The Spelling Bee and Other Worthless Championships

 No kid should ever spend a minute watching the Spelling Bee contest, leave alone bother to spend days, months and years of valuable time practicing for it.

There are more foolish contests in this world, but I am hard pressed to name one.

But why, Sanjiv?

The Spelling Bee teaches you all the wrong skills, namely memorizing meaningless strings of letters that form words. Nobody needs this skill. As I type this essay about this infernal contest, I make spelling errors galore. And yet, the editor fixes them on its own – for the most part. There is nothing to fix the words or the (lack of!) thought that went into them.

Spelling is a worthless skill. You may as well teach your kids the fine art of stenography or how to become a telephone operator.

There is a good reason why kids with Indian origins have won the last 11 Spelling Bee contests. Their parents went to school in India and learnt the art of learning worthless skills. One of these is rote memorization of strings of letters that form meaningless words like “marocain” that they, nor anyone else shall ever use.

Indian schools are notorious for creating a curriculum that is completely devoid of independent thought, problem solving, or imparting even the most basic skills. Just remember some rubbish, like how to spell the word marocain, and you get to pass the final exam. Yay! Now go a job and become someone else’s problem.

Perhaps India should have contests about memorizing random numbers. The first one to recite 1200 digits wins!

The kids in these contests COULD have been taught more useful skills, like constructing useful sentences and thoughtful paragraphs. That skill that seems to be a lost art. I can’t seem to find a decent writer to save my life. Perhaps, we should have a writing contest, but then it could not be packaged into nice TV prime time segment, complete with cute children with glasses regurgitating dictionaries.

The kids COULD have participated in hackathon where the smart kids are writing useful code that will be used in billion dollar products and websites. Then they get hired, by the next big startup to be the head of department that writes the core of next hot IPO.

Do your kids a favor. Let them take those soccer lessons or teach them useful things like gardening or fixing cars, carpentry or making websites. They will learn useful things, like solving problems and working with people.

Or, you could teach your nerdy kid how to rot in front of a dictionary all day.

Your choice.

Confidence is Everything

If I was running or was in any way responsible for a large economy, the first thing I would worry about is how secure people and institutions felt about their lives and their money.

Capital expenditures are a very important part of a large economy like this one. These expenditures are essentially multi-year investments that institutions and people make in order to earn money or somehow improve their lives. That washing machine you just bought for your new house? Two large investments, both made for multi-year periods.

You will not make these investments if you think your life may be upended tomorrow but some kind of an economic or other storm – such as deportation.

Similarly a business will not make such an investment (like a $500 million new plant), if there is a chance that they will suddenly not be able to sell product from that plant to all their markets.

When you contemplate a 20% border adjustment loudly, as the government, you are sending a signal to everyone contemplating such an investment. DON’T BOTHER - unless your consumer is entirely domestic. When you impose a 20% tax on your side of the border, you know the other side of the border will retaliate with a 20% tax on their side of the border. And suddenly, you have poorer consumers on both sides.

Aside from poorer consumers, you will have poorer producers on both sides of the border, who will start going bust in droves because now they cannot sell product where they were selling product a year ago. Suddenly, they are laying off their employees and then you have economic chaos in every direction.

The system will eventually re-converge in a few years, with domestic producers picking up the slack at higher price points. But even they will be affected by the confidence problem. If I invest now, will this tax be eliminated in 2 years and then I go bust?

Meanwhile, back on the farm you have a bunch of immigrants wondering if they should apply that coat of paint and replace that dying washing machine, or maybe even buy a new house. Suddenly, they are panicked consumers hoarding cash and not even going to the movie theater. If I get deported, how much cash will I need?

The problem is much bigger when you realize that it’s not just the undocumented immigrants who are wondering if they should hang around. Meanwhile, as they dribble out the United States loses skills it desperately needs – across the economic and skill spectrum.

Let’s not forget tourists who decide not to bother showing up because they just might not be welcome here. Who wants to buy expensive tickets and book non-refundable rooms and then be turned away at the border? Let’s go to Paris instead.

Creating uncertainty reduces consumer and business confidence. The University of Michigan has a survey that attempts to measure this confidence. It’s far from perfect but is a reasonably good leading indicator of where things are headed. It’s not exactly rising – and not without good reason.

When you affect confidence, you affect capital expenditures, operating expenditures and hiring and suddenly you have lower growth – even (and especially) if you never impose those border taxes. This is no way to accelerate growth in an economy. You can douse short term fuel on the fire – like a tax cut. That will only cause a few big flames that will lead to a lot of smoldering in just a few seconds.

Why Democrats lose Elections - And What They Should Do About It

The Democrats are great at marketing to their own people. The problem is that if you want to win an election, you actually have to reach out the other side and frame the message in a way the other side can understand.

The one line from the Hillary Clinton clown parade that I remember was “look at the website. It’s all there”. Now, I am sure there was a website and have no doubt that “it” was all there. However, I never bothered to look. Neither did most Americans.

On the other side was a boisterous chant “lock her up! Lock her up!”. Never mind that there was no reason to lock her up, or a website that explained the reasons to lock her up. It was just a brilliant slogan based upon a sliver of non-fact.

If you want to win the war of words about the “Endangered Species” Act, rename it to the Noah’s Ark Act or Saving God’s Creatures Act. The rural world cares not one lick about “Endangered” and has no knowledge of “Species”. You want to win a war of words that involves them, use the terminology they use in Church, because that is where they go – a lot.

The Democrats like to use the phrase “conflict of interest” to describe Trump’s obvious conflicts. Does this resonate with the masses? What is a Conflict of Interest anyway? The man is set about making America Great Again. If you want to win a war of words, you have to weaponize your phrases, not use some educated Ivy League economic club terminology.

Then, you have to keep using that weapon until everyone else is using your weapon to describe the problem.

If you want to describe Trump’s Russia problem, you need to call him a Russian Stoogie. Name him Vladimir Trump. Call him Traitor Trump in your speeches, Democratic Congressmen and Senators – because he Sold Out. Don’t hold back on the caviar and vodka jokes. Make cartoons with Trump sitting meekly in Putin’s kangaroo pocket drinking from a baby bottle.

If you want to keep the “Estate Tax”, don’t let Republicans rename it to the “Death Tax”. Call it the “Aristocrat’s Tax” and talk about how it was designed to make sure future generations actually work for a living instead of passing on wealth to their children.

If you want to pass a “Carbon Tax”, quit calling it a “Carbon Tax”. For heavens, sake what is Carbon? And I am being taxed enough already! Call it “Saving God’s Green Earth Act”. It’s the Law that prevents Florida and California going under water. Who cares if Antarctica is melting? Let it melt!

And if you want to make Conservative into a bad word, quit calling Republicans Conservatives. Call them the Primitives. They want to bring back Primitive ideas and take the world back to an Ancient place. Make Conservative into Primitive and make the whole thing into a bad word like “Liberal”.

Repeat these terms repeatedly (again and again!) even if there is not a sliver of fact to them. Your opposition has no interest in facts. Your job is to make other people repeat your slogans.

You want the country to kvetch about the health care mess, tell them to “kiss your health care goodbye” and how your cancer stricken children will die on the streets like they used you while people go bankrupt. Make jokes about how the Republicans are planning on a Million Dollar Deductible on your health care plan. Don’t talk about Obamacare repeals. The GOP made sure that the word “Obamacare” is toxic.

And if you really want to win, couch your health care desires in pro-life terms. You are the Pro Life party. You want to make sure all Children don’t die because they lose their health care. You want to make sure people don’t have heart attacks and diabetes. You want HUMAN LIFE to live! Who is going to be opposed to that anyway?

Never mind the facts. They do not matter. What matters is how you phrase what you want. Your job is to come up with slogans that will make your positions appealing to the vast majority of this country – not just the liberal elites living in big cities.

And Chicago Loses Again...

There is something hopeless wrong when the highest paid teachers in the country run the worst school system with the shortest numbers of hours and demand big raises and no accountability whatsoever.

Missing from the Union’s chants to bring down the Mayor, during the recent strike, was the question “Are we creating value for our (little) Customers?”. In a school system that is funded to the hilt, with an average wage roughly $20,000 per year higher than the national average, should the discussion really be focused on teacher wages and the lowest level of accountability possible?

As a union, when you divorce yourself completely from the outcome and focus on “Me, me, me and me!” you will find that your Customer then finds themselves irretrievably and irreconcilably on the path to removing you from the discourse. You have become an entity that is utterly and completely oblivious to reality of the situation.

In this case, the reality is the slow but study decline in student enrollment across the spectrum in Chicago. Parents like me ask, “Do I really want my kids to see any part of the Chicago Public School system” as they slowly but surely (like me) migrate to the suburbs. And when they do that, they ask the question “While I am at it, should I move out of the state as well?”. And, for the decades the answer has been yes, as Illinois (despite all the immigrants moving in) loses net population on a daily basis.

I don’t have a single friend that has any kids enrolled in a standard Chicago Public School. Either they are in private schools or magnate schools. Some pay the privilege of paying upwards of $40,000 per year for their children’s private education.

I had a an employee come to me the other day and ask

“Why don’t you propose Solution X. The Customer will pay for it”.

“Because”, I answered, “It does not make sense for the Customer”.

“But they will pay for it. There is money on the table Sanjiv!”

Because, Solution X does not create value for this Customer. And if they buy something that does not create value for them, they will ultimately not be able to pay for it. And then, one day, they will ask themselves, “Can I do this cheaper elsewhere?” rather than asking the question “Can Sanjiv help us create more value out of what we have?”.

If I was running the union, I would go out of my way to let the world know that I was committed to getting rid of the lousy teachers because they give the union a bad name. I would even forgo the pay increase and would likely even agree to the extra hours because I was already one of the highest paid union in the country. Then, I would negotiate an agreement that contained an element of job security.

The Mayor would probably give me the job security.

Now, the Union has set itself up on a path of serious and severe school closures followed by massive layoffs, and raises that are likely to get cancelled – as they have in the past.

If the Teamsters helped GM create value by maximizing productivity, one day they would be standing next to the CEO of GM and hear him tell the world that the Union was indispensable to the job and he was working hard to ensure they stayed around. Instead it’s an “us vs. them” war (a word the union likes to use a lot) and it’s a war that the money wins every single time. It may take decades, but money always finds a way of getting a choice. For Chicago parents, that choice could be (and increasingly is) the State of Texas.

And the savings I find my Customers? They find a way to spend that and more on us.

Thats it, IBM?

So, Watson wins at Jeopardy. Now what to do with Mr. Watson?

The last time IBM did something truly stunning,  “Deep Blue” defeated Russian Grandmaster Gary Kasparov in 1996. To celebrate its victory, IBM dumped the machine in the trash and went forward in its quest to sell large blocks of time to Fortune 500 companies.

In all fairness, IBM just does not know how to compete with products. The products it now sells are difficult to replicate platforms like mainframes, servers, esoteric software. To its credit, IBM at least knows this and has dumped mass market products to which it lost bruising battles to Microsoft and hardware manufacturers.

So, it comes as no surprise to me to see IBM pitching “Health care applications” and other arcane uses for its incredible achievement. The people in that ivory tower just have no idea how people use computers these days.

How about a search engine for Watson?

Google’s natural language processing sucks. Nobody else even comes close to Watson’s ability. The keyword + hyperlink “votes” model just does not cut it when it comes time to answer natural language questions. There is just too much garbage out there with almost everyone trying to manipulate search results for their commercial gain.

A search engine that allows people to get answers quickly will get immediate market share with a giant advertising bounty to boot. If there was ever a Google killer, this would be it. If executed well, Google’s primary business could be easily leapfrogged in no time. Clearly a lot of work would have to be done to make it all work, but the upside is so huge, it is almost a sin not to do it. Why not setup a funded independent unit that is partially venture funded with a world class management team?

But, visionaries, these people at IBM are not. They have become a giant Body Shop (aka “services”). It amazes me, that they have an R&D budget focused on Artificial Intelligence. They know nothing about  commercializing these advances.

I never understood why the Chess grandmaster was not put on the web during its early days. It would have more than paid its way at $10 per game. You would have had people like me lining up all day to play against a grandmaster. Where on earth do you get that opportunity? It would have given IBM a connection with end users during the early days, and a way to pitch its platforms – if not make money on Chess. Instead, “Deep Blue” made it into the dumpster. 

I don’t have much hope for Watson. There are just too many bodies to sell at IBM.

America Loves Socialism

This blog is not about the recent bailouts, even though they make for a good headline with the S-word on it. It’s not even about the health care plan.

It is about big business’s tendency to suddenly develop amnesia when they happily receive handouts, welfare payments and subsidies at taxpayer expense.

Take the pharmaceutical business. A large chunk of drug and other medical device discoveries are funded entirely by the National Institute of Health (NIH). The discovery work happens for years on end in a myriad series of mundane labs in Universities across the national. Researchers apply for and receive numerous grants to study the minutia of the human body. In rare cases, they stumble onto something useful. Sometimes, that useful discovery can be turned into something really useful that is worth hundreds of millions and in many cases billions of dollars in revenue.

While this is an excellent example of American ingenuity at work, except for one thing. The highest risk capital used to fund this discovery comes from the taxpayer. Unfortunately for us taxpayers, Uncle Sam is not allowed to own any patents. So, the intellectual property then falls into the hands of the University and the researcher combined. A venture capitalist that funds a high-risk early stage discovery worth something would get 90% ownership. The Federal Government gets nothing.

The researcher and the University start a company, financed by venture and public funding and eventually a drug or device gets to market. And that is when the” free market talk” begins. The company charges the same taxpayers a $1,000 a day for this drug and tells us all that free market principles ought to apply here.

Correct, except someone needs to account for the dollars the sucker paying $1,000 per day paid to develop this drug in the first place. And that is when these companies become amnesiacs. The classic example is Amgen, which was founded on a set of discoveries related to erythropoietin at University of Chicago and Columbia University, both NIH funded labs. Amgen now generates over $2 billion a year by selling this discovery back to the people who funded it in the first place – all under the guise of “free market”. The taxpayer who paid to discover it, gets zilch.

Next, consider the oil business. Let’s forget the hundreds of millions the feds pay the oil companies as “incentives” to find oil – even though it reached a record around $140 a barrel. These leaches take the money while preaching “free market” and fight like cats and dogs to keep the subsidy.

Let’s instead focus on the $700 billion defense budget. We would not require this outlandish budget if it were not for oil imports. We could simply abandon the Middle East and it would return to the desert complete with camels and Bedouins in less than 20 years.

Taking a rough approximation that the oil protection racket costs us roughly $500 BILLION in defense spending per year, and dividing it by the roughly 2 billion barrels per year imported from OPEC works out to $200+ subsidy PER BARREL of oil imported from OPEC. Given that oil prices reached a record around $140 per barrel, it’s easy to see what a giant subsidy we give Exxon and every damn fool who wants to drive a giant SUV. In a “free market”, this would get charged to oil consumers in the form of a tax to help pay for obtaining this gunk bought from people who want nothing better than to blow us up. The unsubsidized price works out to roughly $7-9 per gallon of gas (depending on taxes) during a period when it is now selling at the pump for roughly $2.50.

This brings us in much closer to the European price of gas. Turns out, the Europeans are pricing oil much closer to the real cost of obtaining it, and us Americans the ones subsidizing it.

Meanwhile, the free marketers at Exxon lobby against solar panels, calling the 30% tax credit a subsidy. In fact, this is a great deal when compared to the subsidy for oil. Let’s not forget nobody has to die to put those solar panels up.

Were we not to subsidize oil to this extent, our consumption would be dramatically lower, our production substantially higher and a thriving market in alternatives – which would now be viable without any government subsidies.

Like a wise man once said, it’s only socialism when you and I get a benefit. When Exxon, Amgen and Citicorp get something, it’s called the free market.

Disclosure: This blog was first written in Dec 2009 and was on the www.chinetworks.com website briefly

Resistance is futile

I finally saw “The Day the Earth Stood Still”. Its yet another move about Aliens plundering mother earth and wiping out the natives in order to obtain (fill in the blank) _____________, written by some screenwriters with clearly a lot of dollar signs in mind and not a lot of fact.

Only this time, the screenwriters seem to have a recent prediction by the venerable physicist Stephen Hawking and noted astronomer Marek Kukula, around why these (presumably illegal) Aliens want to “conquer and colonize” everything in their path. In Earth Stood Still, it was because humans were ruining the place and there were very few habitable planets in the cosmos.

Balderash.

Perhaps, the problem is that we as a species like to project our experiences into what we believe is the next big thing. Because Columbus and his ilk plundered the big empty space between China and Europe, and wiped out the natives (as Dr. Hawking predicts will happen with Earth), perhaps the next guy is going to smear us out. Why else would they spend so much “money” to get here?

Dr. Hawking ignored some important facts. Just to get to Earth, from many light years away, you need mastery over time, space, energy and matter. More specifically the conversion of matter into energy and more critically, energy into matter.

There is no chemical formulation possible that allows propulsion and life sustenance for inter planetary travel, leave alone intergalactic travel. If aliens do exist, and its physically possible for them to get to Earth, they must have absolute engineering mastery over the mass/energy conversions – essentially nuclear reactions. Without it, it is entirely impossible to move across millions of light years.

Basically, the alien speicies must have the capability to take any object, convert it completely into (huge amounts!) energy without blowing up their spaceship, their planet or anything else. And then, they must be able to take that huge amount of energy and use it to create some other object or use it in a propulsion system of some sort to help you them millions of light years – quickly.

If you can generate infinite amounts of energy and convert it back to mass in an easy way, you can literally have anything you want. The concept of a rich/poor divide goes away, since anyone can make anything they want. This is what is absolutely needed for unlimited space travel and this is what any civilization must have BEFORE they can even get to Earth.

And if they have the technology to make anything they want, well why on earth would you need Earth? If you were an alien being in an infinite universe full of infinite planets that can be traversed in short time periods, what could you possibly want from the 3rd rock by some average star in mid-life.

Well, for one, you may want to check out the buzz in interplanetary circles about some kind of creepy crawly creatures with ancient transport and incessant quarrels. You may even want to write a research paper and collect a 3D scan of one for a catalog. Maybe even an actual sample.

What else? Coal? Oil? Unobtainium? Unpredictable weather by a supposedly sunny beach? The latest Xeon processor?

Ludicrous.

The universe if full of every kind of element on the periodic table. There is nothing an alien civilization needs from us. Definitely not oil, and most certainly nothing that Intel can even imagine leave alone produce. As for the sunny beach, I am willing to wager that a civilization that has engineered a matter energy conversion can create a pretty nice beach on a spaceship, without the weather headaches. Assuming, of course, that is their definition of “nice”.

If an alien civilization wanted this planet, they would have taken it a long time ago. And, no, our computer viruses do not work on their spaceships and our bacteria would not kill them and no, our pop guns and water pistols just won’t work.

So, why don’t they contact us? It’s the same reason why you don’t disturb the animals on a wilderness tour. You are there to observe, not alter their lifestyles. On Star Trek, it was known as the Prime Directive – “no Starfleet personnel may interfere with  … alien life and culture” as long as they do not have the ability to travel at “warp” speeds. And that was interpreted as a “Do Not Contact” order.

So, quit worrying. You will not be assimilated.