Rambles

The Trabant in the US - Green jobs and bailouts

2012-01-28T13:54:00.000-08:00

The announcement today about the third failure of a company that the Obama administration bet on made me begin to think about the effects of this administration's industrial policy. These guys believe they can actually pick winners - companies that will produce what they think consumers will buy and will conform to their narrow vision of markets. Ener1 cost the American taxpayer $118 million; Beacon Power cost the taxpayers another $43 million and Solyndra cost us $528 million. In the State of the Union the President claimed that he wanted to produce a lot more "Steve Jobs." You may remember that the former Apple CEO once said "If Henry Ford had asked consumers what they wanted he would have heard faster horses." That is exactly the point. From the record this set of policies has not produced even mildly positive results.

Frederic Bastiat discussed the "seen and the unseen" (knowing that some choices result in tradeoffs which are not properly accounted for). So look at the major bet that this Administration. The original cost of the bailout of GM and Chrysler was estimated at $80 billion. The government owns 500 million shares of GM at this point (about a third of the total capitalization). The government pushed GM to produce an electric car (the Volt) which to this point has been something of a colossal failure (about 6000 units sold).

During the coming campaign you will hear the Administration claim that its bailout of the auto industry saved 1 million jobs. Voters should not let them get away with those claims. Would the American auto industry have gone away if the government had not injected $80 billion dollars? It is not clear what would have happened. Ford certainly would have remained and if the market had been able to operate some remnant of GM or Chrysler would have survived. But the distorting effects of the bailout remain. The chart is Ford (blue) v GM (red) since the start of the administration. Some stock traders argue that GM's price is partially depressed because of the worry that investors have for the company - with a third of their outstanding shares being held by the government.

Would the economy continued to spiral down, as the Administration's inside and outside commentators claim or would we have had a more normal recovery curve? We'll never know. But the failures in having the government pick winners in other parts of the economy does not suggest a positive result.

Warren Buffett - Mercantilist

2012-01-28T08:44:00.000-08:00

Think a bit about the proposed Buffett Rule. He argues that for "tax fairness" we should raise rates for the richest taxpayers (there is some dispute about what "the richest" actually means). Buffett has had a pretty good run but look at how he made Berkshire Hathaway the company it is.

He had the good sense to rigorously look for companies, especially family owned companies, that were in need of a change in leadership. Many of his most successful investments were in places like Borsheim's which was a mid-sized family run firm in the midwest that needed a transaction to get the family out of confiscatory estate taxes. Then there was his touting of Fannie Mae - where he was a very heavy investor. Not all of his investments have been based on utilizing government policy, but many have been.

Classic mercantilism was linked more to foreign trade - mercantilists were granted special favors by the state to run a particular good or franchise. But the key principle was the use of state power to alter the market. Estate taxes, when utilized effectively as Buffett has done, are as close to a mercantilist grant as you can come. Higher income tax rates would also have the effect of altering behaviors. They would encourage fewer taxpayers to take risks in the marketplace. With the diminished importance of estate taxes, they would also encourage more high wealth individuals to consider complex strategies to avoid taxes.

Facebook Ads and Nonsense

2012-01-28T08:31:00.000-08:00

Sometimes Facebook ads amuse me. Take this one "Congressman Garamendi is working to rebuild U.S. manufacturing, to 'Make it in America' again. Like to hear what he is doing for jobs." "Congressman Garamendi is working to rebuild U.S. manufacturing, to 'Make It In America' again. Like to hear what he's doing for jobs."
Congressman Garamendi was first elected to public office in 1974 - he then served in the California legislature for 16 years (including a stint as Senate leader) - during that time he ran for a couple of other offices including a couple of unsuccessful runs for Governor. He was the state's first elected insurance commissioner. (A job that many of us believe should not be elected.) And during that first service he made some controversial decisions that many believe were questionable (at best). He left that to join the Clinton administration in the Department of the Interior. He came back for a second dip at Insurance Commissioner. From that biography he has spent his entire career on the public payroll (he was actually a Peace Corps volunteer before he began to run for office).

Prior to his first election he was in the family cattle ranch in a small city east of Sacramento. He serves on the Natural Resource and Armed Services Committees in the House. He holds a BA from Berkeley and a Harvard MBA.

None of this is to run down his record as a public servant. But I simply cannot see anything in his background that would qualify him to understand even the basics of manufacturing. So just how is he "working" except to propose yet another set of new laws? I purposely did not include a link to this - it will only encourage more silliness.

Is the President Real?

2012-01-27T20:27:00.000-08:00

In the State of the Union, the President made the claim that he would work to find common ground with his GOP colleagues. Taxes are a place where the President could walk the walk. The President claims it is essential to increase rates on high income taxpayers. He clearly would like to raise a bit more tax revenue. But if he were serious about this he might take some of the ideas of former GOP Presidential candidate Jon Huntsman and reduce rates and eliminate deductions and credits.

When that was last done (1986) a couple of things happened. First, tax revenues increased. Second, rich people (the guys that Obama wants to target) actually paid more taxes.

If he is using this as a political ploy - then he will not try to think about how to co-opt the GOP - we get gridlock and lousy tax policy and he thinks he can win re-election with that nonsense.

Setting the Record Straight

2012-01-27T08:04:00.000-08:00

In 2007 one of the better movies was about a debate team from a historically Black college (HBCU) called Wiley College. The movie, produced by Oprah Winfrey, told the story of a dedicated professor (Melvin B. Tolson) and his efforts to get his debate team some recognition among predominantly white colleges in 1935. It ends with Wiley being invited to Harvard. Trouble is the story is not true. Wiley did have a superb debate team in that era. And they did do some debates including one at USC. For some reason the writers of the movie thought moviegoers could not understand anything but Harvard. That debate will be replayed, according to the Bee, in Wiley, Texas.

Chris Medina, Wiley's director of forensics commented "I think it is an incredible opportunity for the two teams to get together once again. We owe a debt of gratitude to USC for being groundbreakers in allowing us, an HBCU, to really, at that point, achieve legitimacy. They were one of the few white colleges that would debate with us."

The article goes on to say that while there was not a national debate championship at the time USC was a powerhouse.

Harry Truman he is not

2012-01-25T15:31:00.000-08:00

Last night's State of the Union was an odd mix. Clearly the President has decided to tack left to assure his re-election. At the same time he tried (I believe unsuccessfully) to invoke the 1948 campaign of Harry Truman.

Near the end of his address he used a Lincoln quote that may come back to haunt him. He said he believed in the sixteenth president's maxim "That government should do for people only what they cannot do better by themselves, and no more.”

The focus of the whole speech was "fairness." As the President defined that term he envisaged a much more activist government. When you poll the American people about the issues of fairness a lot of the responses depend heavily on how the term is discussed. The State of the Union was announced by the President's handlers as the opening salvo in the 2012 campaign. It sounded a lot like one. Obama's tone was more combative than 2008, which I think was a conscious decision. It may or may not work.

The contrast here will be interesting. Whoever the GOP nominee is will need to present an alternative message of fairness. Obama's is based on more government and more income redistribution. Neither is especially popular at this point. Were I advising the GOP nominee I would keep bringing up Lincoln's quote and then ask - did more government actually help? Was the stimulus successful? Did all those new regulations (show a picture of a year's worth of federal regulations) actually help get things fairer? Do you really trust the elites (media and government) to solve your problems? I think the President will have a hard time running on his record.

One other theme which I found odd. He suggests that the rich should pay more to solve the deficit problem. Any candidate from the other side would be able to point to the sorry state of European economies (who have relatively high tax regimes) as a response to the goodness of that strategy.

Every election is about the middle 20%. A lot of where that group will go in the coming election depends on which narrative they choose. At this point in the campaign, neither story is well cemented. But based on prior elections the more the President is perceived as veering left, the less successful he is likely to be.

I fully expect a lot more twists in this story over the next few months.

Wishes and Care

2012-01-22T19:05:00.000-08:00

Yesterday's rather stunning win by former Speaker Gingrich raises two sets of questions. First, why did he win? And second, what happens next?

A lot of my friends on the left have been quite smug about the results. They believe (as the picture from one Facebook post suggests) that Gingrich will be easy to defeat. As I thought about both the results and the next steps in this race, I believe there is a lot to suggest that the smugness is misplaced. In politics be careful what you wish for - you may get it.

Why did Gingrich win? There are two possible explanations on why he won. The first, which many pundits have advanced, is that the vote was a confirmation that Romney is not acceptable to a large portion of the GOP electorate. That may well be true. But it may not explain why Gingrich won. There is a second and much more credible reason that Gingrich won - his response to the first question of the debate on the nineteenth to John King (ABC). The nation was buzzing about revelations about comments by Gingrich's former wives. (The kind of smut which many in the media cannot wait to publish, especially about conservatives.) Instead of cowering, Gingrich took on King (who by the way has served as a useful foil more than once in this season). The exit polls suggest that the former speaker got a goodly percentage of last minute voters. His Thursday night performance may have clinched the deal.

The President believes that he will be successful by appealing to "fairness" but his definition of fairness includes significant redistribution - which seems to appeal to only about 40% of the population. You'll hear an opening salvo in his State of the Union on Tuesday night. But I think a "Give em hell, Harry redux" campaign might well be a hard sell to the American people. The President is counting on the low numbers of congress to make his case. The problem is his numbers are not significantly better. Tracking polls suggest that by an almost 2:1 margin voters disapprove of Obama's job as president.

The remaining voters find the idea of redistribution, in the way the President would implement it, appalling. An alternative way to get to the populist base was presented in a speech given by Sarah Palin in Indianola which received precious little coverage. Palin slammed the "elitists" in the media and the political class. Gingrich's stunt ignited the same kind of visceral response. If the GOP candidate can make this election about the role of the elites - the President's assured election will be very much in doubt. There is a large enough fraction of the electorate that is a) skeptical of his performance and b) distrustful of his definition of "fairness" that could make his tack to the left a colossal mistake.

What happens next? Predicting the future in this year is especially tough. But from my perspective there are at least three different scenarios that might happen. First, Romney might win Florida and this momentary block in his path to the nomination would soon be forgotten. Were this to happen it is hard to make a case that Romney could motivate the same anti-elite notions that Gingrich seems to have stirred up. From my view, Obama might well prefer to have Romney because it fits into his campaign story. At this point, Romney has a pretty significant lead in polling. But the upset in South Carolina could have changed things.

Second, Florida produces another Gingrich win. In that case Gingrich has a chance to become the nominee. Depending on who he chooses for VP, he could have a shot at defeating the President with a populist from the right campaign. I think that is the least likely scenario.

Third, Florida results are not dispositive. In that case we could see some new candidates emerging. Clearly, Gingrich has significant liabilities along with his assets and his seeming sparking of populist notions. Romney, in many ways like his dad, seems unable to close the deal on his nomination. At the same time, a lot of GOP leaders are saying privately that Romney may not be as strong a candidate as they would like.

2012 is fundamentally different from 2008. If it becomes apparent that the President's numbers do not improve, it might well draw in candidates from unexpected places. It might also lead to a deadlocked convention and a dark horse emerging from the convention.

At this point I do not believe that Gingrich will be the nominee. But from my perspective the President is a far cry from closing the deal.

What is lacking in today's political class

2012-01-21T10:52:00.000-08:00

One of my occupations for the last couple of years has been to read and comment on a Facebook group called the Wheelspinners - which is a selection of former reporters, political consultants and others who range in political philosophy from right to left. This morning one of our reporters mused about what is different about today's political class. He suggested that three of Reagan's key staff people (Ed Meese, Lyn Nofziger and Jim Baker) were "not only helpful in understanding what was going on but also to be genuinely good people." He lamented that the GOP of that time had leaders like Everett Dirksen,Thurston Morton, Margaret Chase Smith, George Aiken, Hugh Scott and Clifford Case. He concluded that what "we need most is some adults in the political equation and not petulant poseurs."

There was a lot that I agreed with in the post. I actually worked with a couple of those senators (especially Aiken when I worked for the other Vermont senator at the time). But there are a couple of assumptions that I think were flawed. First, I think one of the key variables in the Reagan team was that they understood the difference between principles and policies. Reagan had a series of well developed (although many democrats then and now belittled them) principles which guided his actions. And I think he was rarely willing to compromise principle. He was even willing often to make statements that many in the political class found troubling (for example - Mr. Gorbachev, Tear down this wall!) But he was willing and able to compromise policies. The 1986 Tax Act is a superb example - Reagan started with a couple of principles (lower rates) but was willing to change policies that had been cornerstones of GOP politicians. I think many politicians today lack a set of clear principles.

The second slight disagreement I had with the post is that I think part of the people he mentioned (including Hugh Scott and Everett Dirksen) were classic politicians. Their first goal was to get elected and re-elected. I am not sure that they started, as I believe Reagan did, with a set of principles. I think the need to be re-elected has often trumped politicians who start with principles.

Third, I think the post ignores (he went on to lambast the Tea Party people) that the ideologues inhabit both sides of the aisle. How many democrats in the national leadership would dare to violate the absolute right of choice on the abortion issue?

It is a dilemma that all of us should think about. One of the promises of the current president was that he would try to work with the other side. He clearly has not tried to do that. We would have had a much better set of policies (health care, economic recovery, financial regulation) had he simply followed his original promise. Had the President done that I think he would be in the position of being almost unbeatable.

In my opinion, although many GOP theorists believe that the President will win, this election is still undecided. The last couple of days of the GOP debates, may have begun to turn a tide against a strong GOP nominee. The original point of the reporter's note is still worth considering.

Crossover Artist

2012-01-19T09:44:00.000-08:00

Johnny Otis died on Tuesday. Many will not remember the author of "Willie and the Hand Jive" or the launcher of a number of big singing careers (Big Mama Thornton, Etta James - to name two). He grew up in Berkeley. He was white but was closely associated with Rhythm and Blues. Most people thought he was Black. Over his life he did varied things - he was an artist, worked for Merv Dymally (former California Lieutenant Governor), he even helped his son sell organic vegetables. He was married to his wife for 70 years. In one of the articles about him he was quoted as saying "The music isn't just the notes, it's the culture — the way grandma cooked, the way grandpa told stories, the way the kids walked and talked," Here he is with the Three Tons of Joy. (One of his backup groups) What I liked about him was (as one friend said) "he never seemed to get bogged down."

The Keystone Decision

2012-01-18T20:24:00.000-08:00

So the President is going to run against Congress - he has read about the Truman campaign. There are a lot of GOP buddies who believe this BS will be successful. But today the president, after 40 months of review, said the (evil) GOP did not give his State Department enough time to evaluate whether creating 20,000 jobs would be a good idea. (Hint: Mr. President- indeed it would be.)

What a crock - I hope that the 20% of the American people who are up for grabs in any election will not be taken in by this very bad decision. I guess the President believes in more windmills. Don Quixote had more sense.

Bureaucratic Carcinogens

2012-01-18T07:50:00.000-08:00

I am in the Bay Area for a board meeting and stayed in a hotel last night. On the desk I found a Prop 65 warning. Prop 65 was a bit of silliness created by former Senator Tom Hayden - which was designed to warn us about possible carcinogens in our daily life.

This warning cautioned me to be worried about a) Second Hand Smoke (except it is illegal to smoke in a hotel in California); Transportation Related Exposures (I guess it is not a good idea to sleep with an exhaust pipe running in my room); Furnishings and Electrical Components (yeah, sure there are some things which taken in enough quantity have been shown to have a link with cancer. Wait, I brought in three devices - my cellphone, iPad and iPhone - all three emit low level signals that some paranoids think may be linked to cancer - ooh.); Combustible Sources - all sorts of things like heating elements may have a remote link to cancer); and finally Food and Beverage Service (my God, if I eat or drink something I may get cancer? Got to stop that.

The point is here that this two page disclosure is utter nonsense. Some of the perils which might be real are prohibited by California law. Others are simply the paranoid rant of whack jobs that see danger in every day life. I wonder how much cancer risk I had in touching the paper which was created using solvents and other chemicals, when taken in very high doses, cause cancer. The mind shudders.

Jon Huntsman and the GOP

2012-01-17T09:27:00.000-08:00

Yesterday Former Utah Governor Jon Huntsman dropped out of the race for the GOP nomination. In one sense that is not very important - the Governor never really caught on with a large portion of the GOP. In another his withdrawal makes the nomination of former Governor Romney all the more likely.

But there are at least two reasons why his announcement was very important. First, while nothing is inevitable in politics, the winnowing of the field of candidates will shine even more harsh light on the also-rans like Gingrich and Perry. And it should. There is a subtle divide between the positive effects that the primary race has had on the front-runner (Romney is a better candidate now than when he started) and the negative effects that continued shots could have on the fall campaign. All of the Super-Pac money that is being spent now to develop snappy videos will be re-broadcast like political acid reflux by the Obama campaign. In one sense it gives Romney a chance to try out themes but in the other Gingrich and Perry are just adding ammo to the other side.

The second is more subtle. A major issue in this campaign should be tax policy. Since 1986 our tax system has grown fat with preferences and complexities. From my perspective Huntsman had a better tax plan than any other GOP candidate. (While I do not agree with every part of the plan - it is very strong in its consistency and general direction.) His plan would have lowered rates by eliminating deductions and credits; eliminated the Alternative Minimum Tax; Reduced the corporate rate by ten points - to 25% (to bring us more in line with other developed countries); introduced a territorial system of taxation which when coupled with his proposal to implement a tax holiday for repatriating capital back to the US would have simplified the business taxation for multi-nationals; and finally he would have reduced taxation on capital gains and dividends to zero.

Romney's plan looks a lot more like a committee document. He would maintain current rates for both individual taxes and capital gains, interest and dividends. And would eliminate those taxes for people under $200,000 income. He would eliminate the "death tax." Finally he would do the same shift from worldwide to territorial taxes for multinationals. The three major differences between the plans are the elimination of inheritance taxes (Romney) and the carve out for incomes below $200,000 for interest, capital gains and dividends and Romney's plan does not attempt to dethatch the code (which is in sore need of cleanup). Let's hope after the primary contests are over that Romney at least looks at the good ideas of another candidate.

Thinking about the Economics Debate in the Coming Election

2012-01-16T09:06:00.000-08:00

Based on some recent polling by Gallup the economy will be at the forefront of what is bothering the American voter in 2012. Indeed, Gallup suggested in a release of polling data today that the President faces a "challenging" re-election climate. Only Bill Clinton's approval rating was lower at this point in the re-election cycle among modern presidents. Obama is six points under where George H.W. Bush was in 1992 on the percentage of voters that is satisfied with the direction of the country. Obama's rating on the economic confidence index is sixty points below where George W. Bush 43 was at the same time in the election cycle. And the mention of the economy at the most important issue facing the nation is ten points higher for this president than it was for George H.W. Bush in 1992. Polls do not make elections so a lot could happen between now and November.

If the economy is going to be at the center of this election - what are some good sources to think about the issue? In the last year I have found two E-books which I think are superb. The first is Tyler Cowen's (George Mason University) The Great Stagnation. Cowen argues that for at least the last several decades the American economy has picked what he describes as the "low hanging fruit" of innovation. He suggests that without some pretty good research we are likely to plod along at tiny rates of economic growth. The consequences of that are huge. First, we have assumed a higher level of growth to fund social programs in government and that surplus, if reduced, will not be available. Second, we risk having an increasing portion of the workforce being outside it.

The other book is by two MIT economists (Erik Brynhjolfsson and Andrew McAfee) Race Against the Machine . Those authors take a slightly different approach. They argue that we may be reaching something that Norbert Weiner argued for six or so decades ago - namely machines are taking away jobs at a faster rate than technology is creating new ones (and even if that is not true - technology is dislocating some formerly well paid employees). As with any disruptive technology cycle the rewards to the innovators seem disproportionate to one group.

Both books are well written and inexpensive (less than $8 for both!) and somewhat interactive - so for example in the MIT book if you see a reference you can click to see the original research from which the point was made. What is fascinating about them is that they have some common threads. First, while both argue we are going through a significant set of changes, neither is completely pessimistic. Second, both argue that part of the solution to dilemma posed in the book is increased education.

Ideological Pap or Substance

2012-01-16T08:42:00.000-08:00

In an article in the New York Times yesterday titled "What the Right Gets Right" Thomas Edsall responded to an earlier question about what conservatives understand. He asks in the second paragraph "What insights, principles and analyses does this movement have to offer that liberals and Democrats might want to take into account?" It is a good question. Unfortunately, Mr. Edsall seems predisposed to ignore the answers.

He began the article with his interest in an "intriguing and unexpected debate" about the dangers of what Joseph Schumpeter called "creative destruction." I do not believe that the nattering in the GOP primary about Governor Romney's role at Bain Capital is actually a substantive debate. It is an example of increasingly desperate candidates like Gingrich trying to bring back the limelight to themselves. There may be a reason to discuss the long term implications of the changing face of the economy (indeed two recent short E-books do just that - The Great Stagnation (Tyler Cowen) and Race Against the Machine (Erik Brynjolfsson and Andrew McAfee) - both can be purchased for less than $8.)

Even if the discussions about Bain Capital are indeed substantive, Edsall ignores some very good information. He had posed the question to conservative think tanks like Heritage - how would conservatives deal with issues like unemployment, government benefits or "losers" in the new economy. Heritage was diligent enough to send him a set of policy papers which he said "evaded the question and in my view amounted to ideological pap." Well Mr. Edsall what then would you describe as substance?

Take one issue - unemployment - which you listed first. The first paper from Heritage was in my opinion, a good discussion of why extending unemployment benefits actually exacerbates the problem of unemployment. If he had bothered to read the paper instead of reacting to it, he would discover that the heritage people actually argue that the extension of unemployment benefits to 99 weeks increases unemployment by .5-1.5% and actually increases the duration of unemployment by five to eleven weeks. The paper even quotes one of President Obama's economists in support of their research. Had the conservative approach been followed unemployment might actually have been lower today.

Edsall's solution to his problem is to consult with a bunch of intellectuals from the left. They came up with some characterizations that were interesting but were opinions not " insights, principles and analyses .. that liberals and Democrats might want to take into account?" Ultimately, the divisions in the American political system would be improved a bit if both sides bothered to read what the other lays down as analysis.

Investment Nonsense

2012-01-14T18:04:00.000-08:00

The Investment Risk/Reward Triangle

On the weekends many radio stations offer a set of infomercials often about health or investments. Much of what these hosts say is absolute nonsense. For example, today I was driving to the gym and heard one Sacramento station investment advisor claim he had figured out a way to get away from the "traditional tradeoff between risk and return."

All investments involve uncertainty. If I invest in a stock or a piece or real estate or a work of art - will the value increase or decrease? Generally speaking, investors demand a "risk premium" for investments that involve a higher degree of risk. Thus, in situations like a new business, investors demand a higher rate of return than in an established and well understood business with a long history.

The diagram at the right is a good conceptual tool to explain how this works. Think of the diagram as a bucket for projected returns. If you put $1 into the bucket you have a chance of increasing the value of that dollar or losing it. The two axes of the picture (horizontal and vertical) represent the dynamics of investments. The Horizontal Axis represents the relative security of an investment. Keep it in the green zone and you will get the expected rate of return. Put it in the red and you will lose it. In reality there are very few purely safe investments, even when you give up return. The Vertical Axis represents rate of return. At the bottom of the axis you can expect very little return but relative surety that you will get your money back; at the top a very large return. What the diagram suggests is that if you want a very high rate of return, you have to be willing to expect that your investment will not pay off, a large percentage of the time.

The "guru's" magic bullet was time. He yammered on that by laddering maturities you can increase yield without risk. Well duh - but don't be so sure. Any competent professional always includes time as one of the variables on risk. The problem is solving the time part of the risk equation is especially complex right now.

At the right you can see what most people would call a normal yield curve - the yield increases as you stretch out to a longer maturity (thanks Investopedia!) Note - yield curves can do all sorts of strange things including flattening (where the amount of money you receive for an investment does not vary based on the time of investment) or even inverting (where you get a higher yield for a shorter maturity).

A key challenge in today's environment is your expectations of inflation. For the last several years the premium given to longer investments has been pretty modest. So for example, the current returns on Treasuries give you .1% for a month and 2.91% for 30 years. But the risk that the 30 year investor pays is huge. If inflation begins to rear its head at all - the dollars you will get paid back with will be worth a lot less than the ones you paid in - so even though you will be getting a bit less than 3% on your investment to maturity - the value of those dollars will be less.

The Hosanna Tabor Decision

2012-01-12T22:15:00.000-08:00

The decision yesterday by the Supreme Court in a major First Amendment case relating to hiring was stunning in several ways. First, unlike several other SCOTUS decisions this one was unanimous; and it included two concurring opinions - from Justice Thomas and a joint one from Justices Alito and Kagan.

The main decision was written by the Chief Justice and is superbly clear. Evidently, Constitutional Law is not a required course for EEOC lawyers. In trying to persecute this small church related school the EEOC had made some outrageous claims. The facts of the case are simple. A teacher for a small Lutheran school in Michigan took a leave for a health issue (Narcolepsy). The school hires two types of teachers - lay teacher and "called" teachers. The latter were assumed, in addition to their teaching responsibilities to have special training and were required to perform religious functions in the school. The school expressed a preference for "called" teachers. While the "called" teachers performed many of the same functions that the lay teachers did - they were clearly different in terms of training and function. The complainant came back to the school and reported for work, but school officials said they believed she was not ready. She demanded that the school officials sign a written document that she had reported for work. One of the tenets of this branch of Lutheranism argued that individuals should solve their disputes without resorting to the courts. Clearly the complainant did not want to follow that tenet. After the complainant said she would file an EEOC action the school board fired her.

The opinion makes it clear that both sides of the First Amendment support the school's point of view. Robert's opinion argues that on the side of the Establishment Clause that the American system is clearly different from the British one. He argues that at the founding of the Republic that a clear implication was that we rejected the Act of Supremacy - which was adopted when Henry VIII wanted to break from Rome and set himself up as the head of the church in England. The American story is quite different. Government is proscribed from involving itself in governance issues.

The opinion repeatedly argues that the Free Exercise Clause gives wide latitude to religious organizations in who they shall choose. The EEOC had made the specious argument that Hosanna Tabor and the local chapter of the Junior Chamber of Commerce are functionally equivalent and the opinion makes quick work of that bit of twaddle.

Perhaps the most interesting part of the decision is the concurring opinion offered by Justices Alito and Kagan. They make a strong case that in order to exercise their religious rights religious organizations and associations need to be able to make their own decisions about what constitutes a minister (which the concurrence even argues is not a proper title in many religious organizations).

Some observers have minimized the importance of this decision. In reality the unanimity and the clarity of the arguments against the expansive views of the EEOC will make this decision an often cited case.

The New Hampshire Primary

2012-01-10T20:21:00.000-08:00

The first primary in the nation (Iowa is a caucus system) produced at least seven conclusions in my mind. They include:

#1 - In 2008 John McCain received 37.1% of the vote and Romney received 31.6%. This year Romney seems to have been above 39%. Put another way Romney improved his standing by almost 8%. Romney broke out of the 25% that most of his opponents thought he was stuck in.
#2 - Newt Gingrich and Rick Perry got about 11% between them; time to reconsider their runs. A couple of 2008 candidates had the good sense to pull out. Gingrich will continue to try to be a spoiler. The longer he stays in, the less he will be a national figure.
#3 - Ron Paul went from just under 8% to 23% - that is a pretty good rate of growth. What this suggests is that there is a substantial part of the GOP electorate that does not want government to grow. If Romney wants to win in November - he will need to message to them. I suspect that most of Paul's looney ideas - like disengaging from the world - do not have a large following. But his economics will be an important part of any potential winning coalition.
#4 - Surprisingly, more than half of the voters choose a Mormon candidate; so much for the fantasy that voters are wary of Mormons. There is, indeed, a group of Christian voters who will not vote for a Mormon. One hopes that at least some of them will follow Dennis Prager's dictum - he would vote for a candidate with similar political views even if he disagreed with a candidate's theology. I suspect most American voters will not be in the camp that automatically rejects a person for his religious beliefs. Romney also beat Santorum even among Evangelicals. (According to Exit Polls)
#5 - Huntsman's results were a bit under where many observers thought they would be. I suspect he will not be the final candidate but he may give Romney some room to adjust his messages. Gingrich will continue to be the bitchy loser he has been for the last two weeks. But let's see what Huntsman can do in South Carolina. Romney's tax message is in need of some significant modification and Huntsman may give him a chance to do that.
#6 - Voters in this primary were down a bit from 2008. But the majority of voters are looking for someone who can be competitive against Obama and two thirds of the voters with that need - chose Romney. But according to the WSJ only about half of the voters here called themselves conservatives. In next week's race almost two thirds of them are. Romney got a larger percentage of the voters that are angry about Obama (Fox news exit polls) - that is significant.
#7 - The debates are building interest in the race. A high percentage of voters who made their minds up late were influenced by the debates. In spite of the absurd performance by George Stephanopolous.

Hotel TVs

2012-01-09T21:07:00.000-08:00

I stay in hotels a lot. In the first 9 days of this year I have been in hotel rooms for a third of them. But as time has gone on I am less likely to turn on the TV. There are a couple of reasons. Most hotels now have some form of WIFI so when I get back to my room I am often more interested in using my laptop than in watching the TV - even though most hotel TVs are flatscreen and high resolution. Second, most hotel TVs have a set of options most of which I do not find appealing. They include some relatively recent movies (I carry a half dozen movies a want to watch on my iPad); a soft porn channel; a set of games (have them on my laptop or my iPad); and regular TV channels. Even though many have a guide somewhere in the room - it is always a hassle to flip through the 30 or so channels that are a mix of local and national (CNN, ESPN 1-7, Fox, etc) that quite frankly I do not watch at home. SO when I get back to my room the TV does not go on because it is not worth the hassle. I wonder what percentage of hotel guests never turn on their TV.

An odd bit of logic

2012-01-09T08:04:00.000-08:00

Yesterday I moderated a forum on higher education issues and was struck by one of the comments of one of the panelists. One of the issues we discussed was whether the current model for financing higher education is broken. There are a lot of indicators - college tuitions have risen pretty steadily at a rate higher than the CPI or even health care prices for a sustained period; last October student debt began to exceed all consumer debt. But my colleague argued that "we changed student loan policy so that private loans are no longer necessary." When the Obama Administration came in one of their immediate priorities was to eliminate the private role in student loans. There were plenty of problems to point to. Financial aid administrators were getting lots of fancy perks; the banks were making pretty dandy fees. But as I thought about it the more absurd the statement became. Some parts of higher education were recruiting ill-prepared students to take classes based on their eligibility for student loans.

There are obvious alternatives between a state regulated model like we had when the federal government issued guarantees and offered banks fees to run a program and a complete government takeover. The risks of the government takeover are huge. The government will have even more authority over colleges and universities because they have exclusive control over who is able to borrow money. A good example of that came this summer in the budget fight when the subsidy that is offered to graduate students while they are in school was eliminated. In the next round of budget adjustments it is highly probable that undergraduates will also lose the subsidy so their net cost of borrowing will rise. But it doesn't stop with loan policy - when you receive lots of money from the feds they also express an interest in all sorts of other things colleges and universities do that are not related to student financing.

The other model is to either let the market solve the problem of student loan finance or to introduce some modest regulations which help to define the marketplace for student loans (one is the complete free market the other would be akin to licensing that goes on for securities dealers). The opponents of the market approach would argue that there will not be sufficient loan capital for students to attend college. If the market is actually viable - that possibility is small.

The more I thought about my colleague's comments, the more I was reminded of Aeroflot or the Trabant. Both were examples of state run enterprises. With all the turmoil we've had since the Carter Administration eliminated the government role in selecting winners and losers in the airline industry, it is hard to argue that consumers are not way better off in terms of options. The same would probably apply to student loans.

Some thoughts about the Employment Numbers

2012-01-06T11:47:00.000-08:00

The Labor Department released the jobs numbers today and they suggest that for both November (revised upward) and December +200k the jobs picture is improving. Indeed, the lead in many of the stories about the numbers was that unemployment has dropped to 8.5%. On the other hand, labor market participation rates continue to be low by historical standards. When the President was inaugurated the participation rates were in the mid-sixties; currently they are in the high-fifites. Were we judging employment using the participation rates as a guide the unemployment rate would be just under 11%.

There are a couple of possible explanations for these seemingly divergent numbers. First, the long extensions of unemployment benefits could be dampening the incentive to find a job. In essence our generosity is depressing the real jobs picture. Some economists actually believe that is a better alternative than instituting a less generous unemployment benefit (I am not one of those). Second, we are going through what Norbert Weiner suggested almost sixty years ago - a restructuring of the economy to prior participation rates will never be achieved again. When you look at some of the tech startups the demand for workers is significantly smaller than for more traditional manufacturing concerns. Indeed, traditional manufacturing concerns are hiring fewer workers to do more. Third, some have speculated that the Boomers are beginning to retire in significant numbers and that we may be moving into a Japan of the 1990s economy where labor market participation is artificially depressed. I am sure there are some other explanations.

The question is what do we do about this from a policy sense? If the first explanation is correct, the easiest economic issue is to bring unemployment benefits back to a shorter duration. (That seems, in this election year, entirely impossible politically.) If the second explanation is correct, you might create some incentives to go into new areas where jobs would be created. (Although the history of government programs being able to solve those problems is not at all robust.) If the third one is true (and from my perspective it is the least credible) then you look at the Japanese example and hope that we can be more creative than they have been.

The third option also seems less credible as a result of the relative paucity of the boomer's savings. For the most part they were not very good savers and the dips in 2008/9/10 wrote down a substantial portion of the prior retirement capital. So if it is true, we are likely to have a very large dependent class with us for a lot of time. I don't know what the answer is but I do believe more people should be trying to craft an answer.

Warhorse

2012-01-05T08:32:00.000-08:00

In the 1930s there were a series of movies made with an inanimate object as the vehicle for a group of stars to perform in short stories around a theme. My favorite is If I had a Million (1932) where a dying millionaire becomes a benefactor to a group of major Hollywood stars of the time (it works so well that the millionaire has a miraculous recovery!). The most recent movie I can remember of this type is the Yellow Rolls Royce (1964) which revolves around three owners of a car.

Steven Spielberg has reinvented the genre with Warhorse, but this time it involves the stories of several people and a horse. The movie is very entertaining. It begins in Ireland when a tenant farmer acquires a thoroughbred horse at auction when he should have bought a plow horse. The son trains the horse to do some amazing things. But eventually it is sold to become an army horse in WWI.

The movie is a melodrama in the best sense of the word. You know how it will come out. But each of the stories is engaging and the characters, for the most part are well crafted. The ending is a bit retro (think Gone with the Wind) but even with that it was an enjoyable experience.

Christophobic Columnists

2012-01-04T21:51:00.000-08:00

One of the increasingly less successful taunts used by the left is to defame people with whom they disagree. A prime example of that came from a column in today's Sacramento Bee where William Endicott, a former editor who should know better, tried to ascribe "homophobia" to the leader of the Fremont Presbyterian Church.

On the First of January the Bee had a story about a gay man who committed suicide. The man, Thomas Panniccia, was evidently one of the first members of the Armed Forces to declare publicly that he was gay. On the anniversary of his declaration he committed suicide. The pastor, Donald Baird, of Panniccia's church was described in the article as his "mentor, friend and pastor." Fremont is one of many protestant churches that has struggled with the issues of gay marriage and ordination of gays. Baird is pretty clear - "If a church loses its integrity, it ceases to be a church," Baird said. "The world changes. God's word doesn't." Obviously , there are some who take a much more flexible view of scripture - who believe that they can update the Bible to suit their personal biases or current political views. There is plenty of evidence that one of the reasons that mainline protestant denominations continue to lose members is that many of their leaders seem almost cavalier with their scripture.

Pannicia was, according to the story an important part of the parish. He had a job as an outreach coordinator, which he got after he moved to Sacramento and was laid off from his computer job. The pastor's son said the veteran was an important part of the family of the parish - he was "truly accepted and comfortable." One of the tenets of the parish, based on their interpretation of scripture, is that no person should engage in sexual relations without being married. According to the article Pannicia accepted that tenet. He clearly could have found another church, if he disagreed with it. Baird said "I'm not homophobic. I know people have this view that evangelicals hate gays, and that's not true. We don't. We hate sin, and we are all sinners." When I read the story, I thought here is an interesting set of issues, and a religious leader who is struggling with his job of leading a Christian flock.

Endicott uses the quote from Baird without reflecting a bit on it and then goes on to suggest that it suggests that Baird believes "being born gay is a sin." I am not sure how he discerned this unless he is indeed scared of Christians or Christophobic. Part of any religious denomination is a set of tenets which help us to become better people. Reverend Baird's church, or at least a substantial portion of its members, do not accept sexual relations outside of marriage - either heterosexual or homosexual. Their focus is not status, but behavior. The commandments say thou shall not steal, if someone does not subscribe to that are they robophobic? Of course not.

I've met Mr. Endicott a couple of times and I suspect he is, if he carries any religious views, on the left. But tolerance does not seem to be a strong suit for him. I took away from the first story a compelling description of how two Christians struggled with trying to live their lives appropriately. Endicott's column today suggests that he did not spend the same amount of care that the original author did with the issues raised by this tragedy.

The Iowa Caucuses

2012-01-04T08:47:00.000-08:00

Last night's 8 vote margin for Mitt Romney suggests an interesting spring - but an eventual result. I came away with five conclusions about the state of the GOP primaries.

1. First, Romney needs to figure out how to engage effectively with the evangelicals. Clearly, he has not. 2. Second, the GOP voters here were energized. You can say a lot about whether the margin was too close or just enough - but the fact is there were a lot of people participating in the caucuses. One does not feel the same amount of energy on the left.
3. Third, Bachman and Perry are history. (Gingrich should be, but he proved again that his mouth sometimes exceeds his mind.)
4. Fourth, I doubt whether Paul will run in a third party spoiler role - there are a couple of considerations . His son has a promising career in the GOP but only if the dad knows when to bow out of the race but not the party. At the same time, the string for Paul looks worse not better. A lot of people have commented that Romney is a 25% candidate - but the same could be said of Paul (only with a slightly lower number). Some of those voters will never be satisfied without Paul but a lot will look for a candidate who does not seek to expand government. If Romney can make that point - he will be successful.
5. As soon as it is clear that Romney is the candidate watch the democrats begin to unload negatively - the professionals believe that negative campaigning works (as evidenced even in the last few weeks in Iowa) but there is good reason to believe that negative attacks by Obama may not be successful. His future depends more on whether the American people change their mood about his lack of success in solving our economic problems than in cleverly crafted campaign ads.

Priorities

2012-01-03T21:44:00.000-08:00

I had an interesting day today - the second time I have fished for Steelhead on the Trinity and I caught (and released) four with a good friend and an excellent guide from Confluence Outfitters. Tonight was the Iowa caucuses and it seems that former Senator Santorum won the thing but Romney was a strong second. There are two realities here. First, Ron Paul - after committing a lot of time and energy to the state came in a dismal third but ahead of both Newt Gingrich and Rick Perry. Seems I had a much better day than most of the GOP field. I think, assuming that Romney wins New Hampshire that he becomes the closest thing to a nominee possible.

Tomorrow the California Legislature reconvenes for the beginning of the second year of a two year term. For the first time since 1974, I will not be there to work on stuff. Again, even though I only fished for one day - ditto for the California Legislature.

Most conflicted bowl game....

2012-01-01T00:25:00.000-08:00

I am not a big fan of the BCS. This year my most conflicted bowl game was the Fight Hunger Bowl - played in a baseball stadium. It matched UCLA versus Illinois. Both teams had losing seasons. Neither deserved any postseason play - UCLA was humiliated by USC and Illinois after winning several of its initial games with 0-6 for the end of the season. UCLA had a coach who was fired (and should have been) before the game - named Rick Neuheisel, who was a jerk. There were two competing themes here - I wanted the interim coach to win (because it would help to further repudiate Neuheisel's tenure. (Although the Illinois coach was also fired for losing six straight at the end of the season.) At the same time an operating assumption for me is that my second favorite college football team is whoever is playing UCLA (or Notre Dame and since they lost their non-important bowl game already) - Illinois should be favored. There was another conflict, Illinois has a very good linebacker with my name. I generally support a Pac-12 team over an opponent although I also root for an independent college over a public (No choice here). So what's a fella to do?

Calling the Fight Hunger Bowl cheesy is just too easy. The game started with a coin toss using an Oreo Cookie (great way to fight hunger). Then UCLA got held to 18 rushing yards.

In the end the Illini defeated the Bruins 20-14 but if the BCS had any legitimacy neither team would have been able to humiliate college football in the post season. When is the NCAA going to understand that a playoff system would be fairer and better for all concerned. The Fight Hunger Bowl? - come on.

A Tip to the Sacramento County Assessor

2011-12-28T14:30:00.000-08:00

My wife and I own two properties in Sacramento County. When property taxes come due we send them to be received on the 10th of December which is when the first installment is due. This year for some strange reason I mixed the parcel numbers so that the first property had the second parcel number on it and vice versa. This morning, as I was beginning some year end activity I noticed my mistake and checked to see if either check had cleared. They did indeed. And, wonder of wonders, the Tax Unit figured out which parcel to apply the tax to so that both properties paid their taxes on time. Figuring out how to match these took a bit of effort - we hold both properties in a trust so the staffer who opened the check needed to find the appropriate property possibly by matching that the properties are held in the same name. I realize that the tax unit gets a lot of checks in December; I am not sure how the match was made but I am appreciative.

The Iron Lady

2011-12-27T09:13:00.000-08:00

The new movie the Iron Lady is horrible. I got a chance to see it last night. The subject matter, Lady Margaret Thatcher, should be a good subject for a movie. She was a transformative figure in British politics. She was able to get into and lead a "boys club" as the Prime Minister for eleven years. Yet she was unceremoniously dumped by the same "boys club." She seemed passionate about recovering a nondescript set of islands that no one else seemed to care about. She was a good friend and ally of Ronald Reagan. She was a leading figure in keeping Britain out of the Euro - a move that looks better and better but which she was criticized for at the time. She took on the labor unions in Britain and substantially won her fights. She did some transformative changes in local finances in her country. But this picture dwells on her after she had left office and attempts some surrealistic lapses into the beginnings of dementia. What comes off is a disappointing confused and non-informative movie that simply drags out.

Meryl Streep gives, at least, a good portrait of Lady Thatcher at her best, unfortunately, those performances are interspersed so haphazardly that one almost has to dig for the effort. I will admit that for part of the performance I kept thinking about Julia Child (Julie and Julia) but her bio part of the role looked like it could have been pretty convincing.

Lady Thatcher was often a divisive leader. How could she gain and maintain her position in power, what drove her to take positions that she did and what were the consequences of those positions could be the interesting stuff of celluloid. But what we were left with was a muddled haze of nonsense. Avoid this like the plague.

Distribution of Profits - ideas come first

2011-12-25T11:41:00.000-08:00

One key concept in the new globalized world is how important ideas have become. These two charts demonstrate that fact clearly. The first is for the iPhone. It divides all of the inputs into the creation of the iPad and iPhone among all the people in the chain that makes the product - from idea to manufacture and distribution.

In products like these the design takes place among Apple employees in California. For the phone the device is then manufactured in Asia and then distributed throughout the world. The carriers that provide the phone service derive some of the profits, so do the retailers. But in the end the largest share of profits come from the ideas.

For the iPad the distribution is a bit different and the parts are a bit more expensive. So the distribution of profits are a bit more distributed.

Politicians in Washington keep yammering about keeping production in the US and the supposed loss of our manufacturing base (although there is plenty of evidence that the US manufacturing base is beginning to come back as the value added of US manufacturing becomes more apparent). What they should be concentrating on is assuring that we have the educated workforce that can continue to provide these benefits to our society - that takes a first class educational system - and at least in the K-12 arena - there is plenty of evidence that we are failing to provide that critical need. The original graphs for this come from a paper by three economists at UC Irvine, Berkeley and Syracuse that was originally published in July of this year.

Hyperventilation then damage....

2011-12-24T11:56:00.000-08:00

The agreement that Congress came to before they snuck out of town was absurd on its face. It continues the extension of unemployment benefits and the 2% reduction in Social Security taxes for two months. In his victory statement the President claimed that the average worker would save $1000 as a result of the agreement but that is a gross misrepresentation. The real savings, based on average wages, will be about $20 per week or the price of five lattes in a week. For the eight weeks of the extension that amounts to about $160, not the $1000 claimed by the President.

Besides politics what are the possible benefits of the temporary bill (or even the permanent one)?

An aggregate increase in demand - If the first version of this actually had a positive effect economic activity would have been increasing proportionally - but it has not. In many key areas of the economy growth is stagnant. The stimulus bill has been a drag on economic growth. Adding to that has been the uncertainty about tax policy - as John Taylor argued earlier in the week, the best tax policy is a stable one. Like the original Bush Tax Cuts which the President likes to defame - uncertain tax policy tends to diminish the real incentive effects of any change. This sixty day extension is a fantasy in terms of stimulative effect.

Employment growth - Labor force participation continues to trend down. That has been caused in part by extended unemployment benefits - what seems like a humane policy is actually holding many people in dependency. Were labor force participation at levels before this recession - the unemployment rate would be over 11%.

But as any good pitchman from TV would say - there is even more - The best description of the American political class on its response to issues in the Social Security System has been derelict at best. This solution makes the long term viability even less certain - at the same time it increases the notion that Americans are entitled to something without contributing to it. Neither is a consequence that is good for the long term.

The GOP should have stuck to its guns and tied the real growth in employment that would have resulted from the pipeline with a year long extension of the rate for FICA taxes. This was not a proud moment for the American political system.

Sherlock Holmes/Again

2011-12-18T16:07:00.000-08:00

I was a fan of Basil Rathbone as Sherlock Holmes. In the 1950s he and Nigel Bruce defined the Conan Doyle characters in a number of black and white movies. A couple of years ago, Robert Downey and Jude Law tried to redefine the characters into a more modern version (interestingly by going back in time from the period that the Rathbone/Bruce versions used - contemporary to when the stories were written.) From my view, they did a marvelous job by not trying to recreate the prior performance. The first movie (Sherlock Holmes, 2009) was great fun.

I looked forward to the sequel. And again I was delighted with the results. Many of the first themes are readopted and the rhythms of the first movie are recreated without trying to extend the first movie. The plot is fun and engaging. I cannot wait for the third version.

A Wise Man and a Fool in Public

2011-12-18T12:31:00.000-08:00

This morning when I read about the death of Vaclev Havel I returned to a copy of his 1990 speech to Congress. At the time I thought Havel had done a marvelous job of summarizing a very vibrant period in history. The speech combined some inspiring rhetoric with a couple of superb references to US history (always a good way to put some ideas in context when speaking to an American audience like the Congress) with some very specific ideas about history was evolving. As I re-read his words I found them to be both gracious and thoughtful.

But as inevitably happens I also found other references to the speech. One was from Noam Chomsky. In my mind Chomsky is a small minded public scold (I would hesitate to call him an intellectual) whose early writing is revered by linguists but whose contributions to intelligent public dialogue have been non-existent for the last several decades. Chomsky, in a letter to Alexander Cockburn, called the speech an "embarrassingly silly and morally repugnant Sunday School sermon" The easiest way to understand the value of Havel's speech more than 20 years after it was delivered is to re-read it (or for the first time if you missed it then) - I have posted a hot link in the reference above.

NPR commented that he struggled with "reconciling his moral principles with the pragmatic requirements of governing." Not a bad place to be for a leader. The LA Times in their article quoted his motto "May truth and love triumph over lies and hatred." I tired long ago of Chomsky's rants, reading his sophomoric comments on Havel this morning only reinforced that fatigue.

The Descendants

2011-12-17T09:02:00.000-08:00

Last night we went to the new George Clooney movie which is listed as a comedy-drama. I am not sure that is an accurate description. But the movie is an interesting mix of pathos and some humor. Clooney's character is from an old established Hawaiian family that has the largest remaining tract of land in the state. The land is in a trust and they need to make a decision about how to handle it. (Trusts cannot last forever.) At the same time Clooney's wife was injured in a boating accident and is comatose. At some point he finds that his wife was engaged in an affair. To compound the plot, her doctor says she is brain dead and so has to be pulled of the machines. If all that sounds like a bunch of maudlin sentimental junk - don't get fooled. As the plot evolves, it is an engaging story with interesting characters. The supporting cast is superb but Clooney carries the story with grace and subtlety.

Reflections on Medicare

2011-12-15T22:17:00.000-08:00

Today I signed up for Part B of Medicare - which is where many of the costs of the system come from. I also signed up for all the other coverages which will make my medical bills, when I fully retire, for my wife and I, about $1000 per month (including a part b,d and f policy). I wondered what kind of a deal I was getting. Coincidentally it was also a day when Congressman Paul Ryan and Senator Ron Wyden announced a pretty good plan for reducing the costs curves on Medicare - it correctly in my opinion begins to add some consumer discipline to senior health care without pulling the rug out from the social equity parts of the current Medicare system.

First, I should say something about Social Security offices. I've had three encounters with Social Security offices - two yesterday and one about six months ago when I turned 65(which was handled on the net and with one phone call). While there were some annoyances in the processing of forms (minor) I can say that the people I have encountered have been uniformly helpful and well informed.

But here is the question I began to think about when I filled out all my forms. The company I retired from was charged about $1500 a month for our medical insurance. I required my employees, last year, to make both a $40 co-pay and a cost sharing of 10% of the premium. Undoubtedly costs would have gone up had I continued to work for them. But is the $1000 per month (for all of the coverages for both of us) actually worth it? That depends. I keep very detailed records on taxes paid and so I can go back and calculate the money that I have paid into the system over my working life. The total amounts to a bit more than $48,000 in current dollars or something north of $70,000 in present value (that is a conservative estimate). In any event the sum total of current payments (which continue to be made) and a conservative flow of the value of an annuity which could be used to fund part of our health care costs would produce a negative or severely negative investment. Since the additions beyond Part A are significantly skewed for higher income payments - if our income drops significantly in the next couple of years, the net negativity will diminish by some.

I found today that at the end of my COBRA period I will also have to self insure for dental and vision coverage which would add to the negative investment over time. The major difference however is that the government programs plus the supplement have purchased a set of benefits that are richer than I had when I was employed full time and ones that I would not likely choose for myself.

Government is too large - another example

2011-12-14T16:17:00.000-08:00

The National Transportation Safety Board has proposed to ban the use of cellphones in cars to combat something called "distracted driving." In their press release they say this evil caused 3000 deaths last year on our highways. That number sounds small to me, compared to the total number of auto related deaths, but take it as a real issue.(For background the DOT says there are about 30,000 auto deaths a year or about 1.14 deaths per 100 million miles driven. For another perspective the number of alcohol related deaths is in the range of 10,000 per year.)

The buffoons at the NTSB have cobbled together a classic bureaucratic response. But even if you buy the premise that there is something called distracted driving that a change in policy can improve, there are several problems with the NTSB assault here. First, is their evidence - if this were a significant problem one would expect a lot of recent data. In the Press Release the NTSB cited five cases only one of which involves the allegation of involvement of a hands free device. (Which happened in 2004.). If the problem is static why the push now? If it is not why not present some relevant evidence? Texting is already banned in many states. The other four examples are all about texting and driving. There is no mention of accidents caused by other forms of distraction - in the insurance data things like applying make-up and changing a radio station are cited as causes of accidents.

The public scolds who want to ban the use of cellphones continue to cite the statistic that using a cellphone is akin to being legally drunk. That is nonsensical on its face. Is that for hands free? If it is then is a conversation with someone else in the car equally dangerous? What bunk!

Second, is their sloppy use of definitions. A serious definition of distracted driving would establish some parameters. But the supporters of restricting freedom are not really interested in solving a problem.Were they interested they would attack areas where they are likely to have a significant effect - which in my opinion many states already have - prohibit non-hands free calling, texting and even the application of makeup - any action which disengages the drivers attention from the steering wheel and the road.

In the insurance company board that I serve on, we've had a couple of discussions about whether it would be a good idea to do a simple key combination for phones to prevent texting while driving. A combination like #25 might issue a statement to a phone users who try to text a driver who has sent the sequence - "I am sorry but I am driving now and cannot receive your text when I arrive I will receive the text and respond."

Ultimately safer driving will happen with the right combinations of incentives and technologies which will allow people to make the right choices. Restricting a useful tool at the whim of bureaucrats is unlikely to improve the situation.

Keynesian Theory (Bunk)

2011-12-13T08:16:00.000-08:00

We've been told that increasing government spending will have a "countercyclical" effect on unemployment.

Here's a chart (from Mark Perry) that shows what nonsense that idea is.

Next time one of your lefty friends claims that government spending has a positive effect on unemployment - whip out the chart - it won't convince them - but it will at least show up the folly of their "thinking."

This generation's Jack Kemp

2011-12-13T08:11:00.000-08:00

During the time that I worked in Congress, I got to know Jack Kemp quite well. He was an engaging fellow; smart, witty and well read. But as I watched him I became convinced that he should not be president. The qualities that the best presidents have are a strange mix - they need to have charisma but they also need perspective. In one sense a person who is driven to be president, probably will not make a good president. (Although it is hard to think of a successful president in my lifetime who was not driven to be president - perhaps Ike.)

In this election cycle Newt Gingrich seems to fit the mold of Jack Kemp. I do not know Gingrich but have encountered him in a number of forums. He is an engaging speaker. He too is well read and smart. But like Kemp he seems to lack a sense of proportion. I first noticed it when he was Speaker and he threw a hissy fit for not being included on the President's plane when coming back from Europe. Everyone should have the ability to have one gaffe but Gingrich has had several.

Witness the following:
1) He called the Ryan health plan "right wing social engineering." Paul Ryan is one of the few people in Congress who is thinking carefully about how to balance the budget. There are elements of his budget plan that are not popular - but the low cut on a fellow member of his party and a leader in Congress is bad taste and bad policy.
2) Gingrich worked for one of the two Government Sponsored Enterprises (Freddie Mac) that helped us get into the housing mess. He claims he was only a "historian" - a claim that is so spurious it is laughable. In the most recent debate, Gov. Romney criticized Gingrich's post House employment - which involves a lot of work in and around government. Gingrich shot back that Governor Romney should return the fees he earned with Bain and Co. Bain's work was in restructuring American companies. Gingrich seemed to have argued that all of that work was somehow negative - yet the economic growth in the 1990s came in part from the redeployment of capital. Which is better experience - working for a company like Bain or lobbying? In my mind that is an easy choice - even if Bain made mistakes. (which they certainly did)
3) Gingrich's personal life has not been a shining light. He divorced his first wife when she had cancer. His second marriage was rocky at best.

The current president is such a disaster that we cannot stand four more years. I'm also not much attracted to any of the other candidates. Perry seems all hat and no horse. Romney reminds me a lot of his father - a decent man but unable to generate enthusiasm. The rest of the also rans are just that. So we may be left with an uneasy choice. So regardless of who the GOP nominates, I will end up voting for the person just to take us away from the current disaster.

Boys will be....

2011-12-10T20:35:00.001-08:00

This afternoon my 9 year old grandson celebrated his football season. Wasn't much of a season for him - he broke his arm early in the season and so missed most of his games. He played in the championship round and was voted MVP for the tournament.

We went to a pizza joint near Roseville (very good pizza - Touch of Tuscany) but where was my grandson? He and a couple of his team mates went outside and engaged in what 9 year olds do - playing for the shear joy of it.

There are many things about youth sports today that I appreciate. Kids can get involved at a very early age. But in playing many parents do not get that at his age and for a bit longer - the game should be fun. Some parents - including a moron from last season - thought their kids should be playing at the highest level.

There is another thing about the current range of kids sports that I abhor - trophies. There is a subtle line between encouraging achievement and forgetting that this level of sports should be fun. Now every kid - regardless of commitment - gets a memento of the season which is a trophy. That cheapens real achievement.

The kids outside today understood that they could enjoy the sheer experience of running and catching balls without wondering what the score is. My grandson came in and got his trophy - but his real interest was in playing with his buddies. That is as it should be.

Was Bob Cratchit a B level worker?

2011-12-09T21:37:00.001-08:00

One of my traditions at this time of year is to see both versions of the Miracle on 34th Street (interestingly George Seaton is given credit in both movies for writing the screenplay although he died more than fifteen years before the second movie) and then a series of versions of a Christmas Carol.

This afternoon I saw the later version of Miracle and then in my afternoon workout saw the Alistair Sim version (Scrooge) and began the Bill Murray version (Scrooged). But as I watched the Sim version I was struck with a question - was Ebeneezer's clerk a B guy - using the definition that Steve Jobs used in evaluating people (he only wanted to work with A people). I've worked for people like that (former Treasury Secretary Bill Simon was like that) and if you come up on their wrong side you may not be able to correct the problem. One commentator said about the current business environment "Today, the bottom line is more important than the people who are out there in the stores making the money for the faceless money-mongers who dictate the policies.
" From my point of view this moving characters ahead by a century and a half is just plain silly.

There has been a lot of writing about the inadequacies of Cratchit. At the beginning of the story - Cratchit is a feckless person working for someone with a singleminded approach to business. (Scrooge) Scrooge could either be an A or a B masquerading as an A. But based on Dickens' description he seems to have been an A.

Cratchit seems to be a bit more laid back. He wants to get off "the whole day" to be with his family. He accepts Scrooge's miserly wages. And he seems committed to his family. But we really do not have a good impression of what kinds of skills Scrooge's clerk actually has.

In my mind Type A people in business have a single minded determination to succeed but they may also have human characteristics. I've certainly found a lot of entrepreneurs who want to succeed but also have balance in their lives.

But the simple answer is we do not have enough information to decide. Cratchit may or may not be a Type B - but regardless, A Christmas Carol is a type A story.

The Steve Jobs Book

2011-12-01T10:03:00.001-08:00

While I was in San Miguel I read the Walter Isaascon biography of Steve Jobs. As biographies go it is interesting in many ways. But here are three thoughts about the book.

#1 - I have not read the other biographies by Isaascon but if this one is any indication he could have used a good editor. I got it in the first hundred pages that Jobs was prone to treat people badly. But how many ways can you tell a reader that he was temperamental?

#2 - There is a lot of good detail in the book even with the redundancies. My history with computers, in many ways, parallels a lot of the story that Isaascon tries to tell. I bought my first computer (an Osborne) at the Byte Shop in Palo Alto. I was involved with an Osborne users group but soon found out I was more of a user than a geek. As technologies grew and elaborated, I moved from one to another. I bought the first 128 K Macintosh and have remained a loyal Mac user since then. His discussions of the development of the various products of Apple and Jobs' role in those developments; the period between Sculley and Amelio; his explanation of Jobs' control of infinite detail on product launches - and a lot more - were fascinating. I learned a lot.

About a two weeks before Adam Osborne went bankrupt, I had the opportunity with a small group from the Osborne users group to have dinner with him. Isaascon has a great quote from Osborne - Adequate is sufficient, the rest is superfluous - which sets up a division between people like him and Steve Jobs. Isaascon's description of Bill Gates also seems to ring true.

#3 - The author comes back to a dichotomy in the book between open (Microsoft) and closed (Apple) computer architectures in computers. From that perspective, it is not clear to me how much Isaascon knows about computers. Indeed, Gates was willing to allow his operating system to be run on many kinds of computers and Jobs was not. But that does not make Microsoft any more open than Apple. Their legendary ponderous nature of many Microsoft products is not an example of open versus closed. Many of the mis-steps by Microsoft in both hardware and software are not the result of being open but if not demanding the same kind of attention to detail that Jobs obsessed on.

The differences between the two companies is not open or closed but one of integration of hardware and software. Jobs saw the problems for a computer company as figuring out how to make the best experience for the user - Microsoft seems to be solving to create software only.

I enjoyed the book, even with the repetition and with the metaphor (closed versus open) which I thought was inapt. What worked best for me, is that Isaascon was able to gather a lot of information about one of the most interesting people in our lifetimes and present it in an organized fashion.

Final San Miguel Thoughts

2011-11-30T13:13:00.001-08:00

Our month in San Miguel came to an end this morning. But there are 5 things I would like to say about our month here.

#1 - The city is walkable - during November I walked more than 240 miles in the city. Except for the hills it is a great place to be without a car (even with the hills it is pretty good).
#2 - Without stop lights or signs driving here is pretty polite. Each morning and afternoon I would go out for a walk around the city. Drivers almost uniformly stop to let pedestrians pass. (Markets do work - if given the chance.)
#3 - We met some wonderful people. For probably two thirds of the nights we were here we had dinner with the couple we first met. They invited us to an Expats dinner on Thanksgiving. They entertained us with fun conversations and lots of lore about the city and this part of Mexico. At the same time we found a friend of my wife from kindergarten - who has made a life in San Miguel. She is a contributing member of the community - as our friends who we met the first night at dinner are. We found an Anglican parish which was also quite welcoming.
#4 - This is a buyer's market for real estate. Yesterday we spent a good part of the day looking at five houses (a tiny jewel box, a dump/fixer upper, an architectural gem, a big place that was way too expensive, and a house which we ultimately did not connect with. The real estate person who took us around was quite gracious. We talked more about our future than about which house was appropriate.
#5 - I could live here and depending on what happens in other things I am pursuing we could well get something here soon.

Cheepie Cheepie then Revisit and Dinner

2011-11-27T17:57:00.001-08:00

This morning we awoke to what people in Xalapa call Cheepie-Cheepie. Xalapa, like many areas in tropical areas of Mexico has a soft and gentle rain called Cheepie-Cheepie. I went out for my morning walk and found that walking when the pavement and cobblestones are a bit wet is tougher than it should be. We decided to stay in the house until the rain cleared away. Rain at this time of the year is not normal - but this was not a substantial rain.

By mid-day our friends took us back to Atotonilco - with my sister. I wrote about our earlier visit and the only thing different today was that it was a gray day. There is also a Sunday market. Our friend Federico - who has lived here for the last eight years - expressed regret that we could not sample some of the things that the vendors were selling(the food smelled great) - but we both decided that it would not be wise. The market was nothing to write home about. There was a lot of ticky tacky in a fairly small one street town.

In the late afternoon we went to a restaurant that had been recommended to me by a friend in California called Restaurante de Andrade. It is in an old hacienda a couple of miles out of town. For most of the last month we have eaten in a variety of restaurants. Many have been quite good but none hold a candle to this one. The place does not have a menu. We each ordered a salad (I had a caprese salad which was excellent). I then chose lamb which was equally good. Finally I ended with the best panna cotta that I have ever had. There was a middle course of ravioli with spinach which was prepared from fresh pasta - we watched it being made and then it was served with a superb sauce. All of it was wonderful. When we come back this is a sure repeat.

Los Pozos

2011-11-25T19:35:00.001-08:00

Today we went to Pozos, which is a ghost town about 45 minutes outside of San Miguel. Pozos, for a good part of its history was a very wealthy town - a lot of mining of silver and gold. Under Mexican law, gold is owned by the government but silver is able to generate independent wealth (thus the market here for silver is much greater than for gold).

The original miners in this town were Jesuits. As a result they generated a great deal of wealth. (They eventually got ordered out of the country - with a demand that they get to Veracruz and then get out in about two days.)

Several decades ago the mines got abandoned and thus the town became the Bodie of central Mexico. In the last few years, there has been some effort to remake the ghost town into an artistic community - a San Miguel2. I remain a skeptic.

We first went to the old mine sites. That is the top picture. We spent about an hour looking around one of the open sites. It is remarkably peaceful - more than Bodie (that ghost mining town in the Eastern Sierra) - but it is also high and dry like Bodie. And like Bodie - it has wind. We learned from our wonderful guide (Dali Amor) a lot about the growth of the town, the infusion of the French (about the time of Maximilian) and the eventual bust of the mines.

But the second picture shows the town as it is today. Again, it is very peaceful. There is not much activity in the town. Some investors have put a lot of money into making the town more of an artistic center. Unlike San Miguel - where I found an immediate list of things I wanted to do - this place is boring. Double of triple the size and it is still a snooze.

Our guide has a great idea of doing speciality concerts in the old mine site. Groups would come to Pozos on a first class bus and then listen to a concert and go to a restaurant for a first rate meal. He has the sites picked out - all he needs is some investors. (note go to my homepage and click on the email link in case you want to be that angel).

One other comment. As we were at lunch a young student in tourism from Anáhuac de Queretaro. She came up to our table and asked why we came to Pozos. We had a good discussion about the town and its attractions. She was doing research for a class. She was well spoken and asked good questions.

LaCañada de la Virgen and Expat dinner

2011-11-24T18:39:00.001-08:00

One of the things I have enjoyed about Mexico is visiting pyramids around the country. I have been to several in Oaxaca, Veracruz and the Yucatan. This morning we went to one of the northernmost pyramids in the country. Like many others this one was abandoned well before the Spanish arrived in the Sixteenth Century - and there is no particular explanation why they closed down. This one closed about the same time as Teotihuican.

Like many other pyramids in the country this one seems to have been an observatory. But unlike others this one did not revolve around the equinox. This one, called LaCañada de la Virgen, has only been open to the public for about six months. The land was in private hands (and still is) and it took a lot of wrangling to get access for the government. The owner is an Argentinian who is related to the Krupps. It is one main pyramid and a couple of other structures at this point. To get to it, because it is surrounded by private land, you have to go to a center and then are transported by bus. It was a pleasant trip - about 20 minutes outside of the city.

There is a lot of mumbo jumbo around the archeological sites in Mexico. Some of the guides we have had in the past ascribe all sorts of things to these areas. There is some discussion about the role of certain numbers (13 especially) and cyclical calendars based on the lunar calendar. Some of their speculations may have been true. But I prefer to look at these things with a bit of a jaundiced eye. These places a magnificent to see - even if we cannot explain all of the things that go into the places. Remember, that many of these sites were remarkably able to project movements of the sun and moon. (All this was done without a sextant.) The sheer act of being able to produce these edifices which seem to have been pretty advanced in a number of sciences makes me want to walk the grounds.

The other thing which annoys me is the constant attention to sacrifices that were done in some places. Our guide today did a wonderful job of explaining both the conception of these peoples of the individual and also of the afterlife. (Both of which are very different from our current thoughts about these things.)

There is a lake below the city of San Miguel that is way down because there have been a couple of lousy rain seasons. The lake is man made and so you can now see part of a church which was submerged when the lake was created. Evidently, if there is a good rainy season next year the lake will fill up quickly.

At about three PM we joined with a group of Expats at a restaurant off the Jardin called Pegaso. We've been there several times since we have been here. Today they created a special meal. It was superb - starting with deviled eggs and then a salad and some calabasa soup, followed by turkey, corn dressing, string beans, mashed potatoes, cranberries (arándano in Spanish). The dessert had either pumpkin pie or poached pears. It was very tasty. We finished the night looking at the gallery of our friend Federico Correa which is in a former coach house near the Jardin.

50% airlines and something silly...

2011-11-23T15:53:00.001-08:00

For more than two decades I have flown more than 100,000miles per year. When you fly that muchyou begin to build enough experience on various airlines to form someconclusions. For example, I will go outof my way to avoid flying on what wasonce dubbed Hughes Air Worst (now US Air). At the same time in Mexico I try to avoid Aeromexico. (The national flag carrier of Mexico.) Most national airlines were started when airtravel was somehow romantic and many countries thought it was wonderful to havea flag carrier. Fortunately, marketforces beginning in the 1970s began to blow up those flag carriers and airtravel improved as a result.

The last couple of days confirmed my prejudices aboutAeromexico. As I talked about in anearlier post, we went from San Miguel to Merida on Sunday. We had a total of four flights to get fromhere to there and back. (Many flightsfrom one place to another go through Mexico City.) A day before the Sunday flight we got a notefrom Aeromexico that they had cancelled the flight between Leon and MexicoCity. So we arranged othertransportation to Mexico City and got to Leon on the original second leg of theflight.

This morning, the airport in Merida was fogged in for an8:20 flight. The gate personnel were notvery informative about what was going to happen but when we did take off twoand a half hours late, we were told that we would arrive at 12:15 (all timeswith this airline are approximate). Wearrived about ten minutes after our flight to Leon left (or about a half an hour after the revised projected arrival).

We got off the plane in Terminal 2, which is the domesticterminal at Mexico City. It is notexactly the picture of efficiency. Wewere told to go down a hall for connections and then that required us to gothrough security again (even though we had been checked in Merida) but by doingthat we were able to stay on the same level (the other option would have beento go down to the first level and get with the agents downstairs.) We quickly went to the first gate andexplained that we had missed our flight to Leon and the agent told us to go togate 65, when we got there we were told to go to 75, and then on return to goback to 65. The Aeromexico staff seemed intent on letting us get some aerobicexercise but I do not think it was out of concern for our health. I will admitthat I do not have a high threshold for being part of human ping-pong so Igrumped a bit. (Well actually a bit more than a bit.) After a couple of other volleys we arrivedat the real information desk – which is between 65 and 75 and they were able toget us on a flight at 3 (about 2 hours later). So in the end Aeromexico was able to serve us on 50% of the originalflights. I am not sure how most peoplewould grade their performance but in my book 50% is well below par.

Adam Osborne, the computer entrepreneur once said thatadequate is sufficient and anything beyond it is superfluous. That certainly did not prove true incomputers and it also does not apply to most other things in life including airlines.

So what was the alternative? We could have avoided Mexico City by flying to Houston and then toMerida and then returning by the same route. It would not have been the most logical route but then did I say I rankAeromexico beside US Air?

Now to the silly; the room that we were in in Merida was ajunior suite – thus it had a nice sitting room and a bedroom. It was a very comfortable hotel room. But the whole thing is probably about 600 sq.ft. In the sitting room was a portabletelephone. There was an extension inthe bedroom. But then just in case someone called you whileyou were doing your business there was an extension in the toilet. I do not want to get gross here but in thoserooms with a potty phone I have always wondered about why they werenecessary. Explanations abound. #1 – These rooms are only rented to peoplewho are not very mobile so they need phones everywhere. #2 – Some people think bathroom sounds aregreat accompaniment to their mundane talk. They may be correct. #3 – Thenature of the room holder’s talk is so confidential that it must take place ina secure room and these special rooms are constructed to dampen noise. #4 – Some people believe that the nature oftalk is best when it is done in darkness (usually hotel room bathrooms have nowindow). #5 - These people suffer from multi ringee-dingee phobia (discovered by an obscure Austrian psychoanalyst which found that some people cannot stand to have a phone ring more than once). As I said there are plenty ofexplanations just none that I can find logical.

A better way

2011-11-23T03:30:00.001-08:00

We've been in Merida for a couple of days. I attended an international advisory board for a prestigious university (University del Mayab) and my wife got to see the area. Her luck on weather held again. About three years ago we went to Tajin, which is a great archeological site in Veracruz. I've been there three or four times and each time was unable to get good pictures because it was so humid (steamy lenses do not make for good photography). We got off the plane in Poza Rica and it was about 70• and low humidity. So we got here, which is very tropical, and the weather was pretty nice.

We spent the day before the meeting visiting Progreso - which is a beach town about 30 minutes from Merida and then walking around downtown. The photo is of a major bureaucratic mistake of a couple of hundred years ago. The cathedral in Merida was slated to be built in Lima, Peru but the plans got sent to Merida, a much smaller town then.

The Zocalo in Merida is wonderful. This magnificent cathedral plus a municipal palace with a salon on the second floor that is adorned with a series of paintings about the history of the region. On Monday night they were preparing for a civic event but we got to sneak in and see the inside. We also were given a private tour (by a guard who was very proud of the theater) of the Teatro Péon Contrearas which is a bit larger than the one in Guanajuato but dates to about the same time.

Yesterday, I participated in the board meeting. The university is doing some very interesting things including developing an incubator for start-ups called Unico. When I was last here, they were in construction and the building is now completed. The project will encourage a group of start-ups by giving them space and advice. One of the companies is about to negotiate a sale of its product to a major health company and a couple of others are growing concerns. They will add the expertise of the university in design and law (for intellectual property issues) to help these companies grow. They are also looking at some growth issues and like many of the best universities in Mexico are thinking about how do they develop and maintain standards that put them a the small group of universities around the world.

So what is the better way? In the hotel we are staying in they bill you on the internet for usage. I am often grumpy about paying for internet in hotels. After all you do not pay for water or towels. I've even had a series of exchanges with the CEO of Hilton hotels about the issue. They offer free internet to customers who reach a high level in their loyalty program. I argued (to no positive result) that they would get more of my business if they offered (as some parts of the Hilton chain do) free internet. Well, the Fiesta Inn, offers a series of plans that allow you to use internet for a period of time. So we bought 24 hours - which was available for the entire stay. We ended up, over the three days using only about half the time (between my wife and I) but from my perspective, for a little more than what most American hotels charge for 24 hours on the clock - that sounds like a fair price.

Today we head back to San Miguel for our last week there. Dar Gracia - comes up tomorrow.

Reflecting on the Day of Revolution

2011-11-20T08:38:00.001-08:00

The 20th of November is a day commemorating the 1910 Revolution in Mexico. We were woken this morning by several blasts of fireworks about four in the morning. That seemed to begin the celebrations.

Last night in the Centro there were a lot of people hanging out - with a street fair and a couple of bands. We chose to eat at a place called La Grotta - a small place with an interesting menu - I had a chicken breast wrapped in spinach very tasty.

But back to the revolution. The three pictures that you see are of three of the principals of the 1910 revolution. There were certainly more. Basically the country was divided into three geographic factions led by Emiliano Zapata, Francisco Madero and Pancho Villa. The relations between them were complicated. Villa was given almost Robin Hood status in the US at the time. There were all sorts of plots and counterplots.

Fundamentally the order of the country was breaking down as at the end of the long presidency of Porfirio Diaz who was pushed out of the country and then the power struggles began. All of this would make a good opera.

Ultimately, Villa was gunned down in a small town. Zapata was also ambushed. Madero was also assassinated. One of the controversies about both Zapata and Villa was whether they were bandits or pursuing a social agenda (Zapata was a big force for land reform). There are a couple of good histories of Zapata and Villa. And there is a long but interesting treatment of all of Mexican political history done several years ago by Enrique Krauze.

The middle

2011-11-19T16:25:00.001-08:00

In a recent book about the perils of higher education(Abelard to Apple) Richard DeMillo argued that the most vulnerable part ofhigher education was what he defined as the “middle”; those institutionswithout significant resources and with only nominal selectivity. He argued that they are beset with a rangeof issues – competition for admissions, rising costs and a commodity likebrand.

In one sense he is right. Those institutions do have a higher possibility of failure. Although any analytical person who looks atthe flagships notices some significant cracks around their super-structure –huge demands on resources (as Howard Bowen once said “Institutions raiseeverything they can and spend everything they get.”), arrogant faculty who teachas a hobby while pursuing other interests,and students who demand everyamenity.

But we were discussing the middle. Last night I was honored by one of those inthe middle, in Mexico, Universidad del Pedregal. At the entrance of the University there is astatue of a man with a sledgehammer breaking rock – indeed the universityrefers to its job (as many universities in Mexico do) as formation ofstudents. The university has arelatively young rector who has just completed his third year. I first knew him when he was a student.

On an annual basis, most Mexican rectors offer an Informe,which sets out the accomplishments of the last year and proposes some plans forthe future. This is a formal meeting,where the Rector gives an address and then a senior member of the boardresponds. As you can see from thepicture, in this instance the auditorium was beautifully decorated. (I countedmore than 600 roses.) What I heard about last night was a university on themove. They are determined to stay trueto their mission, which is to educate middle class students. But they have grown in size (both in termsof matriculations and graduates). Theyhave improved the academic qualifications of their faculty. They have used their resources carefully butthey have taken some risks. In short,while many other universities talk a good game about continuous improvement –they are working on it.

So was DeMillo right? As I look forward on higher education, I believe that all universitiesface some real challenges. I fullyexpect that the sector faces, especially the independent sector, a pronouncedset of issues that will sink some places. I fully expect that some of those failures will come from among the mostprestigious universities. But I look ata place like Pedregal and think they will continue to “stick to their knitting”(as Waterman and Peters – In Search of Excellence once said) and continue toserve their market quite well.

Expats and coffee

2011-11-18T07:20:00.001-08:00

Yesterday we had lunch with one of my wife's friends from her grade school. This woman moved to San Miguel 27 years ago. She and her now ex-husband were trying to reconcile and it did not work. She was left in a foreign country with two small daughters.

But she built a life. First, she developed a riding academy. Then she met an old guy who offered to help her get her business up and running. He mentioned that a son was finishing veterinary school and they eventually met and married. They built a house slightly out of town which is really quite wonderful. It is built around a patio like a classic hacienda. The place is all adobe construction. She is in the process of doing a lot of work on sustainable flora and fauna. She is active in the community being especially mindful of neglected children. By the way, it turned out that the old guy she met actually ran the other riding academy in town - which he did not mention.

We've met a lot of ex-pats here. They are a diverse lot. Yesterday we also heard about when Starbucks came to town. A lot of people here were glad to have a place in town where teenagers could congregate without alcohol. And indeed, at some times during the day the place seems to serve the function of a soda shop. The store is right off the Centro - sort of diagonal from the Parroquia.

But a group of the ex-pats protested the store. Mind you that the company that runs the franchise is a Mexican company which employs Mexicans. But the silly Americans grumbled none-the-less. One of our new friends here (who did not protest) said a) he enjoys the coffee and b) some of the grumps now frequent the place a lot. I do not drink coffee so I cannot comment on their product although I sure like their iced green tea.

To Mexico City

2011-11-18T07:01:00.001-08:00

This morning we are going to Mexico City on an ETN bus. As we have travelled in Mexico we have been on a couple of classes of busses, including the third class ones where the goats and chickens included at no extra cost. But before you sigh, this is a first class bus. We were able to make reservations on line and when you arrive at the bus station you check in electronically. The bus has about 24 seats and movies and WIFI. In addition they give you a drink and a sandwich. Nothing like this in the US.

We have about 10 people on this trip but I have been on trips where the bus is full. You are given an assigned seat. The accommodations are comfortable. The flight from Leon to Mexico City is about an hour and change but the drive to the airport is an hour and a half. So the differences are pretty clear - no airport security, relaxed travel and we get to Mexico City in just a bit more time. The cost for the trip is considerably less than the corresponding flight. All in all, as I said, nothing like this in the US.

One irritation raised its head this morning. Aeromexico sent us an email that the first leg of our flight to Merida on Sunday (We are going there for a board meeting on Tuesday) has been cancelled. I have found Aeromexico's service to be spotty. What would you expect of a government airline? But then we are on the bus. We thought about bussing to Merida but the trip is a very long one so we will figure out how to get to Mexico City to pick up the rest of our flight.

Singers at Dinner

2011-11-17T05:34:00.001-08:00

One of the traditions at many restaurants in Mexico is to have strolling singers - sometimes solo and sometimes a group (often a Mariachi) - come to your table and offer songs. I've always had mixed feelings about that tradition. Most Americans mark themselves because their list of songs is short. There are perhaps ten songs that I believe we choose about 99% of the time - Cielito lindo and Béseme mucho; not so much Las Mañanitas (which is sung at birthdays). My mixed feelings come from a couple of thoughts. First, the singers can be pretty wide in their abilities. Second, especially with Mariachi, they can be loud. But third, I suspect that many of these singers get tired of singing the songs from the ten most requested.

The singer last night (there is a short clip here of one of my wife's favorites which is also in the top ten - just to prove the point) was excellent. More importantly, he offered up a couple of songs I had not heard before. The music is often sentimental. The song he offered last night is from Guanajuato and very sad. Germans have their Heimat Filme and Mexicans their ballads.

Mariachi originated in the state of Jalisco - also the state of Tequila. Some suggest that it comes from a corruption of the French word for marriage. A lot of this music comes from celebrations. But WIKIPEDIA says the word comes from the native language Coca. I was told once that the addition of brass to the bands came when the music was first played on the radio - the guitars and other stringed instruments did not pick up well on the primitive microphones. There are other branches of Mexican music which Americans mix into traditional Mariachi music. They each have their own distinct traditions.

One of the major singers of Mexico, Pedro Vargas, was born in San Miguel. As we talked with our singer last night he said Vargas seemed to get better as he consumed more adult beverages. Vargas actually started his career as an opera singer in Cavelleria Rusticana in Mexico City. There are a couple of statues to Vargas in San Miguel.

In Mexico City there is a zone where the Mariachi bands congregate called Plaza Garibaldi. It is a large plaza which also has a wonderful restaurant close by called the Salón Tenampa. In this large hall each time I have been there there are four bands playing in each of the corners of the room. Oddly, each time there have been three Mariachi and one band playing in the style of Veracruz - which is without brass. If you want to hear those guys you have to sit close.

Wonders in the morning

2011-11-16T05:58:00.001-08:00

I generally get up before my wife to read and do email. This morning I looked out the window and saw the following scene. With Mozart on my iPod seemed like a perfect start to the day.

Fountains and Doors

2011-11-15T17:18:00.001-08:00

This afternoon we went on a doors and fountain tour. San Miguel's downtown requires wooden doors (although like some other requirements in Mexico - this one is not always enforced). The fountains abound in the city. There is even a place where there are spaces for people to wash their clothes, children and pets- which seems to be busy on the weekends.

One of the things which intrigues me about the city is the architectural features that seem to pop out in many places. One of the interesting features on many doors is the fanciful door knockers. We found big hands, lions, dogs, cows, dragons and a host of other types. I put a set of photos up at my Flickr site with 82 photos. But here are some examples of what we saw.

Traffic in San Miguel

2011-11-15T07:30:00.001-08:00

I have been walking twice a day for the time we have been here. This is probably only the second time in fifty years that I have not driven for more than a couple of days. There are no stop signs in downtown and precious few in the outskirts. The average speed on the streets is probably less than 20 miles per hour. (This is a place with narrow cobblestone streets and lots of topes- little traffic mounds).

Amazingly what I have found is that with few exceptions the drivers are courteous. They yield to pedestrians almost unfailingly. That is certainly not true in other parts of Mexico or in the US.

Reflections on San Miguel and Mexico

2011-11-14T19:46:00.001-08:00

One of the interesting paradoxes I have experienced in the last couple of years has been the US perception and reality of Mexico. We've treated the drug problem as Mexico's but as the Ambassador to the US said to me in a lunch about six months ago - the drug problem has both a supplier (Mexico) and consumer (US).

Tonight we had dinner in an Argentine type restaurant (what we would call in the US a good steak house) and for most of the meal we were the only ones there. This afternoon, we visited the Mask Museum in San Miguel and spent an interesting hour and a half with the owner - who has assembled a fine collection of traditional masks with some great explanations of how each of the indigenous cultures uses masks. There is a huge collection in Zacatecas, but this one is better because it puts all the collection in context.

You might wonder what these two events have in common. Both reflect the relative condition of tourism in San Miguel. My wife and I have walked throughout the town at all times of day and night. One of the interesting things about the city is how well people seem to get along. The Episcopal parish that I discussed in earlier posts has Spanish and English speakers together. We've found the people in shops and on the street to be uniformly friendly and helpful. But as the owner of the B&B/Mask Museum said to me this afternoon between the economy and the over-reaction that news sources have had about violence in Mexico related to the drug cartels, business is off. This is clearly a buyer's market in real estate.

When we were getting ready to come for our trip - we asked a lot of friends to come visit us. We have a huge house so we could accommodate guests. Some had schedule conflicts but more than a few said they were afraid to come to the city or to Mexico. That is not denying that there has been some significant violence in Mexico City and north of where we are. But as a city, this place is tranquil.

Eating in San Miguel

2011-11-14T09:16:00.001-08:00

One thing I never seem to do is get hungry in Mexico. There are tons of restaurants in San Miguel from simple to elaborate. We've been here for a bit more than 2 weeks and have not found a bad place yet. At the same time we have not found a place that was thoroughly compelling. We had some great fresh fish at La Felgura which is in the Hotel Posada Carmina. It is an outside patio with great service. There is a nice informal restaurant off the Centro called Pegaso where the tables are close together and we've met some nice people there. There are a couple of Argentine and Italian places that we have liked (notably Cafe Vivoli one La Garufa). We've also been to a couple of tapas places including Cafe Iberico. There have been several others including Casblanca that were fun and the food was good.

We thought the food at the Rosewood was a bit pricey and bland. Rosewood is a new development in town associated with a hotel. Their condos are very well done. They have completed on phase of the development and are working on another. One attraction is that there are four restaurants nearby (in the hotel) for residents of the complex.

One of the odd things about some of the restaurants is that they keep erratic hours. So it is best to check before starting out. Some restaurants that we like (including the Restaurant and Chamonix - both of which were excellent) are closed on Sundays.

The Gospel in Two Languages

2011-11-13T16:24:00.001-08:00

One of my favorite gospels is the Parable of the Talents. The church we attended this morning reads the gospel in both english and spanish. I have always liked the parable because it says two things. First, that one should use what we have been given and second that we should take risks in life.

In the english version a master brings together three servants and gives them one, two and five talents. He comes back after a while and two of the servants have doubled their master's money. The third had buried it in the ground and so returned only the talent he got. I've liked this gospel because it encourages us all to take risks in life. We come into life with a set of things that come to us without regard to our needs or desires but regardless we should take risks to make the best use of what we are given.

The spanish version has two major differences. First the servant (servidor) becomes and employee (empleo) and the master becomes a boss (jefe). Second, the amount is expressed in thousands so one becomes one thousand. I am not sure it makes much of a difference theologically.

They also did a baptism this morning, which was done in Spanish. I was able to keep up with the responses reasonably well.

Eternal Verities and telephones

2011-11-13T12:49:00.001-08:00

This morning we were down to the Starbucks (to use the WIFI in order to be able to make a couple of phone calls - more on that later) and my wife was in the restroom. There was a young family in the courtyard with two boys about 3 and 5 and a girl who was probably in between.

There was a small puddle in the void between four bricks that had less than a shoe full of water. The two boys were immediately drawn to it and their sister looked at them as if they were crazy. But there they went stomping it until the water was all splashed about. No cultural nuances here - just gender ones.

I have tried three ways to phone in Mexico - Google, Skype and Ooma. All three use WIFI to connect and then depending on the connection are quite inexpensive. For example, the Skype for a call to a Mexico City cellphone was 8¢ per minute. The Google was about 15¢. I have only used the Ooma service to call US numbers and there the service is free. But their Mexico rates are about 9¢ per minute. AT&T on a cellular call is 60¢ per minute. All three of the nontraditional providers have superb voice quality.

The Mexican phone system continues to confuse me. In some places you are required to put a prefix in and in others not. Cellular calls (to and from) require another prefix (usually 44). So the addition of the WIFI services has been a great boon.

Jazz times two/times two

2011-11-11T06:53:00.001-08:00

On Wednesday afternoon we at a restaurant for lunch that had two guitarists who played a lot of Django Reinhardt. I first encountered his music at the Sacramento Jazz Festival several years ago. These two guys played some enjoyable music. Last night we went out to dinner to a place called Casa Rama which is near the Rosewood development - which was featured in Sunset magazine. The food was good and so was the music.

The life of an artist

2011-11-11T06:38:00.001-08:00

I've always wondered about how and why people create art. On Wednesday night we went out to dinner with friends who are visiting (one is an artist) from Sacramento and with the couple we met on our first night here (ditto).

We had a good discussion in the SMdA artist's studio about how he works through images and also about how things eventually come back in many iterations. He showed us a collection of images, drawings, paintings from many years that are works in progress. The best description I heard from both artists was how their activity evolves - it does not simply go from idea to completion.

Pilgrimages

2011-11-11T05:31:00.001-08:00

Yesterday we got a guide and went to Guanajuato (the largest city in the state that holds San Miguel de Allende. I first went there almost twenty years ago and before he became president, I met Vicente Fox there (when he was governor). The city is much larger than San Miguel and grew up initially as a mining town (you can still see the walls of a working mine - near the top of one of the hills that surrounds the city).

On our way out of San Miguel we encountered a pilgrimage that happens about this year which brings people to a ranch away from the city where there is a small church, where miracles happen. People make the trek to this place annually either seeking miracles or expressing thanks. They come by horse, foot and bicycle as well as car. The walk is about a three day trek from San Miguel.

As you come into Guanajuato your are struck with three things. First, there is an observation area from the top where you can see the beautiful colors of the buildings. Second, the downtown area, which is very old, has a lot of streets that are pedestrian only. Third, as you enter, from at least one part, you actually go under the city in a series of tunnels that were designed to divert traffic but also to handle water (originally). When you come to see the sights - you park and walk.

There is a classic theater there which was completed near the end of the reign of Porfirio Díaz. We sat in this magnificent smallish theater and discussed the relative merits of Benito Juarez and Porfirio Díaz. Juarez was president from 1857-1872. He is credited with a lot of things - but from my perspective his presidency evokes more founding traits than substantive results. A lot of what he did was to redefine the nation. Díaz was President from 1876-1911. He ruled as a dictator but he also completed a lot of infrastructure during his presidency including public markets, roads, and transportation systems. He was eventually deposed and spent the last four years of his life in France. There are plenty of good histories about the evolution of the presidents of Mexico. My favorite is a book by Enrique Krause. What you are struck with is how uneven the histories become. Many of the presidents of Mexico ended their terms violently.

One of our first stops, after the Teatro, was the Museum of Don Quixote. The museum was funded by a publisher named Pedro Garfias who emigrated to Mexico from Spain. He spent time in Spain in one of Franco's concentration camps (as a Spanish Jew) and at one point traded cigarettes for a copy of Cervantes' novel. When I read Don Quixote, I was struck by the notion that it is hard to tell who is crazy in the book. On the surface, Quixote is nuts - going on these quests. But the book can be read on quite a different level where Quixote is the sane one. Garfias read the book as an inspiration about the possibilities of life. When he reached Mexico he became very successful but also began a collection of Quixote-ana in all sorts of media. This is a first rate museum with hundreds of Quixote artifacts - paintings, weavings, sculpture, ceramics.

We also went up to the main building of the University of Guanajuato, which is one of the most prestigious public universities in Mexico. It's main building is famed for its steps - which are many and steep.

We also visited two of the churches in the city - since this is a large city there is a bishop here. From my view the smaller church next to the Teatro (San Diego de Alcala) is more impressive.

We then went up to the Aldondiga. When Mexico began to separate from Spain four major figures started a movement. They eventually amassed a group (mob) of about 25,000 people and went to Guanajuato. They stormed the newly constructed (1809) grain exchange. There are lots of heroic stories about this relatively short encounter - and lots of violence. The mayor of the city first blockaded the city then decided to gather the 200 most prominent citizens in the Aldondiga along with 300 soldiers. The building is built around a patio - so the rebels were able to lob stones into the center. But for a while the soldiers were able to hold them off until (according to legend) one person strapped a large rock to his back and was able to avoid the soldier's shots and burned one of the main entrances. During the siege the mayor peeked out and was shot in the eye. The rebels eventually broke through the burned door and killed everyone inside.

Eventually the four main protagonists against Spanish rule were betrayed and captured and executed. As a sign to the population they were beheaded and their skulls were placed in four containers (second photo) where they stayed for a decade. When you enter this building all that history is omnipresent. Like the GPO in Dublin, you can still see bullet holes in the outside masonry. The building now houses a pretty good museum. Yesterday there were a couple of groups of school children so you could get an idea of what it might have been like to be shut in with 500 people.

The city has a third attraction, which is out of downtown. Like much of Mexico, the state of Guanajuato is in the desert. For much of the city's history people were buried above ground in wooden caskets. Some of those bodies were eventually exhumed when the descendants were not able to pay taxes necessary to maintain the cemeteries. What they found is that, as opposed to those buried in the ground, the bodies above ground mummified. The city has a museum of some of these remains. The museum is eerie, tragic and a bit macabre. In the middle of the museum there are some infants in this condition and a series of photos, that were common at one point, of mother's holding their dead infants all dressed up.

What struck me about the day is how all those things we saw tied together. From the pilgrims in the morning to all the things we saw in Guanajuato they involved the possibilities of the human spirit - some elevated, some optimistic, some violent.

Oomaing from Mexico

2011-11-08T22:14:00.000-08:00

One of the real frustrations in Mexico is the phone system - you need a separate three number code for cellular calls and you also need a city code. I have never been able to master it. At the same time, costs for US users are high. Even with a discounted rate the costs can be 60¢ per minute to the US.

But here comes my Ooma which I mentioned in an earlier post. This afternoon, I set up my Ooma mobile APP (about $10 on the APP store). I then tried to make a call over my WIFI network in the house. Cost for three phone calls of about 10 minutes each - $0. The voice quality is outstanding - better than Skype. The system also works on 3G but the usual call costs apply.

As I said in the earlier post on Ooma - this device is simple to set up. What was more interesting is that I asked one family member to call me on our home number - it rang on my cellular phone. I am a techie but this device blows me away.

Night and Walking

2011-11-08T22:08:00.000-08:00

This evening we went downtown for dinner and finished about 9 PM. For a good part of the first week we have been here, there has been something going on in the Centro - first Halloween, then Dia de Los Muertos - then the weekend. But tonight, as we went down to Starbucks to get some coffee ground the Centro was quiet.

One of the things I like best about Mexico is the surprises of finding a place of interest unexpectedly. Here is one shot from tonight (iPhone photos) that caused me to think about those serendipitous situations. This was on the way to the men's room at a restaurant that we found on our first night here.

Since the first morning I have been here I have done about 2-3 miles of walking. At the end of the day I have done between six and seven miles of walking between our other explorations. That has allowed me to explore the town. This morning I set out on a slightly different route from our house and found a beautiful park and cultural center. The Parroquia is a good landmark that is visible from many parts in the city - so every time I have been a bit lost, I simply try to find that and then recalibrate on next steps.

To Market, To Market

2011-11-08T16:18:00.000-08:00

There is a serious tradition in Mexican towns of the market. My first experiences with these were in Oaxaca where there is a superb market near the central bus station on Saturday and then a huge one a few miles out of town in Tlacalula on Sunday.

These markets are a mix of social gathering, place to shop and a bazaar. One can get all sorts of food - superb fresh fruit and vegetables, usually many kinds of cooked food, clothing, auto parts, hardware, sometimes antiques and rummage. The two in Oaxaca are interesting places.

They differ a bit from the in town markets that are present in many Mexican towns which often mix food, clothing and souvenirs but not auto parts. (The Tlacalula market was for some time called Tokyolula but the natives because you could buy new cars there.

In 1995, I first noticed how slick the vendors were. The peso was under tremendous burden and yet each of the vendors seemed to have understood the international monetary flows. Let me offer two examples. You often get a small coin purse to hold spare change. For about a year I watched the price of the purses fluctuate with the value of the peso. I also noticed that if an American came when the peso was really in the dumps (just before the devaluation) that they would offer a premium that was close to 20% for dollars. About a year later, when the peso had stabilized that discount disappeared. What amazed me about those two trends is that most of the vendors do not look like they studied international finance.

This morning we went to the Tianguis del Martes or Tuesday market. It is done on the edge of town in a huge space. I wanted to present a short video with three intents in mind. #1 - Contrary to the notions that many Americans have of Mexico - not all music here is enchanting. #2 - To give you an idea of the hustle and bustle in Mexican markets. #3 - This will give you an idea about the variety of options in the market - the picture above gives you an idea about the colors.

Compared to some of the other markets we have been to in Mexico (including the Saturday market in San Angel in Mexico City) we did not find any exciting treasures.

Great Use of Space

2011-11-08T06:09:00.000-08:00

Yesterday we walked around the city with our friends who are visiting and then had a wonderful lunch near the Centro. (The best mojo de ajo I have ever had - made with Sea Bass) We then went to a converted textile mill which is now used for art and design space. It is called Fabrica La Aurora (Click on the name to get to the site.)

What intrigued me about the space was the mix of galleries and spaces for working artists in all sorts of media. One gallery had very smartly designed outdoor furniture. Several had jewelry or textiles. Of course there were lots of spaces for painting and sculpture. The space also has a restaurant and a coffee place.

The photo at the Left is of one artist who works in bronze. His sculptures have a certain whimsical tone. Luckily our friend the artist was able to explain how the bronze is treated with chemicals to resist deterioration in the elements.

This would not have been a place that I would have gone - but it was well worth the short trip from downtown.

St. Paul's San Miguel

2011-11-06T21:27:00.000-08:00

This morning we decided to visit the Episcopal parish in San Miguel. It is called St. Pauls and is located near a new development called Rosewood. The parish had scheduled a single service today but the priest, recognizing that there were nine of us there for the early service, agreed to offer communion.

The sermon had been drafted by the Associate rector and had been based on one of the readings from Amos. It paralleled a discussion I had on a Facebook I am a member of called the Wheelspinners relating to personal responsibility. One of the interesting twists in this was that the priest who had written the sermon for delivery at 10:30 came into the church in the middle of the service. He thought the regular rector had done a good job offering someone else's sermon notes. I agree.

San Miguel is mostly walkable. We took a cab this morning and arrived about an hour before the 9 AM Service. So we walked around the neighborhood. When we returned we decided to walk back home - not a bad distance.

The parish is smallish but very accommodating and has services in English and Spanish. My wife is likely to go there on Wednesday when the Shawl ministry convenes. She is active in the same project at home - which produces shawls for people who need them - either because of illness or some other major event where they need comfort.

In the afternoon we went downtown for Caso Fundido and Soup awaiting the arrival of our friends from Sacramento. I spent the afternoon after church reconstituting financial statements of a place I am looking at. That does not sound very interesting to most people but I am always amazed about how numbers can be put together to help our understanding what is going on in an organization.

Our friends arrived at about 5:30 and we went out for a wonderful dinner.

Yes we have no Siqueiros

2011-11-05T20:52:00.000-07:00

One of the main muralists of Mexican art is David Alfaro Siqueriros. Along with Diego Rivera and Jose Clemente Orozco he looms large as an artist that helped define the muralist heritage in Mexico. So one of the things you need to see when in San Miguel is a mural he painted in San Miguel in the Bellas Artes.

Siqueriros did a lot of murals all over the country including a magnificent one in the Children's refuge in Guadalajara. (SEE SECOND PICTURE) We visited that about fifteen years ago and the young art student who showed us it was so excited because the artist did it on his back with one hand. The mural in the refuge is amazing both in its use of color and in its progression of themes.

Like Rivera, Siqueriros was a lefty politically. Indeed he was implicated in the plot to kill Trotsky. If you know enough about the intensity of debates on the left you can understand how someone on the left would try to assassinate the intellectual godfather of the Russian revolution. But enough of that.

When you come to SMdA you need to see this mural. So today we set out to see the it. Your picture is better than ours. It seems that the roof of Bellas Artes collapsed and the museum is closed. We got to tour the church next to Bellas Artes which dates to 1511(although not sure how that worked since Cortez came to Antiqua eight years later). We hope Bellas Artes will reopen by the end of the month. In Zacatecas there is this great art space called the convent of San Francisco which has some amazing art work as well as a huge collection of masks and its ceiling collapsed - and that adds to the ambience.

The third in the triumvirate of heroic art in Mexico is José Clemente Orozco. In Guadalajara, the municipal palace houses a heroic painting of the father of the Mexican revolution, Miguel Hildago (the guy who I said in an earlier post should have listened to deAllende). Orozco's mural is compelling.

None of this is marked by subtlety. It is not unlike the WPA stuff that Ben Shawn. For a period of about thirty years muralists thrived in a number of countries. The Mexican muralists, at least from my limited perspective, seem to have had the most lasting effect.

We found other stuff to do today including finding a knitting shop for my wife and going to the Mega for some more provisions. But we hope we can see the mural before we have to return to the states.

Not another Church?

2011-11-04T16:51:00.000-07:00

If you've been to Mexico you have been to at least one church and probably one archeological site. Today we went to a town that is northeast of San Miguel. The one attraction in the town is a church that was built in the 1740s and illuminated by one artist (Miguel Antonio Martinez de Pocasangre). The priest who initiated the project was named Fr. Luis Felipe Neri de Alfaro. Who was a native of San Miguel. This is not the oldest church in the state of Guanajuato. (By a long shot) But among all the churches I have been in Mexico or even around the world, it is one of the most impressive.

The ceiling frescoes are dark but if you go through the church carefully you will find the major parts of Christ's life. For example there is a scene of Judas receiving the 30 pieces of silver and in the background of Judas after he hung himself. Like many churches in Mexico this one changed as the population changed. So it grew from the initial sanctuary to a series of side chapels. It has been named as one of the 100 most endangered monuments by the World Monuments Fund.

The church remains important as a religious location for a couple of reasons. First, it is the beginning of an annual pilgrimage from it to the city of San Miguel where a statute of the Lord is brought to the city. The tradition began when a wealthy merchant was ill and asked that the statue be brought to him to comfort him in his final hours and he recovered. Second, the church is the site of a series of pilgrimages from Catholics all over Mexico seeking repentance. Our guide said that as many as 7000 people come for these annual events.

For me the most beautiful part of the church was the most subtle. Evidently the entire church building was painted but the outside paintings have been mostly destroyed by sun and the elements. But as you walk into the main sanctuary you see a series of door panels which have been partially protected from the elements. These images are faded but even in their current condition you can see their absolute beauty.

Atotonilco is also a location that was important to the 1810 revolution. Miguel Hildago is supposed to have aroused some of the native people against the Spanish here - so there is a statute of him in front of the church.

Later in the day we went on to Dolores Hildago. This town has an important church in it. And if you want to see pictures of that church you will have to go to my Flckr site to see those shots. The original name of the town was Dolores, but in honor of Miguel Hildago the name was changed. (Not unlike San Miguel de Allende after another of the four leaders of the 1810 revolt.)

One of the highlights of our visit there was lunch. We stopped at a small cafe that specializes in Carnitas - which is basically fried pork. You buy lunch by the kilo and they bring you out fresh tortillas, condiments, onions, chills, salsa, pico de gallo and even possibly some soup. This place was called Vicente. If you have ever had what passes for Carnitas in the US, if you try this you will become a lot more picky.

Our guide today was named Mario- he had a good sense of humor. When we got into his car he told us solemnly "I was born in the last century." Good line.

Misunderstanding on Both Sides

2011-11-03T19:47:00.000-07:00

This evening we began our walkabout looking to an Italian restaurant that I found in my morning walk. We ended up across the street at a place called Cafe Iberico. The Maitre d' got us there because he promised the food was good. It was. It turned out that he learned his English in Houston where he spent several years but overstayed his visa. When he was discovered he spent another eight months in detention (which he described as worse than jail) and then was deported. He came back at about the same time as his grandfather was dying. He said he was fine with being back in the town where he was born but has a lot of family still in Houston. He was a good waiter. I am not a real fan of Paella and they evidently have chef who wins competitions for the dish in Spain. The Tapas were superb - we had a range of five dishes and are likely to go back there.

The other story was the wife of the owner. She is originally from North Carolina near Raleigh. Her husband would like to live in Spain and goes there frequently. She said business in the restaurant is down because Americans are staying away in droves. Business is way down. They are thinking of moving to Queretaro because business in San Miguel is so down. She worried that the American news casts have so driven a false impression of the country. So on both sides we have not achieved the kinds of conversations that neighbors should have.

Clearly, the US and Mexico would have benefitted from having Santiago in either place. And, like we found in Ireland after Drumcree, the problems facing venues that depend in part on tourists are huge if there is a perception about a problem.

The Fate of Heroes and more Surrealism

2011-11-03T13:53:00.000-07:00

One of the heroes of the Mexican Revolution of 1810 was Ignacio Allende. He was a native son of San Miguel and so is commemorated in many places in the city. He fought with Miguel Hildago but had differences with the father of the revolution about military tactics. Allende was a skilled soldier so Hildago should have listened to him. Ultimately, Allende was betrayed and then captured and executed. The Spaniards were aghast at the insurrection so they beheaded Hildago (and three other conspirators - Allende, Aldama and Jimmenez) and then put their heads on the corners of the Aldondiga in Guanajuato. One of our side trips while we are here will be to see Guanajuato and the Aldondiga. I first went there when Vicente Fox hosted a dinner there for a group of academics (while he was Governor of Guanajuato). Allende is memorialized in the statue in the picture. But evidently, like all these kinds of memorials the pigeons seem to care about the hero of the revolution than the citizens.

Another highlight of the morning was a visit to the town library. The library is supposed to be a unique community resource. One of the rooms is being restored with a vibrantly colored mural. We went in to see the muralist at work. Blaring from a boom box was Mozart's Requiem. The German painter said it gave him inspiration. Works for me.

San Miguel, Verdi and Gyms

2011-11-03T09:41:00.000-07:00

Yesterday we sought out a GYM for me. We had vague directions to where it is located and after a lot of false starts found the place which costs about $400 pesos for a month membership (or $200 per week). The place is a bit of a walk from our house and the facilities were just adequate so I decided that I would start out each day with a walk.

So this morning I went out with my iPod listening to a collection from EMI of Verdi performances that are supposed to be the best. They are mostly old time performances Tibbet, Caruso and the like. It was a wonderfully surrealistic experience to be traipsing down the cobblestone streets of this colonial city. The collection, by the way, for Verdi fans (at least) is pretty good. But it is especially good for here. I am not sure whether I would have had the same experience on a walk in Omaha.

Modern Wonders and Ritual

2011-11-02T21:49:00.000-07:00

Today Walt Mossberg, the dean of technology writers did a retrospective of technology over the two decades that he has covered the field. He named a number of innovations that have changed our lives. Among them, he reminded me that my first cellular phone (more than 20 years ago) cost about $3000 and was about the size of a hard bound book (remember them?).

But I was also struck today by five unrelated events we experienced in San Miguel. #1 - Video Conferencing with SKYPE - We had a video conference with a friend in San Francisco . We are working on a project and he had a lunch yesterday with my successor and we talked about possible next steps. One false start but for the most part the video was clear and the voice quality fine.

#2 - Speaking with our grandchildren and their parents. We had two FaceTime experiences today with our son and his family in Sacramento and our daughter and hers in LA. We got to give them a short tour of the house we are staying in as well using the opportunity to chat and see them.

#3 - A phone call - We had a friend call us while we were at dinner on my iPhone. That is a fairly expensive event (60¢ per minute) but we got to catch up and to see if he could come to visit during our stay.

#4 - iCloud - at Breakfast this morning I think I began to convince my wife that using the cloud for synching contacts and other things in life is a positive thing. She is attached to her paper address book - but it becomes outdated almost immediately as it is written. With iCloud - on her iPad and iPhone and home computer - all of her contacts are kept in constant synch. She said she still prefers the book - but I think began to appreciate the utility of getting those things all together where ever she is. iCloud is not perfect but for my money it is very, very good.

All of the first four were mostly not possible even five years ago. The phone certainly was but it was a) even more expensive, and b) the quality of the call was uncertain. But the last thing has been around for a lot longer time.

#5 - Watching the Observance of Dia de Los Muertos - This is the second day in what we call in the US - All Saints Day but is a much bigger event in Mexico - called Dia de Los Muertos. I've been in Mexico several times for this couple of days and I think even in San Miguel once. As in the American equivalent it is a time to remember members of your family (broadly defined). What struck me about this time was two things. First, there is an element of fiesta or celebration but there is also a solemn part of the events. This is a time in Mexico for families to reflect on members who have died. In the main church on the Jardin they open the crypt for both days (as I mentioned yesterday). But we also went to a smaller church off the square where there was a mass going on. So there is something to this that is more than a party. As we went into this more simple church we found a number of statues which I believe some Americans would find grotesque. But they are meant to remind people of the story of Christ. They are symbols but they are also tied up in ritual. As we came out of the second church an old couple going to the Centro stopped and prayed a moment in front of the church. This was not a big thing but it is also not infrequent. The elements of ritual in American life have often become less prominent or simply forgotten.

So how do numbers 1,2,3 and 4 fit with 5? From my perspective there is indeed some element of ritual associated with advances in technology - but the difference is that the rituals around Dia de Los Muertos are designed to get us to think about higher purposes.

Moving into the House

2011-11-01T21:06:00.000-07:00

This morning we left our Bed and Breakfast (called Casa Schuck) and moved about half a block up the street to our home for the month. Inside is a first rate art collection, four bedrooms and marvelous views of the city.

The B&B was the home of a couple who moved here from Connecticut. In 1966 they rebuilt a historic house and turned it into a ten room hotel. It is rated highly by Conde Naste. (deservedly) It has had numerous famous guests and seems to be a destination for weddings. The room we stayed in was comfortable. The interior courtyard was beautiful with lots of bougainvillea.

By the time we got down to the centro it was mid-afternoon. So we went to the large church in the Centro (San Miguel) - during two days in the year they open the crypt and so we went down to see it. Evidently the Emperor Maximilian commented that he thought the space was fit for a king. We had a small lunch and then got a cab to the Mega. We thought about going to the Tuesday market but decided it was simpler to go to the big store. We bought all the essentials - Tequila, Beer, Fresh Fruit, Yogurt, Cereal and Milk.

San Miguel has a ceiling style that I first noticed when I came here in 1999. The ceilings are intricate patterns of bricks.

We came back to the house for some guacamole and then sat around looking at the view, doing email and Q read for a while. About 7:30 we went back down to the Centro for dinner. I had a Chile Poblano which was prepared with shrimp and a sauce that was made of beets and raspberries. It was delicious. The square was filled with people celebrating Dia de Los Muertos including the couple above.

First Night In San Miguel

2011-10-31T20:41:00.000-07:00

We flew all day to get here and then after finding our B&B (where we will stay for the night) found the location of our house (which is about a block away) and then went out for dinner. We ended up at a place about a block away from the Centro which was fine. We sat next to a couple (a retired clinical psychologist and a painter) - we found out a lot about the city. They came here eight years ago for two weeks and bought a house before they left.

The picture is of the Cathedral on the Centro - which is decorated for Dia de los muertos. When I first started to come to Mexico - Halloween was unknown. But now before the two days of the celebration we call All Saints in the US - kids dress up in costume.

There is a large Expat community here - so there is even a US Counsel's office. We found out about a Gym and the location of two markets, a panaderia (essential for the morning), and a couple of restaurants. We also got the name of a guide who could take us to some of the sites near here that I would like to show my wife. I will try to post shots over the month with commentary here and will add some shots to my Flickr site. The first shot is from my iPhone (and it would have been better with one of my other cameras.

The SC-Stanford Game

2011-10-30T07:50:00.000-07:00

I must say I was conflicted a bit about the game last night. As a Trojan was I disappointed in the loss? Of course. But like Thursday's World Series game, it was an exciting match. (Coincidentally, in both games the Cardinal(s) won.) After the game Coach Kiffin expressed disappointment that SC was not granted a timeout with one second left on the clock. One could make the case but I thought Kiffin's beef was bad form.

Here are three thoughts on the game. #1 - SC played Stanford well - going to TRIPLE OVERTIME is no small feat. It was a memorable game, in spite of the loss.

#2 - For this season, the game really counted for Stanford (who remains undefeated) and not so much for SC because of the sanctions they are still living under. This game was the closest to post season play for the Trojans and they played exceptionally well.

#3 - The forced error in the final play where Stanford recovered a fumble in the end zone, decided the game. Curtis McNeal, SC's linebacker simply concluded "No excuses, I just fumbled." This rivalry has a history of close games (2007, 2010 are two examples)

Theatric Carnage

2011-10-29T08:01:00.000-07:00

The B Street Theater is a real community resource for the Sacramento area. It has two smallish stages and a good repertoire company. The season tickets a reasonably priced and for that price once or twice a season you find an unexpected delight.

The current piece in the large stage was a Tony award winning play. The Bee's review of the play was very positive "French playwright Yasmina Reza's special talent lies in exposing our coarse and, ironically, often poetic inner lives." For my taste, on this production, I regretted that there was not an intermission so I could have bolted for the door.

The play has four characters (two sets of parents) who meet to discuss a problem between their two sons. It starts pleasantly enough and then devolves into a series of screeching ensembles between the characters. The two males are a dealer in "fixtures" and a high powered lawyer. The wives are a writer and a wealth management advisor. Each has some eccentricities. The characters and the jokes are cliched.

I enjoy theater for a couple from a couple of premises. First, I look for one or more characters that I would like to find out more about - either in drama or comedy. Second, I want to hear some elegant turns of phrase - many authors have a superb way of presenting language with verve. I do not have to like the characters, but I would like them to be more than cardboard stand ups. What bothered me about this play is that once you get the premise, that is all there is. None of the characters develops in a surprising way. The dialogue is stylized at best.

Our normal night is earlier in the run of a play. The Mainstage fare is normally light comedy. There have been a couple of plays this season where I wanted to come back again simply because the theater was so compelling. One play last season took the Hitchcock movie The 39 Steps and made it into a farce. Although I know the movie well, the play kept me laughing the entire production. For this one, I pulled out my cellphone and did email. (Not unlike the jerk attorney in the play.)

Not Thurman - But Phone

2011-10-27T17:49:00.000-07:00

A few years ago I switched from Vonage to Comcast for our home phone line. You might wonder why anyone would want a home phone line - and I would reply that for things like security systems on your house it is always easier to have a home phone. (Notice I did not say land line because Vonage and Comcast and even a good bit of AT&T is done using Voice Over Internet Protocol or VOIP.)

I switched because Vonage service, at the time, was horrible. The router they gave me was klutzy. Their customer service was not English enabled. Comcast was better but expensive. (about $20 per month and their international rates are not great) But Comcast also did not do well in my house. I called their service a couple of times and they argued that my crackly voice problems were based on "herz interference" which meant that their router was picking up the frequencies on my cordless phone system.

Then I discovered a new device called an Ooma. I read the reviews - they are uniformly wonderful. I spoke to their customer service people - they are communicative. I found out that they included in the device a signal processor which improves voice quality. So I bought one (about $200). I also signed up for the Premium Service which costs $120 per year but allows you to port your existing number. When I called to register the device I spoke with an agent who said, you need to be near your device when we set it up - I said when can we do that and she said pick a time - I picked one eight hours hence and she said fine. At the appointed time, she called me, we went through the steps to set it up and in five minutes, I had my new phone system.

There are all sorts of options on the device like a bluetooth converted to allow you to use your bluetooth device on the network(so your cellular phone can be used at home); a WIFI converter which allows you to connect the device outside of an ethernet connection to your router. They also offer handsets for about $50 per unit.

What is more they offer a iPhone (or Android) APP which can allow you to be a part of the network anywhere in the world where you have WIFI. That reduces your expense when you are in a foreign country.

From my initial impressions - this is an intelligently designed device that has a lot of features but with one caution. VOIP systems work when your network does - so if your internet goes down so does your phone. In the early days of VOIP that was a problem. In the last couple of years with Comcast that has not been a problem and I do not expect it to be going forward.

Paranoia or Substance?

2011-10-23T18:52:00.000-07:00

A lot of people on the left have begun to argue that the key intent of the GOP at this point is to defeat Obama rather than advance the country out of its current mess. That is nonsense on a couple of levels.

First, while the ultimate objective for any political person is to replace their opponents, the GOP has not been without proposals that are alternatives to the President's plans. When the "Jobs" plan that the president advanced came up for a vote in the Senate a number of democrat members voted for the GOP alternative. But not all dems voted for the President's plan. That would suggest that his approach is not one which is popular.

Second, the President's record on two areas gives little support for the idea that he is trying to compromise on any issue - his speech proposing his most recent plan for improving the economy was not well received but he still said only "pass it now." Legislative process involves give and take but so far his approach has been more my way or the highway. If, as many conservatives believe, the President's proposals will continue to harm the economy, why should they support extensions of ideas that have thus far proven to be not helpful and even harmful to recovery. The first stimulus package did almost nothing to improve employment in the country and indeed actually made state and local government more dependent on federal funds. But the President presses on.

These guys are amateurs. Obama's total experience in DC and in Illinois is limited. His record as a legislator was to be a backbencher. So one would not expect that he is very skilled at working in a divided political environment. But does that mean the mean old GOP has as its first goal to defeat him? NO - the GOP in the House passed a budget proposal which the President has not countered to any serious degree. They passed a "jobs" proposal - while he has proposed something it looks more like campaign rhetoric than serious policy. A president has many jobs but as Bill Clinton recognized in 1994, one of his jobs when he has strong opposition in the Congress is to figure out a way to make policy not speeches.

Great Retirement Gifts

2011-10-22T21:56:00.000-07:00

On Wednesday night the organization that I have worked for - for a very long time gave me a retirement dinner. It was the fourth such event commemorating my work with this group. (Each one offered by a different but associated group.)

Over the course of these events I have received some interesting things. Two songs were written about me - one in English and one in Spanish. Someone made me an honorary Kentucky Colonel and gave me an engraved Louisville Slugger. I got a vintage SC jacket. But the most intriguing was offered from a friend at Stanford.

In 2007 USC was on a roll and played Stanford. The Cardinal's regular QB was out so a second stringer came in. SC was favored by a lot. SC had a good year - beating Notre Dame by 38-0 and UCLA by 24-7. They went on to win the Rose Bowl against Wisconsin by 49-17. But they lost to Stanford 24-23. And that back up QB scored the winning TD with less than a minute to go.

A friend from Stanford got that QB to autograph a game ball with the score on it. Some gifts you appreciate - others you treasure.

Familia (extensa)

2011-10-16T22:16:00.000-07:00

On Saturday we went to the birthday party of two nephews of an old friend from Mexico. She has a niece that she is very close to with the same name and the niece and her husband are living in the LA area while he works on a project. They held a birthday party for the two kids (which coincidentally was also the couple's anniversary). Also present was the dad of the niece and the mother of my friend (not pictured).

The kids are three and five and fans of Mario Brothers - and so the party was themed about those characters - everyone in the family dressed the part.

I am always struck by the graciousness of these events. Everyone was made to feel welcome. And the real focus was on the kids (who are 3 and 5). Of course, there was lots of food and the kids seemed to have a great time. So did we.

My friend and I met when she worked at a university in Mexico City. But she has always been a good friend. Her mom is also a kick and it was good to see her again.

2 Million Miles

2011-10-16T22:10:00.000-07:00

On Saturday we took our first trip through the new part of the Sacramento airport. At the beginning of the week, on a trip to New York, I went through the United terminal which is now in Terminal A. But on the weekend was our first try through the new space. The photo is of the old Terminal B - which will be torn down soon. For most of my career this was the key terminal that I flew out of on United flights - at this point I have more than 2 million miles with United - so this was a place that I spent a lot of time - often arriving before 5 AM and coming in after 10 PM.

I am not nostalgic about it - an airport terminal is an airport terminal. But it certainly marks a change.

999 - too simple??

2011-10-14T13:57:00.000-07:00

In the last few weeks GOP candidate Herman Cain has generated a lot of attention to his plan for reforming the tax system. It would eliminate the current income and corporate tax systems in favor of a greatly simplified system which assessed personal and corporate income taxes on the basis of 9% and would simultaneously create a new tax on consumption of 9%. A couple of caveats to the plan. First, the income tax for individuals exempts investment income. Second, the new income tax would be greatly simplified. All income (except investment income) taxed at 9%. Cain is not clear as to whether there would be a zero bracket amount (a level of income which is not taxed to help protect equity in the system).

The left has begun to go ballistic on the plan. They claim that because of the way the corporate tax is implemented that the poor will have an effective rate of 27% (they will pay on all three). Interesting that I have never heard of the left arguing that all corporate taxes get shifted forward to the consumer. They also claim that the tax would only raise about 14% of GDP (when the historic rate of tax revenue is about four points higher). Not sure how they can be confident of those numbers.

But as a conservative I also have some concerns about the proposed plan. First, the record of adding one tax to substitute for another is not very promising. The new consumption tax (and actually the income tax would function a bit like a consumption tax) would be added to the state levies so many consumers might end of paying up to 20% for purchases. It is not clear from the plan whether services would be included in the plan. That might well reduce the costs of compliance for taxes but the combined rate would put a significant damper on consumer expenditures. My best guess, based on the make-up of the Congress (present or future) is that the consumption tax would have some exemptions to improve equity - so the rate might be pushed up to 10-12%. Second, while the income tax looks an awful lot like a consumption tax, my suspicion is that at least a couple of the current parts of the tax code would survive. High on my list would be some recognition of the charitable impulse (either as a deduction or a credit). The realtors and construction industry would push for the mortgage interest deduction (which does not make a lot of economic sense but has a lot of political force around it).

So two questions - how do you play this against the President's Buffett rule? And, what should be the alternative? The President is clearly trying to suggest that his alternative, to raise rates, is the best alternative. Anyone with half a brain can figure out that the tax code is as popular as a skunk at a picnic. So the best response for any other GOP candidate is to recognize that Cain's simplification of the tax system is a good first step. As to the alternative, we need to begin to think about the outlines of the 1986 Tax Act - broaden the base and lower the rates. In this year, where big government and big corporations are unpopular from all fronts that would seem like a winner.

The Buffett Rule - What about Averages

2011-10-13T16:03:00.000-07:00

There are figures and then there are figures. The President has been trying to make a case that the richest Americans pay less than the average joe. Based on the data of averages by decile the American tax system, even when you include payroll taxes is progressive. Rich people actually do pay more as a percentage of income than poor people do. There are all sorts of charts that prove that. But recently, among some of the writers on the left a new argument has emerged. Indeed, these people say that the variability of tax rates among the highest income taxpayers is higher than for people in lower brackets. (That is undoubtedly true because of the sources of income.) AND, these same people argue that some middle income taxpayers may actually pay more than some very high income taxpayers. (That may also be true.)

But there are some serious caveats to the analysis. First, averages are exactly what they are purported to be - averages. And so there is some variation. Second, part of the variation on tax rates, especially for the middle income taxpayers may be as a result of the alternative minimum tax (AMT) which affects people in the upper reaches of middle income hood or in the lower reaches of upper income hood. For those taxpayers so affected their average rates rise. A major difference between the two groups is the involuntary nature of the AMT. Buffett argues that people in his lofty place on the income totem use the preferences for capital which can lower effective rates. That is discretionary, the AMT is mostly not.

A final comment should be added about Buffett's fairy tale. It is almost impossible to get to the percentages that Buffett claims for his employees. Effective rates of 33-41% do not occur for people who are firmly in the middle class. Either his co-workers were in a strange tax year (possible) or Buffett was merely creating the data (probable).

Ultimately, the best tax system is one which intrudes little in the lives of citizens - that would mean lower rates and a broader base. But then that is not the point that the President or his tax raiser lapdog is trying to make.

Thousands Standing Around but always on your Nickel

2011-10-12T22:56:00.001-07:00

This evening I came back from a trip to New York at about 8:30 PM. As I walked out of terminal A I noticed that there were no less than 10 Transportation Security Administration blue shirts standing around. That seemed odd. I checked the departure monitors and indeed there are several flights that depart after 9 PM - unfortunately all of them leave from the new terminal.

I sure am glad that the boobs who run the TSA understand that it is an efficient way to run our airport security by having a group of employees cover the entrances well after the last flight is scheduled to depart. Just who are they checking? The TSA was a vast over-reach during the Bush Administration which cost us a lot more than it is worth.

Pundit Footnote(s) times three

2011-10-07T21:42:00.001-07:00

In my last post I suggested that the almost universal pan that the "techno-pundits" offered might have been a bit off. IN the first 12 hours for pre-ordering the 4S phone - they had more than 200,000. That is a record. Evidently the consumer saw something the pundits did not. No figures yet on the uptick for the now free 3G phone purchases.

One more comment - based on the response on Friday - the delay for late orders is 1-2 weeks. The 16 seems to be selling best.

One more comment on Monday - the first 24 hours saw orders for 1 million phones - again a new record. Looks like 3 million units for the weekend.

Financial and Tech Pundits Always Get IT Wrong

2011-10-06T15:48:00.000-07:00

As stories about the succession at Apple have begun to build we have gotten a new line of discussion by "experts" who argue that Tim Cook is not Steve Jobs. Well, duh. At Tuesday's event he did not try to become Jobs. (Although they both wear black shirts.)

One pundit on CNBC this morning droned on about the "pipeline" which would sustain Apple for a while and another yammered that the pipeline was short. Most viewers of the announcement event earlier in the week where the 4S phone was announced panned it.

Let me explain why I would not be so quick to judge. Apple did a couple of major things this week. First, they did not announce a radical restructuring of the iPhone - although there are some very nice upgrades. Second, they did some interesting strategic repricing. Get a phone with monster memory for a smartphone and it costs you $400. But get a phone two generations out with 8 GIGs of memory for free. That sounds to me like the company gets where the market is moving. And all of the current product line gets the upgrade of the operating system.

More importantly are the two products which I believe will be game changers. First is reminders and Siri. I have used the standalone SIRI app since it came out. With the new features I think this will make my phone even more indispensable. It is rarely away from me and now that will be even less. Second, the camera - it looks like a major upgrade to the capabilities both in terms of resolution and other features. Ditto for the stickiness of those changes.

Obviously, Tim Cook has his own style. And we surely did not hear the "one thing more" riff that you expected from Steve Jobs' performances. But what Tim Cook did was present, in my mind, a very credible case that Apple will continue to lead on portable devices. When the first iPhone was about to come out some numbskull marketing expert from Wharton said the phone was "too expensive" and that it would never sell. Let's wait and see how the first couple of days of pent up demand works out. I will buy one tomorrow morning because those features and the extra memory seem well worth the price.

Steve Jobs

2011-10-05T22:09:00.000-07:00

The co-founder of Macintosh died this afternoon. I was an original MacEvangelista. When I finally met Guy Kawasaki last year, I asked him why I was one of the originals in the group - and he could not offer a good answer.

During my career I have developed the reputation as a constant Mac Supporter. For the last decade or so I have probably bought most of the new versions of the newest Apple product. Every iPhone - sure - on the first day. Every iPad - yes - all three versions (WIFI and 3g and iPad 2).

Keeping to my tradition, when the new CEO of Apple did his presentation on the iPhone I watched the presentation on the new IOS.

What has disappointed me about this important event in humanity has been the mundane nature of the coverage. Two posts on Facebook caught my eye. My Daughter In Law copied an Ad from Apple that said - Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do. My son, quoting another post simply said iSad.

But as I thought about what was most important to me about this major figure in American enterprise, was a You Tube Video that I have on my iPhone. It is Steve Jobs commencement address at Stanford in 2005. Jobs was the modern embodiment of the "bull headed brewer" that Smith celebrated in the Wealth of Nations.

In my opinion Jobs was a contradiction in progress. He supported those in the political culture that would destroy the very qualities that he celebrated in his 2005 address. He had a clear idea of what would come next which he could not be persuaded to modify. For the contributions of new technologies and his unwillingness to compromise, we should thank him.

Too smart by a half but with our money...

2011-10-03T18:39:00.000-07:00

As the Solyndra scandal continues to unfold the democrats on the appropriate House committee released a series of emails that purport to show there was no "payoff" and there was dissent within the White House and Obama supporters who were advising the White House.

What is revealing in the emails is their arrogance. Larry Summers started an exchange between him and Brad Jones of Redpoint Ventures.

Summers (this is the same arrogant SOB who lasted a short time as president of Harvard who declared himself to be "The Paul Revere of the Global Economy") said in December 2009, that he was “interested in left coast perspectives on economy markets and econ policy and especially advice.”

Jones replied: “The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much. . . . One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”

Summers responded: “I relate well to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly. ” (Emphasis added)

So one of the President's chief academic advisors realizes that the government is lousy at making capital allocation decisions and one of the Administration's chief financial advisors agrees and they still made the "investment" of more than half a billion dollars of taxpayer money.

I don't care if there was a payoff - this is like the rest of the President's "shovel ready" investments - Ron Johnson's comment comes back again - My neighbor's dog has created more shovel ready projects than Barrack Obama.

The United Airlines APP

2011-10-01T18:23:00.000-07:00

Last night as I was returning from some meeting in Louisville I found a reference to the United Airlines iPhone APP. I downloaded it. In one place you can do all the things you might want to do with an airline - from finding a flight, to getting boarding passes, to checking upgrades, to finding out about miles and it even has a Sudoku game on it.

The application is simple and useful. It should be a big hit. And compared to the hassle that one has to go through on other airlines in accessing all these services - it could be an advantage for the company I have now flown 2 million miles with. Well done, United!

Tech Thoughts Before IOS5

2011-10-01T17:56:00.000-07:00

I am a fan of Apple so when I saw a stock analyst suggest that both Apple and Amazon would crash (he suggests that Apple would drop to $100) I read it with interest. His suggestion is that a lot of Apple's business is in Europe and that is a basket case and therefore even though 10% of the company is in cash - a significant decline is coming. He also makes the claim that Apple and Amazon will beat each other's brains in on content.

He makes the case the Amazon will have problems because they are expected to lose money on their new Kindle Fire. But he also argues that with the imposition of sales tax across the country that its narrow margin of less than 3% will disappear.

The post was intriguing but the premises are wrong. A lot of the future of both companies depends on the market they are serving. The picture at the left is a graph offered recently by Jeff Bezos comparing E-book sales to traditional sales. Note that the sales figures converged about a year ago. I have not bought a hard bound book for more than five years. Sure, Amazon will have to deal with sales taxes. But their business seems to be well positioned to meet coming demands regardless of that change. Book buyers are not going to go back to Borders and all of Amazon's other content providers are racing to get the marketing model that Amazon has pretty well down. For me Amazon is one of the first places I look when I want to buy something.

Now to Apple. There is a lot of chatter about the declining percentage market share that Apple will have with the Tablet market- while true all of the unbiased projections suggest that Apple will continue to be the dominant maker of tablet devices for several years - in a market that is evolving. A lot of their future depends on the success of iCloud and of IOS5 but based on the last couple of revisions of Mobile Me and the earlier IOS versions - they will appeal to a large installed base. We will see in the release of the new IOS and phone but both seem to be offering some real improvements.

Now to the coming war between Apple and Amazon. Both offer content in terms of music, video and books. (Indeed, I use both for different types of content.) Both offer a Cloud service, although the Amazon cloud looks a bit clunky for what you get. Both offer hardware - although Amazon seems to be using the Gillette model of marketing (give away the razor and sell the blades). My impression however is that while they offer similar product lines their direct competition is not yet destructive. Indeed, what their competition may be producing is a higher buy in for those companies that want to disrupt the marketplace.

This is a fascinating time for technology. Increasingly everything from airline boarding passes to music and books to restaurant reservations are going to the net. That iPhone is more useful than when version one came out. (I spoke with one young associate who said he no longer uses a camera because his iPhone does everything he wants in a camera). Both companies have a lot of stickiness - things that get me to come back again and again. From my perspective that looks like a pretty bright future.

More on Buffett's BS

2011-10-01T09:43:00.000-07:00

Nick Kasprak at the Tax Foundation has constructed a superb calculator to estimate maximum tax liability based on income and Social Security taxes. He even includes the employer side of employment taxes. It shows Buffett's claims to be totally bogus. But then we already knew that.

The Calculator can be found by clicking on the word CALCULATOR.

If Mr. Buffett really feels he is under taxed he could always choose to send a voluntary payment to the feds. A lot of his income, as others have shown, comes from special preferences in the tax code including capital gains and before it was reduced helping families to avoid the disastrous effects of estate taxes - but then he did not bother to explain how his taxes are well below what most people in his income bracket pay. Why ruin a good yarn?

In an interview for Bloomberg Buffett argued that raising rates is better than simplifying the tax code.
It is odd that he would not consider the alternative of simplification.

Tom Seaver

2011-09-26T22:40:00.000-07:00

This afternoon I had the opportunity to go to an informational reception for the Baseball Hall of Fame. Hall of Famer Tom Seaver spent about an hour talking about his career and answering questions.

First to Cooperstown. We were there in 2008. We happened to be there on Induction Weekend and had the chance to see and talk with a couple of great ball players. It is a bit hard to get to but well worth the trip. Interesting exhibits and a town with a lot of other attractions.

Seaver was a Trojan when Rod Dedeaux coached the team. He was on the 1969 Mets team and had a .286 lifetime ERA. He was funny and had a lot of good stories.

But when they got to questions he was asked whether the following four players should be elected into the Hall of Fame: Gill Hodges, Pete Rose, Barry Bonds and Roger Maris. Seaver commented that Hodges, based on his playing and coaching career, deserved to be there. Hodges started as a catcher but then was moved to first because Campy became the key Dodger catcher. He managed the Mets in 1969. From his perspective Rose, because he bet on baseball, should never be in the Hall of Fame - the fact that Rose claimed he never bet against his own team is irrelevant. He also said Bonds should not be there based on his use of steroids. He made an interesting point in suggesting that it was fine to steal signals but the use of chemicals was inappropriate. Finally, he said Maris did not deserve to be there, in spite of his 61 home run - he had a lifetime batting average of .260 and only 1325 hits (275 home runs). That sounds about right to me.

A question raised by an NPR Segment - is Compromise the Lubricant of Democracy?

2011-09-25T13:28:00.000-07:00

This morning NPR had a segment with Bob Bennett and Byron Dorgan - Dorgan retired from the US Senate after a long and distinguished career but at least with the partial recognition (which NPR appropriately failed to mention) that it was unlikely he could win another term. Bennett was defeated for re-election in Utah because the participants in the caucus system thought he was not GOP enough. In the piece it was described that some people thought he was thrown out because he dared to consider compromise on the healthcare bill. That is a gross over-simplification of what actually happened.

The NPR piece tried to paint the picture that the Senate was changing and that it was harder to get compromise because it was less possible to reach across party lines. Anyone who watches the process understands that to be true. Bennett - commented the that "Compromise is the lubricant of democracy" The more I thought about that the more concerned I grew.

Bennett argued that he and (former) Senator Chris Dodd (of the special deals for mortgages fame) forged the TARP agreement when the financial markets had precipitously declined by a trillion dollars. I agree that Bennett and Dodd helped to formulate the TARP. The financial markets were in fundamental disarray(in part because of policies developed in Congress) and it is unclear whether adoption of TARP aided or slowed the process of recovery. Conventional Washington wisdom of both the problem and possible solutions may or may not have been clear enough or sufficiently broad enough to serve the needs of the nation.

Bennett lost because he had lost touch with his constituents. He (like Dorgan) settled not back in his home state but it DC. So while I believe democrats and republicans should learn how to speak to each other more effectively - I am also convinced that spending a long career in DC may dull one's sense about the range and breadth of alternatives to solve our nation's challenges.

The President's Speech

2011-09-20T22:07:00.000-07:00

Yesterday's speech seemed to have been more for the 2012 electoral cycle than for making substantive policy. The deficit "reduction(s)" proposed by the President are things that not even some democrats would support. I am sure that the White House has decided that the best way to win re-election is to try to demonize the GOP as all "Tea-Partiers" - and if you read polls on Congress - it gets single digit in positives. But the folly of that is the trend line on independents. The President has begun to lose independents in big numbers.

Even worse than the politics was the substance. The AP put out a fact check on the President's speech on the Buffett provision and found it to be seriously lacking.

If that is Mr. Obama's definition of "leadership" then he deserves to be a one term president. I guess the comparison to Jimmy Carter (who was arguably the worst president of the 20th century) is a bit mild.

Pundits verus Public Shills

2011-09-19T14:43:00.000-07:00

When Warren Buffett first started to make his claims about who pays taxes in the US I did a post which questioned whether the numbers he was using were in any way correct. Mark Perry, an economist in DC, published the following table on his blog Carpe Diem which brings into questions Mr. Buffett's claims by using IRS data.

Buffett recently made a deal with Bank of America to create some special stock for his investment which will have an effective tax rate of 10.5% - so clearly his expertise has been in manipulating the tax system. A lot of the success that Buffett's company has made over the time that I was a shareholder (I sold my A stock when it went to $123,000 per share) has been based on tax strategies which avoid the punitive taxation of estates before the 2001 Tax Act.

One other comment here. According to calculations from IRS data if you established a tax rate of 100% (Take all their income) for people earning over $1 million you would yield only about half of the current deficit.

I have one other chart which tracks BRKA for the last couple of months as Buffett has made these claims.

Perhaps Buffett is a better investor than public pundit.

The End of the Season

2011-09-17T07:57:00.000-07:00

Last night's final game in the PCL Championships summed up a lot about the Rivercats season. Here are the ways:

1) Errors - Two errors were very costly. The Cats were very error prone this season. I have not seen a total but I bet we were near the top.
2) Hitting - Last night we got 10 hits but we also left 10 men on base. We were below the middle of the pack on hitting. (with a .283 average) The first five in the league were in quirky ballparks but then came Round Rock and Omaha. That extra .006 showed in each of the games with Omaha. We were second in home runs but an awful lot of those were single HRs.
3) Pitching - We had either the best or one of the best pitching staffs in the league but in the playoffs our best guys were not able to hold on. Omaha (for the season) actually generated only a slightly higher ERA and fewer hits. We were about average in runs scored against us (in the 690 range). We were at the top with strikeouts. But in five game series like the championships all that season stuff makes little difference. We were the least generous on WHIP (walks plus hits per inning pitched - at 1.39).
4) Home and Away - Our season record on home and away games was remarkable. We were 10 games over at home but 22 over .500 on the road. Yet in the playoffs we lost all five games on the road.
5) Attendance was slightly down this season at just over 600,000 but compared to the early years, it was way down. Still we were second, behind Round Rock.
We ended up Pacific Conference Champs (and for the tenth time in eleven years the Southern Division Champs). 2009 is the only other year where we won the Conference but lost the PCL.

More on the Season

2011-09-15T07:25:00.000-07:00

The Cats won a superb game on Sunday against the Reno Aces and went off to Omaha for the PCL series against the Atlantic Division title holders - the Omaha Stormchasers. As I commented in an earlier post - Omaha swept us in the only series we played against them this season. This is a five game playoff so every game counts. In the first game we kept it close in score until Omaha picked up a run in the seventh. But they outhit us 9-3. Godfrey had one strikeout to Mendoza's 8 but the score looked close.

Last night we came out booming with three runs in the first with a Cardenas home run. They added 1 each in the first and second and then 5 in the third. And that was about it. We added 1 more run in the sixth - but they added 2 in the sixth and 3 each in the seventh and eighth. They collected 18 hits to our 9.

What that means is we come back to Raley field needing to do what we did last weekend with Reno - win every game. Total attendance for both games was a bit over 8000 - I guess it is time to break out the thundersticks.

The Cats Come Back

2011-09-12T06:57:00.000-07:00

Coming into today's final game there were a lot of things to worry about. The Rivercats record on 5th game playoffs was not stunning. We looked very good in Saturday night's game but wondered whether the team could sustain the energy on this third game at home. Our home record during the regular season was much worse than our away - and yet we had dropped both games to Reno on their home turf. But after the Aces scored first in the second with 2 - we began to build with 5 in the third, 2 in the fourth, 3 in the sixth and 3 in the seventh. Lenny DiNardo gave seven strong innings of pitching with 3 hits, 4 strikeouts and 1 walk. We had good hitting performance through the middle of the lineup with Josh Donaldson picking up 4 of the 12.

Tuesday they start with the Omaha Stormchasers, who had the worst divisional record in the PCL with 79 wins. But in the four games they played the Cats they swept us.

(Note - iPhone Video)
This season, as I mentioned in an earlier post, this team has heart. When they come to play, as they did in the last three games against Reno, they win.

How do you spend a day of Remembrance?

2011-09-11T21:52:00.000-07:00

Sacramento held a 5K walk and run today to commemorate the 10th Anniversary of 9/11. It got about 3000 participants. At the end of the race finishers were given a small flag to affix to the name of one of the victims of that 9/11. It was solemn without being maudlin. I thought most of the coverage on NPR today was not at all helpful. It ranged between a series of replays of that terrible day with some interviews of relatives of people who perished. But I also saw clips of the Fox and CNN coverage and it was no better. Not sure how many times I heard the phrase - it seems like just yesterday - but it was a lot. What got me about the Run/Walk was that it brought a group of locals together for something that was both meaningful and helpful to the community (funds from the race went to first responders).

It was a beautiful day - slightly cool in the morning and quite comfortable most of the day with a nice breeze. The course was fun - winding through old Sacramento and then down to Miller Park. After the race Capitol Mall was set up with food booths (the best by far was Burgess Brothers Burgers) and a series of information setups on things like fire safety.

Policy Folly without a Clue

2011-09-11T21:45:00.000-07:00

The Bee had an article this morning which was remarkable, if for nothing else than its disconnectedness. The opening paragraph stated "Their homes are gone, their credit is shot and their rent is often more expensive than a mortgage payment." It then went on to suggest that the downturn caused by the mortgage meltdown weighed more heavily on African Americans and Hispanics. The article argued that many lower income borrowers were "forced" into the higher risk loans because that was all they could afford.

What was absurd about the article is that the writers did not seem to have a clue that public policy designed to assist actually worsened the problem. The Community Reinvestment Act; the demands of members like Barney Frank for more lending to low income communities and the pressure on Fannie and Freddie to increase their leverage - all contributed to the loan bubble that put these borrowers even more behind the eight ball.

Reflections on 9/11 Ten Years After

2011-09-10T09:52:00.000-07:00

I was in Mexico City on 9/11 and teaching at Anáhuac Mexico Sur, which I had done for several years. I taught a short course (two weeks) on Technology and Globalization. The University offered adjuncts a house in Coyoacan. Each morning I would go out to run in the park where the bullfighters ran. The park has a dirt track and each morning young and old trek around the space which is probably a half mile in circumference.

I came back to the house to get ready to go to the University and saw the housekeeper looking at TV intently. One of the normal routines at the time was to watch a newscaster who wore a clown's nose and funny hair and basically made fun of the news. (John Daily with funny hair and in Spanish) But this was clearly different. I walked into the room and saw an image of plane #2 going into the second tower. We had a limited discussion because both of us were simply agape. Then the pictures of the Pentagon began to appear and I kept asking is this real or a simulation? The pictures of plane #2 and then the Pentagon kept repeating with cutaways to grim faced newscasters blathering the same banalities they had said a few minutes ago.

I arrived at the University by about 10 AM and found it in a high state of activity. The media center was downloading tons of video. Classes were cancelled. Within about an hour, the university had organized a mass. My good friend the rector gave a homily that I will never forget; both for its brevity but also its clarity. The substance of it was that a) this was real - not some video game and b) that the world does indeed have evil in it. The motto of the university is "vanquish evil with good."

I am not sure what I did the rest of the day. I think I had lunch and then returned to campus but I may have stayed on campus. I know I kept busy. I called my family and had a short but good talk with my daughter who was a bit more than a year out of college. But by about 8 PM we left campus for dinner at a small pasta restaurant. The place had about 20 tables and two TVs. It was mostly empty. The news on both TVs was repeating the images we had seen all day with the newscasters repeated the same tired phrases. After about 20 minutes of seeing the same thing repeat (which I had seen several hundred times before) one waiter walked over and turned off both TVs. There were only about four tables occupied but all of us cheered for that act.

In 1997, I had noticed the same thing about TV news while coming back from living in Oaxaca. I was in the Red Carpet room waiting for a flight with my daughter and her friend and CNN kept repeating the same tired phrases about the death of Princess Diana. Newscasters had the same game face on and also the same repeated images.

On the weekend, I went with a friend (who was then a young dean but is now a Rector of a University) to Veracruz for Mexican Independence Day. We went out to dinner heard the President's traditional Grito. We then went to a disco (boy do I love discos- NOT) and stayed until five in the morning. As we got back into the car we realized that we did not know the way back to the hotel. My friend said we'll simply ask someone to give us directions. Three guys were on the street - one with a bottle of Johnny Walker Red stuck in his belt. My friend asked them directions and they said they would take us back to the hotel. If you asked three strangers to do that in Mexico City you would be in big trouble but in a small town like Xalapa it was not a problem. My suspicion is that our three new buddies probably did not have 100 pesos among them.

We got back to the hotel and one of the three guys looked at me and asked if I was an American. When I replied in the affirmative - he said the tragedy that happened on 9/11 did not happen to you. I must have looked a bit quizzical or angry but he then followed up with - "not to you but the whole world. " I began to realize the dimensions of the events on 9/11. We then sat down at the taco stand in front of the hotel and had tacos and talked about life - with my limited Spanish. Although it was offered several times, I never did take a plug out of the Johnny Walker.

At the end of my course I flew back to California. I had called United and they said I needed to be at the airport 3 hours before my flight. I dutifully arrived at the airport at 3:30 AM. The ticket counter was not open and the only people in the airport were an elderly couple that was going to visit their son in LA. We waited around until about 5:45 and then the United people showed up. I guess the United people on the phone had not been informed of the new policy.