Astroturf

Gotta remember this for later.  Internet smack-down between fed-ex and ups.

http://www.businessweek.com/bwdaily/dnflash/content/jun2009/db2009068_154641.htm

http://www.youtube.com/watch?v=yqqTKQhBsSs&feature=pyv&ad=5836022712&kw=john%20McCain

http://www.brownbailout.com/?fbid=B-px5aoA9Kr

http://www.fedexdriversarentpilots.com/

things to think about in the coming days

The unique nature of DC advertsiing

the self organizational nature of education

Chinese gangs moving into northern italy

The interplanetary medium

Economic vs. Social Profit

Chart from Business Processes, Prof. Nishida,
Carey Business School - Johns Hopkins University

  I've been paying a lot of thought to this chart over the last few days, trying to understand its implications.  It is a chart of relative economic profits across various industries.  Economic profit, oft confused with accounting profit, takes into account the opportunity costs involved in a transaction, i.e. when you buy something, it doesn't just cost you the money in your pocket, but also the best option you had for using that money.  In some cases, this is easy to calculate.  For instance, going to grad school for two years doesn't just cost you the $100,000 tuition, but the $200,000 you would have made if you were working all the while you were in school, so the economic cost is $300,000. Economic profit is revenue minus accounting cost minus opportunity cost.

  This chart bothers me for a number of reasons.  I can see how, within industries, one could have opportunity costs inherent in running a business, do you expand your warehouse space, or not, do you expand production capacity, or not.  But I fail to see how the opportunity costs between industries can be compared.  The chart is basically saying that power companies are better off investing their profits in soft drinks than themselves.

  I wonder what the chart would look like if social benefit were taken into account.  The top industries in terms of economic profit, like tobacco and soft drinks would have a much lower value.  At the same time, those industries without which our world would not function, power, telecom, steel, railroads and air transport, would be much better off.

  How to quantify social benefit is possibly the most difficult puzzle for accounting to solve, there's no such thing as a social balance sheet.  And yet, if the economic profit of some industries is negative, how is it that they have hundreds of billions in equity.  It points to the consideration of social factors which are not captured when considering economic profits alone.

Of Orwell and Hunter S. Thompson

  I've been working a lot lately with non-native English speakers on projects that involve collaborative writing. Surprise at how well my teammates  take suggestions has gotten me thinking about what role models and advice I can point non-native English speakers to.  I'm especially interested in helping my Chinese colleagues recognize the habits from their native language that define their English writing style.  Chinese metaphor, idiomatic structure, and adjective usage tend to have a lot of flourish and awkward phrasing that is normally absent in good written English..

The first piece I always point people to is Orwell's essay, "Politics and the English Language." Getting beyond using strings of pre-cooked phrases to form sentences is difficult enough for native English speakers.  I hope non-native speakers have an easier time of it while they're still rapidly acquiring English proficiency

Hunter S. Thompson also makes a good role model.  He's up there with Hemingway in terms of clarity and style, but more accessible with his ESPN column.   Not that Hemingway isn't the gold standard, his advice was just too terse and short articles are easier to digest than short stories.

I'm sure more will come to mind as time goes on- suggestions are welcome.

Just Sayin'

  After careful consideration, I have come to the conclusion the phrase, "Just Sayin'" needs to be stomped out from common usage.

  Grown adults say things, or they don't say things, but they don't just say things.   The only people who just say things- blurt out their thoughts without consideration or context- are small children and people with serious mental disorders such as Tourette's Syndrome.   When a person denotes their most recent utterance with "Just Sayin'," most commonly after having said something offensive, they are excusing their inability to control themselves thereby hoping to lessen any offense.  I think its therefore important to a. not use the phrase myself, and b. point out, when socially appropriate, to other people what a a terrible phrase it is.

If only GOD would save us from the oil spill

Louisiana Governor Bobby Jindal is calling for a day of prayer to help solve the oil spill crisis.  I like this praying solution, or at least I like what this solution says about the relationship between the people praying and their god.  It says:

• God is not doing what you want.
• By begging, or nagging, God can be made to do what you want.
• That God has the power to stop the crisis, but hasn't already done so because you have not asked in the correct manner.

I guess it makes sense to directly request action from God after growing frustrated with the Federal Government for not having the powers of God.

  This confusion about agency- what are the actions and within the ability of Man, versus what are the actions and within the ability of God - is a theme on the Right with regard to the BP oil spill crisis.  For instance, after Rep. Barton's apology to BP, House Minority Leader Boehner issued this statement: 

"The oil spill in the Gulf is this nation’s largest natural disaster and stopping the leak and cleaning up the region is our top priority.  Congressman Barton’s statements this morning were wrong.  BP itself has acknowledged that responsibility for the economic damages lies with them and has offered an initial pledge of $20 billion dollars for that purpose.

"The families and businesspeople in the Gulf region want leadership, accountability and action from BP and the Administration.  It is unacceptable that, 59  days after this crisis began, no solution is forthcoming.  Simply put, the American people want all of our resources, time and focus to be directed toward stopping the spill and cleaning up the mess."

  Calling the ongoing oil spill a natural disaster is ascribing it to God's agency when it is actually a result of the actions of Man.  On the other hand, saying that it is, "unacceptable that...no solution is forthcoming." implies that Man is capable of instantly solving this problem but has not done so for lack of will.  Make no mistake, the solution to this disaster requires engineering on the scale of putting men into space, such things require time. To solve the problem without trial and error - to get it right on the first try- would be a miracle .  Miracles only result from God's actions.      

  I have noticed that the collective actions of Man are often ascribed with Gods powers.  The Markets are one example, the Markets show favor and disfavor towards political decisions and current events.  A particular index rises on a given day, we turn to the priesthood -financial reporters- to read the auguries and explain what pleased or angered the Markets that day.  Perhaps todays 100 point drop in the Dow was caused by a 3% drop in cattle imports, never mind that it's on the same day as a solar eclipse. We then seek to appease the markets, by trying to ascertain what they want and giving it to them.  So too Government, which is nothing but the collective actions of Men, is ascribed with God-like powers.  We confuse those who break its laws with sinners, and pretend any action that happens contrary to its will is in defiance of the natural order.

  Actually, if you take it as given that the Government is a god, as is any sufficiently large corporation, then the dissonance disappears.  Under this framework, the disaster is an act of a god, as is the solution. Then it makes sense to pray, because god will not act on your behalf until you have exercised your power over it using the correct ritual.  One caveat, if you're going to take the collective actions of Man as a god, don't expect any miracles.    

  

The future of computing

  This article if kind of neat,  but I disagree.

• Apple is going to lose with their current strategy because its competitors will not limit their customer base by locking them into a single hardware platform.  
• Because non-apple hardware is open to all, including the forces of commoditization, it will always be  faster and cheaper, by contrast Apple's soul is in delivering slightly inferior hardware with a slick user interface at a premium price.  
• Apple is a closed platform with rigid rules.  Innovators are going to get tired of asking for permission, and whatever inefficiencies arise from cross platform programming, will be overcome from the advances in hardware.
• Local processing power and data storage are so cheap, we're never going to give them up.  Cloud computing will enhance what we have come to know as the computer, not replace it.
• Large organizations will always shy away from giving up control.  Cloud computing at the corporate level is already being delivered by Microsoft, it is called SharePoint.  The only serious competitor is Google docs, which has the downside of not being completely private or completely under the owners control.  The latest version of MS Office only makes sense as a SharePoint terminal.
• Upgrading is no longer self justifying; there are computers in the world today, that will still be in use 20 years from now, and will still be useful to the owners in a non-trivial way.  Therefore, the returns in trying to force people into a particular version of tommorowland are quickly diminishing. 

The Tale of Comm Services

   The other day my wife received a nondescript white envelope in the mail with a return address from a company called Comm Services LLC.  Inside the envelope was a DVD of some 70s movie that no-one has ever heard of, and even fewer have watched.  My wife and I both came to the same conclusion -  the evil spirit from "The Ring" must be franchising.  We set the DVD aside for fear that watching it might unleash an angry spirit into our house, and forgot about it.

  A few days later, curiosity about the DVD crept back to my conscious mind, and I googled Comm Services.  It turns out that they are well known on the Ripoff Report.  My incredibly low opinion of Ripoff Report aside, I was interested to learn that I should look for a $9.95 charge to my wifes credit card.  Sure enough, there was a charge from Comm Services at the end of March.  My wife had overlooked it, thinking that the name was related to one of our telephone or data services.  A review of Comm Services website told me that, aside from some very strange ordering procedures, they are happy to give a full refund if you return the DVD.  I then went to check the DVD only to find out that it didn't work.

  Based on this information, and my knowledge of credit card processing rules and practicalities, a few things became known to me.

• My wife's credit card number was compromised.
• We had gotten off easily, only losing $10 in the process.
• Comm Services is a scam. There are 0 people on this planet willing to pay $10 for a copy of "I Wonder Who's Killing Her Now"

 Whatever we do now, that $10 is lost.  Even if I get it back, the dollar value of the amount and time and effort it will take is going to exceed the $10.  The only thing I can do to get my money back at this point is to get my full entertainment value out of that $10.

  As far as credit card scams go, this one is not half bad. So first, and explanation of what I think they are doing. When an amateur steals a credit card, they go on spending spree.  If they are a smarter than average amateur, they wait until after the close of business on Friday, so that the charges don't show up on any statement until the following Tuesday.  A pro, on the other hand, is not going to run the charges at a store to get new shoes, they are going to run it through some form of clearing house where the charges can be turned into cash.

  A clearing house for this sort of thing will typically look like a normal business, but it sells products that no-one would actually go looking for.  The key is to be nondescript; have an accessible presence to give the illusion of legitimacy, but make sure to only sell something that no right-minded person would actually order. If someone stumbled on your site and ordered, you would have to provide a product and or service, which would complicate things.  On the other hand, the clearing house should seem legitimate enough that they can play the role of the victim if a card-holder comes looking into what this or that charge means.  Cash can then be bled from stolen credit cards at the clearing house.  If a card-holder calls demanding information or reports the theft, the clearing house immediately acquiesces in order to keep charge-backs to a minimum.  A smart clearing house is going to use multiple processors on continuous rotation to keep charge-backs with any single processor to a minimum.    

 When a credit card is run at a merchant, a deduction is immediately made from the customers credit account.  That money then goes to the processor, the company that provides the ability to take credit cards to the merchant.  After swirling around in the ether for about three days, the processor wires the money into merchants bank account. When a charge-back occurs, the customer goes to their credit account holder and reports an erroneous charge.  The credit account institution and the processor then argue for a little while, and possibly request documentation from either the customer or the merchant to verify whether the charge was legitimate.  If the charge is found to be illegitimate, then the processor makes a demand on the merchants bank, the bank deducts the money from the merchants account, and the money heads back to the customers account.

   Typically a thief will try to bleed as much money as possible, as fast as possible without tripping the credit card company's fraud detection system.  As soon as the money hits the bank account it is immediately withdrawn, so that when the processor goes to claw back the funds, the bank account is empty, and the merchant's bank is left holding the bag.  Comm Services is smart in that they go for the slow kill.  By using a nondescript name, which could be anything really, and charging a very small amount, they slip under most people's radar.  The typical consumer, even if they check their statement thoroughly every month, is likely to, just like my wife, justify the charge rather than question it.  $9.95 is so low that it is very unlikely to trip any fraud detection system, but if it is run on thousands of credit cards every month can quickly add up to real money.  The numbers used are likely bought on exchanges that trade in stolen credit card numbers, where batches of numbers are sold for cash.

  So why the DVD?  Simple, to confuse the charge-back system.  Since something of "value" has been exchanged, Comm Services is able to argue against the charge-backs, delaying the time before a threshold is reached where the account is closed for suspicious activity.  Terrible movies that no-one would want are used because the discs are pirated.  If the copyright holder doesn't care about the piracyl, then there is almost no chance of prosecution.  Because the amount per charge is so low and actual merchandise changed hands, it is unlikely that law enforcement will get involved, seeing it as merchant account issue and leaving it up to the banks to enforce.  Furthermore, because the $9.95 charge is ostensibly for shipping and handling, even if piracy was alleged they could claim that they weren't actually selling the DVD.

  So the question remains, what to do?  Aside from reporting the card as stolen, which we did as soon as we figured out what was going on, I'm going to send the disc back so that the credit card company can't refuse my   request to get our money back.  I will probably mail it certified, just so that I can prove that I did send it back, which means that we're out $4 no matter what, but before I do that I'm going to talk to the postal police.  I don't expect anything to come of it, but you never know- it is a form of mail fraud

  As a general rule of thumb, I can't stand crusaders; people who see an injustice, real or imagined, that then work to, "take them down" or "punish" the wrongdoing.  I'm a big believer that you can't get angry because of this sort of thing.  At most you inform someone in authority and then let them do the rest.  Society is going to function whether these guys go down or not, and even if they do go down something else will take their place. But, they did have the good fortune of catching my attention, and I see no reason why I shouldn't rattle their cage to see if I can't get some fun in watching them scurry.  I hope the Postal Police have some good advice, it could be fun to watch this go someplace.

Of Ayn Rand and Metallica

  During a long walk home today I pondered how Alan Greenspan is a huge fan of Ayn Rand.  Ayn Rand is one of those thinkers with whom I enjoyably disagree.  Or better put, I disagree with her philosophy, but the process of constructing arguments against it fortifies my own thinking, and forces me to consider things I otherwise would have overlooked.  This feeling is not a given with all argument.  For sure there are positions to be held from which there is nothing to gain through argumentation, and the only correct response is to walk away and shake one's head in pity at the daftness of the arguer; creationism  is a good example, as is the birther movement, the Tea Baggers and the anti-government conspiracies of the gun nut crowd.

  I was lucky to read Atlas Shrugged in a time and place that allowed my full attention over a period of several days, and that highlighted the themes in vivid detail.  I had picked up a copy in Hong Kong, during my first trip to China, after my travelling companion that I spent the summer backpacking with returned home.  At the time I was determined to make my way in the world by trading in the arts and crafts of the Far East and had set out in my search for treasure.  This search washed my up to the banks of the PuDong River, at 15 HuangPu Lu - the PuJiang Hotel.

   The Pujiang Hotel, easily my favorite hotel in this world, is like something right out of Ms. Rand's novels.  Built in 1846, the hotel introduced China to such wonders as the first electric light, the first western circus and the first telephone call. By the time I found the place, the hotel had reinvented itself in the modern Chinese era as backpackers hostel.  A bed could be had for $7 US a night, in a suite the size of a tennis court with 30 more just like it.  It was the Grand Central Station for backpackers in Shanghai, where information could be traded, temporary friends had and new adventures planned.  Except I arrived in this magnificent structure of common use at time when no-one else was around, and got to look at 30 other empty beds in this hugeroom where the only one occupied was mine.

  I was lonely, in lonely surroundings, in a country that can be imposing in its isolation, in what was once the greatest hotel in China, pondering the start of  a new venture that I had no clue on how to begin, and it was here  that I read Atlas Shrugged.  Even at the time I understood it as an exercise in Hegelian reasoning, reading a book about unfettered capitalism, in China's former center of unfettered capitalism, which had fallen under totalitarian rule, but which was struggling to regain its former glory as the center of a mercantilist economy.   I ate the book whole in that hotel.

  And for a time, I thought I might chose to believe in Ms. Rands teachings, in the same way I thought I might be a Buddhist when I first started learning about Buddhism.  This lead to two memorable things: not buying pirated movies and software despite their abundance; and refusing to exchange dollars for RMB with a friend at the lower state-set exchange rate instead of the black market rate.  But, just as I eventually realized I would never be a Buddhist because I reject the central teaching that all life is suffering, so to I  realized I would never be an objectivist because I believe that altruism is man acting at his greatest, not his worst.

 I moved beyond Ayn Rand and her ideas, but still look back with nostalgia. In a way, it is similar to my musical tastes in high school.  When I was 14, I loved Metallica.  That year I had a birthday party in which a dozen friends came over and we stayed up all night, playing pool and video games, eating junk food, and listening to Metallica's Black Album.  It was glorious.  I think back on the music fondly, an it vividly evokes my memory of that party, but my tastes have changed.  I remember loving it long ago, but can't bring myself to listen to it again.  And today I look with suspicion upon anyone my age expressing the same enthusiasm for the Black Album I did at 14. In that same way, I question the judgement of educated adults that haven't been able to move beyond Ayn Rand.  

Naiveté v. Cynicism

Naive  [nah-eev]  
–adjective

1. 
   

   having or showing unaffected simplicity of nature or absence of artificiality; unsophisticated; ingenuous.

2. 
   

   having or showing a lack of experience, judgment, or information; credulous: She's so naive she believes everything she reads. He has a very naive attitude toward politics.

—Synonyms 
1. simple, unaffected, unsuspecting, artless, guileless, candid, open, plain.

—Antonyms 
1. sophisticated, artful.

Naive. Dictionary.com. Dictionary.com Unabridged. Random House, Inc.http://dictionary.reference.com/browse/Naive (accessed: April 26, 2010).

Cynical  [sin-i-kuhl] 

-adjective

1. a person who believes that only selfishness motivates human actions and who disbelieves in or minimizes selfless acts or disinterested points of view.
2. a person who shows or expresses a bitterly or sneeringly cynical attitude.

—Synonyms 

 pessimistic, sarcastic, satirical

—Antonyms

optomistic.

cynical. Dictionary.com. Dictionary.com Unabridged. Random House, Inc.http://dictionary.reference.com/browse/cynical (accessed: April 26, 2010).

  Why are these two words not listed as antonyms of each-other?  In fact don't they describe the opposite ends of a scale measuring trust in human action.  I can't help but think, whenever someone being described as a cynic is held in a positive light, or when naiveté is held in a negative one, how either extreme is undesirable.  I certainly don't approach new business deals naively; but at the same time doesn't the company of a cynic tire quickly? 

  Each of these ends of the scale has its place, is not naiveté a prerequisite for falling in love?  While cynicism the cornerstone to strategy, whether it be in business, politics or war?  So now, when I hear these words used to describe thought or action, I find myself saying, " Yes, that was cynical for sure, but its good to see he still had room for some naiveté"

On Blogging and this Blog

Some Blogs are are for pundits to disseminate wisdom to their followers, others Blogs are aggregators of links.  There are Blogs that tell stories, and blogs for hobbyists to compare notes.  There are blogs of expertise, where a subject can be examined in great detail, and blogs of recordation where a mind exposes itself in an attempt to achieve immortality. There are blogs of conceit, where the author has nothing new to say, but says it anyways.  There are Blogs that are diaries that should be facebook pages, and there are facebook pages that should be blogs.

  But this here, this isn't supposed to be any of those.  There are no comments, I find all comments on the internet to be universally terrible. It is neither promoted or hidden, so that only those that search might find it.  There is no tracking, so that I might never know of those that come or go, and therefore never feel obligated to an audience. This place is where I come to practice putting my thoughts to page - nothing more.

Digital Communications Etiquette

I have found that the plethora of means of contacting someone confuses people about what is and isn't appropriate. This is especially relevant in the professional world, where ill-informed customers can really get my hackles in a yaw with a particularly bad breach. I have therefore decided to write my etiquette guide to communication with me in the always-connected age.

E-mail:

E-mail is a medium specifically to replace the transportation of written documents. I do not consider it conversational, and generally do not remember to respond to personal e-mails. That said, it is the perfect medium for exchanging notes, meeting transcripts, working out the details of an order, explaining a problem you wish me to solve and collaborating over documents.

E-mail etiquette

• Brevity is best. Please say what you have to say and then end it. No need for a salutation, or small talk.
• Use complete words. E-mail is a long form written document, there is no excuse for using texting-speech. I will mock you for using "lol" replacing the word "for" with "4" or "you" with "u".
• Use complete sentences with proper grammar, and proofread your work. Modern e-mail clients correct your spelling, there is no excuse for bad spelling. If your message is incomprehensible it will be ignored and I will ask you to rewrite it to clarify what you mean.
• Save the emotion. E-mail is a faceless medium and people already have a tendency to read with a negative voice, even when the writer didn't intend one. If you are upset or angry when you write your e-mail it will come through much more intensely than you may like. Writing in that voice can be given a couple of times, but it can quickly change my opinion of you and your request for the worse.
• Never read into the time-stamp on my e-mail. If I responded to your e-mail at 1:00am, that is not an invitation to begin a conversation or worse yet call me on the phone. There is no secret message hidden in the time stamp, it is not a mark of special importance or concern. All it means is that I sent an e-mail at a particular time.

Voice-mail:

Most calls anyone place to me will end up in voice-mail. This is not because I do not want to speak with you, this is because I do not believe in constant interruption. I believe that the task at hand, whatever it is, deserves my full attention. In turn, By letting you go to voice-mail, when I am able to speak with you, you will have my full attention.

That said, I do not actually listen to voice-mail. All voice-mails that come to me are transcribed into text and e-mailed to me, or written down as a message by someone else and given to me. Be as detailed as you like, or not, but I will not go back and listen to it if it is garbled. In most cases, I will take you're voice-mail as a page, and react to the missed call in my call log long before I actually read your message. Therefore do not be surprised if I am unaware of the contents of your message.

Phone Etiquette:

• Understand that pounding my phone line will make me react deliberately slower to your request to communicate. There is never a situation where continuous calling will coerce me to pick up the phone. Generally, I have a 1 day rule. I usually wait one day before returning a call when someone practices line-pounding. Yes, this does lead to situations where a person can prevent me from calling them back for several days.
• Do not play the phone-number capture game. Me calling you on my cell phone is not an invitation to start calling my cell phone. My cell phone is a personal line, it is not the secret squirrel line for reaching me . I pay for it with my own personal money to maintain the convenience it offers. The only people who have an open invitation to call my cell are people who have information that is important to me. That includes friends, family, my attorneys and bankers and some co-workers. If you are not on that list, your problems are not important enough to me to deal with them through my cell phone. If you break this rule, I will immediately blacklist you in the phone and none of your calls will get through again.
• If you think that I am not picking up because I am screening my calls, changing numbers to hide the origin will only make things worse. First off, this usually doesn't work because the area code gives it away, and secondly if you feel the need to resort to outright dishonesty to reach me, our relationship is probably over soon anyways. This goes for blocking caller-id when it normally functions on your line.
• In general I am not to worried about greetings and goodbyes, if you accidentally get my name wrong or say "I love you" at the end of the call, don't worry about it. We all talk to dozens of people in a workday and wires get crossed; really, it is no big deal.
• Learn the phonetic alphabet and use it. If it is good enough for every pilot in the US and the military it is good enough for you. If I have to spell something I will use it, and it never ceases to amaze me how long it can take people to figure out the the first letter or "Golf" is "G".
• If we have a bad signal, please say something. I will probably, apologize, hang up and call you back, but that is much preferable to the constant "What?......can you repeat that.....I think we have a bad connection." If you think we have a bad connection then we do, yelling into the phone is not going to fix it.

Texting:

Texting is the perfect medium for relaying short, one-way information. This is the best way to send me an address, telephone number or how to spell your name. It is also a great way to make a one line request; please call me, don't forget to mail that, I'm running late. If you need to give me information, and no response on my part is necessary, texting is the way to go. Text is not a conversational medium, if an exchange is going past two or three lines, the communication is better served with an e-mail or phone call.

Arguing by Proxy

Arguing by proxy is a bad habit. All to often, you hear people reciting someone's arguments as their own without completely understanding the original position. When two of these people go at it, you might as well walk away.

That said, Brad Delong, a blogger for whom I have the utmost respect has a recollection of Robert Rubin's position on the regulation of derivatives in the late 90's that differs significantly with a recent report by Frontline on the same subject.

I'm not about to breach my own etiquette standards and quote Frontline's position at Delong in his comments section. The proper thing to do is to post a link instead and ask for an opinion. I'm sure nothing will ever come of it, but at least here I have the chance to put both positions side by side.

For my own part, I don't think its being too cynical to side with Frontline and say that Rubin is only in favor of regulation now, in hind-sight, after he helped crash Citigroup into the ground using derivatives.

Space Monsters and the Tao

I recently lent a copy of the Dao De Qing to to a friend with whom I often discuss religion and religiosity. He never took my proclamation of being an evangelistic Taoist seriously, so I felt it necessary to back up my claims.

The Tao talks at length about action through inaction. This is interpreted by many, including my friend, that one ought do nothing. His understanding raises a paradox - how is good on this earth brought about if the apex of virtue is to do nothing. This is a common misinterpretation of the meaning of inaction.

Firstly, action through inaction is a warning against taking action for action's sake. Often when a problem arises the general feeling is that SOMETHING must be done. But action solely for the sake of being seen as doing something often worsens problems more than it helps. Solutions must be deliberate if they are to cause good, and in many cases letting things run their course is the best option.

Secondly, it is a strategy. All events have an ebb and flow, that rythm can only be stopped or reversed through direct action at great cost, if at all. On the other hand, a thorough understanding of the situation at hand and a small nudge in just the right action can bring about great change. Think of a pendulum. How much harder it is to make it reach the highest point opposite its direction of travel by stopping it and throwing it in the direction you want. How much easier to gently nudge it in the direction it is already going, knowing that it will be where you want it eventually.

Kerry Supporters for Bush was an example of these principles; Bush got a second term, and then America elected the first black president.

This comic, is another great example of these principles.

Crazy as Entertainment

Every once in a while, a piece of writing lands in my inbox that is nothing short of awe-inspiring. If I had to quantify its awesomeness, I wouldn't know where to start. Perhaps, with its mind blowing use of the English language, or with the incredible insight into the secret underpinnings of our world, or perhaps the sheer impeccability of its logic...

		THE QUEEN DOES PUSH DOPE! by Lyndon H. LaRouche, Jr. LaRouchePAC.com Yes, Mabel, the Queen of England does push dope. Anyone who seeks to deny this now, is worse than a Nazi-like liar. Worse, her government is presently engaged in the greatest attempt at mass-murder, planet-wide, in world history to date. In her regime's effort to bring about the great, world-wide genocide advocated by the World Wildlife Fund of her husband, the Duke of Edinburgh, her minions have also attempted to destroy the most prominent force against genocide operating world-wide today, the Catholic Church. Worst of all, she is using her dupe, the Nero-like, would-be, Hitler-like mass-murderer President Barack Obama, in the effort to accomplish those Hitler-copied objectives. We wish to say next to nothing here about British sex practices such as those associated with types such as the late John Maynard Keynes, et al.. We stick to the issue of her government's resort to the combined practices of genocide and drug-pushing. The methods for promoting the destruction of civilization through opium production in Afghanistan is now McChrystal-clear. One of the leading features of the practices of the drug-pushing British monarchy, is the British effort to destroy the Catholic Church, world-wide, in an attempt to eliminate that Papacy which continues to be the chief opponent of British-orchestrated campaigns of genocide throughout the world at large, as the British Empire has done in Africa for about two centuries. We are not certain that certain oddities of the behavior among the Yahoos of the British Isles are to be class as being exactly sexual behavior; fecundity does not appear to be a purpose in that practice among the figures deployed on the playing fields of Eton. The purpose of preying upon minors as a form of genital play among the clergy and others, has long thought to have been a mark of British upper-class breeding, as much as anything else. Apparently, the British clergy have enjoyed no monopoly on the specific form of amusements. To anyone possessed of an active adult mind should recognize immediately, the British monarchy's efforts to destroy the Catholic Church, is intended to wipe out the world's traditionally leading adversary of the practice of genocide among governments. In the meantime, the very strong suggestion in the atmosphere today, is that now that the Nero-like President Barack Obama has virtually used up his usefulness to his British master, points to the intention, from among their quarters, to bring about that President's assassination as a means for unleashing a dictatorship in a U.S. now threatened with a London-inspired assassination of the unfortunate, used- up tool Obama.

A Note

I started writing here as practice for an exam I have in one month which will require me to digest a large amount of data and produce a policy recommendation in a limited amount of time. To prepare I began the practice of absorbing large amounts of data for its own sake, which is easy enough using the internet, but I needed a place to practice the writing side of the equation. Once I realized that if I'm successful on the exam I will have to take ownership of this blog, even if the last time I wrote here was 2004, I figured here is as good a place as any to practice. So if the subjects or style seem disconnected that is why.

When I first saw this article, I thought to myself ,"I really like that Thomas Barnett guy but he's way off the mark here." What bothers me is the idea that attacking middlemen is a new phase of globalization.

First off, Wal-Mart is not buying anything new. Ostensibly, they are still buying the same product from the same original sources. Secondly, they're not doing anything new; cutting out middlemen is a time honored tradition. Finally, what they're doing isn't necessarily any more productive.

"Not necessarily any more productive?" you say. "But middlemen contribute nothing, and take away from your profit."

And that is where the assumption falls apart. In the age of the Internet, all buyers and sellers are supposedly on an equal informational footing, the theory goes that anyone interested in buying a product can simply search hard enough for it on the Internet and get access to the same source as the middleman. Which certainly is a problem for some types of middlemen; those that solely buy from party A and sell to party B at an increased cost. But not all middlemen are created equal.

To start with, we can ignore the entire wholesale level. There's good reason that people make money buying 10 of something at $1 a piece and selling it one at a time for $2 a piece, it's called retail. And by that same token, the world needs people who buy 100 units at $0.85 and sell them 10 at a time for $1, that's called wholesale and without it no mom and pop shop would ever be able to stock their store with mass produced goods. But Big Box is so big that they are their own distributor, so they should already be cutting out this level.

To show what Wal-Mart is doing here I have to explain a common problem I often had sourcing products in China. Where does the middleman end and the factory begin. By law, all Chinese factories are required to transact export sales through a trading company. As obvious middlemen with obscure purpose trading companies were, therefore, always a first target for the inexperienced buyer that wanted to save a buck. But the trading companies perform a useful and necessary service in dealing with the export nature of the transaction; currency exchanges, freight consolidation, local taxes, export documentation and certification, etc. The problem wasn't the trading company, it was staying blind to the supplier, and as long as you could deal with them directly, you gained nothing by shaking the trading company. So in our first level you have middleman as formality facilitator. You either have to be really big to assume this role on your own behalf, or you have to already be in this role for this level of middleman to be shaken. Wal-Mart is as big as they get, so yeah they deserve to be making this extra 2-3%, but doing so is not new and not newsworthy.

And sometime when you drill down past the trading company you find a factory, exactly like the factories in your dreams, with time clocks, workers, factory floors and dorm rooms. And now you're dealing with the source directly. Or perhaps in an attempt to stay relevant that trading company that you shook is also acting as a sales rep and makes 2-3% on the transaction no matter what you do. And as every manufacturer already knows, you can lose the rep in the transaction, but you never give the customer the reps sales commission. That money is your marginal cost in sales, giving that up to big customers is an admission that you are narrowing your customer base. You make the sale today, but hamper your ability to make new sales tomorrow. So small buyers don't have the clout to cut out the sales level either, and big buyers remove it at the expense of their supplier's business stability.

These same factories also don't produce goods for their own sakes. When they do they are poorly designed and of low quality. Instead at its base, the factory is a set of production capabilities that people come to with things that need to be produced. These people, with the things that need to be produced, are also middlemen. This is what every major shoe, clothing and consumer product's company does. The official term for these middlemen is Brand (or sometimes Label), and they provide good design and consistent quality. To cut out that type of middleman is to cut yourself off from the source of product innovation, marketing and customer loyalty that the brand provides. Just because you bought the shoe from the same factory that made a Nike running shoe doesn't make it a Nike, or even as good. Or to put it differently, dropping the middleman in this case is like claiming that Bud Lite and Sam Adams are equal because they are made in the same brewery. If you want to cut out the middleman in this case, you need to step up and provide the design and quality control that the middleman brought to the equation, or take whatever sub par product the locals are selling. In this case, Wal-Mart can move in on the lesser known brands without much lost but stands to lose quite handily on anything well known or well protected by patent.

Then beyond the traditional factory, there are some factories that have no factory floor, instead they have a warehouse and some rudimentary QC facilities. Orders are placed with the factory owner, (the guy who owns the warehouse) and the owner contracts with dozens or even hundreds of local family businesses who then go and produce the product. The factory owner acts as quality control, only paying for those units that meet specification, and gathers up the relatively uniform product, packages it and ships it out. In China, I've seen this done for stuffed animals (this family makes only left arms, this one right arms, this one assembles....), lacquer boxes, plastic injection tooling and agricultural produce. Under this scenario, who is the middleman? Under the one I just described, it would be difficult to say that the factory owner is the middleman in the transaction, but that hypothetical factory owner is exactly who Wal-Mart is cutting out in this scenario.

The model I just described is exactly how agricultural produce export works. The middlemen who buy from the local farms, consolidate, grade (QC) and in some cases finance the production. They then turn around and market the product to a wider audience. Sure, there are large operations that can skip a few tiers in getting their product to market, but that's not everyone. Under the "distributed production" factory owner scenario, the farmer, home run shop or grandma doesn't have to finance their sales. They don't float inventory for the next guy in the chain. And when there is a QC problem, it is dealt with right then and there i.e. a sale not made. When larger problems arise, bad weather and whatnot, there are bonds of locality and time tying the two together so that doors aren't necessarily closed. In turn, this factory owner takes over the marketing and transactional risk. If Wal-Mart pushes out that particular middleman, they get joy of micromanaging an ever more complex supply chain and unlike what is claimed here, they are not necessarily decreasing risk and increasing supply chain security in the process.

Added together, I would agree that Wal-Mart could save about 5-15% across their supply chain when then entire process is done but I would bet that it is closer to the 5% range for a number of reasons.

• You bully local original suppliers too hard and they're liable to fold if they're small or not deal with you if they're bigger. don't bully them enough and you become Harbor Freight.
• Middlemen act as a stabilizing force in your supply chain. They absorb the manufacturers risk in transactional cost and marketing and the customers risk in quality control.
• Wal-Mart's middlemen are already very savvy folk. In many cases their margins are pushed so low in their deals with Wal-Mart, they may as well be well-paid employees, albeit ones not subject to labor laws.
• Wal-Mart already uses its middlemen as fall guys for things they themselves can't be associated with. Industrial espionage, customs requirements like country of origin markings, and intellectual property infringement are a few that come to mind.

Bottom line, because of how Wal-Mart does business, the move is risky with less upside than first appears, and certainly not new. If there is anything in the move that is worth considering as incremental progress in the road to globalization, it is the idea that they the entire Wal-Mart system is purchasing as a single entity across their global supply chain. Now that really is interesting, but the big surprise there is that they weren't doing that already.