Think Piece on Democrats vs. Liberals
Michael W. Lodato
I’ve never been a democrat, I didn’t vote for Trump, and I long ago withdrew from the Republican Party. Republicans in the government, like their democrat counterparts, have become swamp dwellers that only serve their own interests. Both took an oath to perform public service and to do the right thing but instead put their emphasis on such things as getting re-elected, taking care of the powerful, and maintaining the status quo.
But this think piece isn’t about Republicans. It’s about the disappearance of liberalism and my worry about the future of the Democrat Party. I don’t want to see the democrats become even more irrelevant than they already are. That would be bad for the country. In spite of rosy economic performance and forecasts of late, we have significant problems. Instead of offering solutions, democrats are behaving like small children – miserable, trash-talking, ill-disciplined, self-righteous and useless. Witness the behavior of democrat lawmakers at the State of the Union address.
But it is worse than that. Back when I became eligible to vote, democrats were liberals, and while I didn’t agree with all their ideas and programs, there was a certain dignity to being a liberal – still is. But Nancy Pelosi, Chuck Schumer and their followers are no longer liberals, if they ever were. Their stance has eroded from a political ideology that sponsored a strong central government, welfare and other entitlements and has become an identity that is the repository of moral authority expressing itself in moral opinions.
Where the raison d’etra of liberalism is liberty and freedom; the raison d’etra of democrats is moral authority. Democrats are good; the rest of us are not to be trusted. Today’s democrats no longer challenge the ideologies of the rest of us; they attack us directly. Those that don’t agree with them are evil people who have to be marginalized, isolated, threatened, jailed, hated and even put to death. More on this later.
Take for example the majority of people who deep in their hearts are against abortion because it kills humans. They are branded by democrats as anti-women and there are marches, demonstrations and even riots, condemning them as evil. I’m not making a moral judgment here about abortion. Unwanted pregnancies represent a significant problem the solution to which is far above my pay grade. But this type of behavior exposes what the democrat party has become: a politics shrouded in pathos –an appeal to the emotions of the audience rather than the logic of its politics.
Worse still, democrats have participated in an increasing amount of political violence of late. Some months ago a democrat fired upon 24 members of congress after being assured they were republicans. And there was also the ‘Antifa’ violence in Berkeley and elsewhere. Those behind the masks vote democrat. And there have been calls by democrats in the entertainment industry for the death penalty for some of Trump’s aides and for Trump himself. Can another inquisition be far behind?
Democrats have not only encouraged such political violence, they have thwarted free speech on college compasses, indulged in hate speech (See Hillary’s commencement address at Wellesley last year.), etc. Real liberals would not do any of this. The fact that our president makes personal attacks on his opponents is no excuse for what’s going on. It is one of the reasons I didn’t vote for him.
Sure, democrats are bitter about losing an important election, not only for President but for many other government offices. But their behavior also comes about from years of adherence to political correctness and identity politics. They are more concerned with diversity of demands by women, African Americans, Latinos, immigrants, Muslims, and L.G.B.T. people than in appealing to Americans as a whole. A result is an America that is as divided as it has been since the Civil War.
Democrats have made victims out of each of the identities: e.g. women, blacks, Latinos, Muslims, lesbians, gays, bisexuals, transgenders, and others. As is typical of victims, democrats are taking no responsibility for the shape that the country is in. And worse, will not accept any accountability for the divided nation that we have become. They have become an openly intolerant, bigoted, group of people. And they are joined – perhaps even led – by CNN, MSNBC, NBC, CBS, and other news organizations of their ilk.
So my plea is to democrats to get off their duffs and do something before it is too late. Separate yourselves from the Pelosis, Shumers, Clintons and other hate-spewing radicals, if for no other reason than the fact that the voters, other than on the left and right coasts and a few other places have not been fooled. Go back to being liberals. You can’t possibly think that there are not significant problems with our country’s handling of healthcare, education, immigration, the economy, taxes, foreign affairs, entrenched establishment and so much more. You have a lot of things to work on; things you can contribute to.
Democrat leadership thinks that they can win a lot of elections this year. I wouldn’t bet on it. Democrats lost many seats in the past 10 years because the voters don’t think democrats can or will do anything for them. For the past year they shout that they will make sure that the current government doesn’t get anything done either. Democrat leadership has presented no ideas or solutions. They don’t have a plan for sustained economic growth that would provide better opportunities for upward mobility for middle and worker classes. That’s not much of a platform. Good luck with that. How stupid do they think Americans are?
There isn’t much time. Democrats need to get noticed for something other than opposition and bad manners. They need to get off your duffs and do something before it is too late. They need to become relevant.
Economics and Economists
By: Michael W. Lodato
Where I’m coming from: I’ve been skeptical about economics and economists for a long time. I come from a discipline, theoretical mathematics, where there is absolutely no ambiguity. In fact most of the reading is of symbols – each having very precise definitions.
In economics there seem to be all kinds of conflicting theories with names like
• Keynesian economics, that argues that economic activity is stimulated when government lowers taxes on the middle class and increases government spending.
• Supply side economics, that suggests that when economic activity is less hampered by government controls or higher taxation it produces more economic benefits for the poor in the form of jobs and cheaper goods.
• The Laffer Curve that looks like this
• Trickle-down economics – a theory that says benefits of the wealthy trickle down to everyone else – sort of like John D. Rockefeller’s wealth trickling all the way down to grandson Nelson.
• and more.
But while there are times when the economy is good, the deficits persist and debt keep rising to astounding levels. But mostly I am concerned that economics is so political. My friend Ernie Wassmann says: “There is no true economy; it is always a political economy.” No matter what the theory, politicians, on both sides of the aisle, as they say, “kick the can down the road” for future politicians to solve. Something is wrong with this picture.
Full Disclosure: Before you make any judgments about what I write here, you should know that I never took a course in economics nor worked as an economist. It is only recently – after attending the UCLA Economic Outlook on December 6, 2016 – that I got interested enough to think about it. I have since attended two more of these quarterly meetings and my interest intensified. When I get that interested I write a Think Piece – an article not intended to tell people what I know about something, but to find out for myself what I know about it. I send Think Pieces to a very small audience, if at all. All of them can be found on my blog www.michaelsthinkpieces.com. If you encounter one, and you don’t agree with it, please let me know so I can continue to know more. While, as a voter, I’m not Republican or even conservative in the strict sense, I have always been a fiscal conservative. I think governments, especially at the federal level, should resist the temptation to try to guide things – especially the economy.
So let me rant on.
A few things I picked up on the internet and from other sources. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. So, it’s about taxes and spending. It is the sister strategy to monetary policy through which a central bank influences a nation’s money supply. So, this is about money supply and interest rates. These two policies are used in various combinations to direct a country’s economic goals.
Before going on let me present an opinion which is key to this think piece.
Two Solid Truths. What I have known for a long time is that there are two truths related to economics that you can take to the bank. They are:
• supply and demand always works and
• compound interest is one of the most important discoveries in history. That’s what Albert Einstein said, at any rate.
Economic theories that mess with them are bound to lead to trouble as we have seen in both our fiscal and monetary policies.
The Law of Supply and Demand
[If you want to study supply and demand in some depth there is a lot of excellent coverage of the subject on the internet. I present a summary below – enough, I hope, to support my conviction that economists have not given enough respect to the subject in steering our economy.]
Supply and demand is a fundamental concept of economics.
Demand refers to how much (quantity) of a product or service is desired by buyers The quantity demanded is the amount of a product or service people are willing to buy at a certain price during a specific time period. The relationship between price and quantity demanded is known as the demand relationship. (See the figure below.)
Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good or service producers are willing to supply when receiving a certain price during a specific time period. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. (See second figure below.)
Price, therefore, is a reflection of supply and demand.
The Law of Demand: The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good. As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more. The chart below shows that the curve is a downward slope.
A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation between quantity demanded (Q) and price (P). So, at point A, the quantity demanded will be Q1 and the price will be P1, and so on. The demand relationship curve illustrates the negative relationship between price and quantity demanded. The higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C).
The Law of Supply: Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity producers are willing to provide. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.
A, B and C are points on the supply curve (below). Each point on the curve reflects a direct connection between the quantity supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and the price will be P2, and so on.
[Insert graphic 2]
The next graphic puts supply and demand together.
[Insert graphic 3]
Equilibrium: When supply and demand are equal (i.e. when the supply curve and demand curve intersect) the economy is said to be at equilibrium. As you can see on the chart, equilibrium occurs at the intersection of the demand and supply curves, which indicates no allocative inefficiency. At this point, the price of the goods and the quantity are referred to as equilibrium price and quantity.
At Equilibrium, the allocation of goods is at its most efficient because the amount of goods being supplied is exactly the same as the amount of goods being demanded. Thus, everyone (individuals, firms, or countries) is satisfied with the current economic condition. At the given price, suppliers are selling all the goods that they have produced and consumers are getting all the goods that they are demanding.
In the real market place, equilibrium can only ever be reached in theory, so the prices of goods and services are constantly changing in relation to fluctuations in demand and supply. You experience this with the almost daily change in the price of gasoline.
Surplus occurs when the price is too high for the demand or when the quantity supplied is greater than the quantity demanded. Prices are above Equilibrium. To eliminate surplus you lower the price. If the price is set too high, excess supply will be created within the economy and there will be allocative inefficiency.
Shortage occurs when the price is too low for the supply or when the quantity demanded is greater than the quantity supplied. Prices are below Equilibrium. To eliminate shortages you increase the price.
Elasticity: The degree to which a demand or supply curve reacts to a change in price is the curve’s elasticity. Products that are necessities are more insensitive to price changes because consumers would continue buying these products despite price changes. Conversely, a price increase of a good or service that is considered less of a necessity will deter more consumers because the opportunity cost (see below) of buying the product will become too high
A good or service is considered to be highly elastic if a slight change in price (say from P2 to P1) leads to a sharp change in the quantity demanded or supplied (say from Q2 to Q1).
[Insert Elastic demand graphic]
An inelastic good or service is one in which changes in price witness only modest changes in the quantity demanded or supplied, if at all.
[Insert inelastic demand graphic]
In the real world economy, there are many examples of demand being too high or too low for the supply and/or supply being too high or too low for the demand. Take professional sports, e.g. the NFL. The demand, e.g. the fans that want to see a game, far exceeds the number of seats at games that are available for viewing. A result is that the teams can and do charge a high price for tickets.
Factors Affecting Demand Elasticity: There are two main factors that influence a demand’s price elasticity:
The availability of substitutes. In general, the more substitutes, the more elastic the demand will be. As an example, if the price of hamburgers goes up, some people may switch to hot dogs – if they are more affordable.
Amount of income available to spend on the good. This factor affecting demand elasticity refers to the total a person can spend on a particular good or service. So, if one’s income is reduced there is an elastic reaction in demand. That is, one is forced to reduce his/her demand for the good or service unless there is a corresponding reduction in the price. If there is a decrease in income, demand tends to decrease as well.
Basically, supply and demand says that if there is a lot of something available you don’t have to pay as much for that something as you would if the supply of it was low. From the demand side, if there is a high demand for a good or service, a supplier of that good or service can raise and get a higher price for it than if the demand was lower.
From here on I will try to support my claim that economists seem to be ignore supply and demand more often than not.
How Fiscal Policy Works
Fiscal policy is very important to the economy. The idea is to find a balance when changing tax rates and public spending, as is under consideration this year.
Let’s say that an economy has slowed down. Unemployment levels are up, consumer spending is down and businesses are not making substantial profits. A government thus decides to fuel the economy’s engine by decreasing taxation, which gives consumers more spending money. At the same time it increases government spending in the form of buying services from the market (such as building roads or schools). By paying for such services, the government creates jobs and wages that are in turn pumped into the economy. In the meantime, overall unemployment levels will fall.
With more money in the economy and fewer taxes to pay, consumer demand for goods and services increases. This, in turn, rekindles businesses and turns the cycle around from stagnant to active. If, however, there are no reins on this process, the increase in economic productivity can cross over a very fine line and lead to too much money in the market. This excess in supply decreases the value of money while pushing up prices (because of the increase in demand for consumer products). Hence, inflation exceeds the reasonable level. For this reason, fine tuning the economy through fiscal policy alone can be a difficult, if not improbable, means to reach economic goals. If not closely monitored, the line between a productive economy and one that is infected by inflation can be easily blurred.
On the other hand, when inflation is too strong, the economy may need a slowdown. In such a situation, a government can use fiscal policy to increase taxes to suck money out of the economy. Fiscal policy could also dictate a decrease in government spending and thereby decrease the money in circulation. Of course, the possible negative effects of such a policy in the long run could be a sluggish economy and high unemployment levels. Nonetheless, the process continues as the government uses its fiscal policy to fine-tune spending and taxation levels, with the goal of evening out the business cycles.
Who Does Fiscal Policy Affect?
Unfortunately, the effects of any fiscal policy are not the same for everyone. Depending on the political orientations and goals of the policymakers, a tax cut could affect only the middle class, which is typically the largest economic group. In times of economic decline and rising taxation, it is this same group that may have to pay more taxes than the wealthier upper class.
Similarly, when a government decides to adjust its spending, its policy may affect only a specific group of people. A decision to build a new bridge, for example, will give work and more income to hundreds of construction workers. A decision to spend money on building a new space shuttle, on the other hand, benefits only a small, specialized pool of experts, which would not do much to increase aggregate employment levels.
The Bottom Line
One of the biggest obstacles facing policymakers is deciding how much involvement the government should have in the economy. Indeed, there have been various degrees of interference by the government over the years. But for the most part, it is accepted that a degree of government involvement is necessary to sustain a vibrant economy, on which the economic well-being of the population depends.
From my perspective, the degree of government involvement has been excessive. Just look at the tax code and regulations on business before the 2018 Income Tax Reform bill.
The federal budget process doesn’t seem to allocate spending effectively, as evidenced by the 2018 spending bill. Government agencies and programs are almost never closed down or ended, regardless of poor performance. I am concerned about the current administration’s efforts in tax policy. Trump’s spending plans, with a projected $1 trillion deficit in 2018, may have us in a fiscal policy that is reckless.
Income Tax Reform
I’m convinced that cutting tax rates, as was done in early 2018, is the wrong way to achieve sustained economic growth. The evidence is just not strong enough that a cut in tax rates leads to strong economic growth for very long. To the contrary, the evidence is that while economic growth does follow a tax cut, it only lasts for a while and it is always accompanied by significant increase in deficits and the debt. Rather than cutting rates as a goal, why not have rate cuts be a consequence of tax code simplification and reform? Economic growth should not be the objective. The objective should be to fix a very broken tax system. Economic growth will be a consequence.
If the idea of a tax cut is to give consumers more spending money and businesses more money for investments and hiring, why not, as a first step, simplify tax preparation so much that taxpayers will not have to spend as much time and money on it each year as they do now. There is very little simplification in the new tax code, if any.
Let me give an example or two. Say you get rid of the deduction for state and local taxes – (a policy that means that lower tax states have in effect been subsidizing higher-tax states). Suppose further that you want to keep the tax revenue neutral. This means you can lower the tax rate compensate for the lost deduction. The higher-tax states could help the situation by lowing the taxes they impose on their citizens, but there is no evidence that this will happen.
Another example would be to get rid of the special tax rates for capital gains and qualified dividends. That alone would get rid of having to complete Form 1040, Line 44 that consists of 27 lines of very complicated arithmetic – a big step toward tax simplification. This was not done in the new tax law.
My guess is that simplification of the tax code would result in enough reduction in tax rates (even while keeping revenue neutrality) so that for most people the amount they earn from gains on investments would be taxed at rates at or below the current capital gains rate. Sure, high income people might pay a rate higher than the current rate on capital gains, but they will be getting help in other parts of the simplification including the elimination of the cost and time of tax preparation.
The need for simplicity. Tax preparation may be done by the taxpayer with or without the help of tax preparation software, online services or a tax preparation professional such as an attorney, certified public accountant.
I’ve read that, over the years, the tax code has grown to over 70,000 pages reaching nearly four million words. This imposes an unconscionable burden on taxpayers. If done without help the cost is the number of hours spent by the taxpayer in tax preparation, amounting to literally billions of hours per year. According to a report from the U.S. Government Accounting Office, the efficiency cost of the tax system—the output that is lost over and above the tax itself—is between $240 billion and $600 billion per year. For tax return preparation, Americans spent roughly 20% of the amount collected in taxes. That’s huge. An estimate of time spent that I’ve seen a lot is that tax payers spend a total of 6.1 billion hours to file their taxes. That’s roughly the equivalent of every one of the 135 million American taxpayers devoting 45 hours to filing their taxes every year. At a national average wage of about $30 per hour, that comes to $183 billion worth of our time. The estimate might have flaws, but it is the best guess as to the time it takes for businesses and individuals to fill out tax paperwork. Because of the complexity about 60% of individual tax returns are filed by paid preparers.
The convoluted code especially harms small businesses that can’t afford to hire expensive accountants or pay additional fees. Their tax compliance costs are 67 percent higher than those of big businesses.
A conclusion that I have reached is that, if tax preparation was a lot simpler, tax payers would have a tremendous amount more money to spend than now and businesses would have not only more money to spend and grow but also lower labor costs. The amount easily reaches to hundreds of billions of dollars.
If done right the economy could be stimulated without reducing tax income. Combine this with some government spending reductions (e.g. a smaller IRS) and we might just save the country from financial disaster. Unless we tackle the looming national debt crisis – and quickly – the best case is that the U. S. could grow briskly for a few years. I’ve read that interest on the national debt alone will triple, to about $800 billion, accounting for $1 for every eight the U.S. spends. Imagine what the country could do if it had that $800 billion available each year.
The law of supply and demand will then kick in as consumers spend and businesses invest more. Of course the increase in demand will cause some inflation, just as a tax rate cut would, but a tax rate cut, by itself, increases the deficit and national debt and doesn’t reduce the burden of tax preparation.
How do we make tax preparation simple? Well, it wouldn’t be simple and my think pieces, by their nature, are too short to develop and present solutions. To start with, powerful lobbyists and special interests colluding with the government to benefit themselves at the expense of taxpayers would fight tooth and nail to prevent making tax preparation easy and far less costly. Tax attorneys, CPA firms, tax prep companies like H&R Block, tax software companies like Intuit and other organizations that benefit most from complexity of the tax code would be vigorous in lobbying Congress against making tax preparation simple. Politicians that are the targets of their lobbying and who receive funding from them would try to bring ridicule on those favoring simplicity by charging them as being heartless in taking away the careers of attorneys, CPAs and the like.
Of course, supporters of tax preparation simplicity would be condemned, not for the idea, but as being inhumane and in favor of putting tax preparation people out of work. But we’ve had many of examples of an economy recovering after technology did away with the need for buggy whip workers, telephone operators, secretaries, and others.
My recommendation: Present a tax simplification bill that is revenue neutral. Then, if you insist on being reckless, make some further cuts in tax rates.
Monetary Policy – the Money Supply
Monetary policy can also be used to ignite or slow the economy but is controlled by the central bank, the Federal Reserve, with the ultimate goal of creating an easy money environment.
The Federal Reserve Board purchases and sells U.S. government bonds in the open market. This can increase or decrease reserves with banks while influencing the supply of money whether they are buying or selling bonds. The Fed can also change the reserve requirements (amount of cash a bank must hold in reserve against deposits made by customers) at banks thus directly increasing or decreasing the supply of money. The Fed can also make changes in the discount rate which flows through the banking system and ultimately determines what consumers pay to borrow and the interest they receive on their deposits. In theory, holding the discount rate low should induce banks to hold fewer excess reserves and ultimately increase the demand for money.
As interest rates fall, they stimulate economic activity by making it cheaper to borrow money, encouraging consumers and businesses to ramp up spending and investments. Rising rates do the opposite. By adjusting short-term rates, the Fed aims to keep the economy humming at a sustainable pace, without causing too much or too little inflation. But they don’t always succeed. Slashing rates to nearly zero in 2008 didn’t prevent the Great Recession. And the post-recession recovery has been one of the most sluggish ever, even though the Fed kept rates near zero ever since.
Let’s look at housing. The Federal Reserve, (The Fed) kept interest rates near 0% for a long time. A result was that monthly mortgage payments by home buyers was lower than they would make if interest rates were determined by interaction between borrowers and lenders based on the supply of money for such loans and the demand for it.
For example, say a home buyer takes out a 30 year loan for $400,000. At 4% interest rate the monthly payment would be $1,910. At 6% it would be $2,398 – a difference of about $5,736 per year. Far more people can qualify for the lower monthly payment and so the demand for that $400,000 house would go up and so would the price, (because of the law of supply and demand). And so it has, substantially, in the past several years. This situation is a double-edged sword. Sure, the monthly payments are lower in a low interest environment, but the price for the house is much inflated. Now, with the Fed allowing rates to increase we can expect that rate of growth of housing prices to slow down, perhaps abate, because fewer people would qualify. But the decrease in demand should cause housing prices level off or to go down. This is supply and demand at work.
Let’s look at wages. There is a lot of talk about the minimum wage these days. It seems like a simple thing. Raise the wages of the lowest level workers to say $15 per hour and charge more for what they produce or earn less profit for the business. On December 27, 2016, a USA Today article reported that “higher wage minimums have led to the loss of hundreds of jobs in California alone as restaurants close or lay off workers to offset the higher costs.” And, more recently, in June 2017, a University of Washington team found that, although Seattle’s $15-an-hour minimum wage law has boosted pay in low wage jobs, there would be about 5,000 more low-wage jobs in the city without the law. This is another example of the law of supply and demand at work.
As for me, I’m willing to pay more for fast food to give these low level workers a little more money to put food on their tables. But the minimum wage issue is much more complex issue than it seems. Take fast-food jobs and other low-paying work where young people just getting started in the labor market first learn about job responsibilities, inventory and customer service. An increase in the federal minimum wage to $15 from the current $7.50 would reduce those learning opportunities.
While the teen age worker is earning pocket change to buy lattes, sneakers and other items, there is another side to the issue. There are many low-wage workers these days trying to support a family – and those workers need a higher minimum wage. So the problem is complex.
Recently, the Federal Reserve hiked the federal funds rate by ¼ of a percentage point for the fourth time since December 2015. The funds rate is still below the rate of inflation, which means the Fed is still a long way from becoming tight.
I’m suspicious that our monetary policy with the Federal Reserve and other central bank’s obsession with keeping interest rates at extremely low levels has been reckless. Further, I’m concerned because the Fed has acquired such massive power that it owns over $4 trillion in government debt on its own say so, pays banks billions of dollars in interest with no oversight.
It tinkers with the strength of the dollar and ignores supply and demand. It confuses changes in prices that come in response to supply and demand in the marketplace with movements in prices that result from changes in the value of the dollar.
The Fed’s suppression of interest rates has been a disaster for savers, money funds and lenders. Why not let the price of money be set by borrowers and lenders? (Let the market set interest rates.)
Maybe There’s Hope in the Middle
January 19, 2017
Tomorrow is the inaugural of a new President – conducted in a sea of anger and ignorance. Too bad.
In our local paper, yesterday, was a letter to the editor that was relevant, brilliant and worth sharing as a Michael’s Think Piece. The author is a former deputy who had won a medal for valor, but criticized by a colleague for being stupid by risking his life. So he asks “when do we cross the line from being brave to taking on too much? And when are we so obsessed with safety that we become cowardly?” (Think of today’s policeman.) He found an answer from Aristotle who wrote “bravery, like all virtues, is found in the middle between cowardice and recklessness.”
Think of this in the context of today’s political climate where we are increasingly pushed to extremes. From the right, perhaps represented by the Tea Party and the likes of Sean Hannity, there is a conviction for individual freedom and liberty. From the left, perhaps represented best by Bernie Sanders, Elizabeth Warren and MSNBC commentators, the conviction is for equality. The author says, and I agree: “Both concepts have their worth but when pushed to extremes, the results are anarchy or communism.”
We, as a nation, have been moving to the extremes for so long that I have lost hope in our future. We have already reached a model of governance that is unacceptable to me. I guess that’s because I find myself in the middle – between the extremes. But the middle is difficult to describe. The English language can be misleading as Bush the First found out when he said: “Know new taxes.” (Joke).
I ask: Can the knowledge that extremes are dangerous and undesirable be of some value and provide motivation toward the middle, for compromise and balance? Do enough people think that it is time to accept political middle ground as a worthy goal – a balance between freedom and equality? The author concludes with the words: “The middle is the only place where harmony can ultimately exist in politics.”
Trigonometry Averts Loss of Airplane
On a dark and stormy night in late December 1955 I was on duty at a US air defense radar base in north-eastern Italy near the town of Campoformido.
Just north of us were the Dolomite Mountains, also known as the Italian Alps. The cloud cover (ceiling) was at best 200 feet. With the technology of the day, this was not the kind of night you wanted to be flying. Suddenly, we got a call from a USAF pilot who told us he was in a storm, not sure of where he was, low on fuel and needed help. We were not really in position to give it to him. We didn’t even have a paved landing strip. There was C-47 on our base so that fliers could log in time and earn their flight pay, but they took off and landed on a grass field – only in the day time because there were no landing lights.
We did have a search radar for detection of aircraft (see photo) . It rotated steadily, sweeping the airspace with a narrow beam. When the beam strikes a flying object, a blip appears on a circular radar scope. And there was a height radar that didn’t rotate but did bob up and down in the direction it was pointed and gave the altitude of the flying object at which it was pointed. In 1955, technology was extremely crude. A blip on our radar screen was, in actual size, more than a mile in diameter. So we didn’t have as good an idea of his position as we would have liked. So, we were faced with a serious problem.
My goals were to
1. get the plane to travel in the right direction,
2. get some lighting on our field,
3. get better accuracy on the position of the aircraft, and
4. feed the pilot information about rate of decent by telling him at what altitude he should be at different distances from us as he approached the landing.
Since the grass landing strip was right next to the radar, direction was not a problem – just aim the plane at the center of the radar scope.
For lighting I asked a sergeant to get all the trucks and cars he could find, line them up on both sides of the “runway” and turn their lights on.
For better accuracy, we pointed the height radar at the aircraft. While we didn’t need the altitude information because we could get that from the pilot, it would give us better resolution than the search radar.
Goal number 4 was harder. But I came up with a crazy idea. A year earlier I had earned a degree in mathematics, and I remembered some things from trigonometry that might help. The reader might know that trigonometry was about such things as sines, cosigns, tangents, etc. But it was also about triangles, particularly about right triangles (ones that have a 90 degree angle). I remembered that ratios of the sides of a 30-60-90 degree triangle were as follows: if the short leg (opposite the 30 deg. Angle) is of length X, the diagonal (hypotenuse) is of length 2 times X and the long leg (opposite the 60 deg. Angle) is X times the square root of 3 – in symbols √3
What I needed to do was, for different ground distances from the landing point, calculate the altitude, x, in feet at which the plane should be on its decent and feed that info to the pilot so he could adjust his altitude accordingly. For example, at 10 miles from the base I had to solve for x in the equation:
10 (miles) = x (miles) × √3
or x = 10 miles ÷ √3
or x = 10 miles÷ 1.732 = 5.7735 miles
To get the altitude in feet, you multiply x by 5,280 – the number of feet in a mile. Hence the altitude should be 30, 485 feet at 10 miles from touchdown, if he is descending at a 30 degree angle. At 5 miles from touchdown the altitude should be 15,242 feet. And so on.
This is simple arithmetic today – my hand calculator gives me the square root of a number with one click. But one must remember that in 1955 we had no calculators. To get the square root of 3, we started with a guess, multiplied the number by itself, looked at the result adjusted the guess up or down and did it again. After doing this multiple times we set the square root of 3 at 1.7320508.
The result of all of this was what I thought was a miracle – the plane burst through the cloud cover in line with the lights provided by the cars and trucks. Everybody was delighted especially the pilot and his passengers that included a USO troupe of musicians and dancers. Lucky us. We all went to a large villa that I rented with 3 other officers and had a grand party.
About a year later I was dining in the Officers’ Club at a base outside of Casablanca and the pilot of that flight saw me from across the room and brought a group of people over and related the story to them.
In World War II, our site was an Italian air base. The place we used for the Officers’ Club was the basement of a building that was bombed in December 1945. It turns out that one of my golfing buddies may have been the one that dropped the bombs. On the record of his missions was a note that, on Christmas Day 1945, while returning from escorting bombers to and from the Ploesti oil fields in Romania in his P-38 fighter, he dropped some bombs on the Campoformido air base.
A Golfer’s Guide to Strategic Management Agility
In this YouTube video, I illustrate that golf is like life and business – always a series of new beginnings. You need a strategy for managing the external and internal changes of your business. All executives will enjoy the video – especially those who are avid golfers. Click on the url; below and enjoy.
How to Build a Better Future for America
Michael W. Lodato Ph.D.
I recently finished reading Zero to One by Peter Thiel, the founder of PayPal and a Silicon Valley venture capitalist. It got me to thinking about the problems in our country’s present and future and why there is very little likelihood that they will be solved.
Thiel describes two approaches to the future:
Horizontal or extensive progress means copying things that work – going from 1 to n. It’s easy to imagine the result because we already know what it looks like. If you take one typewriter and build 100, you have made horizontal progress. Globalization is horizontal progress because you take things that work somewhere and make them work everywhere. Today’s best practices, while helpful, lead to dead ends. It is copying what works elsewhere. California’s bullet train from Bakersfield (nowhere) to Fresno (nowhere) will result in horizontal progress. It’ll move people and things on trains but only a little faster. 1 to n.
Vertical or intensive progress means doing new things – going from 0 to 1. It is harder to imagine because it requires doing something nobody else has ever done. If you have a typewriter and build a word processor, you have made vertical progress.
Thiel says that most people think that the future of the world will be defined by globalization, but the truth is that technology matters more. Our challenge is to both imagine and create new technologies that can make this century more peaceful and prosperous than the last.
A lot of recent progress has been made using management processes. My own career has benefitted from it, but looking back I guess I was a good 1 to n guy. There are a lot of consulting firms and web sites making money by expressing different views on management processes. Thiel says that arguing over process has become a way to endlessly defer making concrete plans for a better future. Today, process trumps substance: when people lack concrete plans to carry out, they use formal rules to assemble a portfolio of various options. Just look at the political landscape during this election cycle for proof of what I mean. Politics has trumped policy.
The government has had some 0 to 1 moments, but, except for the Pluto flyby and similar space feats, not lately. In the 1940s it was able to coordinate complex solutions to build atomic weaponry and in the 1960s it applied high technology to send astronauts to the moon and back. But today, Thiel says, after 40 years of indefinite creep, the government mainly just provides insurance; our solutions to big problems are Medicare, Social Security and a dizzying array of other transfer payment programs. According to the indefinite logic of entitlement spending, we can make things better by sending out more checks.
On the other hand there are many examples of 0 to 1 progress in the non-government world. Look at how easy it is to communicate with others now. Billions of people have smart phones and every one of them has thousands of times more processing power than the computers that guided astronauts to the moon and back. (I know; I was in the Houston Mission Control Center during some of those Gemini missions.) They can easily reach one another from across continents and from sitting next to each other. Using voice recognition and texting, two hard-of-hearing people in the same room can communicate by speaking comments into their smartphones to create a text message and then sending it to be read by the other party. I call this smartphone closed captioning. (So far as I know, this is my invention. It is my own 0 to 1 thing.)
Consider also the 0 to 1 offerings by Google, Apple, Tesla, SpaceX and others.
Our country and the world have many, many very serious problems – from out-of-control spending – to unsustainable debt – to terrorism – to poverty – to serious civil rioting – to hunger – to disease. It has become evident, that we can’t solve these by following the polls or listening to focus group feedback or copying others’ successes. I am convinced that we might be able to solve them through careful planning, technology, and intelligence. But in our system the people in office or who get elected, on both sides of the aisle, show no evidence of planning ability or intelligence and seem to be suspicious of technology. There may be an intellectual or two but I see no evidence of elected officials with intelligence and motivation to solve any of our problems. (You can refute that statement by providing some evidence.)
We tend to confuse the terms “intellectual” and “intelligent.” For me there is a big difference between people with intelligence and intellectuals. Intellectuals are people who make their living dealing in ideas such as hope, change, universal healthcare, global warming. Their jobs are not necessarily to get things done. They don’t go after occupations where you actually have to solve problems and exploit opportunities. They are known for their books, articles, speeches and other communications, but not necessarily for the problems and opportunities they faced and what they did about them.
Don’t get me wrong, intellectuals do a lot of good things and we need them. Think of Martin Luther King Jr. and the Founding Fathers.
Intelligent people, on the other hand, when faced with problems or opportunities, come up with actual solutions. There is no guarantee that an intellectual is intelligent. At the same time, there are people who are enormously intelligent, but not at all intellectual. They do not make their living working with ideas. They may not even be learned. Yet their unencumbered intelligence can sometimes see the future more clearly than someone who is encumbered by complex ideas that their intelligence can’t sort through.
Here is the way intelligent people address problems or opportunities:
- Describe the problem or opportunity clearly. Definition includes what exists or doesn’t, to what extent, when, where. Often you will find a timeline in the description, or a process flow, or an input-output diagram
- Identify potential causes
- Set measurable objectives. (What are we trying to accomplish by solving the problem or exploiting the opportunity?)
- Define the measures to be used to gauge that objectives have been achieved.
- List alternative solutions. Include determination of potential corrective actions.
- Define criteria to be applied in choosing from among the alternatives.
- Collect, Organize and Analyze Existing DataAnalyze each alternative and apply the criteria to each and choose one that achieves the objectives. That is, make a decision.
- Then they follow a management process that insures successful implementation of the chosen alternative.
The essence of intelligence is objectivity. It’s the difference between a cognitive leap and jumping to conclusions. So someone who brings a strong political ideology to a problem or opportunity is not likely not to make a contribution to effective decision making.
Note that this discussion does not address the concepts of liberal and conservative. There are intelligent people and intellectuals in both camps.
My concern is that the problems facing our country are
- systemic, i.e. they are embedded within and spread throughout and affect the whole society and country. Any one of the problems can, by itself, bring the whole country down. Our elections have become a never-ending process of auctions, in which politicians outbid each other with promises.
- malignant, i.e. they are very serious and dangerous, tending or likely to grow in a rapid and uncontrollable way that can cause the fall of our society and democracy. They may be incurable if the problems continue to be ignored or addressed in a horizontal fashion and
- growing, i.e. they are getting worse every day.
It may be too late, (I’m pessimistic about this. I think it is too late.). But if we can elect people with big, bold ideas and the intelligence to implement them maybe there’s a chance. People who have a 0 to 1 vision rather than a 1 to n vision. People who are intelligent, unafraid of technology, and respect planning. People who intend to invent the future rather than try to improve it. It was important that we did this during the 2016 election cycle. But we didn’t because there were no such people on the ballots from either party. We never had a chance.
Inventing the future starts with planning for it. But a good definite plan will always be underrated in a world where people see the future as random. Progress without planning is what we call evolution. Why would you expect our country to succeed when it doesn’t have a plan to make it happen? Darwinism may be fine in theory in other contexts, but to make our country better, intelligent design works best.
Perhaps a breakthrough technology can be created and applied instead of incremental improvements. But we have to have the right people.
The System Launch Date is Not an Input. What went wrong with the Obamacare Website
This is a non-partisan explanation for the problems associated with the launch of the Obamacare website.
- Served as the responsible executive for computer system launches.
- Was Executive VP of a company that sold and installed project management methodologies worldwide to major organizations both government and non-government
- Consulted for two years for another project management methodology company
- Consulted to organizations when their new product launches got into trouble
- Published a book Management of New Product Launches in 2008
While I wouldn’t classify myself as an expert and at 81 my pilot light doesn’t burn as brightly as it once did, I know a lot about this stuff.
The magnitude of a product launch
A product launch is a tremendous project management challenge deserving of high quality management effort. All the components of the offering: in our case the website, service, insurance policy contracts, website support, marketing communications, etc. have to be in place and coordinated at launch time. They must be introduced with first rate promotion and marketing. Execution of each function must be crisp – on time and on target. A lot of major things have to come together at launch time. Almost every company, including the big ones, botches the launch.
Four Key Issues
There are four key issues on launch projects:
- The scope of the project and system
- The resources applied to the effort
- The quality imposed
- The schedule – including the launch date.
If you set the scope and apply resources appropriate for the scope, while imposing a level of quality, you can develop a doable schedule and completion (launch) date. A few words about each of the four issues follow.
The Scope: The project scope gives the objectives, desired project outcomes, constraints to be considered, quality standards and user expectations. The system scope describes how the system would work, the features and functions, security of information, storage capacity, speed, number of users at one time, speed, number of policies handled, maintainability, ease of use and other capabilities. One manifestation of the system scope is the detailed system design.
Resources: The major resources required on launch projects are people (by numbers and capability), technology (methodologies, computers, software, and standards), information, facilities and equipment, and support services. Resources are identified and allocated as part of project planning.
In the planning, project work in broken down, level-by-level, to define individual tasks. We want tasks to be bite-sized (big enough to chew on but not so large as to choke). The resources that will be applied to each are determined and task durations are calculated. For people resources, I recommend that a par estimate of hours to complete a task be created. Par estimates assume the task will be performed by a single individual, of average performance, working at least 90% of his/her time on the task and where there is no more than one user to have interaction with during the task. Then adjust par estimates for the environment. Adjustments are made for team size, average team experience, percent of time on other work, user support, program complexity and a few other things. A record of the assumptions made relative to these issues should be kept for reference when specific individuals are actually assigned and when the project gets into trouble.
Quality: This issue deals with all the things that will be done to ensure that the system meets the quality standards established during the setting of the scope. So, tasks have to be included in the project plan for such things as load testing, alpha tests, beta tests, quality reviews, project reviews, document reviews, status reporting.
The Schedule: Tasks are linked together recognizing precedence relationships. Some tasks can be done in parallel while others require the results and/or talents from other tasks and therefore must be scheduled to start after the other tasks are completed. Using the task durations for the lengths of the activities, networks of tasks can be built and timed. A path is any connected sequence of events and activities that has a starting event and ending event. The project critical path for the launch is any path along which slippage in any activity will cause an equal amount of slippage in the launch date. The total elapsed time required to do all the activities on the critical path is the duration of the project.
A Problem Imposed by Management
Suppose the Launch date turns out to be March 30, 2014 and management demands that it be October 1, 2013. If the original schedule was done with integrity there are three alternatives to shorten the project schedule:
- Reduce the scope, and/or
- Add more resources, and/or
- Reduce system quality
But, in my experience, management often will not tolerate any, or only a little, reduction in scope. So an earlier than planned launch date can only be accomplished by alternative B and/or alternative C.
Adding resources might help but not as much as you think. For example, adding another person to a one person task does not reduce that task’s duration by half. A lot of the work just can’t be hurried much. The old saying, “nine women in one month do not make a baby” is applicable. Replacing a junior performer with an experienced one will help. In addition, adding resources adds to the project costs, sometimes significantly.
When the problem can’t be solved by reducing scope or adding resources, compromises are made on quality and things really get out of hand.
How to Get Out of Trouble
Find out where you are REALLY. You can’t go from point A to point B if you don’t know where point A is. I’ve built a list of readiness requirements for a launch to be successful. These are capabilities that should be in place at the time of the launch. And I’ve developed a set of checklists for measuring the work that is being done to meet each readiness requirement and for getting a clear picture of what work remains and when it can be expected to be completed. For readiness requirements that have not been completely satisfied there is a set of related tasks that, once completed, would lead to satisfaction of the requirement. There are four issues to be addressed relative to each related task identified:
- Has the task been defined? (You would be surprised at the number of times required tasks have not even been defined.)
- Has it been assigned?
- Is there an agreed upon task completion date?
- Has the task been completed?
When the last question has been answered with a yes, the readiness requirement has been met.
Estimate cost and lead times to fill gaps.
Estimate and schedule the remainder of the project. Insist on full time staff.
If the new launch date is unacceptable
- Try to reduce the scope
- Add people if task dependencies make it practical
- Make judicious quality compromises only as a last resort.
Let’s hope the new launch date of November 30, 2013 was derived and not imposed. We’ll know soon enough.