Merry Christmas

Just shy of one year ago my sweetie pointed out the “somewhat” cynical and negative tone of many of my posts. The category, “The Art of the Possible”, was created for things positive.

Well, here we are, almost a year later with only two posts in the category. Today, I decided, it’s time for another. It is the Christmas season after all.

Families have Christmas legacies. Mom began ours (or continued her family’s) with her great enthusiasm for all things Christmas. When we were kids it began in pretty much the normal way. She created such excitement about Santa Claus, decorating the house, and gift giving.

We did all of the decoration stuff including the careful selection of the “double balsam” fir, the best, Mom said. It sure smelled good.



Dad borrowed one of the big Graflex cameras from the office and took our pictures by the fireplace for the Christmas card.

Note, I said Mom emphasized gift giving not getting. We were fortunate and would get wonderful gifts (Oh, those Lionel train components!) but after the present opening was finished and my sister and I had settled down, we did the deliveries. Mom had been baking and there were lots of packages of grand treats to be delivered to friends, to the nuns who taught us, to the priests at the church, and to others needing joy on that day.

I can’t speak for my sister but I dreaded the process and loved it at the same time. We would drive around town spreading our little happiness packages and receiving great receptions wherever we went. Always with great trepidation, I would approach a door with gift in hand, knock, and shyly wait for the person to answer. In our small town, everyone knew everyone so I was greeted warmly all the time. The trepidation faded and the good feelings surged. On to the next stop.

At the homes of some friends the drop off turned into an extended visit and a chance to share the joy of my friends with their presents. After all stops were completed, the return home brought us back to all of the new toys and that sweater from Aunt Datie, a welcome gift, but not easily played with.

This year, my children, now in their thirties will be with their gals’ families leaving our family get together for January or Danuary as we call it. My youngest son Dan was born in January and his birthday celebrations always seem to last the whole month. I believe that it has something to do with Eileen, their mom, having them in social situations almost since birth. I am convinced that this blessing she gave them was the foundation on which the boys amassed such a large collection of friends.

So, for the first time in my life I am not going to be home this Christmas. My sweetie and I will be going to one of the last grand old victorian hotels in New Hampshire. Currier and Ives set the standard and we hope to live it.

While my Lionel trains were great and buying toys for my own kids and wrapping until the wee hours on Christmas eve is something I will always cherish, the real Christmas for me is the wonderful, happy connection with family, friends, and others around me.

Mom’s last year was filled with the pain of terminal ovarian cancer. She knew she had little time left but true to form when my sister and I went down to care for her in her final days, late in November, the Christmas presents were arrayed on her couch. She had catalog shopped during the summer. We brought them home after she passed and had the sad joy of opening them that Christmas only days after her passing.

Mom, I hope I have done the tradition proud. Merry Christmas to you and Dad.

Posted in The Art of the Possible | Leave a comment

5%, 10%, Yes, even 15%

A flimflam? You betcha.

A TV commercial for one of the TBTF bank credit card businesses came on the other night (yes, I watch TV, but only for the articles… no that’s not right…).

These unrealistically happy people in the commercial were going on about the cash back they were getting from their credit card company. Buy this and get 5%. Buy that and get 10%. Yes, you can even get 15%, if you buy those kinda things.

We all know the stories of the drug dealer giving the customer a couple of “samples”. The customer gets hooked and becomes the “user”. The credit card folks went from a simple consumer credit convenience product that was reasonably priced to a fully built out, completely addicting, customer screwing product with millions of hooked “users”.

And, you thought the neighborhood drug gangs were dangerous? Read on.

Why did the credit card companies change? Well, the banking business, especially for the TBTF folks that have been created since the elimination of Glass-Steagall, can have some bad cycles, especially when they go way out on the risk curve and loose billions.

While they were loosing these billions, someone noticed this burgeoning credit card business. They could borrow from the Fed window for a couple of points and lend that money out for 10% or so, a nice eight point or more spread. (Today the spread is more like 30% since the fed window is effectively zero and the card rates have often been bumped to 30%.)

Folks had become more and more addicted to their credit cards.

Then during the TBTF institutions recent trip down the risky road, all hell broke loose. Without going into why that happened, these folks looked at this huge collection of addicts, err… customers, they had hooked in their credit card businesses.

First came the fees: late fees, over limit fees, currency conversion fees, reward program fees, activity fees (if you DON’T use the card), paper statement fees, payment protection fees, reward recovery fees, and whatever else they can think up. Now some of these fees had been around for a long time but they were increased to some pretty dramatic numbers.

Credit lines were reduced, minimum payment calculations were changed, rates were increased, and rates were made variable. All of this was often done without any change in the card holder’s credit rating. The cute finagles of the credit rating agencies will have to wait for another day. Were they complicit? You bet.

Two of the participants in the current economic troubles were actually tasked with writing regulations to avoid such bad things in the future, Dodd and Franks. Oh, the arrogance of government.

At least the idea of having the bank robbers write up how to keep the bank from being robbed seems like a good idea. When the bank robbers are still walking the streets though, do you thing their new regulations will stop the problem or just move it to a new venue?

Bankers said these changes to their credit card products were made to adjust for the “new market reality”. Whose reality? Theirs or yours?

Kicking the habit isn’t easy. Beating them at their own game is not impossible but it is really difficult.

I believe that these “products” are no longer viable for consumer use. The 5%, 10%, yes even 15% messages are designed only to keep you addicted not to benefit you.

What to do?

As I have written elsewhere here, “Credit Cards Are Not Local”. You can start by not using them to buy coffee. You can stop using them to “keep track of my expenses”. Pay them down and put them in the desk drawer. Use another form of payment for your online purchases. Use cash. You can get a credit card from the local credit union but these have their own problems. Sure, they are better than the TBTF cards but be careful.

Most credit cards now are operated by the TBTF institutions, e.g. your gas cards, department store cards, etc. They are all are bad deals.

The big idea? I think this is a perfect time for a new, perhaps locally provided, consumer credit product.

Posted in Business | Leave a comment

Premature Celebrations

Yesterday, Sunday, was a day of pain as the NY Giants absolutely blew it against their arch rival Philadelphia Eagles and the NY Jets continued down their “all yak and no shack” path.

This post is not about that, though. Football, yes, the NY teams no, except as examples of the very odd behavior I am about to discuss.

Now I am not a true fan. I like to watch the NFL; college football, not so much. I like to watch lots of sports being executed at the very top level. It is interesting to think about these being the very best competitors in the world.

Imagine the first drag racer to exceed 330 mph in a quarter mile drag race, imagine 3000 hits in major league baseball or a major league pitcher delivering a no hitter, think about facing a person consistently serving over 140 mph in tennis, and more.

Think about Tony Stewart who won the NASCAR, Sprint Cup championship yesterday. He had so much trouble with his car that he kept needing to get it fixed and fell to the back of the pack multiple times. He passed 118 cars to finally win the race, a true champion who, ten races ago hardly had a statistical chance of winning the championship.

Now considering that these NFL football players are the very best in the world, I am totally baffled by the celebration behavior exhibited after almost every play.

A tackle, any old run, no not a first down, not a huge gain, just a four yard run, and forget a real accomplishment like a touchdown. The celebrations got so bad the league had to rule that they could not overdo it. Imagine making those calls?

Is it because the camera is on them? Is it because they are only interested in their own stats? I sometimes suspect this because players celebrate a touch down when their team is thirty points behind. The touchdown goes on their stats while the game is a disaster for their team.

Now I get the psych that is needed to run full tilt into a 350 pound person running full tilt right at you. I understand psyching up for a game. I do not, for the life of me, get these continuous celebrations.

What if this happened in an office. You finish the complex spread sheet you are working on and jump up and start pumping your fist and dancing around your desk.

The monthly report is done. High fives all around.

You hit your revenue target and do a back flip off your desk…

Maybe all of this stuff is related to the transition from being part of the “participation trophy” generation and then getting involved in very serious programs in school.

Maybe it’s just generational.

I love to watch linebackers. They tend to be smaller, very fast, and frighteningly tough. When I was a kid, Sam Huff was one of the best and played for the NY Giants. He helped develop this shy little New Hampshire kid’s love for the Giants (the Boston Patriots did not exist when I was a kid). Today there are the likes of Clay Mathews with his long flowing blond hair. I don’t think Sam would ever have hair like that but it was a different time…

These wonderfully talented defensive players are so critical to a winning team. I love to see them just do their jobs, jump up off the turf with a satisfied shoulder shrug, and get set for the next play. Now some celebrate as well but it seems less so.

Guys it’s a game and a job. Do it well. Do your best all the time. Let’s get back to the shoulder shrug and puffed out chest and leave it at that.

Posted in The Curmudgeon's Corner | Leave a comment

Made In The USA

There is lint everywhere.

A few weeks ago I realized that my supply of everyday socks needed replenishing. As a new Prime member, not local I know, but locally my choices would be WalMart JC Penny, and the like, I did a quick search and ordered some Hanes socks. Why? Because I recognized the brand and connected it to quality.

They arrived, looked great, and I started wearing them. Some lint showed up the fist time they were washed. OK, it’s the first time. Well, it isn’t the first time anymore and they continue to pollute the apartment with lint.

I checked the tags when they arrived and, yes, they were “Made in China”.

For years, I have worn great outdoor clothing from Orvis, the fly fishing, wing shooting, and general outdoor activity company. I liked it because it was durable and stylish.

The last few years I have gotten clothing from them that was poorly sized, made from inferior fabric, was not durable, and, in one case, had buttons falling off the first time I put it on. I checked the tags; made in China.

Frustrated, I wrote a letter to the CEO. The letter did not complain, it only pointed out that their quality had slipped. I got a quick response saying that I could return for full value anything with which I was not satisfied. It did not even matter how long I had had the product.

I returned a number of items and, true to their word, they sent me a complete refund. A few days later a woman called to make sure that I was satisfied. I said sure. I was impressed with their policy. I pointed out to her that the point of my letter was completely missed, however, by telling her that they should not bother sending me any more catalogs.

Unfortunately, I could go on with more examples.

Made in the USA is the title of this piece. Does that represent some kind of patriotic leaning? Well, sure, but it really points out that by working the cost side of your business and chasing labor rates all over the world, you threaten your market share with collapsing quality. This is especially true for once strong brands like those mentioned above.

I am often accused of wanting to go back to the “good old days”, that I want things to be as they were, denying all of the wonderful progress of the past fifty years. I guess this is a natural occurrence with aging but this isn’t what is happening here, at least not completely.

As I look back over our country’s manufacturing glory days, I see companies that innovated and created wonderful products.

The inspiration to create great products was strongly inculcated by the owners of these companies. Proud employees created those high quality products.

Employees were truly seen as valuable assets and treated as such.

Right here in my home town, the Faulkner and Colony Mill would do such things as reduce hours worked rather than lay off valuable workers during a slow down. Owners would put in their own capital to retain employees during tough times.

Sure, we have to think about the economic and environmental costs of shipping our clothing, food, and everything else around the world as oil becomes more and more scarce. I think it’s just as important that we think about how to recreate these great companies that produced wonderful, well designed, and durable products.

There are tons of questions to think about. Can smaller companies run by owners compete with scale companies run by hired hand managers (who have learned how to empty the cookie jar apparently without upsetting the stockholders)? Why is there a need for unions? Have we too completely destroyed the infrastructure of manufacturing? Can we be local and still impact global markets with our expertise and great products? Will the urbanization of the world need to be reversed? The list goes on…

My Great Aunt Datie gave my Dad a Pendleton Shirt each Christmas for years. Dad loved them and wore them to a threadbare condition over many years. When he passed, a few were left and ended up in my closet. I loved to wear them because they were Dad’s. They also looked good and wore like iron.

I wonder where they are made today?

Posted in Sustainability | Leave a comment

The Sad State of TV News

Lots has been written about this topic but let me wale away at it for a bit.

I worked for one of the, at the time, big three networks for a number of years in the good old days. Back then, at least at my network, the news division was not compelled to produce a profit. This was supported by the founder of the network who was still alive and still involved in the management of the company. His belief was that journalistic integrity would be hurt by a profit motive.

Now this would seem to be a bad notion for a public company with a strong profit motive. It does, however, not imply that the news division was to be run irresponsibly or allowed to continuously abuse the corporate till. These are decisions that can clearly be managed for the overall good of the profit motivated parent. This point was lost on some of the journeyman managers who began to take over as time wore on. At one point it was declared that the news division must make money.

Some of us had a sinking feeling.

The sinking feeling was validated at a fancy, black tie affair in the grand ballroom of the Waldorf Astoria one night. I was sitting at a table with some great folks including the Director of News from the local owned and operated TV station of our network.

It was around 10PM when a non black tie dressed person rushed into the ballroom and came over to speak to the news director. After some whispering, he rushed off. The news director turned and apologized to the rest of us at the table for the whispering. He explained that there were two breaking stories in Gotham that night and a decision was needed about which story should lead the 11PM news.

As an aside, this story ages me (easy to do) because there were obviously no cell phones at the time.

He explained what the two stories were and we asked which one he chose. While I don’t remember what the stories were, I do remember that one was quite newsworthy but not exciting and the other was pretty much in the yellow journalism arena.

Guess which one he chose to lead the show?

Today, I don’t even watch the TV news except as a captive audience at the gym when it is the only thing on the television. Today, there are not just three networks there are… too many to count and many of them broadcast twenty-four hours a day seven days a week. That’s a ton of time to fill and fill they do. The amazing thing to me is that they get enough folks watching for advertisers to want to buy time on these networks.

The other night at the gym I was watching one of these networks consume their precious air time with the most inane commentary on the current state of the GOP primary campaigns. Now the GOP primary stuff is pretty inane all by itself but imagine what a service these networks could do if they used all of that spectrum that we, yes we, GIVE them to actually try to analyze just what the candidates positions are and how we might make an intelligent decision about whom to support.

Imagine if they did that without service to their own agendas.

Imagine money growing on trees.

Now the sad thing relates back to the fact that folks watch this stuff, hence the advertisers interest.

If they actually did great analysis, these very same folks would not watch and there would be no advertisers. Check out the ratings of some of the more thoughtful NPR shows. When a show had a really low rating, it would get an asterisk in the ratings books. We created a new noun and called these shows asterisks.

Asterisks did not last long.

So modern television news is really bad but how could it be fixed? One simple way, that I keep coming  back to in my mind as I contemplate all of the troubles of the world, is for us to stop watching. No viewers, no advertisements, asterisks, and then no show, maybe no network.

Obese Americans? Don’t eat so much. Eat healthy unprocessed food.

Angry at the banks? Take your money out and invest it locally. Put the credit card away and use cash. Use local currency.

Don’t like the quality of the clothing you are getting these days? Buy only quality clothing made by someone you trust, preferably local.

Concerned about the planet? Don’t drive your car that much. Make your living space energy efficient.

I could keep going but the real question is why don’t folks do these things instead of complaining and hoping some other “authority” will take care of it and them?

Be personally responsible for yourself and what happens to you and then let’s see what happens to the world and its troubles.

Posted in The Curmudgeon's Corner | Leave a comment


Elsewhere, I discussed government regulations just a bit. Tis a very big topic as you will see. A recent interaction with some of my students and teaching colleagues has resulted in me taking a closer look.

It seems to me that there is way too much government regulation and that it is choking commerce and other aspects of our lives.

Well, that’s a start. Now let’s take a look. Remember the usual rules apply, this is not a thesis, just some of my rumination that perhaps will advance thought somewhere, hopefully, in my head at least.

As was pointed out in my George and Government Regulation post, common wisdom seems to indicate that there are those in favor of government regulation and those against it. As I noted there, I don’t think it’s that simple and I do think that simplistic viewpoint taints any decent discussion of the topic. So let’s put that nonsense aside.

Who are they?

So who are the regulators? The federal and other governments state and local contain the legislators who create laws. These governments also contain certain regulatory agencies that they created like the Securities and Exchange Commission (SEC), the Food and Drug Administration (FDA) and on and on.

In California alone there are over 500 state agencies. They employ over 350,000 folks not including the folks they contract to do stuff. All of these folks get salaries, medical benefits, and pensions at the expense of the taxpayer.

Now the hand in the cookie jar image implies a negative but as I perused the list of CA agencies there were many that sound like duplicates, there is no clear process for house cleaning the list, and there is little incentive at the municipal level to contain this spending. Perhaps the negative is deserved.

What are these entities up to?

Government funds its activities with taxes or borrowings. The activities are voted on by representatives of the people. Expenditures have some transparency because they are in the government’s budget. These same representatives can create the agencies which create the programs that the people must follow. The agency may be funded, to a degree, by taxation and debt but the people must also kick in with compliance costs as these agencies create their rules.

With these agencies, a mechanism is in place to increase the size of government without it appearing in the government budgets and without all of the actions of the mechanism being voted on by the representatives of the people.

Instead of Taxation Without Representation that the fellows below saved us from, we have Regulation Without Representation.

How Much

The Federal Register is the official record for the approved acts of the US Government. It is intended to provide some transparency into the workings of the government, yeah, right. In 2010 it had 81,405 pages. When I graduated from college in 1965 it had 17,000 pages. Either the government got a lot more transparent in that time or a lot bigger. What do you think?

The Federal Register is where proposed and final rules, created by all of the agencies, are documented. The 2009 register noted 3,575 final rules created that year. There were 3,830 for 2008 and 3,718 for 2006. Now I could dig out all the numbers but if those  numbers are representative, we have a lot of rules.

Clyde Wayne Crews, Jr. studies this stuff and publishes Ten Thousand Commandments, an annual snapshot of the Federal regulatory state.

The costs of these rules are compliance costs that usually end up passed on to us, the consumers of company products and services that are subject to the rules.

One study showed that in 2008 these compliance costs totaled $1.75 trillion. Since there are more added every year, when you compare this number to the 2010 federal spend of $3.45 trillion, regulatory costs exceed half of the total cost of government.

In 2008 regulatory costs exceeded total corporate profits of $1.46 trillion, they dwarfed the taxes collected from corporations of $157 billion and from individuals of $936 billion (2010).

These costs represent over 12% of the country’s GDP. It’s amazing what we can’t see… Add in the regular (irregular?) government spend and the total cost of government is around 35% of the total economy.

Too Much?

Gut reaction… WAY too much.

Some, sort of random, numbers:

  • Regulatory costs are about double what the government takes in from us in income taxes
  • Nearly 38,000 final rules have been issued since 2001
  • In 2010 there were 3,573 final rules issued vs. 217 bills voted in by congress. Unelected bureaucrats are creating 1600% more laws than our elected representatives. (To be fair, this needs some sorting out since some rules are the result of the legislation.)
  • At one point in 2010 there were 4,226 regulations in the works, 845 of which would impact small business. This was about a 12% increase over 2009.
  • 547 of the 4,226 would impact state governments
  • 346 of the 4,226 would impact local governments

The regulations slam small business, the greatest job creating engine that we have available to us.

As the rules cascade into state and local arenas they drive up the costs that we have to cover for them. Remember the federal burden is 35% of the total economy. I don’t currently have any figures for what the state and local burden adds in.

Notice that nowhere did I discuss the number of rules that were eliminated. There probably are some, but would you dare to hazard a guess on the order of magnitude of that number?

We are clearly drowning, not in the rising waters caused by global warming, but in the rising tide of the hidden activities of our governments federal, state, and local as they try to control every aspect of our lives.

Dad and Mom taught me individual responsibility. Clearly understanding what that means and how it can impact your life can be read about in a great book by Jack Canfield, The Success Principles. Truly understanding what it means to be responsible for your own life is worth looking into.

Do you want to live your own life or have someone live it for you?

Posted in Political, sort of... | Leave a comment


Occupy Wall Street, wow! What is going on here?

As usual, many are discussing this in ways that suit their favorite ideological message. Some say it’s a bunch of loonies. Some say it’s the new liberal force for good. Some point out that many of the protestor’s “demands” or “declarations” are really quite reasonable and reflect the original notion of our government as described in our founding documents.

With so much to chew on let me make just one point. This point will look at only one tiny element of what appears to be a very broken financial system. 

Recently the board of directors of Hewlett Packard (HP) fired their Chief Executive Officer after a tenure of less than a year. The stock price dropped 47% on his watch. He was the fourth CEO at HP, the worlds largest technology company, in less than six years.

The owners of the company, the shareholders, having lost 47% of their value will now have to anti up over $10M just to get rid of the CEO. It’s in his employment contract.

So there is a “revolt” on Wall Street as the OWS’ers try to make their points but where is the shareholder revolt? This $10M is coming from money that could go directly to the shareholders or go to them through the effective investment of the $10M to improve operations and bump up the stock price. It’s their money.

“Tax the rich” ideas often come in response to the huge shift in wealth in the country to the top 1%. The OWS’ers actually call themselves the 99%. Taxing the rich hurts the job creators say some, but I think taxing the rich begs the question. Why pay $10M to someone who was an abject failure at his job? It’s just plain foolish and wasteful.

Bill Gates became very wealthy not by paying himself at an exorbitant compensation level but because the company he created and substantially owned was hugely successful making his ownership stake very valuable.

It’s time for shareholders, us, to step up to get some reason back into the compensation plans of the hired hands of the companies we own.

Posted in Business | Leave a comment


Correct tire pressure is a good thing. It will give you consistent performance, better mileage, and increased safety. When I was a kid, Dad checked the tire pressure pretty much every time we filled up the tank of the old Buick. He carried a pen shaped gauge in the glove compartment.

Years ago, a therapist asked me what I remembered about my Dad. I said, “Not much.” He then proceeded to help me remember not by the usual, it’s his fault you are all messed up approach, but by gently easing me to a place where memories like this one about the tire pressure gauge came back to me. This was one of the nicest gifts anyone ever gave me. If you are a regular reader, apart from being amazingly unique, you will notice that Dad gets a fair share of mentions.

Now if the old Buick needed a bit of a tire pressure boost, the gas station had an air hose right there to do the trick. Sometimes the air hose was located right in the same island with the gas tanks.

Why am I writing about this?

I have always been a car guy, check out My Favorite Car. Today, I am driving another of my favorite cars and always like to make sure the tire pressures are correct.

The other morning I set out for brunch, stopped for gas and found that the “gas station” had no air hose. Actually calling it a gas station is clearly a misnomer. At least using the benchmark of the fifties referenced above. Today most places to buy gas are actually convenience stores that also sell gas. There are no mechanics, no garage bays, you can’t get an oil change or a small repair done, and you can’t get air. If they do have air, it is dispensed by a regulated device (usually broken) and costs money.

Notice these convenience stores are deceptively branded with the large oil companies brands making them look like what some of us think are gas stations.

What happened between the gas station of the fifties and the convenience store version of today? Did the business model of the old time gas station break down? In conversations I have had with gas station owners over time, I learned that the margin on selling gas is very small. Repairs are where the money is. Without a good mechanic, the gas station owner was hurting for revenue. I guess it is easier to have some kid sell soda pop and unhealthy snacks than to have a mechanic.

Then there was the change in the road infrastructure. The Interstate Highway system had not been started in the days of the old Buick. Actually, it was authorized in 1956 and took 35 years to finish. When we went from my home town of Keene, NH to visit my grandparents in Utica, NY, we drove mostly on two lane highways and through lots of little and big towns and cities.

If we were hungry we stopped in a small town at some Mom and Pop diner. If we needed gas, a locally owned gas station. If we needed to go to the bathroom, well, the side of the road was the most likely stopping place.

As the Interstate Highway system was built out and other major, divided highways were built, along came the rest stop. They had gas, bathrooms, and food. This is where the convenience store selling gas notion came from.

Now, all these big highways are not the worst thing considering the increase in economic mobility, the time savings for a trip, and the wide ranging that is possible. Along these big highways, the convenience store selling gas notion is a pretty good one. That is, if you like soda and unhealthy snacks and don’t need air.

Now when a gallon of gas costs over $10 we will have another problem but that is too big a topic for me at this moment.

Now, why, in my little home town, do we have these convenience store things downtown? On our main street, there is a Cumberland Farms. It is the exact same building that you would find out on the highway system. It probably put at least four or five local businesses out of business: a gas station, a small grocery store or two, a coffee shop, and a newsstand. Another interesting thing is that if you are a pedestrian, and being downtown there are a few of those, there is no way to walk into this convenience store without crossing car lanes. In other words, this is completely a building that belongs on a major highway, not downtown.

In all of the strip malls that started to go in in the fifties and now dominate the edges of our little city, we have the other convenience store/gas stations, with NO air for your tires. Another bunch of locally owned gas stations and small grocery stores out of business.

I guess that the city lusted for the tax dollars that the developers, most from out of town, promised when they approved these projects. What happened is the developers made their money, cashed out and disappeared. The strip malls and Cumberland Farm like convenience stores are now mostly owned by folks from out of town who bought them from the developers. They are trying to wring as much profit out of these assets as they can with little or no incentive to reinvest in the community. Their incentive is to take as much economic value out of the community as they can.

What’s the economic effect of this kind of development? Many studies have been done and they all come with numbers like the following:

  • For every $100 in consumer spending with a local firm, $68 remains in the local economy.
  • For every $100 in consumer spending with a chain firm, $43 remains in the local economy.
  • For every square foot occupied by a local firm, local economic impact is $179.
  • For every square foot occupied by a chain firm, local economic impact is $105.

So we have very under leveraged dollars being spent in many different places every day.

What do I mean by under leveraged? It is a question of a multiplier. In economics the multiplier effect is when an increase in some economic activity starts a chain reaction that generates more activity than the original increase. Looking at the numbers above, the $25 difference between chain and local stores is the increase in economic activity that would stay in our little city if folks bought from local firms. It is the local multiplier.

To think, all of this started because I could not find a source of air to fill my tires. We must be observant as we move thorough the world that we have created so we can fully understand the implications of the environment that we have built.

Let’s go back to free air and all that it implies.

Posted in Uncategorized | 1 Comment

5%, 10%, 15%, More?!?

The seeds were sown in the late seventies but the phenomenon came on strong in the eighties, the pursuit of break up value.

Financiers realized from years of studying US firms that many had undervalued assets. Years of business as usual percentage based budgeting (budget expenses for next year up 5% without calculating an exact amount) was one of many bad behaviors that drove inefficient business practices, poor hiring decisions, and overall management laziness. All of these bad behaviors were masked, to some degree, in successful companies by OK performance.

Not masked enough though, as eagle eyed analysts found many companies where, by their calculations, the value of a company’s assets (net asset value) was greater than the current market value of the company (stock price times the number of outstanding shares).

Many companies were bought and sold for parts. My most intimate connection to this behavior was CBS, a broad based entertainment conglomerate in the seventies and early eighties. They were in many different businesses: music, broadcasting, publishing, and musical instruments. Bought by Larry Tisch, they were broken up into many pieces leaving only the broadcast entities as CBS.

This pursuit of break up value applied pressure on all companies to actually improve the efficiency of their operations to protect themselves from these corporate grabbers. The reality was that many had slipped from excellent performance to being quite average by not being more precise in their operations.

Throughout this era, many is the time the “request” came down from on high and landed on my desk to cut expenses 5%, 10%, 15% or sometimes more.

The 5% to 10% category for most operations was not that difficult, at least the first time. We had all been guilty of the percentage budgeting technique and other less than optimal approaches.

New techniques were developed to optimize operations. One of the best, in my estimation, is Business Process Re-engineering. Here all business processes are mapped out and analyzed. The object is to create large changes in operating characteristics through the discovery of inefficient cross functional processes.

We also took hard looks at the overgrown command and control organization structures with all of their layers of management. Often human resource problems were solved with organization changes. An employee reaches the point where they should be promoted, but there is no position to promote them into, so one is created.

These efficiency driven “clean ups” became part of the fabric of most operations. Quality and other Excellence awards came on the scene and operations tightened up and stayed that way.

This all brings me to SAU 29, the local school district. Over the years they pretty much got the budget they wanted from our little city because it was “for the children”. As crunch time hits across the country, it has also hit in our little city. Currently, SAU 29, consumes more of our tax dollars than the city itself (45% vs. 40%). They care for a couple of thousand students vs. the city and its twenty-five thousand residents.

As they struggle to find ways to save, I have heard suggestions to eliminate one elementary school principle or to completely close one of the elementary schools. Immediately, my brain thinks that there is no way that they have done the kind of thinking that can deliver 5%, 10%, 15% or more in savings.

Why eliminate a single principal? Why not eliminate that entire layer of administration? Understanding how to do something like this takes a very comprehensive study of how processes are done and how they are governed. The skills to do this do not exist in SAU 29 and no one is demanding that they go through the drill as the takeover behavior did to corporations in the eighties and nineties. SAU 29 answers only to the voters most of whom are, quite naturally, not well informed about such matters and most of whom DON’T vote.

If anyone suggests tougher targets, they are immediately accused of wanting to hurt the children. This emotional response is really unproductive and typically comes from the cushy, protected job environment that has been created over the years. My old home, New York City has grotesque examples of this with $100,000 plus a year teachers, some of whom are awaiting resolution of various offenses including sex offenses against students, are being paid and are sitting in “rubber rooms”. In the corporate world, these folks would have quickly been dismissed and any liability associated with them eliminated. This seems appropriate in a world where individuals have to take responsibility for their actions. A characteristic not found in the world of our education institutions.

What to do? The protected job folks want the voters kept in the dark with the “it’s for the children” mantra strongly heard. The progressive local press does all they can to support this position. Isn’t this extremely unfair to the voters, the children (study after study shows that forty years of this kind of behavior has done nothing to improve education), and the city in general?

Seems so.

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The Amazing BATFE

The Bureau of Alcohol, Tobacco, Firearms, and Explosives has a mission:

“A unique law enforcement agency in the United States Department of Justice that protects our communities from violent criminals, criminal organizations, the illegal use and trafficking of firearms, the illegal use and storage of explosives, acts of arson and bombings, acts of terrorism, and the illegal diversion of alcohol and tobacco products. We partner with communities, industries, law enforcement, and public safety agencies to safeguard the public we serve through information sharing, training, research, and use of technology.”

Without spending “thesis” like amounts of time, I tried to discover the history of the organization. About all I truly discovered is that once the Federal Government creates something, it may change, a lot, but it will NEVER, EVER, die, especially if it involves collecting money for the government. To those of you who think the solution to our current difficulties is to tax and regulate more please note this NEVER, EVER die characteristic.

After the revolutionary war in 1789, congress decided to tax imported spirits to pay off the war debt. This must have worked well because in 1791 they taxed domestic spirits as well. This led to the Whiskey Rebellion. If you would like to discover a ton of parallels to what is going on today, read a bit about this “rebellion”.

Mixed in there is the seed, the folks collecting the spirits tax, from which the current BATFE, officially founded in 1886, grew. They started as revenue collectors.

All these years later we have the mission that opened this post. Mission creep or just the government doing its thing?

Today these folks are demonstrating Whisky Rebellion inducing behaviors with their “Fast and Furious” operation. The idea was that they could create a case against folks smuggling guns to Mexican drug gangs, but THEY became the master smugglers. They actually watched as “straw purchasers” (folks in the US who can buy guns legally, at least until they get caught selling them to their illegal recipient customers) bought a lot of guns (close to 2500) and then moved them to Mexico.

Now straw purchasing is illegal, but the BATFE folks just watched, supposedly going for bigger fish. They did not arrest the straw purchasers. In addition, the BATFE requested licensed firearms retailers in Arizona to permit these transactions to occur, in other words to break the law. Under normal circumstances, these behaviors are illegal as the retailers were aware of the “straw” nature of the transactions.

At this juncture, a US Border Patrol officer has been killed by one of the guns and over 1,000 of them have not been found.

Hearings by the House Oversight and Government Reform Committee (sounds appropriate) appear to have been stonewalled often by the powers that be. The BATFE now reports to the Justice Department which is part of the executive branch. Certain of those testifying have suggested that knowledge of this “operation” existed at the highest levels, i.e. Eric Holder, the head of justice, and his boss, The Big O. Both, it appears from testimony, were aware of this operation.

Why stuff like this becomes so convoluted escapes me. Well, not really, but let’s start there. It was done. It was REALLY stupid and even criminal. Maybe it had aspects of other back door approaches that the current (and other) administrations have used to get things done. Maybe there were implications for satisfying the anti-gun interest groups that strongly support the current administration. But so what. Take responsibility. Take your lumps. Move on. Stop wasting our time and money.

Along the same line of the BATFE wasting time and money, you can add in violating our constitutional rights. I understand that, a working group within the BATFE has recommended that any shotgun (semi-automatic, pump-action or any other) that has any one of 10 specific features should be banned from importation, on the grounds that such shotguns are not “generally recognized as particularly suitable or readily adaptable to sporting purposes.”

To the BATFE:

Laws with language like “sporting purposes” open the door to way too much interpretation. You would think that if I am sitting out on the back forty plinking at cans with my single shot 22 caliber rifle all would be right with the world. Well, probably not, because it’s not a “sporting purpose”. But that really is not the point.

Creating back door approaches to limiting gun ownership is not in your mission statement. You are an enforcer of the rules not the creator of them. The executive branch, remember?

Looking back at the mission, I am not in a gang (“violent criminals”), have not sold guns to criminals (“criminal organizations” and “illegal trafficking”), don’t illegally store my ammunition (it’s in a locked, fireproof safe), and don’t smoke. OK, I do enjoy a glass of wine with my dinner now and then (should I worry?). More importantly to me, I really do enjoy my shooting competitions. See Guns Not Butter to see how guns have impacted my life.

Take another look at your mission and how you are doing reducing gang violence (on the rise I understand), keeping guns out of the hands of criminals (they get them any time they want and often by stealing them from law enforcement agencies or having you buy the guns for them it appears), putting criminals in jail (many repeat gun offenders walk the street), stopping arson, etc.

Have you ever considered education? The NRA gets great results with programs that focus on education and good law enforcement. The great thing is that their approach works. Yours won’t. The efficacy studies on the Clinton gun ban done by groups like the Center for Disease Control showed us that laws like the “Assault Weapons Ban” and your proposed shotgun restrictions, have no impact whatsoever on your, keep the populace safe, mission. They do, however, severely mess with folks like me.

We need to get the BATFE shaped up or closed down and reconstituted as an organization that has a clearly defined, sensible mission intended to safeguard the populace and not just to serve the ideology of a small portion of the populace.

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