Wednesday, March 22, 2006

Looking for a Good Cause?

Support my friend Jon Hilton and The Leukemia and Lymphoma Society.  Jon is currently raising money through Team in Training and is currently training for a Triathlon in Philadelphia.  

Torture Revisited

Andrew Sullivan seems somewhat baffled by the latest poll showing that the majority of Americans favor torturing our enemies in some circumstances.  This poll would seem to indicate that the majority of Americans would agree with me that Charles Krauthammer got the better of Sullivan in the torture argument.  Most Americans are probably comfortable employing torture if it means maintaining order and security even though it is unquestionably evil.  

Although torture is evil, it is evil in a very human kind of way.  In fact it is exactly the evil that Jesus came into the world to illustrate, to make explicit.  Maybe this is even why Christians seem to be more comfortable with torture than agnostics or atheists.  Jesus accepted torture from Cesar but He did not attempt to become the Cesar who did not torture.  He explicitly rejected that.  

This seems like an interesting irony to the Christianits philosophy that Sullivan rightly calls the administration on.  While Christianists want the government to act morally except in the case of torture, Sullivan wants the government to refrain from being a moral actor, except in the case of torture.  My own view is that it is not possible for the government to ever be a moral actor, but to only act from self-interest, which is why it is so hard for a Christian to become a Cesar.  

A couple of other foot notes: First another way of looking at the Christian vs. atheist/agnostic divide on torture is that if one believes that a person is more than just a body it might be easier to torture that body, but that if one believes that a person is just a body that body becomes more sacred.  Second, although it seems to me that the government should the ability to torture in limited circumstances, evidence (pointed out in many cases by Andrew Sullivan) suggests that torture is much more wide spread than I could ever justify.  If we are going to do evil, we should make it a conscious decision in every case.  It should never become policy.

Tuesday, March 21, 2006

Skiing: Days 10 and 11

As I rode the lift at Killington on Sunday, I realized that I should have blogged this entire ski season so that I would have a record of fun.  Well I am starting now better late than never…

I skied Saturday and Sunday at Killington in Vermont.  This was my third trip to Killington of the year, and contrary to my expectations it was the most fun.  Saturday was pretty rough with cold weather and lots of ice, frozen after a week of 60-degree weather.  On Sunday, however, the resort had great conditions after about 4 inches of snow on Saturday night.  I spent the morning lapping the mogul run Outer Limits.  They were making snow the entire day so the bumps stayed soft, although some parts got a little icy due to the number of people who had the same idea that I had.  

In the afternoon I took a couple of runs with my family on the greens that my mom likes and then on a couple of blues for my dad before returning to Outer Limits for the low point of the day.  That occurred at about 3:15 when I decided to take a couple of last runs for the day.  I bombed down about 85% of the hill before I had a spectacular crash.  I tweaked my MCL a little bit (ok a lot) and that pretty much ended my day and maybe my season.  

So, unless I am able to squeeze in another day on the slopes before the snow goes away, I am looking at 11 days of skiing this year: 5 at Whistler; 4 at Killington, and 2 at Stowe.  I also had two days of snowboarding at Jay Peak, which is a great resort that I am defiantly going to return to next year.  

Indiana Toll Road Deal

I seem to have missed this story last week.  In a very positive development, it turns out that the State of Indiana plans to lease the Indiana Toll Road to a private company for a term of 75 years.  Macquarie-Cintra, an Australian-Spanish consortium will pay the state $3.8B for the lease and will have management control over the toll road including maintenance and collecting toll revenue.  Apparently, Indiana plans to spend the lease money to finance other road improvements in other parts of the state.

I have previously written about the potential of privatizing much of our transportation infrastructure.  We need many more of these kinds of deals where government turns over operational responsibility of public assets to private firms.  (In fact I would go farther and assert the Indiana should simply sell the toll road to Macquarie-Cintra.)  

I found a pretty good financial analysis of the Indiana Toll Road that Crowe Chizek Financial prepared for the state.  Currently the tool road has annual revenues of about $95M and annual operating expenses of about $70M.  The financial analysis projects these revenues and expenses out for the next 75 years based on a variety of assumptions to reach the conclusion that if the state continued to operate the toll road it would be the equivalent of a public company worth $1.92B.  That Macquarie-Cintra is willing to pay $3.8B shows how optimistic the consortium is about its ability increase cash flow!  

It will be interesting to see how this deal unfolds.  Macquarie-Cintra is clearly paying a fairly dear price for the toll road based not only on the financial analysis, but also on the fact that there are not too many public companies with $100M in sales, 20% net operating margins, and $3.8B market capitalizations.  To make this work out, Macquarie-Cintra are going to have to move quickly to implement cost reducing technology, such as EZ-Pass, and find ways to increase revenues.  Hopefully, this deal and others like it will show the benefits to private profit seeking firms operating a larger share of what was once considered public property.  

Friday, March 17, 2006

Pandora Stations

I just added a box at the bottom right with links to my Pandora stations. Pandora is a really cool internet radio station that chooses songs based on which artists or songs a user says that they like. I am still trying to tune the stations to my liking, but it is a really fun way to discover music. Enjoy!!

If you would like to add Pandora stations to your blog, step by step instructions are here.

Thursday, March 16, 2006

Breath of Freedom

Tamar Jacoby had an interesting opinion piece in yesterday’s Wall Street Journal detailing the ongoing debate on immigration reform in the US Senate.  At issue is the fate of the eleven million undocumented workers currently in this country.  We simply have to find a legal framework so that these people can continue to contribute to our country’s economy.  We currently have a 4.8% unemployment rate and in the worst times of the last downturn, unemployment never went much above 6%.  That is a spectacular performance even with 11 million undocumented workers who supposedly steal Americans’ jobs.  

Undocumented workers do not threaten America’s prosperity.  They increasingly form the backbone of many labor-intensive industries.  I can only describe plans that call for undocumented workers to return to their home country before applying for legal status as ridiculous.  Are we really going to disrupt entire sector of our economy so that people can go through the motions of visiting their home country and then returning.  The same goes for any so called amnesty.  The problem is not that people have broken this country’s laws in order to try to improve their lot in life.  The problem is that our current immigration laws are ridiculous.  

Passing laws and building fences to try to keep people from realizing economic prosperity can never work.  The resourcefulness of our undocumented workers in bypassing our border patrol and evading our INS agents proves that.  It also proves these undocumented workers have the stuff to make a positive impact in our society if given the chance.  

Here is a proposal: lets truly liberalize our immigration policy so that anyone who wants to move to this country to work can do so.  That solves the current problem as well as the problem going forward.  If our system cannot handle all that at once then lets phase it in over five years, but by all means give these masses a breath of freedom.  

Wednesday, March 15, 2006

The Road to Serfdom

Although it is a bit simplistic in its reasoning and over dramatic in result, I like this cartoon, which illustrates the dangers of ceding too much control to government planners.  Defeating Fascism and Communism abroad took the better part of last century.  Defeating Islamic Totalitarianism abroad will likely require the better part of this century.  We must remain vigilant against the specter of totalitarianism at home.  

Friday, March 10, 2006

Wednesday, March 08, 2006

Sales Philosophy

Sales is the process of creating value for your customer in order to capture a piece of that value for your company and yourself.  

A few years back I heard a non-sales executive say that sales is the process of overcoming objections.  This seemed wrong to me, but at the time I could not exactly say why.  Now that I have formulated my own definition I know exactly why that executive was wrong.

The sales process actually consists of two separate but interrelated processes: creating value and capturing value.  Because creating and capturing value is what business is all about this clearly makes sense, but lets look at how these two processes influence sales.

When people talk about creating value, often they mean creating value for their company’s shareholder, but in sales creating value means creating value for your customer and your customer’s shareholders.  Creating value can take a number of different forms.  Maybe the product is so fantastic that its value is obvious to the customer.  In that case sales just got a lot easier!  

More often, creating value takes the form of explaining the product and more importantly how the customer can utilize the product to improve some business metric.  When the underlying products are nearly identical, creating value may take the form of improved delivery, better terms, or easier business process interactions.  Alternatively the salesperson could have such a pleasant personality that the customer just loves to do business her; that’s also creating value.  

Notice that in the discussion about creating value, I did not mention price.  As the sales process progresses, your customer will place a certain value on your total sales offering.  The price that the customer pays for that value is the mechanism that your firms use to capture a portion of the value that the customer sees.  If your sales offering can deliver much greater value to your customer than your competition then you will have the ability to command a higher price.  

It is really that simple.  Unfortunately many people do not seem to understand that sales is a two way street.  If the customer does not see the value, you either have not done a good enough job of articulating the value or you are deluding yourself about the value that your company can provide to your customers.  Likewise, just because one customer thinks that a particular product is the best thing in the world does not mean that another customer will recognize that the product brings the same value to them.  Value is customer specific, so creating value is a separate, often personal process with every customer.  

So that is my sales philosophy.  I try to make sure that it permeates every aspect of my sales engagements.  If you like it, make it the framework for your sales engagements too.  That is of course unless you are calling on my customers!

South Dakota and Abortion

So, South Dakota just passed a law prohibiting all abortions except to save the mother’s life. My response to this is, “Oh brother…”

I have wanted to write a longer post on my position on abortion, but that never materialized. So here is the short version.

I believe that abortion is morally wrong. It is morally wrong not because of its similarity to murder, but because the action represents an active rejection of God’s invitation to love. It seems very difficult to reconcile the act of abortion with Jesus’ urging that we love our neighbors as ourselves.

So what about the legality of abortion? Abortion is not like murder. While I reject murder on the same moral grounds, of failing to love, as abortion, the reason that we need a law against murder stems from the state’s obligation to enforce order. Society would simply cease to exist if individuals could murder one another with impunity. The parallel for abortion simply does not hold.

In fact not only is society not threatened by abortion, but laws designed to prohibit abortion actually threaten society’s morality. I firmly believe that the state should not have the power legislate morality. Travis keeps using a Janice Rodgers Brown quote, “Where government moves in community retreats…” I think this is true. I also think that where government moves in morality retreats. Although we may fail to actively sin when the state (read men with guns) prevents us from sinning, we also fail to actively love.

Tuesday, March 07, 2006

Monopoly Power

On 3/4/06, Travis links to an article written by Allan Greenspan in the 1960’s to assert that monopolistic behavior does not exist. Travis misreads Greenspan if he thinks the article disproves the notion of a monopoly. Greenspan states:

Therefore, the existence of a free capital market does not guarantee that a monopolist who enjoys high profits will necessarily and immediately find himself confronted by competition. What it does guarantee is that a monopolist whose high profits are caused by high prices, rather than low costs, will soon meet competition originated by the capital market.

Monopolistic behavior exists. Greenspan’s point is that if a monopolist holds his prices too high for too long he risks allowing a competitor to profitably enter his market. In the presence of free capital markets, monopolies, like glory, are fleeting. Here is where I actually have an issue with Greenspan’s article.

Greenspan uses the nineteenth century western railroad industry as an example of how flawed government policy aided in creating monopolies, which other flawed government policies tried to eradicate. However, Greenspan’s analysis hinges on “the existence of free capital markets.” However one of the notable characteristics US economy of the nineteenth century was the lack of liquidity in the capital markets. Without free capital markets, competitors would not be able to generate capital to challenge firms charging monopoly rents. In fact of the reasons that many people wanted to move to a silver standard was to increase liquidity so that competition could emerge in the railroad industry. The nineteenth century railroad industry is a poor example because the mechanisms that Greenspan advocates to regulate monopolies did function well at the time.

In addition, while there may be some truth to the fact that Standard Oil gained important efficiencies by being an integrated monopoly oil supplier, Standard Oil is also a poor example of a good monopoly because of the well documented cases of corruption and thuggery that protected it’s monopoly status.

Nonetheless, I did like the thesis of Greenspan’s piece in that it illustrates that monopoly power can be regulated by the threat of competition posed by the capital markets funding new market entrants. However, this regulation can only be viewed as a kind of delayed regulation in that it takes time for other firms to enter monopoly markets and become competitive. Unfortunately, this type of regulation cannot remove the dead weight loss caused by monopoly.

So are we ready to dispense with the Justice Department’s regulation of monopolies? Certainly our capital markets are extremely liquid and persistently low long-term interest rates ensure that firms should have no trouble finding capital for new investments. In fact, one of the bigger concerns about today’s economy is the lack of new investment ideas. But my concern is, why does monopoly power still exist? In this case, why is every song on iTunes $0.99? Are there structural issues in the music industry that allow monopolies to exist there without the threat of emerging competition? I will be interested to see the follow-up to this investigation.

Monetary Policy and Monopoly Power

While I was writing the Monopoly Power post, I thought about an interesting monetary effect. If capital markets ultimately regulate monopoly power, then, all else being equal, the extent of monopoly power that a firm can exhibit will be directly related to interest rates. When interest rates are high, like in the late nineteenth century, firm’s monopoly power will also be relatively high. When interest rates are relatively low like today, monopoly power will be low.

So, in addition to the other effects that accompany the Federal Reserve raising interest rates to cool the economy, we can add increasing firms’ monopoly power. (Other than commodity companies, each firm has a monopoly on its brand and products.) So rising interest rates give firms extra margin to raise prices, which increases the dead weight loss to the economy and contributes to the slowing effect.

Friday, March 03, 2006

Roundup of Regular Reading

So here is a brief list of blogs and articles that I read on a fairly regular basis. Check them out and please let me know if I am missing something that I might really enjoy!

I read the Andrew Sullivan’s Daily Dish in its entirety every day. I appreciate Andrew’s writing because of our shared classical liberal/libertarian worldview and our shared Catholic religious background (although Andrew’s current relationship with the Church tends to be in flux). The writing really challenges my thinking because Andrew is a real intellectual while I am a wanta-be intellectual and because of the very different experiences that he has had as a gay man.

The first blog that I started reading and one that I still read almost every day is James Taranto’s Best of the Web Today (the blog has a different url every day and is usually updated around 3:00). Taranto usually has a good roundup of the top political news stories of the day from the viewpoint of a conservative editorial page writer. The site makes regular digs against lazy journalists and overly politically correct behaviors. Sometimes there is a bit of an inside baseball view of journalism, but this is made up for by Taranto’s wit.

Ever since the week that Dan Savage guest blogged for Andrew Sullivan last summer, I have regularly read Dan’s Savage Love advice column. In fact I spent hours reading most of the archives that are available! I don’t know which rock I must have been under for the past decade, but now that I know about it I find the column one of the most entertaining things that I read each week. Dan’s often irreverent responses to the wide range of sexual and relationship questions is must read material.

In the same vein, just yesterday I came across Clue Chick which is a blog written by an anonymous chick who is into picking up dudes online for no strings attached sex. I have never been into this scene myself or known anyone who was so it is really interesting to read about some of the finer point of this lifestyle.

On the Sports side, my friend Pat and some other guys write The Blue-Gray Sky, which is probably the most in depth blog commentary on Notre Dame Football. For those unfamiliar with Notre Dame Football, the title of this blog is a reference to Grantland Rice’s “The Four Horsemen”, an article that led to the creation of one of the most famous sports pictures. The first sentence of the article is, “Outlined against a blue-gray October sky, the Four Horsemen rode again.” Pat and friends do a great job of analyzing the Notre Dame’s games, opponents, recruiting, coaching, polls, and much more. Recently some members of the group also started a site focusing on Notre Dame Basketball called The Fieldhouse, which is a reference to the first building where Notre Dame’s basketball team played. Like most Notre Dame fans, I am not a big a fan of basketball as football, but I bleed gold and blue no matter what the sport. The great thing about both sites is that for years, I have used Pat as my information gathering system on Irish sports, but now everyone has the same access.

Finally, I always try to read Dobber’s World and Neoperspectives by my friends Dobber and Travis, respectively. Dobber and Travis are big-time libertarians and constantly inform their readers about the doings of the mafia-government. Of course Dobber is actually a military officer for that mafia-government, but I guess that is beside the point…

What am I missing? Please drop me a line in the comments section if there is a great blog out there that I should start reading.

Thursday, March 02, 2006

School Choice

Thanks to everyone who commented on my compelling interest question a few weeks back. Glad to see that we were able to get some discussion going. Also I am glad to see that most people seem to believe that the government has some interest in funding the education of the next generation. My concern with a completely private education system is that parents of school-aged children typically would struggle to fund their children’s education, which could result in a generation of people who lack the skills to make a meaningful contribution to society – especially in a rapidly globalizing world in which low skilled laborers in the U.S. must compete with people in third world countries that are just joining the world economy. Ultimately threat of increased competition at the lower end of the skills spectrum should focus public attention on the great importance of improving education so that the U.S. can continue to maintain a competitive edge.

With that in mind, I was happy to read this opinion piece in the Wall Street Journal, which describes the state of education in Minneapolis, one of the leaders in adopting school choice. Apparently low income and minority parents are pulling their children out of the public schools and sending them either to suburban public school districts or to charter schools in the city. I particularly liked this paragraph containing quotes from a community leader:
Black leaders like Louis King have had enough. He has a message for the school board: "You'll have to make big changes to get us back." He says the district needs a board that views families as customers and understands that competition has unalterably changed the rules of the game. "I'm a strong believer in public education," says Mr. King. "But this district's leaders have to make big changes or go out of business. If they don't, we'll see them in a museum, like the dinosaurs."
School choice has been a reality in Minneapolis for over fifteen years, but is not even offered to the majority of parents and students in this country. We need to increase the pressure to allow more educational options in this country or we will not be prepared for the emerging threat of globalization.