Spero Consulting

Archive for October 31st, 2008

Dis­parate issues linked by their over­whelm­ing smallness.

It’s been a few of weeks since our last post, and such a long gap is highly unusual as we’re rarely at a short­age for words. We’ve been busy, but more impor­tantly, we didn’t feel com­pelled to write about our nor­mal top­ics of inter­est; despite the mar­ket volatil­ity, lit­tle has changed in the inter­ven­ing days.

In addi­tion, the accu­mu­lated effect of see­ing so many behave in such small ways over large mat­ters was and is rather sad and depress­ing. No, we’re not talk­ing about the elec­tion cam­paigns, which, by the grace of God do have a def­i­nite end­ings – if only for a year or so until the next ones begins.

The Small­ness of Our Lead­ers: in the finan­cial cri­sis, few indi­vid­u­als took right, rea­soned, and prin­ci­pled courses of action or both­ered to think before they spoke. While we expect such fallen behav­ior on a day-​to-​day basis, we do hope that our elected and appointed offi­cials are able to rise to the occa­sion. Their fail­ures to do so – their panic and expe­di­ency – remain sources of dis­ap­point­ment. Here is a very, very, very small exam­ple that has stuck with us for nearly a month and was likely unno­ticed by most.

In the days between the two Con­gres­sional votes on the bailout, we saw a Con­gress­man from Ten­nessee rant about mark-​to-​market account­ing. He knew no more about account­ing issue than he did about any­thing else, except talk­ing per­haps, but that didn’t stop him.

While we lis­tened to his dia­tribe against it, we thought, hmmm, not a sin­gle spe­cific ref­er­ence to the under­ly­ing issues of rel­e­vancy, reli­a­bil­ity, eco­nomic effi­ciency, etc. Replace “mark-​to-​market account­ing” in his oth­er­wise generic spiel, “we have to some­thing about mark-​to-​market account­ing before it…,” and he had a ready-​made speech for all that is evil du jour: AIDs in Africa, the lack of clean water in vil­lages, ille­gal drugs, legal drugs, drunk dri­ving, inter­na­tional piracy, child labor, greed, for­eign car man­u­fac­tur­ers, can­cer, dia­betes, Wall Street exec­u­tives, oil prices, etc., and no other words would have changed. He had a handy demo­niza­tion tem­plate, and that made actual con­tem­pla­tion super­flu­ous; so, he had changed his mind and would vote for the bailout.

A the time, we thought, unfor­tu­nately, there are no lit­er­acy or poll tests for vot­ing in Con­gress. Or was it another exam­ple of voter fraud.

As we men­tioned, it is a very small exam­ple, but it suf­fices for small men and their lack of depth, and it also relates to the main pur­pose of this post.

A Few Words on Finan­cial Mar­kets: By the way, on those mar­ket and incen­tive top­ics – our nor­mal blog fod­der – we stand by every­thing that we’ve writ­ten and con­tinue to believe the bailout was and is a mis­take. Even if it does mit­i­gate the liq­uid­ity cri­sis – and we’re not sure that it has – we ask, at what cost to our econ­omy and our freedom?

For exam­ple, we’ve been mus­ing that many gov­ern­ment offi­cials have been able to quite inad­ver­tently meet their elec­tion year promise of sub­stan­tially reduc­ing energy costs – even before the elec­tion. But at what cost? They can rightly argue that their actions – whether planned or not – have saved bil­lions for the Amer­i­can peo­ple as oil has moved from its peak of $147 dol­lars per bar­rel to its cur­rent range in the mid-​60s. Unfor­tu­nately, it has been at the cost of tril­lions of dol­lars of wealth.

On that topic, in April, we pre­dicted (wildly guessed) that oil could be at $40 per bar­rel by year end. We could actu­ally see it quite lower – even in the $25 per bar­rel range. Our ratio­nale: the cohe­sion of OPEC and its part­ners, par­tic­u­larly Rus­sia, will likely fail­ure, and we expect large invest­ment funds – like CALPERS – to con­tinue to liq­ui­date their com­mod­ity hold­ings since equity val­ues have plummeted.

We’ll have more to say about eco­nomic issues in the next few days, par­tic­u­larly with respect to the recent change in tax poli­cies that pro­vide a ben­e­fit – the absorp­tion and use of loss car­ry­for­wards – that the IRS is per­mit­ting acquir­ing banks to take in the recent mergers.

That pol­icy change, while far less grace­ful and effi­cient, is not much dif­fer­ent than our idea to solve the mort­gage cri­sis – but not the liq­uid­ity cri­sis; so, pro­vides a small bit of hope. (Search the archives or read just about any­thing we wrote in Sep­tem­ber and early Octo­ber. We’ll still not sure that offi­cials real­ize that these two crises are distinct._ It is not nearly as clean or as pre­cise as our approach, but that’s not why we are writing.

Sarah Palin: as we wrote almost two months ago, we con­tinue to be amazed at the sense­less vit­riol and sheer hatred spewed towards Mrs. Palin, par­tic­u­larly among Hol­ly­wood and New York celebri­ties, who put forth as much thought as the above-​referenced Con­gress­man from Ten­nessee. As we wrote in our ini­tial post, they hated her before they knew her, and they could hate her with such ease because of who she is – some­one very sim­i­lar to many peo­ple we know, like, and love: con­ser­v­a­tive, pro-​family, pro-​life, middle-​aged, reli­gious and gun-​totin’.

But, we must add, we’re not sur­prised that so many thought­less and dull folks dis­miss her small town may­oral expe­ri­ence and her small pop­u­la­tion guber­na­to­r­ial expe­ri­ence. It says more about them and their lack of expe­ri­ence and intel­lec­tual empa­thy than it does about her.

We spent ten years in acad­e­mia, but it didn’t take that nearly long to appre­ci­ate the valid­ity of Henry Kissinger’s quote that – and we para­phrase – the fight­ing in acad­e­mia is so vicious pre­cisely because the stakes are so small.

What’s true in uni­ver­si­ties it is also true in small towns and most other orga­ni­za­tions as well, includ­ing the staff depart­ments of large corporations.

Regard­less of all the many ways that one can describe func­tions of gov­ern­ments, at a min­i­mum it involves resource allo­ca­tion and gath­er­ing (fund­ing). In other words, who gets what the gov­ern­ment has and who has to give for the gov­ern­ment to have.

Does the reader think that resource allo­ca­tion deci­sions are eas­ier in a small town than in the naiton’s cap­i­tal? One’s pur­chase deci­sions in a small town may aid or bank­rupt a neigh­bor, an acquain­tance or a for­mer class­mate who walks or dri­ves by your home every­day or attends the same church or shops at the same stores or eats in the same restau­rants. Con­sider that as opposed to doing this or that to a neb­u­lous and abstract groups like “small busi­ness­men” or “big cor­po­ra­tions?” in a locale where almost every­one – mostly strangers – are rep­re­sent­ing some­thing or some­one else: rather than directly feel­ing the pain of actions and decisions.

Does the reader think that tax­ing deci­sions are eas­ier in small towns than within the fed­eral gov­ern­ment? Raise prop­erty assess­ments and earn the wrath of those same neigh­bors, acquain­tances, and for­mer friends.

[Where is one more likely to receive the imme­di­ate feed­back from uncom­fort­able con­ver­sa­tions and cold stares? In Wash­ing­ton or Wasilla? Where is one more likely to receive neg­a­tive feed­back fil­tered and diluted through a staff of gut­less, careerist syco­phants? Wash­ing­ton or Wasilla? Yeah, the ques­tions really do answer them­selves. (Our hypoth­e­sis: local politi­cians find more dog waste in their front yards than aver­age cit­i­zens do.)

In one of our own vol­un­teer activ­i­ties, we allo­cate a pre­cious, scarce, and first-​class resource among a group of indi­vid­u­als who do not pay for its use. Such a set­ting is, of course, a recipe for exces­sive demand. Based upon that expe­ri­ence we’d cer­tainly argue in Mrs. Palin’s favor over some­one whose main pri­vate sec­tor expe­ri­ence seemed to be orga­niz­ing beg­ging efforts directed towards the fed­eral gov­ern­ment. (In our case, we joke that the best evi­dence of fair treat­ment is when every user is annoyed with us so try to ensure it.)

Of course, the con­tentious reader might always argue that such small towns are so cor­rupt that there is no notion of tak­ing actions that annoy friends and acquain­tances, i.e., the whole objec­tive is to enrich them (and one­self) while in town hall. In that case we’d then argue that it, indeed, pro­vides excel­lent train­ing for work in the nation’s cap­i­tal. But, that’s not really why we’re writ­ing, either.

Our point is much smaller though it is related to Mrs. Palin.

Mr. Letterman’s Per­sis­tent Lack of Humor: we were too involved in our work to change the chan­nel when David Letterman’s show began last night. We don’t recall any of the mono­logue bits, but they were as lame as usual. (No one, in good con­science, could call his lines jokes.)

What we do recall was a skit where one of the child actors wore an over-​sized ver­sion of Sarah Palin’s pass­port as a Hal­loween cos­tume. It was stamped Mex­ico and Canada (and the USA) and nowhere else, and that was it. That was the whole “joke.”

The car­di­nal that flies into and bangs its head on the fam­ily room win­dows hun­dreds of times each morn­ing exhibits about the same level of wit.

I guess the point of the pass­port cos­tume was to show that Mrs. Palin hasn’t trav­eled much out­side of Alaska or the US. Pre­sum­ably, such travel is now a qual­i­fi­ca­tion for Vice Pres­i­dent because…well, who knows why. It must be some­thing that only some­one as sophis­ti­cated and learned and cul­tured as our Ball State grad, Mr. Let­ter­man, could appre­ci­ate. Per­son­ally, we’ll take some­one will­ing to kill a moose. It takes more skill and courage.

Now, maybe we’re slow or just don’t pay enough atten­tion, but that’s when it finally hit us.

Mr. Let­ter­man has been unfunny for years; that’s not news, we and many oth­ers have writ­ten about that, and it seems to be true since at least the Rea­gan administration.

No, what we’ve con­cluded is last night was not only is Mr. Let­ter­man inher­ently unfunny, but to do that night-​after-​night, year-​after-​year, requires a staff. He can’t be doing the very lit­tle that he does alone. It is very likely that he has a very large and equally untal­ented staff of writ­ers excret­ing such mate­r­ial like ele­phants with dysen­tery five nights a week.

As we see it, it would take a sub­stan­tial num­ber of inse­cure and untal­ented indi­vid­u­als to gen­er­ate the group think required to per­mit such crap to air. Why, at its essence, it almost seems like gov­ern­ment work.

If it were only a few writ­ers, it seems that they would be more likely that they would be able (1) to main­tain their self-​respect and dig­nity and judg­ment, which would then per­mit killing such lame ideas when they were ini­tially dis­cussed or (2) to have the dis­cre­tion not to men­tion them to oth­ers in the first place.

Of course, we must con­sider all pos­si­bil­i­ties, and it could be the case that Mr. Let­ter­man only hires degraded indi­vid­u­als will­ing to do any­thing for money or nox­ious house­hold chem­i­cals. (In that case, he might be a bit more effi­cient than we sus­pect and is able to gen­er­ate his (albeit low-​quality) out­put with only a few comrades.)

So, why does he get the big money? Well, this is one time when we must pro­pose a labor the­ory of value as the answer. Per­haps, the per­sonal effort and sac­ri­fice required to asso­ciate with Paul Shaf­fer for an hour a day jus­ti­fies the com­pen­sa­tion. Bet­ter he than we.

Happy Hal­loween, and don’t worry, it gets worse before it gets bet­ter. The elec­tion is next week.