Saturday, September 18, 2010

Here's Your Ticket, Pack Your Bags...

Time for jumping overboard... as David Byrne sings in Burning Down the House.  I saw him last Summer in Seattle, and anyone can play his songs... he had a street performer marching band from San Francisco back him up on the same tune in Seattle.  What I also like is he started his concert saying "Any recording of this concert is strictly forbidden, please only put flattering images of me up on the web."  Very funny libertarian.  Byrne's lyrics are text collages, and his music is compelling.  he too seems to pick up on the zeitgeist.  So what does this have to do with time for jumping overboard?

May I recommend some history reading, about what it is like when things that cannot go on, stop going on?  The first is the Forsaken Army, and English translation of a book by Heinrich Gerlach, a Wehrmacht soldier who made it out of Stalingrad.   How do people behave when it gets really, really bad?

The next is the Twelve Caesars, but Michael Grant.  OK, so Suetonius covered this topic, but Grant, a Numismatist, has something unique to offer... emperors put epigrams on their coins, which expressed clearly exactly what the emperor wanted to say.  It is amazing how such a narrow field can offer so much to history in general.

Josephus saw which way the wind was blowing and went to work for the Romans as they destroyed Jerusalem.  His Jewish Wars should be essential reading as part of the library of anyone interested in history, especially when it is time for jumping overboard.  With these witnesses, you are better able to assess for yourself what is going on today.

Remember, we are witnessing the end of only a system, not the system.  If we like, w can come up with one that works, is sustainable.  In the meantime, keep your eye on what matters, a loaf of bread, a jug of wine, a little salami, cheese...good friends...  like these two friends...


The Chan's Great Continent

I have every book Jonathan Spence has written, and just finished reading another, the Chan's Great Continent.  If you want to learn about China, this Yale professor is about your best guide.  In this book Spence surveys Western views of China since Marco Polo, who may or may not have actually gone to China.

Spence is too good of a scholar to ever draw on the fable of the blind men touching the elephant at different places and all coming up with a different description of "elephant."  It is far more interesting than that.  Contact with China was always politico-economic, and views of China very much serve the purposes of interested parties.

Westerners description of China tell us at least as much about the west at the time the description was being made as it does about China, so this becomes a survey of western civ, 1200 to the present.

Marco Polo is an obvious source, but what the scholars know, and we never hear, about Polo is fascinating in its own right.  Spence then proceeds to introduce a surprising array of China observers, none less than Mark Twain.  At googlebooks you can google an author, such as Spence, click on a title, then over at the left is "find a library."  You put in your zip, and up comes a list of libraries closest to you that carries that book.  If you are interested in China, or history, or wonderful story-telling, then read everything by Spence.


The Center Is Not Holding

Check out Gary North over at lewrockwell site, on the worries of the powers that be.  On the same page, a fellow has listed 15 recent statistics about poverty in America...  The two go together well.  Foreignors will support USA indolence as long as we are transferring technology that is more valuable to them than the money they are sending to us.  When that ends, it will get very ugly very fast in USA.  There will be no more foreign support, and no imperial power, we will produce a strong leader, he (perhaps a she, remember... Margaret Thatcher immediately got the UK into a war...) will lead us into more oppression and war, but we'll lose, in one big action like the Russian empire went down in the straits of Tsushima in 1905. And then we'll slowly sink into the dark ages that ex-empires sink into... and settle, somewhat broken up, into a tourist playland, like Italy or Greece.  Gee whiz, we'll say, we really weren't any different than anyone else.

This country will need a Hong Kong like China needed a Hong Kong. Loyal and independent.  USA Navy would put a cordon sanitaire around this territory, and USA/New Hong Kong relations would be conducted through New Hong Kong leaders and the Admiral in charge of this base. Since all policies would be unilateral, there would be no need for any foreign office.


Friday, September 17, 2010

Iconography

I took a delightful class in renaissance iconography in college, and became attuned to spotting images in art and ads that have meaning.  I saw an Apple computer in an ad, and I looked closer thinking Costco was now selling Apple products... yippee, lower prices on multipac iPhones!  Alas, it is not so.  This has got to be the crudest collection of images in support of a product... it came in an ad from Costco along with pool tables and motor oil.  See if you can count all of the impertinent associations to serve this ad.  They are subtle.  Some are repeated, so count them as one, there are at least eight.  Otherwise, the ad makes no sense whatsoever.


Goats On the Roof

Sash points out Patent Attorney and IPT critic Stephen Kinsella has reported on a rather bizarre example of IPR enforcement...  as is often is the case, the comment section is a good as the article... One theme in the comment section is "if we don't have IPR, there is no incentive to innovate."  More conditioned reflex, I am afraid.  Hmmm... how did the rest of the world make all of those innovations before the white man came up with IPR, a century or so ago?


There has always been a mechanism for rewarding innovators and first movers.  It is called the market, and marketing.  In history by far the majority of innovation has used this and uses this now.  And what is best, it is customers who reward either the first mover of the copycat, depending which pleases the customer most, usually through continuous improvement and redesign.  At the heart of IP support is the dream/fantasy of never having to work again.  At the heart of innovators is the dream of a lifetime of ever-improving customer satisfaction.


Research Resource on Payments

Things are changing fast in international payments, and here you can download a review of the progress by a U Washington Law professor wh is specializing in this topic, Jane K. Winn.


Intellectual Property & the Wheel Barrow Problem

In the book Against Intellectual Monopoly, the authors retrace the problem of compensation for the fellow who invented the wheel barrow on page 158, as an example of how something extremely useful but easily copied, might be managed. They address it from an academic point of view, refuting other academics, and I recommend their views.

But from a business point of view, I have a simple solution: the inventor can make wheel barrows and sell them to his customers, and others can make them and sell them to their customers.  Let the customers decide who wins, not courts.


Thomas Jefferson Epitaph

So what is missing from Thomas Jefferson's epitaph....?


AUTHOR OF THE DECLARATION OF AMERICAN INDEPENDENCE
 OF THE STATUTE OF VIRGINIA FOR RELIGIOUS FREEDOM
 AND FATHER OF THE UNIVERSITY OF VIRGINIA


Think about it... think about it...  hmmm?

How about "President of the United States?"  Once he in fact had power, he was just as wicked as any Hamiltonian... to his eternal regret, so "president" does not show up on his epitaph.


Thursday, September 16, 2010

Acid Attack

There is some tradition lunatics pick up on the zeitgeist and participate, and perhaps that is what is behind the woman in Washington State who disfigured herself with acid and blamed it on a "black woman."  Blaming blacks is an American tradition, and seems to be applied to, if not the reason, the elected Obama.

Let's see what google is running:

Blame Bush:   1.5 million hits

Blame Obama: 12.3 million hits

Now Obama has been in office about 1/7th the time of Bush (1/10th if you include his Dad) but he is blamed about eight times as much as Bush.

The weird thing is Obama policies are exactly the same as Bush policies... but that is the point.  Blame the black guy.


Stock Prices

Let's see how it works:  you are major corporation or bank and you can borrow money cheap from govt and others.  So you have a billion cash you are sitting on, although you are obliged to repay it some day.  Nonetheless, it looks good.  "This company has a billion cash!"  No one looks closely, which helps stock prices, so your pension buys this stock.

Next, as the price naturally declines, the insiders in the business begin selling their stock, as part of a business stock-repurchase program.  In spite of the fact this is borrowed money buying the stock, and an insider is selling it, it helps push the price up.  The insiders get out.  They no longer care about the company. Your pension buys it, since to a computer it looks good.

At some point the ponzi game runs out, and the stocks start to fall.  Precipitously.  You scream.  The government responds:  "deregulated markets cannot be trusted with your pensions, so we will guarantee them, take them over.  We'll buy your lousy stock and replace them with US treasury bonds. We will guarantee you a fixed income. Enough for bread and circuses."

Problem solved.  Govt pension, govt housing, govt food, govt entertainment, required drug programs, what more could you want?


Election Upset!

Or not.  Most politicians are too venal to see what is going on with themselves, given what rewards they have lavished on them.  No time to reflect, no need to reflect.  Luxury is a corrupting as poverty.  The politicians who lost out to tea party people will go on to bigger and better luxuries.

The one key non-negotiable factor in the hamiltonian state is warfare.  These "tea party" people talk smaller government, less regulation, anti-bailout... except they are pro-war.  It is axiomatic: pro-war is big government, and all the detriments that go with it.

When it comes time to covert pension obligations and pensions into government obligations, by selling government bonds to pensioners, that is to require pensions to be in govt bonds, these teaparty people will do the "right thing."

Revolutions only make things worse.


Wednesday, September 15, 2010

China's Imports Growing

It all depends on what China is importing, and in this case it seems to be raw materials.  Trade wars turn into bloody wars, and the USA is threatening trade wars with China.  The Chinese are making efforts to window dress that of which we complain.

It is one thing to harm ourselves with silly economic policy, it's another to drag other countries into a fight.  A fight with China does allow the powers that be to change the topic from their mismanagement, and I imagine China is fast unloading those 2.5 trillion in bonds as payment for raw materials worldwide.

China is taking the steps USA took to become a superpower, of which war was a critical step.  It does not have to be that way, but war helps the powers that be in USA, and that is why we have continuous war in middle east.

People assess the impact of a trade war, without assessing the impact of a war that would follow.  If that is considered, then China has the advantage.  Taking on China would be equal to 300 Iraqs, and 8 years in, we are still fighting there.  And against China, we would have fewer friends than in our war against Iraq.    We ought not start something we cannot finish, let alone win. There is a better way.


Cop Cam

We had a discussion here a while back on cop cams to film one's interaction with the police.  Now the Cato Institute weighs in with a video in support of the topic.  Once upon a time Cato was very much pro-police and now seems less so.  In fact, articles are running more and more against the police, although I cannot quantify it, it just seems to me.

A recurring theme in the news is govt pay and pensions, a problem that has gone mainstream in reporting.  After spending decades lavishing money on police, and justifying it with overstating the role of police in society, are we now running the other way, cutting back and understating the role?

In Japan the Meiji restoration overthrew the shogunate, and so one day the Samurai were no more, just a crew of unemployed former hotshots undone by technology.  Most went out and got jobs or hired themselves out for whatever.

We are experiencing a Soviet-style end to the reaches of what capitalism can offer government.  Within the governing ranks, there will be pushing and shoving over the diminishing returns.  Law enforcement now gets a huge amount of money, just under schools.  Schools will win the fight.


Tuesday, September 14, 2010

Business Contracts Galore

A Law Prof pointed out a source of business contracts to me, from public corporations obliged to report such details...  they may make interesting reading if you are framing a contract.  Email me and I can send you a .pdf of a WalMart supplier contract.


Monday, September 13, 2010

It Starts With The Customer

 C.J.  wrote:


Hi John:

I've been out at retailers showing them my puzzle designs and had a nice experience that seemed like something right out of your seminar.  I was in a small mom & pop store on Capitol Hill and had been chatting with one of the owners for a while when a customer came-in.  I stepped aside to keep out of the way of her doing business but the owner asked me to come back and show my designs to the customer.  She loved them and told the owner "....I'd definitely buy this - and this is why I come into your store, because you sell things like this that I can't find anywhere else."
***Competing on design.... up to now we get a feel for the store, then find stores with similar feel, and build a business and stores that feel right. it's not a bad way to go, people make whole careers out of it.  But statistics might allow people to get to more such stores faster, since retailers tend to respond to their demographics, and conform themselves to please the customer.  thus we should find stores ina give zip with X demographics should be reversible so X demographics provides us with given zips...  My hypothesis, anyway...***
I immediately thought of what you said about niche retailers' needing to constantly have new & interesting product on the shelf....and then also that I'd likely be able to come-back and ask this owner for help again.
***right, but critical to show progression with each meeting...***
I'm starting my post-retailer design modifications and factory-hunt now. Thanks again for all the advice.  Things are working-out very much as you said.
***It does for me too... I just teach what I was taught that works..

Also,  as to data analysis...  It is already june... arrrggghh... mid-June...  In sept I am sending out a mailiing in seattle area, maybe 20,000 addresses...  of course my mailing house can arrange by zip, etc...  my idea is perhaps we can set something up that coordinates a proper test with zips sampled, unsampled, etc so we can learn where in Seattle customers exist for a given product, in this case online courses. wuld it work to direct the zip analysis project to this effort, and then use it as a basis to build on for ever better knowledge of where the customers are, and where they might be...***

John


Cheap Labor

 Anthony wrote:


Lets expand on the cheap labor is never a factor....
It takes 1 hour to make a widget.  A worker at the Chinese widget factory makes $3/hour.   A worker at the US widget factory makes $8/hour.   The $5/hour labor cost savings would really add up as the orders climb right?   Wouldn't the labor savings compele you to look at China for making your widget?
Anthony

No, the component cost of labor of a given item is negligible.  The $5 an hour difference is immaterial when:

1. The item retails to the end user for $150

2. Management's arrangements result in costs of

a. china - $30 (so $150 retail)

b.  usa - $90  (so $450 retail)

It's quite difficult to spot, but there it is... is it clear?

John


Small Property Versus Big Government

Mish Shedlock is quoting Hussman on inflation/deflation debate:



To clarify once again - I emphatically do not anticipate inflationary pressures until the second half of this decade. As I've repeatedly emphasized, the primary driver of inflation - historically and across countries - has been growth in government spending for purposes that do not expand the productive capacity of the economy.



Perzactly!  I am reading a very good book on 1970's California anti-tax revolt led by Howard Jarvis that resulted in proposition 13, and a tremendous cut back on property taxes.

The writer's thesis is the small property owners anti-tax initiative was hijacked so that big business got the lions share of the benefit of the tax cuts.  The copyright is 1990 so it does not have the experience of the last 20 years to draw upon, but it tells an interesting story that would very much benefit the Tea Party folk today.  I'll give story away:  you too will fail to reform the system.

The story is clearly laid out, and the author's thesis is "the political processes affect, and sometimes completely alter, the redistributive program of a movement."  In essence, The Man could care less, and will use his government office to frustrate you.  The powers that be will hijack your movement, and use it to please themselves.  Please note that Dick Armey is in charge of the Teaparty movement.  The fix is in.

Back to the 1970's... the government was printing money wildly and the inflation was showing up in home prices.  County assessors in California were shifting from personal assessing to computer-based assessments.  (Here the author makes another observation:  an assessor deciding on his own may take a bribe to lower an assessment, but he will also pity the unemployed worker and lower the assessment there too. A computer can't do either. Score one for corruption.)

As the property values skyrocketed, based on comparable sales (a ludicrous way to establish property values) people who bought $20,000 homes at 6% taxes, found they were soon enough living in $100,000 homes, at 6% taxes.  From $1200 to $6000 in taxes, when one's income only went up from $11,000 to $12,000 in the same period.

The author, Clarence Y. H. Lo,  makes an interesting observation:  although the media and government (well, that is the same thing) portrayed the activists, homeowners and small business people, as wanting to change the system, in fact the activists wanted to keep things the way they were, they wanted to put limits on tax increases. It was the government that was changing things, by destroying home ownership and small business through rapidly rising taxes.

The small guy thought he won the fight.  And would have, if the powers that be did not simply raise fees and assessments on anything and everything else, to make up the loss (and more) from property taxes.  The size and scope of government kept growing, it did not miss a beat.

The author sees big business gaining most of the benefit from proposition 13, as opposed to the small business and property owners.  There is a fundamental error in the thinking though: businesses do not pay taxes.  The customers pay the taxes.  All taxes are ultimately borne by the consumer. It is impossible in theory and practice to tax a business. At best you can make a business an unpaid tax collector, but even that cost they will pass on to the consumer.

What the author does not observe, nor almost no one else asks, is what is the vast amounts of new money, collected in these tax rises, what is the money used for?  Well, it is used to vastly expand government hiring,  jack up salaries of government workers to the point they take home double what private industry does, promise them gold plated pensions to get their votes at re-election time,  launder massive sums through "public works" projects... gold plate camping grounds and college campuses, in short spend the increase on the unnecessary and based on the unsustainable.  What the author did not see 20 years ago we see today: California is bankrupt, not from a lack of taxes collected, but what it is spent on.  Which takes us back to Hussman's quote:

the primary driver of inflation - historically and across countries - has been growth in government spending for purposes that do not expand the productive capacity of the economy.

Perzactly!  If any reform contemplated today does not include reducing both the number of people working for government, plus cutting taxes by the amount collected to support them, say going back to at least 1990 levels, we will see no improvement.  This would require that the social security numbers of the riffed government workers were put in a database to be consulted before hiring anyone for govt work, and it would be a criminal offense for them to take another government job,  on both sides of the application (employer and employee.)  Noting short will do the trick.

In a book printed by Cal Berkeley Press, redistribution would be an important point.  The premise is redistribution is a fundamental government task.  Again, this is nonsense. Redistribution is a market function.  The freer the market, the better the redistribution of goods and services.  People forget the Jim Crow laws were laws, that is enforced by government.  Going against government, Martin Luther King got no where.  Appealing to businesses, he made progress.  The government maintains the status quo for the powers that be, such as with the Jim Crow laws.  It is up to business and activists to set things right.


Imports From Vietnam Growing

Cashews and furniture among other things, are growing in imports from Vietnam to the USA.  Shoes are in the top ten but dropping, meaning Nike is getting more elsewhere, which also means there is first rate excess production capacity for a shoe aficionado.

I was there in April, and I think no matter where the next war is, it won't involve Vietnam, but Vietnam will likely play a role (maybe planning on it) like Japan in the Korean war (where war contracts jump-started the Japan economy) or even better like Ireland during WWII, supplying both sides with help.

I've been all over the world, from Moscow to Aruba, and Vietnam is the only place outside of USA that I would consider actually buying a place to live.  It will only go up in the next 100 years.  The reason of course, is that communism is moving towards free markets in their march to anarchy (the peace and prosperity version, the goal of communism.)


I Was Just Kidding!

Earlier I said it would be wonderful, given Chinese advances in mass transit and maglev, that they start building railroads in USA.  Again.  Well, a report says Schwarzenneger was in China trying to get them to to just that.

It is pretty clear what is going on here, we are being sold out to less expensive management, instead of just letting the free market set USA management rates at an undistorted level.  We are experiencing the result of hamiltonian economic policies.


Sunday, September 12, 2010

Chemistry and Outsourcing

I wandered on to this site and found chemists talking about outsourcing chemistry to China, and how the savings are not really there.  Note the mention of "workers in China, management in USA."  Well, no wonder the savings are not there.  The expensive part is management, and its implications.

So what is the solution?  They suggest sending USA management to China.  Sigh.

What the USA chemistry industry needs is a wave of bankruptcies, after the govt gets out of medicine, so we can have a renaissance in chemistry and medicine.