Monthly Archives: April 2008

Apr 30

Big Agriculture Illustrates Difficult Trade-offs

By kevin | Decision Making

Big agriculture is in the news lately, offering some useful examples of the concepts of “trade-off” and “hidden costs.”

An obvious place to start is the noise about rising food prices and the role of ethanol production.

Some top international food scientists Tuesday recommended halting the use of food-based biofuels, such as ethanol, saying it would cut corn prices by 20 percent during a world food crisis.

But even as the scientists were calling for a moratorium, President Bush urged the opposite. He declared the United States should increase ethanol use because of national energy security and high gas prices.

The conflicting messages Tuesday highlighted the ongoing debate over food and fuel needs.

This isn’t a small matter. The press has been flooded with the latest bounty of bad news, food shortage hysteria. Contributing factors include a crippling drought in Australia, capped Argentinian exports (for domestic reasons), the usual miserable harvests in third world countries, burgeoning demand for food stocks, hording by big consumers fearful of supply gaps, upward price pressure from the ethanol business, and yes, upward price pressure from financial speculators who are looking for the next big score now that the debt markets have been brought to their knees.

This is truly a matter in which the various players have different and conflicting interests.

Agriculture is the political and economic backbone of most countries. In the US, it’s more political than it is economic, but it’s astonishing how many matters of “public interest” redound to big agriculture’s benefit. In the end, the answer invariably is to funnel money to big Ag to support production of the Big Five Crops: corn, cotton, rice, wheat, and soy. Writing about the 2007 Farm bill, Deirdre Fulton had this to say . . .

An extremely expensive piece of legislation — one that dictates how much food costs, what kinds of food we’re more likely to eat, and the viability of farming in America — is currently winding its way through Congress. The Farm Bill, which carries a price tag of more than $280-billion to be spent over the next five years, piles hundreds of millions of dollars in subsidies onto Midwestern and southeastern farmers, leaving Maine and other Northeastern states with the dregs at the bottom of the pork barrel — Maine ranks 43rd in the commodity-crop category of Farm Bill funding; all six New England states are in the bottom 10.

Nothing has changed since. In Washington, the answer to every question involving an incredibly wide range of questions is more corn. Aid to poor countries? Corn. Improve nutrition at home? Corn. Energy independence? Corn. Secure some votes come election time? Corn. Granted, it’s an amazingly versatile crop, but it’s not the answer to everything.

Specific to the ethanol craze, corn is particularly problematic notes blogger 4-Reasons Why

1. As arable land gets converted for the production of biofuel crops, food prices have been on the rise. As noted in the Guardian, the cost of rice, maize and wheat have risen by 20%, 50% and 100%, respectively, over the past year. While biofuels can’t be held totally accountable for this, the conversion of food crops to biofuel crops only exacerbates any environmental influence.

2. It’s like the gold rush all over again. Governments are becoming blinded by the rush to biofuels and the apparent financial returns, even if it sacrifices the provision of basic needs. In Swaziland, where there is an acute food shortage, the government has allocated thousands of hectares to produce, and export, biofuels made from cassava – one of its staple crops.

3. There are growing arguments that the production of biofuels actually contributes more to greenhouse gases that the world’s reliance on oil. Proponents of biofuels have focused solely on CO2 emissions, while the contribution of nitrogen fertilizers (296 times as powerful as CO2) has largely been ignored. One Hand Clapping suggests that methane and nitrous oxide are not taking their share of the blame in inducing global warming.

4. As noted here, there are between 1.5 and 2.4 billion hectares of arable land on Earth. To replace the current consumption of transport oil, between 35% and 107% of all potential farmland would need to be dedicated to biofuel production. Imagine the impact on the environment and the world’s population if this were to happen!

Not mentioned in that list is all the energy required to create a liquid fuel from a bunch of seeds. When you add it all up and then factor in the fact that ethanol produces less energy per unit than does the same volume of oil-based fuel, and you presently need oil-based fuel to run all the equipment, it’s a very, very thin bet.

Many folks in the know say a far better answer is the use of Cellulosic Ethanol which is derived from plant wastes or switchgrass. These show a net energy content that is three to five times higher than corn based ethanol with much lower uses of fertilizers and about the same levels in production of greenhouse gasses. The biggest problem? It’s not corn and the big players like ADM don’t grow it.

The Hidden Costs of Factory Farming

Another good example of hidden costs comes from a new study published by the Pew Foundation. Here’s a snip from the Seattle Times . . .

Factory farming takes a big toll on human health and the environment, is undermining rural America’s economic stability and fails to provide the humane treatment of livestock, concludes an independent, 2 1/2-year analysis that calls for major changes in the way corporate agriculture produces meat, milk and eggs.

The report, sponsored by the Pew Charitable Trusts and Johns Hopkins Bloomberg School of Public Health and released Tuesday, finds that the “economies of scale” long used to justify factory-farming practices are largely an illusion, perpetuated by a failure to account for associated costs.

Among those costs are human illnesses caused by drug-resistant bacteria associated with the rampant use of antibiotics on feedlots and the degradation of land, water and air quality caused by animal waste too intensely concentrated to be neutralized by natural processes.

This will be a tough fight but I can imagine progress being made. If we focus only on the cost of the product on the shelves, we come to one conclusion about factory farming. It’s good because it has driven prices down. It has also shifted huge costs to the environment and the overall health of the nation to someone else’s ledger. Taken together, it’s not such a good deal.

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Apr 27

Thoughts on David Einhorn’s Brilliant Analysis of the Credit Mess

By | Decision Making

You probably didn’t hear about it and don’t know who he is, but David Einhorn’s speech last year at the Helbrunn Center for Graham & Dodd Investing ranks as a must read if you want some clear and concise analysis of the current credit mess. The PDF text of the full  presentation is at Naked Shorts. Here’s the lead . .

What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual.  In my view, the crisis wasn’t an accident.  We didn’t get unlucky.  The crisis came because there have been a lot of bad practices and a lot of bad ideas. Securitization is a mediocre idea.  Re-securitization of already securitized assets into a CDO is a bad idea. Re-securitization of CDOs into CDO-squared is a really bad idea.  So is funding a pool of long-term illiquid assets with very short-term funding in the so called asset backed commercial paper market. And as I will get to in a moment, it is a horrendous idea to delegate most of the responsibility for assessing credit risk to a group of credit rating agencies, paid for by the issuers rather than the buyers of bonds.

This crisis came for exactly the right reason.  There is a big flaw in the structure of our credit markets.  The bad structure induced lenders to take imprudent risks and make imprudent loans, which, of course led to losses.  What is unique about this crisis compared to others is that the losses are in illiquid, opaque structures scattered around the world.  Why should anyone be surprised?  We got what we deserved.

Last Saturday’s Wall Street Journal reported that the big fear that the US Treasury department is working to avoid is, “the danger that dozens of huge bank-affiliated funds will be forced to unload billions of dollars in mortgage-backed securities and other assets, driving down their prices in a fire sale. That could force big write-offs by banks, brokerages and hedge funds that own similar investments and would have to mark them down to the new, lower market prices.”   So the fear is that the new prices are actually disclosed.  This is the “don’t ask-don’t tell” method of security valuation.

In my view, the credit issues aren’t just about subprime.  Subprime is what the media says.  Subprime is what parts of our financial establishment say.  Subprime is about them – those people and the people who made foolish loans to them.  The word “Subprime” is pejorative.  Subprime is not about us, for we are not subprime.  How convenient to be able to pass the blame.

There has been much talk from politicians and pundits about predatory lending – that is making loans at high rates to people who couldn’t reasonably be expected to pay them back.  They are right, that is a bad practice, but that is not what’s shaking the markets.  At issue today is that lenders of all sorts have lent too much money and did not demand enough interest to compensate them for the risks they took.  There has been a colossal undercharging for credit across the board. 

It goes on like that, calling a spade a spade. The naked truth is that the captains of finance took unreasonable risks, spurred on by non-existent oversight and no real personal downside if they busted the pinata (which they did). In a sign of rushing backwards from change, the mortgage business is mounting a full scale assault on the latest round of attempts to introduce some transparency and standards into what has become a game of liars poker. See this from the NYT . . .

The plan presented by the Fed was proposed by its chairman, Ben S. Bernanke, and Randall S. Kroszner, a former White House economist in the Bush administration who is now a Fed governor and leads the Fed’s consumer and community affairs committee.

The plan would not cover existing mortgages but would apply only to new ones. It would force mortgage companies to show that customers can realistically afford their mortgages. It would require lenders to disclose the hidden fees often rolled into interest payments. And it would prohibit certain types of advertising considered misleading.

The Fed is expected to issue final rules this summer.

Earlier this month, as the comment period was about to close, the Fed was deluged with more than 5,000 comments, mostly from lenders who said the proposals could affect loans that have not presented problems. Some bankers and brokers also said the rules would discourage them from lending to some creditworthy borrowers.

I can remember what it was like to get my first mortgage a couple of decades ago. It was a lot of work. It was a lot of paper. EVERYTHING had to be explained. But it got done. I can promise you with 99.99999% certainty, the contention that "the rules would discourage them from lending to some creditworthy borrowers" is a complete crock. People will still want to buy and finance homes. It’s a very, very big business. Someone will meet the need.

As to the part about cost rising, they should. I realize that’s profoundly anti-consumer, but I can’t think of a single good reason why risk shouldn’t be properly priced. Governments distort the price of things all the time for all sorts of reasons. Exhibit one is the cost of gasoline at the pump in the US . . . it’s not even close to what it should be given the huge bill the Chinese and Gulf States finance every year so that our vast military can make the Gulf safe for the flow of oil. Sorry, I digress.

Nothing about the debt markets for the past five years has been properly priced. As obnoxious as lenders find the various regulators, they clearly were AOL. So whatever the compliance costs, they were, in retrospect, too low. Same with the ratings firms, whose negligence borders on the criminal. It’s not that the money shape-shifters weren’t taking their vig every time something was transmuted into something else. But none of that drag was staying home in the form of capital. And yes missy, at the end of the day, the mess would be less messy if the firms had spent less energy trying to leverage their capital to the nth degree in service and more energy running sound businesses.

As Ben Stein points out . . .

The S.E.C. told me that all of its actions were helpful to investors and that no one could have prevented the Bear Stearns collapse because it was caused by liquidity issues, not capital issues. My respectful response is that if Bear were thoroughly well capitalized, why would liquidity issues come up at all?


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Apr 27

Are we at the bottom yet?

By kevin | Decision Making

It’s surely a sign of something when editors break out the “consumers are cutting back” articles. The New York Times featured a big one today with lots of interesting statistics and observations. As you would expect, there are lots of signs of cutting back, passing on little indulgences, switching to off brands, shopping the low price stores. All perfectly rational decisions given the general mood. Here’s a bit that I did find surprising . . .

By no means has the economic downturn been bad for all product categories. For instance, sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms.

Falling prices for such devices and a looming government deadline to convert to digital television have helped. So has the view, sensible or not, that the technology is a good investment. At a Best Buy in Southfield, Mich., James Szekely, 28, a mechanical engineer, was shopping for a big high-definition TV that he expected would cost at least $2,000, an expense he rationalized because “at least we can watch movies at home.”

(In a survey conducted this month by the NPD Group, a research firm, consumers suggested that they would sooner cut spending on clothing, furniture and eating out than on video games.)

And this . . .

. . . chains that emphasize low prices, like TJ Maxx and Wal-Mart, are thriving. And cut-rate supermarkets, like Save-A-Lot, are swamped.

“People are not not spending, but they are changing how they spend,” said Marshal Cohen, chief analyst at the NPD Group.

What does it all mean? Usually by the time this sort of thing gets written, the turn is here or about to get here. At least that’s how it works on the upswing.

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Apr 25

In Search of My Lost Moto-Mojo

By kevin | Rants and Raves

Robert Pirsig famously opined, or perhaps it was whined, in his landmark “Zen and the Art of Motorcycle Maintenance” about the importance/beauty/honor/rightness of deep involvement with the mechanics of the motorcycle. I remember nodding along in righteous agreement. I was 23 at the time and then made my living (sort of) as a carpenter/plumber/electrician/dry wall monkey. I didn’t own a motorcycle then, but I wanted one. I did however own a clapped out Volvo 144 that constantly called for my attention. Just to pick one grim memory, I can remember lying under the car in the snow by the side of the road changing out a fragged clutch cable. More than once.

[amtap book:isbn=0060589469]

This was also a time when motorcycles sported carburetors, freely leaked fluids, completed combustion in two-strokes (well, a lot of them did), and were comprised of slightly more than 73 moving parts. Metallurgy had barely advanced past the high standards set by the cookware industry. Fifty percent of the riding public knew the Prince of Darkness personally. Ultimate bragging rights were swapped between the Norton Commando, Kawi Z1 and the strangely colored BMW R90S. The idea that you didn’t know your way around a set of wrenches . . . well, there really was no choice B.

Yes, those were the days all right. Real men used tools. And there was a special place in the manly firmament reserved for men who used power tools. Riders didn’t expect their bikes to run longer than 500 miles without some roadside excitement, and were seldom disappointed. They knew about gaps, and rings, and things.

Three decades on, it’s all different. Any prole can wander down to Home Depot and come home with a trunk load of “contractor grade” tools. Front line bikes are more complex than last year’s top class race winner. Yes, there are still true moto-men amongst us. I see pictures of their work on forums from time to time: Their garages, or better still their living rooms, are taken over by an explosion of bike parts in service of the perfect HID light installation, the ultimate farkle, or a year-long project in powder coating 487 unseen parts. These few, proud, moto-men stand as beacons for the rest of us, our psychic links through Pirsig to the sword benders and armor makers of ancient times.

The rest of us are pleased when we can switch the trip computer from average fuel consumption to ambient temperature. A big day is actually finding the oil level window and note there’s something “kind of brown” in there. Checking tire pressure is cause for a shot and a beer. NASA takes hopeful notice every time another GPS unit is successfully programmed for the destination the rider actually had in mind.

Men, we’ve lost our mojo.

The Siren Calls

When I returned to motorcycles after the “valley of the shadow of ‘responsibility’” I did so with an unflagging conviction that the journey ahead would not involve tools. At least not any that I owned. As one half of my brain thrilled to the immense capability and complexity of a modern bike, the other half just went tilt at the idea of doing anything more complicated than washing it. I mean really, even Harley Davidson has gone fuelie, ABS, and fly-by-wire. The days of fixing these things with a hammer and a stick found by the roadside are gone.

After a brief fling with a Temptress from Bologna, I jumped into the arms of mama-yama, lulled by the promise of vast horizons to conquer, 130 ponies at my beck and call, and a reasonable expectation that my bike wouldn’t see the inside of a dealer more than once a year unless I rode the wheels off the thing.

In the words of Erica Jong, I was looking for the single-track equivalent of the “zipless fuck.”

[amtap book:isbn=0451209435]

Ahhh, but motorcycles are truly a gift from the gods. From the first one to now, they seduce with a potent promise of freedom and ultimate responsibility, danger and release, awe and terror, zen-like peace and PAY ATTENTION RIGHT NOW sphincter-clenching. While the practical need to be one part mechanic has faded with time, the call for total immersion and involvement has not. You simply can’t own and ride bikes for very long without feeling the stirrings of your latent moto-man/ancient warrior coming to life.

Unless your moto-mojo is already in full flower, the first noticeable urge is usually to farkle. To modify. Looking at bikes at shows and at dealers doesn’t trigger it. Then, they’re just bikes. Glorious to be sure, but just bikes. Once home in your shed, they become something different. A Muse, or maybe a Siren. I’ve already used the word Temptress.

At first you think the call is simply to ride. And at first, it is. But then the tone changes. Something is no longer right in your two-wheeled world. You don’t know it at first but what you’re now hearing is the call to get involved. To get physical. To mark this bike as your own. To have your way.

So you buy your first doodad. Just a little thing like a Cramp Buster or maybe a throttle lock.

If you’re already well bitten, that first doodad is on its way before the bike rolls through the garage door. For the novitiate, you don’t yet know about, much less suspect the damage that will be visited on your wallet by the likes of Touratech, Aerostich, and Parts Unlimited.

With luck, that first doodad doesn’t require tools beyond the screwdriver you found buried in the top drawer in the kitchen . . . the one your wife borrowed three years ago and you’ve been looking for since. But if not this doodad, then the next one will require tools. And that’s how it begins. The affair has moved to another phase. The minute you buy tools to work on your bike, you’re officially involved.

For me, the climb began slowly. I didn’t dare do anything to my Ducati but ride it. If I wanted something modified, I took it to the dealer. There would be a tribal gathering at the catalog next to the cash register, the parts guy would incant secret phrases, and my bank balance would plummet. Ted Bishop describes this phase well in his book, Riding with Rilke . . .

[amtap book:isbn=0393330745]

When I tighten the chain, I feel like a real mechanic. After all, I’m using two wrenches. Clearly, Ted and the Art of motorcycle maintenance would be a short book. I don’t tune the carburetors. For a Ducati, you need a two-year training course and proficiency in Italian even to find the carburetors. And to set the valves, you need special tools and special shims that come handcrafted from Bologna and cost twice as much as those for any other motorcycle. (Shims are the bits of metal that go under the valve stems to change how far they open and close; I’ve never seen one, but I’m assured they exist and when they appear on my work order, they are extravagantly expensive.)

The Yamaha presented itself as a more complete work. Everything about it seemed just perfect. Until I got it home.

I am a huge fan of Gerbing’s heated clothing. I had the Ducati dealer install the wire the last time around. With 20 miles on the FJR, I decided that I was man enough to hook two wires to a battery, so down to the garage I went. It was Friday night. I was going for a 400-mile ride the next day.

Within minutes, disaster struck. Fumbling about, I managed to drop one of the infernally small and evilly placed battery terminal screws into the bowels of the bike. It was irretrievably lost somewhere inside the fairing. The bits might as well have fallen through a wormhole. I think I actually cried.

I will admit this now as it’s been two years and lots of therapy since. I went upstairs and asked my wife for help. In therapy they call it an intervention. The bike had cast its spell on me but she was completely immune. It was she that suggested that we just take the fairing off the beast in order to find the part that had gone missing.

TAKE THE FAIRING OFF? My new bike? But that would require tools! Something might go wrong! If God wanted me to see the bike naked, he wouldn’t have granted it clothes! But she was right. Having ruled out taking the bike back to the dealer and asking for another, there was no other obvious course of action.

I actually think the bike conjured this episode for my behalf. You have to pop your cherry at some point and the bike, in its infinite inanimate wisdom, decided that the best time and place to reintroduce me to my tools was in a decently lit garage for small stakes poker.

Bit by bit the panels came away from the side of the bike, revealing Thor’s own workroom beneath. The bike didn’t blush and neither did I at the sight of all that alloy and wires and tubes and things. I tried not to gasp.

The stupid little prick of a nut kept chasing deeper and deeper into the fairing until I had Tupperware all over the garage. But we finally drove it to earth. My bloodlust up by now, I danced and pounded my chest at this act of unvarnished manliness. No two cent part is going to get the best of me! I am moto-man. My wife kept her opinion to herself.

Miraculously, all the parts went back the way they came off with nothing left over. My wife, she with the prehensile paws, graciously aided in completing the task that had previously defeated me: attaching the red lead to the screw under the red rubber boot. Victory was truly mine. Cigars and single malt all around. Bike and wife just smiled.

Over the months that followed my quest to reclaim my moto-mojo knew no bounds. What a crock. It knew lots of bounds, but I was not so easily defeated when it came to fooling the small stuff. I successfully installed a raft of critical parts like a new windscreen, grips, hand guards, sliders, throttle tube, throttle lock, and fork brace. Soon a Givi rear rack followed. And then, in an act of supreme confidence, I undertook the diabolically difficult installation of a Power Commander, which required tipping up the tank and actually disconnecting electrical things! And the bike still ran when I was done!

And then one day a new disaster struck. Some piece of excrement cretin pig broke into our building. Our very secure, fully alarmed, multi-tenant fortress of a building. And of all the things that motherfucker might have taken, all he grabbed were MY TOOLS! And not very good ones at that. Nothing but a mismatched set of sockets, handles, and open-ends. But they were my tools!

It cranked me no end that he also took my radar detector, but I wanted a new one anyway. And he took the cheek pads out of my Shoei in order to get at a $20 pair of helmet speakers. Whatever. But my tools! My beloved, had-them-for-30-years tools! What a bastard!

Climbing the Ladder of Moto-Mojo

Over the years I’ve been on the bad side of a break-in four times. One time it was my hi-fi. The other three times it was my tools that got lifted. It always feels like a huge violation, but particularly when it comes to tools. A man’s work is wrapped up in those things. His identity. His ability to respond to his muse. There is a special place in the depths of hell reserved for people who steal another man’s tools.

Beyond the normal hurt and anger came the extra aggravation that I was now without some specialized tools I had acquired to do specialized things like setting the sag on the whippy cool HyperPro shock I had installed. Double-damn. You see, I had now moved beyond the initiate to moto-man, fourth degree, only six more levels to climb!

Level 1: Use of tools
Level 2: Buy tools to use
Level 3: Own more than one shop manual
Level 4: Buy specialized tools; power tools go here
Level 5: Undertake a job that requires the use of multiple tools at the same time
Level 6: Undertake a job that requires multiple types of tools
Level 7: Complete disassembly and reassembly of something with more than 50 parts.
Level 8: Custom fabrication / extensive modification of existing structures
Level 9: Diagnosis and repair or rebuild of mission critical assembly (like a motor rebuild)
Level 10: Diagnosis and repair or rebuild or anything anywhere without tools.

So the tool-taking wasn’t just a casual violation as it might have been for a struggling Level 1. This was tugging on Super Man’s cape. This was taking a run at the USS Nimitz in a speed boat. This was trifling with Thor’s Hammer!

Patrimony Restored

Into the soup of worst parts was added my thousand dollar insurance deductible. But it is just these challenges that make a man. It is just these sorts of calls that bring out a man’s true moto-mojo. Before the sun set that day I was the proud new owner of a full set of new tools. NEW TOOLS. New tools from the forges of the Fatherland, hammered into existence by the wizened hands of master craftsmen. New sockets, new wrenches, a new torque wrench scribed in Newton meters for God’s sake!

Patrimony restored, I was now tooled-up and free to farkle and adjust with new confidence. As I write this, my FJR is at the dealer getting all the greasy and grimy stuff done in anticipation of a big riding season. So truth be told, I completely fail the Pirsig purity test. But one of the joys of advanced years and perspective is the possibility of some security in your own skin. I’m involved. I heard the Muse. I bought the tools. I answered the call. It’s totally okay with me to let the dealer do the 16,000 mile service. I’m a fully capable, though oft reluctant Level 6!

Now if I could only transfer my deep insights into the truth about motorcycles to the arthritis in my neck . . .

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Apr 23

How Not To Pick A Candidate

By kevin | Decision Making , Uncategorized

Several weeks ago–it seems like years ago–I sat in a conference room with Howard Dean, major domo of the DNC, listening to him explain the beauty of the Democratic nominating system.

  • Everyone gets a chance to play
  • Everyone gets a chance to be heard
  • Candidates have to campaign everywhere in front of everyone
  • Inclusion, inclusion, inclusion

He even likes the super delegate system . . .

  • Gives minorities and unheard voices a place at the table
  • They all (mostly) answer to someone so they won’t do something nutty

So here we are in the death throes of the most expensive primary in the history of the Republic without a Democratic nominee, forced to read tea leaves to figure out who the candidate will be. Winning is losing, losing is winning, numbers aren’t what they seem. And in the end, a candidate will emerge from the scorched earth . . . The folks in the other party must be pinching themselves every morning when they wake up. "Can the other side really be that dumb?" Not the best decision making process I’ve ever seen.

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Apr 22

Def Sec Wants More Mavericks. Hope Springs Eternal.

By kevin | Decision Making

Defense Secretary Robert M. Gates is beating the drums in front of both the Army and Air Force young officer cadres to become more innovative "forward thinkers with the courage to advance new approaches needed to confront current and emerging threats." A couple of quotes from the pentagon website . . .

He challenged the officers to think outside the box to help the military adapt to a constantly changing strategic environment characterized by persistent conflict.

Bucking convention isn’t easy, Gates conceded. “Virtually every institution is organized in a way to stifle out-of-the-box thinking,” he said.

Ideas that break with the status quo aren’t always met with open arms, he added.

Gates noted the example set by the late Air Force Col. John Boyd, a maverick reformer who turned traditional approaches to air-to-air conflict and principles of maneuver warfare on their head. To do so, Boyd had to overcome “a large measure of bureaucratic resistance and institutional hostility,” Gates said.

The way Boyd saw it, everyone faces a fork in the road in his military career. People choose to “be somebody,” Gates said, making compromises and turning their backs on their friends to get ahead. Or they choose to “do something” — sticking their neck out for their country, their military and themselves — while recognizing that it’s not likely to garner them favor or career advantage.

Three cheers to Bob Gates for a great message, particularly after the complete and utter disdain his predecessor showed for anyone’s ideas other than his own. But it will take a lot more than saying to get the doing. Do a little thought experiment. I’ll flip a coin, you call it. If you’re right, I’ll give you a dollar. If you’re wrong, you get nothing. No buy in. Anyone will take the wager. It’s all upside. Same if the reward was on million dollars. Now do it the other way. If you’re right, you get nothing. If you’re wrong, you owe me $1. Hmmm. That feels different. And in fact, research shows, that we value a gain much less than we value the avoidance of a loss. So the idea that people are going to suddenly start "thinking outside the box" just because is an exercise in hoping and dreaming. Everything needs to change, particularly in a big organization, before people will step out, particularly to the extent that John Boyd did.


After his retirement from the Air Force in 1975, Boyd continued to work as a consultant in the Tactical Air office of the Office of the Assistant Secretary of Defense for Program Analysis and Evaluation. Boyd reputedly wanted to work without pay but was not allowed, and so accepted the bare minimum. He was quoted as telling a fellow maverick, Franklin C. Spinney, that there were "two ways to be free: to become rich, or to cut your needs to the bone", and since he did not think he could become rich, he did the latter.

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Apr 21

Conversation with Carl Schelin

By kevin | Interviews

I met Carl (virtually) on a motorcycle forum. Think of him as your average, every day, mid-life motorcycle crazy. He agreed to answer my various questions. Lots of great thoughts about riding. He also has assembled one of the most impressive personal motorcycle sites you’ll ever find: loads of ride reports, maps, pictures, and more. Enjoy.

Tell me a little about yourself. What do you do, do you have family, that sort of thing.

Hmm, first off I’m a gamer. I’ve been playing War games, Role playing games, Board games, Computer games and such since I was a kid. I got in to Dungeons and Dragons in 1976, about the same time I started riding motorcycles.

I’m an official computer geek. I’ve been doing stuff with computers since 1979 or so when I was plunked in front of a computerized typesetter while in The Army. Within 6 months I was teaching the guy who had originally manned it for 2 years how to do neat stuff and eventually streamlined the process, saving money and increasing productivity.

Combining D&D and computers is what got me in to the field. I wrote a few programs to help me with gaming. Not the graphic stuff you see nowadays but more gaming aids. Character generation, monitoring, and stuff like that.

(It’s important, bear with me 🙂 )

When I left The Army, I rambled through a couple of jobs. Selling cars and working as a security guard. In both cases, I was also working on computer programs to help make the jobs easier. I created a salesman’s tutorial. You’d enter in data from brochures and it’d “flashcard” you to help you memorize facts. I created a security program so you could quickly look up vehicle information on folks approaching your post.

From there I started getting jobs as a programmer. First assisting a surveyor with their programs, then working on funeral home software, and even a small program for a local political party (don’t recall who but it was a simple survey type program).

From programming I got to PC installation and LAN configuration. Then I administered LANs. Then started Unix administration.

Now I’m a Team Lead and Senior Unix Administrator for Intrado. The servers I manage are part of the country’s emergency 911 infrastructure including the Amber Alert system. I only worked here for 4 months and was given a raise because of my valuable contributions to the servers.

I have two daughters from my first marriage. The older one is a computer geek just like dad and lives in Portland Or. The younger one stepped away from computers and lives with her husband in Fredericksburg Va.

I met Rita online. She was living in Denver and I was in Virginia. We chatted, exchanged e-mails, and then got together. I flew out to Denver to visit, we met again in Florida, and then she moved in with me. We got married on Halloween, 2000. She has a daughter, also in Virginia.

Do you remember your first bicycle? Is there a good story about it?

Oh yea. We were living in Chula Vista Ca. My first bicycle ride was short. I started going parallel with the curb, then swerved right to the opposite side of the street, wobbled around back to the other curb and ran straight into it going over the bars. My first highside 🙂

When did you first ride a motorcycle?

My uncle raced Bultaco’s and I lived with him and his family for a year. I was too chicken to get on the back of the bike because he was nuts, but was fascinated with it. He “gave” me a junker with “blown seals” (I had no idea what a blown seal was though). I sat on it but we never actually worked on the bike. When I rejoined my parents, I asked about a bike but they said “not in my house”.

After I got out of high school in 1976, I joined The Army. At my first post I wanted a bike. A friend of mine rode a Honda CB450/4 and offered to teach me how to ride. I don’t recall how we got my first bike to the abandoned barracks where Maurie was going to show me how to ride. He gave me some quick lessons on how to stay up and be safe.

After I got my license, I waved at him once and he gave me a piece of his mind on keeping both hands on the handlebars. I also attended the required post Defensive Driving Course taught by a Maryland State Motorcycle Police Officer. He did his best to scare the life out of all us riders with horrible pictures and stories.

What was the first bike you owned?

A Yamaha 250. After a couple of months, I was ready to buy my first brand new bike. I rode the Yamaha (which needed a tune up and was throwing a bunch of smoke) down to the dealer in Maryland and traded it for a Honda CB360T.

What do you own now?

2002 Suzuki Hayabusa
2001 Suzuki SV650S
1989 Honda TransAlp
1976 Honda CB750 (Chopper Project)

Wife has a 2007 Kawasaki Ninja 650 (I list it because I also ride it from time to time).

How many miles do you expect to ride this year?

Including commuting and all my bikes, maybe 20,000 miles.

How would you describe your involvement with motorcycling now?

Learning and trying to help newer folks with the answers I’ve received and learned over the past few years. Planning long rides to great areas in the country (ours and Canada). Learning how engines and motorcycles in particular work (I’m doing my own wrenching for most everything).

What attracted you to motorcycling? Why do you ride?

Initially it was my Uncle Rod. He raced Bultaco’s, lived in a big Addams Family type house and had a hippy type lifestyle. Initially it was just because it was fun and inexpensive. My friends were riding and I liked being part of a group.

Now I ride because it’s a lot of fun and challenging. I ride year round in all sorts of weather. I tour all over the US and Canada including places people think a sport bike shouldn’t be riding.

There are times when I’m a little wiped out at work or home and get on the bike and the cares of the world are whisked away with the breeze.

Did you have to make any sort of deal with your wife?

Not really. We did have some discussion but I think she thought I wasn’t going to actually do it. She said she was afraid that I’d turn into one of the stereotypical Harley riders she sees riding around. I told my first wife and this one that I’d been riding before I met them and I was going to ride. She responded by getting a largish sized life insurance policy on me

The funny part is that she says I’m surprisingly safe on the motorcycle.

Does she ride with you?

She does ride on her own bike. She’s somewhat short and doesn’t like sitting on the back of the bike. She also has a back condition so her feet have to be at a precise angle with her pelvis and bouncing around on the back of the bike doesn’t really help. That’s the reason she started riding her own bike.

What do you think about when you ride?

When commuting, I’m generally either enjoying the view; the sun rising behind me and highlighting the Rockies can be awesome on some mornings, or trying to keep some yahoo from running me over while they’re yakking on their cell phone. Sometimes I’m thinking about work or an upcoming event or ride.

When touring, my mind generally swirls in work and home related stuff for a day or two, then it settles down in to looking around, checking the gas tank, enjoying the road and music, and all the stuff that goes along with touring.

This is perhaps an indelicate question, but how do you think about the ‘dangerous’ part about riding?

I’m very conscious of how risky it is to ride. I wear an Aerostich one piece textile suit or Alpinestars one piece leather suit (when on the track), full face helmet, gloves, and ankle high Harley Storm boots. I have a 132db air horn on the Hayabusa and use a headlight modulator. I read forums and dissect accident reports to see how I would have reacted in those situations. In general, my riding doesn’t fall into the majority of motorcycle accidents I’ve read about. I’m aware that one of the biggest problems is the inattentiveness of cagers and the inability of them to see bike riders. I have the headlight modulator and air horn to help with that. I pay particular attention when approaching danger zones such as where folks will turn left in front of you. I adjust lane position to be the most visible. Most of the time I make an effort to get out of traffic clumps so I’m not in a position of danger. In riding, I’m always scanning; looking at drivers, making sure I don’t sit in their blind spots if possible and being extra aware when I’m forced to. I always look around to see where the next problem might come from.

It sounds like I’m spending all my time alert for the slightest danger. But really all that takes a very small part of my riding thoughts. I’ve been surprised a few times, for example recently I was surprised when a driver who was slowing down in the left turn lane decided he didn’t want to be at that light and pulled back in to traffic. I was able to slow down without incident in part because I was paying attention. Even though it was a surprise, my constant scanning for trouble had me reacting quickly and out of danger before it was a problem.

I guess in general I’m just very aware and try not to worry about the risks involved. My wife says I’m very optimistic and act like it’ll all work out in the end 🙂

What one piece of advice would you give to someone coming to motorcycles for the first time? I’m thinking about the “mid-life” rider now?

TRAINING! Training training training training training.

Even if you’ve ridden a lot before, things change. When I started riding again (Harley Softail), I was surprised by the number of close calls just in the first 6 weeks and there were 2 or 3 incidents where if I wasn’t paying attention, I might not be here now. A friend who was riding pulled me aside and said that I was riding wrong, even though it was right when I stopped riding.

The Defensive Driving Class (required for riding on the Army Post) back in 1976 stressed staying to the left of the lane and away from the cars so you had time to react. But nowadays, cagers are even more distracted than they used to be and you need to be a little less defensive and a little more offensive. My friend pointed out that I should be riding in the right side of the lane, closest to the cage in the lane to the right. Because as long as you’re watching, the guy in front of you isn’t going to affect you. Same with the guy behind. I can’t tell you the number of times in riding that I’ve seen cars move over to the shoulder because of suddenly stopped traffic. If you’re on the left, that leaves you open to being hit. But the biggest danger is the inattentive cager to your right. Stay behind his rear bumper so he has a chance of seeing your headlight in his mirror and when you pass, pass aggressively.

Take the Basic Riders Course. Then the Experienced Riders Course. Then look in to some of the schools that are probably in your area. Here in Denver there’s a school that for $250 or so will take you to the next level in riding.

What bike would you recommend (and why)?

For a first bike, something small and light, so you can be confident and think about other things. And used. Even folks getting back in to riding should get a smaller used bike to start. There’s always someone behind you waiting for you to get familiar and when you’re comfortable, you can move up to a larger bike.

My wife decided to go with a Honda Shadow VLC when she started riding because of the seat height. It was her second bike. After wobbling around and even crashing it once, she moved to one of the larger scooters (Aprilia Atlantic) and eventually a Honda Metro. We attended a Sport-Touring.Net national meet in Colorado and one of the lady riders came down from Seattle on a Honda Interceptor (250cc). Rita started checking out the sport bike side of the house and found a Kawasaki Ninja on Craigslist. Even though the Ninja has a taller seat, it’s narrower so she could still flat foot and it’s light so she could concentrate on riding and not on trying to keep it up. In just one season on the 250cc Ninja, her confidence raised up significantly and now she’s on a Ninja 650 and sometimes I have to zip up to catch her

After that, it’s whatever fits your style of riding. I’ve ridden the Harley around the country and found my back didn’t like the seating position. I had the Goldwing and again, my back hated it. I rode around quite a bit on a GSXR750 and ride my SV650 and neither are really meant for any sort of distance. The best one for me has been the Hayabusa with Heli-bar risers. It’s been the most comfortable of the bikes I’ve ridden over the years. My back isn’t jarred by road bumps and with the risers, I’m not leaning on my wrists.

I’m not saying folks just getting back in to the game should get a Hayabusa or Ninja ZX14 but something that’s comfortable for you. For me it took a few bikes before I found it.

What’s the coolest thing you’ve done on/with a motorcycle?

Last year my wife talked me out of taking the Hayabusa up to Alaska by letting me get the SV650. I bought it with the intention of doing some track riding. I’ve been learning how to ride better on the Hayabusa and getting more speed out of corners with more stability and control (I’d read the Total Control book). I tried taking it to the track but for the smaller track that’s available to me here in Denver (a go cart track really), the Hayabusa was a tad heavy. The first time I took the SV650 on the track, I got my knee down all the way around the track. Not only was I excited about it, a friend from the local group was there taking pictures and he got several so I have nice memories as well.

If you could pick one place you’d recommend as a riding destination / experience, what/where would that be?

There are just so many great places to ride, it’s hard to really pick a good single destination. And experience would depend on what you are excited about. Some places I’ve been since I got back on two wheels:

  • Jasper/Banff National Park in Canada
  • Labrador Canada
  • Apache Highway in Arizona
  • Rt 44 in West Virginia
  • Mt. Washington and Mt. St Helens in Washington
  • Coast Highway, north of San Francisco
  • Rt 149 in Western Colorado
  • Peak to Peak Highway in Colorado
  • Glacier National Park in Montana

Basically just explore. Break out your map book and go ride.

If someone handed you a blank check and said “go buy a motorcycle you’d enjoy riding (not just collecting), what would you pick?

I like my Hayabusa. At the moment, I’d just get another one. When I told my wife I was approaching 68,000 miles on the ‘busa, she said “well, it’s about time for another bike then.” I told her that instead, I’d rather refurbish the Hayabusa and maybe put in a “stage one kit”. Something to soup it up just a little.

Busa on the road

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Apr 21

Health Care Needs More Choices

By kevin | Decision Making

One of the keys to quality decision making is giving yourself good choices. Right behind that is information about those choices so that you can make trade-offs with confidence.

It turns out that both these ideas are they keys to sorting out the mess that is US health care . . . and it is a mess. Check out these statistics from a recent piece in Forbes.

Hospitals are still the heart of the health care industry, consuming a third of the $2 trillion U.S. health care bill. Some are very good. But many are not, brimming with infectious bugs, systemic error and negative hospitality. And because the hospital industry does all it can to thwart competition, many communities are stuck with the hospitals they have. One in 200 patients who spends a night or more in a hospital will die from medical error. One in 16 will pick up an infection. Deaths from preventable hospital infections each year exceed 100,000, more than those from AIDS, breast cancer and auto accidents combined. The presidential candidates are grappling over the plight of the uninsured, yet you’re five times more likely to die from visiting a hospital than from not having health insurance, according to the not-for-profit Committee to Reduce Infection Deaths.

Wow, that’s inconvenient, the biggest killer in the US is hospitals. Here’s where the problems arise. Working in inverse order, there’s the part about information. It’s just plain hard to come by. A good place to start is a company called HealthGrades. Another possibility is RevolutionHealth.  The later relies on “web 2.0” and consumer generated reviews. Much more cost and outcome visibility is needed. Count on the providers doing everything they can to keep the lid on. It will take either legislation or an enlightened entrepreneur to fix this problem.

The second problem is the part about choices. The truth is that big medicine is no more friendly to choices than it is to transparency.

Patients have a choice, but it’s not widespread yet. It’s called the specialty hospital, a center that focuses on the care of a particular body part such as the heart, spine or joints, or on a specific disease such as cancer. There are 200 specialty hospitals in the U.S. (out of 6,000 hospitals overall), and they often deliver services better, more safely and at lower cost. A recent University of Iowa study of tens of thousands of Medicare patients found that complication rates (bleeding, infections or death) are 40% lower for hip and knee surgeries at specialty hospitals than at big community hospitals. A 2006 study funded by Medicare found that patients of all types are four times as likely to die in a full-service hospital after orthopedic surgery as they would after the same procedure in a specialty hospital.

“Specialization is a law of nature,” says Robert Tibbs, a neurosurgeon and part-owner of the Oklahoma Spine Hospital. “Spine surgery is an elective procedure. One of the biggest risks to any surgery is infections. Here we don’t have sick people.” Last year, out of 1,773 patients who slept over at the hospital, only 7 got an infection. That’s one-third to one-ninth the rate seen for similar patients at a big hospital. At Oklahoma Spine anesthesiologists are practiced in putting patients under in the prone position for back surgery. At a big hospital few anesthesiologists would be skilled in that particular task. “You don’t take your Ford to the VW mechanic,” says Tibbs’ partner Stephen Cagle.

There are arguments against “allowing” specialized hospitals and treatment facilities to propagate, but they’re not very good ones. Where it has happened, laser eye surgery and cosmetic surgery are examples of procedures that grew up and thrived outside the health care department stores that are hospitals, costs have come down and quality and patient satisfaction has gone up. What’s not to like? It turns out competition is what’s not to like.

The big rise in hospital errors and infections has spurred Medicare to reconsider how it pays for services, potentially refusing to pay for procedures ordered as a result of medical error. This plays into the hands of the specialty hospital movement. But don’t expect their quality advantages to win the day in Washington. Political action committees associated with HCA, the American Hospital Association and the Federation of American Hospitals have already donated $2 million this election cycle to political campaigns. “The only way to solve this is to put the cat back in the bag,” says Charles (Chip) Kahn, president of FAH. At the state level hospitals still rule. Hospital safety advocates expect the California Hospital Association to kill a new bill that would force hospitals to report staph infections. Shouldn’t patients be able to comparison-shop for safety? “Consumers do not have the ability to do that,” says Deborah Rogers, a vice president at the CHA.

Keep your eye’s opened. There will be new legislation at the Federal level in the next few years. Key Democratic Congressmen are working the wrong side of this issue.

After fierce lobbying by the hospital industry, Congress in 2003 passed new Medicare rules that effectively banned new physician-owned specialty hospitals. The ban was extended until August 2006. Since then only a couple dozen specialty hospitals have been built. With Democrats controlling both houses of Congress, there is currently a move to restore the ban and make it permanent. Last year California Democrat Fortney (Pete) Stark Jr., chairman of the House subcommittee that controls Medicare spending, added a specialty hospital ban to a bill expanding the program for health insurance subsidies. The bill died in the Senate, but the issue will doubtless come up again this year.

Stark, who 20 years ago helped write the laws that regulate what businesses physicians can invest in, has been trying to ban doctor-owned specialty hospitals since the 1970s. “These doctors are not entrepreneurs. They’re getting a kickback from referring patients,” says Stark. “They make enough money.” Of the patients who prefer smaller facilities: “If that’s what they want, back rubs and silk robes, go to India.”

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Apr 19

Alton Logan, Innocent Man, Imprisoned by ethics

By kevin | Ethics

I know of at least one college professor who is planning to discuss the case of Alton Logan in an upcoming ethics class. The facts are there.

  • Alton Logan is convicted of killing a man in a McDonald’s.
  • Andrew Wilson tells his attorneys that he, not Logan killed the guard.
  • The attorney’s, "bound" by the ethical code of privilege, keep this secret for 26 years.
  • Wilson is in jail for other heinous crimes. Wilson finally dies.
  • The attorney’s come forward and petition the court on behalf of Logan
  • Logan may or may not go free.

The attorneys present themselves as wracked with anguish.


Kunz says he knows some people might find his actions outrageous. His obligation, though, was to Wilson.

"If I had ratted him out … then I could feel guilty, then I could not live with myself," he says. "I’m anguished and always have been over the sad injustice of Alton Logan’s conviction. Should I do the right thing by Alton Logan and put my client’s neck in the noose or not? It’s clear where my responsibility lies and my responsibility lies with my client."

So here are the choices that the attorney’s perceived they had:

  1. Remain silent. To do otherwise would be to violate their code of ethics.
  2. Remain silent. To do otherwise would put their client, already guilty of other capital crimes, at risk of another verdict and perhaps a death sentence.
  3. Speak up and risk censure and/or civil action by their client.
  4. Resign and speak up and risk the possibility of civil action by their client.

According to the article, it was their plan to "do something" if Logan was sentenced to death which he wasn’t. They also apparently made numerous attempts to find a way through the ethical thicket with no apparent outcome. Finally Wilson died in prison and they came forward. Logan is astonishingly philosophical.

After spending almost half his 54 years as an inmate, this slight man with a fringe of gray beard, stooped shoulders and weary eyes seems resigned to the reality that his fate is beyond his control.

"I have to accept whatever comes down," he says, sitting in a visitor’s room at the Stateville Correctional Center in Joliet.

He insists he’s not angry with Hope — the man who first said he was innocent — or even Wilson. He says he once approached Wilson in prison and asked him to "come clean. Tell the truth." Wilson just smiled and kept walking.

Nor is Logan angry with the lawyers who kept the secret. But he wonders if there wasn’t some way they could have done more.

"What I can’t understand is you know the truth, you held the truth and you know the consequences of that not coming forward?" he says of the lawyers. "Is (a) job more important than an individual’s life?"

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Apr 17

Beware your information biases

By kevin | Decision Making

Nicholas Kristoff makes some good points about some common decision traps in discussing the predictable reactions to the recent Obama / Clinton Debate.

To understand your feelings about Wednesday night’s debate, consider the Dartmouth-Princeton football game in 1951. That bitterly fought contest was the subject of a landmark study about how our biases shape our understanding of reality.

Psychologists showed a film clip of the football game to groups of students at each college and asked them to act as unbiased referees and note every instance of cheating. The results were striking. Each group, watching the same clip, was convinced that the other side had cheated worse — and this was not deliberate bias or just for show.

“Their eyes were taking in the same game, but their brains seemed to be processing the events in two distinct ways,” Farhad Manjoo writes in his terrific new book, “True Enough: Learning to Live in a Post-Fact Society.” It’s the best political book so far this year.

And this

We seek out information that reinforces our prejudices. One study presented listeners with static-filled recordings of speeches that they believed they were judging on persuasive power. Listeners could push a button to tweak the signal, reducing the static to make it easier to understand. When smokers heard a speech connecting tobacco with cancer, they didn’t try to improve the clarity to hear it more easily. But they pushed the button to get a clearer version of a speech saying that there was no link between smoking and cancer. Nonsmokers were the exact opposite.

This resistance to information that doesn’t mesh with our preconceived beliefs afflicts both liberals and conservatives, but a raft of studies shows that it is a particular problem with conservatives. For example, when voters receive mailings offering them free pamphlets on various political topics, liberals show some interest in getting conservative views. In contrast, conservatives seek only those pamphlets that echo their own views.

Likewise, liberal blogs overwhelmingly link to other liberal blogs or news sources. But with conservative blogs, the tendency is much more pronounced; it is almost a sealed universe.

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