Author Archive

Previous in the series:
I, II, III, IV, V

Embrace and extend is a proprietary software company strategy that was made famous by Microsoft’s use of the practice. The idea was to embrace an open standard, create the best implementation of that standard in part by adding proprietary extensions, and get everybody to use your version and become addicted to the proprietary goodness which was not released as an addition to the standard. Everybody buys your commercial software that includes the enhanced standard feature and you gain an extra dollop of lock-in profits for several product cycles.

The challenges of moving beyond current unionization efforts to a true workers movement is a bit like a photo negative of Microsoft’s strategy. What’s desired in this case isn’t to create something proprietary to extend a standard for advantage but to identify the jewels in the proprietary 1st generation unions, standardize and spread their benefits to all workers, and create efficient methods to achieve legitimate worker ends without the violence and without the contribution to crony capitalism that present day unions participate in.

Jewel #1 – Education
US vocational education is generally a mess. Union vocational education is generally considered a viable, quality system.

Jewel #2 – Benefits provider
According to the US tax code ( 501(c) 5 ) Unions have the ability to provide benefits consistent with their purpose. That makes them natural health insurance and pension providers that are financially distinct from the company. Union provided benefits are associational and allow increased worker mobility between firms covered by the same union which is both good for workers and good for capitalism.

Jewel #3 – Worker Protection
This one’s a very flawed jewel, but in a dysfunctional organization that has not yet gone broke, the union might be all that is between you and bearing the cost of changing jobs in a sticky economy when you’ve been done an injustice or have even been asked to do something dangerous or illegal.

Adaptation #1 – The open badging movement in education needs extension into the vocational education sphere. This isn’t really a technical challenge, that part is being handled by the technical crowd admirably. Instead the major unaddressed issues are social and organizational ones. People need to know about the badges both in HR departments and in the job seeking population. Badges need to be something that can give you an edge in finding a job. Badges need to be something that lets you find more good employees and filter out more duds. This is a major work in progress and nobody’s really cracked the code yet though there are a lot of entrepreneurial initiatives trying to work out the issues including big names like MIT and Harvard.

Adaptation #2 – Unions are a ready made association that can stay with workers throughout their working lives and provide benefits no matter what happens to a particular employer. This is a very valuable service, one that could use as many entrants into this market as possible in order to prevent membership gouging If you’re a Catholic, scout master, and bricklayer, picking your benefits among your three major associations gets you better possibilities if all of them are participating as benefits provider associations. This is going to require a sea change in legislation so that cross-state associations can provide benefits packages. President Bush proposed this early in his 2nd term and had his head handed to him. President Obama is obviously not interested. Would our next President do better? On the first day President Romney says he would work to replace Obamacare with a more common sense set of reforms. Would this qualify as part of the solution?

Adaptation #3 – Ultimately, this is the most difficult of adaptations because here is where threat and intimidation get applied in a form of street justice to handle situations that are ill suited to the formal justice system. If management behaves badly, unionized workers impose costs is generally how it works. But the ultimate expression of this tactic in current unions, the strike, is disruptive without being very effective. An entire industry has grown up around making it ineffective. Either formal justice needs to be radically reduced in costs to make these situations solvable by the courts or street justice needs to move into the 21st century so that it has lower dead weight loss, lower overhead, and higher effectiveness.

President Obama’s decision to support a southern section of Keystone XL is a commitment to build a pipeline to nowhere. Until extra oil supply hits Cushing, OK from Canada, there is no purpose to building a pipeline from the Gulf of Mexico to there. And that’s the kind of economic development, President Obama apparently likes, the dig a hole then fill it in variety.

Keynesians see nothing wrong with this sort of useless development that doesn’t actually meaningfully enhance an economy’s productive capacity. The actual construction project is a stimulus and that’s fine with them. But those that follow the Austrian school find such development a key factor in setting up future economic trouble because it’s malinvestment, siphoning off investment money to little useful purpose other than to shorten the tanker car runs Warren Buffet is making profits off of.

Popular joke in the halls

Q: What do you call Call of Duty in Pakistan?

A: Sims.

I think this generation hasn’t quite internalized multi-culti.

I tried to submit the following post to FT on a climate change story, GE rejects Republicans’ climate change doubts. My comment was rejected due to “suspected profanity”. For the life of me, I can’t figure out what the problem is.

There is no doubt that climate is changing. The question under doubt is whether the changes are man-made and require trillions in expenditures to address. This last one is not as well established as they are economic and political questions, not scientific ones. The scientific fact is that we are undergoing a pause in warming that is, at best, at the far end of the lower error bar bounds of the current models. Once the error bars are exceeded, you toss that model out and get something better.
 
If you’re depending on these models to justify trillions in expenditures over the next decades, you take a step back and you are a bit humble. A cold year or two and the problem isn’t even arguable anymore. It means that the science wasn’t right and we’re driving the world economy blind, without working models. We might as well call in a shaman. He would have equal scientific validity as models whose error bars are exceeded by stubborn, plain, empirically observed reality.
 
We are currently undoing major scientific damage that the climate modelers have inflicted on science by hiding their data and stonewalling independent inquiry. The Berkley BEST effort at least will be open and the skeptics can take their best shot at working out the problems. And there are problems, from Briffa’s magic tree in the Yamal data set (the one tree whose inclusion or exclusion reverses the entire conclusion of a highly influential tree ring data set) to the reversal of sign in the Tiljander sediment data (you don’t get to just reverse signs on measurements when they are inconvenient to your conclusions). Time after time data that has been stonewalled turns out to have problems when it is finally pried out into the light of public scrutiny.
 
There is nothing wrong with GE betting on efficiency and reducing pollution. That isn’t what this is about. It is about public monies and massive changes in the world economy based on science that is tough to check because the original data is often kept out of the hands of skeptics.

As if we needed something more to raise our concerns about our children’s education comes a blog post from the belly of the beast of math textbook creation.

Be afraid, be very afraid. It’s like reading reports about Big 3 auto operations right as the Japanese started cleaning their clocks.

There may be a reason you can’t figure out some of those math problems in your son or daughter’s math text and it might have nothing at all to do with you. That math homework you’re trying to help your child muddle through might include problems with no possible solution. It could be that key information or steps are missing, that the problem involves a concept your child hasn’t yet been introduced to, or that the math problem is structurally unsound for a host of other reasons.

It’s enough to make you a bit ill about what we’re subjecting our kids to.

Francesca Minerva and Alberto Giubilini wrote a paper entitled After-birth abortion: why should the baby live?. They were subsequently shocked that their argument in favor of infanticide instead of putting up for adoption led to death threats.

There is something deeply wrong in the state of modern, academic philosophy and ethics. The first problem is in making the argument. The second is in being so isolated from society that the reaction to the article surprises them.

I just got an anonymous call from Indianapolis, a hang up from the number 317-550-1990. This is annoying and potentially illegal if what’s going on is an attempt to put robo-calls on answering messages. So I look up the number as a search and find whocallsme.com as the top link. It’s a Richard Lugar hate fest there with people swapping stories about how they are going to vote for Mourdock and how they’ve annoyed the Lugar people when the call connects.

There are obscure forums out there that the politicians don’t even know exist and they’re invisibly undermining them.

Fascinating dynamics, my kids have just invented their own rock, paper scissors variant called hunter, princess, bear. Bear kills the princess (it eats her), hunter kills the bear (he shoots it), and princess kills the hunter (he has pity on her and she back-stabs him). The image of the manipulative, back-stabbing princess comes from one of my girls, actually.

Senator Lugar is elected from the state of Indiana. The residence he claims for voting and driving purposes has not been in his possession for many years and several electoral cycles. In fact, he sold it in 1977. The Indiana Secretary of State was just convicted of several class D felonies for fooling around with his legal address during one electoral cycle. If you intentionally misstate your address on a driver’s license it’s actually a worse offense, IC 35-43-5-2(c)(1) makes it a class C felony. That’s 2-8 years in prison and a $10,000 fine.

Two things possibly protect Sen Lugar in terms of residency. The first is Article 2 section 4 of the Indiana state constitution. The second is implementing legislation, IC 3-5-5-5, both of which say much the same thing, “No person shall be deemed to have lost his residence” in the State and precinct respectively “by reason of his absence, either on business of this State or of the United States.” This leaves the obvious question unanswered, what does it mean, to be on the business of the United States? It could mean that if you’re elected Senator, you can live anywhere until you lose an election or die and you are still an Indiana resident. That seems unlikely. Then again, it could mean that when the Senate is in session or you are on a fact finding trip or other Senate business, those days do not count for residency and where you live the rest of the time is what is judged. In 2011 the Senate was in session 181 days and out 184 days. This would make a great deal more sense and here, Sen. Lugar gets in a bit of trouble.

Sen Lugar sold the Indiana house he actually lived at in 1977 and while he continues to maintain a farm in Indiana, he does not claim residency there. He has a million dollar home in Virginia and stays at hotels when he comes to Indiana. He could pick a hotel room and officially reside from there or he could list his farm address but neither choice is politically convenient for him. The legal requirement is easily satisfied but for 35 years he hasn’t done it.

One thing possibly protects Sen Lugar’s drivers license, that Indiana doesn’t actually comply with the federal Real ID act of 2005 in its requirement that the address on a license is the holder’s principal address. By any reasonable argument, Sen Lugar’s principal address is in Virginia and it would look like Virginia law might also support that.

Sen Lugar is a very popular politician, with cross-party support and a long political career. There is a real reluctance to dig into these matters but here are, perhaps, some questions for those who would like to take the plunge.

In 2011 (and 2010, etc) how many days was Sen. Lugar absent from Indiana on the business of the United States. How many days was Sen. Lugar absent from Indiana on other business?

In 2011 (and 2010, etc) when Sen. Lugar was in Indiana, where did he reside? Why did this address (these addresses) not become his Indiana address? Why does Sen Lugar get to choose his Indiana residence in a way that nobody else can?

The Federal Real ID law requires that a driver license address be the holder’s principal address. Is an address which was sold by the license holder in 1977 consistent with the federal requirement? And if it is not, does Indiana law actually align with Real ID? If they do align, has Sen Lugar violated IC 35-43-5-2(c) by continuing to use his old address for the past 3 years now since the 2009 Indiana driver license reforms were passed? If they do not align is Indiana vulnerable to the penalties of the Real ID act, that its driver licenses will no longer be accepted as ID at federal checkpoints?

Is Sen Lugar in compliance with Virginia law regarding driver licenses? Within 60 days of moving to Virginia, you are required to get a Virginia driver license. Even if you are a full time student, if you are employed, you still need to get a Virginia driver license. Sen. Lugar is certainly employed. He does not claim an address that he actually owns or rents in another state as a residence. According to Virginia law, has he moved? Is Sen Lugar in violation of Virginia driving law?

Ultimately it seems very unlikely that Sen Lugar is going to be called to account for any of this. The point of the exercise is to expose how out of touch he is, not to secure a conviction. Ordinary people have to swap out their license, reregister to vote when they sell their house, actually rent or own a property to qualify for residence, and if the house they usually sleep when not on federal or state business is in Virginia, they accept that they’ve moved. Sen Lugar hasn’t.

Previous in the series:
I, II, III, IV

First there was TEDx, the low cost/no cost to the original TED initiative to spread the TED message around the world in local affiliated events. Now there is MITx, an initiative to create free/low cost classes with an MIT affiliation but no degree. So why isn’t there AFL-CIOx? There is no great leap necessary to figure this out. Fire up a web site and provide tools for all workers to improve their position. AFL-CIOx could provide templates on how to lobby their local governments to diversify local economies and cater to entrepreneurs so the increase in businesses operating locally would improve the chance that different employers would compete for local workers. Employers bidding up salaries in order to compete is how non-union workers get salary increases and it’s a successful strategy. It used to be that union workers earned more than non-union. That is no longer true.

And they could provide “plus” services that would carry a fee that you could take or leave. Hat sales alone would probably cover most of the electricity bill. And yes, I’d buy one. I’d also use the site as I assume a lot of people who would viscerally reject joining a union, ever. Google will index it and people will use compelling content, giving unions a 2nd chance at a large part of the population that have long written them off as irrelevant and outdated.

So where is that site? Where is the effort to improve the position of all American workers by providing a 21st century education on how to be a smart, savvy worker?

Contrary to Instapundit’s regular reminders, I am not stocking up on 100 watt light bulbs right now. That’s because Monday I plan to try and buy them after the toothless New Year’s dead line passes and they are “banned”. It will be an educational experience all around. If I find them stocked, well and good. I have regular retailers with the stones to do the right thing, offer a legal product despite the protests of the nannies. That’s a useful thing to know and something that ordinary people don’t have a chance to find out in the regular course of business with their retailers. As economic corporatism becomes more and more accepted on the left, this will increase in importance.

I’m going to set aside enough time for this chore that I can have several calm conversations with managers at my local retailers in case they have been cowed or are on the other side. Those on the other side lose my business and I go into “name and shame” mode. Not only are these people siding on the side of the green fascists, they’re taking sides in a constitutional battle between the Congress and the Executive. If defunding a regulation doesn’t stop it from taking effect, what point the power of the purse? Those who have been cowed get to find out that they’re between a rock and a hard place and they might as well pick the option that at least gives them additional sales.

A innovation/manufacturing article focused on high tech batteries had an interesting section on A123:

When Yet-Ming Chiang cofounded A123 Systems in 2001 on the basis of his MIT research on battery materials, there was no advanced-battery manufacturing in the United States.
…
So Chiang and his colleagues at A123 built a manufacturing plant in Changzhou, China (see “An Electrifying Startup,” May/June 2008). The move was meant not to outsource production, says Chiang, but to acquire the needed manufacturing know-how. Subsequently, A123 bought a South Korean manufacturer as a way to begin developing the expertise it needed to make the flat cells required for electric-car batteries. When A123 decided it needed to be closer to its potential automotive customers in Detroit, it cloned the Korean plant in Livonia, Michigan, and the Chinese factory a few miles away in Romulus, aided by a $249 million grant from the federal government. As a result of this strategy, A123 was able to become a major manufacturer in a remarkably short time, building the Livonia plant in just over a year and the Romulus plant in nine months.

Methods used by “catch up” countries to do technology and expertise transfer from the US are not one way processes. We can do it in the other direction, and in the case of A123 we already have. What will matter in the future will be legal regime and placing manufacturing close to consumption.

Previous in the series:
I, II, III

Given my positions about work and unions, it would be natural to assume that I would want them to shuffle off into history as fast as possible. Nothing could be further from the truth. Unions are bankrupt, but that doesn’t mean that they are without value. The process of bankruptcy is the process of trying to maximize the value you can save from something when it can no longer continue operating as it has in the past. Ideologically bankrupt unions need to go through bankruptcy to identify and save that value as best as possible, not to kill them off and throw that real value away.

This is where simplistic conservative solutions go wrong. The wasteful idea of “just shut it down” guts political support among the population of people who are frugal and understand what bankruptcy is. These people are natural conservative supporters but they are not going to sign up for wasteful shutdowns that increase net value loss for society. So long as they perceive that there’s more net value to retaining the present arrangements than to tear them down without replacement they will both be unhappy with unions and fight to keep them in business.

Improvement and replacement instead of elimination creates a wider natural coalition. The union label itself will likely live on so long as it has brand value and far beyond it retaining its original meaning.

The invaluable XKCD strikes again with an examination of money.

I think their bias might be showing a bit though, they have an order of magnitude error on GOP campaign finance spending in 2010. They added 3 zeroes onto the GOP actual expenditure. I *wish* the GOP had that much money to throw around.

The Greeks do not need Germany to come bail them out. Russia was in something of a similar situation in the mid-1800s and resolved their financial and strategic difficulties by selling Alaska to the United States. At the time Russia feared that they had to sell Alaska or lose it to British Colombian expansion.

There are over 6,000 islands in Greece of which only 227 are inhabited. These 5500+ are all assets that could be used to satisfy Greece’s debts either by concession, Hong Kong style, or outright sale as Russia’s Alaska holdings were sold. At the very least this is an option that should be talked about. Strategically, a sale could be offered to France, Italy, or the UK (I do not believe the US would be interested) that would create interesting possibilities of introducing a buffer state between the remaining Greek Aegean territory and Turkey. The islands themselves may or may not be worth much but their economic zones, fisheries, and resource possibilities are intriguing.

The idea ultimately may turn out to be insufficient by itself to save Greece. But you really don’t know until you present the idea and so far nobody seems to be pursuing it. I find it odd that a proven method for raising money that does not require default or endanger the EU is not even on the table for consideration.

There seems to be a lot of oppositional thinking about labor and capital. I’m not sure that this is conducive to clear thinking and wonder if putting them on a continuum would lead to more productive solutions to everybody’s problem, how to make money.

In the cycle of producing stuff and serving customers, the later you get paid, the more the risk you won’t get paid at all. To take hindmost position, the capitalist takes the greatest risk and consequently reaps the greatest reward. Flipping over the coin, the sooner you get paid, the less you get paid because your payment is a surer thing and thus you don’t get as much in risk compensation. So the common stockholder gets the biggest rewards and is paid last, preferred stockholders get paid earlier, but their payments tend to be less, ditto bondholders.

Labor is, by definition, made up of people who are paid in advance of sales and regardless of whether there is a profit made of the fruits of their labor. The laborer gets paid first, even more so than the bondholder or the preferred stockholder. But just like the bondholder and the preferred stockholder, getting to the head of the payment line has a price.

Now if you’ve got no reserves, I can see the need to be paid right away. But after age 30 when you’ve got some money put away and could afford to not be paid immediately, would deferring compensation either in part or in whole make sense? In terms of the enterprise you would be reducing the capital requirements to produce and reducing the risk that the capitalist has to take. Payroll would drastically shrink and payout would be in shares as sales came in. Capitalists would have a shrunken role in the enterprise because they would only have to fund the land and the tools. In terms of worker attitude, you would be strongly aligning worker interests with increasing sales in order for their back end compensation to come through. To some extent, these workers would cease to be labor.

Labor would become a phase you went through as a kid, if your family couldn’t stake you to a more normal working arrangement, or right after a bankruptcy, because you’d exhausted your reserves and couldn’t afford to wait for your pay anymore. It might also be something you would do if you lost faith in your company’s future but hadn’t found another position at a different company yet. It could also be used as a weapon, punishing management by demanding to be paid on the front end or the back end and driving up costs by shifting quickly from one to the other.

Would firms accept a lower capital cost and a better incentivized work force in exchange for the risks? I suspect that some would be amenable to it but we’ve gotten so stuck in the rut that labor is paid first and hit with the penalty of not taking part in the risks of the firms that it just hasn’t been considered an option.

Do you believe in communism? In its most technical sense, communism is the idea that bureaucrats can reasonably control production and distribution to provide adequate supply and avoid shortages. At this point, most people say no, they don’t believe, and for good reason. The quest to find a sustainable government system of production that didn’t break down has consumed decades, untold lost production, and created a river of blood as the need for scapegoats of this system’s failure consumed millions of lives.

Do you believe that there is an exception for drug production communism? The US Government thinks there is. In the 1970s it established the current production quota system, a system that is currently in the middle of breaking down as shortages pile up. It is unabashedly communistic with the Attorney General in charge of both overall production numbers of Schedule I and II drugs and List 1 chemicals as well as assigning individual company quotas on a yearly basis.

As virtually anyone with a brain could predict, the system lasted for a while and is now breaking down amidst a growing number of shortages. About 1 in 5 medical practitioners knows of circumstances where these increased shortages have adversely affected patient outcomes. It is unlikely we are going to ever get an accurate body count of this drug communism. Nobody is going to want to open themselves up for liability if they are a private practitioner and no bureaucrat is going to want to turn over this rock because of its political implications.

Fortunately, over the next two years, these regulations are going to finally come under review. So as a practical matter we’re going to have an answer to my title question, do you believe?

Well, do you?

Previous in the series:
I, II

What are the common interests of workers? Do present worker associations, unions, further those goals? This is the heart of any real examination of labor but I can’t recall reading anybody seriously addressing the question.

Workers, in general, have an interest in labor being in short supply relative to jobs in order to drive up the cost of labor. They have an interest in having effective, portable lifetime education available to them at affordable or even free rates. They have an interest in being able to get decent medical care. They have an interest in not being shackled to an abusive employer for any reason. They have an interest in being able to retire from work before their bodies or minds give out and have a dignified retirement that cannot be taken away by anyone.

How do today’s unions stack up in terms of satisfying workers’ interests? I don’t think that they stack up well at all. Unions do create labor supply shortages but it’s on a firm-by-firm basis, forcing employers to exclude non-union dues paying members from employment. If you are not a member, you’re not a real worker in their eyes. Unions provide health insurance through employers but the way that they do it shackles employees to their employer. Union educational programs are not generally portable or accredited or open at all to any sort of healthy competition. And with the coming crackup in Medicare and Social Security, a whole generation of workers is going to feel the betrayal in their pensions.

A worker association that offered accredited education standards and classes meeting those standards would be far superior to present. An association that worked hard to create labor shortages for everybody would raise wages while improving the whole economy. An association that backed associational healthcare would remove the shackles from a lot of workers. And an association that supported a Chile style retirement system would be able to sustainably keep faith with our elders as far as the eye could see.

Previous in the series:
I

I started off this series hoping to get some good comments that would further my rethink. Jim Bennet is an articulate representative of a current in the comments – “The first thing is for the union to realize that the primary interest of the union is to see that the employer survives and prospers.” I disagree but only because it ignores an important case, when employers do not deserve to survive.

I am starting from the premise that in capitalism’s 3 legged stool, there is no privileged leg. Capital, labor, rents, all have their heroes and their villains. All need to have the heroes promoted and the villains marginalized. This line of cooperativist thinking denies the need for villain marginalization. But sometimes we do need to kill off businesses. Sometimes we have too many firms and the weak need to go to the wall while salvaging their resources as much as possible. If either hero promotion or villain marginalization processes are weak or missing, the capitalist system suffers economic performance drops. We must have robust systems to more efficiently kill firms that need to die and labor can play an important role in that capitalist process. Labor needs to judge capital and act accordingly.

Let’s take a look at the UAW, for example and grant that everything they say about GM management is true. Let’s stipulate that collectively, GM management is unimaginative, largely made up of poor planners, make repeated bad decisions over a span of decades, and are generally responsible for running an American icon into the ground. So why did the union let them get away with it when they could have destroyed GM and served their members better? Stipulating that the UAW is entirely right about its indictment of GM management should have led to entirely different behaviors and would have largely saved Detroit and helped keep the rust out of what we now call the rust belt.

The UAW should have looked ahead to the inevitable train wreck and politically encouraged company formation in the areas where its members lived. It should have reworked its own structure so that union members moving to “nonunion” firms didn’t lose out with the union by it. It should have educated its workforce on the need to pass judgment on bad management in a practical sense and the importance of creating enough jobs at good employers so there would be sufficient lifeboats at other firms when GM eventually collapsed under the weight of its poor decisions. The UAW did none of this. That’s a good reason why the UAW needs to be replaced.

The UAW should have encouraged the creation of laws to allow quick approval of low volume models so that custom car builders in the Midwest would be a constant challenge to “the big three” and increase the chances of an American firm with better management rising up on a consistent series of hits and replacing GM. That could happen either by simply outcompeting GM or as NeXT software did to Apple by the guppy swallowing the whale and giving the larger company a management transplant.

A proper representative of labor would be agitating against laws restricting the sale of automobiles to expensive dealership networks, for reducing the cost of approving cars so they can be driven on public roads, and generally for pro-startup legislation. A proper representative of labor would pressure local municipalities and counties to constantly diversify their job base so that no matter how badly a particular company did, members wouldn’t be stuck in dying towns with few job prospects.

A capitalist system that had unions like this would have improved growth prospects, healthier communities, and be much more hostile to bad management wasting resources and serving their shareholders poorly. It makes you wonder why nobody’s made this sort of organization.

As they currently stand, Unions are dangerous dinosaurs. But that doesn’t mean that worker interests have no need for structures that serve their interest. If we’re serious about believing in liberty, we need to address how to create viable, sustainable, superior worker organizations. They might just end up keeping the “union” label if the brand isn’t irredeemably sullied by its present users.

So what characteristics would this new type of organization have?

Sustainably low cost
Concentrate on proactively improving worker situations
Unabashedly pro-capitalist
Interventionist in secondary education, aligning student production better with worker needs.

Anybody have some other features?