Archive for May, 2007

Talk About Consumptive

So the patient diagnosed with a drug-resistant strain of tuberculosis, who ignored doctors’ instructions not to travel on a commercial flight back to the United States, is a personal injury lawyer?

[Andrew] Speaker said in a newspaper interview that he knew he had TB when he flew from Atlanta to Europe in mid-May for his wedding and honeymoon, but that he did not find out until he was already in Rome that it was an extensively drug-resistant strain considered especially dangerous.

Despite warnings from federal health officials not to board another long flight, he flew home for treatment, fearing he wouldn’t survive if he didn’t reach the U.S., he said.

He was quarantined May 25, after his return from his honeymoon, in the first such action taken by the federal government since 1963.

Consider, if you will, the class action ….

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Manufacturing Leadership Book Review

The Science of Success: How Market-Based Management Built the World’s Largest Private Company
by Charles G. Koch
CEO, Koch Industries, Inc.

Koch Industries has grown 2,200 fold over the past 40 years and is the world’s largest privately held firm. The NAM-member company produces some of the world’s most recognizable products, including STAINMASTER carpet, Dixie cups and Quilted Northern tissues, among its many product lines. Those distinctions alone would earn Charles G. Koch’s book, The Science of Success, a prominent spot on the recommended reading list for executives.

But what makes The Science of Success so compelling is that Koch introduces the reader to a remarkable business philosophy, Market-Based Management ®, or MBM, that engages Koch employees in “a passionate pursuit of innovation toward an unknown future of ever-greater value generation.”

MBM, as a business philosophy, embraces those timeless principles that allow a free-market society to achieve prosperity and societal progress, and applies them within the context of an organization and its mission. Though Koch focuses on how MBM has been applied within his company, he is quick to point out that it is equally applicable at institutions ranging from non-profit organizations to government agencies.

By relentlessly applying MBM, Koch Industries avoids the natural tendency toward complacency that can accompany financial success. “MBM teaches that we must continually drive constructive change in every aspect of our company or we will fail. As a result, we continually pursue innovations and opportunities through internal and external development and acquisition.”

This book is not a self-congratulatory memoir. The author candidly describes instances in which the company did not apply MBM effectively. He lists not only the firm’s major business groups, but also the many businesses Koch has exited because it found higher-valued alternatives for its resources, be they raw materials, corporate assets or human talent.

While MBM is a weighty topic, the The Science of Success reads quickly and easily, with great insight for the reader. We recommend the book highly.

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Criminalizing Wind Energy

A energy conservation-minded blogger picks up on NAM President John Engler’s testimony last week before the House Natural Resources Committee. Wind advocates are energized against a provision in H.R. 2337 — Chairman Nick Rahall’s energy package — that would severely limit development of wind turbines. The American Wind Energy Association characterizes several troubling provisions in this release:

  • Stall all new wind projects until Fish and Wildlife Service (FWS) rules are issued and require FWS certification of every turbine
  • Require all existing turbines, even small residential units, to cease operating 6 months after issuance of new FWS rules until they are “certified,” an unwieldy bureaucratic process applying to many thousands of turbines that, again, will take years
  • Make it a crime, punishable by a $50,000 fine or a year in jail, to construct or generate electricity from an unapproved turbine, even for home use
  • What is it with criminalizing everything these days?

    Anyway, the blog post notes Engler’s statement in his written testimony:

    The National Association of Manufacturers believes that a comprehensive approach toward energy leads to the logical conclusion that the United States must diversify its sources of energy. Wind energy should be part of this mix. The new certification requirements of this section of H.R. 2337, however, would bring wind energy development across the United States to a halt, this despite the fact that the National Academy of Sciences has concluded wind turbines cause less than 0.003 percent of human-caused bird mortality. Furthermore, the broad mandate directing the U.S. Fish and Wildlife Service to review every existing and planned wind project is far beyond the agency’s resources and capabilities.

    Excess regulation and unnecessary criminalization are hardly the way to encourage increased supply of anything, energy included.

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    Chimerical Energy Policies

    From New Jersey writer Stephanie Cohen, pondering “energy indepence” and global politics in The New Atlantis:

    Paying homage to the goal of “energy independence” has become a rite of passage for American politicians, whether left, right, or center. On the left, finding alternative sources of energy is seen both as the route to peace on earth (since most wars are supposedly wars for oil) and the only way to save the earth (since fossil fuels are destroying the planet). On the right, energy independence is seen as essential to preserving American prosperity while limiting foreign entanglements in a dangerous Middle East.

    That’s the first paragraph. The last paragraph:

    In confronting this predicament—or series of predicaments—we need to wonder whether the rhetoric of energy independence, with its promises of national autonomy, is a useful motivator that will make us as self-reliant for our energy needs as possible, or a utopian standard that deforms good policymaking. Like the rhetoric of democratization, words have consequences—sometimes inspiring us to noble purposes, sometimes blinding us to harsh realities. And when it comes to energy, this may be the harshest reality of all: in order to defeat our oil-rich enemies over the long-term, we may need to keep making them rich in the short term. This may be hard to swallow, but we have the misfortune not to live in a lollipop world.

    ‘Round here, we prefer the term “energy security.”

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    The Green in Greenpeace

    Activists groups like Greenpeace make much of the financing that corporations provide to think tanks and foundations, claiming that the dollars determine outcomes. The truth of the matter is corporations give money for a variety of reasons — purely eleemosynary, to be a good corporate citizen, PR, or to promote political or cultural principles (or skills, etc.) consistent with their business philosophy. Or all of the above. All legitimate. And we’d say the same for the foundations and inviduals that support anti-business groups.

    But the well-financed Greenpeace and their compadres never tire of claiming nefarious, dollar-driven connects. It’s tiresome, a way to avoid engaging the arguments.

    Most recently, Greenpeace blasted the National Center for Public Policy Research, a free-market think tank, accusing the center of being a tool of big oil in its questioning of the science and politics involved in global warming. So the National Center shot back, challenging Greenpeace to be as transparent with its funding as the center is with its own money. (May 18th news release here.) Tell us your donations from last year in excess of $50,000.

    No response, yet, so the NCPPR sent a follow-up letter from its vice president, David A. Ridenour, on Wednesday. (The full text is in the extended entry below.)

    Perhaps you allow donations to influence your positions on public policy issues. We do not.

    Since you’ve raised the issue of public disclosure of grants in a manner critical of others, we believe you should lead by example. That’s why I’m challenging you to a very high standard for transparency. If Greenpeace will publicly disclose its donations exceeding $50,000, we will do the same.

    Ridenour notes that the Greenpeace Fund gave Greenpeace itself $3.6 million in 2006 — 23 percent of the group’s funding — in a non-transparent transfer.

    Good and positive challenge, albeit with a few digs thrown it, but Ridenour still doesn’t imply base motives the way Greenpeace is quick to do. We’re sure Greenpeace will take the challenge in the spirit in which it is intended. Right?

    UPDATE (4 p.m.): The National Center’s Amy Ridenour posts more on the topic here. She writes:

    Greenpeace is spending tax-exempt dollars “exposing” the names of donors to groups with which Greenpeace disagrees, yet Greenpeace hides the identity of some of its major donors. Since Greenpeace apparently perceives itself as being “on the payroll” of its donors, and believes in “exposing” (although what Greenpeace “exposed” had already been voluntarily and publicly disclosed in multiple venues) the names of the donors to other organizations, shouldn’t it fullfill the disclosure standard it has set?

    (continue reading…)

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    The Semi-Canard of Growing Income Disparity

    Steven Pearlstein, a Washington Post business columnist, took a whack at the topic of income disparity, AKA the growing wealth gap, in today’s paper. Must admit, usually skip right over these pieces because of their predictable slant: Current economic policies are bad, the Administration is bad, corporations are bad, America — pretty bad — but the European social democracies, really, really good! Knowing Pearlstein’s fondness for the death tax (scroll down), well, that’s why they have recycling bins at the Metro.

    But it’s really as balanced of a piece as you could hope for, at least given Perlstein’s predilections (and all his asides aside), drawing on a recent monograph by economist and former Democratic staffer Stephen Rose. Basic point: The demise of the American middle class has been greatly exagerrated.

    This doesn’t mean the middle class isn’t shrinking. In fact, from 1979 to 2004, Rose calculates, the percentage of households in the “middle class” category — those with incomes of $30,000 to $90,000 — fell to 39 from 47 percent. But it would be hard to describe that as bad news when the proportion of well-off households — those with incomes of more than $90,000 — rose by nearly nine percentage points. During the same time frame, the percentage of households that were poor or near-poor remained about the same…[snip]

    It is also a myth that the Great American Jobs Machine is producing mostly lousy, low-paying service jobs. Rose simplifies the government data by putting all jobs in three categories: “elite” jobs, encompassing managers and professionals; “good jobs,” such as those held by supervisors, skilled blue-collar workers, craft workers, police, firefighters and clerical workers; and “less skilled” jobs, such as those held by unskilled machine operators, laborers, sales clerks and waiters. Looking at it that way, it turns out that the number of lousy, low-skilled jobs has been on a long, steady decline since 1979, while the number of “elite” jobs has been growing steadily. The number of “good” jobs has declined marginally as skilled office work has replaced skilled factory work.

    Which, we would argue, just reinforces the case for better education, training and basic seriousness of purpose. Knock off the bread and circuses and do your trigonometry.

    Anyway, it’s a worthy discussion on the topic, and Pearlstein’s follow-up online chat was informative, as well. If only he had used the power of the web to provide a link to Rose’s study (and poster) : “Social Stratification in the United States.

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    Lou Dobbs Caught in the Act of Deceit

    There is a wonderful and long overdue expose of Lou Dobbs in today’s New York Times by David Leonhardt. It begins with Lou’s preposterous claim, that he defended in an interview with Leslie Stahl on the CBS program “Sixty Minutes,” that there had been 7,000 cases of leprosy reported in the U.S. in the last three years. When Stahl challenged him, Lou said, “If we reported it, it’s a fact.” In reality, there have been 7,000 cases of leprosy reported in the last 30 years, not three. Leonhardt also cited Dobbs’ claim that a third of the inmates in the federal prison system are illegal immigrants. Actually, illegal immigrants comprise 6 percent of the federal prison population.

    But then, it would take a lot of space to document all of the bogus claims aired by Lou Dobbs. Or as Leonhardt put it, “Mr. Dobbs has a somewhat flexible relationship with reality.” Man does he ever.

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    The Joke of the Day

    OK, maybe this is an old, old joke, but it’s new to us:

    Three gas station owners report for their first day in prison.

    The prison guard asks one of them, “What are you in for?”

    He replies, “The government says I charged customers more for my gasoline than other gas stations. I’m in for price gouging.”

    The guard looks at the second man. “And you?”

    He answers, “I charged less for my gasoline than everyone else. I’m in for anti-competitive pricing.”

    The guard looks to the third. “And you?”

    He shrugs. “I charged the same price for my gasoline as all the other gas stations. I’m in for collusion.”

    Hat tip to North Dakota’s premier political blog, Say Anything.

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    Romans to Streisand: No Price Gouging!

    We have identified a new area for Congressional legislation on price gouging: entertainment. It seems that a consumer group in Rome has protested the high price of tickets that Barbra Streisand was going to charge for a concert in the Stadio Flaminio, which would have been her first concert in Italy and the start of her European tour.

    According to the AP story,

    Last week, consumer groups Codacons and Adusbef protested as “absurd and shameful” ticket prices ranging from $200 to more than $1,200, calling on authorities to deny Streisand use of the 24,000-seat stadium. The stadium is “public property and cannot be used for immoral deals that are shameful to a civilized country,” the groups said in a statement.

    Apparently believing in the power of the market, Streisand has shifted her opening concert to Zurich. Her tour promoter said that the change resulted from “unexpected production delays.” Well, in fact, such things do happen. But Ms. Streisand and her fellow travelers are impatient when similar delays occur in the rest of the business world — especially energy — and demand government intervention. Will price control-loving members of Congress demand similar price gouging laws on entertainers’ ticketing prices?

    Don’t hold your breath. This episode brings to mind the film in which Ms. Streisand performed about ten years ago, The Mirror Has Two Faces. Click here for the full story.

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    Market Contradictions: Gas Prices and Gassy Claims

    What is it again that Blogger Emeritus Pat Cleary calls Washington Post columnist Robert Samuelson? Resident wise man? In any case, Samuelson once again gets to the heart of a matter in today’s column, “A Full Tank of Hypocrisy.” In it he points out the inconsistencies coming out of certain Washington circles: Angry protests against high fuel prices — conspiracies! profiteering! gouging! — from those who insist we must fight global warming by conserving energy.

    Guess what: These crowd-pleasing proclamations are contradictory. Anyone fearful of global warming should cheer higher gasoline prices, because much higher prices represent precisely the sort of powerful incentive needed to push consumers toward more fuel-efficient vehicles and to persuade the auto industry to produce them in large numbers. Bravo for higher prices!

    Perish the thought.

    Samuelson also punches holes in the argument that the oil companies have so concentrated refinery capacity that they can manipulate production to push up prices and profits.

    Testifying last week before the congressional Joint Economic Committee (JEC), Michael Salinger, an FTC economist, said that the industry’s concentration levels remain “low to moderate.” According to JEC figures, ConocoPhillips is the biggest U.S. refiner, with 13 percent of capacity; the six largest have 61 percent of capacity. The oil industry is less concentrated than the auto industry, which is considered intensely competitive. As for the absence of new refineries, that problem preceded the merger wave by many years; the last major U.S. refinery was constructed in 1976. There must be some other explanation (environmental restrictions, past low profitability).

    And environmental restrictions contributing to past low profitability. (Salinger’s testimony at the hearing is available here in a .pdf file.)

    Thing is, we wager many (we hope not most) members of Congress when reading Samuelson’s column would say to themselves, “Yes, well. All that’s true. But it’s easier and better politically to pound the table than to explain, much less address, the policies that contribute to high gas prices.”

    Perish the thought.

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