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Archive for February, 2010

Welcome To Michael

CAI has added a new writer to its stable of semi-literate pontificators.  We are glad to welcome Michael (Pete’s brother) to the fold and look forward to a new voice and a new point of view to add to the mix.  He is jumping right into the mix with his first post… a tale of a Hummer.  Michael will be adding an about page before too long so you can find out more about him.

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No more Hummers!

I am very happy to hear that the Hummer brand is likely to disappear, but before I explain my glee, I must qualify my comments. Without a doubt, I am deeply sorry for the people who have lost or will lose work or any type of income over this. Especially the ones who drive Priuses.

Obviously, The Hummer was an environmental nightmare, but that’s not the real reason I hate this vehicle. I really hate the vehicle because of what it seems to do to people.

A friend of mine told me a wonderful story that, for me, really says it all. He lived in an apartment and drove a small, fuel efficient automobile.

On frequent occasions while leaving his apartment complex parking area, he would find himself blocked by a Hummer heading in the opposite direction. Because the Hummer was so wide, and the apartment complex street, so narrow, the two cars could not pass. Therefore, one car would need to back up into a parking berth so the other could pass.

On the first such occasion, my friend politely backed up and allowed the beast through. On the second occasion, he paused for a moment, assuming that the Hummer driver would allow him through first. After all, that would only be neighborly.

The Hummer did no such thing. Again, my friend had to be the neighborly one. Subsequently, my friend found himself backing down from this auto-bully repeatedly for the next few months.

Eventually, however, my friend took a stand. On this morning, he had a full mug of coffee, and a strong mind to stand up for himself and his fuel efficient vehicle.

So this time, when the Hummer lumbered into the center of the road, my friend steered into the center as well to face his nemesis head on. He swigged his coffee and slowly but decisively inched forward.

At first, the Hummer held its ground, but my friend didn’t flinch. He didn’t slow, he didn’t swerve, he didn’t signal, he didn’t hesitate, and most important, he didn’t cry. Once he reached the Hummer’s front bumper, he revved his engine and honked his horn as if to command, “You will move out of my way, or there’s going to be trouble!” Okay, maybe with his car it sounded more like, “Ah come on fella, let me through this time!” Either way, the Hummer got the message.

After what seemed like hours the Hummer pulled backwards into a parking berth and stewed while my friend zipped by in glorious victory.

I’m guessing the Hummer had to eventually back down because it would have run out of gas eventually, but I digress. The point of the story is that the Hummer, aside from being a completely useless vehicle for suburban streets, also seemed to be the epitome of the Compensate for my own Insecurities Through my Vehicle Syndrome, or CITVS, which is a syndrome that I just made up.

How do I know that the driver of the Hummer was compensating? Well, first let’s take the fact that he or she lives in an apartment and drives a car that costs about as much as a home. Second, because the Hummer, like all Hummers, was clean. No dirt! If he’s not using it off-road, what other reason is there to own one?

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Click on “environment” over on the category cloud and you will find my frustrations with the global warming consensus… and I’ve taken some heat for it.  But lo and behold when skepticism has some measure of evidence.  And we are seeing a rise of that, following on the heels of the IPCC’s leaked e-mail scandal.  Well now the leader of that IPCC group seems to be easing up a bit.  From a wonderful Wall Street Journal opinion piece:

Phil Jones, the University of East Anglia scientist at the center of the emails, last week acknowledged to the BBC that there hasn’t been statistically significant warming since 1995. He said there was more warming in the medieval period, before today’s allegedly man-made effects. He also said “the vast majority of climate scientists” do not believe the debate over climate change is settled. Mr. Jones continues to believe in global warming but acknowledges there’s no consensus.

How nice to hear this after we were all bludgeoned over the head that there WAS consensus, and all skeptics were anti-environmentalists intent on destroying the earth.

As the opinion piece’s author, L. Gordon Crovitz continues:

Skeptics don’t doubt science—they doubt unscientific claims cloaked in the authority of science. The scientific method is a foundation of our information age, with its approach of a clearly stated hypothesis tested through a transparent process with open data, subject to review.

The IPCC report was instead crafted by scientists hand-picked by governments when leading politicians were committed to global warming. Unsurprisingly, the report claimed enough certainty to justify massive new spending and regulations.

Some in the scientific community are now trying to restore integrity to climate science. “The truth, and this is frustrating for policymakers, is that scientists’ ignorance of the climate system is enormous,” Mr. Christy wrote in the current issue of Nature. “There is still much messy, contentious, snail-paced and now, hopefully, transparent, work to do.”

I don’t know much about science.  What I do know, is that I do not like being told “just trust us” when a decision is being made, and especially decisions of such monumental importance.  And the “just trust us” attitude is all I feel has been presented for a while.  I’m not saying that the debate is over and solved now… but rather that it seems a debate might actually be forced to take place finally.

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YO In Trouble

This means I'm cool

When I was growing up it seemed that everyone thought it was cool to scrap off the “to” and “ta” on the back of their Toyota pickups so that they drivers behind them saw just a YO.  Needless to say it was about as cool as putting a NOTW sticker on your car – according to some.

Well now a couple decades later and Toyota is not a tiny little maker of cheap pickups, but the largest auto manufacturer in the world.  And in case you haven’t been reading or watching the news, they are in a bit of a pickle.  They are recalling vehicles faster than a UAW worker will threaten strike over missing a break Lindsey Vonn on a downhill slope.  There is no shortage of discussion in business schools and papers about what went wrong at Toyota, and what management needs to do to correct the damage done.  Well, my brother Greg wants to know, “How come CAI has no reporting on the Toyota fiasco? Doesn’t this have something to do with the free-market and capitalism and all that?”  As any reader of CAI will know, I am fierce defender of capitalism and the free market.  But what needs commenting?  The market is acting.

Toyota’s stock has dropped $20 in one month, as investor confidence is shaken and stockholders foresee huge revenue losses amidst lawsuits and recall costs.  And it will take a while for it to recover (though I think through this all, consumers will still prefer Toyota over Ford) but eventually with their business skill it will recover.

But more than share price the point is, or that I think maybe Greg was inferring is… is this a failure of capitalism?  Did greed outweigh the need for safety?  Proof that the free market can’t police itself?  I don’t think so.  I don’t believe there is a grand conspiracy behind this, but if there is it will come out and punishment will be handed down.  Capitalism isn’t perfect, as I’ve stated many times, I just believe it is the best of the options out there.  Toyota as a private company is no more immune to failure than the IRS.  The special aspect of the free market is choice.  Toyota made a mistake or failed in some way and I have choice of whether to trust them again, or not.  If a government institution or nationalized company makes a mistake, what is my choice?  Where do I turn to?

An economic treatise may provide little solace to those affected by the deaths reported in this debacle.  But they will get their day in court and sue for wrongful death, which is a sad somber fact of business.  You can try to sue the government if they allow you, but does it cause less pain to sue one over the other?

As I’ve quoted before, “…the trouble with capitalism is capitalists”, but the problems with other systems are the systems themselves.  So I suppose you could correctly view this as a failure in capitalism, as long as you viewed the results provided by other systems as bigger failures.  If Toyota was remiss in anyway we will see the results in how people respond, and they are responding in lawsuits galore.  But the market is working.  Capitalism is functioning.  I hear lots of questions and complaints, but I’ve yet to be offered a better alternative.

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The Shark Tank

I’ve become an enormous fan of ABC’s Shark Tank. If you haven’t seen it, let me briefly explain the premise to you: Five ultra successful entrepreneurs (the sharks) sit in big, comfortable chairs and entertain business ideas from would-be entrepreneurs. And, well, basically, that’s it. It’s not exactly a premise that I would have signed off on if I were an executive producer, but then again I would have had my reservations about Seinfeld as well.

Sometimes one or two of the sharks jump on board and agree to put their own money on the line to buy themselves a portion of these new ventures. Sometimes they get into a bidding war with each other. Most of the time they examine the business inside and out, only to ultimately turn it down, agreeing that it’s not a worthy investment. But, like I said, there’s little more to it.

The first time I saw it, I was convinced that there would be follow up and we would hear more about the ventures discussed with the sharks, and there would be heart-warming stories of the sharks’ involvement in these people’s lives. But, as far as I can tell, we don’t. And I’ve come to realize that I love the show exactly for this reason: there is no gimmick, no heart strings being pulled, no phony crying. Instead we get a close-up, raw look at capitalism and, in particular, venture financing.

It’s fascinating to see the ideas that are presented, and to see the different ways that individuals attempt to bring products to market. Most of them have a cottage industry running out of their garage or basement and have already spent their life savings attempting to make it work. In many cases entirely families are brought in to the operation and have taken on a roll in the company. In this sense you can see capitalism working as we would hope, in that it taps the creativity and potential of people who are not politically connected or of any particular esteem, but who have an idea and a will. In some cases you also see poorly thought-out ideas getting hit by the light of day, as the sharks dismiss them in rather shark-like fashion.

When the show is at its best, you see the sharks attempting to bluff disinterest in an idea, hoping to ward off competition, only to eventually make a casual offer that betrays their demeanor. When it turns out that two or more of the sharks are bluffing, things really get fun. In some cases the sharks go after each other, occasionally getting heated up in the process. Often, however, their differences are resolved in a partnership that satisfies both competing interests. The sharks are never moved by sympathy for the presenter; they only proceed on the basis of whether or not there is an opportunity to add to their already vast fortunes. It’s not exactly a model of Christian virtue, but again, that’s not the point of the show. It’s because they are heartless that the best ideas get financing and the rest don’t. (One of my favorite scenes involved a kind-hearted college kid who had invented glutton-free play-do, and he wanted financing to build a manufacturing plant. The sharks asked him why he didn’t just sell the idea to one of the three big toy manufacturers and he replied that he wanted to create jobs in his community. The look of incredulity that this statement was received with was absolute television gold). Many people do get helped, but only in a manner that Ayn Rand would approve of- they are helped on terms that help the helper. It’s a reality show that actually feels realistic, it’s raw capitalism, it’s fascinating and it’s entirely entertaining.

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Just yesterday (or today in America), Democratic Senator Evan Bayh announced his retirement from the Senate. His reason?  Bayh argues that “Congress is not operating as it should,” citing a lack of bipartisanship causing a legislative gridlock.  Bayh has made it a point to note that he is not fed up with public service as a whole, but specifically with the current state of Congress.  According to political analyst Jennifer Donahue, the left-wing members of the Democratic Party in the executive branch and in Congress are putting a large strain on the Democratic centrists.

Similar criticisms of centrism are facing the Republican Party, with former Arizona congressman J. D. Hayworth challenging John McCain for his Senate seat, claiming, “You could say they are two John McCains.  The one who campaigns like a conservative and the one who legislates like a liberal.”

From the perspective of this European correspondent (tongue-in-cheek), American politics is largely a centrist playing field.  In the UK, for instance, the ‘centre’ is much farther left than in the US, but there does exist a sizable neo-Fascist party (BNP), something nearly unthinkably right-wingéd in the United States.  From this perspective, the ‘far-right’ and the ‘far-left’ Americans are actually not as far apart as we might immediately suppose.  Though Barack Obama has been accused of being a socialist, it would be difficult to find a Labour Party member who would consider him such.

Still, in the heat of American partisanship fueled by the fierce rhetoric of newscasters and politicians (and those posing as politicians), the center is no man’s land.

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Have a great weekend everyone.  Enjoy “To Kingdom Come” by Passion Pit. Thanks again to Greg for the introduction.

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