Fueling Conservation

The recent drop in oil and fuel prices has raised a new question: will Americans' recent decreases in driving (which seemed to be a consistent phenomenon as prices rose) evaporate like gasoline vapors on a hot day?

The answer -- at least in the teeth of severe economic turmoil -- seems to be "not yet."

Of course, this isn't all good news. As Jenna Wade of Roseville, California explains:

Q: How have plunging gas prices changed your driving habits?
A: Not at all. I’ve no job to go to any longer so I no longer drive.

Of course, others simply see their reduced driving as a good habit worth maintaining, and a way to keep money in the bank.

Speaking of keeping money in the bank, some utility companies want to be paid -- just as they would be paid for delivering a kilowatt-hour of electricity -- for investments that help reduce consumer consumption of energy. Their argument is that conservation is capital intensive, and that utilities have a lower cost of capital, so they should be paid to deliver what consumers aren't necessarily in a position to afford -- but to be compensated for it. Depending on the lifespan of some of those improvements, and the accuracy with which savings can be modeled, that might make sense. On the other hand, efficiency that leads to excess -- making the house colder in the summer than previously, because the home holds more of the chill -- might not lead to net gains. There may be some expenses users don't care to avoid, if the total cost isn't big enough to them. The idea is interesting, but I'd like to see the math. And maybe a local demonstration project to see that it works on a city-wide basis, among people unaffiliated with the power company.

If we really can induce good energy practices, all the better.

One Laptop Per Child

If Microsoft had its way, that'd be one software vendor per child.

The One Laptop Per Child (OLPC) program, led by Nicholas Negroponte, is hoping to deliver budget laptops around the world to keep even low-income people abreast of modern technology and to allow them to leverage high tech to improve their lives. OLPC is, in essence, about trying to maintain the possibility of modern education in a world of scarce resources; it is an idealistic effort to provide the tools needed to make sure children can learn to use the tools that make the future possible.

Microsoft's efforts to get pre-installed status on the XO haven't been exactly smooth. OLPC, after all, reportedly rebuffed a no-fee offer by Apple to license MacOS X (whose open-source kernel is derived from the FreeBSD project to which Apple is a contributor, and the Mach project which Apple's retired Avadis Tevanian had nursed at MIT), purportedly because of non-open-source code also involved in MacOS X made the system politically unsatisfactory to OLPC. But apparently you can buy satisfaction. Microsoft, apparently concerned about a future in which discount laptops around the world would obsolete its proprietary file formats and render its high-margin products irrelevant, poured significant resources into a version of Microsoft-Windows designed to run on XO. Microsoft has insinuated its products into the OLPC program, even to the point of causing hardware modifications in OLPC in order to allow its enormous code to be stored and run on the machines. The fact that retail buyers in the US are not yet assured the ability to buy XO with pre-installed Microsoft products is of little concern to either Microsoft (which assumes you as an American can afford a costlier copy, and will do so on your next computer purchase) or OLPC (which is trying to look like an Open-Source advocate).

The fact that towns in Columbia have begun deploying Microsoft-Windows-equipped XO machines in schools (at least in part on Microsoft's nickel, hence the product placement opportunity) suggests that OLPC hasn't really stuck to its principled stance that recipients need to enjoy the Four Freedoms when they use and study software. OLPC is more interested in keeping its own project from becoming irrelevant through lack of funding. And there, OLPC and Microsoft can find common ground.

Citizens Clobber Klan

The Knights of the Ku Klux Klan suffered a potentially serious economic blow when a not-really-an-illegal-alien-after-all (an American of Native-American and Panamanian descent) victim of a serious 2006 Klan beating was awarded by an all-White jury a verdict finding him entitled to $2.5 million in damages.

The Klan's freedom to assemble cannot be lawfully barred, but the likelihood that the judgment will be levied against the the group's 15-acre compound threatens to reduce the local Klan chapter's convenience in conducting identity-building ceremonies, indoctrination rituals, and creating a feeling of reassurance that one is surrounded on all sides by likeminded believers.

People who think jury awards are somehow out of hand haven't been paying attention. Without juries to see the right of cases, we'd have to cede justice to an entrenched bureaucracy. Without punitive damages, people could commit calculated evils for fun or profit and remain safe from serious consequences so long as they were careful in selecting their victims. This Klan verdict is a reminder that there are evils in the world -- old-time evils we would like to think long laid to rest -- and that we need juries to spot when the line has been crossed and the public should inflict a punishemnt designed not only to repay injured parties for their medical bills, but to reform behavior for future generations, to protect victims who would suffer if the same calculations that caused earlier injury were not derailed and replaced with something more concerned about the welfare of others.

I doubt the $2.5 million judgment will be satisfied in full, but it'll likely be enough to ensure that all the organization's high-profile, hard-to-hide assets are transferred to parties aligned with the defendants' victims.

UAW to Gov't: Loan GM Money!

Keeping GM in business -- and any other large employer of its members -- is surely of considerable interest to officials of the UAW (which, interestingly, stands for International Union, United Automobile, Aerospace and Agricultural Implement Workers of America). The reason strangers need to loan GM this money, rather than the UAW or its members, is that they aren't looking to lose money, but to get paid. The union collects dues it spends, and the members collect paychecks they spend. They can't be throwing good money after bad, or it'd quick catch up with them. And they feel they've done enough already to support GM, thank you very much.

That is apparently why loaning money to GM is your problem.

My problem with loaning GM money isn't just that many of its cars are being thrashed in the market by safe, reliable, price-competitive alternatives. This is a problem of U.S. auto makers generally. GM's special problem is sort of interesting. See, GM has been mortgaging its future for a while now.

A few years ago, a friend explained what a smoking deal he got on his new Hummer. He was upside-down on his SUV note, and angry at the dealership, and they worked out a financing plan whose details blew straight past him, but what he remembers is this:

1. his monthly payment didn't go up (though it was no doubt extended), but
   
2. he swapped out his little SUV for a bright new H3, and
   
3. GM promised him price protection on the H3.

That third point was the sale-closer. To make him feel confident entering a sale on a vehicle in which he was concerned his collateral would quickly be worth less than the note securing it, and to make sure he came back to GM, GM guaranteed him that it'd give my buddy a trade-in price on the Hummer that was equal to his purchase price. I forget how many years that deal was supposed to last -- maybe the length of his note, or a year after -- but it obliges GM to pay way over market for a used car down the road when it's hungry to sell him some new vehicle. The problem is that GM won't be able to raise prices across all its lines in the face of fierce price competition in the auto business -- certainly not during a credit-crushing recession that drives up unemployment. All that surplus trade-in value is coming right out of GM's future bottom line: right out of the recession-discounted givaway pricing I expect GM to fall into as part of its fight to retain some kind of sales share.

The problem with simply throwing money at GM is that there's no reason to expect different results from the same operations. It's not like auto sales are exploding so greatly that there's good money to be had by every vendor with a product. The auto market is competitive, and everyone in the market is selling a different grade of commodity. Even the luxury vendors are up against luxury competitors; nobody is safe, and nobody's product is so differentiated that it hasn't got competition.

In the 1980s, when the Japanese economic miracle was producing cheap, efficient, reliable cars that were actually beginning to take safety seriously, some folks looked at Japanese organizations to determine what enabled their success. Pursuing Deming's teachings and using a number of innovations to detect, eliminate, and prevent product defects, the Japanese learned to build American designs better than could Americans. Americans who thought implementing quality circles, mixing management and line workers in teams, and broad cross-training to enable people to understand the whole process of a product's creation all tended to run into the same problem: the UAW. Collectively-bargained contracts enforceable under the NLRA specified that certain job titles needed to exist, and protected people from doing jobs outside those descriptions. Allowing (non-union) management to perform line jobs threatened the dues base, and cross-training tended to make people more easily replaceable.

Unacceptable.

So American auto manufacturers kept with their same old broken systems, occasionally scaring workers into fits of relative productivity but not addressing the systemic issues that led to the defects that embarrassed the non-Japanese manufacturers. I heard a tale from the early 1980s of an observer of an American auto assembly line watching a worker stop bolting fenders onto the passing cars long enough for a couple to go by with no bolts at all on that side. Confronted with the fact, the worker allegedly explained, "I had to light a cigarette." The same collectively-bargained agreements that prevented radical organizational re-engineering also made it extremely costly to threaten a worker's job, so there was no recourse. Even if the tale was apocryphal -- and it may well have been, though it sounded plausible enough when I heard it -- the fact remains that Americans have been unable (despite the famed productivity of the American worker) to build automobiles with as few defects, or for as little money, as Japanese competitors. To the extent that organizational re-engineering was thwarted by job classification rigidity in union contracts, and employers' inability to create meaningful incentives to encourage production quality targets under the union contracts, the industry was essentially destroyed by factional infighting. In theory, management and labor could have worked out a scheme that enabled superior competition; however, to the extent the solution appeared to require blurring the line between labor and management, it was political anathema for a union to accept such a proposal. Labor and management knew better how to exist as adversaries than they knew how to both profit from cooperation.

And the chickens have come home to roost.

While the same political forces keep the business utterly broken, I strongly urge anyone with a voice to speak out against throwing the innocent public's hard-earned and quickly taken tax dollars at an enterprise with such dismal prospects for the future. Americans can make cars, of course -- and without GM, they might have made them even better -- but saving these dinosaurs might not be in anyone's interest. Much better that GM be allowed to go into bankruptcy where creditors can work out how to arrange a future for GM that involves some profit. Saddling GM with its existing array of obligations -- including the collectively-bargained labor agreements that prevent the kind of labor/management admixture needed to duplicate the successes of American firms' Japanese rivals -- is sure to kill further investment just as it has killed prior investment.

What American auto manufacturers and their workers need is an opportunity to begin again with a clean slate. Saddling employees with brainless zombie employers doomed by longstanding agreements to repeat the organizational failures of the last forty years -- or saddling employers with sure-fail organizational designs enshrined in 1950s-style collectively bargained employment contracts full of specialist job titles and limited work duties that preclude process re-engineering -- does no good for employees' job security or employers' fiscal plausibility. We need better than a mere handout to GM.

What we need may turn out to be is a creative bankruptcy judge. Anybody know one?

Islamofascists Maybe Trainable After All

Muqtada al-Sadr is in the news, and it's not for renewed attacks by his Medhi Army. The Islamist has, instead, called for a peaceful demonstration against an Iraqi government agreement on the terms of U.S. military presence in Iraq, to take place following evening prayers.

Grand Ayatollah Ali al-Sistani, who didn't take sides when Hussein was being ousted by the United States, issued a slightly cryptic statement "forbid[ding] any stance that targets the sovereignty of Iraq no matter how small it is." It's unclear whether specific terms of the force reduction agreement offend al-Sistani as impugning the sovereignty of Iraq, although one lingering and offensive issue involving U.S. troops has been the power to try U.S. troops for activities within Iraq. Obvoiusly, United States officials cannot agree to turn American volunteer soldiers over to a nation with a recent history of protecting those who were engaged in murdering Americans for the crime of being American; however, Iraqi officials offended at the conduct of Blackwater contractors have a natural reason to demand meaningful accountability for the activities of armed foreigners roaming freely in their jurisdiction.

I assume that Americans won't be clearly subject to Iraqi civil and criminal authority under the terms of the agreement governing the draw-down and withdrawal of remaining U.S. troops, and that this alone is sufficient to offend al-Sistani. The presence of U.S. troops on any terms is, of course, a grave concern to al-Sadr, whose efforts to sieze power by naked force have been reeatedly thwarted by U.S. response.

The question remains whether al-Sadr will keep preaching nonviolent protest after Americans leave, or whether this is simply an ad campaign for future Islamist revolt against civil government. In the meantime, the plausible threat of force seems to be effective in dampening the overt threat posed by al-Sadr to the rule of law in Iraq. The fact that peaceful protest results in fewer deaths will hopefully not be lost on participants.

On the other hand, Fox News reports al-Sadr's actual position is that a new agreement on force deployment will be grounds to renew attacks. Maybe he hasn't learned his lesson, after all ....

Time Running Out To Ditch Unruly Teens

The safe haven law, intended to reduce risk to children by granting immunity to parents who deposit unwanted children where they will be safe at Nebraska hospitals, was apparently intended to target unwanted infants and wasn't expected to draw a wave of despairing parents of unruly teens to drive into Nebraska to rid themselves of their little tormentors. (Of the dozens dropped off under the law, none have been infants.)

Seeing what conduct the law actually caused, Nebraska's legislature has amended it, effective January 2009, to make the teen drop-off-and-drive-away a thing of the fond past. Time is running out! And so are some teens who realize they're about to be turned over to the State of Nebraska ...

So, beat the rush and dump those worthless ingrates sooner than later. Fuel is getting cheaper again, so there's no excuse for delay. Holidays can be expensive, and you know times are tough ....

Reading Tea Leaves: Predicting Obama's Moves As President

Okay, I'm guilty: I've been looking at the news for indications of what to expect in January. And I've discovered something. There's no telling what we'll get in January.

Aim High
The Second Amendment crowd has been in the news snapping up firearms in the wake of the election that strengthened Democrat control of Congress and placed its legislation in a place of relative safety from Presidential veto. Are they justifiably afraid? Back in February, before the Supreme Court clarified the issue, Obama as the democratic nominee said at a Milwaukee event: "I believe the Second Amendment means something. I do think it speaks to an individual right." The idea that Obama has taken the view of the Second Amendment as creating an individually-enforceable right even before that view was declared to be the clear law of the land is something I doubt came through NRA advertisements about the impact of the election on gun control. Democrats have long worked to create window-dressing legislation to restrict transactions involving firearms, even in the absence of evidence that such laws had any effect at all on anyone except law-abiding collectors and sportsmen. The ban on so-called "assault weapons" (a definition unknown to the world of firearms until Congress created it, entertainingly including weapons with plastic stocks but not necessarily weapons with wooden stocks, for example) was an old favorite of the NRA: it made no sense and helped prevent no identifiable evil, but offended gun collectors. If this article is right, it'll be coming back, with Obama's support. The right to bear arms might mean something to Obama, but apparently not what the NRA thinks it means. The Second Amendment folks worried about Obama's calls while in the Illinois legislature for federal taxation increases of 500% on firearms and ammunition haven't led him to introduce any related bills while actually in the federal legislature. Although Obama mentioned gun control in his speech accepting the Democratic nomination, he didn't confess any particular policy objectives and could easily have thrown that in to mollify those wanting all the party planks polished rather than because it's particularly important for him to address.

My question: if you plan employing Americans in a venture that involves boating into pirate-infested waters, or territory perilously near drug runners, is there some reason Congress doesn't want you to have high-powered automatic weapons with which to repel would-be attackers on the high seas? Granted, this isn't the general case. But it is a case I've had to deal with recently, and it was entertaining to learn that the accepted solution was to buy a weapon on the black market in the vicinity of the work area. Buying one in the U.S., paying taxes on it, and lawfully exporting it seems too fraught with red tape to bother with. European manufacturers will be getting this security business.

The good news? "With the U.S. economy in a tailspin, however, the president-elect's advisers say gun legislation is not a high priority." Well, thank goodness for that!

Order Up
One quick thing to do is to obsolete offensive Executive Orders.

Abortion: Under Reagan, a "Mexico City" abortion policy was attacked through an executive order prohibiting funding organizations that perform or promote abortion overseas. The order was dropped under Clinton and re-instated under Bush. I want to hail pro-choice movement, but I hesitate to cheer a move like the one Obama is believed to support. My question is this: given our tight economic situation, and ignoring the question of whether abortions are or are not appropriate for any particular case, why would we use federal dollars to help send people abroad for medical interventions available virtually everywhere in the United States?

Birth Control: Another executive order brings crazy funding into sharper focus. An executive order bans federal funding to organizations like the U.N. Population Fund that operate in countries that practice forced sterilization. Exactly why does the United States need to solve foreign public health problems when we have a desperate need for public health programs in this country? Forced sterilizations are vile, period. Sure. But why do we need to single them out for special treatment, and to fund some alternative? Unless it's a national security issue to promote stability, and therefore a justifiable part of the budget of the Department of Defense, why on Earth would be be involved in other nations' family planning programs? We need some education and immunization right here, and we could fund it better if the local money for these interventions weren't taxed away to the federal level then exported to some distant land and squandered where it will create no U.S. jobs and improve the quality of life of no U.S. families. Oh, I get it: visiting Africa is nicer for U.S. tourists if we control overpopulation there. Hello? Operator? I have found a brain, is someone missing theirs? I think there's a serious opportunity here to start looking at U.S. involvement in foreign charity conducted by federal officials using funds taxed from Americans by force. (To the bleeding hearts who disagree taxes are taken by force: try not paying it and see how long you can go without experiencing force. Hint: if you resort to lying about your income to avoid detection when you neglect to pay the taxes, that is cheating.)

Gitmo: Oddly, Obama sounds remarkably like Bush on Gitmo's on-base prison. He'd like to close it down, but he wonders what to do with its residents. He's going to have to spend a while reviewing their cases, and might set up some kind of tribunal that hopefully passes Constitutional muster. Ahem. Did I miss something here?

Oil: Drilling agreements in federal lands in Utah and other places beloved by environmentalists could be halted by the same kind of executive action that set exploration into motion. Well, assuming there's not already an enforceable contract, in which case you buy a lawsuit as you do it.

Stem Cells: An executive order barring use of federal funds for creating new stem cell lines from human embryos was entered by Bush43 out of pro-life concerns that each new attempt would end a human life. (At least, for some people's definition of human life; many reasonable people have not decided that a frozen embryo whose owners don't plan to use it, and won't be paying for its maintenance, and which might as easily be lawfully disposed of as medical waste and destroyed without contributing to a scientific study, is "human life".) Due to the creeping federalization of everything under the sun, it turns it that developing new medical therapies that can be sold for profit, and conducting research into treatments for human health conditions for which insurers and benefit plans routinely provide payment, are activities that are overwhelmingly intertwined with federal funding. This is so obviously an arena for health-related venture capital enterprises and state and private universities that take a share in the intellectual property created with university funding, that I cannot conceive of a reason the United States should risk federal funds without even a scintilla of a hope that the resulting findings will produce a return for the taxpayers whose money funds the elevation of the academic careers based on the research. The offensiveness of the executive order's impact on stem cell research was so great that California created its own multibillion dollar research program. This seems to undermine the very thesis that federal funding is required at all. Federal conditions of funding are obviously a political football -- in research as in education -- and should not be part of the American research landscape outside the limited scope of bona fide national security projects.

====
Real Change and Justice
One thing that can happen for the better is the appointment of an Attorney General who will restore to the Justice Department the nonpartisan ethic it once was felt to have. Ideally, an officer who believes in what the Constitution says and will stand up for those beliefs, even when under pressure by allies to do expedient things instead of good things. There's a serious opportunity to clean house in the Justice Department, and I for one hope this goes off like clockwork.

One thing to keep in mind is that the United States is an enormous employer, full of numerous bureaucrats that can't be fired at will (due to due process issues that don't face private employers in many parts of the country). A revolution at the federal level may involve long lag times between the initial acts of reform and the ultimate changes seen by people encountering the "new" government. The Justice Department, for example, will be run through with political recruits ideologically opposed to some of the changes that may be proposed. The INS, IRS, SEC, NSA, FBI, and numerous other agencies involved in surveilling Americans and their foreign dealings, and enforcing various interpretations of the rules governing the complex relationships people have in their business lives ... all these will have inertia and it could take a while for change to manifest even if initial efforts are swift.

The best case for quick change is high-profile change that makes clear not only to government agents but to the public that interacts with them what the new order of business is, so that nobody gets away with Old Business approaches once a new standard has been set. Unfortunately, the media won't be covering the details that will make the changes work. We run a risk that those implementing federal programs will either not be with the new program, or will be stuck with old rules that run contrary to the new program while waiting for legislative interventions that have not yet been devised.

Show Me The Money
With respect to the economy, there's some good news: the problem is so high-profile that it will get quick attention, and will be widely covered. Everyone will know what changes are afoot. Movement could be fast. However, as Buffett indicated, even doing everything right could leave considerable lag time -- many months -- while the effect of interventions ripple through the economic system.

Let's hope those initial steps are in the right direction, eh?

Conclusion
During the campaign, all the candidates said what they thought would get them into office. This isn't unlike Supreme Court nominees trying to give the right answers before being confirmed, after which they are free to do whatever pleases them until they hear their last case. If you give the right story, you eventually get a position from which you can pretty much do as you please and can't be removed until the timer rings. We therefore can't know what officials will do once in power.

However, we have a pretty good idea (a) what each party argues for, and (b) what the specific players have advocated. Still, this makes for a bad set of tea leaves: once in, they're free.

Also, to the extent Congress must create new positions, authority, or funding to make a solution work, the President needs to get a consensus from folks who may want quite different things. There will be quite a bit of salesmanship and arm-twisting. What we get on the other end of the sausage machine is hard to guess.

The really good news is that, unlike other countries that have sporadic revolutions, nobody was killed in ours. Even if this goes into the toilet, we will be in a position to start replacing officials in a mere two years. The Republican Party, whose high-profile and wholesale betrayal of its small-government and pro-individual rhetoric caused it to be driven from office in a major rout, will be hard at work trying to find something relevant to offer Americans, and the fallout should include some improvement in the public examination of our fiscal policy.

It's too much to hope Americans stay serious about their concerns over government -- already, they don't care how the Congress votes on issues -- but perhaps we can drive attention toward major economic issues and keep them in the spotlight long enough to make sure they don't become political casualties.