FROM A WALL STREET JOURNAL ARTICLE on the falloff in auto sales this quarter:
Despite the slide in total sales, GM boosted its first-quarter North American production target to 1.32 million vehicles from 1.3 million. The company said it still aims to build on momentum created by interest-free financing and other incentives. In last year's first quarter, GM produced 1.21 million vehicles.
Okay, I'm just a lowly MBA, but what momentum? Like Napster, all GM has succeeded in proving is that people like getting things for free. Which is a truism, not a business model.
Matt Welch has a great list of where to find common ground with the protesters he calls "noodle-muppets". And I agree with all of his points except being in favor of regulation My problem with the protesters isn't that I'm in favor of high tariffs and corporate welfare; it's that their notion of how to change this is toddlerish at best: I don't know how to make it work, but I want it to work, so I'll throw a tantrum until Daddy fixes it! But he is right that we should try to explain why free market solutions work better, so I'll look to put up some simple posts on trade issues over the next few weeks -- even though I'm quite sure that the protesters won't read them. That way, I'm not whining and handing out simplistic solutions (get a job, being the one that comes first to mind); I'm proposing solutions and mounting an education campaign in my own, small fashion.
MommaBear sends word that Sgt. Stryker's site got hacked. Just a reminder to everyone to make backup copies of their work early and often, which is what I'm doing right now. . .
Okay, the news channels here are reporting that the much feared protests didn't happen because it was raining. Now when I was their age. . . we may have been dilettantes, but we didn't get stopped by a fine drizzle.
I read this NY Times article on Ground Zero and steam started coming from my ears as the editors blithely dismissed property rights and the rule of law as if they were no more than historical artifacts of little importance, like square dancing or the beefeaters at the Tower of London. But then I began to imagine what an editorial would look like advocating the same treatment of the New York Times as the Times is advocating for Silverstein. And I began to smile.
The news that the publisher Punch Salzberger is gearing up for a redesign of the New York Times should be a warning bell for all New Yorkers concerned with the intellectual development of our city. The public's views need to be officially heard, and planners should begin working with all deliberate speed. Otherwise the city is not going to get what it really deserves — a magnificently reported and masterfully* coordinated Paper of Record that includes all the vibrant cultures that make up our city.
Mr. Salzberger, who inherited the enormous journalistic apparatus despite his lack of experience, apparently feels that he and his editors will be the leading voices in deciding how it should be run. Technically, as he owns the paper, he has a legal right to decide what should be put on its pages. But whatever he decides to do there will have a big impact on the entire intellectual community. While Mr. Salzberger promises "all the news that's fit to print", his ultimate goal should be a newspaper that fits into a spectacular new plan for truthful and timeley news coverage in the City.
The New York City Committee for Fairness and Accuracy in Media is in the process of setting up advisory committees on what to do with the paper. These panels should immediately begin providing forums for the many passionate voices concerned about the paper's future. Rudy Giuliani, the Committee chairman, is going to have to figure out how to give these many views their rightful due, while still coming up with an inspiring and unified proposal for the news coverage and editorial pages.
The sudden appearance of an array of conservative politicians on the advisory panels is worrisome. Too many political egos could produce a collective mush that pleases no one: our watchword should be "Remember Time Magazine". Actually, that's three watchwords. But certainly good ones to have, if you're going to have more than one. As I was saying. Great reporting requires a great editor and a great publisher. When the public is the client, it is too easy to wind up with little more than a tabloid. Mr. Giuliani's committee has the difficult task of making certain these public figures are heard but that the final plan is also a model of innovative reporting and scrupulous attention to facts.
While the committees are thinking, the readers that valiantly stayed with the paper after Mr. Salzberger's ascendance are still having to cope with the problems that come from selective reporting of facts and slanted, editorial style news columns. Unlike the editorial page, which few take seriously, these sections of the paper must be replaced right away. The Committeee should step in quickly to determine whether to restore the old center-left slant or institute a bipartisan editorial board that will ensure that labelling of people, groups or positions is distributed evenly, and both sides are heard. The Committee must find out how much it would cost to institute an objective regime at the paper, and whether it is necessary, considering the counterweight provided by the New York Post and Wall Street Journal. We should view this as a grand opportunity to provide New Yorkers with the full spectrum of ideas available in the marketplace, and determine where the New York Times will fit in this scheme. There are now numerous media proposals drifting around the city, some temporary and modest, others elaborate ones that advocates have been dreaming about for years.
Somewhere in the middle is a solid plan from the non-partisan Weblog Community that makes it possible to restore the area's news coverage in stages. Smarter Times has already begun its critique of the editorial pages, with a full-blown alternative to the Times expected within the year. Later the bloggers could construct a virtual neural network stretching leftward from the Libertarian Samizdata and Front Page Magazine across InstaPundit to a Chomsky conspiracy theoristt somewhere to the left of Tom Tomorrow. This plan would try to replace the tangle of muddled ideas and steep slant to the left with a more workable policy hub somewhere around Ken Layne. The motto, of course, will be "We've fact checked your ass!"
Mr. Giuliani's group needs to juggle many tasks at the same time — the editorial staff must be reamed out and fired, new reporters must be found, Mr. Salzberger must be brought into the fuller picture and the public must be allowed to have its say before it is too late. The outcome should be a living monument to the vibrancy of the city, a whole media plan far more powerful than the sum of its many parts.
*Ed. note: I tried to keep it as close as possible to the original. But my inner editor will not allow "Masterly" to stand in for "Masterfully". From what clown college is the Times now recruiting copyeditors who don't know an adjective from an adverb?
Tee-hee! Midwest Conservative Journal brings us the news that those wily Rhodesians have unseated the Elders of Zion for control of the World Media. He doesn't indicate whether the Zionists still have control of the world's banks, but I suspect that we may soon hear some news from the crafty and shrewd people of Paraguay on that front.
Incidentally, thanks a million to my contributors, whoever you are. I now estimate that I am being paid for this blog at almost a tenth of the hourly rate of those Bangladeshi garment workers the Planet Protest yobs are here to scream about. Which is only fair, since I can't sew.
On a totally unrelated note, most of my archives seem to have disappeared from the archive box, although they're still on the server. Does anyone know what will happen if I hit the "Republish All" button in the Archive section of Blogger Pro?
Which reminds me that if you haven't signed up for Blogger Pro, you should if you can possibly afford to. If you want to help establish new paradigms for the Information Society, you're going to have to do the right thing on the money side. Otherwise we'll all have to go back to using vast networks of high-speed carrier pigeons, and the pigeons will probably be unionized federal workers, and then where will we be? Also, if you sign up now, you get a discount. $35 dollars is less than the cost of dinner and a movie for two at the local mall. And you don't have to eat Olive Garden Linguini Nondescripta.
And don't forget to buy someone's Blogger Ad for President's Day. It's the gift that keeps on giving.
Exhortations are over. We will now return to our regularly scheduled deprogramming.
This Time, Anyone Looking For Trouble's Gonna Find it
Excuse the martial tone of recent posts, but I can't resist Rod Dreher's warning to the globalization protesters. The piece is titled "In No Mood" and that about sums up how most New Yorkers feel. We are all now too familiar with the devastation wreaked by people who think that a cause they believe in is a license to indiscriminately smash anything in their path, to have any sympathy for whitebread college students whose most challenging life experience so far has been hosteling through Europe.
Lest you think that I am being reflexively unkind to the little darlings, intolerant because I don't understand how sensitive and caring they are, let me say that I understand exactly how their delicate little psyches work because I was one of them. Yes, while most of my fellow Libertarian bloggers were honing their computer programming skills or reading Hayek, I was out with the Philadelphia ACT/UP chapter, staging die-ins to force George Bush to cure AIDS. Let me tell you something about those committed idealists: it took them all morning before a protest to color-coordinate their outfits so their bandannas matched their Silence=Death shirts and everything showed up well on TV. The joy of seeing oneself on television, and the fun of controlled rioting, being 90% of the reason we were there. As soon as the rally/die-in/sit-in/march was over, we all rushed back to our dorms to watch ourselves on the idiot box.
Not that we didn't believe. I really believed that George Bush wouldn't cure AIDS because he was mean, mean and homophobic. It never occurred to a single one of us that the issue might be at all complicated: that no matter how much money he spent on AIDS, Bush couldn't guarantee a cure; that there might be other diseases we want to research too, and the supply of doctors is finite; that it might help the fight against AIDS a little more to get a degree in medicine or biochemistry than to sit out on the street. Or maybe it occurred to us, but we quickly dismissed the idea because studying orgo isn't quite as much fun as lying on the pavement on a warm spring day. Also, no one puts your picture in the paper.
So I know the people who are coming here, and I know that they do what they do first and foremost because it is fun. That is why they switch so easily from communism to environmentalism to anarchist liberalism -- the cause is less important than the joys of solidarity. The ones who smash things or attack police don't think that it will achieve anything; they couldn't. The successful antiwar rallies on which they model themselves had a unified, concrete goal -- although my mother still maintains that that goal was not Freedom from War but Freedom from Hygeine. At any rate, the globalization rallies are too diverse, their goals too diffuse, to provide an actual forum for change. Even if they wanted to respond, what specific program should politicians enact? It's impossible to tell. Maybe the young college aged students are too dim, as we were, to recognize this. But the experienced activists and professionals, of which there are many, certainly must. So why do they riot?
They think the cause -- whatever it is - justifies it. Which is another way of saying that they want to attack someone, and the rallies provide both the excuse, and the camouflage, for carrying out their violent urges. Well my advice, one protester to another, is this: Don't.
You don't understand what New York has suffered. I know from talking to friends inside New York and out that as much as America grieves, it declines dramatically the farther you get from Ground Zero. If you weren't here, you don't know. You don't know what it was like not to know, for terrifying hours, where any of your loved ones were. You don't know what it was like to wait that long first day or night for people who struggled home hours after you'd given them up for lost -- and for people who never did. You didn't see the smoke rising, as I did, five miles away, or smell it days later. You didn't have memory upon memory destroyed. And I am not unique. 8 million New Yorkers felt the same thing.
So don't try to tell anyone that some traumatic life experience you've had prepares you to sympathize. It may have been traumatic, but it wasn't the same. And no one here wants to hear it from an upper middle class college student who is financing this trip -- and the later repair work on the resume -- on Daddy's credit card. So if you start acting like a spoiled toddler, a lot of angry New Yorkers will be all too pleased to deliver a heartfelt "Behave yourself!" with the back of their hand. You cannot imagine our grief and rage. So take it from me that you do not want to invoke it.
Yes, I am being patronizing and impatient. But you know what? That's honestly what this movement deserves. Their ideas are simplistic and foolish, and not one of them has even attempted to do the hard work of learning some subject that might actually advance their goals. If you care about the Third World, you note that it desperately needs doctors, engineers, scientists of all sorts, serious economists -- people who can actually build something in the rubble. If you want to help, you can study one of these subjects and go there. Lots of countries would love to have you. If you want to make a difference in peoples' lives, I can tell you from family narratives that putting in an electric generator and a nice, clean septic tank means more to people in the Third World than any amount of marching.
But there are no scientists or engineers in the movement. Their aversion to anything mathematical and concrete is complete. While I'm not saying that everyone has to be a math wizard -- Lord knows, I flunk on that score -- the total absence of any "hard" disciplines in the movement indicates to me that it has neither the interest in, nor the mechanism for, figuring out what is true, or what will actually work. This is my problem with these kids -- not so much that they are stupid and ignorant as that they seem determined to remain stupid and ignorant. I am passingly familiar with the platforms of many of the groups that will be present; I can refute them using logic and reason. Now go find me a protester who can do the same thing for free trade or the minimum wage. You will get a sound byte: "People before Profits"; "Fair Trade not Free Trade". The dolts who attempted to infiltrate the Walk for Capitalism illustrate what I consider to be the typical shallowness of the anti-globalist understanding: politics without context, reason, or complexity. In general, I think that if your philosophy fits on one easy-to-read poster, you have some serious thinking to do.
So if I sound contemptuous and intolerant, it's because I pretty much am. But I think that in this case, my targets have earned it.
The problem with letting the government put preemptive "reasonable restrictions" on rights (driving isn't a right, should be but isn't) is that for those rights that are unpopular with the government, who in turn determines what the requirements will be, will find themselves loaded with requirement after requirement until the right for all practical purposes does not exist even though it's there on paper. It would be one thing if what you were talking about was just a quick, simple, and relatively inexpensive class that would teach the basics. But that's not how it usually ends up. It is all too easy, and all too common, to pile on more and more "reasonable restrictions" and "reasonable requirements". Many anti-whatever groups use exactly this kind of tactic to try and slowly eliminate things they don't like and it's often worked for all intents and purposes.
I don't disagree. Tactically, for those of us who are committed to the citizen's right to bear arms (along with anything else that doesn't bother the neighbors), it is better to take a hard line than to slowly concede the right. Nonetheless, I think that we also need to think ideally about what effective gun laws would look like. And I think that they should ultimately be much like driver's licenses: prove that you know how to operate the vehicle, and are physically able to do so, and you're off to the races. Anything else is an excuse for the elite to disarm the poor, minorities, or their political opponents. Anyone who starts talking about how most people are too stupid to be allowed to have guns should get the "What hill were you standing on when they handed you the list of who's a grownup and who gets treated like they're three?" speech, followed by the unanswerable question: "You think they're too stupid to have guns but you want to let them vote on the largest economy/last free state/most complicated society in the world?" Hell, almost everyone I know who's against gun rights is in favor of programs like Motor Voter to make sure that the most apathetic and uninformed segment of our society casts a ballot. (But aren't I biting my own tail? Not quite. I'm not advocating that we restrict apathetic and uninformed people from registering to vote in any way. But that doesn't mean we should encourage it. But I digress.)
However, that doesn't eliminate safety restrictions. I think good gun law would also restrict certain types of guns from public places. High penetration rounds -- not in high density areas. You don't get to protect yourself by drilling one through the walls into some poor kid's bedroom. Ditto automatic weapons. Whether or not you think that people should have a right to own machine guns, I think most sensible people would agree that a right to carry around a fully automatic weapon in crowded public places is an invitation to disaster. Full auto is meant to kill everything in front of you. On a city street this is a bad idea. Put it away and take the handgun instead.
I certainly think that a campus group has a right to advocate that on the (private property) of the campus, safety training be encouraged or required. Whatever "gun culture" we may or may not have had, too many people today are totally ignorant of the way guns work to just say "Sure, let anyone buy a gun". This gives ammunition to the anti-gun groups -- and that lack also allows those groups to spread ignorant lies like the myth of "assault weapons". Anyone who knows anything about guns has probably had this conversation many times: a gun control supporter starts ranting about "semi-automatic weapons". You tell them that all guns, except revolvers and muzzle loaders, were semi-automatic. Despite the fact that they have never held a gun, they refuse to believe you. No matter how many objective websites, such as Webster's Dictionary, you refer them to, they persist in telling you you're mistaken because they saw a 10 minute segment on CBS -- the one where CBS used a machine gun to cut a watermelon in half, and then didn't tell the viewer that that wasn't semi-auto. Or when you delineate carefully the characteristics of an "assault weapon" and painstakingly demonstrate that each of these characteristics is totally cosmetic and has nothing to do with the operational effectiveness of the weapon, they tell you you're wrong.
Education can only help. In fact, I think I'd like to sponsor a group that does nothing but go to campuses to offer free shooting lessons to students -- in the process disabusing them of the notion that merely holding a gun can transform you into a crazed killer, teaching them that the difference between assault weapons and regular rifles is only cosmetic, etc. I understand, tactically, where SAS is coming from. But I think that any gun-rights movement that does not focus first and foremost on education about guns, whether mandatory or voluntary, is both hurting its effectiveness and endangering the rest of us who are educated.
I hesitate to make fun of the David Pearl kidnappers when they have an innocent victim in their clutches, but honestly -- they were going to execute him yesterday; they didn't (Thank God); now they're giving the US more time to meet their demands. This means that these yahoos actually thought the United States of America was going to give into the demands of some little crackpot terrorist group. Previously, I thought these guys were pure evil, seizing an American for the purpose of executing him and blaming it on the US. Now I still think they're evil, but dumb evil; the kind of evil that makes the class loser bully think that the prom queen will go out with him if he beats up some girl who was mean to her. The analogy is imperfect, of course. But the idea that this little gang of disaffected morons was going to negotiate on par with the most powerful nation in the world -- particularly when their cause is so manifestly unjust -- would require a better writer than I am to capture the fullness of its risibility.
Message to the terrorists: let him go before you do something stupid. Witness that we will do whatever it takes to destroy those who threaten the lives of innocent Americans. The entire American nation is in favor of your capture, torture, and summary execution; they are not far from endorsing tracking down your families if we can't find you. Forget Iraq; if you don't let him go, you're next.
Disney has just announced that it will no longer buy consulting services from the company that audits its books.
What a spectacular illustration of the power of the market. No regulators needed to intervene; just a pre-emptive strike to maintain trust in the accounting. (I've analyzed Disney's financial statements for a class -- they need the help.) I have a feeling that we will see, over the next year, companies taking a hit if they don't separate their auditors from their consultants. So audit services, rather than a loss leader, will actually be a detriment to the consulting side. I think we can fully expect to see the audit firms spinning off their consulting arms soon.
Now, longtime readers know that I think that auditors would still have conflicts of interest even absent the lucrative consulting business. But it's a start.
VIA INSTAPUNDIT COMES THIS article on a handful of Mount Holyoke students demanding the right to carry guns. I find this interesting because my sister was the only social conservative on the Wellesly campus during her tenure there. So a Second Amendment Sisters chapter with 50 members at Mount Holyoke seems to represent something of a sea change in the women's colleges.
I have to say I'm a little disturbed, though, to hear that SAS is opposing mandatory firearms training for those carrying guns. The reason that we force people who drive cars to have licenses showing that they actually know how to operate the thing is that untrained operation has huge negative externalities (an economist's term for the costs that one imposes on others through one's actions). Even more so with a gun, where a user who doesn't, for example, know that the gun is likely to kick upwards and to the right when fired, probably won't kill himself, but quite possibly will kill someone else who isn't a legitimate target. Finding ways to minimize negative externalities is a legitimate focus of government. The right to bear arms does not imply the right to irresponsibly discharge them where others might be hurt.
Reasonable gun rights activists (and yes, I know that I am arbitrarily defining reasonable to measure a degree of agreement with my own views; nonetheless:) do not want to loose hordes of people who don't know how to load, clean, or operate their guns on the public. They want shall-issue laws, but that doesn't preclude making sure that the person who has this intensely destructive machine knows how to operate and maintain it. In my opinion it doesn't even preclude cops from being able to check that you are keeping the gun you are carrying cleaned, oiled, and otherwise well maintained, to minimize dangerous accidents. It does not mean that the blind or senile should be allowed to carry a weapon, any more than blind people can be allowed to drive a car, because it's insanely dangerous for others, and you can be sure that some idiot will do it anyway unless you threaten them. Again, in this case a gun is even worse than a car, because a blind person driving probably won't make it out of their driveway, but a blind person with a gun can easily carry it to somewhere it can do serious harm.
Yes, forcing people to get training before they can get a gun will delay them. The same can be said for getting a car, which someone might desperately need on an emergency basis to get to work. And I feel for women who are being stalked and are afraid, but bad cases make bad laws. I think the answer is rather to encourage gun training early, so that a woman who needs a gun can get one any time. I'm sure the libertarians will lacerate me. But just as the right to freedom of speech does not include the right to shoud "Fire!" in a crowded theater, the right to bear arms does not exist in a vacuum. Any regulation of the right should be soberly considered, minimized, and well reasoned. Note that I don't care whether someone is getting a handgun or a howitzer, as long as they maintain it and know how to safely operate the thing. But while I fully support the right of well meaning idiots to seal their own doom, I cannot extend that right to their neighbors.
Why is everyone so vehement about Janet Reno? The things they make fun of her for often aren't things she can help. It's not her fault that she looks like a man, or has a gravelly voice, or isn't particularly poised or charming. I'm sure there are good arguments for hating her; it's just that I never seem to hear actual arguments, only nasty remarks about her hair. I felt bad for her when she passed out -- I'm blessed with something called Benign Positional Vertigo that has caused me to black out temporarily in public, and it's extremely traumatic. Not to mention utterly humiliating. As those of us on the conservative side of the spectrum were repelled when people on the other side expressed a wish that Bush had actually choked to death on the pretzel, so we should confine our bad wishes to Janet Reno to her political death, rather than a physical one. I really, really, really don't want to see her as governor of Florida -- but thank God there's no danger of that. So I can wish her a long and happy life in the private sphere.
I WANTED TO USE MY DAY OFF to post interesting things. Unfortunately, between sending resumes, moving the car (DISCUSSION TOPIC: Is NYC's alternate side parking the direct design of Satan, or merely the intellectual offspring of one of the lesser minions of the Lord of Darkess? -- talk amongst yourselves), and talking Adam through installing Microsoft publisher, that didn't happen. Then, at 5:00, when I was ready to get going, Tatiana arrived to drag me out for some post birthday margaritas. I am now enjoying a History Channel show on Ferraris as I watch the room sway gently in the evening breeze.
So here's what we decided: the Extremely Drunk Synopsis of Life, the Universe, and Everything:
1) Maybe there's an afterlife, maybe there's not. Experts disagree. It is a good idea to imagine that you have been given a month to live, and decide whether or not you would feel your life had been Well Lived or a Total Waste. If the latter, do the things you wanted to do. As Robert Heinlein said, Happiness consists in working long hours at whatever you feel is important, whether that is robbing banks or supporting a family. If you spend most of your waking hours trying to minimize the time spent on your major life activities, you should be doing something else. Perhaps you should rob banks.
2) Men -- who can figure them out? Experts disagree. Nonetheless, things are very dull without them.
3) The second order of fajitas were definitely a mistake.
4) Your moral code should be something you are constantly challenged to live up to, rather than a low bottom line below which you dare not fall.
5) Life is uncertain -- order two desserts. Moderation is for monks.
6) Your life will never be as good as it looks in commercials.
7) Nonetheless, it's better than the alternative.
8) People are endlessly amusing. Oneself most of all.
9) Five margaritas in three hours usually seems like a good idea at the time, but actually, it's not.
10) There is a point beyond which orderly lists cease to be amusing or useful. One should stop before then.
Sorry no insightful commentary. If indeed you find my commentary insightful. Peace to all, and to all a good night.
100% GUARANTEED!!!! Don't believe the hype, read the science... See the PROOF....
CLICK HERE NOW High traffic site. If unavailable be sure to revisit in 10 minutes.
You may download an eBook full of facts about the science behind the 2-Day Slim Down by clicking here.
We subscribe to the DMA e-Mail Preference Service. If you wish, Add your e-mail address to help reduce the amount of unsolicited commercial e-mail you receive.
What My Junk Mail Filter Marks for Deletion
To commemorate President Bush's first State of the Union address, I am introducing a blog-within-a-blog dedicated solely to my real-time commentary on the President's speech and the immediate reaction to it. As you tune in tonight at 9 p.m. eastern time, fire up Rants in a browser window!
http://www.patrickruffini.com/rants/
Patrick ____________________________________________________________ This symbolizes what the Taliban really did to Afghanistan !!
Okay, I have to go to my second birthday dinner now, so I'll leave you with this interesting little excercise: Open Microsoft Word and type in the following: =rand(200,99) and then hit enter. Then go to www.boxerjam.com if you want to get addicted to some mind games.
Is there sexism in the tech field? You betcha. The entire time I worked as a network consultant, I worked with exactly two women. The 99.99% male population in the field gives it a certain fraternity atmosphere. It also gives the engineers a rather rich and exotic fantasy life, which they seem to enjoy sharing with any females in the vicinity. I learned about some things that I had not only never heard of, but which I could not have imagined if you had offered me a million dollars to dream up something no human being would ever do. I worked with men who seemed determined to work out all the many issues they'd had with their mothers in my performance reviews. I had valuable client contacts moved to other, male, engineers who could more easily take the clients to girlie bars. These things are not rare in the field, and ultimately they do cause some women (not me) to leave it.
But we can't be engineers because engineering classes are taught in "male centered" ways? I'm having trouble envisioning the kind of "female centered" class the authors of the article envision -- the kind where it doesn't matter whether your code works as long as you all had a good time, maybe.
Authors who write stupid studies like this are the kind of people who envision nothing as having any purpose except a social one. GM is not there to make cars; it is there to provide jobs to people in Flint, whether any cars get made or not. Computer Science programs, likewise, are not supposed to produce students who write working software; they are supposed to produce people who feel good about themselves and technology. When these women are huddled in their collapsing hut with its leaky, 'non-traditional' roof, trying to figure out how to make a hoe for their organic gardens with 'alternative' iron-smelters and 'non-androcentric' metalworking machines, they will still be prattling that the reason for their slow starvation is the failure of society to adopt a more inclusive paradigm. And I have only one thing to say: don't you dare go around saying that I can't learn anything I damn well want to thank you very much.
Meanwhile, Robert Samuelson discusses the danger of stock options. I find this quite interesting, because in business school, we heard a lot about how compensating with stock options can avoid the perverse incentives inherent in most types of pay. To wit: if you pay by the hour, managers maximize hours. If you pay by booked sales, salesmen book sales that are never going to be completed -- this is one of the many things that got Sunbeam in trouble. Whatever you use as your pay metric, you will find managers maximizing that metric, often to the detriment of the firm. Paying by stock options was supposed to avoid this, by aligning management's incentives with the interests of the shareholders. Now it turns out that stock price is yet one more metric that can be manipulated to the detriment of investors. Samuelson rightly excoriates this.
Samuelson's solutions, however, are a litle iffy. He basically outlines three steps:
1) "Change the accounting -- count options as a cost" This is simplistic. I agree that option accounting doesn't express the true costs of the options: current standards count the full cash flow from the strike price as part of projected revenue, and record the dilutive effect on the outstanding stock. Personally, I think that the Black-Scholes value of the options, recorded as a cost, would be a more appropriate measure, with cash flow and dilution recorded only as they occur -- but I'm sure that there's a financial wizard out there who can tell me why that's a bad idea. Anyway, the point is that those options are taken into account by analysts, however badly.
2) "Index stock options to the market" Samuelson makes a valid point: that if the stock price is trailing, or rising in tandem with, the market, then much of the rise does not reflect management's contribution. However, there are a couple of problems with indexing. First, even if it's not working perfectly, options are a better way than most to align management's incentive with that of the shareholders; market indexing would make such compensation effectively worthless to most managers. Second, if it's legal (about which I don't know) such indexing would represent an extremely complicated financial instrument. Enron managers couldn't handle diversifying their damn portfolio, whih is Investing 101; do we really want to add options and derivatives to their retirement planning?
3) "Don't reprice options if the stock falls". Samuelson says "Some corporate boards of directors issue new options at lower prices if the company's stock falls. What's the point? Options are supposed to prod executives to improve the company's profits and stock price. Why protect them if they fail?" On this one I say, "Amen, brother."
I don't know what the solution is -- or even if there is one. My current, off the cuff, wing-nut idea is making it so management can't sell stock for a long lock-up period -- say, 10 years. That should do a little alignment, but I haven't yet though through the implications, which might be horrendous.
Thomas Friedman thinks that Yasser Arafat is a dead man, only we haven't realized it yet. I agree, but then I also thought we'd be at war with Saudi Arabia right now. I know that Yasser Arafat can't possibly survive -- but I can't imagine what form his ouster will take. Or rather, I can imagine it, and all of the ways that I imagine involve an immense war in the Middle East. From which my imagination shies away. Given what a lackwit stance the moral no-shows at the UN have taken on Israel, I'm not sure we can build a solution that averts war. At least we can thank God we have someone in the White House who won't stand by talking a good game while Israel is annihilated. Or at least, I think we do.
Well, my Ken Layne post below is, as Rand Simberg points out, fubar. So much so, in fact, that I can't even edit or delete it. So here it is again, minus the commentary. It's really, really hilarious and you should read it.
STRAW POLL: who thinks all that "Axis of Evil" stuff, majestically redolent of both World War II and the fight against fat-free cookies, means we are about to drag Iraq behind the woodshed and deliver a whaling the likes of which has not been seen since Binky Snodgrass took the club handball trophy from Ty Witherspoon in a record-breaking six minutes, forty-seven seconds?
Unfortunately, I don't have the kind of web skills that allow Charles Johnson to deliver those fabulous polls, so if you have an opinion, just shove it over there in the comments.
