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.

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.

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.

Corporate Philanthropy

Below is a graph that I have been sitting on for a while. I have been thinking about writing a comprehensive article on the conditions when corporations should engage in corporate philanthropy, which I loosely define as any outlays that are not incidental to doing business. Donating to the Red Cross would qualify while salaries or a Christmas part would not. Upgrading a public road to improve logistics to a facility would probably not qualify either although it certainly would benefit others.

My thesis is that corporate philanthropy can only be justified if it can generate increased value for shareholders, which is the sole mission of corporate officers.

As the graph shows, some non-zero level of outlays in support of philanthropic causes will increase share holder value. However at some level, those outlays cease to increase value and become a waste of the shareholders money. Where this inflection point occurs will vary from firm to firm and perhaps industry to industry and can only be determined based on the individual executive's judgment. I hope to elaborate on the considerations of this process in future posts.

Nonetheless, at this point I will comment that philanthropy should not be used as a kind of insurance policy. Corporate philanthropy should be used in cases where corporate and philanthropic objectives align, not to curry favor with the public in the event of a scandal. The best insurance policy against a scandal are strong internal accounting controls and a culture that promotes ethical business dealings.

Ski Selection

A while back I mentioned that I was looking for a new pair of skis for this season. Well I may be a little late in providing an update, but better late than never. For the past couple of months I have been riding Dynastar's Legend 8000. They are really a great ski for the style of skiing that I enjoy most i.e. able to make quick turns across the fall-line or through a mogul field but also able to float in the power. I really got a good chance to learn about my new ski's performance in the powder while skiing in Whistler, BC. They had a ton of fresh powder three of the five days that I was out there. Although the 8000's did not float as well as a true powder ski they held up very well and certainly will perform better than any powder ski in New England ice! I highly recommend these skis to anyone interested in a great all mountain ski.

Congratulations Sgt. Wasilewski

My friend Josh Wasilewski has recently been promoted to Sergeant in the Ocean City Beach Patrol, where I work part time in the summers. This is a picture that I took of Josh last summer before we went to work.

Here is another picture of Josh on the OCBP's website along with his biography!

Also congratulations to the other three newly promoted Sergeants: Ryan Cowder; Jamie Falcon, and Nick Thompson.

Imagine That A Contested Election

It seems like this might actually be old news, but it appears that the Republicans is actually going to run a candidate against Edward Kennedy in this year’s senatorial election. Four years ago, John Kerry did not have a Republican challenger in his election even though the Mitt Romney was running a strong campaign for governor. This year, Kevin Scott plans to challenge Kennedy. I doubt that Scott has much of a chance to beat Kennedy, but it will at least be nice to have a choice of candidates on Election Day.

BCS Season

I am a little tired today after staying up after midnight for the past three nights watching some of the best college football of the season in the four BCS bowls. Each of the four games, Notre Dame vs. Ohio State, West Virginia vs. Georgia, Pen State vs. Florida State, and the Southern California vs. Texas provided excellent competition. The players really left everything that they had on the field.

I was a little disappointed with Notre Dame’s play against OSU. On offense the team did not really seem to be in synch with many dropped passes and way too little protection for the quarterback. Our defensive line was unable to get any pressure on OSU’s quarterback and the lack of blitzing meant that Troy Smith and his receivers had plenty of time to pick apart our secondary. On the positive side, Darius Walker had a number of great runs and showed that he can be a huge threat when he is healthy.

On the other hand, I was not disappointed at all with last night’s Rose Bowl. Texas and USC put on a great competition for the National Championship. I was impressed with Vince Young’s ability to make some tough passes, but was even more impressed with the way he seemed to effortlessly gain yards when scrambling away from USC’s defense. These teams were so evenly matched, and had both had such success during the regular season that there can be no doubt that these two teams were the best in the nation. Congratulations to Texas for their victory!

Deciding to Withdraw Medical Care

I liked this post detailing concerns making decisions about how and when to withdraw medical care. In medical care, as in all other aspects of life, we constantly find ourselves required to make choices about how to allocate finite resources most effectively. The questions that Julian asks help to clarify the difference between economic justice and resource allocation that often become confused in the actual decision making process and in general debate:

There's one question about economic justice, whether someone has a share of resources we think is adequate to give someone a fair range of real options—to put food on the table and also, if she wants it, provide for medical insurance. There's a distinct question about how we react once people have disposed of just shares as they see fit and still find themselves in dire medical straits.

Compelling Interest?

Travis and Dobber posted an interesting collection of opinions about obsticales to enhanced school choice. Clearly everyone in this group believes that increased choice is imperative in the education market, but it seems that the group breaks into two divisions based on whether they believe that society, through government, has an interest in insuring that every person has some minimum level of education.

So, here is the question for you guys, does society, through government, have a compelling interest in guaranteeing that every person has a minimum level of education?

If the answer is yes, then tax funded charter schools and voucher programs are an appropriate solution to providing competition to government run schools. However, if the answer is no, then the tax funded primary and secondary education system should be privatized.

Thoughts…

Great Speakers

Last week I found a great page on the university of Notre Dame Mendoza College of Business website that contains video of many of the business leaders who come to speak at the business school. When I was an MBA student, I often attended many of these events. Watching these the polish and poise of these speakers really encouraged me just like it did when I was a student. I hope that the University continues to make video of these presentations available on the site so that alumni and other interested people can benefit from them.

I have already spent a couple of hours watching and listening to
Tom Mendoza,
Jack Welch, and
Charles Phillips.


These gentle men are great examples for everyone in the business community to emulate.

Sullivan vs. Krauthammer

In recent weeks, many people have debated the legality and morality of United States Government agents torturing enemy combatants in the hopes of gaining critical information. While I certainly believe that torture is morally wrong, the real existence of people in the world who endeavor to destroy the United States along with my moral system makes the limits on interrogation techniques that we place on our government an important question. Last week Charles Krauthammer published an essay in the Weekly Standard arguing that the government agents should have the flexibility to employ torture in a couple of extreme conditions. Today Andrew Sullivan published a response in the New Republic in which he insists on an absolute ban on torture by the government. These two essays present the best cases that I have read on both sides of this issue.

My sense is that Krauthammer gets the better of this argument. Sullivan's strongest point is that totalitarian instruments have no place in a war for freedom. However, I think that this is overwhelmed by the real need for the government to have complete flexibility to defend its citizens from foreign enemies with out facing presidential impeachment.

CPR: It Could Save a Life

Travis pointed me to this article about changes to the recommendations for CPR. It seems that chest compressions are relatively more important than had been previously known and that the efficacy of second and third AED shocks is lower than experts thought. The key quote from the article is:

Chest compressions must be deep and the rescuer must allow for complete recoil of the chest after each compression. The panel said this 'back-to-basics' approach should help boost uniformity in emergency care, which has included too many ventilations, too may interruptions, and not enough focus on chest compressions.

Another interesting data point on the subject: My girlfriend Lori, works in an intensive care unit and has to perform chest compressions on coding patients from time to time. In an ICU setting, the medical staff can monitor the patient’s heart rhythm while performing the compressions. According to Lori, rescuers need to perform the chest compressions much harder and deeper than most people simulate in CPR instruction in order for the monitors to indicate acceptable circulation. In fact, if CPR is preformed properly, the rescuer should be very tired after five minutes of compressions.

Another Defender of the BCS

Dan McGowan has a good post arguing that the BCS, while not perfect, is certainly preferable to a playoff in NCAA D-I football. Dan hits on the fact that even though a tournament would allow more teams to participate, there would still be some very good teams left out. To me, the even better point is that the presence of a tournament for the top 8 or 12 teams would likely mean the end of some of the lesser bowls. Without these bowl games, many above average teams would not have an opportunity to participate in post season play, which would hurt college football as a whole.

I did not think of this argument when I wrote this post defending the BCS, but it certainly strengthens the argument.

Race to the Rose Bowl

I like this animation of the Race to the Rose Bowl. Too bad that I just found it at the end of the football season. Also it is too bad that the Volunteers had such a tough season this year.

Update: Here is the final version.

BCS Unfair?

Mike Celizic begins a post about the upcoming Bowl Championship Series' Fiesta Bowl by stating that, "Notre Dame is probably going to the Fiesta Bowl, and this Domer will be the first to agree that's not fair."

Fair? When has college football ever been about being fair? College football and especially post season bowl games have always been explicitly about making money not about determining the best team. If the organizers of the Fiesta Bowl or any other bowl believe that they will earn more money by inviting Notre Dame than another team then they should invite Notre Dame.

As I have stated before, I think that a playoff system is unrealistic for a variety of reasons. All that I have ever seen in response to criticisms of a playoff system is that either the alternative is unfair, that it causes people to hope that only two teams remain unbeaten at the end of the season, or that it gives additional teams the opportunity to play for the championship even though they did not have very good regular seasons.

None of these arguments convince me that either the BCS or its predecessors have fundamental flaws. I don't think that we need an undisputed champion of college football. The experience and the dispute are part of the fun.

Java Hound

My friend Rob Miller just published an article titled Fitnesse Testing for Fast-passed Agile Web Development on java.net. In the article, Rob describes methods of Fitnesse testing, which allow web developers to shorten their testing cycle. Testing usually accounts for a significant portion (often the majority) of any development effort. So if web developers can shorten their test time they will gain the ability to rapidly release new versions of their product, perhaps as often as every day. Planned rapid software releases allow companies to quickly respond to their customers changing needs, which contributes to increased customer satisfaction. Good work, dude!

School Choice in DC

The Club for Growth pointed me towards this article about some early results of the school voucher program in Washington DC. In general, I am in favor of allowing parents to choose where to send their children to school, even if that means sending public tax dollars to private schools. It appears that many of the parents in Washington DC share that opinion.

Quote of the Day

“Businessmen owe it to themselves and owe it to society to hammer home that there is no such thing as ‘profit.’ There are only ‘costs"’ costs of doing business and costs of staying in business; costs of labor and raw materials, and costs of capital; costs of today's jobs and costs of tomorrow's jobs and tomorrow's pensions.
There is no conflict between ‘profit’ and ‘social responsibility.’ To earn enough to cover the genuine costs which only the so-called "profit" can cover, is economic and social responsibility--indeed, it is the specific social and economic responsibility of business. It is not the business that earns a profit adequate to its genuine costs of capital, to the risks of tomorrow and to the needs of tomorrow's worker and pensioner that ‘rips off’ society. It is the business that fails to do so.” Peter Drucker in “The Delusion of Profits”, published in the Wall Street Journal Feb. 5, 1975.

Peter Drucker, who died Friday at the age of 95, was perhaps the greatest commentator on the state of business in the United States. His extensive collection of articles and books will continue to inspire. I intend to reread The Effective Executive in his memory.

Big Government Conservatism?

Well just one day after I noticed and commented on the Progressive take on individual choices, the Weekly Standard published an article by Ross Douthat and Reihan Salam with a conservative take on where to go after confronting the realities of entitlement reform. Douthat’s and Salam’s realization is that:

This is the Republican party of today--an increasingly working-class party, dependent for its power on supermajorities of the white working class vote, and a party whose constituents are surprisingly comfortable with bad-but-popular liberal ideas like raising the minimum wage, expanding clumsy environmental regulations, or hiking taxes on the wealthy to fund a health care entitlement. To borrow a phrase from Minnesota governor Tim Pawlenty, Republicans are now "the party of Sam's Club, not just the country club."

Given these political realities, the authors recommend fleshing out the Big Government Conservatism that President Bush seems to have adopted as the new Conservatism. Douthat and Salam would seem to agree with Paul Glastris’ vision of reality in which Americans cannot succeed by themselves but actually need the government to help them. Then they do exactly what Glastris accuses them of doing, by putting forth proposal that enshrine small government ideals in big government programs.

The jist of most of these proposals is, well if we have to spend so much money on the poor we might as well spend it on wage supports instead of just giving it to welfare recipients. I guess that this stuff is a step in the right direction…

As a side note the article mentions a really interesting study by the Pew Research Center for People and the Press that breaks down the American citizenry into nine political segments. They also have an online quiz so that you can categorize yourself. I turned out to be an Enterpriser. Interestingly enough, much of the commentary published in political magazines and blogging on the internet seems to be a contest between educated enterprisers and educated liberals, but of course both of these groups combined represent less than 30% of the electorate.

The Catholic Church and Evolution II

I was pleased to see Cardinal Paul Poupard recently comment on the relationship between religion and science that the evolution debate currently raging in many parts of the world has highlighted. Cardinal Poupard reiterated John Paul II’s assertion that there is no fundamental conflict between the theory of evolution and the Roman Catholic faith. A few months back I posted my concern about comments made by another Cardinal, Cardinal Christoph Schoenborn, who hinted that there might in fact be a conflict between science and religion. Thankfully, the Church is engaging the modern world, science included, instead of retreating into an isolated fantasy. I like Cardinal Poupard’s description of the interoperation of science and religion:

We know where scientific reason can end up by itself: the atomic bomb and the possibility of cloning human beings are fruit of a reason that wants to free itself from every ethical or religious link, but we also know the dangers of a religion that severs its links with reason and becomes prey to fundamentalism.

Beautiful.

Contrast that with Evangelical Christian Pat Robertson commenting on a recent school board election in Dover, PA where voters ousted school board members who supported the teaching of intelligent design.

I’d like to say to the good citizens of Dover. If there is a disaster in your area, don’t turn to God, you just rejected Him from your city. And don’t wonder why He hasn’t helped you when problems begin, if they begin. I’m not saying they will, but if they do, just remember, you just voted God out of your city. And if that’s the case, don’t ask for His help because he might not be there.

Oh Brother…

Individual Choices

Andrew Sullivan pointed me towards this article in the Washington Monthly by Paul Glastris, which offers a critique of President Bush’s Ownership Society initiatives and the conservative political agenda on choice. In his article Gratis attempts to carve out a progressive position between one-size-fits-all liberalism and the conservative ideal of reducing the size of government. I think that he does a good job of laying out the obstacles to increased individual choice, but I differ in the way to overcome these challenges.

Glatris outlines the conservative position as follows:

Talk to scholars at the Cato Institute or the Heritage Foundation or to movement organizers like Grover Norquist, and they'll walk you through the strategy. Big government and individual freedom, they'll explain, are opposed to each other; more of one means less of the other. The three big areas of non-defense-related government spending are retirement (mainly Social Security), health care (mainly Medicare and Medicaid), and education (mainly K-12 public schools). For political reasons, it is practically impossible to cut spending in these areas. But it is possible to dismantle the government bureaucracies that administer them in a way that enhances personal freedom and makes possible big cuts down the road: privatize the benefits.

He goes on to describe the circumstances of some of the areas where conservatives and President Bush have attempted to insert individual choice into government programs and have either failed or achieved at best mixed results. Examples include school choice in Washington DC where less then ten percent of parents opt to send their children to another school, low participation rates in a Medicare prescription drug discount card program, and the falling public support for privatizing a portion of Social Security. Each of these initiatives seem to fail due to a combination of the apparent complexity of the choices offered, the natural tendency of people to procrastinate, and the individual’s propensity for risk aversion.

Undoubtedly those are the three reasons why some people would prefer to have others make their choices for them as opposed to making the choices themselves. In the particular case of Social Security, people who truly believe that the government will take care of them would never want to switch to a complex system where they have to make choices and bear the risk of failure. However, for people like myself who do not expect to see any return from the payroll taxes that we send to the Social Security system the real risk is leaving our security in the hands of the government.

The three hundred million people living in the United States make countless decisions every day without the influence of government. The aggregate of these decisions results in the economic output, social service, and personal development of our nation and in general these decisions have resulted in the highest living standards in the world. Individual citizens just do not need government intervention in their decision making process to be wildly successful.

What is interesting, however, is that in areas where government has encroached into the ability of individuals to make their own decisions the capacity of individuals to make their own decisions has atrophied. Where individuals can make decisions about what career to pursue, they cannot make decisions about how to save for retirement. Where individuals can make decisions about where they live, they cannot make decisions about where to send their children to school. Where individuals can make decisions about what car to buy, they are unable to make decisions about their health care. The objective of increasing opportunities for individuals to make choices should not be primarily about the role of government but about the decision-making capability of individuals. We will never achieve utopia because of the inherent flaws of human nature so living in a society where individuals are capable of meeting and overcoming adversity, even if it means making choices, raises the quality of life for all.

Glatris concludes his article by stating:

There are plenty of good reasons, then, for progressives to embrace the idea of designing more choice and individual control into government programs. But doing so means facing down some major opposition—from corporations that don't want tobe regulated to liberal interest groups that often oppose choice initiatives. Liberals also have to stop accepting the right-wing proposition that choice and empowerment are somehow inherently conservative ideas.

But it's conservatives who face the bigger obstacle. They are committed to a strategy of using choice as a Trojan horse to undermine government, yet it's impossible to
make choice work in the real world without strong measures from government. With choice, as with so much else, conservative have mastered the art of winning
elections with abstract language voters agree with, even as they push policies
voters don't much like. They can't pull that trick off forever. At some point,
conservatives themselves are going to have to make a choice.

I disagree that we need government in order to make choices. I believe that the government has an obligation to provide an environment where citizens can flourish, but part of flourishing is having the confidence and ability to make their own choices. This is not about government, it is about people, their dignity, and the quality of their lives.

BCS: Working OK

I noticed this article in the Washington Post the other day describing how Virginia Tech's loss to Miami on Saturday makes more likely that the BCS will work the way many people want it to: matching up two undefeated teams to play for the national championship. I wrote this post a few weeks ago to describe the benefits of the current BCS and Bowl system over a playoff. So, it looks like it is likely that this year we will have an undisputed College Football Champion and everyone calling for a playoff system can take a breather.

Also interesting at the end of the WaPo article are some of the quotes from Miami coaches and players. Quite a few of my fellow Notre Dame fans really hate Miami for what they describe as a lack of class. I certainly do not hate Miami. In fact I think that they bring something special to college football. In the NCAA there is room for both Notre Dame and Miami and that is what makes college football great!

Go Irish

Beat Cougars!!

This is Pretty Ridiculous

James Taranto (last item) pointed me to this article in the New York Times and this follow up article in the Boston Globe regarding Anheuser-Busch’s promotion of a “Bud Pong” game and their subsequent retrenchment in the face, apparently, of perceived public pressure.  What is going on here?  We see college administrators and the president of MADD saying that adults at bars are not able to take responsibility for their own actions.  

Are there lots of positive aspects to beer pong or any other drinking game?  Are their associated risks?  The answer to the first question is probably not many, but at least the individuals who participate have fun.  The answer to the second question is yes, but there are risks associated with any activity including sitting on the couch.  

It is sad to see Anheuser-Bush, Miller Brewing Company, and Coors Brewing Company all have so little faith in their customers’ ability to take personal responsibility for their actions.  It is sad that university administrators and advocacy groups want to limit the freedom of adults to make their own decisions about their personal conduct.  But most of all it is sad that A-B still has 50% market share because their product is terrible.

Book Reviews The Kings Depart

I just finished reading The Kings Depart: The Tragedy of Germany Versailles and the German Revolution by Richard M. Watt. The Kings Depart describes the people and events that influenced the end of World War I and its aftermath. This thoroughly researched story provides the reader with great insight into what events transpired as well as how and why they transpired. Watt certainly believes that each of the actor’s backgrounds, personalities, and interpersonal skills played an important part in these events. Before describing many of the events and interactions in this period, Watt provides bibliographic sketches of each of the important players such as Woodrow Wilson, Lloyd George, and Georges Clemenceau, as well as Friedrich Ebert Germany’s first socialist Chancellor. Watt uses each player’s biography to place their interactions with others and their reaction to events within the context of their lives. I have long believed that individuals have great power in influencing events so I really appreciated this mixing of biography and more classical history.

The Kings Depart certainly depicts a few battlefield conflicts, but more importantly it depicts the negotiations that lead to the Versailles Treaty and the Socialist Revolution in Germany. Watt clearly understands how negotiations work and did an excellent job of depicting each person’s individual negotiating style. In particular, Watt details Woodrow Wilson’s failure in his negotiations with George and Clemenceau over the form of the peace treaty, which ultimately reflected George’s and Clemenceau’s desire for revenge more than Wilson’s Fourteen Points. Watt attributes this to Wilson’s propensity to become mired in details, his refusal to delegate to his team, and ultimately his failing health.

The piece of history that I knew almost nothing about was the revolution that occurred in Germany once it became apparent that Germany would lose the war. Essentially almost every unit in the Imperial Army and Navy mutinied against their officers and took up the red flag of socialism and almost the entire country went on strike to protest rule by the Emperor. Watt describes the various states of anarchy that prevailed in many of Germany’s cities during this period and the various attempts that the government made to restore order. This story alone gives new meaning to the words order, discipline, and organization because it illustrates their polar opposite. Also interesting are the fissures that formed when the opposition Socialists found themselves actually running the government. These fissures formed between those who took responsibility to try to establish some sort of order and the true socialist believers whose concept of reality was actually utopian. In my lifetime, socialism has been more of a slur than a political ideology so this portion of the story helped to illustrate the various intellectual schools that once existed.

Finally and tragically, Watt describes the deep misgivings that many members of the allied parties had with the treaty that the Allies forced Germany to sign, Herbert Hoover and John Maynard Keynes among them. Of course everyone knows how this story ends, so Watt details Adolph Hitler’s periphery role in these events and how that setup his eventual rise to power.

Quote of the Day

Quote of the Day: “I will never understand the stupidity of people who turn their backs on the ocean.  People who have no knowledge of the danger the ocean threatens will walk right into it backwards while snapping pictures of the family.” Eddie Aikau quoted in Eddie Would Go: The Story of Eddie Aikau, Hawwiian Hero and Pioneer of Big Wave Surfing

I have been looking for this quote for some time and only found it today using Google Print.  Wes Smith, the Lieutenant in charge of Training for the OCBP drew my attention to this quote, which neatly summarizes how too many people treat the ocean.  Every year the ocean kills people; everyone needs to realize that.

I Hate Getting Passed

Most mornings I run for about six miles on a trail adjacent to the Charles River near my building in Boston.  Usually these runs are not that exciting, but this morning I actually have something to write about.  Near the beginning of my run, I heard a group of what I later realized were three runners behind me on the trail.  These guys were pretty quick and were running a little faster than I usually run by myself (unfortunately I have not been able to run with others much, which is slowing my pace).  I never like being passed on a running trail, but for some reason I felt particularly strongly about that this morning.  These guys pushed me for most of the three miles out before turning off the trail.  On the way back I was a little winded, which my chest cold did not help, so I probably slowed down somewhat.  Nonetheless, I ran this particular course about a minute faster than my previous best.  I am still struggling to get back into form, but the having those guys behind me on the way out certainly helped.  

College Football Championship

Each year, the champion of College football is determined through a system known as the Bowl Championship Series, which ranks the top college football teams and invites the top two teams to play for the championship. In addition six other highly ranked teams are invited to play in three other highly visible bowl games. Each year the BCS ranking system generates controversy over which two teams should play for the National Championship and which teams should play in the other three Bowl Games. Unfortunately this year Notre Dame appears to be getting a bad deal in these rankings. In addition to complaints and arguments about why a particular team should have a different ranking in the BCS poll, the controversy surrounding the BCS also brings calls for a playoff system to determining the National Champion (like this article, this post, and this comment among others). Unfortunately, a playoff system in College Football is just not feasible because it is a logistical nightmare.

The idea most often proposed is to hold a single elimination tournament with either the top four, eight, or even sixteen teams to ensure that every team with a legitimate shot at wining has the opportunity to prove that on the field. The models for this playoff system are the NFL’s playoff and NCAA Basketball’s Tournament. However there are significant differences between NCAA Division I College Football and the NFL and NCAA Basketball. These differences make a playoff system to determine the National Champion difficult if not impossible to implement.

Like college football, NFL teams play relatively few games (one per week) but there are relatively few teams in the league, which is split evenly into two conferences of four divisions each. So, in the NFL most teams play each other and all teams have common opponents. In college basketball, there are relatively many teams, but each team plays relatively many games including many conference tournaments. So, although many teams may not play each other, almost all teams at least have a few common opponents. In college football, there are relatively many teams, but each team plays relatively few games so very few teams play each other and very few teams even have common opponents. This fact makes it much more difficult to objectively seed a tournament in college football than in college basketball, or the completely objectively seeded NFL. These differences in and of themselves do not constitute an argument for or against a college football playoff, but they certainly place real constraints on the seeding issue.

NFL teams all play their games in stadiums that are physically located near major population centers so the majority of an NFL team’s fans can easily attend a game. In the NFL playoff system all games except for the Super Bowl are played at one of the two team’s home stadiums, which makes home field advantage an integral part of the playoff process. Home field advantage makes the complete objectivity of the playoff seeding critically important. In College Basketball, due to the somewhat less objective nature of the tournament seeding process all games take place in neutral stadiums so that neither team benefits from home field advantage. However, very few fans actually choose to attend these tournament games, likely due to time and travel requirements. The evidence of this is that either four or eight teams play their tournament games in the same arena over the course of a weekend and all tickets are good for at least two back-to-back games. This effectively means that fans from four or eight teams, who are in the area to watch their team also attend some of the other games, which helps fills the arena. If enough fans from the two teams playing the game were actually willing to attend each of the games there would be no need to sell a single ticket good for multiple games.

The seeding of a College Football tournament would likely be less objectively seeded than in College Basketball (certainly less objectively seeded than the NFL playoff), which would demand that all games take place at a neutral site*. Of the four BCS Bowls played in 2005, only three of the four actually had attendances higher than their capacity and all three of these Bowls were held in the week following New Years when many people have an opportunity to travel. Compared with the NCAA Basketball tournament venues, the BCS venues are huge with an average capacity of 78,000 vs. 22,000 at the Savvis Center, venue for the 2005 Final Four. Of course one of the reasons that so many people attend the BCS games is that each of these bowls was seen as the final game for the teams competing, making fans were eager to attend.

Although there is certainly interest in watching BCS bowl games, the facts of the NCAA basketball tournament make it doubtful that enough fans will be interested in attending a multiple week football tournament. The likely result of a multiple week college football tournament would be partially full stadiums for at least some of the games because fans would simply not be able to afford the financial and time costs of traveling each week. Solutions to this such as selling a single ticket to multiple games would probably not work because the longer duration of a football game – not many people would be willing to spend eight or nine hours in a stadium. A tournament would certainly be good for television networks, such as ESPN, but this would come at the expense of filling stadiums to near capacity.

A playoff system for College Football is not feasible and would likely represent a worse solution than the current BCS. Although the BCS certainly stirs up controversy, this controversy is an integral part of college football. College Football is and always has been a sport contested both on the field and in the press. Although determining an objective champion in College Football is a laudable goal, the realities of the sport and its fans make achieving this goal impossible. Instituting a playoff system would change the sport for the worse.


* (Although the NCAA Division III Football Champion is determined by a tournament in which most of the games are played at one of the team’s stadiums, all of these stadiums are much smaller, which limits the home field advantage. For example the stadium for the 2004 champions, Linfield only holds approximately 1760 spectators. Update: NCAA Division IAA also holds a playoff system. I found a website that lists the sizes of their stadiums here. With the exception of six schools all of these teams play at stadiums with less than 30,000 person capacities. So again, these playoffs are held at much smaller venues.)

Sales Mistakes

I recently noticed two posts at Bizinformer regarding two of the most common sales mistakes ever made. Unfortunately, I have seen operational examples of both Failing to be Overt and Selling Past the Close in my short sales career. I agree that both of these are mistakes, but I disagree about their relative importance. Failure to be overt will immediately doom any sales engagement, while selling past the close is really just a matter of bad form.

The real issue when salespeople do not specifically ask their client if the client wants their services is the fear of hearing the word no. This fear paralyzes a salesperson in the engagement because they are not able to ask the appropriate questions to determine if they will reach a deal. This is absolutely detrimental in environments with long sales cycles because the salesperson, sales management, and the people in the business unit all have an unclear view of the client’s true intentions. Maybe the client is really interested, maybe he is really not interested, or maybe he is just talking to the salesperson to fill up his day, without overtly asking the client the important questions no one knows so everyone is wasting their time.

Failure to be overt sucks the life out of a sales engagement and causes everyone to waste time on a deal that may never materialize. Good sales people are not afraid to ask the tough questions and are prepared to change strategy and tactics if they learn that they are losing.

Babylonian Math

I never knew about this.  It turns out that the ancient Babylonians invented a sexagesimal number system, meaning that instead of counting to 10 they counted to 60.  This numbering system was more convenient for fractional calculations than a decimal system because the base (60) had more factors (2,3,4,5,6,10,12,15,20,30) than the base (10) in decimal (2,5).  This means that there are many more one digit fractions making division easier.  Another interesting source shows just how advanced their astronomy, trigonometry, and algebra were at such an early date.  

This site makes many of the same points but also illustrates the symbols that the Babylonians used to represent numbers from 1 to 59.  The interesting thing about looking their symbols is that it looks like they started with a base 10 numbering system and then expanded it to a base 60 numbering system.  Perhaps as they began doing calculations, they realized that they had too many infinite fractions and chose to change the base to reduce this.  For the new base they simply took the lowest common multiple of 2, 3, 4, and 5, which is 60.  If they wanted to include the next prime number, 7, they would have had to use base 420, which may have been unworkable.  So they compromised.  

The other interesting fact that I did not know was that the Greeks and Europeans carried on sexagesimal notation on through the fifteenth century for astronomical and mathematical calculations.  It seems strange to think that many people doing very advanced calculations just a few centuries ago were using a totally different numbering system than we use today.  It is also interesting that the vast majority of the population did not actually use the sexageseimal numbering system for calculations, but only an educated elite who needed to do complex calculations.  Nonetheless, sexagesimal notation was used for telling time, as there are sixty minutes in an hour and sixty seconds in a minute.  So, our conception of time is directly related to the numbering system invented by the Babylonians.

I am going to try to learn more about this.

Political Ideology

I recently took a political Ideology quiz that I found quite interesting. I am a little apprehensive about boiling down my politics to a point on a graph. Hopefully my readers will keep an open mind about the rest of my writing.

You are a Social Liberal (63% permissive) and an... Economic Conservative (80% permissive) You are best described as a: Libertarian Link: The Politics Test on OkCupid Free Online Dating Also: The OkCupid Dating Persona Test

Over the past couple of hours, I have reflected on how my views have probably changed over the past ten years. I am certainly much more socially liberal now than in the past, but economically I probably have changed very little. Why have I changed my views on social issues? I certainly still support law and order in a very strong way. However, I have come to oppose the use of government power, which boils down to men with guns, in efforts to control other people's personal activities. The key word in the previous sentence is personal in that the government needs to regulate activities that affect others and not regulate activities that affect only the individual. Striking an effective balance here is the key so perhaps the reason for my shift towards more social permissively has to do with a greater understanding of the costs to society of attempting to regulate activities that only affect an individual.

For example, ten years ago I believed that drug use (cocaine, heroin...) is an incredibly stupid and destructive behavior. I still believe that today. Ten years ago I favored a harsh crack down on drug users, dealers, and traffickers. Today I am coming to the painful realization that the costs of enforcement and social chaos outweigh the benefits of stopping and individual from using drugs. The movie Traffic really drove that point home to me a few years back.

I have come to see government regulation of personal activities as the antithesis of freedom and perhaps one of the reasons that we have trouble taking personal responsibility.

Ski Shopping

Summer has ended, fall is here and I am looking forward to the winter ski season! This winter I plan to buy a new pair of skis to replace my ten year old Rossignols, which have served me well but take quite a beating in the process. I love to rip through the moguls and the powder (when available). I am used to a pretty stiff ski and I love to make short snappy turns. The only problem is that at many of the New England mountains, where I usually ski, many of the runs are steep, flat, and icy so my perfect ski has to allow me to deal with longer faster turns. Also, I want my new skis to have twin tips so that I can learn take jumps backwards.

Over the next couple of months I will be shopping for skis and hopefully trying a few out when the first snow comes. If anyone has suggestions please leave them in the comments section. As I narrow down my choices I will publish my comments in subsequent posts.

Market Extremes

Interesting post on market dynamics in a variety of industries as various competitors angle to become either low cost or high value players. The companies who successfully establish themselves at the extremes seem to win the majority of the business while those caught in the middle lose share.

Why is this happening?

I think that there are a couple of factors: 1. Increased technology and information tend to drive costs lower – from Wal-Mart in retail to just about everything in technology and electronics costs continue to fall, relentlessly; 2. Falling barriers to trade and barriers to entry allow new firms enter markets as low cost leaders and allow premium players to leverage increased scale; 3. It seems that consumers’ choices are becoming more bipolar – either they really care about a product or service and want the best that they can afford or they just need the product and want to pay as little as possible.

Maybe there are other factors at work here, but it seems reasonably clear to me that the era of middle of the road competitors is ending.

Governmental Responsibility

I enjoyed reading Peggy Noonan’s essay about governmental authority and responsibility. More than the incompetence of and lack of coordination within our government’s response the recent hurricanes exposed problematic relationships between citizens and their government. Noonan states that, “We are losing the balance between the rights of the individual and the needs and demands of the state.” This problematic relationship extends beyond just emergency management; it touches all aspects of our lives.

I am still trying to work out exactly what I want to say about this essay and the problematic relationship between citizens and their government. Only individual people can take responsibility; groups, such as a government, cannot. However groups can take authority, although tragically often they often take poor or even unjust actions when no one in the group takes moral responsibility. Taking individual responsibility is inherently a moral action, but failing to take responsibility in a group is hard to define as immoral. Ultimately individuals must take responsibility for their own actions and jealously guard that responsibility because it represents their freedom. Failure to guard individual responsibility leads on the road to tyranny.

Eliminate Trade Barriers Now

President Bush finally makes a strong statement about the urgent need to eliminate trade barriers to trade between nations.  Trade barriers serve to distort efficient investment and serve to keep too many people locked outside the formal economy and in poverty.  The United States currently subsidizes its farmers, many of whom are millionaires.  These farm subsidies hurt both consumers in the United States, through higher domestic food prices, and farmers in the third world, through lower international food prices.  This is truly shameful behavior on our part.  

Agriculture has consistently fallen in relative importance to our national economy for the past one hundred and twenty years.  It is certainly a significant portion of our past but will never regain its former prominence.  For those that continue to farm, significant technological advancements combined with better risk management approaches allow farming to remain profitable in the absence of depression era subsidies.  It is time for these subsidies to end.  

Likewise, other industries, such as garment production, are currently at competitive disadvantages relative to their foreign peers.  In these industries domestic firms will never catch up let alone regain their competitive edge.  The money and effort that we currently expend in protecting these industries would be much better spent retraining employees for positions in growing industries that will become a major part of America’s future.  Allowing dying industries to die and moving their employees to growth industries will enhance our nation’s economic growth, but more importantly release those employees from the stagnant wages and allow them the opportunity to move into an industry where they can greatly improve their standard of living.  Sometimes harsh medicine actually makes the patient better.  

Gamma Ray Burst

It appears that NASA and other space agencies have detected a huge gamma ray burst from a dying star that occurred 13.7 billion years ago 12.6 billion light years from earth.  Apparently this gamma ray burst is the oldest such burst ever recorded and it is the result of the death of one of the first stars to have formed after the Big Bang formed the universe.  It is fascinating that we have the ability to detect events that happened so long ago and so far away.  Hopefully, this discovery and future discoveries will clarify our picture of the origins of the universe.

Cake

Lori and I went to a Cake concert put on by WFNX at Government center in Boston. There was a huge crowd in attendance as many of the area college students were in their first few weeks back in town. I have enjoyed listening to Cake for quite a few years, but had never seen them live. That was a real treat. They played a few songs from a bunch of different albums, including their newest one. The highlight of the song occurred during No Phone when they mentioned that ladies go first in almost every situation in our society, but that this time the men would go first. The reason that the men go first is because for thousands of years our male ancestors have been trying to communicate as little as possible, but that in the last ten years American women have forced their men to communicate with them at least every ten minutes. In recognition of this, Cake was allowing the men to go first in singing, "No phone, no phone I just want to be alone today" along with the band. That was followed by the ladies singing, "No phone, no phone?". Thanks to everyone who helped put on this great, free show!

Contract with America II?

The Washington Post has a piece about Newt Gingrich’s response to Hurricane Katrina, which devastated New Orleans almost two weeks ago and devastated the credibility of the Federal, Louisiana, and New Orleans disaster response teams shortly afterwards.  The former House Speaker’s assessment of government efforts made Andrew Sullivan’s quote of the day:  “For the last week the federal government and its state and local counterparts have consistently been behind the curve.”  He goes on to say, “We're not in a values fight now but over whether the system is working.  The issue is delivery.”

Events like Hurricane Katrina drive home the point that government does not perform well in a variety of situations.  One of the reasons that the response to Katrina was so disorganized is that no one had clear accountability to ensure success.  The response came from a number of interlocking government agencies at various levels of government, all of which lacked effective leadership and coordination.  This bureaucratic mishmash degraded the effectiveness of the response to this hurricane.  However, other very similar bureaucratic mishmashes contribute to degrading the effectiveness of government response in other aspects of our lives.  From highway spending, to Medicare, to education adding levels of decision makers who are removed from the situation and who lack direct accountability for results creates waste and inefficiency in government response to problems.  

It appears the Newt Gingrich recognizes this and wants to do something to correct it so that we can unlock the potential in our government and in our economy.  Newt Gingrich is an interesting politician - he is idealistic enough to recognize efficient solutions to complex problems, but is practical enough to understand if items are politically possible.  His Contract with America set the tone for reform in the 1990’s and he successfully moved towards greater efficiency.  

I remember listening to a speech Gingrich gave at Notre Dame while I was a student there.   His topic was leadership and his theme was that in order to lead, leaders must: first listen; then learn; then help; and finally lead.  He told the story of how he identified the opportunity to move the country in the direction that he wanted to go, how he gathered momentum with the Contract with America, and how he successfully pushed significant parts of into law.  At the time he had already left congress.  He stated that he had to lead congress because he could only lead a movement, he could not manage a status quo.

Are we seeing the beginnings of new movement lead by Newt Gingrich?  Will the Republicans nominate a Gingrich-Giuliani ticket of outsiders to shakeup Washington and to reform government at all levels?  Time will tell, but if they are serious about reform they will have my support.

Go Irish

Last Saturday’s defeat of the University of Pittsburgh gave every Notre Dame fan a great shot of encouragement.  At last a Notre Dame team had defeated a top 25 opponent in convincing form!  Many Notre Dame faithful like myself have a dose of cautious optimism about the season.  That optimism will come face to face with reality tomorrow in Ann Arbor when Notre Dame takes on number 3 ranked Michigan.  Michigan remains a perennial powerhouse in college football.  Their rivalry with Notre Dame extends back over on hundred years.  Tomorrow Notre Dame fans will watch the game hoping that the Irish will win, but also looking to measure a new team and a new coach against one of the best programs in the nation.  Win or lose, if Notre Dame plays well Irish fans know that the Weis era is off to a great start.  

Intelligence Evolves

This is an interesting article about two recently discovered genes, which apparently have an affect on human brain size and potentially cognitive ability. The mutations, which created these two genes probably, occurred less than 60 thousand years ago with one mutation likely occurring less than 6 thousand years ago. Previously, the common accepted view of human history was that after humans took on their modern form, around 200 thousand years ago, only our culture has changed. These finding indicate that genetic changes played a roll in humanity's shift from a hunter gather lifestyle to an agricultural and productive lifestyle. According to Bruce Lahn quoted in this article:

A lot of people, including biologists, think we are at the pinnacle of evolution
. . . that the human form may be at the best form ever. They think that in the
last 200,000 years [since the modern human emerged] there has just been a
cultural evolution, and we're saying no, there is also genetic evolution.

But will genetics continue to play a part in human advancement? Both of these genes apparently formed more at least 6 thousand years ago. At that time, our ancestors faced much greater threats to survival than we do today. In that environment, a cognitive advantage likely conferred an advantage in survival and a higher likelihood of producing offspring. Today however, most humans in the developed world do not face a challenge to survive on a daily basis - their lives are significantly more comfortable than that of our ancestors. As a result, almost every human has the opportunity to have offspring - in fact the problem in many cases is too many offspring. In today's environment, many successful people either choose not to have offspring or choose to limit the number of offspring that they have. On the other hand many less successful people choose not to limit their offspring. Given these circumstances is it still reasonable to expect genetic mechanisms to continue to work and to continue to make our species mintelligentgent?

Go Irish!!!

The University of Notre Dame football team opens up their 2005 season tomorrow night against the University of Pittsburg at 8:00. Notre Dame has a new coach, Charlie Weis, who coached the New England Patriots to a superbowl vicotry last year as offensive coordinator. Weis is a Notre Dame alumni so he has more than just a professional investment in driving the Irish to perform. Notre Dame football has been in a rut for nearly the past decade. Here is hoping that Charlie Weis can turn things around. Detailed commentary from a group of Notre Dame alumni can be found at the Blue Gray Sky blog.

Federalism and Hurricanes

Andrew Sullivan links to an interesting article about Federal Government funding for levy construction (or lack thereof) in the New Orleans area. Apparently, the administration diverted federal funds away from levy construction in New Orleans to pay for military spending in Iraq. In light of the recent hurricane, which caused floodwaters to break those levees this looks like a potential political problem for the President.

The final paragraph of the article states:

Local officials are now saying, the article reported, that had Washington heeded their warnings about the dire need for hurricane protection, including building up levees and repairing barrier islands, "the damage might not have been nearly as bad as it turned out to be."

This sounds remarkably like a breakdown in federalism. The local officials and their constituents in New Orleans are the ones being the most affected by the failure of the levees. They should be the people making decisions about levy construction and they should be the people to bear the political responsibility for raising taxes to pay for that construction. Andrew ends with the comment:

Yes, some would even blame Bush and the war for a hurricane. But blaming Bush and the war for the poor state of New Orleans' levees is a legitimate argument. And it could be a crushing one.

The supposed reason for the poor state of New Orleans’ levees is the Iraq War. Shouldn’t the management of the Iraq War be a higher priority for the President of the United States than the poor state of New Orleans’s levees? Shouldn’t the poor state of New Orleans’s levees be a higher priority for the local officials? Lets place responsibility where it belongs.

1421

I just finished reading 1421: The Year the Chinese Discovered America by Gavin Menzies. The thesis of the book is that in the years from 1421 through 1424, a Chinese fleet under Admiral Zheng He voyaged across the globe and discovered all seven continents – all seventy years before Columbus. Interestingly a Google search of 1421 China returns Menzies’ site as the number one site and returns a site called Debunking Gavin Menzies second. Clearly, controversy surrounds Menzies thesis.

The evidence in favor of the Chinese voyage is certainly interesting. Much of the evidence comes in the form of old maps containing coastlines that had not been explored by Europeans at the time of their drawing. In addition, Menzies presents evidence of apparent Chinese shipwrecks, Chinese artifacts, and Chinese populations (colonies) throughout the world.

Unfortunately, the style of the writing leaves much to be desired. Many of the book’s conclusions could better be described as stretches. Some are certainly plausible, but Menzies is not as careful as he could be about making his cases. Menzies really wants to believe his thesis so he presents his evidence in a way to make it fit – this comes through in the writing. The other convenient aspects of the thesis is that no written record exists of the Chinese voyage. The Chinese apparently destroyed all evidence of the voyage as they fell into self-imposed isolation, the fleets apparently did not visit Europe, and the Portuguese who apparently inherited the Chinese maps did not mention them directly in their writing. All in all Menzies book is certainly an interesting story, but one that I would prefer to see presented much more rigorously, and with more corroborating evidence.

Leaving aside some of the shaky evidence, this story highlights the importance of political stability to human accomplishment. If all the Chinese actually accomplished all that Menzies claims, they were hundreds of years ahead of the Europeans. That within a few hundred years, China was actually conquered by those same Europeans shows just how fleeting their accomplishments were. Interesting to contemplate when viewing history on a scale of centuries, but hard to appreciate in our fast paced daily lives.

Lawyers vs. Businesspeople

The $253 million judgment against Merck in the recent Vioxx case provides me with a great opportunity to comment on the differences between lawyers and businesspeople.  While both groups are routinely castigated in public opinion for being greedy and unconcerned for the plight of their fellow citizens, these people drive our economy and provide the backbone for our country’s economic health.  Although both lawyers and businesspeople contribute to our country’s economic success, they contribute in vastly different ways.  Business people primarily use their creativity and leadership to create value, while lawyers use their knowledge of the law and contracts to defend or to redistribute value.  

Businesspeople use their knowledge of their customers as well as knowledge of some specific technical subject to create and sell products and services that bring unique value to their customers.  In return for creating that value for their customers, the business people and their firm capture a portion of the value that they created for their customers in the form of profits.  Changing customer preferences, technological advances, and relentless competition make the quest to capture profits an ongoing process.  Businesspeople must continually identify and develop new ways to serve their customers or risk losing their position to the competition.  

In contemporary business, almost every activity requires input from multiple individuals who have specialized skill sets - in many cases, these individuals may even work for separate firms.  In order for these groups to perform effectively, business leaders must coordinate activities and motivate the group.  The ability to organize a group of individuals into an effective team defines leadership in many areas and especially in business.  Business people and their companies require effective leadership and creativity to serve their customers well, which creates value.  Business people can defend their positions well in the marketplace but need help in the courthouse.  

The United State’s legal system provides an environment in which individuals and firms can freely contract and seek remedy for transgressions.  Absent this environment, the best efforts of business people could easily be lost without redress.  Lawyers use patents, copyrights, contracts, and lawsuits to defend the value created by businesspeople.  Without patents and copyrights others could benefit from a firms creative new ideas and inventions.  Without effective contracts, other parties would not have to honor their business agreements.  Both the threat of and an actual lawsuit provide incentives for others to act in accordance with the laws with respect to a particular firm.  All of the activities that lawyers perform serve to keep the value that businesspeople create within their firm.  Lawyers do not create value; they protect it.  

Unfortunately for Merck, their lawyers did not succeed in defending the value that Merck’s creative scientists, marketers, and production organization created with Vioxx.  Whether justified or not, this judgment will clearly affect Merck’s future investment decisions, likely reducing the number of creative new drugs entering the market.  Regardless of how successful a firm is in developing attractive new products, unless it can expect to retain the value created thorough its efforts the firm will not succeed in pleasing it’s stakeholders.  

Red Sox Game

Went to the Red Sox game last night with three friends, Mel, Pat, and Jody. Special thanks to all of the people who had seats on the third base line and decided to leave during the rain delay. It was great fun to have such a close view of the game - literally eye level with the players. Below are a few grainy pictures that I took with my mobile phone. The built in camera is ok for taking close up pictures in doors, but does not work well outside especially in tough lighting situations. Pictures aside, the Red Sox played a great game to beat the Devil Rays 10-6 with plenty of home runs to go around!

Red Sox

Bye Abe!

Red Sox

Huff strike one

Transportation Socialism Comments

A few days ago Travis posted an interesting essay on the unfortunate federal highway bill just signed into law. In general I agree with Travis’ conclusions regarding 1. Returning control of highway spending to the states, and 2. Exploring private ownership of roads. If there ever was a compelling federal interest in highway construction, it has ceased to exist with the completion of the interstate highway system. Returning decision making and tax authority to the state level will at least remove one layer of government and hopefully make the decision making process more accountable to tax payers. Going a step further, allowing private ownership of roads and compensating these firms via tolls will allow for price signals and consumer behavior to drive future investment. Also it will remove the government from the decision making process and allow individuals and firms to make the choices about what serves them best. For an interesting background article please take a look at this.

What I think that Travis misses in his essay is the fact that monopoly power is real. That the government (state and federal) currently has a monopoly over the highway system is not really a good argument for replacing one monopoly with another. The only good reason to privatize highways is to increase the efficiency of our highway system through incentives and competition. Clearly the public would not be well served if a single firm controlled all of the highway routes between two places. If this were the case that firm would price tolls higher and invest less than if a competitor operated an alternate route and each driver had a choice of with route to take.

My point is not that a private highway network is unworkable, but only that the government should have regulatory authority to ensure that no firm gains monopoly power over consumers. For example separate firms should operate interstates 95, 495, 93, and route 90 in the Boston area to ensure that drivers had multiple options to reach their destination.

In addition other modes of transportation such as railroads and air travel should be included in the definition of travel when assessing a firm’s market position. The CEO of Amtrak has stated that he believes that transporting people is only a marginally profitable business. How can this possibly be true? Americans travel constantly for business and pleasure and are willing to pay for that ability. The reason that the major airlines lose millions of dollars a day and that Amtrak needs over a billion dollars a year in government subsidies is that the transportation industry has been constrained and regulated too much by government. Freeing all modes of transportation from government control and only regulating enough to prevent monopoly power (which likely means not at all in many if not all markets) will enable private capital to improve our national transportation network and earn strong returns while they do.

Rip Currents

I have posted about rip currents and ocean wave theory before and recently I came across some interesting material describing some of the key causes of dangerous rip currents as well as well as the theory behind how rip currents form and how strong they become. The National Weather Service has some great resources on rip currents for anyone who does not know what a rip current is or how to identify one on their website.

The first paper, which is on the NWS’s rip current page, describes a study to improve forecasting of dangerous rip currents in Volusia County Florida. The study concluded that four factors contributed to the formation of dangerous rip currents – those rip currents that tended to lead to large numbers of rescues by local lifeguards. These four factors are: wave height, wave direction, wave period, and a tidal factor. The first two factors seemed pretty obvious to me because wave height and wave direction clearly play an important factor in the strength and formation of rip currents. The later two, wave period and the tidal factor, were interesting to me. I had not thought much about wave periods influencing rip current strength, but it certainly makes sense that:

Long period waves will be effected by the bottom at deeper depths and will break further from shore, resulting in a larger wave set up. Long period waves may also have significance due to their ‘groupiness’ creating pulses of the rip currents (Shepard and Inman 1950), catching bathers by surprise.

When I think back to days when I have made the most rescues, the majority of rescues tend to happen after a larger set of waves breaks over the sandbar. I would hypothesize that long period waves cause increased rescues due to 1. the increased strength of the rip current themselves and 2. the temporarily higher set up height which causes swimmers in relatively deep water to suddenly find themselves in water over their heads and hence become venerable to the currents.

The tidal factor undoubtedly plays a major role in the formation and strength of rip currents. This study found that 62% of rescues occurred during the 42% of the time when the tide was between 0.45 m and 0.75 m below the mean with 0.6 m below the mean being ideal. It is interesting that evidence from Volusia County shows this empirically. I would expect that the tidal component might be somewhat more complex than this because of differences in the structure of the ocean floor at various different beaches. The empirical study shows that when the tide falls below 0.75 m of the mean the number of rescues decrease, perhaps because of sandbar exposure. The tidal level where sandbar exposure begins likely varies from beach to beach and also over time at a single beach as the height of the sandbar changes.


I will not comment as much on the second article that I found here, which describes some ongoing research to determine the causes of rip currents and lists some hypothesis about why the form in the first place. Many people who swim in the Ocean have long been able to describe what a rip current is, how to identify it, and how to avoid and escape from one. It looks like science is still working to identify the underlying physics of why they from and how to predict where and when they will form.

Weekend at the Beach

I went to the beach, Ocean City Maryland, this weekend for another great long weekend.  While at the beach, I worked for the Beach Patrol.  The weather was great all weekend except for a few hours of drizzle on Friday.  Unfortunately the surf was very small, bordering on nonexistent so I could not surf in the mornings before work or the evenings after work.  Oddly enough the weather and surf conditions in the middle of August this year remind me more of the middle of July when the air is hot and the surf is small.  

The highlight of our weekend trip occurred at the Beach Patrol’s annual awards banquet where I received an award for ten years of service.  Amazing to think that I have been associated with an organization for ten years – as a lifeguard no less.  I intend to compose a more carefully considered essay on what I love so much about the Beach Patrol and post it here in the next few days to weeks.  For now, I think that it is enough to say that I had a great trip this past weekend and have loved all ten years of being a part of the Beach Patrol.  

Breaking the 11th

In the Agora has declared August 11, 2005 Breaking the 11th Commandment Day, which is an opportunity for Republicans to criticize the Republican leadership currently in power. As a confirmed Republican, I am going to take this opportunity to express my concerns with the performance of those Republicans currently in power. Hopefully criticizing my own party will help strengthen it and demonstrate my intellectual honesty. Over the past four and a half years, the Republican leadership has let me down in three areas: limiting the size of the federal government and liberalizing the economy, and blurring the line between Church and State

Limiting the Size of the Federal Government

Republicans have traditionally been known as the party of limited government. From their position as the minority in congress the GOP opposed the big government programs from the New Deal to the Great Society. Ronald Reagan and Newt Gingrich continued this tradition and made the promise of limited government explicit although they did not have enough control over government to completely realize their objectives. With the election of George W. Bush, the GOP gained control of both the executive and legislative branches of the federal government so the ability to limit the size of government should be with their control. Unfortunately over the past four and a half years the federal government has expanded greatly rather than contracted. Nearly all areas of the federal government have greatly expanded their budgets even those outside the scope of homeland security. From bloated transportation and energy bills, to Medicare prescription drug entitlements, to the farm bill, to no child left behind, to Amtrak Republicans have spent government (taxpayer) money on programs far beyond the scope of anyone's definition of limited government.

Liberalizing the Economy

President Bush campaigned for office by telling voting Republicans that he would enhance our economic potential through tax cuts and more open trade with other countries. While the tax cuts and a few free trade agreements have been enacted, the administration has committed multiple missteps along the path to a truly liberal economy including steel and lumber tariffs and the farm bill. Steel tariffs were the first misstep and the first issue where I disagreed with this president. In addition to violating our commitments to other countries, they drastically raised the cost of steel, which hurt US consumers and especially US manufactures who must purchase steel. Likewise placing punitive tariffs on Canadian lumber only hurts US consumers and the housing industry. Finally the farm bill greatly expanded agricultural subsidies, which serve to distort our agricultural market and enrich US farmers at the expense of desperately poor farmers in other parts of the world. Each of these missteps has served to enrich special interests in the US (steelmakers, lumber industry, and agribusiness) at the expense of the average American consumer. In a truly liberal economy, consumers would benefit from greater competition and all sectors of industry would need become much more efficient.

Blurring the Line Between Church and State

On social issues the republicans in power have blurred the line between church and state too much for comfort. Although faith based initiates certainly stop federal programs from discriminating against religious charities, which is better than the previous status, ideally government should not fund any charities at all - individuals would. Forcing Federal involvement upon religion serves to cheapen the role of religion in society. Conversely, writing discrimination of gays into the constitution and Federal intervention in the Terry Schrivo situation are illustrations of Republicans allowing religion to master government. In the Byzantine world nearly constant state intervention in religion ultimately hurt the Orthodox Churches while in the west the Roman Church essentially took over the Roman Empire and culminated in corruption and reformation. We need to be vigilant about both of these relationships in the US. Church Religion needs a space separate from state, in which to operate in people's lives without the crushing weight of state intervention. Some Republicans seem to have forgotten.

Armor for Sleep

Went to a free concert at the Hatch Memorial Shell, which is on the beautiful Charles River Esplanade. WFNX put on the show, which featured Armor for Sleep (we missed the first band). The band has an interesting sound. They have a very heavy sound, but lighten it up with melodic chords. Many of their songs transition multiple times, which makes for an interesting effect. I was happy to hear this band in an open air environment, because in a club I am sure my ears would have been ringing at the end of the show (not that that is necessarily a bad thing). The concert was a nice treat in the middle of the week.

Ocean Waves

Last week I spent three days at Ocean City, Maryland, which is a beautiful resort town on the Atlantic Ocean. We had a little bit of a swell from Tropical Storm Franklin as it passed to the east. I have always enjoyed riding waves first on body boards and then on surf boards. Even when I do not have either of these I like to body surf the waves. The rush of catching a wave is an incredible feeling.

Once I had advanced far enough in physics and engineering to understand the properties of waves in general, I began to wonder about the physics of ocean waves in particular. From a brief search of the web, I found a couple of interesting sites that give explanations of how ocean waves form, how they propagate, and how the release their energy. The best overview discussion is here. A site with a little more math, but without quite enough physical background is here. A particular description of the formation of rogue waves is here. Please post references to any other descriptive or mathematical sites in the comments field.

Privacy

Travis makes an interesting comment regarding privacy in response to this post on the Digital Television Industry. I agree that many people may oppose this type of development on privacy grounds, however I can only describe their position as tenuous. The entire reason that television exists today is to allow advertisers to gain access to viewers. To assert that content and service providers should invest in creating and distributing programming to serve some public good (entertainment?) is counter factual. As corporations, service providers aim to maximize value for their owners so refining and targeting demographics, ultimately down to individuals is clearly in their interests for the reasons that I cited before.

From a consumer perspective, privacy can only serve as a waste of time and a waist of an opportunity to learn about valuable goods and services. Most Americans spend countless hours watching television, with almost half of that time spent watching commercial messages. What possible good can be served if majority of these messages are for products that the individual does not want because the advertiser does not know anything about the viewer? I want advertisers to know as much about me as possible so that they can pitch products that I actually value highly.

Privacy advocates often use class to argue for increased privacy. I presume that their argument would be that corporations would focus their resources on more affluent individuals at the expense of the less affluent. However, targeted advertising will make both rich and poor alike better off as advertisers of luxury goods target those who can afford them and advertisers of low cost goods target those who need to make their money go farther. Are their other arguments to make in favor of privacy over utility?