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  • Archive for November, 2012

    Headline of the Day

    Posted by Shannon Love on 30th November 2012 (All posts by )

    John McAfee still a fugitive despite new blog

    Seems to assume you can’t be a fugitive and still blog. I don’t think they know how this internet thing works, especially for a computer millionaire.

    Posted in Uncategorized | Comments Off

    India and the Polar Route

    Posted by Carl from Chicago on 30th November 2012 (All posts by )

    Travel from the US to Asia has been shortened by use of the “Polar Route“, which means flying over Greenland and the north and then traveling across Russia to Asian countries. It should have been obvious to me that we were taking the polar route since it was a long, direct flight out (to Hong Kong, with connections) but I really didn’t think about it until we started flying north, over Canada.

    As someone who has spent their entire life studying military history, particularly the Russian fronts, it was fascinating to me that I was actually flying over that country. When you are up over Canada and over Russia and looking at the sparsely populated map on the flight display it does get a little unnerving. When I got back home I looked up the “diversion airports” and there are a few here and there over Canada and then over Russia but it is a long way between them in what would be the dead of winter.

    Also interesting is the distorting effect of Greenland on maps as you near the north pole. Greenland is actually about the size of Mexico but of course it seems enormous due to the distorting tendency of common mapping technology.

    On the outbound flight we were in a United 747, a four engine aircraft. On the return flight we were in a 777, a two engine aircraft. It is a bit scary to fly over the far north in an aircraft that presumably wouldn’t get far on a single engine. To make matters worse we were waylaid on the tarmac for a few hours before we took off due to “engine troubles”. We made it, but it was a bit hair raising. Per wikipedia there haven’t been any serious incidents with the 777 but our faith in mechanical airplanes is truly amazing.

    I also learned to sympathize with flying from the developing nation point of view. The Delhi airport was busy at 2:30am because flights take off in the wee hours of the night in order to arrive in the West at a reasonable hour. It was brutal for me to stay awake that late and it didn’t seem to help my jet lag which I really wasn’t cured of for over a week.

    Cross posted at LITGM

    Posted in India | 13 Comments »

    Just Another Mickey Mouse Argument on Copyright Law

    Posted by Shannon Love on 30th November 2012 (All posts by )

     Virginia Postrel  makes some good arguments against the current mess of copyright law, but both she and most others neglect what I believe to be a primary driver for major corporations seeking ever broader copyright protection: franchises.

    Until we address the need of corporations to protect franchise in which they are still creating new works, we won’t make any progress on copyright law.

    In mass entertainment, a franchise is a connected series or group of works sharing common characters, plots etc produced over relatively long span of time. Franchise characters or settings become recognizable brands in their own right. Recurrent characters like Sherlock Holmes became franchises long before the term was coined. In the modern era, Star Wars, Star Trek and various Disney properties are examples of major franchises. Star Wars and Star Trek have produced a vast number of secondary works from novels to games, not to mention the toys, T-shirts and, according to some, religions. Disney has been in the franchise business since the end of WWII. Many credit Walt Disney for creating the artistic franchise business model in the first place.

    Traditional copyright law predated the evolution of the franchise and instead assumed that copyright protected discrete works e.g. a single short story, novel, song etc made by a single artist. Read the rest of this entry »

    Posted in Economics & Finance, Law | 17 Comments »

    History Friday – The Legend of Sally Skull

    Posted by Sgt. Mom on 30th November 2012 (All posts by )

    It was said of Texas that it was a splendid place for men and dogs, but hell for women and horses. Every now and again though, there were women who embraced the adventure with the same verve and energy that their menfolk did; and one of them was a rancher, freight-boss and horse trader in the years before the Civil War. She is still popularly known as Sally Skull to local historians. There were many legends attached to her life, some of them even backed up by public records. Her full given name was actually Sarah Jane Newman Robinson Scull Doyle Wadkins Horsdorff. She married – or at least co-habited – five times. Apparently, she was more a woman than any one of her husbands could handle for long.
    Read the rest of this entry »

    Posted in History, Miscellaneous, USA | 1 Comment »

    The Municipal Bond “Storm” Is Still Coming

    Posted by Carl from Chicago on 30th November 2012 (All posts by )

    A while back there was a furor over analyst Merideth Whitney, who made a “call” that the Municipal Bond market had serious issues and would have an increasing number of defaults. This comment was cited as irresponsible by cities, bond underwriters, and others involved in the municipal funding business.

    Many people have been gloating about the fact that these defaults haven’t occurred, such as this article in Bloomberg. The cities and states were bailed out by ultra low interest rates (ZIRP) and a demand for any sort of yield which made their bonds look good in comparison.

    While our insane ZIRP has given a lifeline to many municipalities and states, the facts are plain to anyone with any fiscal sense.
    1. Most states and municipalities are running annual deficits, meaning that they need to keep borrowing more money to keep functioning
    2. Long term liabilities like pensions and medical care for staff (and the many unionized staffers) are continuing to grow and are gigantic relative to money set aside to pay them
    3. Even if the state or municipality were to stop running an annual deficit, there is little capability to PAY DOWN this giant pile of debt

    Detroit, long a leader in social ills, is now a leader in fiscal ills. To be fair, the city is a shambles, with a vast acreage to support, a huge flight of anyone in the upper or middle classes, and a history of corruption and failed leadership.

    The city is down to its last bullet, and reliant on state aid. Per this article,

    Detroit had its bond ratings cut deeper into noninvestment-grade territory by Moody’s Investors Service, citing a cash crisis that may mean bankruptcy or default in the next 12 to 24 months.

    “These downgrades reflect the city’s ongoing precariously narrow cash position and a weakened state oversight framework,” Moody’s analysts Genevieve Nolan and Henrietta Chang said in a statement from the New York-based credit-scoring company. The downgrades affect $8.2 billion in Detroit debt, according to David Jacobson, a Moody’s spokesman.

    Who owns that $8.2 Billion in Detroit debt and what are they thinking right now? They can’t be assuming that Detroit will pay them back – Detroit can’t cover their CURRENT obligations and is shrinking rapidly – much less would they be able to ever pay down this debt.

    In reality they are likely counting on other groups to bail out Detroit, whether it is the state of Michigan, or the Federal Government, because Detroit itself as a stand alone entity shouldn’t be able to finance a night out on the town, much less support $8.2 billion in debt. This game made winners of some with Greek debt, for instance (buy on the cheap during distress and wait for the German taxpayers to pick up the tab) and absolutely could be the right strategy right now, as well.
    Read the rest of this entry »

    Posted in Big Government, Economics & Finance | 8 Comments »

    India – The Rich and the Poor

    Posted by Carl from Chicago on 30th November 2012 (All posts by )

    In my time in India I was struck by how much obvious wealth was on display. We stayed in Gurgaon, which is one of the richest areas of India. Per wikipedia there are over 40 malls in Gurgaon, many of them brand new and built in a striking style and visible from the street. They also had multiple high end retailers including at least two Kohler stores and many other interior designers.

    The cost of real estate is also astronomical, especially for what is considered to be a developing country. The condos in that building in Gurgaon in the photo above likely went for between $500k – $1M USD. There is a shortage of land on which to build and a second shortage of high end “western style” modern facilities, thus driving up the price on both. If you have a large stand alone house (likely passed down in your family) in a major city it can easily have a value greater than $1M USD.

    In the past when India was under severe socialism and cut off from the West I remember photos of their obsolete cars that were produced for local consumption. Today on the streets (among the tuk tuks and often animals and scooters) you can see many modern autos made likely by local companies in partnership with major auto manufacturers – they are not obviously different from what you’d see in the West.

    Even in Gurgaon you can’t really walk outside as you can in the West. You need a driver or a car to get anywhere. Part of this is due to the way the area was developed but another element is just that even in the richest area myriad people are continuously on the streets and you’d be endlessly hassled if you went out to take a jog or something.

    Then there is the rest of India. Since we didn’t seek out poverty we only saw what was available from the side of the road. There were many smaller towns and settlements, with businesses (usually selling snacks, mobiles, or car parts) set up in dilapidated buildings among other abandoned buildings. It is common for people just to urinate outside (like that guy in the corner of the photo) and many of the settlements looked like they had no proper sanitation or sewers and garbage was strewn about (although likely picked clean of anything of value).

    You start to understand what Malthus was talking about when you see a tiny plot of land being farmed (often by hand) with a little hut without electricity (and I assume water, too) and then likely there are multiple children living with that family. That bit of land barely feeds who is there now, much less leaving much for multiple kids to inherit. The drive to leave and seek work elsewhere is always present as a result. I didn’t see it but someone we were with noted a woman having a child out on the street when we were passing by. That is the kind of eye opening thing you don’t see in the west.

    In the richest areas of India you can live like you do in the West, albeit with many more servants and you can’t walk anywhere (need a driver). The prices, if anything, are higher than many areas of the West. As for the rest of India, you can see the great challenge they face with poverty.

    Cross posted at LITGM

    Posted in India | 3 Comments »

    Social Media Bubble

    Posted by Jonathan on 30th November 2012 (All posts by )

    Jesse Colombo on Twitter:

    A consistent theme of mine has been that the popping of the soc-media bubble will result in layoffs. Read last parag.: http://seekingalpha.com/article/781911-is-the-social-media-bubble-finally-popping

    Posted in Economics & Finance, Markets and Trading, Tech | 2 Comments »

    Julian Fellowes and an American Downton Abbey?

    Posted by Sgt. Mom on 29th November 2012 (All posts by )

    Seriously, I hope they have better luck than the last time American TV producers tried to riff off the success of the original Upstairs, Downstairs – it was called Beacon Hill, as I recall and a routine googlectomy confirms. It started with great fanfare and interest, and promptly fizzled out, probably confirming expectations that American TV just cannot do family saga/period drama in anything other than as a TV miniseries with a limited run. It’s certainly a wise choice to go back to the rip-roaring decades of what Mark Twain called the Gilded Age. Twain did not mean it as a compliment, though – he meant something vulgarly over-ornamented, cheap pot-metal covered with a microscopic layer of gold. All flash and glitter, trashy glamor to fool the tasteless and/or newly-rich, of which there were a lot in post Civil War America, which was going industrial in a way and in a degree that made the genteel old-money established families, with fortunes based on land, trade, banking and the occasional eccentric invention look on in horror. Read the rest of this entry »

    Posted in Arts & Letters, Deep Thoughts, Diversions, History, Media, USA | 5 Comments »

    The Iron Dome Story

    Posted by David Foster on 28th November 2012 (All posts by )

    An interesting article about the development of this Israeli weapons system at the WSJ.

    The American Sidewinder air-to-air missile system was also initially developed in something of a skunkworks environment. (Management consultant Tom Peters has used Sidewinder as a good example of successful skunkwork innovation, IIRC, though I can’t find a link at the moment)

    Somewhat related: My post about Bernard Schriever and the development of the American ICBM.

    Posted in Israel, Management, Middle East, Tech, War and Peace | 22 Comments »

    Five Thought-Provoking Statistics Problems

    Posted by David Foster on 28th November 2012 (All posts by )

    here

    Posted in Statistics | 15 Comments »

    India – Animals

    Posted by Carl from Chicago on 28th November 2012 (All posts by )

    In India we saw a wide variety of animals. We weren’t on any sort of nature excursion and only saw those that happened to be at our popular tourist locations or out the window of our bus as we sped by (or sat in traffic).

    The most famous were the elephants at the Amber Fort. At 8am they begin queuing up for tourists and you can ride on their backs 2 at a time (they apparently used to do 4 passengers but then went down to 2 after complaints from activists). Our elephant was slow and a bit balky but it was a lot of fun. This elephant coming towards us was made up for the Dawali holidays apparently.

    Due to the fact that I was pretty much limited to coffee, bottled water, and beer, I spent a lot of time looking at that brightly colored bird on the Kingfisher beer bottle.

    All that nature study came in handy when a Kingfisher came and landed right in the pool where we were staying!

    Cows of course were everywhere. Cars stopped for them and many of the cows looked to be in decent shape, although some were getting old in the tooth.

    Read the rest of this entry »

    Posted in India | 5 Comments »

    We Really Like the Moon!

    Posted by Jonathan on 28th November 2012 (All posts by )

    A recurring theme here, in case you hadn’t noticed.

    There’s a full moon tonight, BTW.

    The full moon rises over the Port of Miami, Florida and Miami Beach condo buildings in the background on October 29, 2012. (© 2012 Jonathan Gewirtz / jonathan@gewirtz.net)

    Posted in Photos | 2 Comments »

    Debt Frontiers – Amazon and Australia

    Posted by Carl from Chicago on 27th November 2012 (All posts by )

    Amazon, the giant online retailer, recently issued debt at absurdly low rates. Per this Bloomberg article:

    Amazon, which had no bonds outstanding, sold $750 million of 0.65 percent three-year notes that yield 38 basis points more than similar-maturity Treasuries, $1 billion of 1.2 percent five-year debt with a 63 basis-point spread and $1.25 billion of 2.5 percent securities maturing in 10 years that yield 93 basis points more than benchmarks

    Let’s look at those yields again. Amazon is able to issue 10 year bonds with a yield of 2.5%. That is an amazingly low rate for a company that barely makes a profit, albeit one with a giant market cap.

    Nowadays you don’t even have to have a REASON to issue debt. Amazon issued this debt partially to pay for their new corporate campus and partially for “general corporate activities”.

    When corporations can issue debt at these sorts of low, low rates you really need to think about the rate of return that you are expecting for your portfolio. These sorts of low rates either point to a “bubble” in corporate debt (it doesn’t look like a bubble to the less sophisticated because they associate high prices for stocks or real estate with a bubble, but in terms of bonds, a low interest rate on a longer term maturity means that you essentially got a lot without paying much to investors in return) or just a long term re-setting of expectations among bond investors, a capitulation of sorts.

    On the other side of the world, Australia is having a wild ride. The Australian Dollar is coveted because it is a “commodity economy” and is independent of the typical reserve currencies such as the US dollar, the Euro, and the Yen. Australia also offers higher (relatively) yields on their government debt. When I was in Australia many years ago the Australian Dollar was 60 cents on the US dollar; the Australian dollar is now stronger than the woeful US dollar (or US peso). As a result of these strengths, 63% of Australian debt is now held by foreigners (per the article). Recently some government officials are calling for a more formal registry into who is buying their bonds; the government is attempting to reduce the value of the Australian dollar because it is hurting tourism, exports and their international competitiveness and reduced interest rates significantly as a result. But all is to no avail as the value of the Australian dollar stays high, buoyed in part by the robust demand by foreigners for Australian denominated assets such as government debt.

    It is a strange world where a company that doesn’t have much of an actual profit can raise debt at rates not much higher than the US government and a country like Australia has giant demand for their currency and government debt due in part to its diversification from the typical currency basket components.

    Cross posted at Trust Funds for Kids

    Posted in Economics & Finance | 9 Comments »

    India Electricity

    Posted by Carl from Chicago on 27th November 2012 (All posts by )

    Since I spent a lot of time in the power generation business I am always interested in electricity systems. India is probably the first country I’ve ever been to where you can regularly witness electricity theft from the system on a large scale.

    The electrical systems seemed to be reliable during the time I was there, although it was likely “low season” since it wasn’t very hot out (November) which I assume sets the peak demand for India.

    The power routinely turned on and off in one of the hotels I stayed at. The lights would go out completely for a moment until the “hum” of the backup generator kicked in. Likely the inclusion of backup power is an absolute requirement for the type of higher level tourist hotels that I stayed in.

    High quality hotels in India had the European model where you had to put your key card in the slot when you entered the room in order to turn the power on or keep it running for more than a few minutes. This model power down the room when you are out.

    The newer office parks where the IT service industry was located had what appeared to be modern electrical systems with many of the lines buried underground. The transmission lines along the highway often appeared new, even if they ran right by huts and houses that obviously had no power since they weren’t connected to the local distribution system.

    India also appeared to be air conditioned in the major tourist areas for hotels and shopping as well as the newer office parks. The buildings were designed as if to rely on central air conditioning and the backup power was there to provide electricity when the power goes out (although I don’t think they could run A/C indefinitely).

    Cross posted at LITGM

    Posted in Energy & Power Generation, India | 10 Comments »

    Indian Armed Police

    Posted by Carl from Chicago on 26th November 2012 (All posts by )

    While in India I was struck by the myriad number of police and security personnel that I encountered armed with a wide varied of weapons from a large bamboo stick (a lathi) to an old shotgun to myriad variants of the AK-47 (since the Indians have long relied on Soviet weapons).

    I have a general policy of not taking photos of people with guns and I thought this was a doubly wise policy to follow in India. The above security forces were at the Taj Mahal where everyone was taking photographs anyways so I thought that would be harmless.

    The number of police forces and security forces you encounter on a regular visit can be staggering. There were armed soldiers (actually paramilitary forces, although apparently they don’t like the term in India) with AK-47’s checking your ticket at the major airports. I always wonder why you’d arm someone with an MG like this in a crowded situation since it would be hell on civilians but I guess they are likely preparing for a heavily armed terrorist attack more than a typical criminal encounter.

    At the famous facilities like the Taj Mahal and the Amber Fort many of the security forces were unarmed but in uniform. The uniforms generally seemed clean and organized at the main tourist attractions.

    This wikipedia site details the various security forces within India, which don’t include the main branches of the armed services. Malls and stores also had armed guards, particularly those dealing with gold and jewelry, although one old shotgun I’d bet hadn’t been fired in a decade or more.

    Cross posted at LITGM

    Posted in India | 3 Comments »

    Amazon Web Services Bleg

    Posted by Jonathan on 26th November 2012 (All posts by )

    This is a stupid question. I want to use AWS to store/backup photo files when I am traveling. Something like 1-5 GB/day of files that I would upload and then probably not access until I returned home and downloaded them.

    The Amazon website goes into much detail about APIs and buckets and consulting solutions, without providing a clear answer to the question of how someone who wants to use AWS for straightforward personal file storage and retrieval should go about it. Google hasn’t been much help either, but maybe I asked the wrong questions.

    I have an AWS account. Can anyone recommend an easy to use, inexpensive AWS front end that would work for my purposes? Does Amazon really have a browser based UI for this purpose, as someone suggested to me? I am grateful for any help.

    Posted in Blegs, Tech | 11 Comments »

    India Pollution

    Posted by Carl from Chicago on 26th November 2012 (All posts by )

    In the US we hear frequently about the environment and how we are doing so much damage to our environment. It would be good for people to visit India to see actual pollution in action on a large scale.

    As we drove around Delhi, the smog was amazing, even with all the vehicles that converted to CNG from diesel (in this picture you can see a tuk tuk in “CNG” yellow and green colors). In this photo there are a couple of huge office buildings right off the road but you can’t even make them out in the smog. We asked our guide if the CNG over diesel made any difference and he said that in the days before the conversion “if you wore a white shirt outside it would be colored grey from all the soot in one day”.

    This photo shows a jet flying over a famous minaret in Delhi. You can see the smog there, too.

    I felt like one of those cartoon characters where when you cough “dust” flies out of your mouth. One of my close travel mates blew her nose and it just came out black. And we were in a tour bus much of the time that was just from being outside seeing the monuments (and then getting herded back in the bus).

    With the CNG and investments in public transport it seems that India is trying but the current state seems unimaginable to a Westerner. I really don’t think that I’d be able to survive in Delhi for an extended period of time since I have allergies unless I never left the house.

    Cross posted at LITGM

    Posted in Environment, India | 16 Comments »

    Addiction

    Posted by Jonathan on 26th November 2012 (All posts by )

    poppy seed cake

    Some Chicagoboyz are heavy drug users.

    Posted in Photos | 11 Comments »

    India Driving

    Posted by Carl from Chicago on 25th November 2012 (All posts by )

    I recently was in five major cities in India. I was struck by driving in India and how different it was than driving in the western countries.

    Photos And Observations

    They have vehicles in India that I haven’t seen before. This is a “tuk tuk” or auto rickshaw as they are formally called. They are 3 wheelers with a motorcycle in the front and a seat in the back for passengers. Note that the streets are empty because this is a secured area – the India Parliament is in the background – you cannot linger here – and this was about the only light traffic area I saw in India except on some of the major tollways (briefly).

    The tuk tuk is yellow and green because that is the color of vehicles that have been converted from regular fuel to Compressed Natural Gas (CNG). This was done in order to make the air cleaner in major Indian cities such as Delhi.

    One item that makes Indian driving so much more complex than in first world countries is the bewildering array of vehicles on the road from horse and camel drawn carts to bicycles to rickshaws to tuk tuks to scooters and everything else. There are vehicles barreling down the road as fast as they can and those that can’t move hardly at all, sharing the same space.

    Scooters and motorcycles were everywhere, mixed in with the cars. We saw a family of five on one scooter, with a child in front, the male driver (with a helmet), another child, his wife (sitting sideways), and then another child on the very back.

    In India they don’t use lanes, they just crowd together and cut each other off, honking their horns to signal all the while. To Westerners it looks like chaos but it obviously works in that an entire country is getting where they want to go. I heard of a campaign called “Lane Driving is Sane Driving” trying to change behavior but I could see no evidence of it at hand.
    Read the rest of this entry »

    Posted in India | 10 Comments »

    Customer Protection in Brokerage Accounts

    Posted by Carl from Chicago on 24th November 2012 (All posts by )

    The Wall Street Journal has an article in their November 24, 2012 issue titled “Protecting a Small Account” with the tagline “What the Spate of Brokerage Blowups Means for Investors”.

    The article discussed some recent events where brokerages went bankrupt or ran into financial troubles, specifically smaller or regional firms. They give some generic advice, such as research your firm or and carefully check your brokerage statements each month for evidence of unauthorized trades.

    The overall risk is that if a firm goes bankrupt while holding your money, The Federal Securities Investor Protection Corporation (SIPC) provides the following guarantees:

    The Securities Investor Protection Corporation protects customers against the loss of missing cash and/or securities in their customer accounts when a SIPC member broker-dealer fails financially. SIPC either acts as a trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

    The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities – such as stocks or bonds – that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities custodied with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash.

    The simplest answer to this potential risk is to split up your assets so that you don’t have more than $500,000 with a single brokerage firm.

    However, there are downsides to doing this. For one thing, larger firms give bigger discounts as you consolidate assets. Vanguard, for example, gives a large number of free trades and provides lower cost mutual funds, along with other services. In order to get certain types of brokerage services at other firms it helps to be a larger scale customer, as well.

    Based on a review of Vanguard, Fidelity and eTrade, the major firms also take out insurance with Lloyds of London for additional coverage beyond the SIPC minimums. Per Vanguard’s web site:

    To offer greater protection and security, Vanguard Marketing Corporation has secured additional coverage from certain insurers at Lloyd’s of London and London Company Insurers for eligible customers with an aggregate limit of $250 million, incorporating a customer limit of $49.5 million for securities and $1.75 million for cash. Coverage provided by SIPC and certain Lloyd’s of London and London Company Insurers does not protect against loss of market value of securities. The policy provided by certain Lloyd’s of London and London Company Insurers is subject to its own terms and conditions.

    In addition to a Lloyds policy, Fidelity describes additional protections available to investors at their site here. Key additional items:

    Broker CDs, which are issued by an FDIC-insured institution and held in Fidelity brokerage accounts, are also eligible for FDIC insurance. The coverage maximum for IRAs and brokerage accounts is $250,000 per bank. All FDIC insurance coverage is in accordance with FDIC rules.

    I inadvertently tested this over and over during the 2008-9 crash as CD’s I bought from high yielding bank through my brokerage account repeatedly failed and the cash investment, plus accrued interest to date, was transferred back into my cash account with every failure. I certainly wish that I had those high yielding CD’s back today, since interest rates are now below 2% even for 5 year CD’s, but I digress…

    There are important exceptions to the coverage, including stocks bought on margin and futures contracts. If you are using these sorts of instruments then you need to do additional research.

    Cross posted at Trust Funds For Kids

    Posted in Economics & Finance, Investment Journal | Comments Off

    History Friday – The Fort at La Ramie

    Posted by Sgt. Mom on 23rd November 2012 (All posts by )

    Once upon a time in the west, there was a pleasant piece of land, of open meadows broken by stands of trees on the headwaters of the North Platte River by the foot of a range of dark hills, in the present state of Wyoming. A creek flowed into the North Platte, just there, where in the very early days of the North American fur trade a French-Canadian trapper named Jaques La Ramee was supposed to have been killed by hostile natives and his body thrown into it. So the little stream and the place where it joined the Platte became known as the Laramie River, and the confluence as the Laramie Fork, or in the alternate spelling of the era “Laremais’ Point.”
    Read the rest of this entry »

    Posted in Anglosphere, History, USA | 7 Comments »

    RERUN–Thanksgiving and Temporal Bigotry

    Posted by David Foster on 22nd November 2012 (All posts by )

    (Originally posted in 2003, and rerun several times since)

    Stuart Buck encountered a teacher who said “Kids learn so much these days. Did you know that today a schoolchild learns more between the freshman and senior years of high school than our grandparents learned in their entire lives?” (“She said this as if she had read it in some authoritative source”, Stuart comments.)

    She probably had read it in some supposedly-authoritative source, but it’s an idiotic statement nevertheless. What, precisely, is this wonderful knowledge that high-school seniors have today and which the 40-year-olds of 1840 or 1900 were lacking?

    The example of knowledge that people usually throw out is “computers.” But the truth is, to be a casual user of computers (I’m not talking about programming and systems design), you don’t need much knowledge. You need “keyboarding skills”–once called “typing.” And you need to know some simple conventions as to how the operating system expects you to interact with it. That’s about it. Not much informational or conceptual depth there.

    Consider the knowledge possessed by by the Captain of a sailing merchant ship, circa 1840. He had to understand celestial navigation: this meant he had to understand trigonometry and logarithms. He had to possess the knowledge–mostly “tacit knowledge,” rather than book-learning–of how to handle his ship in various winds and weathers. He might well be responsible for making deals concerning cargo in various ports, and hence had to have a reasonable understanding of business and of trade conditions. He had to have some knowledge of maritime law.

    Outside of the strictly professional sphere, his knowedge probably depended on his family background. If he came from a family that was reasonably well-off, he probably knew several of Shakespeare’s plays. He probably had a smattering of Latin and even Greek. Of how many high-school (or college) seniors can these statements be made today?

    (In his post, Stuart compares knowledge levels using his grandfather–a farmer–as an example.)

    Today’s “progressives,” particularly those in the educational field, seem to have a deep desire to put down previous generations, and to assume we have nothing to learn from them. It’s a form of temporal bigotry. Indeed, Thanksgiving is a good time to resist temporal bigotry by reflecting on the contributions of earlier generations and on what we can learn from their experiences.

    As C S Lewis said: If you want to destroy an infantry unit, you cut it off from its neighboring units. If you want to destroy a generation, you cut it off from previous generations. (Approximate quote.)

    How better to conduct such destruction than to tell people that previous generations were ignorant and that we have nothing to learn from them?

    11/22/2012: Previous CB discussion thread here. See also related posts by Jonathan and Ginny.

    Thoughts on the lessons of the Plymouth Colony from Jerry Bowyer and Paul Rahe.

    Posted in Education, History, Holidays, USA | 17 Comments »

    On a brighter note

    Posted by Helen on 21st November 2012 (All posts by )

    Happy Thanksgiving to all from this side of the Pond. One day I shall ensure that I am on that side for this holiday.

    Posted in Holidays | 15 Comments »

    Defined Benefit Pensions Reduce Customer Value and Threaten Companies

    Posted by Shannon Love on 21st November 2012 (All posts by )

    Hostess is being bought down by in part by unfunded defined benefit pensions forced on the company by its unions over the last 50 years. In a previous post, I explained how, as a company’s products age, its profit margins decline and pension costs consume an ever increasing percentage of revenue.

    Defined benefit pensions are especially destructive:

    In economics, a defined benefit pension plan is a major type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age, rather than depending on investment returns.

    ….

    The most common type of formula used is based on the employee’s terminal earnings (final salary). Under this formula, benefits are based on a percentage of average earnings during a specified number of years at the end of a worker’s career.

    Obviously, if the pension payout is based not on the success of investments or current company revenues but instead on the particular worker’s performance years or decades ago, a company has to make up any difference between investments and pension cost with current revenue. Revenue diverted to pensions contributes nothing to value for the current customers who provide the revenue. The current customer literally doesn’t get what they paid for. If they had instead bought the product from another company identical in all respects to the first except for the defined benefit pension cost, they would have paid less and/or gotten a higher value.

    The value delivered to the customer is the single determiner of business success. High pension costs undermine delivered value and thereby harm both the customer and the company.

    It was Taiichi Ohno most often credited with formalizing the business folk wisdom that all business profit arises from value delivered to the customer. Read the rest of this entry »

    Posted in Economics & Finance, Unions | 12 Comments »

    The last Stalinist show trial

    Posted by Helen on 21st November 2012 (All posts by )

    The last Stalinist show trial took place in Prague sixty years ago this week. The defendants were Rudolf Slansky and thirteen other Communist ex-members of the government and former holders of senior positions in the hierarchy. Eleven of them were sentenced to death and executed on December 3. Three months later Stalin died and the Soviet Communist system changed irrevocably.

    I have written a long piece on the East European purges and trials on another blog but, just to get people interested, here are the first and last paragraphs of the article:

    One morning at the end of November, 1952 a five-year old Czech boy, Ivan, who was staying with cousins of his parents in Bratislava while his mother, who had seemed exhausted and unwell, remained in Prague, wandered into the kitchen, a little surprised and disappointed that the usual appetizing smells of baking were not noticeable. He found his grandmother’s cousin and her daughter sitting tensely at the table, listening to some boring official announcements on the radio. Ivan thought it was silly of them. Then, in response to something said by the boring official announcer, they exclaimed and clutched each other’s hands. One of them burst into tears. Ivan was puzzled. “I thought someone died.”- he said and the women looked at him in shock, then sent him away to play with cousins of his own age. About ten years later Ivan realized that what he must have heard was the announcement that his father, Rudolf Margolius, former Deputy Minister for Foreign Trade and one of the defendants in the last Stalinist show trial, the Slansky trial in Czechoslovakia, had been sentenced to death. Out of fourteen defendants, eleven received the death sentence, carried out on December 3.

    ….

    I started with Ivan Margolius’s reminiscences; let me end with my own from several years later, when the system was falling apart. As small children who started school in Budapest in the autumn of 1956 we knew that things were uneasy but failed to understand exactly what was happening. It was morning school on October 6 (mornings and afternoons alternated week in, week out as there was insufficient school space) and we were walking home at lunchtime. I knew my parents would be out and somebody was coming to look after my brother and me. It was a grey day with intermittent rain, which had stopped producing a sort of crystalline clarity with the droplets in the atmosphere making everything look sharper and brighter. There were black flags everywhere. We were talking quietly. Some of us had been told that this was the first time for some years that the Day of Mourning, the anniversary of the execution of 13 Hungarian generals in 1849, was marked. Others had heard another name connected with the day: Rajk. My parents had gone to the reburial of Rajk and those who had been executed with him. (Slansky could never have been reburied as his and his co-defendants’ ashes had been thrown out of the car onto an icy road.) They had gone and had stood through the macabre rain-sodden ritual because they knew that it presaged something bigger. Just over a fortnight later, on October 23, they went to another major demonstration. By the time they returned from that, the city was in the throes of an uprising.

    Posted in Europe, History | 7 Comments »