The Solution to Gun Control?

I’m sure it’s a little more complicated than that, but it’s still a pretty neat idea.

Deconstructing Hillary vs Obama

With the Republican race for the final presidential nominee more or less settled for John McCain, the US is turning their attention to the final race still in question: the contest between Hillary Clinton and Barack Obama.

This particular contest is not only fascinating because of its historic nature (the racial/gender identity of the most likely candidate for President), but it is also fascinating because of all the fuss being made over what amounts to very little. As I mentioned before, primary races are unique in that they are typically elections between very similar candidates. Of course there are some nuanced differences between the policies that Obama and Hillary are touting, but these differences are minor compared to the differences in policies between the Democrats and the Republicans, and they are probably minor compared to what policies will actually make it through the legislative process.

And, the thing is that both campaigns know this. Instead of touting policy differences (which, in my opinion, is usually a sign of a weak candidacy — think back to Howard Dean and Ron Paul and John Edwards, candidates who campaigned almost exclusively on their policy differences), both candidates have focused on what are essentially character attacks. While Hillary trumpets her experience and her connection with the very popular President Bill Clinton, Obama touts his “message of change.”

The ironic thing, however, is that a closer examination of both of their records suggests that, with a few exceptions, most of their campaign talk is bunk:

1. Hillary Clinton is no more experienced in any meaningful way than Obama
2. Claims that Obama will “change” everything are vastly overstated.
3. If elected, Hillary Clinton’s administration will probably be very different from Bill Clinton’s.

Hillary Clinton and her “Experience”

This is a very bizarre “reason to vote Hillary” in my opinion, because I just don’t see anything solid behind it. As this Slate article puts it,

“Obama served eight years in the Illinois state Senate and is halfway through his first term in the U.S. Senate. Clinton is about to begin her eighth year in the U.S. Senate. Going by years spent as an elective official, Obama’s 11 years exceeds Clinton’s 7“.

Of course, the legitimate response to the previous point about her not having as much experience as an elected official is to say that experience is more about the number of years served as an elected official. But even this fails to stand to criticism. What experience has she had? No, sleeping with Bill Clinton doesn’t count. The Slate article continues with this telling tidbit,

“During her husband’s two terms, Hillary Clinton did not hold a security clearance, did not attend meetings of the National Security Council, and was not given a copy of the president’s daily intelligence briefing. During trips to Bosnia and Kosovo, she acted as a spokeswoman rather than as a negotiator.”

But even if we grant the premise that Hillary has vast tracts of experience behind her, we can still question the quality of her experience and her ability to lead. Very brilliant (and also liberal) economist at UC Berkeley Brad Delong has this to say about Hillary’s “experience in the White House”:

“I think it is the two cents’ worth of everybody who worked for the Clinton Administration health care reform effort that Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life. Heading up health-care reform was the only major administrative job she has ever tried to do. And she was a complete flop at it. She had neither the grasp of policy substance, the managerial skills, nor the political smarts to do the job she was then given. And she wasn’t smart enough to realize that she was in over her head and had to get out of the Health Care Czar role quickly.

So when members of the economic team said that key senators like Daniel Patrick Moynihan would have this-and-that objection, she told them they were disloyal. When members of the economic team told her that the CBO would say such-and-such, she told them (wrongly) that her conversations with the CBO head had already fixed that. When long-time staffers told her that she was making a dreadful mistake by fighting with rather than reaching out to John Breaux and Jim Cooper, she told them that they did not understand the wave of popular political support the bill would generate. And when substantive objections were raised…”

But let’s go out on a limb even more and grant that Hillary has vast tracts of good experience behind her; that still pales in comparison to the experience that John McCain has, in the Senate, as a soldier (and even a P.O.W), as a consensus-builder. This is not an endorsement of McCain (I have my own problems with his campaign) so much as sheer bewilderment at why Hillary would be willing to run on “experience” when it’s so clear she would lose in a contest of experience with the Republican frontrunner!

Do I believe that Hillary has the “experience” to lead the country? I think that question is a red herring. The President of the United States is not some lone cowboy facing down legions of problems (that sounds more like some other President that is currently facing his final year in office), he/she is an individual who works with advisors, with Congress, with the private sector, and with other countries to devise and implement solutions. That means it is not a question of if the President has the experience so much as a question of if the President has the skills to correctly identify key problems, to build consensus among the affected parties, and to carefully balance the tradeoffs that need to be made. Does Hillary have the experience to do that? I’m sure she, Obama, and McCain all do.

Obama and “Change”

There is no denying that Obama is an excellent speaker. His speech at the 2004 Democratic National Convention still strikes me as the best speech I’ve ever seen delivered by a politician. Yet, Hillary Clinton and her supporters have lashed back that all Obama offers is words and no real change. Is this true?

Frankly, to me, this almost goes without saying. In a democratic system where people are neither willing nor able to grapple with complexity and are grossly uninformed about politics, all politicians have good reason to make promises which are not entirely honest.

The Obama campaign’s response to these charges has been a nonsensical statement that Obama’s detractors are simply being hostile to a “message of hope.” This is as inspiring and uplifting as it is completely devoid of any real substance. Obama’s campaign has an obligation to prove that he truly represents something different.

So, does Obama prove that he has something different? Yes and no. On the one hand, the vast majority of his policy prescriptions are fundamentally the same as those of Hillary’s. There is no brilliant change embodied by his proposals for tax cuts for the middle class or on college tuition or green energy. His campaign has not made a move to openly support gay marriage or to ban corn-based biofuels. As Robert Samuelson points out, despite Obama’s statements about the need to move beyond “Red states vs. Blue states”, his toeing of the party line suggests this broad consensus he’s attempting to build won’t be as broad as his supporters hope, as Washington Post columnist Robert Samuelson notes:

“[Obama] has run on the vague promise of ‘change,’ but on issue after issue — immigration, the economy, global warming — he has offered boilerplate policies that evade the underlying causes of the stalemates. These issues remain contentious because they involve real conflicts or differences of opinion … He seems to have hypnotized much of the media and the public with his eloquence and the symbolism of his life story. The result is a mass delusion that Obama is forthrightly engaging the nation’s major problems when, so far, he isn’t.”

To be fair, while Obama’s end goals and policy prescriptions do not differ all that much from Hillary’s, Obama still represents an interesting change in policymaking philosophy as guided by the academic pragmatists he has signed on to his campaign (e.g., David Cutler, Austan Goolsbee, Jeffrey Liebman, and David Romer). While the final tax policy may be similar to Hillary’s, Obama has demonstrated interest in building an “iPod government” — something simple and elegant and easy-to-understand. Hillary, however, backed by a base of traditional Democratic advisors, seems content to use traditional policy tools with a expansive system of tax cut and subsidy levers to achieve the same goals.

So, does Obama represent change? Yes, but potentially on a level which is not especially relevant to most Americans.

Hill Clinton?

What has been driving a great deal of Hillary’s support is her association with the very popular Clinton administration in the mid-90s (at least that’s what pollsters had to say about the broad support for Hillary from Latinos). This is, again, a big puzzle for me, as a quick look at Hillary’s policy stances will show that on a wide range of issues, her administration will be quite different from that of her husband’s. If the reason people are voting for her is some nostalgia for the mid-90s (and come on, let’s face it, most of us do), they should think twice before voting on that alone.

• We are not in the midst of a tech bubble. If anything, we are in the midst of a mortgage bubble quickly deflating. There is no reason to believe that we can quickly and painlessly re-create the growth of the mid-90s regardless of who the President is.
• The foreign policy objectives are completely different. With no core national security threats, no strong demand for military action against any clear enemies in the 90s, the Clinton administration was able to focus almost entirely on gung-ho humanitarian and alliance building exercises. With the US military today stretched out over multiple strategic arenas and both Hillary and Obama committed to facing a new, hard-to-pin-down super-national threat (i.e., Al Qaeda is not based in one country), it is hard to imagine that the foreign policy of Bill Clinton which Democrats seem to love so much will return in the near-future.
• Hillary is anti-trade, Bill wasn’t. Do you know those NAFTA and WTO agreements that the Democrats seem to hate so much and blame for all of America’s problems? Guess who passed them? If you said Bill Clinton, you’d be right. And if you were to say that most economists think free trade is a good thing and probably one of the big reasons for American prosperity in the 90s, you’d get extra credit — and Hillary would probably fail.
• Bill Clinton was an easier grader in law school, while Hillary would kill you – okay, not a really serious point here, but this blog post comparing their teaching styles was just too cool for school

Long story short: Hillary is NOT Bill Clinton. There is no reason to expect her administration to end up anything like Bill’s. This is not a reason to vote for or against her, but people who are voting for her solely because they expect to go back to the mid-90s are going to be sorely disappointed.

Work-life Balance

The most challenging thing to deal with at a any job is balancing a personal life with the demands of the job. This is something that is especially difficult in a professional services setting, where client demands make the job unpredictable and very stressful. This is not only a problem for individual consultants who oftentimes have to juggle a myriad number of duties and tasks along with a hectic travel schedule, this is a particularly important problem for the firm, which depends on motivated workers to put in the extra time and effort for the client and for recruiting.

It’s no wonder that most firms have evolved different means of helping workers strike a healthy equilibrium. I happen to be very lucky in that my current case team has two mechanisms in place to ensure that, although our work may not always let us have as much free time as we want, we will always be mindful of maintaining a balance between personal life and work.

1. Ombudsman - A Swedish word, ombudsman means “man of the people”, a position in many European governments who’s role is to represent the interests of the public. What the ombudsman (or ombudsperson, if we want to be politically correct here) does in the team setting is to act as a constant link between the “people” (aka the poor working grunts) and the team management, presenting anonymous quotes about (a) what management should continue doing, (b) what it should consider doing, and (c) what it should stop doing. This is done on a weekly basis, with the ombudsperson presenting the results at team meetings for candid discussion.

Although I was skeptical at first when the Swedish female transfer brought up the idea, I am very happy to admit that it has been a success; management has been very responsive to team member requests, and the team members have presented valuable suggestions to improving work-life balance.

2. Virtual Babies – The idea of “virtual babies” originated when a new parent asked if it would be possible for him to make it home everyday by a certain time to be with his baby. This led to concerns of fairness amongst the younger folk who lacked such “trappings” (e.g. unmarried and/or single), and the concept of a “virtual baby” was born — something key to work-life balance which the case team could track on a weekly basis to quantitatively show how the case team was doing on lifestyle sustainability from week to week.

On my current team, despite the abundance of team members with very young children, the virtual babies have all tended to be exercise-related. Each member sets a specific, but reasonable goal (e.g. “my virtual baby will be ‘fed’ if I work out 3 times during the week”), and his or her progress tracked each week. As my team’s “virtual nanny” (the individual responsible for tracking these scores), it is my duty to not only present to the team management how well the team is doing on any given week (to alert to management if there are problems), but to also present suggestions for how to handle work-life balance, and to determine if any individual is on track to having a dangerously unsustainable work-life balance. The exercise has been interesting, not in that too many valuable insights have come from it, but from it focusing every individual on ways to change our work patterns so that we can better “tend” to the priorities in our personal lives.

The cool thing about these suggestions is not only that they work, but that they are not specific to consulting. They can be applied to any work setting. The only critical “must haves” for these to work are:

1. Team members have to take it seriously. Virtual baby scores and ombudspeople are useless if people do not accurately report their scores, consistently contribute comments, and carefully consider meaningful suggestions for management to consider.
2. Management needs to show a credible commitment to sustainable lifestyle. Paying lip service to the ombudsperson or the virtual baby scores without actually thinking about them and carefully considering and implementing suggestions will mean that these efforts are a sham.
3. Reasonable expectations. At the end of the day, there has to be recognition that work is not vacation. One can’t expect virtual babies to deliver a work environment in which everyone works fewer hours, but is paid more, and delivers more impact. What it can do is help track when problems arise, or when management is doing a good job, and that is an important distinction to make.

So, that’s what I got. Does anyone else out there have any useful work-life balance suggestions?

Love "Actually"

Slide-umentation is more than just bad as a form of communication, it can break up your relationships (hat tip: co-worker who somehow stumbled on this recently updated Boston Consulting Group classic)

"Science" fiction

There is no question in my mind that the high quality of life experienced by Americans today and the dominant position in the world which the United States currently enjoys are in large part due to the nation’s leadership in science and technology.

But despite the importance of science today, and its relevance in maintaining this favorable status quo for America tomorrow, Americans show a bizarre lack of understanding of basic science. This manifests itself in a more serious way in the the sheer number of individuals who believe that evolution and creationism are equivalent in validity and/or who believe that vaccines cause autism — both are quite wrong; both are testament to how little many Americans comprehend of science; and both are signs that this lack of understanding has real political impacts.

On the less serious side, however, this also manifests itself in a number of odd “scientific” beliefs which, although oftentimes having no basis in reality, are actually widely held (from: LiveScience)

Top 10 Most Popular Myths in Science

1. Humans use only 10% of their brains.
2. The Great Wall of China is the only manmade structure visible from space.
3. It takes 7 years to digest gum.
4. Yawning is “contagious.”
5. Water drains backwards in the Southern Hemisphere due to the Earth’s rotation.
6. There is no gravity in space.
7. Chickens can live without a head.
8. Eating a poppy seed bagel mimics opium use.
9. A penny dropped from the top of a tall building could kill a pedestrian.
10. Hair and fingernails continue growing after death.

And now you are enlightened. Go forth and spread your newfound scientific “wisdom.”

The Writing on the Computer

When people think of prolific writers, their mind jumps to people like Charles Dickens or St. Augustine or Shakespeare — individuals who have shaped Western intellectual thought with huge tracts of their wisdom bound together in paper form.

They’re about to eat Philip M. Parker’s dust (hat tip: Freakonomics)

Philip M Parker, a professor of management science at Insead, the international business school based in Fontainebleau, France, patented what he calls a “method and apparatus for automated authoring and marketing”.

Huh? Wazzat? It’s a machine that writes books!

The book-writing machine works simply, at least in principle. First, one feeds it a recipe for writing a particular genre of book – a tome about crossword puzzles, say, or a market outlook for products. Then hook the computer up to a big database full of info about crossword puzzles or market information. The computer uses the recipe to select data from the database and write and format it into book form.

Parker can literally create a book on demand:

Nothing but the title need actually exist until somebody orders a copy. At that point, a computer assembles the book’s content and prints up a single copy.

The Guardian claims he’s “written” 200,000 different books so far, of which include the fascinating Webster’s Albanian to English Crossword Puzzles: Level 1, the suspenseful The 2007 Import and Export Market for Ferrous Metal Waste and Scrap Excluding Waste and Scrap of Cast Iron and Alloy Steel in United Kingdom, and the unforgettable 2007-2012 Outlook for Edible Tallow and Stearin Made in Slaughtering Plants in Greater China.

Let’s see him craft an epic poem?

Project Bunnyrabbit

Consulting, for better and for worse, involves a great deal of secrecy. On the one hand, it means my firm pays for each consultant to have a company laptop (Thinkpad T60) with encrypted hard drive and a 3M privacy filter. On the other hand, it makes it extremely difficult to talk about my work, or to request information.

My firm, for example, makes it a point to never mention client’s names. Even with our dealings with senior management (at the VP level), treating information on a “need to know” basis would be considered a very loose policy. This may seem odd, but makes sense seeing how we are oftentimes discussing potential acquisition targets and potentially sensitive issues (e.g. laying off a division). If such information were to leak, it could lead to a particularly tricky situation for management (e.g. if the division which was to be axed caught wind of this), or, worse, lead to an investigation by the Securities and Exchange Commission.

The bar for confidentiality is set even higher for private equity clients. Because private equity firms basically make large bets on companies by either buying up entire firms or divisions (e.g. like how Cerberus bought all of Chrysler from Daimler-Chrysler, or how KKR bought up all of RJR Nabisco) financed by borrowing all the money, their success depends strongly on getting the best deal for an acquisition. This means that if even the slightest word got out that a certain company or strategy was under consideration, there is a big chance that the acquisition price will go up or a competitor will move to neutralize that strategic opportunity.

It’s no small wonder, then, that in private equity cases, and in situations dealing with potential acquisition targets, case teams at my firm follow the strictest of privacy guidelines. We even take it to the next level by assigning each acquisition target a code name, making it a practice to never use the actual target name, not in slides, not in written correspondence, and not even in face-to-face discussions.

This may seem absurd, but it’s happened on more than one occasion, that two separate case teams at a firm will be working with two different private equity groups, but both be considering the exact same target. Going this extra mile insures that confidentiality is protected, and conveys to the clients that we as a firm take their priorities very seriously.

On a lighter note, though, case teams occasionally use more “colorful names” — “Project Bunnyrabbit” comes to mind as one example from my firm — leading to very bizarre conversations, which, when overheard, sound absolutely ridiculous:

CONSULTANT 1: Yeah, Bunnyrabbit looks really good.

CONSULTANT 2: I agree. Especially this past year, it did really well compared to its peers.

No truth please, we’re British

Rejoice, fellow Americans! The days where a haughty British accent communicated intelligence may soon be over! (hat tip: B. Farmer)

Quarter of Brits think Churchill was myth

Britons are losing their grip on reality, according to a poll out Monday which showed that nearly a quarter think Winston Churchill was a myth while the majority reckon Sherlock Holmes was real.

The survey found that 47 percent thought the 12th century English king Richard the Lionheart was a myth.

And 23 percent thought World War II prime minister Churchill was made up. The same percentage thought Crimean War nurse Florence Nightingale did not actually exist.

Three percent thought Charles Dickens, one of Britain’s most famous writers, is a work of fiction himself.

Indian political leader Mahatma Gandhi and Battle of Waterloo victor the Duke of Wellington also appeared in the top 10 of people thought to be myths.

Meanwhile, 58 percent thought Sir Arthur Conan Doyle’s fictional detective Holmes actually existed; 33 percent thought the same of W. E. Johns’ fictional pilot and adventurer Biggles.

UKTV Gold television surveyed 3,000 people.

Made in Taiwan

I’ve been on my current case for about 3 months. As I’ve mentioned before, it is a high level strategy case for a technology client. As a result, I’ve been able to do a great deal of fairly interesting work researching various technology markets and trends, ranging from the typical (Internet search) to the more esoteric (grid computing), as I help the client scope out successful strategies by other technology players and possible expansion opportunities.

During the course of this research, I have been surprised by many things, but what I found most surprising (although, in retrospect, I probably shouldn’t have) was how important Taiwan is to the global technology market.

This is a particular point of pride for me, for despite Taiwan’s pre-eminence as an economic power and it’s fascinating fusion of Western, Japanese, and Chinese influences, the island is not given the same respect or attention as Hong Kong or Shanghai or Singapore. Despite a vibrant political system, it has no seat on the United Nations, no diplomatic recognition by any major country, and even to the United States which guards the island as if it were its own, it is the black sheep of the United State’s circle of friends — rarely to be mentioned in polite conversation.

And yet, the world as you or I know it would not be able to get along without it:

1. Taiwan is the center of the world’s semiconductor foundry business. Because cutting-edge semiconductor factories (called fabs) are so expensive to manufacture, only the largest semiconductor firms (such as Samsung and Intel) have the annual sales numbers to justify building their own factories. Smaller players are better off outsourcing their production capacity to dedicated semiconductor factories, called foundries. Today, almost all semiconductor manufacturers use the services of a foundry to build most if not all of their semiconductors. The world’s two largest foundries, TSMC (Taiwan Semiconductor) and UMC (United Microelectronics) are located in Taiwan, and together control approximately 60% of the world foundry business (the next largest foundry is only half the size of UMC, which is itself only about one third the size of TSMC!) and exert significant influence in the global semiconductor industry.
2. Taiwan is the center of the world’s electronics manufacturing services. What many people don’t realize is that companies like Apple and Dell tend to only specialize in marketing and some design, but not in manufacturing (which would involve building a factory, gaining manufacturing expertise and skill, and other expensive and difficult things for a firm trying to stay lean and on the cutting edge). These firms thus outsource their manufacturing to specialized firms called Electronic Manufacturing Services (EMS) firms. The world’s largest EMS company by far is the Foxconn/Hon Hai conglomerate which is responsible for about 20% of the world’s outsourced electronics manufacturing, almost double that of the second largest firm. Never heard of them? You’ve certainly heard of its products: the MacBook Pro, the iPhone, the iPod, the Playstation 3, the Wii, the Xbox 360, graphics cards for AMD/ATI and NVIDIA, … the list goes on.
3. Taiwan is the world’s original design manufacturing capital. Original design manufacturers (ODMs) go a step further than EMS firms — they actually do provide some of their own design services (which begs the question of what we’re paying Dell and HP and Apple for when they’re outsourcing design to ODMs). This is one reason that many ODMs are also original electronics manufacturers (OEMs) — companies which attach brands to the electronics themselves (think Apple, Lenovo, Dell, etc.) Of the top 10 ODMs in the world in 2006, at least 9 are Taiwanese companies (and that’s because I was too lazy to look up the last one — TPV technology) — those firms alone control nearly 70% of the global ODM market — and they include Windows Mobile phone manufacturer and Open Handset Alliance member HTC, the rapidly growing computer OEM/ODM ASUStek, Compal, and OLPC manufacturer Quanta Computer.
4. Taiwan is also home to D-Link and Acer. The latter of which recently is trying to resurrect dying brands of eMachines and Gateway.

Long story short — Taiwan matters, and I hope this will be the first in a series of posts that explains a bit more about the country that I come from.

The Britney-conomy

How can you quantify the “social impact” of a single individual? For instance, how much of an impact does Britney Spears have on “society”? (And, yes, those and other quotes that you see in this post are meant to convey vast depths of sarcasm).

An economist could argue that Britney’s worth to society would be her income. The reasoning behind that is that if she were worth less to society, society would simply not pay her so much. If she was worth more to society, Britney would, because she is clearly a rational utility-maximizing individual, find some way to extract from society her true value in the form of a higher income.

Even if we put aside moral issues with this definition of value to society, any careful observer will notice that Britney does more than just “add value” equal to her income. For example, she was a popstar, meaning her “work” rakes in extra money for the record label. Her face and escapades become the “incomes” of paparazzi and celebrity gossip columnists. Her “image” backs her perfume lines and her appearances in advertisements. These cannot all be directly attributed to her (i.e. she did not set up the record label, she did not write the columns dedicated to “her life”, etc.), so her income doesn’t necessarily reflect these, but it can at least be said that Britney enables a whole world of economic activity which (*drumroll*) Conde Nast’s Portfolio.com estimates to be worth over $110 million. (Hat tip: Freakonomics)

This is how big she is:

A celebrity tabloid with Britney Spears on the cover sells 1.28 million newsstand copies, some 33 percent more than the average. Between January 2006 and July 2007, Britney was a cover subject of People, Us Weekly, In Touch, Life & Style, OK!, or Star a total of 175 times in just 78 weeks. During that period, newsstand sales of issues with her on the cover amounted to a staggering $360 million. She’s also topped the annual Yahoo Search rankings in six of the past seven years, slipping to No. 2 only in 2004, when Paris Hilton briefly stole her crown. Searches for Britney were up 60 percent in 2007, the year of her divorce, shaved head, and car wreck. “If there was no Britney, would all Web traffic stop?” asks Vera Chan, senior editor at Yahoo. “I would hesitate to give her that much power, but it’s hard to argue with the facts.”

And the breakdown of this $110 million?

Estimated annual take (record company, promoters, licensers, and others): $30 million to $40 million

Estimated average annual take (Paparazzi): $4 million

Estimated average annual take (the Media): $75 million

Estimated average annual take (K-Fed): $1 million

Hit me baby one more time? No seriously. Hit me. Because this number can’t be real.