larry Bird, the existence of talent without continuing effort, and a desire to excel, yields few championship trophies.

In order for the Road Runner to have existed all of these years, he had to outrun Wile E. Coyote everyday, and come up with new ways to “out-coyote” him.

His survival is dependent upon his speed and agility.

Yesterday, the 2009 National Book Festival, founded by former First Lady Laura Bush in 2001, commenced in Washington, D.C. That such a festival was only started recently might come as a surprise to many, but may reflect something about us.

Many of us consider a good education and the ability to read as givens. Yet, the percentage of functionally illiterate citizens in America would probably shock most.

At least those of us who can read.

A friend of ours spent some time teaching courses at a community college. He often tells the story of a student who, while taking a math test, summoned him. He told her that he could not assist her.

She noted that the issue was not a math issue, but a word issue. When he looked at the problem, she pointed to the word “suspension,” and said she did not know its meaning. Without knowing its meaning, it was impossible for her to perform the calculation necessary.

In response to this revelation, our friend decided that even in his math classes, his students would learn 10 new words each day. After announcing his new policy to his night class and the reasons for the change, a student approached him after class, and said that he was one of the people about whom the instructor had spoken.

When our friend inquired as to what the student meant, the student related an amazing story. He said that although he was not very proud of it, he got kicked out of high school one month before graduation, and did not learn to read prior to that time.

Imagine an educational system where a student can be promoted for 12 years, and still not manage to read. And consider the fact that no one single factor, teacher, school, or system can be singled out for this travesty.

One of our other friends has been in collegiate and professional athletics for years. He has always contended that he’d rather have a bunch of C grade players who hustled and gave their best, than a team of A grade players who didn’t.

After listening to the introductory speakers during the opening ceremonies for National Book Festival, it occurred to us that we have a long way to go in getting the most out of our human resources, and that acknowledging that many of our current systems are perhaps not the best in the world, might be a good starting point.

For some reason, this line of thinking made us re-visit one of the longest running marketing slogans around, that for Avis Rent a Car, the number two agency behind number one Hertz. “We try harder.”

We did not know who started this campaign, but we had a suspicion, and looked it up. And yes, it turned out to be another Bill Bernbach masterpiece.

Its beauty is in its simplicity.

It’s neither un-American, nor un-patriotic to question our standing in the world, and investigate whether what we’ve been doing is really in the long-term, national, collective interest.

Societal responsibility is not dramatically different from personal responsibility. A nation can’t complain about its standing in the world, if it hasn’t done all that it can do to excel, and use its human resources to the fullest extent possible. That includes equipping all of its citizens with competitive tools, and ensuring that they are ready for the fight.

And that’s just plain Common Sense.

Post No. 122c: Thinking About Innovation and Business Models

We're always interested in different ways of viewing subjects.

To the right of our blog, in the light green column below our Shelfari bookshelf, appears what is referred to in the blogosphere as our “blogroll.” It is a list of blogs which we find to be of interest, and links to them are provided. One of the nifty aspects of New Media technology is that it provides the ability to exponentially expand one’s realm of contact. Folks can “stumble” on your content without you actually directing them toward it.

One of the more interesting blogs which we follow is that of J.P. Rangaswami. His blog, Confused of Calcutta, is about information. Rangaswami was born in Calcutta, and lived there for half of his life before immigrating to the United Kingdom in 1980.

Originally an economist and financial journalist, he now considers himself to be an “accidental technologist.” He deals in the ether where finance meets technology.

He recently generated a post about long-term business cycles and author Hugh MacLeod's upcoming book. It so piqued our interest, and made us think about issues currently being battered around about the global economy, that we thought that you might also find it to be of interest.

Check it out. Some of his references to other thinkers on the subject might prompt you, as it did us, to do some further reading about economic theory and business.

Nothing is ever quite is simple as it may first appear.

Post No. 116a: Article of Interest: U.S. Sends Emergency Aid to Pakistan

We just came across an article indicating that the United States is about to send emergency aid to Pakistan. Several questions:

1. Should the U.S. send aid to Pakistan during the current economic slowdown?

2. Should the U.S. have sent aid to Pakistan one year ago, before the economic slowdown became apparent?

3. Without performing the research to determine the answer, where do you believe the U.S. stands in rank (in terms of percentage of GDP) in providing foreign aid?

4. Do you believe that it is ever appropriate to provide foreign aid to other countries if there are hard working, law abiding, tax paying U.S. citizens giving it their all, who are having difficulty making financial ends meet?

5. Should the U.S. have anticipated the current unrest in Pakistan when the U.S. encouraged the former "President" and military leader to step down, and return control to civilians in order to allow democracy to work?

Post No. 116: Swaying the Undecided

© 2009, the Institute for Applied Common Sense

Contrary to most commentators, we are among the “undecided” in terms of our response to most news events. Call us the Hank Kimballs of the Blogosphere. “Mr. Kimball,” you may recall, was the County Agent on the Green Acres sit-com show.

This is not to suggest that we can not take a position, or balance competing considerations, when necessary. However, most times we need a little time to think things through.

We’re generally 10 seconds away from appreciating any position. We’re just not into drawing hard lines in the sand. Plus, we might be wrong.

We’ve been mulling over George Will’s statement, to the effect that the beauty of conservatism is its “purity”, and Jonathan Haidt’s conclusion that the “pursuit of moral clarity” is the magnet which draws Republicans together, for several months now. The concepts are beginning to come into focus.

We recently heard Joshua Cooper Ramo say something which helped crystallize our thoughts on another issue – namely the role of government.

We are systems oriented in our approach to issues. For some time now, we have argued that the U.S. is not ready, at this point in its evolution, for a nationalized health care system, just like some nations are not yet ready to embrace democracy.

We raised three concerns. First, Americans are addicted to Kentucky Fried Chicken, donuts, and giant Slurpees; avoid exercise like the swine flu; and are thus insufficiently motivated to maintain good health on the front end. Why build a back end system around people who don’t care?

Second, trying to manage a health-care system involving 300 million subscribers would be like herding 300 million cats.

Third, we do not have any experience managing a dedicated bureaucracy involving 300 million beneficiaries. Our military is about as close as it gets, and the number pales in comparison.

Our new President’s detractors call him a Socialist. The rhetoric is full of allusions to the “pathetic state” of purportedly "has been" Western European powers to whose rescue the Americans came during WWII, and the “failure” of the Soviet Union.

Not being sufficiently versed in the history of socialism, and not having any appreciation of, or first hand knowledge about, the area, we historically viewed ourselves as part of the “undecided.”

Plus, we always try to identify some element of internal consistency in our positions, when they are applied to other areas. It seems to us that if one believes that socialism or central control is a bad thing in one area, then it’s probably a bad thing in another, and another ….

How does one justify the involvement of government in any aspect of our lives, other than perhaps the military? Isn’t it disingenuous to pick areas where you feel government should play a part, and then choose others where it should not?

We raised questions about whether government should be involved in education, in responding to natural disasters, and in other areas we take for granted.

We remained open to the notion that less government is better. However, no one ever convinced us of the merits of that position, since it always appeared to be ideologically and subjectively driven, and not systemically based.

Finally, to our rescue came Rambo. Well, not quite, just Ramo. He is the author of The Age of the Unthinkable. During his book presentation on C-Span2 Book TV recently, he claimed that the world is different today than in years past, and that old approaches to problems will not work.

But this was the bottom line: Things are more interconnected today. Our economic systems are more interconnected. The more interconnected they are, the more complex they are.

The more complex they are, the more potentially unstable they are. Like a house of cards.

If any significant aspect of the system fails, the whole system is at risk. Arguably, this is what brought down the Soviet Union, and not President Reagan’s threats per se. Sorta also sounds like that “a chain is only as strong as its weakest link” saying.

We’ve come to recognize the importance of the manner in which a concept is framed. (For example, we've long felt that the pro-choice faction chose a poor label for their cause since a woman arguably has choices available to her long before conception.)

Once we heard Ramo refer to the “instability of interconnected systems,” it struck a chord. The emotion laden arguments against socialism or central governance always struck us as arguments of those disinterested in sharing with others, because they had theirs.

This instability argument is one with which we may be able to work.

We’ll think about it a bit over the coming months, and get back to you.

Post No. 111: Been There; Done That

© 2009, the Institute for Applied Common Sense

We frequently suggest that in tackling problems, we examine history, starting with a minimum of 5,000 years, and as far back as 13,000.

However, we’ve come to the conclusion that history alone may not always be able to help us out of jams.

Alan Greenspan recently lamented that those principles he relied on for 40 years no longer apply.

An historian once noted that we should always proceed with caution when we think that the policies of the past can be reapplied, and will generate similar results.

We might do well to consult physics, and better understand the laws of static and dynamic forces. (These are older than humankind and history.)

In order to assess or address anything within a dynamic system, one must freeze or suspend all movement or change, of as many variables as possible, or otherwise isolate the component at issue.

We also know that slight tweaks (no, not tweets) of a variable can result in dramatically different results.

Logic dictates that the larger and more complex the system, the more difficult it is to manage or affect any part of it.

As comforting as it may be psychologically, to resort to playing marbles and pick-up-sticks, it is of questionable value to return to many practices of the past.

Imagine trying to reconstruct that romance which you had with that guy or gal back in school (altered state of consciousness or not), and hope that those old moves lead to the same results.

As a nation, we can never re-create the circumstances extant when prior practices and policies were implemented and applied.

The world may have changed every year back then, but it now changes every nanosecond. We need to recognize this, and conduct ourselves accordingly.

It’s actually lazy and simplistic to merely repeat the practices of the past, even if they were successful. It requires far more energy, commitment, focus, and innovation to craft appropriate approaches to new conditions, everyday.

Sitting on the sidelines and simply watching changes occur without responding also may not be the best tactic.

To suggest that our enemies or competitors have been sitting still, or that the conditions in our country have been in suspension, is just plain science fiction.

For years, Corporate America used large, 100 year old silk-stocking firms to perform its outside legal work. The Logistician and his partners sought that same work, somewhat successfully, by offering a lower rate. They were smaller, more nimble, had lower overheard, and more importantly, hungrier.

Yet, many corporations were reluctant to make such a change. If things went awry, someone would undoubtedly question why the referring counsel did something out of the ordinary, and did not stick with the tried and tested firms.

Hollywood’s like that. It’s far easier to explain why “Men in Black 12” did not generate record box office numbers, than a new concept.

But consider this.

If you‘re surprised about a development over a span of 30 years, like the demise of our educational and industrial systems here in the U.S., you probably were asleep at the switch, and not paying close attention to changes on an annual, much less a monthly, basis.

We all have a tendency to go through repetitive motions. They’re safe, familiar, less subject to scrutiny, and require less effort.

UPS had a marketing campaign which referred to “moving at the speed of business.” Hong Kong is a 24 hour business city. Imagine what happens to others when their business communities are asleep.

It’s the nature of competition, and the nature of change.

There’s been much noise about returning to the policies of Clinton, or Reagan, or Kennedy, or FDR. Quite frankly, returning to those dated tactics, no matter which side of the ideological line they may fall, may not be particularly helpful.

Those circumstances no longer exist, and will never exist again. And that doesn’t take into consideration the efforts to revise history.

We can’t duplicate the economic variables. We certainly can not re-create the psychological and social variables.

Going forward, we need to craft new procedures, new principles, new tactics. Ones that fit our current conditions, which have never existed before.

So to all of our politicians and policy makers out there, please detach yourselves from your ideological goals and preferences, and repeating that mantra about what you think worked in the past.

Try to figure out what’s most likely to work, TODAY, going forward, based on current conditions, and those we anticipate.

The world is far flatter than we once thought.

Post No. 108a: Article of Interest re U.S. Education Status

The following article appeared in the April 22, 2009 electronic edition of the New York Times:

April 22, 2009

Op-Ed Columnist

Swimming Without a Suit
By THOMAS L. FRIEDMAN

"Speaking of financial crises and how they can expose weak companies and weak countries, Warren Buffett once famously quipped that 'only when the tide goes out do you find out who is not wearing a bathing suit.' So true. But what’s really unnerving is that America appears to be one of those countries that has been swimming butt naked — in more ways than one.

"Credit bubbles are like the tide. They can cover up a lot of rot. In our case, the excess consumer demand and jobs created by our credit and housing bubbles have masked not only our weaknesses in manufacturing and other economic fundamentals, but something worse: how far we have fallen behind in K-12 education and how much it is now costing us. That is the conclusion I drew from a new study by the consulting firm McKinsey, entitled The Economic Impact of the Achievement Gap in America’s Schools."

* * *

To view the remainder of the article, click here.

Post No. 108: Too Few Indians; Not Enough Chiefs

Something’s bothering us.

How in the heck did so many become experts on economic theory overnight, and declare themselves competent to expound on this tactic or that?

Not only are they economic experts; they can predict the future with certainty.

Lots of us have difficulty tracking a checking account balance.

We here at the Institute aren’t sure of much, other than tequila will make you stupid, vodka will make you delusional, and hanging out with more than one woman will make you broke.

And so with amazement, we have watched talk show hosts, pundits, and just regular folks like us, draw lines in the sand describing what happened, why it happened, and what is about to occur.

Where were these people before things started heading south? And why weren’t they running things?

We’ve operated businesses. Stuff’s tricky. We don’t pass judgment on others, especially those with larger /more complex operations.

One of the Logistician’s partners used to say that business people are happy if they get it right 51% of the time. 60% will make you wealthy.

And yet people with not even lemonade stand experience call others incompetent.

That’s not to mention those who’ve cornered the market on history and claim their view is historically accurate, while others are revisionist in nature, or worse yet, lies.

A symposium on the economy was recently held at George Washington University.

There were roughly 10-13 economists, journalists, former banking officials, and business professionals.

First, the group noted that over decades, our best and brightest were diverted or “distracted.”

Instead of pursing careers in science, bio-tech, and other technological areas, they spent time creating “innovative financial instruments,” and generated huge amounts of money, mostly for themselves, through leveraging.

Second, the question arose as to how the best and brightest from our top educational institutions managed to be at the center of this whole mess. This was not a collection of dullards.

Third, there was some sense that the captains of finance had little sense of social responsibility.

Fourth, no one attributed our economic situation as primarily due to one factor, a short period of time, one party, or one administration.

Even the least sophisticated amongst us should appreciate that:

1) The world hasn’t faced a similar economic crisis in our lifetime. There is no historical precedent. No one really knows precisely what to do;

2) This crisis seems to have been precipitated by an economic situation more or less defined by the availability of more capital than good deals;

3) There is no more “them” or “us.” We can’t get along without Chinese money and China can’t get along without the American market. We need a world wide coordinated effort… which is going to be difficult;

4) The economic policies of the last 8 (or 15, or 20, or 30) years got us to this point and did not produce the desired results;

5) When you find yourself in a hole, the first thing to do is stop digging;

6) There is no drug as addictive or powerful as easy credit and the promise of instant wealth;

Finally, we’ll pass on something from a buddy who should know. The main reason why Tim Geithner is flailing in the wind is he can’t consult the Street and the Big Banks because there are horrendous conflicts of interest. Treasury is also inadequately staffed for this reason, along with the fact that few have the guts to take on a task of this magnitude.

Much of the wailing and brow beating can largely be attributed to a few who became very rich during the last decade exploiting easy credit and nonexistent regulation.

They became hooked on the most powerful drug extant.

The rest of this public viciousness is nothing but political finger pointing.

Hunter Thompson once observed of Washington: “In a closed society, where everyone is guilty, the only crime is in getting caught, and the only sin is stupidity.”

Mark Twain, 100 years earlier, noted: “Few things are harder to put up with than the annoyance of a good example.”

We elected this man on the promise of change. Lord knows our economy is in desperate need of something different.

We at the Institute of Applied Common Sense ask only that those both for, and against, this change “get with the program.” If you have a better idea, let’s hear it.

If not, let’s tamp down the fervor, and give a new approach a chance.

After all, the stuff we did before obviously didn’t work.

Except, perhaps for the benefit of a few.

Post No. 91: Tell Us What You Thought

Last evening, we all watched as President Obama delivered a speech to the world. The “talking heads” have had much to say during this relatively brief Obama Administration.

We here at the Institute for Applied Common Sense have no political agenda.

We simply believe that, by encouraging the exchange of ideas in a civil forum, where the views of each person are equally respected and valued, we will ultimately arrive at better solutions through consensus. Through this process, a Common Sense approach will emerge.

We have several questions of you, the American citizen:

1. What did you think of the President’s speech?

2. What are your thoughts about the first 30 days of the Administration?

3. Did the President’s speech make you feel better or worse about the Economic Stimulus Bill which he recently signed?

Go for it.

Post No. 90: Making Use of the Current Financial Mess

© 2009, the Institute for Applied Common Sense

Mark Twain observed that if a cat sits on a hot stove, she will never do it again. Unfortunately, she'll probably never sit on a cold stove either.

Everyone has their favorite villain for the current economic collapse. The Logistician sent me a list of 10 ways in which he felt consumers were responsible.

I told him that I did not buy into his premise, but in thinking about it further, I realized that if we only point the finger at the fat cats, we will have learned little. We all bear some responsibility.

We are behaving much like Mr. Twain’s cat. Despite our efforts to revive our financial system, we have little to show for it… yet. We definitely can’t sit at the starting line waiting for the next guy to say, “Go.”

We simply need to use some Common Sense, on which the left and right should be able to agree.

According to the Scientific Method, bad ideas and experiments that don’t work are as valuable as those that do, provided we learn from the experience, and use that knowledge productively.

So, with 2/3rds of our economic well-being based on our own behavior, we would like to suggest a few topics for discussion, the results of which may assist us in finding our way out of this financial wilderness.

1. If a deal sounds too good to be true, it probably is.

You don’t need a Ph.D. in economics to realize that markets don’t always go up. The observation that a few people are making great sacks of money, and violating the rules of Common Sense, does not relieve us of the obligation of doing our own home work.

If you can’t make the numbers work within your current income, don’t bet on massive increases in the value of your investment to bail you out.

You have a better chance in Vegas than in a financial commodity you do not understand. (And the truth be told, few of us really understand them.)

2. Don’t bet your home on things you don’t need.

Contrary to the Logistician’s mantra, there is nothing wrong with wanting a better, more luxurious life, but not at twenty percent interest. Here there are demons…like bankruptcy…and acid rain falling on your childrens' heads.

Save the money 1st; then buy the Lexus. It’s only Common Sense.

3. Ignore herd instinct.

When everybody agrees on the direction of a market, guess what…?

4. Be careful when building and buying things which are more than you need.

Advertising not withstanding, buying an Escalade won’t make you an NBA star. There is a reason why the Toyota Camry and the Honda Accord are the 2 best selling cars in the country.

5. Particularly avoid using credit or going into debt to build or buy things which are more than you need.

We went into debt, both individually and collectively, based on the assumption that the party would never stop.

Pick up any book on history…it always does. And, you don’t want to be the guy playing musical chairs when….

6. Remember that gluttony and greed are 2 of the 7 deadly sins.

Really want to make a 20% return on your income? Pay off your credit cards.

7. Carefully weigh the impact of retirement on an individual and societal level.

The Logistician and I differ on this point. The Logistician feels we got lazy and retired too early. My take is that we took the money and ignored our inherent desire for a more worthwhile job… and after 30 years we couldn’t wait to get out.

With our most experienced workers, although still productive, leaving the workforce early, all of this experience went to waste… and it is experience we can ill afford to waste.

8. Avoid being seduced by the short-term Sirens.

There was a time when we bought things to last. Next time you are in the park, look at the number of people taking pictures with manual focus SLR cameras.

This desire to last drove a subsequent demand for quality… producing a pride of workmanship that represents the essence of “Quality of Life.”

9. Don’t leave the education of your kids to the entertainment industry.

Not wanting to engage them, we abdicated our responsibility to the likes of Nintendo, Disney, and MTV, as long as they didn’t interfere with our pursuit of the “good life.”

If you don’t want children, don’t have them. You can not experience the sense of wonder children project, as they learn about the world via remote control.

You have to be there… and evolution suggests that this is one of the few primal pleasures we have inherited undiminished.

10. Lend a helping hand.

If you know someone in need of a job, through no fault of his own, ask around. Do what you can to help him get re-employed.

Want to raise the “quality of your life,” watch the face of a man or woman you have helped put back to work. Government can’t do that.

You see, we do most of the spending. No income, no spending. No jobs, no income.

Is there anything on this list which defies Common Sense?

After all, we should be smarter than Mr. Twain’s cat.

© 2009, by the Laughingman for the Institute for Applied Common Sense

Post No. 68b: Financial Meltdown Worsens Food Crisis

The following article of interest is taken from the October 26, 2008 electronic edition of the Washington Post. We suspected that because of the impending presidential election at the time of the original publication of the article, many readers would pay little attention to it and the significance of the issue.

We purposely held it in abeyance with the intention of bringing it to your attention once the election mania subsided. The situation described in the article should cause us all to pause.

It should remind us that all conduct has consequences, and possibly consequences beyond our immediate circle. It suggests that we should always consider the long-range (both in space and time) ramifications of our conduct. It should further prompt us to consider that responsible conduct is always bigger than us, and always bigger than the here and now.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/25/AR2008102502293_pf.html

Post 55a: WATCH NOW Panel Discussion on Economy: Tom Friedman and Others

Panel Discussion on the Economy with Thomas Friedman, Barbara Ehrenreich, and Michelle Singletary.

On C-Span2 Book TV, right now as this e-mail is being generated. Started at 2 pm EDST. Some of these presentations you can watch on line.

http://www.booktv.org/program.aspx?ProgramId=9889&SectionName=Politics&PlayMedia=No

Post No. 49: Finally, Someone Explains Something That We Can Understand

I was fortunate enough to receive a decent education at some decent educational institutions. I also took corporate, business, accounting, banking, finance, and various other management courses.

However, I must be honest. I do not understand even a quarter of what occurred over the past 20 – 30 years to lead to our current financial situation.

Although I am sure that most of us can point to some emotional, conceptual issues, be it outsourcing, illegal immigration, two foreign wars, decreased industrial output, and greed, I just really feel like I am in the minority in terms of understanding investment banks, hedge funds, selling short, bundling, derivatives, and such.

Just last week, I contacted two of my graduate school buddies, one with a specialty in banking, and the other in corporate securities, and I told them that I hoped that they were in the Senate Banking Committee sessions to keep them honest.

One of them, “The Bear” (no relation to the term to describe financial markets), forwarded the following article to us by John P. Hussman, Ph.D. of Hussman Funds, entitled You Can’t Rescue the Financial System If You Can’t Read a Balance Sheet, which was posted by Dr. Hussman earlier today. It provides food for thought.

September 29, 2008

You Can't Rescue the Financial System If You Can't Read a Balance Sheet
John P. Hussman, Ph.D.
All rights reserved and actively enforced.

This is a bad idea.

However the final legislation is written, the Troubled Assets Relief Program (TARP) being rushed through Congress will evidently be built around its single worst provision, which is that the Treasury will have authority to purchase distressed mortgage securities from U.S. financials.
As I noted last week in An Open Letter To Congress Regarding the Current Financial Crisis, the sequence of bankruptcies that we've observed among U.S. financials has been almost exactly in order of their gross leverage (the ratio of total assets to shareholder equity). The reason for that is:
1) as the assets of a financial company lose value, the losses reduce the asset side of the balance sheet, but also reduce shareholder equity on the liability side;

2) as the cushion of shareholder equity becomes thinner, customers begin to make withdrawals;

3) in order to satisfy customer withdrawals, the financial company is forced to liquidate assets at distressed prices, prompting a further reduction in shareholder equity;

4) go back to 1) and continue the vicious cycle until shareholder equity goes negative and the company becomes insolvent.

Let's return to the basic balance sheet of a typical financial company before the writedowns:
To read the remainder, click on: http://www.hussmanfunds.com/wmc/wmc080929.htm.

Post 47b: First Draft of Economic Rescue Package Released at 5 pm EDST

View the first draft. Still to be finalized.

http://www.foxbusiness.com/story/markets/economy/draft-economic-rescue-package/

Post No. 47: Needed - Attitude Adjustment Following Meltdown

© 2008, The Institute for Applied Common Sense

Much has been made in recent days regarding a prospective leader’s ability to multi-task. And yet we must recognize that there are consequences.

Just yesterday, a colleague here at the Institute mentioned that there was plenty blame to go around in connection with this economic mess. He also suggested that the first step in addressing a problem is to take responsibility for having participated in its creation.

Consequently, we the citizens of this nation, must examine ourselves, since a nation is not comprised of political and business leaders alone.

Most available evidence suggests that members of the last two generations do not read anything but comic books. They purportedly depend almost entirely on friends, and the Internet, for their news. In the competition to be among Phil Night's "Cool Five," (http://www.meetup.com/members/3961181/) being first with the rumor counts more than being right with the implication.

And when you are doing six things at once, who has time to run the numbers, or check the sources? In the interest of fiscal responsibility, GM has canned more than half its North American work force in the last five years... replaced them with a workforce with virtually no experience in auto manufacturing… but willing to work for half as much. And while GM was busy canning workers, revisiting the expectations of retirees, cutting "supplier" costs, building new factories in the cheapest labor markets possible, and taking a fling in the sub prime real estate lending market, Toyota increased its US production by half to become the best selling brand in the US, and the best selling producer in the world.

In the mean time, Toyota's credit arm surpassed both Ford and GM's captive units to become the most profitable lender in the US.Toyota's currently underutilized employees are still working for Toyota... most receiving more training, and thus looking toward the future.

That may be partly due to government involvement in corporate conduct, as is the case in many countries, but it still reflects the nature of the competition, not quite as anxious to post quarterly profits and thus sacrifice the long term. The scientific method teaches us that experience is not expensive; it is priceless... that results you cannot duplicate cannot be attributed to the work you are doing... and that repeating the same actions and expecting different results is insane.We do not need to reproduce the ten year long recession Japan suffered after their housing bubble burst.

But if we are going to avoid it, we are also going to have to concentrate on what they did right...and wrong, and learn from their mistakes.

We as a nation need to observe how others do things, and take notes. To do that, some of us are going to have to spend a bit more time reading printed material other than comic books...and a bit less time on FaceBook, running down the latest rampant rumor.

A colleague, after teaching adults students at a local community college, called me up and said that he felt that someone had “cheated these people out of an education.” The cheaters obviously did not appreciate that cheating affects us all, and for the long term.

With the New Deal, more and more of our citizens learned to depend on government. In recent years, more and more workers learned not to depend on jobs, particularly in the corporate arena, and launched out on their own.

Having now determined that we can not trust our government and political leaders, perhaps it’s time for ordinary citizens to take charge of their destiny, and rely less on our purported “leaders.”

Maybe McCain had it right in picking someone who could connect with “regular citizens.” I can’t imagine any hard working citizen from that social strata doing to this nation what our corporate and political leaders have done.

© 2008, The Institute for Applied Common Sense

Post No. 45a: Where is Adam Smith’s "Invisible Hand?"

Where is Adam Smith’s "Invisible Hand? "


1. Thus far, 53,000 babies have become sick, and 4 have died from this product. I imagine that if you are in a country of 1.4 billion, that’s small change. But do we here in America care? Check out the latest on the global milk scandal.

http://www.cnn.com/2008/WORLD/asiapcf/09/24/china.milk/index.html?iref=newssearch

2. By the way, some have suggested that there is a common element which exists between the motives of those behind the Chinese global milk problem and those individuals who led our country into its current financial mess. It might be instructive for us to revisit the ideas of Adam Smith. http://en.wikipedia.org/wiki/Adam_smith; or http://encarta.msn.com/text_761556047___0/Adam_Smith.html

3. Finally, we previously examined the failure of our government to address, three years later, the basic living standards of some of the Louisiana residents ravaged by Katrina. Earlier today, the news reports showed long lines of cars containing Galveston, Galveston Island, and other South Texas residents heading back to their homes. http://www.cnn.com/2008/US/weather/09/24/galveston.ike/index.html?iref=newssearch. Does our country have the political will and economic resources to return these folks back to the status they enjoyed prior to the storm? If so, will any Louisiana residents still be in limbo after the needs of Galveston residents are theoretically addressed?

Just stuff to think about today other than our current financial and economic complications…. You know, maybe we have created a false sense of expectations in this country. When you take people’s money through taxation, they develop expectations about what the government can and should do, and I can guarantee you that the expectations vary in amount and degree.

Post No. 45: CEO America by Guest Author "Mark Twain"

CEO America

© 2008, The Institute for Applied Common Sense

Shortly after the election of George W. Bush to the presidency, someone commented that for the first time in American history, we might see a president who would run the country like a corporate CEO.

Few of us appreciated, at the time, the prescience of that statement.

We are now at a tipping point.

We have two, very, very good guys... individuals who make their own party finance people squirm and sit up nights worrying about their own futures... running for president... and, ladies and gentlemen, the game has changed.

When Congress gets done, we, the American taxpayers, will be on the hook for about $1 trillion, to guarantee that the derivatives, sub prime mortgage bundles, and a host of other questionable financial vehicles, we were repeatedly told we were "not sophisticated enough to understand."

(Tell me if I am alone; however, I know very few regular, working class people, who would have tried to pull this B.S. off, at least not in good conscience.)

What this means is that neither candidate will get to do any spending on behalf of his financial backers.

There is not enough difference between these two guys, with respect to the leadership qualities which really matter, to overload a mosquito in flight.

We are forty something days away from an election that will decide the future of our country... and we are being inundated with paid for advertisements debating the meaning of putting lipstick on a pig.Talk about putting lipstick on a pig.

What is more interesting is how the talking heads and spokespeople who engage in this ridiculous banter generate more in annual income than the average American family.

The first question I want to hear answered in the upcoming debates is: "Where would you put your opponent in your cabinet?"

And the second is, "Who would you put in charge of the economy?"

In 1975, car sales fell 50% below 1974 levels.

Sure the Arabs had something to do with it...but the bigger problem was our own federal government's "Seat Belt Interlock Law."

A law that fixed no problem I know of... and I fear without some serious discussion of what has got us into this financial hole, we will see another such idiotic piece of legislation promoted to the public as the solution to the rape Congress is currently debating.

Of course, I could always be wrong... but I am part of the emergency medical staff the local politicians are bragging about... and as best I can tell, they have no intention of paying me for my services... but I’ve got a few creditors out there who want some serious bucks from me... and want them right now... for services rendered to me and my family which were far more pressing and necessary than padding the wallets of some greedy business types.

Go figure....

Yeah, you business types may consider me unsophisticated, but I’m mad at hell… and, for good reason.

© 2008, The Institute for Applied Common Sense

Post 44b: Anxious in America by Thomas Friedman

This is a reprint of an op-ed piece by Thomas Friedman originally published on June 29, 2008

Copyright 2008, The New York Times

June 29, 2008

Op-Ed Columnist

Anxious in America

By THOMAS L. FRIEDMAN

Just a few months ago, the consensus view was that Barack Obama would need to choose a hard-core national-security type as his vice presidential running mate to compensate for his lack of foreign policy experience and that John McCain would need a running mate who was young and sprightly to compensate for his age. Come August, though, I predict both men will be looking for a financial wizard as their running mates to help them steer America out of what could become a serious economic tailspin.

I do not believe nation-building in Iraq is going to be the issue come November — whether things get better there or worse. If they get better, we’ll ignore Iraq more; if they get worse, the next president will be under pressure to get out quicker. I think nation-building in America is going to be the issue.

It’s the state of America now that is the most gripping source of anxiety for Americans, not Al Qaeda or Iraq. Anyone who thinks they are going to win this election playing the Iraq or the terrorism card — one way or another — is, in my view, seriously deluded. Things have changed.

Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.

The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck. On Thursday, The Palm Beach Post ran an article on your S.U.V. options: “Continue to spend upward of $100 for a fill-up. Sell or trade in the vehicle for a fraction of the original cost. Or hold out and park the truck in the driveway for occasional use in hopes the market will turn around.” Just be glad you don’t own a bus. Montgomery County, Md., where I live, just announced that more children were going to have to walk to school next year to save money on bus fuel.

On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.

My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans. We are the ones in need of nation-building. It is our political system that is not working.

I continue to be appalled at the gap between what is clearly going to be the next great global industry — renewable energy and clean power — and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.

“America and its political leaders, after two decades of failing to come together to solve big problems, seem to have lost faith in their ability to do so,” Wall Street Journal columnist Gerald Seib noted last week. “A political system that expects failure doesn’t try very hard to produce anything else.”

We used to try harder and do better. After Sputnik, we came together as a nation and responded with a technology, infrastructure and education surge, notes Robert Hormats, vice chairman of Goldman Sachs International. After the 1973 oil crisis, we came together and made dramatic improvements in energy efficiency. After Social Security became imperiled in the early 1980s, we came together and fixed it for that moment. “But today,” added Hormats, “the political system seems incapable of producing a critical mass to support any kind of serious long-term reform.”

If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.

That’s us. We’re at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about — even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.

Copyright 2008, The New York Times