Friday, March 21, 2008

10 Ways Our Government Does Business that You Shouldn't

10. Secrecy. Somebody once said that secrets “are government's excuse to lie.” All of you in web 2.0 have seen the success of platforms that are open to scrutiny. That's democracy in action, and we know it works. From the arcane and hidden accounting fiascsos of Enron, WorldCom and now Bear Stears, from Dick Cheney's secrecy fetish and his energy roundtables, secrecy's hidden cost is everywhere these last few years. Private citizens deserve privacy; public entities deserve and, I would say, flourish from scrutiny. Put your stuff out there. Did anyone say Diebold?

9. Unclear Mission Statement. “I just want you to know that, when we talk about war, we're really talking about peace.” (George W. Bush). Anything as big as our government will have some inherent contradictions, but, as a business leader, you should be careful to have a single goal and communicate it effectively.

8. Phoney Services. A good example of this is the Walter Reed Scandal. Our government touts its patriotism as awe-inspiring and our president never misses a chance to be photographed with a boy in uniform. Yet, when it comes to taking care of our veteran amputees, our president leaves the room faster than you can say “cut and run.” Lesson: don't advertise big love for your customers when all you are really doing is giving them peanuts. Don't say you are a green company when you invest .005% of your budget in that area...

7. Know your customer. Somewhere near 100% of the U.S. senators are millionaires, and nearly all of them get even richer when they leave government. This leads to a situation known as “being out of touch.” As economists have shown, the rich are getting richer and the poor are getting poorer, and that real wages compared to inflation have been in decline, especially since 1980. This is not a good way to do business and, eventually, it will catch up with you, as it did for congress in 1994 and 2006. Your customers are busy and, because of you, working harder every day, but, eventually they realize that “trickle down” means “piss on.”

6. Use your own product. This is not unrelated to number 7. Once you become a top government official in the house or senate, you will get healthcare—and good healthcare it is—for life. If you are in charge of producing a product (or refusing to produce a product) or regulating such a product's availability, you should live by those laws too. If the version of Windows you run at MS headquarters has magic features that allow it not to crash and bring on the blue screen of death, you should at least give your customers the same version, right? (See number 8)

5. Watch out for hostile takeovers. When a new boss comes in and starts replacing all the key staff members with people you know you shouldn't trust, look out. For example, when Bush puts the lawyer for mine companies in charge of mine safety, or when complete hacks with false resumes get put in charge of FEMA, watch your rear. Before you know it mass displacement (layoffs, firings, forced migration, etc.) will come. Sure, some forseeable "natural" event (a hurricane, a recession, foreign competition) will be the excuse, but--and you knew it all along--this group of bosses actually likes the hurricanes and has lots of friends running that foreign factory...

4. Don't kill your customers (too quickly or at all). This is an interesting one because the government actually does better here than in other areas. Philip Morris has shown that killing your customers slowly can still be a viable business model. The government's food pyramid, drug-approval system and its lack of universal health-care tend to emulate this model. If people die slowly and in ways that are hard to correlate with your product, then you might do quite well. If, however, your product kills quickly, make sure that the public is willing to make the sacrifice. Developing a strong mystique of manliness that is deeply interwined with the national identity is good way to do this. Marlboro man almost worked, but the government actually wins this battle with the second amendment and the military.*

3, 2 and 1. Get rid of unecessary paperwork and bureaucratic nightmares and focus on what you are good at. Now I know this is going to be controversial, but I'm not talking about taxes here, though I think there is a lot of room for improvement there too. I'm talking about cutting the size of the world's largest military. I'm talking about getting out of wars that are not doing us or the world any good. When the need arises, you can still create a large military—that's what happened in all the wars we won—so focus on your strengths. I'm talking about getting rid of health insurance companies that spend 25% of their budget on paperwork and management compared to medicare, which spends less than 10. (That is right, the government is more efficient at delivering healthcare than insurance companies.) So, lesson numbers 3-2-1: Cut out the middlemen and focus on what you are good at and on delivering it efficiently to your customers. The same goes for school vouchers. Why would the government give tax dollars to citizens to then send those dollars to private schools which have the right to refuse those students. Public education works—when you do it right and fund it. Focus on your strengths, such as not doing top 10 lists when you are really good at top 7 or top 8 lists. So, when I say focus on what you are good at, I really mean focus on being good.

*If you do happen to kill customers or if happen to some homicidal costs on your balance sheet, it helps if they are poor and brown and live in places like New Orleans, Baltimore, Iraq and Bhopal. This is immoral and not recommended, but the national media will probably let you get away with it as long as it does not adversely affect their shareholders or put "the system" into question.

Thursday, March 20, 2008

Le rat des champs

It's been one of those days...

Here's more of her work:

Crashing the System

Students in Global and Cultural Studies beware. The real world might be on your test. What do these things have in common?

Saner voices within the capitalist class, having listened carefully to the warnings of the likes of Paul Volcker that there is a high probability of a serious financial crisis in the next five years, may prevail. But this will mean rolling back some of the privileges and power that have over the last thirty years been accumulating in the upper echelons of the capitalist class. Previous phases of capitalist history-one thinks of 1873 or the 1920s-when a similarly stark choice arose, do not augur well. The upper classes, insisting on the sacrosanct nature of their property rights, preferred to crash the system rather than surrender any of their privileges and power. In so doing they were not oblivious of their own interest, for if they position themselves aright they can, like good bankruptcy lawyers, profit from a collapse while the rest of us are caught most horribly in the deluge. (Harvey, Introduction to Neoliberalism, 152-53)

There are two ways to read last night's sale of Bear Stearns to JPMorganChase for $2 a share:

  1. There were no other bidders. Bear Stearns only other option was to file for bankruptcy this morning. And Bear Stearns's executive were convinced that that was not an option--that not playing along meant that everybody everywhere would look with glee on the filing of every criminal fraud charge against them anyone could think of.
  2. Even with the Federal Reserve offering a put on the worst $30 billion of Bear Stearns assets, there is so much garbage in the closet that $2 a share is a fair price.

The market this morning believes in (2). I tend to believe in (1)--especially as JPMorgan is said to have set aside up to $6 billion to deal with litigation when Bear Stearns's shareholders and others claim they got a raw deal... (Brad Delong)

The nation’s fifth largest investment bank Bear Stearns nearly collapsed last week. It was saved only after the Federal Reserve took extraordinary measures to help JPMorgan purchase the eighty-five-year-old firm. The Fed has become the lender of last resort for other investment banks in a move that marks one of the broadest expansions of the Fed’s lending authority since the 1930s. We speak with Nomi Prins, an author and former investment banker at Bear Stearns, and Max Fraad Wolff, an economist and writer.

[Transcript of interview with Max Brad Wolff]
Well, I mean, I think it’s always tough to know exactly what’s going to happen. The way I like to do this in other lectures or my classes is to make the following point: there’s an epidemiology to this. And the discussion so far reminds me of the AIDS as “GAIDS” discussion, where we pathologize early victims as deviants who get some just punishment and pretend that it’s not a sort of pathogen entering a population where the sickest and most vulnerable fall first.

The sickest and most vulnerable people in the US money game are highly indebted, low-income consumers who tend to get subprime loans. In the journal—the mainstream journalist discussion, it sounds like there’s subprime people, like they’re born subprime in a special incubator with some kind of deformity. In fact, that’s a FICO credit score. And the poorest people get hit first and hardest by every economic disruption, because poverty means vulnerability in a market economy. So what we’ve seen in the beginning of a turndown of a long boom, a boom that really began in the early ’80s, is the weakest and most vulnerable with the most debt and the least income, the subprime crowd, hit—got slammed first, and then it sort of moves to the population, as “GAIDS” becomes AIDS becomes recognized.

And so, we’re—I think we’re in the early innings of this, maybe a third of the way through—half, if we’re lucky. Now, that doesn’t mean that the pain will continue to be so localized in finance. It’s already spilling out into the US macroeconomy. It is already an international phenomenon. And it’s heavily falling into retail. I expect severe difficulties in retail soon, and I expect greater difficulties in housing markets, because, actually, although it gets less press than I think it deserves, already 40-plus percent of delinquencies and default issue notices are moving out of the strict subprime market into what’s called Alt-A, Alt-B, and then prime—so, in other words, people between subprime and prime, and then cascading over into prime. We know this is a problem, because ten percent of all US homeowners are what we call “underwater”—they owe more than their house is worth. That’s a pretty serious amount.

And so, I see increasing bailouts with willy-nilly rewriting of federal legislation, which was done in those meetings. The JPMorgan-Federal Reserve meetings with Bear Stearns, in effect, redid American financial regulatory law, bumping an inactive Cox-led SEC out of the way, asserting Federal Reserve control in places and ways that had not been asserted before, and therefore front-running Congress and the presidency, which has been sitting on its hands, which is a little bit like the Glass-Steagall situation.

But now we have the Federal Reserve coming in to basically take out, not bail out, one firm to support all the other firms, immediately making available to them all kinds of access to cash and support they never got before, which, by the way, would have saved Bear Stearns, and in so doing—blasé, private meeting, no transparency—rewriting American financial legislation, while the President tells crazy fictional stories about Iraq and the Congress does fundraising for its next election, and is a byproduct that will be told later, what legislation to pass. I mean, it’s kind of surreal at this point.(Democracy Now)

Wednesday, March 19, 2008

Obama's Speech

h/t Obeygiant

It is rare that I link to the speeches of politicians in a positive way, but I think the rare occasion has arisen with Obama's discourse yesterday on race. Of course the media think he did not distance himself enough from Wright, and, of course, the media are wrong on at least two counts: 1) They cannot acknowledge the existence and need for resistance within poor and oppressed communities (because the media is blind to institutional oppression); and 2) because they do not hold other candidates to the same standard. Think: McCain and Haggee, Bush and any number of racist kooks. Anyway, read the words:

For we have a choice in this country. We can accept a politics that breeds division, and conflict, and cynicism. We can tackle race only as spectacle – as we did in the OJ trial – or in the wake of tragedy, as we did in the aftermath of Katrina - or as fodder for the nightly news. We can play Reverend
Wright’s sermons on every channel, every day and talk about them from now until the election, and make the only question in this campaign whether or not the American people think that I somehow believe or sympathize with his most offensive words. We can pounce on some gaffe by a Hillary supporter as evidence that she’s playing the race card, or we can speculate on whether white men will all flock to John McCain in the general election regardless of his policies.

We can do that.

But if we do, I can tell you that in the next election, we’ll be talking about some other distraction. And then another one. And then another one. And nothing will change.

That is one option. Or, at this moment, in this election, we can come together and say, “Not this time.” This time we want to talk about the crumbling schools that are stealing the future of black children and white children and Asian children and Hispanic children and Native American children. This time we want to reject the cynicism that tells us that these kids can’t learn; that those kids who don’t look like us are somebody else’s problem. The children of America are not those kids, they are our kids, and we will not let them fall behind in a 21st century economy. Not this time. (Link)

Monday, March 17, 2008

We all know something

I want to go to a conference like this.

"In his 2004 book The Wisdom of Crowds, James Surowieki captured the spirit of the collaborative trends in media and society. The combined individual activities of many can provide an accurate understanding of even the most complex issues. “We all know something” is the underlying theme driving much technological and societal change. Although the well-crafted reasoning of experts will continue to play an important role in conferences, the more informal discussions and presentations at “unconferences” offer valuable exposure to—and, more important, the opportunity to contextualize—cutting-edge ideas.

The real emphasis should be less on technology and more on the affordance of the open dialogue that now defines the primary value of conferences. Whether a small-table discussion, a chat at the bar, or a contribution to the conference wiki, blog session, or Twitter-fest, the common defining theme centers on control. Instead of listening passively, conference attendees in each of these scenarios experience a high level of engagement and ownership. Web technology, to date, has best symbolized this important shift, since its decentralized structure does not reflect as strong a central position for the speaker or teacher."

It is surprising that those of us who preach about the open classroom so often subject others or let ourselves be subjected (some may say abjected) to such structure.

Like many, I believe that knowledge is social and that institutions that push toward proprietary or even secretive ends are so anathema to democracy that they should be avoided at all cost. Indeed, the costs of insular "knowledge" is high. Look at what the class of experts known as Wall Street has recently wrought. Look at the "experts" who got us into the war now entering its fifth year.

So it goes that we do not need to comprehend every detail of a topic to be informed about it. Understanding physics is necessary to understand how to build a missile. It does not take physics to understand that bombs are bad. Of course, we cannot be experts or even well informed about everything, but, on the other hand, we cannot abdicate our responsibility to inquire and to inform ourselves about the world around us.

My point is that if we are truly believers in democracy and building knowledge from within the social realm, we must learn to live in it, teach in it, and to demand it from others, whether in politics or academic conferences.

Large conferences, like large classrooms, are built on a flawed model. While they are efficient at delivering specific types of information, they are inefficient at creating new knowledge. The opportunities for networking and Q&A are simply too limited, and, as everyone knows, networking and social connections are why everyone goes to conferences. That probably why I've always felt more at home at, say, SE17 rather than the MLA. It's probably why I am happy at Whittier College too.

Here's a quote from John Dewey that alway lingers in the forefront of my thoughts: "A class of experts is inevitably so removed from common interests as to become a class with private interests and private knowledge, which in social matters is not knowledge at all."

While expertise is a real and valuable thing--would I want a neophyte building a bridge or a plane I was about to use?--it is all too easy for experts to forget that their power and "value" is socially determined and not intrinsically tied to their so-called knowledge. This is as true for the teacher as it is for the economist or the carpenter. While it may sound like knowledge represents one more market in which ideas are traded, that only remains true to a point. Dewey's phrase means more, because, implicit in the idea of an expert class lies the idea of class power. Once a group of, say, economists gain political favor (in academia or in Washington or Moscow), it becomes easier for that group to wield more power, to use political and social influence to skew the marketplace for ideas. The market, thus skewed, becomes less a bazaar and more a cathedral (to use the famous computing metaphor).

Expertise leads to more specialization and, often, self-aggrandization: I understand x and am therefore valuable to you; you should pay me more. I write complicated arguments based on math, philosophy and Science(!); you should pay me more. Our society tends to believe the experts even when the evidence should easily convince us of the contrary. How many CEO's leave companies in ruins while they grow richer? How long will it take to see that Greenspan's long reign and his bubble(s) are not the work of a good economist but that of a good politician? How many profs from Harvard or Yale supported the war in Iraq?

Don't believe me that specialists think they are really special? Look at this article by Harvard prof G. Mankiw:

NO issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood. This gap in perspective grows especially wide whenever the economy experiences short-run difficulties, as it is now. By all indications, the issue could come to dominate the presidential campaign.
See? Economists are magicians, priests, scientists! Everyone else is a muggle-minded "Joe Sixpack." Again, let me ask how long will it take to see that Greenspan's long reign and his bubble(s) are not the work of a good economist but that of a good politician? How many profs from Harvard or Yale supported the war in Iraq (or go about blindfolded yelling "free trade!")?

Those are simple questions, and some would say naïve, but that is my point. Power, beliefs, news, hierarchical structures can make us blind to our own power and to the powers that be. Power makes us forget to be like children and to ask the simple questions, the ones that matter. Simple questions, like the simple needs of shelter, food and community, are the foundation for democracy and democratic economies, and, while simple answers are rare and should generally be avoided, simple questions are often the most revealing.

Sorry to be so long-winded, but I think this is important. I will be attending some unconferences this summer to hopefully learn something from some experts and to ask them some simple questions. Just think: what if Colin Powell had presented his "proof" that Iraq had WMDs at an unconference rather than the U.N.? What if the NYT's W. Kristol actually had to answer to some of the lies he gets from Newsmax? (I'll refrain from linking to that trash.)

Now I'm not saying that organizations and institutions have no place, for I think they do, but permit me to believe that if our world contained a little more democracy, a little more Web 2.0, it just might be a better place.